Speaker 1: She's on the Money. She's on the Money.
Speaker 2: Hello, and welcome to She's on the Money, the podcast
Speaker 2: for millennials who want financial freedom, back by popular demand.
Speaker 2: Today we are jumping straight back into another Q and
Speaker 2: A episode, helping answer the questions we didn't have time
Speaker 2: for in our last Q and A show. Expect wedding chats,
Speaker 2: home loan tips, and ideas for where best to funnel
Speaker 2: your extra cash, plus plenty.
Speaker 3: More that is diverse, Georgia, I appreciate it.
Speaker 2: I know now. My name is Georgia King, and joining
Speaker 2: me as always is financial advisor Victoria Divine. We are
Speaker 2: back today to answer more of our communities burning questions.
Speaker 2: How ex are you?
Speaker 3: I am stoked, No, genuinely, I'm really excited because these
Speaker 3: are really fun. They're like shortsh up to the point
Speaker 3: things where I feel like you guys walk away with
Speaker 3: a whole understanding of like random topics Like is that
Speaker 3: not fun? I think that's fun.
Speaker 2: Yeah, it's like the taste of lots of different topics
Speaker 2: in one episode.
Speaker 3: Right, So, George, we probably should just jump into them,
Speaker 3: shouldn't we.
Speaker 2: Let's do it be okay, So our first question here
Speaker 2: is from Bonnie. She has asked, if I'm in my
Speaker 2: early twenties lucky and I have a decent chunk of savings,
Speaker 2: how should I be investing slash growing this She feels
Speaker 2: that it's being wasted in the bank where she's not
Speaker 2: getting much interest off her money at all. But she
Speaker 2: also doesn't want to invest a larger portion in shares
Speaker 2: as she might want it in a few years for
Speaker 2: a home loan. So what do you do in that case?
Speaker 3: Be oh, you got to go see a financial advice
Speaker 3: or my friend, because that is asking for financial advice,
Speaker 3: and it would be very irresponsible of me as the
Speaker 3: financial advisor, to provide you with direct advice.
Speaker 2: But here's gentially, that's generally.
Speaker 3: Where you should be looking. So first things first, there
Speaker 3: are different time frames for investment. So you could invest
Speaker 3: for five years, you could invest for ten years. The
Speaker 3: priority could be investing for the long term. And obviously
Speaker 3: I talk a lot on this podcast about investing for
Speaker 3: the long term because I want you guys to be
Speaker 3: creating financial freedom. But I know a lot of people
Speaker 3: who are saying, oh cool, probably want to buy a
Speaker 3: house in like seven to ten years. But I'm going
Speaker 3: to invest in the short term and sell down my
Speaker 3: asset once I'm there, because I want exposure to those returns.
Speaker 3: So it's not to say you shouldn't invest. There's obviously
Speaker 3: just risk that comes along with that when you talk
Speaker 3: about it being wasted in the bank. Obviously, we are
Speaker 3: really lucky here in Australia to have a really safe
Speaker 3: banking system and we also have access to interest rates
Speaker 3: on some of our banking products, which means you can
Speaker 3: make a return. But if you're wanting more of a
Speaker 3: retur than that, I can't actually recommend a direct product
Speaker 3: because it would include more risk and what you've just
Speaker 3: said is you're not willing to take more risk than that.
Speaker 3: So sometimes we really need to think like what is
Speaker 3: the plan here? And it's actually really common question where
Speaker 3: they're like, oh, I feel like my money's been wasted
Speaker 3: in the bank, but I don't want to invest. I'm like, well,
Speaker 3: there's actually no unicorn middle product where it's like, oh
Speaker 3: my gosh, great returns, absolutely no risk, can pull it
Speaker 3: out whenever you want, So you can buy a house
Speaker 3: like it's not going to happen, and if it was,
Speaker 3: I'd be recommending it because it would be safer and
Speaker 3: less risky than investing in shares, and it would also
Speaker 3: be better than the bank. So you would have heard
Speaker 3: this from me already. I promise there are a couple
Speaker 3: of ways about going about it, though. You could be
Speaker 3: looking at maybe less risky shares and having a more
Speaker 3: conservative portfolio so that you are exposed to a bit
Speaker 3: more risk, but you're also not, you know, in a
Speaker 3: super high growth portfolio that's arguably going to see more fluctuation.
Speaker 3: But I think it's really important to understand what your
Speaker 3: timeframes on different goals are and if you're saying should
Speaker 3: I be investing, I believe, from my personal opinion, yes,
Speaker 3: at some point you need to start investing for our future.
Speaker 3: If you've got superannuation, you are pretty an investor, and
Speaker 3: we should be thinking about our financial future as a whole,
Speaker 3: not just prioritizing. I want a house, I don't want
Speaker 3: a car, and so every single dollar I earn goes
Speaker 3: into that again, bigger conversation. I can't give direct advice,
Speaker 3: but that's what I would say when we start thinking
Speaker 3: about that concept.
Speaker 2: Okay, so it's not then completely wasted in the bank,
Speaker 2: Like it's okay to leave it there, it's okay to just.
Speaker 3: Have savings, especially if you're saving for home deposit or
Speaker 3: you are saving for your first car. In fact, something
Speaker 3: that I think is really important to talk about is
Speaker 3: your first home deposit or your first one hundred thousand
Speaker 3: dollars worth of savings are going to be the hardest.
Speaker 3: They're going to be the hardest because you don't see
Speaker 3: any compounding. You don't see any return on the money
Speaker 3: that you have saved or invested in the short term.
Speaker 3: Whereas after that, I promise everything thing is so much
Speaker 3: easier because a five percent return on five grand not
Speaker 3: that much. But when we start looking at five percent
Speaker 3: return on one hundred thousand dollars, you're like, oh, that
Speaker 3: seems to be a fair bit, and it starts to
Speaker 3: compound over time. So what we want to do is,
Speaker 3: if you're in your early twenties, it can feel like
Speaker 3: a long slog, it can feel like you want better returns,
Speaker 3: but it's about being consistent. And if the plan is
Speaker 3: to get into the property market, great, go with that.
