Author Archives: Halle

What is good for you? The RBA cuts the offical interest rates

Due to experiencing low inflation, soft economic growth, plunging in commodity prices and falling in mining investments, the Reserve Bank of Australia (RBA) cuts the official interest rates to historical low of 2.25% from 2.5 % on 3 February 2015. In my opinion, it was too early action.

My view is based on several factors;

  • The surprise drop in the unemployment rate to 6.1% in December 2014.That means the labor market is moving. The ANZ Job advertisements series, along with the NAB’s respective employment indices have all been moving higher for some time.
  • The drop in oil prices should help consumer sentiment and spending. Although Australia is a net- energy exporter (coal and LNG), we are a net-importer of oil. The fall in petrol prices flowing from lower oil prices has so far cut the average Australian household’s petrol bill by around $14 a week, therefore, $728 a year.
  • Increasing growth in non-mining sectors of the economy; dwelling construction – demand for new homes especially for units remains solid -, tourism, higher education, agriculture and manufacturing are likely to see a boost.
  • A weaker $AU.Because of arise in the value of the $US in response to relatively strong economic conditions in the US, and drop in commodity prices mainly plunge in iron ore price, the dollar is rapidly falling towards the RBA’s preferred US 0.75 cent level, which should have reduced pressure for a cut in official interest rates.
  • A weak $AU should help to boost sentiment among trade-exposed industries, which will provide a partial offset to lower commodity prices. Depreciated $AU makes the Australian produced goods and services more competitive in global markets. This should be a plus for investments, job creations, and federal tax revenues. Beside this, weak $AU will attract more international tourists, and international students for their high education in Australia. This again will help businesses’ bottom line and increase in employment.

    Thus petrol prices and $AU are already doing part of the RBA’s job for it, leaving interest rates steady for now would have leaved the RBA better flexibility to respond more forcibly to demand weakness later should that be needed.

    However, as the official interest rates drop to historical level of 2.25%, $AU will depreciate even faster. That should help trade-exposed industries, encourage businesses to spend more if possible to expand, and stimulate the housing industry a bit more.

    But we know that household debt is actually Australia’s biggest economic problem. Surely, making borrowing even more attractive by cutting rates is not, therefore, the solution.

    In the meantime, this decision will deteriorate the returns from cash and bank deposits for those who hold their savings and retirement income in those accounts.

    On the other hand, if banks pass on the RBA’s the interest rate cuts to their mortgages’ interest payments on their loans then mortgages benefit from this decision.

    Halle Yilmaz is a financial adviser and business consultant. As a financial adviser, she gives solid advice that can create rapid and lasting results for her clients. Sign up for her free E-Book and download “7 Steps to Healthy Wealth Management.” Follow Halle on Twitter @halleyilmaz

Powerful Ways to Getting Your Financial House In Order

Unfortunately, not only you, many of us spent more than what we could afford financially over the recent holiday season. And now, focusing on paying for those bills might be too stressful.

However, as your 2015 New Year’s resolution, you can stop this uncomfortable experience becoming your perpetual habit by getting your financial house in order.get your financial house in order

Here are some simple but powerful strategies to think on;
Strategy 1:
Behavioral researcher and strategist Dan Gregory says spending is just like any other method people use to fill an emotional gap in their lives. And I strongly believe this is a short term fix to a long term problem.

The first step to eliminate poor financial decisions and making smart ones is to find out your emotions that might have been sabotaging your financial life.

Strategy 2:
To help you, although many people dislike hearing, I would say “develop a realistic budget/cash flow“. It is the best way to reduce unnecessary expenses. As it provides you with a snapshot of how much money comes in and goes out, and what all these spending are for.

Strategy 3:
Accessing information, comparing products or their prices within our high tech environment is only a click away. Rather than setting and forgetting, gaining the habit of shopping around for a better deal on your credit card, phone and internet, and other utility bills even on your home loan can pay off surprisingly well. To reduce time and energy while doing it, as a first step start asking your current service providers for a beter deal.

Strategy 4:
Making extra loan repayments as much as you can may potentially save you thousands of dollars in interest. And never get into your comfort zone again when interest rates fall, instead maintaining repayments during this period can reduce your debt or help you get out of it as quickly as possible.

