Seven ways to achieve your money goals

When it comes to managing finances and striving towards financial goals, it's crucial to discern between factors within our control and those beyond our influence.

Elements such as interest rates, inflation, investment market returns and economic growth are external factors over which we have limited sway.

Nevertheless, there exists a realm of variables within our control, each representing a lever that can be strategically manipulated to shape our future financial landscape.

So which financial levers can investors utilise to enhance their financial well-being and achieve their desired outcomes?

1. Regulate expenditures

Among the most potent levers within our reach is the ability to regulate our expenditures.

It's imperative to scrutinise our lifestyle choices, steering clear of the “lifestyle creep” pitfall where escalating spending accompanies rising income.

How attentive are you to your spending patterns? By practising fiscal prudence and living within our means, we create room for savings and investments.

2. Increase income

Another financial lever ready for activation is to increase income. While this might seem obvious, many underestimate its transformative potential.

We can expedite our wealth-building journey by actively seeking avenues to bolster our earnings through career progression, side ventures or entrepreneurial pursuits.

Elevating our income not only increases resources for saving and investing, but also broadens financial prospects and fortifies financial security.

3. Amplify investments

Amplifying investments represents a robust lever with profound implications for long-term financial success.

By allocating a greater share of our income to investments, we harness the power of compounding and leverage the growth potential across diverse asset classes.

Adopting a disciplined approach to investing, incorporating strategies like automatic savings and prioritising personal savings is pivotal.

Consistent and methodical investment practices enable the construction of a portfolio harmonised with our financial objectives.

4. Elevate investment returns

While controlling expenses, increasing income and boosting investments are integral, investors should not overlook the importance of enhancing their investment returns.

This lever involves making astute choices regarding asset allocation, diversification and selecting investments aligning with long-term goals.

While investment returns should not singularly dictate financial success, optimising our investment strategy and capitalising on opportunities to maximise returns can substantially influence overall wealth accumulation.

5. Fine-tune retirement timelines

A frequently overlooked financial lever involves fine-tuning our retirement timelines.

Although many individuals set a predetermined retirement age, it's essential to reassess this timeline in alignment with our evolving financial circumstances and aspirations.

Extending our working years offers additional time for savings and investments, fostering further asset growth.

Conversely, some may opt for early retirement, prioritising financial independence and a fulfilling lifestyle.

Thoughtfully re-evaluating our retirement timeline empowers us to make informed decisions tailored to our unique situation.

Evading financial mistakes emerges as a pivotal lever for safeguarding wealth and financial well-being

Sam Instone,
co-chief executive, AES

6. Steer clear of financial pitfalls

Evading financial mistakes emerges as a pivotal lever for safeguarding wealth and financial well-being.

Through vigilance and knowledge regarding common financial pitfalls, we can mitigate risks and preserve financial resources.

Learning from past mistakes and seeking insights from experienced individuals aid navigation through the intricate terrain of personal finance, enabling sound financial decision-making.

7. Housing considerations

Housing decisions serve as an additional financial lever.

Adjusting the size or downsizing where we live can unlock equity and trim housing-related expenses, creating room for savings and investments.

Innovative options like equity release present opportunities for added financial flexibility without the need to move.

Scrutinising our housing needs and weighing the financial implications empower us to optimise housing decisions in alignment with broader financial goals.

Investors have a range of powerful levers to take control of their financial situation.

Consistently pulling these levers over time allows for the compounding of results that can potentially reshape one's financial trajectory.

By understanding these levers and working to strategically deploy them, investors position themselves optimally to chart their financial course and progress steadily towards their definition of financial success.

Sam Instone is co-chief executive of wealth management company AES

Four reasons global stock markets are falling right now

There are many factors worrying investors right now and triggering a rush out of stock markets. Here are four of the biggest:

1. Rising US interest rates

The US Federal Reserve has increased interest rates three times this year in a bid to prevent its buoyant economy from overheating. They now stand at between 2 and 2.25 per cent and markets are pencilling in three more rises next year.

Kim Catechis, manager of the Legg Mason Martin Currie Global Emerging Markets Fund, says US inflation is rising and the Fed will continue to raise rates in 2019. “With inflationary pressures growing, an increasing number of corporates are guiding profitability expectations downwards for 2018 and 2019, citing the negative impact of rising costs.”

At the same time as rates are rising, central bankers in the US and Europe have been ending quantitative easing, bringing the era of cheap money to an end.

2. Stronger dollar

High US rates have driven up the value of the dollar and bond yields, and this is putting pressure on emerging market countries that took advantage of low interest rates to run up trillions in dollar-denominated debt. They have also suffered capital outflows as international investors have switched to the US, driving markets lower. Omar Negyal, portfolio manager of the JP Morgan Global Emerging Markets Income Trust, says this looks like a buying opportunity. “Despite short-term volatility we remain positive about long-term prospects and profitability for emerging markets.”

3. Global trade war

Ritu Vohora, investment director at fund manager M&G, says markets fear that US President Donald Trump’s spat with China will escalate into a full-blown global trade war, with both sides suffering. “The US economy is robust enough to absorb higher input costs now, but this may not be the case as tariffs escalate. However, with a host of factors hitting investor sentiment, this is becoming a stock picker’s market.”

4. Eurozone uncertainty

Europe faces two challenges right now in the shape of Brexit and the new populist government in eurozone member Italy.

Chris Beauchamp, chief market analyst at IG, which has offices in Dubai, says the stand-off between between Rome and Brussels threatens to become much more serious. "As with Brexit, neither side appears willing to step back from the edge, threatening more trouble down the line.”

The European economy may also be slowing, Mr Beauchamp warns. “A four-year low in eurozone manufacturing confidence highlights the fact that producers see a bumpy road ahead, with US-EU trade talks remaining a major question-mark for exporters.”