Speaker 1: Welcome to How Do They Afford That? The podcast that
Speaker 1: peaks into the financial lives of everyday Australians. I'm Uncle Thompson.
Speaker 1: I'm an author and the co host of the podcast
Speaker 1: Fear and Greed business news As always, I'm with Canna Campbell,
Speaker 1: financial planner and founder of Sugar Mummer TV, the financial
Speaker 1: literacy platform covering YouTube, podcast, books, Instagram threads, TikTok and more.
Speaker 1: Did you hear me pause between financial and planner? Then
Speaker 1: I just suddenly suddenly just hit me financial planner and
Speaker 1: financial advisor. Is there a difference?
Speaker 2: Yes, a financial planner tends to be more experienced. Okay,
Speaker 2: I may have had more qualifications and training behind them.
Speaker 2: Normally a financial advisor is reserved for maybe a junior,
Speaker 2: like someone who is new to the industry. Maybe not
Speaker 2: necessary to have as much experience as many qualifications.
Speaker 1: Okay, Well, I will no longer hesitate when I get
Speaker 1: to that, and I'll just jump straight in with financial
Speaker 1: plan How are you going?
Speaker 2: I'm well.
Speaker 1: How are you I'm good? I'm good, Thank you, we
Speaker 1: are we're going back to basics today. Yeah, this is good,
Speaker 1: it's good. It is one of the most common questions
Speaker 1: that we get here at how today afford that? How
Speaker 1: do I get started investing in shares? So today we
Speaker 1: are you going to put together a step by step
Speaker 1: guide to investing in shares? If you're open to.
Speaker 2: That sounds good to me?
Speaker 1: Okay, all right, Before we do that, obviously, everything that
Speaker 1: we talk about is general in nature. It is never
Speaker 1: personal investment, strategic or product advice. It is purely financial
Speaker 1: education purposes only. I'm actually going to rewind slightly and
Speaker 1: say why shares? Why should an investor think about investing
Speaker 1: in equities?
Speaker 2: All right? There are lots of reasons why you should
Speaker 2: be investing, okay, So obviously before on shares today. So
Speaker 2: having ownership of a business that is going to hopefully
Speaker 2: grow over time and obviously means your money is growing
Speaker 2: over time. It's also a source of passive income to you.
Speaker 2: To give you that financial freedom. It is an opportunity
Speaker 2: to grow wealth over the long run and try and
Speaker 2: exceed or beat inflation. And shares are a lot more
Speaker 2: liquid than say property. You know, if you have a
Speaker 2: property worth say five hundred thousand dollars, and you need
Speaker 2: suddenly fifty thousand dollars, you can't go and sell one bedroom,
Speaker 2: whereas with a share portfolio you can fill fifty thousand
Speaker 2: dollars shares and then the money will be in your
Speaker 2: account within a couple of days.
Speaker 1: Okay, we will get to some more of the benefits
Speaker 1: as we go through, as we go through our step
Speaker 1: by step guide. But when you buy a share, what
Speaker 1: are you actually buying?
Speaker 2: Buying a slice of the company.
Speaker 1: It is as simple as straightforward as.
Speaker 2: That you're own a percentage of that business, and it
Speaker 2: doesn't matter how small, you still own a percentage, and
Speaker 2: obviously you can build that over time with various different strategies,
Speaker 2: but you also have right to some of the gains
Speaker 2: through a dividend, and obviously the long term growth of
Speaker 2: that share price, which is your represents your share of
Speaker 2: the business. But obviously, at the same time you carry
Speaker 2: the risks that that company may go through a tough time,
Speaker 2: or the value may drop, or they may stop dividends
Speaker 2: for a period of time. So it's like owning an
Speaker 2: investment property when you buy shares, but instead of receiving rent,
Speaker 2: you receive dividends, and of course you are hopeful that
Speaker 2: the value of that property goes up. You're hopeful that
Speaker 2: the value of that share your ownership and that business
Speaker 2: goes up as well.
Speaker 1: Okay, so you're buying a share, a slice of the company,
Speaker 1: and you are sharing in the fortunes of that company
Speaker 1: moving forward, whether it goes up or down, whether they
Speaker 1: make money, whether they lose money. That you are also.
Speaker 2: Bearing that you're like a business owner.
Speaker 1: Okay, shall we get to the steps. Why are you
Speaker 1: laughing at that? Is it just because I like to
Speaker 1: put everything into a list.
