Making Money Made Simple in Audio, FoFA, Advice Does Work...
No Images? Click here
 
   
 

There are three things to leave behind: your photographs, your library, and your personal journals.  These things are certainly going to be more valuable to future generations than your furniture.

 

JIM ROHN

 
 

HOW MUCH DO YOU NEED TO RETIRE?

 

Do you really need a million dollars to retire? It’s the question that has been dominating the media all week since a fund manager grabbed the headlines by putting out a press release claiming that a person could retire quite comfortably with less than a million dollars in their portfolio.  From what I read it was based on the premise that a healthy social security system would keep everybody in good shape, and make good any shortfall.

It’s a pretty silly question when you think about it, because there are a multitude of factors that determine how much anybody would need to retire comfortably.  These include the state of your health, the extent of travel you are planning, and how often the children are likely to put their hands out for help.

Another factor is the age of the person doing the sums.  Suppose a person was aged 30 now and wanted to retire at age 65 with $50,000 a year in today’s money.  If they could achieve an 8% return on their funds, and inflation was 3%, they would need $2.05 million.  However if they were 60, they would need only $845,000.

For a person aged 65 who thinks they will live until age 90, the rough rule of thumb for working out how much you will need to accumulate is approximately 15 times your expected expenditure.  Therefore, based on the figures above, the target could well be between $1 million and $1.4 million.  Of course, if inflation is running at 4%, you should be able to achieve a much better return on your portfolio, which would make achieving the target somewhat easier.

In short, long term projections of the amount needed for retirement are pointless.  What you need to do is decide when you want to retire, how much you think you will need, and then meet with your adviser at least once a year to find out if you are on track to meet these goals; and if not what strategies need to be put in place to get you back on track.  It’s also important to take into account what legacies it’s reasonable to assume may come your way.  Even though a bequeathed asset may be years away, it’s still worth considering when planning how much you need to invest now.

A key factor in the amount you will need to accumulate is the rate of return you can achieve on your portfolio.  I am still receiving a stream of emails about the forthcoming pension changes from retirees who have nearly $1 million in assets, entirely held in cash, because they are scared to diversify in case another global financial crisis happens.  They could well end up paying a very high price for this type of thinking if rates continue to fall further, which I believe is highly likely.  Don’t forget they will lose any pension they’re getting now in 2017.

The following example illustrates the importance of a diversified portfolio that is producing a good rate of return.  A person currently aged 50 who had $350,000 in super, and wanted to retire at 65 with an income of $50,000 in today’s dollars, would be on track to achieve that with no further contributions if their portfolio produced 8% per annum.  However, if the best they could do was 5% per annum, they would need to make additional contributions of $18,000 a year to achieve their goal.

But what about the age pension?  Yes, at current levels most retirees will be eligible for a substantial pension, but it would be a brave person to base their retirement plans on the assumption that today’s generous age pension will last forever.  Australia is borrowing $100 million a day to pay its bills, and this state of affairs cannot continue indefinitely.  In The Australian today, it was pointed out that the Australian government is paying out $10 in expenditure for every $9 it receives in revenue.  This situation cannot continue indefinitely – something’s got to give.

It’s not hard to envisage a situation a few years down the track when the government of the day will start to ask why any retiree with say, a few hundred thousand in financial assets, should be eligible for help from the government.

 
 

CALCULATORS

 

I’ve been working flat out to try and get some useful and unique resources on my website.  I’m delighted to announce that we have a new calculator called the Retirement Drawdown Calculator, which will help anyone work out how much they need to retire.  Obviously you’ll need to assume the rate of return you think you can achieve on your portfolio, and as you play with the figures notice the big difference that rate of return makes.

Make it one of your goals today to go to my website and enter some numbers.  It’ll only take a very short time, and could be a great help to your knowledge about finance

 
 

SAVING MONEY ON CURRENCY TRANSFERS

 

A lot of my friends, like me, have children overseas and there is a need to remit money to them occasionally.  I used to do it through my bank but this was a tortuous process which involved phoning the bank, getting a quote, feigning shock, and asking them to check head office for a better rate.  Once we agreed on a rate which still wasn’t that good, it then had to be confirmed by fax, yes fax, and a week later if all went well my son had the money.

A friend introduced me to OzForex, which was a whole new world.  Their rates are far better than the banks and the process of transferring currency couldn’t be simpler.  I just go to their website, enter the amount of foreign currency I wish to buy, and a quote comes up on screen.  I then accept the quote, and enter the name of my son from the list of saved beneficiaries embedded in the system.  It’s then only a matter of paying the money into OzForex’s bank, and a couple of days later I’ll get an SMS saying the money’s been delivered.  

I was speaking to one of their people at a function recently, and they have kindly offered to do a special offering for subscribers to this newsletter, by waiving their normal transfer fees for transfers over AU$1,000.  

