Archive for year: 2019

By Noel Whittaker | 15 March 2019

See why credit cards can create issues for travelers, families and retirees alike.

Love them or hate them, the fact remains that credit cards are a necessity for most people.

You can hardly book accommodation, airfares or a rental car without them and they take the worry out of carrying cash when you shop. Still, you still need to be aware of the traps.

A classic is having just one credit card when you are travelling and finding it blocked when the hotel demands you hand it over at check-in, to guarantee any purchases you may make while you are staying there.

Another major problem is supplementary cards.

To save on fees, many families have one main credit card, with the partner and other family members using supplementary cards.

Unfortunately, with many cards, all associated cards are blocked as soon as one of the cards becomes lost or stolen. This can be particularly embarrassing if you’re travelling overseas.

Obviously, the solution is for couples to have individual credit cards but, as a recent email from a reader points out, it is becoming increasingly difficult for retirees to qualify for a credit card.

She wrote: “My husband and I have had a 40-year association with a major bank, have paid off numerous loans, and have a history of never missing a payment.

We are 62 and 73 and are self-funded retirees with substantial assets.

After reading your articles, I decided to apply for a credit card in my own name, which has to be done online. It was declined by the bank’s computer on the grounds I had no taxable income.

I can’t see the logic of this, and am concerned that my 40 years’ loyalty with the bank appears to count for nothing.

The bank’s decision makes me feel discriminated against — both as a married woman and a grandmother. Do you have any ideas how I can overcome this absurdity?”

I telephoned the bank on her behalf and spoke to one of their senior people, who promised to look into it. Within five days I received an excited email from the reader telling me that a credit card in her own name had been approved. She was over the moon!

I phoned the executive I’d been dealing with to relay the good news and asked him the obvious question: what is the mechanism for a person in her situation to get a credit card?

There is a Plan B

It’s ridiculous to expect that the only way for a card to be approved is for somebody in the media to bring it to the bank’s notice.

To his credit, he was most helpful. He suggested that the first line of attack should be to go to a bank branch, talk to a staff member face-to-face, and make sure all details of the conversation are recorded.

In most cases, this should solve the problem. But if it doesn’t, he also suggested a Plan B.

Apparently, all the major banks have an Advocate, whose job is to handle matters such as this for aggrieved customers.

Seek the help of the Advocate

Anybody who feels they have been badly treated can contact the Advocate, who will investigate the case and help the customer achieve an outcome that works for both parties.

I must confess that this is a term which is new to me but if you do a web search you will find every bank’s Advocate is clearly shown.

I guess it’s good to know that in this age of computers we still have a human avenue of appeal if needed.

This article was originally published by The Sydney Morning Herald on 3 February 2019. It represents the views of the author only and does not necessarily reflect the views of Tailored Lifetime Solutions.

Whatever your age, if you’re thinking of dabbling in investments like shares, managed funds or cryptocurrencies, here are a few things to steer clear of.

You might be looking to invest your money in something (whether it be shares, manage funds or cryptocurrencies, such as bitcoin) for a variety of reasons.

You may have money in savings and property, and want to diversify, or you might simply be looking to invest in something affordable, should investing in things like real estate be a bit out of your reach.

If your goal is to get rich quick (wouldn’t that be nice), spoiler alert – that’s probably not going to happen, as more often than not things like time in the market, compound interest and avoiding unnecessary risk will be the keys to success (I know, sorry to burst your bubble).

Meanwhile, if you are very close to dipping your toe in the water, here’s a list of common mistakes newbie investors tend to make which are generally worth steering clear of.

Investment mistakes beginners make

1. They fail to plan

When looking to invest, it’s generally wise to think about:

• your current position and how much you can realistically afford to invest (consider what other financial priorities you have or existing debts you may be paying off?)
• your goals and when you want to achieve them
• implications for the short/medium and long term
• whether you understand what you’re actually investing in
• whether you know how to track performance and make adjustments
• if you want to invest yourself, or with the help of a broker or adviser.

2. They don’t know their risk tolerance

As a general rule, investments that carry more risk are better suited to long-term timeframes, as investment performance can change rapidly and unpredictably. However, being too conservative with your investments may make it harder for you to reach your financial goals.

• Low-risk (or conservative) investment options tend to have lower returns over the long term but can be less likely to lose you money if markets perform badly.
• Medium-risk (or balanced) investment options tend to contain a mix of both low and high-risk assets. These options could be suitable for someone who wants to see their investments grow over time but is still wary of risk.
• High-growth (or aggressive) investment options tend to provide higher returns over the long term but can experience significant losses during market downturns. These types of investments are generally better suited to investors with longer term horizons who can wait out volatile economic cycles.

Try our ‘What style of investor am I?’ tool to help understand what level of risk you might be comfortable with.

3. They think investment returns are always guaranteed

The idea of guaranteed returns sounds wonderful, but the truth when it comes to investing is returns are generally not guaranteed.