Strategy 5:
Never underestimate the power of consistently saving certain amount, regardless of how big or small. Pay yourself first. Put some money that you are comfortable with aside and watch them grow over time. Savings to good use in the future is a kind of stress release method.

Strategy 6:
No one wants to hear about “tax“. There is an old saying “you cannot escape from two things in life; one is death, and the another one is tax.” However, you can legally use strategies to minimize your tax. Ask for an advice from your accountant or a qualified financial adviser about it.

Strategy 7:
For peace of mind, review your personal and asset protection plans/insurances if your circumstances have changed – for instance if your loan amount has increased, have recently got married, or your income has increased or you have changed your employment etc. – and make sure they are still enough to eliminate any financial burden to your loved ones if you were no longer able to earn an income.

Strategy 8:
Look after your long term investment – your super fund -. If you have multiple super funds, think about merging them into one so you can reduce the paper work hassle, and potentially save on fees while monitoring it with much ease.

For sure, your best chance of reducing money related stresses comes from developing a financial plan that is specifically tailored for your circumstances and goals. And when things do not go as planned, have the discipline to readjust and flow through again.

Should you want to review your financial plan, or have friends, family members who are worried about their financial health get in touch with your financial planner/adviser.

Halle Yilmaz is a financial adviser and business consultant. As a financial adviser, she gives solid advice that can create rapid and lasting results for her clients. Sign up for her free E-Book and download “7 Steps to Healthy Wealth Management.” Follow Halle on Twitter @halleyilmaz

How well your lifestyle support system works!

Having the ability to earn income can boost your confidence in dreaming and living the lifestyle you have worked for.

As you know, being healthy day in day out, year after year of your working life is a pretty tall order. Lifestyle and IncomeWhat if a severe illness or injury were to prevent you from earning income today for a period of time – weeks, months or even years? How long could you sustain the lifestyle you have worked very hard to create?

Here are 3 simple calculations to find out.
Step 1: Current position
Add up your total monthly expenses (mortgage/rent/, food, clothing, utility bills, child’s education cost, insurance etc).Disregard your main income; add up any other income after tax.

$monthly expenses – $other income = +/- $current position

Step 2: Emergency cash
Calculate your emergency cash fund by adding together any owed weeks of sick leave and annual holiday. Multiply this by your weekly income (after tax) and add that to any accessible savings.

weeks multiply $weekly salary plus $accessible savings=$emergency cash

Step 3: Funding months
To calculate the number of months sustainable without your income, divide emergency cash by current position.

$emergency cash divide $current position = months of self-funding

Did you know? 75% of Australians have had a disease or other health problem that had lasted, or was expected to last, 6 months or more. Source: AIHW 2010

What if you could not work more than your self-funding months and you still had to

  • meet your mortgage repayment
  • cover the cost of your immediate and ongoing health cost
  • pay living expenses
  • fund your children’s education – if you have any

How would you cope with all,beside your efforts to get healthier again?Well, do not stress up! There is a solution to your problem; Before too late, simply get your ability to earn income is insured. How?

Basically, income protection insurance provides up to 75% of your before tax income when you cannot work due to an illness or an accident.The benefit payment would be on a monthly bases like salary/wages.The good thing to know about this type of insurance is that premium payable is tax deductible.

I assume you will agree with me that your income is not just about paying your living expenses. It is also your lifestyle, your future! And insuring of your income is the cheapest option to consider when it comes to making sure you can receive an income in the event of not being able to work because of an unexpected illness or an accident.

Should you want to find out more about income protection plans, and the best possible strategy that suits your need feel free to contact Halle Yilmaz.

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Halle Yilmaz is a financial adviser and business consultant. As a financial adviser, she gives solid advice that can create rapid and lasting results for her clients. Sign up for her free E-Book and download “7 Steps to Healthy Wealth Management.” Follow Halle on Twitter @halleyilmaz

What are you like when you are at your best?

When you stand up for a leadership role, you do not only influence the direction of a group, an organization or a country, you also consciously and subconsciously influence the culture where interactions take place. This cannot be seen most of the time apart from its physical manifestation in that environment.

orkestra-şefi_441882Culture in many ways is like personality of a person made up of values, beliefs, attitudes, and behaviors shaped by a group of people.  The key influencer of it is the leader of a group or an organization, and the person’s values, beliefs and behavior. So the personality of a leader can tell you a lot about the culture where the leadership takes place.

