Speaker 1: Put your hand up if you've kissed more than one person,
Speaker 1: and people will put their hand up and we're like, well,
Speaker 1: that's diversification. You know, you're spreading the love. You're not
Speaker 1: putting all your eggs in one basket. You hear so
Speaker 1: many horror stories about investing in the stock market, which
Speaker 1: I hate because nine times out of ten it's from.
Speaker 2: People that haven't diversified.
Speaker 1: I would rather go to sleep and not have to
Speaker 1: wake up in the middle of night to make sure
Speaker 1: that my portfolio hasn't fallen off a cliffs. One of
Speaker 1: the easiest ways, and it's not a lazy way. It's
Speaker 1: not a cheating way, it's not a you know, get
Speaker 1: rich quick way. It's literally a strategy that many many
Speaker 1: great vestas have used.
Speaker 3: Kyota and Welcome to Shared Lunch, brought to you by Charesia's.
Speaker 3: I'm Sonia Williams, co CEO and co founder at chairs
Speaker 3: EA's and we're on a mission to create financial empowerment
Speaker 3: for everyone. Today on the podcast, I'm excited to welcome
Speaker 3: back Victoria Harris, co founder from financial education and investment
Speaker 3: platform The Curve. In this episode, we'll get into the
Speaker 3: nitty gritty of diversification, what it means, when to do it,
Speaker 3: and some potential ways on how to do it. Before
Speaker 3: we get started, here's some important information.
Speaker 4: Investing involves risk. You might lose the money you start with.
Speaker 4: We recommend talking to a licensed financial advisor. We also
Speaker 4: recommend reading product disclosure documents before deciding to invest. Everything
Speaker 4: you're about to see and here is current at the
Speaker 4: time of recording.
Speaker 5: Victoria, Welcome back to the podcast.
Speaker 2: Hi, how are you? Thanks for having me.
Speaker 3: Really cool to have you here to talk about a topic,
Speaker 3: a very cool investing topic.
Speaker 5: Diversification one of my favorite words. Well love that.
Speaker 3: Do you want to tell us a bit about what
Speaker 3: diversification is?
Speaker 2: Yes, So diversification is.
Speaker 1: It sounds like a mouthful, but really it's all about
Speaker 1: spreading your risks, So investing in lots of different things,
Speaker 1: spreading the love, splitting up your investments so you're not susceptible.
Speaker 1: If you know, if you put all your investments into
Speaker 1: into one company and it didn't do well, then you
Speaker 1: wouldn't be too happy. So it's spreading the love around
Speaker 1: and spreading investments around so you're less susceptible to one
Speaker 1: bad decision.
Speaker 3: Yeah, so let's jump into that a little bit more like, so,
Speaker 3: what are the benefits why diversify?
Speaker 1: The best thing that we want to do when we
Speaker 1: invest is we want to get great returns with the
Speaker 1: lowest amount of risk, and that's what everyone wants to
Speaker 1: do at the end of the day. And the best
Speaker 1: way to do that is to spread your investments around
Speaker 1: multiple things, whether it's investing in lots of different companies,
Speaker 1: so like investing in the S and P five hundred,
Speaker 1: which is the top five hundred companies in the years,
Speaker 1: or spreading your money around different assets so that could
Speaker 1: be property in stocks, or investing in in different sectors.
Speaker 1: There's lots of ways that you can diversify. But essentially
Speaker 1: diversification is so that you are reducing your risk and
Speaker 1: it's just a really great investment strategy for building long,
Speaker 1: long term wealth.
Speaker 3: He touched on it, well, it's also like looking at
Speaker 3: your whole wealth picture and how you might split or
Speaker 3: consider diversifying, you know, your income or things like that.
Speaker 1: Yeah, that's that's a really good point. You can diversify
Speaker 1: in many ways throughout your life. The end of the day,
Speaker 1: it's just all all about reducing your risk. If you
Speaker 1: had diversified income streams and you lost your job and
Speaker 1: you still had your side hustle, then that's great, you'd
Speaker 1: be you'd have less stress if something happened or if
Speaker 1: something didn't go right. And so that's the whole point
Speaker 1: of justification is to kind of, I guess, reduce the
Speaker 1: stress when something doesn't go right, protect yourself while also
Speaker 1: on the investing side, build your wealth in a really sustainable,
Speaker 1: sustainable kind of wealth creation way.