There are risks attached to investing, which means while you could make money, you might break even, or even lose money should your investments decrease in value.

On top of that, liquidity, which refers to how quickly your assets can be converted into cash, may be an issue. Depending on what type of investment you hold or what may happen in markets at any point in time, you mightn’t be able to cash in certain investments when you need to.

4. They put all their eggs in one basket

Investment diversification can be achieved by investing in a mix of:

• asset classes (cash, fixed interest, bonds, property and shares)
• industries (e.g. finance, mining, health care)
• markets (e.g. Australia, Asia, the United States).

The reason diversifying may be a good thing is it could help you to level out volatility and risk, as you may be less exposed to a single financial event.

5. They believe the opinions of every Tom, Dick and Harry

Changing your strategy on the basis of market news may or may not be a good idea. After all, people have made all sorts of market predictions over the years, all of which haven’t necessarily come true.

On top of that, we all have that one friend that likes to pretend they’re a property, share or general investment guru, who while may come across as persuasive in their market commentary, does not have the qualifications to be giving people advice.

With that in mind, if you’re looking for guidance, you’re probably better off consulting your financial adviser who may be able to give you a more well-rounded picture of the current climate and the potential advantages and disadvantages you should be across.

6. They make rash decisions based on fear or excitement

Many investors get caught up in media hype and or fear and buy or sell investments at the top and bottom of the market.

Like with anything in life, it is easy to get stressed and concerned about the future and act impulsively but like with other things this may not be a smart thing to do.

While there may be times when active and emotional investing could be profitable, generally a solid strategy and staying on course through market peaks and troughs will result in more positive returns.

By Nader Naeimi
Head of Dynamic Markets and Portfolio Manager of Dynamic Markets FundSydney, Australia

In a recent address to senior Chinese Communist Party officials, President Xi Jinping warned of the threat posed by “black swans” and “grey rhinos”. They are both terms that have entered popular use over the last decade to describe perceptions of risk in a market economy. But what do they – and other animal metaphors used to describe economic conditions – mean?

Black swans

The term black swan was coined by the ancient Greeks to describe an impossible event. It was used for centuries by Europeans who had only ever seen white swans. This changed when Europeans discovered Australia and saw, for the first time, black swans.

A black swan is now used to describe an event which is outside the realm of prior expectations, but which carries an extreme impact, and is prone to post-rationalisation in order to explain its occurrence. The terrorist attacks of September 11, 2001 are often described as a typical black swan; it was unanticipated, but easily explained in hindsight, and the signals for such attacks in the future are now commonly discussed and recognised.

Grey rhinos

In contrast to the low-probability black swan, the grey rhino is a high-impact, high-probability event that for various reasons is usually ignored by investors and policy makers. It could be used to characterise problems such as climate change, debt, and economic inequality.

Why the animal names?

The use of animals as metaphors dates back to the some of the earliest human literature, with the likes of Aesop employing animal characters to explain the limitations of human reasoning. John Maynard Keynes, in his General Theory of Employment, Interest, and Money, coined the term ‘animal spirits’ to describe economic decisions taken as a result of a spontaneous urge to action, rather than a rational evaluation of the consequences¹.

Bulls, bears and bunnies

Today analysts continue to ascribe animal characteristics to market behaviour, most notably in reference to bull and bear markets. The most interesting theory for the origin of these terms comes from the North American bearskin trade, where ‘bear-jobbers’ would short-sell skins in the hope that prices would fall². The term ‘bear-jobber’, later shortened to ‘bear’, found its way to the stock market, and a ‘bear’s market’ became common terminology for a falling market. According to this explanation, the term ‘bull’ was added later.

More recently, the zoo has expanded to include gummy bears (bear markets which satisfy technical definitions but which return to pre-bear levels within a year) and grizzly bears (where falls are much deeper and last much longer, as in the global financial crisis).

In my experience, the progression through both bull and bear markets can be characterised by a number of stages:

The three stages of a bull market:

1. A few forward-looking people begin to believe things will improve or get less bad.
2. Most investors realise improvement is actually taking place.
3. Everyone concludes things will get better forever.

The three stages of a bear market:

1. Just a few investors recognise that despite the prevailing bullishness, things won’t always be rosy.
2.  Most investors recognise things are deteriorating.
3. Everyone’s convinced things can only get worse.

The final, and perhaps least-known, member of the menagerie is the bunny market, the meaning of which should be immediately obvious: it’s a market which hops up and down but doesn’t really go anywhere.

Need a new reason to get up in the morning? Enrich your life by finding and developing your next passion, with tips from psychology researcher Angela Duckworth.

Ever watch The Great British Bake-off? It’s an addictive reality TV show about the hunt for Britain’s best amateur baker. Few of the contestants cook for a living — baking is simply their passion. And it’s passion that carries them through weeks of competition and critiques, past weeping pie crusts and sad meringues. At every new challenge, they’re just excited to do what they love and to do their best.