In a sense culture is a set of unspoken and unwritten rules for acting together. You can experience the culture in different formats – in spoken and unspoken languages, decision making process, daily activities, or reactions to crisis in any environment. People learned the cultures through interactions with others in the same environment.

Your leadership as a leader either builds up the culture for better, or deteriorate it which would be very costly exercise for everybody. As changing a culture is not as easy it sounds. When you really begin to understand your unconscious mind and its influence on the culture and the direction of the organization then you become more aware of your accountability with your success.

CemiCan_rop1Transformational leaders are aware of their good and bad influence on others and the culture in general. Therefore, they work on their belief systems, values, behavior and attitudes, and become conscious of their unconscious – autopilot – mind. In doing so, they build such a culture, and articulate it to the followers that exhibit a sense of vision, and purpose to move together in the same direction.

When leaders in an organization or group realize and recognize that their current culture does not serve any more therefore, needs to be transformed to support the whole group’s success and progress, then change can occur. However it would not be that easy. It requires understanding, commitment, and tools.

To change any culture as a leader, you need to understand the existing culture, your personal values, beliefs, behavior, and language and decision making process very well first. This can be done, however you must

  • have a coach working with you to help you find the ways to access your subconscious decisions, and manners  in a way to get to understand yourself better
  • try to be objective observer of the culture in action. Look at the people’s behavior and interactions with each other in the environment with the eye of an outsider
  • watch for people’s emotions. Emotions are the great indictors of people’s values, belief systems. Observe to also see if there is any conflict between people.

Once you get a clear understanding of current situation, then you can make plans on where you want yourself and the group, or organization to be. You might want to discuss on this matter, contact Halle.

Halle Yilmaz is a financial adviser and business consultant.As a business consultant she works with business owners and leaders on their culture and performance optimisation in their organisations. She uses very effective tools from Neuroscience techniques to help leaders and teams create deep emotional engagement and profitable business results. Follow Halle on Twitter @halleyilmaz

The Federal Budget Looms

moneyAustralia’s new federal government today, 13 May ,will deliver its first budget.

The first budget a government brings down is typically one that contains tough political decisions because it has two years to engineer a recovery in the polls. The bluster in parliament and elsewhere about inherited large federal budget deficits and expanding government debt hints at a hard-hitting budget. But this might not be the best thing for the economy.

The economy is expanding but its unsteady growth and the risks it confronts warrant a gentle removal of fiscal stimulus, especially in the form of spending cuts. If the global financial crisis should have taught policymakers anything about fiscal policy it’s that austerity hurts economies, often in a way that is self-defeating in terms of fixing government finances. The size of Canberra’s deficit and debt don’t demand such drastic action.

Much angst about the federal government’s budget deficit stems from how each update on the government’s finances usually shows bigger deficits than previously estimated. The most recent figures from the government are in the mid-year review in December. They showed that the budget deficit for this financial year is estimated to have blown out to $47 billion, or 2.7% of GDP, from $18 billion, when former treasurer Wayne Swan delivered the budget in May last year. The mid-year review projected that Australia is headed for federal deficits each year until at least 2023-24 without any policy changes. By 2016-17, the sale of government bonds to pay for four years of federal deficits is expected to boost net government debt to $280.5 billion, which would by then equal about 15.7% of GDP. While these numbers are big, our ratio of net government debt to national output is low by international standards. The figure for Japan, for example, is headed above 140% of GDP this year.

The government’s budget is the difference between government revenue (which includes taxes) and spending. The reason behind the blowout in the deficit is not excessive government spending. The problem is that the fizzling out of the China-inspired mining boom is slowing economic growth more than expected. A slowing economy reduces government receipts as people and companies pay less tax and boosts government payments if it is forced to pay out more on welfare – which is why austerity is usually self-defeating. The mid-year review said “significantly” lower economic growth (a slowing from 3% to 2.5% in 2014-15) had resulted in an estimated drop of tax receipts of more than $37 billion over four years.

All governments should aim for a balanced budget over the longer term. In the short term, policymakers should stimulate the economy by running a budget deficit if economic growth is lagging and do the opposite if the economy is humming enough to threaten inflation. As even the government admits the economy is expected to be sluggish in the near term there is nothing wrong with the government running a deficit in the next couple of years, even if that adds to government debt.

