Being a new parent inevitably comes with a variety of challenges. One challenge that new parents shouldn’t have to face is an unfair work culture. Is your business is taking the right approach?

The millennial workplace has taken positive steps over the last decade in order to accommodate the evolving environment that we work in.

Whether it’s larger scale issues like encouraging flexible working, or smaller nuances like the aesthetics of the workplace, we have certainly come a long way.

READ: 3 major benefits to a positive company culture

More specifically, there has been a huge improvement in company policies that relate to new parents (both pre- and post-natal).

Creating a culture within your workplace that’s genuinely ‘new-parent friendly’ is becoming an essential foundation of healthy business environments.

Thanks to the many activists and advocates who have devoted their lives to this cause, workplace policies in this area have evolved drastically.

Today, employers are becoming increasingly accommodating to people who are starting or growing their family.

An example of an Australian organisation that has been advocating for fairer ‘new-parent’ policies in the global workforce is WORK180, a female-led business that pre-screens companies to see how female-friendly their workplace policies are.

Because of the tireless work of companies like WORK180, both larger scale corporates and SMEs are adopting practices that not only tolerate those wanting to start a family but are encouraging and supporting of them throughout the process.

The poor practices of an Australian unicorn

But, every now and again, there are stories that surface about companies whose approach to those looking to start a family is dated and unfair – making the already emotional and vulnerable time of pre- and post-pregnancy unbearable.

In fact, SmartCompanyrecently reported that Australian prodigy and so-called ‘unicorn’ startup, Envato had been “drastically changing” the roles of mothers returning to work, and “denied them career development opportunities”, causing a pregnant employee to feel “unsafe” in her work environment.

Hearing such stories is a sobering reminder of how much more needs to be done to ensure that fair policies become mainstream and that no employee falls between the cracks of such poor practices.

Starting the conversation by educating managers

So now that we’ve identified how important it is that a company looks after employees who are starting or building their families, what’s next?

What kinds of things does a company, small or large, need to do to improve their practices and ensure that these employees feel safe, encouraged and supported?

To gain some insight into this subject, I reached out to Valeria Ignatieva, trailblazing co-founder of WORK180, who was happy to share some guidance for companies who are unsure whether their practices were up to scratch.

“A huge part of dealing with this issue is by educating businesses about what starting a family is all about,” Ignatieva told The Pulse.

“Many of these companies have managers or supervisors who don’t know the first thing about pregnancy.

If we continuously strive to educate ourselves and others on the topic, we will eventually get to where we need to be.”

Keep the rules gender-neutral

When talking about the idea of childbirth and family building, the spotlight tends to fall on women.

But Ignatieva outlined the importance of remaining gender neutral, keeping in mind that “primary caregiving is not gender specific” and therefore anybody involved in the care- giving process requires the understanding of their employers.

Running a HR policy ‘health-check’

One of the tools that WORK180 has developed is an HR ‘health-check’ tool, a questionnaire that’s designed to learn about a company’s policies and procedures and give a score on the standard of the company’s HR policies.

According to Ignatieva, there are three policies in particular that are indicative of a company’s standards:

1. Superannuation

Unlike regular annual leave, Ignatieva said that there is no legal requirement for super to be paid to employees on parental leave. But, if an employer includes super in their parental leave packages, it’s normally a good indication that their policies are up to scratch in this area.

2. Pre-parental leave tenure

Another important policy to look at is the amount of time an employee is required to have worked at an organisation before they are ‘eligible’ for parental leave.

According to Ignatieva, organisations that don’t require their employees to spend a certain amount of time in the job to access paid parental leave to have “exemplary standards” in this regard.

“By keeping this standard, it shows that the employer understands that having or building a family isn’t an inconvenience, but an asset to society and something to be encouraged,” Ignatieva said.

Global software giant Microsoft leads by example in this area, making parental leave an entitlement upon employment.

