Retirement Investing

Anyone that has had a credit card before know how easy it is to fall in to debt you can’t afford. It happens when all the bills come in at once, Christmas, birthdays etc. Sometimes it builds up and it can feel like you will never get on top of your debts.

Here is a simple 6 Step Process to eliminating debt fast.

Step  1. Stop Spending Money You Don’t Have.

The first step to eliminating debt is to stop creating it! Cut up your credit cards and throw them in the bin! The last thing you want when you are paying your debts off are no results!

Step 2. Cut Your Spending.

Now that you don’t have other people’s money to spend, you won’t have that extra cash to lash out on items you don’t really need. You will need to cut spending on the luxuries and focus on paying off your debts as fast as possible.

Step 3. Create A Budget.

This is one of the most important steps to be taken. You need to make a budget based on your income. It should include every detail about where you are spending your money. You should also keep receipts and check back on how you have spent your money compared to how you planned to spend it.

Plan how much you will be spending on fuel, groceries, personal spending, bills and importantly repayments on debt. Stick to your budget as strictly as possible. NEVER reward yourself for being good by spending money.  This is the worst mistake you can make.

Try pooling all your income into one mainstream account. From this account you can set up periodical payments into separate accounts dedicated to different expenses. This gives your budget structure and reduces the opportunity and chances to spend your money on other things.

Step 4. Prioritize Your Debts.

Make sure you pay off the debts that are costing you the most first. In most cases this will be personal loans or credit cards. Pay the minimum amount for your mortgage repayments and throw every spare cent you have at your personal loans and credit cards. Once these are out of the way, it’s important to continue paying the same amount you previously were towards your debts, only now you’re focusing on your home mortgage. With the extra payments you will save a bucket load of interest and pay your home loan off in far less time.

Step 5. Make Regular Payments On Your Debts.

Not only will regular payments slash the amount of interest you pay, but you will pay it off much faster by paying weekly or fortnightly instead of monthly. Here is the how it works.

Personal Loan. Debt: $5000. Terms: 2 Years. Interest rate: 10%.

$230.72 Minimum payment per month.

230.72 x 24 Monthly payments = 5537.28 paid over 2 years.

230.72 / 4 Weeks = 57.68.

57.67 x 104 Weekly payments = 5997.68 paid over 2 Years.  (Effectively, you could pay $52.61 per week and keep up with minimum repayments)

In this situation you can see how by paying on a regular basis you are making extra payments without even feeling the effect on your budget.

(Please note: This may vary depending on your loan terms. Some lenders will calculate interest on a daily basis where others might calculate interest on the highest/lowest loan balance for the month etc.)

Step 6. Don’t Give Up.

It’s important to remember that paying off your debts is not an overnight exercise. It can take many years of careful budgeting to blow your debts out of the water. Just remember that you don’t need to see immediate results for it to be working, but if you budget carefully and commit to your long term goals you WILL pay your debts of much faster. You should also consult a qualified financial planner to discuss in detail your financial situation as they will be able to create a budget to suit your needs.

 
Find this article helpful? Please comment below.

If you are looking for investing strategies, increasing growth and learning how to create wealth and cash flow, look no further! Here is an opportunity for you to get a glimpse of what the experts are all on about with this FREE eBook.

When I first came across this opportunity I was sceptical as I tend to be, but after ordering it myself I am glad I did. After all there is nothing to lose, its completely Free!

This is just some of the areas covered in this Free eBook.

- How smart investors are replacing their income in 90 to 180 days or less by using the unique cash flow strategy.

-How to cut your mortgage in half.

-The 4 key skills you must master to succeed in the 21st Century, and how others have used these skills to earn over $100,000pa.

-REVEALED: How smart investors sell insurance in the market for a small fortune and why your financial planner doesn‘t know about it.

-EXPOSED: The myth that it takes money to make money - 8 ways investors raise money to start investing immediately, even if they have no cash.

-How some Australian‘s have become millionaires in the last 6 years, some who have started with very little.

