Smart money weekly; Russia and what it means for your money, painful money gaps, setting up after living abroad, and how to put an inheritance to work
Hey team,
Happy Sunday.
Things took a turn for the worse on Thursday when the disturbing news hit late afternoon that Russia had started to invade Ukraine. This is deeply alarming on a number of fronts and I’ll leave the reporting up to the general media, but this opportunity to focus on the money aspects for you.
The global economy plunged by late Thursday afternoon, with the ASX down 3%, the worst fall in 18 months. For those of you holding US stocks, particularly single stock holding, this would have been felt much harder. With Russia being an energy powerhouse, other effects are the price at the petrol pump and this will likely trickle into rising gas costs due to potential supply diversions.
So what does this all mean for most of you? For most, sit tight. These are uncertain times, but history will show that as long as you can, wait it out. If you’re sitting on a bunch of cash, depending on your cash flow position, consider investing while the reality is the market is quite low. Before you do anything, do your research or seek advice. But if you’re looking for a sign, this is it.
Smart Money upside #57
Because people don’t often talk about the full ins and outs of their money, it’s hard to learn lessons from hearing what good and bad choices other people make. This story is from one of our clients to help you take your money game to the next level.
Numbers/Background
Couple; late 30’s, income ~$300k, total assets ~$4m, savings~ $20k annually
Frustrations
We find the topic of finances confusing and there is an information overload, which is overwhelming for us. We’re generally busy people, with high performing roles and want an ability to focus on our family outside of work. We are not super clear on a plan or what a good outcome looks like for us.
What they wanted from us / the advice process
Clarification on a financial strategy and plan for the future. A clear plan to grow our wealth, something we can work towards and know our money is working hard for us.
What success looks like for them
Have confidence in our finances and know exactly what to do with our money and how it works for us. We want to feel more empowered with our finances and confident that they can meet our children's education needs and enable us to give them rich experiences. We want an effective use of funds received from a payout this year and feel confident that we have maximised the opportunity. Ultimately a financial plan that provides them with structure and security for their family.
What money strategy they were following before we went through the planning process
Savings structure with little else.?
What money strategy they chose to pursue from our planning work
Financial plan, structured bank and cash accounts, purchase of an investment property and investments that are both ethical and meet our long term risk profiles.
Key benefits of going through the process
A clear structure was put in place, and we have more confidence with how our money is working for us. We are more educated about strategies and ways to utilise structure, and investments to save money and grow our wealth.
Value of advice after all advice fees year one: $56,016
Year 20 upside after advice fees: $4,418,078
If this story resonates and you want to chat about how to get these sorts of results, you can?book an intro call here.
Share market wrap
US and Australian 10-year government bonds rallied on Thursday as investors rushed for shelter against the backdrop of escalating geopolitical tensions in Europe. Bitcoin is following the general market downturn and by Thursday afternoon continuing to drop.
Key sharemarket numbers:
Investment story of the week: PEXA (ASX:PXA)
PEXA is an electronic conveyancing company with arguably a near-monopoly on the market. The company boasts that 80% of all real estate transactions in Australia are conducted through PEXA. As the cost of using its service is passed on from its customer base (lawyers and real estate agents) to their clients as a business cost, PEXA is somewhat immune to any potential price-based competition.
The boost in revenue and strong outlook that’s seeing the PEXA share price lift off this week was helped by a 37% increase in PEXA Exchange transactions during the half, which reached 2.1 million. The company also reported that it has now facilitated more than 10 million property transactions since launching. Those transactions are worth more than $2 trillion. During the 1H FY22, PEXA Insights also launched its first two products. These are designed to help improve financial institution efficiency. On the international expansion front, the company said that “momentum continues to build in PEXA International”, reporting “significant progress” during the half-year with its United Kingdom market entry strategy. Keep an eye out for this exciting company in 2022.
Giving update of the week
At Pivot we’re passionate about the benefits of having a solid education in all important areas of life (money included), so we’ve celebrated by providing 100 children with access to life changing e-learning education and training. This is all part of our ongoing commitment to make a difference in the lives of our clients and simultaneously make an impact on our world through our partnership with B1G1 (Buy 1 Give 1).?You can check out more information about our giving here.
Money Hack of the week: How to spot gaps in your financial management.
Do you know where you're going wrong on your financial journey? It's easy to get caught up in the daily grind and lose focus of what's happening with your money. Luke Olsen realised that he didn't know what he didn't know about his portfolio. Everything changed once he had the Pivot Wealth team to hold him accountable.?Check out our full chat here.
Money mistake of the week: Focusing on fantasy when determining value in the housing market.
Not all properties are created equal. So, are you reading too much into the statistics of your potential investment? On the podcast, Chris Gray and I talked about where the value lies in property investing and why we need to rely on more "real-life realities" vs. predictions and market shifts if you want to make money in real estate. Check out our full chat here.
Jargon Buster of the Week:?Liquidity?(Canstar)
The ease with which an asset or security can be quickly bought/sold at its intrinsic value on the marketplace aka. The ease of converting it into cash. For example, savings accounts are highly liquid. An investment property, on the other hand, has low liquidity.
Podcast from last week:?#157 Money chat w. Christine & Walter - How to set up your money after living overseas
In this session, I chat with a couple of our lovely clients, Christine and Walter about their money journey. They returned after leaving the US a bunch of times and came back wanting to get on the front foot with their money. We talked about the journey, how they tackled their planning and some of the things that surprised them about the process.
These guys did a really great job of leaning into the decision-making and conversations that happen around the planning process. And what that actually translated to in terms of the decisions that they made and the outcomes that they're working towards as well as some of the things that they're excited about.
If you want to chat about how we can help?book an intro call here.
Be awesome,
Ben
Disclaimer:
The information in this note is not personal advice, a guaranteed pathway to that elusive beach bod, or the lost script of Edna St. Vincent Millay's Pulitzer Prize-winning?Conversation at Midnight. This is just a bulk communication pushed out into the internet, and it doesn't even have your name on it. Your personal situation, needs & objectives, and financial situation have not been considered in putting this together - nor have we considered your dietary preferences, the way you like your hair cut, or your favourite travel destination - but we have spent a lot of time thinking about the future of urban society, whether there is other intelligent life in the solar system, and the pervasion of soy and linseed bread in Australian metropolitan hubs. You should consider the appropriateness of any general advice in relation to your own objectives, financial situation and needs and seek advice before taking any action. You should also consider using a variety of eau de toilette fragrances to keep your partner interested and colleagues on side, not using plastic straws, and minimising your screen time. Where information relates to a financial product, you should read and understand the relevant product disclosure statement. Where information relates to your own potential for awesomeness, you should consider backing yourself totally and completely. Past performance is definitely not an indicator of future performance when it comes to investments and financial products, as well as the likelihood of your children sitting still and quiet for an hour being satisfied playing with a used piece of wrapping paper.?Financial services guide.