3. Flexible working policies (pre- and post-natal)

Finally, the flexible working policies are another key indication of high standards.

Aside from being very helpful for those involved in the emotional and physical process of both the lead up to and time after birth, Ignatieva insisted that flexible working arrangements are beneficial for the employers as well.

“If you let them work the way they work best, you’ll get better results,” said Ignatieva.

“By forcing people in the perinatal period into restrictive working environments, they are almost guaranteed to underperform.”

READ: How flexible working arrangements can improve your business

Ultimately, it all comes down to attitude.

Nurturing employees who require support throughout the childbirth process doesn’t only improve your business standards, but it also makes you an enabler of the next generation’s ability to catapult into a safe and successful future.

Source: MYOB

Reproduced with the permission of MYOB. This article by Benjamin Kluwgant was originally published at www.myob.com/au/blog/

Important:
This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.

Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author.

Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

If you are a shareholder of a company, you may receive payments known as dividends. These payments represent your share of the company’s profits and are your reward for investing. Dividends may be a great way to boost your income and are often considered tax effective. Find out exactly how they work and how often you’ll get paid.

Why and when companies pay dividends

When a publicly listed company makes a profit, its board of directors decides whether to:

• pay out the profit to shareholders in the form of dividends

• retain the profit to invest in the company’s growth, or

• a mixture of both.

Australian companies tend to pay out a high proportion of earnings as dividends compared to companies listed in other countries. This currently sits around 65% compared to around 45% for global shares¹, which could make Australian shares popular with income-seeking investors.

Some Australian listed companies choose to pay dividends twice a year, known as the interim and final dividends. However, dividends are not guaranteed, and some companies don’t pay any dividends at all. In fact, a company that has previously paid dividends may decide not to, and vice versa. The size of the dividend can also vary, and often depends on how the company has performed.

Dr Shane Oliver – Head of Investment Strategy and Economics and Chief Economist, AMP Capital says companies like to manage dividend expectations smoothly. 

“They rarely raise the level of dividends if they think it will be unsustainable. Sure, some companies do cut their dividends at times, but the key is to have a well-diversified portfolio of sustainable and decent dividend paying shares.”²

Large, well-established companies with stable earnings and certain industries like banks tend to pay dividends consistently. Other companies, such as those involved in developing new technology or medical research, often choose to reinvest all their earnings for research and development and pay no dividends at all. Investors in these types of companies are typically looking for long-term growth rather than income.

How are dividends paid?

Companies generally pay dividends in cash to the bank account that you nominate or send you a cheque.

In some cases, rather than receive a cash payment, investors may be able to take advantage of a dividend reinvestment plan. This involves the company offering investors the choice to use their dividends to purchase more shares in the company, instead of receiving the cash. Often, the shares are offered at a discount to the current market price. 

It’s important to consider your particular circumstances and goals before deciding what’s right for you. For example, investors who want to increase their income may prefer to receive their dividends as cash payments. However, investors who are more focused on growing their wealth may consider a dividend reinvestment plan to help grow the number of shares they own over time. It’s a good idea to seek financial advice to help determine a strategy that suits your needs.

How are dividends taxed?

Dividends are considered income for tax purposes. Just like the income you may earn from other sources, like rent from an investment property or interest from a bank account, dividends will be taxed at your marginal tax rate. 

The current income tax rates are published on the Australian Taxation Office website.

It’s important to keep records of your dividends so you or your accountant can complete your tax return accurately. You’ll receive a statement when dividends are paid. If you take advantage of a dividend reinvestment plan, you still need to include the dividend income in your tax return, even if you didn’t actually receive the cash payment.

Details of a company’s dividend are also published both on the company’s website as well as the Australian Securities Exchange (ASX) website.

What are franked dividends?

Companies are required to pay tax on their profits, which means the money they distribute via dividends has already been taxed. To avoid double taxation of company earnings, (once in the hands of the company, and then again in the hands of the investor) these dividends come with a franking credit, also sometimes referred to as an imputation credit. The franking credit represents the amount of tax that has already been paid either partially or in full.

When you do your taxes for the year, you will receive a credit for any tax the company has already paid. If your top tax rate is less than the company’s tax rate of 30%, you’ll receive a refund from the Australian Taxation Office (ATO) for the difference. That’s why franked dividends are considered tax effective.

Case study

Maryanne is focused on building her personal investment portfolio and bought some shares in the Big Div Company. Later that year, she receives a fully franked dividend of $700, with a franking credit of $300. That means the before-tax total of her dividend is $700 + $300 = $1000.

Maryanne starts completing her individual tax return. When declaring her income, Maryanne must include the $1,000 dividend she received as income from Big Div, along with all income she receives from other sources. Her marginal tax rate is 19%. Normally, she would have to pay $190 tax on the dividend (19% x $1,000). However, because the dividend was fully franked, and her marginal tax rate is below Big Div Company’s tax rate of 30%, Maryanne is entitled to a refund. She will receive $300 – $190 = $110.

Please contact us on  Phone: 07 5641 4134 we can help you make the most of dividends and create a strategy to help you reach your goals.

[1], [2] https://www.amp.com.au/personal/hub/grow-my-wealth/why-i-still-love-dividends-and-you-should-love-them-too

Source : AMP July 2019

Important:
This information is provided by AMP Life Limited. It is general information only and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances and the relevant Product Disclosure Statement or Terms and Conditions, available by calling Phone: 07 5641 4134, before deciding what’s right for you.

All information in this article is subject to change without notice. Although the information is from sources considered reliable, AMP and our company do not guarantee that it is accurate or complete. You should not rely upon it and should seek professional advice before making any financial decision. Except where liability under any statute cannot be excluded, AMP and our company do not accept any liability for any resulting loss or damage of the reader or any other person. 

Even when they’re truly detrimental to your health, certain activities can be difficult to give up. Whether it’s smoking, regularly indulging in sugary beverages, or binge drinking, there are a handful of practices that experts have linked to an early death.

Before suggesting that these activities were harmful, researchers studied big groups of people over long periods of time.

In one of those studies, published this week in the American Heart Association journal Circulation, scientists found troubling links between high intakes of soda and early death. And in a large review of two studies published in the same journal last year, researchers pinpointed five habits that appeared to be tied with a significantly shorter lifespan.

Here’s an overall look at what scientists have concluded are the most harmful habits for your health:

1. Drinking Sugary Beverages and Eating Processed Foods

Drinking soda, juice, and other heavily sweetened beverages appear to take a heavy toll on our bodies.

In fact, a new 34-year study of more than 118,000 people suggested that the more sugar people drank, the more likely they were to die from problems such as heart trouble. However, as with many nutrition studies, this one merely involved observing people over time. That means the research could not definitively conclude that sugary drinks are bad – it could suggest only that they might be.

If you’re worried about your drinking and eating habits, there’s plenty you can do to counteract the problems tied with sugary drinks. Aside from simply avoiding soda and juice, a growing body of research suggests that a meal plan focusing on vegetables, protein, and healthy fats has key benefits. Those include losing weight, keeping the mind sharp, and protecting the heart and brain as you age.

The best diets (and the ones linked with the longest life) involved high intakes of vegetables, nuts, whole grains, healthy fats (such as those from fish and olive oil), and low intakes of sugary beverages, such as soda and juice, processed sweets and breads, red and processed meats, and trans fats and salt.

2. Smoking

Smoking kills. No other habit has been so strongly tied to death.

In addition to cancer, smoking causes heart disease, stroke, lung diseases, diabetes, and chronic obstructive pulmonary disease, which includes emphysema and chronic bronchitis, according to the Centres for Disease Control and Prevention (CDC).

