Although excited at the time of the purchase, once they’ve spent a lot of money, many people feel a deep regret and concern that they made the wrong decision, referred to as buyer’s remorse. In this article, I’m going to specifically discuss the buyer’s remorse associated with buying a property.

Buying a property is an emotionally-charged process. I tried to briefly capture this range of emotion in the chart above.

During the initial search process, many buyers may go from feeling excited to frustrated when they realise the constraints of their budget. After some time, it is not unusual for many buyers to see a property they like but then miss out on it for one reason or another. This may result in a feeling of disappointment and loss.

When buyers eventually exchange contract on a property, many may feel a sense of relief and euphoria.

However, this feeling of elation often does not last long, as many buyers naturally begin to feel a sense of remorse over their purchase as they grapple with a series of fear and anxieties such as:

• fear of having made the wrong choice;
• fear of having over-paid;
• fear of over-indulgence or living beyond one’s means;
• fear that other people may later question the purchase or claim to know better alternatives;
• fear of buying at the wrong time;
• fear that a better/cheaper property is around the corner (also known as Fear of Missing Out or the FOMO factor);
• fear of the financial implication to ensue (i.e. debt); or
• fear of having been pressured by the sales agent.

It is also not uncommon for buyers to compare their purchase with those of their friends and families. Buyers need to be careful when doing so because no two properties are like.

For example, just because a friend/family purchased a property at $800,000 as opposed to your $850,000 does not automatically mean that they got a bargain whilst you over-paid. So be cautious not to have a knee-jerk reaction to price only.

Another common trigger for buyer’s remorse is the pre-settlement inspection. Many properties have been scrubbed clean, landscaped and styled within an inch of its life just prior to sale. So it comes as a shock to many buyers to see the property empty, slightly dirty and with overgrown yard for example. The gloss of the marketing campaign is over and buyers are faced with the reality of a vacant property which does not seem as glamorous as in the brochure.

The good news is that, based on our experience, buyer’s remorse doesn’t last too long. Acceptance and contentment soon follow – especially once the buyers are able to start putting their personal touches to the property (such as painting).

So if you are a property buyer experiencing buyer’s remorse, just stay calm and have faith that all your due diligence and research will stand the test of time.

Oliver J. Stier is the Director of OH Property Group, a leading Sydney Buyers Agency. He studied Quantitative Economics and Finance at Cambridge University (UK), University of Toronto (Canada) and Princeton University (USA). In addition to being a licensed real estate agent, Oliver is also a Chartered Financial Analyst (CFA).

OH Property Group

OH Property Group is a licensed Australian property Buyers’ Agency based in Sydney specialising in the search, negotiation and purchase of residential and commercial real estate in Sydney for both local and overseas buyers. We are an independent advisor and trusted advocate for home buyers and investors alike.

For more information: www.ohpropertygroup.com

The contents of this article are the views, research and opinions of the Author, Oliver Stier

Extra Investment Costs

When you jump in and out of products, you are racking up unnecessary expenses.  Constant trading raises your turnover ratio, which is also known as churn when the ratio gets high.  It’s not smart movement of your money but rather movement for movement’s sake or a reflexive reaction to something you’ve seen in the news.  As a result of all the movement, you pay multiple transaction fees, lose money on shifts in the price point of your investments, and become subject to higher capital gains taxes since you hold the positions for less than a year.  All of these experiences eat into your overall margins of return on your investments.

Missed Opportunities

When you aren’t committed to an investment, you can miss out on gains by jumping too soon from your investment path.  Panicking over some new development or perhaps still recoiling from a previous market burn, uncommitted investors tend to be the first ones to flee when the going gets rough.  This causes scores of missed opportunities for those without the market discipline to tough out temporary set backs.

Prey For Stock Peddlers

As an uncommitted investor, you set yourself up as an easy target for persuasive peddlers of new investment products that may not operate in line with your best long term interests.  Since you’ve got no deep love for your current plan, why not try out a new one?  Forever chasing the new and different, your mind is permanently on the lookout for something else to buy or try.  Persuasive brokers can thus easily separate you from your money by locking you into a number of fee generating programs that boost their returns, not yours.

Concluding Thoughts

It all adds up to less money in your pocket at the end of the year and when you actually need money available.  Why sabotage your own money-making efforts?  Work through your commitment failure and learn to consistently stick with your system to boost your returns.

About the Author

Scott Goold is the Managing Director of Lifestyle Investor Services. He began his career working for the Australian bond clearance house, Citibank in foreign exchange and then as a financial analyst. Scott became a senior trader at Refco Trading Services before living for a year in the United States and Canada. Returning to Australia, Scott worked at the Sydney Futures Exchange and then as a futures and options broker.

He boasts significant market experience in challenging environments such as the Asian Currency Crisis, September 11, 2001, the outbreak of war in Iraq and the shift of futures markets from pits to electronic trading.

The contents of this article are the views, research and opinions of the Author, Scott Goold

The markets have been rising for the past two years despite earthquakes, tsunamis – even the announcement by rating agency Standard and Poors that there was a 33% chance that the US will have their credit rating downgraded within 3 years was merely a speed bump in the markets rise.

After the worst recession since the great depression everything is climbing higher and higher, in fact US markets have managed to rise 100% from their March 2009 lows. Gold hit an all time high and registered 8 days of higher prices over the past 9, silver is reaching for the moon (It behaved in a similar manner from 1979 to 1980 then proceeded to crash 80% over the following months) and not even the threat of default (err sorry restructure) on the part of Greece can dampen enthusiasm.

It turns out that Portugal didn’t tell the whole truth about how deeply in debt they were, but that’s Ok as the European Union stands ready to bailout any nation that can’t make ends meet. As of September 2010, foreign banks had a combined $2.5 trillion exposure to Greece, Ireland, Portugal and Spain. So it’s not really in anyone’s best interest to let any European nation fail, but the question is how long they can keep up this juggling act.

