Archive for the ‘Wealth Creation’ Category

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Planning For Your Families Future

Monday, March 1st, 2010

It’s something most of us want to do, but not many of us manage to do in the best way possible. Setting up our estate and making a will is as much a part of financial planning as funding your retirement, investing your savings and building a portfolio.

It’s important to have your estate in order so that everything you are working hard to achieve in your life is handled the way you want. Here are a few tips to make sure that your wishes are clear when you are not around to explain for yourself.

Someone other than yourself needs to know where it is. Make sure your executors and at least one beneficiary know where your will is stored. If no one knows where your will is it’s the same as not having one.

Keep your will up to date. Review your will when circumstances change, births, deaths, marriages, divorce, buying or selling assets, setting up family trusts or taking out a major loan will all impact upon the nature of your will and the allocation of your assets.

Make your wishes clear and specific. If your intentions are not clear – if they can be interpreted in more than one way – you’re leaving your estate open to dispute. It can happen easily so be sure to get your will drafted by a professional.

Make sure any changes you make are done professionally. Don’t make changes on notes or rewrite an informal will, they can cause confusion and delays.

Don’t use beneficiaries as witnesses. Using a beneficiary or their spouse as a witness could mean any gift to them is invalid and they will not be entitled to any part of your estate.

Choose your executors carefully. Avoid appointing someone as an executor who might have a conflict of interest, such as a business partner, older people or people who might not be capable because of a lack of experience or knowledge in financial matters or because of time or business pressures.

Preparing your estate and making your will is an essential part of your financial plan don’t leave it until it’s too late and be sure to get professional advice.

Reference

McIntyre, J 2001, What I Didn’t Learn at School But Wish I Had.

Have an Amazing Day

Teresa and the Team at

AustraliaWealth.com.au

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The 4 Buckets of Wealth

Tuesday, February 23rd, 2010

Jamie McIntyre has spent a lot of time studying and researching wealth creation. He has had a number of millionaire mentors that have steered and guided him in creating his own wealth, even after being broke and in debt.  Jamie uses a strategy he calls, The Baby Bucket Principle, which is designed to turn the risk factor of investing into your friend. This is done by dividing your available funds into separate wealth buckets. Starting out with a big bucket containing all your investment funds you then divide your wealth into four smaller buckets.

  • The Security Bucket, The Growth Bucket, The Momentum Bucket and the Lifestyle Bucket.

The Security Bucket is low risk investments. These include cash management trust accounts ie cash. Insurance would also be in here, eg income protection, disability and health, use a broker as they will find what suits you best.

Growth Bucket investments include renting shares, residential property and quality companies.

The Momentum Bucket would cover renting shares, commercial property and traditional business. Be careful here as traditional business can be one of the highest risk strategies if not done properly and funded from the right sources (ie. not your home).

The Lifestyle Bucket is for funding lifestyle investments such as holiday homes, a restaurant because you always wanted one or a hobby farm if that’s your dream. Hopefully these can also be growth investments but if not your  other investments should help fund your lifestyle ones. The reason for these buckets is to stop you from choosing the wrong kinds of strategies and using all your money to do it. By using the buckets you divide your wealth into different levels of risk instead of choosing to put everything into one hot tip and possibly losing most, if not all, of your investment.

The whole process that Jamie teaches is aimed at increasing your financial intelligence but in doing so you also have to have control of your emotions. The buckets help with our emotional intelligence they teach us to not be attached to outcomes, instead because the risk is spread we can take a certain amount of risk with one bucket while ensuring the security of another. Combining good financial intelligence with sound emotional intelligence will ensure you’re on the road to strong financial growth.

Have a Profitable Day

Teresa and the Team at

AustraliaWealth.com.au

Reference: What I Didn’t Learn st School But Wish I Had, Jamie McIntyre, 2002.

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Results, Purpose, Action – RPA

Sunday, February 21st, 2010

Results, Purpose, Action (RPA) is a strategy Jamie McIntyre has implemented and now teaches to ensure that once a person’s dreams and goals have been established they have a system to turn them into reality.