-How to put your kids through college starting with a $10,000 investment

-How to eliminate debt in 3-7 years.

-How to instantly add tens of thousands of dollars to the value of your property for as little as $400.

-How smart investors are earning a nice and easy $35,000 a year from their investment property - tax free!

-A step-by-step demonstration on how to buy an investment property…..with virtually no money down!

-A 21 point proven checklist for investing in property so the odds are on your side.

If you have read this far down, I congratulate you as you are obviously keen and ready to learn how to make good money from investing. For more information, or to order your FREE eBook, please Click Here.

As I have stated before, if you want to make good money through investing you have to take action. Sometimes taking action can be harder than what it sounds, often the first step is the hardest step. Here is something that may help you take that first step.

Jamie McIntyre’s 21st Century Academy is a company that strives to help people create wealth. It offers a broad range of resources and products, but the one that stands out to me is the Homestudy package. It’s not cheap, but its worth it. It offers a wide range or resources from seminars, magazines, investing reviews, informative DVD’s and full support for any questions you have.

If you are sceptical like I was you can order a FREE DVD and EBOOK. They send you out a pack with all the information you need to decide whether this is for you or not. It also comes with a DVD of one of Jamie’s seminars which covers the main topics of shares and property investing but touches on a few other related topics.

How do I know? Because I got the free DVD and ebook and I liked it that much I bought the Homestudy package too. If you don’t believe me, this is a picture of what they sent out when i requested my free DVD. (May take a moment to load, resolution is descent so you can read the pages)

These are just some of the features of the Homestudy Package:

• How smart investors are replacing their income in 90 to 180 days or less by using the unique cash flow strategy.• The 4 key skills you must master to succeed in the 21st century, and how others have used these to earn over $100,000.00pa

• How to cut your mortgage in half

• REVEALED: How smart investors sell insurance in the market for a small fortune, and why your financial planner doesn’t know about it.

• EXPOSED: The myth that it takes money to make money- 8 ways investors raise money to start investing immediately, even if they have no cash.

• How some Australian’s have become millionaires in the last 6 years, some who have started with very little.

• How to put your kids through college starting with a $10,000 investment

• How to eliminate debt in 3-7 years

• How to instantly add tens of thousands of dollars to the value of your property for as little as $400.

• How smart investors are earning a nice and easy $35,000 a year from their investment property - tax free!

• A step-by-step process of how to buy an investment property…..with virtually no money down!

• A 21 point proven checklist for investing in property so the odds are on your side.

 What’s that I hear you say? Tell me more? Click Here for more information.

If you are keen to learn how to invest, you have to start somewhere! There is no better way to learn about a topic than to read about it!

 ”A man may as well expect to grow stronger by always eating as wiser by always reading.”  - Jeremy Collier

This section of RetirementInvest.com.au will be devoted to the review and recommendation of books that are a worth reading if you want to furthur expand your knowledge of investing and investing for retirement.

The idea of having millions of dollars worth of assets to fund your life style and eventually your retirement would be a dream for many people. The reality is, it isn’t all that hard with the help of a little friend called ‘capital growth’. Capital growth is the increase in the value of an asset, or the difference between its purchase price and current value.

The amount of growth you get in an investment property depends on a lot of factors. It depends on the location, the type of property you buy as well as surrounding property and development. You can also boost capital growth through renovations and upgrades to your investment. This can include things as a new kitchen or bathroom, extensions, painting or laying new carpet.

Although renovations can boost your growth, the BEST thing about “natural” capital growth on property is that it compounds. According to The Real Estate Institute of Victoria (www.reiv.com.au), the average property in Melbourne has doubled in value on average every seven to ten years in the last 50 years. This means, on average, capital growth has been just under 10% per annum, which compounds on the previous year’s growth.

The table below demonstrates the average capital growth of 10% per annum compounding over time.

