1
00:00:00,680 --> 00:00:01,000
Speaker 1: Hello.

2
00:00:01,560 --> 00:00:05,040
Speaker 2: My name's Santasha Nabananga Bamblet. I'm a proud yr the

3
00:00:05,160 --> 00:00:08,760
Speaker 2: Order Kerney Whoalbury and a waddery woman. And before we

4
00:00:08,800 --> 00:00:11,440
Speaker 2: get started on She's on the Money podcast, I would

5
00:00:11,520 --> 00:00:14,520
Speaker 2: like to acknowledge the traditional custodians of the land of

6
00:00:14,560 --> 00:00:18,680
Speaker 2: which this podcast is recorded on a wondery country, acknowledging

7
00:00:18,680 --> 00:00:22,560
Speaker 2: the elders, the ancestors and the next generation coming through

8
00:00:23,079 --> 00:00:27,159
Speaker 2: as this podcast is about connecting, empowering, knowledge sharing and

9
00:00:27,240 --> 00:00:30,560
Speaker 2: the storytelling of you to make a difference for today

10
00:00:31,040 --> 00:00:32,640
Speaker 2: and lasting impact for tomorrow.

11
00:00:33,320 --> 00:00:34,120
Speaker 1: Let's get into it.

12
00:00:34,800 --> 00:00:39,000
Speaker 3: She's on the Money, She's on the Money.

13
00:00:57,920 --> 00:01:01,000
Speaker 4: Hello, and welcome to She's on the Money, the podcast

14
00:01:01,000 --> 00:01:05,240
Speaker 4: for millennials who want financial freedom. My name is Beckside

15
00:01:05,280 --> 00:01:08,399
Speaker 4: and with me is Victoria Devine. Hello, we are going

16
00:01:08,480 --> 00:01:11,640
Speaker 4: back to investing basics today.

17
00:01:11,800 --> 00:01:14,360
Speaker 1: Sexy very excited about this topic.

18
00:01:15,120 --> 00:01:15,280
Speaker 2: Lat.

19
00:01:15,640 --> 00:01:18,560
Speaker 1: I'm worried that you'll be really annoyed by all my questions.

20
00:01:18,760 --> 00:01:21,559
Speaker 1: I don't know, only so excited. I'm so excited because

21
00:01:21,600 --> 00:01:25,000
Speaker 1: I feel like there have been so many community questions

22
00:01:25,000 --> 00:01:27,400
Speaker 1: being like, hey, you know, I wanted to understand this, this,

23
00:01:27,400 --> 00:01:29,800
Speaker 1: this and this, and while we have done a mini

24
00:01:29,840 --> 00:01:32,240
Speaker 1: investing series and a whole host of episodes on it.

25
00:01:32,280 --> 00:01:34,880
Speaker 1: I feel like back to Basics episode is kind of

26
00:01:34,920 --> 00:01:37,880
Speaker 1: like the reset all of us need. But hello, Beck,

27
00:01:38,200 --> 00:01:42,560
Speaker 1: sorry that I'm very excited about this. This episode is

28
00:01:42,600 --> 00:01:45,240
Speaker 1: for you. If you've had investing as a goal that

29
00:01:45,400 --> 00:01:47,200
Speaker 1: just keeps getting pushed to the back of your to

30
00:01:47,240 --> 00:01:49,080
Speaker 1: do list because you don't really know where to begin,

31
00:01:49,800 --> 00:01:52,760
Speaker 1: or if you're worried that you'll make the wrong decisions,

32
00:01:53,160 --> 00:01:55,600
Speaker 1: or maybe you get overwhelmed with all the research and

33
00:01:55,640 --> 00:01:59,000
Speaker 1: information and jargon that is out there. We honestly have

34
00:01:59,200 --> 00:02:01,920
Speaker 1: all been there. The worst place to be is at

35
00:02:01,920 --> 00:02:04,840
Speaker 1: the start of a journey and feeling really overwhelmed by

36
00:02:04,880 --> 00:02:06,480
Speaker 1: all of it and you just don't know what to do.

37
00:02:06,840 --> 00:02:09,919
Speaker 1: But please don't think that you're the only one there,

38
00:02:09,919 --> 00:02:12,359
Speaker 1: and don't let that stop you. That's why we're here

39
00:02:12,440 --> 00:02:15,040
Speaker 1: and taking you back to the basics of investing today.

