Tips on how to motivate yourself after leaving college or university

As many college and university graduates would know, one of the hardest things to do once you leave the educational system is to motivate yourself and to find your direction.  The 'go getter' attitude that you normally start working with rarely lasts longer than the first year of work and then the malaise often sets in.  I have experienced this myself, seen it with almost all of my friends and had comments from readers of this blog about it too.

The good news is that this does not have to be the case - but unlike school, college or university you need to choose your own direction and provide your own motivation to succeed in the work environment.  Below are some tips on how you can start taking control of your work life, how to set some goals and how to keep yourself motivated.

Why do graduates get disillusioned so fast after entering the workforce?

In my opinion, graduates get disillusioned very quickly after entering the workforce for several reasons

1. There is no clear 'end game'
• In the education system you know what you are working towards.  You know that if you work hard and get good marks in school you will get into the right university and if you work hard and get good marks in university then you have your pick at graduate positions
• Unless your organisation is very hierarchical (like an Investment Bank or a Law Firm) where there are constant clear 'next steps' the lack of direction is really confusing for many graduates.  They no longer know what they are working towards
  
2. They are not getting the constant feedback they are used to
• In the education system you are constantly getting both explicit and implied feedback.  This is through educator comments and more importantly through marks
• For high achievers, not getting anything in the workplace (annual reviews really are a joke most of the time) is quite a disconcerting feeling - you do not know how you are doing
• Not knowing how you are doing and whether you are actually doing the right thing is a major reason a lot of people feel 'lost' in the workplace
  
3. The external motivation is almost completely removed
• Related to the point above the education system provides a lot of external pressures and motivations for you to work hard and succeed
• In school the teachers push you very hard and your motivation is almost never internal.  In college it is much more internal however there is still implied pressure through the constant grading of papers / exams and the need to work towards the 'end goal' mentioned above
• In the work place motivation is almost always completely internal.  Most workplaces that take a lot of graduates often start placing external pressure at the start because they know this is an issue however this drops off very quickly and graduates need to completely motivate themselves which is a very new feeling and often is hard to get the hang of
  
4. The feeling that you are not completely in control of your own destiny
• In the education system it really is a very personalised risk / reward system.  If you work hard then your results reflect this.  There is a very direct link.
• In the workplace it is a lot more subjective.  You need other people to recognise what you are doing in order to get ahead
• Unfortunately this is the nature of working in organisations however the disconnect between your effort and the perceived end benefit can be very disconcerting until you get used to the idea

I'm sure there are other reasons.  If you have any please post them below - I'd love to have a discussion around it.

How can graduates and new employees address these issues and get their mojo back?

In order to get your mojo and lost motivation back there are some things that YOU can do.  It is all about internalising those things which have been provided to you in the past. It is about realising that you are now the architect of your destiny.  A lot of people are very uncomfortable with this - they seek out mentors because they want someone else to guide them.  I think getting advice is fine however if a mentor is used to abdicate personal decision making and responsibility then I think it does more harm than good.

Here are some very definite things that you can do in order to get your motivation back

1. Work out what you want your end game to be
• It does not need to be financial or money or career related.  It is about where you want to be in the long run
• My personal objectives are very clear on this blog.  I know what I want my end game to be financially BUT I also have personal objectives that I want to achieve in my life
• These are not fixed objectives and change as I mature
  
2. Work backwards from your end objective to what you need to do today
• Staying in a tough job becomes easier if you can see that it gets you to the 'next step' in your life plan
• At the same time if your current job is not going to get you where you need to go, it provides direction around what type of job you need to get and what experience you need in order to achieve what you want to do
  
3. You need to be providing your own feedback while taking advice from others
• No one is going to provide you feedback and advice unless you ask for it
• Keeping in mind your objectives ask for advice on how you can get to the next stage in your plan
• Ask for feedback on how you are doing and be constantly self assessing to see whether you are getting to where you want to be
  
4. You need to motivate yourself - this is your life and your life plan
• This is one of the hardest things to get used to.  Once you get used to the idea however that you are responsible for your own outcomes and you know what you want your outcomes to be the motivation seems to come much easier
  
5. Realise what you can and can't change
• You can change how you act and react and how hard you work and what sort of relationships you have in the work place
• You cant change the nature of people who work together.  If you work in a truly toxic workplace then it is probably not helping your end objective but if you think you can get ahead in organisations without learning interpersonal skills then you're going to be constantly disappointed.