The RPA Planning Process is a proven system for taking anything you can envision and making it real. It teaches you how to organise and think clearer thereby turning your thoughts into positive action instead of a muddling, overwhelming chaos.

The process is broken down into three steps:-

Step 1 -

Result – Ask yourself – “What do I want from this situation – what do I want my result to be?” Result is the R in RPA so be sure you ask yourself what you want the result to be not “What should I do” but “What result am I committed to achieving?”

Until you are clear on the result you want any ‘to do’ lists or plans will not be enough to motivate you to action.

The second step is:-

Purpose – Ask yourself – “Why do I want that result – what is my purpose”? To achieve anything successfully there must be a ‘why’ a compelling purpose or reason something that will keep you going in spite of setbacks. Without a reason then giving up is easy,
there isn’t a lot we do without a reason. So find your purpose and be specific and clear about it.

The third step -

Action – Ask yourself – “What action do I need to take to achieve the result I want”? So once you know what you want your result to be and why you are committed to achieving it you are then in a state of mind to begin creating an action plan.

The sequence for stepping towards success in achieving your goals and dreams always begins with the end in mind. You must be totally clear about the result you want, then be able to build a burning reason to achieve it before you can decide the action you need to take and have the commitment to follow it through.

Have a Productive Day

Teresa and the Team at

AustraliaWealth.com.au

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4 More Steps on the Road to Wealth

Saturday, February 20th, 2010

We have already looked at the first four steps on the path to wealth, in this post we will learn four more, together they make up Jamies‘ eight steps to becoming a millionaire which he learnt from his millionaire mentors.

It is necessary to understand that creating wealth is made up of several different forms of income and the goal is to create a system of wealth producing ventures that will earn money without you being there or doing anything. These steps are setting you up to begin your wealth creation system.

STEP 5 – OPM

OPM stands for Other Peoples Money, it is possible to use other people’s money to invest but it is something that has to be considered carefully by weighing up all relevant facts. For example if you were to take out a personal loan it would mean you have money to invest with straight away and the opportunity to earn income from that investment. What you would have to consider is your current situation, the cost of the loan to you, the potential risk of your investment and the potential earnings. Borrowing money to invest can get you started but it must be carefully considered before going ahead so you don’t end up worse off than before you started.

STEP 6 – USING EQUITY

If you own your home or are paying off a mortgage there’s a good chance you have or will have equity. Equity is the portion of your home that is yours above and beyond what you owe to the bank. Equity can be used to build wealth. Investing in property or secure, insured share strategies offer low risk ways of creating wealth out of your equity.

STEP 7 – PARENTS EQUITY

If you don’t have your own home it may be possible to use the equity in your parents or grandparents home. Many people have done this successfully myself included, my husband and I purchased our first property using his mothers home as security for a short period of time. Once the value in our property had increased enough to secure the mortgage we were able to release my mother-in laws property with no cost to her at all. In the majority of situations in Australia, where property is concerned, you have an appreciating asset. This means, providing you do your homework, you have managable risk that will increase in value and create wealth for you.

STEP 8 – SUPERANNUATION

Learning what you can about super is a good idea, having your own self managed super fund could work out to be more beneficial, as long as you are prepared to learn and understand the rules and regulations and how to make it work for you. If you have your own self managed super fund you can choose your investments and take an active role in funding your retirement.

So now you have eight steps that will help to get you started in creating a life of wealth and financial freedom. Everything we do in life comes with a certain amount of risk but to do nothing is even riskier, none of us are going to get out of this alive, so live as much as you can.

Have a Wonderful Day

Teresa and the Team at

AustraliaWealth.com.au

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4 Steps on the Road to Wealth

Friday, February 19th, 2010

Every journey has to start somewhere, it doesn’t matter where you start but if you have a destination you want to reach then you have to start from somewhere. In other words if you want a life of financial freedom then it doesn’t matter what your financial situation is now what matters is you start doing what it to takes to achieve that.

In Jamie McIntyres book What I Didn’t Learn in School But Wish I Had he covers eight steps to get yourself in a situation where you can begin to invest. Then your investments can start generating some passive income, that is income that doesn’t require you being there to earn.

