AS the connections of today's Melbourne Cup winner show off their gold trophy and bank the $3.6 million prizemoney, the lure for the rest of us to join them can be enticing.

The glamour, the thrills, the cash. Watching them, it's hard not to wonder whether you too could join the winner's circle.

But how much of it is luck and how much of it is a large amount of well-directed money invested in the right bloodlines?

The answer is a bit of both. And maybe "invested" isn't really the right word. An investment is putting money into something with the expectation of gain and some security that you will have a great chance of recouping the initial outlay.

On this basis, buying into a racehorse is probably more akin to punting than investing.

We often focus on the headline-grabbing winners and not the thousands of other horses that continually lose.

However, even with punting there are ways to tilt the odds in your favour. And, as with all money matters, that begins with being well informed.

While some horses are plucked from relative obscurity and trained to greatness, most winners come from good pedigree, with a champion somewhere along their bloodline.

Even the semen of champion stallions attracts a hefty price and the foals of great mares a healthy sum too. For casual investors, grabbing a bargain will probably lead to obscurity and a financial black hole.

But there are exceptions. Take heart from the story of Takeover Target (pictured), the great Aussie thoroughbred that won more than $6 million in prize money after being bought for just $1250 by former taxi driver Joe Janiak.

About $1000 is about what you're looking at as the bottom end of thoroughbred prices. The top end can be in the tens of millions of dollars. Like every asset, there is no guarantee that the purchase price will go up or even be maintained.

Just last week, mining magnate Nathan Tinkler sold some of his racehorses at the Magic Millions auction. Some that cost him $200,000-$300,000, sold for $7000-$20,000. But the purchase price is just the first of the costs associated with being part of the sport of kings.

Owning a horse for racing can cost about $3000 a month in training and maintenance fees, and about $600 a month when it's "spelling" on a farm.

Getting a proven trainer will cost more but will also improve the chances of success.

There's a reason the likes of Gai Waterhouse and Bart Cummings consistently feature in the winner's circle. Trainers play a big hand in a horse's fortunes. They charge a fee and can keep part of the winnings.

Spreading the risk by being part of a syndicate is a popular option. You can form your own syndicate with friends but there are also professional outfits that offer syndicate shares to the public. Either way, you'll need to be registered and licensed. The experts say syndication is definitely the best way to get involved, as it spreads the costs and risks of ownership among a group of owners. But as with any other business deal, make sure any syndication is drawn up correctly.

A less common way to get involved is to lease a racehorse. This way there is no up-front purchase cost. You cover the costs while the owner is entitled to a fee and a share of the prize money. At the end of the lease, the horse is returned to the owner.

It's still normal procedure that prize money be split with the jockey and trainer too. As a guide, the jockey might expect 5 per cent, the trainer 10 per cent, and the owners (and bills) share the balance.

And then there's the big win that every racehorse owner has, the main motivation for getting in on the action, the social return on your investment.

There are certainly some big players in the racing business, which some people see as a great networking opportunity.

Challenging the terms of a will, while appearing tacky and aggressive, may be the only means of achieving fairness for all dependents.

A family member passing away is a sad and difficult time for any family and sorting out the financial side of affairs is often racked with emotion too.

The usual procedure for distributing a deceased estate is to follow the last legal statement a person makes before they die, the will. It outlines how their assets are to be distributed after they’re gone and, usually, is the final say on the matter.

However there are circumstances that may warrant challenging the deceased’s final wishes so it’s important to be aware of the grounds and process to do so.

Now we’re not spruiking gold digging here, just outlining the circumstances and steps to make a challenge if you are left hard done by in a loved one’s will or suspect foul play was at hand.

You see, while a will is the final word from the deceased and a binding legal document, Australian law recognises that people have a responsibility to others who have been involved in their wealth even after they’re gone.

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The international regulations are aimed at bring more stability to the banking system by encouraging banks to build longer term, rather than shorter term, deposits.

We’re already seeing term deposit rates matching at-call rates and that’s likely to continue.

It is an important change for those investors who need income from the investments to fund their lifestyle.

“We’re expecting to see financial institutions bring back notice accounts, which were popular in the 1980s and 1990s,” predicts Michelle Hutchison from research group Ratecity.com.au.

“Notice accounts are similar to other savings accounts as they have variable interest rates but you must give a certain notice period if you want to withdraw money. For instance, if you have a 31-day notice account you must give 31 days’ notice before you can access your savings.

“We also expect to see greater competition for term deposits over 31 days and financial institutions are likely to lift interest rates to attract longer-term capital. This should see the value of term deposits overtake at-call savings accounts.”

When they’re talking about $20, $50 or even $100 we probably don’t think twice. But what if they’re asking for thousands of dollars to help buy a new car, put a deposit on a house or start a new business?

Gulp. That is serious money. And what about the consequences on your relationship of saying no? It’s a very tricky situation which needs some tough questions answered before even considering the request.

. Can I afford it?

It always amuses us how easily people make assumptions on the financial status of others. You know, “they can afford it?”

The reality is no-one ever really knows. Often outward signs of financial wealth can be based on mountains of debt.

So before even contemplating the idea of lending money to a friend or relative, work out whether you can afford it in the first place. And, more importantly, whether you can afford to lose it if things go wrong. If not, then carefully weigh up whether loyalty is worth putting your own family’s financial stability in jeopardy.

Our advice is always to protect yourself and immediate family first.

. What’s the fallout if I say no?

Financial tensions can so easily destroy families and friendships. Think carefully about the consequences if the loan goes bad or you refuse to lend the money in the first place.

It is important to sit down with the borrower and sensibly go through all the reasons why the money isn’t available or, if it is, your expectations for it to be repaid and the adjustments you expect them to make in their lifestyle to ensure it happens.

Maybe think of getting another family member or friend involved to witness the transaction so there is an independent arbiter in case of a future dispute.

. Is there a chance the money won’t be repaid?

Assess the character of the applicant and whether they will stick to their promises.

Are they reliable in other areas of their life? Are they hard workers and do they have a pride in their achievements. These are all good signs.

But if they are unreliable, shopaholics who are always looking for the easy way out then they are best avoided.

. Why couldn’t they borrow from a bank?

Banks are an easy scapegoat to blame if someone has their loan application rejected. But often the bank is the only one thinking with their head rather than their heart.

Banks carefully assess every loan application by looking at the purpose and the borrower’s chances of repaying it.

With all their expertise and knowledge, if the bank doesn’t think your friend or relative is a good risk for a loan then why should you?

. Are there any alternatives?

If your friend hasn’t gone to the traditional lending institutions (like banks, credit unions and finance companies) then suggest they take this route first and come back if they get rejected.

Maybe offer to help them with the application to improve their chances or provide a reference to their good character.

Hopefully they get the money which lets you off the hook. If they don’t then use that rejection to suggest they reassess the need for the money and whether the whole project is too risky.

. Is there an alternative “non-financial” option?

Offer to sit down with the relative and help develop a family budget to see where they can cut costs or earn extra income to raise the money themselves. It’s always easier to hit someone else up for the money rather than make some sacrifices and fund it yourself.

If they accept the offer then that’s a good sign they are committed to making it work and assures you they won’t be living the high life on your money. If they don’t want help then start to worry.

Maybe offer to make an appointment with your financial planner or accountant to get independent advice.

. What is the best repayment plan?

If you decide to be the friend or relative’s banker, and fork out the money, then act like a bank.

Sit down and work out a repayment plan. Make sure everything is put in writing and, depending on the amount involved, even think about asking for security over a house, investments or other assets… just like a bank would.

If the borrower is surprised by the formalities, simply explain it shouldn’t worry them if they’re confident of living up to their promises.

HOW TO BORROW FROM A FRIEND

. be professional

. outline a repayment plan

. if it’s to start a business, give them a share

. suggest the deal be put in writing

. explain the sacrifices you’ll be making

At the end of August we wrote that September and October would be critical for the world. That, after the northern hemisphere summer holidays, something decisive had to be done to tackle the debt problems in Europe, the sluggish US economy and a slowing China.

