WEBVTT - What financial risks to avoid in the year ahead 0:00:10.520 --> 0:00:13.760 Hello and welcome to The Australian's Money Puzzle podcast. I'm 0:00:13.840 --> 0:00:18.240 James Kirkby, the Wealth editor at The Australian. Welcome aboard everybody, Well, 0:00:18.400 --> 0:00:22.560 how is your financial year going? We are moving towards 0:00:22.640 --> 0:00:24.840 the end of January. You've had a few weeks now. 0:00:24.880 --> 0:00:28.960 Have you enacted those plans formulating in your mind all 0:00:28.960 --> 0:00:31.000 through the holidays about what you were going to do? 0:00:31.600 --> 0:00:33.479 Have you got on top of those posts you had 0:00:33.520 --> 0:00:37.479 about maximizing your situation as an investor? Have you sold 0:00:37.640 --> 0:00:41.000 those stocks that you know are no good and you 0:00:41.040 --> 0:00:45.040 won't let go? And most importantly, have you got a plan? 0:00:45.880 --> 0:00:47.280 Have you got a plan for this year? And my 0:00:47.320 --> 0:00:49.159 guest today is what I would think of as a 0:00:49.200 --> 0:00:53.159 classic financial planner and keeps his eyes firmly fixed on 0:00:53.240 --> 0:00:56.880 the issues that matter most two investors, and that often 0:00:56.920 --> 0:01:00.360 comes down to actual detail or the nitty grit if 0:01:00.360 --> 0:01:02.600 you like, of managing money as much as it does 0:01:03.000 --> 0:01:05.520 what we all have to talk about, which is markets 0:01:05.520 --> 0:01:12.200 and global forces and geopolitics which drive markets seem short 0:01:12.400 --> 0:01:15.600 of the Sonas Group, He's volunteer to answer the first 0:01:15.600 --> 0:01:21.160 batch of questions from investors for the year. How are 0:01:21.200 --> 0:01:21.959 you Liam. 0:01:22.240 --> 0:01:24.760 I'm very good. James has a lovely breakover Christmas in 0:01:24.840 --> 0:01:27.119 New Year, so ready to go for twenty twenty five. 0:01:27.760 --> 0:01:29.480 I like the sound of that. I like the sound 0:01:29.560 --> 0:01:33.280 of the refreshed guest. Very good, very good. All right 0:01:33.360 --> 0:01:37.240 now we still are just about and perhaps no more 0:01:37.319 --> 0:01:40.520 after this, but I think people do like to reset 0:01:40.640 --> 0:01:42.440 and get a sense of, you know, how is last 0:01:42.480 --> 0:01:45.360 year of what's coming down the line. We've covered that 0:01:45.440 --> 0:01:47.640 in the show fairly well, and most people would have 0:01:47.680 --> 0:01:51.320 listened now to the summer series where we laid out 0:01:51.400 --> 0:01:54.520 what the expectations are and some guides if you like, 0:01:54.600 --> 0:01:57.520 for the year ahead in all acid classes, shares and 0:01:57.560 --> 0:02:01.120 property and everything else. Just from your point of view, Liam, 0:02:01.720 --> 0:02:05.360 in terms of every year, some planners will be so 0:02:05.480 --> 0:02:09.840 sort of focused on a textbook approach. Would be like 0:02:09.919 --> 0:02:12.400 that they refuse to think that there's anything different one 0:02:12.480 --> 0:02:14.800 year after another, that the basic stay the same, but 0:02:14.840 --> 0:02:17.560 there's always new things. And just give us, if you would, 0:02:17.680 --> 0:02:22.119 your estimation of what the risks and opportunities are specifically 0:02:22.160 --> 0:02:24.520 this year. What about the risks, because I know there 0:02:24.560 --> 0:02:26.799 is there's certainly some points you want to make. 0:02:26.880 --> 0:02:28.600 Now we've had a couple of good years for people 0:02:28.639 --> 0:02:31.600 to invest in cash and fixed interest term of positive 0:02:31.639 --> 0:02:34.799 rates have been above five percent, and they did really well, 0:02:35.280 --> 0:02:37.960 and they've got accustomed to it. And now what we're 0:02:37.960 --> 0:02:40.760 seeing is as those rates start to drop and people 0:02:41.360 --> 0:02:43.240 understand that they're probably going to drop a fair bit 0:02:43.480 --> 0:02:47.200 in this year, probably about over zero point eight percent 0:02:47.240 --> 0:02:49.080 by the end of the year, but it's still a 0:02:49.120 --> 0:02:51.760 drop below that five percent. Key what I'm afraid of 0:02:51.880 --> 0:02:54.480 is that people are now going to be poached or 0:02:54.880 --> 0:02:58.200 attracted to new investments that are still offering more than 0:02:58.240 --> 0:03:01.320 five percent and in some case is double that by 0:03:01.400 --> 0:03:04.640 making it sound like they're safe investments. That The one 0:03:04.680 --> 0:03:07.880 I'm worried about is private credit and private equity. Often 0:03:07.919 --> 0:03:12.560 these are badged up as wholesale investments sold to wholesale investors, 0:03:12.560 --> 0:03:15.600 which means it just means somebody with assets over two 0:03:15.639 --> 0:03:17.960 and a half million or an income over two hundred 0:03:18.000 --> 0:03:20.840 and fifty zer now in one of the capital cities 0:03:21.160 --> 0:03:24.320 that a person's house may qualify them for that. So 0:03:24.440 --> 0:03:28.160 what concern is these investments are being targeted at people 0:03:29.240 --> 0:03:32.520 because their wholesale investor status, they don't have to give 0:03:32.520 --> 0:03:36.920 as much information. There's no protection in the background if 0:03:36.960 --> 0:03:40.760 it goes wrong, because they're not retail funds. So all 0:03:40.760 --> 0:03:43.560 I'm saying to people is, instead of trying to chase returns, 0:03:44.560 --> 0:03:46.680 understand that the cash raid is going to drop a 0:03:46.720 --> 0:03:48.720 little bit and your term deposits will drop a bit. 0:03:49.080 --> 0:03:51.040 Maybe look to do a two or three year term 0:03:51.080 --> 0:03:53.280 to posit that your four point seven or four point 0:03:53.320 --> 0:03:56.640 eight percent rather than worrying about, you know, sort of 0:03:56.680 --> 0:03:58.920 trying to get more than five percent in a different investment. 0:03:59.400 --> 0:04:02.160 That's thing you know, people have we you know this 0:04:02.320 --> 0:04:06.360 can't this this broadcam census and team that rates cycle 0:04:06.400 --> 0:04:09.120 the top, then that rates will fall in the year ahead. 0:04:09.200 --> 0:04:11.480 I've not actually come I'm not entirely convincedly in myself 0:04:11.520 --> 0:04:15.560 that they will, but they may, and the US certainly, 0:04:15.680 --> 0:04:17.880 I'm particularly not convinced that they might fall anymore. 0:04:17.920 --> 0:04:18.240 There. 0:04:18.320 --> 0:04:21.719 But having said that, that doesn't matter, because the banks 0:04:21.720 --> 0:04:24.279 will upset their rates anyway, won't they. They'll do what 0:04:24.320 --> 0:04:27.200 they like regardless of official rates to some degree. So 0:04:27.880 --> 0:04:30.600 you're altually coming upon this when you talk about this 0:04:30.720 --> 0:04:37.440 whole rush to private credit and unlisted opportunities, but mostly 0:04:37.640 --> 0:04:41.719 what they call private credit. Private and let's distinguish that 0:04:41.760 --> 0:04:44.719 from private equity or whatever. This is private credit where 0:04:44.720 --> 0:04:48.240 people are it's put in front of investors that they 0:04:48.279 --> 0:04:50.800 can get in on this sort of line of business 0:04:50.880 --> 0:04:53.320 that was always there, and for some reason we are 0:04:53.880 --> 0:04:56.719 led to believe that all of a sudden it suits everyone. 0:04:57.279 --> 0:05:00.080 And why hadn't everyone been in it all the time? 0:05:00.680 --> 0:05:04.480 Tell me, if you would, how that comes across and 0:05:04.640 --> 0:05:08.599 how how are people like our listeners encountering this. Is 0:05:08.640 --> 0:05:11.520 it in the way of a listed option, a listed 0:05:11.680 --> 0:05:14.080 investment on the market. Is it a private fund? How 0:05:14.240 --> 0:05:16.440 how does this stuff get offered? Is it just ads 0:05:16.480 --> 0:05:19.160 basically in newspapers and on websites. 