These kinds of returns can be expected from well purchased properties with consistent high level of growth. If you think this is too good to be true, ask your parents or grandparents how much they purchased their first house for, and what it is worth today. It cost a couple I know around $50,000 for the land and materials to build a house during the mid 1980’s. They sold the property no more than 6 years later for over $160,000. It is now worth over $350,000. In 30 years time the value of the property grew over six times from what it was originally worth. Not a bad investment huh? And we have not taken into account all the rental income it has generated over the years.

So why isn’t everyone a millionaire?

The main setback for many first time investors is they simply do not have the capital to get started. Many people are not aware of this, but they are often sitting on a goldmine! Let me explain.

If a young couple purchased their first home for $220,000 (with $200,000 finance) and paid off $20,000 off their loan over 5 years, they would have $40,000 worth of equity in their home. If we take into account capital growth over this period of time, (we will be conservative and say 5%), their property would now be worth around $280,000. With only $180,000 left on their loan, they now have $100,000 worth of equity that they can ‘tap into’. In most cases, the banks will loan you a minimum 80% of the value of your property, in this case $224,000. This means they can refinance their loan to access $44,000 to invest into another property. It is possible to repeat this many times over. After a period of time and consistent purchasing of property when affordable, their equity and rental income combined will be growing at a fast rate than their loan, and before they know it, they are millionaires!

If you can maintain good capital growth off one property, there is no reason why you can’t do it with two, three or ten properties!  In many cases you can buy an investment property with not one cent of your own money! The rental return, complimented with your own income can maintain the loan repayments whilst your portfolio grows and grows.

The bottom line to becoming filthy rich is this: Control as many appreciating assets as possible.

Compounding is a very important term when relating to investing. It can be defined as: The process of adding investment growth to the original investment to generate more growth through reinvesting. A little confused? Here is an example:

I have an investment of $10,000. This particular investment brings me (on average) 7% growth per year. After one year I have made $700. I decide to not take my earnings and to reinvest it instead. I reinvest $10,700. After another year I make a further $749 on my original investment. After two years I have already made $1449 for nothing! Let’s speed things up. After ten years time, if my investment grew an average of 7% over 11 years, my $10,000 would now be worth over $21,000! On my 12^th year, I will make over $1400!

The concept of compounding is very important when considering investing. I like to refer to compounding as the ‘snow ball effect’. As demonstrated in the example above, the longer you leave your investment to grow, the faster it grows! Also, the more money you can pump into your investment, the bigger it will grow too! I will discuss the application of compounding to different kinds of investments and how you can make big money doing so in more detail in further articles to come.

It would be a great feeling going into retirement knowing that you have built up enough assets over your working life that you can provide enough passive income to life off. This would mean you would have to keep working part time after you retire because your  pension isn’t enough to cover costs. Unfortunatly this is not the case for the majority of people.

“The considerably lower incomes that accompany retirement are evident in the average incomes of older income units, that is, those aged 65 years or over. In 1999-2000, the average weekly income was $248 for older person units (table 21) and $533 for older couple (table 11). A high proportion (75%) of older income units were primarily dependent on government cash benefits for their income (table 4).” - 6523.0 - Income Distribution, Australia, 1999-2000 (Source: Australian Bureau of Statistics)

This tells us that three in four people over the age of 65 years were primarily dependent on a government funded pension during the period of 1999-2000. With the baby boomers reaching retirement age, I can’t see this statistic getting smaller any time soon.

So what does this mean? Well, if you would like to become financially free for retirement you need to start investing! When I ask people why they don’t own shares or property as investments, one of the main excuses i hear is that they simply do not have the capital to get started. In my opinion, this is too easy of an excuse as it can easily be overcome by sound financial planning. If you can set up and follow a personal budget successfully you will be able to get enough capital to start investing faster than you think!

There are three main offenders for not being able to save cash.

Temptation - Having that brand new pair of shoes, the stylish handbag you saw when you went shopping or the need to have a bigger flat panel tv than your friends are not going to help you save up enough cash to start investing.  ’Temptations’ are items that often decrease in value after you buy them and are not always neccesary, making them a very poor investment.

