I love this picture – it was the moment the North Queensland Cowboys player’s “never say die” attitude staked their claim on securing the club’s inaugural NRL Premiership. Jonathon Thurston evaded an attempted tackle in the dying seconds of the game, passes the ball to Michael Morgan who flick passes the ball to Kyle Feldt on the wing and the rest as they say is history.
The result was thrilling, but the path to glory was a long time in the making, this was no overnight success story. Countless hours in the off season training, time spent on perfecting the basics – ball skills and standard plays. Weeks spent in the gym building physical strength and on the field perfecting defensive tackles and plays designed to preserve hard earned gains. Years spent building teamwork amongst players so that on the field, in the heat of the moment under pressure, teamwork and skills engage instinctively. In essence, the mundane, the boring and the routine combine to deliver a spectacular result when it counts. An inaugural football premiership.
The reality is, the above example applies exactly the same to financial success as it does to football. Which begs the question, what are you doing to secure your own financial premiership? Being brilliant at the basics, maintaining financial discipline, engaging with a team of professionals and investing in line with your tolerance for risk all lay the foundations for delivering long term returns that will provide for your financial future. And the sooner you start, the better off you will be.
- Be Brilliant at the Basics. When was the last time you reviewed your current financial position? Do you know what your current debt position is and is the debt on a favourable interest rate? Do you have adequate risk protection in place through personal and general insurance? Do you know how your superannuation is invested and how it is performing (and let’s be honest – do you look at your super more than once a year)?
- Maintain Financial Discipline. Do you have a basic budget so that you know where your hard earned money is being spent? Have you set up direct debit or direct credit payments for ongoing insurance premiums so that you don’t run the risk of a policy lapsing and you not being covered when the unexpected occurs? Do you pay yourself first – i.e. are you putting away a percentage of regular income into a dedicated savings plan? Do you have a regular contributions plan for super? By maintaining financial discipline you can put more of your money to work for you and take advantage of the effect of compounding returns. The wonder of compounding (sometimes called "compound interest") transforms your working money into a highly powerful income-generating tool. Compounding is the process of generating earnings on an asset's reinvested earnings. To work, it requires two things: the reinvestment of earnings and time. The more time you give your investments, the more you are able to accelerate the income potential of your original investment.
- Be the Captain of your Financial Team. Understand that in a team everyone has a role, and that role is pivotal to the overall success of the team. One person acting in isolation won’t deliver the same potential return that comes with acting in unison with other members of the team. Or as I remember (back in the day) the sign above the lockers in the change rooms saying: “A champion team will always beat a team of champions”. So go and build your own financial team which you will Captain – and get your Financial Advisor, your Accountant, your loan provider and your solicitor all in the room together to map out a holistic plan to build your financial success on.
- Manage Risk. Knowing your tolerance for investment risk will ensure your investments pass the sleep test – that is you are able to sleep at night without worrying about your investment portfolio. What if you are a defensive investor – are you aware your super fund may have you in a default investment option with more exposure to growth assets than you are comfortable with? Matching your tolerance to risk with your investment strategy is pivotal; and that can be as simple as having a simple investment objective matched to prudent investment of capital. An example of this is the Magellan Global Fund whose Investment Objectives are to “achieve attractive risk-adjusted returns over the medium to long term, while reducing the risk of permanent capital loss”; an approach reflected in their performance since inception in July 2007 of delivering a compounded return every year of 11.58% through rising and falling markets. If you had invested $1,000 at inception it would be worth $2,562 now.
- Managing risk also includes using the correct structure to hold assets and invest in (as a Individual / Partnership / Company / Family Trust / Superannuation Trust / Self-Managed Superannuation Fund). The correct structure helps with asset protection, managing taxation of income and capital gains, and assisting with generational transfer of wealth and assets. It also incorporates insurance through these structures to protect against the unexpected.
And this is my favourite photo from that game, absolute jubilation when all the hard work and team work put in over hours, days, weeks and years delivers an outstanding result that is captured in a single photo. But it is not a photo of overnight success, or representative of 40 seconds of play. It is the mundane, the boring and the routine delivering exactly what the coach said the strategy would.
If you want to seek out professional financial advice and start down the path to your own financial premiership, then please contact Colin Lea at the Carey Group on (07) 4760 5900 or email firstname.lastname@example.org to request an obligation free appointment.
Disclaimer: Carey Financial Pty Ltd (www.careygroup.com.au) is an authorised representative of Securitor Financial Group Ltd and provides financial planning services for superannuation, managed investments, personal risk insurance, shares and self-managed superannuation fund investment advice.
This information is of a general nature only and has been provided without taking account of your objectives, financial situation or needs. Because of this, you should consider whether the information is appropriate in light of your particular objectives, financial situation and needs.