Speaker 3: Save for your first home, get there. That property is
Speaker 3: then going to, hopefully if you've bought a good property,
Speaker 3: increase in value, or it might be an investment property
Speaker 3: that then generates you income, but if it increases in value,
Speaker 3: then we have what's called leverage, so we can start
Speaker 3: borrowing against an asset so you don't have to start
Speaker 3: from scratch again. And the same thing can be said
Speaker 3: to be true in the share market, where your first
Speaker 3: one hundred thousand dollars is the hardest to earn and
Speaker 3: the hardest to actually get into the market, and once
Speaker 3: you have surpassed that, everything becomes a little bit easier
Speaker 3: because your shares start to compound and your dividends start
Speaker 3: to reinvest and you start to actually seek growth. Whereas
Speaker 3: you know, when we are dealing with and I'm not
Speaker 3: calling them small by any stretch to the imagination, but
Speaker 3: in this day and age, I think it's really important
Speaker 3: for me to be quite direct about this. It's going
Speaker 3: to be hard, and there are going to be decisions
Speaker 3: that you need to make along this journey where you go, oh,
Speaker 3: I'd really like to invest and get some returns, but like,
Speaker 3: it's actually not worth it in the short term because
Speaker 3: it's car, or it's a house deposit, or it's actually
Speaker 3: allocated to something else.
Speaker 2: Yeah, so probably creating a three year strategy is not
Speaker 2: going to be that beneficial.
Speaker 3: No, I don't think so. Especially if you're saying I
Speaker 3: would like to expose an asset to the shed market
Speaker 3: for less than five years, I'd probably really shy away
Speaker 3: from that because I am really adverse to risk and
Speaker 3: I wouldn't want you taking unnecessary risk. But in saying that,
Speaker 3: if it was anything more than that, absolutely considers something
Speaker 3: that could help you a lot. That journey, that's in
Speaker 3: line with your risk profile.
Speaker 2: Beautiful. All right, good luck with the home ownership journey, Bonnie.
Speaker 2: We are rooting for you. Okay. Vanessa is our next
Speaker 2: question here, v Lord. She wants to know the pros
Speaker 2: and cons of renting, specifically in retirement. So we did
Speaker 2: a podcast on this on Renting Forever a few weeks
Speaker 2: ago now of a few months. Even she says she's
Speaker 2: always been taught that it's better to have a home
Speaker 2: of your own when you do retire, so you're not
Speaker 2: paying rent out of either your investments or your pensions
Speaker 2: and so on. So what are the pros and cons
Speaker 2: v of renting in retirement?
Speaker 3: So there are a number, and she's actually correct. We
Speaker 3: did not talk about the benefits of renting or the
Speaker 3: cons of renting when you are retired. Because obviously that
Speaker 3: would mean that you had to have capital to pay
Speaker 3: for the rent, right, But if we're working towards a
Speaker 3: safe and comfortable retirement, we will always have funds available.
Speaker 3: Like that's the purpose of financial security and creating financial freedom.
Speaker 3: So if we are talking about the pros of renting
Speaker 3: in retirement, obviously you're going to have the flexibility to
Speaker 3: move around and live a lifestyle you want when you
Speaker 3: are younger. You don't have to save up for a
Speaker 3: house deposit and then pay back a mortgage. A lot
Speaker 3: of people will say, oh, my gosh, but the I
Speaker 3: want to own a house outright, so that the pension
Speaker 3: is all mine or my super money is all mine
Speaker 3: and it's not being spent on accommodation. Like, Okay, each
Speaker 3: to their own. I think that there are a number
Speaker 3: of benefits to just owning your own things. But let's
Speaker 3: be honest, that is a privilege that is denied to
Speaker 3: so many of us. And it's actually kind of cool
Speaker 3: that through to retirement we can rent. Like, at the
Speaker 3: end of the day, being able to rent just means
Speaker 3: that we need to allocate our budget consistently so that
Speaker 3: we actually take into account that expense and you know,
Speaker 3: maybe once you become retired, if you are a homeowner,
Speaker 3: that expense drops off, but it doesn't mean you have
Speaker 3: no expenses. You're going to still need an income. Whereas
Speaker 3: if you are retiring and you haven't purchased a property
Speaker 3: that is your live in forever property, you're going to
Speaker 3: need to budget for a home, right, you're going to
Speaker 3: need budget for accommodation. But the idea that that can
Speaker 3: then be far more flexible is really appealing. So the
Speaker 3: idea that you could go, okay, cool, like rent's a
Speaker 3: bit expensive and I want to change my lifestyle, you
Speaker 3: can do that very easily. You could scale up as
Speaker 3: well if you had more disposable income than you thought,
Speaker 3: maybe rent a bougie apartment in comparison to the house
Speaker 3: that you'd been renting. And then obviously the maintenance costs
Speaker 3: that come along with a home you wouldn't have to
Speaker 3: take into consideration because that would be the landlord's responsibility.
Speaker 3: But when it comes to cons obviously a landlord could
Speaker 3: bump up the rent or sell your home, which could
Speaker 3: be a massive headache. Especially as you're getting older, you
Speaker 3: might need a greater amount of superannuation to live off
Speaker 3: because you will be paying rent as well as compared
Speaker 3: to having a mortgage paid off. But again, maybe if
Speaker 3: you're a bit younger and you're in this situation where
Speaker 3: we are planning for retirement, the plan of purchasing a
Speaker 3: home paying off a home might actually be far more
Speaker 3: financially than planning to rent in retirement. So that's where
Speaker 3: we need to and in financial advice Land, we actually
Speaker 3: project these things out and do analysis where we go, okay, cool,
Speaker 3: what would that look like in the future if we
Speaker 3: sat Georgia down now and she invested XYZ, What would
Speaker 3: it mean if we changed this particular part of her circumstance.
