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Financial Advisors - Where to Find Them

December 12th, 2011 at 09:20 am

Many people depend on a financial advisor to help them achieve their financial goals. Financial advisors have access to a great deal of knowledge about finances as they are trained especially in this area. You can find a financial advisor by searching the Internet (websites), going to a bank or financial institution, or looking in the phone book. Friends and family may also be able to recommend a good financial advisor. Make sure your financial planner is properly qualified and licensed with ASIC (Australian Securities and Investment Commission).

Financial advisors charge in a variety of ways. They may charge a flat fee at an hourly rate, or a percentage of your income/assets. Some financial advisors are free - they get paid a commission on the products they sell. Most people feel this creates a conflict of interest, as they will certainly push those products from which they get the biggest percentage, rather than what is most likely to suit you.

Those financial planners who work for a bank are likely to only push the bank’s products - this is only natural, but remember the banks want to make money first, so their products are not necessarily designed to cater to your own specific needs.

Financial Goals 2010

January 20th, 2010 at 06:17 am

Wealth management encompasses all elements of creating wealth including tax reduction as well as investments; implementing business structures; protection of assets, trusts and self managed super funds. A financial planner can help you to put wealth management procedures into place that will meet your financial goals and desires for your future.

Before consulting a

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financial planner you need to know exactly what those goals are, but if you find it hard to think through, then they can offer preliminary suggestions to help you. But it is only when they have a thorough understanding of your specific goals that they will be able to devise the right financial plan to suit you.

Strategic wealth management is always tied to planning for tax reduction, because when your tax is legally reduced it naturally increases your wealth. A financial planner can help you in many areas: -

- Setting financial goals
- Saving in order to achieve those goals
- Budgeting in order to save where you thought you couldn’t
- Managing your debt
- Buying a home
- Protecting yourself with insurance - remember you are your biggest asset
- Deciding whether to rent or buy
- Helping to work out what you should put into your super fund to achieve financial goals.

These are just a few examples. There are many other areas where a
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financial planner can help you.

Winners & Losers

July 15th, 2009 at 04:45 am

You've all heard the expression "the rich get richer and the poor get poorer" right?

Well to my way of thinking there is one major difference between financial winners and financial losers.

Winners borrow money at low rates of interest for assets such as property and shares that increase in value as time passes.

Losers on the other hand borrow at high rates of interest on consumables like furniture and cars that decrease in value, in the case of new cars around 20% as soon as they leave the showroom.

While interest rates are at the lowest they have been in years do the right thing (if you are able) and borrow some money to invest in quality assets.

Why Creating an Emergency Fund is a Good Idea

July 8th, 2009 at 03:31 am

An emergency fund is good insurance

You may have gone to a lot of trouble to work out a budget so you know just what bills are coming in and how much you'll need to pay them. Then you feel that anything left over is yours to spend how you like. That is true of course; you've earned that money and so you have the right to spend it.

But before you go out and blow the lot on a party or the latest electronic gadget, remember that life has a habit of taking some unexpected turns. And usually money is needed to cover the costs. If you have only enough cash set aside to pay your expected bills, what happens when you get an unexpected one? Your water heater could suddenly develop a serious leak, the car may need unexpected repairs, or illness may keep you from working for some months.

If you've set aside money in an emergency fund such as a savings account or short term deposit, you won't need to worry how you'll cope financially. Sure, you feel that your credit card will get you out of any financial hole, but don't forget you have to pay that back. And if you don't pay it in time, you'll get hit with the highest interest there is. Using a credit card to cope with unexpected bills could well be digging a financial hole that it is very difficult to climb out of. So creating a special fund to cope with emergencies is a sensible thing to do.

Why Winning the Lottery is Not a Safe Financial Plan

July 7th, 2009 at 04:15 pm

The recent $93 million lottery draw got me thinking if buying lottery tickets is the best way to a better lifestyle.

Do you buy a lottery ticket every week - or more often - in the hopes of winning the big one? Do you constantly dream about what you will do when you finally win the lottery? Take a trip, buy a new car or house, and help out the kids? Why leave your finances in the hand of Lady Luck who is known to be so fickle?

While we know that someone has to win, the chances of winning a significant amount of cash in a lottery is really poor. In fact, experts tell us we have less than three one-hundredths of one percent chance of winning a lottery.

Instead, tot up the amount of money you spend each week on lottery tickets; it might surprise you just how much it is. Especially if you multiply that weekly amount by 52 to see how much you spend in a year. Now multiply your yearly amount by 5 to see how much you'll have spent in five years.

