Friday, October 5, 2012
Hear me roar?
Being a female in the finance & business industry is challenging. Being a 45kg, 5ft, female in finance & business can be, well let’s just say “interesting”. Consequently, there've been times I've needed to roar.
- By the way, if you're a woman in business and haven't booked in for my 10 things women in business should know morning tea click here. Or if you know a woman in business, please forward the details asap (places are limited) -
When it comes to finance, even personal finances, there are still many women who feel in the dark. And that's not a comfortable place. Working with women over the past 18 years, I've found the following issues have been reasonably common:
- little or no involvement in the household finances;
- little or no knowledge of family bank accounts, investments, insurance policies, etc;
- lower superannuation balances due to time out of the work force;
- lower income earning capacity due to time out of the workforce;
- re-building financial position after separation or divorce;
- a general concern about finances.
If any of those resonate with you, it's time to “roar.” We're lucky to live in the information age and knowledge is power. There are great ways to learn more about money and take control of your financial circumstances. My advice is to find out as much as you can – read widely, attend presentations, talk to other women, and of course, listen to experts. Take charge and find out more about:
- ways to optimise your super balances;
- strategies to ensure you earn and draw your income as effectively as possible;
- being actively involved in the household finances at least to the extent that you understand where things are, or which specialists to talk with in the event you unexpectedly become responsible.
- about money and finance in general so that it becomes comfortable and maybe even fun!
Where I believe we have a key responsibility is taking advantage of the information age and making sure our children, understand financial concepts, regardless of gender. Now I’m not talking about arbitrage or futures trading, but giving them confidence and comfort around the specific money issues they will most likely face - budgeting, borrowing, saving, tax, superannuation, cashflow, insurance etc,
The better their understanding, the better their capacity to make sensible and appropriate long-term financial decisions.
Ok so this blog has changed direction a few times, what are the key out-takes?
1) If you are, or if you know, a woman in business click here for more details about my 10 things women in business should know morning tea;
2) Many women still don't feel 100% confident when it comes to money or financial decisions. More importantly, have been financially disadvantaged and need to take back some control.
3) We should be teaching our kids about money now to help them make financial decisions.
If knowledge is power, make sure you have plenty!
Friday, September 14, 2012
Some thoughts on being a business owner, a test for you, and a reminder about the awesome opportunity for local businesswomen!
See if you can guess all 4 super-successful businesswomen
(hint, they’re all Australian).
If you’ve read Michael Gerber’s E-Myth, then you’ll know that most business owners are 3 people in one – the entrepreneur, the manager, the technician. And according to Gerber the breakdown is approximately 10% entrepreneur, 20% manager, and 70% technician, suggesting that what many business owners actually own is a busy, time-consuming, and highly stressful job.
So if being a successful business owner is a learned skill, we need to be open to all the different ways to learn. One way is to learn from those who’ve already succeeded. It may be just succeeded in business, or in your specific industry.
Unashamedly, I love motivational guru Tony Robbins. Tony counsels that regardless of your objective, you should learn from people who have already succeeded. He says “Mastery in any area requires immersion, dedication, and modelling those who are already outstanding.” I love it.
He uses losing weight as an example. Rather than partnering with someone else who’s struggling with their weight, you should look to people you know who have already successfully made diet and exercise changes.
Makes sense yeah? Ergo, if you’re a business owner, you should be actively seeking out entrepreneurs you’d like to emulate and learn their secrets and their mistakes. Why reinvent the wheel?
I always recommend modelling your systems and procedures on businesses that are more successful than yours, and regularly spend time learning from business owners who have already made a success of practices you’d like to implement in your own.
Which is all a segue into reminding you about my Morning Tea for local businesswomen on Thursday 27 September (10am-11.30am so not a big chunk out of the day). Somehow we’ve managed to get Julie Bishop ( Deputy Leader of the Federal Liberal Party and Shadow Minister for Foreign Affairs & Trade) as the key speaker. Pretty impressive for out in the burbs, right?
But I want to be clear, this is NOT a political event, it’s a rare opportunity to hear one of Australia’s most successful and influential women speak about business leadership – IN CROYDON.
I’ll also be presenting some great advice and easy tips for positioning yourself as an expert in your industry to improve your business profitability. Oh and yes there will be a truly scrumptious morning tea. Ordinarily there would be a price per head for this type of event, however The Hendrie Group is covering all costs so that as many local businesswomen as possible can attend. By the way, business men are welcome to come along too. Click here for a copy of the invitation.