These 4 actions have certainly been decisive;

. China unveiled a $150b infrastructure spending program.

. the German Supreme Court approved Germany’s contribution to the Eurozone rescue fund.

. the European Central Bank started an open ended program to buy Government bonds of troubled Euro members to keep their borrowing rates down.

. America’s Federal Reserve Bank started an open ended stimulus program to buy mortgage backed securities to kick start the housing market and consumer confidence. Basically printing money.

They are bold decisive moves which hopefully do the trick. Fingers crossed.

That’s great if your parents were money savvy. But if they weren’t then your inherited money habits could be wrong, dangerous, costly and probably all three.

So lets put to bed some of those bad intergenerational habits which need addressing.

. All loans are bad

There is good and bad debt.

Bad debt is when credit is used to buy a consumable item which disappears or rapidly depreciates. Borrowing for luxuries like fancy clothes, flash dinners out, a new upmarket boat or car is bad.

Good debt is borrowing to invest in an asset which appreciates in value to build wealth and a long term investment portfolio.

. Spending a windfall rather than saving it

Every little bit counts. That tax refund, bonus from the boss or birthday money from Grandma can make a significant difference to reaching a financial goal.

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We’re getting lots of questions on whether now is the time to fix. Frankly no-one really knows the answer because every individual borrower is different and forecasting interest rate movements is fraught with danger.

The general consensus is that the Reserve Bank will cut official interest rates by one per cent over the next year depending on how the European crisis pans out.

When it comes to revisiting your home loan it should be done according to how you are currently handling it. Regularly stress test your mortgage to determine whether you need to make a change or can continue with the current deal.

Remember you can be in a mortgage for a long time and through a lot of rate cycles, both up and down.

A few things to consider are that when fixing loan, or a part of it… you are locked in at that rate no matter where the banks’ variable rates go, and usually you don’t have the option to pay it off early.  Early repayment attracts hefty exit fees.

But for those contemplating retirement, it’s a big decision. It’s a decision to be seriously thought through carefully and to ask yourself a number of serious questions.

. Is this a permanent decision to retire or just an extended break?

The way Australians retire has changed dramatically over recent years. Retirees are now encouraged to take on part time work or even periodically come back to fulltime employment.

Retirement is no longer being put out into permanent employment pasture… unless you want that of course.

So it’s best to work out from the start what sort of retirement you want because the prospect of that extra income and stimulation can do wonders for your retirement lifestyle.

. Do I really just want a change of career?

Analyse the reasons why you want to retire. For many it can come from frustration with your current job.

“I hate this job and I’m at an age where a lot of my mates are retiring so bugger it, I’m going to throw in the towel and live the good life”… that sort of thing.

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From a “children should be seen but not heard” position of previous generations, modern families are lot more democratic and transparent in the family decision making.

But it’s a fine line between including children in so-called “adult decisions” to help with their personal growth and protecting them to enjoy a stress free childhood.

Household finances are a classic example. In the past any discussion about money was seen as grubby, one of those taboo topics never to be discussed. It produced young adults ill prepared in simple matters of money management which often led to some very expensive mistakes.

Our fear is that the pendulum may have now swung to the other extreme where children are too exposed to the strains of the family finances with the risk that they will grow up to fear money and making mistakes.

Naturally how much you reveal to children depends on their age.

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Three of these companies are attracting attention;

Seek (SEK)

Australia’s largest media company will benefit from any economic upswing as the nation’s leading job recruiting platform. It has a low debt levels, is well managed and its ability to grow profits over the past 12 months is testament to its robust business model.

TMS Capital’s Ben Clarke points out that another big plus is the company’s international acquisitions (Mexico, Brazil and Hong Kong) expose it to growth markets outside the resources sector too.

A word of warning though. Seek reported very strong results recently which saw a spike in its share price occur already.

Dulux (DLX)

Is closely linked to the fortunes of the economy as the building sector swings with booms and busts. If people are building or renovating, they’re painting too.

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