Smokers inhale burned tobacco and tar along with toxic metals, such as cadmium and beryllium, and elements such as nickel and chromium – all of which accumulate naturally in the leaves of the tobacco plant.

So it’s no surprise that studies find that abstaining from cigarette smoking for life is linked with living longer. If you’ve already smoked, the research still has good news: Both quitting and cutting back have also been linked with positive outcomes related to life expectancy.

“Smoking is a strong independent risk factor of cancer, diabetes, cardiovascular diseases, and mortality,” researchers wrote in one study. “And smoking cessation has been associated with a reduction of these excess risks.”

3. Sitting For Long Periods of Time

In general, staying sedentary for lengthy periods of time seems to be awful for your health.

But getting up every once in a while to do regular cardio exercise is an all-natural way to lift your mood, improve your memory, and protect your brain against age-related cognitive decline. In other words, it’s the closest thing to a miracle drug that we have.

A wealth of recent research suggests that cardio – any type of exercise that raises your heart rate and gets you moving and sweating for a sustained period of time – has a significant and beneficial effect on the brain.

“Aerobic exercise is the key for your head, just as it is for your heart,” according to a recent article in the Harvard Medical School blog Mind and Mood.

Most research suggests that the best type of aerobic exercise for your mind is anything you can do consistently for 30 to 45 minutes at a time.

4. Being Overweight or Underweight

People who weigh above or below average appear to face a slightly higher risk of death from a range of causes, according to a large recent study that assessed peoples’ weight using a measure called the body mass index (BMI).

Researchers like to use BMI for quick assessments of large groups of people. Generally speaking, a BMI of between 18.5 and 24.9 is considered within the “healthy range” for adults over age 20, according to CDC.

And people who fell within that BMI range tended to outlive their peers who fell outside it, the study found. In other words, people who had BMIs that were either above or below the “healthy range” lived shorter lives than people with BMIs that fell within that range.

That said, BMI is far from a perfect means of gauging your overall health.

The 1830s-era measure does not take into account a number of key health factors, including overall body fat, gender, muscle composition, or the amount of fat you’re carrying around your middle.

This measure, also known as abdominal fat, is emerging as a key alternative to BMI because of its strong links with heart health and diabetes.

5. Drinking Heavily

It’s been tough to pin down the precise relationship between drinking and overall health. A little bit of alcohol (such as one or two drinks per day) seems to be OK. More than that, however, and the benefits appear to vanish.

The most dangerous types of drinking are heavy drinking and binge drinking.

Defined by the CDC as eight drinks or more per week for women and 15 drinks or more per week for men, heavy drinking has been tied to a host of negative outcomes, including an overall shorter life expectancy.

Binge drinking, or having four drinks if you’re a woman and five drinks if you’re a man within two hours, may be equally or even more harmful, studies suggest.

Other problems tied to heavy drinking and binge drinking include cancer, heart disease, respiratory disease, and injury.

Source : FoodMatters April 2019 

Reproduced with the permission of the Food Matters team. This article by Erin Bodwin was originally published at https://www.foodmatters.com/article/5-deadliest-habits-avoid-you-get-older

Important:
This provides general information and hasn’t taken your circumstances into account.  It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person. 

Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business, nor our Licensee take any responsibility for any action or any service provided by the author.

Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

Decide how you want to be looked after if you can’t make your own decisions and how you want your assets to be distributed after you die.

What is estate planning?

If you’ve got people in your life who you love and want to take care of, it’s wise to build an estate plan. This plan, which you can put together with the help of an estate planning specialist, will make sure loved ones are taken care of in the event of your death.

An estate plan is more than just drawing up a will. It also involves formalising how you want to be looked after (medically and financially) if something happens to you, or if you’re unable to make your own decisions later in life. Your estate plan will also clarify how you want your assets to be protected during your lifetime and distributed after your death.

How does an estate plan help?