40
00:02:15,080 --> 00:02:15,320
Speaker 2: Beck.

41
00:02:15,440 --> 00:02:18,720
Speaker 4: Yes, yes, yes, I'm so here for this. So, as

42
00:02:18,760 --> 00:02:21,239
Speaker 4: you know, my knowledge is entry level for sure, love it.

43
00:02:21,520 --> 00:02:22,520
Speaker 1: So I do have lots.

44
00:02:22,320 --> 00:02:24,639
Speaker 4: Of questions for you, v So in the first half

45
00:02:24,639 --> 00:02:26,560
Speaker 4: of the show, we're going to get you to explain

46
00:02:26,680 --> 00:02:30,799
Speaker 4: some of the absolute basics like what is a share,

47
00:02:31,000 --> 00:02:35,040
Speaker 4: types of shares, how you earn money from shares, risk profiles,

48
00:02:35,160 --> 00:02:36,720
Speaker 4: and then in the second half you tell us about

49
00:02:36,720 --> 00:02:39,640
Speaker 4: compound interest, and we'll talk about some common concerns about

50
00:02:39,680 --> 00:02:42,520
Speaker 4: investing and some questions we should be asking ourselves at

51
00:02:42,520 --> 00:02:45,320
Speaker 4: the start of our journey to determine next step.

52
00:02:45,680 --> 00:02:48,760
Speaker 1: Sexy am I the only one that's like really excited

53
00:02:48,800 --> 00:02:51,080
Speaker 1: about this, then to dive straight back in. I know

54
00:02:51,200 --> 00:02:53,560
Speaker 1: so many of you might be following along and go, oh,

55
00:02:53,680 --> 00:02:56,120
Speaker 1: this is stuff I know, But I would actually encourage

56
00:02:56,120 --> 00:02:59,240
Speaker 1: you to still listen because there's no such thing as

57
00:02:59,280 --> 00:03:02,160
Speaker 1: too much information, and there's also no such thing as

58
00:03:02,160 --> 00:03:04,440
Speaker 1: knowing absolutely everything. So there could be a tidbit that

59
00:03:04,480 --> 00:03:06,680
Speaker 1: you learn or something else, or a different point of

60
00:03:06,720 --> 00:03:09,280
Speaker 1: view or a way of seeing things that you hadn't

61
00:03:09,320 --> 00:03:11,680
Speaker 1: seen it before that can actually be really helpful on

62
00:03:11,720 --> 00:03:14,080
Speaker 1: your investing journey. So while you might go, well, I

63
00:03:14,120 --> 00:03:15,959
Speaker 1: know what a share is, full stop, end of story,

64
00:03:16,080 --> 00:03:19,080
Speaker 1: like this conversation can actually be a really empowering one

65
00:03:19,280 --> 00:03:22,919
Speaker 1: to either remind you of how well you're doing or

66
00:03:22,960 --> 00:03:25,480
Speaker 1: to make you feel really empowered about taking the next step.

67
00:03:25,639 --> 00:03:29,560
Speaker 4: Absolutely wouldn't hurt so I'm going to ask first what

68
00:03:30,080 --> 00:03:31,639
Speaker 4: is a share?

69
00:03:32,320 --> 00:03:35,240
Speaker 1: What a share and what a stock? So a share

70
00:03:35,240 --> 00:03:37,800
Speaker 1: in a stock same thing. A share is more of

71
00:03:37,840 --> 00:03:40,240
Speaker 1: an Australian term, and a stock is more of an

72
00:03:40,280 --> 00:03:45,120
Speaker 1: American term, but in Australia they are used interchangeably. So

73
00:03:45,280 --> 00:03:49,520
Speaker 1: a share is essentially a very small part of a business. Beck.

74
00:03:49,600 --> 00:03:52,480
Speaker 1: So what happens is a company goes to market and

75
00:03:52,560 --> 00:03:54,280
Speaker 1: say I want to be on the share market. I

76
00:03:54,320 --> 00:03:56,600
Speaker 1: want to be able to sell parts of my business

77
00:03:56,640 --> 00:03:58,640
Speaker 1: to the general public. And you go, all right, no worries.

78
00:03:58,680 --> 00:04:00,680
Speaker 1: And they might break it up, and they might say,

79
00:04:00,680 --> 00:04:03,400
Speaker 1: all right, let's issue forty percent of our company to

80
00:04:03,400 --> 00:04:05,640
Speaker 1: the public. So we'll keep sixty percent of it. We're

81
00:04:05,680 --> 00:04:07,720
Speaker 1: going to issue forty percent of it to the public,

82
00:04:08,040 --> 00:04:10,160
Speaker 1: but we're going to break it up. So you can't

83
00:04:10,160 --> 00:04:12,480
Speaker 1: just go buy one share and get forty percent, right.

84
00:04:12,480 --> 00:04:15,200
Speaker 1: They might break it up into one hundred thousand pieces,

85
00:04:15,400 --> 00:04:17,680
Speaker 1: and therefore there might be one hundred thousand shares in

86
00:04:17,720 --> 00:04:19,919
Speaker 1: the market that could be bought. They might break it

87
00:04:20,040 --> 00:04:22,919
Speaker 1: up into a million pieces, and therefore you get a

88
00:04:22,960 --> 00:04:25,640
Speaker 1: million to forty percent, which is obviously not even one percent.

89
00:04:25,680 --> 00:04:28,560
Speaker 1: But you have a very small fraction of that company,

90
00:04:28,839 --> 00:04:31,360
Speaker 1: and when you buy a share, you become an owner

91
00:04:31,440 --> 00:04:34,120
Speaker 1: of that company. It might be very, very small, but

92
00:04:34,200 --> 00:04:37,320
Speaker 1: with that ownership comes voting, right, so you could vote

93
00:04:37,440 --> 00:04:40,360
Speaker 1: if you really wanted to, oh, when their board makes decisions.

94
00:04:40,880 --> 00:04:44,000
Speaker 1: But it also entitles you to a portion of the

95
00:04:44,040 --> 00:04:46,960
Speaker 1: profits if there are some in some shares. So if

96
00:04:47,000 --> 00:04:48,600
Speaker 1: you go and you say, all right, I'm going to

97
00:04:48,640 --> 00:04:51,640
Speaker 1: give you ten dollars for this share that I purchased.

98
00:04:51,680 --> 00:04:53,000
Speaker 1: And it might be in a bank, it might be

99
00:04:53,000 --> 00:04:54,599
Speaker 1: in something else, but we're going to use a bank

100
00:04:54,640 --> 00:04:57,160
Speaker 1: share as an example because they are kind of like

101
00:04:57,520 --> 00:05:01,280
Speaker 1: tried and true blue chip boring stock that basically everyone's

102
00:05:01,279 --> 00:05:03,159
Speaker 1: heard of. Right. You hear about them on the news

103
00:05:03,200 --> 00:05:05,440
Speaker 1: all the time. You hear about them when people are

104
00:05:05,480 --> 00:05:07,960
Speaker 1: talking about oh, hands is down or up, or a

105
00:05:07,960 --> 00:05:10,400
Speaker 1: bought NAB shares or a bought Combank, like everyone talks

106
00:05:10,400 --> 00:05:12,440
Speaker 1: about it. Right, But if you went and bought a

107
00:05:12,480 --> 00:05:15,719
Speaker 1: Combank share, how much do you think a share is worth?

108
00:05:15,960 --> 00:05:16,320
Speaker 2: Oh?

109
00:05:17,040 --> 00:05:20,520
Speaker 1: It depends, it does depend. It's okay, it does depend.

110
00:05:20,600 --> 00:05:25,440
Speaker 1: And one share one share in Combank in Combank, Yeah,

111
00:05:25,600 --> 00:05:29,160
Speaker 1: I'm going to say twenty dollars. Oh, if they were

112
00:05:29,160 --> 00:05:32,200
Speaker 1: twenty bucks, I would be going and buying so many

113
00:05:32,240 --> 00:05:34,599
Speaker 1: of them because back today there are one hundred and

114
00:05:34,600 --> 00:05:37,960
Speaker 1: ten dollars a share, right, a lot more than a

115
00:05:38,000 --> 00:05:40,800
Speaker 1: lot of people think they are, which is why fractionized

116
00:05:40,920 --> 00:05:43,480
Speaker 1: investing has become popular, where you buy like a fraction

117
00:05:43,560 --> 00:05:45,680
Speaker 1: of share so you can still have exposure, but you

118
00:05:45,760 --> 00:05:47,760
Speaker 1: might not be able to afford the full share at

119
00:05:47,760 --> 00:05:50,360
Speaker 1: one hundred and ten dollars each, right, But essentially if

120
00:05:50,360 --> 00:05:52,599
Speaker 1: you went and bought that share, it entitles you to

121
00:05:52,680 --> 00:05:54,880
Speaker 1: some of the profit but then also some of the

122
00:05:55,000 --> 00:05:57,680
Speaker 1: gain over time. So one hundred and ten dollars is

123
00:05:57,720 --> 00:06:01,920
Speaker 1: what Combank is worth today as of record. However, maybe

124
00:06:01,960 --> 00:06:04,880
Speaker 1: in a couple of years that Combank share might increase

125
00:06:04,920 --> 00:06:08,080
Speaker 1: in value because they've grown their business model and they're

126
00:06:08,120 --> 00:06:10,600
Speaker 1: a far more profitable bank and they're a lot sexier

127
00:06:10,640 --> 00:06:13,919
Speaker 1: than they currently. They're a standard share today, and banking

128
00:06:13,920 --> 00:06:16,440
Speaker 1: shares in Australia don't have a lot of flexibility, like

129
00:06:16,480 --> 00:06:18,280
Speaker 1: they don't go up and down in the same way

130
00:06:18,320 --> 00:06:20,480
Speaker 1: a lot of other shares do that we talk about

131
00:06:20,680 --> 00:06:23,360
Speaker 1: because they are a blue chip stock, which means they

132
00:06:23,360 --> 00:06:25,799
Speaker 1: are tried and true and have existed for a long time,

133
00:06:25,880 --> 00:06:29,400
Speaker 1: so their fluctuation in price usually stays similar. If their

134
00:06:29,440 --> 00:06:32,440
Speaker 1: business increases in price, will your share price increases, which

135
00:06:32,480 --> 00:06:34,680
Speaker 1: means if you go to sell that share, you can

136
00:06:34,680 --> 00:06:36,720
Speaker 1: then see a piece of that profit because the share

137
00:06:36,720 --> 00:06:38,600
Speaker 1: that you sold is now today worth more than it

138
00:06:38,680 --> 00:06:41,880
Speaker 1: was when you bought it yesterday. Right. But then along

139
00:06:41,920 --> 00:06:44,720
Speaker 1: the way, as the company says, okay, well we've had

140
00:06:44,720 --> 00:06:46,360
Speaker 1: a really good year back or we've had a really

141
00:06:46,360 --> 00:06:49,360
Speaker 1: good six months. We've done all of our banking, we've

142
00:06:49,400 --> 00:06:51,960
Speaker 1: done all of our bookkeeping, we have, you know, a

143
00:06:52,000 --> 00:06:56,039
Speaker 1: million dollars profit, they will then divide that among their shareholders,

144
00:06:56,080 --> 00:06:58,440
Speaker 1: so you'll get a payment which is called a dividend

145
00:06:58,920 --> 00:07:01,240
Speaker 1: just for owning the stock because you're a part owner

146
00:07:01,240 --> 00:07:04,320
Speaker 1: of the business and therefore the money that you've put

147
00:07:04,360 --> 00:07:06,640
Speaker 1: into the share market is making you money in a

148
00:07:06,720 --> 00:07:09,400
Speaker 1: number of ways. So one is that capital growth, so

149
00:07:09,480 --> 00:07:13,160
Speaker 1: the business increasing in value over time. But also two,

150
00:07:13,280 --> 00:07:15,920
Speaker 1: you're getting paid a percentage of the profit that that

151
00:07:16,040 --> 00:07:18,200
Speaker 1: business makes each and every single year because you're a

152
00:07:18,240 --> 00:07:19,679
Speaker 1: part owner. And as to get.

