Last month we talked about Set Up Short-term Goals. This month we focus on Step 9 - Set Up Long-term Goals. I define long-term goals as something you would like to achieve in the long term, generally in more than 10 years' time, but can also be anything in more than two years. Have your notebook and pen ready at your desk. Think about the things your plan for after the next two years, in five years, ten year or longer. It can be related to your age, for example age 45, 60, 65, important anniversaries, for example 20th wedding anniversary, or milestones for your children, for example age 7 going to primary school, age 18 going to university. Jot them down in your notebook. Speak to your spouse, partner, children, families and friends that you would like to plan things together with, jot down the additional things that are going to happen after the next two years. Be specific in your goals. Visualise what you would like to happen, write down the details of your goals. The more specific your goals are, the more you will be driven to achieve them. So instead of saying "living in a retirement home at the coast", make it more specific by saying "living in a two-bedroom retirement home in a secure estate in Hermanus, Western Cape by age 65". Make your goals more specific by applying the 5W2H method, asking these questions: What? Why? Where? When? Who? How? How much? Examples or ideas are:
You can now develop the list of long-term goals into a spreadsheet in your notebook, or use a spreadsheet such as Excel or Google Sheets, with the following columns: Column 1: Description of the goal Column 2: With whom (you will be doing this with) Column 3: Date (and age) Column 4: Amount required (this is the amount of money required for that goal) Column 5: Bank/investment account for this purpose Column 6: Notes/Comment (this is where you expand, to explain who will contribute, whether you will contribute for someone else, someone else will contribute for you, how you are going to build up the fund, monthly or an ad-hoc lump sum) Column 7: People/skills/resources required Column 8: Status - Not started, in progress, completed For some of these goals, in particular investment or business goals, you should develop a business plan with the necessary details. Access the required skills, such as business, financial, bankers, legal, engineering, investment professionals, to help you develop a proper business plan. Write your goals on colour stickers or magnets, stick them on your wall so they are visible, acting as reminders to you. Work out your monthly and annual plans to attain these goals. Revisit your long-term goals spreadsheet quarterly, or at least annually, to check whether you are on track, or anything you still need to do. Certified Financial Planners are trained to help people develop a holistic financial plan, focused on your long-term financial wellbeing. It is advisable to use the services of a qualified financial planner to develop your financial plan, to identify areas you may have not considered.
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In partnership with Morningstar - I came across some recent research and thought you would find it valuable. I therefore share it with you and would love to hear your thoughts.. In short, it does a good job highlighting that true financial success comes from two viewpoints: actual financial progress (the numbers) and financial wellbeing or empowerment (the feeling of success or security). These are both important to me, and hopefully you too, as the evidence shows we must achieve both. Current State It would be great for you to think about your financial success via these two perspectives and let me know where you stand on a scale of 0 to 10 for each. I hope we can agree that we’ve made solid progress on both fronts, especially given the challenging last 18 months, but please let me know if that isn’t the case and I’ll do my best to help. Of course, some clients would rather not be involved in the intricacies of their financial plans. Perhaps simply by having us on your team is enough to feel financially empowered. If so, that is great. The importance of financial empowerment To demonstrate the evidence, the graph below compares people who feel empowered by their finances with people who don’t. It shows that people who feel empowered had mostly positive experiences with their finances, even in the lowest income ranges. Those who felt disempowered were less happy than their peers and didn’t reach the positive range until their annual earnings were well above $100,000 (this is US based, so equates to around R1 500 000). I
Source: https://www.morningstar.com/lp/when-more-is-less Achieving both sides of financial health As your adviser, my primary job is to crunch the numbers, but I also like to see myself as your partner in prosperity on your road to financial success. The lesson here is fascinating: A sense of financial wellbeing—as well as the money itself—may be the key to success in our financial lives. So, if there are some behavioural traits, such as reinforcing good investing habits, that I can help with – please reach out to me. For example, as it stands, it is likely you have enough assets to withstand a reasonable economic shock, but that doesn’t mean that you can’t and/or won’t be anxious about your finances. On the other end of the spectrum, I sometimes have clients that aren’t in the greatest place economically, and despite their best intentions, they still spend carelessly because they feel fine about their finances. If we want to be truly successful, we must find a balance between the two. I hope you find this different perspective useful. If you would like me to elaborate further on the above, or any other matter—I’d be delighted to chat. If you would to set up a meeting with Financial Planner please contact Kevin emails: [email protected] tel:(011)658-1333 Written by: Kevin Yeh in partnership with Morningstar Last month we talked about Money Is A Means To An End. This month we focus on Step 8 - Set Up Short-term Goals. According to the website www.mindtools.com, the process of setting goals helps you choose where you want to go in life. By knowing precisely what you want to achieve, you know where you have to concentrate your efforts. You'll also quickly spot the distractions that can, so easily, lead you astray. I define short-term goals as something you would like to achieve in the next two years. Depending on your personality and preferences, you may define the short-term as things that happen in the next 12 months. Have your notebook and pen ready at your desk. Think about the things you know are going to happen, or your plan for in the next two years. Jot them down in your notebook. Speak to your spouse, partner, children, families and friends that you would like to plan things together with, jot down the additional things that are going to happen in the next two years. Examples or ideas are: Attend a wedding Getting married Finish my study Finish reading this book Learn to cook a cuisine Learn something new (be specific) Start a family Buy a house Renovate my house Buy a car Pay for my children's education Pay off my credit card debt A weekend away Year-end holiday Overseas holiday (if COVID restrictions allow!) Start a side hustle 30th birthday party Run the Two Oceans Marathon Make a donation to a charity You can now develop the list of short-term goals into a spreadsheet in your notebook, or use a spreadsheet such as Excel or Google Sheets, with the following columns: Column 1: Description of the goal Column 2: With whom (you will be doing this with) Column 3: Date (an approximate date is fine) Column 4: Amount required (this is the amount of money required for that goal) Column 5: Bank/investment account for this purpose Column 6: Notes/Comment (this is where you expand, to explain who will contribute, whether you will contribute for someone else, someone else will contribute for you, how you are going to build up the fund, monthly or an ad-hoc lump sum) Column 7: Status - Not started, in progress, completed Write your goals on colour stickers or magnets, stick them on your wall so they are visible, acting as reminders to you. Work out your monthly plan to attain these goals. Revisit your short-term goals spreadsheet monthly, say at the end of the month, to check whether you are on track, or anything you still need to do. In partnership with Morningstar - A boom in young and overconfident investors has led to the rise of investment influencers on social-media platforms, but following their advice blindly is not a solid strategy. Morningstar behavioral economist Sarah Newcomb says speculation is fun and is what attracts a lot of people to investing. “And if you speculate with only money you can afford to lose, events like these can be exciting and sometimes profitable. In partnership with Morningstar - There’s an old saying in the world of fitness – “summer bodies are made in winter”, meaning that, although it is common for us to let our fitness regime slip in winter, it is actually the season we should be using to get our bodies in shape for summer. If one had to apply the same logic to finance, it could be something like Oscar Wilde’s quote - “when I was young I thought that money was the most important thing in life; now that I am old I know that it is.” It has been widely published that the representation of female-run funds, financial advisors and investment teams over the past decade has been relatively consistent in that women continue to be underrepresented. This is, of course, a serious issue that deserves attention and we need to work harder to continue to attract women to the financial industry. According to Morningstar’s research, only around 11% of South African fund managers are women. And in the UK, Morningstar data shows there are more funds run by men named Dave than there are female fund managers in total. Of 1,496 UK-listed open-ended funds, 108 are run by managers named David or Dave – equivalent to 7.2% of funds. Meanwhile, just 105 funds in total have a woman at the helm. It’s a stark reminder of the lack of diversity across the fund industry. Improving diversity will take time. We need to start paying more attention to the industry’s graduate recruitment, and the perception of the financial industry. Firms need to look at how they can support the recruitment and retention of more women. There is an industry perception that isn’t landing with young women, as the number of applications for junior roles remains low. Long-term investing is far from the macho image portrayed in movies, and firms should look at ways they can help to change this, starting with job descriptions and with females in the industry sharing their success stories. I spoke to a few of the female advisers that partner with Morningstar Investment Management South Africa to share their experience of the financial industry. The feedback received, painted a very interesting picture. The most prominent being, how rewarding it is for women to work in the financial industry. I’ve highlighted a few key takeaways below, of why more women should consider working in the financial industry - Financial planning and advice enable you to make a difference, whilst earning a living. Being a financial adviser enables you to make a meaningful impact on the lives of your