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Speaker 1: Welcome to Fear and Greed Sunday feature. I'm Michael Thompson.

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Speaker 1: Every Wednesday, we release a sister podcast called How Do

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Speaker 1: They Afford That, which features me and financial planner Canna Campbell,

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Speaker 1: all about personal finance, making your money work harder for you.

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Speaker 1: A lot of what we talk about on that show

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Speaker 1: is investing, and today's episode was released late last year

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Speaker 1: and it doesn't just take a one size fits all

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Speaker 1: approach to investing, not at all. This is investing for

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Speaker 1: each generation. We've got a special guest in the studio,

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Speaker 1: Roger Montgomery from Montgomery Investment Management. Just a heads up,

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Speaker 1: there is a lot in this episode. It is on

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Speaker 1: the longer side, so you may want to listen over

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Speaker 1: a couple of days, but you will want to be

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Speaker 1: taking notes because Roger is full of terrific tips for

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Speaker 1: investors basically at any life stage. I hope you enjoy it.

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Speaker 1: Welcome to How Do They Afford That? The podcast that

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Speaker 1: peaks into the financial lives of everyday Australians. I'm Michael Thompson.

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Speaker 1: I'm a writer and the co host of the podcast

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Speaker 1: Fear and Green Business News, and as always i'm a

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Speaker 1: Canna Campbell financial planner and founder of Sugarmuma TV, the

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Speaker 1: financial literacy platform that you will find pretty much everywhere

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Speaker 1: YouTube podcast like this one, obviously, books, Instagram, threads, TikTok

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Speaker 1: and more. Hollo Canna, good morning, How are you. I'm

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Speaker 1: going well, and I'm looking forward to today's episode because

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Speaker 1: it is going to be big and it is going

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Speaker 1: to I reckon this will answer more listener questions in

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Speaker 1: one episode than anything we've ever done before.

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Speaker 2: We've got a lot to cover and there's some things

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Speaker 2: that have really been burning at the back of my

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Speaker 2: mind that we're going to sort of unpack today.

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Speaker 1: I'm looking forward to it. Investing. We're talking about investing. Obviously,

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Speaker 1: investing isn't a one size fits all thing, which I

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Speaker 1: think is something that we've established over the course of

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Speaker 1: this podcast so far. Someone who's in their twenties, for instance,

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Speaker 1: might have a very different approach to investing compared to

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Speaker 1: someone who is approaching retirement or who has already retired.

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Speaker 1: So today we are going to look at investing at

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Speaker 1: different life stages and generation. What to consider if you're

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Speaker 1: a baby boomer or Gen X or a millennial, gen Y,

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Speaker 1: gen Z all those things, and to do that we

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Speaker 1: are getting some help. Roger Montgomery is the founder of

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Speaker 1: Montgomery Investment Management. He has more than three decades of

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Speaker 1: experience in funds management and related activities, including equities analysis

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Speaker 1: and stockbroking. He is also the author of best selling

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Speaker 1: investment book value Able, and is a supporter of this podcast.

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Speaker 1: Roger Montgomery, welcome back to how do they for that?

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Speaker 3: Thank you both for having me, really really great to

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Speaker 3: see you again.

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Speaker 2: Oh we are absolutely honored and I cannot wait to

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Speaker 2: pick your brain and ask your whole follow questions that

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Speaker 2: are burning on the tip of my tongue.

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Speaker 1: Before we get into any of that. As you're listening,

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Speaker 1: please know that anything we talk about is always general

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Speaker 1: in nature. It is never personal, investment, strategic or product advice.

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Speaker 1: It is purely for financial education purposes only.

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Speaker 2: Absolutely remember we do not know what your risk profile is.

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Speaker 2: We do know what your goals are, what your situation

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Speaker 2: looks like, what's important to you, so please always bear

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Speaker 2: that in mind and know that this is general in nature.

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Speaker 1: Roger, can I start with a fairly broad statement, and

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Speaker 1: I suspect there could be an error or two in it,

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Speaker 1: but I'm just going to put it out there starting

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Speaker 1: with the youngest investors. A couple of key principles here,

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Speaker 1: get started early and aim for growth. Does that sum

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Speaker 1: it up reasonably?

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Speaker 3: Well? Look, I think there's merit in the philosophy, no

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Speaker 3: doubt about that. When I think about this particular generation,

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Speaker 3: which is Generation Z, I think about my kids. My

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Speaker 3: eldest is twenty three, the oldest Gen Z is twenty

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Speaker 3: nine or thereabouts, and the youngest to be fourteen. My

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Speaker 3: youngest is fifteen. I wrote my book to give them

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Speaker 3: a recipe if I came to an untimely demise. I

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Speaker 3: wanted to give them a recipe for how to invest

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Speaker 3: in shares. They don't care about shares. They don't care

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Speaker 3: about investing. They're not even thinking about it. Except for

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Speaker 3: my eldest, who at the moment is working in the

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Speaker 3: cryptocurrency space in Tokyo and does some fascinating stuff there.

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Speaker 3: So he's interested in profiting and making money and growing

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Speaker 3: his wealth, but not the traditional way. He's not thinking

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Speaker 3: about shares. He's not thinking certainly not thinking about bonds.

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Speaker 3: Wouldn't even know what a bond is, and he's not

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Speaker 3: thinking about private credit or other asset classes. Really, for him,

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Speaker 3: it's about a high growth asset where he can make

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Speaker 3: a lot of money very quickly. That happens to be

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Speaker 3: cryptocurrencies for him and property, and he wants to take

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Speaker 3: his profits from digital currencies and plow that back into

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Speaker 3: property as quickly as he can. I think there's merit

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Speaker 3: investing in property, but I also think that there's merit

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Speaker 3: in sticking to what you know and what you're good at.

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Speaker 3: He really does know that space very very well, So

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Speaker 3: why would he venture outside into something that he doesn't

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Speaker 3: know anything about unless he's guided into that by somebody else.

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Speaker 1: You've talked to us before we've and definitely go back

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Speaker 1: and have a listen to the pre episode that we've

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Speaker 1: done with Roger, because it is a fantastic guide as

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Speaker 1: to what to look for in quality companies to invest in.

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Speaker 1: Do you find it perhaps frustrating then, that there is

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Speaker 1: a generation here who is perhaps not looking at those

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Speaker 1: same principles of investing that you've gone through. When you've

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Speaker 1: laid this out in terms of what people can look

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Speaker 1: for and looking at the history of a company and

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Speaker 1: then using that to make some kind of educated projections

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Speaker 1: about what is going to happen for that company in

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Speaker 1: the future. That shares seem like a fairly obvious logical

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Speaker 1: place for a young person to be investing in. Is

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Speaker 1: that at all frustrating that suddenly that there isn't this

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Speaker 1: attention that you go. If you got onto this right now,

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Speaker 1: you could be setting yourself up for life. Yeah.

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Speaker 3: Look, because I don't know the people who aren't taking

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Speaker 3: it up, I'm not frustrated by it. Yea.

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Speaker 1: It's a very kind of zen approaches. Actually, it's not

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Speaker 1: not trying to work control things control.

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Speaker 3: What does frustrate me though, is I had a little

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Speaker 3: experiment where I was allowed by my wife to have

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Speaker 3: access to Instagram and Instagram reels, and it was properly

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Speaker 3: turned off because I quickly became quite.

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Speaker 4: Addicted to it and I was saving all of these

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Speaker 4: bizarre things and anyway, but during that short exposure, I

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Speaker 4: saw lots of financial advice.

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Speaker 3: I was privy to financial advice on reels. Some of

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Speaker 3: it was reasonable and conventional, some of it was just

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Speaker 3: plain bizarre. And I worry for a generation of people

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Speaker 3: such as this generation jen Z, who are digital natives.

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Speaker 3: You know, they've been brought up on this technology. They're

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Speaker 3: not getting their advice from financial advisors. They're not getting

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Speaker 3: their advice from people who know what they're doing. They're

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Speaker 3: getting their advice from peers, and their peers don't have

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Speaker 3: that experience, and they don't know what they don't know,

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Speaker 3: and because of that, there are some dangerous stuff that's

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Speaker 3: being offered to them as advice. And I worry and

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Speaker 3: I'm frustrated by that because there's been a lot of

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Speaker 3: work done by the generations that have gone before them,

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Speaker 3: and it's frustrating that that generation is going to make

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Speaker 3: the same mistakes that the generation before them made by

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Speaker 3: not listening to the advice of the generation before them.

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Speaker 1: So it's like, stick with what you know for one thing,

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Speaker 1: is kind of the first part of it. But also

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Speaker 1: make the most of all of the work that has

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Speaker 1: already been done in terms of explaining these principles. And

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Speaker 1: that episode that you spoke to us about is a

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Speaker 1: great example of that. Is it is a how to

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Speaker 1: guide as to what to look for a starting point

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Speaker 1: for your research.

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Speaker 3: There are millions and millions of people gen X and

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Speaker 3: baby boomers who have lost billions of dollars trading shares

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Speaker 3: and futures and derivatives using charts. And when I turned

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Speaker 3: on Instagram, reels. There were these young kids promoting charts

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Speaker 3: and I thought, oh my gosh, you know, I tested

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Speaker 3: well for BT Australia. We had an algorithm. We worked

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Speaker 3: on algorithm. Then I worked with another guy, a business

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Speaker 3: partner of mine, and we were at one point we

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Speaker 3: were the biggest traders of the NIKEE Futures Index on

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Speaker 3: the Tokyo Exchange Tokyo Futures Exchange, and we learned what

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Speaker 3: works and what doesn't work. And I can assure you

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Speaker 3: that when you take all of these charting techniques and

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Speaker 3: digitize them and test them, which is what we did.

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Speaker 3: We back tested all of this stuff over many, many

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Speaker 3: years and across markets to see if they were robust

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Speaker 3: or not. They don't hold water, they don't work. It's

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Speaker 3: the most bizarre thing. If you don't mind, can you

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Speaker 3: indulge me a very quick little story, y please. There's

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Speaker 3: a thing in charting called support and resistance, right, and

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Speaker 3: support is supposedly the level at which the share price

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Speaker 3: won't go below, and resistance is the level above which

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Speaker 3: it won't go But if the price breaks through resistance,

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Speaker 3: then according to this reel that I watched, the price

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Speaker 3: will keep going up. Well, Let's suppose the price in

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Speaker 3: the middle is two dollars, support is at a dollar fifty,

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Speaker 3: and resistance is at three dollars, for example. So the

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Speaker 3: theory goes that you don't buy the shares at two

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Speaker 3: dollars today, you wait for it to go above three dollars,

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Speaker 3: then you buy it. Think about doing that in real estate.

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Speaker 3: Imagine going to an action and you're there with your

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Speaker 3: dad or your mum and you say, Mum, I really

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Speaker 3: want to buy this apartment. It's going to go for

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Speaker 3: two hundred and fifty thousand dollars. Oh no, no, no,

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Speaker 3: we'll come back next year and see if it's gone

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Speaker 3: through three hundred thousand, then we'll buy it, because then

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Speaker 3: it might go up further. That's absurd, and if it

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Speaker 3: doesn't work for one asset class, it's not going to

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Speaker 3: work for another sset class. It's nonsense. And I see

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Speaker 3: a generation of young people making the same mistakes that

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Speaker 3: all the generations before them have made. It's just a

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Speaker 3: waste of time, and it's so sad that they're going

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Speaker 3: to lose a lot of money.

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Speaker 2: The one thing that I completely grew with absolutely everything

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Speaker 2: you're saying, and I have to say, you know, viewers

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Speaker 2: watch these people on these reels selling these programs and

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Speaker 2: software trading systems and charts and graphs, and they don't

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Speaker 2: realize the person in front of them is actually not

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Speaker 2: actually a successful investor.

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Speaker 5: They're a successful salesperson indeed.

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Speaker 2: And that's where I think the smoker mirrors is just

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Speaker 2: causing a lot of problems and people investing.

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Speaker 5: It takes.

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Speaker 2: As you know, you've got three decades of experience when

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Speaker 2: it comes to investing. It's it's experienced, it's education as

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Speaker 2: a huge amount of analysis, not having the right connections,

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Speaker 2: Like I mean, I won't even go through the long

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Speaker 2: list of skills and intuition and education you need. And

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Speaker 2: these everyday people thinking they could just pick it up

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Speaker 2: by doing a two hundred and ninety nine dollars course.

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Speaker 2: I used to like, it's just insane.

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Speaker 3: I used to meet a lot of this is fifteen

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Speaker 3: twenty years ago, met a lot of dentists and doctors

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Speaker 3: who took up trading. They and I pointed out to them,

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Speaker 3: you know you've done You've done a dozen years of

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Speaker 3: study to become qualified at what you're doing, and you

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Speaker 3: think that this is something that you can just read

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Speaker 3: a book and that's going to be enough. You know,

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Speaker 3: charting behind the charts are businesses. We talked about this

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Speaker 3: the last time I was on the program. You know,

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Speaker 3: behind those charts. Turn the charts off. You don't need those.

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Speaker 3: You just need to look at the operating performance of

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Speaker 3: the business and you'll be able to pick the right

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Speaker 3: things from that. The charts is kind of an attempt

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Speaker 3: at a shortcut, and it's a really clumsy attempt.

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Speaker 2: The second thing that really worries me and infuriates me

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Speaker 2: to a certain degree is the lack of understanding of risk.

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Speaker 2: You have this young generation who has motivated and driven,

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Speaker 2: you know, they want to get ahead financially, which I

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Speaker 2: think is admirable, But they don't understand risk, and they

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Speaker 2: are self educated, and they are making these massive decisions

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Speaker 2: with their hard earned money, not understanding the risk that

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Speaker 2: they're taking.

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Speaker 5: Okay, and this is where I find most self educated.

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Speaker 2: And I just not necessarily mean my selse self educated

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Speaker 2: that they actually really do know what they're doing. No

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Speaker 2: one knows what a risk profile is. And if that

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Speaker 2: anyone goesn't see a financial planner one of the first

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Speaker 2: documents they're going to sit you down and go through

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Speaker 2: with you is a risk profile. Now people will come

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Speaker 2: to me and say, you know, I invested in this

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Speaker 2: and that, and they're high risk investments. So as far

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Speaker 2: as I'm concerned, they should be just going to the

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Speaker 2: casino with the level of risk that they're taking. But

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Speaker 2: when I do a risk profile with them, which has

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Speaker 2: you know, mean there are hundres of different risk profiles

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Speaker 2: out there, but the quality ones, Suddenly people will realize, oh,

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Speaker 2: hang on, no, I would never take that type of risks.

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Speaker 2: And I'm like, well, look what you're doing over here.

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Speaker 2: It doesn't make sense. But they just as you just said,

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Speaker 2: they don't know what they don't know. And I'm interested

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Speaker 2: to know what are your thoughts of risk profiling is

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Speaker 2: something you would recommend someone does as part of getting

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Speaker 2: into building up a share portfolio and investing in shares.

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Speaker 2: How valuable do you see it in someone understanding the

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Speaker 2: importance of understanding timing with shares? And I might don't

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Speaker 2: say timing and trying to pick the market, but time

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Speaker 2: and going weill I need this money to pay for

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Speaker 2: a deposit in five years. Maybe shares aren't the smartest

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Speaker 2: thing necessarily.

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Speaker 5: To use all my money for right now.

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Speaker 3: Yeah, I would Look, we talked a little bit the

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Speaker 3: last miles on the program about private credit and private credit.

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Speaker 3: I think if you're going to need the money in two, three,

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Speaker 3: four years, then the stock market, unfortunately, it could be

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Speaker 3: on its knees when you need the money. Yeah, because

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Speaker 3: the stock market is volatile, and so private credit probably

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Speaker 3: offers a more attractive alternative. If your time horizon is

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Speaker 3: longer than that five years plus, then I would say, well,

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Speaker 3: that's enough time for the stock market to recover, and

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Speaker 3: you'll probably do okay, particularly if you're investing regularly, so

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Speaker 3: you're not just making a lump some investment today and

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Speaker 3: then putting in the bottom drawn forgetting about it, but

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Speaker 3: you're regularly adding. That way, if the market is volatile

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Speaker 3: in the intervening five years, you can buy more at

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Speaker 3: a lower price and that will help with the recovery.

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Speaker 3: That will accelerate the recovery. A couple of points that

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Speaker 3: you made that I think is interesting. I'm going to

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Speaker 3: be really unconventional here. I think nothing teaches you risk

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Speaker 3: like losing money. Yes, right, do that when you're young.

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Speaker 1: Do that good.

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Speaker 3: And I've contradicted what I said earlier. But if you're

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Speaker 3: going to lose. I remember a friend of mine and

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Speaker 3: I was in Melbourne. We're at university, and this is

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Speaker 3: back in nineteen eighty nine, and I remember both of

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Speaker 3: us saying we were coming up with an idea for

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Speaker 3: making money in the markets, and we thought ten thousand

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Speaker 3: dollars is a lot of money. My mum went Garran

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Speaker 3: Taur on a loan for me to get the ten

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Speaker 3: thousand dollars. My friend was very, very wealthy and it

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Speaker 3: was nothing for him to get ten thousand dollars, so

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Speaker 3: we put out ten thousand dollars in we turned that

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Speaker 3: twenty thousand dollars very quickly into forty thousand dollars. And

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Speaker 3: this is back in the late nineteen eighties. I thought

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Speaker 3: I didn't need to go to university. I thought, why

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Speaker 3: am i uni? I'm just going to keep doing this.

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Speaker 3: This is quit UNI and I'll be fine. But then

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Speaker 3: over the ensuing couple of weeks, we lost all of

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Speaker 3: our money and I ended up working at a fish

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Speaker 3: and chip shop for a year and worked at a

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Speaker 3: night club to pay my mum back because she was

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Speaker 3: Garantaur on the loan, the ten thousand dollar loan. Nothing

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Speaker 3: taught me risk like losing money. But I'm glad that

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Speaker 3: I did it then because both of us said at

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Speaker 3: the time, look, when we're in our forties and fifties,

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Speaker 3: ten thousand dollars won't matter that much to us, So

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Speaker 3: now's the time to do it. It seemed like all

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Speaker 3: the money in the world, but inflation and salary increases

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Speaker 3: and property price increases over time diminishes that initial risk

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Speaker 3: that you thought was a lot. I noticed that I

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Speaker 3: was in an auction on the weekend and there was

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Speaker 3: a person bidding at the auction and they were bidding

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Speaker 3: in you know, twos and three thousand dollars increments, and

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Speaker 3: the other bidder was bidding in eighty thousand dollars increments. Well,

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Speaker 3: every time it went up two thousand dollars, they'd bid

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Speaker 3: another eighty and an event, you know, after three bids

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Speaker 3: they were knocked out. And I think that's a function

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Speaker 3: of the fact that they were thinking about what the

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Speaker 3: property is worth today, not realizing that, you know, at

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Speaker 3: an average increase of about seven percent, which is what

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Speaker 3: Australian property prices, particularly houses, have gone up by over

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Speaker 3: the last fifteen years or so, that property is going

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Speaker 3: to be worth twice as much in ten years time.

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Speaker 3: So the extra eighty grand is not that much. When

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Speaker 3: you realize that, you know it's going to be worth

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Speaker 3: a whole lot. More So, when you're young, you can

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Speaker 3: you can afford to have that perspective. You can afford

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Speaker 3: to think about ten years time, fifteen years time, twenty

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Speaker 3: years time, and you can afford to take a few risks.

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Speaker 3: They have to be measured. You don't want to bet

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Speaker 3: the whole farm, although that's what I did. You know,

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Speaker 3: I didn't add to work to pay it off, but

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Speaker 3: it taught me risk, which came in very, very handy

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Speaker 3: for the rest of my investing career.

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Speaker 2: And that's exactly what we want to do here, is

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Speaker 2: make sure that whatever you decide to do, you understand

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Speaker 2: the risk involved. And you know, I'm a very aggressive

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Speaker 2: investor like yourself. You know, I'd say ninety five percent

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Speaker 2: of my investment portfolio, who are including my super is

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Speaker 2: predominantly shares. I'm in it for the long gain.

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Speaker 5: It's aggressive risk.

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Speaker 3: Ye say that's aggressive, But if you understand your risk,

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Speaker 3: it's rational risk taking.

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Speaker 2: Exactly, which is an aggressive And this is the frustration

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Speaker 2: as a financial planner. I actually think I invest very conservatively,

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Speaker 2: and I think my investment portfolio is extremely boring, but

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Speaker 2: from an acid point of view, and with my financial

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Speaker 2: planning license, and that's it's technically deemed as high growth,

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Speaker 2: which is then considered highly volatile and high aggressive, even

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Speaker 2: though I think it's incredibly boring. But you know, that's

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Speaker 2: the difference and understanding my risk and understanding obviously the

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Speaker 2: financial education piece and how valuable it is.

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Speaker 3: So then the younger generation generation ZED, my son who's

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Speaker 3: invested inverted commas, invested in crypto, you know, he understands

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Speaker 3: that risk. He knows, he's been through a couple of cycles,

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Speaker 3: he's seen how far it can fall. He gets it.

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Speaker 3: But he's still committed to it and he's that's what

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Speaker 3: he's doing, so he knows the exposures that he's taking.

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Speaker 3: It's when you don't understand the risk, that's when that's

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Speaker 3: when bad things are going to happen that are unanticipated.

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Speaker 3: Bad things can still happen to you, but you anticipate

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Speaker 3: it and you ride through it because you know what

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Speaker 3: the long term outcome is going to be. So for

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Speaker 3: that younger generation Gen Z, you know they can take

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Speaker 3: a few risks early. That's okay, all right.

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Speaker 1: All right, so that's I mean, we may have to

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Speaker 1: leave gen Z behind now because we have a number

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Speaker 1: of other generations still to get through. But really we

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Speaker 1: are talking essentially an acceptable level of risk, and the

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Speaker 1: risk kind of varies depending on the age and the individual.

