Part 11. Financial Security for all…join and stay in the 1%
The wealthiest 1% will soon own more than the rest of the world’s population, according to a study by anti-poverty charity Oxfam. Are you in or out of the 1%. Why you should be in? Because “Financial security tops the list of changes that would most increase happiness (39%), and is the most commonly cited obstacle to prioritizing things that would make people happier (33%).
According to a survey conducted by Life Reimagined, in association with Luntz Global, December 2014. US. If you are already in and want to stay in make sure you take possession of your assets because if not the people managing your investments have taken too much power over how that money is used and where it is invested. Often you will find it is not in your interest (no pun intended!). The amount being syphoned away is not small. “Over time, these seemingly small fees will compound and can easily consume one third of investment returns, yet a lot of people don’t believe that this problem applies to them,” says Mitch Tuchman, Managing Director of Rebalance IRA, If you are out of the 1%, then make it your life time objective because it can change your life and make you a happier person on the long term. But be sure to know that for it to happen, you must drive it and not expect others to do it for you and certainly not the markets. Be aware that it will not be a get rich quick, that it is a long whole and as the rich have already figured out it is mostly common sense.
The first rule is always DO NOT SPEND MORE THAN YOU EARN. Then save as much you can and let the magic of compounding do its trick. Dedicate yourself to creating it permanently or find yourself an independent financial guardian!
You can either take your “Financial Security” plan in your hands to do or be accompanied. If you are disciplined and know enough about the investment world and you want and feel capable of doing it then apply the following rigorous approach:
- Read and understand risk/return concept;
- Calculate your net worth – there are many applications on the market to assist you and I can point to you if required;
- Calculate your cost of living covering your mortgage/rent, utilities, food and groceries; transport, insurances & health cover; holidays. You can then add clothing need, dining and entertainment costs. If you want to further add long holidays and other luxuries like regular week-end breaks.
- Based on your ideal cost of living, define your lifetime financial objective.
Now list the steps you will take to achieve your financial objectives.
Alternatively you may want to find yourself a financial guardian. Make him your personal Chief Financial Officer. Discuss your life time objective. Get him to confirm, select, validate and monitor banks, asset managers, and other service providers to ensure that your objectives are achieved. Ask him to monitor costs. He should be Qualified, understand the investment world and have powerful IT tools to create the appropriate dash board to map your financial security journey.