Speaker 2: I'm going to ask you a question in a second,
Speaker 2: because I feel like there is an ulterior motive behind
Speaker 2: the topic today. And yes, you're looking very.
Speaker 1: Scared right now. No, I just I don't I like
Speaker 1: to ask the questions on this show. I don't like
Speaker 1: it when you turn it back on me because I
Speaker 1: never know where you're going to go with things, and
Speaker 1: I don't like to get caught out. Step number one,
Speaker 1: do you start with research? Yes, that was an assumption,
Speaker 1: and I made a correct assumption for once. This is
Speaker 1: a good day. Look.
Speaker 2: The golden rule but that it comes to investing is that
Speaker 2: you never invest in something you don't understand. And that
Speaker 2: doesn't mean that you go, oh, I don't understand this,
Speaker 2: Therefore I won't invest in it means no, you need
Speaker 2: to keep going with your research until you understand what
Speaker 2: that is and then you can work out whether it
Speaker 2: is the right investment for you. So a great place
Speaker 2: to start is look at things that you were generally interested,
Speaker 2: generally and genuinely interested in. And there is so much
Speaker 2: free research online that is an amazing quality, you know,
Speaker 2: such as like more Star and the AX has so
Speaker 2: much brilliant online tutorials as well to help you get
Speaker 2: started with investing. But look at brands that you use daily,
Speaker 2: the supermarkets that you visit, or where you do your banking,
Speaker 2: or you know where you buy your appliances from, so things,
Speaker 2: you know, places that feel really relevant and real. That's
Speaker 2: a great place to get started. And then of course
Speaker 2: you need to think about well how am I going
Speaker 2: to buy these shares and that's when you need most
Speaker 2: of us need an online share training account unless you're
Speaker 2: going to go through a user stockbroker.
Speaker 1: Okay. Can I also make one recommendation that in terms
Speaker 1: of research, and that is go back and listen to
Speaker 1: an episode that we have done previously where we spoke
Speaker 1: to Roger Montgomery who took us through in detail what
Speaker 1: he looks for in buying a quality company, and he
Speaker 1: goes through in really plain English kind of how to
Speaker 1: look at what the company is planning to do in
Speaker 1: the future, whether it's making money, and what its future
Speaker 1: prospects are, and whether that might make a good choice
Speaker 1: to put some money into.
Speaker 2: So he's got his book as well.
Speaker 1: Yeah, absolutely, he spoke to us about twelve months ago,
Speaker 1: so you will find that in the how to they
Speaker 1: afford that playlist. Step one start with research. How do
Speaker 1: you decide then what you are going to buy? And
Speaker 1: this is quite broad because it's not just specifically which
Speaker 1: company you are going to buy, because there's actually a
Speaker 1: number of ways that you can be investing in shares.
Speaker 1: You might not be just going for a particular company.
Speaker 1: You might be buying an ETF, an exchange traded fund.
Speaker 2: Or even a listed investment company. So all right, you've
Speaker 2: got lots of different choices out there, so you can
Speaker 2: go with your individual shares. Obviously that involves a lot
Speaker 2: more research, a lot more risk. You've got to make
Speaker 2: sure that you quickly diversify because initially your first investment
Speaker 2: might be solely in just one company, so you need
Speaker 2: to make sure that as new money comes in, you know,
Speaker 2: you diversify, so there is there is risk with that,
Speaker 2: and if you're a beginner investor, that's where I would
Speaker 2: strongly suggest starting to with your research around things like
Speaker 2: ETFs and listed investment companies, even you know, maybe managed funds,
Speaker 2: because it means you're buying a investment into an investment
Speaker 2: portfolio that's already diversified for you. It's like grabbing a
Speaker 2: shopping basket that's already been pre packed for you.
Speaker 1: In diversification. You ask anybody and they will talk about
Speaker 1: the fact that that is a really important part of
Speaker 1: your strategy. It is about spreading the risk.
Speaker 2: Exactly, and it saves you a lot of time as well,
Speaker 2: because if you're new to investing, it is very overwhelming
Speaker 2: and you want to get started. Do you want to
Speaker 2: get hit a bit of a block and go, Okay,
Speaker 2: I haven't invested yetuse I haven't worked at what stopped
Speaker 2: be buying at. But if you look at something like
Speaker 2: a listed investment company or an ETF, which are very
Speaker 2: similar just different tax structures, this can mean that you
Speaker 2: can actually get your foot in the door start building
Speaker 2: that investment portfolio. You know, set up a regular investment plan.