Wouldn’t you want a passion like that?

Psychologist Angela Lee Duckworth thinks a lot about how to find and nurture a passion — it’s part of her work on what she calls “grit.” Simply defined, grit equals passion plus persistence.

Passion is not something you discover, she says — “it’s not like a lost set of keys!” Instead, she says: “Passions tend to be developed. It’s not just about being intense about what you’re doing but waking up week after week, month after month, year after year, wanting to think about the same thing.” It’s something fulfilling and enjoyable, but it’s not that easy; Duckworth calls it “hard fun.”

Here are five steps to help identify your next passion — or cultivate one you already have.

1. Clear out the distractions.

One reason you may not know your passion: you haven’t given yourself the time and space to pursue it. Now, many of the distractions in our lives — picking up kids from daycare, writing a proposal for work, dealing with a burst pipe in the basement — are non-negotiable; they come with being a human in the world.

But what about the negotiable distractions? One major source is right there in your pocket: your phone. “Whether it’s watching frivolous videos or scrolling through social media, there’s enough that you could do those things forever,” says Duckworth. “But it’s time that doesn’t really add up to anything.”

She asks: “How committed are you to not doing that anymore? Reflect on how you’re using your time, and whether or not you want to be distracted by these temptations.”

2. Think of a passion as like an internship.

Most internships serve as a trial run for a job — while you’re acquiring skills and knowledge, you’re also trying to see if you want to commit. “You might figure out you don’t love the field as much as you thought you did,” says Duckworth, “but you find out something else about yourself that is a clue to something that’s a better fit.”

Just like an internship, a passion is something you learn by doing. “You can’t figure things out on paper, or think about them,” says Duckworth. “That’s not how you develop a passion — you have to do things. It takes experience; it takes trial and error.”

To help her children start cultivating passions, Duckworth made them each choose one “hard thing,” such as learning ballet or playing soccer. Because she knows passions don’t develop overnight, she made rules of what they could pick — “it has to entail practice with feedback; they can’t quit in the middle; and they must choose the activity for themselves” — to prevent them from dropping it when they hit a speed bump.

3. Be patient.

Don’t expect to fall in love immediately. “A reason why passions take time to develop is that at the very, very beginning of things, we’re all clumsy and awkward and the learning curve is very steep,” says Duckworth. “Frankly, it’s hard to be in love with something when you’re that clumsy amateur.”

Her daughter Lucy picked the viola as her “hard thing.” But Duckworth says, “It didn’t become her passion in year one or year two. I wouldn’t say she was wildly enthusiastic, but she kept wanting to do it. Now she’s good enough that it can be enjoyable to her in a way that wasn’t possible in the beginning.”

During the learning period, you’ll need to tap into the other aspect of grit: persistence. In keeping with Duckworth’s rules for her kids, just make sure you give yourself a real chance before you move on to another activity. “I’m not saying you should stick with everything you’ve ever tried,” she says. “Use your judgment.”

As you progress with your activity, look out for this sign that you’re nurturing a passion: “You never get bored; in fact, you get more and more interested,” says Duckworth.

4. Stay motivated by remembering the bigger picture.

Every passion has its share of less exciting moments. For playing the viola, it may be practicing scales for the umpteenth time. For baking, it could be washing up; for teaching seventh-grade English, grading papers. The secret to not letting them derail you is to see how every way you engage with your passion — no matter how small or dull — is a step toward something bigger.

“I have to check my email today, read a bunch of research articles, write a revision of an article, and these can be total drudgery if I treat them like isolated tasks that need to get done,” Duckworth says. “But when I understand that they help me become a better scientist and that helps me help children thrive, and when I think, ‘That is the only thing I want my life to be about — to help children live better lives’ — then all of a sudden the emails, articles and revision become meaningful.”

This shift in perspective may seem subtle, but it’s effective in keeping you engaged. “Connecting your short-term work with your long-term ambitions can be enormously helpful to people who feel like they’re losing their drive,” she says.

5. Avoid burnout with this one weird trick.

It is possible to go overboard while pursuing a passion. Are you just not making progress like you want to? Is your passion less fun than it used to be? Duckworth suggests: “The first thing I’d ask is: Are there objective things you can do to just take care of yourself?” Ask yourself if you’re really burning out on your passion or if you just need more sleep.

But if your burnout feels deeper than that, it’s time to step outside your own problems — and look for someone who is similarly frayed and fried. Yes, really.

“It sounds paradoxical that when you’re exhausted, you should use your energy to help another person,” says Duckworth. “But we’re wired to help each other. When we give advice to others, sometimes we’re counseling ourselves in the process. It can draw your own attention to things that you can do. In research, we’ve found that it can boost your confidence and give you the sense that progress is possible.”

Angela Duckworth’s book Grit: The Power of Passion and Perseverance is now out in paperback.

Watch her TED talk here: