We all want financial freedom, whether it be to fulfill our most basic needs, or to change the world. 

Attacks on our freedom can often be discouraging and seem out of our control. Why not control what we can control?

Here are five major attacks on your financial freedom and strategies to defend against them:

Inflation

Inflation shows up as an increase in the price of goods and services and a decrease in the value of our currency. Because inflation over the past few decades was usually at or under the two per cent target, we didn’t really notice it too much. We’re paying attention now though!

Here’s how to fight inflation:

1. Invest in assets that both provide a fair rate of return and increase in value. Stocks or real estate are examples.

2. Invest in learning and capabilities that make you more valuable in the workplace.

3. There is no shame in being frugal when looking for value. It is a sure way to fight “lifestyle inflation.”

Comparison culture

Most of us will never be satisfied with our current state. There’s nothing wrong with that – it’s what keeps us moving forward.Things go offside though when the comparison of our current and desired states is driven by someone else’s goals rather than ours.

Now is the time to focus only on goals that matter to you and avoid those that don’t matter. Once you’ve clearly identified those goals, it becomes easier to steer clear of the distractingshiny objects.

Excessive fees and expenses

Research Firm Dalbar Inc. regularly publishes its Quantitative Analysis of Investor Behaviour Report. It shows that average equity fund investors underperform their relevant benchmarks by between 3% to 5%, depending on the type of investment. This is due to a long list of costs including behavioural costs, trading costs, management expense ratios, excessive portfolio turnover, and many others.

There is no easy answer to this. I would suggest only payingfees when they are reasonable, when they add value and whenthey are supported by investment principles that are based on evidence, rather than speculation.

Taxation

Whether you are filing your own tax return or paying someone to do it for you, you may be leaving thousands of dollars on the table by not incorporating tax planning into your financial plan.

There are three basic tax strategies that you could explore:

• Deduct – use available deductions to reduce your taxable income.

• Defer – By compounding your growth under a tax deferral, the compound effect can be spectacular. You will eventually pay tax, but it may be at a lower rate of taxation (in retirement for instance) and the tax will be on a far larger sum than you would have grown had you paid tax every year.

• Divide – Use tools such as pension splitting, spousal loans RESPs etc.

If you’re interested in a checklist of tax credits and deductions that may be available to you, please reach out and we will email it to you.

Financial illiteracy

Social media is designed to “day-trade” our attention. That makes it hard to find financial truth.

The very fact that you’ve read this far into this article speaks volumes about your curiosity and desire to dig deep rather than react to the abundant fluff out there means you’re on the right track. Don’t stop learning and always dig deep when looking for the truth.

By admin

Leave a Reply

Your email address will not be published. Required fields are marked *

https://ltg-academy.ch/wp-includes/situs-judi-slot-terbaik-dan-terpercaya-no-1/