WEBVTT - An investing guide for each generation 0:00:01.680 --> 0:00:03.960 Welcome to How Do They Afford That, the podcast that 0:00:04.000 --> 0:00:07.480 peaks into the financial lives of everyday Australians. I'm Michael Thompson. 0:00:07.520 --> 0:00:09.600 I'm a writer and the co host of the podcast 0:00:09.680 --> 0:00:12.600 Fear and Greed Business News and as always, I'm a Canner, 0:00:12.640 --> 0:00:15.960 Campbell Financial Planner and founder of Sugar Muma TV, the 0:00:16.120 --> 0:00:19.200 financial literacy platform that you will find pretty much everywhere 0:00:19.239 --> 0:00:23.040 YouTube podcasts like this one, obviously, books, Instagram, threads, TikTok 0:00:23.040 --> 0:00:23.320 and more. 0:00:23.360 --> 0:00:25.479 Hollo Canna, Good morning, How are you. 0:00:25.680 --> 0:00:28.760 I'm going well, and I'm looking forward to today's episode 0:00:28.760 --> 0:00:31.080 because it is going to be big and it is 0:00:31.120 --> 0:00:34.120 going to I reckon this will answer more listener questions 0:00:34.159 --> 0:00:37.680 in one episode than anything we've ever done before. 0:00:38.000 --> 0:00:39.840 We've got a lot to cover and there's some things 0:00:39.840 --> 0:00:42.080 that have really been burning at the back of my 0:00:42.120 --> 0:00:44.479 mind that we're going to sort of unpack today. 0:00:44.880 --> 0:00:47.800 I'm looking forward to it. Investing. We're talking about investing. Obviously, 0:00:48.920 --> 0:00:52.600 investing isn't a one size fits all thing, which I 0:00:52.600 --> 0:00:54.640 think is something that we've established over the course of 0:00:54.680 --> 0:00:57.400 this podcast so far. Someone who's in their twenties, for instance, 0:00:57.800 --> 0:01:00.880 might have a very different approach to an investing that 0:01:01.000 --> 0:01:03.840 compared to someone who is approaching retirement or who has 0:01:03.960 --> 0:01:06.880 already retired. So today we are going to look at 0:01:06.920 --> 0:01:11.160 investing at different life stages and generations. What to consider 0:01:11.160 --> 0:01:14.080 if you're a baby boomer or gen X, or a millennial, 0:01:14.200 --> 0:01:16.399 gen y, gen Z all those things and to do 0:01:16.440 --> 0:01:19.320 that we are getting some help. Roger Montgomery is the 0:01:19.400 --> 0:01:22.520 founder of Montgomery Investment Management. He has more than three 0:01:22.840 --> 0:01:26.560 decades of experience in funds management and related activities, including 0:01:26.560 --> 0:01:30.720 equities analysis and stockbroking. He is also the author of 0:01:30.800 --> 0:01:34.399 best selling investment book value Able, and is a supporter 0:01:34.480 --> 0:01:37.000 of this podcast. Roger Montgomery, welcome back to how Do 0:01:37.080 --> 0:01:37.560 They Ford That? 0:01:37.760 --> 0:01:40.080 Thank you both for having me, really really great to 0:01:40.080 --> 0:01:40.680 see you again. 0:01:40.920 --> 0:01:44.319 Oh we are absolutely honored and I cannot wait to 0:01:44.560 --> 0:01:47.080 pick your brain and ask your whole follow questions that 0:01:47.120 --> 0:01:48.760 are burning on the tip of my tongue. 0:01:48.960 --> 0:01:51.640 Before we get into any of that. As you're listening, 0:01:51.680 --> 0:01:54.360 please know that anything we talk about is always general 0:01:54.400 --> 0:01:57.800 in nature. It is never personal, investment, strategic or product advice. 0:01:57.880 --> 0:02:00.480 It is purely for financial education purpose only. 0:02:00.800 --> 0:02:03.560 Absolutely Remember we do not know what your risk profile is. 0:02:03.600 --> 0:02:05.680 We do know what your goals are what your situation 0:02:05.920 --> 0:02:09.040 looks like, what's important to you. So please always bear 0:02:09.080 --> 0:02:11.640 that in mind and know that this is general in nature. 0:02:12.400 --> 0:02:16.440 Roger can I start with a fairly broad statement, and 0:02:16.520 --> 0:02:19.280 I suspect there could be an error or two in it, 0:02:19.320 --> 0:02:21.480 but I'm just going to put it out there. Starting 0:02:21.480 --> 0:02:25.400 with the youngest investors, a couple of key principles here, 0:02:25.720 --> 0:02:28.800 get started early and aim for growth. Does that sum 0:02:28.800 --> 0:02:30.560 it up reasonably? Well? 0:02:30.960 --> 0:02:35.000 Look, I think there's merit in the philosophy, no doubt 0:02:35.000 --> 0:02:38.560 about that. When I think about this particular generation, which 0:02:38.600 --> 0:02:43.000 is Generation Z, I think about my kids. My eldest 0:02:43.040 --> 0:02:46.560 is twenty three, the oldest Gen Z is twenty nine 0:02:46.880 --> 0:02:49.320 or thereabouts, and the youngest to be fourteen. My youngest 0:02:49.360 --> 0:02:53.440 is fifteen. I wrote my book to give them a 0:02:53.520 --> 0:02:58.200 recipe if I came to an untimely demise. I wanted 0:02:58.240 --> 0:03:00.440 to give them a recipe for how to invest in shares. 0:03:01.160 --> 0:03:04.480 They don't care about shares, they don't care about investing. 0:03:04.680 --> 0:03:07.440 They're not even thinking about it, except for my eldest, 0:03:07.880 --> 0:03:11.800 who at the moment is working in the cryptocurrency space 0:03:12.160 --> 0:03:15.959 in Tokyo. He does some fascinating stuff there. So he's 0:03:16.000 --> 0:03:19.560 interested in profiting and making money and growing his wealth, 0:03:20.160 --> 0:03:23.000 but not the traditional way. He's not thinking about shares, 0:03:23.040 --> 0:03:25.320 he's not thinking certainly not thinking about bonds. Wouldn't even 0:03:25.360 --> 0:03:28.240 know what a bond is, and he's not thinking about 0:03:28.240 --> 0:03:32.239 private credit or other asset classes. Really, for him, it's 0:03:32.280 --> 0:03:34.360 about a high growth asset where he can make a 0:03:34.360 --> 0:03:37.520 lot of money very quickly. That happens to be cryptocurrencies 0:03:37.560 --> 0:03:40.200 for him, and property, and he wants to take his 0:03:40.240 --> 0:03:45.240 profits from digital currencies and plow that back into property 0:03:45.240 --> 0:03:48.360 as quickly as he can. I think there's merit investing 0:03:48.360 --> 0:03:51.760 in property, but I also think that there's merit in 0:03:52.000 --> 0:03:54.080 sticking to what you know and what you're good at. 0:03:54.320 --> 0:03:57.600 He really does know that space very very well, So 0:03:57.640 --> 0:04:00.520 why would he venture outside into something that he doesn't 0:04:00.560 --> 0:04:05.640 know anything about unless he's guided into that by somebody else. 0:04:05.960 --> 0:04:08.880 You've talked to us before we've and definitely go back 0:04:08.920 --> 0:04:10.960 and have a listen to the previous episode that we've 0:04:11.000 --> 0:04:13.360 done with Roger, because it is a fantastic guide as 0:04:13.400 --> 0:04:18.120 to what to look for in quality companies to invest in. 0:04:18.640 --> 0:04:22.720 Do you find it perhaps frustrating then that there is 0:04:22.760 --> 0:04:25.599 a generation here who is perhaps not looking at those 0:04:25.600 --> 0:04:29.080 same principles of investing that you've gone through, when you've 0:04:29.160 --> 0:04:31.400 laid this out in terms of what people can look for, 0:04:31.440 --> 0:04:33.480 and looking at the history of a company and then 0:04:34.120 --> 0:04:37.200 using that to make some kind of educated projections about 0:04:37.240 --> 0:04:39.000 what is going to happen for that company in the 0:04:39.040 --> 0:04:45.560 future that shares seem like a fairly obvious logical place 0:04:45.800 --> 0:04:47.520 for a young person to be investing in. Is that 0:04:47.520 --> 0:04:50.400 at all frustrating that suddenly that there isn't this attention 0:04:50.480 --> 0:04:52.359 that you go if you got onto this right now, 0:04:52.520 --> 0:04:54.240 you could be setting yourself up for life. 0:04:54.560 --> 0:04:57.400 Yeah, it look because I don't know the people who 0:04:57.440 --> 0:04:58.800 aren't taking it up. 0:04:58.880 --> 0:05:02.280 Yeah, I'm not frustrated by Yeah, it's a very kind 0:05:02.279 --> 0:05:06.920 of zen approaches. Actually, it's not trying to control things control. 