New Year’s Resolutions for your finances

New Year’s Resolutions for your finances Written by Ellen Hellyer – a millennial It’s that time again, when news articles abound about the ‘New Year, New You!’, and the gym is crammed with people who haven’t visited since last year, looking confused and getting stuck on the exercise bikes. New Year New Me isn’t going particularly well so far, given that I spent the first two weeks of the year stuffing my face with ice creams and fish and chips on holiday. But the one New Year’s resolution I’m serious about sticking to is to get a better handle on my finances. The self-improvement that comes with New Year’s resolutions often focuses on individual, short-term goals – for example, join the gym or eat more vegetables. Occasionally we’ll come up with a more altruistic goal, like ‘be nicer to people’ or ‘recycle more’. But I can’t think of many people who have come up with goals that have something to do with their financial decisions. This is surprising, given how important our financial health is to our overall wellbeing during our lifetimes. So why would this be the case? My theory is that it is something to do with the timing for when you should expect to see results from your resolutions. Go on a health kick, and if you stick with the gym and salads you can see results within a few weeks. On the other hand, if you sort out your finances you might only see the benefits years down the track. It’s hard to keep your money goals top of mind when the payoff is a...

Hoverboards and jet packs – we may be overthinking technology-focused investing

Written by Ellen Hellyer – a millennial https://www.rosemontwordsmiths.com Lately, I’ve noticed a rash of new investment vehicles and financial products that claim to be weighted towards investments in the technology sector. The idea being, presumably, that technology is now such a profound and influential feature in our lives that investing in technology-oriented companies and products will produce a good return. These investments seem to take on a bit of tech buzz themselves, accompanied by an evening of pizza and beer with the backwards-hat-and-track-panted investment team. On one hand, investing in companies and sectors producing goods and services that are relevant to how we live today is surely a good thing. I’d rather park my money there than in companies rolling out horse-buggies or Betamax. But I’m still suspicious of the buzz surrounding these “tech investments”. The reason for this scepticism is that I think there is some confusion in what we mean by investments that focus on technology. In truth, technological advances are prevalent across all sectors in the market today. Companies in the banking sector, as well as infrastructure and mining make huge investments in technology, and depend entirely on a sophisticated set of platforms and technological capabilities in order to run their business. Still, I don’t think that funds are referring to these companies when they say they are investing in tech. Instead, they are referring to companies like Facebook, Google and Amazon. Even when narrowed down to these companies, the definition of “tech investment” might be misguided. While these companies certainly rely on a foundation of digital capabilities and platforms, many of them don’t operate in...

A pack of weasel words – the tribalism in corporate speak

Written by Ellen Hellyer – a millennial https://www.rosemontwordsmiths.com I didn’t realise this when I began a role in corporate strategy a year ago, but I’ve stepped into a world that is rich in metaphor. I no longer simply meet people to discuss the progress of a project, I now “touch base”. I don’t think about how to make the company more money, instead I’m “unlocking new revenue streams”. And, my personal favourite, I no longer investigate an issue to understand it in more detail. Now, I “double-click” on it. To the former English major who still lives inside me, this feels like a bit of an assault on the normal use of language. And it continues to surprise me just how prevalent it is. These aren’t occasional witty turns of phrase designed to impress in presentations, they are sprinkled throughout daily conversations like seasoning. It really does seem like the corporate world has developed its own dialect. What I find interesting is that this corporate speak seems to exist in a separate category from technical language. While the workday conversations of engineers, radiographer and lawyers might be incomprehensible to an untrained ear, the jargon and idiom used is often intended to convey a specific technical meaning. Not so for the use of corporate speak. I can’t imagine the specific technical nuance I’d convey by asking someone to “touch base” on an issue. It seems more likely to cause confusion than anything else. I don’t think this use of language, specific to the corporate world and likely to confuse a novice, is accidental. For one thing, it deliberately flies in...

Cross-couple portfolio diversification

Cross-couple portfolio diversification Written by Ellen Hellyer – a millennial When it comes to investing, my boyfriend has an incredibly low boredom threshold. Our dinner conversations frequently include an update on how the household’s Bitcoins or cotton futures are doing. This is exciting for me, with my more pedestrian holdings in exchange-traded funds and a savings account – I guess it’s nice that we’re covered in the event of a futuristic global move to cryptocurrencies, or alternatively a step backwards into agrarian times. On balance though, I’m pleased that our entire household wealth isn’t subject to the same dizzying highs and crushing lows. Having different investing styles within a relationship is probably pretty common. In the same way that we have to navigate different opinions on politics, or the appropriateness of pulled-up rainbow socks with shorts, we have to get along with different views on household finances. More commonly though, I suspect what happens is that the less “financially confident” partner will yield the floor and let the other manage all of the household investments. However, this would be a mistake. In our case, though I lack enthusiasm for emerging digital currencies and obscure commodities, I am providing important diversification for our household portfolio by sticking to ETFs and a savings account. There are many ways to make different investing styles work for you. Mainly, you both need to be clear on what your objectives are for your dosh. If you plan to invest everything you own in buying a house within six months, having half of your deposit invested in lithium equities won’t work – this is a...

Predicting The Future Exactly

Predicting the future, exactly Written by Ellen Hellyer – a millennial                   Picture credit: xkcd My parents recently took a life expectancy questionnaire that was published in the Sydney Morning Herald. According to Mum, I should get ready to roll out the funeral muffins and sausage rolls on 21 May 2045. As the child in the family who likes to plan ahead, it’s nice to have this much notice. I don’t think the Herald is really privy to the level of predictive capability or detailed medical knowledge that would be required to suggest that Mum doesn’t make any big plans for 22 May 2045, but the fact that they provide a life expectancy forecast that is exact to the day lends the exercise more credibility than if they had simply said “2040-ish”. This seems like a case where we can easily mistake precision for accuracy. There are a number of areas where we might want to receive precise information that is based on forecasts or averages. Sometimes this precision can be useful – if you’re launching a satellite into space, precisely predicting a set of orbit coordinates is pretty important. But in other areas precision can be less helpful, and even misleading. In addition to life expectancy, we are given a recommended daily calorie intake that is based on an “average” person’s nutritional requirements. We are also sometimes given predictions about how much our house, super balance or investment portfolio will be worth in ten years’ time, down to the last dollar. But just because we can come up with a...

Bumps in the road – non-linear investing for retirement

Remember to download our free awesome apps:      Bumps in the road – non-linear investing for retirement Written by Ellen Hellyer – a millennial http://rosemontwordsmiths.com/ When I get my quarterly statement from my super fund, I notice a graph that shows me how much I’ll need to have in super to afford a comfortable retirement. This graph is usually on the front page of the statement, and it shows a long growth curve between my small twenty something super balance, and the millions I will need to have in my sixties to avoid a cat-food based diet and only one eco-bulb in my council flat. Interestingly, the message in this chart is never “You’re doing amazingly at contributing to your super! Relax for a while and book that trip to Barbados!” It seems that I could always be socking away a bit more for my golden years. Thinking about the scientific precision of this forecast (and the incredibly surprising conclusion that my super fund thinks I should put more money in super), I wonder how useful it could really be for retirement planning. My super fund actually knows very little about my personal circumstances, beyond what I contribute to it each month. Most retirement planning and investment forecasts seem to assume that you will contribute a stable amount consistently over time, until retirement, death, or another unspecified end point. But how many of us have this kind of completely stable financial situation over our lifetimes? An obvious factor my super fund seems to be missing is that I am a female person in my late twenties, so statistically I...
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