The economy would probably have a bigger problem if the government tried to return the budget to surplus too quickly, especially if it tries to do this via spending cuts rather than higher taxes – which it is predisposed to do. While the housing market might be frothy enough to prompt the Reserve Bank of Australia to this year raise the cash rate from its record low of 2.5%, the economy faces plenty of challenges. The prices of Australia’s exports are falling as China’s economy struggles. The eurozone confronts numerous threats. While the US economy is bouncing back, its recovery is timid. While the political clock says now is the time for tough budget decisions, investors can just hope that the federal government doesn’t make it harder for the economy to surmount these risks.

Australian budget information comes from the federal government’s Mid-Year Economic and Fiscal Outlook. 17 December 2013.http://www.budget.gov.au/2013-14/content/myefo/html/index.htm. Other financial information comes from Bloomberg, and Fidelity’s research unless stated otherwise.

Behavioural Investing (1) – The power of compounding

Investors’ decisions – both conscious and subconscious – have an important bearing on their long-term wealth. It is often said that “perception is reality.”

When we make decision on our money or investment options our decisions can be heavily influenced by our past experiences, our belief system and by the information we choose to focus on. Successful investing can be hard, but it does not require you and me to be genius. In fact, Warren Buffet once quipped “success in investing does not correlate with IQ.” Successful investing requires the ability to identify and overcome one’s own psychological weaknesses.

In this article, we will prefer to focus on how to benefit from the power of compounding.

behavioural investing imageCompounding isn’t a new concept – many of us will remember studying it back in our school days. Legendary scientist Albert Einstein famously called it ‘the most powerful force in the universe’, while American business magnate John D Rockefeller suggested compounding is the ‘eighth wonder of the world’.These might sound like bold claims, but the power of compounding on an investment portfolio should certainly not be underestimated.

What is compounding?
In simple terms, compounding is the process whereby returns made on an investment are reinvested in order to generate subsequent returns of their own. To benefit from compounding you need to follow rules;

  • You need to be perseverance to save regularly. It might become hard at times when short term temptation triggers spending where self- discipline plays an important role
  • You need to know which investment option helps you get better outcome from
  • Allocate time. You need to be patient, as compound works through time.

The concept of compounding is best illustrated using an example. Twines Annie and Jane both allocated $10,000 to the same interest-bearing investment on their 25th birthday. For simplicity, let’s assume the investment pays interest of 5% per year.

Annie reinvests all of her interest every year, while Jane banks the $500 each year and spends it on everyday living expenses. Let’s see how their investments had fared by their 45th birthdays.

Effect of Compounding over 20 Years

Jane earned $500 interest each and every year for the 20 year period – a total of $10,000. Of course she still had her original $10,000 investment as well.

Annie, on the other hand, saw her investment grow to more than $26,000 by reinvesting her interest. The additional $6,000 she earned over and above Jane highlights the power of compounding. You can see from the table that Annie’s investment is now earning her $1,263 per year, while Jane’s investment is still earning her only $500. This differential would continue to grow over time if the sisters remained invested.

Make compounding work even harder for you

The power of compounding can be magnified if you make small regular contributions to your investment. The long-term performance impact of compounding can be significant and must not be overlooked by investors.

These examples highlight how compounding and contributing regularly to an investment can have a major influence on investment performance. The long-term performance impact of compounding can be significant and must not be overlooked by investors. Perhaps Einstein and Rockefeller were right, after all.

DISCLAIMERS
This document has been prepared by HQ Financial Solutions, an Authorized Representative of Guardianfp Ltd trading as Guardian Advice ABN 40 003 677 334 AFSL & ACL No.237641 based on providing for information purpose only. Accordingly, reliance should not be placed on this material as the basis for making an investment, financial or other decision. While all care has been taken in the preparation of this document (using sources believed to be reliable and accurate), to the maximum extent permitted by law, no person including HQ Financial Solutions, Halle Yilmaz or Guardian Advice, accepts responsibility for any loss suffered by any person arising from reliance on this information. Before acting on this material, you should consider its appropriateness, having regard to your financial circumstances and needs, and talked to a specialist in that field.