0:05:19.440 --> 0:05:23.000 Yeah. Look, often it's being prompted by you know, promotion 0:05:23.120 --> 0:05:27.600 to accountants or to probably trusted advisors, and they're you know, 0:05:27.800 --> 0:05:31.400 they're being sold. But it's usually unlisted and you're talking 0:05:31.720 --> 0:05:34.520 a managed funder unit trust. The key factors that we've 0:05:34.520 --> 0:05:37.640 seen it is because it's private credit, it's loans to companies, 0:05:38.120 --> 0:05:39.560 and a lot of this has come from the fact 0:05:39.600 --> 0:05:42.520 that in construction of property development at the moment, they're 0:05:42.520 --> 0:05:45.480 finding it hard to raise money from the normal lenders, 0:05:45.520 --> 0:05:48.960 the banks and other providers, so they're looking for an 0:05:49.000 --> 0:05:52.680 alternative source of financing, and that's where these private credit 0:05:52.720 --> 0:05:55.320 funds are built up. So they're packaging up these It 0:05:55.400 --> 0:05:58.280 might be you know a number of different developments around 0:05:58.320 --> 0:06:01.400 the country and you're funding that the developer. But it 0:06:01.440 --> 0:06:04.520 doesn't really sound like that in the perspectives. It's just 0:06:04.800 --> 0:06:07.599 and it is a very short perspectives because it's for wholesale. 0:06:08.120 --> 0:06:10.719 It's basically been sold as you know sort of, it's 0:06:10.760 --> 0:06:13.960 you lending to private companies, you know, and it's pretty 0:06:14.000 --> 0:06:18.200 secured secured over investments, and you know, but you know, 0:06:18.320 --> 0:06:20.120 you start looking at things like it may be locked 0:06:20.160 --> 0:06:22.919 in for three to four years, so there's no liquidity, 0:06:23.440 --> 0:06:26.720 there's no guarantee on the return on the investments, even 0:06:26.720 --> 0:06:29.919 though there's assets backing it. Well. You know, for example, 0:06:29.960 --> 0:06:33.040 if there's a development that falls apart and doesn't go ahead, 0:06:34.839 --> 0:06:36.320 most of the money could be lost on that. It 0:06:36.440 --> 0:06:39.680 just depends on what they recover selling the land that's there. 0:06:39.760 --> 0:06:43.880 So I just warned people to to think twice, get 0:06:43.920 --> 0:06:48.000 an independent view of something like that, and really ask themselves, 0:06:48.279 --> 0:06:51.240 am I a wholesaler sophisticated investor do it have I 0:06:51.320 --> 0:06:54.840 really got the knowledge to manage something like this and 0:06:54.880 --> 0:06:58.520 to be involved in something like this, and there is 0:06:58.560 --> 0:07:00.760 the person who's selling it to be are they connected 0:07:00.800 --> 0:07:03.560 to it in any way integrated? 0:07:03.880 --> 0:07:07.080 I must ask you two things. One is, this isn't 0:07:07.120 --> 0:07:09.880 all private, right? There is listed versions of this, isn't there? 0:07:09.960 --> 0:07:10.120 Yes? 0:07:10.280 --> 0:07:12.680 So that means you don't have to be a sophisticated investor, right. 0:07:12.720 --> 0:07:15.400 So if it's on the share market, you can buy 0:07:15.400 --> 0:07:18.040 five hundred buxworth. So but as you say, the sort 0:07:18.080 --> 0:07:23.320 of target audience is so cold sophisticated investor audience, which 0:07:23.400 --> 0:07:26.920 is something of a misleading term these days if it 0:07:26.960 --> 0:07:29.280 was ever or anything else, but certainly misleading these days 0:07:29.320 --> 0:07:31.760 because it allows the seller of the product to not 0:07:31.800 --> 0:07:33.680 take half as many as they don't have half as 0:07:33.720 --> 0:07:37.480 much responsibility to you because you're classified as sophisticated. You're 0:07:37.480 --> 0:07:40.240 classified sophisticated. Nothing to do with your sophistication, just a 0:07:40.280 --> 0:07:41.920 matter of your bank accounts and how much you have. 0:07:42.560 --> 0:07:47.960 And they haven't indexter changed that threshold. Consequently, the number 0:07:48.000 --> 0:07:51.800 of people who qualify has become enormous, really, and they 0:07:51.800 --> 0:07:55.120 are reviewing that, but for the moment everyone's taking advantage 0:07:55.120 --> 0:07:58.600 of it. I went to a presentation with the top 0:07:58.760 --> 0:08:01.800 really the top and I'm not want to pin someone here, 0:08:01.840 --> 0:08:04.880 but I went to the presentation from the leading private 0:08:04.920 --> 0:08:09.560 credit group probably in Australia and one of the originals. 