Speaker 3: What do it mean if she rented forever instead of
Speaker 3: making a family home purchase. What do I mean if
Speaker 3: she made a family home purchase? What would her cash
Speaker 3: flow look like? What would her budgeting look like? I
Speaker 3: think it is very important to take into consideration all
Speaker 3: the options if that's in line with your values, and
Speaker 3: also remembering that if we own a family home and
Speaker 3: we do need to claim sent link or a pension,
Speaker 3: that family home's value is not taken into consideration. So hypothetically, Georgia,
Speaker 3: if you have a lot of super and you're not
Speaker 3: able to claim the pension, but you actually need to
Speaker 3: because it's like a lot of super but not enough
Speaker 3: super for you to pay for your retirement. If you
Speaker 3: then purchased a house with that superranuation money, you could
Speaker 3: potentially then claim the pension as well, because that asset
Speaker 3: is not taken into consideration when working out whether you
Speaker 3: get the pension or not. It's other assets outside of that,
Speaker 3: So talking about that as obviously a benefit of owning
Speaker 3: instead of renting, and then also AFSA, So the Australian
Speaker 3: Financial Services Authorities calculations say that if you're renting in
Speaker 3: Sydney as a couple, you would need a total of
Speaker 3: one million, one hundred and sixty six thousand dollars to retire,
Speaker 3: and singles would need one million and forty five thousand
Speaker 3: dollars to retire, which would then cover their rent to
Speaker 3: live a quote comfortable lifestyle. And obviously Sydney is our
Speaker 3: most expensive city in the country, but it's worth thinking
Speaker 3: about and maybe if you are renting and those figures
Speaker 3: are out of reach, then living rigidly might be a
Speaker 3: smarter idea financially. So I think when we start to
Speaker 3: break it down and talk about it, like how much
Speaker 3: would it cost you to buy a house in the
Speaker 3: location that you live? So example, if you live regionally
Speaker 3: and houses cost three hundred grand, that's very different Georgia
Speaker 3: than saying, Okay, the average house price in my area
Speaker 3: is a million dollars, so I need to save a
Speaker 3: million dollars purchase property, and then I'm also going to
Speaker 3: need a million dollars in super to live comfortably, Like
Speaker 3: which one is it? What are we prioritizing? How is
Speaker 3: that going to work? Because it's not one or the other,
Speaker 3: it's which situation is going to work best for us? Gotcha?
Speaker 2: Our next question here V is from Claire. So she
Speaker 2: is at a stage in life where she can start
Speaker 2: investing in shares, and she is wondering if it's better
Speaker 2: to concentrate on building her super as it's pretty low
Speaker 2: at the moment, or if she should buy shares outside
Speaker 2: of Super.
Speaker 3: Claire, Claire, Claire. What is with you guys asking specific
Speaker 3: financial advice questions which I'm legally not allowed to answer,
Speaker 3: Like if it is about you, my friends, I cannot
Speaker 3: give you a direct answer. And that's not a bad thing.
Speaker 3: I'm not lying coming at Claire or any But I
Speaker 3: do want to point out I'm not trying to skirt
Speaker 3: around the issue, guys. I'm not trying to be like,
Speaker 3: oh my gosh, I'm not going to answer Claire's question directly. Legally,
Speaker 3: I can't because I haven't looked at Claire's personal situation,
Speaker 3: haven't done a fact find. I don't know what other
Speaker 3: assets Claire owns. I don't know what her income looks like.
Speaker 3: I don't know even what superanuation fund she's in. So
Speaker 3: it would be incredibly irresponsible of me to be like,
Speaker 3: Claire put more in super like. I don't know that,
Speaker 3: And the answer to that question, if I answer it directly,
Speaker 3: could be not in her best interests, which is really
Speaker 3: upsetting because I would love to be like, Okay, George,
Speaker 3: this is what you do. This is how you create
Speaker 3: financial freedoms. Follow step A, B, C, and D, and
Speaker 3: you are going to be golden like. I wish I
Speaker 3: could answer it that way, Unfortunately I can't. So this
Speaker 3: is the way we're going to do it today. So Claire,
Speaker 3: my friend, you are going to have a think about
Speaker 3: your future and what you want to achieve. Supernuation is
Speaker 3: a brilliant tax vehicle. Did you hear that Georgia I
Speaker 3: did not call superannuation investment. I said it was a
Speaker 3: tax vehicle, which is essentially what it is. To me.
Speaker 3: Superranuation is not an investment. It is a tax structure
Speaker 3: which enables you to pay fifteen cents on every dollar
Speaker 3: instead of your marginal tax rate on the money that
Speaker 3: you put into superranuation, which is then invested on your
Speaker 3: behalf by a superanuation fund that manages that money. So
Speaker 3: we need to look at super and go, okay, cool,
Speaker 3: this is a great tax structure the moment. If you're
Speaker 3: not paying any tax, then it doesn't really matter too
Speaker 3: much where you're investing because you're already not paying much tax.
Speaker 3: But it might be beneficial for you tax wise to
Speaker 3: put some more money into super because the tax difference
Speaker 3: is obviously quite significant because you could be earning more
Speaker 3: than one hundred and eighty grand and paying the top
Speaker 3: marginal tax rate. So it kind of makes sense to
Speaker 3: start considering that as an option. But the other thing
Speaker 3: with supranuation is we need to remember that you cannot
Speaker 3: access that until you're sixty and properly at sixty five,
Speaker 3: So are you willing to wait that long for your
Speaker 3: future financial freedom. If the answer is no, that's okay.
Speaker 3: It's still a priority. It is still something that we
Speaker 3: are contributing to constantly. I mean it's now ten percent
Speaker 3: of our incomes that get put into superannuation, which is significant.
Speaker 3: I don't know anyone Georgia who can turn around and
Speaker 3: be like, oh my gosh, since I started working, I
Speaker 3: have been investing ten percent of my income. That's what
Speaker 3: we're doing with SUPER Like. We need to care about
Speaker 3: it more so from my perspective, we need to work
Speaker 3: out what that looks like and pick an investment strategy
Speaker 3: or pick a way of investing, whether that's more into
Speaker 3: super or going and getting a platform with shares these
Speaker 3: or going and setting up six Park or going on Superhero.
Speaker 3: It doesn't matter which one it is. You need to
Speaker 3: work out what is going to work best for you. So, Claire,
Speaker 3: my friend, if you want to start investing in shares,
Speaker 3: that's super exciting, but have a think about where you
Speaker 3: want to see those returns. If you want to access
Speaker 3: that before retirement, then go and do that. There isn't
Speaker 3: a right or wrong. It is down to your values.
Speaker 3: I'm sorry, George, you need to pick questions where I
Speaker 3: don't have to be elusive. No, that was good.
Speaker 2: I feel like Claire would have gotten a little bit
Speaker 2: out of that, So thank you.
Speaker 3: VD.
