Having a cash flow plan is the first step to successful financial management the second is being disciplined and staying accountable to your planned expenses.

I admit it is hard these days with all the advertising trying to get us to spend our hard earned money on 'stuff' and 'things'. We all know people who suffer from what I call 'chronic-not-enough-ness'. Always needing to buy the latest and greatest. This isn't bad if you can afford it, but often leaves people stuck on the tread-mill of debt and repayment which build and builds to a point which sometimes gets a little overwhelming.

This Christmas I challenge you to do things which are meaningful but don't leave you with the credit card hangover. Then for Christmas 2010, decide on your spending amount for Christmas and set up a bank account with no ATM access into which you can set aside a fortnightly amount.

When you start shopping for Christmas, do as 'Santa' does and make a list, check it twice, set aside an amount for each present and go shopping with what one of my colleagues John de Ridder says 'purpose in mind', rather than just 'money in hand'.

I have a client who does all their Christmas shopping in January the year before during the sales - now that is planning!

Enjoy the silly season and remember a 'plan' is as good as a holiday! I may have that a little confused but a plan will ensure you can enjoy your next holiday and you won't start the new year with a debt hangover!

Need assistance with your cash matters? Contact Money Mechanics today to discuss your needs - 1300 772 643.

New research conducted by KPMG Econtech and commissioned by the Investment and Financial Services Association (IFSA) was released in November.

The research found that people who seek the advice of a financial planner are better off by an average of $2,457 each year, compared to a similar individual who does not have a financial planner.

So what does a financial planner do to add value to your situation you may ask?

Step 1: Where are you at? This stage is the information gathering stage which is important for both parties to get an understanding of where you currently are with regards to the resources you can use towards your financial management. This can include your income, assets and also has a lot to do with your habits and attitudes that currently come into play with your money.

Step 2: Where do you want to be? This can sometimes be the hardest part of the process as this is the goal setting phase and involves putting your dreams, hopes and thoughts for the future into tangible outcomes.

Step 3: Your strategy development This is where the training and knowledge of the financial planner comes into play and should also include collaboration with your other professional advisers. This collaboration will ensure that other strategies and structures you have in place will work together to achieve your outcomes. This area could include your cash flow, superannuation, wealth creation and back up plans. Each of these areas has different strategy solutions which may be suitable for you depending on your comfort and level of willingness to be involved in the day-to-day process.

For each area of strategy development there will be a financial product solution which will help to achieve your goals. This could depending on the advice be a managed investment, or direct investment product which is based around debt investments such as cash, term deposits or government or corporate debt or equity investments such as property, shares which could be local or internationally based.

As with all planning and strategy development it is important to regularly review your strategy to ensure it is continuing to meet your needs and to check in to see if any of your goals or plans have changed.

If you want to review your current situation, be it your superannuation plans for your current defined benefit, retail, industry or self managed super funds, or your wealth creation, cash flow or back up plans contact Money Mechanics today.

Exchange traded funds or ETF's as they are often called have opened up a new investment opportunity for investors worldwide.

The first fund that can be described as an ETF was launched in the US in 1993. Steady growth ensued and by 1997 total assets under management in ETFs approached US$8.2 billion.

Since then, the ETF market has taken off. The message of cost-effective, diversified investing has hit home, making ETFs an ideal vehicle for modern investment strategies. Globally ETF assets hit US$933 bn at the end of September 2009.

Structure of ETF's

ETFs are like open-ended managed funds which are listed and traded on major stock exchanges around the world. Similar to an index tracking pooled fund, an ETF seeks to reflect the performance of the chosen index. This is achieved through holding a diversified underlying basket of securities as represented by a particular index with, for example, a domestic or international focus.

The performance of an ETF generally corresponds to the price and yield performance, before fees and expenses, of a particular index sponsored by an independent index provider.

A distinct advantage ETF's have over managed funds is that they trade like any other listed share. They can be bought and sold on the ASX, and can employ the same trading and investment strategies used with listed shares such as market, limit and stop orders, short sales and margin lending.

The Advantages

ETF's are liquid. High or low demand for a fund is unlikely to affect its market price. If the demand for a fund rises, new baskets of securities can be created in the US. This process works in reverse if the demand should "fall". This ensures the fund value and price only represent the prices of the shares it holds.

ETF's are transparent aim to reflect the performance of an index, so you know what you are investing in. ETF's disclose their holdings regularly so you can see exactly what you hold in your portfolio. Actively managed equity funds usually disclose holdings much less regularly.