Taken in isolation, you would seriously need to wonder about how these issues would impact the markets, but right now it seems that investors have never been surer of anything or more optimistic for that matter. Everyone knows that gold will keep going up and that the US dollar is doomed and anyone that doesn’t realise this is mentally challenged. AUD 120 and beyond is a sure thing and the collapse of the US due to debt burdens is a forgone conclusion. Never mind that Greece, Spain, Ireland and Japan (also under threat of a ratings cut) are in far worse shape than the US.

Things have a funny way of turning out completely different to what the majority thinks. After all, if investing was so easy and the herd got it right then the dice wouldn’t be loaded and everyone would live in mansions, with holiday homes by the beach and drive Ferraris. Sadly, it doesn’t work that way as most people tend to get it wrong.

True, more and more bears are giving up and going into hibernation and as of the first week of April, more bears defected to the dark side than at any other time since 2003.  But that’s always the way it is before a trend change; it takes so long to reverse that people question their judgment and then finally just give in.

The volatility index VIX dropped below 15 on the 25^th of April. This was yet another signal of complacency that most investors believe there is nothing to worry about, which is generally an indicator that volatility is about to increase. Although I don’t believe that history repeats, I do believe it often rhymes and right now the market is behaving in a similar way that it did this time last year before the infamous flash crash.

Anecdotal evidence continues to mount that we are close to a bottom in the USD because my wife asked me if I was sure the USD wasn’t finished. She lives with me and constantly hears my arguments and reasons why the USD is going to rally and surprise everyone, but even 5 years of brainwashing on my part wasn’t enough to convince her that the USD still has a fighting chance. Add to this that I just launched a currency fund that targets 36% per annum on the USD/GBP cross and now the creators of the system want to launch EUR and AUD versions which tells me that we are close to a bottom. But the most compelling evidence is the look of pity in the lady’s eyes at the money exchange place every time I convert USD. She tells me that the USD will keep falling and I should convert all of it now before it falls further. Seriously, that’s akin to the taxi driver giving investment advice at the height of the market.

When you think about it, does it make sense, logically that investors would prefer to hold Euro even though nation after nation needs help paying its way, or that the YEN, the currency of the most indebted westernised economy, with the most rapidly aging population in the world, is regarded as a safer currency than the USD?  The IMF is also sounding the alarm about the USD and America in general when they said earlier this week that the “Age of America” will end and the US economy will be overtaken by that of China.”  This could also be seen as a bullish indictment for the USD, as the IMF generally tends to shut the gate well and truly after the horse has bolted.

Virtually everyone thinks the USD is going to keep falling. However, the reality is that this is an incredibly bullish sign, as we are running out of people to bet against the dollar and put downward pressure on it.  It also means that a small rise in the dollar will cause investors that are short the dollar to cover their shorts and buy back the dollar. This, then, creates more upward pressure on the dollar, forcing even more investors to cover their shorts and you end up with a rising USD, when everyone thinks it can’t.

Generally when belief and sentiment is so one sided it’s indicative of a turning point. Of course the USD could fall a little lower, but it’s certainly closer to bottoming than it is to more falls on the downside.

The truth about the dollar is that it was devalued in the boom years. This was done through the massive extension of credit, in essence creating more dollars. However, the USD actually bottomed in 2008 and has for the most part been rising ever since. It’s just that the rise in commodity dollars has been so powerful as to mask this. Recent weakness in the dollar appears to be coming to an end and could result in a multi year rally in the USD.

However, it should be noted that the AUD, NZD and CAD are approximately where the USD was in 1993, which means their upside is limited while the downside is huge.  I know this is hard to believe when the USD seems to weaken daily, the AUD puts on almost a cent a day.

If you can’t get your head around how the USD could possibly go up in value then think about it like this: bananas in Australia can now cost up to $4 each while before the floods and cyclone bananas were plentiful and didn’t cost anywhere near this. But after the damage caused by the floods and cyclone there were far less bananas available and the result was that the remaining bananas became more valuable and their price went up. It’s exactly the same with the USD, as more debt is paid back and destroyed, there are less dollars and they become more valuable. It’s the opposite of what happened during the easy credit times, when the dollar was diluted.

The end of Quantitative Easing 2, which is scheduled for June 30, will also play a part in the rise of the USD.  The concept was, of course, to print more money into existence, which the banks could use to make loans to consumers and businesses, to keep the economy going. Unfortunately, demand for what I would term productive loans just wasn’t there. So, the only people really borrowing are speculators and banks and we currently have between $7 and $9 billion a day finding its way into the markets, putting a floor beneath them and pushing up commodity prices. The question is what will happen when this free money and support is taken out of the market?

It’s obvious to people living in Main Street that QE2 was a failure and only managed to push up the price of commodities and food while it was unable to put a floor under housing which has fallen for the 8^th consecutive month. In fact if you look at housing in the US adjusted for inflation it’s around the same price it was in the 1970s.

So, the man in the street pays more for food and fuel as the value of their homes continue to fall but, by the Feds measurement, it’s a success as there are less people looking for jobs and the markets are up. This will make it very difficult for the Fed to introduce QE3 even though that is what the market’s complacency seems to indicate they believe will happen irrespective of what Bernanke actually says.

So, from my perspective, the end of QE2 will take the floor out of the market and end the free money, which has the potential starting a market decline again. Realistically, it’s no different to what happened in Japan, every time the stimulus stopped the markets fell and once the free money started flowing again the markets rose. If the markets do start to fall, then the USD will rally. As a side note, market volume has actually been decreasing since its peak in July 2009, which has made it easier to take the market higher with less money.

So, with the end of QE2, the question will be whether it’s done gradually or the spigot is simply turned off forcing the market to go cold turkey either way we are certainly living in interesting times.