153
00:07:19,520 --> 00:07:22,480
Speaker 4: Paid, So what is the benefit to the companies, Like

154
00:07:22,480 --> 00:07:24,800
Speaker 4: why do they do this so often? You would go

155
00:07:24,960 --> 00:07:27,800
Speaker 4: public so that you can raise more capital so that

156
00:07:27,880 --> 00:07:31,520
Speaker 4: you have more working capital, because that company right then goes, oh,

157
00:07:31,560 --> 00:07:33,920
Speaker 4: we arewn one hundred percent of our company, and we

158
00:07:34,000 --> 00:07:36,280
Speaker 4: want millions of dollars to expand this part of our

159
00:07:36,320 --> 00:07:38,240
Speaker 4: business or grow this part of our business, or we

160
00:07:38,320 --> 00:07:40,840
Speaker 4: need more cash coming in so we can lend it out.

161
00:07:41,320 --> 00:07:43,360
Speaker 1: And that is often why they end up on a

162
00:07:43,400 --> 00:07:45,760
Speaker 1: stock exchange because they go, well, we need BEX money

163
00:07:45,840 --> 00:07:48,280
Speaker 1: because we don't have any of our own right now.

164
00:07:48,840 --> 00:07:51,160
Speaker 1: And that's basically why you would go on the stock exchange,

165
00:07:51,200 --> 00:07:52,960
Speaker 1: just to make money as a business so that you

166
00:07:53,000 --> 00:07:55,440
Speaker 1: can continue to trade and continue to grow and build.

167
00:07:55,680 --> 00:07:59,320
Speaker 4: Okay, that makes a lot of sense. Honestly, you know,

168
00:07:59,480 --> 00:08:01,960
Speaker 4: I'm at LACE entry level. So tell me, are there

169
00:08:01,960 --> 00:08:05,360
Speaker 4: any terms to do with investing? I should know yes.

170
00:08:05,440 --> 00:08:08,040
Speaker 1: So first things first, I feel like in our community,

171
00:08:08,160 --> 00:08:11,240
Speaker 1: I have a laundry list of five terms that we

172
00:08:11,320 --> 00:08:13,760
Speaker 1: talk about most often, and we're going to go through them.

173
00:08:14,160 --> 00:08:17,240
Speaker 1: So the first one is ETF and that is an

174
00:08:17,280 --> 00:08:22,400
Speaker 1: exchange traded fund, and an exchange traded fund sounds really complicated,

175
00:08:22,920 --> 00:08:26,440
Speaker 1: but strip it back, it is a pulled investment. That's

176
00:08:26,440 --> 00:08:30,000
Speaker 1: probably too complicated still, so think of it as a basket.

177
00:08:30,120 --> 00:08:33,719
Speaker 1: So essentially an ETF isn't an individual share that you've

178
00:08:33,760 --> 00:08:35,960
Speaker 1: gone and bought one share of Combank because it was

179
00:08:35,960 --> 00:08:38,680
Speaker 1: one hundred and ten dollars. You might go, fee, I

180
00:08:38,679 --> 00:08:40,720
Speaker 1: have one hundred and ten dollars, but I don't want

181
00:08:40,720 --> 00:08:44,120
Speaker 1: to only own one asset because then I only own Combank.

182
00:08:44,240 --> 00:08:45,880
Speaker 1: I want to own a lot of different things so

183
00:08:45,920 --> 00:08:50,200
Speaker 1: I get good diversification in my portfolio. Because if you

184
00:08:50,200 --> 00:08:54,160
Speaker 1: know Combank crashed tomorrow, well that's my whole portfolio. That's

185
00:08:54,160 --> 00:08:56,200
Speaker 1: one hundred percent of what I own. But if I

186
00:08:56,240 --> 00:08:58,280
Speaker 1: owned a lot of different banks, and I owned you know,

187
00:08:58,320 --> 00:09:01,880
Speaker 1: a few different other industry if one crashes, it's not

188
00:09:01,920 --> 00:09:04,280
Speaker 1: going to be felt as harshly because I own one

189
00:09:04,320 --> 00:09:07,760
Speaker 1: hundred different companies. So instead of buying a stock, an

190
00:09:07,760 --> 00:09:10,760
Speaker 1: individual stock, you might go and buy what's called an ETF.