0:08:09.560 --> 0:08:11.280 And of course people would have made money out of 0:08:11.320 --> 0:08:15.760 this fund and funds from this house in the early days, 0:08:15.880 --> 0:08:18.120 and now of course they see now they just know, 0:08:18.360 --> 0:08:19.640 you know, this is what we're going to go for 0:08:19.720 --> 0:08:22.680 the middle Australia. We can get the average investor. And 0:08:22.800 --> 0:08:25.280 the same group has gone very big and they've moved 0:08:25.280 --> 0:08:30.320 from their little suburban office block up in the suburbs 0:08:30.360 --> 0:08:33.160 into the middle of town. I'm sure you have an 0:08:33.160 --> 0:08:36.440 idea who I'm talking about. Anyway, it was such a 0:08:36.440 --> 0:08:39.280 good presentation. It was so convincing, and it was about 0:08:39.320 --> 0:08:41.640 how the banks were pulling back and the banks weren't 0:08:41.679 --> 0:08:45.960 really lending anymore, and this was the opportunity for lifetime 0:08:46.080 --> 0:08:48.800 and you know, don't miss this, You're going to If 0:08:48.800 --> 0:08:51.959 you miss this, you're going to regret it. Blah blah blah, 0:08:52.000 --> 0:08:54.880 And it was quite convincing. What's the flow in their presentation? 0:08:55.000 --> 0:08:55.680 Do you think. 0:08:56.320 --> 0:09:00.000 It's the nature of the assets that are backing these 0:09:00.120 --> 0:09:04.520 funds has changed dramatically since COVID. The financing is tougher 0:09:04.720 --> 0:09:08.040 materials have gone up to cost the trades to complete 0:09:08.040 --> 0:09:11.599 these developments, and council requirements to complete these developments. Is 0:09:11.640 --> 0:09:11.880 it all? 0:09:11.960 --> 0:09:12.839 It's propertly Liam, is it? 0:09:12.880 --> 0:09:13.000 I mean? 0:09:13.080 --> 0:09:14.280 Is there nothing else to these guys are doing? 0:09:14.760 --> 0:09:18.000 There is some yeah, you know, we talked to private 0:09:18.000 --> 0:09:21.360 equity separate, but there's also you know, financing for companies 0:09:21.360 --> 0:09:23.120 that want to do some growth and things like that. 0:09:23.559 --> 0:09:25.440 The ones I'm worried about are the ones that are 0:09:25.520 --> 0:09:28.520 backing construction. I know that we have to build in 0:09:28.520 --> 0:09:31.160 this country, and I know that's required, but I don't 0:09:31.200 --> 0:09:32.840 think that should be done on the back of people 0:09:32.840 --> 0:09:35.440 that don't understand what they're getting into. If I was 0:09:35.480 --> 0:09:38.800 doing funding a private developer, I would be wanting eighteen 0:09:38.840 --> 0:09:41.720 to twenty five percent return. So when somebody sees something 0:09:41.760 --> 0:09:44.160 that says ten to twelve percent and it's a great opportunity, 0:09:44.840 --> 0:09:46.760 I don't think that's a great opportunity because you're taking 0:09:46.840 --> 0:09:48.720 a lot of risk that the development can go wrong, 0:09:49.160 --> 0:09:51.079 and we you know, I think there's over seven hundred 0:09:51.080 --> 0:09:54.920 construction companies went bust in Victoria last year, and I'm 0:09:54.960 --> 0:09:56.520 not sure the number of New South Wales and the 0:09:56.559 --> 0:09:59.400 other States. But that should tell you alone. And the 0:10:01.280 --> 0:10:04.720 thing you mentioned the banks are pulling back from this area. Yeah, 0:10:05.679 --> 0:10:08.040 the banks have assessed the risk and decided. 