Regret, reflect or…forget?

The idea of letter to 16-year-old self is thought provoking. What advice to give the younger you if you could reach across the years? For some, it could be a long imploring treatise in an attempt to sidestep embarrassments and pitfalls of a best-forgotten past. Many would embrace common themes of acceptance and courage, scattered with some well-considered words of wisdom. Wisdom most didn’t possess as a naïve adolescent. Wisdom by definition hard earned through mistakes and experiences made and had along the way. That have fashioned us into the complex and interesting people we are today.

Jill and I have the opportunity to talk to girls in this impressionable teenage stage, and we often wonder as we walk away whether any of them will take heed of our beseeching messages: Pay attention to your finances. Start now. Take, and keep, control. These, plus other salient lessons on personal finances - just one, but nonetheless vital area of a developing woman’s journey. So we ponder: does the metaphorical penny ever drop or does each of us have to learn through painful experience? Would it be better to render our self-addressed letters to the scrapheap and allow ourselves to head through the hard times in the expectation they will hone us like steel?

Perhaps it is more opportune to consider what we can tell ourselves today. We do have control over the choices we have in the years ahead so let’s put aside our dwelling in the past and consider rather what the future may bring. Looking at the cards we hold now, how can we optimise our prospects? We are presented with the same problem as all those years ago – with all the options we face, the path isn’t always clear.

Take investing for instance; there are as many opinions on the road ahead as there are experts. Go to Cash, say the prudent and paranoid, the unraveling euro zone spells Armageddon in equity markets. Buy now, risk takers advise, easing monetary policy in China means structural growth stocks will lead the equity market higher. Stay your course, counsel the pragmatic, shares will still deliver reasonable returns in the form of dividend yield in a world where deposit rates are falling. Trés confusing and, as we know from history - no one really knows. So what to do?

Short of receiving an express delivered letter from your future 70 year old self, all we can do is to keep making well-informed and pro-active decisions and hold off recriminations if things don’t turn out the way we expect. After all, there’s risk in everything we do that’s remotely worthwhile – that’s what living is about after all. So, let’s promise ourselves: No Regrets! Onwards and upwards to 2012 - a year we will embrace to the full with all the ups and downs that life and the equity market is bound to throw at us. Until then, be safe.

3 Things Our Children Should Know About Money and Relationships

So, last week was a low one for me. I am having a hard time watching friends and clients go through draining divorces and all the attendant regrets, recriminations, if onlies, and should haves that go with that. That’s sounding way too selfish because whatever I feel about it, those involved feel a hundred times worse. Having been through it myself a few years ago I suppose it also triggers memories of bad times and a huge dose of empathy.

What’s even harder is seeing those who come out at age 50 with very little to show for long marriages and careers and a shared life. It makes the process so incredibly hard for those who find themselves literally starting all over again in their 40’s and 50’s. I have heard every permutation of how money issues causes gaping rifts in relationships as surely as sex does. It’s more than the dollar and cents – it comes down to dynamics and how each of us contributes to the subtle nuances in our interactions.

So, this week I am thinking about how to put my insight into helping the next generation – our children. Here’s what I think we need to tell both our girls AND our boys about being in a relationship and how to avoid the standard pitfalls.

Get Involved with the Big decisions

Partner about to put your house up as security for their business or an investment? Find your voice and work it through together. Understand the risks. Weigh up the pros and cons. Be aware of what you are signing and what it means. It doesn’t imply you have the final say but many a good marriage has gone awry because of one person’s insistence on putting JOINT assets on the line for a risky proposition.

It won’t protect you from the consequences if you go ahead and things go bad but at least you will have had the conversation. Stand up and take some responsibility and make a stand if needs be. Just don’t be a victim and say you didn’t understand or didn’t know. No-one can force you to do something against your will and if they do then you would have to reassess that relationship in light of this behaviour.

Don’t Use Money as a Power Tool.

You know the story. The stay at home mum hides the latest purchases from her husband to avoid a scene. He buys golf clubs but whinges every time she comes home with a pair of shoes. Come on, people, what is this? 1955? Like it or not, marriage means you are an economic unit. Whether you work in or out of the home, earn money or not, each half of the partnership has a right to the family income and assets. That’s not me telling you - it’s the law!

This has boundaries of course. Decide on a spending limit that is reasonable to you both. If something is over that limit talk it over with each other. Other than that stop the power games and give each other some respect.

There is nothing so ugly as listening to someone say “She spent all the money I earned and she did nothing other than have lunches with her girlfriends”. No doubt at some point both parties were happy with the arrangement and if you weren’t then…SPEAK UP!

Play Your Part

If your family’s finances are under strain or you want things that cost money don’t sit on the sidelines and expect someone to provide it for you. Yes, having small children is hard work and it makes sense for someone to be the main carer for a time but there is always a way for you to play your part in helping out.

Being the main provider is a huge responsibility. It’s competitive, hard work and can be very stressful when there are more mouths to feed, house and clothe let alone all the consumerist aspirations we all take for granted in this western world.

Doing some paid work has many unseen side benefits in self-esteem and pride that makes keeping your foot in the door a great thing. Just don’t sit there being a prince or princess wondering why you aren’t keeping up with the Jones. You are meant to be a team and each person has a part to play. Some of us are lucky to marry someone who will happily pamper and spoil you all the way but…at what price and what happens if that person isn’t always there?

That’s it.

I am sure you can all have your say on whether I am being fair or not in making these comments. Every situation and relationship is unique. It’s a cliché to say we all have faults and make mistakes along the way, both personally and in our marriages. Our differing personalities make it hard for us all to act in the best possible way all the time.

But…if something is going to change then we all have to look to ourselves to make the necessary alterations. Small modifications in how we react and respond to people transform our relationships. If you take away anything from my ramblings, take that.

