Experts share their investing secrets. We learn a lot when we listen to others that have been there and done that. It can take years to come up with a successful winning investing strategy. We don’t need to re-invent the wheel. That is why I enjoy talking to guests that have had a go and have come up with their own investing strategy. We can all take advantage of their experience and appreciate their efforts to create a better financial future.
There are many ways to invest your money. Having it sit safely in a term deposit at the bank is an investing strategy. Deposit rates vary greatly around the world. In Australia the best rate I could find for a Term deposit was 2.4% per annum, the USA was 1.25%, Canada 1% with many countries below 1%. You would have to live in a country experiencing very high inflation rates like Brazil to achieve high-interest rates on deposits today. If you are able to roll your interest over and add it to your capital each year than the compound effect of that strategy will pay dividends.
Why do you need to invest?
- So you don’t have to work all of your life
- To send your kids to college
- Buy a fancy car
- Save for retirement
- Reduce your taxable income
- Support others
- Earn a higher rate of return
- Bail-in threat when financial institutions fail
- Be debt free
We may want to get ahead ourselves so we don’t have to work all of our lives by building a healthy retirement fund. We may want to be in a position to help family members or others in our community. Some people take great pleasure in donating to charities operating in third world countries. Others just want to travel. Once we find out the why then we can start looking at how we can achieve this. Clarity of thought will give us the focus. Once we have the focus we can start prioritising investing in our lives.
We can no longer be assured of government support through to our old age. In Australia, it is now harder to qualify for the Seniors Aged Pension. Instead of it being a right for citizens the Australian Government have means-tested this pension. If you have saved too much money or accumulated too many assets you may be ineligible to receive this support in your senior lives.
The other great concern that we should be aware of is the bail-in threat in times of financial crisis. Back when the GFC (Great Financial Crisis) hit in 2008 the US government had to scramble and help their banks from failing. This big bank bailout saw $700 billion used to save the banks by the US treasury department and some say it was more like trillions of dollars that has been paid out.
Fast forward now to 2012–2013 which saw the Cypriot financial crisis? The government of the Republic of Cyprus was reluctant to restructure the troubled Cypriot financial institutions. An international bailout was finally agreed to on 25th March 2013. It included a bail-in that came at the expense of and saw the closure of the Bank of Cyprus, imposing a one-time bank deposit levy on all uninsured deposits there. This deposit levy is a capital levy on depositors money as it is a is a tax on capital rather than income.
In my interview with Paul Engeman, from Ainslie Bullion, Paul warned that governments will no longer be using a bail-out in future financial crisis. The opposite is now favoured by governments around the world. A bail-in will be used to rescue a financial institution on the brink of failure by making its creditors and depositors take a loss on their holdings.
If nothing else has motivated you than this last threat of a bail-in should get your attention. It is not a threat it has already happened. It is up to us to provide for our financial future. Sit back and enjoy listening to a summary of the experts that have shared their investing secrets in 2017.