Add about 8% to that total to see how much you would have got if you'd saved that amount in a term deposit instead of spending it. Of course it won't be quite accurate, because you would have to start off with just your first little weekly total, but savings mount up over time. And you don't have to depend on Lady Luck for your increase.

Who is best qualified to give that financial advice?

April 20th, 2009 at 07:38 am

Many people these days need financial advice to get out of debt, or to negotiate the tricky waters of finance in their daily lives, including paying off that mortgage while still making ends meet. But who is best qualified to give that advice? Who should they listen to? It could be a friend, or even their grandparents if they are really good at budgeting and so can give the sort of advice that will help them. But when it comes to most financial problems, getting the help of a professional person trained and licensed to give advice in that area is the best solution.

People who have no training may be able to advise on certain aspects of finance, but their advice will certainly be limited. And if an untrained person gives you specific advice about what stocks and shares to buy, or which bank to deal with, then you need to be very wary. What happens if you follow their advice and it all goes wrong? You could easily lose all your money and even if you sue them, it's not that likely you'll get it back.

At least you know that a financial advisor who has certificates to prove he is qualified will be more likely to get it right. And if he is officially working for some financial company then there will most likely be insurance for some kind of protection.

Types of investment products

March 17th, 2009 at 07:11 am

There are several different types of investment products on the market and to choose one to suit you, your needs and goals must be thought through carefully. Most stable investments should be for the long term, that is 5 years or more - more is better.
Perhaps the most popular investment product would be superannuation. This is because of the tax savings that are significant and also the fact that the government will add more money for free if you salary sacrifice up to a certain amount. There is a limit, of course, but it is certainly worth the effort. Superannuation can be DIY (do-it-yourself) or done for you. The latter option is the easiest, though many people like the idea of DIY.
Other investment products that are easy to get into are those such as managed funds offered by banks or other financial institutions. All you need to do is create the account and have a minimum deposit in it. Because the money is pooled with that of other investors, these let you diversify your investments a great deal more than if you were investing on your own. Diversification is another word for safety, in investing. But since banks need to make money out of these investments too, your share may not be as significant as if you were doing your own investing. It will, however be safer - so long as you choose the safe option.
A term deposit is an investment product of a simpler kind. Here you simply park your money for your chosen time and then get paid a good interest rate on it when the maturity date rolls around. Even a savings account could be considered an investment product, though the rate of return on most is usually not significant.
A more complex investment product is sometimes quite difficult to understand. All investment products should come with a disclosure statement that tells you how your money will be invested, what returns will be generated and in what way they will be paid to you. If you cannot understand anything that is in the statement, you should seek the advice of a professional or else don’t go ahead with it.
You need to know if you can get your money back early if necessary and if so, what fees apply. If you want to sell your investment, is there a ready market that enables you to do so? And it is wise to choose a product that is issued by a person or company that holds an Australian Financial Services license.
Remember that the better the expected return on your investment is, the higher the risk is likely to be.

Golden Rules of Investing

January 19th, 2009 at 04:50 am

Since the whole idea of investing is to make money, it is important to take the time to get the most bang for your investment dollar possible. While you can simply leave it all to the professionals, knowing what they are up to will give you more peace of mind. And if you do your own investing, then regularly checking your investment portfolio can only be considered wise.

Following the golden rules of investing will help to enhance your return and minimise fees and losses. Read on for some wise advice about investment portfolios from the professionals.

1. Firstly, if you have business interests, you should certainly keep them separate from your personal investment portfolio. Then if something nasty should happen to your business, you can’t be sued for the clothes on your back, as it were. You might think your business is rock solid, but accidents such as fires can happen - and then, you may pass the business on to the younger generation who may not be as wise as you are. So protect your investments by keeping them separate.

2. Hold your investment portfolio outside your name. Many lenders require a personal guarantee that means you can be sued for your personal assets if you should default on the loan. So for standard asset protection, put them in another name.

3. Thinking ahead will help stave off any problems. Burying your head in the sand will not solve anything and it only makes matter worse. Saving money outside of your personal name and your business name makes good sense, even if your business appears rocks solid at the moment.

4. Now that superannuation laws have been changed, it’s up to you to make the most of them. Adding significant contributions to your super while it is still allowed will certainly increase your investment returns. And the new law means that your superannuation is protected from creditors in the event of bankruptcy.

