Financial Planning and understanding money

Financial Planning commentary

michael — Tue, 07 Feb 2012 06:16:51 +0000

Financial Planning is all about understanding money. There is a never ending stream of data being thrown at us all in this increasingly technologically-fed world but in many cases, all that extra data does is to add to the ‘noise’. Here at Michael’s Musings, a Perth planner will help you sort out the real information in amongst all that noise. Feedback and comment cheerfully received, even if sometimes ignored. PSRZS4985ZJ3

What is the true value of a Euro?

michael — Mon, 06 Feb 2012 03:25:26 +0000

With all the ruckus that gets thrown into news headlines, it can sometimes be difficult to remember just what the longer term looks like. If anyone is in any doubt why Australian’s are currently NOT spending money in shops, and are instead going on overseas holidays or going online to spend their currency then this little chart will help bring understanding. It shows the Euro charted against the Australian dollar since 1996 – that’s 16 years of history folks. Winners and Losers in markets So there will continue to be winners and losers in markets throughout Australia. It is clear that the world sees less relative value in the Euro at the moment – but we should remember that the Euro remains one of the larger global currencies, and so the above chart is more a reflection of the risks in the Euro than it is a statement of love for the Australian currency. You can be sure that the position will be reversed the second the Euro community sorts out their backyard. Fortunately for we Australians, it doesn’t seem that anyone in Europe is actually in a position to make the changes that would do this. At least, not in [...]

2012 – At the crossroads

michael — Thu, 02 Feb 2012 07:57:08 +0000

2012 is definitely lining up to be a watershed year, in which some of the global monetary tensions built up over the past 4 years finally work themselves out. The big question, of course, is exactly how these monetary pressures will resolve. Panic Buy or Panic Sell? In my role as a financial planner, i get exposed to many of the ‘trends’ in markets, which reflect the broader hopes, fears and tensions cultivated in ‘mainstream’ media. For over 4 years now, most investors have continued to take a long term approach to their finances, opting to let market booms and busts resolve themselves, and to work on the assumption that the last bust will eventually work into a new boom. On the other hand, there are a few people who are convinced that 2012 will herald “Global Financial Crisis – Mark II”. These people are selling as much of their investment exposure as they can. And here lies the dilemma, the worry, the angst, the fear and the uncertainty of trying to make a good decision in the face of uncertainty. There are many very informed people who think the GFC II will happen. There are many very [...]

Financial Planning Bias

michael — Fri, 13 Jan 2012 10:42:32 +0000

It’s the new year, and financial planning as an industry is headed pretty much where previous posts have suggested. Happy New Year! Today, we are going to continue to investigate the ins and outs of bias as it stands in the financial planning industry in Australia. Pour a cup of your favourite brew and let’s get started on how institutional bias works. Financial Planning holds an inherent bias in regards to investment processes and preferences. Understanding this is an important step in understanding what financial planners attempt to do when they sit down to analyse money issues. This post focusses on some of the more blatant bias that exists in the financial planning industry. This does not mean that it is all bad or that i am making a judgement in this regard. The point is to simply highlight where bias may exist, and ways in which it benefits or penalises the individual seeking financial planning help. Financial Planning is Biased i know that in using the term ‘bias’, there may be people who wonder just what i am suggesting? The key point under the microscope in my latest posts is “bias” in all it’s various shades. i am really trying [...]

2012 Financial Checklist

michael — Wed, 04 Jan 2012 02:58:33 +0000

New Year resolutions come and go, with most consigned to the rubbish bin by mid-February. How are yours shaping up? If you haven’t made any this year, here’s a shopping list of small financial targets to get the creative juices going. 2012 Financial Checklist Start a budget Always a great place to start, yet it can seem much harder than it needs to be. Are there months where you will be cashflow negative? Prepare for them now. Do you have a fixed savings regime or do you simply save ‘whatever is left’? If you are paying off debt, do you know how much you can pay off by the end of 2012? Plan your 2012 strategy Will your focus be on debt reduction/ savings/ investing or a combination of all three? Is your superannuation aimed at the long term or the short term? What reserves or contingency plans have you available for disasters/opportunities? Ponder your mortality Write a will What happens with your assets and your debts? What guardianship have you arranged for children or people you are responsible for? Does anyone have a power of attorney, to be able to deal with your finances if you cannot? Alongside of [...]