Places are strictly limited to 50 and it’s already more than half booked, so please call us on 9725 2533 or email me at c.hendrie@hendrie.com.au if you’d like to attend.
Now for the fun bit, see if you can guess all four super-successful business women and post below if you think you know.
Tuesday, July 3, 2012
GREECE is the word!
…..Italy?........France?...
In the olden days it used to be said that sharemarkets were efficient (because all investors had the same information on which to base decisions), and that today’s news didn’t effect sharemarkets because the markets worked on expectations of the future.
In these modern times, you could be forgiven for thinking that these long-held truths no longer apply, as markets gyrate to the latest news reports issuing particularly from the European scene.
John reckons he can lay the blame for all the ups and downs at the door of the communications industry. In the 70s, 80s, and even the early 90s, news travelled relatively slowly, and economics was not a regular feature of our daily news broadcasts.
The spread of computers, the advent of the internet, and the development of broadband have led to a situation where news of what’s happening in the world of finance anywhere around the globe reaches us almost instantaneously.
Couple this ready access to information with a dramatic increase in the number of small investors who can trade with ease over the internet, and we have a situation where daily market movements can be determined by these small traders, while the larger, longer term institutional investors sit back, and watch and wait.
We’re lucky, aren’t we????
Anyway…..to Greece.
For now, at, least the election result has averted a messy Greek default and exit from the Eurozone, which would likely have had a contagious effect on other European economies. European leaders met on 28/29 June, to hopefully can devise an acceptable plan for a sustainable solution to their systemic problems.
As part of this meeting they agreed to allow aid to be delivered directly to struggling banks, rather than through national governments. The upside being that banks can be re-capitalised without adding to the debts of individual countries.
The leaders also agreed to set up a joint supervisory body for banks across the Eurozone and approved a $160 billion stimulus package.
Meanwhile, across the water, the US economy has been showing signs of slowing, and may take a further hit in the new financial year as planned budget cutbacks settle in. The saving grace here is that, compared to Europe, the US is not fragmented in the same way (even though the political parties can sometimes make it seem that way), and no one fears a credit default by the US government.
With all that said, expect market gyrations to continue for some time, while the financial world settles down and anticipated stimulus packages kick in. Invest in the downturn, and wait for better times.
Monday, April 23, 2012
Should you loan money to friends or family?
A number of years ago one of my clients came to me to ask my advice about loaning a significant amount of money to her daughter. The first question I asked was whether there was any chance that her daughter might not pay her back, to which she replied “oh there is every chance she won’t pay me back.”I knew her financial position and knew that she couldn’t afford that risk, so told her to explain to her daughter that she wasn’t in a position to help out.
But there are cases where we are in a position to help, and at the end of the day, the only person who can decide if you want to loan a friend or family member money is you, but I do have some tips.
Questions to ask yourself:
1. Will you suffer financially, if the loan isn’t repaid. If the answer is yes, then my recommendation is to walk away. You don’t want to put yourself into financial hardship because of somebody else’s money problems.
2. Will your relationship be damaged beyond repair if the loan isn’t repaid. If the answer is yes, then again, I recommend walking away. You don’t want to lose your relationship AND your money.
In the very few times I’ve loaned money, I have gone into the arrangement with the attitude that if I never saw the money again, I would live with it. If I can’t feel that way, then I just don’t do it.
3. How formal do you want the arrangement to be? If someone asks to borrow money from you, particularly if it’s what you consider to be a sizeable amount, then you have the right to expect a formalised written agreement. The written agreement should state the amount borrowed, any interest that may apply, payment terms (how much and how often), and the date the loan should be finalised.
I’d recommend having the agreement drawn up by a solicitor, and I personally believe that the person borrowing money should foot the cost of any fees.
4. Will you charge interest? And if so, at what rate?
Often loans between friends or family members are no interest, or low interest, and this is of course up to you. You may wish to apply a market rate of interest, particularly if you believe there’s a reasonable chance that you might not get your money back. Perhaps it’s unlikely that person will be able to get a loan from a bank or other lending institution, and would be more than happy to pay the market rate to obtain the capital
You do need to be aware that legally you have to declare all interest to the ATO, even if it’s a loan between friends or family.