5. Use of a discretionary trust is a good way to protect assets in case of bankruptcy, but also gives excellent tax benefits. This is done by splitting income and capital gains with adults who have a lower tax rate than your own.

6. Forming a company may not be the best way to protect assets or gain tax benefits. Appreciating assets from investments should not be held in a company because they are not eligible for the CGT discount of 50%. However, companies do have some good points if care is exercised.

Guide to Getting Financial Advice

December 30th, 2008 at 03:52 pm

Once you decide you need a financial advisor, you then have the problem of locating one that is right for you and part of this is in the location. You need to be able to get to your financial advisor without too much hassle or a long trip, so choose one that is in a convenient location to you.

You could always ask your friends or family for their recommendations, but remember that their financial circumstances and goals may not be the same as yours, so their financial advisor may not suit your needs. Picking one at random from a phone book is your next option. You won’t always know if the one you pick will suit you, but you can go in for the first consultation and find out. At least you should know whether they are conveniently located by the address given.

Or you could go online and do some research. The Financial Planning Association (FPA) website makes it easier to wade through the array of financial advisors. You just need to type in your postcode to bring up all those that are close to your location. Seeking a financial advisor who is also a member of a financial organization such as the FPA will ensure that you get someone who must not only undertake extra development and training all the time, but is committed to a code of behaviour and ethics beyond that required by the law.

The financial advisor you choose can only work with what you tell him or her, therefore it is important that you are honest about all your financial dealings. Only then will they be able to produce a statement of financial advice that will be of use to you. And by the way, they are required by law to give you a written statement of advice, not just tell you verbally.

An important question to ask your financial advisor is whether another company owns their business. If it does, this might have some bearing on what products you will be offered, since they will always be interested is selling products from which their company will gain commission. Once you have your financial advice all sorted out, you’ll find that it gives you peace of mind to know that you are doing all you can do financially to get a better life. By following the advice of a professional financial advisor you will be making the best decisions possible.

Tailoring Your Investment Plan

December 23rd, 2008 at 05:11 am

Your investment planning strategy should be tailored to fit your own unique circumstances and position. Only you know what your interests are, how much you know about investing generally, your risk comfort level and how much you have to invest.

Age is one of the main factors in working out an investment plan to suit you. Since all investment carries a certain degree of risk, the younger you are when you start investing, the better. If you are young enough to factor in at least 25 years of investing before you need to touch your money, you are at the prime position for investing. You have time to lose and recover investments when you are young. This doesn’t mean you should choose high-risk investments for all of your spare cash. A good portion of your investments should still be in areas that are safe, such as superannuation or other retirement accounts.

No one should venture into the stock market without a modicum of knowledge - that would be foolish. Instead, set yourself to learn a little bit at a time so you don’t feel overwhelmed and give up before you start. The less you know, the more your investing planning should rely on managed funds. There is a great deal to learn about investing and you won’t be able to learn it all in just twelve months. But once you start to learn, you may be comfortable keeping a percentage of your money out of managed funds and invest it using the knowledge you have gained.

Since personal investing takes time and effort, you need also to make sure you have the time to invest your money satisfactorily. Depending on your knowledge of stocks, you’ll need to commit at least five hours of your time per week to your investing. Of course this will depend on the ratio of individual stocks to managed funds that you have.

Investments need to be analysed to find out if they are a good risk. You can use expensive investment services or you can choose the free ones that are just as good. Many public websites have balance and cash flow statements, press releases and earnings reports. Choose a few reputable websites and stick to them, otherwise you’ll be inundated and confused with the amount of information you find.

Even when deciding on your own investment strategy, you can take advantage of a general market index. Keep a similar investment ratio across the sectors, otherwise you may find that you are dangerously over-allocated in one sector. Then if it begins to lose money, your diversification will not be wide enough to save you. Don’t let thoughts of losing money put you off investing though. It is by getting in and doing it that you learn best, and you stand to gain a great deal more by investing than by standing on the sidelines wondering if you should.

The Best Financial Advice I Ever Got

November 4th, 2008 at 04:39 am

There is much financial advice floating around - some of it is even free. But you may think that the only financial advice worth taking note of is something you've paid dearly for. It must be some special, long report full of jargon that you can barely understand - and of course written by those professional financial advisors who charge an arm and a leg for it. In fact, you would need to take it to another financial advisor to have it explained.