Speaker 2: Let's move on here to quite an interesting question that's
Speaker 2: come from sim. She is after some finance tips for
Speaker 2: neurodivergent people. So she said, for example, people with ASD
Speaker 2: or ADHD. So what are your tips here, V, because
Speaker 2: we haven't spoken about this before.
Speaker 3: Yeah, okay, So I think that this one is an
Speaker 3: interesting topic to cover because there are so many neurodivergent
Speaker 3: people in our community, and often you don't know who
Speaker 3: they are. Neurodivergence could be lots of different things. So
Speaker 3: there are several types of recognized neurodivergence. So there are
Speaker 3: things from autism and aspergers to dyslexia, epilepsy, you've got hyperlexia,
Speaker 3: You've got things like Tourette's and obsessive compulsive disorder, and
Speaker 3: then AD and ADHD, which are two very different things
Speaker 3: that do different things if you look it up. Even
Speaker 3: left handedness is considered being neurodivergent, which is interesting that
Speaker 3: I'm taking from that is me, as a left hander neurodivergent.
Speaker 3: Obviously I am perfect person to talk about this, but
Speaker 3: more specifically, I do actually have two degrees in psychology
Speaker 3: Georgia and I've actually studied neurodivergence, which is really interesting.
Speaker 3: So from what I understand, when we talk about neurodivergence,
Speaker 3: it would be very hard for me to go, Okay, cool,
Speaker 3: if you're a neurodivergent, here's the answer, Because someone who
Speaker 3: has autism versus someone who has ADD or even ADHD
Speaker 3: or dyslexia, it's all very different. The advice is going
Speaker 3: to be very different. But I think what we are
Speaker 3: going to discuss here is ADHD because I feel like
Speaker 3: there's been a very big surge of diagnoses of ADHD recently,
Speaker 3: particularly for women, because we are learning more about what
Speaker 3: those markers are, those indicators look like for them. So,
Speaker 3: from what I understand about ADHD, people with this, they
Speaker 3: struggle when it comes to things like concentrating, impulsivity, and
Speaker 3: over activity, and that means that money management can be
Speaker 3: super tough. It can mean that the concentration that is
Speaker 3: required to manage money is just not going to be
Speaker 3: able to be given. And impulsive spending for people with
Speaker 3: ADHD is a massive issue. I have spoken to so
Speaker 3: many people in our community who have ADHD and they're
Speaker 3: like Victoria, I cannot get my impulsive spending under control.
Speaker 3: So it makes sense that neurodivergent people do really struggle
Speaker 3: with money management, and I hope that she's on the
Speaker 3: money can actually be a really safe space for you
Speaker 3: to learn about it. But I also think that when
Speaker 3: it comes to money management, one of the best ways
Speaker 3: to deal with this is automation. We need to put
Speaker 3: a plan in place that actually works for us when
Speaker 3: we aren't able to work with it. So that means
Speaker 3: setting up a banking structure that makes sense. This is
Speaker 3: something that I have worked with for a number of
Speaker 3: years now. It's actually one of the reasons I started
Speaker 3: building my budget and cash Flow master class to actually
Speaker 3: get on top of these things because I have a
Speaker 3: number of clients that are neurodivergent and it's about automating things.
Speaker 3: So when it comes to bills, putting them on direct
Speaker 3: debit for people who have ADHDS really helpful because even
Speaker 3: if they get the bill and it's front of mind,
Speaker 3: they'll just put off paying it and they just won't
Speaker 3: do it because it is not in their capacity to
Speaker 3: do so. Sometimes and sometimes they get really motivated and
Speaker 3: do six million things all at one time. So one
Speaker 3: really quick win can be to automate your banking structure
Speaker 3: and set it up so that it works for you,
Speaker 3: and then setting aside a certain amount of money that
Speaker 3: you are allowed to spend, which is where my idea
Speaker 3: of the food, fuel and fun budget comes from, so
Speaker 3: that we don't end up sacrificing our longer term goals
Speaker 3: like maybe saving for a house or a holiday or
Speaker 3: a car. We don't sacrifice those because we are impulsive spenders.
Speaker 3: So we need to put a structure in place that
Speaker 3: works really well for us. Another thing that I would
Speaker 3: say is really helpful when it comes to money management
Speaker 3: is starting out with as many money apps as possible.
Speaker 3: We talk about them in our community and they can
Speaker 3: be really helpful. We've obviously spoken about Pocketbook and our
Speaker 3: friends get reminded they would be so helpful in this situation. Also,
Speaker 3: if you live in a sharehouse and struggle remembering what
Speaker 3: you owe and who to set up the app split
Speaker 3: wise with your housemates or even just your partner to
Speaker 3: keep track of your budget and what people are spending
Speaker 3: on what. And when it comes to budgeting, there are
Speaker 3: a whole heap of apps out there that are really good. Obviously,
Speaker 3: we have worked historically with Pocketbook and we really like
Speaker 3: them as a budgeting app. We Money is also another
Speaker 3: one that our community seems to get around and love
Speaker 3: and then think about using round up apps. So we've
Speaker 3: talked about upbank before. They actually are able to round
Speaker 3: up your spending so that you can start investing without
Speaker 3: having to actually commit to transferring it each and every sea.
Speaker 3: I also know we're not just talking about bills when
Speaker 3: we say automate your spending. It's about automating your savings
Speaker 3: as well. And I think this is also Georgia a
Speaker 3: really good time to talk about our friends at the
Speaker 3: National Debt Helpline. So if you feel like you're in
Speaker 3: a pickle and you don't want to pay for advice
Speaker 3: and you just feel like you need a hand, reach
Speaker 3: out to them and they will tear you up with
Speaker 3: a financial counselor that I know will give you some
Speaker 3: tips and tricks that will set you on the right path.
Speaker 2: You mentioned impulse buying. There is a big problem for us.
Speaker 2: Why is that such an issue for neurodivergent people and
Speaker 2: how like what solutions are there to help bring that
Speaker 2: under control?