You can make your wishes known

One of the benefits of a sound estate plan is the ability to formalise your wishes in writing. This can help if someone contests what you’ve said you want after you’ve passed away, or if you’re unable to speak for yourself.

You could minimise disagreements

Unfortunately, disputes often arise when unsettled assets need to be distributed among others—especially if there are no clear guidelines set. Being prepared with an estate plan could go a long way in preventing disputes should family members need to divide assets among themselves or make other hard decisions on your behalf.

You may improve tax consequences for your heirs

As the distribution of assets (including your income) can come with different tax obligations, a good estate plan might also minimise any tax that your heirs would need to pay. For instance, if they decide to sell something they’ve inherited, depending on the type of asset, they may need to pay capital gains tax. Estate planning, particularly with the guidance of estate planning specialists, could reduce these extra tax costs.

Key points when creating your estate plan

Consider drawing up a will and whether you want something legally binding

A solicitor or estate planning lawyer can help you draw up a will that is legally binding and covers what you’d like to happen with your assets, children (if you have any) and funeral when you die.

It’s important this document is kept up to date, and be sure any changes to your situation (marriage, divorce, separation or otherwise) are accounted for, so those who matter most are taken care of.

While it’s also possible to draw up your own will (there are various kits available online), these may not be adequate in complex situations, which is why engaging a professional is still worthwhile.

A word of warning: if your will is deemed invalid, your estate will be distributed according to the law in your state (which may not align with your wishes), and claims could be made by unintended recipients. This is why it’s a good idea to enlist the services of an estate planning specialist, even if you think your situation is relatively simple.

Review your nominated beneficiaries for any super or insurance you might have

When it comes to your super, you’ll need to do some planning in advance to make sure it’s distributed properly in the event of your passing.

During this process, take the time to nominate your beneficiaries with your super fund, and make sure you’re across how long different nominations are valid for. If you don’t make a nomination, the super fund trustee could use their discretion to determine who your super money goes to.

In addition, if you have insurance outside of super, make sure you’ve listed your beneficiaries on your insurance policy and that those beneficiaries are also kept up to date.

Consider appointing an enduring power of attorney to make decisions if you can’t

There may come a time when you’re unable to make legal or financial decisions on your own because of advanced age or medical issues. Granting power of attorney means you are designating an individual to make these decisions on your behalf if such a scenario arises.

For this reason, it’s important to choose someone you trust, as they’ll be responsible for looking after your bank accounts, ongoing bills, and even selling your house if you need to move into a care facility.

It’s also worth noting that you may be able to appoint a different type of power of attorney depending on what tasks you’d like this person to carry out on your behalf. For example, you may want your son or daughter to make general lifestyle decisions for you, while you appoint a financial adviser to make financial decisions.

Choose an executor to help carry out your wishes when you’re gone

Generally, an executor is the legal individual who manages and distributes the estate with the assistance of a solicitor, according to the terms you’ve set out in your will (which your solicitor should have a copy of).

When you nominate an executor in your will it’s important to let your family know, to avoid disputes after you die. Make sure the executor also has a good understanding of their duties and where your will and other important documents are kept. You may also want to let your family know where this information is stored.

The executor will typically be responsible for things like making funeral arrangements, ensuring your debts are paid and bank accounts closed, and collecting any life insurance.

They will also usually need to apply to the court for a grant of probate, which is a required legal step before your estate can be distributed. A grant of probate certifies that your will is valid.

Do you need help planning your estate?

Estate planning can be a complex process, and there could be legal and tax implications if you don’t set things up correctly and understand the fine print.

For these reasons, it’s very important to speak to a legal professional and your financial adviser before making any decisions and signing on any dotted lines.

For more information speak to us on Phone: 07 5641 4134 .

Source : AMP May 2019 

Important:
This information is provided by AMP Life Limited. It is general information only and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances and the relevant Product Disclosure Statement or Terms and Conditions, available by calling Phone: 07 5641 4134, before deciding what’s right for you.