Nope, not so. You don't need financial advice that is hard to understand or so longwinded it bores you to tears. What you need is something short and succinct. You need financial advice that switches the light bulb on in your brain; that gives you one of those moments of brilliant clarity with which to peer down the long years of your life. It should be easy to understand and easier still to implement. This financial advice should become a part of your life, your spending habits and character. And certainly it should be something that you can easily pass onto your kids.

The best financial advice I ever got was from my mother. She said, “Do you really need that?” Now how hard is that to understand? Do you really need it? You may desire it. You may long for it. You may even dream about owning it. But do you really need it? In other words, will not having it cause you to die?

You can apply this piece of financial advice to clothing. We all need clothing. We don't need designer clothing that is so expensive that it would feed a third world child for a year. We don’t need to have our wardrobes stuffed so full of it that we never see the bottom layer.

We can apply this financial advice to food. Everyone needs food: we don’t all need the most expensive cut of steak. Nor do we need to eat out every night, nor even once a week. Homes? Sure we all like to live in a nice, big home. A little one will do, though. We won’t die if we don’t have four bedrooms with ensuites and a swimming pool. New modern furniture would be great, but we can make do with stuff from the op-shop, or Gran’s bedroom suite.

Financial advice doesn't have to be difficult. Ask yourself do you need it every time before you buy something and you'll soon find that you have plenty of money to invest - and some left over to pay for expert financial advice on the best way to do it.

Choosing Your Financial Advisor

November 3rd, 2008 at 02:38 am

Choosing a financial advisor can be the best - or worst - thing you ever did. There are many people out there who call themselves financial advisors, but are they trained and licensed to do the job they claim to be good at? And are they a good fit with you personally? Even if the financial advisor you choose is good at his job, if he has a personality that clashes with yours, you won’t find it comfortable or pleasant working with him.

The main thing to remember is not to use Uncle Joe or Grandpa as your financial advisor - unless they are trained and experienced in doing the job. Even so, they may not be objective enough when it comes to your investments, simply because they are close to you.

A financial advisor can guide you through a maze of laws, rules and regulations on all kinds of topics to do with finance. His expertise about retirement plans, superannuation, insurance, income and family taxes will be invaluable. But before you choose your financial advisor, you need to find out a few things about him.

You need to know if he has the kind of good track record that comes with experience. A financial advisor can be highly trained and have all the right certification, but unless he also has a proven track record of giving successful financial advice, then you don’t want him touching your finances.

You also need to find out how your financial advisor gets paid. If he is paid commission from the products he advises for you, then you cannot be sure that they are truly the best ones for your situation. He could want you to have them because he gets paid a great commission from selling them. Even if a financial advisor claims to be fees-based, that doesn’t mean he is totally paid by fees. It could be that his remuneration is only part fees and the other part is commission.

Another consideration is what you actually want your financial advisor to do. If you have a specific problem such as estate planning for him to sort out, then you need to choose someone who is well trained in that area; if you have tax questions an insurance advisor would not be the best person to ask.

To find the best financial advisor, start by asking your friends and family whom they use. You can also ask other professionals that you trust whom they would recommend.

Financial Advice for School Leavers

October 31st, 2008 at 03:20 am

Most school leavers don't have a great deal of money, so they have to be careful what they spend. If you are heading off to university, you may be even more worried that you won’t have enough money to see you through. But there are ways and means of saving what you have - or at least making it go further. Read on for some financial advice.

The cost of accommodation is one of the biggest for all school leavers. The best financial advice on accommodation is if you are able to stay at home for a few years, then do so, even if you pay your parents a small sum to help cover costs and food. If your Uni is too far to travel to daily, then living on campus is usually cheaper than getting private accommodation. There are often houses around a university that are let to students on a share basis. You may have to share with up to five other people, but these are often work out a bit cheaper than leasing a whole flat to yourself. If you do get a private flat, see if you can share the space and costs with a friend.

Get some financial advice about budgeting if you’ve never done it before. There is plenty of free financial advice online that covers many things as well as budgeting. Budgeting not only means spending wisely, it may mean not spending at all for those treats you can do without, such as alcohol and cigarettes and yes, even chocolate. Getting the most bang for your buck is important too.

Shopping for food near to closing time will often get you bargains that were not available earlier in the day. Buying in bulk - combining with other students - is also a way of saving money. Buy clothing and other items only when it is on sale or discounted with a two for one special.

Take advantage of the Uni's financial advice as far as fees go. They have advisors that will work out a plan with you that will see you through. Books are often a big cost, but you don’t need to rush out and buy them all on the first day. Some will be available through the library; others you’ll be able to purchase second hand from last year’s students.

