Have you ever carried out a SWOT analysis on your finances?

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A SWOT analysis is a strategic planning technique used to help a person or organization identify strengths, weaknesses, opportunities, and threats. It is a highly effective way of improving many areas of your life, particularly your finances. 

At Blueprint Financial Planning we undertake a SWOT analysis when creating someone’s financial plan, it gives a clear, easy to understand and logical overview of a person’s current financial situation. 

An example of one such SWOT analysis I recently undertook with a recently married couple, one self employed and one a public sector employee can be seen below;

Strengths

Two incomes into household

Low mortgage repayments

Public sector defined benefit pension

Weaknesses

Self Employed income very variable

Very small rainy day fund

Opportunities 

Early retirement an option for public servant due to years of service

Ability for access a tax free lump sum from a Buy out Bond as turning 50 soon

Threats

Sickness / injury for self employed individual as no income protection or social welfare benefits

If early retirement taken by public servant, service will be short thus tax free lump sum will be reduced.

So if you want to take an honest look at your finance and identify areas that need to be addressed a SWOT analysis may be suitable for you! 


10 Financial Habits You Must Start Doing Today

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(If you ever want financial freedom).

As advisers one of our main tasks is to improve people's attitudes towards money and enforce better habits, not always easy but a worthwhile task nonetheless. Once people adopt better financial habits the difference it can make is huge, it can help reduce stress and worry about impending bills, eradicate the dread of living from payslip to payslip, possibly free up some cash for leisure activities and instil a sense of accomplishment that people are now far more financial literate. Below are my 10 financial planning tips that can improve your overall financial situation and make you more productive going forward.

  1. Create a budget > this is vital for anyone, whether you are single or married, have kids or not, self employed or an employee. You need to have an idea of your major outgoings on a monthly basis and see if you can highlight any areas of "leakage" or unnecessary expenditure.

  2. Pay yourself first > this is one of Warren Buffett's (the world's most famous investor and self made billionaire) golden rules. Once your wages are lodged to your account you should immediately divert a portion towards savings, with some ideally going towards a unit linked investment plan.

  3. Streamline your Direct Debits > If possible try and have as many direct debit's taken on the same day (or as close as possible) - if you get paid on the first of the month but have DD's on say 10 different days in the month it's hard to keep a structure on your finances. If you have most of your DD's gone early in the month you know you have a lot of the big outgoings paid for.

  4. Use cash as much as possible > "Will i tap"? Surely one of the most uttered questions in shops and cafes nationwide , "oh tap away" is usually the answer, It's very hard to track your spending when you constantly use your card. Take out €200-€300 at the start of the week and see if you have money left at the end of the week.

  5. Have a rainy day fund > Another must.....you need some reserves built up for the unforeseen events in life. Unforeseen events are usually costly so having the peace of mind that there is money for some such occurrence reduces anxiety.

  6. Have a fun fund > It can't be all stick and no carrot so save some money for some of your favourite leisure activities - those new golf clubs will feel and look a lot better when they haven't been bought on the credit card.

  7. Be wary of the Credit Card > Banks charge outrageous interest on credit card balances so be careful, it's great to have a line of credit but if you're paying back 17 or 18% interest on the outstanding balance you owe that's gonna hurt.

  8. Do a tax return > Claim back anything you possibly can. GP, Physio, Dental visits, pharmacy prescriptions. Reallocate tax bands and credits if married and it's prudent to do so. Don't leave any money on the table.

  9. Reduce impulse buys > We are all guilty of buying stuff we really didn't need, that watch for €400 - bargain (even though you have 4 other watches) , that dress for €250 that you wear once ...... remember what you have to earn gross (ie before tax) to pay for these impulse buys.

