Articles by The Professional Trustee Team
In Chinese horoscopes, 2014 is the Year of the Horse. As we all know, in horse racing there are some horses that are a sure fire bet to back. Then there are the horses you'd wished you'd backed. Finally, there are the nags you'd rather never have set eyes on, let alone wasted your hard earned money backing. An analogy can be made with respect to employing your money.
There are some actions and opportunities which are guaranteed to put you ahead in the financial wealth race to prosperity. Conversely, there are some things you can fail to do which are certain to negatively affect your financial performance. On the basis you want to have a stellar 2014 financial year, read on ….
1. Applying the Grey Cells
Our greatest asset, well for most of us, is our brain. The little scorecard in our heads usually analyses information quickly and provides us with directions as to what we should and shouldn't be doing in the financial stakes. Of course the answer to our financial direction depends upon what information we feed our brains with. For this point, be aware of your thinking. Are you operating with all the requisite, current, pertinent information you need to make your monetary decisions?
To ensure your brain stays on the correct track, gain a little education. Read and then discuss. Most people in their specific fields are happy to share information with you. Being armed with the right information (e.g. key drivers, common issues, etc) decreases the chances you will make an adverse financial decision. It also facilitates an awareness of opportunities to increase your wealth, other than investing in the traditional housing regime Kiwis know and love. By way of illustration, from talking to people, I've been told there are good opportunities to make financial headway by getting involved in construction, dairy, tourism, food and beverage manufacturing, and forestry.
2. Employing the Right People
We all need to be aware of our long list of talents. Equally importantly, we need to be conscious of our potent list of faults, even if they comprise a short list. Having this cognisant awareness empowers us to seek out the right people to assist us in making and implementing high quality decisions. This enables us to achieve positive future financial results. Always ensure the people on your team are qualified to give you the advice they are handing out and have your best interests at heart.
3. Understanding the Numbers
Many of us make the mistake of not being acquainted with the numbers in our lives. Numbers tell us what we have coming in and what is going to head out. Numbers ensure we don't over extend by over spending. Numbers help us avoid adverse financial situations like buying too much property with great long-term capital growth prospects but failing to realise those ambitions because we run out of cash flow to fund the actual holding. Ultimately, you need a complete understanding of the timing and flow of your money, including a numerical comprehension of all investments you are intending to undertake. Making blind decisions, including failing to keep in check debt-to-asset ratios, will get you an "F" for fail.
4. Managing the Dollars and Cents
Before you manage your money, you need to understand it, so take heed of the above point. Once you are armed with information, actively set about managing your moo la. Employ it. Set up the correct bank accounts. Choose the right loans for your needs.
5. Following a Money Recipe
The chances of baking a great chocolate cake dramatically improve when you follow a recipe. The same can be said in respect of your gold. The odds of achieving a financially positive 2014 are increased when you follow a money plan. Get one. These plans tell you what your financial position is right now, what sort of financial personality you have, what investments you will feel comfortable with and what you should do to ensure you reach your pre-chosen financial destination. They can even tell you what investments to buy, where to invest and what time you should invest. Then all you have to do is implement the plan.
6. Briefing Out
It never fails to amaze me how wound up people get when it comes to their accounting. If you don't like doing it, brief it out. Sure this is going to cost you but if you are smart with your time, you'll sensibly employ those hours making far more money than what you pay your accountant/bookkeeper. Not only does this save pulling your hair out but it puts money in your pocket. More to the point, it enables you to have up to date information as to your financial position, consequently letting you rest easy at night.
7. Implementing the Correct Accounting System
This heading says it all. Stop fighting with your calculator and accounting system. Get advice from your accountant as to what system is appropriate for you. Many people are turning to Xero with good reason. Get this sorted and your life becomes easier. You'll likely to save on accounting bills too.
Hi Matthew, my name is Mark Soster and I would just like to congratulate you on your wonderful book Property 101. A few weeks ago I had a "financial awakening" and began devouring all the books I could find on the subject, however I keep coming back to yours. After 3 reissues from the library I think it easier now just to buy it. Wonderfully simple yet complex enough to require multiple reads and note taking. It has taken a lot of the fear away with regards to property investment but also tempered me with caution. Without it I would probably have stupidly invested anywhere but Auckland, telling myself it’s too expensive, I now appreciate why would you invest anywhere else? The numbers never lie, in a 20 year plan then Auckland is King for capital gain. As a fan of maths (the only perfect thing on earth?) I can see how each opportunity can be ruthlessly examined on a purely financial level. Anyway, thanks again, I will definitely be contacting your company with regards to coaching and expertise. - Mark Soster - October 2017
If you're investing in residential property, seeking to maximise your ability to succeed and minimise risk, then this is a 'must read'.
Matthew Gilligan provides a fresh look at residential property investment from an experienced investor’s viewpoint. Written in easy to understand language and including many case studies, Matthew explains the ins and outs of successful property investment.