0:10:07.800 --> 0:10:11.320 It's too book. That's right. It was good, it was 0:10:11.360 --> 0:10:13.880 good business. You'd imagine they'd be in there. I want 0:10:13.880 --> 0:10:16.560 to simplify it, but there is that line of thinking, okay, 0:10:16.640 --> 0:10:19.760 very good. So it's interesting that to do this with you, 0:10:19.840 --> 0:10:22.000 just to sort of narrow down and say, Okay, there 0:10:22.080 --> 0:10:25.200 standing risk and what about the harder question imagined for 0:10:25.240 --> 0:10:28.000 someone like you to answer, what about the outstanding opportunities 0:10:28.040 --> 0:10:28.480 This year? 0:10:28.720 --> 0:10:31.960 It can be really volative, continued volatile year. There's a 0:10:31.960 --> 0:10:35.040 bit of euphoria today that Gazza seems to be you 0:10:35.160 --> 0:10:38.080 on its first step, but that that could fall apart 0:10:38.760 --> 0:10:40.720 very quickly, and if it does, then may be a 0:10:40.720 --> 0:10:42.960 shock to the market. So this is a year to 0:10:43.000 --> 0:10:45.880 keep some money in cash. Trump is coming in. If 0:10:45.920 --> 0:10:50.200 he suddenly announces tariffs or threadns tariffs, the markets may drop. 0:10:51.280 --> 0:10:54.480 That's always his first gamble gambit, so he often pulls 0:10:54.520 --> 0:10:57.160 back from that. So when he does threaten them, the 0:10:57.240 --> 0:10:59.880 markets may fall. That maybe your time to buy into 0:10:59.920 --> 0:11:02.840 a nicely diversified ETF and just get yourself a little 0:11:02.840 --> 0:11:05.320 bit of extra exposure and just ride that wave of 0:11:05.400 --> 0:11:08.319 recovery once he calms down and says, okay, instead of 0:11:08.360 --> 0:11:09.880 a twenty five percent taro, if I'm going to do 0:11:09.920 --> 0:11:12.439 a five percent taro for you know, I'm not going 0:11:12.480 --> 0:11:14.840 to attack Canada and Mexico because they are good. 0:11:14.720 --> 0:11:19.720 Neighbors in itself. By the dips. Is this fairly bullish view, 0:11:19.800 --> 0:11:20.199 isn't it? 0:11:20.640 --> 0:11:23.000 Well? If if you're buying into a solid blue chap 0:11:23.000 --> 0:11:26.760 etf well diversified for the long term, it's nice to 0:11:26.800 --> 0:11:29.200 get in at five or ten percent below where it's 0:11:29.240 --> 0:11:32.320 currently trading. Yeah. And I'm a long term investor, James, 0:11:32.360 --> 0:11:34.800 So I'm not trying to trade the market. I'm just 0:11:34.800 --> 0:11:37.440 looking for opportunities for at the moment, I'm looking at 0:11:37.440 --> 0:11:39.160 it and going, oh, I really don't want to put 0:11:39.160 --> 0:11:41.560 more into the market at the moment. But if I've 0:11:41.559 --> 0:11:43.200 got an opportunity to get in at five or ten 0:11:43.200 --> 0:11:46.000 percent less, yeah, So for the long term, I'd like 0:11:46.040 --> 0:11:48.320 to just move a little bit of money from cash 0:11:48.320 --> 0:11:51.360 and fixed interest where we've done really well, just to 0:11:51.400 --> 0:11:53.400 take a little bit of an extra risk going forward. 0:11:53.760 --> 0:11:55.880 But also I'm taking some money out of things like 0:11:55.960 --> 0:12:00.760 CommonWell Bank and things that just can't back their valuations. 0:12:01.160 --> 0:12:02.840 And I'm just saying a lot of my clients are 0:12:02.840 --> 0:12:05.680 in pension phase, so there's no CGT, so I'm able 0:12:05.679 --> 0:12:07.439 to take some money out of there, and just I'm 0:12:07.480 --> 0:12:09.040 looking for opportunities of where to place that. 0:12:09.679 --> 0:12:13.520 Okay, that's right, Okay, very interesting two issues there. One 0:12:13.559 --> 0:12:17.680 is obviously that idea that the fixed interest has the 0:12:17.720 --> 0:12:20.679 cycle has topped, as you say, and you said at 0:12:20.679 --> 0:12:23.040 the start, perhaps if you still want that, perhaps you 0:12:23.120 --> 0:12:25.640 fix at the inn and around these levels, knowing that 0:12:25.760 --> 0:12:28.400 you know, there's very few times in history really where 0:12:28.440 --> 0:12:32.560 you get where your cash rad is above this to say, 0:12:32.600 --> 0:12:34.640 four to six percent. That's a sort of standard range, 0:12:34.640 --> 0:12:35.079 isn't it. 0:12:35.320 --> 0:12:38.200 And I was just getting some quotes this morning, James. 0:12:38.240 --> 0:12:42.439 So you can get a four year annuity for four 0:12:42.480 --> 0:12:44.360 point nine percent, or a five year one at four 0:12:44.360 --> 0:12:46.960 point nine to five. So that's locking in four point 0:12:47.000 --> 0:12:50.400 nine five percent paid each year for the next five years. 0:12:50.679 --> 0:12:52.960 You know, if you're somebody in pension phase that needs 0:12:52.960 --> 0:12:56.600 to fund your your pensions, that's a lovely guarantee for 0:12:56.600 --> 0:12:57.160 the next time. 0:12:57.240 --> 0:12:59.800 That's you said, a newity. That's not a fix. That's 0:12:59.800 --> 0:13:01.640 not that cash deposit. 0:13:01.960 --> 0:13:04.560 Yeah, the term deposits. For the same time, you're looking 0:13:04.600 --> 0:13:07.559 at four point five to four point seven, So you 0:13:07.559 --> 0:13:09.679 can get that a little bit extra by going through 0:13:10.040 --> 0:13:14.160 an annuity provided and there's challenger and resolution life and comeback. 0:13:14.840 --> 0:13:17.000 So just shop around and just have a look. 0:13:17.800 --> 0:13:19.760 You're putting cash with the annuity provider, is. 0:13:19.760 --> 0:13:22.560 It, yes, into a fixed term annuity? 0:13:23.040 --> 0:13:25.280 Yes, I see a right, okay, and they tend to 0:13:25.320 --> 0:13:26.640 pay a little more, do they. 0:13:26.559 --> 0:13:29.079 Yeah, well, at the moment they do. Okay, you can 0:13:29.080 --> 0:13:31.959 still get The trick is you can open an incentive 0:13:32.000 --> 0:13:33.880 save over with one of the banks, or you know, 0:13:33.920 --> 0:13:36.079 a high interest savings acount and still get over five. 0:13:36.720 --> 0:13:38.520 But we know at some stage during the year that's 0:13:38.520 --> 0:13:41.120 going to drop. Even if interest rates don't drop, the 0:13:41.160 --> 0:13:44.000 banks will start dropping them themselves. You had three months 0:13:44.000 --> 0:13:46.199 ago the term deposit rates dropped the four point seventy 0:13:46.280 --> 0:13:49.720 five because the thought rates would really start dropping from February. 0:13:50.080 --> 0:13:51.920 Now we're back up to where we can get five 0:13:52.240 --> 0:13:54.480 percent for term deposits at the moment for one year, 0:13:54.960 --> 0:13:57.200 four point nine for two years, and then it starts 0:13:57.240 --> 0:13:59.280 dropping off. But when I was so I was looking 0:13:59.320 --> 0:14:01.600 for alternatives. And I looked at some the nudities over 0:14:01.600 --> 0:14:04.200 the last few days and I can get four point 0:14:04.280 --> 0:14:06.319 seven to four point nine to five from two year 0:14:06.400 --> 0:14:10.240 to five years. So you talk about laddering to make 0:14:10.280 --> 0:14:13.240 sure that you're covering your future capital needs to pay 0:14:13.240 --> 0:14:16.240 pensions or to pay your living expenses. And by using 0:14:16.280 --> 0:14:20.160 those term the puzzles and the nudies over twelve twenty four, yeah, 0:14:20.200 --> 0:14:23.640 three years, four years, and five years, they can lock 0:14:23.760 --> 0:14:25.920 in and be sure that then with the rest of 0:14:25.960 --> 0:14:28.560 their money, they don't have to react to market changes. 0:14:28.560 --> 0:14:31.560 They can invest longer term knowing that they've covered their. 0:14:31.560 --> 0:14:33.520 Cost, they've got this core and they know they're going 0:14:33.520 --> 0:14:36.320 to get for it over a period of time. Very yeah, 0:14:36.440 --> 0:14:39.800 very interesting. Okay, all right, And just on the other issue, 0:14:39.840 --> 0:14:42.600 just before we go to the break, taking some off 0:14:42.640 --> 0:14:45.400 the table. Obviously, after a very good year on equity markets, 0:14:45.400 --> 0:14:47.360 there are certainly a very good year when we look 0:14:47.400 --> 0:14:49.320 at it, it was only it was a goodish year 0:14:49.320 --> 0:14:52.160 for equity markets, but it was a spectacularly year for 0:14:52.240 --> 0:14:54.480 bank stocks. So you're talking about taking a little bit 0:14:54.520 --> 0:14:56.520 off the top of the bank stocks. 