 

Halle Yilmaz is a financial adviser and business consultant. As a financial adviser, she gives solid advice that can create rapid and lasting results for her clients. Sign up for her free E-Book and download “7 Steps to Healthy Wealth Management.” Follow Halle on Twitter @halleyilmaz

The Rules of the Game

You do not need a title to be a leader.And a simple fact of having a title won’t make you a leader. Every day in one way or another you consciously or subconsciously play a leader role in life; as a mum, dad, teacher, boss, entrepreneur, or on a job you influence outcomes.

To positively influence outcomes, a leader must master ethical leadership as much as being inspirational.

Ethics is not definable, is not implementable, because it is not conscious, it involves not only our thinking, but also our feeling. Valdemar W. Setzer

Although the general agreement that business leader should be leading ethically, many of them are still failing to meet these standards. Why?

Mainly because of failing in their leadership style, and the lack of moral awareness.

images (6)How to master ethical leadership that will have a big impact on others cooperation

1. Successful leadership. It is not about gaining leadership skill sets or obtaining many leadership degrees. It is about true rapport, commitment, empowerment, and connection with others. In fact there are three main experiences that all humans set as the primary, most important, have to have experiences:

Safety + Belonging+ Appreciation = Trust

The lack of these three important experiences can be attributed to others feeling alienated and disengaged. When people feel safe and belong, and can develop a unique identity and feel significant, they will cooperate. However, when this does not happen, that creates the potential for conflict. It is vital that leaders become aware of these experiences and their impact on the performance and collaboration of others.

2. Moral awareness. A leader must have moral principles including honesty, respect, compassion, fairness and justice. A moral problem arises when one that is in conflict or seemingly so with one of those principles. Therefore, leaders should deliberately and reflectively examine their actions, and understand how they affect the people involved.

When it comes to the moral obligations of leaders in any organization, there are four key factors that are essential:

  • Always put people first in decision making.
  • Respect the individual’s human dignity.
  • Treat everybody fairly.
  • Be honest, and tell the truth.

It’s important to remember that successful leadership and moral awareness are both conscious choices. People choose to be honest. People choose to act with integrity. This is a choice and as with all choices, there are consequences, good or bad. It is the leader’s responsibility to see what others do not see, to distinguish what others may not, and to act with conviction, and moral purpose. This is excellent ethical leadership quality and it results in high loyalty,cooperation of others,and increased performance and productivity.


Halle Yilmaz is a financial adviser and business consultant.As a business consultant she works with business owners and leaders on their culture and performance optimisation in their organisations. She uses very effective tools from Neuroscience techniques to help leaders and teams create deep emotional engagement and profitable business results. Follow Halle on Twitter @halleyilmaz

How Does It Feel When You Have A Solid Financial Foundation?

There is no difference between having your desired physical and financial house. Both of them require the same: a design, structure, the finished work exam and furnishing of each room accordingly.

financial house foundationYou cannot buy the furniture first and put them in a storage room and then to get the design and structure of your house correct. However, many people do it with their financial house, buying all the financial products first then trying to get them fit into their financial house.

It may seem like a simple part of the overall construction process is the foundation, but getting it right before building your rooms to furnish them with the right products is incredibly important. The biggest reason for this is that your entire house sits on top of it! Any mistakes you make in the foundation will only get worse as you go up. You might skimp in the foundation and something fails, I can tell you that it cannot be an easy fix.

A solid financial wealth will also be based on a strong foundation of wealth protection where it will reduce the financial impact of certain events that are out of our control such as premature death, serious illness, total or partial disablement, fire or an accident. Unfortunately, some people underestimate getting the foundation right first. They are all concerned with increasing wealth in their lives, however managing and protecting the wealth, assets and lifestyle they currently have is an extremely important aspect to consider.

Events such as premature death, partial or total and permanent disablement and serious illness (- for instance cancer or heart attack-) will no doubt have an emotional strain however; they can, and often do, have a catastrophic financial strain for an entire family. The consequences of such events can result in unplanned loss of assets and lifestyle changes for you, your loved ones and business partners. Although an event might be a temporary one, the negative financial effects will last for many years.

Therefore, it is very crucial to have a solid structure, which has to support the weight of your wealth building and accumulation plans and goals like those that your physical house does. Do you know that after a building is built you cannot even see the foundations? Hence, it takes 30-40% of the time of building a house just to make sure the foundation is right and strong. The same thing applies to your financial house. Your financial foundation deserves the highest focus and attention.

