1. CASH MANAGEMENT
If you don’t understand what you are doing with your money, you are going nowhere.
Nobody teaches us money management skills, so the old saying “we don’t know what we don’t know rings” true. If you don’t know or understand how to manage your money, this makes achieving financial gains very challenging.
Modern Society is such that we are constantly bombarded with messages to spend money, “now”. There are literally millions of spend “now” opportunities between pay cheques. So much so, that the probability of spending more than we earn is almost inevitable.
How do we avoid these pitfalls, and what tools are available to help us?
Any budget advisory service can draw you up a budget, but experience shows that it is out of date within 24 hours.
The successful operation of a budget requires three key components which are absolutely essential. If one of these ingredients is missing, it simply will not work. The three ingredients are as follows:
1. Honesty
2. Accuracy
3. Discipline
Cash Management, in simple terms is the “effective control” of your Income and Expenditure. Most people have the capacity to provide the honesty and the accuracy required. It is the discipline that determines whether or not they will be successful.
To this end Kauri, can offer you a tool which gives you precise information pertaining to your income and expenditure which puts you in control of your financial future. This tool will assist you in your spending decisions and to keep you on track to achieve your financial goals.
The purpose of effective Cash Management is to streamline your ongoing expenses to make way for financial gain.
How do we make “Financial Gains”? Click here to fill out a Contact Form.
2. DEBT MANAGEMENT
Contrary to popular belief, there is no such thing as an “interest free” loan or hire purchase. The interest is already built into the commodity price.
Debt management is all about acquiring those things that you want i.e. a Home, a Vehicle or some other such item, in the most cost-effective way. Therefore, reducing the amount of interest that you pay is the best place to start.
For home owners who wan to pay off their mortgage faster, understanding the principles od debt is critical. Know how to structure your mortgage to be able to accelerate your debt repayment can and will save you many tens of thousands of dollars interest payments to your bank.
To begin with there is a huge difference between the amount of interest that you pay and the “interest rate” charged on a credit contract. This is easily understood when considering the use of a credit card. The interest rate charged may be 20% but if you repay the full balance owing on or before the due date the actual amount of interest paid is “NIL”
In reality, there is no such thing as good debt. What is true is that some forms of debt are better than others.
The difference between good debts and bad debts are as follows:
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Some debts attract tax deductions whilst others don’t.
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Some debts are incurred to purchase investments rather than liabilities i.e. a House versus a typical family Car.
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The difference is that Investments appreciate in value and liabilities depreciate in value.
The key to controlling your debt is to control your cash flow. The key to reducing your debt is to create positive cash flow (go to Cash Management).
Positive cash flow can be assisted by utilising the difference between good debt and bad debt. This then creates the best investment strategy which will not only enhance your future life style but help you to reduce your debt more efficiently. (Go to Investment Management)
The purpose of effective Debt Management is to reduce the amount of interest that you pay to open the way for financial gain.
If you are interested in saving unnecessary interest payments to your bank, click here to get in contact with Kauri Financial Services.
3. RISK MANAGEMENT
As you take on more responsibility in life the risk of a financial loss is increased, therefore the need for financial protection increases. This necessitates a comprehensive “Risk Management Plan” to help you negotiate and protect your changing lifestyle. This in turn will provide you with continuing peace of mind.
What is Financial Security?
To be financially secure means that you have reached a position where no matter what happens there are no financial risks. If, right now, you do not have the capacity to provide for all of your needs in any event, then clearly, you have the requirement for a risk management plan.
Your financial security could be threatened by three uniquely different events. Any one of these can preclude the achievement of “Financial Security” for you and your family. These events are as follows:
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Death
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Disability or
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Traumatic illness.
What is your “Most Important Asset”? The key to maintaining your lifestyle is undoubtedly your ability to earn an income. This is without question your most important asset. Why? Because it provides all others. Should you become disabled either through sickness or injury your lifestyle comes under threat. When your income stops, the bills don’t. Mortgage, rates, taxes, education and other daily expenses continue indefinitely.
The best way to protect your income is to insure it. Just as you can insure your income you can also insure against death and traumatic illness. (For more details click here).
What “Financial Risk’s” do you run if your health fails?
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Loss of employment resulting in loss of income. Your employer will not subsidise you forever.
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Loss of savings due to increased cost of health care.
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Possible loss of family home due to inability to pay either mortgage or rent.
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Loss of current and future family lifestyle.
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Loss of your financial security, because if you don’t already have a risk management plan you now cannot get one.
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You go from being your family’s’ greatest asset to your family’s greatest liability.
A well-designed “Risk Management Plan” by Kauri Financial Services, not only minimises the financial consequences of all of these risks, but opens the way for financial gains. We will help you find that all important balance between having the lifestyle that you want, paying down debt at a rate that allows you to enjoy that lifestyle, and knowing that if something untoward was to happen, then financially, your family unit will still be secure.
To find out more about reaching and achieving this balance, fill out a contact form here.
4. INVESTMENT MANAGEMENT
What do we really mean by investment?
The Financial services industry is in our opinion somewhat confused about what is an investment. To our way of thinking an investment is something that not only guarantees you a return on your money, but guarantees you the return of your money.
This leads us to the different types of investment. Typically, financial planners would divide these into five main groups as follows:
Cash:
This is essentially currency trading for the purpose of making a profit. It can be volatile therefore requires constant monitoring and a great deal of experience and expertise.
Fixed Interest:
This means exactly what it says, a fixed deposit of an amount of funds for a specific rate of return over a specific time period. It requires little expertise but the higher the rate of return the bigger the risk.
Shares:
This is trading in the shares of public companies for the purpose of making a profit. It can be volatile and also requires constant monitoring and considerable experience and expertise.
Property:
This is the acquisition of property for capital gain i.e. it’s
increase in value over time. Like all investments it is cyclical but if held over time will generally increase in value.
Commodities:
The acquisition of rare commodities such as “Works of Art” etc. which can appreciate in value over time somewhat like property.
Which investment is the best for you?
Nobody likes to lose money. That goes without saying. But it is unrealistic to assume that investing comes without some element of risk. The thing is to invest the least amount of money for the highest possible return without running any real risk of losing your original investment. If this is available and we believe it is, then clearly this is the best investment for you.
Using our definition of an investment i.e. “something that not only guarantees you a return on your money, but guarantees you the return of your money”, which of the Asset Classes above would qualify as an investment? This question eliminates Cash and Shares, because you could lose your original investment. This leaves 3 remaining asset classes, Fixed Interest, Property and Commodities.
We consider the remaining three classes to be more secure, because the chances of losing your original investment are reduced. This is especially true of Property and Commodities because even if the value depreciates for a period of time you still own the Property or Commodity.
Experience shows that over time the value is re-established and goes on to make further gains. Furthermore, Property and Commodities can attract better tax treatment than fixed interest.
Would you like someone else to pay for your investment?
Of the two remaining Asset Classes which one could you acquire without the necessity for you to make any contribution whatsoever? Property!
Of all investments Property has this distinct advantage over all the rest.
A well-designed “Investment Management Plan” not only guarantees you a return on your money, but guarantees you the return of your money, and opens the way for financial gains.
If you are interested in learning how to guarantee a return of on your money, and a return of your money, please fill out a contact form on the home page.
