(03) 9020 2905The older one gets, the closer one’s final breath becomes. Given that, age could be blamed for taking financial risks decisions based on shorter and shorter time frames, right?
Logical. But that’s not how it happens. Particularly when it comes to money.
It’s the reverse. The closer death comes, the longer you allow financial decisions to work their magic. The less you expect financial miracles, the more you realise the quick buck is fleeting and understand the need to chase steady returns.
And the more you realise that if you wanted life to have turned out differently, the earlier you should have planted the right seeds. So many moons ago.
It’s “youth” who are impatient, who demand everything now, who won’t plan for the future. It’s the young ones who pray one knockout lucky guess will deliver them a lifetime on Easy Street.
You can’t put a wise head on young shoulders.
So what do old people wish they knew about money when they were 25 or 35? “If I knew then what I know now, how differently would I have done things?”
Bugger waiting for the wise head to arrive. What do the old know that the young should learn earlier?
What they know now
Fortunes are built over time. Short-term gains are usually small and based on luck. They don’t create great fortunes. They mean very little unless they’re consistently built on.
Don’t listen to the “noise” of the nightly finance news, but listen to the trends. That can only encourage day-trading. Day-traders spend more money on trading fees than they make in profits, if they profit at all.
Take calculated small risks. Early. Often. The more often you take risks, the less likely you are to stuff up timing. You know, like investing a wad just before a market meltdown.
Show some love to your superannuation. Super works because it’s in a compounded low-tax environment for decades. Less tax this year, plus less tax next year, and for every year in the future, means less boiled lollies. There can’t help but be more chocolate. And eventually, there is NO tax to pay on your super.
Get advice. If you can’t be bothered studying shares and property and other matters finance, pay someone else who’s already studied it to do it for you. They’re more likely to get it right the first time. Delivering you more time to kick a footy with your kids.
Think long term about the roof over your head. You’ll probably have three houses and three mortgages, so get stuck into the first one. If you think a mortgage is scary when you’re young, try thinking about renting when you’re 70.
The stuff they think you should forget
Forget about new or fast cars. Automobiles are great big wealth hoovers. An addiction to nice wheels can suck $10,000 a year or more from your back pocket.
Work hard. But not at the expense of your family. You had kids because you love them. They grow up fast. Time at the office is time not with the kids. Work hard, but play hard … with your kids.
Reckless abandon. Life’s fun when you’ve got no worries. But you can’t live for today always. Plan for tomorrow. And tomorrow will be brighter if you make a few sacrifices today.
But what about us poor mugs in the middle? The 40-somethings. We’re on the verge of learning the right stuff and have hopefully left a lot of immature, idiotic behaviour at the door of turning 40.
Apparently, my age group are in the high-risk zone for a full-blown crisis of a mid-life variety. That age that doesn’t want to accept that youth has passed us by. Equally, that refuse to accept that we are, actually, supposed to be preparing for old age.
By all accounts, acceptable reactions to this crisis include (a) buying a Porsche, (b) developing a botox addiction, and (c) having a fling with a younger thing at the office.
Or, new plan, we could just grow up a little sooner than we’d planned. We could make the transition by heeding, earlier, the advice of wiser generations. Because as attractive as the crisis options might look, or make us feel, they will probably score an epic fail leading out of these transition years.
Bruce Brammall is the principal adviser with Bruce Brammall Financial (www.brucebrammallfinancial.com.au).
E: bruce@brucebrammallfinancial.com.au.