Welcome to the Money Maven's Financial Blog

Money Maven Blog by Sheryl Sutherland, Authorised Financial Adviser and Director of The Financial Strategies Group

Recommended Reading

Recommended Reading by Sheryl Sutherland: Girls Just Want to Have Fund$ - Every Women’s Guide to Financial Independence, Money, Money, Money Ain't it Funny - How to Wire your Brain for Wealth, and Smart Money - How to structure your New Zealand business or investments and pay less tax.

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The Financial Strategies Group

Most of us spend 40 years working to secure our financial future; the most important investment you can make is to purchase appropriate financial planning advice.

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Monday, 16 July 2012

Everyday Money

Struggling to organise joint finances? Try the following:

Source: Girls Just Want to Have Fund$ by Sheryl Sutherland

Musings and Amusings

Evolution has given humans a huge advantage over most other animals: middle age – who would have thought?

We are used to dismissing our fifth and sixth decades as a negative chapter in our lives, perhaps even a cause for crisis. But recent scientific findings have shown just how important middle age is for every one of us, and how crucial it has been to the success of our species. Middle age is not just about wrinkles and worry. It is not about getting old. It is an ancient, pivotal episode in the human life span, pre-programmed into us by natural selection, an exceptional characteristic of an exceptional species.

Compared with other animals, humans have a very unusual pattern to our lives. We take a very long time to grow up, we are long-lived, and most of us stop reproducing halfway through our life span. A few other species have some elements of this pattern, but only humans have distorted the course of their lives in such a dramatic way. Most of that distortion is caused by the evolution of middle age, which adds two decades that most other animals simply do not get.

An important clue that middle age isn’t just the start of a downward spiral is that it does not bear the hallmarks of general, passive decline.

Excellent news for those who were worrying about the impending doom and gloom of old age.

 Source: The Washington Post

Who's counting?

Most New Zealander's would not survive longer than three months in the face of a personal financial disaster, according to new research. 

Visa's 2012 International Financial Literacy Barometer surveyed more than 25,000 people across 28 countries. 

New Zealand was ranked the sixth most financially literate country, behind world leaders Brazil, Mexico and Australia. 

Our savings rate was well behind the Chinese, about half of whom have built up enough of a cash buffer to survive for six months. 

However we came out ahead of Pakistan, where just 13-14 per cent of respondents were able to endure a three-month financial calamity. 

One of the key findings of the survey was that earning a high income did not necessarily translate to good financial health. 

For example in Canada, Russia and Serbia high-income earners were less prepared to weather a crisis than their peers getting by on lower incomes. 
The survey also found that New Zealanders were pretty good at following a household budget, scoring 45.8 out of 100, and at talking to their kids about money (44.9). 

But our lack of faith in young people's ability to understand money management basics put us near the bottom of the table for that category, in 21st place. 

The survey found that the youngest and oldest individuals tended to be most at risk, with those aged 35-49 in the best financial position.
Source: Richard Meadows, Fairfax News


 Following the lead of countries like Spain, France, Italy, and Belgium, the European Union is considering legislating quotas for women directors on boards.

Quotas are a drastic step, especially in Europe, where men overwhelmingly run companies, and boards of directors are also almost entirely male. Just 13.7% of large-company directors and 3.2% of presidents and chairmen within the EU were women as of January, the New York Times reported in March. That’s after a program designed to boost women’s selection for boards, instituted last year, garnered little support from companies.

Viviane Reding, vice president of the European Commission, has been pushing for EU-wide quotas. She noted in a March press release that in 2010, the EU’s largest public companies had women represented on boards just 12% of the time. She is also urging companies to sign a “Women on the Board Pledge for Europe,” which commits them to have a board made up of 30% women in 2015 and 40% in 2020.

“It confirms what I always believe about change: that it goes from the ‘unthinkable’ (quotas are unthinkable) to the ‘impossible’ (not in our country) to the ‘inevitable’ (the sky does not fall and actually quotas turn out to be a good thing),” Liswood said in an email to The Wall Street Journal.