The contents of this article are the views, research and opinions of the Author, Endre Dobozy

It’s a trader’s delight – at least from the perspective of liquidity and ease of trading, which probably explains why there are around 4 million trades a day globally. These trades comprise not just financial traders, but also traders who are working in the dealing rooms of trading houses as well as in banks who need to exchange currency for their clients and for their own trading desks. The other attractive factor is that currencies are often considered easier to understand as they do not require the in-depth stock selection process that is associated with the trader or investor in the stock market who stock-picks.

There are however fundamentals to deal with in currency trading. They are, after all, in many ways the public face of the underlying economy. Hence a currency is affected by a wide range of economic indicators such as interest rates, unemployment rates, terms of trade, political stability, demographics and geopolitics. Because it is so widely tradable by literally millions of traders, the downside of currency trading is that at times a currency can be very volatile – not just due to changes in relation to the fundamentals but also due to changes in sentiment.

A technical analysis of the behaviour of a currency can provide the trader with sufficient information to trade on. “Rules” in currency trading thus are no different to rules in any commodity or share market: there are essential money management principles as well as psychological principles in involved. Many people enter currency markets on a whim, believing it’s an easy and quick way to make money. If they have never traded in a market before they may be facing an expensive lesson as most will tend to extend themselves too far and make poor decisions and lose money. They then become discouraged and move on. Others rely on technical analysis thus eschewing the need for fundamental analysis.

Investors and traders need to exercise good money management, because coming into this market there is often much volatility and a trader is usually trading on margin, that is, in effect, on borrowed money.

Most traders – sensibly – begin their trading experience in currency markets with what is called a “demonstration” account (which is free). It is an excellent way to see how a position plays itself out. If a trader for example wanted to trade the upside on the Australian dollar versus the US dollar he would enter with one contract on paper (so to speak) watch it for a while, noting what he may do in the event of the currency moving the wrong way. It’s important to understand one’s own psychology as people who are risk averse often a frightened off by the first sign of an adverse movement and never get to see how a current trade can play itself out.

The other warning side for newbies is to avoid currency markets where there is large volatility as these can be very damaging if caught out on the wrong side of a trade. Any trader, whether a newbie or an experienced investor should spend time studying historic charts of the currency movements that they are interested in, noting the high volatility events and understanding why these movements occurred. That time spent is a sound money management investment.

About the Author

Morris Kaplan, one-time stockbroker and venture capitalist, as well as author of best-seller 5 Years to Financial Freedom (Hardie Grant Books) brings his finance skills and knowledge to bear on bipolar investment markets.

The contents of this article are the views, research and opinions of the Author, Morris Kaplan

Traditional Chinese Medicine asserts that illness and disease are caused by disturbances to the natural Qi. By restoring the body’s natural balance of yin yang Qi, the likelihood of illness, including stress, depression, circulatory problems, high blood pressure and headaches, is reduced. This can be done through a variety of TCMs. Tai Chi, Qi Gong and acupuncture are all methods to achieve a better sense of calm, improved well-being and increased energy in the corporate workforce.

In TCM the various exercises of Tai Chi and Qi Gong are designed to develop and maintain a healthy mind and body, and avoid illness – which is essential in the workplace. This ancient Chinese art uses slow, rhythmic actions to stretch and tone the body and is designed to increase energy, promote the flow of blood, oxygen and Qi throughout the body and improve health whilst restoring balance in your life. Through practicing these exercises, one gains a more harmonious approach to life within and out of the workplace, leading to a better foundation upon which to base important decisions.

Traditional Chinese Medicine practitioner Angela Zhu, of Sydney-based company Traditional Qi, translates the concepts of Tai Chi and Qi Gong to what the Western world understand as “deep breathing that ensures high oxygen levels in the blood, which leads to better health through improved sleep patterns, a more effective immune system and a more efficient digestive system”. The calming workout can be easily practiced at home or in the office, making it a convenient option for busy people. Tai Chi and Qi Gong bring to the practitioner peace, health and harmony, and are invigorating exercises to recharge the body and mind.

Involving a series of movements combined with breathing techniques and visualisations that unblock the body and fill it with energy, the practice of Tai Chi and Qi Gong are gentle and easy, the power they bring is considerable – a power that gives you the ability to prevent illness and heal yourself. It is well known that it is much less demanding on the body to stay healthy than it is to recover from ill health.

Acupuncture, a Traditional Chinese Medicine therapy is gaining increased recognition in medical profession for its preventative and curative benefits. Acupuncture is an effective and natural form of healing for many conditions including stress, depression, addiction and disease. Acupuncture incorporates a holistic approach which is not only used for stress and illnesses but is a method that can work to make you look younger and feel younger too.

The body has an energy flow system which runs through the meridians. However, if meridians become blocked the body fails to maintain balance and serenity resulting in stress or illness. Acupuncture uses needles at points throughout the body to increase energy flow which revives emotional stability through the release of endorphins. The realignment of energy levels enhances performance by removing anxiety, unnecessary toxins and heightening confidence levels.

Creative flow and a calm but energised mind are essential in the workplace. Through Tai Chi, Qi Gong and acupuncture, both the mind and body are revived. Based in Bathurst Street in Sydney, Traditional Qi offers a variety of corporate packages designed to improve well being and performance through the power of Tai Chi, Qi Gong and acupuncture. The exercises of Tai Chi and Qi Gong are ideal for the corporate environment as they are slow and can therefore be performed by anyone and at anytime of a busy day. Half day or full day programs or weekly exercise classes are available. Traditional Qi’s Corporate Programs can be specifically designed for any business consisting of group workshops, executive support programs, conference and seminar packages and corporate retreats both locally and in China.

Traditional Qi’s two core principles are prevention and wisdom. Through practicing the exercises of Qi Gong and Tai Chi, not only is the body strengthened physically, but it brings about a heightened level of mental clarity. Interestingly, these principles also have relevant applications in the business environment, and when practiced can offer significant benefits.