Speaker 3: Yeah, So impulsivity is actually one of the major symptoms
Speaker 3: of ADHD. So it's not actually uncommon for people with
Speaker 3: ADHD to buy first and think later. So things like
Speaker 3: after pay us slippery slopes for these friends. So yes,
Speaker 3: impulse spending is something that we need to get a
Speaker 3: hold of. But it's actually not just the purchasing, it's
Speaker 3: the impulsive behavior. They are far more likely than you know,
Speaker 3: people who aren't near idovert to actually do first and
Speaker 3: think later. So I think it's important to just understand
Speaker 3: that that would then stretch into spending and they'll go, oh,
Speaker 3: I really like that top, I'll have that top, and
Speaker 3: then they just didn't think about the thing that they
Speaker 3: were saving for down the track or the other goal
Speaker 3: that they had. It can actually be a little bit
Speaker 3: like having blinkers on and you're not able to consider
Speaker 3: the bigger picture because you just didn't take the time
Speaker 3: out to think about that at that point in time.
Speaker 3: So it's something that if you're in that situation, it
Speaker 3: makes sense as to why you are being impulsive, why
Speaker 3: you're maybe not so good at money management. That's where
Speaker 3: it's just important to have the right people on your team,
Speaker 3: the right podcast in your ears.
Speaker 2: Absolutely, okay, very good, thanks for that. VD. Let's have
Speaker 2: a little break here. But on the other side, guys,
Speaker 2: we will be answering the rest of your incredible questions,
Speaker 2: including wedding chats.
Speaker 3: Very excited for that. Not my wedding, not George's wedding,
Speaker 3: so not as exciting to be clear.
Speaker 2: So we'll see you on the other side, guys, VICKI
Speaker 2: D we are back. Hope you had a wonderful break there,
Speaker 2: so excited.
Speaker 3: Do you are sure about atfs and managed funds?
Speaker 2: Is that question funny you ask?
Speaker 3: Mate?
Speaker 2: Our next question here is from Susan. She has asked
Speaker 2: what is the difference between managed funds and ETFs?
Speaker 3: Are you ready for this later? According to the AX
Speaker 3: and your friendly neighborhood financial advisor Victory Devine, ETFs are
Speaker 3: managed funds. That's what I thought I got on. But
Speaker 3: traditional managed funds are sometimes less transparent and potentially are
Speaker 3: a lot more of an expensive approach to investing. So both, however,
Speaker 3: are open ended funds that have co mingling assets and
Speaker 3: seek to achieve a stated investment objective to be more specific,
Speaker 3: So at the end of the day, an ETF is
Speaker 3: a managed fund, but a managed fund, not an ETF. Okay, yeah,
Speaker 3: very similar. So when we look at ETFs, both ETFs
Speaker 3: and managed funds can track an index or they can
Speaker 3: be managed by a professional investor. Look, there are a
Speaker 3: number of similarities, so let's run through the top two,
Speaker 3: because everybody loves an educated queen. So sit down, JOHNS King,
Speaker 3: are you ready? So legal ownership is number one. Legally,
Speaker 3: both ETFs and managed funds are trust structures. The units
Speaker 3: of these funds they're combined and owned by unit holders.
Speaker 3: So what that means is it's kind of like a
Speaker 3: giant bucket and all of the assets that that trust
Speaker 3: owns sit in the bucket, and as an investor, you
Speaker 3: purchase units in that bucket, not necessarily units in those
Speaker 3: individual shares. So if you are buying an ETF and
Speaker 3: that ETF holds Facebook, you are not buying Facebook, but
Speaker 3: that Facebook share that you have a share in is
Speaker 3: owned by that ETF, and you've just purchased into that ETF,
Speaker 3: if that makes sense. Whereas if you were a direct owner,
Speaker 3: you would have a little certificate that says G. King
Speaker 3: on tour is the owner of this Facebook share, whereas
Speaker 3: that certificate actually says ETF XYZ is the owner of
Speaker 3: that share, So you're just purchasing into what I like
Speaker 3: to call a bucket, because from my perspective, that's the
Speaker 3: easiest way to think about these things. Okay, the second
Speaker 3: is diversification, So they're very similar. Both funds can be
Speaker 3: a blend of underlying shares or other assets like bonds
Speaker 3: or cash, and a pool that defines the fundamental premise
Speaker 3: of the fund. So when we're talking about an investment pool,
Speaker 3: it's essentially an investment bucket. I like to think about
Speaker 3: ETF's as buckets, and those buckets are full of different
Speaker 3: shares and assets like cash or bonds or stocks, and
Speaker 3: it doesn't matter. It's all put into the bucket, and
Speaker 3: you go, Okay, nice bucket. Can I buy some of
Speaker 3: that bucket? And then you buy shares in that bucket,
Speaker 3: And that's essentially an ETF in a really really simplified way,
Speaker 3: which obviously gives you more exposure to diversification because instead
Speaker 3: of going and purchasing one into the due share in
Speaker 3: one individual company, you're purchasing into a pulled investment, which
Speaker 3: is essentially a bucket full of a whole heap of
Speaker 3: shares that then put you in a position where you
Speaker 3: automatically have exposure to all of those assets or all
Speaker 3: of those shares, which is to me a very sexy
Speaker 3: outcome Georgia. And then when it comes to the differences
Speaker 3: between ETFs and managed funds, when it comes to adding
Speaker 3: new funds, managed funds actually allow investors to cost effectively
Speaker 3: add or remove money through regular contributions or deductions, making
Speaker 3: them really suitable for dollar cost averaging. So dollar cost
Speaker 3: averaging is where you consistently invest into the market to
Speaker 3: make use of the highs and the lows of the market,
Speaker 3: so on average you have an average purchase price instead
Speaker 3: of trying to time the market, because no one can
Speaker 3: do that. And I've said before if I could time
Speaker 3: the market, I would be an incredibly wealthy human being.
Speaker 3: But in comparison with ETFs, investors are free to buy
Speaker 3: additional units at any time during the trading day, but
Speaker 3: usually when you're purchasing an ETF, brokerage is payable on
Speaker 3: every single transaction, and brokerage is typically a fixed dollar amount,
Speaker 3: So you might go to your trading platform and they
Speaker 3: might say, okay, each trade is fifteen dollars or forty dollars,
Speaker 3: depending on where you're investing, so ETFs might suit investors
Speaker 3: who are either making large or irregular investment. So for example,
Speaker 3: you might go, oh, I'm only going to invest every
Speaker 3: time I get to one thousand dollars to make sure
Speaker 3: that I'm not paying ridiculous brokerage, Whereas if you were
Speaker 3: investing pretty consistently, you might go, I don't really want
Speaker 3: to put money into an ETF every month because I
Speaker 3: only have fifty dollars to put in and brokerage is fifteen,
Speaker 3: and that's a really large percentage that I don't really
Speaker 3: want to lose just to brokerage, because that's a fee
Speaker 3: to get into the fund. So it's important to consider that.
