John Cameron's personal blog

Just as crops are first grown, then harvested, so is wealth.

Think of all the years of putting money away into superannuation. Money is regularly added, and this can be thought of as fertiliser. It helps the crop grow. Then there is the performance of the investments, which grows over time, with the occasional setback (much like a crop can experience setbacks due to weather, disease etc.).

All of a sudden it is time to harvest. Just as a well tended crop of fruit trees can go on producing fruit year after year, so to with a well structured investment portfolio. 

One of the most powerful tools in financial planning is the boring old household budget – especially on the expenses side.

While there are many reasons why people get into financial difficulty, one of the most common is overspending. And, before you can control your spending, you need to know what you are spending, and where it is going.

Also, your spending is the one thing over which you have the greatest control. You can’t control interest rates, or the stockmarket, or your future job security (and hence income). In this age of uncertainty, it makes sense to have a good handle on the things that you can control – such as spending.

Ever since the GFC, economists have struggled to explain events, to direct policy, or to accurately predict trends.

Could it be that their models (theories?) are missing something vital?

According to Richard Koo, economist with Nomura Research Institute, the answer is definitely, “yes”.