All information in this article is subject to change without notice. Although the information is from sources considered reliable, AMP and our company do not guarantee that it is accurate or complete. You should not rely upon it and should seek professional advice before making any financial decision. Except where liability under any statute cannot be excluded, AMP and our company do not accept any liability for any resulting loss or damage of the reader or any other person.

Do you feel like ‘stressed’ is your new normal state of being? Can you remember the last time you went to bed without a care in your mind and woke up the next morning energized and excited for the day? Our modern lives, though full of opportunity, have us anxious, stressed and exhausted, and it’s almost at the point where if you’re not constantly stressed about work, finances or relationships, you might just stress about not being stressed enough!  

While a stress response is a normal function for our bodies and we definitely do need it in certain circumstances, being constantly stressed is not healthy and it’s making us sick. In fact, according to the World Health Organisation, stress is the health epidemic of the 21st Century. 

How We’re Stressed 

There are three ways our bodies can be stressed:

1. Physical: this can be a trauma, injury, accident or fall

2. Chemical: this includes flu, bacterial infection, hangovers, and unbalanced blood sugar levels

3. Emotional: this is the fear-inducing situations, perceived pressure at work or financially, family tragedies. 

Joe Dispenza explains that when our bodies experience physical, chemical or emotional stress, it knocks the brain and body out of balance and activates the Sympathetic Nervous System. This is the fight or flight system that helps us deal with perceived threats in our external environment. When this system is activated, other systems in the body are affected, including the way in which the body sources and burns energy to give the body a rush of adrenaline. 

This activation and mobilization of energy and particular body function are great in situations where we need to be able to react quickly – jump out of the way of speeding car or falling object – situations that are short-lived but require an immediate response. However, when the perceived threat to us is ongoing – say mortgage and financial stress – the body stays on high alert for prolonged periods, using up enormous amounts of energy and leaving the body unable to return to its normal state.  

What’s The Problem With Prolonged Stressed?

“Over 90% of disease and illness today is based on lifestyle and stress, not genetics,” – Bruce Lipton 

Stress hormones shut down the immune system making us vulnerable to disease, infection, and cancer. 

What does that mean for the average person living with constant stress? Bruce explains that by always being stressed “we are inhibiting our immune system every day.” This creates an environment for disease to develop… and that’s serious.  

Consider this: people produce cancer cells every day, but healthy immune systems can get rid of it. If you’re constantly stressed, creating a weakened immune system, your body will be less likely to protect you against cancer cells.  

Additionally, Dr. Josh Axe has shared that our emotions can impact our health with specific feelings driving disease in specific organs. He believes that managing our emotions is just as, if not more, important than fixing your diet for your health.  

The impact of emotions on the organs:

• Fear: reproductive organs, kidneys, and adrenals

• Frustration: liver

• Grief, sadness, depression: colon, lungs, immune function

• Anxiety: heart, small intestines

• Worry: spleen, pancreas, stomach

Techniques Proven to Reduce Stress 

By acknowledging your stress you can start to reverse its presence and impact on your life. There are a number of techniques you can implement to reduce stress and improve your health, and it starts with making a commitment to change your lifestyle.

Dr. Libby says that ‘stressed’ is the busy person’s word for fear. She shared with us that most of the time, people who are stressed at work have a fear of disappointing others or letting down the team, or a fear of failure. If you can understand the source of your fear, you can start to overcome the issue and reduce the stress.  

Dr. Libby also explains that it takes time to change the way we respond to stressful events. “We understand that for physical fitness, we need to train our body – we can’t just get up one day and run a marathon. The same is true for our mind – it requires a daily practice of ‘training’.” 

8 Ways to Reduce Stress 

1. Reducing your caffeine consumption

2. Talking to yourself about the source of your stress, try to change fear into fascination and learn more about yourself. Catch negative thoughts as they appear and replace them with thoughts of gratitude and positivity.

