Who can I trust to help grow my money?
Posted by Faith, 15 September 2009
Growing wealth takes time. So, who can we trust to help us along the way?
Let's start by talking about trust.
To place trust in someone takes time and plenty of evidence on their part to prove that they are worthy. However, having trust doesn't mean that we 'wash our hands' of any personal responsibility.
No financial adviser can know us as well as we know ourselves. We have to take an active part in the relationship by talking with our adviser to ensure that our needs are met in a way that is realistic, and we need to ask questions about when and where our money is invested.
This is very important, particularly when investing for the long term. Investing into KiwiSaver does not give us the excuse to sit back for 10, 15 or 20 years and just 'let things happen'. We need to participate and learn about the product we have purchased.
We don't have to be experts; we did hire the fund managers for our investments (like KiwiSaver) for a reason. They can do a job we can't and it was a good decision to trust them. However, it's not a good decision to ignore that investment from now on in the hope that it continues works as we expect it to.
We should look to renew our trust every year, by asking some simple questions and ensuring we understand the answers.
- What is the financial situation of the company in which our money is invested? How strong is our fund manager, whether AMP, ING, Westpac, AXA or whichever company is helping us to manage our money?
- Where is my money invested? Is the split between the asset classes (cash, fixed interest - government stock, property and shares) and the amounts in New Zealand and the rest of the world, right for our stage of life and needs?
When you understand this and then watch the news, you can start to appreciate what may affect your investment. When interest rates or share markets rise or fall, you can expect this to affect a portion of your investment.
- What has happened to my contributions? Regardless of the investment, if you are contributing money, keep a simple record of what you and others have put in. Make sure you know where your money has gone.
- Who do I call if I need help and do they answer my questions satisfactorily? Is there more than one person who can help me, meaning I am not reliant on only one source of information?
- What is the performance of the investment and how does it compare to others?
Please be careful with Question 5, as it can lead to making bad investment decisions if taken out of context. Just because other funds have done better in the last six or twelve months than yours, does not mean you should chop and change frequently. Don't get caught in the trap of chasing last year's winners.
There will always be winners and losers, but over time you should receive a rate of return that is consistent with the level of risk you are taking. If you put most of your money in cash and fixed interest, you should not expect the same level of returns as if you put it in growth assets like property and shares.
Remember, funds like KiwiSaver are not meant to “blow the lights out”. It is a 'steady as you go' method to help provide for your future years. However, you can get rich slowly, if you give conservative investments enough time to grow.
It is good to find an expert to help us grow our wealth and we should not be scared to do this. There are a lot of very good financial advisers out there.
Last week was Financial Awareness Week, which showcased the advantages of having a good financial adviser. Over the last few weeks I've talked about the 6 key steps that are vital for financial success, which were also a feature of this special week:
- Plan your financial life - Ready, Set, Goal!
- Make the most of what you've got - Make it, Save it, Spend it!
- Protect what you can't afford to lose - Cover the “What ifs”!
- Manage your debt - Swim, Don't Sink!
- Grow your money - Make Dreams Real!
- Secure your retirement - Plan to Work Less (or not at all)!
Don't lose the momentum from Financial Awareness Week. Start learning about how to grow your money and supercharge your financial fitness today.
Find out more
- How to be good with money http://www.keepingthefaith.co.nz/financial_planning_faith_blog_100809.cfm
- Keeping your money safe http://www.keepingthefaith.co.nz/financial_planning_faith_blog_170409.cfm
- Grow your money - Make Dreams Real! http://www.financialawarenessweek.co.nz/financial-planning/steps/step5.php
- How to find a Certified Financial Planner near you www.ifa.org.nz
Buy my new book Faith Speaks Money Talks to discover how to:
- Stop money pouring out of your life
- Smash the spending habit so you have more money for what you really want
- Handle the big money decisions with ease
- Buy property with confidence and without going broke
- Get a better life with the 7-week money challenge
- Decide what is important to you
- Make the most of KiwiSaver
See previous blogs:
Don't sweat the small stuff.
Can you grow a money tree?
What's holding you back?
Money or your life - which has more value?
The seven secret thieves
Five questions to change your life
Find that spark
Switching lives - what would you choose?
Who can I trust to help grow my money?
How to swim in a sea of money
Life can be unfair
The rule of happiness
No way to live
Anyone can be good with money
Best ways to warm up winter
Who wants to be a millionaire?
The secret of wealth
Keeping your money safe
Having it all
Win an all-expenses-paid trip for two to Europe (Part 3)
Win an all-expenses-paid trip for two to Europe (Part 2)
Win an all-expenses-paid trip for two to Europe (Part 1)
Make a change for good
A recipe for a happy Christmas
Nothing else matters
Rage, rage against the dying of the light
Make a wish come true
Buying or Selling a House – Those that care least, usually succeed
When is a good time to buy a house?
Sleepless Nights in a War Zone
Transitions - more life or more of the “same old, same old” boring stuff?