New Year, New (Financial) You

By Mark Copsey, Partner at Allworths and Director at Allworths Wealth Management

Eating breakfast on my balcony, I watch the people down below – walking by in their shiny new trainers or tight Lycra outfits – eager to get their New Year’s resolutions off the ground. I’m sure, as the weeks go by, more and more of them will be sleeping in while their sneakers gather dust under their beds. We are creatures of habit, after all.

So, whilst this was written in the spirit of helping, I’m sure it will wash over most of you. But for those looking to change their financial outlook in 2019, here are a few simple tips to get you going:

1. Prepare a simple budget. It’s incredible how many people have no idea how much they spend a month. I recently did this exercise with a couple and they were blown away by their monthly outgoings. A good place to start is Scott Pape’s The Barefoot Investor. You can read it in a few days and it has plenty of common sense advice to get you thinking.
2. Start saving. Once you’ve worked out your budget, plan to save every month – whether through superannuation or directly. Beware the expensive and usually rubbish managed funds. You might instead consider Exchange-Traded Funds; see my introduction to ETFs by clicking here.
3. Protect your family. I’ve said it in previous newsletters but please – if you have debt and/or young kids and unless you’re super rich – take out life insurance! You can read our overview on the matter here. It actually doesn’t cost a lot and, personally, I think it’s crazy to go without and be so irresponsible with your family’s future.
4. Protect your business. If you are in business, you should also look at Key Person Insurance. We have it in our practice and it saved us when one of our partners sadly passed away. Without it, I wouldn’t be writing this now.
5. Self-managed super funds: When was the last time you looked at your investment strategy? Are you well diversified?  The markets are pretty volatile at the moment but, trust me, cash is the worst investment in the long run.
6. For the wealthy: Try to think about why you save. If you have a “bucket list,” get on with it! One day you’ll be too old or too dead to enjoy it. You can’t take it with you.

Further Reading/Listening

If you are that way inclined, here are some good resources I think are worth checking out:

The book Unshakeable might have Tony Robbins’ face on the cover but it was actually co-authored by Peter Mallouk, a proper investment manager.
It’s an easy read for a weekend or two. Or, if you have a long road trip coming up, you can download a podcast of the entire book for free.

Another great podcast featuring Peter Mallouk is episode #356 of the Tim Ferriss Show. More on Tim Ferriss in a later article.

If you have the appetite for something a little longer, the book that changed my attitude towards investing is A Random Walk Down Wall Street by Burton Gordon Malkiel. Highly recommended.

And finally, a very cynical take on the investment profession is a book I’ve just finished reading Fooled by Randomness by Nassim Nicholas Taleb. I don’t recommended this to anyone in the financial markets industry, you may find it offensive!

If you happen to check out any of the resources above, let me know what you thought in the comments below. All the best with your financial planning for 2019!

Disclaimer

The content of this post is general in nature. Any general advice has been prepared by Allworths Wealth Management Pty Limited AFSL 457 155 without reference to your objectives, financial situation or needs. You should consider the advice in light of these matters and, if applicable, the relevant product disclosure statement before making any decision to invest.