Once I started doing the above things I found that a lot of my lost motivation and mojo started to come back.  I am not quite as motivated as I would like to be but it is constantly improving and I'm working on it all the time.

You May Also Be Interested In:

Do I need to wear expensive clothes to work?

How to get great value fully tailored suits...and a free holiday

What not to do after an internship

Diversity Hiring in Investment Banks - How will it affect you?

How to calculate retail versus institutional shareholders

I recently did a post on Woolworth's and the attempt of an activist group of shareholders to change the companies constitution.  Part of my analysis after the failure of this vote was an evaluation of how retail versus institutional shareholders voted.  This post will cover how you can calculate what percentage of the register is institutions versus what percentage is retail.

Why is being able to calculate type of shareholders useful?

I think there is a value in knowing what sort of shareholders form the shareholder base as an investor.  Although you shouldn't put too much weight on this issue it does give you some sort of indication about how the share price moves and how reactive it is to negative sentiment:

1. Retail shareholders want different things
• In the current market environment retail shareholders tend to be very yield focussed at the expense of all other characteristics - in other markets the focus is on growth or on technology.  With this focus on yield some stocks will trade well above their fundamental valuations if they have a strong yield and a strong retail shareholder following
  
2. Retail shareholders often tend to react more to 'noise'
• Although this is a generalisation - retail shareholders (more so than institutions) tend to react to noise and negative sentiment.  This is because institutions typically have to be close to fully invested in something while retail shareholders are able to sit in cash
• Companies with large retail shareholder bases can have much more volatile share prices as they fall in and out of favour with retail shareholders
  
3. Retail shareholders are more loyal to companies 'they know'
• Retail shareholders tend to like companies they truly understand (which is definitely a good thing), however what it means is that the valuation of these companies may not fall to a point where it looks like particularly compelling value
  
4. Institutional shareholders are more vocal and keep companies 'in line'
• Although this is a gross exaggeration, institutions do tend to make their voices heard and companies with large institutional shareholders tend to listen to those shareholders
• For this reason institutions often avoid (or allocate a discount to) companies controlled by one person or a family (like News Corp and the Murdochs)

There are many more traits like the ones I've mentioned above and there is no clear way you can benefit from the knowledge - however it will often explain why companies take certain actions or the stock price responds in a certain way.  It adds another lens for you to understand your investments and it is so easy to do that you can calculate it in under 5 minutes on your own.

How do you calculate what percentage of shareholders are retail versus institutional?

Note that this example below is for Australian companies.  I'm not exactly sure how to calculate it for international companies but there is normally a way to do this from the information provided year to year.  I will try and look into this for future posts.

I am using Woolworths as an example.  Part of the Annual Report (and sometimes for the interim reports) will always be dedicated to a summary of the shareholders section.  For Woolworths I have linked to it here.   What you need then is a couple of pieces of information and assumptions

• You need the current price of the stock (approximate will do).  As at the date of writing this post WOW share price was ~A$30 per share.
• You then need to make an assumption around the maximum value of shares that a retail shareholder is likely to hold.  I normally assume this is ~$100,000.  Retail shareholders are unlikely to hold more than that in a single company

Then you need to look at the ranges of fully paid shareholders.  Woolworths breaks theirs up in the following categories

• 1 - 1,000
• 1,000 - 5,000
• 5,000 - 10,000
• 10,000 - 100,000
• 100,000 and over

Then assign assumed value ranges to these categories which then makes it

• $30 - $30,000
• $30,000 - $150,000
• $150,00 - $300,000
• $300,000 - $3,000,000
• $3,000,000 and over

Retail shareholders therefore are going to fall within the first two categories only.  I am going to make a simplifying assumption and say that all the people in the first category are retail shareholders.  

I then take the number of shares within these categories (103,294,619+273,371,259) and divide it by the total shares outstanding (1,234,216,128) to get the percentage of shareholders which are retail.  For Woolworths this comes to 30.5%.

It is very simple to do and can give you an insight into any company you invest in.

You May Also Be Interested In

What is TERP and how do you calculate it?

What is Investment Risk?

What is diversification and how does it work?

What is NAV (Net Asset Value)?

November 2012 Expenditure Tracker

Item	Nov 2012	Target (new)	Over/(Under)
Share Investments	-$28,968	+$3,100	-$32,068
Offset Acct.	+$72,252	+$1,300	+$70,952
Personal expenditure	+$2,777	+$2,000	+$777

As with my October 2012 post, this post will only have my performance versus my reset expectations.  In this month's post you will see how I have achieved on a cumulative basis) all my goals for the year thus far with the exception of my personal expenditure goals.  This may seem strange given I split my income up between the three categories that I track.

However the big impact this month was my tax return and the bonus that was paid to me by my employer.  The tax return is something inherently uncertain and I cannot bank on this in any given year - I have discussed more below why this years return was so large.  My bonus, however is more stable, and forms a reasonably large part of my compensation.  However I prefer not to include this because it tends to fund a lot of my large extra curricular activities such as overseas holidays which I like to do on an annual basis.  As I pointed out in my November 2012 net worth post I expect a lot of the bonus amount to be spent in the coming months as I go overseas and buy a new car so the effect of this will be virtually zero.

There were two particularly large impacts this month on my income

• My tax return was much larger than expected (~$20,000)
• This was due to several factors including paying a higher tax rate at my old employer (an investment bank) as I was earning more and then dropping to a lower tax rate so I got the excess in tax I had paid back
• Paying off my HECS debt also reduced the tax rate that I had to pay
• I received my bonus for the year
• About 40% of this bonus was in deferred compensation and I have included this amount in my share investments.  Although I am not entitled to sell them until it vests it still is subject to fluctuations in the share market and I have no intention to move from this job in the near term

If I now look at my 3 accounts in turn:

• Share investments
• If you look above you will notice that I moved a LOT of money out of my share investment account.  This was for several reasons.
• A lot of it was sitting in my brokerage cash account and was related to amounts I had transferred into it for the FKP rights issue
• I sold out of my employee share plan during the month and this amount was transferred into my home loan offset account (I did a post on this during the month)
• However this was offset by the purchase of shares as part of my deferred compensation scheme (mentioned above) and I also continued to participate in my employee share plan
• If you look at this account on a cumulative basis it is still well above what my target is (see below)
• Home Loan Offset Account
• This account was in serious deficit.  Look at last month's expenditure tracker and you will see that I had under-invested in this account to the tune of ~$41,000 compared with my goal
• However with the transfers from my share accounts, my cash bonus as well as my tax refund this account is well above what my aim for it should be (see the cumulative effect below)
• Personal expenditure
• I spent a similar amount this month compared with last month which I am pretty happy with.  It is rather controlled although I have been putting off several expenditure items including my work clothing which is definitely reaching the end of its life 

December 2012 is likely to be a month which sees decreases in my home loan offset account (due to over-saving of my bonus which is likely to be spent) as well as general Christmas gift purchases and holiday spending.  I should get more clarity around some of my deferred compensation which may see a step up in the share account.

