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Keeping On Track

By Chris Webb
This article is published on: 5th May 2017

05.05.17

Speaking with my many clients one of the most talked about topics is “I wish I had done something sooner” or “I wish I had put a plan in place”.

All too often in our younger years we race through the nitty-gritty details of our finances and neglect to focus on crucial “future proofing” in the process. In our 20’s we tend to spend, spend, spend. In our 30’s we try to save, but starting a family or purchasing property make it difficult. In our 40’s we’re still suffering the hangover from our 30’s and inevitably the work required to provide for your financial future becomes increasingly harder.

But if you adopt a marathon approach to money (opposed to a sprint – see my article on this topic), it can allow you to take a more holistic look at your overall financial picture and see how decisions that you make in your 20s and 30s can impact your 40s, 50s and into your retirement years.

It doesn’t matter how old you are, being financially healthy boils down to two things. The level of debt you have and the level of savings/investments you have. The only real difference is how you approach both subjects, as this will change with age .

Tips in your 20’s

1. Debt – Loans And Cards
It’s easy to think that making the minimal payments and delaying paying them off, to save more, is a good idea, but this strategy rarely works. The more you make the more you tend to spend, so getting round to clearing off these debts never comes any closer. As you go through the 20’s cycle, additional costs will start being considered, like starting a family or purchasing a house therefore the ability to clear your debts just doesn’t materialise.
This is why now is the time to work on breaking the credit card debt or loan cycle for good.

2. Start An Emergency Fund
While you’re busy paying down your debt, don’t forget that you should always be planning on having a “savings buffer” in the bank. To help accomplish this goal you should transfer funds straight from your “day to day” account into a deposit account. One where your aren’t likely to get access through an ATM which reduces the temptation to spend it on a whim. Ideally, you should aim to have three times your take-home pay saved up in your emergency fund.

3. Contemplate Your Future – Retirement
At this point in your life, retirement is far off, but it can be important to start saving as early as you can. Even small amounts can make a big difference over time, thanks to the effect of compound interest. Start saving a small percentage of your salary now to reap the rewards later in life. See my articles on compound interest and retirement planning to see the difference it can make.

Tips in your 30’s

During this decade, your financial goals are likely to get a bit more complicated. Some people will still be paying off credit card debt and loans, whilst still working on the “emergency account”. So what’s the secret to juggling it all? Rather than focusing on one goal you should be looking at the biggest of your goals, even if there are three or four.

1. Continue Reducing Debt
If you’re still paying down your credit card balances then considering consolidating onto one card with an attractive interest free period should be your first task. Failing that you need to concentrate on the card with the highest interest rate and reduce the balance ASAP. The most important thing to consider with debt is the interest rate, If you have low interest rates (I’d be surprised) then there’s no major rush to pay them off, as you could manage the repayments and contribute to other financial goals at the same time. If your interest rates are quite high then the priority is to clear these debts down.

2. Planning For Kids
Little ones may also be entering the picture, or becoming a frequent conversation. Once this is a part of your life you’ll start thinking about the cost implications as well. Setting aside a small amount of funds now to cater for the ever increasing costs of bringing up a child will reduce the financial stress later down the line. If you have grand plans for them to attend university, potentially in another country, then knowing these costs and planning for these costs should be part of your overall financial planning.

3. Assess Your Insurance
The thing that most people forget. Big life events such as getting married, having kids, buying a house are all trigger points for reassessing what insurance you have in place and more crucially what insurance you should have in place. If you have dependents, having sufficient Life cover is paramount. Other considerations should be disability, critical illness and even income protection.

4. Start that Retirement Plan
It’s time to stop just thinking about setting up what you call a Pension Pot, it’s time to take action. Starting now makes it an achievable goal, leaving it on the back burner because you’re still too young to think about retiring is going to come back and haunt you later in life.

Tips in your 40’s

This is the decade where you need to make sure you’re on top of your money. At this point in your life, the ideal scenario would be to have cleared any debts and to have a nice healthy emergency fund sitting in a deposit account.

1. Retirement Savings – Priority
During your 40s it’s critical to understand how much you should be saving for retirement and to analyse what you may already have in place to cater for this. In my opinion it’s now that you need to start putting your financial future/ retirement ahead of any other financial goals or “needs”.

2. Focus Your Investments
Although you may not have paid much attention to “wealth management” in your 30s, you’ve probably started accumulating some wealth by your 40s. Evaluate this wealth and ensure there is a purpose or goal behind the investments you have done. Each goal will have a different time horizon and potentially you will have a different risk tolerance on each goal. The further away the goal is the more you can afford to take a “riskier” option.