0:05:07.040 --> 0:05:08.960 What does frustrate me though, is I had a little 0:05:09.040 --> 0:05:12.000 experiment where I was allowed by my wife to have 0:05:12.080 --> 0:05:18.279 access to Instagram and Instagram reels, and it was properly 0:05:18.320 --> 0:05:21.880 turned off because I quickly became quite addicted to it 0:05:22.000 --> 0:05:25.560 and I was saving all of these bizarre things and anyway, 0:05:25.600 --> 0:05:29.359 but that during that short exposure, I saw lots of 0:05:29.480 --> 0:05:34.600 financial advice. I saw I was privy to financial advice 0:05:34.640 --> 0:05:38.560 on reels. Some of it was reasonable and conventional. Some 0:05:38.640 --> 0:05:42.120 of it was just plain bizarre. And I worry for 0:05:42.160 --> 0:05:45.279 a generation of people such as this generation jen Z, 0:05:45.680 --> 0:05:48.120 who are digital natives, you know, they've been brought up 0:05:48.200 --> 0:05:52.680 on this technology. They're not getting their advice from financial advisors. 0:05:52.720 --> 0:05:55.440 They're not getting their advice from people who know what 0:05:55.480 --> 0:05:59.920 they're doing. They're getting their advice from peers, and there 0:06:00.200 --> 0:06:03.960 is don't have that experience, and they don't know what 0:06:04.120 --> 0:06:06.960 they don't know, and because of that, there is some 0:06:07.080 --> 0:06:10.600 dangerous stuff that's being offered to them as advice. And 0:06:10.640 --> 0:06:13.960 I worry and I'm frustrated by that because there's been 0:06:14.000 --> 0:06:15.960 a lot of work done by the generations that have 0:06:15.960 --> 0:06:18.680 gone before them, and it's frustrating that that generation is 0:06:18.720 --> 0:06:21.760 going to make the same mistakes that the generation before 0:06:21.800 --> 0:06:24.680 them made by not listening to the advice of the 0:06:24.720 --> 0:06:25.960 generation before them. 0:06:26.520 --> 0:06:28.840 So it's like, stick with what you know for one thing, 0:06:29.160 --> 0:06:31.040 is kind of the first part of it, but also 0:06:31.520 --> 0:06:33.560 make the most of all of the work that has 0:06:33.600 --> 0:06:36.600 already been done in terms of explaining these principles. And 0:06:37.600 --> 0:06:39.919 that episode that you spoke to us about is a 0:06:39.920 --> 0:06:42.880 great example of that. It is a how to guide 0:06:42.920 --> 0:06:44.960 as to what to look for a starting point for 0:06:45.000 --> 0:06:45.520 your research. 0:06:45.640 --> 0:06:51.240 There are millions and millions of people gen X and 0:06:51.360 --> 0:06:57.200 baby boomers who have lost billions of dollars trading shares 0:06:57.240 --> 0:07:01.200 and futures and derivatives using charts. And when I turned 0:07:01.200 --> 0:07:05.880 on Instagram reels, there were these young kids promoting charts 0:07:06.120 --> 0:07:09.800 and I thought, oh my gosh, you know I tested well. 0:07:09.800 --> 0:07:12.920 I used to work for BT Australia. We had an algorithm. 0:07:12.920 --> 0:07:15.320 We worked on algorithm that I worked with another guy, 0:07:15.680 --> 0:07:18.280 a business partner of mine, and we were at one 0:07:18.280 --> 0:07:22.120 point we were the biggest traders of the Nikeye Futures 0:07:22.160 --> 0:07:27.200 index on the Tokyo Exchange Tokyo Futures Exchange, and we 0:07:27.520 --> 0:07:29.480 learned what works and what doesn't work. And I can 0:07:29.560 --> 0:07:33.200 assure you that when you take all of these charting 0:07:33.280 --> 0:07:37.560 techniques and digitize them and test them, which is what 0:07:37.600 --> 0:07:40.400 we did. We back tested all of this stuff over many, 0:07:40.440 --> 0:07:43.320 many years and across markets to see if they were 0:07:43.400 --> 0:07:46.520 robust or not. They don't hold water, they don't work. 0:07:46.800 --> 0:07:49.320 It's the most bizarre thing. If you don't mind, can 0:07:49.320 --> 0:07:52.560 you indulge me a very quick little story. Please. There's 0:07:52.600 --> 0:07:56.240 a thing in charting called support and resistance, right, and 0:07:56.320 --> 0:08:00.440 support is supposedly the level at which the share won't 0:08:00.480 --> 0:08:04.120 go below, and resistance is the level above which it 0:08:04.160 --> 0:08:08.320 won't go. But if the price breaks through resistance, then 0:08:08.360 --> 0:08:10.880 according to this reel that I watched, the price will 0:08:10.880 --> 0:08:14.640 go keep going up. Well, let's suppose the price in 0:08:14.680 --> 0:08:18.360 the middle is two dollars. Support is at a dollar fifty, 0:08:18.880 --> 0:08:22.480 and resistance is at three dollars, for example. So the 0:08:22.480 --> 0:08:25.200 theory goes that you don't buy the shares at two 0:08:25.240 --> 0:08:28.560 dollars today. You wait for it to go above three dollars, 0:08:28.880 --> 0:08:32.000 then you buy it. Think about doing that in real estate. 0:08:32.040 --> 0:08:34.440 Imagine going to an action and you're there with your 0:08:34.520 --> 0:08:37.640 dad or your mum, and you say, Mum, I really 0:08:37.640 --> 0:08:39.640 want to buy this apartment. It's going to go for 0:08:39.679 --> 0:08:42.439 two hundred and fifty thousand dollars. Oh no, no, no, 0:08:43.040 --> 0:08:44.679 we'll come back next year and see if it's gone 0:08:44.720 --> 0:08:47.240 through three hundred thousand, then we'll buy it, because then 0:08:47.280 --> 0:08:50.000 it might go up further. That's absurd. And if it 0:08:50.040 --> 0:08:52.120 doesn't work for one asset class, it's not going to 0:08:52.160 --> 0:08:54.920 work for another asset class. It's nonsense. And I see 0:08:54.960 --> 0:08:58.160 a generation of young people making the same mistakes that 0:08:58.280 --> 0:09:01.600 all the generations before them have made. It's just a 0:09:01.640 --> 0:09:04.200 waste of time and it's so sad that they're going 0:09:04.200 --> 0:09:05.079 to lose a lot of money. 0:09:05.960 --> 0:09:08.680 The one thing that I completely agree with absolutely everything 0:09:08.679 --> 0:09:10.880 you're saying, and I have to say, people, you know, 0:09:11.280 --> 0:09:15.239 viewers watch these people on these reels selling these programs 0:09:15.240 --> 0:09:19.760 and software trading systems and charts and graphs, and they 0:09:19.800 --> 0:09:21.720 don't realize the person in front of them is actually 0:09:21.800 --> 0:09:25.720 not actually a successful investor. They're a successful salesperson indeed. 0:09:25.920 --> 0:09:27.920 And that's where I think the smoker mirrors is just 0:09:28.040 --> 0:09:31.839 causing a lot of problems and people investing is it takes. 0:09:32.000 --> 0:09:34.319 As you know, you've got three decades of experience. When 0:09:34.320 --> 0:09:37.760 it comes to investing, it's experience, it's education. There's a 0:09:37.800 --> 0:09:41.280 huge amount of analysis, not having the right connections, Like 0:09:41.400 --> 0:09:43.080 I mean, I won't even go through the long list 0:09:43.080 --> 0:09:47.000 of skills and intuition and education you need. And these 0:09:47.240 --> 0:09:49.240 every day people thinking they could just pick it up 0:09:49.280 --> 0:09:51.760 by doing a two hundred and ninety nine dollars course, 0:09:52.120 --> 0:09:53.880 I like, it's just insane. 0:09:54.080 --> 0:09:57.120 I used to meet a lot of This is fifteen 0:09:57.160 --> 0:09:59.920 twenty years ago. Met a lot of dentists and doctors 0:10:00.040 --> 0:10:03.000 who took up trading. They and I pointed out to them, 0:10:03.040 --> 0:10:07.280 you know, you've done a dozen years of study to 0:10:07.360 --> 0:10:10.520 become qualified at what you're doing, and you think that 0:10:10.640 --> 0:10:12.959 this is something that you can just you know, read 0:10:13.000 --> 0:10:15.200 a book and that's going to be enough. You know, 0:10:15.280 --> 0:10:19.080 charting behind the charts are businesses. We talked about this 0:10:19.080 --> 0:10:21.320 the last time I was on the program. You know, 0:10:21.360 --> 0:10:23.840 behind those charts. Turn the charts off. You don't need those. 