Hey,
Happy Monday.
Before we get into it for this week I’m PUMPED to share something with you. Over the last little while I’ve been working on my second book baby, Replace Your Salary by Investing which has just gone live(!).
Through this book, I unpack the principles you need to nail to drive permanent money success, and the hacks you can use to save more, invest smart, cut your tax bill, and get ahead faster. You can check out all the details and order a copy here.
In money news for this week, the NSW First Home Choice scheme has just gone live, giving eligible first home buyers the option to ditch the lump sum property stamp duty in exchange for paying an annual land tax. Given stamp duty is around 4% of a property value, the land tax option will save most people tens of thousands of dollars in year one – but over time you end up paying more. Time will tell whether first home buyers will give into the temptation and cost themselves a packet in the process.
Smart Money upside #101
Here we unpack the numbers from a recent client we helped, what they were doing with their money when they came to see us, what they chose to do as a result of going through the financial planning process, and the financial impact and upside we helped them achieve. To chat about how to get these sorts of results, you can book an intro chat with us here.
Numbers/Background
Couple, late 30’s; household income ~ $140k; total assets ~ $870k; saving ~ $5k annually.
Frustrations
Lack of support, not having a financial strategy in place, feeling stagnant and having little money momentum.
What they wanted from us / the advice process
Getting some financial accountability and coaching, begin building a passive income stream and have clarity on their financial strategy.
What success looks like for them
Having a better work/life balance and less overall stress, a property portfolio journey laid out in front of them and working towards building a passive income stream.
What money strategy they were following before we went through the planning process
Trying to save in their bank but not to their potential.
What money strategy they chose to pursue from our planning work
Clearly allocating portions for debt, and living expenses and then investing the remaining surplus.
Key benefits of going through the process
Clarity on a financial roadmap, better confidence and outlook for their future and some clear guidance and direction.
Value of advice after all advice fees year one: $8k
Year 20 upside after advice fees: $1.2m
If this story resonates you can book an intro call with us here.
Video of the week
This week we’re discussing how to start the new year on the front financial foot and save and invest more in 2023. In my chat with The Today Show, I also break down how to set up your goal to ensure success. Check out the full video here.
Client story of the week
Upgrading your home is a big money decision that has a big impact on your levels of real wealth both today and into the future, so getting it right is critical if you want to come anywhere close to achieving your financial potential. This story is from a recent client and how we helped them plan a home upgrade without sabotaging their investment plans. Check out the full video here.
Podcast drop
Learn the tips, hacks, and strategies to help you level up your money game. Pods released last week:
- #285 Money news in human words; RBA rate cut, GFC declines forecast, & holiday home tactics
Upcoming events:
Free online money education to help you invest smarter and create a life not limited by money:
- Get money smart in 2023 – January 27, 2023, 12pm
- Buy property smarter in 2023 – February 22, 2023, 12pm
- Build a second income investing in 2023 – March 8, 12pm
- Invest with property equity in 2023 – March 22, 2023, 12pm
Blog of the week: How not investing today will cost you $250k p.a.
Money isn’t easy.
There, I said it. You knew it. I knew it. But not a lot of people talk about it. And because we don’t talk about money, it’s easy to fall into the trap of thinking everyone else has it more together than you do.
They don’t.
There’s so much confusion out there when it comes to money.
In Australia, there are thousands of different investment options and providers, banking solutions, crypto investments, super funds, and the list goes on. Figuring out which options are best is hard.
Then, even if you manage to work through these options, you then need to wrap them into a money plan that will deliver solid results and fit in with the thousands of potential variations of your lifestyle in the future.
So yeah, money can be tricky.
But the good news is that you don’t need to be an expert from day one.
If you plan to achieve serious money success, by the time you get to the finish line you will need to have a lot of money knowledge and skills. But, those aren’t the skills you need to get started.
The main building block of money success is investing. And while you do need to have some knowledge to get started investing, you don’t need to know it all.
For example, if you were to invest just $5,000 in the next year, this money would grow to be worth $248,022 in 40 years time assuming the long-term Australian share market return of 9.8%.