These are Jamie’s 8 Steps to Start You on the Path to Becoming a Millionaire:-

STEP 1 – SAVINGS

Saving will always be your first step to wealth. It doesn’t matter how much you earn you always need to save at least 10%. Learn this principle well, teach it to your kids as soon as they can understand, no matter what you earn or what you owe, SAVE. Even if you can’t manage 10% at first, save whatever you can, pay yourself first. Developing a savings habit creates a mental shift that makes wealth creation possible.

STEP 2 – SELL SOMETHING

Most of us have accumulated more stuff than we need or use – sell it. You would be surprised how much cash you can make by cleaning up and clearing out all those items. Use the money you make to begin your savings plan or to start an investment strategy.

STEP 3 – TAX

This step is about minimising the tax you pay. The majority of Australians, the middle income earners pay huge amounts of tax, there are legal ways to reduce the tax you pay. Tax rules are constantly changing so it’s best to ask your accountant some ways you can minimise the tax you pay.

STEP 4 – INCOME

You may be thinking an increase in income is easier said than done, that may be true but not impossible. One very important skill of the current century is the ability to think creatively and solve problems, if you can do this in your current field you have a valuable skill. Effective communication is another sort after ability that has the potential to earn you rewards. The ability to market a new idea or concept and bring it to reality can earn you huge amounts whether in your current field or independant of it. The art of negotiation is also a valuable skill, one or all of these skills have the potential to increase your income and put you in a position to negotiate a better wage or payment plan for yourself.

In the next post we will complete Jamies total of eight steps,

Have an Incredible Day

Teresa and the Team at

AustraliaWealth.com.au

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Debt Help

Tuesday, February 16th, 2010

Bad debt is easy to get but getting rid of it can be like a ball and chain around your neck. In Jamie McIntyres book, What I Didn’t Learn at School But Wish I Had he covers a debt reduction strategy that can help reverse the situation.

Remember there are two kinds of debt, good debt and bad debt. Bad debt is the kind that once purchased goes down in value and is usually not tax deductible such as holidays, clothes and cars. Good debt on the other hand is when you buy something that goes up in value and has a number of tax deductions, such as property or shares.

Jamie’s strategy is designed to get your bad debt under control so you have the opportunity to increase your good debt and create more wealth in your life.

First of all list all your debts as shown in the example below:-

  • Personal Loan      25 000   Payment Amt      520            Factor        60
  • Credit Card              5 500   Payment Amt      160            Factor        34
  • Store Card                4 500   Payment Amt      160            Factor       28

Total                       35 000   Payment Amt      840 per month

In this scenario the factor is the number of payments left to make. By taking the lowest factor, being the least number of payments to finalise the debt, and increasing the payment with any extra money you have you will decrease the amount of time required to finalise it. For example, let’s say you decide not to go out for dinner once in the month and that gives you $100 to spare, add this to the $160 store card payment, this will reduce the factor to 17. So ,in seventeen months your total store card debt will be gone and you can then add $260 to the credit card debt. So now you are able to pay $260 + the original $160  = $420 off the debt per month. This means your credit card can be paid off in thirteen months instead of thirty four.

These figures are a little off due to balance adjustments as payments are made, but I hope you get the idea and can apply it to your own debt.

The most important thing to do if debt has got out of control is to contact the lender, inform them of your situation so you can work out an acceptable payment arrangement.

Have a great day

Teresa and the Team at

AustraliaWealth.com.au

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Your Financial Goals

Sunday, February 14th, 2010

In Jamie McIntyre’s book What I Didn’t Learn in School But Wish I Had, he breaks down the steps for you to establish what you will need to be financially secure, independant or free.

How much will it take for you to be financially free?

Congratulations if you know the answer to this question, most people don’t.

Doing the following excercises will help you figure out how much money you need to reach financial security, independance or freedom in your life.

