Business Trends Tips & Topics

Start Planning Your Retirement Early

In the early 1980s, I started doing the occasional talkback radio segment on Sydney radio station 2BL. Retirement was something many callers wanted to discuss. It seems to me that at that time, people planned to retire at 65. Most financial planning was fairly haphazard and tended to take place after the date of retirement.

Today, almost two decades later, we have changed. People plan to retire much earlier and better health means we are living much longer. It has now got to the point where some people will spend more time in retirement than in the work force.

This makes retirement a serious business. A 55-year-old male will now live for another 23.8 years, on average, and a 55-year-old female 28.2 years. On top of this, our expectations for retirement have changed. We do not expect to stay at home all day minding the grandchildren. We hope to be healthy, active and doing those things that we did not have time to do in our working lives, such as travel – and in my case, play more golf!

Now, the bad news here is that an active lifestyle tends to cost more. Travel can be done cost effectively, but it still requires money. You will want to run a car, be able to eat out occasionally, and not have to worry about the cost of a meal with friends.

Don’t get me wrong. You don’t need a fortune to live well. In fact, most people don’t have a fortune to retire on and, today, around 74% of 65- to 69-year-olds are on an age pension.

A retired couple I know live on a public service pension, plus an investment portfolio of around $150,000. They own a modest but comfortable home. Sure, they are well set up, but not dissimilar to many other retired. Between the income from their portfolio and the pension, their annual income is around $25,000. Due to a few of the simple tax strategies like income splitting and franked dividends, they pay very little tax – which help a lot.

What fascinates me about this couple is that they lead a truly global lifestyle. In retirement they decided they wanted to learn the languages and culture of other countries, so they live four months a year in Australia, four months a year in Italy and the other four months in France – all on $25,000 a year. Sounds ridiculous doesn’t it? But they are able to do it, and this is how:

  1. They rent their home for at least six of the eight months they are away. Yes, this is a hassle because they have to store all their personal possessions with their family, but they rent it out fully furnished for a bit below market rent and do very careful reference checks on the people moving in.
  2. The eight months they are away each year, in France and Italy, they take a small apartment well away from the tourist haunts and they find that they can live more cheaply than in Australia. Remember, they can now speak both languages fluently so they mix and eat with the locals at local, not tourist, prices.
  3. They book and pay for their airfares well in advance to get the best deals.

Even if the last thing you want to do is live overseas, my point is that your retirement should be, and can be, a time when you reap the rewards of your working life.

Okay, so these days you need to start planning your retirement early. If you are getting close to retirement, you need to start thinking about a number of other things as well:

  1. What are your plans for your retirement? What do you want to do and what will it cost?
  2. Will your assets provide the income you need to live comfortably? Can you top this up with a pension?
  3. Where will you live? How will this impact on your lifestyle and your family?
  4. What are your views on estate planning? Does your will reflect your wishes?
  5. Investment will become very important. Do you need an adviser, and if so how do you choose one?
  6. What plan do you have to ensure your retirement is a stimulating time in your life?

My best tip on retirement is, of course, to plan early. For younger readers of this article, or those of you who can influence younger readers, please do think about it and encourage people to plan for retirement from the day they start work. An 18-year-old only needs to put aside about 12% Of her salary into super and she can retire on 75% of her final salary, linked to inflation. This would provide quite a decent standard of living. At 35 years of age the requisite contribution increases to around 30%, at 45 around 49% and at 55 you’d need to save 108% of you salary to retire on 75% of your final salary. Now I know some good savers, but putting aside 108% of your salary would not be easy!

Please don’t feel depressed if you are retired or close to retirement and have saved very little. After all, the importance of saving has only been made clear in the last few years. Fortunately, we do have a reasonable age pension system. I know it isn’t generous, but it does provide a minimum standard of living and is certainly better than nothing.

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Is Owning a Business The Best Way To Make Money?

There is another question we need to consider: is owning a business the best way to make money?

This was definitely a belief that I held in my early twenties – that if you wanted to be wealthy you had to own a successful business. I’m not sure if I was influenced by my family, friends or things I read, but I always wanted to start a business of my own.