The spectrum of life

Life is full of shades of grey isn’t it? Just when you think you’ve formed an opinion on a topic and start to act accordingly, someone or something comes along to challenge its validity. Take home brand groceries for instance. I’ve finally come to recognise the acceptable quality of various private label brands, and in the name of better economy taken the plunge of actually purchasing some of these items. It is compelling as in some cases they’re up to half the price of branded items. So I’m feeling good about myself – choosing where to spend my hard earned cash etc etc.

Next thing I’m reading about Woolworths’ CEO undertaking to double its sale of home brand items. This is followed by an investigation by the Consumer Commission into potential mis-use of power by the giant retailer, talk of anti-competitive behaviour, of small suppliers being “shut-out” of the market, and us consumers being robbed of choice. So now what? I’m left in a quandary – do I continue my virtuous choice of white labels, or express my displeasure at Woolworths’ bullying tactics by eschewing them, and rather purchasing the more expensive brands?

This predicament of inherent contradiction and mixed messages pertains to many major issues and debates we see in the headlines. From mining tax to carbon tax. From upping our refugee intake to saving old growth forests. Discussion on the pros and cons of different policies is guaranteed to turn up the heat at any dinner party…if you have the guts to raise the subject, that is.

In my opinion all’s good as long as we keep talking, arguing and hashing through these hair raising modern dilemmas. The real enemy is one common to all of these problems – apathy. When questions of morality don’t fire up reasonable citizens we’re really in the dwang.

It’s probably the issues which for each of us individually are pure black and white that really get us galvanised into action, to beat our personal drums for a greater good. Starving kids, abused or endangered animals, environmental degradation – no grey there.

A friend of mine has a child with a disability and is incessantly lobbying the government (and all her friends) to move forward with the National Disability Scheme. The 1 million women campaign is set on enlisting a million women to take action on climate change and to reduce carbon emissions in their homes. Jill and I are passionate about increasing financial literacy in young women. There are so many people slogging tirelessly in their own realms, striving to make a small difference in the world around them.

As long as we’re thinking, and acting and discussing issues around us we can live in hope that the world will keep moving to a better place. So, although we may reserve the right to vacillate our views on what to place in our supermarket trolleys, we need to stick fast on those things that really raise our ire.

Who Moved the Goalposts?

Well this issue isn’t going away in a hurry. I am going to follow on from Nicky’s blog last week on executive pay and mine from 2 weeks ago on the Occupy Wall Street movement to further dissect what’s really bugging me about the salaries, bonuses and privileges enjoyed by those in the corporate and financial sector.

I might be biting the hand that feeds me given I work in financial services. I also live in Mosman, which houses many of those working for the institutions that are copping the flak over their reward system. At the end of the day we are all human beings doing our best and we are essentially hardwired to make the most of any opportunities and advantages we can. Let me be clear - this is not a personal attack.

To get you in the mood here is some background reading for those of you who are into it. Read this and this to get a picture of what is going on in corporate Australia. I read them, tried to remain objective but was still left with a sour taste in my mouth.

What’s the story with moving the goalposts on the hurdles for bonuses? What the heck is overriding board discretion (code for really the hurdles don’t actually mean anything we will just give it to you if we feel like it)?

Hands up who has sat in a review with their boss and had it explained why there’s no bonus or pay rise because of the economy, tough times blah blah blah insert lame reason here. Yet…get up the top of the heap (undoubtedly with a lot of hard work no arguments there), buddy up to the board so they can use their “discretion” and those days are well behind you. There’s barely a year in which you don’t see your salary go up.

Now I am not disputing that in most instances there is a huge price to pay in terms of time, energy, accountability and risk of tenure in these senior roles. But bottom line is that there is barely a downside risk to payday when performance is not up to scratch. I can recognize the risk I take in buying Wesfarmers shares with respect to capital and dividend growth but what about those charged with the task of achieving those outcomes. Apparently the buck doesn’t stop here!!

Anyway enough griping and whining. What’s the solution? Again I am going to defer to those with a larger perspective than mine and provide a link here to a great article from the man who wrote The Black Swan – Nassim Nicholas Taleb. His solution – end bonuses for bankers! Although it’s from an American perspective and pertains to bankers more than corporates I think he raises some good points on how the system of reward has become untenable and asymmetrical. As he points out “where is the disincentive for failure?”

Is change actually possible when there are so many powerful vested interests in keeping the status quo? Who has the stomach to take it on? Would we all, as human beings, have our own snouts in the trough if we had the opportunity?

The capitalist system, like anything, is not perfect. But it doesn’t mean, with informed debate about alternatives and solutions, revision can’t be made to shade the imperfections so the system evolves over time into something more stable and equitable.

In reality, we all need to know where the goalposts are once and for all.

Up, up and away

How darn crummy it would have been for those Qantas passengers stranded across the country or across the world. As aircraft take to the skies again, it leaves us wondering about the long-term impact the controversial decision to ground its fleet will have on Qantas. In the short-term CEO Alan Joyce’s extreme approach paid off. Fair Work Australia ruled to terminate the industrial disputes that caused mayhem over the past weeks. The irony is that all this follows hot on the heels of the Qantas AGM, where Alan Joyce feathered his already luxurious nest with a 71 percent increase in total pay – to a cool $5 million. And he’s not alone – the whole management team was awarded pay rises. Rather predictably Qantas has justified Joyce’s pay hike by deeming it “not excessive” in comparison to the salaries of other big boys in town.

These pay increases are against the backdrop of airline plans to cut 1,000 jobs and employees scrabbling for a cost of living increase. The share price has fallen 16 percent over the past year, and no dividends declared for over 2 years. It’s no wonder there is some shareholder objection to the pay increases. Dissenting (mostly retail) shareholders were very vocal at the AGM – hissing and booing and walking out of the meeting. But their votes amounted to just 2.79%. It seems the boys club is thriving as institutional shareholders and proxy advisers ensured the Qantas remuneration report sailed through with a 96% vote in favour. We know Qantas isn’t the only one paying out of the realms of reasonableness in terms of executive remuneration.