Speaker 3: Is it just something you should consider when you're getting started,
Speaker 3: or is it, you know, something that you need to
Speaker 3: worry about when you're an experienced invested.
Speaker 1: When we've started educating and we were talking about diversification
Speaker 1: and we were talking to beginner investors, what we noticed
Speaker 1: was that it was almost stressing them out more because
Speaker 1: they were like, well, you know, I'm investing. All I
Speaker 1: want to focus on is finding the right investment, investing
Speaker 1: in one thing let alone, something else or something else
Speaker 1: and something else, and diversifying. And someone said one day
Speaker 1: to me. They were like, they were like, diversify when
Speaker 1: you can. So if you're investing in the stock market
Speaker 1: and then you have the financial ability to invest in
Speaker 1: the property market, then you should. So it's like but
Speaker 1: don't stress yourself out being like, oh gosh, I have
Speaker 1: to invest in property and stocks and diversify within property
Speaker 1: and diversy within stocks, and get stressed out about how
Speaker 1: much you have to diversify.
Speaker 2: It's like start, start with one thing.
Speaker 1: And diversify in that if you can, and then diversify
Speaker 1: beyond that.
Speaker 3: Yeah, yeah, I just saw that kind of meme pop
Speaker 3: into my head of the person staring off into middle distance.
Speaker 5: While all the calculations are coming on.
Speaker 3: As you're talking within diversifying and diversifying.
Speaker 1: Even diversifying the word itself diversification, people's eyes glaze over
Speaker 1: and we say, put your hand up if you've kissed
Speaker 1: more than one person, And people will put their hand up,
Speaker 1: and we're like, well, that's diversification. You know, you're spreading
Speaker 1: the love. You're not putting all your eggs in one basket.
Speaker 1: If you start dating, you don't want to date just
Speaker 1: just one guy in case you might be a plunker
Speaker 1: and then you've got to start again. You know, it's
Speaker 1: like just you know, not date multiple gill at once,
Speaker 1: but you know, keep your options open. You know you
Speaker 1: might have a successfu one, you might have a done
Speaker 1: so It's the same with investing. It's like invest in
Speaker 1: lots of different things. So if one doesn't do as well,
Speaker 1: it's like, so what, I've got all these other ones
Speaker 1: that are doing well, and it's it's it's not going
Speaker 1: to be as impactful for me on almost stress levels
Speaker 1: but also my finances.
Speaker 3: Yeah, totally. So now that we've established that, it's really cool.
Speaker 3: It's really important as part of your investing, you know,
Speaker 3: and considering wealth as a whole. You know, when should
Speaker 3: people and how should people consider to start seriously thinking
Speaker 3: about diversifying or moving different things into different buckets.
Speaker 1: Yeah, I think the simplest and easiest way is to
Speaker 1: start with ETFs. It removes the thought process of like, okay,
Speaker 1: well how many how many stocks we have to invest in?
Speaker 2: It is it four? Is it ten? Is it twenty?
Speaker 2: Do I have to pack all those companies?
Speaker 3: You know?
Speaker 1: It's it removes that that that decision making element, while
Speaker 1: you still get access to stop the US stock market.
Speaker 2: Say, if you're invested in the S and P five hundred.
Speaker 1: And you're just owning one thing in your portfolio, which
Speaker 1: is a share in an ETF, you're getting access to
Speaker 1: all these underlying companies that are in it, and I
Speaker 1: think that is one of the easiest ways. And it's
Speaker 1: not a lazy way. It's not a cheating way. It's
Speaker 1: not a you know, get rich quick way. It's literally
Speaker 1: a strategy that many, many great investors have used, which
Speaker 1: is buying ETFs and getting diversification that way. We get
Speaker 1: a lot of questions of people asking, you know, do
Speaker 1: I have to direct do I have to directly pickstocks?
Speaker 1: And if I want to diversify, what is a correct amount?
Speaker 2: Is it five? Is it ten? Is at twenty? And
Speaker 2: there's no real answer.
Speaker 1: It's you know, you could have ten companies that you're
Speaker 1: investing in that are all in the healthcare industry. Yes,
Speaker 1: you're diversified, but you're not You're not very well diversified
Speaker 1: because you've still got exposure to one industry. So it's
Speaker 1: really thinking about you know, diversification can reach so many
Speaker 1: different areas.
Speaker 2: It can be diversification and size of company.