3. Enjoy Your Wealth
It’s about getting the balance right. Hopefully you’ve worked hard and things are stable from a financial point of view. You need to remember to enjoy life today as well as planning on the future. As long as important financial goals are being met there is no harm is splashing out on that dream holiday, and enjoying it whilst you can.

Tips in your 50’s

You may find yourself being pulled in different directions with your money. Do the children still require financial support, do your parents require more support than before ?, The key thing to remember is to put your financial security first, and yes I know that sounds a bit tough…….. You still have your retirement to consider and probably a mortgage that you’d like to clear down before retirement age.

1. Revisit Your Savings and Investing Goals
Your 50’s are prime time to fully prepare for retirement, whether it’s five years away or fifteen. At this point you should be working as hard as possible to ensure you reach your required amount. This means that careful management of your assets is even more critical now. It’s time to focus on changing from a growth portfolio to a combined growth, income and more importantly a preservation portfolio. What I’m saying here is it’s time to really analyse the level of risk within your asset basket.

2. Prioritise – Your Future V Kid’s Future ( It’s a tough one….)
During their 50’s a lot of clients struggle with figuring out how much they can afford to keep supporting a grown child, especially when they’re out there earning themselves. The bottom line is that although it can be tough you have to continue to put yourself. first. The day of retirement is only getting closer and unless your planning has been disciplined there’s a possibility you may need to work longer than anticipated, or accept less in your pocket than you hoped for.
You are number 1…….

3. Retirement Decisions and considerations
You should begin to revisit your estate planning, your last will and testament, power of attorney if you feel necessary and confirm that your beneficiaries on any insurance policies or investment accounts are all valid.
Once you’ve covered off the administration part then I’d suggest you sit back and look forward to the biggest holiday off your life……..have a great time !!!

So What’s Your Strategy ?

By Chris Webb
This article is published on: 30th April 2016

30.04.16

Investing is not a sure thing in most cases, it is much like a game – you don’t know the outcome until the game has been played and a winner has been declared.

Anytime you play almost any type of game, you have a strategy. Investing isn’t any different – you need an investment strategy.

An investment strategy is basically a plan for investing your money in various types of investments that will help you meet your financial goals, depending on your time horizon.

Each type of investment contains individual investments that you must choose from. A clothing store sells clothes – but those clothes consist of shirts, trousers, dresses, skirts etc. The stock market is no different, it’s a type of investment, it contains different types of stocks and different companies that you can invest in.

If you haven’t done your research, it can quickly become very confusing – simply because there are so many different types of investments and products to choose from. This is where your strategy, combined with your risk tolerance and investment style, all come into play.

If you are new to investments, we will work closely together to ensure you have a full understanding before making any investments. I will help you develop an investment strategy that will not only fall within the bounds of your risk tolerance and your investment style, but will also help you achieve your financial goals.

Never invest money without having a goal and a strategy for reaching that goal! This is essential.

Nobody hands their money over to anyone without knowing what that money is being used for and when they will get it back! If you don’t have a goal, a plan, or a strategy, then you are essentially handing your money over without any idea of what it can do for you!

How Much To Invest?

By Chris Webb
This article is published on: 28th April 2016

28.04.16

Many first time investors think that they should invest all of their savings. This isn’t necessarily true. To determine how much money you should invest, you must first determine how much you actually can afford to invest and, just as importantly, what your financial goals are.

So, how much money can you currently afford to invest? Do you have savings that you can use? If so, great! However, you don’t want to cut yourself short when you tie your money up in an investment. What were your savings originally for?

It is important to keep three to six months of living expenses in a readily accessible savings account – don’t invest that money! Don’t invest any money that you may need to lay your hands on in a hurry in the future.

So, begin by determining how much of your savings should remain in your savings account, and how much you feel you are comfortable to use for investments.

Next, determine how much you can add to your investments in the future. If you are employed, you will continue to receive an income, and you can utilise your surplus income to build your investment portfolio over time.

Together we can work at setting a budget and determine how much of your future income you will be able to invest.

With my help, you can be sure that you are not investing more than you should or less than you should in order to reach your investment goals.

For many types of investments, a certain initial investment amount will be required. This at first glance, may look out of your reach. However I may be able to reduce these entry levels.

If the money that you have available for investments does not meet any required initial investment, you may have to look at others. Never borrow money to invest, and never use money that you have not set aside for investing!

Stabilise first then invest

By Chris Webb
This article is published on: 14th April 2016

14.04.16

Before you consider investing in any type of market you need to take a good look at your current situation. Investing for the future is a priority but clearing up potentially bad situations in the present is just as important.