Do you ever wonder what those highly paid CEO’s do with their money? I mean how on earth do you allocate each and every day what the average person earns in a month, or a year? Obviously the cash just keeps accumulating onto their ever-expanding mountain of investments, assets and toys. This leads to another question - Why? Why do the corporate leaders of this country, and globally, keep justifying huge annual increases, while those at the bottom of the pile are struggling to keep up with the cost of living? How much can someone possibly need?

Methinks a big part of it is Keeping-Up-With-The-Joneses, on steroids! The remuneration disclosure requirements, meant to keep people honest, have delivered the opposite result. Those enormous executive egos now know exactly what their competitor counterparts are pocketing and feel a need to see them and raise it a hundred thou (or several). Moreover their pay doesn’t seem to have any link to delivery. Hurdles too onerous? Just lower them. Share price at an all time low? Give the management team a raise. Booted due to non-performance? Take a couple of mil to soften the blow to self-esteem.

Our blog last week referred to the Occupy Wall Street protests and in part they are objecting to this sort of disparity in society, where the bigwigs get it all while the battlers who make a real difference get precious little. Let’s get back to basics. Put egos aside and remember that more money does not equal more happiness. It would be refreshing indeed to try a new paradigm, where compensation (financial and non-financial) is truly proportionate to performance. A true meritocracy, one where creativity, endeavour and excellence are rewarded. One where there is blue sky for everyone.

Who Are The 99% ?

So have any of you heard about the “Occupy Wall Street” movement that started life in New York but has now spread across the world’s major cities in various forms. Well, you would have if you have liked our Facebook page as I posted two articles on it in the last week about this very subject, but for those of you luddites out there not on Facebook (yes, I know - social networking is evil and will turn us into antisocial zombies) let me enlighten you a little?

Although not completely 100% clear on what their biggest beef is and who it is with (and this has been one of the main criticisms levelled at the group), their main bone of contention boils down to a growing realisation (perception?) that they have been done like a dinner. Their tagline is “we are the 99 percent” which refers to their belief that the 1% rich have got richer while the rest of them have seen their wealth decimated, job opportunities dry up and their homes foreclosed at record levels.

They have a sneaky suspicion that the wizards of Wall Street have got away relatively scot free with peddling their dodgy wares of cheap and easy credit and tricky dick investments, with government bailouts and handouts, and have taken up where they left off a few short years ago, while the 99% are expected to pull in their belts and suck it up as America tries to get their economic ball rolling again.

Although nowhere near the level of intensity that has been seen in America, there have been similar protests here. Protest is probably too strong a word for the benign camp outs in financial districts that have so far been the hallmark of our arm of the movement but let’s stick with protest for the sake of this blog.

So, what do I think?

It’s easy to look down your nose to say the protesters are grumbling victims blaming nasty big corporations and bankers for their predicament when, in boom times, those same people were in there with their ears back racking up credit for a plasma tele and a McMansion in the burbs. That’s the easy way out.

There’s a part of me frustrated at the financial district’s smug self righteous talk of capitalism and free markets while those who are nearing or at retirement invested in so called balanced options in their super funds (for balanced read up to 75-80% in growth assets!) now peering down the barrel of filling in forms at Centrelink. I no longer look at those men (or women) in suits in the glass towers of the CBD as superior experts with the inside scoop on how or where to invest. I realise there is no magic bullet to building wealth. I understand more about the nature of risk and return.

As the commentators keep telling us we should count ourselves lucky to live in this country and in this part of the world. With our economy cushioned by stricter banking controls and a resources boom that has some way to fire yet, what I most fervently wish for is that we all make the best of our good fortune. That when the boom does peter out (as all booms must) we find ourselves at an individual and national level experiencing the security and comfort that comes from financial responsibility. And that responsibility falls not just on us but also on the shoulders of our business and political leaders.

Here’s hoping, anyway.

Broadening perspectives

So there we have it. For the second year running research has highlighted the correlation between having women on boards and higher returns on equity. Studies were performed on ASX 500 companies – those with female directors outperformed their male only peers by 6.7% over 3 years and 8.7% over 5 years. Not insignificant. Yet still, around half of those reviewed, Australia’s largest corporations, have boards consisting entirely of grey suits. Shareholders of slow moving companies should be up in arms.

This is hardly an epiphany. Darwin championed diversity - its byproducts of variation, competition and selection are compelling indeed. Diversity ensures survival of the species. Diversify or die. Or rather, when it comes to our investments, significantly underperform. We all know that, right? Those of us with portfolios skewed heavily towards shares as an asset class have felt the pain in the last few months. We know the drill – diversification smoothes our portfolio returns.

And this latest report gives us hard evidence that it’s not different when it comes to the management of complex organisations. The same principles apply – when times are complex (and when are they not?) it requires creativity, collaboration and lateral thinking to navigate a large company through the mire ultimately to produce satisfactory outcomes to stakeholders: staff, customers and shareholders alike. And to have its leaders seeing things from different perspectives is paramount to achieving this. Celebrate difference, embrace debate - this is what gives birth to the ideas of the future.

As a country we are trending in the right direction, albeit at snail’s pace, mainly due to the personal crusades of the likes of Elizabeth Broderick, the Sex Discrimination Commissioner, and persistent murmurings about instilling quotas should numbers not improve from their current dismal state. Women now hold 9.5% of board positions, up from 7.1% last year. As I said, inching forward.

We can sit and navel gaze about why Australia is so far behind other Western countries in achieving an element of equality in this area. Or we can just do it. There is no shortage of capable and willing women out there to take up the challenge. Do or die.

Are You Up For It?

Well, are you? You may have heard of this initiative already but October is Buy Nothing New month. You pledge to buy nothing new (apart from the essentials of food, drink, medicine and hygiene) and reap the rewards of a lower environmental footprint, more cash in your pocket and perhaps a large swathe of smug self-satisfaction. Rather than me rehashing the whole website go here to get the scoop. It’s something that appealed to Nicky and I immediately and we have stuck our necks out and signed up to pledge.