Speaker 1: It can be diversification in sector, it can be diverstic
Speaker 1: diversification and country. It can be diversification in your asset classes,
Speaker 1: so stocks.
Speaker 2: Bonds, property, like, yeah, it's it's never ending.
Speaker 3: Can you tell us a bit about different asset classes.
Speaker 3: We've talked about those, but maybe might be helpful to
Speaker 3: go into those in a bit more detail.
Speaker 1: Yeah, So there's typically four asset classes. So we've got stocks, bonds, property,
Speaker 1: and cash. And the reason that assets are lumped into
Speaker 1: those classes is because they move in different ways.
Speaker 2: We've got stocks, which.
Speaker 1: Are high on the kind of risk but then higher
Speaker 1: the reward spectrum in general, and then we've got then
Speaker 1: we've got property next, and then we've got bonds, and
Speaker 1: then we've got cash. So cash is at the bottom.
Speaker 1: It's low risk, but it's also low return. If you
Speaker 1: put one thousand dollars in the bank, you pretty much
Speaker 1: know unless you've spent some of it that in a
Speaker 1: year's time, you're going to wake up and there'll be
Speaker 1: a thousand dollars in there. But because of that guarantee
Speaker 1: or that I guess that security, you're not taking a
Speaker 1: lot of risks, so therefore you're not compensated for that,
Speaker 1: so there's not not a lot of return, whereas with
Speaker 1: stocks at the other end of the spectrum, because you're
Speaker 1: taking a lot more risk, then you're getting compensated for
Speaker 1: it by a higher return on average.
Speaker 3: Yeah, co and how about currencies.
Speaker 1: With currencies, it is something to consider when investing a
Speaker 1: lot of the companies that we invest in, a lot
Speaker 1: of the household companies that we know companies in the
Speaker 1: S and P. Five hundred, they're all US dollar companies,
Speaker 1: and so we do have to transfer our New Zealand
Speaker 1: dollars into US dollars. So therefore, if the currency moves
Speaker 1: in the opposite direction, say our stocks go up, but
Speaker 1: the currency moves in the opposite direction, and that's going
Speaker 1: to impact our overall return in a negative way.
Speaker 2: And so we're not going to get as much of
Speaker 2: a return when we.
Speaker 1: Convert our profits, all the money that we've made in
Speaker 1: those stocks back to New Zealand dollars, and the opposite
Speaker 1: happened can happen as well though, So if you invest
Speaker 1: in US dollars and then the currency moves in your favor,
Speaker 1: that can boost your returns. So I try, particularly for
Speaker 1: beginner investors, to not get too hung up about currency.
Speaker 1: I yeah, there's it's very hard to predict, you know,
Speaker 1: currency moves, and I think if you just accept that,
Speaker 1: you know, sometimes it will benefit you, sometimes it might not.
Speaker 1: But over the long term, you know, it should be
Speaker 1: the returns of the of what you're investing in. That
Speaker 1: that's the most important. So you've been investing for a
Speaker 1: while now, as you have and I have. Are there
Speaker 1: any blind spots or what are the blind spots? What
Speaker 1: catches people out? You hear so many horror stories about
Speaker 1: investing in the stock market, which I hate because nine
Speaker 1: times out of ten it's from people that haven't diversified,
Speaker 1: and it's from people that have put, you know, their
Speaker 1: entire life savings into bitcoin, for example, and that hasn't
Speaker 1: gone to plan. And so that's and then those stories,
Speaker 1: you know, flow down to beginner investors, and they get
Speaker 1: spooked and they get stick scared, and then they or
Speaker 1: they put they don't diversify from day one, and they
Speaker 1: have the same experience and they never invest again. And
Speaker 1: that's that's the opposite of what we want here. But
Speaker 1: some other blind spots, I think you might might not
Speaker 1: be as diversified as you thought, Like I was talking
Speaker 1: about with you know, investing in maybe a healthcare healthcare
Speaker 1: ETF for example, Yes you're diversified, but you're still in
Speaker 1: the healthcare space. So say we had an election that
Speaker 1: cut a whole lot of healthcare spending, then that ETF
Speaker 1: would be impacted even though you're still investing in a
Speaker 1: whole bunch of companies within that ETF, you're still you're
Speaker 1: overexposed or investing heavily in one sector. That's why the
Speaker 1: S and P five hundred is so great, because that
Speaker 1: ETF has over five hundred companies across, like over nearly
Speaker 1: twelve different sectors. Big companies, small companies, companies that get
Speaker 1: most of their revenue from offshore or outside of the US,
Speaker 1: companies that get their revenue from inside the US. So
Speaker 1: there's a lot of I guess, risk mitigation going on
Speaker 1: within that ETF. For example, it's probably not a blind spot,
Speaker 1: but it's more of like something that people might stress
Speaker 1: out about is is having too much focus on being
Speaker 1: too diversified. So there's kind of I guess what I'm
Speaker 1: getting at is there is a middle ground. Don't stress
Speaker 1: yourself out about being you know, super super diversified and
Speaker 1: owning you know, twenty different ETFs like that's you know,
Speaker 1: if you've got if you've got a handful of them,
Speaker 1: that's that's fine, or even just one well diversified ETF.
