Advice from a Physio

I thought , since I am beginning my financial blog and also a Physiotherapist (Physical Therapist) I would provide some free Physio advice today for my viewers.

Tip 1: Back Pain – something is better than nothing

Regardless of the severity of the pain you need to get moving. I understand that someone with a slight twinge may be able to continue running whilst someone with stabbing pain and leg symptoms may only be able to deal with walking for 5-10 minutes.

Both are equally important!

Movement will not damage your body; your bones, joints and muscles are resilient. If you stay sitting or lying in bed all day you lose muscle mass and this will make it harder to get better.

Get moving as much or as little as you can. Pain is OK, listen to your body and gently challenge it.

Tip 2: Posture – slouch on

Research has revealed there is no correlation between slumped posture and pain.

If you try to sit bolt upright for 8 hours a day vs slouched for the same time you will likely be in just as much pain.

The important thing to do is change your position regularly. Stand up, go make coffee, have a gentle stretch. I meet people in my clinic who don’t get up from sitting for 2-3 hours. This is the main issue not slouching.
Your next posture is your best posture

Tip 3: Build some muscle

In this Instagram day and age we think of muscle building as six packs or steel buns.

However, strength work can be so much easier. Cardio is simply not enough unfortunately. Strength training improves our bones, muscles and can tone our bodies.

People think muscle weighs the same as fat, however this isn’t true. We are better off increasing or muscles to reduce our fat to become more healthy for the future.

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We are all aiming to retire early, well then we need to be healthy to enjoy it
Strength challenge – Do once daily:

  1. 20 sit-stands
  2. 10 press ups (wall/kneeling/full)
  3. 15 step ups

Gradually increase the amount you do or just add some weight by carrying a bag of shopping or a child when doing these.

This list will only take 45 secs to do…..Smash it out

Become Recession-proof

The New Zealand dollar has dropped to a 2 year low versus the US dollar following the central banks decision to keep interest rates low, amongst other global changes such as Turkey’s diminishing currency and the ongoing US trade war.

There is an acceptance that New Zealand is heading towards an economic slowdown and here are some things we need to know about the possibility of a recession.

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First of all, understanding why the central bank has decided to keep interest rates low.

What are interest rates? 

Interest rates are a way for the central banks to try keep control of the economy.

Low interest rates are put in place to stimulate the public and businesses to spend more money to kick-start the economy. Low interest rates mean you can borrow money and pay less back to your bank/credit card.

Low interest rates are not just helpful for Joe Public but also for the economy. A low interest rate encourages investors from overseas to fund business.

However, low interest rates also result in people borrowing more than needed and people also avoid saving and this can lead to a boom bust cycle.

A boom-bust cycle is explained in this video from Investopedia:

When the economy is doing well high interest rates are implemented. The aim is to discourage spending which can lead to inflation and rising prices. This encourages Joe Public to save more due to higher savings rates. This also ensures people live within their means.

The recent decision to maintain low interest rates in New Zealand comes on the back of a slowing economy. This has been caused by a cooling housing market amongst other factors.

So what should I do with a weak currency/slowing economy:

Become financially resilient:

Challanges:

  • Live off one persons income
  • Invest in NZ companies who export
  • Holiday at home and avoid foreign payments during this time
  • Try get rid of debt when you can

These are small steps to begin with to recession-proof yourself.

Review of a finance course

I recently followed ElementumMoney on Twitter. They offered a free 5 day intro to learning about money and getting a little more serious about certain aspects of your finances.

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I found this right up my street. It was fairly basic information, but we all need to start  somewhere. The information is provided by Aparna a financial planner in India who has kindly put in effort to help people like me.

The overview of the course was:

  • Day 1: Basics of managing your money 
  • Day 2: Basics of Insurance
  • Day 3: Basics of Investments 
  • Day 4: Basics of Loans 
  • Day 5: Basics of taxation 

Day 1 focused on income vs. expenditure. It was a 101 into what other options you had to increasing your income and decreasing your spending. This touched on making your money work for you.

Day 2 went into the murky world of Insurance. To buy or not to buy? This section was good at highlighting when insurance was really needed. This focused on life, health, car and travel insurance. I realised the former are most important when you have loved ones depending on you. The latter were good reminders as to why these are needed but not at all times

Day 3: Investing! This is a new avenue for me. I have never invested before and recently joined Sharsies as part of a mutual fund investment. This broke down important information on investments ranging from bonds to stocks. It also gave me a springboard to reviewing my current investments

Day 4 reviewed loans. Loans are important for being able to afford those high cost purchases in your life such as vehicles or a house. This section had a link to a good Home loan guide too and pitfalls to avoid

Day 5 discussed taxation. This reviewed the importance of filing taxes, reviewing tax exemptions and what items can be reimubursed.

 

Overall, this was a helpful news letter which went through the basics of 5 key pillars of financial areas. You can follow Aparna at ElementumMoney

How to Invest, Why to Invest

So why should you invest?