On a cumulative basis my personal expenditure (versus goals) is as follows:

Item	Jul 12 - Nov 12	Target (new)	Over/(Under)
Share Investments	+$25,464	+$15,500	+$9,964
Offset Acct.	+$31,380	+$6,500	+$24,880
Personal expenditure	+$16,453	+$10,000	+$6,453

You May Also Be Interested In

Expenditure Tracker - All Topics

Net Worth - All Topics

November 2012 Net Worth: $319,000 (+19%)

A few updates on the personal finance front - November 2012

November 2012 Net Worth: $319,000 (+19.0%)

	Value	% Change
Assets	$672,000	+8.3%
Liabilities	$354,000	0.1%
Net worth	$319,000	+19.0%

My net worth performance this month was best in absolute terms since I have started tracking the increases. In % increase terms it is my second best performance however it is from a much higher base which is why the % increase was not as good as the absolute performance.  As highlighted in a mid-month post there were several things which drove this result including

• Getting my annual bonus
• After leaving investment banking my bonus was much lower than in previous years as was to be expected.  However I still work in finance so the bonuses are still pretty good and this contributed a significant amount to the uplift in my net worth for the month
• Also, as I am earning less and I no longer have a HECS liability the weighted average tax rate I paid on this bonus decreased significantly
• A component of this bonus is deferred compensation.  Where I have been allocated these shares I have fully valued them however there is another component I have not valued as I have no way of checking how this value moves month to month
• Receiving my tax refund
• I have been talking about doing my taxes for several months in my net worth and expenditure tracker posts however I finally got down to it this month and received significantly more than I was expecting back on tax (approx $20,000)
• I realised some of the gains on my share portfolio
• This actually had a negative impact on my net worth 
• I track the share price movements through my excel file on a month to month basis however there were significant transaction costs associated with selling my employee share plan schemes.  For future periods I have found ways of avoiding these costs
• My personal expenditure was much higher than usual however this got lost in the noise
• I did not control my expenditure as well as I could have this month however because of the big bulky increases mentioned above, a lot of this effect was lost

For December 2012 I actually forecast a decrease in my net worth

I had pre-committed a lot of the amount I received for my bonus so the effects of this increase are going to be quite temporary (which is fairly disappointing because I was very excited to see my net worth go through $300,000 for the first time).  Things I had committed to included:

• An overseas holiday I am taking in a few weeks.  I'm guessing this will cost me about $6,000 including accommodation, spending (I really have to buy new suits while I'm overseas) and entertainment.  Note that I paid for the flights several months ago
• Christmas presents:  There really is no way of getting around this and I wouldn't want to.  I really enjoy giving Christmas gifts however it does affect the bottom line.  I am budgeting for about $1,000 on gifts.
• A sports car.  This I mentioned was one of my goals for the year.  Although I have not bought it yet I know what I want to get and how much I want to spend.  I am planning on spending ~$25,000 on the new car and selling my existing car for about $12,000 so will be out of pocket an extra $13,000

My goal for December 2012 is to keep my net worth above the $300,000 mark and I should be able to manage this given I will still be earning during this time.

You May Also Be Interested In
Net Worth Tracker - All Posts
Expenditure Tracker - All Posts
October 2012 Net Worth
A few updates on the personal finance front - November 2012

What are the most efficient ways of using your credit cards awards points?

Credit card awards schemes are one of those nice to have features of a credit card however it should not be central in your decision to choose one credit card over another.  The fact is that the points are worth so little that unless it is an 'added benefit' for the same cost you probably should not bother.

Most people realise this.  Indeed, when post people work out that it costs them ~$14,000 - $18,000 worth of expenditure to get $100 worth of value most people stop worrying about the points and then redeem them every time they realise that they have a decent balance.  However although the seem to have such little value, there are still ways you can optimise the value you get from them - also this post is to  remind everyone that uses these rewards systems that the points can and do depreciate in value so it is best to use them reasonably quickly.

Gift cards are almost always the best value option

I have done a post on this before which spells this out in more detail but I thought I would outline again why gift cards and vouchers are always the best option.

You should never use your points to buy products.  Go online and see how much the product actually costs and then work out how many points it is costing you and you will see that it can be double or triple the regular price using your points.

Using your points to get cash is also a terrible idea.  The difference in the number of points it takes to get $50 worth of cash versus a $50 gift card to buy groceries is astounding!  Getting cash or reduction in your credit card bills are almost as bad value as getting products.

A better way to get the items you want is to redeem your points for gift cards and use these to buy products

If there is a particular product you want then go and see what stores you can buy this item from and get a gift card from that store - it will work out much cheaper than using your points.  However if you really want to maximise your points and the value for money you get then you should do the following:

1. Work out what the cheapest gift card is
• Gift cards do not all cost the same amount of points.  Cards for supermarkets tend to cost less than cards from other retailers (this is not always the case so make sure you check with your rewards provider)
2. Buy the cheapest card from a store you regularly go to (it does not have to be the one you want the item from)
• If you shop at a particular supermarket often and this has the cheapest card then you should go for this
• Alternatively fuel cards are often very cheap as well and if you have a car you are always going to use it
3. Use the cash you save from this other store to buy the item you want
• In this way you are getting the item you want for effectively the best points value that you can get

You tend to get better value when you redeem more points at once...BUT don't wait for too long

With most rewards systems the amount of value you get from gift cards tends to increase the more points you accumulate.  Typically speaking if it costs you 8,000 points to get $50 worth of value it should cost you less than 16,000 points to get $100 worth of value.

Credit card companies and rewards programmes do this deliberately for several reasons.  Firstly they make more money if they don't have to pay out the cash as often and and secondly every so often they increase the number of points it takes to redeem a certain amount of value so they win when they charge you more points to get the same amount of money.

The best thing for you to do is to strike a compromise.  Know how much money you typically spend on a credit card and if it is going to take you an extra year to get from a $250 gift card to a $500 gift card and you are only saving 500 points then it is probably better for you to get a $250 gift card each year.  You may lose a little bit in terms of the points it costs you but you have the benefit of getting the first amount earlier and the risk that your points reduce in value is diminished.

You May Also Be Interested In:

Visa or MasterCard: Does it make a difference?

Credit cards rewards programs: Always take the gift card

How many credit cards should I have?

Travelling overseas: Credit cards versus Travel Cards

Investing in property: How much will you pay for non-interest expenses?

Recently a reader of this blog asked to me do a post on what the expenses associated with running an investment property were like.  This post will deal with that issue.

It will not, however deal with interest expenses.  Although this is the biggest expense associated with an investment property it is too hard to generalise about because it all depends on:

• How much you pay for the property
• What sort of gearing you use (i.e. a higher gearing will result in a higher interest cost)
• The interest rate you are charged on the loan
• How fast you pay the loan down

All of the above are not related to the property per se but rather with how you finance it and repay your loan.

While other charges will also typically be related to the individual property (e.g. the age of the property and the condition that it is in will determine what your maintenance expenses are) it is much easier to generalise about this and the costs associated with these.

When I discuss the costs below I will talk about them as a percentage of the rent I receive.  Note that this is only indicative and what I receive for my investment property and you should remember that every property will be slightly different.

Property management expenses (7% of gross rental)

This amount is a negotiated rate and includes GST.  I have posted before on how you can negotiate this rate with your agent down.  Note that this is the total amount that I paid to my agent - some people think they are paying a certain percentage but then end up getting stung on things like advertising, leasing and other miscellaneous fees.  

Paying between 5.5% and 8% is pretty standard for a property management fee.  If you are thinking about investing in property and are looking to add up all the expenses go down to your local real estate agent and find out what they charge.  It will always be a percentage of gross rent.

Maintenance expenses (~1%)

This will vary drastically from year to year. I have been pretty lucky, however and have had few issues.  This however was a function of the property I bought - I was willing to pay a little more for a property with few issues and then deal with all the relevant problems upfront before I leased it out.

In a previous post I recommend doing all the necessary maintenance up front and working out what can be left for later.  If you're thinking about how much maintenance expenses will cost you I would not assume something this low - I would choose a number more like 5% of gross income per annum. 

Rates and council fees (~9%)

As a landlord you will be paying the council rates as well as the water rates associated with the property (note that you do not pay for the water usage but rather the connection charges).  This will vary from property to property and from council to council.  My charges have been pretty steady at 9% so I feel confident using this number to forecast into the future.

If you are thinking about calculating this for yourself remember that your council fees are dependent on the value of your property.  If you are buying a high value, low yield property then this charge will be higher as a percentage of rent than if you bought a cheap, high yield property. 