Speaker 2: But then you can in the meantime know that your
Speaker 2: money is invested in working for you. But you continue
Speaker 2: on your financial education journey and start maybe thinking, Okay,
Speaker 2: I've got ten thousand into this listed investment company, I
Speaker 2: want to go and cherry peak my next five stocks
Speaker 2: I'm going to buy individually. So you aren't backed into
Speaker 2: a corner where you can only go into ETFs or
Speaker 2: listed investment companies. You can have a blend of everything.
Speaker 2: And that's actually what I have.
Speaker 1: Yeah, And so in terms of listed investment companies, typically
Speaker 1: there will be you are essentially buying a piece of
Speaker 1: that company, which in turn owns a whole bunch of
Speaker 1: other companies that are chosen by professionals working behind the.
Speaker 2: Scenes exactly up just eighty different companies, not.
Speaker 1: More, and they may have different themes to them as well.
Speaker 1: And then ETFs the exchange traded funds. They might be
Speaker 1: a fund that tracks a particular part of the market
Speaker 1: to buyte track kind of the ASX two hundred of
Speaker 1: might track the tech companies, or it might track companies
Speaker 1: and stocks that are exposed to gold, for instance, And
Speaker 1: you can really kind of pick where you want to
Speaker 1: be putting your money by going with it, say ETFs
Speaker 1: or listed investment.
Speaker 2: Companies, and you can look at their historical returns. Now,
Speaker 2: obviously that does not indicate future performance, but also when
Speaker 2: you look at these companies and read the research reports,
Speaker 2: you can see the fees that they're charging as well
Speaker 2: and in what dividends they're paying, and you know how
Speaker 2: they've attracted in comparison to the benchmark. And they're very
Speaker 2: easy to read. Just going to sit down and just
Speaker 2: have a look, and there are lots of cheat sheets
Speaker 2: available online as well.
Speaker 1: Yeah, you are right, it's a good place to start
Speaker 1: for someone getting into it looking at these listed investment
Speaker 1: companies or ETFs because they are they can be quite broad,
Speaker 1: but you'll often find some good kind of research material
Speaker 1: around it and explain the material as to kind of
Speaker 1: what they are investing in and benefiting from the expertise
Speaker 1: and the experience of the people that are actually running them.
Speaker 1: What do you need then, So say you've kind of
Speaker 1: made all of these decisions, you've done a whole lot
Speaker 1: of research, what do you need in terms of an
Speaker 1: app or a platform for physically buying these shares? Should
Speaker 1: you be looking for something that is attached to your
Speaker 1: bank or should you be going there's a whole lot
Speaker 1: of different apps and platforms now to buy shares. What
Speaker 1: do you look for?
Speaker 2: There are so many out there, and there are so
Speaker 2: many great ones. Obviously making sure it's you're low or
Speaker 2: I'm not going to say low, because they can sometimes
Speaker 2: be a bit of a cash So you want to
Speaker 2: look at cost effective brokerage fees. Don't necessarily go with
Speaker 2: the cheapest because they may be making a profit in
Speaker 2: an indirect way, which I think we've explained in a
Speaker 2: previous episode. But also making sure that it's very user friendly,
Speaker 2: like there's nothing worse than getting stuck and not understanding
Speaker 2: about how to put a trade through or how to
Speaker 2: pounce or something, or know how to access certain components.
Speaker 2: So an intuitive you know what, they call it, a
Speaker 2: friendly interface online platform. Then looking at making sure that
Speaker 2: there's actually some really great free resources that are independent,
Speaker 2: such as independent research, and then making sure you've got
Speaker 2: updates so as to what's going on around the world,
Speaker 2: you know news feed as well. But then this one
Speaker 2: is missed by a lot of people, and it's actually
Speaker 2: access to wealth building tools such as margin loans, and
Speaker 2: this is you know, if you're someone who doesn't own
Speaker 2: property and would like to borrow to invest, you're limited
Speaker 2: as to how you can access loans to build your
Speaker 2: share portfolio. Now. If your platform offers a marginal loan facility,
Speaker 2: that's great because you can sometimes if it's the right
Speaker 2: product for you, go through that. If they don't offer
Speaker 2: a gearing facility like a margin loan, you then have
Speaker 2: to find another one, which means moving your share portfolio
Speaker 2: to a new account, which could be It's doable, It's fine,
Speaker 2: but it can be a little bit fiddly, So think
Speaker 2: about what you need immediately, but also what tools you're
Speaker 2: going to be able to want to have access to
Speaker 2: further down the track so you don't have to create
Speaker 2: more paperwork for yourself and moving money around.