191
00:09:11,080 --> 00:09:13,959
Speaker 1: So that's an exchange traded fund, and it's essentially a

192
00:09:14,000 --> 00:09:17,320
Speaker 1: fund that exists that has bought maybe one hundred or

193
00:09:17,320 --> 00:09:20,680
Speaker 1: two hundred companies, or it could be an ASX top

194
00:09:20,720 --> 00:09:22,880
Speaker 1: two hundred, so it could be the top two hundred

195
00:09:22,960 --> 00:09:26,079
Speaker 1: companies in the share market, and it just holds that

196
00:09:26,760 --> 00:09:29,640
Speaker 1: and you go and buy one share in that basket

197
00:09:30,240 --> 00:09:33,000
Speaker 1: as opposed to buying the share directly. So you go,

198
00:09:33,160 --> 00:09:36,800
Speaker 1: I want to own an exchange traded fund, an ETF,

199
00:09:36,960 --> 00:09:39,760
Speaker 1: And that's a type of pulled investment where instead of

200
00:09:39,800 --> 00:09:42,160
Speaker 1: you giving your money to combat and saying thank you,

201
00:09:42,200 --> 00:09:44,480
Speaker 1: I would like one of your shares, you give your

202
00:09:44,520 --> 00:09:47,640
Speaker 1: money to the fund. So the exchange traded fund and

203
00:09:47,679 --> 00:09:50,240
Speaker 1: the manager there say can you put my money in

204
00:09:50,240 --> 00:09:53,719
Speaker 1: the basket with everybody else's money, And then collectively we

205
00:09:53,800 --> 00:09:57,800
Speaker 1: all own a lot of different stocks. So essentially it's

206
00:09:57,840 --> 00:10:02,680
Speaker 1: a pulled investment security holds lots of different underlying assets

207
00:10:02,800 --> 00:10:05,960
Speaker 1: rather than just one individual stock. So that makes sense.

208
00:10:06,000 --> 00:10:08,520
Speaker 4: That does make sense. So files to user in a sentence,

209
00:10:08,600 --> 00:10:12,040
Speaker 4: I would say I own a share in an ETF.

210
00:10:12,360 --> 00:10:16,000
Speaker 1: Yeah you could. You absolutely could do that. And you

211
00:10:16,120 --> 00:10:18,880
Speaker 1: buy and sell ETFs in exactly the same way you

212
00:10:18,920 --> 00:10:21,720
Speaker 1: buy and sell shares. They are on the ASX as well,

213
00:10:22,240 --> 00:10:24,800
Speaker 1: so you go and it might have different code, and

214
00:10:24,840 --> 00:10:27,439
Speaker 1: you go and purchase. In Australia, one of the biggest

215
00:10:27,480 --> 00:10:30,800
Speaker 1: issuers of or two of the biggest issuers of ETF's

216
00:10:31,040 --> 00:10:34,600
Speaker 1: a Vanguard which you might have heard about, and Beta shares,

217
00:10:34,640 --> 00:10:38,560
Speaker 1: which both do ETFs and the cool thing about ETFs

218
00:10:38,640 --> 00:10:41,320
Speaker 1: these days is there's basically an ETF for everything. So

219
00:10:41,320 --> 00:10:43,280
Speaker 1: if you're like, well, I'm an ethical investor, I really

220
00:10:43,320 --> 00:10:45,319
Speaker 1: want to own ethical shares, well, you can go get

221
00:10:45,360 --> 00:10:48,360
Speaker 1: an ethical ETF. Or if you go, i'm really into

222
00:10:48,440 --> 00:10:51,200
Speaker 1: tech Victoria, like I just want to invest in different

223
00:10:51,240 --> 00:10:55,120
Speaker 1: tech companies, go buy a tech ETF. Or you could go,

224
00:10:55,200 --> 00:10:58,520
Speaker 1: you know what, I only want to own American tech companies.

225
00:10:58,559 --> 00:11:02,560
Speaker 1: There's an ETF for that. There's literally ETFs for everything that.

226
00:11:02,679 --> 00:11:05,440
Speaker 1: A couple of years ago, I was online obviously looking

227
00:11:05,520 --> 00:11:07,760
Speaker 1: love ETFs because I was bored and it was fun.

228
00:11:08,080 --> 00:11:11,840
Speaker 1: I found an ETF that only invests or only holds

229
00:11:11,920 --> 00:11:14,720
Speaker 1: businesses that have one hundred percent women on their board.

