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White, who is highly regarded, is reported to have predicted the GFC that occurred around ten years ago.

Sensationalist journalism seems to be a dime a dozen at the moment. Of course, in my role as a financial advisor, I need to be abreast of financial news but I keep seeing the same rhetoric over and over again. And I’m getting sick of reading this stuff!

Here is a little sample of some recent views, where so called financial experts have got it wrong:



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Diversification

Diversification is paramount. Consider if you’d just invested in equities. Over the long term (30 years) equities have generated some of the largest gains since July 1987. They have also seen some extreme volatility.  Not all investors can cope with such volatility.

Spreading your invested wealth across a range of asset classes is likely to provide you with strong returns over time but reduce volatility to your asset base. 



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But when reflecting on the past one tends to drift into dark territory recalling all the stuff you got wrong or regret. I find myself shaking my head and telling myself to snap out of it and concentrate on the positives – you can’t change what’s done. So, that is my focus.

My life falls into three categories – family, profession and self.

Family



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Think back to your first job, I bet the pay cheque wasn’t huge but you somehow managed to fund all things you did on that wage. Now think about how much you currently earn. Sure, you can probably afford nicer things; cars, clothes, TV’s but I bet you still wish you had more money.

They key to making what you have work is a budget. Yes, I know that the word budget can make even the most seasoned finance professional cringe but a budget doesn’t necessarily have to be a complex spreadsheet; it can be as simple as setting a financial goal and then working towards that goal.



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Do you repay debt? Contribute to the balance of your superannuation? Help out other family members? Invest? Or do you blow it all on the holiday of a lifetime?

It’s going to depend on your personal circumstance and, of course, your personality. No matter your personal circumstance, you’d be well advised to talk to a certified, independent financial planner.

But generally speaking…

What are your options?

Repay debt



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In recent years substantial sums of investor capital have been invested in passive investment strategies and moved out of more traditional active strategies.

Passive investing, otherwise known as index investing, is a style of investing that mirrors an underlying market. For example, a particular investment could be purchased to replicate the performance of the Australian S&P/ASX 200 index. In theory, its performance should match that of the index, no more or no less.



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In 1991, during a Parliamentary committee hearing into the tax practices of his then company, Consolidated Press, Packer famously said “If anybody in this country doesn't minimise their tax they want their head read. As a government, I can tell you you're not spending it that well that we should be paying extra."

Does the same apply today? I would suggest so.



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Certainly, those who take time out of the workforce to raise a family are disadvantaged in the current superannuation system.  Added to this is the relative immaturity of the super system, with the 9% Superannuation Guarantee Contributions only applying since the 2002-03 financial year.  It will take until around 2045 to see the real impact of compulsory superannuation contributions on average superannuation balances at retirement (based on a people starting work at 20 and retiring at 65).



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This is yet another example of the need for a complete disconnect between financial product manufacturers and those providing financial advice.

To state the obvious. Institutions who have a vested interest in manufacturing and managing packaged products for generating massive amounts of income for themselves should not be in the business of providing strategic advice to customers. Not only is there is a clear conflict of interest, there is a clear conflict of motivation and intent.



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