Speaker 3: So I mentioned it before Georgia, they do differ when
Speaker 3: it comes to transparency, and this might not be true
Speaker 3: across the board. There might be some manager funds that
Speaker 3: are super transparent, but compared to many active managed funds,
Speaker 3: they are less transparent than ETFs because ETFs are extremely transparent,
Speaker 3: and it is very easy to find information about an
Speaker 3: ETF's underlying holdings because they're usually just available on that website,
Speaker 3: on the ETFs website. So you might go to Vanguard
Speaker 3: and it will tell you exactly what that ETF holds,
Speaker 3: whereas in comparison, managed funds are actually not required to
Speaker 3: disclose their portfolio holdings, and more often than not they
Speaker 3: only list their top ten investments, which, as somebody who
Speaker 3: likes to be in control, I don't.
Speaker 2: Really like that interesting, Okay.
Speaker 3: I mean that's not true. Across the board, there are
Speaker 3: a lot of managed funds that work really well and
Speaker 3: for full transparency. As you guys know, I am a
Speaker 3: legit financial advisor. I use managed funds a lot in
Speaker 3: my business, Zella, and I talk to clients about them
Speaker 3: because they can be really powerful. But you have to
Speaker 3: make sure that you're picking the right one and you
Speaker 3: fully understand the company and their ethics and what they
Speaker 3: are actually holding. This is just general.
Speaker 2: Yeah, when it comes to ethical investing, VEE, is it
Speaker 2: better to go with an ethical managed fund or like
Speaker 2: ats Like, what's the best way of doing that?
Speaker 3: Look, we've covered that in our ethical Investing podcast, But
Speaker 3: when it comes to investing ethically, we just need to
Speaker 3: understand exactly what that means. So unlike going to the
Speaker 3: supermarket Georgia and heading on over to the organic section,
Speaker 3: where you know all of that food sitting in the
Speaker 3: organic section has passed Australian standards to get their organic sticker.
Speaker 3: There's no such thing in the investment world for ethical investing.
Speaker 3: In fact, I could start an investment fund tomorrow and
Speaker 3: call it green, and you might automatically assume because it's
Speaker 3: called green, it is actually ethical. So we need to
Speaker 3: understand first what our own values are and what we
Speaker 3: would like to see reflected in the share market, because
Speaker 3: from my perspective, ethical means something different to everybody. Like
Speaker 3: you might go, oh, Victoria, ethical just means that they're
Speaker 3: good company, is treating their staff well, I go oh, great,
Speaker 3: And that's actually what a lot of companies do. They'll
Speaker 3: be like, oh, this is the sustainable portfolio and go oh,
Speaker 3: that means ethical. That is not the case by any
Speaker 3: stretch of the imagination, Whereas on the flip side, you
Speaker 3: might go, oh, actually, Victoria, I'm a vegan, I'm really
Speaker 3: into animal rights, I'm really into the environment, And for me,
Speaker 3: an ethical portfolio wouldn't have anything that impacts avcd FG
Speaker 3: and also doesn't invest in gambling, it doesn't invest in alcohol,
Speaker 3: and it doesn't invest in anything that would you know,
Speaker 3: impact this thing that I love. So that's why it's
Speaker 3: so important to understand your own values and then be
Speaker 3: able to see those values reflected in the asset that
Speaker 3: you are going to pick or you are going to purchase.
Speaker 3: So from my perspective, ethical investing is great. There are
Speaker 3: so many options. I only invest one hundred percent ethically
Speaker 3: in my business as Zella because that is really important
Speaker 3: to me and the values that my company holds. So
Speaker 3: I'm really lucky that I work in a business where
Speaker 3: I just get to call shots and I've made that decision.
Speaker 3: But not many advisors are in that position where they
Speaker 3: get to make that decision because they're usually adhering to
Speaker 3: investment mandates of their companies that they work for. But
Speaker 3: when it comes to ethical investing, yes, there are so
Speaker 3: many great options. There are ethical ETFs. In fact, there
Speaker 3: are so many ETFs out there you could literally go,
Speaker 3: I want to only invest in businesses that have women
Speaker 3: on their boards. There's an ETF for that. So I
Speaker 3: just think it is very cool and ETFs are limitless
Speaker 3: when it comes to what their values are and what
Speaker 3: they hold fabulous.
Speaker 2: Okay, let's move on now. V I am very excited
Speaker 2: for the next question. Oh, it has come from the
Speaker 2: new SHEI, and she wants to know how much you
Speaker 2: should responsibly spend on a wedding of a newshi. We
Speaker 2: wouldn't know, would we be?
Speaker 3: No, we're not married, can't help.
Speaker 2: Sorry, I'm saying that, like I'm sad. I'm not actually sad,
Speaker 2: visa a little bit sad.
Speaker 3: I'm not sad. I'm not. Oh my gosh, I would
Speaker 3: never want my partner to feel pressured to marry me.
Speaker 3: But also, where the hell is my ring? No kid,
Speaker 3: I kid, But at the end of the day, like,
Speaker 3: my friend, that's a question for your own values and
Speaker 3: your own ethics, Like, it's not a question that I
Speaker 3: could be like, the answer is twelve thousand dollars, Like,
Speaker 3: obviously that is responsible, because if I said, g twelve
Speaker 3: grand on a wedding, you might go Victoria. That's so
Speaker 3: much money. I can't afford that. That is absolutely not
Speaker 3: something that I could reasonably and responsibly spend. I've got,
Speaker 3: you know, true kids that I need to send to school,
Speaker 3: or my car needs fixing, or I don't even value weddings.