230
00:11:14,920 --> 00:11:17,719
Speaker 1: That is really cool. I think it is very cool.

231
00:11:17,800 --> 00:11:20,079
Speaker 1: I'm very biased because I love this space, but I

232
00:11:20,120 --> 00:11:22,560
Speaker 1: think it's an interesting concept to wrap your head around

233
00:11:22,559 --> 00:11:24,680
Speaker 1: as well, because I feel like a lot of people

234
00:11:24,720 --> 00:11:27,199
Speaker 1: will say things like, oh, on, ETF's a bit too complex,

235
00:11:27,520 --> 00:11:30,400
Speaker 1: when in reality, they can be really good for beginners

236
00:11:30,440 --> 00:11:32,320
Speaker 1: who are like, well, I don't know where to invest,

237
00:11:32,440 --> 00:11:34,760
Speaker 1: but they might know their values or they might know

238
00:11:34,800 --> 00:11:37,040
Speaker 1: where they want to start, and it's a good place

239
00:11:37,080 --> 00:11:42,200
Speaker 1: to get instant diversification, because diversification is really important. It's

240
00:11:42,240 --> 00:11:44,040
Speaker 1: making sure that you don't have all your eggs in

241
00:11:44,080 --> 00:11:47,840
Speaker 1: one basket. Instead of just having exposure to CBA, you

242
00:11:47,920 --> 00:11:50,559
Speaker 1: have exposure to heaps of things. So if one thing crashes,

243
00:11:50,640 --> 00:11:53,079
Speaker 1: I guarantee something else is doing well, and then maybe

244
00:11:53,240 --> 00:11:56,320
Speaker 1: other things are just coasting along. So your returns are

245
00:11:56,320 --> 00:11:59,200
Speaker 1: an average of that bucket of shares as opposed to

246
00:11:59,440 --> 00:12:02,160
Speaker 1: just that dire one share. Does that make sense? That

247
00:12:02,280 --> 00:12:05,000
Speaker 1: does make sense? Okay, So what's the next one? All right?

248
00:12:05,040 --> 00:12:07,199
Speaker 1: So we've just talked about ETFs, and I feel like

249
00:12:07,320 --> 00:12:10,120
Speaker 1: in our community we've been talking a lot about the

250
00:12:10,160 --> 00:12:13,800
Speaker 1: difference between an ETF and a managed fund, and sometimes

251
00:12:13,840 --> 00:12:16,719
Speaker 1: they're compared like apples for apples, because people think it's

252
00:12:16,720 --> 00:12:19,800
Speaker 1: one or the other, but they're actually completely different products,

253
00:12:19,800 --> 00:12:22,200
Speaker 1: and that's like comparing apples with oranges, which is a

254
00:12:22,200 --> 00:12:25,560
Speaker 1: bit silly. So a managed fund is an alternative to

255
00:12:25,840 --> 00:12:28,840
Speaker 1: individual shares or an ETF, and a managed fund is

256
00:12:28,880 --> 00:12:31,680
Speaker 1: basically just what it sounds like. It's an investment fund

257
00:12:31,760 --> 00:12:35,199
Speaker 1: that is managed by a fund manager, whereas an ETF

258
00:12:35,360 --> 00:12:38,040
Speaker 1: often is not. If you put your money into a

259
00:12:38,080 --> 00:12:40,760
Speaker 1: managed fund. You're essentially giving your money to them to

260
00:12:40,880 --> 00:12:44,240
Speaker 1: invest on your behalf, so you often have very little

261
00:12:44,280 --> 00:12:46,440
Speaker 1: say over what they do with your money, which is

262
00:12:46,480 --> 00:12:48,160
Speaker 1: fine because you're not going to pick a fund manager

263
00:12:48,160 --> 00:12:49,680
Speaker 1: that you don't believe in, right, You're not going to

264
00:12:49,720 --> 00:12:51,120
Speaker 1: go give it to Beck if you think that Beck

265
00:12:51,200 --> 00:12:53,760
Speaker 1: is not going to use it wisely, So you do

266
00:12:53,880 --> 00:12:56,800
Speaker 1: have to hope that they will invest it wisely. And

267
00:12:56,920 --> 00:13:00,120
Speaker 1: one of the key differences between the managed fund and