About the Author

Angela Zhu is principal of Traditional Qi Pty Ltd and the Tai Chi & Qi Gong Institute Australia. She is a qualified practitioner of Traditional Chinese Medicine and a National Accredited Qi Gong and Tai Chi instructor who specialises in applying acupuncture and the exercises of Qi Gong and Tai Chi to promote healing and personal well-being at her Sydney-based company Traditional Qi. See http://www.traditionalqi.com.

Angela was born in Beijing and followed in the footsteps of her grandfather, father and mother to become a TCM practitioner. She has over thirty years of international experience and has been in practice in Australia since 1992.

The contents of this article are the personal views, research and opinions of the author, Angela Zhu

According to The World Bank, ‘Girls’ education yields some of the highest returns of all development investments . . . both private and social benefits that accrue to individuals, families and society at large.’

Room to Read believes that World Change Starts with Educated Children®. We envision a world in which all children can pursue a quality education that enables them to reach their full potential and contribute to their community and the world.

Room to Read seeks to transform the lives of millions of children in developing countries by focusing on literacy and gender equality in education. Investing and working in collaboration with local communities, partner organizations and governments, we develop literacy skills and a habit of reading among primary school children, and support girls to complete secondary school with the relevant life skills to succeed in school and beyond.

By partnering with individuals all over the world who share our dream, Room to Read hopes to reach its goal.

A Little History

It was in 1998, aged 35, that John Wood took a holiday from his fast-paced job as Director of Marketing for Microsoft Australia to trek through Nepal. During his trek, John was amazed by the warmth and enthusiasm of the students and teachers, but also saddened by the shocking lack of resources.

Driven to help, John quit his senior executive position with Microsoft and began to build a global team to work with rural villages to build sustainable solutions to their educational challenges. It was the beginning of a life-changing journey, and the beginning of Room to Read.

Eleven years later, after growing Room to Read to be a global leader in the non-profit education sector, John returned to Sydney for the launch of Room to Read in Australia – an awareness and fundraising presence. Since 2009, Australia has embraced Room to Read, raising over $4m for our programs in Asia and Africa and establishing chapters in Melbourne, Brisbane, Canberra, Perth and Adelaide in addition to Sydney.

From humble origins in Nepal in 2000, delivering donated books to rural communities, Room to Read has now grown to become a global organisation dedicated to promoting and enabling education through programs focused on literacy and gender equality in education.

Our Reading Room program provides libraries to offer children and their families the opportunity to learn to read and to develop the habit of reading. Our Local Language Publishing program allows children to read books in their mother tongue. Our School Room program gives children a safe place to learn. Our Girls’ Education program enables girls to enroll and stay in school.

We currently work in Bangladesh, Cambodia, India, Laos, Nepal, South Africa, Sri Lanka, Vietnam and Zambia – with plans to expand so we can bring educational opportunities and resources to children throughout the developing world.

The heart of a charity with the head of a business

In founding Room to Read, John Wood wove proven corporate business practices with a vision to provide educational access and opportunities to children in the developing world.

Room to Read’s novel approach to non-profit management calls for:

• Scalable, measured, sustainable results
• Low overhead, allowing maximum investment in educational infrastructure
  • Challenge grants fostering community ownership and sustainability
  • Strong local staff and partnerships to ensure culturally relevant programs

Room to Read is committed to the highest quality programs that provide the greatest benefits to children in the developing world.  Tracking our results through monitoring and evaluation is an area in which we are making substantial investments – investments in people and in systems.

Room to Read conducts monitoring and evaluation of each of our core programs on an ongoing basis to:

• Track project information to ensure that we work effectively towards our goals and objectives.
• Identify strengths and weaknesses to inform program decisions and make timely improvements.
• Provide accurate and timely information about progress towards desired objectives to our stakeholders.

Commercial disciplines and a focus on delivering measurable results mean that Room to Read runs with the heart of a charity but the head of a business. And our results are impressive.

Since 2000, Room to Read has established more than 1,400 schools, created over 11,000 bilingual libraries, published over 550 local language children’s titles, distributed more than 9.4 million books and supported over 10,000 girls through the Girls’ Education program. Our programs have already reached more than five million children and will impact ten million children by 2015.

Investing on our Program side

Investing with Individuals

Imagine a world in which every child has access to an education. Room to Read is doing our best to make this dream a reality, one child at a time. Like Marjory, a 14-year-old girl from Chongwe, Zambia, who dreams about being a lawyer so she can help bring law and order to local communities in her home country. Room to Read’s Girls’ Education program ensures that Marjory has the supplies, tools and mentoring she needs to complete her secondary education and accomplish her life goals.

Investing with Communities

To increase the likelihood for success and long-term sustainability, Room to Read enlists community involvement and co-investment through our Challenge Grant model. Villages often contribute a significant portion of the overall expenditure in the form of land, labour, materials and/or small amounts of cash.

These challenge grants act as catalysts for community building while also maximising the local participation and expertise brought to our programs – and minimizing the likelihood of corruption.

Investing with Countries

Room to Read hires local staff, who are personally vested in their nation’s educational progress, and we empower them to make key decisions within their country. They are already familiar with the language, conditions, customs and governments and understand the specific needs of the educational system.

We also rely heavily on in-country partners to help us implement our programs. Working in collaboration with government agencies and local NGOs helps us build upon the strengths of existing work and also ensures the long-term sustainability of our programs.

Investing on our Funding side

Investing with like-minded organisations

Room to Read’s partners are a huge factor in our success, providing us with generous financial and organisational support. They make a world of difference by providing innovative ways to support Room to Read. Like Atlassian, an Australian-born software development company, whose Starter licenses provide start-ups and small teams with perpetual, fully supported software for 10 users for just $10, with all proceeds going to Room To Read. To date, the popularity of Starter licenses has raised $1 million for Room to Read.

Investing with Individuals

Donors

The realization of our vision to reach 10 million children by 2015 will depend upon our successful partnership with donors who share our belief that “World Change Starts with Educated Children”.

