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Living to 100…

So many things have changed in the last four decades, and yet so much has stayed the same. Financial planning has become an entire profession and is no longer just a bunch of salespeople selling insurance. It’s evolved into a profoundly nuanced practice, and those of us who are continually advancing our professional development are spending more time on understanding the integration of all aspects of life and well-being in our approach to financial planning.

But still, people are talking about retiring at 65 and asking how much money they will need. Forty years ago, the assumption was that at 55-65, you could comfortably retire if you had enough money to support yourself for another two decades.

Plans were made, and products were bought in order to see this happen, but forty years on, the landscape looks quite different to what was expected.

Yet still, people are talking about retiring at 65 and asking how much money they will need.

The Stanford Centre on Longevity recently stated that: “By the middle of this century, living to the age of 100 will become commonplace, continuing a remarkable trend that saw human life expectancies double between 1900 and 2000, increasing more in a single century than across all prior millennia of human evolution combined.”

And Aubrey de Grey, a British biomedical gerontologist living in the US, believes that the first person to live to 150 has already been born.

Wynand Gouws, the author of “Life to 100”, says that this continued increase in life expectancy is profound and should significantly impact how we think about life and retirement planning.

We can begin by reframing our thinking: instead of looking at retirement as our ‘last chapter’, we start to see that we could have two or three more chapters from 65 to 100. Gouws highlights that population ageing has been recognised as one of the four global demographic megatrends, next to population growth, international migration, and urbanisation, which will have a lasting impact on sustainable development.

As much as we’ve seen radical changes in recent history, we will most likely see even more change in the near future, which for many of us reading this, will see us entering our last few chapters of life. We don’t have to enter without a plan; we can celebrate our health and new opportunities, ensuring that we have an integrated financial plan.

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Why do we become people pleasers?

We all have reasons for doing things. It might be because we’re sticklers for following rules, or perhaps we avoid difficult situations and emotions by constantly focusing on the positives. Maybe our motivations come from a restless spirit or a drive to keep control and order – but for some of us, we become people pleasers.

It may not be in every area of our life, but in certain situations, we may find ourselves defaulting to keeping everyone around us happy, often at the cost of our own happiness. It’s nice to be accommodating, but auto-accommodating can be exhausting.

If we’re trying to change habits and experience a more fulfilling life, we need to be able to notice behaviours that are causing us to cut back on self-care. If we want more energy and freedom to have me-time, we must learn to say no.

But – saying no is really difficult for people pleasers. The desire to avoid conflict can cause us to put off tough conversations about healthy boundaries. However, the thing about boundaries is that the people who genuinely love us will respect them, and the people who don’t will be the ones who get frustrated. This helps us distinguish between our healthy and unhealthy relationships. We want less engagement with people who exploit us and more engagement with those who encourage and respect our personal space.

For some, being a people pleaser is a coping mechanism learned in childhood, and their self-worth is now heavily tied up in helping people and receiving praise for being so helpful. Being helpful is not bad at all, just as it’s not wrong to want to follow the rules, keep a sense of control, acknowledge individuality or look for the positives in a situation. But, when we become fixated on one motivation, we can become frustrated and feel stuck in life.

In extreme cases, people pleasers will be so fixated on helping others that they won’t feel comfortable accepting help from others. This is why it can be so exhausting, and bad habits form, affecting everything from how we spend our time and energy to how we spend our money.

Ultimately, people pleasers have not figured out their boundaries, and this is okay because we can choose to start setting new boundaries today. If you feel like you need to set some limits or notice someone in your life who might need some encouragement to set their own boundaries, don’t wait another day to put them in place. The best day to make a healthy change in your life is today, not tomorrow.

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The hidden costs of credit

As 22seven recently published on medium.com, “Always think twice before you buy something on credit or take out a loan.”