Is it just me or do you agree that as you get older you realize that the most joyous moments of life often come from the simplest (and often cost negligible) things. A bumper sticker I saw recently declared “The best things in life aren’t things” and that resonated with me.

Here’s an example - on the weekend, along with many Sydneysiders scrambling to enjoy the first teasings of summer, I sat on the beach doing nothing more than skimming the newspaper and eating an apple and it was, quite frankly, the most pleasant way to spend an afternoon.

Here’s another one – it’s become a running joke between Nicky and I about how much we love using leftovers from our respective houses to eat at work together the next day rather than dropping $12 on an average salad or sandwich at the coffee shops down the road. Who would have thought a Mexican chicken quinoa salad could cause so much excitement but there we were exclaiming how excited we were to have a new leftover meal on the menu. Just call us Mrs and Ms Scrooge.

I am not sure if it is age, the after effects of the GFC or out-and-out necessity that is driving me this way but I hanker after the simpler life. Not in a “give it all up and find myself while meditating on a mountaintop in Tibet” kind of way but just less. Less spending, less debt, less consuming for the sake of consuming. It’s not easy doing that in a place such as Sydney (goodness knows I went a bit mad at the North Bondi markets last weekend) but for me, getting off the treadmill of acquisition, is where I would like to be heading. I am realistic enough to know that I will always enjoy a shopping splurge now and then but I really enjoy making conscious decisions about what I want to spend my dollars on. In my own small way – saying no gives me a powerful buzz!

So mull on that for the week, readers, and see if you are up for the challenge – can your curb your consumer cravings? Well, one month at a time anyway. Will let you know how WE go!

Caring for the Carers

The world is so out of whack isn’t it? I was watching a news article on television the other day about caregivers to the elderly and disabled and about how they are trying to negotiate a minuscule payrise. Contrast that to the bulging paychecks of the financial and legal community and it doesn’t take long to get a rather nasty taste in your mouth.

What’s more galling is that seemingly you don’t even have to perform well to get your payrise, bonus, share options and other perks of office. Let alone even be held to account in any shape or form for blowing up companies through bad management, excessive debt and downright greed. The court cases take forever, if they are ever started at all after all the toing and froing between lawyers who split hairs over details of what their defendants did or not do. Then, like magicians they reinvent themselves and reappear in another role somewhere else with barely a dent in their well-oiled armour and a new juicy package to boot.

Yeah, yeah, yeah! They’re smart, they work hard, they’re away from their families more than most, blah blah blah. Cry me the proverbial river.

Ok, it’s unrealistic to expect that those in professions who truly make a difference in people’s lives – nurses and caregivers, teachers, childcare workers – will ever be rewarded on par with someone employed in an investment bank or public company. But why does it have to be like getting blood out of a stone when it comes to giving these people a payrise? Surely they deserve it?

I know we are talking in general about the government funding these incremental payrises and when I say the government, of course, I mean you and me via our taxes. I’m not pretending that it is an easy task to run and manage the budget of a hospital or school. On the other hand, I don’t know many taxpayers who would begrudge an improvement in the balancing act of the wages of caregivers versus money spent on some ridiculous initiative after intense lobbying by some obscure group hellbent on receiving funding.

Aarggghh…life is so damn complex. I’m probably opening a can of worms with my rant. I know there are many more shades of grey to this issue that I can adequately present in my short blog. By their very nature blogs are a window into what one is thinking about at a particular time. By their very nature they are transient and ephemeral. But there you have it, for what it’s worth, a window into my mind one night this week.

When trust isn’t enough

I got a big wake up call last week. An embarrassing and infuriating discovery all the more ironic since I spend my days imploring clients to get their house in order when all the time mine was not in order at all. Let me elaborate. We are constantly pushing the point of Know What Is Going On! Find out about your family trusts! Who are the trustees? The beneficiaries? Imagine my dismay when I perchance studied the trust deed of our own “family trust” which revealed that neither my name, nor those of my children appeared AT ALL in the documentation, not as the appointer of trustees or as beneficiary (I am a trustee, but the “appointor” can change trustees at will). It refers to the “Principal” – you got it, my husband (who is named), and “his current or future spouse” – that’s me. Reduced to a role, and allowing for replacement. This documentation is apparently “standard” (tax reasons).

So why didn’t I know? My excuse is probably quite similar to that of many women, give or take a few details. When my hubbie and I set up the trust eleven years ago, we were recent and wide-eyed emigrants with two young children, and I was taking my first tentative steps in new roles at work and home. I was more than fully occupied and I just didn’t pay attention. And for all the years since I have assumed that, as it’s our “family trust”, we would both be equally represented, or hold equal powers.

But the most enlightening part of this whole situation was yet to unfold, which is this: when I declared to our accountant that the trust deed “will need to be changed”, he summarily informed me that he would “talk to my husband” about it. To effect the changes required, I will need to rely on the goodwill of my husband. All well and good if things are going swimmingly, as they are (to the best of my knowledge). Somewhat precarious, if not.

There are two reasons this is important. Firstly, marriage breakdown (or breakup.) Now I know in this situation the law dictates a fair division of property, which includes assets in family trusts. However, having assets (the house, superannuation, family trusts) under your direct control holds a power that is impossible to match. There can be a definite and deliberate sleight of hand take place at any juncture of the separation process: from preparation of balance sheets, to splitting of superannuation and allocation of assets, that can prejudice the “receiving” spouse, and potentially the children.

Secondly, if some misfortune befalls the “current spouse”, a so-called “future spouse” may turn out to be a stepmother in the fairy tale mould, may not be particularly predisposed to her newly inherited family, and could influence her new partner in ways that may not work in the favour of your children. This leaves them vulnerable, again something you’d rather insure against now if at all possible.

So, don’t take things for granted – check your status quo and work to change it if it isn’t fair and equitable to you and your children. Here’s hoping mine goes without hitch.