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Speaker 3: You know, it's not fair. I mean, it's really hard

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Speaker 3: to talk about a generational investing because, as I said earlier,

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Speaker 3: I've got three children too, adult children who are gen

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Speaker 3: Z and one team, and they're all completely different people,

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Speaker 3: and they have different different appetites for different attitudes to money.

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Speaker 3: One as a saver, one is a spendthrift, and they're

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Speaker 3: going to have different lives as a consequence of that,

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Speaker 3: but that's who they are.

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Speaker 1: All right. What we're going to do is, in a

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Speaker 1: little bit, we're going to take a break, and after

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Speaker 1: the break, I want to talk to you about the

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Speaker 1: kind of the middle generations, because to me that kind

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Speaker 1: of feels like where there's a fair bit of gray

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Speaker 1: as to as to the perhaps the right mix for

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Speaker 1: those generations. But before we do that, we've talked about

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Speaker 1: the young. Let's talk about the other end of the

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Speaker 1: age spectrum, but also the other end of the risk spectrum. Sure,

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Speaker 1: so we're talking about kind of older Australians, people who

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Speaker 1: are either quite close to retirement or have already retired.

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Speaker 1: And assuming then that if we when we're talking about

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Speaker 1: young people, we're talking about the ability to take a

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Speaker 1: few more risks, presumably that's not the case for this generation.

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Speaker 3: Yeah, and Canna, you and I were talking about this

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Speaker 3: before we began recording the podcast. The conventional wisdom is

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Speaker 3: that as you get older, you invest more conservatively, you

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Speaker 3: invest more for income, but that what that does is

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Speaker 3: if you follow that recipe, you miss out on growth.

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Speaker 3: And as you pointed out, you know, if you're retiring

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Speaker 3: at sixty five today, you've got twenty and potentially thirty

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Speaker 3: years of spending that you have to finance.

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Speaker 5: It could be.

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Speaker 2: Really dangerous and detrimental to your financial will being to

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Speaker 2: follow that bonds fixed interst cash generic recommendation.

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Speaker 3: So I'll give you an example. Thirty years ago, my

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Speaker 3: friends introduced me to red wine, and I have since.

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Speaker 3: I've had a love of red wine for a very

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Speaker 3: long time. And back thirty years ago when I was introduced,

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Speaker 3: I bought a bottle of Penfold Saint Henri Claret. It

401
00:20:50,440 --> 00:20:53,360
Speaker 3: was called a claret. Then the French preventators from using

402
00:20:53,440 --> 00:20:55,720
Speaker 3: we're not allowed to call it claret anymore. But it

403
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Speaker 3: was fourteen dollars ninety nine a bottle, which in your

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Speaker 3: mid twenties you're cuinding, going okay, well, you know it's

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Speaker 3: more than a six dollar pad time, but you know

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Speaker 3: it's it's fourteen dollars. That wine today is one hundred

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Speaker 3: and fifty dollars, and in fifteen years time it will

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Speaker 3: be three hundred and forty dollars for the same wine. Now,

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Speaker 3: the point I'm making is if you're retiring today and

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Speaker 3: you're enjoying St. Honri a one hundred and fifty dollars

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Speaker 3: a bottle, you've got to grow your money at the

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Speaker 3: same rate that wine is increasing so that you can

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Speaker 3: still afford to drink it in twenty years time, or

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Speaker 3: thirty years time or fifteen years time. So it's really

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Speaker 3: important that you have growth in your portfolio. You have

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Speaker 3: to have some growth. And if you deny yourself that growth,

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Speaker 3: and what's going to happen is the income that you

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Speaker 3: are generating, it's not going to grow, and consequently, the

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Speaker 3: purchasing power of that income is actually going to start declining.

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Speaker 3: So what you can afford to buy today, you won't

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Speaker 3: be able to afford when you're in the later years

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Speaker 3: of your retirement.

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Speaker 2: And that's when we see people start to eat into

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Speaker 2: their capital. You know, the superaneration portfolio starts to reduce

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Speaker 2: because that can't just sell off investments to to help

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Speaker 2: plug the holes in the budget and the living expenses.

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Speaker 2: And once you start that speed at which the funds

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Speaker 2: or investment portfolio significantly reduce.

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Speaker 3: Yeah, there's a balancing that goes on. You know, if

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Speaker 3: you're in your nineties now and you've got twenty million

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Speaker 3: dollars sitting aside and you're eating bread and water because

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Speaker 3: you're just living off the income, you know, well, that

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Speaker 3: doesn't that's crazy. You can probably go on a holiday

434
00:22:26,320 --> 00:22:27,960
Speaker 3: and you can spend some of that money that you've

435
00:22:27,960 --> 00:22:30,720
Speaker 3: got there. You can spend some of your capital, and

436
00:22:30,760 --> 00:22:34,080
Speaker 3: you're going to be okay, depending on how committed you

437
00:22:34,119 --> 00:22:37,280
Speaker 3: are to leaving something behind for others. But you're right,

438
00:22:37,880 --> 00:22:42,000
Speaker 3: the biggest problem I see amongst people is not planning

439
00:22:42,280 --> 00:22:46,000
Speaker 3: for being healthy and well for long enough. And that's

440
00:22:46,000 --> 00:22:48,200
Speaker 3: something that needs to be funded and it really can

441
00:22:48,240 --> 00:22:52,359
Speaker 3: only be funded through growth. I mentioned earlier private credit.

442
00:22:53,080 --> 00:22:55,800
Speaker 3: I think that, and I'm plugging it because I think

443
00:22:55,800 --> 00:22:59,040
Speaker 3: it's an emerging asset class of vital importance because it

444
00:22:59,080 --> 00:23:02,760
Speaker 3: has lower volatility, less risk, but it also delivers a

445
00:23:02,800 --> 00:23:05,960
Speaker 3: reasonably attractive return. So I think that's going to solve

446
00:23:06,000 --> 00:23:07,800
Speaker 3: some problems for a lot of retirees.

447
00:23:09,040 --> 00:23:12,800
Speaker 1: Can I talk to you both about something that we

448
00:23:12,920 --> 00:23:15,560
Speaker 1: have talked about in the past, And I think you

449
00:23:15,600 --> 00:23:17,640
Speaker 1: both have a strategy along these lines, and you call

450
00:23:17,680 --> 00:23:20,000
Speaker 1: it different things, but kind of you've got what you

451
00:23:20,040 --> 00:23:22,720
Speaker 1: call your sleep well strategy sleep.

452
00:23:22,440 --> 00:23:25,879
Speaker 2: Well yeah, and nursery rhyme to send everyone off to sleep.

453
00:23:26,040 --> 00:23:29,560
Speaker 1: They follow it, and the whole idea is about allowing

454
00:23:29,680 --> 00:23:33,200
Speaker 1: for volatility during retirement. Can you just give us a

455
00:23:33,240 --> 00:23:35,840
Speaker 1: quick kind of summary as to how this works on

456
00:23:35,880 --> 00:23:36,800
Speaker 1: why it's important.

457
00:23:37,200 --> 00:23:41,000
Speaker 2: Well, my financial wisdom to people is as they approach

458
00:23:41,080 --> 00:23:45,920
Speaker 2: retirement to try and have at least two years worth

459
00:23:45,920 --> 00:23:51,000
Speaker 2: of living expenses set aside in cash. Now, the reason

460
00:23:51,000 --> 00:23:53,840
Speaker 2: why I recommend that is is if you have a

461
00:23:53,960 --> 00:23:57,800
Speaker 2: high growth portfolio that's predominantly equity based or private equity,

462
00:23:58,440 --> 00:24:02,199
Speaker 2: you have bought yourself up to two years for the

463
00:24:02,320 --> 00:24:06,000
Speaker 2: market to recover. So if the share market, which naturally

464
00:24:06,000 --> 00:24:09,600
Speaker 2: does experience is a pullback, a correction high levels of volatility.

465
00:24:09,920 --> 00:24:12,040
Speaker 2: You're never backed into a corner where you have to

466
00:24:12,080 --> 00:24:13,600
Speaker 2: start selling things down.

467
00:24:13,480 --> 00:24:17,080
Speaker 3: At a low price exactly meansizing less assets left over

468
00:24:17,160 --> 00:24:17,920
Speaker 3: to recover.

469
00:24:17,880 --> 00:24:20,720
Speaker 2: Exactly crystallizing those losses I do know whatever, So you

470
00:24:20,720 --> 00:24:23,040
Speaker 2: don't want to be forced to sell it the lows exactly.

471
00:24:23,119 --> 00:24:26,560
Speaker 2: And by having two years worth of living expenses in cash,

472
00:24:26,640 --> 00:24:30,120
Speaker 2: you can actually just switch off the dividends, turn off

473
00:24:30,119 --> 00:24:33,719
Speaker 2: the TV, unplug the computer screen, go on holiday if

474
00:24:33,720 --> 00:24:35,199
Speaker 2: you want it, because you've got two years with the

475
00:24:35,200 --> 00:24:39,360
Speaker 2: living expenses there. And history shows that on average takes

476
00:24:39,359 --> 00:24:41,480
Speaker 2: about eight months for the market to recover when we

477
00:24:41,480 --> 00:24:43,280
Speaker 2: look at all you know historically, all the sort of

478
00:24:43,520 --> 00:24:46,439
Speaker 2: call them crashes have happened previously, so that means you've

479
00:24:46,480 --> 00:24:49,040
Speaker 2: got a six month buffer. On top of that, it

480
00:24:49,160 --> 00:24:52,000
Speaker 2: takes away that stress and that anxiety, and it means

481
00:24:52,000 --> 00:24:54,879
Speaker 2: that you can even if you want to potentially reinbose

482
00:24:55,080 --> 00:24:59,400
Speaker 2: those div ends whilst share prices are potentially discounted. So

483
00:24:59,520 --> 00:25:03,600
Speaker 2: it just it keeps you, it's safeguards your financial well

484
00:25:03,720 --> 00:25:07,600
Speaker 2: being and still allows you to invest for the long

485
00:25:07,720 --> 00:25:12,000
Speaker 2: run and not having to you know, follow that herd

486
00:25:12,080 --> 00:25:14,399
Speaker 2: mentality of when you get old and retirement, you've got

487
00:25:14,440 --> 00:25:16,440
Speaker 2: to look at bonds of interest in cash and those

488
00:25:17,320 --> 00:25:20,639
Speaker 2: those investment asset classes which I fear won't go at

489
00:25:20,640 --> 00:25:23,879
Speaker 2: the distance and won't provide those longevity benefits that we

490
00:25:24,080 --> 00:25:28,680
Speaker 2: definitely need when you look at the life expectancy and retirement.