Assess your liabilities, you should do this once each year. It is important to know what is outstanding and what the time horizon to clear it is.

If you’ve set aside some money to invest, but you have outstanding debts, you are better off cleaning up the debt first!

Next, look at what you are paying out each month, and get rid of expenses that are not necessary. For instance, high interest credit cards are not necessary. Pay them off and get rid of them. If you have high interest outstanding loans, pay them off as well.

If nothing else, exchange the high interest credit card for one with lower interest and refinance high interest loans with loans that are lower interest. You may have to use some of your investment funds to take care of these matters, but in the long run, you will see that this is the wisest course of action.

Get yourself into good financial shape – and then enhance your financial situation with sound investments.

It doesn’t make sense to start investing funds if your bank balance is always running low or if you are struggling to pay your monthly bills. Your investment monies will be better spent to rectify adverse financial issues that affect you each day.

Reasons To Invest

By Chris Webb
This article is published on: 8th April 2016

08.04.16

Have a think about how different our lives are compared to our parents or grandparents….. How often do we travel? How used to our luxuries in life are we? Well guess what ……. this all costs money and as we are all going to retire at some point it might be a good idea to start thinking about that cost now!

This is why investing has become increasingly important over the years. Gone are the days of relying on the state to look after you in your golden years, and I’m pretty sure leaving your cash in the bank isn’t going to get the results you need either.

Times are changing and more and more people want to insure their futures, and they already know that if they are depending on state benefits, and in some instances company pension schemes, that they may be in for a rude awakening when they no longer have the ability to earn a steady income.
Investing is the answer to the unknowns of the future.

You may have been saving money in a low interest savings account over the years. Now, you want to see that money grow at a faster pace. Perhaps you’ve inherited money or realised some other type of windfall, and you need a way to make that money grow. Again, investing is the answer.

Investing is also a way of attaining the things that you want, such as a new home, a university education for your children, or the longest holiday of your life………… retirement.
Of course, your financial goals will determine what type of investing you do.

If you want or need to make a lot of money fast, you will be more interested in higher risk investing, which will hopefully give you a larger return in a shorter amount of time. If you are saving for something in the far off future, such as retirement, you would want to make safer investments that grow over a longer period of time.

The overall purpose in investing is to create wealth and security, over a period of time. It is important to remember that you will not always be able to earn an income… you will eventually want to retire.

You cannot rely on the state system to finance what you want to do, and as we have seen with Enron, you cannot necessarily depend on your company’s pension scheme either. So, again, investing is the key to insuring your own financial future, but you must make smart investments.

Dealing with volatility

By Chris Webb
This article is published on: 11th March 2016

11.03.16

Market volatility has become a common discussion with all of my clients. Whether they are seasoned investors or new to the investment game, volatility is an area that is now at the forefront of their minds when looking to invest their hard earned savings. To a large percentage of people their only understanding or awareness of a volatile market comes through the media, who we all know love to sensationalise every story at every opportunity.

What is a volatile market? By definition a volatile market is where unpredictable and vigorous changes occur in the price within the stock markets. It is necessary for some movement within the market in order to sell commodities, however a volatile market can represent the most risk to investors.

If you’re not in the “daily trading” game, and are investing for the medium to long term then it’s not always wise to listen to all the hype and speculation in the media. It may be a wiser decision to focus on the fundamentals behind why you invested in the first place, and stick to those fundamentals. Two key areas to focus on are your personal emotions and your attitude to risk.

In volatile times emotions play a significant role in investing decisions. Many investors feel the short term variances in the returns of their investments much more than the average return over the medium term of their investments, even though the decision to invest was a medium term one. Rationally, investors know that markets cannot keep going up indefinitely. Irrationally, we are surprised when markets decline.

It is a challenge to look beyond the short-term variances and focus on the long-term averages. The greatest challenge may be in deciding to stay invested during a volatile market. History has shown us that it is important to stay invested in good and bad market environments. During periods of high consumer confidence stock prices peak and during periods of low consumer confidence stock prices can come under pressure. Historically, returns trended in the opposite direction of past consumer confidence data. When confidence is low it has been the time to buy or hold. Of course, no one can predict the bottom or guarantee future returns. But as history has shown, the best decision may be to stay invested even during volatile markets.

