Speaker 1: Welcome to How Do They Afford That? The podcast that
Speaker 1: peeks into the financial lives of every day Australians. I'm
Speaker 1: Michael Thompson. I'm an author and the co host of
Speaker 1: the business news podcast Fear and Greed, and as always
Speaker 1: I'm with Canna Campbell, financial planner, founder of Sugar Mama TV,
Speaker 1: and my co author on our upcoming book, Twelve Months
Speaker 1: to Financial Freedom. Canna, Hello, Hello, So today's episode comes
Speaker 1: from a listener. I love these kinds of episodes because
Speaker 1: they can go in any direction. Right. Chris on Instagram
Speaker 1: wrote in and said this, and Chris wrote to me,
Speaker 1: not to you. I want to make that abundantly clear.
Speaker 1: Chris said, Hi, Michael, I'll add on to the asking
Speaker 1: you questions instead of Canner because I think many many
Speaker 1: months ago I put out an appeal. It was basically
Speaker 1: just one of pure pity, asking people to just feel
Speaker 1: sorry for me and get in touch with me because
Speaker 1: I was feeling neglected. Anyway, Chris has done that, and
Speaker 1: Chris says, I've been inspired by How Do They Afford
Speaker 1: That to get back on top of growing my share
Speaker 1: portfolio and had set a goal to reach by twenty
Speaker 1: twenty eight due to market upswings, I'm now close to
Speaker 1: reaching that goal, which is amazing. All right, that's twenty
Speaker 1: twenty eight that Chris was aiming for and now they've
Speaker 1: achieved it nearly in twenty twenty six. But with the
Speaker 1: stock market volatilities, how do I keep goals dynamic and
Speaker 1: deal with setbacks and increases that are not in my control?
Speaker 1: Or do I set habit goals rather than number goals?
Speaker 1: What do I do? So if we take a look
Speaker 1: at that, Chris set a goal to grow their share
Speaker 1: portfolio certain amount by twenty twenty eight, that a good
Speaker 1: run at the time they're how close to hitting that
Speaker 1: goal years early? It raises some good questions, doesn't it
Speaker 1: about kind of what do you do when your financial
Speaker 1: goals change? How do you stay motivated when the share
Speaker 1: market has other ideas? Shall we start with Chris's dilemma?
Speaker 1: If it's a dilemma at all, They've kind of done
Speaker 1: the right thing. They've set a goal, now they're almost there.
Speaker 2: Well, first of all, congratulations, Yes, I mean this is impressive,
Speaker 2: and you know, not many people can say that. And
Speaker 2: let's step back and look at this. This is a
Speaker 2: good problem to have. Oh yeah, you know, but before
Speaker 2: you do anything, you know, don't go move the goal post, like,
Speaker 2: take a deep breath. Oh really, yeah, and come back
Speaker 2: to what was the reason you got started in building
Speaker 2: this share portfolio in the first place.
Speaker 1: Oh, is this reconnecting with your why a little bit?
Speaker 2: Well yeah, yeah, so you know what was this money
Speaker 2: actually for? So, you know, some people get into the
Speaker 2: share mark and build a share portfolio with the idea
Speaker 2: of using it as a deposit to buy their home,
Speaker 2: whereas others like to invest in shares with the idea
Speaker 2: of living off the passive income stream. You know, other
Speaker 2: people like to do it for a particular niche goal, perhaps,
Speaker 2: you know, to help build up an investment portfolio that
Speaker 2: helps pay for children's education and create options in life.
Speaker 2: So the number is never really the destination. It's actually
Speaker 2: about building the vehicle. There's going to help you achieve
Speaker 2: something that is much bigger here. So obviously, looking at shares,
Speaker 2: it's a long term investment product, you know, sort of
Speaker 2: minimum seven years, if not indefinitely. So come back and go, well,
Speaker 2: hang on, what was my reason for getting started, And
Speaker 2: then you can start to think about whether you need
Speaker 2: to move the goalposts at all or whether you need
Speaker 2: to change your strategy, change your mindset, or even change
Speaker 2: the exit plan.