Well here is how much a bank savings account rate can offer you in New Zealand via the comparison site Finance.co.nz:

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These rates are similar worldwide (via Halifax in the UK):

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For example, If you put $10,000 into your savings account which had a 2.10% interest rate and then added $100 per month for 30 years this would be how much you could earn:

  • Initial Deposit: $10,000 + $100 per Month over 30 years = $46,000
  • 30 years Interest Rate: 2.10% p.a. 
  • Deposits Plus Interest After Tax: $61,253
  • Interest gained: $15,253 (Free money)

Investing

This is a marvelous blog post by Passive Income who has done some great work and calculations to review how much of a return you would receive investing in the NZX 50 Index (The top 50 companies in NZ).

Over the last 5 years the NZX would have returned, on average, 8.85% on your investment.

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Remember that calculation above, well here it is for an investment in the NZX 50 for 30 years:

  • Initial Deposit: $10,000 + $100 per Month Savings Period = $46,000
  • 30 years Interest Rate: 8.85% p.a.
  • Deposits Plus Interest After Tax: $168,570
  • Interest gained: $122,570 (Free money)

If the markets were to continue as they have done for the last 5 years you would make a staggering $107,317 gain if you had invested in the NZX 50 rather than placing the money in your savings account.

But aren’t stocks risky

People do lose money on the stock market. However, these people tend to be in it for the easy, fast money (which rarely works).

Historically, stocks have increased greatly since their beginning. We just have to look a the S&P 500 (Similar to the NZX 50 which tracks 500 US companies) which on average since 1928 returned 7% per year (adjusting for inflation).sp-500-historical-chart-data-2018-08-13-macrotrends

As you can see there have been several times when the markets have dropped. These include the Wall Street crash in 1929 which lead to the great depression and most recently the 2008 crash due to the financial crisis. However despite all this there is still an average return of 7%. Compared to that 3% we may receive via our bank accounts.

The best way to begin investing is to be in it for the long haul. There will be some downs, but the ups far outweigh this.

Don’t expect to get rich quickly, this is not a lottery ticket, this is an investment.

So where do I sign up?

I recently started with a company called Sharsies in New Zealand.  They allow investors with even small amounts of money to begin investing with them. Sharsies allows you to lodge an initial deposit and then contribute what you can, when you can.

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Sharsies invest your money into an ETF (Exchange traded fund). So rather than investing in each company individually, your money is pooled together with other investors into a group of companies. If you wanted you, would be investing in all of the NZX 50 companies combined. (There are may other investment opportunities available such as investing in the Top US, Australian, European and Asian markets)

Sharsies blog has a really helpful analogy for how ETF’s work:

“Imagine you go to a market (NZX) and buy some fruit. Buying individual fruit is like buying shares. You pay the price for each piece of fruit.

An ETF is like buying a basket of fruit. You get all the different types. These can be grouped by theme, like a colour or a season. In short: An ETF is a pool or basket of investments that trades on an exchange.”

This is really helpful for investors starting out with little knowledge of how trading really works (Like me).

The benefit of this type of trading is that your investment is steady. It would be unheard of for all 50 companies in the NZX 50 to fail, therefore you have much more security in your investment.

If you are not from New Zealand, there will be similar companies available to you too such as Vanguard in the USA.

Keep an eye on the blog for more helpful tips

Why I switched to Flick Energy

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I moved to New Zealand in March 2018.

Stupidly, I went from winter/spring in the UK to spring/winter in New Zealand.

New Zealand has lovely, warm summers.

New Zealand has bitterly cold winters.*

The houses in NZ are not well renowned for their central heating or insulation (this is slowly changing). NZ houses are primarily heated with “heat pumps” which are air conditioning units.

Our (my partner & I) first winter here was in a large open plan apartment with NO HEATPUMP and SINGLE GLAZED WINDOWS. We had some electric heaters to use but these were of no use and regularly we could see our breaths as we shivered.

Admittedly, this was our decision to move into this flat but we were not well informed especially after leaving the UK with their glorious (under appreciated) radiators.

We moved earlier this year to a similar sized flat with a heat pump installed.

We also moved to a different energy company called Flick Electric.

The company advertised “Join Flick between 17 May and 10 August 2018, and we guarantee you’ll save money on power with Flick until 31 August 2018. And if you don’t? We’ll pay you back.

We joined in April, and I have been very happy with the service we have received. My current bills during these cold winters are down by between 5-10% and our house is nice and toasty with a fairly active heat pump.

The app Flick have designed is also very helpful in tracking the cost of the electricity. At high peak times I receive a notification and this allows me to pause my dishwasher, washing machine or switch off my heat pump.

I really enjoy this control over my own finances. Especially, when it comes to utilities. It also measures my Co2 usage in goats……

This is one step towards reducing my overheads and having more revenue to spend on investing and saving

*relative to my experience….. This is no Siberia

Where to Start: Manage Your Expenses

I am new to the process of improving my financial position.

I am keen to learn about improving my passive income through blogging and increasing my investments (This will take time).

One thing I was good at from my university days was managing my expenses vs. income. I would recommend this as a starting point to any young person.

It is really easy to do and you can see the benefits immediately. 

Take control of your money

I started an excel spreadsheet to take stock of my income and expenditure when I was at university. This was an attempt to make sure I wasn’t spending random amounts on eating out and I was keeping track of my bills.