Speaker 1: But yeah, don't stress yourself outself out about being you know,
Speaker 1: needing to be so diversified that you're just owning things
Speaker 1: for owning them, for owning them's sake. You know, you're
Speaker 1: not actually owning them. You're actually making a conscious decision
Speaker 1: of why you own that ETF or stock.
Speaker 3: Yeah, that's such a good point, and we see that
Speaker 3: play out and the data.
Speaker 5: Around like how people use shares these as well.
Speaker 3: So we've got over seven hundred thousand people investing and
Speaker 3: most have you know, a few a few funds and.
Speaker 5: A few companies like that. It's like level of data.
Speaker 2: So yeah, or satellite approach.
Speaker 1: I'm like, I should be I should be direct stock
Speaker 1: picking all my stocks, but I don't give time.
Speaker 2: I'm trying to like run a business as well.
Speaker 1: And it's so I'm still interested in investing, and of
Speaker 1: course I want to grow my money and grow my
Speaker 1: you know, grow my wealth.
Speaker 2: So I'm going to put eighty percent in ETFs and.
Speaker 1: Funds, But then I might read about a company that
Speaker 1: I'm like, oh that's interesting, or yeah, by buy companies
Speaker 1: that I that I want to almost like double down
Speaker 1: and support because I think they're going to do They're
Speaker 1: going to do really well.
Speaker 2: So I'll do that as well, So.
Speaker 1: There's no right or wrong, it's it's kind of what
Speaker 1: works for you as well.
Speaker 3: Yeah, that's that's so great to hear it because that's
Speaker 3: exactly how I invest as well. And and it's one
Speaker 3: of those almost myths that we're trying to bust, which
Speaker 3: is when people say, oh, I'm just a beginner, so
Speaker 3: I invest like this, and it's like, well, I've actually
Speaker 3: been using for a while now and I miss like
Speaker 3: that too, Like I know, yeah, So it's kind of
Speaker 3: almost like you know, trying to that is we you know,
Speaker 3: it's the great principles to start with, great principles to
Speaker 3: continue doing. And it's cool to hear that, you know,
Speaker 3: and and it's well known like that really sophisticated investors
Speaker 3: can continue to invest in that way.
Speaker 5: Coming back to.
Speaker 3: Your comment about like when you come across like a
Speaker 3: few companies you're keen to invest in as part of
Speaker 3: that course satellite approach, there's another phrase that you hear
Speaker 3: a lot in investing, which is like invest in what
Speaker 3: you know? How do you think about that? And what
Speaker 3: do you what are your reckons?
Speaker 2: Yeah? I love it.
Speaker 1: I love that phrase, and that was one of I
Speaker 1: remember my first day as an analyst, and my boss
Speaker 1: threw a book down on my my DearS can. He said,
Speaker 1: I don't want to do anything today. I just want
Speaker 1: you to read this book and it was Peter Lynch
Speaker 1: One Up on Wall Street. And the key takeaway from
Speaker 1: that book is invest in what you know. And that
Speaker 1: is just stood buy me. You know, my entire investing
Speaker 1: in career. And it's so true.
Speaker 2: And I think investing has got, you know, so complicated.
Speaker 1: And can be so overwhelming and confusing for so many people.
Speaker 1: But if you strip it back, it's like what do
Speaker 1: you enjoy, what are you passionate about, what are you
Speaker 1: interested in? What products do you use? Yeah, and it's
Speaker 1: like what are your values? All of that just comes
Speaker 1: down to investing in what you know. And for me,
Speaker 1: it's like, I don't know biotech. I'm not going to
Speaker 1: know if some clinical trial is going to be a success.
Speaker 1: I'm not going to invest in those companies like I'll
Speaker 1: leave them for someone else to invest in.
Speaker 2: I'm going to stick to.
Speaker 1: Companies that I'm interested in, like technology companies, media companies, retailers.
Speaker 1: All of that really interests me, and I it doesn't
Speaker 1: seem like like it's it's tiresome, or it's just something
Speaker 1: I have to do. It's because I'm interested in it.
Speaker 1: I'm following those companies, I'm reading articles on them, I'm
Speaker 1: using their products, I'm looking, you know, using their new features.
Speaker 1: So I know, because I'm a user and it's and
Speaker 1: it's a company. I know if for whatever reason I don't,
Speaker 1: I don't use it anymore, or I see all my
Speaker 1: friends not using it, or they're using something some other platform,
Speaker 1: or or they're buying a different product, then that is
Speaker 1: that's research, and that's investment research. And so I'll be like, oh,
Speaker 1: hang on, if all these people and myself are now
Speaker 1: no longer using this product or no longer interested in
Speaker 1: this in this company, surely there must be other people.
Speaker 2: And so you start to.
Speaker 1: Be in this investing world without realizing it. And at
Speaker 1: the end of the day, you know, if you're a
Speaker 1: consumer and you're you're you're voting with your wallet for
Speaker 1: that company, you know you may as well benefit as
Speaker 1: an investor as well and benefit from that company's growth.
Speaker 1: If you're kind of giving it the tick of approval
Speaker 1: as a customer, it kind of makes sense to double
Speaker 1: down and benefit from it as an as well.
Speaker 3: Yeah, I love that, And I think the way I
Speaker 3: think about it too is, you know it really you
Speaker 3: can turn observation into your superpower because when you invest
Speaker 3: in the things that you're just around and you're amongst,
Speaker 3: and you're observing, you can really say huh, like yeah,
Speaker 3: as you say, like the taste of this thing has
Speaker 3: changed or they've changed the recipe, I'm not that into it.
Speaker 1: And something like for women, it's like we make up
Speaker 1: eighty percent of global spending and so it's like, yes,
Speaker 1: you're a consumer, so it's like you are dictating where
Speaker 1: that money is spent, you know as a gender or
Speaker 1: you know your majority of spending. It's like you can
Speaker 1: see these trends and you are almost part of the trend.
Speaker 1: So you've got that foresight before a lot of other people, particularly.
Speaker 2: Men, might have.
Speaker 1: You know. It's like using these these things to your
Speaker 1: advantage rather than kind of being like, oh, it's not
Speaker 1: a world for me, or it's I'm not part of it.
Speaker 2: It's like we're all part of it, whether we are
Speaker 2: like it or not.
Speaker 5: Like yeah, it's such a good point.
Speaker 3: Let's deep dive into rest, Like how how does risk
Speaker 3: plan to diversification and you know, how do we think
Speaker 3: about how should people think about that?
Speaker 1: Yeah, so risk is effectively the movement up and down
Speaker 1: of prices. So if something is got big movements in
Speaker 1: its in its price, then it's got a lot of risk.
Speaker 1: So things like cryptocurrency, they you know, there's big moves
Speaker 1: in cryptocurrency. You know, Bitcoin for example, has has moved
Speaker 1: around a lot over the last couple of years.
Speaker 2: Therefore it's quite risky.
Speaker 1: So when it comes to risk and diversification, the the
Speaker 1: two intertwined, and the fact that yes, if you if
Speaker 1: you spread your risk, so you invest in lots of
Speaker 1: lots of different companies. Let's say, for argument's sake, you
Speaker 1: invest in lots of different companies. Some of them might
Speaker 1: have big moves, some of them might not move at all,
Speaker 1: but the average of those is not a lot of movement.
Speaker 1: I think it comes back to you never know what's
Speaker 1: around the corner. And yes, you might invest in something
Speaker 1: that has done very well over the last few years,
Speaker 1: and you know the ins and outs of that investment
Speaker 1: or that company or whatever it is, and you are
Speaker 1: so positive that it's going to do well, but that
Speaker 1: just the world is so unknown and you never know
Speaker 1: also how other investors are going to react, because when
Speaker 1: you're buying and selling a share that's off other investors,
Speaker 1: So how they react is you also have to take
Speaker 1: into consideration if they don't want to own this stock
Speaker 1: anymore or this company, but you do, and there's a
Speaker 1: whole lot more of them than there are of you,
Speaker 1: than the share price is going to go down. So
Speaker 1: it's you've got to take all that into consideration as
Speaker 1: well as kind of what's going on with the company,
Speaker 1: the world that there's a lot of There's a lot
Speaker 1: going on that you need to consider if you it's
Speaker 1: going to be still one thing we didn't foresee COVID,
Speaker 1: for example, and that led to a lot of sheer
Speaker 1: price falls. But again that's probably a really good example
Speaker 1: of diversification. If you'd owned, you know, heading into COVID,
Speaker 1: if you'd owned just travel companies, then your portfolio would
Speaker 1: have looked pretty dire, Whereas if you'd owned some travel
Speaker 1: companies and some tech companies, you would have, you know,
Speaker 1: feared a lot better. Yes, the travel companies would have
Speaker 1: gone down and the tech companies would have gone up.
Speaker 3: It can be an event like that, but it can
Speaker 3: also just be the subtle changes of trends or how
Speaker 3: people you know, Like I think even at the moment
Speaker 3: when you consider like run club culture, like that feels
Speaker 3: like something that's like really a fundamental shift that it's
Speaker 3: like almost going back to you know, like aerobics in
Speaker 3: the nineties being this really but the whole like social
Speaker 3: and exercise coming together.
Speaker 5: You're like, oh, I see, I see where this is going.
Speaker 3: And that like when you come back to the COVID thing,
Speaker 3: like who would have thought that it would be totally
Speaker 3: fine and a lot of businesses to.
Speaker 5: Work remotely to.
Speaker 3: You know, like there's just so much that is that
Speaker 3: reset in motion that you know, new new like emerging
Speaker 3: technologies or emerging ways of doing things, emerging businesses, like
Speaker 3: new stuff pops up tod.
Speaker 1: And in those times, you know, when there is uncertainty,
Speaker 1: you want to worry about yourself. You don't want to
Speaker 1: sit there worrying about your investments. And so if you diversify,
Speaker 1: there's kind of less uncertainty you.
Speaker 2: Have to worry about.
Speaker 1: You know, you can you can be selfish and you
Speaker 1: just worry about yourself because you know you've got your
Speaker 1: investments sorted and so you can just focus on the
Speaker 1: things that that are important rather than stressing about your investments.
Speaker 2: Because yeah, it's not.
Speaker 3: That I do the sleep at night test, which is
Speaker 3: just like that to me is priceless.
Speaker 2: Yeah.
Speaker 3: So it's like if there's yes, winning is awesome, but
Speaker 3: like I would rather have a portfolio that meant that
Speaker 3: I could sleep at night and like sleep comfort.
Speaker 5: Yes.
Speaker 1: Yeah, And some people love having the spicy stocks assets
Speaker 1: in their portfolio and that's fine.
Speaker 2: That is not for me. I'm sorry.
Speaker 1: I would rather go to sleep and not have to
Speaker 1: wake up in the middle of the night to make
Speaker 1: sure that my portfolio hasn't fallen off a cliff. I
Speaker 1: just yeah, I would rather do a more pragmatic, considered
Speaker 1: a tried and true way.
Speaker 2: Of investing through diversification.
Speaker 5: Yeah yeah, but a garnish, but a garnish here and there.
Speaker 1: Yeah, but chili flake would be would be good for you.
Speaker 3: So how does it differ between you know, how an
Speaker 3: individual might think about it or manage diversification versus like
Speaker 3: a professional like a fund manager or different money managers.
Speaker 1: Yeah. So when I was a fund manager, we were active,
Speaker 1: active fund managers, so we were out there picking stocks,
Speaker 1: picking companies on behalf of clients, and so we had
Speaker 1: a duty to make sure that the portfolio was well
Speaker 1: diversified all the time. And you know that that was
Speaker 1: the reason that our clients had given us money, was
Speaker 1: to make it grow, and so we had to make
Speaker 1: sure it was diversified.
Speaker 2: So we would have about.
Speaker 1: Depending on the fund, but you know, an average of
Speaker 1: maybe like thirty different companies to invest in to make
Speaker 1: sure that we were properly diversified as well as.
Speaker 2: Generating good returns.