0:10:23.880 --> 0:10:25.680 You just need to look at the operating performance of 0:10:25.720 --> 0:10:28.040 the business and you'll be able to pick the right 0:10:28.080 --> 0:10:31.920 things from that. The charts is kind of an attempt 0:10:31.960 --> 0:10:34.720 at a shortcut, and it's a really clumsy attempt. 0:10:35.440 --> 0:10:38.560 The second thing that really worries me and infuriates me 0:10:38.600 --> 0:10:42.760 to a certain degree is the lack of understanding of risk. 0:10:43.679 --> 0:10:47.640 You have this young generation who has motivated and driven, 0:10:47.840 --> 0:10:49.760 you know, they want to get ahead financially, which I 0:10:49.760 --> 0:10:53.800 think is admirable, but they don't understand risk, and they 0:10:53.840 --> 0:10:57.320 are self educated, and they are making these massive decisions 0:10:57.760 --> 0:11:01.079 with their hard earned money not under standing the risk 0:11:01.320 --> 0:11:05.839 that they're taking. And this is where I find most 0:11:06.640 --> 0:11:09.480 self educated, and I does not necessarily mean when I 0:11:09.520 --> 0:11:11.360 say self educated that they actually really do know what 0:11:11.400 --> 0:11:15.080 they're doing. No one knows what a risk profile is. 0:11:15.160 --> 0:11:18.080 And if that anyone goes and see a financial planner, 0:11:18.440 --> 0:11:20.760 one of the first documents they're going to sit you 0:11:20.800 --> 0:11:23.680 down and go through with you is a risk profile. 0:11:24.400 --> 0:11:26.440 Now people will come to me and say, you know, 0:11:26.559 --> 0:11:29.360 I invested in this and that, and they're high risk investments. 0:11:29.360 --> 0:11:30.840 So as far as I'm concerned, they should be just 0:11:30.840 --> 0:11:33.400 going to the casino with the level of risk that 0:11:33.400 --> 0:11:35.360 they're taking. But when I do a risk profile with them, 0:11:35.880 --> 0:11:37.920 which has you know, mean, there are hundreds of different 0:11:37.960 --> 0:11:42.160 risk profiles out there, but the quality ones, suddenly people realize, oh, 0:11:42.160 --> 0:11:44.200 hang on, no, I would never take that type of risks. 0:11:44.200 --> 0:11:45.920 And I'm like, well, look what you're doing over here 0:11:46.320 --> 0:11:48.480 doesn't make sense. But they, just as you just said, 0:11:48.640 --> 0:11:51.439 they don't know what they don't know, and I'm interested 0:11:51.440 --> 0:11:51.800 to know that. 0:11:52.679 --> 0:11:53.520 What are your thoughts of. 0:11:53.559 --> 0:11:56.160 Risk profiling is something you would recommend someone does as 0:11:56.200 --> 0:11:59.240 part of getting into building up a share portfolio and 0:11:59.280 --> 0:12:02.040 investing in share How valuable do you see it in 0:12:02.080 --> 0:12:06.280 someone understanding the importance of understanding timing with shares, and 0:12:06.320 --> 0:12:09.080 I'm I say timing and trying to pick the market, 0:12:09.120 --> 0:12:11.240 but time and going okay, well I need this money 0:12:11.280 --> 0:12:13.800 to pay for a deposit in five years, Maybe shares 0:12:13.840 --> 0:12:16.840 aren't the smartest thing necessarily to use all my money 0:12:16.880 --> 0:12:17.520 for right now. 0:12:17.760 --> 0:12:20.439 Yeah, I would look. We talked a little bit the 0:12:20.520 --> 0:12:24.360 last miles on the program about private credit and private credit. 0:12:24.880 --> 0:12:29.600 I think if you're going to need the money in two, three, 0:12:29.880 --> 0:12:33.760 four years, then the stock market, unfortunately, it could be 0:12:33.800 --> 0:12:36.679 on its knees when you need the money. Yeah, because 0:12:36.679 --> 0:12:40.320 the stock market is volatile, and so private credit probably 0:12:40.360 --> 0:12:44.280 offers a more attractive alternative. If your time horizon is 0:12:44.320 --> 0:12:47.600 longer than that five years plus, then I would say, well, 0:12:47.720 --> 0:12:51.040 that's enough time for the stock market to recover and 0:12:51.080 --> 0:12:54.800 you'll probably do okay, particularly if you're investing regularly, so 0:12:54.840 --> 0:12:56.960 you're not just making a lump some investment today and 0:12:57.000 --> 0:12:59.400 then putting in the bottom drawn forgetting about it, but 0:12:59.440 --> 0:13:02.080 you're regular. Adding that way, if the market is volatile 0:13:02.120 --> 0:13:05.520 in the intervening five years, you can buy more at 0:13:05.520 --> 0:13:07.560 a lower price and that will help with the recovery. 0:13:07.600 --> 0:13:10.800 That will accelerate the recovery but a couple of points 0:13:10.840 --> 0:13:12.679 that you made that I think is interesting. I'm going 0:13:12.720 --> 0:13:16.240 to be really unconventional here. I think nothing teaches you 0:13:16.400 --> 0:13:21.720 risk like losing money. Yes, right, do that when you're young. 0:13:23.080 --> 0:13:25.720 Do that good. And I've contradicted what I said earlier. 0:13:26.240 --> 0:13:28.800 But if you're going to lose I remember a friend 0:13:28.840 --> 0:13:32.280 of mine and I was in Melbourne. We're at university, 0:13:33.720 --> 0:13:36.960 and this is back in nineteen eighty nine, and I 0:13:37.000 --> 0:13:40.640 remember both of us saying we were coming up with 0:13:40.679 --> 0:13:43.880 an idea for making money in the markets, and we 0:13:43.920 --> 0:13:46.360 thought ten thousand dollars is a lot of money. My 0:13:46.440 --> 0:13:49.360 mum went garranteur on a loan for me to get 0:13:49.360 --> 0:13:52.640 the ten thousand dollars. My friend was very, very wealthy, 0:13:52.760 --> 0:13:55.520 and it was nothing for him to get ten thousand dollars. 0:13:55.679 --> 0:13:58.480 So we put our ten thousand dollars in. We turned 0:13:58.480 --> 0:14:01.520 that twenty thousand dollars very quick into forty thousand dollars. 0:14:01.960 --> 0:14:04.920 And this is back in the late nineteen eighties. I 0:14:04.920 --> 0:14:07.240 thought I didn't need to go to university. I thought, 0:14:07.240 --> 0:14:08.920 why am i UNI? I'm just going to keep doing 0:14:08.920 --> 0:14:11.880 this this is I can quit UNI and I'll be fine. 0:14:12.320 --> 0:14:14.920 But then over the ensuing couple of weeks, we lost 0:14:14.960 --> 0:14:17.240 all of our money and I ended up working at 0:14:17.240 --> 0:14:20.200 a fish and chip shop for a year and worked 0:14:20.240 --> 0:14:22.760 at a nightclub to pay my mum back because she 0:14:22.800 --> 0:14:24.880 was guaranteur on the loan, the ten thousand dollar loan. 0:14:25.600 --> 0:14:28.880 Nothing taught me risk like losing money. But I'm glad 0:14:28.920 --> 0:14:30.480 that I did it then because both of us said 0:14:30.480 --> 0:14:33.160 at the time, look, when we're in our forties and fifties, 0:14:33.600 --> 0:14:36.200 ten thousand dollars won't matter that much to us, So 0:14:36.280 --> 0:14:38.400 now's the time to do it. It seemed like all 0:14:38.440 --> 0:14:43.360 the money in the world, But inflation and salary increases 0:14:43.360 --> 0:14:47.640 and property price increases over time diminishes that initial risk 0:14:47.640 --> 0:14:48.680 that you thought was a lot. 0:14:49.160 --> 0:14:49.320 Yeah. 0:14:49.360 --> 0:14:50.920 I noticed that I was in an auction on the 0:14:50.920 --> 0:14:53.680 weekend and there was a person bidding at the auction 0:14:53.760 --> 0:14:56.360 and they were bidding in you know, twos and three 0:14:56.400 --> 0:14:59.080 thousand dollars increments, and the other bidder was bidding an 0:14:59.120 --> 0:15:01.880 eighty thousand dollars increments. Well, you know, every time it 0:15:01.920 --> 0:15:04.840 went up two thousand dollars, they'd bid another eighty and 0:15:05.160 --> 0:15:07.360 an event, you know, after three bids they were knocked out. 0:15:07.760 --> 0:15:10.000 And I think that's a function of the fact that 0:15:10.000 --> 0:15:12.160 they were thinking about what the property is worth today, 0:15:13.000 --> 0:15:15.160 not realizing that, you know, at an average increase of 0:15:15.200 --> 0:15:19.320 about seven percent, which is what Australian property prices, particularly houses, 0:15:19.320 --> 0:15:22.680 have gone up by over the last fifteen years or so, 0:15:23.040 --> 0:15:25.360 that property is going to be worth twice as much 0:15:25.640 --> 0:15:27.920 in ten years time. So the extra eighty grand is 0:15:27.960 --> 0:15:30.440 not that much when you realize that, you know it's 0:15:30.440 --> 0:15:32.800 going to be worth a whole lot more So when 0:15:32.800 --> 0:15:35.320 you're young, you can you can afford to have that perspective. 