Drawing the Battle Lines

You get to the ripe oldish age of 43(like moi!) and by this time you have observed and been a party to a fair few fights, disagreements and battles. In your marriage, family, friendships and work life you are a rare beast (or perhaps a beast without a discernible pulse) if you don’t occasionally end up on differing sides of a point of contention (and oh my, how many points of contention there can be!).

From my viewpoint and experience (a divorce and four siblings has provided me with the prerequisites needed for my commentary) people can be divided into 2 main camps. Ok, there is probably a few more camps but for the sake of this blog (and the point I am trying to make) just run with me on this.

There is the group of people who love a good barney, discharging every emotion and thought as they pass through their brains clear in their conviction of what (or who!) is right and wrong. Seemingly, conflicts barely raise their heart rates or ruffle their feathers. The fear of permanently damaging a relationship with the true weapons of mass destruction (our words) does not seem to enter their head as they keep at you and at you, driving home their perspective on the situation with a lack of empathy and ability to see others viewpoints.

Those residing in the other camp will run a mile from any prospect of speaking their mind and resolving an issue. They often seethe with resentment over their issues and have a memory like the proverbial elephant, storing grudges to be brought up later at the most inopportune moments.

As I said I am using extremes here. However, having recently witnessed an uncomfortable conflict in a work environment, it made me ponder the different styles that we all bring to the table and what to do when we feel there is an issue to raise. Keep the peace as much as possible or speak your mind as the dispute arises.

What I do know is that becoming a wise counsel to yourself is vital. Learning if, when and how to raise an issue is a life skill that unfortunately, for most of us takes a lifetime to cultivate. With some people you wonder if it is cultivated at all!

Whenever I used to tell my mother I wanted to give someone a good spray over something I perceived was unjust or unfair to me, she would often advocate the “people in glass houses” theory. This ran along the lines of – go ahead and spray if you must but bear in mind that when you do so you open yourself up to the person on the other end of your tirade equally expressing their views on your behaviour and position. Realising that perspective is just that – YOUR take on a situation and not necessarily the “truth” can teach you to take a cautious approach with your words or perhaps remaining silent.

That is not to say that walking away or turning the other cheek is always the way to go. Resolving conflict can be a pathway to a better relationship (be it a personal or business one) if there is not too much argy bargy or descent into mudslinging along the way.

As in all things, a measured and balanced approach is best. What exactly that approach looks like…sorry, I end this blog as a fence-sitter, only you can answer that for yourself!

Is it safe to go back in the water?

It’s well known that we humans feel a loss far more than we feel a gain of the same degree. So the past weeks have been particularly agonising for those of us invested in the share market. If this latest fall was a one off it may have been bearable, but it was just a few short years ago that we experienced a similar painful drop. Do we still have the nerve to dive into the turbulent waters that is the stock market? And do we need exposure to this volatile asset class in our portfolios at all?

Many investors will, understandably, take their money and run…onto dry land and into the relatively safe havens of term deposits and bonds. Capital protected and not a bad return - when the interest rates are 6%. But these assets are not the Holy Grail they may appear. While interest rates are high, yes it makes a compelling alternative to the growth assets of property and shares. But, (and there’s always a but!), we’ve spoken about the link between investment return and risk, and therein lies the rub with the so-called “safe” assets. Lower risk equals lower return in the long run. Cash and fixed interest securities do not provide capital growth, only income, and therefore are not wealth building assets.

For those with time on their side, ie: not retired or about to retire, the investment horizon is long term indeed, so we need to continue to actively grow our capital bases. That means not running for dry land, but rather holding our breath and going in for more. Taking the plunge involves courage and the realization that although there will be ups and downs, history has shown us the share market delivers over the long term. The long-run expected return from the ASX is around 9.5%, which is made up of a combination of dividends and capital gain. Over time this is materially higher than returns from defensive assets, because of the higher risks involved. The higher return ensures that our nest eggs are not eroded by inflation, but are hopefully growing over time.

Those of us closer to retirement still need some exposure to growth, but will be invested more conservatively. Dipping the toes is a sensible route to go – still refreshing but not an all out assault on the senses. Chat to your adviser for individual advice for your circumstances, but don’t put away your swimmers just yet.

Here we go again...

Ok – a show of hands! Who’s feeling demoralised by the stockmarket? Who’s feeling a pit of anxiety in their stomach every time they tune into the news and see drops across all sharemarkets of 5%? Who is feeling battered and bruised every time they look at their stagnating and often declining superannuation balance?

I know my faith in the long-term returns of shares is being sorely tested after the bloodbaths of the last few years let alone those earlier in this century (the dot com boom and bust is sooooo last decade!). Add to this a failing confidence in the abilities of governments, policy makers, investment bankers, ratings agencies etc. who seem to have all played their part in the train wreck that is this unfolding debt driven nightmare.

What is clear with the benefit of our oft-mentioned friend, Harry Hindsight, is that taking a more conservative approach towards our investments as we near retirement is a sensible, prudent approach. Yes, we may miss out on some of the glorious, exciting upside when the stockmarket is in “bull” mode, however, the impact on us when we lose large chunks of capital, at a time when we are visualising an end to our working lives and fulfilling some of our long held dreams and aspirations, is hard to bear for most of us with modest retirement balances.

How this conservative approach looks for each of us is of course an individual decision. What it does require is an inner resolve to get up close and personal with where our money is invested. No excuses for those of us who have a “head in the sand” or a “set-and-forget” policy. Having financial assets necessitates our involvement. Whether this involvement is a little or a lot is something you need to determine and depends on your interest and time constraints. A reliable adviser can be an objective sounding board for our anxieties, not to mention a welcome helping hand in mapping out the possibilities and choices we have for our investments.

But, still, I refuse to drown in a sea of doom and gloom. Having survived a few personal life changing events in the last few years (and who amongst us dodges these?) I am learning that life has a way of restabilising and adapting to new realities, as fortunately, do we. The sun still comes up, the world keeps turning and life demands that we get on and make the best of our circumstances. What other choice do we have?

