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nelson mandela bay's family lifestyle
author:
john osmond
the bridge of wellbeing
issue:
9, easter 2009
Almost daily, newspapers tell fresh stories of those who have lost their life savings through bad decisions on the market or through property scandals. Others have fallen prey to other schemes & scams that lie in wait for the unwary. The stories are different, but the results are the same: always a tragedy, and always avoidable. The main reasons that people end up being duped by a scam is that most people do not have a sound decision making framework to help them reach the appropriate action. Unfortunately many decisions that end up in disaster often have a similar thread: Over-reacted to peer group pressure; Took mental short-cuts that led up blind alleys; Didn't think about what would really make them happy; Didn't accept advice outside their area of expertise; Believed the adage: 'You can't go wrong with bricks and mortar': Failed to understand how much was enough. When we make investment decisions we are driven by emotions such as fear and greed and unfortunately these 2 powerful emotions are probably the single biggest reason people's plans fail. What we need to have is a sound decision making framework so that we are able to avoid the costly mistakes that are driven by fear and greed. Now shut your eyes and spend a few minutes recalling all the truly happy memories that you have from the past 5 years. If the time seemed to fly and you spent not 5, but 20-30 minutes in joyful recollection of happy memories, then read no further as you have already achieved a high degree of wellbeing. For most people, however, this exercise takes a much shorter time. We may start to fidget and your mind may have started to wander to more mundane issues and you may find it difficult to recall episodes of true happiness. Imagine not being able to fill our minds with even a few minutes of happy memories of the past five years. Unfortunately the problems the world faces at the moment are as a result of our obsession with acquiring more possessions than the next person. Too few people use plans that reflect what they really hope to achieve in life. Clinical psychologist Timothy Sharp, author of The Happiness Handbook and founder of the Happiness Institute, says that financial goals are part of a much bigger goal-setting programme. 'Truly content people are in control of several key domains of their lives – work, health, recreation, social life, money and relationships – and they aim to balance their time and effort among them.' If you are currently facing uncertainty in your life and you would like to replace this with confidence then we need to provide you with some pillars to build your bridge of well being if you want to live your life to its full potential. At the moment, there may be a gap between these two points. Values and Goals: The starting point is to understand your values and goals. Sharp says 'they should be consistent with what really matters to you and what you honestly value'. Goals should be time bound - if they all have 20 year time horizons you'll struggle to stay on track. Examples of short term goals are going out to a restaurant once a month, a short weekend break every 3 months, improving your qualifications. Medium term goals might be buying your first home or upgrading the current one, having a family, educating children or an overseas holiday. Longer term goals will relate to retirement and your lifestyle then. When setting goals, look forward, not back. As the saying goes: 'If you do what you've always done, you'll get what you’ve always got'. Financial Strategy: We suggest applying your resources to achieve your goals by mapping out your financial resources now and in the future. This is easier – and more fun – than it sounds. In fact, if you have spent time thinking about what you want to achieve at various stages of life it can be very enlightening. Identify your current income and expenditure by doing a budget. Don't be too precise, estimates will get you started. Also list your assets and liabilities to work out your net wealth. Estimate your income and expenditure in the medium and longer term and try to balance your current and future needs and goals - remember not to confuse needs with wants. “The first step to happiness is spending less than you earn”. Paul Clitheroe Investment Strategy: All you need is a basic understanding of the four key investment principles and good advice. Having a simple strategy that you understand, plus a sensible investment portfolio will stand you in good stead during periods when the markets are working against you. The four key investment principles are Quality, Value, Diversity and Time and can be further described in the following way: Quality – focus on sound assets with good prospects; Value – buy and hold investments at reasonable prices; Diversity – invest widely to access opportunities and reduce risk; Time – remove emotion and allow investments time to perform. These three pillars and working in conjunction with a financial planner will enable you to achieve your full potential, give you a sense of control and feeling of confidence.
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