A. How much will it take?

(Guess a figure that you think will mean financial freedom in your life – write down the first figure that comes to mind)

$_______________________

B. How long will it take to achieve?

(For now have a guess and write it down)

A._______________________

MAKING YOUR PERSONAL FINANCIAL DREAMS A REALITY

Everyone has the right to pursue his or her financial dreams. To turn those dreams into reality, we must identify precisely what they are. Following you will see five levels of financial well-being that are possible to attain. Use the list to clarify what dreams are most important for you to achieve in your lifetime.

A thought to remember : Clarity equals Power!

  1. Financial Protection
  2. Financial Security
  3. Financial Independance
  4. Financial Freedom
  5. Absolute Financial Freedom

Now we are going to define each level precisely so you can see an achievable goal and whats required to attain it.

The first thing to define is what you want financially-

Make some headings in your goal book better still give each a page

  • Goals    -    Set some time frames
  • Short Term 6 – 36 months
  • Intermediate 3-10 years
  • Long Term 10+ years

Next write (use pictures as well) under each heading what you want and place it in the time frame you think it will take to achieve

Toys and rewards – Things you want to own

  • House
  • Car
  • Art
  • Yacht
  • Jewels

Things you want to give or experience (for yourself or others)

  • Travel
  • Philanthropy
  • Buy a house for your parents or children

Economic goals

  • Reduction of debt
  • Cash in hand
  • Net worth
  • Annual Income from investments
  • New business profitability

1. Financial Protection

The precise amount of money you will require in liquid assets to be financially protected can be established by reviewing your current monthly expenses. What does it take for you to keep things together?

For example

  • Mortgage payment
  • Utilities
  • Transport
  • Food
  • Insurance
  • Private Superannuation

This does not include credit card or other debts just your basic survival expenses. Arrive at a figure then decide to save for six months financial protection. So this means you commit to setting aside enough money to cover six months of necessary expenses if you can’t earn any money.

2. Financial Security

Financial security is achieved when your investments produce an income equal to your financial protection figure (basic necessities). So your basic expenses are covered by the income produced by your investments.

3. Financial Independance

This means how much money you need to be independant from having to work. In other words duplicate your current income. Your investments need to generate at least the same amount of money as you are currently earning from your job. If however you earn enough to save and you don’t spend your entire income than what you need to earn to maintain your lifestyle would be less.

4. Financial Freedom

This goal is attained when you are earning more money than you require to live and you are able to maintain that income for the rest of your life.

5. Absolute Financial Freedom

This is when your investment income provides you with enough money to do whatever you want, when ever you want without having to work again.

Obviously you need a plan in place, and the sooner you start the more chance you have of obtaining it. You can achieve these levels through investing in business, property or shares  having a mixture of these investments is wise. Educating yourself on how to achieve these levels is essential without the knowledge you would find it difficult to get beyond the first or second levels.

Ask yourself the following…

  1. Which of your dreams is really important for you to turn into reality?
  2. By what age must you accomplish it?
  3. Write down the amount you guessed you will need to be financially secure?
  4. Write down the amount you calculated you need to be financially secure? ( is this figure higher or lower than what you guessed, for most peolpe it’s lower)
  5. Where are you today?

Have an Inspiring Day

Teresa and the Team at

AustraliaWealth.com.au


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You Don’t Need Approval to Drive a White Mercedes

Monday, February 8th, 2010

How do you feel about creating  wealth or becoming successful? Do you get excited by the thought? Do you feel its something you can achieve? …Or…

Do you have a nagging voice in your head telling you over and over, you can’t do it, you don’t deserve it, are you worried about what people will think or some other irrational reason?

It has taken me a long time to put a muzzle on my nagging voice. I have dreamed the dreams, I have goal set, I have recited affirmations but still wealth eluded me.

But not anymore, I have given up being worried about stepping out of my comfort zone, there really is no comfort there just numbness and dellusion.

I have given up looking at successful people wishing that was me. I have come to realise that success is about knowing what it takes and then just doing it. It is really that simple. It may take you a month, it may take you a year, it may take you ten years to reach the goal you set yourself but reach it you will, if you know what you have to do and do it.

There are many paths you can take that will lead you to success, pick one that’s right for you and follow it. If you love it you’ll keep doing it.

It is important that you choose something that you are passionate about to be successful at. Love will conquer most things in this world including your fear of success, so love what you do.