Room to Read is committed to transparency in our interaction with our partner communities and with our investors.  As a result, we have developed a “Sponsor a Project” menu through which donors can choose to fund a specific project or contribute to our area of greatest need.

Volunteers – chapter network

Room to Read has created a global chapter movement with more than 50 volunteer chapters in 16 countries made up of over 8,700 individuals who have made a long-term volunteer commitment to promoting and supporting Room to Read via their networks and communities. In 2010, chapters raised over $12 million for our programs.

Room to Read in Australia

Room to Read is experiencing a groundswell of support in Australia. Volunteers, school communities, foundations, businesses big and small, local media and individual donors are all choosing to invest with Room to Read.

Having launched the Australian arm of Room to Read through the efforts of a volunteer team, supported by a local board, in August 2010 a small office was established in space generously donated by Credit Suisse.  The appointment of two individuals means that there is now consistent administrative support for the Australian Chapters, but otherwise Room to Read in Australia is run entirely by volunteers.

We are always looking for energetic and generous individuals who are interested in investing with Room to Read.

More information

For information about Room to Read’s fundraising operation in Australia, please contact Australia@roomtoread.org or consult our website, www.roomtoread.org/australia.

At the time of the last nationwide census in 2006, there were almost 2.7 million Australians aged over 65, making up around 13% of the population.

Looking forward to 2016, the Australian Bureau of Statistics estimates that this age demographic will grow dramatically in every state, with a nationwide average increase of 54%.

The ageing population will present many challenges for governing authorities, but also opportunities for entrepreneurs and investors around health, aged care and housing.

THE RETIREMENT LIVING SECTOR

It is estimated that around 5% of Australia’s population aged over 65 years live in a retirement village, compared with 7% in New Zealand and 13% in the United States, demonstrating plenty of room for growth in the domestic market.

The Retirement Living sector provides accommodation for older, retired people.  The majority of accommodation options in Australia have previously been targeted to the elderly, low and middle socio-economic demographic, with village-style accommodation and additional services such as meals, cleaning, or nursing.

The Retirement Living Sector is distinct from the Aged Care Sector, which offers aged care or hospice facilities to individuals who can no longer live independently.  The majority of operators of these facilities are not-for profit entities such as religious or charity organisations.

It is estimated that around half of the retirement communities in Australia are now owned by corporations such as investment banks and large property companies, with the remainder owned by private individuals or the not-for-profit sector, including church groups and benevolent associations.

The entry of corporations into retirement living has brought an increased level of sophistication to the industry, but also greater complexity.  These organisations have spent millions of dollars on tax lawyers and accountants to structure occupancy agreements that operate within the retirement villages legislative framework, but also maximise the tax and profit outcomes for the village owner.

PURCHASE ARRANGEMENTS

Retirement living accommodation is typically either an Independent Living Unit (or ILU) or a Serviced Apartment. Modern retirement living communities try to offer a mix of accommodation styles and care options, which allows the village owner to manage residents within the complex as their needs increase.  For example, a resident may initially move into an independent living villa or townhouse within the community.  As their independence and mobility decreases, they have the option to move into a smaller, more easily maintained apartment also within the community.

Retirement homes are procured and occupied by residents under five main types of arrangements.  An “arrangement” describes the way in which an individual purchases and lives in a retirement living unit and it is not unusual to find variations of each type, particularly between different states.

The five types of arrangements are:

• Freehold, typically strata-titled
• Leasehold;
• Company Title;
• Rental; and
• The Deferred Management Fee or DMF scheme, also known as Loan/Licence or Loan/Lease.

Freehold

The freehold scheme is usually strata-titled and similar to any freehold property purchase that uses a community title scheme, such as a block of units or townhouses.  A body corporate or owners’ corporation governs the complex within the limits of the corporate charter and the relevant state or territory community titles legislation.  The corporation has a committee made up of unit owners, who hold the various positions of office such as chairperson, treasurer and secretary.

Leasehold

Leasehold, not to be confused with the “Loan/Lease” contract used under the Deferred Management Fee scheme, is a common contractual arrangement offered by retirement villages where the resident owns the house and leases the plot of land upon which it is built.  The complex may be managed by a retirement village operator or an owners’ corporation.

Company Title Schemes

Under Company Title Schemes, a corporation owns the complex and a resident purchases shares in the company at a market value that is reflective of the property value.  Ownership of the shares deems the right to occupy the premises attached to those shares.

Rental

A Rental scheme is not a purchase arrangement.  A rental village operates under standard residential tenancy agreements, whereby the owner or operator of the unit leases a residence to a tenant.  The rent payable under the lease is generally determined by the level of government benefits received by the residents, from programs such as the Age Pension and Rent Assistance Allowance.

Deferred Management Fee

The final and most complex of all purchase schemes is the Deferred Management Fee or DMF scheme.  Most units in retirement villages in Australia are occupied through DMF schemes.

The DMF scheme is also known as a “Loan/Lease” or “Loan/Licence” scheme.  In essence, it is an annual fee charged to the resident for each year of occupancy, capped at a set number of years, and calculated as a percentage of either the original sale price or subsequent re-sale value of the licence.  The fee is accrued over the duration of the resident’s tenure in the property and is physically received by the operator only upon departure of the resident.

HIGHLIGHT INSERT:

The DMF is basically an annual fee charged for each year of a resident’s occupancy, capped at a set number of years, and calculated as a percentage of either the original purchase price or subsequent re-sale value of the licence.  The fee is accrued annually at each anniversary of the resident’s commencement at the village and paid out to the village owner from the proceeds of the re-sale of the unit.  Under DMF contracts a resident may also be obliged to share some or all of the capital gains (if any) upon re-sale of their unit, in addition to the deferred management fee.

Another peculiar twist to the DMF contract is that the resident occupies their retirement unit under a lease or licence – the freehold title remains with the village owner!