Speaker 1: Okay, does that then mean number goals? Forget about it.
Speaker 1: Unless that number is a time duration, just don't target.
Speaker 1: I want to grow it to a certain amount by x.
Speaker 1: It is I want to achieve what is the bigger
Speaker 1: picture goal, whether it is I want to have passive
Speaker 1: income or I want to do something.
Speaker 2: So when it comes to your goals, I think you
Speaker 2: should add detail. It shouldn't be just I want to
Speaker 2: build a passive income of say eighty thousand dollars. Yeah,
Speaker 2: it should be I want to build a passive income
Speaker 2: of eighty thousand dollars so that it can pay for,
Speaker 2: you know, me, to be able to retire early part
Speaker 2: time at age fifty five instead of sixty five. I
Speaker 2: give it a lot more depth and meeting and substance. Okay,
Speaker 2: So it's got more grit and you've got greater sort
Speaker 2: of tenacity to want to embrace it and happen as
Speaker 2: a part of your life. Number goals are still extremely
Speaker 2: important because how do you know if you've achieved a
Speaker 2: goal without seeing that number? You know it gives them,
Speaker 2: gives you something to like a tangible. I guess something
Speaker 2: you can sink your teeth in when you have that number.
Speaker 2: And one thing I will say is people who don't
Speaker 2: have goals, you know, that's where you tend to drift
Speaker 2: a lot and waste a lot of time. And that's
Speaker 2: when people come to me and say, I'm treading water.
Speaker 2: I never get ahead, you know, like another year's past
Speaker 2: and I still haven't done anything, Like what's going on?
Speaker 2: I'll say, well, what's your goals? And they either have
Speaker 2: a fluffy, flaky goal or they don't have a goal
Speaker 2: at all. And that's sort of the common denominator I see.
Speaker 2: So having a really clear investment target helps create a
Speaker 2: sense of like direction, motivation, and accountability. You know, you've
Speaker 2: got a goal to work on. You find yourself catching
Speaker 2: yourself going to waste money. You go, well, hang on,
Speaker 2: remember I've got this goal again.
Speaker 1: Okay. Does it make more sense though than okay you
Speaker 1: need to know where the finish line is or at
Speaker 1: least what you're working towards. But does it make more
Speaker 1: sense in the short term at least to set habit
Speaker 1: goals in that I'm going to invest I'm going to
Speaker 1: put aside one hundred dollars a month for investing or
Speaker 1: something like that.
Speaker 2: So you need both, Okay, it's not one or the other.
Speaker 2: Have the goal, make sure the goal excites you, lights
Speaker 2: up something you empowers you. And then when you've got
Speaker 2: that goal, you've got the exact number, you've got the timeframe,
Speaker 2: and you really understand your why. You know, I talk
Speaker 2: about this in my Money Mindset Manifestation program. If I
Speaker 2: was to jump into an elevator with you and we've
Speaker 2: got twenty seconds, you've got to give me your goals,
Speaker 2: and you've got to be able to articulate them with
Speaker 2: all of those three things and talk about them in
Speaker 2: a positive present way. So then you've got your goal,
Speaker 2: you've got your why, you've got the deadline, you've got
Speaker 2: the amount, you've got the landing destination which you've spoken
Speaker 2: about for your lottery money for example, And then you
Speaker 2: can then look at the habits. All right, what are
Speaker 2: the things I can do today that will help get
Speaker 2: me to where I am? You know, even if you
Speaker 2: look at what's one simple thing every single day, do
Speaker 2: that for three hundred and sixty five days, see where
Speaker 2: that takes you. So this is where you can look
Speaker 2: at the habits, the mindset, the reactions, the systems that
Speaker 2: you have in place, the routines, the rituals that are
Speaker 2: all in positive alignment to those goals. So it's the goal,
Speaker 2: but also the habit system and the stacked habit system
Speaker 2: that helps support it.