You don’t have to have everyone agreeing with you, or believing in you, you don’t need approval to pursue a dream.

You do need a reason ‘why’ you want it. You do need to know what it’s going to take, what you need to do. Then you just need to do it.

Have an amazing day

Teresa and the Team at

AustraliaWealth.com.au

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Robert Kiyosaki ~ Guide To Investing – Pt 4

Friday, February 5th, 2010

Following are the last four lessons from the section of Kiyosakis book that asks are you mentally prepared to be an investor. Take your time through the lessons to prepare yourself mentally for wealth.

Investor Lesson 13 ~ Reduce Risk Through Financial Lieracy – In the world of investing there are three basic asset classes you can invest in. Roughly 80% of the very rich became rich through building a business.

Do you increase the value of your money by spending it on assets or do you devalue your money by spending it on things that devalue over time?

Being financially literate gives you the knowledge you will need to understand when you see an asset producing investment. Learning how to read the relevant financial information will allow you to decide for yourself if an investment is risky or safe.

Investor Lesson 14 ~ Financial Literacy Made Simple - Rich dad explained financial literacy very simply by explaining the difference between as asset and a liability. An asset puts money in your pocket while a liability will cost you money. If you can figure this out from the financial statement of an intended investment you have lessened the risk associated with investing.

Investor Lesson 15 ~ The Magic of Mistakes - Mistakes are opportunities to learn something new. If you are not willing to make mistakes and learn from them it is unlikely you will become one of the  really rich. You will often learn more from your failures than your successes.

Investor Lesson 16 ~What is the Price of Becoming Rich - You can become rich by being financially smart. You must take the time to learn financial literacy, you must have a plan and you must be willing to make mistakes.

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Robert Kiyosaki ~ Guide to Investing pt 3

Tuesday, February 2nd, 2010

In lessons nine to twelve Kiyosaki goes into a bit more detail about what is required if you want to be seriously rich. He looks at whether you value your money or your time more as this will definately impact on the type of investor you are.

Investor Lesson 9 ~ Each Plan Has A Price -What is the difference between being secure, being comfortable and being rich? The difference is price, if you want to be comfortable and secure you need a lot less money than it takes to be truly rich. At first glance it appears price is measured in money but it is actually measured in time, a more precious asset. Most people are not willing to invest the time, they wish to get rich quick and are in such a hurry to make money they lose both time and money. Are you willing to invest the time ?

Investor Lesson 10 ~ Why Investing Isn’t Risky – Anyone who has ever said investing IS risky has either not been trained to be an investor, lacks control or is out of control as an investor or is someone who invest from the outside then the inside.

Investor Lesson 11 ~ On Which Side Of The Table Do You Want To Sit? – The poor man says work hard and save money, the rich man says working hard and saving money are important if you want to be secure and comfortable. The government taxes people when they save, when they spend and when they die. If you want to be rich you will need greater financial sophistication than merely working hard and saving money.

Investor Lesson 12 ~ The Basic Rules Of Investing – Investing is comprised of seven rules. The first basic rule of investing is to know what income you are for, either earned (work, job etc.), portfolio (stocks, bonds, mutual funds etc.) or passive (real estate,patent royalties, license agreements etc.). The second basic rule of investing is to turn your earned income into portfolio income or passive income as efficiently as possible. The third rule of investing is to keep your earned income secure by purchasing a security you hope converts your earned income into passive and portfolio income.  Fourth basic rule of investing is, it is the investor that is really the asset or the liability. Fifth basic rule of investing is, a true investor is prepared for whatever happens. A non-investor tries to predict what and when things will happen. Basic rule number six is, if you are prepared (educated and experienced) and you find a good deal, the money will find you or you will find the money. In reality, in the world of investing, regardless of if it is real estate, business, or paper assets, the key is always people, people people. The best real estate in the best location lose money because the wrong people were in charge. Lastly basic rule number seven, It is the ability to to evaluate risk and reward. An investment which brings more risk then reward is not a financially good investment.

Have a Fantatstic Day

Teresa and the Team at

AustraliaWealth.com.au

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