I’ll have what she’s having…

I for one have had it with being a “price-taker”. When I’m the one holding bargaining chips in the form of cash, particularly in this current climate of intense competition, I want to be courted. I want wooing, well considered foreplay followed by full satisfaction, guaranteed. And not just as a first time customer. Don’t take my loyalty for granted. It really annoys me to see my bank attempting to lure newcomers with tantalizing offers that represent a significantly cheaper deal than the one I, a longstanding and reliable client, am receiving. Not just with my borrowing, but also my lending. Yes, I too would like to receive that introductory term deposit rate. No? Well, I’ll go somewhere else then.

But am I deluded? Perhaps it’s us, the consumer that has to be doing the hard yards, and being proactive about finding the best value for money. We, the average Australian shopper, just don’t seem to be that flash at getting a good deal. We feel a bit embarrassed to ask for a better price. Maybe it’s our Western sensibilities and compliant natures that hold us back when our rationale tells us there’s a better deal to be had. All the while, others with more aggression and persistence are getting the goods.

So this bargain hunting obviously doesn’t come naturally to all of us – those of us with a more reticent nature need practice, even a bit of role-play. There’s the option of hightailing it to the markets of Africa or Asian bazaars, where negotiating before you part with your hard earned currency is deeply ingrained into the culture. But leaving exotic travel aside, we can flex a bit of muscle closer to home, starting with those (few) retailers who actively invite us to negotiate. Announcing proudly that they will match a lower price found elsewhere, we can take them at their word, do our research online, swallow our inhibitions, and yes, just ask.

How about all the press lately about increases in online shopping to the detriment of local businesses? There is another course to take – instead of trying it all on for size and discarding a pile on the change room floor heading off to purchase online, why don’t we steel ourselves and challenge our favourite boutique to simply match the online price? We walk out happy with an immediate purchase, after sales service and a good price. The retailer has cash in her pocket and stock out the door. A win-win.

So I suppose, as with any great relationship it’s a two way deal between us and our merchants – don’t take us, your customers, for granted and we’ll keep you on your toes with a bit of hard work and some newly cultivated haggling skills.

The Challenge of Change

A few weeks ago, when the Greek debt crisis was in full swing, I read an illuminating article on the reasons why Greece (and I use Greece as a convenient example – as we know it’s hardly the lone ranger in having a debt crisis at the moment – hello Ireland, Portugal, Italy, Iceland…US?).

Without rehashing the article (and opening myself to plagiarism laws) the essence of the piece was that a country has a debt crisis much the same way an individual (or company, for that matter) has a debt crisis. It borrows too much, spends too much, does precious little about paying the loan down and effectively squanders the chance for financial security through bad choices and mismanagement. Access to easy and cheap money (as it was for extended periods of time in the early to mid noughties) coupled with man’s inherent pleasure seeking and pain avoiding nature is a recipe for disaster as we have all found out with the benefit of hindsight.

As I watched the scenes on television of mayhem and rioting by some members of the Greek population aggrieved at the “harsh” measures (tax hikes, spending cuts and privatisations of state owned assets) contained in the austerity package the government was trying to get through, it struck me how hard it is for human beings to moderate their behaviour when it is required. Oh yes, somewhere in our hearts we know we gotta do something, but if we get there, it’s kicking and screaming all the way.

Retire later – are you kidding? Learn to live on less – no frickin’ way! Make headway into that credit card debt – it’s not fair, we cry. All the handwringing, bellyaching and “woe is me” moments don’t really do anything other than delay the inevitable slow climb out of our own self-created hole of debt.

But what riches (and I don’t necessarily mean of the folding variety) await us if we do conquer our demons and start back on the path to self discipline and control. It’s a well-known truism of life. What doesn’t kill us makes us stronger. The confidence and fulfillment in seeing ourselves as masters of our own destiny rather than jelly-spined victims is heady stuff indeed.

My own current personal vice vanquishing moment is reducing or even eliminating artificial and processed sugar from my diet. For a self-confessed carb addict this is no mean feat. Kicking a one–a-day diet coke habit and eschewing a hot chocolate at a cafe may not seem much to some but for me, it’s my version of Mt Everest. Ok, that’s a little bit dramatic – let’s make that Mt Kosciuszko to keep it in perspective.

Despite all this talk of taking responsibility, I have empathy for the general Greek populace. They have lived their everyday lives with no discernible difference to the years before, unwitting accomplices, to a certain extent, to the decisions made on their behalf by the government of the day. And now being expected to tighten their belts and make changes to move Greece forward into a new era of fiscal restraint.

On that note, we each have to ask ourselves, are we up to the challenge of change?

Vacation Contrarian

We were tardy in booking our winter break this year and so ended up tossing all and sundry into the Landcruiser and heading north to our customary summer haunt. I had been emphatic this July we were to escape the blustery and bleak Sydney winter for at least a week and had investigated all manner of island alternatives, albeit at the very last minute. The late hour suggested our options were not great, hence the decision to take the safe and known course. So mid north coast it was.

Two advantages to the holiday were evident up front – inexpensive and low admin. Out of season rates shared with another family – almost cheaper than staying home! And…no dogs to kennels, no passports, airports, transfers – toss the boogy boards and beach bats in the rear and head out onto the delightfully traffic free highway. As it turned out I vastly underrated the week away – it turned out to be a most enjoyable and restful break for adults and kids alike. We concluded that it’s actually not a bad way to do holidays: buck the trend and brave your favourite resort when everyone else is headed in the opposite direction.

We did have the weather to thank for a great deal of our fortune – clear sunny skies all week. We effortlessly changed our summer routines to fit the short days and long nights. Instead of January’s mad rush to hit the sand before it turns to molten ash and the sun sears all to a cinder, we had a leisurely morning walk followed by breakfast, sometimes barely making the beach by noon. But no fear, the sun’s feeble rays kept us mildly warm, the sea’s temperate 19 degrees meant often more comfortable in than out, so the waves were well frequented (ok the kids did prefer their wetsuits…). Evenings meant games, TV, a huge log fire and a glass or few of pinot.