491
00:25:28,800 --> 00:25:31,600
Speaker 2: So if your average atirement sixty five, life expectancies eighty

492
00:25:31,600 --> 00:25:35,520
Speaker 2: eighty five male or female, that's call it fifteen twenty

493
00:25:35,520 --> 00:25:40,119
Speaker 2: five years, whether living expenses, that's a long period of

494
00:25:40,119 --> 00:25:42,280
Speaker 2: time you've got to live off your investment portfolio or

495
00:25:42,359 --> 00:25:45,760
Speaker 2: superannuation or asset base, those funds you to outlive us.

496
00:25:45,840 --> 00:25:48,560
Speaker 2: So this allows you to be able to access those

497
00:25:48,720 --> 00:25:51,960
Speaker 2: investment classes but also have a controlled element of risk

498
00:25:52,400 --> 00:25:54,119
Speaker 2: from a proactive level.

499
00:25:54,480 --> 00:25:58,240
Speaker 3: Yeah, look, I think actually what you're describing is really sensible,

500
00:25:58,680 --> 00:26:00,840
Speaker 3: and I'm confident that having.

501
00:26:00,800 --> 00:26:02,800
Speaker 5: I feel really proud, thank you well.

502
00:26:02,840 --> 00:26:06,199
Speaker 3: Having liquidity short term liquidity is vital because what it

503
00:26:06,240 --> 00:26:09,480
Speaker 3: does is it gives you something called optionality over cheap prices.

504
00:26:10,040 --> 00:26:12,680
Speaker 3: So if you've got let's say you've got a couple

505
00:26:12,680 --> 00:26:18,000
Speaker 3: of years of needs set aside in something that's attracting

506
00:26:18,359 --> 00:26:22,000
Speaker 3: a reasonable yield but at the same times not exposed

507
00:26:22,000 --> 00:26:26,040
Speaker 3: to volatility. Then you can draw on that to add

508
00:26:26,080 --> 00:26:28,679
Speaker 3: to your other buckets, to add to your other investments

509
00:26:28,680 --> 00:26:31,879
Speaker 3: if the market does fall, and you can recover the

510
00:26:32,000 --> 00:26:35,719
Speaker 3: loss much quicker if you're adding at the lows. So

511
00:26:35,760 --> 00:26:38,920
Speaker 3: that makes really good sense. Another metaphor that I think

512
00:26:39,000 --> 00:26:42,119
Speaker 3: is useful is the construction of a boat. So if

513
00:26:42,160 --> 00:26:44,880
Speaker 3: you imagine that the hull of the boat, you need

514
00:26:44,920 --> 00:26:48,600
Speaker 3: that hull to stay afloat, so you have a large

515
00:26:48,640 --> 00:26:53,320
Speaker 3: proportion of your assets in This is for retirees and

516
00:26:53,359 --> 00:26:55,960
Speaker 3: pre retirees. If you have a large proportion of your

517
00:26:56,000 --> 00:27:02,760
Speaker 3: assets in secure, safer, more stable assets, and your the

518
00:27:02,800 --> 00:27:05,720
Speaker 3: liquidity pause is in that building the hull of the

519
00:27:05,720 --> 00:27:08,200
Speaker 3: boat to keep you afloat. Then you have an outboard

520
00:27:08,200 --> 00:27:10,240
Speaker 3: engine that gets you moving, so you have some growth

521
00:27:10,280 --> 00:27:13,320
Speaker 3: assets they represent the outboard engine. And then if you

522
00:27:13,400 --> 00:27:15,520
Speaker 3: really and not everyone has this appetite. We were talking

523
00:27:15,520 --> 00:27:19,120
Speaker 3: about this earlier, that not everyone invests the same way

524
00:27:19,160 --> 00:27:21,240
Speaker 3: and has the same risk appetite in the same generation.

525
00:27:21,760 --> 00:27:23,320
Speaker 3: You know, there are some people who want a higher

526
00:27:23,400 --> 00:27:25,719
Speaker 3: risk exposure. You know, they want something a little bit

527
00:27:25,760 --> 00:27:30,280
Speaker 3: spicy and whatever that is. That's the turbo on the

528
00:27:30,320 --> 00:27:33,639
Speaker 3: outboard engine, and it's in proportion. So the bulk of

529
00:27:33,640 --> 00:27:37,240
Speaker 3: your assets are in these conservative safe Admittedly they can

530
00:27:37,280 --> 00:27:38,840
Speaker 3: be high yielding, you know, they.

531
00:27:38,760 --> 00:27:40,280
Speaker 5: Can be Assey boundaries.

532
00:27:40,400 --> 00:27:42,960
Speaker 3: Yeah, indeed, and again I bring up private credit. You

533
00:27:42,960 --> 00:27:45,160
Speaker 3: know that can be the bulk of that. That's your core.

534
00:27:45,640 --> 00:27:49,040
Speaker 3: And then you've got a lesser exposure to growth, and

535
00:27:49,119 --> 00:27:52,520
Speaker 3: that's your outboard engine, and an even smaller exposure to

536
00:27:52,760 --> 00:27:56,560
Speaker 3: high growth and more speculative things that might just you know,

537
00:27:56,680 --> 00:27:58,520
Speaker 3: might pay for a night out, or might pay for

538
00:27:58,560 --> 00:28:00,800
Speaker 3: a holiday or whatever if it comes off, and you

539
00:28:00,800 --> 00:28:03,399
Speaker 3: don't mind if that money is lost. And that's the

540
00:28:03,480 --> 00:28:06,520
Speaker 3: turbo on the outboard engine. The engine isn't dependent on

541
00:28:06,600 --> 00:28:10,040
Speaker 3: that to keep you moving forward. Whether that's there or not,

542
00:28:10,119 --> 00:28:12,960
Speaker 3: it doesn't matter. So that metaphor, I think is also

543
00:28:13,000 --> 00:28:16,640
Speaker 3: a good one for frameworking how to prepare for retirement

544
00:28:16,640 --> 00:28:18,480
Speaker 3: and how to invest during retirement.

545
00:28:18,840 --> 00:28:20,240
Speaker 5: I love it all right.

546
00:28:20,359 --> 00:28:23,840
Speaker 1: Self interest is telling me that we need to move on,

547
00:28:23,880 --> 00:28:25,960
Speaker 1: and it's self interest because I want to get to

548
00:28:25,960 --> 00:28:28,200
Speaker 1: those middle generations. I want to get to the millennials

549
00:28:28,240 --> 00:28:30,680
Speaker 1: and the gen X because I kind of fit into

550
00:28:30,720 --> 00:28:35,199
Speaker 1: the slightly older end of the millennial generation, and it

551
00:28:35,240 --> 00:28:38,120
Speaker 1: is an area where there is well for me at least,

552
00:28:38,200 --> 00:28:40,240
Speaker 1: a great deal of uncertainty as to what is the

553
00:28:40,320 --> 00:28:42,239
Speaker 1: right approach. We're going to take a quick break and

554
00:28:42,280 --> 00:28:45,880
Speaker 1: we will come back in a moment and get into millennials,

555
00:28:46,000 --> 00:28:55,000
Speaker 1: gen X and what on earth we should be looking at. Canna.

556
00:28:55,040 --> 00:28:58,760
Speaker 1: We are talking today about investing across generations, and we

557
00:28:58,800 --> 00:29:02,120
Speaker 1: are joined in the studio by Roger Montgomery, who has

558
00:29:02,160 --> 00:29:04,120
Speaker 1: done a fantastic job so far of taking us through

559
00:29:04,160 --> 00:29:08,240
Speaker 1: the youngest generation and the older generations and what we

560
00:29:08,280 --> 00:29:12,640
Speaker 1: should be looking at. Let's jump into the middle generation.

561
00:29:12,800 --> 00:29:16,280
Speaker 1: So this is kind of millennials in the age range

562
00:29:16,280 --> 00:29:20,000
Speaker 1: of say, kind of late twenties through to kind of

563
00:29:20,120 --> 00:29:22,360
Speaker 1: early mid forties, so kind of twenty eight to forty three.

564
00:29:22,640 --> 00:29:26,080
Speaker 1: That in that kind of range at gen X, which

565
00:29:26,120 --> 00:29:30,320
Speaker 1: is mid forties up until kind of late fifties yeah,

566
00:29:30,520 --> 00:29:34,480
Speaker 1: also fifty nine, yeah, And so it's a very large

567
00:29:34,560 --> 00:29:37,120
Speaker 1: kind of range in there. There's a couple of thereas,

568
00:29:38,560 --> 00:29:42,280
Speaker 1: But we are not talking about people in their first

569
00:29:42,400 --> 00:29:45,120
Speaker 1: years of work anymore, and we are not necessarily talking

570
00:29:45,160 --> 00:29:48,240
Speaker 1: people that are on the very cusp of retirement. We

571
00:29:48,280 --> 00:29:51,800
Speaker 1: are talking about a big mass right in the middle.

572
00:29:51,880 --> 00:29:55,040
Speaker 1: I'm in that mass. What is the right approach, and

573
00:29:55,080 --> 00:29:58,160
Speaker 1: this might be a question that's too broad, What is

574
00:29:58,200 --> 00:30:02,240
Speaker 1: the right approach to make sure that your portfolio is

575
00:30:02,320 --> 00:30:05,080
Speaker 1: set up the right way to actually achieve what you

576
00:30:05,160 --> 00:30:08,200
Speaker 1: need those what you need to achieve for those age demographics.

577
00:30:08,240 --> 00:30:10,800
Speaker 3: Well, I'd like to invite myself back on the program

578
00:30:10,880 --> 00:30:13,960
Speaker 3: to talk about something called the bucket strategy, which is

579
00:30:14,240 --> 00:30:17,000
Speaker 3: a strategy that I wrote about a little while back.

580
00:30:17,000 --> 00:30:18,560
Speaker 3: So we'll come back and talk about that one that

581
00:30:18,680 --> 00:30:22,360
Speaker 3: answers that that question about how to approach investing and

582
00:30:22,440 --> 00:30:26,880
Speaker 3: how to allocate to different asset classes. And I'll detail

583
00:30:26,880 --> 00:30:28,520
Speaker 3: that a little bit more. But maybe if we could

584
00:30:28,560 --> 00:30:30,120
Speaker 3: just take a step back and can I give you

585
00:30:30,160 --> 00:30:33,160
Speaker 3: some shocking statistics about these age groups?

586
00:30:33,200 --> 00:30:34,960
Speaker 1: Oh dear, please do Yeah.

587
00:30:34,640 --> 00:30:39,640
Speaker 3: So seven percent of Generation X seven percent, not seventy

588
00:30:39,920 --> 00:30:42,320
Speaker 3: seven takes financial advice.

589
00:30:44,000 --> 00:30:46,880
Speaker 2: Funny you say that, Michael, Do you ever follow my

590
00:30:47,040 --> 00:30:51,240
Speaker 2: financial advice that you have free, unlimited access to.

591
00:30:51,720 --> 00:30:53,880
Speaker 1: On occasion I have been known to consider it.

592
00:30:54,000 --> 00:30:56,120
Speaker 2: I think the only advice you took was to invest

593
00:30:56,160 --> 00:30:57,080
Speaker 2: in an air fryer.