  10. Engage with an impartial financial adviser > Brokers, impartial financial advisers/planners - whatever they refer to themselves as, we hold the key to your improved financial future. We can use Cashflow Forecasting to give you a roadmap for your future, We can arrange protection policies in case you go out sick (income protection) or contract a serious illness or leave a lump sum for your family in the case of premature death. We can advise on the best and most applicable pension structure given your circumstances.

I hope this helps and some of these habits can be adapted and improve your financial future


Everyone has a plan until they get punched in the mouth

Image by http://401kcalculator.org

Mike Tyson, one of boxing’s most infamous and ferocious competitors once uttered this rather chilling sentence – “Everyone has a plan until they get punched in the mouth”, one can only imagine what a punch from one of the most successful heavyweight boxers of all time would feel like…..

People get “punched in the mouth” on a daily basis, in one way or another, it might not be an actual punch but a metaphor for some unplanned, painful and hurtful episode that no one saw coming.

With regards to finances there are often “punches in the mouth”, be it

People dying unexpectedly leaving behind no Will and insufficient life cover for their loved ones

Someone getting sick and being unable to work and have no income continuance plan or Serious Illness Cover in place.

Someone who invested money in the next “big thing” only to lose some of their savings.

So how do you prepare for that unexpected punch in the mouth? Well from a financial point of view I believe a well-crafted, impartial and robust financial plan will alleviate a lot of problems life may throw at you.

Remember another famous saying – if you fail to prepare, prepare to fail! 

Disclaimer
Pinnacle Financial Advisers Ltd t/a Blueprint Financial Planning is regulated by the Central Bank of Ireland. All content provided in these blog posts is intended for information purposes only and should not be interpreted as financial advice. You should always engage the services of a fully qualified impartial financial adviser before entering any financial contract. Pinnacle Financial Advisers Ltd t/a Blueprint Financial Planning will not be held responsible for any actions taken as a result of reading these blog posts

The Future You

Image by http://401kcalculator.org

Have you ever had a conversation with your “future you”? That little voice or person on your shoulder that tells you – the future you will achieve that.

You know the way….. right? The little voice that that tells you tomorrow will be different.

Tomorrow I will definitely get up earlier.

Tomorrow I will definitely go to the gym.

Next week after my friends birthday party I’m going to start my diet.

I have a lot on this year but definitely next year I’m changing jobs.

There is another way of classifying this reassuring self-talk – it’s not an actual word or a medical condition but it sums up how a lot of us approach our lives, it’s called LongFingeritis and we all suffer from it, especially when it comes to our finances. As a financial adviser, I’ve heard them all, including

“I’ve been meaning to get some life cover since our little one arrived”

“I’ll wait now until I hit my thirties and then I will definitely start a pension”

“I know you earn feck all on deposit, I really must look into savings options”

“It’s scary how many people I know you have got ill, I must definitely buy some serious illness cover”

You get the message by now – all examples of people putting things on the long finger and not taking responsibility for their own and their families financial futures.

So the next time you find yourself saying “I really must sort out”, here’s an idea, actually do something about it. Remember a pound of action is better than a tonne of intention.

Take ownership of your financial future and as the Nike slogan says “Just Do It”!

 

If you want to sort your financial future and no longer want to suffer from LongFingeritis please contact me at john@blueprintfp.ie

 

Disclaimer
Pinnacle Financial Advisers Ltd t/a Blueprint Financial Planning is regulated by the Central Bank of Ireland. All content provided in these blog posts is intended for information purposes only and should not be interpreted as financial advice. You should always engage the services of a fully qualified impartial financial adviser before entering any financial contract. Pinnacle Financial Advisers Ltd t/a Blueprint Financial Planning will not be held responsible for any actions taken as a result of reading these blog posts

Long term investing makes sense, deposits make cents!  