But, thinking you need to be a money or investing expert before you get started often leads to the feeling of overwhelm, which in turn can result in getting stuck in the inaction trap.
The real cost of not taking action
You can see from the example above the upside of getting started, but the flip side of this example is the real cost of not taking action.
The fact that investing $5k this year will grow to almost a quarter of a million dollars over time means that the actual downside of not investing is huge. For every single year, you delay getting started, you’re costing yourself six figures in lost wealth you’ll never get back.
You’ll then need to play catch up in the future, sacrificing more to get to the same position, or having to compromise on where you can get to with your money.
Money is a muscle
Money is a muscle you build over time. And just like any muscle, you start with the basics, and as you grow and develop you can get more complex and nuanced with your approach.
I do a lot of financial advice and education work with professional athletes, and through this work, I’ve come to realise there are a lot of crossovers between your being an elite athlete and being elite with your money.
When you first start playing sports as a kid, you don’t jump straight into a high-performance plan, conditioning framework, and all the rest of the things a professional athlete does day in and day out.
Instead, you focus on the basics. You do some running to get your physical fitness up. You practise basic drills to help with your coordination. And you do exercises to build your strength and speed, maybe some push-ups or sprints.
And then you practise. Regularly. For years. Over time you add more skills and techniques to your training routines to level up your game.
When you watch an elite athletes play sports, they make it look so easy.
But what you don’t see is the countless hours of practice over years and often decades. It’s this practice where skills are formed, honed, and perfected.
If you fast forward to the future state where you’re crushing it with your money, at that point you’ll have all the skills you need to be there. You’ll have put in all the practice needed to build your money muscle. And you’ll make it look effortless too.
But you don’t need to be there yet.
When you’re earlier on in your journey to money success, you just need to take the next step. You need to flex your money muscle to build it just that little bit so you can do the next exercise and the next variation to make the progress you want today.
Once you make it there, you’ll have learned some lessons and built some skills that will make whatever comes next easier. You then set the next target to work towards, and then pursue that goal until you get there.
At that point, you’ll have learnt some more and added more new skills to your tool kit, that in turn will help you move further forward.
You can see where this is going…
The wrap
If you let it, thinking you need to be an expert from the start can stop you from getting started. It can stop you from making progress. And it can stop you from learning and growing your money muscle. Ultimately, it will stop you from building your money momentum.
Take action today to start driving results. Focus on what your next step is with your money and what you need to do to make it happen.
If your next step is investing, don’t think you need to be an expert on day one. This is an impossible benchmark that will stop you from getting started and building your money momentum. And it will cost you serious dollars, but only if you let it.
To your success,
Ben
PS: Pivot Wealth exists to help people invest smarter to create a life not limited by money. If you want help to make your next steps easier, you can book a 10-minute, no BS chat with us here.
Founder and Adviser
Pivot Wealth
The information in this note is not personal advice, a guaranteed pathway to that elusive beach bod, or the lost script of Edna St. Vincent Millay’s Pulitzer Prize-winning Conversation at Midnight. This is just a bulk communication pushed out into the internet, and it doesn’t even have your name on it. Your personal situation, needs & objectives, and financial situation have not been considered in putting this together – nor have we considered your dietary preferences, the way you like your hair cut, or your favourite travel destination – but we have spent a lot of time thinking about the future of urban society, whether there is other intelligent life in the solar system, and the pervasion of soy and linseed bread in Australian metropolitan hubs. You should consider the appropriateness of any general advice in relation to your own objectives, financial situation and needs and seek advice before taking any action. You should also consider using a variety of eau de toilette fragrances to keep your partner interested and colleagues on side, not using plastic straws, and minimising your screen time. Where information relates to a financial product, you should read and understand the relevant product disclosure statement. Where information relates to your own potential for awesomeness, you should consider backing yourself totally and completely. Past performance is definitely not an indicator of future performance when it comes to investments and financial products, as well as the likelihood of your children sitting still and quiet for an hour being satisfied playing with a used piece of wrapping paper. Financial services guide.