Credit Cards - Although credit cards can come in very handy, it is important to not get ahead of yourself. When used correctly they can be a great source of short-term interest free cash, however you must pay them off before you are charged interest. Not meeting repayment deadlines is a mistake many people make and are often slugged with a high interest rate, normally between 10-20%. If you can reduce the amount of interest you pay on credit cards this will help to put some more cash aside to start investing.

Electronic Banking - With electronic banking becoming the fast and convenient way to handle your money, it has become almost too easy to spend your own money. It almost gets to the point that it doesnt even feel like your spending money. With a simple swipe of your card or a click of a mouse and you are able to spend you hard earned dollars without handing any sort of physical cash over. If you don’t check your bank statements on a regular basis, it can become very hard to stick to a budget and restrict ‘temptation’ spending. It may be an idea to allocate yourself a certain amount of spending money per week and physically withdraw it in cash. This way you will always know exactly how much you have and can make better judgements on when or when not to spend money.

At the end of the day, you have to be able to manage your cash so that you are spending less than what you are earning. With a commitment to reaching this goal, and some sound financial planning, you will be able to get some cash together for your first investment. If you stick with it, your investments will not only fund your retirement, but your current lifestyle before retirement as well. Remember, there is no age limit as to when you can start planning for retirement, infact the earlier you start to plan for retirement, the better off you will be! The first step is the hardest, and from there with a solid commitment for success, it will only become easier.

Difference #1 - Job Security

Job security to the majority of middle class people is often more important that wealth. In their minds, there is no possible way to ger rich withouht a job. They rely on regular payment from their employer to pay bills, buy the things they like, and to attempt to save enough money over their lifetime so they can fulfill retirement plans. The rich on the other hand see wealth as being more important than job security. In fact many people who get rich through sound investing don’t even have a ‘job’, instead they rely on cashflow and/or capital growth from their investments to fund their lifestyle. These rich people are not only investing to fund their current lifestyle, but they are building a massive retirement fund at the same time.

Difference #2 - Change

Middle class people are afraid of change. If they buy a hosue there is a good chance that they will live in and pay off that house for the rest of their lives. Over a period of time they build up equity in their home through loan repayments, rennovations and capital growth, but never use that equity to invest to make more money or for investing for retirement. They are simply too afraid to take action and to make the changes required to create wealth through investing. Rich people love taking action and know that change is a key factor when taking up investment opportunities. RIch people will often buy and sell hundreds of thousands of dollars a year worth of investments without a flinch while the average person debates on whether they can afford a $30,000 car or not.

Difference #3 - Assets

Most middle class people are working to build other peoples assets, and to make them rich. If you are renting your home, you are paying a landlord money every week regardless of whether he or she works or not. If you work for a business or company, you are contributing to their growth and providing constant cashflow for the owners even if they are on holidays. You are funding their lifestyle and you are funding their retirement. While you’re looking to start investing during retirement to sustain yourself, their retirement planning involves relaxing while their assets do all the work for them.

Difference #4 - Tax benefits

When working for an employer, you are paying tax on every single cent of income you receive. However, as an investor you will only pay tax on net income. This means that if you earn $80,000pa in collecting rent (money that you get whether or not you work), and it costed you $50,000pa to maintain the property and loan, you would only pay tax on $30,000. If you were an employee of a company and were being paid the same amount, you would pay tax on the full $80,000 regardless of the expences incurred to be able to work for that wage (eg travel between home and work). It should be noted that you can claim some expences that are incurred at work for work (eg travel during work, uniform etc). However, the tax benefits on investment assets are far more beneficial.

The common problem with retirement planning is that its always hard to get started. People simply do not know where to start looking or techniques on how to find information. In this article, I will briefly discuss the use of online search engines, and how to use them effectively.

Online search engines are websites designed for uses to find other websites quickly and easily by simply searching for words or phrases. Here is a sample of where a lack of knowledge about search engines can effect the results you get:

‘Fred is aged 57, and is nearing retirement. He wants to gain some knowledge on the best way  to go about investing for his retirement. Not knowing where to start he logs onto a steam line search engine and searches ‘retirement’. He is bombarded with information on everything related to retirement from  retirement villages, government websites, finance options for retirement etc.’