0:15:35.840 --> 0:15:38.920 You can afford to think about ten years time, fifteen 0:15:38.960 --> 0:15:41.760 years time, twenty years time, and you can afford to 0:15:41.760 --> 0:15:44.560 take a few risks. They have to be measured. You 0:15:44.560 --> 0:15:46.400 don't want to bet the whole farm, although that's what 0:15:46.480 --> 0:15:50.160 I did. You know, I didn't to work to pay 0:15:50.160 --> 0:15:54.120 it off, but it taught me risk, which came in very, 0:15:54.200 --> 0:15:57.040 very handy for the rest of my investing career. 0:15:57.800 --> 0:15:59.760 And that's exactly what we want to do here, is 0:15:59.760 --> 0:16:02.360 make sure that whatever you decide to do, you understand 0:16:02.400 --> 0:16:05.440 the risk involved. And and you know, I'm a very 0:16:05.480 --> 0:16:08.760 aggressive investor like yourself. You know, I'd say ninety five 0:16:08.760 --> 0:16:13.160 percent of my investment portfolio, including my super is predominantly shares. 0:16:13.280 --> 0:16:16.360 I'm in it for the long gain's aggressive risk. 0:16:16.600 --> 0:16:18.960 Ye say, that's aggressive, but if you understand your risk, 0:16:19.440 --> 0:16:21.360 it's rational risk taking. 0:16:21.160 --> 0:16:24.040 Exactly, which is an aggressive And this is the frustration 0:16:24.120 --> 0:16:26.440 as a financial planner. I actually think I invest very conservatively, 0:16:26.480 --> 0:16:30.040 and I think my investment portfolio is extremely boring, but 0:16:30.200 --> 0:16:33.200 from an acid point of view, and with my financial. 0:16:32.760 --> 0:16:36.760 Planning license, all your money and that's. 0:16:36.600 --> 0:16:40.080 It's technically deemed as high growth, which is you know, 0:16:40.160 --> 0:16:42.520 then considered highly volatile and high aggressive, even though I 0:16:42.520 --> 0:16:47.080 think it's incredibly boring. But you know, that's the difference 0:16:47.240 --> 0:16:50.680 and understanding my risk and understanding obviously the financial education 0:16:50.800 --> 0:16:52.120 piece and how valuable it is. 0:16:52.200 --> 0:16:55.360 So then the younger generation, you know, generation Z my 0:16:55.480 --> 0:17:03.640 son who's invested inverted commas, invested in crypto, you know, 0:17:03.720 --> 0:17:06.439 he understands that risk. He knows, he's been through a 0:17:06.480 --> 0:17:09.639 couple of cycles, he's seen how far it can fall. 0:17:10.040 --> 0:17:13.080 He gets it. But he's still committed to it and 0:17:13.160 --> 0:17:15.919 he's that's what he's doing, so he knows the exposures 0:17:16.000 --> 0:17:18.680 that he's taking. It's when you don't understand the risk, 0:17:19.240 --> 0:17:22.240 that's when that's when bad things are going to happen 0:17:22.480 --> 0:17:26.439 that are unanticipated. Bad things can still happen, you know, 0:17:26.520 --> 0:17:30.000 to you, but you anticipate it and you ride through 0:17:30.000 --> 0:17:32.000 it because you know what the long term outcome is 0:17:32.040 --> 0:17:34.399 going to be. So for that younger generation gen Z, 0:17:35.080 --> 0:17:39.240 you know, they can take a few risks early. That's okay, all. 0:17:39.200 --> 0:17:41.360 Right, all right, So that's I mean, and we may 0:17:41.400 --> 0:17:43.439 have to leave gen Z behind now because we have 0:17:43.480 --> 0:17:46.040 a number of other generations still to get through. But 0:17:46.119 --> 0:17:49.440 really we are talking essentially an acceptable level of risk, 0:17:49.560 --> 0:17:51.879 and the risk kind of varies depending on the age 0:17:51.960 --> 0:17:52.919 and the individual. 