Here’s the thing to remember with credit – it’s just a nicer way of saying that you’re spending money you don’t have. In other words, you’re using someone else’s money to fund your current lifestyle. Credit is sold to us on the premise that it’s money we will have in the future, and often we do have the money in time and can pay it all back, but sometimes we don’t, and we just keep borrowing more. This is when we get stuck.

This continual servicing of debt becomes a hidden cost to our future self, and then the interest and account fees all start adding up, so we look for additional credit providers to help us. From banks to store credit, a recent US study showed that the average American debt (per U.S. adult) is $58,604 and 77% of households have at least some type of debt.

Whilst this will vary from region to region, country to country, it’s safe to assume that most people in today’s global economy have accepted credit to support their current living standard.

This is not necessarily wrong or right, but it’s something we have to talk about and know that we’re all in the same boat together. When we stifle conversations about money, we succumb to unhealthy thoughts and feelings about our financial situations that divide us rather than connect us.

So, before you take on any more credit, make sure you’ve given some thought to the following things:

  1. Is my income enough to cover the full cost of this credit (not the items bought – credit will always cost more)
  2. With inflation, will I still be able to pay for this credit comfortably?
  3. If I had the cash available, would I still spend it on this (or these)
  4. What are the extra costs, like card and account fees, interest, insurance etc

Credit has hidden financial costs, but it also has costs to our emotional, physical and mental wellbeing from the stress of creating too much debt. It’s hard to live without debt, but it’s not impossible to keep it to a manageable amount or reduce it entirely.

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Pop that balloon… or let it go

A balloon payment (also called a residual value) is quite simply an amount of money that is still due after you’ve finished paying your monthly instalments. The goal of structuring a loan with a balloon payment is to make it more affordable on your current cash flow, making it very attractive. 

They are ideal for both companies and private individuals who are facing a cash crunch in the short term but expect their liquidity to improve in the future. Essentially, a balloon payment allows you to make a lifestyle upgrade before your income can fully support it. There are many cases, then, where this approach can be highly beneficial; however, since the global economic crisis in ‘07 and ‘08, banks and borrowers have been a little more disinclined to simply blow up that balloon.

But, when you’re standing in that car lot, and a balloon option brings that nicer, fancier car within your monthly limit, it’s really hard to choose an option that won’t have a residual value in five, six or seven years. For this reason, many people are still driving around in cars that have a residual value looming.

Whilst we all hope our liquidity will improve within the next five years, it might actually decrease – especially with recent inflation increases. In some cases, we may lose our income altogether – making a balloon payment feel more like a noose than a pretty shiny thing, way off in the future.

If you’re sitting with a balloon payment, you should always have a plan to pay it off. Regardless of why you chose the structure, the sooner you can have a strategic approach to popping the balloon, or simply letting it go, the better.

Some people choose to trade-in their car every few years and work in the residual amount on their next finance plan through the trade-in. This is a helpful way to do it if you work towards taking a standard loan (without a balloon) on your next finance option, or if you start saving for a deposit.

If you’re working on that savings option, you might decide to use it to pay off your residual amount instead of trading in your car, which is also a helpful way to pop that balloon. If you find yourself with that increased liquidity, then you can use it to pay back the lifestyle upgrade sooner by increasing your monthly instalments.

At the end of the day, our financial products are becoming more complex in order to suit a wider variety of financial needs, but this makes it harder to know if we’re doing what’s best for our personal situation. If you need to review any recent or future financial choices, please feel free to get in touch!

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Visualisation and stress

Not all stress is bad. But, if left unmanaged and unchecked, stress can become quite unhealthy for us. We all know many causes of stress, but we don’t always slow down enough to think about the specifics that are causing stress in our own lives.

Money, health, family, friends, work, safety and security – are all prevalent triggers, and the sheer volume makes it difficult to intentionally focus on what’s causing us stress. One of the coping mechanisms that we can use is visualisation, a powerful technique that can help relieve the symptoms of stress and anxiety.

The technique involves using mental imagery to achieve a more relaxed mind. Similar to daydreaming, visualisation is accomplished through the use of your imagination. It is common practice for athletes to use imagery while they prepare for an event, practice a movement, or train while injured.

Swimmers mentally rehearse a perfect dolphin kick, and endurance runners imagine pulling extra miles from the depths of their mental and physical resources (Meijen, 2019; McCormick, Meijen, & Marcora, 2015). The mind offers a safe and flexible environment for practising a stressful task. Mentally rehearsing a daunting performance prepares the individual by asserting control over a (sometimes harmful) inner voice (Strycharczyk & Clough, 2015).

Focusing on positive mental images can favourably impact our mind and body and increase self-belief in our ability to cope with change. One study from 1995 took a group of sixty subjects and tested their levels of anxiety and depression before and after using visualisation techniques. After several sessions, all subjects showed vast improvement in stress reduction, lower anxiety, and decreased depression symptoms.

Visualisation can provide temporary relief from pain, tension, or problems. It requires creating images in your mind that are so captivating, so rich in detail, and so all-consuming that you get lost in the images your mind creates.

A recent article on betterhelp.com highlighted several types of visualisation that could help you explore this stress management technique a little further.

  1. Creative visualisation of a favourable outcome
  2. Visualisation as a diversion from stress
  3. Visualisation with deep breathing
  4. Guided imagery
  5. Happy memory visualisation
  6. Visualisation with the senses
  7. Visualisation for self-motivation

If you’re a fan of apps for your mobile, here are some great ideas too:

  1. Balance
  2. Breathe+
  3. Calm
  4. Headspace
  5. Waking Up

Coaches, therapists, psychologists and even early-childhood practitioners use visualisation to help calm overwhelming emotions and create a safe and happy healing space. This makes it a helpful tool to be used as a form of mindfulness and to manage stress.

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Seeing the light.

There are many reasons for our increased stress levels – the use of technology and how it has changed our communication with each other and the world around us is complex and deeply integrated with our wellbeing. But where we used to follow seasons and the flow of the natural world around us, we have now created new rhythms and patterns and this has disrupted our Circadian Rhythm.

The term Circadian Rhythm refers to our body’s biological clock. This clock is observed across bird, reptile, and mammal species and is key for directing daily and seasonal behaviour patterns such as hibernation, eating and breeding. The light/dark cycle of the sun has a powerful effect on the circadian clock, sleep, and alertness. Our circadian clock responds to light, as a signal to be awake, and dark, as a signal to fall asleep. Increased light equals increased alertness, which equals increased stress.

Incandescent light bulbs were introduced in the late 19th century and since then our world has become awash in bright lights. Not only have artificial lights become a staple of our evening and early morning activities – we stare into backlit screens for several hours during the day too. From lamps that light up every street and city skyline all the way to constant mobile device use.

Our Circadian Rhythm is responsible for biological processes like brain wave patterns, hormone production and cell regulation. Studies show that the circadian cycle controls 10-15% of our genes.

Exposure to artificial light disrupts our internal clock regulation and has been linked to:

– Depression

– Insomnia

– Cardiovascular disease

– Cancer

– Immunity/Stress Response

All these conditions are quite clearly linked to our overall wellbeing. Your pineal gland releases the highest levels of melatonin when there’s darkness and decreases melatonin production when you’re exposed to light.

Melatonin triggers a host of biological activities, possibly including a nocturnal reduction in the body’s production of oestrogen. Sleep pattern disruption is thought to interfere with cancer suppression genes, leading to an increased risk of breast, prostate, gastric, and lung cancers.

Whilst things like financial stress, relationship tension, loss of a loved one and dealing with a global pandemic are all obvious causes of stress, a simple imbalance of our waking and sleeping lives can be equally harmful to our wellbeing. If you want to improve your quality of life, it’s not just about earning more money, or eating healthily, it’s about finding the right integration and balance of everything in your life.