594
00:30:58,560 --> 00:30:59,719
Speaker 1: It was very good advice.

595
00:31:00,240 --> 00:31:02,600
Speaker 3: That's an appreciating asset. I think if you pop that

596
00:31:02,720 --> 00:31:05,160
Speaker 3: out on the nature strip, Council will come and take

597
00:31:05,160 --> 00:31:05,960
Speaker 3: it away for zero.

598
00:31:06,120 --> 00:31:07,560
Speaker 1: Well, I certainly appreciate it.

599
00:31:07,640 --> 00:31:08,960
Speaker 5: He did buy the Rolls Royce.

600
00:31:10,120 --> 00:31:13,320
Speaker 1: It has changed our lives in terms of improving the

601
00:31:13,320 --> 00:31:16,520
Speaker 1: efficiency of cooking and everything as it has made a difference.

602
00:31:16,840 --> 00:31:22,120
Speaker 1: But the broader point like seven seven.

603
00:31:21,480 --> 00:31:26,000
Speaker 3: Classic example, seven percent formally take financial advice. I'm sure

604
00:31:26,000 --> 00:31:28,720
Speaker 3: there's many more that you know will take advice over

605
00:31:28,760 --> 00:31:31,080
Speaker 3: a beer and a glass of wine at a barbecue.

606
00:31:31,400 --> 00:31:34,640
Speaker 3: But in terms of those taking formally taking financial advice

607
00:31:34,960 --> 00:31:37,920
Speaker 3: seven percent. You know, the biggest block, how do you

608
00:31:38,000 --> 00:31:40,960
Speaker 3: find a good one? You listen to this program. Obviously

609
00:31:41,320 --> 00:31:44,960
Speaker 3: there's a very good one right here. The way people

610
00:31:45,000 --> 00:31:47,480
Speaker 3: have asked me this question before, how do I find

611
00:31:47,520 --> 00:31:49,880
Speaker 3: a financial advisor that's reputable? How do you know if

612
00:31:49,880 --> 00:31:51,920
Speaker 3: you're not in the industry. You know, I've been in

613
00:31:51,920 --> 00:31:54,680
Speaker 3: this industry my entire life since the day I left university.

614
00:31:55,280 --> 00:31:58,120
Speaker 3: So for me, it's easy. It's you know, it's my narrative.

615
00:31:58,760 --> 00:32:02,520
Speaker 3: But as somebody who's not in the industry, he can choose.

616
00:32:03,080 --> 00:32:05,640
Speaker 3: And the simplest way is, you know, there are governing

617
00:32:05,680 --> 00:32:10,160
Speaker 3: bodies for financial advisors that hand out awards every year.

618
00:32:10,600 --> 00:32:14,880
Speaker 3: They're awarded financial advisors, And my hope is that people

619
00:32:14,920 --> 00:32:18,680
Speaker 3: will look to awarded financial advisors to find the really

620
00:32:18,720 --> 00:32:21,600
Speaker 3: good ones. Now that's a simple way. I don't know.

621
00:32:21,720 --> 00:32:23,320
Speaker 3: I'm not going to name anyone. I don't you know,

622
00:32:23,360 --> 00:32:25,160
Speaker 3: I'm not going to do that. But you know, you

623
00:32:25,200 --> 00:32:28,320
Speaker 3: can Google and you can find awarded financial advisors or

624
00:32:28,400 --> 00:32:31,560
Speaker 3: advisors like you that are willing to put their neck

625
00:32:31,640 --> 00:32:34,360
Speaker 3: on the block, their head on the block, and publish

626
00:32:34,880 --> 00:32:37,120
Speaker 3: what they're doing and what they think because you know,

627
00:32:37,240 --> 00:32:41,080
Speaker 3: like me, I get called up about my previous calls. Hey, Roger,

628
00:32:41,120 --> 00:32:43,080
Speaker 3: you said property was going to do X, and it's done.

629
00:32:43,120 --> 00:32:44,880
Speaker 3: Why he said this? Stock was going to say this

630
00:32:44,960 --> 00:32:48,120
Speaker 3: and it did X. You know, we're taking risk all

631
00:32:48,160 --> 00:32:51,200
Speaker 3: the time and over thirty years. For you to be

632
00:32:51,240 --> 00:32:54,040
Speaker 3: able to do that consistently, you know, you have to

633
00:32:54,080 --> 00:32:56,560
Speaker 3: have built up some kind of track record. So you

634
00:32:56,600 --> 00:32:59,080
Speaker 3: want to find those advisors that have that track record.

635
00:33:00,080 --> 00:33:01,600
Speaker 5: Say, I hate those awards.

636
00:33:01,680 --> 00:33:04,520
Speaker 2: I'm nominated quite a few times ago and actually said

637
00:33:04,560 --> 00:33:05,960
Speaker 2: please take me off right.

638
00:33:06,040 --> 00:33:08,040
Speaker 5: I don't like it. I just I just don't I

639
00:33:08,080 --> 00:33:09,960
Speaker 5: feel really uncomfortable.

640
00:33:09,720 --> 00:33:12,960
Speaker 3: But they're peer reviewed. Some of the better ones are

641
00:33:13,000 --> 00:33:16,080
Speaker 3: peer reviewed. So your peers are saying, can I, yeah,

642
00:33:16,120 --> 00:33:18,640
Speaker 3: you're really good at what you do. You know, but

643
00:33:19,000 --> 00:33:20,800
Speaker 3: if your peers are saying you're really good at what

644
00:33:20,840 --> 00:33:23,120
Speaker 3: you do, then other people should know about that, and

645
00:33:23,160 --> 00:33:25,800
Speaker 3: they should hear about that. You're doing them a disservice

646
00:33:25,920 --> 00:33:27,400
Speaker 3: by not making your name known.

647
00:33:27,680 --> 00:33:31,080
Speaker 1: Yeah, it's also a good starting point, it feels as though,

648
00:33:31,120 --> 00:33:33,440
Speaker 1: at least because there are a lot of names out there,

649
00:33:33,600 --> 00:33:35,840
Speaker 1: and at least this is a point at which to

650
00:33:35,880 --> 00:33:38,840
Speaker 1: start your research because you're not necessarily going to look

651
00:33:38,840 --> 00:33:41,400
Speaker 1: at that list and go, yep, I'm going with that person. Kenny,

652
00:33:41,440 --> 00:33:44,680
Speaker 1: you've talked about the point that when you are investigating

653
00:33:44,760 --> 00:33:47,520
Speaker 1: potential financial planners that you should actually interview them.

654
00:33:48,680 --> 00:33:49,600
Speaker 3: Yeah, you have to do that.

655
00:33:49,600 --> 00:33:51,520
Speaker 1: That this is the starting point, that this gives you

656
00:33:51,560 --> 00:33:53,880
Speaker 1: some names to work with. I asked for a recommend

657
00:33:54,040 --> 00:33:57,280
Speaker 1: I talked to my accountant because I really trust my accountant.

658
00:33:57,640 --> 00:34:00,720
Speaker 1: It gives us great kind of tax advice, and I said,

659
00:34:01,360 --> 00:34:03,600
Speaker 1: do you know anyone that you have worked with over

660
00:34:03,600 --> 00:34:06,680
Speaker 1: a long period of time that you that you would recommend.

661
00:34:06,760 --> 00:34:10,279
Speaker 3: So, Michael, I like to think about frameworks. So you know,

662
00:34:10,320 --> 00:34:12,799
Speaker 3: when we're talking about the younger generation, the framework is,

663
00:34:13,120 --> 00:34:15,640
Speaker 3: you know, it's okay to take a few risks. They

664
00:34:15,640 --> 00:34:18,279
Speaker 3: feel like big risks, but that's okay at your age

665
00:34:18,680 --> 00:34:21,360
Speaker 3: as long as it doesn't destroy you emotionally. When we

666
00:34:21,440 --> 00:34:24,680
Speaker 3: talked about older generations, you know, the framework was you

667
00:34:24,719 --> 00:34:26,920
Speaker 3: talked about one framework, which was making sure you've got

668
00:34:26,920 --> 00:34:30,880
Speaker 3: two years a sign. Mine was the boat construction idea.

669
00:34:30,960 --> 00:34:33,600
Speaker 3: You know, the framework for finding a financial planner start

670
00:34:33,680 --> 00:34:36,759
Speaker 3: with an awarded list and then go and interview some

671
00:34:36,800 --> 00:34:37,120
Speaker 3: of them.

672
00:34:37,160 --> 00:34:39,160
Speaker 2: And I have to say, from my point of view,

673
00:34:39,200 --> 00:34:41,560
Speaker 2: when I talk to other financial planners, I love hearing

674
00:34:41,560 --> 00:34:44,360
Speaker 2: what other financial planners do in their personal lives, indeed,

675
00:34:44,440 --> 00:34:46,759
Speaker 2: because I am never going to take financial advice from

676
00:34:46,760 --> 00:34:48,880
Speaker 2: a financial plan that doesn't much the beat of their

677
00:34:48,880 --> 00:34:50,400
Speaker 2: own drum and follow their own wisdom.

678
00:34:50,440 --> 00:34:52,720
Speaker 3: Well, they do say plumber's pipes are always leaking.

679
00:34:53,040 --> 00:34:56,680
Speaker 2: Well, I didn't don't know about that because I feel

680
00:34:56,680 --> 00:34:58,480
Speaker 2: like I've got my financial ducks lined up and I've

681
00:34:58,520 --> 00:35:02,520
Speaker 2: always been passionate about about that. But you know, ask

682
00:35:02,560 --> 00:35:04,720
Speaker 2: a ask a financial planner like how.

683
00:35:04,560 --> 00:35:05,200
Speaker 5: Do you invest?

684
00:35:05,239 --> 00:35:05,759
Speaker 3: What do you do?

685
00:35:05,800 --> 00:35:08,600
Speaker 2: Indeed, because they need to be the one that inspires you,

686
00:35:08,760 --> 00:35:12,600
Speaker 2: motivates you, empowers you for a long period of time

687
00:35:12,800 --> 00:35:16,640
Speaker 2: and through times which are tough and challenging and you're

688
00:35:16,640 --> 00:35:19,440
Speaker 2: exhausted and you just want to throw the budget out

689
00:35:19,480 --> 00:35:21,080
Speaker 2: the window. You need that fashion plan goes.

690
00:35:21,120 --> 00:35:21,640
Speaker 5: Yeah, I get it.

691
00:35:21,640 --> 00:35:24,239
Speaker 2: It's tough, it's hard, it's frustrating. There are setbacks, but

692
00:35:24,560 --> 00:35:26,680
Speaker 2: hanging they keep going because I'm doing this too, and

693
00:35:26,719 --> 00:35:28,239
Speaker 2: I'm going to hold your hand and you know, you

694
00:35:28,280 --> 00:35:30,640
Speaker 2: use that analogy of a swimming coach can't do the

695
00:35:30,760 --> 00:35:31,440
Speaker 2: lapse for you, but.