0:14:56.680 --> 0:15:00.360 Yeah, and look last year I was winging that back 0:15:00.360 --> 0:15:03.120 in nab and an Ain said, we're so far behind 0:15:03.160 --> 0:15:05.000 and they just had they had a great year and 0:15:05.000 --> 0:15:08.080 they've pulled up. I don't understand Commonell Bank at the 0:15:08.080 --> 0:15:10.480 moment why it's up where it is. So I am 0:15:10.520 --> 0:15:13.360 taking profits on that, but you know, I'm not coming 0:15:13.360 --> 0:15:15.840 out of them. I'm just saying, you know, let's just 0:15:15.880 --> 0:15:17.640 take a bit of a risk off the table. It's 0:15:17.680 --> 0:15:21.640 been a good run and you know, you know, in 0:15:21.640 --> 0:15:23.640 a lot of cases now I need to prepare for 0:15:23.760 --> 0:15:27.040 future pension payments and things like that. So I am 0:15:27.120 --> 0:15:29.960 just building up that cash with the idea that if 0:15:29.960 --> 0:15:31.520 the market does take a big drop, I have the 0:15:31.560 --> 0:15:34.080 option to go in and get in a little low 0:15:34.120 --> 0:15:35.000 price if I need to. 0:15:35.560 --> 0:15:38.480 Right, Okay, very good, Very good. All right, we'll take 0:15:38.480 --> 0:15:48.120 short break, Folks'll be back in a minute. Hello, Welcome 0:15:48.160 --> 0:15:51.200 back to the Australians and Honey Puzzle podcast. I'm James Kirby, 0:15:51.280 --> 0:15:54.480 was editor at The Australian, talking to financial advisor Liam 0:15:54.480 --> 0:15:57.240 Short of the Sonas Group, who's often on the show. 0:15:57.440 --> 0:16:01.280 Always a popular guest. I'm one of my first guests 0:16:01.360 --> 0:16:05.720 of the year for the Money Puzzle. Okay, Liam, I've 0:16:05.760 --> 0:16:07.880 collected quite a few questions for you. We may not 0:16:07.920 --> 0:16:11.160 get through them all, and keep the questions coming everybody. 0:16:11.280 --> 0:16:13.480 They're really good, and I've noticed that they're getting more 0:16:13.520 --> 0:16:17.200 and more diverse in nature, which is great actually, and 0:16:17.440 --> 0:16:19.800 all sorts of Sometimes people literally just make a comment 0:16:20.680 --> 0:16:26.120 or an observation. That's all welcome. Okay, Catherine says, I 0:16:26.160 --> 0:16:28.440 love the podcast. I'm so glad. I wish I'd come 0:16:28.480 --> 0:16:32.080 across this sort of information years ago. Thank you, Catherine. 0:16:32.360 --> 0:16:34.800 The hard part for me was understanding and making the 0:16:34.840 --> 0:16:39.760 first investment, taking that initial plunge, then coping with everything else. 0:16:39.880 --> 0:16:43.720 I guess I learned by doing, But in hindsight I 0:16:43.760 --> 0:16:47.120 really had issues finding good, clean information and independent advice. 0:16:47.200 --> 0:16:49.840 I do not really think it is possible to make 0:16:49.880 --> 0:16:53.080 good decisions without having basic knowledge, given the number of 0:16:53.120 --> 0:16:58.080 bad operators out there. Okay, Catherine, now can you please 0:16:58.840 --> 0:17:02.960 talk about it realistic long term journey to financial literacy 0:17:03.000 --> 0:17:07.560 and security. Please and recommend basic courses on finance because 0:17:07.600 --> 0:17:09.520 I have found there is a lot of bad advice 0:17:09.720 --> 0:17:14.680 out there. Okay. It's a great question, you know, with 0:17:14.840 --> 0:17:18.280 something we should cover more often. Someone who's starting or 0:17:18.359 --> 0:17:21.960 is somewhere near the start of an investment journey. And 0:17:22.040 --> 0:17:24.800 I wish I do wish I could tell you there's 0:17:24.800 --> 0:17:28.040 a course that you can sign up for. I really do. 0:17:28.640 --> 0:17:31.120 I don't know it, and I hate to tell you 0:17:31.560 --> 0:17:34.640 that a lot of the private courses are deeply skeptical 0:17:34.680 --> 0:17:39.320 about courses offered by anyone selling anything. What do you think, Liam, Yeah. 0:17:39.160 --> 0:17:41.320 Well look for me. There's two things you need to 0:17:41.359 --> 0:17:45.000 start with. One, understand your cash flow. So just go 0:17:45.119 --> 0:17:47.560 to moneysmart dot co the you and look for the 0:17:47.600 --> 0:17:48.320 budget planner. 