I read this recently and thought it was interesting enough to share. It all about something that affects us all and can perhaps help us in our daily life, not just in connection with financial services.
Have you written down your Goals? Do you struggle to meet them? Is your past littered with examples of failed diets for example, abandoned exercise regimes and deserted language courses?
Just why do you keep failing? Surprisingly, it might be because you’re hoping to succeed.
Hope won’t get you anywhere.
The problem with hope is that it won’t motivate you enough to succeed.
Let’s say your goal is to run a marathon that’s taking place in two months time. Just hoping to succeed won’t give you the necessary drive to get up early for a run and brave the muscle pain and blisters, nor will it keep going when you hit the wall. When the going gets tough, hope won’t prevent your hitting the snooze button, or get you out from under your nice, warm blanket.
To fuel your motivation, you need to expect that you’ll succeed. You have to visualize yourself pulling your running shoes on, breaking through the wall and crossing the finish line. Only by expecting the successful attainment of your goals will you find the energy and desire needed to achieve them.
So, if you want to stop yourself from constantly falling short, stop hoping for success and start expecting it instead. Of course, there is more to achieving success than just expectation. Learn what else you’ll need, including what inspiration we can take from the moon landings. Trying googling The Motivation Manifesto, by Brendon Burchard. You might find that to be of help.
There are “warning signs” about the health of the consumer credit market, the director of supervision at the Financial Conduct Authority (FCA) has said.
Jonathan Davidson said most of the rise in UK debt levels in recent years has been among better off borrowers and stressed this was not harmful to the economy, but he said this still left a large number of people with problems.
He said: “Most borrowers can still comfortably afford their credit. But it’s most – not all. The Bank of England’s financial stability report last year noted that consumer credit has grown rapidly and that, relative to incomes, household debt is high.
“And there are a significant number of households that are in so deep that the slightest sign of rough weather could see them in over their heads.”
Mr Davidson said an example of this trend was in the motor finance sector, where the number of agreements for new and used cars has grown rapidly from around 1.2m in 2008 to 2.3m in 2017.
Recently the FCA published an update on its review on motor finance which found that while its growth had been strongest for consumers with better credit scores, there were concerns about whether firms were properly assessing those with lower scores.
Mr Davidson added: “We are seeing that arrears and default rates, while still low, are on the rise, particularly for higher credit risk consumers. This is despite favourable credit and economic conditions, which begs the question: if we’re seeing this pattern now, what would happen if there was an economic downturn?
“We are also seeing younger people borrowing a lot more relative to their incomes than my, baby boomer, generation. Why is this? It’s because of more student borrowing.
“Our Financial Lives survey showed that 30 per cent of 25-34 year olds have a Student Loan Company loan. It’s because of the higher cost of getting onto the housing ladder. And it’s because of shifting patterns of savings, borrowing and consumption. You don’t need to wait, you can have it now.”
He said many credit card customers are perpetually in debt, and this has prompted the recent rule changes introduced by the regulator around credit card fees are aimed at preventing the warning signs mutating into a crisis.
You enter the Supermarket. “Bread, butter, toothpaste, onions. Bread, butter, toothpaste, onions. ” A nearby customer glances at you quizzically as you mumble your list under your breath. Twenty minutes later, you leave the store with a cart full of food – but no toothpaste!
You’re not a storage device
One of Lifes’ truisms is that we forget things – whether it’s groceries, someone’s birthday or, horror of horrors, an important meeting – because our brains weren’t designed to store everything perfectly.
To remedy this, maybe we should outsource our memory. And that means writing things down. But it’s more than the trusty shopping list. That is, all your thoughts and ideas, work-related and home-related, should be committed to the page as they occur.
In a meeting? Get the whiteboard out, scribble on it and take a pic of it before you leave. Profound realization over breakfast? Note down that you need to spend more time with your family.
There’s no ground breaking innovation in jotting things down, but doing so consistently will unload the worries and to-dos from your stressed brain onto a safe place where they won’t be forgotten.
Just be sure to always have a small notepad or your phone at the ready. The latter, which we always have with us, don’t we, has a Notepad App. Specifically for these occurrences. Try it!
Since the pension reforms of 2015, investors have a greater degree of flexibility and choice when accessing their savings. Significant though the reforms were, they have to be seen within the context of other changes affecting retirement, particularly demographic developments.
Accelerating life expectancy
Accelerating life expectancy means that a 65-year old man in the UK has an average of 18.5 more years of life ahead of him, while women of that age will live on average for another 20.9 years, according to the most recent data from the Office for National Statistics. These are averages, of course – someone could live for just one or two years in retirement, but there’s also a growing chance that they could live to 100. A retiree with sufficient savings to get them to 85 could still be left with an empty pension pot if they live beyond that point.
It may be surprising to learn that people tend to misjudge how long they are likely to live. A study recently showed that those aged 55-70 significantly underestimate their chances of surviving to greater ages. As a result, they may fail to take the required measures to prepare for a longer retirement.
Another error that people can make is to overestimate the level of income they can expect in retirement. Research has shown that in some cases the average income is considerably less than the amount they’ll need to be “financially comfortable”.
There may be many unexpected demands made on savings in retirement, including those from ongoing debt repayments such as mortgages, financial support for children and long-term care. These can be substantial.
From DB to DC
The decline in defined benefit (DB) (known also as Final Salary) schemes – when many workers retired with the security of an income until death – has created difficulties. Due to insufficient private pension provisions and rising life expectancy, the move to defined contribution (DC) (known also as Money Purchase) schemes has placed far greater responsibility on individuals for their pensions.
Considerations for planning
Careful planning needs to take into account investment risk, inflation, the risk of expenditure such as long-term care and mortality drag. Mortality drag refers to the need for drawdown investments to work harder – as investors become older – if they’re to provide the same income as an annuity. Unlike those annuitants who live longer than average, and who benefit from the cross-subsidy inherent in risk pooling, drawdown investors don’t have pooled risk in place.
Annuities: still working hard
This is why annuities – though waning in popularity – remain an important component of the at-retirement product suite. Investors are more likely to enter drawdown when they reach retirement. But an annuity option remains open to them, and may become attractive if maintaining a sustainable income from drawdown proves too demanding.
Ageing and decision-making
Another feature of ageing is its tendency to bring about cognitive decline. This can affect people’s abilities both to make decisions and to seek help with making decisions. And that includes financial decisions. Yet, despite their cognitive decline, people’s tendency to be confident in their decision-making remains. This is an important but difficult subject to bring up with clients. Cognitive decline, dementia and Alzheimer’s disease will affect more people as longevity increases.
Awareness of the challenges
Being aware that living longer brings many financial risks is not enough in itself to solve all the problems. But it’s a sound basis on which to build a robust investment strategy.