Although everybody wants to have some form of protection, not many people take the action to have something in place.

Interestingly enough a survey was made by a research firm .The first question was that

What is your greatest hope in life?

The top answers were;

  • To be financially secure
  • To have happiness and security
  • To be sure that my family will be secure
  • To retain my health and my income
  • To have the respect of my family and friends

The second question was that

What is your greatest fear in life?

The top answers were;

  • Fear of insecurity
  • Not being able to carry on for self and family
  • Sickness and unemployment
  • Poverty and death

People have always wanted and will look for security as it is our foundation generally at the cost of personal freedom.

There are four great threats to security: unemployment due to unexpected life events, total and permanent disability, serious illness and immature death. Life insurance offers you the most efficient method of achieving economic security against these four threats. You live, work, and bring home the fruits of your labors. You maintain certain standard of living that may not include Caribbean cruises and golf club memberships, but that do include a home for your family, food, clothing, education, and savings for your retirement.

Life insurance not only insures a life, it insures a way of life. Insurance makes it possible for you to have security and, at the same time dignity and freedom when you need it the most.


Halle Yilmaz is a financial adviser and business consultant. As a financial adviser, she gives solid advice that can create rapid and lasting results for her clients. Sign up for her free E-Book and download “7 Steps to Healthy Wealth Management.” Follow Halle on Twitter @halleyilmaz

Stop Forcing! Start Leading With Engagement!

As a leader in your business or in a company your role is to have a vision,convinced with it and communicate to others in a way that they will see an possibility for their dreams within it therefore,being encouraged to move all together in the same direction to make it happen.

The question here is how well you do it? Your answer to this question will define your leadership style.

Influencing others by authority, control or command is already proved to produce limited outcomes while new model – influencing others by engagement and enrolment is gaining momentum.

Yet too many leaders still lead with claws and teeth rather than getting others involved in a way that they are touched, moved and inspired to move in the same direction.

Leadership and Effective CommunicationWhat about you? Are you helping your employees visualise their personal goals aligned with the business goals or sending to their subconscious mind fear and uncertainty?

Influencing others does not mean you tell others what you want them to do. It is about being able to move things forward without pushing, forcing or telling others what to do. It begins with understanding yourself, the way you behave or communicate then the effect or impact you have on others.

Sometimes you can get so used to your own personal style or the way of being or pattern of communicating, that you do not think of how it is being received.

People when they feel being understood, acknowledged or appreciated, they will move things forward easily in a team environment. This happens through effective communication. That is a two way street, which involves saying what you have to say and willing to listen to others’ saying.

To be powerful with your leadership you must take responsibility for your communication with others. It would be very powerful when you come from a creation not a reaction in your style. That requires being present to what is said at that moment.

Moreover, to get others engaged and enrolled in your communication you first seek to understand others then to be understood. Unfortunately, most people do not listen with the intend to understand other persons point of view and his/her world. They listen with the intent to filtering everything through their own paradigms. This shatters communication and feeds fear in others.

As an influencing leader you become an example to others by holding an integrity and a responsibility for your listening as much as your words. Once you do that you would not feel a need in your communication to protect, control or avoid certain conversations which will create a space for others to be who they are.

To be effective in your communication therefore, in your leadership;

  • Stop fixing people instead appreciate their contributions and significance. Find out where and how you can help them to be engaged, cultivate a culture of having open and transparent communication with each other.
  • Ask questions. This is an excellent way to initiate communication because it shows other people that you are paying attention and interested in their response.
  • Check their perception. It is an effort to understand the feelings behind the words.
  • Observe their actions without value judgments, and without making accusations or generalizations about motives, attitudes, or personalities. Otherwise you may unintentionally trigger others ego that you might not want to happen.
  • Give constructive feedback regardless of positive or negative one. Always use sincere praise whenever possible to create a more constructive atmosphere. When giving negative feedback make it privately, without anger or personal attack that does not cause others become defensive.


