Real Estate Investor Magazine South Africa March 2015 | Page 19

BEST ADVICE

There are 9 financial myths that
misguide the masses and destroy our
investment strategies. Understanding in
great detail and debunking these myths
uncovers the new rules of money.
Myth 1: Invest with us, we will beat
the market
Myth 2: Our fees are a small price
to pay
Myth 3: Our returns? What you see
is what you get
Myth 4: I’m your broker and I am
here to help!
Myth 5: Your retirement is just a
retirement annuity plan away
Myth 6: Target date funds – just set
it and forget it
Myth 7: I hate annuities, you should too!
Myth 8: You got to take big risks to get
big rewards
Myth 9: The lies we tell ourselves to
justify our decisions
The starting point
Robbins says the secret to getting
back on track financially is to go
beyond scarcity, no matter what
your financial situation is. You need
to start
by developing and feeling a sense
of abundance right now and to
develop your life as if you already
were financially independent. Tony
says he had a number of personal
breakthrough experiences in this
area by making the following
changes:
1. Make it a must for a compelling
future – for Robbins, the birth
of his son brought a burning
desire to provide him with an
extraordinary quality of life
2. Get hungry by setting your goals
and committing to change
3. Add value to other people’s lives
4.
Don’t be victim by allowing
people to chop you down in size
www.reimag.co.za

Compound interest
The next step is to start
understanding the power of
compounding interest. Albert
Einstein is famous for the
statement: “Compound interest
is the eighth wonder of the
world, he who understands it,
earns it... he who doesn’t, pays
it.” Compounding occurs when
you invest money and allow it to
reinvest itself continuously. It can
produce explosive growth beyond
your wildest imagination.
Statistics show that humans
are living longer, many to their
early nineties, thanks to more
sophisticated medical facilities.
Handling your finances to this end
is critical, so what are you going to
do to invest now? If you are not
willing to take R1 from R10 for
saving or investing today, you won’t
be likely to take out R100,000 from
R1 million for saving or investing.
Both real estate and stock
markets
present
massive
opportunity and it is important
to get your asset allocation right.
John Templeton’s 3-bucket asset
allocation strategy satisfies your
risk tolerance and avoids spur of
the moment investment decisions.
1. Security bucket - One third of
your asset allocation should be
in low risk investments such
as money market accounts,
insurance policies and your
home. The growth rate is slow
and secure and compounds over
time. The profits from this should
stay there and be reinvested.
2. Growth bucket - One third is for
higher risk investments with more
potential for growth such as real
estate, stocks and mutual funds.
3. Dream bucket - One third is for
fun things you want in life such
as a boat, yacht, helicopter or
vacation home.

BEST ADVICE
from David Bach

AUTOMATIC MILLIONAIRE

David Bach, author and financial expert,
says the No.1 mistake investors make is
that they don’t automate their finances.
Pay yourself first before you pay your
bills, taxes or anyone else and do it
automatically before you see the money
in your account.
Breakdown of monthly expenses to get
back on track
1. Savings account – Retirement - 10%
2. Emergency fund – At least 6
months expenses - 5–10 %
3. Dream account – For buying a
home, car, etc. – 10–15%
4. Credit cards – Pay bare minimum
amount on due date – 10-15%
5. Regular bills – Phone bills, utilities,
petrol – 35-45%
6. Charity 5–10%
March 2015 SA Real Estate Investor

19