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Inflation & Interest Rates

Typically, inflation and interest rates are in an “inverse” relationship: When rates are low, inflation tends to rise. And when rates are high, inflation tends to fall.

Moneyweb recently wrote “increasing the cost of credit will reduce the demand for it and therefore slow down the pace of ‘new money’ entering the economy via credit channels. This slowdown of funds entering the economy via credit channels will slow down the inflation rate as less money chases the same amount of goods.”

But, despite the logical and logarithmic reasons, hikes in interest rates in the country are a bitter pill for many who already have financial burdens. The grassroots reality is that whilst a higher interest rate may ensure a better return on our hard-earned investments, inflation can have an opposite devastating impact on one’s savings and investments.

This is because inflation is not just about the increased cost of fuel, utilities, bread and milk; it is the rate at which your money depreciates over time as the cost of living increases. The immediate impact of inflation is what we feel everytime we tap our card or phone at the check out, the delayed effect is felt when our long-term investments are no longer sufficient to support our lifestyles.

Three time-honoured strategies to help with the long-term impact of inflation and increased interest rates are dollar-cost averaging, taking a long-term approach and diversification (including alternatives that are not market-linked).

Cedrick Pila, regional manager at Allan Gray, recently said that if you want to achieve real capital growth that takes inflation into account then consider different alternatives rather than just putting your money in the bank.

However we look at this, we need to fundamentally look at our behaviours and make changes where needed. In the immediate environment, we need to look at how we are earning and spending our money. For many of us, we can’t simply keep things as they are; we either need to cut back on spending, or generate additional income.

For the future, we need to work closely with our trusted financial adviser in order to tweak and adjust our diversified investment portfolio according to our personal needs and event horizons. 

Inflation and interest rates will always affect the value of our money, we cannot afford to close our eyes and hope for the best. If you’d like to connect and chat some more about this, please feel free to reach out and let’s set up a meeting.

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Recognise. Interrupt. Change.

“We cannot change what we are not aware of, and once we are aware, we cannot help but change.” – Sheryl Sandberg

The foundation of most of our ongoing frustrations can be traced back to our habits, and the challenge with habits is we often aren’t even aware of them. When the world went into COVID lockdown, there was an increased awareness of face-touching, hand-washing and social distancing.

All of a sudden, we became aware that we could be touching our faces as much as three times every minute. We became aware of how close we would stand to people and how long we would wash our hands. This awareness, and knowledge of the implications, caused us to interrupt our regular routines and habits and change our behaviour.

Imagine how powerfully we could impact other areas in our lives where we feel stuck and frustrated with limited thinking and unhealthy habits!

When we constantly feel guilty for the money we have or regularly feel the stress of not having enough, we can start to recognise the habits accompanying those feelings. We might habitually be grumpy with loved ones because of finances or spend everything we have the minute it arrives in our account.

Recognising these patterns is the first step to connecting the habit to a desired or undesirable outcome – and we can interrupt that pattern. Even if we simply pause and take a mental note of what we’re doing, we’re already starting to alter our behaviour. Think about the first weeks of the global pandemic; there was so much happening that we would often forget our masks at home and would have to figure out how to work around it. Some of us kept spares in the car, our handbags and desk drawers.

We didn’t change overnight, but our habits and thinking patterns were interrupted enough to slowly spark the change.

If you’re sitting with some blindspots and can’t see the roots of some of your habits, perhaps we could connect and chat through your frustrations. We can’t see our own blindspots, and when we’re unaware of them, we cannot change them. Having a financial adviser or coach work with you can help you recognise, interrupt and change the habits that keep you in an unhealthy space.

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Rewriting retirement rules of thumb

At the end of any retirement planning conversation, we should always end with how our plan is unique to our own situations. But at the beginning, during the exploratory stage, it’s helpful to have some basic guidelines for where we can begin, or how we can craft our own benchmarks.