Halle Yilmaz is a financial adviser and business consultant.As a business consultant she works with business owners and leaders on their culture and performance optimisation in their organisations. She uses very effective tools from Neuroscience techniques to help leaders and teams create deep emotional engagement and profitable business results. Follow Halle on Twitter @halleyilmaz

Never sacrifice long-term goals with short-term view

Regardless of where we live, what we do for living, we all want to be in control of our lives. We all want to experience financial freedom, live our desired lifestyle and keep our dignity until we die. This requires not only focusing on our short-term goals, but also medium to long term goals NOW.

Unless you are one of the very fortunate few to be independently wealthy, setting aside money today to see that you have enough for the years down the road is mandatory. For those of you who are at their early ages of 20′s and 30′s the idea of saving for your long-term goal – retirement- might be odd and a far away goal. Especially when you are working on fulfilling your short to medium terms (1 year to 5 years) goals.

retirement savingsNevertheless, it is worth noting that the very fact that you are young gives you a huge edge if you want to have financial freedom in retirement. That is because when you are in your 20s, you can invest relatively little for a long period and wind up with far more money than someone older who saves much more over a short period. It is due to the power of compound interest.

Compound interest means that interest accrues not only on the base payments but also on the interest earned. When individuals embrace saving early for retirement and make it a priority throughout their earning years, they put the power of compound interest to work in their favour. As a result, a steady stream of savings can create exponential growth.

Consider this scenario: If you begin saving for retirement at 25, putting away $2,000 a year for just 40 years, you’ll have around $560,000, assuming earnings grow at 8 percent annually. Now, let’s say you wait until you’re 35 to start saving. You put away the same $2,000 a year, but for 30 years instead, and earnings grow at 8 percent a year. When you are 65, you will wind up with around $245,000 – less than half the money.

Saving for retirement is not facing old age or possibility death. It is about gaining the discipline required to take control of your entire life. To support this, the government in your country might offer great incentives to its people. Those incentives can help you accelerate your long-term savings. All you need to do is to be aware of, and make use of them as much as you can.

For instance in Australia, we have superannuation savings, which is something that employers are forced to pay. The government has imposed on employers to make 9% of each employee’s before tax salary paid as a super guarantee contribution into their superannuation funds. This rate will increase to 12% by 2020.The main aim of compulsory superannuation is to ensure we save and invest our money during our working life so that we can live off the earnings in retirement.

Australian demographic reports indicate that Australians are living longer. Currently, life expectancy in Australia is over 81 years. This reflects a higher level of health awareness, better health and medical services, better diet and a safe workplace environment. Hence, it is believed that the age pension the government pays to retires would be insufficient.

The Australian government also knows that most of Australian’s would not have the required discipline to save consistently for their long-term goal – retirement savings – from early ages. Therefore, it is made compulsory not to be accessed the money accumulated in the superannuation funds until fund members reach their retirement age (except certain conditions).

Moreover, in order to encourage people to save for their retirement the government sacrifices its tax revenue. The tax, which is levied on superannuation funds based on the limited tax-deductible contributions (currently it is $25,000 in total per year) and the total of taxable earnings of the fund, is at 15% rather than individuals marginal tax rates.

When super fund members reach their retirement age, they can convert their fund balance into tax-free income streams if they wish.

Additional benefit of superannuation in Australia is that any assets or benefits that individuals have in their superannuation are protected from bankruptcy. It means that, generally, your superannuation won’t become part of the property that is divided between creditors in the event of bankruptcy.

Although the money saved and invested in superannuation environment is part of people’s earned income, because it is not seen or touched, many people neglect it easily. This neglect also comes from lack of understanding of related rules, regulations and complex investment options of the funds.

Nonetheless, superannuation is the most attractive investment vehicle in Australia for those who are serious about taking control of their financial life and maximising their wealth for retirement. It is important to point out those investments in super environment requires regular monitoring and control as carefully as the money invested outside of super.

You might use superannuation environment or another investment vehicle to save and invest. They all are there to take you from where you are financially to where you want to be some time in the future, financially. All you need to do is to gain the habit of not only just focusing on short term financial goals , also focusing on long term ones with the mindset of getting the most out of what is available for you now for your future.


Halle Yilmaz is a financial adviser and business consultant. As a financial adviser, she gives solid advice that can create rapid and lasting results for her clients. Sign up for her free E-Book and download “7 Steps to Healthy Wealth Management.” Follow Halle on Twitter @halleyilmaz