John Cameron's personal blog

Everybody has a financial aspect to their lives. For some people, it dominates everything they do, night and day, and nothing else seems to matter. At the other extreme, there are those who rarely give a thought to their finances, are always in a financial mess, and who have to frequently dig themselves out of a hole.

For most people, the reality is somewhere in between. Money is important, but not everything. It is useful for what it empowers us to do (buy the necessities of life, raise children, buy a house, go on holidays, retire, etc.), and not for its own sake. In other words, the better we organise our finances, the further we can make it go. The more we can do with our limited funds.

This is where a good Financial Planner comes in. He or she should be able to help you organise your finances to get the best out of them, in line with your goals, circumstances and risk appetite. I have been giving Financial Planning advice for over 30 years. During that time I have seen many people’s lives improved by good financial advice, and sometimes damaged by poor advice.

In Greek mythology, the Sirens sang such sweet songs to mariners, that nobody could resist them – and they ended up smashed to pieces on the rocks.

In modern Australia, there is a similar group that guides the unsuspecting onto rocks. They are the modern day investment SPRUIKERS. They took a hit following the GFC in 2008, but they are starting to come out of the woodwork again. They sing a beguiling song that many people find hard to resist.

Spruikers have not always been obvious, but they tend to come into prominence when people are looking for investment opportunities. They often (but not always):

In August I attended the annual Portfolio Construction Conference in Sydney. I try to get to this conference every year (I missed last year due to the flu) as it is a high quality event with a strong independent tone to it (no institutions flogging their products).

This year, the highlight to me was a paper from Professor Michael Drew, from Griffith University, who spoke on “sequencing risk”.

Sequencing risk is the name being given to the sequence in which investment returns are received (and not just their size).

The last few years of your pre-retirement investing can make a very big difference to your long term retirement income.  There are three things you can do:

1. Increase your investments including super contributions, especially as your income rises and obligations such as childrens’ education and mortgage repayments fall away.

2. Keep working a little longer; one, two or three extra years earnings will make a big difference.

It’s very possible to live a quite comfortable retirement lifestyle with a mixed private and government pension income. The sliding scale for pension eligibility now allows fairly high private income and assets and some assets (like your home) are excluded.

For many people, it’s not the actual pension payment that is important, but access to the Health Care Card, that can dramatically reduce health care costs including for medications. And there are other concessions, for example on rates. You get full Health Care Card and other benefits regardless of the size of your pension: qualifying for just $1 will do the trick.

In some situations you will be able to arrange expected income and expenditure so that, although you may not be immediately or always eligible for a part pension, you will be at some time in the future.