Now I know I was wrong about this. Wealth can be created by anyone who consistently spends less than they earn and who invests their savings on a regular basis. In fact, the more I look at business failure statistics, the more I wonder about the wisdom of starting any business, despite certainly understanding why people want to.

Once again, we get back to risk and return. Starting or buying a business is risky, but if the business goes well the rewards are high. The business in which I am a shareholder was started by myself and four partners in 1983. We put in $20,000 each and rented a very small, serviced office. Today, we employ well over 280 staff in our offices and South African joint venture.

Funnily enough, the “academic” theory about starting a business is correct. you do need a vision of what you want your business to be and a well-formulated business plan. You must control you cash flow and, in the good years, you must leave money in the company to build up its strength. I feel fortunate that we took the risk in 1983 to quit our quite well-paid jobs, because today business ownership makes me proud, gives me an unbeatable sense of job security and the benefits of controlling my own destiny.

How quickly, though, we forget the reality of starting a business from scratch. In my case, this meant earning next to nothing for five years, working outrageous hours – my partners and I used to laugh about our 35 hours of work. Thirty-five hours on Monday, Tuesday and part of Wednesday; another 35 hours on the other part of Wednesday, Thursday and Friday; and just to top things up, working on Saturday as well. Sometimes we didn’t work on Sunday, holidays were a few days off at Christmas and, as for sick leave, well, we just couldn’t afford to get sick!

If you do want to create significant wealth, building a successful business is certainly one way to get there. Look at people in the “500 most wealthy” lists. Some inherit the money, but most create it by building a business.

Few small businesses will ever grow into a News Corporation and not too many will ever be worth a lot of money, but running a business has benefits beyond the purely financial side. This really struck me when I was sitting on beach. While my kids and some friend were paddling around on a hired aqua bike, I started chatting to the owner of the aqua bike business who was originally from my town. He explained that the business was no world beater but it was pretty good and, living on a beautiful lagoon, next to a beach, hiring boats to generally pleasant tourists was somewhat better than working in a factory in industrial suburbs. He has a point. For him, his business provides lifestyle and a reasonable cash flow. He may have earned more working in his town, but tinkering with boats on Avoca lagoon seems much better.

For every success story like this, though, I know of dozens of failures. Buying or setting up a business for lifestyle is a dangerous thing – you may act on emotion, not logic. If you do plan to start up or buy a business for whatever reason, please be careful.

Look, there’s no denying owning a business sounds good and assuming it works, it is. However, as I found, you’ll probably end up working an awful lot harder for a lot longer than in the job you leave and, for the short term at least, not earning as much.

You’ll also miss out on the benefits that full-time employees are entitled to and often take for granted, such as: employer-funded super; worker’s compensation cover; paid sick leave; four weeks’ paid annual leave; holiday loading; long service leave; and maternity (or paternity) leave. You may also have to forgo other goodies company car; an expense account; paid telephone expenses; low holiday expenses; annual bonuses; share options; and the support of a union or industry association. In other words, when you work for yourself there’s no safety net – you’re on your own. Don’t let me scare the wits out of you, however. While self-employment is not all beer and skittles, the great thing about it is the freedom it gives you to run your own race, which I believe outweighs the negatives.

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Superannuation – Ensure You’re Financially in Retirement

Raise the topic of superannuation next time you have a few friends around for a barbecue and you’ll get a range of reactions. Some people will look at their watches and ask “Is that the time?“, some will pour themselves extremely large drinks, some will slip into a type of coma, others will become completely absorbed by a spoon or salt shaker, and a few will say “I think super is okay because people keep telling me it is, but I’m not really sure why.” The majority will tell you that it is confusing, keeps changing and is all too hard.

Well, I’m one of those people who keeps saying super is okay, and what I am going to try to do here is explain why. And I hope as you read this your mind won’t drift off to a palm-fringed beach on a tropical island. Bring it back here if it does, because, confusing as super may be, it’s worth knowing about. Indeed, if you play your superannuation cards properly, you will actually be able to accompany your mind to that tropical paradise when you retire, as well as doing many other things you have only dream about during your working life.