Following the financial advice of professionals, whether from an online source or offline is very important. You can listen to much financial advice, but unless you put it into practice there will be no benefit from it.

You don’t have to be Michael Phelps to win big this Olympic Games

August 12th, 2008 at 04:16 am

Michael Phelps will be trying his hardest to win 8 Gold Medals and the onlookers will be cheering him on. Excitement reigns - but all must wait until another few days before we can see if he breaks the record held for so long by Mark Spitz. Luckily, with term deposits, you don’t have to wait for a particular start time before winning. The gains begin as soon as you choose the product that suits you best and invest your money in it.

However, just as the Games have a finishing point beyond which no more gold, silver or bronze may be won, so some term deposits have a cut-off point. Some investment products are only available until August25th, the last day of the Olympics. If the investor is not quick with his investment, then that offer of good interest will close and it will be too late to purchase that particular product.

And just as athletes must research to do their training in the most efficient way possible, so does the investor need to research his product to make sure that the investment will return exactly what he wants. Reading the fine print and making sure you understand it is just as necessary to the investor as proper training is to the athlete.

With good training and diligent practice, the athlete is quite likely to gain something at the end. Even if not a medal, then the honour of competing in the Olympic Games is something to be valued. In the same way, the investor does his research and places his money in a term deposit to gain something valuable. Not a medal, but a return on his investment. But - unlike the Olympic Games - the investor can see that return coming to him not just during ten special days, but all year.

5 Ways to Teach Your Kids the Importance of Savings

July 31st, 2008 at 03:29 pm

Many kids nowadays do not understand the value of earning and spending money. They were not taut that investing is necessary even if they are still at school. As parents, you play a crucial role in this area.

You should be able to teach your kids how to save. They should be able to understand the concept of money and investment as early as childhood. This will prepare them to learn money management, as they grow older and start to think about cars loans and mortgages.

Here are 5 essential tips that will teach your children how to save:

1. Your children should be educated of the meaning of money. Once your children have learned how to count, that is the perfect time for you teach them the real meaning of money. You should be consistent and explain to them in simple ways and do this frequently so that they may be able to remember what you taught them.

2. Always explain to them the value of saving money. Make them understand its importance and how it will impact their life. It is important that you entertain questions from them about money and you should be able to answer them right away.

3. When giving them their allowances. You need to give them their allowances in denominations. Then you can encourage them that they should keep a certain bill for the future. You can motivate them to do this by telling them that the money can be saved and they can buy new pair of shoes or the toys they want once they are able to save.

4. You can also teach them to work for money. You can start this at your own home. You can pay them fifty cents to one dollar every time they clean their rooms, do the dishes or feed their pets. This concept of earning little money will make them think that money is something they have worked for and should be spent wisely.

5. You can teach them to save money by giving them piggy banks where they can put coins and wait until they get full. You can also open bank accounts for them and let them deposit money from their allowance. You should always show them how much they have earned to keep them motivated.

The importance of money and saving is not something that is learned by children in one sitting. You should be patient in teaching them and relating the value of money in all of their activities. Children will learn this easily if you are patient and consistent in guiding them and encouraging them in this endeavor.

The Importance of a Good Financial Plan

July 8th, 2008 at 12:59 am

A good financial plan is important, not only to help in the creation of wealth, but also to help people make the most of what they have. Many people don’t take much heed to the actual planning of their finances apart from paying the bills and saving or spending what is left over. Many people depend on credit cards for their financial needs and end up with a debt they cannot manage. Financial advice and planning can avoid this stress.

When you consult a financial advisor, you will gain valuable insight into ways and means to both save money and spend what you have wisely. A good financial plan will take into consideration your long and short-term goals and aid you in becoming financially independent by building wealth, while at the same time being able to enjoy your life.

A financial advisor will need to gather all your financial details and identify your goals - and if you don’t have any, he may be able to help you think this through. He will need to be told of any financial issues such as debts before he can properly advise you. Then he can draw up a financial plan that is suited to your particular circumstances. This is called a Statement of Advice (SOA) and can be implemented by your financial advisor.

But circumstances often change as life progresses, so another part of the financial advisor’s task is to review the SOA from time to time to make sure it is still the best financial plan for you. Having a sound financial plan in place will enable you to reach your goals and give you peace of mind that your future will not be one of miserable despair as you struggle to make ends meet. Even those who are just starting out with their first jobs should consider implementing some kind of financial plan.