On the other hand, there are a lot of people – including women – who are firmly opposed to enforcing gender quotas on corporate boards or don’t think quotas will get the job done.

I am solidly behind this initiative.

Source: Wall Street Journal

Finance & Investments

Over the years, the phrase "emerging market" has become all but meaningless. No group that includes China, Argentina, Kenya, the Philippines, and Romania can possibly qualify as a single coherent class. 

To pick the likeliest winners in this vast category, Jim O'Neill of Goldman Sachs has given us the BRICS (Brazil, Russia, India, China, and now South Africa), the "Next 11" (Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, the Philippines, Turkey, South Korea, and Vietnam) and, more recently, MIST (Mexico, Indonesia, South Korea, and Turkey). Robert Ward of the Economist Intelligence Unit has added the CIVETS (Colombia, Indonesia, Vietnam, Egypt, Turkey, and South Africa.) 

But all these constructions include a dizzyingly diverse set of economies that don't have much in common.

We live in a crisis-prone age.

The countries that are best positioned to prosper are those that are resilient as well as strong. That's why pivot states, those able to build profitable relationships with multiple partners without becoming overly reliant on any of them, are the likeliest winners in the G-Zero era. 

Brazil will continue to enjoy excellent trade ties with the United States. But China is now its largest trade partner, helping Brazil's economy ride out the U.S. slowdown with minimal damage. NATO membership gives Turkey lasting influence in Brussels and Washington, and many in the Arab world look to Turkey as a dynamic, modern Muslim state. Add its position at the crossroads of Europe, Central Asia, the Middle East, and the former Soviet Union, and Turkey has a range of political and commercial options. As in Brazil, this advantage helps absorb the sorts of shocks that are now all too commonplace. 

Asia is home to several pivot states. Indonesia, with nearly 240 million people, enjoys a well-diversified economy with trade ties balanced among China, the United States, Japan, and Singapore. Vietnam receives most of its aid from Japan, its arms from Russia, and its tourists from China; its biggest export market is the United States.

Not all pivot states are developing countries. Far-sighted policy ensures that Canada is now less vulnerable to a slowdown in the United States. The percentage of Canada's exports to countries other than the U.S. jumped from 18% in 2005 to more than 25% just four years later.
The likeliest losers in this more volatile world are shadow states, the opposite of pivots, those whose political and commercial possibilities are determined almost entirely by a single powerful partner. Mexico's largest sources of foreign currency are oil sales, tourism, and remittances from nationals working abroad. In all three cases, the vast majority of that currency comes from the United States.

Mexico's domestic- and foreign-policy choices are determined by its political process, not the demands of a domineering sponsor. But when compared with Canada, Mexico's commercial opportunities and the speed of its development are largely defined by conditions inside one foreign country.

Ukraine, another shadow state, wants to escape Russia's gravitational pull and become a pivot state, preserving relations with Moscow while building new ties with Europe. In fact, Kyiv wants to ink a free-trade deal with the European Union. But Russia has threatened to sharply increase the price of natural gas shipments to Ukraine and throw up new trade barriers if Kyiv moves forward with Europe. The EU, for its part, will end trade talks with Ukraine if it joins a customs union with Russia. Ukraine can't win because it can't pivot. It lacks the strength and independence to improve its bargaining position with either side.

Source: Harvard Business Review


Why have I bothered dieting? Latest study in the NY Times tells me that the low fat carbohydrate-rich diet will not keep me thin (wondered what was wrong!). In fact the study debunks the old calorie in calorie out myth telling us that the fewer carbohydrates we eat the more easily we remain lean. The more carbohydrates, the more difficult. In other words carbohydrates are fattening. What matters, then, is the quantity and quality of carbohydrates we consume.

From this perspective the trial suggests that among the bad decisions we can make to maintain our weight is exactly what the government and medical organisations have been telling us to do: eat low fat, carbohydrate-rich diets, even if those diets include whole grains, fruits and vegetables.