“When you combine ignorance and leverage, you get some pretty interesting results”
– Warren Buffett
While we can never ensure that the stock market won’t go down, or that the value of our investment properties doesn’t drop, or even that we never lose our job, there are some simple strategies we can implement to avoid disaster.
Here I share my top ten tips to ruin your financial life.
1) Stopping your retirement plan contributions during market downturns
Far too often we see investors stop or reduce their contributions into their superannuation or retirement portfolio, thinking that they’ll know when the markets have bottomed. This is a foolish strategy and more than likely guarantee that you’ll miss the bottom of the market.
2) Planning for your retirement ‘tomorrow’
As the saying goes, tomorrow never comes, and far too often people put off their retirement planning, feeling that it’s just too far away. To state the obvious, the earlier you start planning and saving for your retirement, the less you’ll have to put away to get there. I’m yet to hear any of my clients tell me that they wish they had less money at retirement.
3) Never talking about money with your partner
If you never talk about money with your significant other, chances are there’ll be lawyers in your future doing the talking for you. Be sure to set some time on a regular basis to sit down together and map out your financial plan together. You can read my article here where I share my top tips to avoid financial conflict in your relationship.
4) Avoiding the embarrassment of asking stupid questions
The only stupid question is the one that you don’t ask. Many of us are so frightened of appearing unintelligent that we simply avoid asking questions to ensure we understand the financial products or strategies we’re investing in.
You’ve attended a seminar and read a couple of books, and now you’re a financial whiz. It’s important that you don’t mix over-confidence with a lack of knowledge and make foolish financial decisions as a result. Listen, learn and ask questions of your financial adviser – they can be an excellent source of information for you.
6) Listen to journalists
We’ve all seen the headlines, pointing to market collapses and the world on the brink of disaster. It’s important to remember two key items when it comes to the news; 1) Headlines are reporting events that have happened rather than the future and 2) Newspapers are a business and the scarier the headlines, the more papers that will sell.
7) Paying the minimum amounts off your credit cards
If you don’t have the cash to pay for it, chances are you shouldn’t be buying it. Obviously, I’m referring to personal expenses, which are often put on credit cards and the balances never fully repaid. If you’re organised and pay your credit card off each month in full, they can be a very useful tool, however if you’re only paying the minimum off each month, it’s time to revise your strategy and stop making your bank wealthy.
8) Assuming that great marketing material means a great product
It is often the worst financial products that have the ‘flashiest’ brochures and marketing material. This is because the only way the providers can push their products, is to dazzle the customer with pictures and meaningless graphs. Be sure that you understand where your money is invested, and always ask what the alternatives are.
9) Investing in a product your adviser would never invest in
Have you ever asked your adviser if they’ve invested in the same products they’ve recommended to you? If the answer is no, then wouldn’t it make sense to follow this up with a simple, ‘why?’.
10) Shifting the blame
I could not count the number of excuses of why people can’t save money, particularly in Singapore, and more often than not it’s somebody else’s fault. Some people may genuinely be in a position, where it’s difficult to impossible to save, but it’s important that you have a genuine plan for how you’re going to turn this around. In the words of Bill Clinton, “The price of doing the same old thing is far higher than the price of change.”
To Your Financial Success!
Jarrad Brown is an Australian-trained and qualified Independent Fee-Based Financial Adviser with Australian Expatriate Group of Global Financial Consultants Pte Ltd providing specialist financial advice and portfolio management services to international and local professionals in Singapore.
Book a complimentary consultation here.
Jarrad Brown is an Authorised Representative of Global Financial Consultants Pte Ltd – No: 200305462G | MAS License No: FA100035-3
*Please note that Jarrad Brown is not a tax agent or accountant and none of the content outlined here should be taken as personal advice. You should consult your tax agent and financial adviser to review your current personal finances and financial goals to consider whether this strategy is appropriate for you.