ALL ABOARD MY TIME MACHINE…

Could you benefit from a $4,000 annual bonus? More about that later.

Coronavirus is reaping havoc around the world!

It’s a scary time to be alive, but this will pass and things will go back to normal. How long that takes, I can’t tell you. But things will go back to normal.

We’ve seen crises time and time and again. When they arise, everyone panics in the short term, there are stockmarket crashes, everyone stops spending, property stops selling, things kind of grind to a halt because confidence is shot.

Eventually things bottom out and confidence starts coming back. The crisis of the time has a name people remember but just how bad things were at the time is long forgotten and everything starts hitting record highs again.

If you can overcome present-bias, you will be able to make the kinds of decisions that will lead to you waking up years from now reaping the rewards of the sensible decisions you make RIGHT NOW.

Present-bias is the tendency to focus on the here and now at the expense of the longer term. It’s a classic miscalculation by many people when it comes to financial planning… put simply, they don’t have a plan for the future and are solely focussing on now.

That can lead to disastrous decisions being made. For example, some Australians will be moving all their super to the ‘safety’ of cash based solely on the news headlines they are seeing at the moment, with no serious thought as to firstly, whether it’s sensible and secondly, what the long term consequences will be.

When it comes to our money, it’s vital to stay the course, ignore the short-term noise, focus on the things that you can control. We would benefit by not looking at our super balances and instead focusing on things we can control in our life like:

·        Having a system to manage spending and saving

·        Smashing debt

·        Investing in high quality investments for the long term

·        Making the most of superannuation

·        Reducing tax

·        Managing exposure to risk

·        Spending time doing the things we enjoy with the peace of mind that we have a plan in place

I want you to escape the present just for a moment and hop aboard my time machine. We’re ditching 2020 for a few minutes and jumping ahead to 2030. Just for moment, imagine the benefits in 2030 of having the above ducks lined up!

But what if you don’t have a plan?

Perhaps this is the time to make one. I’m fortunate that I can conduct my business either in person, or via video link. If you’re going to find yourself with a bit of down time over the next few weeks, perhaps we should be talking to formulate your strategy going forward.

Just last week I helped a couple reduce the fees on their super by almost $4,000 a year ($3,974 to be exact) while at the same time, increasing their diversification (the ultimate risk management tool).

So, jump aboard that time machine again and imagine the kind of difference an extra $4,000 a year could make over the next 10 years. This is a perfect example of taking control of the things we can control.

I completely understand that no matter how many times you hear these things I’m saying, it won't make it any easier when going through times like these. But if you can spend a few moments in my time machine before you make any decisions, you’ll likely have a different perspective!

If you can put the right money in the right investments for the right timeframes, you will be on the right path. Sounds basic, but it works. It means that at times like this, while still troubling to experience, only long-term money is in things like shares and property. If we fast forward to 2030, that strategy is the kind that will look very sensible even though it can feel scary right now.

It can sound impossible to believe, in the face of current news headlines, but the biggest investment risk you face is not investing. That’s because the biggest long-term financial risk you face is inflation… that is, the ever-increasing cost of living. Having all your money just sitting in the bank (or under the bed!) will ensure your money goes backwards in its purchasing power over time.

We’re all sitting back in amazement at the toilet paper panic buying and there will be some red faces in years to come. The same thing applies to money and investments. Those who lose their heads and panic are going to have some regrets down the track.

Cheers,

Daniel


If you’d like to find out more about how INDEPENDENT financial advice could help you manage cash flow, pay off the mortgage faster, get the most out of super and invest wisely, then get in touch on 0411 484 464 or head to wealthtrain.com.au.

Daniel McGregor is the man behind Wealth Train and is a member of the Independent Financial Advisers Association of Australia. This advice may not be suitable to you because it contains general advice which does not take into consideration any of your personal circumstances. All strategies and information provided are general advice only.

Daniel McGregor and Wealth Train are authorised representatives of Independent Financial Advisers Australia AFSL 464629