Many retirement home buyers sign these contracts ignorant of the true financial implication of their purchase.  Typically, it is not until the resident goes to leave the village that they actually realise the true nature of the fees and charges involved.

It is important to note that under a deferred fee scheme the resident does not actually own the freehold title to their unit – this remains with the owner of the village.  Instead, the resident purchases a “Right to Occupy”, usually in the form of a lease or licence.

Most retirement villages are covered by the state-specific retirement villages legislation, however they may also be administered by other State or Commonwealth legislation, such as strata or community title acts, the Corporations Act, manufactured homes or residential tenancy legislation.

The contents of this article are the views, research and opinions of the Author, Richard Andrews

The longer I spend in the investment game the more I realise that the average investor just doesn’t stand a chance. They seem to spend far too much time focused on the wrong things and act at the worst possible time.

A perfect example of this is how most people will spend more time agonising over their weekend football tips or the features they want in their new car than they do about their investments for retirement, which isn’t an issue when you are 20, but life has a nasty habit of sneaking up on you. Honestly, here we are entering the 5^th month of 2011 and it seems like only yesterday I was celebrating Christmas.

Perhaps this lack of focus on the end game is the reason why it’s estimated that 70% of Australian retirees are currently living off less than $12,000 a year and why only 4% of retirees will have more than $40,000 a year at their disposal upon retirement.

Mind you, this failure to plan for retirement isn’t confined to Australians as a recent study by The Employee Benefit Research Institute (EBRI) in the US found that workers needed to save $250,000 for their retirement to live off their savings while supplementing this with pension and social security benefits.  When you think about it, $250,000 isn’t that much money for your golden years (especially if you figure on living 20 years or more in retirement) but what was truly frightening was that almost 30% of workers surveyed by EBRI had less than $1000 saved towards retirement while approximately 17% had managed to save between $1000 and $10,000 towards retirement. In fact less than 10% of workers surveyed had reached the goal of $250,000.
OK, so the 250K is the minimum that retirees should have saved and you can argue that there is still time for people to change their ways and start saving for retirement. After all, that is the premise of the H.S Dent Foundation that, as we age, we move from spenders to savers, sucking more and more money out of circulation and the broader economy, as we sock this money away for retirement. Great theory but the sad fact is that less than 25% of current retirees in the US have $1000 in their retirement accounts and around 15% of them have put away less than $10,000.

If you combined the savings of workers and retirees you would find that more than 50% of people surveyed have less than $25,000 set aside for retirement or, if you prefer 10% of what they need.

This means that the US, with all its budgetary woes and talk about spending cuts, is in an interesting predicament, as there is very little wiggle room to slash benefits for retirees, in which case taxes will need to be raised to pay for the lack of retirement savings.
Assuming you are one of the lucky few with $250,000 or more set aside for retirement, it’s a small wonder you actually made it this far as the lure of the weekend sports tips isn’t your only headwind when it comes to investing.

Actually, I’m quite ashamed to say that financial advisors, professional money managers and investment commentators have purposely kept the truth about investing hidden from the public. They are terrified that if people really knew the truth about investing that they would simply bury their money in the backyard or hide it under a mattress. While it’s kind of a dirty little secret, cash has actually been a better investment over the past decade than almost any other asset class. Yes, keeping your money in the bank was better than investing it.

Investing is far riskier than anyone will tell you. The risk of financial loss and the emotional toll of investing are far greater than most people can take. You see, from an emotional standpoint we, as humans, value a loss twice as much as we value a gain. This wouldn’t be so bad, but we are all hard wired to seek pleasure and avoid pain and because of this emotional imbalance requiring a gain of twice the size of the loss, most investors never make money. In fact, they pull out because they just can’t handle the emotional roller coaster. This is one of the main drivers behind the buy high and sell low mentality that almost all investors succumb to.

On top of this, it generally takes a long time to make money by investing and, even by giving it a long time, there is still no guarantee that you will make money. Besides which, many new up and coming investors live in the era of instant gratification, where credit buys our luxuries and you can Google anything and get instant answers. So, for this MTV style generation, it’s going to be even more difficult to adopt a buy and hope mentality.

Stock markets in the US, over the past 110 years have been in a sideways trend for 57 of these years and it’s probably unlikely to get any better over the next decade. In fact, the S&P 500, which consists of the 500 largest companies in the US, has returned ZERO to investors over the past 12 years. That’s right; if you had invested $100 into the S&P 500 in 1999 you would still have $100.

Emerging markets, on the other hand, are the future, but they are subject to hot money, which will pull out the moment there is a hint of danger or risk. It gets even worse when you consider that many emerging markets still rely heavily on exports to the aging economies of the west, which means that a major drop in western markets will result in larger falls in the emerging markets.

Even if you are smart enough or lucky enough to choose a great investment, you can still manage to lose money by getting in or out at the wrong time.

There was an interesting report by Elanor Laise of the Wall Street Journal, looking at the top performing diversified mutual fund in the US at the end of the decade. The fund was the GCM focus fund, which had an annualised return of 18.2% during the 10 year period ending in 2009.  Assuming an investor had stayed in for the full 10 years, they would have turned $10,000 into $53,232, which is an amazing performance when you consider that most US equities went sideways to down during that period.

The performance of this fund is important to note, as it illustrates that no matter what the market is doing, there are always good investment opportunities if you are willing to look.

However, research from Morningstar showed that the average investor in the GCM focus fund turned $10,000 into $3,120 which was a loss of 11% a year, compounded over 10 years. This means that he lost almost 69% of the money he started with.

When I read this, it blew me away that an investor in the best diversified mutual fund the US had to offer was able to snatch defeat from the jaws of victory. If an investor had of simply sat on their hands and left things alone they would have made a spectacular return (not that inaction is always the best course of action) but instead they ran for the exits when the fund had a losing month or two and piled back in when the fund had a good return. Imagine how investors in the worst funds did if this was the performance of one of the best.