What is superannuation?

Basically, superannuation is designed to provide for us financially in retirement. It’s built up over our working lives from contributions made by our employers and, hopefully, topped up out of our own pockets. It’s also taxed lightly – both to encourage our active contribution towards it and to increase the size of its pay-out at the end.

That’s the good news. The bad news is that it’s confusing, your money is locked away for a very long time, and the Federal Government continually fiddles with the rules. While this may bring us no joy, the fact is, we need super.

Consider this: in 2001 we have around six people in the work force for every person in retirement. That’s a large pool of taxpayers from which to fund the aged pension. But, because we are having longer and having fewer children, by 2030 there will be only there people working for every retired person.

Let’s look at it another way. Today we have around 8.267% aged 65 or more populations. In 19 years’ time, when I reach 65 there will be just under 10% of us! Already pensions are a major funding burden, accounting for more than 30% of the Federal Budget, so can you imagine what it’s going to be like then? Either taxpayers in  the future will have to be taxed to within an inch of their lives if the aged pension is to remain at its present (modest) real level, or (far more likely) the pension will fall.

But “What about the value of the family home?“, I hear you say. Who cares about a pension if you’re sitting on good real estate? Okay, but do you really want to find yourself at retirement with no option but to sell the home you’re perfectly happy living in and don’t wish to leave? And after you’ve sold and put aside sufficient proceeds to live off comfortably for the rest of your life, you will be faced with taking a very substantial downgrading in the type of housing or the location you can afford. No, relying on the value of your home is not the way to plan for your retirement.

A comfortable retirement can only be funded by a separate next egg of investments, which has been built up for that purpose during your working life. And your success in building up a suitably sized nest egg will depend on your success as a saver. The reason is very clear. If you don’t save, you don’t invest, and if you don’t invest you will have nothing (apart from your home) to retire on.

The problem is, however, that we are not good savers. Certainly earlier generation who lived through tougher times were much better at it than we are. That’s why, I am sure, the Government has decided to force us to save, and the way they have chosen to implement this is through compulsory superannuation.

The key word here is compulsory. If there was only voluntary superannuation there’s little chance we’d contribute enough for it to do what it supposed to do – provide for a comfortable retirement and head off a society increasingly burdened by taxation to pay for the aged.

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Improve Your Personal Qualities – Coping with rapid change

If you find changing jobs difficult, then do it slowly. It’s important that you know your strengths and try and be flexible. Even if you have suffered a redundancy (one of the less desirable effects of constantly changing workplaces), there are steps you can take to safeguard your chances of remaining employable.

When it comes to employment diversity, it’s definitely a case of ‘times have changed’. Most employers now expect to see candidates who have moved between careers and industries. To some employers, a diverse employment background demonstrates flexibility and the capacity to adjust to a new role, company culture and different management practices. The days of ‘jobs for life’ are well and truly behind us and changing jobs is no longer seen as a way of committing employment harakiri. Taking the occasional risk and branching out into new areas can also add to your value as an employee. Likewise, working overseas or making lifestyle changes can reveal a candidate’s enthusiasm for new challenges and the ability to take decisive action.

More and more people have taken the jump into free lancing, working from home or subcontracting as an alternative way of working. Some people refer to this as ‘creating your own job, and in fact for many, particularly older workers, this might be their best option. A word of advice, though, think carefully before jumping head-first into the unknown, into a total career change – it can backfire.

At the same time, never take too lightly the value of experience. Experience is crucial in establishing and maintaining useful  contacts straight into a role because they already have the required skills and information are valuable. One way of making a career change is by moving into a job that shares some common ground with your existing occupation. This is a lower-risk option that allows you to explore new career options by combining your old skills with new skills. For example, a writer could move into publishing or a politician could move into used car sales.

Education – stick with it

The surest way of maximising your chances of being able to adapt in this changing world is by investing time and energy in your own education – and to continue this process throughout your life. What’s more, it doesn’t much matter if you forget some of what you’ve learn or can’t use it directly in your work. The beauty of ongoing education is it keeps your skills up to date, your mind alive and trains you to think, to question, and to find solutions to problems.