During these emotional and challenging times it is easy to be fearful and/or negative so let’s turn to the wise advice of one of the world’s best investors, the late Sir John Templeton:

“Don’t be fearful or negative too often. For 100 years optimists have carried the day in U.S. stocks. Even in the dark ’70s, many professional money managers—and many individual investors too—made money in stocks, especially those of smaller companies…There will, of course, be corrections, perhaps even crashes. But, over time, our studies indicate stocks do go up…and up…and up”

So do you invest or watch from the sidelines? When markets become volatile, a lot of people try to guess when stocks will bottom out. In the meantime, they often park their investments in cash. But just as many investors are slow to recognize a retreating stock market, many also fail to see an upward trend in the market until after they have missed opportunities for gains. Missing out on these opportunities can take a big bite out of your returns.

Whilst dealing with the emotional side of investing it would be worth evaluating your risk tolerance. Many clients attitude to risk will change over time, this may be due to age, personal circumstances or just added awareness to how the markets move. Each and every one of us has their own individual risk tolerance that should not be ignored when considering making any type of investment. Your investments should always be aligned to your level of risk even if that means making drastic / strategic changes to your portfolio as times change.

Determining one’s risk tolerance involves several different things, and there are different ways to look at how you should look at the risk you need to take. First, you need to know how much money you have to invest, what your investment and financial goals are and what time horizon is involved. Then you need to consider the actual risk you are prepared to take. One simple question can help determine your attitude to risk, however a more detailed discussion should take place to really ascertain your tolerance level and to compile a suitable portfolio.

The one question….. If you invested in the stock market and you watched the movement of that stock daily and saw that it was dropping slightly, what would you do, sell out or let your money ride?

If you have a low tolerance for risk, you would want to sell out… if you have a high tolerance, you would let your money ride and see what happens. This is not based on what your financial goals are, it is based on how you feel about your money! Your risk tolerance should always be based on what your financial goals are and how you feel about the possibility of losing your money. It’s all tied in together, it’s emotional.

So a few pointers to help you through the volatility.
Review your portfolio. Is it as diversified as you think it is? Is it still a suitable match with your goals and risk tolerance?

Tune out the noise and gain a longer term perspective. Numerous media sources are dedicated to reporting investment news 24 hours a day, seven days a week. Do you really need to be glued to it? While the media provide a valuable service, they typically offer a very short-term outlook. To put your own investment plan in a longer term perspective, and bolster your confidence, you may want to look at how different types of portfolios have performed over time. Interestingly, while stocks may be more volatile, they’ve still outperformed income oriented investments (such as bonds) over longer time periods.

Believe Your Beliefs and Doubt Your Doubts. There are no real secrets to managing volatility. Most investors already know that the best way to navigate a choppy market is to have a good long-term plan and a well-diversified portfolio but sticking to these fundamental beliefs is sometimes easier said than done. When put to the test, you sometimes begin doubting your beliefs and believing your doubts, which can lead to short-term moves that divert you from your long term goals.

Prior to working with any clients I insist on completing a personal detailed risk tolerance questionnaire. This will tell us exactly what your attitude to risk is and a suitable portfolio can be devised to suit you individually. If you are interested in investing or saving for the future, get in touch to discuss the opportunities available and just as importantly the risks associated. If you already have an investment portfolio and feel that it was never risk rated against your own risk tolerance then let me know, I am happy to discuss further and go through the questionnaire to ensure that what you have already done is suitable for your circumstances.

It is never too early to start planning your financial future

By Chris Webb
This article is published on: 17th June 2015

17.06.15

During conversations with many of my clients, I hear the expression “I wish I had done something sooner” so often, that I thought I should put pen to paper.

All too often in our younger years we race through the nitty-gritty details of our finances and neglect to focus on crucial “future proofing” in the process. During our 20’s we tend to spend, spend, spend. In our 30’s we try to save, but this is the decade when most of us purchase property and start a family so that makes saving for the future difficult. In our 40’s we’re still paying the mortgage and raising our children so inevitably it is difficult to put money aside to provide for your financial future.

But if you adopt a marathon approach to money (as opposed to a sprint – see my article on this topic), it can allow you to take a more holistic look at your overall financial picture and see how decisions that you make in your 20s and 30s can impact your 40s, 50s and into your retirement years.

Tips for during your 20’s

This is the best time to lay the foundations for a bright financial future. Try creating a budget and track your expenses. Keep evaluating over a few months to ensure it’s realistic. This may seem pretty basic but you’ll be surprised how many people don’t track their expenses. This is the best time to do it, your finances are likely to be a lot simpler now than they will ever be!

Debt – Loans and Cards

It’s easy to think that making the minimal payments and delaying paying them off, to save more, is a good idea, but this strategy rarely works. The more you make the more you tend to spend, so getting round to clearing off these debts never comes any closer.

But now is the time to break the cycle of credit card debt or loans for good!

