"You must take responsibility for your own financial health and wellbeing."
How you can retire young through property investment: Pete Wargent
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We are living through a period of great volatility. The world’s economies are fragile, and this makes it more important than ever that you have a financial plan to protect yourself.
Despite the gloom that seems to be perpetually portrayed in the financial press, the truth is that recessionary economic times offer outstanding opportunities to those who are prepared.
Wealth has not simply been lost in the global financial crisis; it has been transferred, from the financially uneducated to the sophisticated.
We have had global recessions before, and you can be certain that we will have them again, because economies move in cycles. The facts and the specifics may change, but the patterns are similar.
The losers in financial crises will continue to be the same: those who try to save their cash (inflation will quickly eat away at the value of savings), the inflexible, people with extravagant spending habits, those approaching retirement with much of their wealth in a managed accumulation fund and, particularly, many of those with a total dependence on a job for income.
Having all your eggs in one basket – a job – is a potentially dangerous approach to personal finance.
So who will the winners be? The winners will be those who have the financial education to spot opportunities, and those with multiple income streams. Winners will also include people with moderate spending requirements and those who are prepared to be flexible.
Winners are generally not dependent on highly taxed salaries to increase their wealth. Stock-market meltdowns offer amazing opportunities to those who are able to time the market. Property investors, too, will take advantage of fear to invest counter-cyclically and will capitalise on the low interest rates that often result from a recession.
It is important to be in tune with the financial markets. By the time you read about a hot stock or a flying property market in the media, it is probably too late. Besides, the press print an awful lot of doom and gloom as it seems to sell newspapers. If you believed everything you read in the press you would probably never invest at all.
What is not good enough is to blame the government, your fund manager, or your employer for your financial predicament. You must take responsibility for your own financial health and wellbeing.
One of the seven Buddhist factors of the path to enlightenment is mindfulness, an awareness of reality and clear understanding. Just as to avoid becoming obese we must be mindful of our diet, to become wealthy and financially free we must apply mindfulness to our finances. The first step is accepting that your financial health is your own responsibility.