ETF's give you diversification. Rather than the higher risk strategy of concentrating your investment on a few individual companies, index investing gives you broader exposure to entire markets. This means you can still make targeted investments in your chosen areas - but with more risk control.

ETF's are cost-effective. The cost of investing in ETF's is generally less than in most actively managed equity funds and even some equity index funds. They are also more cost-effective than holding the same exposure via individual shares. To achieve the level of diversification a fund offers, you would normally have to buy a large number of individual shares, taking on the trading costs for each transaction.

ETF's are flexible. They can be bought or sold just like shares, traded through investment adviser, brokerage or internet trading accounts. Because iShares are so flexible, institutional and individual investors are using them in a whole range of investment strategies.

The same market risks exist for other investment opportunities so it is important to review your complete investment strategy to ensure you are taking risks you are comfortable with. If you want to review your strategy give Money Mechanics a call today.

The returns were similar to MSCI World (Ex Aus) index which rose by 1.6%. The Resources sector was strongest, rising 7% with the OECD+6 leading indicator remaining at record high levels having increased by 21% on an annualised basis over the past 6 months (led by China +41.3%, Germany +25.8%). Economic recovery continues to progress and is in our view undoubtedly now in train. The world is flooded with US dollars which with interest rates at near zero percent makes share and commodity investment very attractive. Locally, strong signals from unemployment and housing went on to give the RBA its' cue to continue to raise official rates. Overall our 12 month ASX200 forecast return was increased to 5576 over the past few days.

Last month
;

Indices	Closing level	Opening Level	Gain / Loss
All Ords	4715	4646	1.49%

Last 28 months

Indices	Closing level	Opening Level	Gain / Loss
All Ords	4715	6187	-23.79%

Australia Dollar Effect

The Federal Reserve stated during the month comments to the effect of the following three statements:

1. A weak US dollar is growing as a source on concern
2. They intend to keep interest rates low until stronger signals occur; and
3. They would not raise rates until stronger signs came out of the labour market.

Consensus is for the Australian dollar to remain strong across the trade weighted basket. The 10yr yield curve forecasts interest rates to rise across the world. The performance of the Australian Dollar to US Dollar then hinges on when the AUD/USD differential begins to narrow, and what the impact is of the first change in direction.

Earning Per Share forecast revisions downward only had to slow to zero for equity markets to rebound; this more or less reflected what happened. We expect something similar in the foreseeable future to impact the Australian Dollar's run. Expectations that the Federal reserve in the US will raise rates would have a disproportionate effect on the $US. For this reason we raised exposure to GOLD - provided the bullion price outperforms in a relative sense to the AUD/USD, GOLD should rise in value. It is also a reason to reduce exposure to Financials given the sector's collective reliance on access to overseas funding.

Risk Tolerance

If the collapse of Dubai's sovereign fund announced on 26 November showed anything, it is that trepidation remains. At least in the mind of the market we are not yet out of the woods. The reaction suggests the world is concerned it is not an isolated event (or has unforseen flow on effects such as Greece recently downgraded on the back of Dubai exposure). Whether other areas like Eastern Europe or the Baltic states suffer the same fate is not so relevant as the total degree of damage done.

Many expect not to see widespread pressure on the banking sector and emerging market debtors, pointing to strong global liquidity growth as the factor preventing this. The rise in the gold price says otherwise, and accordingly we stuck with our relative overweight in gold.

If you wish to review your investment strategy contact our office today to arrange an appointment

Managing on a Low Income
3 March 2010 and 9 June 2010 REID CIT Campus
Cost $25
Struggling to make ends meet? Sometimes it can be hard to imagine getting ahead, let alone really getting there. Living on a low income can take a lot of energy and require a lot of skill balancing your budget from day to day. Our habits and attitudes have a lot to do with how we relate to our money and making ends meet. You may or may not already have good money management strategies in place. This course is one of the first simple steps to making the most of your money, from getting a greater grasp on your day to day budget and debt strategies, to your longer term superannuation strategies.

Superannuation Demystified
14 April 2010 at REID CIT Campus
Cost $50
This evening will cover the taxation strategy of superannuation including the taxation on contributions while in the scheme, and on the way out of the scheme. Technical strategies such as advantages and disadvantages of salary sacrifice to superannutaion and defined benefit superannuation schemes in the context of your financial life and estate plans will be covered.