Speaker 1: It seems as though as soon as you start talking
Speaker 1: about margin loans and things, it's a good time to
Speaker 1: be going. Okay. Might get some advice on this, yes,
Speaker 1: talk to a financial advisor or a financial planner and
Speaker 1: just see if it is right for you and get
Speaker 1: some information on how all of that works, because it
Speaker 1: can be a val valuable tool as long as that's
Speaker 1: right for you.
Speaker 2: It is I mean borring to invest is definitely a
Speaker 2: high restray. It's not for everybody, it's for long term
Speaker 2: game plan, so always go and get advice. And the
Speaker 2: other thing you want to look for when it comes
Speaker 2: to picking the right platform for yourself is what other
Speaker 2: asset classes can you reach? You know, maybe you just
Speaker 2: want to invest in Australian shares now, but maybe next year,
Speaker 2: once you feel more confident with investing, you might want
Speaker 2: to access international share markers as well. Is that still
Speaker 2: going to be the right platform. Hence why I say
Speaker 2: look at what you need now, but also make sure
Speaker 2: you're taking into consideration your long term needs.
Speaker 1: Okay, are there this is what step number five? I
Speaker 1: forgot to number the steps step four, step five. Are
Speaker 1: there minimum amounts that you need to buy or are
Speaker 1: there minimum amounts that you should be looking to buy
Speaker 1: in order to maximize efficiency? Because I can't. I'd imagine
Speaker 1: that you don't want to see all of your money
Speaker 1: eatn up in brokery.
Speaker 2: Yeah, so obviously there are lots of micro investing platforms around.
Speaker 2: I'm not a huge fan of micro investing at all.
Speaker 1: What do you mean by micro investing?
Speaker 2: So investing with small amounts of money? So you know
Speaker 2: five dollars ten dollars look over time. You know, if
Speaker 2: you've got a consistent strategy in place, it's great. But
Speaker 2: as you know, I call it sort of the Friday
Speaker 2: Flat of is share investing. You're never gonna build. It's
Speaker 2: gonna take a really long time and highly unlikely you're
Speaker 2: going to build a million dollar portfolio. When you're investing
Speaker 2: with small amounts of money, you want to make sure
Speaker 2: that your portfolio is growing along with your own financial literacy.
Speaker 2: And obviously it doesn't mean investing constantly large amounts of money,
Speaker 2: but you need your portfolio needs to grow and you
Speaker 2: need to grow as well. So if you can only
Speaker 2: afford to invest ten dollars a month, that's fine, use
Speaker 2: that to get started. But the moment you find that
Speaker 2: you're actually able to start investing a larger amounts of money,
Speaker 2: you know, closer to sort of between five hundred and
Speaker 2: thousand dollars at a time, great, that's when you've outgrown
Speaker 2: those micro investing platforms, and that's when you are more
Speaker 2: likely to build that million dollar investment portfolio because you're
Speaker 2: investing larger amounts of money on a regular basis and
Speaker 2: taking it a lot more seriously. Investing more time, thinking
Speaker 2: about your goals, thinking about the strategy, thinking about the risk,
Speaker 2: tracking your dividends. It's like it's sort of you know,
Speaker 2: I speak to people about micro investing. They tend to
Speaker 2: have a couple of different micro investing accounts with you know,
Speaker 2: between a one thousand dollars and fifty dollars because there
Speaker 2: isn't enough in there. They're not investing their time and
Speaker 2: energy to make it grow and make it work for them.
Speaker 2: So it's kind of a little bit inefficient. Okay, that's
Speaker 2: my issue. It's it's still great to help people get started,
Speaker 2: and that's hence why I call it the Friday flat.
Speaker 2: You learn to get started like skiing on Friday flat.
Speaker 1: Okay, you learn the basics, basics.
Speaker 2: You learn how to how to move safely down the slopes.
Speaker 2: But then you've got to get yourself onto the different
Speaker 2: runs of the mountain and learn how to you know,
Speaker 2: go down moguls and steeper runs and scare over ice
Speaker 2: and we'll snowboard over ice. That's my issue with micro investing,
Speaker 2: So keep going, just don't stop playing in the safe
Speaker 2: kiddie pool.
Speaker 1: Hang on a week I sound all, now we could
Speaker 1: be eating a snow melts melted. I'm enjoying this, and
Speaker 1: please continue this crossed analogy here.
Speaker 2: I'll go back to Friday Flats. We're skiing on flat surfaces.
Speaker 2: It's safe, it's can't hurt yourself. You're can't get too
Speaker 2: much trouble.
Speaker 1: Are our clothes wet from being in the pool, because
Speaker 1: that would be mighty cold.
Speaker 2: Well, if it depends how many times you've fallen down
Speaker 2: in the snow, if you keep falling down the snow,
Speaker 2: maybe stay on Friday Flats until you find yourself learning
Speaker 2: how to ski safely, stop and start and make turns
Speaker 2: and not smash into people.
Speaker 1: Okay, and then we get then we get into the pool.
Speaker 2: The tea bar and go, oh my god, Okay, we're
Speaker 2: stopping the there's no more pool analogy. Sorry, I got
Speaker 2: over excited. I diversified my analogy. Bring it back to
Speaker 2: the skiing snowboarding.
Speaker 1: I understand what you are saying. I get it, and
Speaker 1: thank you for indulging me.
Speaker 2: So can I recommend people speaking from experience? Because I
Speaker 2: built a three hundred and something thousand dollars share portfolio
Speaker 2: by doing this is parcels of one thousand dollars thousand
Speaker 2: all the project. I literally hustled one thousand dollars at
Speaker 2: a time. The moment I had a thousand dollars saved up,
Speaker 2: I immediately invested it before I got time to spend it,
Speaker 2: and I reinvested the dividends and it's grown and I
Speaker 2: gamified it by just sticking to that. That's why it's
Speaker 2: a three hundred and something thousand, three hundred and ten
Speaker 2: thousand dollars diversified share port follow It was enough for
Speaker 2: me to fathom and you know, actually see myself coming
Speaker 2: up with that money didn't seem unreasonable. So I just
Speaker 2: got on and did it. And because I've put more in, obviously,
Speaker 2: it's grown significantly with the help of a small, very
Speaker 2: small margin loan attached.
Speaker 1: Yeah, so you're in the lap pool now.
Speaker 2: Yeah, it's actually quite satisfying to think that's never come
Speaker 2: out of my saving. I'm not biting. I'm not biting.
Speaker 1: You just ignored men, didn't you, Because.
Speaker 2: I'm sorry, I just got caught up in the moment
Speaker 2: of prode like think you should.
Speaker 1: You should be proud of that. That is an amazing achievement.
Speaker 2: It is not single dollar has ever come from my
Speaker 2: savings or for my salary.
Speaker 1: Really.
Speaker 2: Oh wow, Yeah, I've hustled hard.
Speaker 1: You certainly have. Okay, there's a few things as you
Speaker 1: mentioned there that I want to follow up on. You
Speaker 1: talk about dividends and at tracking dividends and reinvesting dividends
Speaker 1: and a bunch of other things there. It will take
Speaker 1: a quick break and come back, because that is our
Speaker 1: first five steps, and we have three more steps to
Speaker 1: go straight after the break. Canad Today we are doing
Speaker 1: a step by step guide to investing in shares. We've
Speaker 1: gone through the process of research and finding a platform
Speaker 1: and the minimum amounts or the amounts the meaningful amounts
Speaker 1: to invest in order to make a difference and to
Speaker 1: help build your portfolio and hopefully get ahead into the future.
Speaker 1: Next step, you've bought your shares. Now, what how often
Speaker 1: do you check them?
Speaker 2: I would recommend people never check their portfolios daily or
Speaker 2: even weekly, Okay, I would suggest either monthly or even quarterly.
Speaker 2: Shares are naturally very volatile in a short to medium term,
Speaker 2: so if you're looking at it on a regular basis,
Speaker 2: you can become a little bit emotional and make knee
Speaker 2: jerk reactions which can come with regret. So just look
Speaker 2: at it every now and again, and what I strongly
Speaker 2: suggest people do is instead of checking the value of
Speaker 2: the portfolio, check the passive income. Is your investment portfolio
Speaker 2: still paying you a passive income? Has that passive income grown?
Speaker 2: You know, where are the sort which sources are they
Speaker 2: coming from? Do we need to add more to help
Speaker 2: diversify that portfolio? So look at the passive income. Otherwise
Speaker 2: you can sometimes make regretful decisions. And then obviously you
Speaker 2: want to stay informed what's going on in the world.
Speaker 2: You know what's going on in particular industries and the
Speaker 2: companies that you're investing in, and understand that there are
Speaker 2: times where you know there are headlines. You know, these
Speaker 2: headlines about billions of dollars being wiped off and calls
Speaker 2: of a market crash. There are always going to be
Speaker 2: those stories around. There's nothing new, but knowing what to
Speaker 2: listen to and what to turn the volume down on
Speaker 2: a brilliant resources. I recommend anyone tune into when they're
Speaker 2: worried about whether they should sell, particularly at times like this.
Speaker 2: Is a economist called Shane Oliver from AMP and he
Speaker 2: is brilliant at explaining what is going on in the
Speaker 2: world and what you need to do, and he helps
Speaker 2: really calm your emotions and explain everything and also to
Speaker 2: see the potential long term opportunity in what's going on.
Speaker 2: So you've really got to think about like shares as
Speaker 2: baking a cake. You know, once you put the cake in,
Speaker 2: you're giving me these looks as then oh my god,
Speaker 2: can it not again?
Speaker 1: It is high risk. We've just wasted a whole lot
Speaker 1: of time with a skiing mix with swimming and baking
Speaker 1: a gate. Where is the baking cake going to end up?
Speaker 1: Is it going to end up in the zoo? Perhaps? Well?
Speaker 2: Building a sharebool follows like making a cake. Once you
Speaker 2: put the cake in the oven, if you're constantly opening
Speaker 2: the door every five minutes, you're probably going to ruin
Speaker 2: the cake, or it's going to take a lot longer
Speaker 2: to actually cook and be eaten.
Speaker 1: Is that it? That?
Speaker 2: Is it? My friend?
Speaker 1: You're not introducing another kind of unusual element.
Speaker 2: I promise there'll be no more analogies this episode.
Speaker 1: I promises you unable to keep What about dividends? How
Speaker 1: do they work? And how do you reinvest them?
Speaker 2: Great questions?
Speaker 1: Two questions. I rolled them into one. I gave you
Speaker 1: a bonus okay.
Speaker 2: Two for the press of one. So dividends. Dividends are
Speaker 2: typically paid two times per year, and they get paid
Speaker 2: as a percentage of the share price. So a five
Speaker 2: percent yield means you earn five dollars and dividends for
Speaker 2: say one hundred dollars invested.
Speaker 1: And so this is typically a share of the profits
Speaker 1: of the company after they've reported their earnings the halfway
Speaker 1: mark through the year, and then again at the full
Speaker 1: and if they've got x amount of money that they've
Speaker 1: made in profit, they may choose to pay a dividend
Speaker 1: to their Yes.
Speaker 2: They look at their profits and they go, all right,
Speaker 2: we need to reinvest into the company, employment more staff,
Speaker 2: spend more money on marketing, product development, and so forth.
Speaker 2: And we've also need to pay out some money to
Speaker 2: our shareholders. So they'll split the profits a balance between
Speaker 2: the two in whichever way they see fit. And that's
Speaker 2: when you receive a dividend, which is the equivalent of
Speaker 2: earning rent from an investment property. To reinvest your dividends,
Speaker 2: which essentially means instead of taking that money for yourself
Speaker 2: and spending it, you actually say no, don't pay me
Speaker 2: that dividend. I want to have the money used to
Speaker 2: buy more shares in that company. Now, there are various
Speaker 2: ways of doing this. Some platforms actually will allow you
Speaker 2: to set it up with an online broker, or you
Speaker 2: have to go through the share registry online and tick
Speaker 2: the box for dividend reinvestment.
Speaker 1: And that's all through that. You say, the share registry,
Speaker 1: that's the that's the.
Speaker 2: Body link market services.
Speaker 1: They will be the ones that send you all the
Speaker 1: correspondents in relation to when you purchase your shares. You'll
Speaker 1: get it in the mail or you'll get a Vira
Speaker 1: email saying you congratulations, you're in our shareholder in X company,
Speaker 1: and we are the registry for it and we'll be
Speaker 1: running this et cetera. And they are the ones that
Speaker 1: you can talk to potentially.
Speaker 2: About It's all done online. And I mean you have
Speaker 2: to do this anyway because you need to upload your
Speaker 2: tax file number and your bank account details. How I
Speaker 2: will say, sometimes companies might not necessarily offer an automatic
Speaker 2: dividend reinvestment opportunity, which means you have to take it
Speaker 2: as cash. That doesn't mean you can't reinvest it just
Speaker 2: means you need to manually reinvest it so you get
Speaker 2: receive a dividend, I say a hundred dollars, hold onto
Speaker 2: that one hundred dollars, and then go and buy physically
Speaker 2: yourself one hundred dollars worth more shares. Okay, Dividend reinvestment
Speaker 2: is very powerful because you don't have to pay brokerage,
Speaker 2: so it actually can help you save money. But you
Speaker 2: need to make sure your portfolio is diversified also on
Speaker 2: that not dibidends. Some companies may go through a period
Speaker 2: of time where they have to pause a dividend reinvestment plan,
Speaker 2: which means you have to take it as cash and
Speaker 2: you still have to pay tax in coome tax that
Speaker 2: is on that dividend, whether it's reinvested or not as well,
Speaker 2: which a lot of people sort of miss.
Speaker 1: Yeah, and I want to talk to you then about
Speaker 1: the tax implications because this is and you've talked about
Speaker 1: that in the past, about people not realizing that they
Speaker 1: still need to pay tax on these dividends, these earnings.
Speaker 1: But there's also like franking, credits and all kinds of
Speaker 1: other elements that come in when we're talking about dividends,
Speaker 1: and it is helpful to have a good accountant when
Speaker 1: it comes to all of this.
Speaker 2: Yes, definitely because you need to look at the dates,
Speaker 2: so you know how long have you held that particular
Speaker 2: asset forward, do you qualify for any of capital gains,
Speaker 2: tax discounts? Really important? And then there's things like franking credits.
Speaker 2: We almost need to do I think an episode purely
Speaker 2: on franking credits because it's it sounds a lot more
Speaker 2: complicated than what it is, but it's incredibly valuable, particularly
Speaker 2: for people who are approaching retirement or are retired.
Speaker 1: Yeah, it's one of the main kind of benefits to
Speaker 1: investing in Australia as opposed to investing overseas. The franking
Speaker 1: credit system we have here.
Speaker 2: That's why I love Australian industrial shares. But you know,
Speaker 2: having knowing your franking credits, the tax credits that is
Speaker 2: attached to each of them, is really important. And then
Speaker 2: obviously being I wouldn't say meridiculous, but you need to
Speaker 2: be organized with keeping a record of what date you purchased,
Speaker 2: what dates you know, how much was reinvested at what
Speaker 2: share price, you know, what if the costs, how much
Speaker 2: you've spent on brokered all those sorts of little things
Speaker 2: that you need to do and be on top of.
Speaker 1: Did you have a question for me earlier. I remember
Speaker 1: earlier in.
Speaker 2: The episode, had you reminded me? Because I wish you
Speaker 2: would have forgotten.
Speaker 1: Well, I'm just thinking of potentially listeners who are hanging
Speaker 1: out for this question to hear me put on the spot,
Speaker 1: and if we didn't deliver, that would be an unsatisfied customer.
Speaker 2: Have you as you know? Now to go back, We've
Speaker 2: been doing this podcast for how many years?
Speaker 1: What? Three or three and a half four?
Speaker 2: I think it's three. It feels like a it'll be
Speaker 2: approaching three. So have you started an investment portfolio? Well,
Speaker 2: started investing at least?
Speaker 1: Ah, I taught you. You have taught me a lot.
Speaker 1: You know what I have done? Yes, you know what
Speaker 1: I have done. I have started seeing a financial planner, Okay,
Speaker 1: and investing is all going to come as part of that,
Speaker 1: all right, all right?
Speaker 2: All right?
Speaker 1: So if you have taught me nothing else, and you
Speaker 1: have taught me a lot of things, the number one
Speaker 1: lesson I have taken from you is the importance of
Speaker 1: getting professional advice, all right, all right, So therefore I
Speaker 1: think I've managed to evade any kind of trouble from you.