0:17:53.600 --> 0:17:55.680 You know, it's not fair. I mean, it's really hard 0:17:55.760 --> 0:17:59.800 to talk about a generational investing because, as I said earlier, 0:18:00.000 --> 0:18:03.760 I've got three children, two adult children who are gen 0:18:03.880 --> 0:18:07.439 Z and one teen, and they're all completely different people, 0:18:07.680 --> 0:18:10.920 and they have different different appetites for risk and different 0:18:11.040 --> 0:18:14.959 attitudes to money. One as a saver, one is a spendthrift, 0:18:15.720 --> 0:18:18.840 and they're going to have different lives as a consequence 0:18:18.880 --> 0:18:21.480 of that, but that's who they are, all right. 0:18:21.600 --> 0:18:23.639 What we're going to do is, in a little bit, 0:18:23.640 --> 0:18:25.640 we're going to take a break. And after the break, 0:18:26.000 --> 0:18:28.000 I want to talk to you about the kind of 0:18:28.040 --> 0:18:30.639 the middle generations, because to me that kind of feels 0:18:30.640 --> 0:18:32.800 like where there's a fair bit of gray as to 0:18:33.000 --> 0:18:36.679 indeed as to the perhaps the right mix for those generations. 0:18:36.680 --> 0:18:39.600 But before we do that, we've talked about the young. 0:18:40.359 --> 0:18:43.560 Let's talk about the other end of the age spectrum, 0:18:43.560 --> 0:18:46.919 but also the other end of the risk spectrum. So 0:18:46.960 --> 0:18:50.760 we're talking about kind of older Australians, people who are 0:18:50.840 --> 0:18:55.080 either quite close to retirement or have already retired. And 0:18:55.480 --> 0:18:58.240 assuming then that if we when we're talking about young people, 0:18:58.240 --> 0:19:01.919 we're talking about the ability to take a few more risks, 0:19:03.040 --> 0:19:05.920 presumably that's not the case for this generation. 0:19:06.640 --> 0:19:09.960 Yeah, and Canna, you and I were talking about this 0:19:10.000 --> 0:19:14.400 before we began recording the podcast. The conventional wisdom is 0:19:14.480 --> 0:19:18.280 that as you get older, you invest more conservatively, you 0:19:18.320 --> 0:19:22.400 invest more for income. But what that does is if 0:19:22.400 --> 0:19:25.919 you follow that recipe, you miss out on growth. And 0:19:25.960 --> 0:19:28.520 as you pointed out, you know, if you're retiring at 0:19:28.520 --> 0:19:31.520 sixty five today, you've got twenty and potentially thirty years 0:19:31.520 --> 0:19:35.000 of spending that you have to finance. It could be. 0:19:34.760 --> 0:19:37.760 Really dangerous and detrimental to your financial will being to 0:19:38.280 --> 0:19:43.360 follow that Bonds fixed interest cash generic recommendation. 0:19:43.720 --> 0:19:46.760 So I'll give you an example. Thirty years ago, my 0:19:46.840 --> 0:19:51.520 friends introduced me to red wine, and I have since. 0:19:51.640 --> 0:19:53.280 I've had a love of red wine for a very 0:19:53.320 --> 0:19:57.080 long time. And back thirty years ago when I was introduced, 0:19:57.240 --> 0:20:00.679 I bought a bottle of Penfoldst. Henri La. It was 0:20:00.720 --> 0:20:03.800 called a claret. Then the French preventedors from using We're 0:20:03.800 --> 0:20:06.040 not allowed to call it claret anymore. But it was 0:20:06.119 --> 0:20:09.320 fourteen dollars ninety nine a bottle, which in your mid 0:20:09.359 --> 0:20:11.159 twenties you're kind of going, oh, come, well, you know 0:20:11.160 --> 0:20:14.240 it's more than a six dollar pad tie, but you 0:20:14.280 --> 0:20:17.600 know it's it's fourteen dollars. That wine today is one 0:20:17.680 --> 0:20:20.720 hundred and fifty dollars, and in fifteen years time it 0:20:20.760 --> 0:20:24.080 will be three hundred and forty dollars for the same wine. Now, 0:20:24.080 --> 0:20:26.520 the point I'm making is, if you're retiring today and 0:20:26.560 --> 0:20:28.800 you're enjoying St. Honri A one hundred and fifty dollars 0:20:28.840 --> 0:20:31.560 a bottle, you've got to grow your money at the 0:20:31.600 --> 0:20:34.320 same rate that wine is increasing so that you can 0:20:34.359 --> 0:20:36.639 still afford to drink it in twenty years time or 0:20:36.680 --> 0:20:39.640 thirty years time or fifteen years time. So it's really 0:20:39.720 --> 0:20:42.679 important that you have growth in your portfolio. You have 0:20:42.760 --> 0:20:45.720