5. If it’s not a formal written agreement, what are your terms? Even if you decide not to formalise the agreement, I do think you need to be clear on the terms. You terms might include a structured amount to be credited to your account each month, or a lump sum to be paid at the end of a certain period.
6. And once you’ve decided the terms, what happens if the terms aren’t met? At what point are you going
to start jumping up and down, or at least giving a little nudge? That’s probably something you should also agree upon from the start. And if the loan is never repaid – what are you going to do? If an agreement is in place, are you going to take legal action?
Probably the best advice I can offer is to be totally up-front right from the start. You may feel a little awkward, but if someone has had the courage to ask you for a loan, then setting the terms should definitely be your prerogative and should be expected. Some ideas for approaching this might include:
“This is a lot of money to me, and while I’m happy to loan it to you, I will need it to be repaid in monthly installments by July. Is that going to work for you?”
“I won’t need the money for the next twelve months, but after that I really do have plans for it. Will you be able to pay me back by September next year? And will you do that as a lump sum, or regular payments.”
“I’m happy to loan you some money, but I have to be honest I’ve seen some relationships turn really sour when money is involved, and I would hate that to happen to us. Would you be agreeable to formalising the arrangement so that we don’t have to worry about any of that?”
“If you happen to miss a payment, do you want me to give you a reminder straight away, or give you a few days in case it’s just slipped your mind?”
At the end of the day it comes down to personal circumstances and your relationship with the person needing a loan. Just make sure you consider the risks involved and what you need from the arrangement.
Talk soon,
C
Thursday, April 12, 2012
“Super” Disturbing
They were offering to have the amount rolled over to their fund - all he had to do was sign and date a form they’d enclosed, and they’d do the rest.
The letter didn’t mention the amount of money involved, and it made no mention of insurance. And in no place did they suggest that they should speak to their adviser or in some way make sure it was an appropriate move for their circumstances.
Now it just so happened that we were in the process of increasing his insurance cover because of his increased debt levels. The amount that he has in his existing fund is enough to cover his additional needs. What makes this so important is that he actually has a pretty severe back condition. The extra insurance we were looking at was either going to be very expensive or was going to exclude back injuries.
Luckily this client found a statement from the old fund (not everyone would be that organised), and lo and behold what did we find? A fairly large existing insurance component in the old fund!
So essentially, the worst thing in the world he could have done from that perspective would have been to close the old account because it would have cancelled his insurance. As I mentioned earlier, the letter he received from his industry fund didn’t even suggest he should consider any insurance component which is completely irresponsible from an organisation that seriously ought to know better.
Now it was an industry fund in this case, but there have also been a number of retail superannuation managers advertising similar offers.
When deciding to rollover your super some of the very basic issues to consider include (at the very least):
- Fees
- Underlying investment options and exposure to unlisted assets
- Investment performance
- Independent research ratings
- What retirement streams are available and can they be transferred from
superannuation phase to a retirement income stream without capital gains tax.
- Type of tax structure
- Insurance options
- Death Nominations
- Does the fund allow superannuation splitting – this might become very important if the
government legislates contribution concessions for balances less than $500,000.
So the message is if you get a letter like the one my client received, don’t just think oh yeah that sounds easy, and sign the form. It may not be in your best interest.
Even if your super isn’t a huge priority for you now, it will be one day, so don’t make bad decisions now that might affect you later.
Talk soon,
C
Friday, March 23, 2012
Hard not to be bitter…
You remember right? All those sub-prime mortgages where banks would loan money to just about anyone, and not only that but some were non-recourse (ie. if the bank forecloses and doesn’t get the full value of the property, there’s no further requirement for the homeowner to pay the balance of their loan). I’m no Julia Childs, but I see a really good recipe there – for disaster! Maybe something like this:
Mix way too many sub-prime mortgages with an over-supply of housing in some areas, and make a well in the middle. Gently fold in rising unemployment and a generous splash of foreclosures due to interest rate hikes. Pour into a tin lined with a collapse in residential housing. Bake at 180 degrees Celsius and test with a skewer and if gross domestic product (GDP) is falling it’s ready. Cool for (let’s face it, about 4 years) and what you have is a perfect GFC yeah?
So it’s a little hard not to be bitter watching their sharemarket screaming towards its highest point in history. In October 2007 the Dow Jones index reached it’s all time high of 14,164 and as I write, it’s at 13,125.