As for the shopping, out of season customer service reaches new heights. Instead of jostling sweaty hordes for overpriced resources, we were able to amble in to the local store at any time to secure our daily needs. Friendly and grateful staff went out of their way to fulfill our every desire. For instance, one evening we’d misplaced our especially purchased parmesan – a core ingredient for dinner, and so tore back to replace, only to find the owner having locked up and headed home. But when he saw our evident distress, he could not have been more accommodating, opening up the shop so we could repurchase the cheese. Smiles and good humour all round.

As friends and family post their gorgeous photos of hot European summer, perfect Perisher powder, sublime island getaway, our break seems pretty pedestrian and I’m sure no-one will be gagging to view our pics. But we are all blissfully rested and non-jetlagged, and I am thankful for the added bonus of no long-term pain in the form of a whopping credit card bill.

A Time to Celebrate

We human beings are a funny lot. Give us a reason, any flimsy reason, and we want to throw a party. Once the reason has been established, the party giver follows a very standard recipe. Lashings of delicious fat and sugar-laden food, liberal doses of alcohol (of course depending on the age of the partygoers) to aid and abet party dynamics and some age-appropriate music to supply background noise and encourage aforementioned partygoers to bust a move on the dance floor.

Nicky and I are having a party this week to celebrate a year since our inaugural education course and also, the launch of our advisory business, wiseadvisory. It got me thinking about celebrations, why we have them and what they represent. I came to the conclusion that they fall into two categories. The first category commemorates the past, and the second, the promise of the future. In the first I would put birthdays, anniversaries and graduations and in the second, christenings, weddings, divorce parties and of course, launch parties.

With the fast approaching end of financial year (another great reason for many in the financial services industry to throw a bash) I decided we should all, in our own way, use this time to look back at how far we have come and look forward to what the next year holds.

It sometimes feels, for me, as if I am never making any headway into what I need to do or accomplish, my inbox and to-do list are always full and I spend my life spinning my wheels and not getting to where I want to be. Yet, when I think back to what I have done over the past year I do shake my head in wonder and give myself a metaphorical pat on the back at what I have manifested through my personal efforts. With that done and the accompanying sense of satisfaction still glowing, I can then turn my head to where I would like to be when June 2012 rolls around.

We need to give ourselves permission to rejoice in what we have done so we gain a sense of pride and self-respect. Why? Because this is what drives us to keep going. At a financial level (and yes, here is the inevitable segue to our finances) we can be very pleased with ourselves when we pay off our mortgage or credit card balance, cheer ourselves on when we reach a savings goal and be delighted about our ability to keep to our budget. They don’t need to be major achievements – changing behaviour is a hard won battle – but take the time to appreciate what you have done to improve the management of your finances. It makes the planning for next year that much easier.

On that note, I am off to the bottle shop to pick up the champagne for friends, family and clients to enjoy at our small celebration of the wisewomen journey. We’ll be back online in a couple of weeks after the winter break... Happy holidays!

Dutch Disease Down Under

When the dollar hit parity we declared a celebration. Now it appears the par(i)ty has gone on too long and a mind numbing headache has taken its place. We’ve fallen ill, and its called Dutch Disease. Pray please tell me what does this mean? Why, with such fun to be had with affordable overseas travel and cheap online shopping, is a strong Aussie dollar such a bad thing?

First things first – what is Dutch Disease, and how did we catch it down under? It could be reminiscent of so many things…but no, it’s not related to clogs, dykes or the legal use of marijuana. When I first heard the term I wondered if it had anything to do with the historic Dutch economic event know as “Tulipmania” which unfolded in the seventeenth century. Huge interest in the beautiful tulip bulb led to prices becoming stratospheric – at their peak, more expensive than a house in Amsterdam. Locals, terrified at missing out, sold their business, homes, livelihoods to participate, only to lose it all when the inevitable happened – the bubble burst: ‘Tulip Crash”! And we thought bubbles’ bursting was a modern phenomenon.

So, not related to tulips, but Dutch Disease is an economic term, and was coined by The Economist in 1977, well within living memory. The concept attempts to describe the relationship between the rising exploitation of natural resources in a country, and a falling significance of its manufacturing sector. When the Netherlands was experiencing a natural gas boom following the discovery of natural gas in 1959, its currency soared in tandem, which negatively affected the attractiveness of Dutch exports. Sound familiar? Australia has fallen victim to Dutch Disease.

You may also have heard talk of Australia’s two-speed economy - maximum revs on the autobahn for mining versus country roads for other industries. As for tourism – more like the breakdown lane it appears, as the strong dollar keeps overseas visitors at bay, and we all head offshore for exotic breaks. But as we can now see, whilst fun for us, a high dollar is not good for our export industries.

Some argue that now is a chance for those industries in the slow lane to carve niches as truly competitive businesses, to focus on innovation, to seize opportunities provided by free trade agreements and create new growth areas that are less reliant on the resource sector. Achievable perhaps if we divert portion of the mining riches to invest in non-boom areas of the economy (sorry, did someone mention a Mining Tax?). Investing in innovation to build internationally competitive industries will diversify Australia’s economy and reduce risk – if and when the resource boom slows, there will be a healthy manufacturing sector to fall back on.

Who’s to know how it will eventually play out, but with a bit of imagination and political vision it seems recovery is possible. We may even emerge with a stronger disposition, a more robust immune system. No sympathy flowers required yet thanks!

In Search Of....The Ideal

It seems like we are all in search of the Ideal. Whether it is a relationship, our bodies, friends, houses or jobs it feels like if we just keep looking and tweaking things here and there, we will finally reach a place where we can sigh, sit back and think everything is in place how we want it.

Not surprisingly, life isn’t that simple. And nor are our investment portfolios.

The array of choice we have in Australia with respect to investments is mind-boggling. And as “consumers” of investment products we tend to become more confused when we have too many choices rather than benefitting from this huge selection.