Speaker 3: I don't want to get married. And then on the
Speaker 3: flip side, someone could turn around and say twelve grand
Speaker 3: the average Australian wedding costs thirty six thousand dollars. That's nothing,
Speaker 3: So I think it's really important to remember our own
Speaker 3: values and put a number on that ourselves. Again, what
Speaker 3: your friends did is not a roughly of what you
Speaker 3: should do. And if your friends have gone and spent
Speaker 3: one hundred thousand dollars on their weddings, that does not
Speaker 3: mean that you need to do that. And to be honest,
Speaker 3: from my perspective, there's no such thing as how much
Speaker 3: should you responsibly spend on a wedding because furthering that,
Speaker 3: according to a survey they did, eighty two percent of
Speaker 3: couples dipped into their savings to pay for their wedding.
Speaker 3: Another sixty percent of couples god alone, and eighteen percent
Speaker 3: of couples use their credit card to pay for their wedding, which,
Speaker 3: when we're talking about responsibility, I don't know. I don't
Speaker 3: want to tut them, but at the end of the day,
Speaker 3: I would hate to think that you are starting your
Speaker 3: married life in debt. We want to start on the
Speaker 3: best possible footing and put ourselves in the best possible position.
Speaker 3: So if that was putting you in the best possible
Speaker 3: position from your perspective, then I'm all for it. But
Speaker 3: we need to consider this as not just a financial decision,
Speaker 3: but like a setting ourselves up for a good future decision.
Speaker 3: And yeah, I live in a world where I have
Speaker 3: a very diverse range of claes clients Georgia. I have
Speaker 3: had clients spend half a million dollars on weddings. I
Speaker 3: have had clients in lope and spend two grand on
Speaker 3: a wedding. I think I have a client actually who
Speaker 3: eloped and spent just like one hundred bucks on the
Speaker 3: certificate and then at the wedding registry. So that's the
Speaker 3: money win. Yeah, massive money win. But is it my
Speaker 3: place to judge them for how much they're spending? No?
Speaker 3: Is it my place to make sure that that amount
Speaker 3: is in line with their goals and values? Absolutely, and
Speaker 3: that half a million dollar wedding great, I'm so happy
Speaker 3: for them. It was absolutely in line with their budget
Speaker 3: and what they could afford. From my perspective, though, like, personally,
Speaker 3: would I ever spend that much morning? Oh god, I
Speaker 3: would simply pass away.
Speaker 2: Is it right that the average amount of is spend though,
Speaker 2: is about thirty six thousand dollars.
Speaker 3: It is thirty six grand is apparently what the average
Speaker 3: Australian is spending on a wedding.
Speaker 2: That's so much like half of your average earner's income.
Speaker 3: Really is insane to think that that's it, because also
Speaker 3: that's after tax money, and what you're talking about is
Speaker 3: the free tax income. Like, oh, that makes me feel
Speaker 3: kind of sick, but only because that average means that
Speaker 3: a lot of people are spending a lot of money
Speaker 3: on weddings. But furthering that, a lot of people we
Speaker 3: know are going into debt for weddings, and a lot
Speaker 3: of people are putting themselves in positions where they're not
Speaker 3: coming out of the other side of their wedding in
Speaker 3: the most financially successful position, and they might not know
Speaker 3: that they can actually completely control that decision. There's no
Speaker 3: have to when it comes to getting married.
Speaker 2: And remember that one in two marriages end in divorce anyway, So.
Speaker 3: I'm key way to bring the conversation.
Speaker 2: I'm like, pretty sure that's the stat but it is.
Speaker 3: Let's move on.
Speaker 2: We've got to be really stick in terms of keeping
Speaker 2: the costs down. If you are into a big wedding, Yes,
Speaker 2: do you have any tips there?
Speaker 3: Yes, budget, budget, budget, my friends. So you need to
Speaker 3: decide what you can comfortably afford to spend, and then
Speaker 3: you need to stick to it. We need to create
Speaker 3: a proper budy that includes everything. I think most people
Speaker 3: end up going over budget because they forget all the
Speaker 3: little things and how much they are going to add up.
Speaker 3: So potentially talking to friends or family who have gotten
Speaker 3: married before and ask them what did you pay for
Speaker 3: in your wedding that you forgot to budget for? Maybe
Speaker 3: Georgia this week, we can put a thread in the
Speaker 3: Facebook group and ask what money did you spend on
Speaker 3: your wedding that you didn't budget for or completely forgot about.
Speaker 3: Because this could be anything from oh, my gosh, Victoria,
Speaker 3: we forgot to book a car and we had to
Speaker 3: spend money on an Uber getting to our own wedding,
Speaker 3: all the way through to oh actually, when we did
Speaker 3: our spreadsheet, we thought we were real smart, but we
Speaker 3: forgot to put in a videographer and that was one
Speaker 3: of the things that my partner really wanted. So it
Speaker 3: could be like a sixty dollars Uber ride, or it
Speaker 3: could be a six thousand dollar videographer. It could be
Speaker 3: so many different things, but add up all the little
Speaker 3: things and break down the costs and work out what
Speaker 3: you are potentially going to need to, say, spend on
Speaker 3: each item, and be realistic, not what you would like
Speaker 3: to spend on each item, what you actually genuinely think
Speaker 3: you will spend. Because it's very nice to say I
Speaker 3: would love to think that I would only spend two
Speaker 3: hundred dollars in my wedding dress, but then deep down
Speaker 3: know that even the shops you're looking at dresses start
Speaker 3: at six hundred dollars. So it's just important to really
Speaker 3: think about not what would I like to spend. I
Speaker 3: know a lot of brides say that flowers were more
Speaker 3: expensive than they had considered. So we're not talking what
Speaker 3: you want to spend, but realistically what you are going
Speaker 3: to need to spend to get the outcome that you
Speaker 3: are looking for. So break down those costs, ask yourself
Speaker 3: what you could do yourself, do research, shop around to
Speaker 3: get a better deal, always always always negotiate, and then
Speaker 3: also have a think about those things that you could
Speaker 3: just chuck out, as in, things you don't need to
Speaker 3: include in your budget at all, that you might not
Speaker 3: want to do. It's funny I went to a wedding.
Speaker 3: A couple of years ago, one of my best friends
Speaker 3: got married and she made the conscious decision to not
Speaker 3: have a wedding cake. She's like, I don't even like cake.