A financial planner’s review of 2011

michael — Tue, 20 Dec 2011 01:09:04 +0000

bedeep bedeep bedeep… in the latest news to hand… Global market players have left early to go on holidays, having universally agreed that the year of the Rabbit sucks, the market sucks, and that it makes sense to have a little rest before the Dragon enters the scene and provides enough lift to see above the snails, bugs and worms. Fundamental and long term analysts worldwide have taken redundancy packages, and are now studying architecture, Japanese writing and Zen meditation techniques. Hedge fund managers are checking themselves into $5,000-a-day therapy retreats, attempting to use the holiday period as a time of quiet and introspection, to ponder how easily a fool and his money are can be parted in a fearful world – and to ask the Great Baal’s support for entrenching the trend. German poker players are studying Angela Merkel’s brink(wo)manship technique, while fraudsters the world over are trying to copy a process that allows Germany to shame every one of its Euro partners into servile guilt-trips, even while banking hundreds of billions of extra export dollars by simply refusing to deal the second round of cards. Australian finance experts have decided to go on Christmas break and NOT take advantage of record 50-year-low interest rates to [...]

Financial Planning – Insurance

michael — Fri, 09 Dec 2011 08:21:20 +0000

Insurance is one of those areas that we all love to hate. So what are the facts? How does a financial planner deal with insurance issues? Facts on Life Insurance Here is a recently released video from Comminsure on the facts about insurance in Australia today. It focusses on life insurance but briefly covers areas such as income protection and critical illness (also called ‘trauma cover’). It’s brief and very well put together. i think you’ll enjoy it. http://www.youtube.com/watch?v=EQhKYMdtBsU I once read that there were three areas a financial planner needed to work on - Accumulation of assets, income and wealth Preservation of assets, income and wealth and, Distribution of assets, income and wealth. For some people, the distribution of wealth through their estate is just a matter of x to that beneficiary and y to this beneficiary. However, many people have not yet finished their wealth accumulation years, and they will often have a shortfall between their preferred estate distributions, and the actual money available for distribution. This is where life insurance comes in. A brief aside… Once upon a time, a snotty-nosed young fellow turned up for a job interview where he was parked in a waiting room, to sit and stew while the powers-to-be [...]

Industry Funds – “Compare the Pair”

michael — Fri, 02 Dec 2011 05:59:41 +0000

Marketing is often most effective when it glosses over the smaller details and focusses on just one or two key points... does that lead to better outcomes or is it misrepresentation?

Merry Christmas from the advisors of WSP!

michael — Thu, 01 Dec 2011 09:30:30 +0000

Kerry can always be relied upon to sort out birthdays, anniversaries, parties and get-togethers. If it weren’t for the fact that she is so good at her current job, Kerry would be running the city’s big events! So Merry Christmas from everyone as WSP Financial Services Pty Ltd, and here’s a special christmas card from all of your financial advisors! http://www.youtube.com/watch?v=HAsoLu_T4yg Enjoy the lead-up to the Silly Season! Michael

Is the world more volatile post the global crisis?

michael — Mon, 28 Nov 2011 05:24:58 +0000

Is the world riskier? Here is a question received from a client recently. My second question is, I remember a time when things ticked along with the ASX rather smoothly, whilst I appreciate the recent volatility is something that we are not used to, I still don’t get the way the market moves at the moment. I assume what makes it move are the big institutions moving large volumes around trying to make money. What I seem to remember was that some days you made money, some days you didn’t but we did not seem to get the volatility that we get today even when things were not all that good in the mid and late 90′s. To what extent do the large institutions create this volatility and why is it that they seem so committed to chase their tails in doing this? Is it simply the way things will be and part of the new way business is done, is it simply we had it so good for so long that no one is used to losing money so they panic the moment things don’t look too good or the risk increases? Is it corporate culture that has built [...]