I was able to budget how much I would have to socialise too, therefore avoiding huge blowouts leaving me struggling for the rest of the month (This still happened at times).

My current spreadsheet looks like this:

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I get paid fortnightly (I find this much better than monthly) and as you can see I track my income and my usual expenses. Once I get paid I immediately transfer my savings into my savings accounts. You can also see a $50 sum goes straight into my investments with SuperLife.

My aim over the next few weeks is to try and cut down my expenditure after reading this blog, which was a real eye opener.

My first port of call is switching energy suppliers and changing my phone package to reduce my costs.

There is a rule called 50/30/20 which suggests you should spend 50% of your income on living expenses such as rent and food, 30% on non-essentials and 20% should be saved.

I am currently saving around 25% but I feel there is more to be gained.

I will update you on how it goes shortly.

Thanks for reading.

Why I can’t commit to Frugal spending…yet

My current position

Age: 28
Salary per year: $57000 NZD
Debt: Nil
Pension savings $800 NZD
Savings Account (2.65% interest p/a):  $10273 NZD
Easy access savings (0.1% interest p/a): $6187 NZD
Managed Funds:  $1700 NZD

NET WORTH: $23,960 NZD

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As you can see from the information above, I am fortunate not to have any debt but I have also been slack with regards to my pension fund.
The reason for the lack of pension savings is down to 2 things:

  1. I was trying to save as much money for my move to New Zealand.
  2. I was oblivious to the importance of it! I thought I wouldn’t need to worry about pensions until I was older. This is the type of information we should be taught at school….. Maybe we were and I just wasn’t paying attention.

Anyways, my financial awakening took place about 2 months ago. I was very interested in the FIRE method of saving, generating passive income and aiming to retire early.

I haven’t fully embraced this method as I think it will be too restrictive on my current aspirations. I will likely be moving back to the UK in the next 2 years. Therefore, I want to enjoy my time in New Zealand by travelling the country, enjoying the landscapes and maybe a cheeky holiday in Fiji or Tonga.

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I also have to save for a deposit, a wedding and the arrival of children all within the next 5-7 years.

Therefore, the complete conversion to a frugal spender is unlikely to happen…yet

Investing

I had never given investing a thought until 2 months ago. The most exposure I have had to investing is watching movies like The Wolf of Wall Street. Even in the movie a lot of the financial jargon went over my head.

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But hey, you cannot deny that whatever Leonardo DiCaprio’s character was doing was making decent money (albeit illegally).

My interests were peaked one weekend I was at home alone. I was scrolling through Twitter and I came across an article about investments for beginners.

I had seen those plus500 advertisements which would give you a pile of fake free digital money for you to fake spend on stocks and shares. I wouldn’t have had a clue what to do with free money, never mind my own.

However, after reading the blog entry about shared funds it appeared that I would not be the one making the financial decisions. I had a review of a couple of different articles such as this one by The Smart and Lazy blog. It gave me a real understanding of what investment opportunities were available to Joe Public (me).

My main take away points were:

  • I had no debt

This seems to be important as debt interest is quite high. So even if you are making great investment returns the debt will stifle your profits.

  • I was already contributing into my pension

I am currently paying 4% into my pension and my employer is also adding another 3%. The New Zealand government add an extra lump sum by the end of the year too.

  • Investing involved placing money on certain companies. If they do well, you do well.

A good example is Apple, who have been valued as a trillion dollar company. Their share price have increased over the last 10 years. If you invested $1000 in 2008, it would now be worth $9,222.50 today.

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  • Invest when you can

I am just beginning my journey of investing but every blog I have read and every financial advisor I have spoken to has recommended investing. In my case……only time will tell.

So what did I do?

Catch up on the next blog post

 

Beginning my financial journey

I have decided to start a blog tracking my financial path. My aim is to review how I can improve my financial position whilst also enjoying a relatively comfortable lifestyle.

A little about me first:
I am a 28 year old physiotherapist who lives in New Zealand. I studied in the UK for 3 years and worked there for another 2.
My partner and I decided we wanted to broaden our horizons and left our families behind and moved to Christchurch.
I never really paid too much attention to my finances during my early twenties. I was fortunate enough to have the NHS fund the physiotherapy degree I completed which allowed me to leave debt free (I worked in a bar to support living costs).
Upon leaving university, it was nice to have spending money but I didn’t overly splash out. I was oblivious to things like workplace pensions, savings accounts and money in general.
The only thing I did was use an excel spreadsheet to manage my expenses versus my income.
Since moving to New Zealand and getting closer to 30 I have had to focus on my personal finances. As per 90% of my age group, I am beginning to worry about mortgages, children and the future.
I’m June 2018 I stumbled upon FIRE (FINANCIAL INDEPENDENCE: RETIRE EARLY). You can read more about this here. I found the topic very interesting but the frugal lifestyle just was not for me despite the benefits. I enjoy my travelling and socialising with friends and family too much to cut back on all frills of life.
However, I have taken plenty of tips and tricks on board and that is what this blog is about.

I hope to share some of my experiences with my readers