Insurance (~4%)

Insurance costs me about 4% of my gross income.  The price you pay for this can vary greatly and it is always worth negotiating every time it comes up for renewal - I save hundreds of dollars by doing this every year.

I have done posts before on how to negotiate your home insurance and why it increases so much.  Modelling for 4% or 5% insurance costs is an appropriate number to use.

Total cash expenses (~21% of gross rent)

My total cash expenses for the last financial year came to 21% of my gross rent.  Note that this number is a 'run rate' type of percentage.  That is your expenses will typically be much higher in your first year of ownership because you are bringing the property up to scratch and have things like legal fees that increase your expenses

I should re-iterate that your interest cost will totally dominate your expense line.  However many people when thinking about property investment totally forget that there are a fair few expenses associated with running it and that you really only have 75% - 80% of your gross rent to help pay it.

Why didn't I include depreciation? 

You may have noticed that one of the big expense line items that I didn't include above was depreciation (which for me is ~20% of gross rent).  This is because it is a non cash expense - you do not pay anything when you claim it (however you receive the tax benefit of the deduction).  

The tax deduction component of depreciation could almost be considered in the income line because you do receive this money back from the government however I have been conservative and not included it.

You May Also Be Interested In

Investing in Real Estate - All Topics

Investing in Real Estate - Setting the Rent

Investing in Real Estate: Property Managers vs Self Management

Why has my home insurance premium increased so much and how can I get it down?

GetUp's poker machine proposal for Woolworths fails

Over the last few months I have been following the Woolworths versus GetUp! saga whereby GetUp! was trying to get Woolworth's to introduce legislation through an EGM whereby Woolworths would be seriously curtailed in the way that it was allowed to operate it's poker machines.  After thinking through the implications and issues quite carefully I was against the resolution for various reasons which I have outlined in previous posts.

Last Thursday Woolworth's put the issue to a vote at an Extraordinary General Meeting (which also doubled up with their Annual General Meeting) and the proposal failed.  This is not surprising however if you look at the statistics and breakdowns in the vote there are some interesting features.

The proposal was resoundingly defeated by submitted proxies well before the actual vote

If you look at slide 14 of the Woolworths EGM presentation you can see what the status of the vote was before the open votes on the day were cast.

• 2.47% of the shares voted for the proposal
• 95.41% of the shares voted against the proposal
• 3.14% were open to be voted at the general meeting

If you look at the final results (see the final page of this document) you can see that most of the shares voted at the meeting were actually against the proposal.  The final count of shareholders voting for and against the GetUp! EGM resolution was:

• For: 2.53%
• Against: 97.47%

The resounding defeat means that either retail shareholders didn't turn out OR they were against the proposal

There is often the perception by participants in the market place that institutions are somehow more 'ruthless' than individual shareholders.  GetUp! made a big play about having motivated the retail shareholder base at Woolworths to vote for the proposal.

Retail shareholders make up approximately 30% of WOW's shareholder base (I will tell you how to calculate this in a later post).  As only ~2.5% of shareholders voted for the EGM proposal this means that retail shareholders either voted against the proposal or they simply did not turn up.  I have posted before about the apathy of retail shareholders when it comes to voting.  

Unfortunately it is hard to see which one of these that it is however it is hard to think of a motion that they are more likely to understand or be encouraged to vote for.

It is unclear whether any institutions voted for the proposal

GetUp! tried to get their members to send letters to their superannuation funds to encourage them to vote for the proposal.  Indeed they even had a standard form letter on their website that you could send to them.  However based on the vote count it does not look like there are any institutions that voted for the proposal (though I could be wrong).

I find this actually very comforting - I like to think that my superannuation fund would vote in a way which protected all of their security holders and not just the ones who are particularly vocal.

You May Also Be Interested In

Corporate Governance - All Topics

Shareholde​r activism: Defining shareholde​rs' interests and the way in which companies respond to shareholde​r complaints
Should you vote for the GetUp! proposal at the Woolworths AGM
Why don't retail shareholders vote at AGMs?