Image by http://401kcalculator.org
Don’t have all your eggs in the one basket
— Warren Buffett

Recently I attended a seminar hosted by a major life assurance company in the beautiful surrounds of Páirc Uí Chaoimh, there was an expert panel discussion, an investment update and an Economic outlook, overall I found it a very interesting and thought provoking event. One thing really stuck with me however, a statistic from one of the speakers, that there is presently over €100 billion on deposit in Ireland… (yes you read that correctly) a truly remarkable figure when you consider that deposit rates are at an all-time low and any paltry level of interest you get is liable to a punitive rate of DIRT tax. I chatted to a few of my industry peers afterwards and we all found this figure hard to comprehend.

After the event I asked myself, why is this the case? How can so many people be willing to accept such a low level of return on their savings;

Are some people still reeling from the downturn of 2008/2009?

Are people nervous that another stock market crash is around the corner, after all we are 9 year’s into a Bull run!

Do people not understand how investments work and rather than engage with a qualified professional people choose the inertia option and decide to bury their head in the sand and do nothing.

People are scared of losing money and view keeping money on deposit as the “safe” option. After all two American psychologists Daniel Kahneman and Amos Tversky carried out a study and found that financial losses cause people twice as much pain as the pleasure they receive from financial gain - this phenomenon is known as "loss aversion".

So why invest I hear you ask? Well some of the following facts should pique your interest;

  1. Since bottoming out in March 2009 the S&P 500 (the American stock market index based on the market capitalisations of 500 large companies) has returned more than 266%.
  2. Historically the stock market has returned an average of 9% a year for more than a century.
  3. From 1996 through 2015, the S&P 500 returned an average of 8.2% a year. But, if you missed out on the top 10 trading days during those 20 years, your returns dwindled to just 4.5% a year – this proves the adage of “it’s time in the market not timing the market” that’s important.
  4. When you invest in a diversified portfolio you are investing in a number of asset classes (Stocks, Property, Bonds, Alternatives, Hedge Funds and Commodities) across a range of sectors in a number of different countries, whereas on deposit you are investing in one asset class i.e. Cash in one country i.e. Ireland.

I can already hear some of the dissenting voices…… Investments are risky, people lost everything, cash is king, etc etc. I will counter with the following;

a)   Investments do have a level of risk, so engage with a qualified professional to ensure you have the attitude AND aptitude to take risk.

b)   You should always have a rainy day fund in place in a deposit account for emergencies.

c)   If your money is on deposit and is earning little or no level of return your money will “lose” to inflation.

d)   As the picture at the start of the article states, don’t have all your eggs in one basket…….diversify to reduce risk and increase potential returns.

I’m a huge fan of Warren Buffett, the world’s most successful investor so I will finish on one of his most famous quotes “never depend on a single source of income, makes investments for a second source”.

I hope you found this article of interest, if you would like to discuss investment opportunities please phone 085/1126454 or email john@blueprintfp.ie.

Disclaimer
Pinnacle Financial Advisers Ltd t/a Blueprint Financial Planning is regulated by the Central Bank of Ireland. All content provided in these blog posts is intended for information purposes only and should not be interpreted as financial advice. You should always engage the services of a fully qualified impartial financial adviser before entering any financial contract. Pinnacle Financial Advisers Ltd t/a Blueprint Financial Planning will not be held responsible for any actions taken as a result of reading these blog posts

Saving for a Sunny Day!

Image by Christopher Michel [ via Wikimedia Commons ]

Image by Christopher Michel [ via Wikimedia Commons ]

We as Financial Advisers often talk to our clients about "Rainy Day" funds, the need to have a sum of money put aside for the "God forbid" or "What if" scenarios that may arise. Whilst I fully endorse the need for these Rainy Day / Emergency funds I recently had a different and somewhat enlightening discussion with a client of mine.

My client was in an enviable position in many ways, she had a good level of protection in place (Health Insurance, Serious Illness Cover and Income Continuance through her employer), furthermore she had a significant amount of money on deposit. She had some disposable income on a monthly basis and was enquiring about savings options available to her. As we were discussing these options we began chatting about her favourite hobbies and past times, she listed Travelling, Painting and Golf. I suggested why not save for a "Sunny Day" and build up a fund she can use to enjoy and pursue her hobbies more, she immediately smiled and agreed that was a great idea.

