I’m sitting at home all week.
No, I haven’t been laid off work… after all, I’m the boss.
On Monday I had a knee reconstruction. Now I told a mate that I had a re-co and he was asking me whether they replaced my knee with a titanium thingamajig. I quickly clarified that it was a knee reconstruction, like the footballers have, not a knee replacement that the elderly have.
Anyway, I’ve been sitting back and enjoying my break at home, catching up on all the financial News on Bloomberg and CNN…
I’m trying to make sense of all the current news reports on
this financial crisis.
These are certainly interesting times.
I think that a lot of Australians are completely oblivious to the impact that the current crisis is having, and will continue to have in our local markets as well as an overall global impact.
First of all, you might be sitting in your lounge room in Australia thinking that all these financial crisis events don’t relate to you. I beg to differ.
For most people, their primary concern is the cost of petrol, rising food prices and housing affordability.
Here’s something else you need to think about…
Chances are that you have some form of superannuation and in most cases it is probably a managed super fund.
You know the one, where its compulsory for you to invest in the future without any say in how the money is ultimately invested… Nice deal (I don’t think so).
Anyway right now in those public programs after most of them have had a 20% to 30% loss of capital, if the fund managers lose a further 10% going forward, then that would be a hugeresult (meaning it’s totally acceptable in this current market place).
Imagine that – a 10% loss of capital in super funds at the moment is accepted as a good result… Some funds have lost in excess of 30%. It might not mean much to you if you are 30 years old. However, if you’re 60 and looking to retire the next couple of years, the current news is a disaster.
What I want to highlight here is that you need to becomeresponsible for your own money and don’t allow others who work in tall buildings and wear nice suits to tell you that they know best, they don’t.
The alternative is to have your own self managed super fund.
Now I can’t advise you on whether that’s an appropriate strategy for you, because I don’t know your personal circumstances. However, you need to investigate it to see whether you qualify… Because it’s a far better alternative that somebody else managing your money.
After all it’s your money and who is the best person to invest it.
You might be saying that it’s all too hard, confusing, that you’re not good with numbers, etc etc etc.
However, the current climate is the best example that it’s more necessary than ever to take control of your own finances.
You might think that fund managers are smarter than you, they probably are, but it is not making them better custodians of your money.
Most superannuation funds will underperform on the upside and over perform on the downside.
Here is what I mean…
When the market was roaring and going up by 25-30%, the fund managers were returning about 12-15%. Most of them were underperforming based on the fact that you could just buying a basket of shares across the board and see better results.
Right now super funds are merely trying to preserve capital,
they’re not looking for further gains because they’re big and clumsy they’re not likely to take advantage of the current volatility in the market anyway.
Any smart investor would recognize that this market is traders market. Here’s what that means if you have a sound understanding of technical and fundamental knowledge you could make some decent profits by day trading the market and having no open positions overnight…
It’s critical that you understand the “no open positions overnight.” The market is swinging ferociously both ways and by you having any positions overnight you are likely to give back a lot more money than you make. Not to mention the insomnia that you would suffer waking up every two hours to check the U.S. market.
The lesson here is crystal clear, you must always be in control of your own money… do whatever you need to do to start building your foundations of your own financial empire.
If you learn one lesson from the current financial crisis, it’s that… Your money is your responsibility.