In the same way that a baby may start to walk anywhere between 8 and 18 months, we all start saving and investing at different stages in life. For an 8-month-old, 18 months is more than double their age. So someone could start planning for retirement at 20, whilst others may only just be getting there at 45 – and that’s okay.

What’s important is that you start as soon as you realise that you need to prepare for life after work!

In a recent article on IOL, they spoke about two common rules of thumb:

The Rule of 120 is a calculation that uses your age to determine the supposedly appropriate asset allocation for your investments: The formula suggests subtracting your age from 120 to discover the percentage of equities you should hold. For many, this may make sense, given that the older you get, the lower your capacity to take on risk.

Then there is the 4% Rule. Since the mid-90s, this has been applied universally as a rule of thumb to determine the appropriate drawdown rate and asset allocation for retirees. It suggests that if you withdraw 4% of your capital in the first year of retirement and only adjust for inflation each year thereafter – and provided that you maintain a minimum 50% allocation to equities – the risk of outliving your retirement savings over a 30-year period is substantially reduced.

But this can feel very technical and detached for many who are unfamiliar with the financial lingo. Also – a notable flaw of rules of thumb is that they cannot account for everyone’s unique circumstances. This is why it’s the starting point, not the ending point. Sometimes, we don’t even bring them up at all.

Ideally, we want to spark and sustain conversations that build awareness that life is changing and these changes affect and impact our financial wellbeing. Traditionally, we’ve been told that retirement is a stage of life that will happen around our 60s and that it will be accompanied by a slowing down and cutting back of work and responsibilities. But this is no longer the case, and certainly won’t be the case in the decades to come. 

Whilst we still need to invest and plan, by changing our motivations and dreams of what life can look like in 10, 20 or 40 years is proving to be considerably more helpful for our mental health, our financial behaviours and our investment portfolios.

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Finding the healthy positive

Everything we know, believe, and feel is based on our internal thoughts. Positive thinking gives us extraordinary power over our thinking and ourselves (Strycharczyk & Clough, 2015).

Some people are exceptional; they always seem to remain positive regardless of what lemons are tossed their way. You know the type, the every-cloud-has-a-silver-lining, glass-half-full, things-will-get-better type of people. We love to have them around when we need their support, but we can also envy their seemingly relentless positive energy.

But – if our positivity is superficial and never permeates deep into our psyche, it can become unhealthy for us. It’s essential to make space in our lives for all the emotions we need to feel to avoid suppressing emotions and potentially becoming ill (dis-eased). This kind of surface happiness can be a little too nonchalant and detach us from what’s really going on in our lives.

It’s less about having positive feelings and more about choosing a positive attitude to whatever we feel. We cannot control our emotions; we can decide how to behave with those emotions – this is when we start to tap into that extraordinary power. Smiling is a proven way to physically start changing our attitude to uncomfortable emotions.

Smiling offers a mood boost and helps our bodies release cortisol and endorphins that provide numerous health benefits, including reduced blood pressure, stress and pain, and increased endurance and a strengthened immune system.

There is also growing evidence that the use of positive self-talk (following on from our smile and going a little deeper) can significantly improve how we tackle a challenge or approach a situation. Talk to yourself as though a friend, coach, or supportive colleague is offering you positive advice. This means that we don’t push out the emotions that we’d rather avoid, but instead, we approach them with a healthier attitude.

We must avoid feeling bad for feeling unfocused, bored, tired, overwhelmed, inadequate, excluded, exposed, anxious (and tons of other feelings!). Instead, we can internally acknowledge them and say to ourselves: “I know you’re feeling overwhelmed and tired, but you can do this. Rest if you need to, and start again a little later.” This creates space for discomfort whilst holding a healthy, positive attitude.

At the end of each day, we can reflect on our successes and achievements rather than dwelling on disappointments or perceived failures. Whether it’s in how we spoke with our family, landed a project at work, or even managed to achieve a finance, fitness or food goal – this practice helps us find the healthy positive.

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