Also, by completing an educational course you achieve something tangible and have a document to prove it. Not only does this boost your self-esteem, confidence and skills levels, it demonstrates to an employer that you have the grit and ability to see something you’ve started through to a successful end, a quality all employers value and seek.

Job searching

When hunting for a job, your first port of call will probably be the classified section of the major metropolitan newspapers. Local papers also carry hob advertisements. If you are open to the possibility of relocating, you might like to consult regional classifieds or ads from interstate newspapers.

Another great way to look for jobs is via the Internet. Some handy websites to search include:

  1. This features a comprehensive list of links to other sites which you can use to search for jobs.
  2. This site will email you jobs suited to your requirements. It can also help you to create a resume online.
  3. The Monster Board : Abiding by the principle that practice makes perfect, this site features a virtual interview page asking some questions that are sure to test the most experienced of interviewees. This site also lets your search for jobs overseas.
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Job Security Follows Job Satisfaction – Personal Qualities in Employment

It is a generally accepted view that the services sector will continue to employ more people at the expense of other industry sectors.  And it’s not just the most likely scenario painted for  – developed, industrialised countries all over the world are moving towards being service-based economies.

So, from the point of view of job security, the service sector is where anyone planning their next career move really ought to look. However, there is more to career choice than job security. Don’t get me wrong – job security is important, but it shouldn’t be your sole motivator. Finding a vacation you like should be top priority. After all, you spend half of your walking life at work so you may as well enjoy it!

And the clincher is that finding a job you like will actually produce its own job security. How? Well, if you genuinely enjoy your work you are more likely to excel at it than someone who doesn’t – and that’s the best job security you can have. I also believe that people who like their work have a much better than average chance of making good money from it – again, because people who like their work generally do a better job than those who don’t

Personal qualities in employment

Listed below are some fundamental personal qualities that all employers value and will be particularly important in the future employment scene. The more endowed you are with them, the greater your chances of success in whatever area of employment you choose.

  • Creativity – the fountainhead of success and the one human characteristic that no amount of brilliant technology will ever be able to replace (at least I pray not!).
  • Adaptability – a willingness and ability to learn new skills and to adapt old skills to new situations.
  • The ability to communicate well, and to understand easily.
  • Commitment and a willingness to work hard.

If you had to distil all this, I think it would ultimately come down to having the right attitude towards the job – one that’s fundamentally and genuinely positive. Employers are more likely to be influenced and impressed by this than by any other attribute you might have.

Step to boost your employment prospects

  1. Present yourself professionally and be on time for your job interview. First impressions are critical.
  2. Forget ten-page resumes. Your resume needs to be concise and easy to read, while providing a snapshot of your achievements, not merely a list of all your jobs. It’s also crucial that you adapt your resume to match individual job descriptions and keep it brief, ideally no more than three pages. Be sure to explicitly deal with all selection criteria covered in the advertisement.
  3. Do your research on the company and the people interviewing you.
  4. Show prospective employers that you can use technology and send online job applications when email addresses are provided.
  5. Prepare yourself for any psychological tests that you are required to do. You can research the standard tests on the Internet or at your local library.
  6. Be prepared to showcase your skills in the interview, to market yourself effectively without lapsing into cheesy self-promotion.
  7. Persistence brings rewards when job hunting. But remember, there is a fine line between persistence and annoyance, so tread carefully.
  8. Rehearse for interviews. (Not The Sound of Music!)
  9. Be proactive and ask questions about the job. This shows that you’ve done your homework and are truly interested in the position.
  10. Be confident and personable. Make eye contact with the interviewer, offer a firm handshake, smile and speak clearly. Consider the start of an interview. Speak confidently and coherently, listen and resist the impulse to interject, and try to present a self assured, relaxed image.
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How Much Do You Know About Job Market?

I know that some reader of this articles will have a secure job (whatever that means), some will be approaching retirement and others will be retired already. So you may be wondering why this article about job market has relevance for you.