clients. By helping your clients to understand how to work with their money and make their money work for them, you can truly have a positive impact on their lives. If you are someone that wants to pay the bills but do good at the same time, financial planning and advice is a great career option. The great part about finance is, the numbers don’t lie – when you see your client celebrating a savings goal that had been reached, it’s very rewarding to know you helped them reach that goal. “I joined the industry wanting to make a meaningful impact on people’s lives. Something that would enrich my soul whilst earning a living. I wanted to help people realise that through taking the time to understand their relationship with money, they could see money as their enabler, and thus something that they could control, rather than letting their money control them.” – Tessa Lefrère, Certified Financial Planner®, Resolute Wealth Management. It is both pencil skirts and sneakers Contrary to popular belief, working in finance can offer the flexibility of hours, being your own boss, owning your own business, managing your own time and engaging with people regularly. The world of finance isn’t only filled with women doing presentations in tight pencil skirts and high heels. The fantastic part is, that if you would like to do that, you most certainly can! But, if you would prefer to rather ditch the heels for a pair of sneakers, that’s perfectly fine as well. There is room for individualism and to do things your own way. “I also enjoy the fact that I have my own business, I’m my own boss and I manage my own diary. As a mother, this is priceless.” - Cilma Sorour, Certified Financial Planner®, Alchemy Financial Solutions If you are a people’s person – working in finance is a great career choice. Yes, having a keen interest in markets, the economy and investments is most certainly a massive plus. However, the female advisers I spoke with, said that working with people is one of the aspects of the industry they enjoy the most. In addition, being invested and caring about their clients is their most valuable and differentiating quality as an adviser. “I work hard at making sure my clients feel that they have been heard but most of all building a lifelong relationship and friendship that is also professional.” – Stephanie Bakhuis, Certified Financial Planner®, Chartered Wealth “Over the years I kept choosing to work with people more than portfolios and hence I’m now in the financial partnership role with our clients. However, I also love the complexity and the challenges of the investment environment.” – Sunél Veldtman CFA®, CFP®, CEO of Foundation Family Wealth Females in finance support each other It might be known for being male dominant, but the women in the financial industry are proud to support each other, empower one another and there are several “Women in finance” groups that aim to facilitate growth, partnership and collaboration between women in the industry. "Apart from helping my clients, I spend a large part of my time teaching and sharing this knowledge with other financial planners so that they too are upskilled to help their clients with their money relationship. I view this as a value-add to clients in the financial planning industry." - Kim Potgieter, Marketing and Life Planning Director, Certified Financial Planner®, Chartered Wealth Whatever you decide to do in life – let it be to save first! When we asked our female financial advisers, what advice they would give their 20 year old self, the standout answer was to save, save and save some more. "Choose to understand your money; make friends with it, rather than fear it. By empowering yourself in your 20’s, you cannot begin to imagine the life you’re setting up for yourself to live on your terms, in your time." – Tessa Lefrère, Certified Financial Planner®, Resolute Wealth Management. In closing At Morningstar Investment Management South Africa we strive for a diverse team. When it comes to gender, our team in South Africa is made up of more than 50% women. The advantages of greater institutional diversity are well researched and documented, and the local investment community should be doing more to attract young women into the industry. “I love being part of such a diverse team of individuals. Everyone brings something unique to the table, which is really inspiring.” – Abigail Wilson, Customer Success Manager, Morningstar Investment Management South Africa A growing body of research suggests that the presence of women on corporate boards and in the C-suite is linked to superior financial performance – for example, Credit Suisse’s CS Gender 3000 report. We also need to think more broadly about diversity and as such especially the diversity of thought. We often view diversity through a gender or race lens, but true diversity is an expression of different cultures, thoughts, energy and ideas. If the COVID-19 pandemic has shown us anything, it’s that what we thought was ‘normal’ and ‘unchangeable’ is, in fact, hugely open to change, in the most positive way. At Morningstar, we will continue to highlight trends in the fund manager industry to spark conversation and dialogue, especially as it relates to matters of diversity. Source: Morningstar Written by: Victoria Reuvers As we celebrate Women's Month, in partnership with Morningstar, we share with our female readers five key steps for women to improve their retirement readiness. Studies show that 85% of women manage everyday expenses, yet only 23% take the lead when it comes to long-term financial planning. It is our mission to help women to retire successfully. |
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