3. Considering your perceived pressure – most of the time we’re putting deadlines and pressure on ourselves that aren’t necessary.

4. Meditating to calm your mind and bring your thoughts internal, rather than being worried about everything external. If you like guided meditations, we’ve got plenty!

5. Working on improving your diet. We know that when people are stressed their diet decisions are generally very poor and limited to things that are convenient. Make healthy food a priority and read our article 9 Foods You Should Eat The Moment You Feel Stressed.

6. Reducing your technology use… and turning those email notifications off when you finish your work day!

7. Conscious breathing. Yes, we all breathe, but being conscious about your breath and making time to take nice deep breathes will change your mood and your body’s interpretation of what’s happening in your environment.

8. Finding a practice that relaxes you and do it often. Whether it’s yoga, surfing, painting or running, whatever it is that you enjoy and enables you to take your mind off things that stress you, make it a priority and enjoy it often. 

Source : Food Matters June 2019 

Reproduced with the permission of the Food Matters team. This article by JAMES COLQUHOUN  was originally published at www.foodmatters.com/article/stress-epidemic

Important:
This provides general information and hasn’t taken your circumstances into account.  It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person. 

Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author.

Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

In a low-interest, lower-return, more-volatile investment environment, investors have an even greater incentive to keep wealth-damaging behavioural traits or biases under control.

Individual investors have no control, of course, on the emotions of other investors or the overall state of investment markets. However, you can try to keep your emotions in check when making investment decisions.

And it is under your control to create and stick to an appropriately-diversified portfolio, set achievable long-term goals and have realistic expectations for returns. A disciplined investor guided by a solid financial plan is less likely to allow emotions to get in the way of investment success.

Here are seven of the undesirable traits that behavioural economists generally say investors should avoid:

Overconfidence

Many investors have an unjustifiable confidence in their ability to make smart investment decisions. Overconfident investors often believe they can pick future winning investments and somehow beat the market.

This overconfidence typically leads to frequently buying and selling shares in a chase for winners and being overly optimistic about the future performance of chosen investments.

Loss aversion

An excessive aversion to loss can make investors unreasonably sensitive to investment losses. Such investors tend to sell their winning investments while holding on to losers that are unlikely to recover.

And loss aversion can lead to investors being unwilling to take appropriate investment risks – potentially lowering long-term returns.

Regret

Excessively dwelling on past losses can lead to investors focusing too much on part of their portfolio rather than the portfolio as a whole. This trait, also known as “narrow framing”, can hinder an investor’s efforts to have a properly-diversified, long-term portfolio and make them more sensitive to short-term market movements.

Inertia

Inertia tends to get in the way of beginning to seriously save, saving more whenever possible and developing a long-term financial plan.

Fear and greed

These are the terrible twins of becoming fearful when markets are falling and becoming greedy when markets are rising. Fear and greed often lead to selling shares after prices have sharply fallen, only to buy after prices have sharply risen.

Comfort in crowd-following

Investors often gain a false sense of security by following the investment crowd. As with fear and greed, this usually results in jumping in and out of the markets at the wrong times.

Confirmation bias

This involves deciding on a course of action and then looking around for evidence to support that action while blocking out contrary opinions and research.

As part of your efforts to keep damaging traits or biases in check, try to block out investment “noise” – the abundance of often-conflicting and misleading information facing investors.

Make the most of investment compounding to magnify your long-term returns. (Compounding occurs as returns are earned on past returns as well as your original investment.) Recognising the rewards of compounding can help investors to stay focussed on the long term.

And think about ways to beat investment inertia including putting yourself into a form of saving “autopilot” by making higher salary-sacrificed super contributions.

 Please contact us on Phone: 07 5641 4134 if you seek further assistance on this topic.

Source : Vanguard June 2019 

By Robin Bowerman, Head of Corporate Affairs at Vanguard

Reproduced with permission of Vanguard Investments Australia Ltd

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