Welcome to the May issue of the Select Wealth Management Dashboard Newsletter. As I write, Finance Minister Grant Robertson is preparing to deliver his 6th budget. Billed to be a "no-frills" budget, there may not be anything too exciting to report on this (although I'm sure they'll find a few lollies to scramble given it's an election year). Perhaps the subject for next month's newsletter... For this month, I wanted to share one of Carl Richard's famous "one page financial plans". Carl Richards is a financial columnist who has forged a career by creating very simple illustrations that encapsulate very powerful financial messages. I love his work. Consider this very simple idea: Have you ever stopped to think about this - I mean REALLY think about it. How much is enough? It's an extremely personal measure, and it's critical to know before you can make any investment decisions. Afterall, how can you make any properly informed investment decision if you don't know what the goal is yet? In my experience dealing with hundreds of different people's personal finances, I have made the following observations: Hardly anyone knows what their "enough" is. When I start a conversation about retirement planning with a new client, they invariably have no idea what their retirement goals are. Often it would be something as arbitrary as "I want to save $1 million" or "we want to live on 1 partner's income and save the other partner's income from now on". These are good ideas and worth pursuing, but they don't necessarily align with your "enough". A smarter way of thinking about this would be to ask things like: At what age do I plan to retire? How much income will I need throughout retirement? How much risk am I willing to assume in the pursuit of returns? Am I willing to spend all my money in my lifetime, or do I want to leave it to the estate? Am I going to downsize my home? Am I going to have any material one-off expenses throughout retirement - a big overseas trip, replacing a car, home maintenance? Once you have clarity on this, you can work backwards to establish how much you need to save to achieve these goals. It might be materially more or less than the arbitrary $1 million. Which means perhaps you don't have to live on only 1 income from now on, or perhaps you need to take a second job. Until you know how much your "enough" is, you cannot formulate a plan to achieve it. No two people's "enough" is the same. I get so annoyed when I see academic studies suggesting you need $XXX to have a good retirement. There is no one-size-fits-all retirement plan, no magic formula to follow. Retirement planning is an extremely personal journey. I have some clients who can live contently on $30,000 per annum, and others who can't seem to get by on $300,000 per annum. Their needs are clearly very different. Neither are right or wrong - this is purely a function of their definitions of "enough" being different. Be very wary of the generic retirement plan - there's a good chance it won't align with your "enough" and result in disappointment. Most people are so obsessed with returns, that they lose sight of their "enough". If you only need a 4% return to have "enough", why should you care about trying to achieve 8%? That's unnecessary risk. Greed is an extremely powerful emotion that we are all prone to - nowhere more evident that when we invest money. Do not seek gratitude in your investment return being better than the next persons or beating some arbitrary benchmark. The gratitude should come from knowing that your investment is going to deliver a return that will achieve your "enough" - no more, no less. This should be your only benchmark or concern. Knowing your "enough" is incredibly empowering. The most enjoyable part of my job by far is taking people on a journey to discover their "enough" and how to achieve it. It's often a penny-drop moment. Clearly defining your goals, committing them to writing, and implementing a plan to achieve them is an extremely empowering exercise. Often there is a reluctance to go through this exercise for fear of your "enough" being out of reach. But in my experience, most people are actually in a far stronger position than they perceive, and are on track to achieve (often exceed) their "enough". And if you aren't, wouldn't you rather know now so that you can start planning how to rectify the situation? Knowledge is power - know your "enough" and how to get there. So there you have it - my thoughts on "enough". Many of you reading this newsletter will have already gone through this "enough" planning exercise with me, and hopefully you got value from it. If you haven't already gone through this exercise, my challenge to you is to start thinking about it. Try imagine what your "enough" is and how you plan to get there. I'm certain you'll get value from the exercise... In terms of the markets, the past 30 days have been mixed, ranging between -5% (Hong Kong's Hang Seng) and +5% (Japan's Nekkei). Earnings season in the USA has all but finished with over 90% of companies having reported earnings for the first quarter. 75% of all companies beat estimate revenues and earning per share (EPS) - meaning that so far this year companies have done better than they forecasted they would. This explains why the American share market (S&P500) is up 8% so far this year. The USA economy seems to be holding up better than expected. The next hurdle for share markets is the debt ceiling negotiations in Washington - a matter that has to be settled by 1 June. All indications are that this is close to a conclusion with an announcement imminent. Mortgage rates have stabilised, but house prices continue to fall (although the pace seems to be moderating). Here are the numbers for the past 30 days:   In terms of your Select Wealth Management portfolio, performance has been solid this year so far. It has also been pleasing to see the model portfolios outperform peer portfolios by some margin over the past year. We remain confident in the fund managers we are using, and continue to find very good value in New Zealand corporate bonds. For those of you who need tax reports, these are now available on the portal. Please feel free to contact me if you have any questions regarding these. Finally, a quick update on our Giving Back program. As we enter the last month for the campaign for the Nurses at Lower Hutt Hospital, we have raised $1,528 towards their coffee machines. We have 6 weeks for a final big push to raise as much as possible for these guys - they are legends. Thank you as always for the introduction to your friends, family and colleagues which makes this program possible - we really appreciate it! To keep track of the Giving Back program visit https://mifinancialplanning.co.nz/giving-back.html That's all for now. Chat again soon Warm regards Dave and the team at Makowem & Isaacs Financial Planning dave@mifinancialplanning.co.nz

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