Speaker 1: Okay, what about the role that market volatility I suppose
Speaker 1: plays in all of this and kind of going back
Speaker 1: to what Chris actually was asking about, where it's worked
Speaker 1: in their favor. Absolutely that they've had a really good
Speaker 1: run and now they're close to achieving these goals. Sometimes
Speaker 1: you do everything right and still go backwards. Though, how
Speaker 1: hard or how important is it to have those goals
Speaker 1: in those circumstances.
Speaker 2: So volatility isn't a flaw when it comes to investing.
Speaker 2: It's just, you know, what we pay for to be
Speaker 2: able to access those opportunities for long term growth. This
Speaker 2: is very very normal. In fact, Shane Oliver, who's is
Speaker 2: AMPS like leading Economists, is probably one of the most
Speaker 2: respected economists in our country. He says, corrections around fifteen sorry,
Speaker 2: five to fifteen percent, you know, are actually very normal
Speaker 2: and very natural, and sometimes they're actually a good thing
Speaker 2: because they present opportunities to be able to buy the
Speaker 2: same quality assets, but obviously at a discount. So you know,
Speaker 2: it's part of the parcel of investing. You've got to
Speaker 2: understand what you're getting yourself into when it comes to
Speaker 2: your financial strategy in trying to achieve that particular goal.
Speaker 1: How then, do you separate your own performance right from
Speaker 1: the market's performance. Is it a case of as long
Speaker 1: as you stick to your guns and stick to what
Speaker 1: you have set out to do. And this goes back
Speaker 1: to the habit based goals of saying, hey, I'm going
Speaker 1: to put aside one hundred dollars a month for investing,
Speaker 1: and as long as you kind of stick with that
Speaker 1: is the whole point that, as you said, it's not
Speaker 1: a short term thing. You need to just stick to
Speaker 1: your plan and you can help and you can ride
Speaker 1: out the volatility.
Speaker 2: Yes, so being patient and being consistent is extremely important.
Speaker 2: Obviously not getting distracted by the headlines and the use
Speaker 2: and you know, people's opinions and the clickbait that sort
Speaker 2: of comes our way and obviously puts temptation to obviously
Speaker 2: run for the hills and sell everything, but you do
Speaker 2: need to stick to it. But also you need to
Speaker 2: make sure that you're educating yourself along the way. You know,
Speaker 2: it's very easy to make your first investment and then
Speaker 2: the share market crashes the next day. It happens all
Speaker 2: the time. But you've got to, as you said, as
Speaker 2: I said, stick to it, review it, come back to
Speaker 2: your goals, and educate yourself. And when you educate yourself,
Speaker 2: you understand the importance of diversification. You understand the importance
Speaker 2: of reinvesting your dividends. Particularly you know when the market
Speaker 2: is down, because the money is going back in and
Speaker 2: you're accumulating more units, more shares at a discounted price,
Speaker 2: and to understand how that impacts the goal. Does that
Speaker 2: mean you're potentially getting more passive income streams? Learning how
Speaker 2: to control your emotions and be able to move through
Speaker 2: the fear and look at the actual facts of the situation.
Speaker 2: That's how I would measure success, not by a fleeting
Speaker 2: number within a very short period of time.
Speaker 1: All right, we're going to take a quick break when we.
Speaker 2: Actually before we sorry, before we take a break, I
Speaker 2: also want to say, it's also the strategy here that's
Speaker 2: been missed, the strategy and the habits that have been built.
Speaker 2: I mean, yes, Chris has built this amazing investment follow
Speaker 2: and he's overshot his goal, which is fabulous. But look
Speaker 2: at the intangible value of what he's created. There's strategy
Speaker 2: and what it's going to give him further down the track.
Speaker 2: So that's also that comes into the success he's gotten started,
Speaker 2: that successful, he's on his way. That is successful, he's
Speaker 2: taken he's taken a proactive approach and managing financial stress
Speaker 2: and building financial independence. That success. Stop pinning it all
Speaker 2: against the value of the share portfolio. It's not enough
Speaker 2: to indicate and determine your level of success.
Speaker 1: Okay, Chris can take a lot out of that then,
Speaker 1: And also we're assuming that Chris is.
Speaker 2: A he oh sorry, that my assumption.
Speaker 1: This is one of those This is one of those
Speaker 1: great mysteries. It could be Christine could be Christina could
Speaker 1: be Christopher. Will never know, well, actually we will know.
Speaker 2: Well hopefully listen to this and the essay they because
Speaker 2: we don't know what gendim it used to identify with.
Speaker 2: But hope fully Chris, whoever you are, wherever you are,
Speaker 2: you won't be a fan of that. We assumed, I
Speaker 2: assumed male.
Speaker 1: And all right, now, very awkwardly, we're going to go
Speaker 1: to a break just while we settle ourselves and come
Speaker 1: back on the other side. I want to talk to
Speaker 1: you then about because we've touched on volatility and you
Speaker 1: mentioned some of the things that some of the benefits
Speaker 1: really of when the market does dip a little bit.
Speaker 1: I want to look at four investors why a pullback
Speaker 1: can actually be useful and the things that experienced investors
Speaker 1: would be looking for the opportunities there. So we'll do
Speaker 1: that in a moment. Cana. We are working our way
Speaker 1: through a listener question today, and this was the question
Speaker 1: from Chris, basically about the fact that they have got
Speaker 1: this share portfolio underway, had a goal that they were
Speaker 1: hoping to hit by twenty twenty eight, and really getting
Speaker 1: very very close to hitting it nearly two years early,
Speaker 1: which is fantastic. But the market volatility is the big
Speaker 1: variable here. You don't know which way it's going to go.
Speaker 1: Sometimes it goes in your favor, sometimes it goes against you.
Speaker 1: Can those pullbacks actually be useful? Really? And what I
Speaker 1: want to know from you here is what are the
Speaker 1: opportunities that experienced investors would be looking for when the
Speaker 1: market does go backwards, and perhaps that newer investors might miss.
Speaker 2: So I like to think of it when the market
Speaker 2: has a correction, that you think of it as a
Speaker 2: stock take clearance at your favorite store. So let's use
Speaker 2: for example, Meyer, you know you the same things that
Speaker 2: you would you need and you want to buy are
Speaker 2: now twenty percent off, maybe even thirty percent off. Now
Speaker 2: does that mean that you don't go shopping anymore? Of
Speaker 2: course you do, because there you can buy the same
Speaker 2: thing at a much greater discount, and that supports all
Speaker 2: of your needs. For example, in your bed, it's exactly
Speaker 2: the same with the stock market pullback, you're actually able
Speaker 2: to buy the same quality. Looking at me, very old, Okay, okay,
Speaker 2: I'm using example of bedlin and I recently bought some
Speaker 2: bedlinen on sales.
Speaker 1: I think that came to mind in that case, it's
Speaker 1: very important to emphasize that your needs in the bedroom
Speaker 1: are related to the linen on the bed. It's just
Speaker 1: this moment.
Speaker 2: Related to getting a good night's sleep, because it's sleep
Speaker 2: as what we're talking about.
Speaker 1: Watching your face just going at some point it is
Speaker 1: going to sink in what you just said. And it
Speaker 1: took a good twelve seconds.
Speaker 2: You can tell I haven't been sleeping very something. My
Speaker 2: mind did not go to the gutter. Clearly yours did.
Speaker 2: I was thinking about a great night sleep and a
Speaker 2: really nice comfortable bed and a really peaceful room and
Speaker 2: no children trying to come in throughout the night on
Speaker 2: dogs barking. So but you know, what I'm trying to
Speaker 2: say is you were able to buy the same quality
Speaker 2: assets at a great discount. And if you're a long
Speaker 2: term investor, you can see the opportunity and you actually
Speaker 2: get excited about this. And you know, some investors, you know,
Speaker 2: a classic example of who we interviewed a year and
Speaker 2: a half ago was Roger Montgomery. He will sit on
Speaker 2: the sidelines with so much self control, building up his cash,
Speaker 2: and then when this happens, he goes all in, you know.