Of course that’s good, I’m not really whinging about their success BUT, in the words of Moving Pictures (or Shannon Noll if you didn’t get to experience the 80s), “What about me?”
In good old Oz, our ASX All Ordinaries index reached 6,854 points in November 2007, and where are we now? 4,348 as of yesterday. Still a long way off our all time high! Seems a tad unfair?
So what should we expect from sharemarkets going forward?
Prior to 2007, business cycles were reasonably long in duration, but it would seem now that they have shortened (eg. 3-5 years) in response to world monetary difficulties (probably euphemistic for some of the European countries). And of course there’s political and religious unrest, not to mention government instability in various geographic regions. So this relatively shorter business cycle began in mid-2009, and economists are forecasting that it possibly has another 12-18 months to run.
Anyone who listens to my radio program will have heard me say that “volatility is the new black”. It’s here to stay for at least this cycle. I did some research a couple of months ago and at that particular time our sharemarket had experienced movement of more than 1% in a single day 97 times in the 12 month period. WOW!! (By the way that’s an expression of amazement, not the Woolworths ASX code). Fortunately most of those times were “upward.”
Sooooooo, market volatility will continue for some time and we’re concerned that government stimulation packages haven’t been enough to sufficiently boost flailing economies. Depending upon a number of factors (eg. presidential and congress elections in the US next year, a programmed change to the political leadership in China, a continued thrust to hold the European Union together) there’s the possibility of a world recession in late 2012 – 2013. So my recommendation is to make sure you protect on the downside by taking a more tactical approach to portfolio management. For example, the current circumstances would seem to call for some strategic defensive positioning. In particular, holding enough equity exposure to take advantage of any market rallies over the next 6-12 months, but also putting measures in place to help protect against “downside” risk.
Alright, well that’s as technical as I’m prepared to get, it must be time for some cheese and bikkies (yes that’s my excuse for a glass of wine).
Talk soon.
C
Friday, February 10, 2012
There’s Wills, and then there’s Wills….
Soooooooo, I figured there must be something in it and decided to run another session this month. I just went and had a look at the register to discover that this session has now booked out in less than a week.
What the?! Seriously guys, the speaker is a solicitor.
Of course I’m joking, because I was just as enthralled as everyone else last year when Mal gave us real life examples of how easily estate planning can go really wrong, and the dangers of Will Kits and executor trustee companies.
Clearly people are interested in getting their estate planning right, but it can be hard to know where to start. In my opinion, there are 4 main groups of people that need to take particular care when preparing their Wills and Powers of Attorney:
Blended families - Not surprisingly, this can be a veritable minefield and one where I have personal experience. Much care needs to be taken to protect the surviving spouse and children, children from previous relationships, and the estate itself. This is also an area where a challenge to the Will is more likely.
Mal has told me a few times now about a woman he knew whose stepchildren legally evicted her from her home because of her husband's poorly worded Will. Obviously a worst case scenario, but it did happen and neither she nor her husband would ever have meant for that to happen.
Parents with young children - Most people don’t realise that appointing a guardian to their minor children in a Will is not legally binding. It still needs to go through the Supreme Court.
And you need to consider what happens with the proceeds of your estate if have young children? Are Testamentary trusts in place to deal with this? Do you have a plan for the guardians to be able to afford to raise your children?
Elderly - One of the messier situations I see time and again is where elderly parents don’t appoint Powers of Attorney while they can. Most people know about Financial and Medical attorneys, but a lot of people aren’t aware of the importance of appointing an enduring Guardian for lifestyle decisions – particularly relevant for aged care accommodation.
Couples - Regardless of the age of your children if you die without a Will, your estate does not automatically go to the surviving spouse. Under Victorian law, if you have children and an estate worth more than $100,000 (which is most people with a house and a chunk paid off their mortgage) then the surviving spouse receives chattels + $100,000 + 1/3 of the estate balance. The remaining 2/3 of the balance is split between any children – regardless of how much it is!
Singles Having a Will in place may not seem important, but you leave your family to deal with unnecessary red tape without one. Oh and Powers of Attorney are an absolute must!!
Hmmmmmmmm, my four categories pretty much cover everyone, which suggests that careful estate planning is particularly relevant for everyone. A few years back John wrote a great paper called “What happens when you die…?” It’s the story of a couple who made a number of simple mistakes and made a dog’s breakfast of their children’s inheritance. Click here for a light look at a pretty serious topic.
Talk soon,
C
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