Hi all,

Happy New Financial Year!

Well another financial year has passed by and I think most of us will be breathing a sigh of relief. Good riddance I say! Australian equity markets will post a loss of over 20% for the second year in a row. The market bounce from record lows in March has been a welcome relief but there is still great uncertainty in the future. We hope that a New Year will bring us some better returns. Venn addresses this issue in today's main article "Is the Worst behind us?"

We have also decided you might be sick of my ramblings so we have invited Rebecca Wells, a life and career coach to write for us about the psychology behind wealth creation. Her article, "Is creating wealth a source of inspiration or a point of pain?" may assist you to see what drives you and improve your chances for success in the wealth game. She also offers a complimentary life coaching meeting so look for her details at the end of the article.

As for me I am busy setting new strategies for clients. A new year means new tax rates and new super contribution rules so it's about fine tuning everywhere! By the way what are you going to do with the few extra dollars in your pay packet as of this week? May I suggest you forgo it and ask your pay office to increase your super by the gross amount? A small increase goes a long way in the favorable taxed environment of super.

To your financial success!

Louise Gooden

Is it all behind us?

By Venn Williams

Well, as we wrap up the financial year of 2009 I can honestly say I have never in my 30 years in financial services experienced a year like it. It has been a time of unprecedented events. The total world wide financial system was within a few weeks of total meltdown.

Speaking to a few economists and bankers it seems the world will only know in hindsight how close we came to a global catastrophe. Like an episode from Spooks, only a few people at the informed top of the food chain really knew what was happening. The rest of us had to wait and see.

Well the worst is over according to most of the global wise men. The World Bank downgraded its growth for 2009 but said the worst is behind us. The IMF has also commented that it does not see immediate recovery but the worst is behind us. Even the OECD has revised their US contraction figures this week. The 'worst is behind us' now seems a common phrase now. Maybe a little too common, as though it seems to be the party line for the next few months to settle us and markets down. Sounds Spooky again! I was trawling the net and most printed media on the weekend and looking for some common theme to see where the 'Experts' think we are going for the next 12 months. The media is full of anyone who has an opinion at the moment and they vary to the extreme.

The Australian Property market is the usual one to toss around across the Sages. There are those that are saying it is recovering across Australia due to population and demand issues. These camps will find any Data to support their 'property is always a good investment' argument. Unfortunately these opinions are usually given by those that it serves best: The Real Estate Industry. On the Other hand I Listened to Harry Dent last weekend (Author of the Great Depression Ahead and The Roaring 2000's) He is of the opinion that we are overpriced in Australia by 20% or more. He bases this on medium house price to average wage. He applies this to the rest of the world and in the 50 most overvalued property markets in the world Australian has 18 in the top 50. The Sunshine Coast and Gold Coast coming in at 7 and 11 respectively. Sydney rated 12 and Melbourne 22 are in there as well. Harry thinks Prices will go back to year 2000 levels. His source is the from The 2008 demographic international housing affordability Survey. This is a frightening tale as our economic growth is very reliant on property growth. The rest of the world expects property to decrease for sometime but we say 'we are different down here'. Best of Luck. I don't see a 20% drop partly because we are different, but I don't agree with BIS Shrapnel's forecast of 22% increase over the next 3 years. The only comfort in their forecast is that, they have never been right. Remember 2 years ago they predicted 7% growth. Please!! So for Australian property if we look at the experts we can expect a 20% fall over the next 3 years or a 22% increase. That's a 42% spread! The reality is I think property will do very little for 3 years, perhaps a modest growth in selected areas. Affordability will come back over the next 3 years simply because wages will increase and property will stay flat.

The world wide markets are uncertain. No one it seems will predict a hearty recovery. It all seems to be the worst is behind us again. If we look at some of the best financial brains in the world we have differing opinions. I have cobbled together a few quotes from my weekend reading from some of the greatest financial brains in the worlds and they all differ.

'A shambles this year and probably well beyond.' Warren Buffet

'Crisis over. State intervention required.' George Soros

'More signs of yellow weeds than green shoots.' Nouriel Roubini Economist who predicted the GFC

'Home prices in the US have been falling for nearly 3 years and the decline may well continue for some time' Robert Shiller.

'We keep giving the critics of capitalism more ammunition' Joseph Stiglitz. Nobel prize-winning economist

'All investors should expect considerably lower rates of return than what they grew accustomed to only a few years ago' Bill Gross CEO PIMCO, largest bond trading house in the world.

There is no doubt that the world is a different place. The credit growth that has powered the world economy to heights never seen before has stopped. That period is over - if not forever, then certainly for a very long time. Credit growth in excess of GDP growth will not return for decades and from next year onwards governments everywhere will have to start raising taxes to pay off the debts that were run up saving the world economy from the banks last year. That will inhibit growth.

In fact budget deficits are here to stay because the new normal for economic growth will not be the 3+ per cent we have become used to in the western world, but 1-2 per cent.
At the moment it seems to be a steady as she goes attitude with no one really knowing or forecasting where the world wide economy is heading. There are fears that inflation is the next economic monster. Yet all indicators point to falling inflation. Some Economists are predicting oil could be triple figures by the end of 2009. Gold is going through the roof say others. I have never seen so many mixed and opposing views as we have at the moment. Although most agree that the early recovery will begin through the emerging economies, there is a reluctance to say who will lead. No one likes to make calls and be wrong.