Well, from a purely vocational perspective it may not. However, from an investment point of view you could find it of value – by identifying the expanding and contracting areas of the economy.

For most of us, our ability to earn an income is easily our most valuable asset and its absence would make life look very different indeed. It is important to remember, though, that the job market today won’t be the job market of tomorrow.

Pretty obviously, our population is getting older. We are having fewer children (62.9 per 1000 American-born female on average), living longer (average life expectancy for women is 81.5 years and men is 75.9 years) and retiring earlier.  This, to me, is a fascinating indicator to where future employment will lie. Into the next century, the growth areas for employment and, therefore, the ones that I am focusing on as an investor, are based on what I believe our ageing population will need.

For starters, there will be heightened demand for carers for nursing homes and retirement villages. For those who decide to stay in their home for as long as they can, this will also provide a boon for the domestic-help industry. Likewise, you don’t have to be Nostradamus to see that there will be an increase in the demand for medical nursing staff. It’s also expected that the baby-boomer for medical nursing staff. It’s also expected that the baby-boomer generation could boost the local tourism industry as they have time, and more importantly, the money to travel when they retire.

Information Technology

It probably comes as little surprise that many pundits rank technology and communications as the number one growth area, with the service industries – particularly finance and banking – not far behind. Despite the so-called ‘tech wreck’ in early 2000, the larger technology companies such as Telstra and Optus have continued to grow, this creating jobs. This trend is set continues.

On the flip side, there is some uncertainty about the future profitability of some smaller technology companies. You need to keep in mind the relative ‘newness’ of many of the smaller players operating in this field. These companies, especially start-up dot com businesses have not returned the expected profits. Only time will tell how many will survive in the short term, let along going on to become viable in the long term. However, the current assessment of the IT industry indicates rapid change, with ongoing new developments, leading to growing employment opportunities. Overall, the future for the technology sector looks good, although it might take some time before the industry settles down completely post the ‘tech wreck’.

The Services Sector

The services sector is ranked just behind IT and telecommunications as a future growth industry. It covers a broad range of vocational areas such as community services; wholesale and retail trades; public administration and defence; finance, property and business services; and recreational services. In recent years careers in sales have been particularly popular, with industry forecasts suggesting that growth in this area will continue.

The good news for people looking to enter sales is that many workers can match their skills and experience to work in it. This area also experiences high employee turnover and, according to the Department of Employment, Workplace Relations and Small Business’s Job Futures Report, projected jobs growth in sales exceeds the national average.

Over recent years, telemarketing and cell centers have also experienced major growth and this trend is expected to continue as demand for these services grows. The upshot of this is that good sales people and telemarketers should have little problem finding work. Another good thing about sales is that the skills can be learn and developed on the job and generally require little formal training.

The services sector is also playing a major role in changing the traditional way we work. Companies in this sector are now leaning towards more flexible staffing arrangements and working conditions including contracting, part-time work and casual employment, as well as outsourcing.

In the past, people grew their own vegetables and tended sheep to provide wool for clothes, now we simply throw our groceries into a supermarket trolley, or even order them online. The next step could see us outsourcing all of those mundane domestic tasks (like ironing, cooking and cleaning) that all too often otherwise don’t get done!

Researching employment opportunities

Whether you’re trying to change jobs or fast-track your career, I strongly urge you to take some time to research the job market to pinpoint the ‘growth industries’. With the work landscape constantly changing, it’s even more important that you get the right qualifications, skills and experience to make yourself more employable and take advantage of careers that offer solid opportunities in the future.

I know it might be stating the obvious, but it’s really important that you plan your career carefully. It makes sense not only to find a job in an area where there is growth potential (such as IT or banking), but to also seek out a progressive company that has a commitment to training and career progression.

So where do you begin your research? A good starting point is the Job Futures Report that I’ve Already mentioned. It predicts that the jobs with the best prospects will be the ‘professional’ occupation such as computing; business/information; sales/marketing and advertising; health; social welfare and accountancy/auditing. These generally require you to have a degree or higher qualification. Other jobs, such as careers/aides that don’t call for the same level of training, also have strong growth prospects.

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