by admin | May 15, 2023 | Financial Planning, St Francis
We may think that being rich and being wealthy are really the same thing but in fact, they are miles apart. Morgan Housel author of “the psychology of money”, describes the highest form of wealth as “being able to do what you want, when you want for as long as you want.” It’s being able to control our time and having independence and autonomy.
Being rich means that one has lots of cashflow or money allowing one to buy all the things that you want. People in this situation can often get caught up by the need to have the latest and the best of everything and often what they have becomes who they are. Their possessions show off their financial success and how they believe they are seen by others.
Being wealthy means that one has unspent savings and investments that provide one with the ability to be able to enjoy the intangible things in life like experiences, time alone or with loved ones. The ability to do what you want when you want. The amount of these savings and investments needed to enable this life can vary depending on how you want to live and does not necessarily have to be a huge amount.
Many rich people are never wealthy as they become slaves to keeping up appearances and never get to a point where they are satisfied with what they have. Often this behaviour leads to self-loathing and family infighting as their offspring adopt the same habits and outlook on life.
I am not saying that one must be a pauper to be wealthy, not at all, but simply that having lots of money does not guarantee real wealth. Many of us will have witnessed friends who change once they become rich, remaining grounded and in touch with what really makes us happy is not always easy to do.
We also see people who become rich, change, and then lose everything because they have not been able to maintain their new spending habits. Most lotto winners are bankrupt 3 years after receiving their winnings.
Real wealth comes from understanding what makes us happy and being able to keep that as our focus daily.
It is easy to envy people who are rich but remember what Bob Marley said: some people are so poor, all they have is money.
by admin | Sep 25, 2022 | Financial Planning, St Francis
Research shows that money is the #1 reason couples cite when filing for divorce in the USA. Experience tells me that things are no different in SA. The truth is that our money personalities are hardwired into each of us at an early age. We all assume that everyone else views money as we do but we learn that this is far from the truth which often causes problems in our relationships.
We make money decisions every day and if we are not on the same page as our partner, the scene is set to explode like a piece of blitz next to a flame! She wants to spoil the kids or get that beautiful new vase for the house while he has spotted the new Taylormade stealth driver, and so it begins.
Money is very personal so when someone criticizes your use of money it can feel like a personal attack, the accusation feels like it is about you, the core of you not just credit card swipes or receipts.
Ideally money should be a topic that is discussed openly and calmly in a relationship. No-one should feel like they are getting an allowance or in the dark about family finances, an imbalance in money power in a relationship will lead to trouble.
Start by making sure that both partners are on the same page about how money is spent and what is acceptable spending and what is not. Create a budget together and reconcile it from time to time to make sure you are both happy with it.
Plan TOGETHER, what you want to achieve in life, for your family, and if this seems overwhelming, then work with a Lifestyle Financial Planner who can assist you in building that plan and help you make decisions that will get you to where you want to be.
I know it sounds hard, but just start.
Dirk Groeneveld, Certified Financial Planner
t. 083 261 9287
e. dirk@clientcare.co.za
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by SFT | Sep 11, 2022 | Financial Planning, St Francis
Many people do not understand that there is a difference between saving and investing. One may think that these words mean the same, but the outcomes are vastly different.
Savings speaks to the accumulation of funds for the short term such as saving for a holiday or new golf clubs. This is normally done through a bank such as a savings or money market account and one’s funds attract “interest” which is paid monthly or annually at a lowish rate, depending on how long your funds are tied up for.
Investing is done over the long term through buying equities (shares or stocks). These investments deliver a real return (return above inflation) over time which is substantially higher than cash.
We always hear that investing in equity is more volatile than any other asset class, but it is the best way to grow one’s long-term wealth. By not investing in equities, the risk we face is running out of money in retirement and our funds losing their spending power by not outperforming inflation.
The graph below shows the return of different asset classes over the last 92 years in real terms. This means, return minus inflation is the actual amount your funds grew by
A lot of people feel safe and secure by having the funds in cash but as you can see from the graph, you actually end up saving yourself poorer. Cash is the perfect vehicle to place savings for your short-term goals and your emergency fund but having too much in cash can work against your long-term goals.
So for your wealth to grow, you need to invest in equity. If this sounds scary, you get in contact with us and we can help you understand how this relates to your long-term Lifestyle plan and why you need not fear but embrace this type of investing.
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Dirk Groeneveld, Certified Financial Planner
t. 083 261 9287
e. dirk@clientcare.co.za
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