If this isn’t enough the addition of currency risk adds a whole new dimension to an investor’s ability to lose money, in effect providing the ability to lose money on investments while they are standing still.

What I mean by this is that if you had an investment denominated in USD and it went nowhere for the past 10 years but your reference currency was AUD then you would have lost almost 57% if converted back to AUD. This is because the AUD to USD was 47 cents a decade ago and its now 108+. Of course, this is hypothetical because the investor has the choice to convert at a later date and we live in a mean reverting world so you would assume you could reduce or mitigate the loss with time. Unfortunately, most investors will choose to covert at the wrong time and crystallize the hypothetical loss.

Add to this the stealth impact management fees have on your investments and you are even further behind the eight ball. What’s interesting to me is how many investors will look to minimise tax first and worry about profit second. To me this is the wrong way around as tax is only paid if you make a profit so it makes little sense staying in an investment that is losing you money and feeing you to death simply because it’s tax efficient. If I used the AUD to USD example from above on an investment that was going nowhere and you factored in a 2% annual management fee, then you would be down a further 21% even though you were standing still.

The concept of going backwards while standing still isn’t new as an investor in the stock market of 1929 would have had approximately the same value in 1953 as they started with. But it gets even worse if you factored in a conservative management fee of 1% per annum, then starting in 1929 with $100,000 and assuming that the market didn’t move at all, that means that 24 years later you would have ended up with $77,782.25 so the reality is break even would have only been break even if there were no management fees, otherwise the investor was down 22.21%.

Honestly, the ability to reduce fees and increase performance must be the two most important areas of focus for an investor. The graph below is from the Wall Street Journal from an article titled Public Pension Fund Squeeze.  It shows the performance of $100,000,000 with a return of 6% per annum compared to a return of 7.5% per annum and how the difference of 1.75% per annum compounded equated to an additional $32,000,000. At a time when US pension funds face a $1.26 trillion shortfall, it makes sense to look at where savings like this can be found.

While many investors might find it difficult to supercharge their portfolios by wringing out an additional 1.75% per annum, perhaps they could reduce the fees they pay for their investments by 1.75% which would have the same effect and generate a further 32% over a 10 year period.

The final issue investors face is that it doesn’t matter how well your investments perform during the course of your investing life if they fall apart just when you need them. In other words, an investor that invested for his retirement for 30 years of gains meant nothing when the stock market fell 54% because it wiped out over half of what he had.
Looking over all the issues an investor faces might make you reconsider investing, but to me it’s similar to the epiphany an alcoholic or junkie has when they admit they have a problem. Once the problem has been identified half the battle has already been won.

Besides, these are the type of issues that keep me up at night and for the last 2 years I have been looking at ways around this. Personally, I believe that investing the right way is still the best way to maintain and achieve financial freedom. It’s just that portfolios now need to be structured in ways where large market moves to the downside have little to no effect on your investments.

So, now that you know the dice are loaded, you can invest accordingly.

One point I would like to make about the ability of an investor to lose money while standing still is that if you can identify a currency that is over valued and converted into another currency that is unloved but poised for a rally, then you could actually make money standing still.

The contents of this article are the personal views, research and opinions of the author, Endre Dobozy.

I strongly believe that by getting your health and your weight right you can have a positive effect on your financial health.

The true reality is that the health and the weight of an individual will be the last thing they focus on in their quest for business success and increasing their portfolio. Longer working hours, combined with family and social commitments usually put paid to that. It is always on the list of things to do but never quite makes the top priorities.

Besides, most people will know the benefits of exercise so I’m not here to lecture you on that. It should be a given. What I am going to share though will be the big take home point – forget about trying to find an hour to exercise each day or even every other day

Yes, you read right. Forget about it.

That method of exercise is broken and outdated. Who has the time to spend an hour exercising most days of the week? I don’t and I am in the industry. So, being realistic, I know that you definitely don’t.

What I do want you to get your head around is the concept of shorter exercise. The benefits of this are twofold.

One, you obviously don’t need as much time. Some of my most productive workouts are when I only have 10-15 minutes total to spare. Why? Because I know I don’t have time to waste. I get straight into it and work hard.

The second benefit is you can actually work out harder. The higher intensity of an exercise means the better fat burning potential it has.

And of course it is not possible to keep the same intensity over an hour workout that you have for a 10 minute burst.

Any research will show you the benefit of interval training compared to slow and steady training for fat loss. Interval training is high bursts of training followed by shorter periods of recovery. But that is not the point of this article quote numbers.

The 10 minute super circuits are interval training on steroids. The intensity goes through the roof and you crank up your metabolism. This means you continue to burn more calories after you finish training – even while you are sitting at your desk or in a meeting.

Now, here is where you’re going to win with these super circuits.

The best thing that a short burst of exercise does is to clear your mind. Do you have a dilemma in your mind about what is going to be the better option for you to take or what area is going to have the greater profit return?

Get outside and hit the super circuit. Don’t even think about it. By the time you’ve hit the shower afterwards you’ll more than likely have your solution.

Just taking you out of your normal environment is going to help you become more productive. The added benefit of course will be stress relief. If you have a problem in the office or a conflict with a customer the chances are you will need to let some steam off.

Exercise is the best form of stress relief. It is far more effective than going home and drinking a bottle of red or going outside for a cigarette.

The positive endorphin hormones that your body releases during and after exercise are second to none. In fact, it is probably the most addictive form of a high once you start. You will actually be looking forward to making these 10 minute super circuits a feature of your week.

Your bottom line may increase further, your profits may soar and your partner will love having you around in a better mood. If your head is clear, you will make smarter and more profitable business and investment decisions.

What is the best way to do a 10 minute super circuit?

While you could do this in a gym, I strongly encourage you to get outside. Personally I’m not a big advocate of the gym. Sure, it works but there is definitely a better way.

When you have spent the majority of a day inside in an artificial environment, with bright lights and little natural light you get sleepy and tired. This doesn’t even take into account the air conditioning system that is either too hot or too cold for half of the office.