Speaker 2: And Warren Buffett's another classic example of this. The very
Speaker 2: they use this as a great opportunity. They're very strategic,
Speaker 2: they want this to happen. They've been waiting for this
Speaker 2: to happen. That's where experienced investors thrive. And this is
Speaker 2: where you depending on obviously on the actual underlying investment
Speaker 2: and staying within the boundaries of your risk profile. This
Speaker 2: is actually, you know, make Hay Whilest the sun shines opportunities.
Speaker 1: And it's always as well a good time to see
Speaker 1: a financial advisor as well to actually go and get
Speaker 1: some advice that is tailored to your circumstances as well,
Speaker 1: because yes, there are opportunities out there in those circumstances,
Speaker 1: and having that advice already in your pocket, ready to go,
Speaker 1: means that you're prepared.
Speaker 2: And you know what, for time, poor people, all people
Speaker 2: who can't afford to see a financial planner or you know,
Speaker 2: just overwhelmed with so many other responsibilities in their lives,
Speaker 2: go and subscribe to Shane Oliver's newsletter. He sends one
Speaker 2: out once a month and it's it's easy to read,
Speaker 2: and he's absolutely brilliant in the way that he explains everything,
Speaker 2: and he refers back to history. He uses lots of
Speaker 2: fixative really, so he uses lots of facts and he
Speaker 2: helps you understand really what's going on and when to
Speaker 2: be worried and when to actually you get excited and
Speaker 2: make the most of it. And he's just he's absolutely brilliant.
Speaker 2: But that's free and that will help calm the nerves
Speaker 2: and practical advice.
Speaker 1: Shane is a regular guest on Fear and greed is
Speaker 1: he Yes, he's always he comes on quite often, and
Speaker 1: his advice and just the way that he is able
Speaker 1: to cut through a lot of noise always very well received.
Speaker 1: So pullbacks, we've established that they are useful and that
Speaker 1: there are things, there are opportunities there for investors. If somebody,
Speaker 1: not necessarily Chris, because Chris our listener who has gotten
Speaker 1: in touches clearly already setting goals. But if somebody was
Speaker 1: setting out today to set some investment goals, what is
Speaker 1: the right mix here of outcome based and habit based goals?
Speaker 1: You said before that you need to know what the
Speaker 1: finish line is, what the target actually is. How do
Speaker 1: you find that right mix?
Speaker 2: So I think you've got to work backwards from where
Speaker 2: you want to land. You know, for example, if you
Speaker 2: want to build one hundred thousand dollars share portfolio over
Speaker 2: X amount of years, you've got to work out, well,
Speaker 2: all right, what habits do I need to create to
Speaker 2: get me there? Is it investing one hundred dollars a week?
Speaker 2: Is it investing one hundred and fifty dollars a week?
Speaker 2: And be open and flexible to tweaking and changing that
Speaker 2: strategy along the way. So it is very much a
Speaker 2: combination of both.
Speaker 1: Okay, bringing it right back to where we started with
Speaker 1: good old Chris and this growing shareport folio. You set
Speaker 1: out by saying stop, take a minute, take a breath,
Speaker 1: don't go shifting the goalposts now, So what should Chris do?
Speaker 2: Then he should come back to his why now if
Speaker 2: he had his WIY for this portfolio was to actually
Speaker 2: use as a deposit, ye and to buy a home.
Speaker 2: Because his share portfolio is a very volatile long term investment,
Speaker 2: he may actually be better off obviously after getting advice
Speaker 2: from an accountant, particularly with the change in CGT rules,
Speaker 2: in potentially selling it down now, because that then can
Speaker 2: be put into a savings account and he can start
Speaker 2: looking for a property buy and he doesn't need to
Speaker 2: worry about that short term market volatility which is extremely
Speaker 2: high risk. Here, if he comes back and goes, all right,
Speaker 2: my goal is actually to build financial freedom. That's what
Speaker 2: I want. Well, then stick to it, keep going with
Speaker 2: that strategy, and review your goals and perhaps you can
Speaker 2: look at a different type of goal. It's not necessarily
Speaker 2: reflective of the value of the portfolio, because really that's
Speaker 2: a one dimensional number to be following you know, we
Speaker 2: talk about this in our book Twelve Months to Financial Freedom.