We torment ourselves with the idea that there is a perfect set of investments or an asset allocation unique for each of us that will perform to expectations year after year. We sometimes look over the fence and think perhaps our neighbour is on to a good thing and question our approach.

We need to get back to basics and remember first principles to combat this anxiety. Although determining appropriate asset allocation levels and investment selection is important we have to remember that there is no ONE right way to build wealth.

Some people are extremely uncomfortable and unfamiliar with shares and concentrate entirely on direct property acquisitions like investment units and houses. Although this might imply a lack of diversification, this can be (and has been for many) a very valid and successful manner of growing your asset base.

Others can’t bear the thought of the work involved in investment property and maintain solely share portfolios, happy to collect their dividends and distributions and rely on themselves and others for research and strategies.

The cornerstone of wealth creation is living within your means and having a manageable debt level as well as protecting your downside through appropriate insurances. Agonising over what investments to make doesn’t really add value. Starting somewhere, anywhere, does.

It’s never a good moment to realise your fund has not performed above the benchmark or see your 1-bedroom investment property stagnate in value for long periods. If you do look back, recognising or appreciating that at the time you made the decision to the best of your knowledge and ability helps alleviate the constant “whys” and “what ifs”. Learning from the experience rather than berating yourself over less than positive outcomes is always a better approach.

There are no guarantees in this life with so many things. Investment performance is certainly one of them. Developing a strategy, putting it into place and giving it time to perform is all any of us can do, no matter whether the dollars are large or small.

Let’s leave “ideal” out of the equation for now and focus on what’s important. Making a start!

Love me, love me not

My 14 year old asked me yesterday what a misogynist was. My answer both intrigued and confused him. How can a whole gender be hated? By whom? Well my response was of course, mainly men (though you’d do well to wonder if that’s really true, what with the backstabbing we sometimes see among the “fairer” sex). Next question: but how can they? Don’t they too have mums and sisters and daughters? At this stage I’d have to refer the question to someone more qualified in behavioural psychology than myself, as the cause of that particular mental state is plainly beyond my realm of expertise.

However what surprises me is how prolific this mental condition is, and often present in the most unlikely of people. Not complete aversion, but rather an intense loathing of women attaining positions of influence and power.

Take people’s reactions to Julia Gillard. I am amazed at how vitriolic and unashamedly hypercritical so many men, and some women, are of her. I’m not talking about her politics or policies, but her voice, accent, hair, dress and general demeanour. Even her earlobes don’t escape comment. The intense hatred of these aspects of her (what else is it but her femininity?) appalls me. You rarely hear male politicians being discussed in this manner. To me it smacks of a sinister misogyny that seems to fester beneath the surface of many a benign male who otherwise pays lip service to the equality of women.

Test question: what is the equivalent of the word, misogyny, for men? Does it even exist? Well it does, I looked it up – misandry. Ever heard of it? No, me neither. It does not form part of everyday discourse. I know some women probably do dislike the entire male gender, more likely as a result of sexual abuse or exploitation than any other reason. But many continue to love and nurture the males of their family and close friends despite experiencing horrifying incidents at the hands of the male gender.

We long for the day when we are all celebrated for who we are and what we can contribute to those around us, rather than judged and sentenced as a result of our sexual characteristics. With any luck when my son grows to adulthood, he will live in a world closer to this ideal. Here’s hoping.

Closure

So, as Nicky said last week we did a radio show with Deb Cameron on 702 a few weeks ago. What she neglected to mention was that we made what we termed a "strategic blunder". We decided that no matter what Nicky would answer the first question, which we duly prepared for. All good so far. When Deb said, "So Jill, how do the financial lives of women differ from men and when is this likely to become apparent" my heart sank. Strategic blunder or no, I went blank and muffed it. It wasn’t a disaster but nor was it my finest moment.

Aside from the effect on my ego, after a few short weeks I have decided the experience is perfect fodder to foster the lost art of laughing at oneself. Still, I am really annoyed that I didn't just answer the bloody question. I keep running through the ideal response in my head. Nicky and I have had discussions on these issues for the last 2 years so I know my opinions on the subject!

Anyhow, I realised I have the ideal outlet for closure for this. What better way to send my answer out to the universe and move on, than my own personal soapbox - our blog?

So grant me my indulgence on this one! Here is what I should have said that morning and it really goes to the heart of wisewomen’s philosophy…

Women, I feel, have inherently different driving forces from men, driven partly by genetics and partly by social conditioning of the last few thousand years or so. When we have a child, something shifts inside many of us. Everything seems to fade into the background as we learn the art of nurturing the tiny being we have brought into the world. Add another child or more to the mix and it makes sense and is sometimes a relief to loosen the reins of our involvement in the family’s finances. Subtle power shifts occur when this dynamic comes into play that is difficult to perceive at the time. When everything is peachy, it seems perfectly normal and “right”.

Life has a funny way of throwing us curve balls, however, in the form of death, divorce or disablement that can quickly highlight how vulnerable women can be when they hand over the responsibility for their money. This is not meant at all to be a man bash. Things will never change if we continue to see ourselves as having being dealt the short straw in the gender stakes rather than acknowledging the choices and decisions we make along the way. Men have equal but different pressures on them around the need to provide and be successful in the eyes of the world. Learning to empathise with each other’s point of view is the way towards resolution of conflict and it is no different here.

The message is that nobody, men or women, should outsource their involvement with their finances. You wouldn’t expect someone to hold your hand with your health and nor should you with your money. We need to take ownership of what is happening and the decisions and choices that are made around spending, saving and investing our money. It certainly means less recriminations and remorse later on down the track if things do come unstuck.

I could go on longer but the nature of blogging is to be relatively short and sweet. And yes, I am feeling better and ready to tackle the next radio interview if the opportunity arises.

I am learning more and more as the years slip by that closure, as psychobabbly as it sounds, is a good thing. The quicker the better, too! Wasting time or agonizing on what could or should have happened is a surefire route to unhappiness. If you read this blog and are stuck on something of your own my wish for you today is…closure.