When is the best time to invest?

The best time to invest is continually. Market timing is high risk and often detrimental to long term wealth creation. Often the biggest gains on the sharemarket are in one day. If you miss out by not being invested on that one day you can miss a lot of investment return.

I use the term INVEST. Speculating is a different thing altogether. Day Traders punt on movements in the stockmarket related to their gut feel on how an individual stock will move on any given day - don't forget the transaction costs of getting in and out. You might as well go to the races - at least you can have a drink and relax there.

Prudent investment will provide a combination of income and capital gains over time. Continually investing smooths out the spikes in prices and allows you to build an investment portfolio that will provide investment returns as long as the businesses you invest in continue to operate profitably.

When investing in property it is generally about supply and demand, and what rental income or capital gain a property may provide now and in the future. A property is not a trading business so the investment performance is generally related to how many properties of a similar type are available, where the property is located and whether good tenants can be found to provide the rental income and how much money the investor can afford to spend on it. There is more potential for emotional issues to affect property prices - whether someone likes the "look" of a property - not necessarily whether the investment return stacks up or not. Timing in property purchases can be like the sharemarket - unpredictable and risky.

You must always factor the opportunity cost of not being invested, particularly when borrowing to invest. Tax planning considerations can come into the overall decision process.

ONE IMPORTANT THING TO REMEMBER IS THAT NO ONE GETS WEALTHY AND STAYS WEALTHY BY NOT INVESTING. IF YOU SPEND EVERYTHING YOU EARN YOU WILL NEVER IMPROVE YOUR ABILITY TO LIVE WITHOUT WORKING FOR YOUR INCOME.

Regards

Damian Ebzery B.Bus M.Bus AFPA ASA

Keeping a roof over your head

It always surprises me when I ask people if they have insured their most valuable asset. Most say, yes we have insured our home.

The truth is for most people their most valuable asset is their ability to earn income. What is it worth? Take your annual gross income and multiply it by the number of years to normal retirement age.

EG: A 35 year old on $60,000 per annum. $60,000 times 30 years equals $1,800,000.

If your income stopped tommorrow many would suffer from financial difficulty by the end of two weeks. This could mean that the family home might have to be sold if the illness/injury causes you to be of work for more than two weeks.

Their are two types of insurance that can cover personal income - Income protection and Salary Continuance. The better quality policies are Income Protection policies and should provide cover on an "own occupation" basis if you were on claim up to age 65.

There are numerous income earners that think they are covered adequately by their income protection available through their superannuation fund. These often have a waiting period up to 90 days and will only cover you for 2 years maximum on claim.

These are some of the issues to consider:

• Own vs Any Occupation definition of disability
• Waiting period before claim can be made - needs to align with your financial situation
• Period the policy will pay out whilst on claim
• Guaranteed renewability - as long as you pay the premiums the policy remains in place regardless of changing health
• Guaranteed Insurability - ability to increase cover by up to 15% without further medical requirements
• CPI Indexed cover prior to claim - cover indexed each year
• CPI indexation of benefit whilst on claim
• Does the policy cover both employed and self employed income including income derived that may be split with a spouse

You should check if you have this in place and if so how good the policy is.

Premiums on Income Protection are tax deductible.

Regards

Damian Ebzery B.Bus M.Bus AFPA ASA