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Financial Planning Budgeting

How to Manage Your Money like a Millionaire

How do millionaires make their money, especially when they’re so young? And just as important, how on earth do they manage it? What are their secrets, and can we learn from the methods that they apply?

Well, Capgemini Consulting made it a little easier for us with the report in which they reveal young millionaire money management methods. Do you want to know how to manage your money like an under-40 millionaire? Then keep reading for some valuable tips.

Manage Your Money like a Millionaire

Socially responsible investing

Do you think millionaires invest all willy-nilly? They do not, and they don’t just support the causes dear to their hearts through donations, they also invest in them. That way, they make a hefty return, but they also have a clear conscience, knowing that the cause is a good one.

They usually benefit from the help of a financial advisor, who can tell them what to invest in. And the method is not limited to just millionaires. More and more millennials (two thirds) and about a third of generation x-ers were found to be involved in such socially responsible investments.

Dubbed as a “feel good return”, this allows people to invest without guilt, but they should still retain a balance and not invest everything in just one place, which is a good tip if you want to manage your money like these millionaires.

The case for cash

Studies have found that people who spend cash spend around 12%-18% less than their counterparts who use credit cards. But that’s not why millionaires like cash. In fact, the reasons given were diverse:

  • They want to have money ready for investments
  • They want to have easily-accessible disposable income to spend in order to live the way they desire, including shopping, vacations, eating out, etc.
  • They want to have a means to protect themselves financially, in case of a market crash or a changing market

If you’re looking to manage your money like a young millionaire, going with cash cannot steer you wrong, especially if you have a safety cushion to land on in case times get rough.

Real estate investments

Real estate remains the tried and true of investment, because it offers multiple income sources that are more or less steady. While investing in stocks of a major company can pay out really big, it can also be incredibly risky, so maybe that’s not something to emulate when it comes to how you manage your money. Rental income, by comparison, is safe.

Interesting is that these young millionaires seek their friends’ and their families’ help, but also the Internet’s advice, when it comes to financial matters. Baby Boomers, by contrast, were much more likely to trust a professional with their money and their investments in their future.

This is just one of the signs that money management in traditional ways doesn’t fly anymore. A growing number of millionaires (not only the young set) claimed that they would like to receive automatic advice from a robot, per the same report from Capgemini.

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Financial Planning

Save Money by Shopping Like an Investor

When you do your groceries, it is best to shop like an investor. Apply those investing skills whenever you shop and you’ll be surprised with the amount of savings you are going to earn.

As you go to a supermarket, how do you choose a product? Most shoppers rely on advertisements being fed by the media. A product endorsed by celebrities often entices customers to buy the item without doing their own research.  An investor does a meticulous research before buying stocks. Shoppers must possess the same attitude whenever they shop or do their groceries. Most shoppers do not realize that they spend on grocery items that they do not need. Without a list, shoppers tend to just keep on adding items in their carts. When they get home, they often wonder “why do I have three boxes of cereal?” Marketing tactics like items on sale or discounted items which comes with freebies often attract shoppers even if they don’t really need it. It is not too late to put an end to this situation.

Shop Like an Investor

Four investor tricks to help you generate big savings:

  1. Research – Perform your own research, however, you need to exert extra effort just like what an investor does. Plan your meals, and list down the items that you need. This way, you can avoid impulse buying. Admit it or not, without a list, you can easily go over your budget.
  2. Buy in bulk – It is cheaper when you buy in bulk. Or you can go for wholesale price which is lower compared from retail price.
  3. Compare prices – Most shoppers do not have the time to shop around for cheap items. If you have time to look around or visit other supermarkets you can compare prices.
  4. Consider other brands – Items with a high price tag is not an indication that it comes with great quality. It is not a bad thing to shift from one brand to another.

These are simple yet effective investor tips that will help you cut down your bills. These days, there are many other brands that aren’t too expensive and it’s worth giving a try. Always make a list and eat before you shop.  It is best to shop in the morning to ensure the freshness of meat, fruits and veggies. If you see items on sale, check the expiry date and condition of the product. Saving extra money is not so hard if you choose to become a smart shopper.

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Financial Planning

Buying Shares from Big Banks Paying Off Well

Buying shares is a form of investment. People do invest because of various reasons. Some do it out of concern for their future while others do it because they have extra cash and they want to put it in an investment. Setting up an investment is easier compared as before. Nowadays, you can invest online by making a phone call, which basically makes the transaction much faster.

If this is your first time investing, you have to familiarise yourself with the terminology, how it works, how you can earn from it and how much you can earn from it. Are you tired of the small interest rate of your savings deposit?  Investing in stock market is like a game where you have to bet on the market, not knowing if you are going to win or not. How do you identify which stock is profitable? Can it stand an economic crisis? The stability and profitability of a stock or share is very important. So where do you put your money?

Buying shares from big banks is paying off well. It is a profitable form of investment on which you can earn up to four times the value of your money. That is a huge difference compared from regular savings deposits which only earn 2.5% interest rate. The rates are not expected to increase in the next few years. So you cannot expect greater income from it.

Buying Shares

Buying shares is a bit risky especially if you can’t afford to lose the amount of money you have invested. The stock market’s movement is affected by the law of demand and supply, and other factors. Economic crisis can happen and anyone can be affected by it especially investors. Yes it is quite risky; you have to be careful where you put your money. Bank dividends continuously grow and it would take another recession or economic crisis for it to decrease. The stock market is quite stable; this is the reason why investors who seek for greater dividends capitalize on it rather than on bank savings.

Before you invest, make sure that you deal with full service brokers. These brokers must provide information, tailored investment plans and make recommendations. Buying shares or stocks is a little tricky for beginners; make sure you are guided by the right people who have extensive experience in this field. Always talk to your broker and discuss the price of shares before you buy or sell your shares.

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Financial Planning Financial Fitness

Generation Y Become Cautious Investors

Generation Y has never seen a recession. A survey has found that they are taking notice of the current global financial crisis, which has weakened their appetite for investing.

Once known as being among the most adventurous and carefree of all investors, those born in and after 1980 have suddenly become more conservative than their baby boomer parents. The portion of Generation Y who treat investing as a hobby has dropped from 30% in 2008 to just 7% in 2009.

This collapse in interest in investment marks a significant shift for a generation that until recently had only known a rising share market, a strong economy and low unemployment.

For Generation X (those born in the decade or so before 1980) the proportion of those investing for a hobby had a gentler decline, from 18% in 2008 to 14% in 2009.  The Baby Boomers (the generation before X) remain a powerful force in investment as they have been less deterred by the market turmoil.

The experience of a falling share market, collapsing companies, an uncertain economy and high unemployment have contributed to generation Y developing into cautious and conservative spenders when it comes to investment.

On the other hand, Generation Y has actually increased the money that they spend on going out, by 31% compared to the same time last year. They are spending more on smaller purchases such as iPhones, GPS navigators and electronic games.

The comfort of still living at home with their parents contributes to their ability to spend more frivolously. The amount of twenty-somethings still living at home has grown by around 300% in the past 20 years.

In saying this, Generation Y’s are still striving to save that ‘housing’ deposit as they follow in their parent’s footsteps by wanting to invest in property.

With the help of Australian Lending Centre, the objective of owning a home may be achieved with competitive interest rates and a variety of tailored home loan options.