 This means Fred has to sift through many websites to find the kind of information he is looking for. This can be very time consuming and somewhat frustrating.

‘After talking to a friend from Fred’s current workplace, he is told about how search engines work and the importance of using specific keywords to find exactly what he wants. That night Fred implemented what he had been told, and was getting much better results from his searches.

The mistake Fred was making was that he simply was not specific enough. The trick when using search engines is to be as specific as possible so that the results that are returned are more relevant to the information you are looking for.

How Search Engines Work

When you search a word on a search engine, it does not find every single website on the Internet that has something to do with that word. Instead, it searches a large database of submitted websites that have chosen specific keywords to be searched for so that their website appears in the search results.

Website owners submit their website to the search engine in a bid to build hits or traffic to their website. The results are based heavily on the keywords that are searched for and how they match with the keywords submitted with the website.

With this knowledge in mind, it is possible to effectively use search engines to find information you are looking for, in this case, retirement and investing. To make things easier, I have put in some time to make a list of keywords or phrases to search for when looking for information regarding retirement investing.

For information and help regarding the process of planning for retirement try searching for:

- retirement planning

- retirement financial planning

- retirement planning help

- retirement plans

- planning for retirement

If your after information, explanations, ideas and tips on investing for and during retirement, try searching:

- retirement investing

- retirement investment

- investing during retirement

- investing retirement money

- investing for retirement

- investing and retirement

Once you have done some research you may want to get your retirement plans underway and begin some number crunching. Try searching these keywords for getting advice and information on investing for your retirement:

- retirement planning advisor

- retirement planning company

- retirement planning consultant

- retirement planning advice

- financial planning for retirement

- retirement planning consultant services

- retirement planning calculator

- retirement planning firm

To refine your search, try to search in you local country only. For example, if you lived in Australia, make sure there is ‘.au’ at the end of the link, in England ‘.co.uk’ etc etc.

Best of luck with your searching!

Phrases such as ‘investing for retirement’ and ‘retirement planning’ are becoming more and more common. Gone are the days where you worked so hard your whole life, only to retire and live on small drawings from your superannuation fund. While the internet can be such a useful tool, it can also be very overwhelming. When you search the phrase ‘retirement investments’ on a mainstream search engine you are flooded with information about how to invest, make money and live the dream! Im sure most people will agree that a sense of direction in this area can be most valuable.

In this article we will break the two terms down so that we can have a better understanding of what it all means and why they go so well together.

Retirement can be defined as:

- The state of being retired from one’s business or occupation

- The point in life where one has given up full time work

- Withdrawal from the active work force

So its fair to say that when you retire that you will no longer be working full time and will have a fair amount of spare time instead. You may wish to take up some part time or casual work to fill in time and get some extra cash flow, or even try some volunteer work which not only fills in time, but can be very rewarding. Now that you have more time on your hands, you may also start a hobby or spend more time with family. All of these are great things, but if you want to completely remove the stress of making ends meet financially, or would love to take that holiday caravanning around the country, you must learn to invest. Now that you have all this spare time now is the time to learn! It’s never too late!

Investing can be defined as:

- laying out money or capital in an enterprise with the expectation of profit

- The act of using money to make more money

- Committing money or capital to an endeavor (eg. real estate) with the expectation of obtaining an additional income or profit

From these definitions we can confidently say that investing is using money to make money. Most people use their time to make money by working for other people, but imagine if the money you already had could make more money without doing any work. Knowing how to use money to make more money? Wouldn’t that be a valuable skill to learn?!

This is where our two terms ‘retirement’ and ‘investing’ come together. If you have a lot of spare time after you have retired, it is the perfect time to start learning how to invest! Even if you feel you are reasonalbly comfortable financially, learning how to invest would be a great hobby to start. There is no limit to information that can be obtained from sources like the internet and authors who have written books of how they became rich by investing.

The best thing you can do is to stay open minded and be willing to learn, and before you know it your retirement plans will be well under way!