A New Adventure – opening our North Shore gym

I don’t know about you, but taking risks is not one of my favourite things to do in life. As a child I was always cautious and careful and therefore mostly avoided childhood injuries. I have always been careful in decisions I have made and don’t like to rush into things unless I know they will work and will be ok.

This time a year ago, my hubby & I decided we would take a HUGE risk and MASSIVE step of faith in opening firstly a Christian charity/ministry (HTL Ministries), but also in opening our own non-profit fitness centre, Fit 4 Life under that Christian charity. The idea is sound, people encouraged us to take this step and God provided the initial resources through investments we had.

But now comes the real test….we’re open, we’re seeing people join, but being non-profit we’re reliant on the donations of others. Right now we need to raise a bit of money to reimburse money loaned to get us started as well as making some improvements along the way. It is a daunting task especially for my hubby as he’s the one doing all the “raising”. It’s a great opportunity to trust in God to provide even when we just don’t see how.

It’s a big risk, but as I said to my hubby….”much better doing this risk then sitting at home washing dishes and that’s all there is to my life”. Are we doing things outside our comfort zones?  YUP!!! But I love a verse in the Bible that says “I can do all things through Christ who strengthens me” Phil 4:13. That verse says it all for me. So, risks aren’t my favourite thing, but here I am in the middle of a HUGE risk and I believe that we can make it work through Christ.

Here’s to taking a risk today….even if it is a teeny tiny one!! 🙂

Christy – Fit 4 Life Staff

The Recipe for Investment Success – Financial Planning

One Saturday morning a few months ago, my daughter made our family some pancakes for breakfast. They looked great; they smelled great; we were all hungry and looking forward to eating them. There was just one problem… they tasted disgusting. We ended up throwing them all into the bin, because it turned out she had accidently put baking soda into the recipe instead of baking powder!

Finding investment success can be challenging even at the best of times, but it’s a lot like following a recipe to bake a cake – or pancakes. If you get the ingredients right you can end up with a great financial outcome, but if you mess up even one of the ingredients you can end up with a disaster on your hands.

So here’s my thoughts on six ingredients that are necessary for finding investment success…

  1. Surplus – An ancient piece of wisdom teaches ‘the ruin of the poor is their poverty’. This is very true; those who have no surplus money to put aside for investing or to better their financial future will struggle to break out of the cycle of poverty. And all the financial planning in the world – no matter how brilliant – cannot help someone who has no surplus money to invest. However for those blessed to be living in the Western world, having at least some surplus wealth is often not as much of a challenge as it can be for those living in third world economies. While you may not have much, there is usually some way for Westerners to put at least something aside to invest. Having something to invest is the first and most basic ingredient, and nothing can be achieved without having money to invest.
  2. Knowledge – The second ingredient to successful investing is knowledge. Of all the ingredients for investment success, knowledge is the simplest (although not necessarily the easiest) ingredient to acquire – again, for those living in the West. Today a multitude of information is available on the subject of investing. Bookstores such as Borders and Whitcoulls have hundreds of books and magazines available on the subject of money and investing. Or, for those on a restricted budget, go to the public library where you can check out as many books on the subject of investing as you like for free. The internet is also filled with financial information which, although it’s not always the best or most accurate, at least we are not lacking for it. The Bible says, ‘if you search, you will find’. This is just as true for knowledge as it is for finding anything else in this life.
  3. Action – The third ingredient is the ingredient that is usually missing for most people – taking action. Even if you have some surplus wealth to invest and you have read a hundred books written by the greatest minds on the subject of money and investing, nothing will ever happen unless you take action and actually do something. You eventually have to take the plunge, put your money down on the table and invest in something – like buying some real estate, purchasing a part interest in a managed fund, buy some shares, invest in some bonds, open a term deposit at the bank, or buy (or start) a business, or what have you. It’s obviously best to have done research and some reading before you make the investment, and have done some financial calculations to see what sort of return you might expect and to calculate your risk, but never confuse knowledge with taking action!
  4. Time – The fourth ingredient is time. Time is the miracle ingredient that allows the power of compound interest to work in your favour. In fact, provided you are getting some return on your investment – even if it’s only small – the amount of money you start with is far less important than the amount of time that you can let your money grow. One dollar ($1.00) will grow to $1,000 in 50 years time at a growth rate of 14.82%. That doesn’t sound too exciting. However, if the money can be left to grow for another 50 years at the same rate of return it will turn into over $1,000,000. I’m not saying getting a +14% return is easy or even possible or that we all have 100 years to leave our money compounding without dipping into it. This is just an example to show what time – and a reasonable rate of return – can produce. However the principle is just as true as Benjamin Franklin observed – ‘time is money’. Like yeast in dough causes a loaf of bread to rise, time is what makes money grow.
  5. Evaluation – It’s a good practice to evaluate your investments from time to time to see if they are performing satisfactorily. This, of course, might lead to questions such as, ‘What does satisfactory investment performance look like?’ (which falls back on the second ingredient – knowledge – to be able to answer) but the practice of checking, reviewing, and evaluating is an important exercise to carry out at regular intervals for any investment. For property investments a review might possibly be carried out every three to five years, whereas with shares it might be carried out every six months to one year. (For share traders, evaluation might happen weekly, daily or even hourly(!), but traders really fall outside the definition of ‘investors’). The time period between investment reviews really depends on the type of investment as well as the goals of the investor, but nonetheless evaluation is a crucial ingredient for investment success. Nothing manages itself – including money. You should have a regular evaluation procedure in place to keep track of your investments. Mark Twain once wrote, “Put all your eggs in one basket; and then watch the basket”. While you may not wish to follow the first part of his sentence when it comes to your investments, the second part is always a good idea for investors to follow through on!
  6. Personality – This is the sixth and final ingredient for investment success. The most successful investors ultimately find an investment area that they enjoy and that gels with their personality. An old friend of mine recently wrote to me concerning a statement I had made in an earlier blog, where I had written that the returns on residential real estate are highly overrated. He said that he had had good experiences with his rental properties – and I don’t doubt this to be the case. For me, however, I hate investing in residential real estate! To maximise your returns with this kind of investment you have to be prepared to negotiate with many different people, including real estate agents, bankers, tenants, insurance companies, repair and maintenance contractors, lawyers, city council members  and the list goes on. It’s also a fairly illiquid type of investment so you have to be prepared to sit and wait – often for years – to really benefit from the investment gains you could possibly realise. If you dislike talking and negotiating with people, or sitting on your hands and waiting for long periods of time, then you might (like me) prefer investing in something else such as shares. For me, I find the daily action of the stock market stimulating; I don’t mind sifting through the myriad of information the markets produce to make decisions; I also don’t mind the lack of social contact; and I far prefer the ease of transaction that is available to me with share investing in the computer/internet age, where all I have to do is click a mouse to make a transaction – even if I am overseas and in a different time zone; also the returns I have experienced with my share investments have been much greater than anything I ever experienced with my residential property investments. But its horses for courses… Donald Trump seems to like investing in hotels, whereas Sir Robert Jones thinks hotels are the worst real estate investment known to mankind. My point is that each person needs to try different investments to see which ones suit them best – not only from the financial results that they produce, but also whether they suit their individual temperament and personality. Many financial advisers recommend that it’s good to have a variety of different investments (diversification); but here is where I do follow the Mark Twain school of investment and choose to put all my eggs in one basket (shares), which –proving my point about the sixth ingredient – suits my personality to a tee.

Bryce Staveley – Fit 4 Life Financial Planner/Fitness Instructor – a Glenfield, North Shore, Auckland gym