Start an Emergency Fund

While you’re busy paying off your debt, don’t forget that you should always try to have a “savings buffer” in the bank. To help accomplish this goal you should transfer funds straight from your “day to day” account into a deposit account. One where you aren’t likely to get access through an ATM which reduces the temptation to spend it on a whim. Ideally, you should aim to have three times your monthly take-home pay saved up in your emergency fund.

Contemplate Your Future – Retirement

At this point in your life, retirement is far off, but it is important to start saving as early as you can. Even small amounts can make a big difference over time, thanks to the effect of compound interest. Start saving a small percentage of your salary now to reap the rewards later in life. See my articles on compound interest and retirement planning to see the difference it can make.

Tips for during your 30’s

Rather than focusing on one goal you should be looking at the biggest of your goals, even if there are three or four.

Continue Reducing Debt

If you’re still paying off your credit card balances then considering consolidating onto one card with an attractive interest free period should be your first task. Failing that you need to concentrate on the card with the highest interest rate and reduce the balance ASAP. The most important thing to consider with debt is the interest rate. If you have low interest rates (I’d be surprised) then there’s no major rush to pay them off, as you could manage the repayments and contribute to other financial goals at the same time. If your interest rates are quite high then the priority is to clear these debts down.

Planning For Kids

Little ones may also be entering the picture, or becoming a frequent conversation. Once this is a part of your life you’ll start thinking about the cost implications as well. Setting aside a small amount of funds now to cater for the ever increasing costs of bringing up a child will reduce the financial stress later down the line. If you have grand plans for them to attend university, potentially in another country, then knowing these costs and planning for these costs should be part of your overall financial planning.

Assess Your Insurance

The thing that most people forget. Big life events such as getting married, having kids and/or buying a house are all trigger points for reassessing what insurance you have in place and more crucially what insurance you should have in place. If you have dependents, having sufficient Life cover is paramount. Other considerations should be disability, critical illness and even income protection

Start that Retirement Plan.

It’s time to stop just thinking about setting up what you call a Pension Pot, it’s time to take action! Starting now makes it an achievable goal, leaving it on the back burner because you’re still too young to think about retiring is going to come back and haunt you later in life.

Tips for during your 40’s

Retirement Savings – Priority

During your 40s it’s critical to understand how much you should be saving for retirement and to analyse what you may already have in place to cater for this. In my opinion it’s now that you need to start putting your financial future/retirement ahead of any other financial goals or “needs”.

Focus Your Investments

Although you may not have paid much attention to “wealth management” in your 30s, you’ve probably started accumulating some wealth by your 40s. Evaluate this wealth and ensure that there is a purpose or goal behind the investments you have made. Each goal will have a different time horizon and potentially you will have a different risk tolerance on each goal. The further away the goal is, the more you can afford to take a “riskier” option.

Enjoy Your Wealth

It’s about getting the balance right. Hopefully you’ve worked hard and things are stable from a financial point of view. You need to remember to enjoy life today as well as planning for the future. As long as important financial goals are being met there is no harm is splashing out on that dream holiday, and enjoying it whilst you can.

Tips for during your 50’s.

You may find yourself being pulled in different directions from a financial point of view. Maybe the children still require financial support, maybe your parents require more support than before? The key thing to remember is to put your financial security first, and yes I know that sounds a bit tough…….. You still have your retirement to consider and probably a mortgage that you’d like to pay off before retirement age.

Revisit Your Savings and Investing Goals

Your 50’s are prime time to fully prepare for retirement, whether it’s five years away or fifteen. At this point you should be working as hard as possible to ensure you reach your required amount. This means that careful management of your assets is even more critical now. It’s time to focus on changing from a growth portfolio to a combined growth, income and more importantly a preservation portfolio. What I’m saying here is it’s time to really analyse the level of risk within your asset basket.

Prioritise – Your Future vs Your Children’s Future (It’s a tough one….)

During their 50’s a lot of clients struggle with figuring out how much they can afford to keep supporting a grown child, especially when they’re out there earning themselves. The bottom line is that although it can be tough you have to continue to put yourself first. The day of retirement is only ever getting closer and unless your planning has been disciplined there’s a possibility you may need to work longer than anticipated, or accept less in your pocket than you hoped for. You are number 1…….

Retirement Decisions and considerations

You should begin to revisit your estate planning, your last will and testament, power of attorney if you feel necessary and confirm that your beneficiaries on any insurance policies or investment accounts are all valid.

Once you’ve covered off the administration part then I’d suggest you sit back and look forward to the biggest holiday of your life……..have a great time!!!