So, rather than going to a gym that has exactly the same environment, why not get outside in the great outdoors? Breathe the fresh air. Enjoy some sunshine. Appreciate being able to get outside during the day when everyone else in your office is stuck inside.

Of course, if you have not been doing any exercise in a long time I insist that you go and get a health check up with your doctor first to make sure that you are okay to do these exercises.

The real beauty of this type of workout, apart from being outdoors, is that there is no equipment needed. You use your own bodyweight which means that you can do it in any park outside in any city in the world.

The intensity of this circuit is targeted towards someone who has not been doing exercise. So more of a beginner level which is where most busy business people would be at despite their past.

If you are used to doing a little bit of exercise here and there you can increase your repetitions to a more challenging level.

But the main take home point is this is going to be a super circuit if you haven’t been doing anything for a long time.

When it gets easy you will need to step up to some more challenging exercises. I’ve even included a video demonstration to show you how to do these exercises safely.

Push Ups x 10 http://youtu.be/40uoPsP09Rs

Prisoner Squats x 10 http://youtu.be/e4deqKFKqg8

Up Downs (on knees) x 10 http://youtu.be/FQZSHGNxsMI

Hover hold x 20 seconds http://youtu.be/7TPYo80MYRw

Back Extensions x 10 each side http://youtu.be/oW0tWRbo-cc

Side to Side Hover x 10 each side http://youtu.be/wnnPPaDVwxM

Repeat three times through as a circuit with limited breaks. The goal is to increase to as many times as you can go through in a 10 minute period.

Your goal is to do this on three days during the week. That is all. 30 minutes of exercise in a week. Can you manage that?

I would recommend a stretching cool down routine at the end of the program as well to help reduce any muscle soreness that you will get from the challenge.

What are you waiting for? Take 10 minutes and go through this circuit. Your waist will go down and your bottom line will go up. Surely it is a win-win situation on both ends!

About the Author

Daniel Munday is a fat loss specialist based in Sydney and owner of DPM Performance. He helps busy professionals get back in their skinny jeans and lose their beer belly even if they have tried, and been failed by, every workout or diet fad that has ever been conceived.

Knowing exactly where you stand financially – your cash position – means that you don’t have to wonder “do I have enough money in the bank to cover my rent and wages this month?”  The health and vitality of your business is dependent upon your ability to cover all tax obligations, payments to suppliers and basic operational expenses (i.e. wages, rent etc.) as they come due in your business.

Unfortunately, knowing where you stand is not as simple as merely looking at the balance in your bank account(s) or estimating your cash needs at a point in time in the future.  Your bank account will indicate your cash on hand (at a point in time) but it will not tell you what your cash flow is.  Cash and cash flow are not the same thing.  Cash flow is about the movement of cash in and out of your business as it operates over a period of time.

The distinction is critical – if your company is profitable yet it maintains a negative cash flow for an extended period of time, eventually it will run out of money and you will not be able to continue to operate.  Therefore, “cash flow is King” and knowing your cash flow is critical to staying afloat.  You can have the most brilliant product or service, but if you don’t have positive cash flow, your business will go under.

Almost every business will experience financial distress or pressure at some point in time – the key to survival lies in the owner’s ability to diagnose problem areas and take corrective action quickly. This requires careful monitoring and measurement of key financial metrics which highlight possible areas of financial pain.  Despite the importance tracking profitability as well as cash flow, many business owners fail to measure even a handful of key performance indicators each month and often ignore the classic warning signs, which if left unaddressed, could foreshadow the death of their business.

Every business that is in distress shows clear symptoms of impaired profitability and cash flow.  In fact, there are 9 key warning signs that foretell the end is near and must be acted upon immediately to turn the business around:

• lack of up-to-date financial information (timely financial statements, management reports) and failure to calculate and forecast cash flow;
• continued erosion of gross profit margins (signifies an inability to control the variable costs of doing business, a reliance on price discounts to entice sales and/or the failure to pass on price increases from suppliers);
• uncontrolled growth/expansion (the business has insufficient working capital to finance the increases in receivables, inventory and payables that come from a substantial increase in the volume of business over a short period of time);
• over-reliance on borrowed funds (the company is not able to run on internally generated funds and cannot service the loan plus all of the other fixed costs of doing business);
• business is experiencing difficulty paying creditors and tax obligations as they become due;
• return on assets continues to decline over a period of time indicating the business is making less and less profit for each dollar of assets invested;
• high employee turnover and reduced productivity are particularly important indicators because they suggest an inability to maintain staff (intellectual capital) and output at previous levels
• increasing marketing/advertising expenditure (as a percentage of sales) over a prolonged period of time (may indicate that the business is chasing customers and sales at the expense of profitability); and
• a continual need for capital injections/loans because the business is not generating enough operating income internally.

The key to avoiding financial distress and failure in your business is of course, early detection. By being aware of the 9 key warning signs, you can focus your attention on what is important in your business, make better decisions and take action that enhances your bottom line and strengthens the long term health and viability of your business.
About the author

From humble beginnings and despite formidable obstacles, to success as a leader, writer and entrepreneur, Rhondalynn has learned what it takes to succeed. She is a fully qualified lawyer, chartered accountant, clinical hypnotherapist and Master of NLP. She is the MD of Imagineering Unlimited, the author of “On The Shoulders of Giants” and “Financial Foreplay” and is a leading expert on business acceleration through financial insights, online business and the power of influence.  She is a regular contributor to 12 major publications and is featured in/on CNN (USA), Yahoo (USA), Channel 7, Channel 9, Kochie’s Business Builders, 3AW, MYOB, Fast Thinking, Sunday Life, Dynamic Business, Australian Anthill, Australian Retailer, Business Spectator, Cosmopolitan and Working Women.

The Contents of this article are the personal views, research and opinions of the author, Rhondalynn Korolak.