Tony Robbins, the well known motivational speaker, life coach and personal strategist has written two books on finance and investment in recent years, namely "Money : Master the Game" and "Unshakeable". He regularly refers to the need to build up a "freedom fund" and to save regularly to pay for both the necessities and luxuries in life. I always stress the importance of savings to my clients, but in my opinion with the savings you have built up they need to be ear marked for a specific purpose, either as a means of protection (rainy day) or enjoyment (sunny day).

I was fortunate enough to be invited by a friend to play golf in the Old Head of Kinsale recently (pictured above), truly a jewel in Ireland's crown from both a golf and tourism point of view. Some of my client's goals with her new "Sunny Day" savings fund is to play golf in some of Ireland's top golf courses, like the Old Head, Ballybunion etc and travel more, safe in the knowledge that she has significant provisions in place for the "Rainy Day" and is putting her new "Sunny Day" fund to good use!

So if you have some disposable income, have sufficient protection provisions in place why not consider saving for your "Sunny Day" , we all have personal interests and goals make sure you get to enjoy and achieve them!

Disclaimer
Pinnacle Financial Advisers Ltd t/a Blueprint Financial Planning is regulated by the Central Bank of Ireland. All content provided in these blog posts is intended for information purposes only and should not be interpreted as financial advice. You should always engage the services of a fully qualified impartial financial adviser before entering any financial contract. Pinnacle Financial Advisers Ltd t/a Blueprint Financial Planning will not be held responsible for any actions taken as a result of reading these blog posts

Inspiration

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An investment in knowledge pays the best interest

If you fail to prepare, prepare to fail
— Benjamin Franklin, renowned Politician on knowledge and planning
 
Risk comes from not knowing what you’re doing

The stock market is a device to transfer money from the impatient to the patient

Never depend on a single income, make investments to create a second source

People should spend what they have left after saving not save what they have left after spending

When people are being greedy be fearful, when people are being fearful be greedy
— Warren Buffett, the worlds most successful investor on income, investing and saving
 
Compound interest is the 8th wonder of the world, he who understands it, earns it… he who doesn’t pays it.
— Albert Einstein, Nobel Prize winner on compound interest
 
Your life does not get better by chance, it gets better by change
— Jim Rohn, American Author, Entrepreneur and Motivational Speaker

The Wheel of Finance

At Blueprint Financial Planning we believe there are 8 core components to a person’s financial wheel, namely  Income, Savings, Banking, Tax, Retirement Planning, Budgeting, Protection Planning and Estate Planning.

Your level of knowledge, proficiency and planning in each area can impact hugely on how your financial future will evolve. We provide our clients with a copy of this wheel and simply ask them to rate on a scale of 1-10 (1 being bad and 10 being the best etc) their approach and level of satisfaction with each area. This is the start of their “Financial Blueprint” from which we build a robust financial plan around. The results obviously vary from client to client but as the saying goes “a picture paints a thousand words”.  From their results and “drawing” their wheel people can see very easily how solid their wheel looks and going forward how smooth their journey will be.  Our aim is to get everyone to a “10” to ensure as smooth a journey as possible towards their financial freedom. So ask yourself if you rated your approach to each section on a scale of 1-10, joined the dots on the corresponding numbers, what would your wheel look like?

Disclaimer
Pinnacle Financial Advisers Ltd t/a Blueprint Financial Planning is regulated by the Central Bank of Ireland. All content provided in these blog posts is intended for information purposes only and should not be interpreted as financial advice. You should always engage the services of a fully qualified impartial financial adviser before entering any financial contract. Pinnacle Financial Advisers Ltd t/a Blueprint Financial Planning will not be held responsible for any actions taken as a result of reading these blog posts