Speaker 1: Can I ask you one more question? Yes? And I've
Speaker 1: left you no time to answer this. There's this whole
Speaker 1: principle of with shares, the idea being that that time
Speaker 1: in the market is so much more important than trying
Speaker 1: to time the market itself. How do shares then work
Speaker 1: as a long term, long, long term, potentially investment strategy,
Speaker 1: that it's not so much about trying to find the
Speaker 1: right time to buy into the market, that it is
Speaker 1: about kind of how this is going to play out
Speaker 1: over ten, fifteen to twenty plus years.
Speaker 2: Well, when you look at the historical performance of all
Speaker 2: the different asset classes, and if anyone wants to get
Speaker 2: a quick, easy free resource, go to the Vanguard website
Speaker 2: and type in Vanguard chart because you can actually see
Speaker 2: all these different color lines. They're really easy to read.
Speaker 2: But time in the market wins, so historically the share
Speaker 2: market rises over the long run. So staying the course,
Speaker 2: going the distance reduces your risk of trying to miss
Speaker 2: the best market days. And even experts who've been doing
Speaker 2: this for ten, fifteen, twenty, thirty forty years still get
Speaker 2: this wrong. And you also look at the when you
Speaker 2: do get it right, the capital games attacks that comes
Speaker 2: off your profit and then obviously the cost of getting
Speaker 2: back into the market and then timing to try and
Speaker 2: get back in the right point. So there's a lot
Speaker 2: of danger in this. So if you had invested ten
Speaker 2: thousand dollars into the AX two hundred and twenty twenty
Speaker 2: and left it untouched, it would be worth significantly more
Speaker 2: than it would be worth significantly more today. So investing
Speaker 2: is like growing a tree. You know, you I promised
Speaker 2: there wouldn't best no.
Speaker 1: More analogies, and now we are. We have gone from
Speaker 1: skiing into the kitchen to bake a cake. Now we
Speaker 1: are growing a tree. Go on, plant those seats, all right.
Speaker 2: It's like planting growing a tree. You plant the seat
Speaker 2: and you see nothing for maybe a couple of years,
Speaker 2: and you think, oh my gosh, I planted. It's done nothing.
Speaker 2: And then you might see a little sprout and you think, oh,
Speaker 2: is that all I've got? That's nothing. It looks like
Speaker 2: a weed. You would get tempted to pull it out
Speaker 2: and start all over again. But if you just trust
Speaker 2: the process, make sure it's got some sunlight, some water,
Speaker 2: you know, watch the pests, then the elements, let it
Speaker 2: do its thing, and over time it grows into fruit
Speaker 2: tree and it gives you back fruit berries, apples, peaches, pears,
Speaker 2: whatever you like, as you can enjoy the fruits of
Speaker 2: your patients, your dedication and your commitment because you've just
Speaker 2: not tried to time the right time to plant, but
Speaker 2: you've just let it's time work. It's magic for you.
Speaker 1: Are you using those fruits in the cake that you're making?
Speaker 2: I could make I make a really good brownie and
Speaker 2: I sometimes put raspberries in that. So if I can
Speaker 2: filt me use raspberries, it's hay packup mix, I will.
Speaker 1: Okay, And that's good fuel for skiing.
Speaker 2: It is, But I don't go and open the door
Speaker 2: all the time and I'm checking the brownies.
Speaker 1: God, this is just one of those episodes where you'll
Speaker 1: have to listen to it three times just to make
Speaker 1: sense of all of the various analogies, which I'm sorry
Speaker 1: I have actually just deliberately tried to confuse you there
Speaker 1: At the end. I think, I think that's a great job.
Speaker 1: You know what?
Speaker 2: That was?
Speaker 1: A what eight step program to investing into shares? I
Speaker 1: think gold star to us? Can we do that? Yes?
Speaker 1: We can award ourselves a gold star. If anybody wants
Speaker 1: more information from you, Canna, where do they find you.
Speaker 2: If you're a confused by all my different analogies, please
Speaker 2: feel free to reach out to me on Instagram at
Speaker 2: Sugar Mama TV and I'll happily come back to you
Speaker 2: as soon as possible with.
Speaker 1: A personalized analogy.
Speaker 2: Yes, so I will even jump on a call and
Speaker 2: help I explain something.
Speaker 1: To confuse you even more. You can hear me every
Speaker 1: day with Sean Aylmer on Fear and Greed, daily business
Speaker 1: news for people who make their own decisions. Thank you
Speaker 1: for listening to how Do They Afford That? Remember to
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