696
00:35:31,360 --> 00:35:34,480
Speaker 5: They'll walk up and down. Yeah, there are long in

697
00:35:34,520 --> 00:35:35,439
Speaker 5: the morning and train. Yeah.

698
00:35:35,480 --> 00:35:37,080
Speaker 3: The other thing that you know, and this has just

699
00:35:37,080 --> 00:35:40,000
Speaker 3: come to me as you've spoken. Warren Buffett and the

700
00:35:40,080 --> 00:35:44,120
Speaker 3: late Charlie Munger had a very pithy quote about seeking

701
00:35:44,160 --> 00:35:47,520
Speaker 3: advice and it's worth remembering. I think they said Wall

702
00:35:47,560 --> 00:35:50,840
Speaker 3: Street and they were obviously relating it to the US markets.

703
00:35:51,239 --> 00:35:53,600
Speaker 3: They said, Wall Street is the only place in the

704
00:35:53,640 --> 00:35:58,440
Speaker 3: world where people who drive rolls Royce's take their advice

705
00:35:58,480 --> 00:35:59,760
Speaker 3: from people who catch the subway.

706
00:36:00,520 --> 00:36:00,840
Speaker 5: Yeah.

707
00:36:01,400 --> 00:36:05,480
Speaker 3: You know you talked about people eating their own cooking,

708
00:36:06,120 --> 00:36:09,760
Speaker 3: and it's really important that they've become successful from investing

709
00:36:09,800 --> 00:36:13,160
Speaker 3: the way they're advising you to invest. You know that

710
00:36:13,160 --> 00:36:16,320
Speaker 3: that's a sensible framework as well. I think that's really smart.

711
00:36:16,600 --> 00:36:17,960
Speaker 5: You need to want to tell you it's going to

712
00:36:17,960 --> 00:36:19,080
Speaker 5: be worth it, because it is.

713
00:36:19,320 --> 00:36:26,799
Speaker 6: Yeah, back to me, I'm sorry, listeners, back to back

714
00:36:26,840 --> 00:36:32,440
Speaker 6: to the older millennials, and I'm speaking on behalf of them.

715
00:36:32,680 --> 00:36:33,880
Speaker 1: Where on earth do we start?

716
00:36:34,040 --> 00:36:34,239
Speaker 5: Yeah?

717
00:36:34,280 --> 00:36:37,400
Speaker 3: Okay, So here's here's a more interesting stats. Very quickly,

718
00:36:37,760 --> 00:36:41,920
Speaker 3: eighteen percent of gen X have at least one residential

719
00:36:41,920 --> 00:36:47,640
Speaker 3: investment property. Only eighteen percent really yep, eighteen percent. Forty

720
00:36:47,640 --> 00:36:51,839
Speaker 3: eight percent of gen X are worried about running out

721
00:36:51,840 --> 00:36:56,480
Speaker 3: of money during retirement, thirty percent are worried they'll never

722
00:36:56,520 --> 00:37:01,319
Speaker 3: have enough savings to retire, and three quarters seventy five

723
00:37:01,440 --> 00:37:06,680
Speaker 3: percent think that the high level of government debt means

724
00:37:06,880 --> 00:37:10,480
Speaker 3: that the government won't be able to fund our retirement. Now,

725
00:37:10,560 --> 00:37:13,359
Speaker 3: I think gen X, and I'm a gen X, you're

726
00:37:13,360 --> 00:37:18,920
Speaker 3: a late gen why. I think we've swallowed a message,

727
00:37:18,920 --> 00:37:22,719
Speaker 3: hook line and sinker. We have been told that we

728
00:37:22,760 --> 00:37:27,239
Speaker 3: have to fund our own retirement. It's a relatively new concept, right,

729
00:37:27,719 --> 00:37:31,680
Speaker 3: and it all started in nineteen ninety two, right with

730
00:37:31,760 --> 00:37:33,960
Speaker 3: the advent of superannuation, which was only three or four

731
00:37:34,000 --> 00:37:37,399
Speaker 3: percent at the time. But we have now swallowed hook

732
00:37:37,440 --> 00:37:39,840
Speaker 3: line and sincer that we're responsible for our own retirement,

733
00:37:39,880 --> 00:37:42,920
Speaker 3: and the government is going, yay, we're no longer responsible.

734
00:37:42,920 --> 00:37:46,160
Speaker 3: We've convinced everyone they're responsible. And the problem that we're

735
00:37:46,160 --> 00:37:48,319
Speaker 3: going to face, I think, and this is a big

736
00:37:48,360 --> 00:37:51,360
Speaker 3: concern for me, is that for my generation and the

737
00:37:51,400 --> 00:37:54,520
Speaker 3: generations that come behind me. I'm fifty three years old,

738
00:37:54,560 --> 00:37:56,920
Speaker 3: so I'm in the middle, the upper end of the

739
00:37:56,920 --> 00:38:00,000
Speaker 3: middle of gen X. I actually think that government debts

740
00:38:00,680 --> 00:38:05,120
Speaker 3: and really mismanaging the fiscal budget. The level of debt

741
00:38:05,200 --> 00:38:06,920
Speaker 3: is going to get to a point where it is

742
00:38:06,960 --> 00:38:10,799
Speaker 3: so large because the population of working Australians is so

743
00:38:10,920 --> 00:38:15,200
Speaker 3: much lower than the population of retired Australians, the responsibility

744
00:38:15,200 --> 00:38:17,520
Speaker 3: of the government is going to be too onerous and

745
00:38:17,560 --> 00:38:22,440
Speaker 3: consequently they'll dip into retirement savings, they will use superannuation

746
00:38:22,960 --> 00:38:25,640
Speaker 3: as a source of long term funding, and they will

747
00:38:25,680 --> 00:38:29,280
Speaker 3: prescribe that part of my super has to be invested

748
00:38:29,320 --> 00:38:32,080
Speaker 3: in this project that the government's going to do. And

749
00:38:32,120 --> 00:38:35,560
Speaker 3: that's not legislation that exists today. But if you look

750
00:38:35,760 --> 00:38:40,800
Speaker 3: at the chronology of legislative changes over time. Superannuation was

751
00:38:40,840 --> 00:38:44,520
Speaker 3: invented by baby boomers for baby boomers and the generations

752
00:38:44,560 --> 00:38:47,319
Speaker 3: that come after them. Well, bad luck for you. This

753
00:38:47,440 --> 00:38:52,120
Speaker 3: is controversial, highly controversial, highly unconventional. But I do believe

754
00:38:52,280 --> 00:38:54,759
Speaker 3: that I will have to work longer before I can

755
00:38:54,800 --> 00:38:57,960
Speaker 3: access my SUPER. I will not be able to access

756
00:38:58,000 --> 00:39:01,400
Speaker 3: as much of it as generation before me, as quickly

757
00:39:01,520 --> 00:39:03,640
Speaker 3: as they have been able to, And there will be

758
00:39:03,680 --> 00:39:06,719
Speaker 3: all sorts of rule changes and legislative changes that make

759
00:39:06,760 --> 00:39:09,480
Speaker 3: sure that that pull of money is accessible by government

760
00:39:09,760 --> 00:39:11,120
Speaker 3: and less accessible by me.

761
00:39:12,080 --> 00:39:14,399
Speaker 1: And what used to fund kind of major infrastructure things

762
00:39:14,400 --> 00:39:16,960
Speaker 1: that I don't know building.

763
00:39:17,360 --> 00:39:19,120
Speaker 3: And you know what, you can't prove that I'm wrong

764
00:39:19,200 --> 00:39:21,840
Speaker 3: right now, and I can't prove that I'm right. It

765
00:39:21,880 --> 00:39:24,200
Speaker 3: will take fifteen or twenty years and will come back

766
00:39:24,239 --> 00:39:24,759
Speaker 3: and review it.

767
00:39:24,800 --> 00:39:27,680
Speaker 2: Then. I actually agree with a lot of what you

768
00:39:27,760 --> 00:39:30,040
Speaker 2: just said, and I have thought I've had the same

769
00:39:30,120 --> 00:39:33,800
Speaker 2: suspicion and concern to a certain about eighty percent.

770
00:39:33,640 --> 00:39:34,319
Speaker 5: Of what you've just said.

771
00:39:34,640 --> 00:39:37,319
Speaker 3: So the consequence of that is that I don't think

772
00:39:37,360 --> 00:39:41,120
Speaker 3: it's such a bad thing to have some money accumulating

773
00:39:41,160 --> 00:39:44,920
Speaker 3: outside of SUPER. I know the advice for generation X

774
00:39:45,040 --> 00:39:48,719
Speaker 3: and generation wise to maximize your contribution to SUPER. And

775
00:39:49,200 --> 00:39:54,080
Speaker 3: that's fair. There's merit with the way legislation is constructed today,

776
00:39:54,320 --> 00:39:57,480
Speaker 3: you should be maximizing your contribution to SUPER. But what

777
00:39:57,520 --> 00:40:00,799
Speaker 3: that advice doesn't take into account is what the legislation

778
00:40:00,920 --> 00:40:02,919
Speaker 3: is going to look like in fifteen or twenty years

779
00:40:02,960 --> 00:40:06,080
Speaker 3: time and how it might change. And knowing that it

780
00:40:06,160 --> 00:40:09,040
Speaker 3: might change, and I believe that it could change, I

781
00:40:09,040 --> 00:40:11,320
Speaker 3: think there's also merit. And this is all I'm saying.

782
00:40:11,600 --> 00:40:14,840
Speaker 3: There's merit in building some assets outside of SUPER.

783
00:40:14,640 --> 00:40:18,279
Speaker 1: As well, so insurance policy indeed, because otherwise it does

784
00:40:18,320 --> 00:40:20,840
Speaker 1: feel very unfair, doesn't it so that you would be

785
00:40:20,840 --> 00:40:25,239
Speaker 1: making long term decisions for your financial future based on

786
00:40:25,320 --> 00:40:28,160
Speaker 1: what is the situation now? But I suppose there is.

787
00:40:28,320 --> 00:40:31,960
Speaker 3: There is If you're the youngest gen y today, you're

788
00:40:32,000 --> 00:40:36,200
Speaker 3: not retiring for thirty five years based on current legislation.

789
00:40:36,640 --> 00:40:39,239
Speaker 3: Do you think the legislation in thirty five years is

790
00:40:39,280 --> 00:40:41,359
Speaker 3: going to be the same as it is today? I

791
00:40:41,400 --> 00:40:45,120
Speaker 3: suspect not. Yeah, lot cost successive governments will have made

792
00:40:45,160 --> 00:40:45,800
Speaker 3: some changes.

793
00:40:46,320 --> 00:40:49,200
Speaker 1: So okay, So we're talking then about taking a fairly

794
00:40:50,280 --> 00:40:53,080
Speaker 1: cautious of you. In a way, it's a fight approach.

795
00:40:53,239 --> 00:40:55,879
Speaker 3: So I want you to you know, if your gen

796
00:40:56,120 --> 00:41:00,400
Speaker 3: X and gen Y, you should be definitely putting a

797
00:41:00,400 --> 00:41:02,960
Speaker 3: a large you know, I talk about paying yourself. I

798
00:41:03,080 --> 00:41:05,840
Speaker 3: tell my kids, make sure you pay yourself first. So

799
00:41:05,880 --> 00:41:08,640
Speaker 3: when you buy something, you're paying Apple. You know, when

800
00:41:08,719 --> 00:41:12,280
Speaker 3: you're paying Netflix, you're paying the pub owner for the beer,

801
00:41:12,600 --> 00:41:15,720
Speaker 3: you're paying them. Don't pay them first, pay yourself first.

802
00:41:16,239 --> 00:41:18,400
Speaker 3: And you know every age group should be doing this.

803
00:41:18,840 --> 00:41:22,560
Speaker 3: You put some money aside that secures your future first,

804
00:41:22,920 --> 00:41:26,080
Speaker 3: and then spend the rest. But put money aside and

805
00:41:26,120 --> 00:41:28,400
Speaker 3: build your assets. And all I'm saying, Michael, is I

806
00:41:28,440 --> 00:41:32,520
Speaker 3: think there's merit in maximizing super but also maximizing what's

807
00:41:32,600 --> 00:41:33,719
Speaker 3: outside of Super.

808
00:41:34,120 --> 00:41:37,600
Speaker 1: Okay, And so to deal with one of those stats,

809
00:41:37,640 --> 00:41:40,000
Speaker 1: the very very low number of people that are actually

810
00:41:40,000 --> 00:41:44,279
Speaker 1: getting financial advice, it's the easiest way to kind of

811
00:41:44,320 --> 00:41:46,360
Speaker 1: clear up what is what still feels to me like

812
00:41:46,360 --> 00:41:48,560
Speaker 1: a bit of a gray area for these middle generations

813
00:41:48,560 --> 00:41:51,560
Speaker 1: where you just there is this question mark over how

814
00:41:51,680 --> 00:41:55,799
Speaker 1: aggressive should I be investing, how much risk should I

815
00:41:55,840 --> 00:41:57,560
Speaker 1: be taking on at the moment when I'm kind of

816
00:41:57,560 --> 00:42:00,440
Speaker 1: in this in the middle where I'm not as you guys, it's.

817
00:42:00,400 --> 00:42:02,360
Speaker 3: Likely you've got a mortgage. You know, a third of

818
00:42:02,360 --> 00:42:05,000
Speaker 3: households in Australia have a mortgage, a third don't, a

819
00:42:05,040 --> 00:42:07,520
Speaker 3: third own their property, and a third don't own a

820
00:42:07,520 --> 00:42:10,680
Speaker 3: property and don't have a mortgage. The majority of that

821
00:42:10,800 --> 00:42:13,320
Speaker 3: third that have a mortgage are in the two generations

822
00:42:13,320 --> 00:42:14,000
Speaker 3: you're talking about.

823
00:42:14,040 --> 00:42:15,840
Speaker 1: Soy I interrupted, you know, you're absolutely right, and there

824
00:42:15,920 --> 00:42:17,440
Speaker 1: was there was some data that back that up in

825
00:42:17,440 --> 00:42:19,880
Speaker 1: the last couple of weeks that just showed just how

826
00:42:19,960 --> 00:42:23,880
Speaker 1: big the mortgages are, particularly in that in the older

827
00:42:23,920 --> 00:42:27,360
Speaker 1: millennial age range that is the this is the generation

828
00:42:27,400 --> 00:42:29,879
Speaker 1: that is most weighed down by kind of mortgage debt

829
00:42:29,880 --> 00:42:31,719
Speaker 1: as a percentage of income, et cetera.

830
00:42:31,840 --> 00:42:34,200
Speaker 3: And part of the reason is because we had children

831
00:42:34,280 --> 00:42:36,960
Speaker 3: later than our parents. You know, if you've got a

832
00:42:36,960 --> 00:42:40,160
Speaker 3: baby boomer parent, they had you in their twenties. You know,

833
00:42:40,200 --> 00:42:42,880
Speaker 3: they were in their early twenties to mid twenties. I

834
00:42:43,040 --> 00:42:45,960
Speaker 3: was born to a twenty two year old mum, and

835
00:42:46,520 --> 00:42:49,640
Speaker 3: you know that's that's just not considered generally now. You know,

836
00:42:50,000 --> 00:42:53,640
Speaker 3: people are having kids in their thirties now, and because

837
00:42:53,640 --> 00:42:57,080
Speaker 3: they've had kids later, they're setting up their families later.

838
00:42:57,520 --> 00:43:00,319
Speaker 3: They're getting moreage, starting their mortgages later, so to be

839
00:43:00,320 --> 00:43:04,640
Speaker 3: carrying those mortgages potentially into their retirement. And that's a

840
00:43:04,760 --> 00:43:08,200
Speaker 3: very different prospect to the generations that came before them.

841
00:43:08,600 --> 00:43:13,600
Speaker 3: So managing managing your assets, and managing your wealth has

842
00:43:13,640 --> 00:43:16,440
Speaker 3: to be finally tuned, much more finely chuned than generations

843
00:43:16,440 --> 00:43:19,280
Speaker 3: that came before us. Can I just say this about mortgages.

844
00:43:19,400 --> 00:43:22,359
Speaker 3: One thing about mortgages. If your interest rate is say

845
00:43:22,480 --> 00:43:26,839
Speaker 3: seven percent, and you're on the highest tax bracket, then

846
00:43:26,880 --> 00:43:29,960
Speaker 3: your pre tax dollars that you have to your pre

847
00:43:30,040 --> 00:43:34,279
Speaker 3: tax return, the pretax equivalent return that you need is

848
00:43:34,360 --> 00:43:38,880
Speaker 3: circle twelve to thirteen percent. So unless you know of

849
00:43:38,920 --> 00:43:42,120
Speaker 3: an investment there's going to get you a better than

850
00:43:42,160 --> 00:43:45,239
Speaker 3: thirteen percent return, should pay the mortgage off?

851
00:43:46,560 --> 00:43:47,120
Speaker 1: Oh wow?

852
00:43:47,400 --> 00:43:50,520
Speaker 3: Right, because your pre tax return is so high, that

853
00:43:50,640 --> 00:43:54,480
Speaker 3: is a guaranteed return. By the way, no other returns

854
00:43:54,480 --> 00:43:58,080
Speaker 3: are guaranteed. Paying off your mortgage guarantees you, if you're

855
00:43:58,120 --> 00:44:00,479
Speaker 3: on the highest tax break at twelve to thirty percent

856
00:44:00,600 --> 00:44:02,960
Speaker 3: return on your money by paying off that mortgage. If

857
00:44:02,960 --> 00:44:05,239
Speaker 3: it's a seven percent interest rate, so you should be

858
00:44:05,280 --> 00:44:09,520
Speaker 3: paying off the mortgage. Get that done. That's a guaranteed return.

859
00:44:10,120 --> 00:44:11,719
Speaker 5: Non deductible debt. That's what I say.

860
00:44:12,040 --> 00:44:13,840
Speaker 2: And then you can if you wanted to factor in

861
00:44:13,840 --> 00:44:15,239
Speaker 2: a recycling strategy.

862
00:44:15,640 --> 00:44:17,879
Speaker 3: Okay, well you can talk about that. I don't even

863
00:44:17,920 --> 00:44:18,480
Speaker 3: heard of that.

864
00:44:19,239 --> 00:44:20,479
Speaker 5: Oh well, we need to chat.

865
00:44:20,600 --> 00:44:24,000
Speaker 2: But so in essence, what you're saying is because of

866
00:44:24,040 --> 00:44:27,640
Speaker 2: the longevity issue, because of the potential risk of legislative

867
00:44:27,719 --> 00:44:32,759
Speaker 2: changes to superannuation, because of medical technology and the way

868
00:44:33,000 --> 00:44:35,520
Speaker 2: we're running our lives later and that having children taking

869
00:44:35,520 --> 00:44:38,280
Speaker 2: out a mortgage later in life, we really need to invest,

870
00:44:38,280 --> 00:44:41,400
Speaker 2: as you say, with a focus on the long run,

871
00:44:41,680 --> 00:44:45,200
Speaker 2: regardless of what generation we technically belong to. And obviously

872
00:44:45,280 --> 00:44:48,200
Speaker 2: we need to take into consideration our individual needs. You

873
00:44:48,239 --> 00:44:51,120
Speaker 2: know what our value system is and where we sit

874
00:44:51,440 --> 00:44:54,680
Speaker 2: with risk and how comfortable we feel. But at the

875
00:44:54,760 --> 00:44:56,719
Speaker 2: end of the big picture is is we need to

876
00:44:56,719 --> 00:44:58,400
Speaker 2: be investing for the long run when it comes to

877
00:44:58,400 --> 00:44:59,600
Speaker 2: picking our underlying.

878
00:44:59,280 --> 00:45:03,160
Speaker 3: Yes, there's some you know this episode that we're recording today.

879
00:45:03,200 --> 00:45:05,600
Speaker 3: You know, we're not going to get into the steps

880
00:45:05,600 --> 00:45:08,240
Speaker 3: for building a property portfolio or the steps to building

881
00:45:08,280 --> 00:45:11,000
Speaker 3: a share portfolio. You know, building up your equity is

882
00:45:11,040 --> 00:45:14,319
Speaker 3: the property prices rise and reducing your debt. But you

883
00:45:14,320 --> 00:45:16,120
Speaker 3: know that's we haven't got time for doing all of that.

884
00:45:16,160 --> 00:45:18,560
Speaker 3: But what I will say is, you know, the one

885
00:45:18,600 --> 00:45:22,560
Speaker 3: bit of advice that I saw on reels on Instagram

886
00:45:22,640 --> 00:45:25,960
Speaker 3: reels that did make sense was early in a mortgage,

887
00:45:26,000 --> 00:45:28,319
Speaker 3: if you can make big lump some payments. You know,

888
00:45:28,320 --> 00:45:30,960
Speaker 3: if you come into extra money, you can knock off

889
00:45:31,000 --> 00:45:34,120
Speaker 3: more than the minimum that is going to shorten that

890
00:45:34,239 --> 00:45:36,759
Speaker 3: is going to shorten that mortgage, that's going to bring

891
00:45:36,800 --> 00:45:40,400
Speaker 3: down your debt much faster. And as property prices increase,

892
00:45:40,480 --> 00:45:42,359
Speaker 3: that allows you and unpresume that's what you meant by

893
00:45:42,800 --> 00:45:46,040
Speaker 3: debt recycling, that allows you to reborrow and then buy

894
00:45:46,040 --> 00:45:47,440
Speaker 3: other growth assets.

895
00:45:47,640 --> 00:45:50,839
Speaker 1: Absolutely Okay, So really we're talking. Some of the key

896
00:45:50,880 --> 00:45:55,280
Speaker 1: principles here for these generations are diversification. It is about

897
00:45:56,080 --> 00:46:00,359
Speaker 1: being mindful of your superannuation and acknowledging that is still

898
00:46:00,400 --> 00:46:03,360
Speaker 1: an enormous kind of asset and the important of making

899
00:46:03,400 --> 00:46:05,040
Speaker 1: the most of that and getting some advice if you

900
00:46:05,080 --> 00:46:06,480
Speaker 1: need to in terms of kind of how to make

901
00:46:06,520 --> 00:46:08,920
Speaker 1: the most of that, but also consider building your wealth

902
00:46:09,000 --> 00:46:10,600
Speaker 1: outside of superannuations.

903
00:46:11,120 --> 00:46:14,200
Speaker 3: And if we can take one step before that, or

904
00:46:14,280 --> 00:46:16,880
Speaker 3: take into consideration a step before that, and that is

905
00:46:17,360 --> 00:46:21,600
Speaker 3: sit down and work out what you know, what are

906
00:46:21,600 --> 00:46:24,839
Speaker 3: you good at. Stick to what you're good at, and

907
00:46:24,920 --> 00:46:27,960
Speaker 3: if you need to invest in asset classes that you

908
00:46:28,000 --> 00:46:30,719
Speaker 3: don't know much about or you don't aren't good at,

909
00:46:31,360 --> 00:46:34,279
Speaker 3: then you are one of the ninety three percent of

910
00:46:34,360 --> 00:46:37,360
Speaker 3: gen X that isn't getting advice, and you should go

911
00:46:37,400 --> 00:46:39,839
Speaker 3: and get some advice. So, for example, you might sit

912
00:46:39,880 --> 00:46:42,000
Speaker 3: down and you say, you know what, I really like

913
00:46:42,080 --> 00:46:44,799
Speaker 3: the idea of building a property portfolio. I'm going to

914
00:46:44,800 --> 00:46:47,840
Speaker 3: be indifferent to the asset class today, or I really

915
00:46:48,120 --> 00:46:51,040
Speaker 3: really like the idea of building a share portfolio. Okay,

916
00:46:51,480 --> 00:46:54,480
Speaker 3: start your journey there, get to know more about that,

917
00:46:54,800 --> 00:46:57,400
Speaker 3: or find out find an advisor who's going to be

918
00:46:57,440 --> 00:47:00,360
Speaker 3: able to help you with that that specific asset class

919
00:47:00,400 --> 00:47:04,000
Speaker 3: that you're passionate about, But don't go into it boots

920
00:47:04,000 --> 00:47:06,279
Speaker 3: and all into an asset class that you don't know

921
00:47:06,320 --> 00:47:07,000
Speaker 3: anything about.

922
00:47:08,280 --> 00:47:10,160
Speaker 1: Can we bring it full circle because we have run

923
00:47:10,200 --> 00:47:12,919
Speaker 1: out of time here and just go Are there any

924
00:47:13,040 --> 00:47:17,160
Speaker 1: a couple of key lessons that younger investors can learn

925
00:47:17,280 --> 00:47:20,680
Speaker 1: from the older generations? What are some of the mistakes

926
00:47:20,719 --> 00:47:24,480
Speaker 1: that you have seen made by investors in the past.

927
00:47:24,960 --> 00:47:26,799
Speaker 1: Then you touched on this earlier. But I think it's

928
00:47:26,840 --> 00:47:28,600
Speaker 1: just such a great way to kind of look at

929
00:47:28,640 --> 00:47:31,120
Speaker 1: it and go that when you made the point about

930
00:47:31,120 --> 00:47:33,920
Speaker 1: how people have lost billions and billions of dollars, we

931
00:47:33,960 --> 00:47:35,719
Speaker 1: need to learn from some of these mistakes that have

932
00:47:35,760 --> 00:47:36,160
Speaker 1: been made.

933
00:47:36,400 --> 00:47:39,800
Speaker 3: Sure, I think I think your best opportunity for creating

934
00:47:39,840 --> 00:47:43,160
Speaker 3: wealth is to start a business. That number one. So

935
00:47:43,239 --> 00:47:48,240
Speaker 3: if you've got any not everyone has the predilection for entrepreneurialism,

936
00:47:48,600 --> 00:47:52,280
Speaker 3: and if you don't, that's okay, but just be mindful

937
00:47:52,440 --> 00:47:56,279
Speaker 3: your greatest opportunity comes from starting a business. If you

938
00:47:56,320 --> 00:47:58,480
Speaker 3: don't want to start a business, then you need to

939
00:47:58,600 --> 00:48:01,080
Speaker 3: learn about investing, and you need to start early. In

940
00:48:01,120 --> 00:48:05,040
Speaker 3: both cases, the best advice I can give is start soon.

941
00:48:05,120 --> 00:48:07,960
Speaker 3: Think of a snowball, and think of a really wrong

942
00:48:08,120 --> 00:48:11,239
Speaker 3: long ski hill, you know, and just think about how

943
00:48:11,239 --> 00:48:14,400
Speaker 3: that snowball hypothetically builds up as it rolls down. There

944
00:48:14,480 --> 00:48:16,920
Speaker 3: was a book written about Warren Buffett, one of the

945
00:48:16,960 --> 00:48:20,239
Speaker 3: most famous books about Warren Buffett, and it's called Snowball

946
00:48:20,560 --> 00:48:22,840
Speaker 3: and the idea, you know, the metaphor is the snowball

947
00:48:22,920 --> 00:48:25,960
Speaker 3: rolling down the hill and accumulating wealth the longer it runs.

948
00:48:26,440 --> 00:48:30,000
Speaker 3: So start your snowball early, and because you've got a

949
00:48:30,040 --> 00:48:32,480
Speaker 3: really long runway, it's going to be a very big

950
00:48:32,520 --> 00:48:34,600
Speaker 3: snowball at the end. The other piece of advice that

951
00:48:34,640 --> 00:48:36,400
Speaker 3: I would give, and I think this is really important.

952
00:48:36,800 --> 00:48:41,200
Speaker 3: When you're young, you don't think long term. You can't

953
00:48:41,200 --> 00:48:44,440
Speaker 3: think long term because you haven't been around long term.

954
00:48:45,080 --> 00:48:47,440
Speaker 3: One of the things that helped me was having children.

955
00:48:48,239 --> 00:48:50,440
Speaker 3: Was really interesting. When I had my first son, I

956
00:48:50,480 --> 00:48:56,520
Speaker 3: was twenty twenty eight or twenty nine, and he gave

957
00:48:56,600 --> 00:49:01,480
Speaker 3: me perspective because I realized, my gosh, one day, this little, tiny,

958
00:49:01,560 --> 00:49:05,840
Speaker 3: gorgeous ball of flesh and blood and skin, he is

959
00:49:05,960 --> 00:49:09,560
Speaker 3: going to be twenty one. He's now twenty three, and

960
00:49:09,960 --> 00:49:13,360
Speaker 3: that time went in a flash, and it gave me perspective.

961
00:49:14,239 --> 00:49:17,239
Speaker 3: And I think when you're young, you don't have that perspective.

962
00:49:17,280 --> 00:49:20,880
Speaker 3: You don't think you're ever going to be old. Trust me,

963
00:49:20,960 --> 00:49:24,880
Speaker 3: you will, and so start early. You know, invest for

964
00:49:24,960 --> 00:49:27,400
Speaker 3: the future. You might not think it's relevant today, but

965
00:49:27,480 --> 00:49:30,799
Speaker 3: get started, because it'll come whether you like it or not.

966
00:49:31,880 --> 00:49:34,680
Speaker 1: Roger, there are so many individual kind of nuggets that

967
00:49:34,719 --> 00:49:36,680
Speaker 1: you have shared with us today. It's probably one of

968
00:49:36,680 --> 00:49:38,360
Speaker 1: those podcasts that will have to go back and listen

969
00:49:38,360 --> 00:49:40,480
Speaker 1: to kind of two or three times in order to

970
00:49:40,480 --> 00:49:42,720
Speaker 1: fully absorb it. Thank you so much for coming in today.

971
00:49:42,840 --> 00:49:44,680
Speaker 3: Always a pleasure. I wish we could talk for longer.

972
00:49:44,680 --> 00:49:45,480
Speaker 3: There's so much more.

973
00:49:45,600 --> 00:49:47,880
Speaker 2: I know, there's a lot even more to unpack. The

974
00:49:47,880 --> 00:49:49,640
Speaker 2: deeper we'd keep digging them more we find.

975
00:49:50,480 --> 00:49:53,440
Speaker 1: That was Roger Montgomery, founder and chief investment officer at

976
00:49:53,480 --> 00:49:57,480
Speaker 1: Montgomery Investment Management, a supporter of this podcast. Visit mont

977
00:49:57,520 --> 00:50:00,520
Speaker 1: invest dot com for more information. Can sign up for

978
00:50:00,600 --> 00:50:04,640
Speaker 1: Roger's insights at Roger Montgomery dot com and don't forget

979
00:50:04,680 --> 00:50:06,600
Speaker 1: to pick up a copy of his book as well.

980
00:50:06,719 --> 00:50:09,399
Speaker 1: Value able canor I know that that has become very

981
00:50:09,400 --> 00:50:10,400
Speaker 1: popular in your house.

982
00:50:10,960 --> 00:50:13,920
Speaker 2: My three year old takes a shin and well I

983
00:50:13,960 --> 00:50:15,359
Speaker 2: am not allowed to take it back from her.

984
00:50:15,440 --> 00:50:16,760
Speaker 5: She screams, blim murdered.

985
00:50:16,800 --> 00:50:18,960
Speaker 3: She sounds like she's a savant. If she's reading that

986
00:50:19,040 --> 00:50:20,480
Speaker 3: book at three, it.

987
00:50:20,480 --> 00:50:23,239
Speaker 5: Is upside down. That's she loves it.

988
00:50:23,520 --> 00:50:25,840
Speaker 1: That is quite incredible, all right, Kenna, how do we

989
00:50:25,880 --> 00:50:27,320
Speaker 1: find you? If we want more information?

990
00:50:27,400 --> 00:50:29,120
Speaker 2: The best place to get in contact with me is

991
00:50:29,160 --> 00:50:31,160
Speaker 2: on Instagram at Trugumma tv.

992
00:50:31,200 --> 00:50:33,200
Speaker 1: And you can hear me every day with Sean Aylmer

993
00:50:33,280 --> 00:50:35,800
Speaker 1: on Fear and Greed, Australia's best business podcast. Thank you

994
00:50:35,880 --> 00:50:38,200
Speaker 1: very much for listening to How Today afford that remember

995
00:50:38,200 --> 00:50:40,239
Speaker 1: to hit follow on the podcast, and the very best

996
00:50:40,239 --> 00:50:42,080
Speaker 1: thing that you can do is tell somebody else or

997
00:50:42,120 --> 00:50:45,080
Speaker 1: Betty yet send them this episode and they can also

998
00:50:45,120 --> 00:50:47,000
Speaker 1: benefit from all of the wisdom that we've had today.

999
00:50:47,719 --> 00:50:49,879
Speaker 1: Thank you very much for your company. Join us again

1000
00:50:49,880 --> 00:50:50,319
Speaker 1: next week.