Speaker 3: I don't want to have a cake, and nobody noticed
Speaker 3: it was even missing because we were too much of
Speaker 3: a good time. So I think it's really important to
Speaker 3: remember that guests aren't going to remember all of the
Speaker 3: nitty gritty and did they do this? And did they
Speaker 3: do those fancy bonbanieris they don't care. They just care
Speaker 3: how they felt on the day and usually if the
Speaker 3: food was any good, But they just care about that
Speaker 3: no one missed the wedding cake. And with wedding cakes
Speaker 3: often being more than five hundred dollars, maybe that's an
Speaker 3: easy way to save. But again, it's going to be
Speaker 3: based on your values. So are there some things and
Speaker 3: some traditions that you could easily skip without feeling like
Speaker 3: you are missing out? And then the next one is
Speaker 3: check online and compare prices to make sure you're getting
Speaker 3: the best deal.
Speaker 2: And probably like, don't tell anyone that you're getting married,
Speaker 2: Like I think.
Speaker 3: Five who cares on Saturday?
Speaker 2: It's just for lunch? And haven't you know, because there
Speaker 2: is there's like that wedding tax wedding to speak about it.
Speaker 2: It's like you can't if you it's it's just a
Speaker 2: cake from the cheesecake shop that'll cost you forty bucks.
Speaker 2: Still overpriced, I would say, but say it's for your wedding,
Speaker 2: and yeah, as you said, five hundred dollars, no thanks, Yeah, And.
Speaker 3: That's where we potentially want to look at maybe non
Speaker 3: wedding things to purchase for our wedding. So do you
Speaker 3: need to google bridesmaid's dresses or could you go to
Speaker 3: one of your favorite stores and look for some beautiful
Speaker 3: dresses that might not be called bride'smaid's dresses that would
Speaker 3: actually look the same. So I think it's all about
Speaker 3: being a little bit savvy and maybe one day, Georgia,
Speaker 3: one day, if if I am lucky enough to ever
Speaker 3: be planning a wedding, I could share that budget with
Speaker 3: you guys, in the same way I'm sharing my house
Speaker 3: for ren No budgets.
Speaker 2: Love All right, it is time for our final question
Speaker 2: of the day, and it comes from the lovely Shelley.
Speaker 2: So she has asked, what kinds of assets do you
Speaker 2: need to be a prove for a loan, there are
Speaker 2: a general amount of savings that increases your chances of
Speaker 2: being approved. I assume she's speaking about a home loan.
Speaker 3: I would assume she's speaking about a home loan as well.
Speaker 3: But my friend, Shelley, you don't need to have assets
Speaker 3: to be approved for a loan. You will need to
Speaker 3: have some savings behind you. If you're going for a
Speaker 3: home loan. For some lenders, that could be a full
Speaker 3: twenty percent. For some other lenders you might get away
Speaker 3: with five percent. It's going to really depend. If you've
Speaker 3: been wondering what type of mortgage fits you, head on
Speaker 3: over to our sister podcast, The Property Playbook to learn
Speaker 3: more about that, which is where I break down literally
Speaker 3: everything to do with property with my buyer's advocate best friend,
Speaker 3: Amy Lenardi. But when it comes to having assets, you
Speaker 3: don't necessarily need them, but you do usually need to
Speaker 3: show good savings habits. So the bank is going to ask, hey,
Speaker 3: g can I see your bank statements? How much money
Speaker 3: are you actually saving? What are you spending your money on?
Speaker 3: Can you actually afford this loan? So that's where budgeting
Speaker 3: and hash flow is going to become really important. But no,
Speaker 3: you don't need any specific assets to be approved for
Speaker 3: a loan except for the deposit and usually said proof
Speaker 3: that you are a financially savvy little human that they
Speaker 3: want to lend to.
Speaker 2: Would you say, v that your salary is more important
Speaker 2: than your deposit?
Speaker 3: No?
Speaker 2: No, because I've been doing some little thingies online, well,
Speaker 2: some little tests with NAB you know you can do
Speaker 2: like a mortgage calculator. Oh yeah, and this scal I
Speaker 2: thought I was killing it. I can only afford a tent.
Speaker 3: So at the end of the day, it's not actually
Speaker 3: what you earned, George King, it's what you can save.
Speaker 3: It is the difference between the money coming into your
Speaker 3: account and what is going out that is going to
Speaker 3: have the most power. If you put in front of me,
Speaker 3: somebody who earns sixty grand a year is so frugal
Speaker 3: save so much money. Is a sassy little human who
Speaker 3: does such a good job at saving. I know a
Speaker 3: bank would look at them very favorably in comparison to
Speaker 3: someone who had a half a million dollar income and
Speaker 3: is spending every single cent of that half a million dollars.
Speaker 3: They are going to look at that person and be like, no,
Speaker 3: like they don't have the capacity to pay back a loan.
Speaker 3: They don't have the ability to service that mortgage. They
Speaker 3: don't even have any ability to service the loans they've
Speaker 3: already got because they're not very financially savvy. It is
Speaker 3: about the difference between what you are earning and what
Speaker 3: you are spending that carries the most power.
Speaker 2: There you go, I didn't know that. Go buy a
Speaker 2: little housey house. Fun.
Speaker 3: That.
Speaker 2: That is all we have time for today, our second
Speaker 2: Q and A episode US.
Speaker 3: Oh my gosh, we have spoken for ages. I have
Speaker 3: loved this chart, but as always we need to wrap
Speaker 3: it up. So just before we head off, we'd like
Speaker 3: to acknowledge and pay respect to Australia's aboriginal and tourist
Speaker 3: right Island people's. They're the traditional custodians of the lands,
Speaker 3: the waterways and disguise all across Australia. We thank you
Speaker 3: for sharing and for caring for the land on which
Speaker 3: we are able to learn. We pay our respects to
Speaker 3: elder's past and present, and we share our friendship and
Speaker 3: our kindness.
Speaker 2: And remember, guys that the advice shared on She's on
Speaker 2: the Money is general in nature and does not consider
Speaker 2: your individual circumstances. She's on the money exists purely for
Speaker 2: educational purposes and should not be relied upon to make
Speaker 2: an investment or a financial decision, and we promise. Victoria
Speaker 2: Divine is an authorized representative of Australia Pacific Funds Management
Speaker 2: Proprietary Limited ABN three four one three two four six
Speaker 2: three two five seven AFSL three three nine one five
Speaker 2: one See you next week. Goes bye.