Sorry about all the Economic Noise

I have an apology to make. I did something this week of which I am not very proud. No. I did not back the Dragons over the Bulldogs, but it came close to being this dire. I am a big fan of Vimal Gor who works as a fund manager with BT Investment Management. I have been to presentations and conferences where Vimal has spoken and I think he is one of the most down to earth thought leaders in an investment industry that lacks true leadership.  He is not entirely accurate but which economist is but he does have some great investment ideas. Like all fund managers, there job is to attract interest in their funds to bring in funds under administration so that his firm can charge percentage based fees and grow their revenues. Simple business really. This week I shared his article from the Sydney Morning Herald and stated, "don't say you didn't have prior warning."  

I simply added fuel to to the negativity and scare mongering that the SMH portrayed to it's readers. There were a few people that engaged with the article but I got caught off-hand by an old - school friend who replied to the post. I have blacked out his details but you can read his reply above. Now, I didn't want to scare the pants off anybody, I was simply sharing an article from an investment professional who probably knows more than me about investment markets.

What struck me about my school mates reply was that like most people, what would you do if you read this article and you were closing in on retirement. He wants to know if I have the answers, and of course I do and I am happy to relay them here at no cost.

  1. Don't take notice of financial journalism. - The job of papers is to sell advertising and subscriptions. The article from Vimal Gor including the heading is quite alarmist. It got the desired result and I am sure there are others who read the article and still have concerns about interest rates and currency. Understand that interesting content sells. Who would read an article that says, the world is fine, keep saving and everything will be alright. Nobody. Keep your eyes on the prize and focus on the goals at hand.
  2. Focus on what you can control. - Think about what would happen to your life if the $AUD went to $0.50 or interest rates were 1%. Seriously, would you stop eating, drinking or watching The Voice? Of course not, and what control do you have over these matters of share and property prices, commodities, Gross Domestic Product (GDP) or whether Liberal or Labor will get over the line in the election. If you worried about any or all of these concerns, you will either get an ulcer or you will be in the foetal position at home. Spend less than you earn, diversify your investments, have cash on hand for an emergency, and make sure you have sufficient personal insurances so that when a real catastrophe occurs like death or disability, you can manage financially.
  3. Seek financial advice - Of course I am biased, but I believe that everybody deserves to get good financial advice. Financial advice incorporates investment and portfolio management but it also includes protection, estate planning and retirement planning. Having a financial planner in your corner allows you clear the noise that permeates our lives and to be able to re-set the focus that is your financial goals. Vimal Gor, Bill Gross or Roger Montgomery may all be accurate in their synopsis of investment markets, but none of them know WHY you are investing. Strategies are available to minimise the risk of investing, but none of these pundits can work with you to tailor an investment plan to get you where you want to be. 

So again, I am sorry for adding fuel to a contentious article. Please know that I am an eternal optimist in regards to families achieving their financial goals. Investment markets will ALWAYS be volatile, low, high, adverse or geared to the wealthy. Know what you want from life, and go for it in a disciplined, focused manner and leave the noise for others to get distracted by.