0:17:48.640 --> 0:17:50.000 It's good, Yeah, to download that. 0:17:50.000 --> 0:17:54.240 Budget planner spreadsheet and get out six months of credit 0:17:54.280 --> 0:17:56.639 card and debit card and expenses and put it into there. 0:17:56.720 --> 0:17:58.760 Have a glass of wine, just take your time doing it. 0:17:59.280 --> 0:18:01.720 But the value of understanding whether or not you've got 0:18:01.720 --> 0:18:04.520 spare money to save or whether you've got commitments that 0:18:04.600 --> 0:18:07.760 mean you can't take a risk, that's the first a 0:18:07.800 --> 0:18:10.679 deal goal. And then go back to that money Smart 0:18:10.680 --> 0:18:13.240 website and start reading some of the articles on different 0:18:13.240 --> 0:18:13.879 things in there. 0:18:14.200 --> 0:18:17.280 Okay, I mean we should tell listeners that the particular 0:18:17.280 --> 0:18:19.320 attraction of the money Smart website is said, it's from 0:18:19.320 --> 0:18:22.840 the government, it's from ask and it's something that Acik 0:18:22.880 --> 0:18:25.440 has done and stuck with and it's evolved and it 0:18:25.640 --> 0:18:29.600 is damn good. So money Smart, which is money smart 0:18:29.200 --> 0:18:33.440 dot gov dot au, the ACIIC website where whatever else 0:18:33.560 --> 0:18:35.639 is going on at that website and whatever is the 0:18:35.760 --> 0:18:40.199 nature or the articulation of ideas And initially, if you 0:18:40.400 --> 0:18:47.800 like basic elementary investment ideas and protections for you, it 0:18:47.920 --> 0:18:50.679 is from the government and they are not selling anything. 0:18:51.480 --> 0:18:53.240 And then move on from there when you're ready to 0:18:53.240 --> 0:18:55.920 start learning about investing. Then if you want to know 0:18:55.960 --> 0:19:02.400 about shares and listed products, the ASEX have courses on shares, ETFs, 0:19:03.040 --> 0:19:06.680 bonds and they're all split down into nice little short 0:19:06.720 --> 0:19:10.359 modules of about ten to fifteen minutes each, really easy 0:19:10.400 --> 0:19:14.000 to understand. If you're interested in SMSF, the ATO have 0:19:14.400 --> 0:19:16.520 a set of about twenty six little two to three 0:19:16.560 --> 0:19:20.720 minute videos on every aspect of running an SMSF. And 0:19:20.800 --> 0:19:24.120 they've also now just issued a course. The course, I'm 0:19:24.119 --> 0:19:27.600 afraid is not what I expected. It's they've designed it 0:19:27.640 --> 0:19:29.639 as the one to punish people who broke the rules 0:19:29.920 --> 0:19:30.520 and force. 0:19:30.400 --> 0:19:33.320 Them to read it, so they spend all their time 0:19:33.400 --> 0:19:35.200 thinking of telling you what not to do. 0:19:35.320 --> 0:19:38.760 Yeah, well, it's just it's very boring. It's all written, 0:19:38.760 --> 0:19:41.879 whereas those videos were excellent. So I would start with 0:19:41.920 --> 0:19:44.440 the videos and then move to the thing, and then 0:19:44.720 --> 0:19:48.240 just start going. If you're interested in something specific, go 0:19:48.280 --> 0:19:51.440 onto a forum maybe on Facebook or somewhere that's talking 0:19:51.440 --> 0:19:54.959 about those forget about what they're recommending on there. Listen 0:19:55.320 --> 0:19:58.679 look for what people say where they learned from. You know, 0:19:59.520 --> 0:20:01.440 they if they the course they did or a book 0:20:01.480 --> 0:20:03.960 that they read. And that's why I go back to 0:20:03.960 --> 0:20:05.520 that money Smart. I know a lot of people love 0:20:05.640 --> 0:20:08.120 Scott Papes Pare for the Investor and things like that. 0:20:08.440 --> 0:20:10.119 I believe now he might be doing a lot of 0:20:10.119 --> 0:20:15.360 work with money Smart. So you're looking for your places 0:20:15.400 --> 0:20:18.480 where you're getting educational content and no one's trying to 0:20:18.480 --> 0:20:21.560