To get the process started simply go to the OzForex website and click on the REGISTER FREE or FOREX TOOLS > CUSTOMER RATES link in the menu.

aThen when you register, quote “Noel Whittaker” to claim your first Fee Free International Transfer.

If you have any questions, please contact Edward Wiley from OzForex directly on 02 8667 9133 or edwardwiley@ozforex.com.au

 
 

TRAVEL JOTTINGS

 

I’ve been extolling the virtues of the 28 Degrees MasterCard for years, and now have further proof of its value.  When we checked out of the Marriott Hotel on the big island in Hawaii, we had a bill of US$4594, which we had to pay by American Express because money I’d deposited in my 28 Degrees card had not yet been processed.  This meant part of the bill was paid by American Express and part by 28 Degrees.  When I compared both statements and checked the rates, I discovered that I would have been $200 better off if I had been able to use the 28 Degrees card for the entire bill.  The great thing about this card is it has no application or annual fees – the only drawback is no reward points.

In a recent newsletter, I mentioned RingCredible for making overseas calls – had occasion to ring Luxembourg on Sunday night and spoke for 38 minutes.  The cost on RingCredible was $1.07.

I’m getting this out today because we’re going on a quick holiday to the Bungle Bungles via Darwin, and then taking a cruise on the Orion from Broome to Bali.  Hopefully we can get out of Bali.  I guess Plan B is to fly to Singapore and come home from there.

 
 

PRODUCT OF THE MONTH

 

Financial literacy is one of the greatest assets you can have, and my books and other resources make it easy and cheap to obtain.  This month, let’s focus on Making Money Made Simple in audio.

It is narrated by Australian actor Carol Burns, who became a household name for her award winning performance in the TV program Prisoner, in which she played tough lesbian bikie, Franky Doyle.  Carol and I have been friends since we worked in the Bank of New South Wales together in 1962.

Everybody involved in the production did a superb job – we have even managed to fit the entire 10 hours onto just two CDs, with a separate track for each chapter.  This makes it easy to listen to any track of your choice, and go back and revise if necessary.  I’m a great fan of audio books, but I get extremely frustrated when the producers run all the tracks together without spaces between them.  It makes it impossible to go back and listen to something again.

The audio version on CD is available from my website at just $29.95.  

For those who think CDs are yesterday’s technology, there are MP3 versions available for download on iTunes.  There is also a facility for online buyers to buy to just buy one single track and have a listen.

This is the perfect introduction to finance for people who spend time in their cars.  It is the book which has sold more than two million copies, and changed the lives of many who have read it.

 
 

AND FINALLY (WEASEL WORDS) 

 

“Going forward” is only half the phrase that gets up my nose - all politicians seem to use the phrase go forward together.  “We must…..we shall…..let us now…..go forward together”.  It gives me a terrible mental image of the whole country linking arms and goose-stepping in unison, with the politicians out in front doing a straight-armed salute.  Or is that just me?
Frances, Canada 

I am a financial journalist and am on a mission to remove words and phrases such as 360 degree thinking from existence.
Richard, London 

The latest that's stuck in my head is “we are still optimistic things will feed through the sales and delivery pipeline” (i.e. we haven't actually sold anything to anyone yet but maybe we will one day).
Alexander, Southampton 

I worked in PR for many years and often heard the most ludicrous phrases uttered by CEOs and marketing managers.  One of the best was, “we'd better not let the grass grow too long on this one”.  To this day it still echoes in my ears and I giggle to myself whenever I think about it.  I can't help but think insecure business people use such phrases to cover up their inability for proper articulation.
Leon, London 

"Need to get all my ducks in a row now - before the five year olds wake up." 
Mark, Bridgend 

Australians have started to use auspice as a verb.  Instead of saying, “under the auspices of”, some people now say things like, “it was auspiced by".
Martin, Australia 

My favourite – “we've got our fingers down the throat of the organisation of that nodule”.  Translation - Er, no, WE sorted out the problems to cover your backside." 
Theo, UK 

The health service in Wales is filled with managers who use this type of language as a substitute for original thought.  At meetings we play healthspeak bingo - counting the key words lightens the tedium of meetings - including, most recently “my door is open on this issue”.  What does that mean?
Edwin, Wales 

The business phrase I find most irritating is “close of play”, which is only slightly worse than actioning something.
Ellie, London

 
 

I hope you have enjoyed the latest edition of Noel News.

Thanks for all your kind comments. Please continue to send feedback through; it's always appreciated and helps us to improve the newsletter. 

And don't forget you'll get much more regular communications from me if you follow me on twitter - @NoelWhittaker

Noel Whittaker

 
 
 
 

VISIT WEBSITE

Lots of new resources available

 
 
 
 

PRODUCTS

Buy Noel's books, eBooks & Audiobooks.

 
 
 
 

CONTACT

Send me your questions & feedback.