Speaker 2: We talk about the mindful Money number goal, which is
Speaker 2: all about building up the passive income stream. So I
Speaker 2: would recommend to Chris that they look at they look
Speaker 2: at a passive income based goal. Now, so I obviously
Speaker 2: we don't know the size of this portfolio, but just say,
Speaker 2: for simplistic terms, it say it's one hundred thousand dollars
Speaker 2: investment portfolio. Say it's generating a passive income stream of
Speaker 2: say five percent a year, so five thousand dollars a year.
Speaker 2: Instead of building your goal around building one hundred and
Speaker 2: fifty thousand dollars investment portfolio, perhaps you look at going, well, okay,
Speaker 2: I want to build my passive income stream from five
Speaker 2: thousand dollars a year to say seven and a half
Speaker 2: thousand dollars a year. That way, you're actually tracking and
Speaker 2: monitoring something that's actually a lot more tangible than some floating, fluctuating,
Speaker 2: highly volatile portfolio value. And it also helps calm the
Speaker 2: nerve so that when corrections happen, which is just a
Speaker 2: natural part of investing, you can have that calm, rational
Speaker 2: objective and idea of what to do next, because you're like, well,
Speaker 2: hang on, yes, my portfolios drop twenty percent, but has
Speaker 2: my income dried up? Has it that drop twenty percent?
Speaker 2: Most likely obviously depending on the investments and how well
Speaker 2: it's diversified. No, So what does this aptually represent and
Speaker 2: how does that come back to my goals? We'll actually
Speaker 2: I could buy more and invest more and grow that
Speaker 2: passive income even further. So this is why I'm such
Speaker 2: a huge fan of actually having a passive income driven
Speaker 2: goal based around a mindful money number then, rather than
Speaker 2: trying to build a net worth or a gross worth,
Speaker 2: because at the end of the day, if it's capital
Speaker 2: growth driven, it's so volatile, particularly with shares, and how
Speaker 2: is that going to support your financial freedom goals? If
Speaker 2: that's what it's all about?
Speaker 1: All right, So that is a great piece of advice
Speaker 1: then for Chris, but very quickly, and I hate to
Speaker 1: put you under a time limit, but in thirty seconds
Speaker 1: or less. Advice for other listeners who might have started
Speaker 1: investing bit of market volatility value is coming back? Do
Speaker 1: they panic?
Speaker 2: I would actually say, stay educated and informed, but stop
Speaker 2: checking your portfolio. This obsession with constantly checking the portfolio
Speaker 2: evaluation rather than the income can actually lead you down
Speaker 2: the garden path and actually come with a lot of
Speaker 2: regret and a lot of waste of time and energy.
Speaker 2: Go back to your goals, look at the opportunity, stay educated,
Speaker 2: and if you need to, just walk away from it.
Speaker 2: And history shows that markets need approximately eighteen months to recover.
Speaker 2: So if you're not comfortable with putting more money into
Speaker 2: the portfolio, that's perfectly fine, but just let it sit there.
Speaker 2: Make sure it's probably diversified. Check in, but just leave
Speaker 2: it be and be very careful as to what you're
Speaker 2: reading online. Who is reputable, who is credible, who's actually
Speaker 2: got the experience, who's gone through this many many a
Speaker 2: time and can give some wise consistent advice like Shane Oliver.
Speaker 1: Okay, all right, there we go. If we want more
Speaker 1: information from you, where do we find you.
Speaker 2: The best place to get a contact with me is
Speaker 2: on Instagram at Sugar Mama.
Speaker 1: TV and you can hear me every day with Sean
Speaker 1: Aylmer on Fear and Greed business News. You can use
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