The reason so many Experts seem to be reluctant is the 'what happened factor'. In other words, If you know or can forecast what's going to happen in the future why didn't you see the looming global crisis last year when you had access to all the data you have now? Very good question. If I was a Expert Economist paid for my opinion I would be hesitant in making any calls at the moment. So until we have more data which we can turn into information which in turn we can interpret into a reasonable forecast, the best we can expect to get at this stage is 'The worst is behind us'. Given the unbelievable carnage of the last 12 months, I for one, am happy with that.

Is creating wealth a source of inspiration
or a point of pain?

By Rebecca Wells

Imagine a spectrum if you will. At the far left end of the spectrum we have 'pleasure' and at the extreme right, 'pain'. The middle represents your 'comfort zone'.

Pleasure…

From a financial perspective, to be 'motivated by pleasure' means that you are driven by the benefits of what a decent living will provide. Perhaps these benefits, or goals, include paying off the mortgage; owning an investment property; having the savings to pay for an extensive holiday every year; or paying bills well ahead of time.

In terms of our spectrum, having this motivation you are firmly left-facing, venturing beyond your comfort zone, propelled by a desire to achieve and be successful.

Pain…

If, on the other hand, you yo-yo between your comfort zone and feeling financial strain, you are a right-facing person, 'motivated by pain'. In plain English, what this means is that you behave reactively and probably believe you need financial pressure to 'get thrifty'.

What does this all mean?

Well, in coaching terms if you are a 'pleasure-seeker' it means that you are firmly focused on what it is you DO want i.e. "I want to be wealthy". It is a positive and proactive strategy that the most successful people in the world follow. No doubt Richard Branson's focus is firmly fixed on how he can create more wealth and be even more successful than he currently is.

Unfortunately 'pleasure-seeking' isn't naturally easy to most people and in reality the majority of the population simply react against what they DON'T want, i.e. "I don't want to be poor". The problem with this is that focusing on situations you are keen to avoid only strengthens the probability that they will achieve fruition.

And what if you sit in the middle? Well if you spend most time in your 'comfort zone' - away from both pleasure AND pain - you are setting yourself up for mediocrity. You are telling yourself that you are only 'worth what you deserve' and thereby stunting your potential. So for example if you put a cap on your ability to earn big, saying "I'll always be a $50,000 kind of person and nothing more" you'll never achieve true financial freedom; Richard Branson certainly doesn't put a cap on his earning potential!

Understanding your current strategies

Everything that you do in life is based on a strategy. When you go shopping for shoes you will have a personal process that helps you decide whether or not to buy a particular pair.

Similarly, when choosing a new romantic partner, solving a conflict at work or looking to find a solution to a particular challenge, you will also have personal strategies in place to help you.

These strategies operate at the unconscious level of course, so you may not even be aware of them, and yet they have a phenomenal impact on whether or not you achieve the outcomes and results you want in your life.

Becoming consciously aware

As a peak performance coach, it is extremely empowering to enable clients to become consciously aware of the various strategies they run at the unconscious level.

Once aware of their strategies, clients now have a choice whether to proceed with a current process (and its resultant outcomes) or whether to find a new, more effective strategy that will help them to achieve their goals.

So for example, if you want to create financial wealth but are struggling, the chances are you currently have a left-facing, pain-avoidance strategy.

To offer a further example, if you are in a relationship that doesn't work for you, you are probably running a strategy like, "I don’t want to be alone" (avoiding pain) instead of telling yourself that, "I want a happy and mutually fulfilling relationship" (seeking pleasure).

Get more of what you do want…

Sit down. Have a cup of tea…

Make the time to take stock of your current situation. Be brutally honest and ask yourself whether or not it meets your aspirations and dreams. Here are some pointy questions to help you:

What do I really, really want?

Who do I want to be in my life?

What do I want to do in my lifetime?

How do I want to be remembered?

What are my end goals?

What are my short, medium and longer term goals?

Once you have answered these questions, you have started to turn around to the right of our spectrum, focusing on what you DO want instead of what you DON'T.

…And make it happen!

Changing habitual beliefs and behaviours will not happen overnight.

To make rapid and focused progress it is important to elicit a professional to help you obtain clarity of what you want your life to include and possibly more importantly, to give you the confidence to achieve the actions needed to get you there.

With this strategy you will feel understood, supported, accountable and motivated by the benefits of the change that lies ahead.

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Rebecca Wells is a Peak Performance Coach and Director of Clear Horizon Coaching, Sydney.

She provides tailored one-on-one private coaching as well as group coaching programs covering various aspects of personal and professional enrichment including life coaching; self-leadership; leadership of others; career development; career change; conflict management; and NLP training.

Email Rebecca at rebecca@clearhorizoncoaching.com to book a complimentary one hour coaching session and start making those changes now.

www.clearhorizoncoaching.com

"Diversification is a protection against ignorance. It makes little sense for those who know what they're doing."

Warren Buffet

Louise Gooden and Venn Williams developed Halogen Private Wealth Services in September 2002. They offer a traditional private financial planning service for individuals and workshops for employers wanting to educate their employees on financial success. Now through Halogen Connect they aim to help even more of you, their valued subscribers, to switch on your financial potential. They believe that wealth creation is a process that can be taught and learnt. Their goal, then, is to educate and motivate you to take action so you too can have a bright financial future.