Speaker 1: Whereas and so that's kind of when you give your
Speaker 1: money to a fund manager that's or an active fund manager,
Speaker 1: what that's what they'll do for you, and that's what
Speaker 1: you pay them a fee for. The thing with the
Speaker 1: professionals is they've got usually teams around them, so it's
Speaker 1: not just and when you're doing it individually, you usually
Speaker 1: only got yourself, so it's yeah, they've got a lot
Speaker 1: of other people and systems and research feeding into those decisions.
Speaker 1: So when I say they're picking kind of twenty to
Speaker 1: thirty stocks to be diversified, you doing that yourself is
Speaker 1: going to be a lot more time consuming, a lot
Speaker 1: more take a.
Speaker 2: Lot more research and effort.
Speaker 1: If you're doing it yourself, then the best way is
Speaker 1: to do it through through an ETF, where you're getting
Speaker 1: that diversification, you're not getting that kind of personal element
Speaker 1: because it's ETFs essentially run by computers that don't really
Speaker 1: change that much. They're pretty stock standard. But as an
Speaker 1: individual you can you can pick that yourself, and the fees.
Speaker 2: Are a lot lower. So an ETF is usually the easier.
Speaker 2: But also you.
Speaker 1: Know, in most cases just as high returning strategy to
Speaker 1: invest in.
Speaker 3: You mentioned like diversifying within diversifying within diversifying, can you
Speaker 3: be to diversify it?
Speaker 5: And what do you do about it? On Once you.
Speaker 1: Realize if you're investing in things that you either don't understand,
Speaker 1: you don't know, you don't want to own, but you
Speaker 1: just have to own because you to be diversified, that's
Speaker 1: not a good sign because then if it doesn't do well,
Speaker 1: you won't know why you owned it, you won't know
Speaker 1: what it does. And it's just I think you can
Speaker 1: definitely have too many things in your portfolio. It can
Speaker 1: become very stressful being across you know all those companies,
Speaker 1: what's going on, you know their financial results, What if
Speaker 1: the CEO leaves, what if there is a product failure.
Speaker 1: What if there's some technological innovation at a competitor or what.
Speaker 1: You know, there's a lot of things to be going on.
Speaker 1: There's a lot of things to be across when you
Speaker 1: own a lot of companies in your portfolio. Some people
Speaker 1: love that and that's great, but I think for a
Speaker 1: lot of investors that can be very overwhelming and almost
Speaker 1: take the shine off investing and the fun off investing.
Speaker 1: And I think that's that's a place we don't want
Speaker 1: to get to. I think you can achieve the same
Speaker 1: or similar outcome by a much more simplify strategy, and.
Speaker 2: That is through and through ETFs.
Speaker 1: And I'm not endorsed by any ETF anyway, you know,
Speaker 1: I keep keep keep, you know, holding up the fame ETFs,
Speaker 1: but I'm definitely not being endorsed by them. But I
Speaker 1: just think it's for a beginner to intermediate you even
Speaker 1: advanced invested. I just feel like it is such a
Speaker 1: good strategy, and yeah, it makes for a very clean
Speaker 1: looking portfolio as well.
Speaker 3: If our listeners were to take three actions from this episode,
Speaker 3: what what do you recommend if.
Speaker 1: You forget beginning your investing journey, always start with diversification,
Speaker 1: Also invest in what you know and go to a
Speaker 1: farmer's market and buy some oranges and apples.
Speaker 5: Love that get you.
Speaker 2: Think of a third one?
Speaker 3: Oh and hey, what was the book that you got
Speaker 3: handed when you're at work? That?
Speaker 2: Yes, Peter Lynch One Up on Wall Street.
Speaker 1: It's very old, it's probably about forty years old now,
Speaker 1: but like that even in itself, you know, there's people
Speaker 1: that have made fortunes, that have been investing this way
Speaker 1: for such a long time, and it's stood the test
Speaker 1: of time and it's still a way that I invest today.
Speaker 1: And yeah, it's Peter Lunch One Up on Wall Street.
Speaker 2: Great book.
Speaker 3: Awesome, love a good book. Book recommend I add that
Speaker 3: to my good Reads. Hey, thanks Hete for joining us, Victoria,
Speaker 3: it's been an awesome conversation. Thanks on Yeah, thanks everyone
Speaker 3: as well for tuning in. You can watch it Shared
Speaker 3: Lunch on YouTube, or follow the podcast on Apple, Spotify,
Speaker 3: or you get your podcasts. Leave us a rating and
Speaker 3: comment on what you'd like to hear about next, and
Speaker 3: enjoy the rest of your week.