268
00:13:00,160 --> 00:13:03,960
Speaker 1: an ETF is that a managed fund is unlisted, so

269
00:13:04,080 --> 00:13:06,960
Speaker 1: it is not going to be on the ASX like

270
00:13:07,000 --> 00:13:09,040
Speaker 1: an ETF that you go and buy in the same

271
00:13:09,080 --> 00:13:12,199
Speaker 1: way that you purchase a share, So unlike an ETF,

272
00:13:12,280 --> 00:13:14,960
Speaker 1: managed funds don't usually trade on the share market. In fact,

273
00:13:14,960 --> 00:13:17,280
Speaker 1: they only trade once a day. So right now, if

274
00:13:17,280 --> 00:13:20,360
Speaker 1: you googled any share, you could get today's right now

275
00:13:20,679 --> 00:13:23,960
Speaker 1: current market price, because in Australia the market opens at

276
00:13:24,000 --> 00:13:27,199
Speaker 1: ten am and it closes at four pm. Surprise, but

277
00:13:27,400 --> 00:13:30,160
Speaker 1: she don't know that. No, but we trade between ten

278
00:13:30,240 --> 00:13:32,360
Speaker 1: and for every single day, which means you can get

279
00:13:32,400 --> 00:13:35,520
Speaker 1: a live price, whereas a managed fund only trades once

280
00:13:35,559 --> 00:13:38,520
Speaker 1: a day and often it is ten am or eleven am.

281
00:13:38,600 --> 00:13:42,079
Speaker 1: Depending on what the company is. Thus, you do have

282
00:13:42,120 --> 00:13:44,200
Speaker 1: to wait until the end of a trading day if

283
00:13:44,240 --> 00:13:46,160
Speaker 1: you want to buy or sell your units, so you

284
00:13:46,160 --> 00:13:48,240
Speaker 1: can't do it throughout the day. It's not something that

285
00:13:48,600 --> 00:13:50,960
Speaker 1: people would become, you know how we talk about the

286
00:13:50,960 --> 00:13:53,400
Speaker 1: concept of share traders, where they're online all day and

287
00:13:53,400 --> 00:13:55,840
Speaker 1: they're like buying and selling shares through really small amounts.

288
00:13:55,920 --> 00:13:58,680
Speaker 1: You can't do that with managed funds. So one of

289
00:13:58,679 --> 00:14:01,760
Speaker 1: the benefits of a managed fund, and this is very

290
00:14:01,800 --> 00:14:05,679
Speaker 1: similar to an ETF, is that allows investors to pull

291
00:14:05,760 --> 00:14:08,959
Speaker 1: their money together with other investors, and the more money

292
00:14:09,000 --> 00:14:11,439
Speaker 1: you have, the more power you have when it comes

293
00:14:11,480 --> 00:14:15,200
Speaker 1: to purchasing and by doing so, opportunities that might not

294
00:14:15,360 --> 00:14:18,280
Speaker 1: actually be available to a retail investor because we just

295
00:14:18,280 --> 00:14:21,360
Speaker 1: don't have enough money can then be opened up. So

296
00:14:21,560 --> 00:14:24,360
Speaker 1: many managed funds will invest in assets like property or

297
00:14:24,400 --> 00:14:27,960
Speaker 1: the government, or corporate bonds or private equity that is

298
00:14:28,120 --> 00:14:31,080
Speaker 1: usually completely out of reach, but you can do so

299
00:14:31,520 --> 00:14:35,160
Speaker 1: by buying a portion of a managed fund get access

300
00:14:35,200 --> 00:14:38,120
Speaker 1: to an alternative asset class, which can for a lot

301
00:14:38,160 --> 00:14:42,080
Speaker 1: of people be really exciting. But as I'm explaining this,

302
00:14:42,200 --> 00:14:44,280
Speaker 1: I think I can see your brain working going this

303
00:14:44,360 --> 00:14:46,800
Speaker 1: is a little bit more complex than an EF. You

304
00:14:46,800 --> 00:14:48,520
Speaker 1: don't just go and buy it and then you can

305
00:14:48,560 --> 00:14:50,920
Speaker 1: sell it whenever you want. You absolutely can buy it,

306
00:14:50,920 --> 00:14:53,160
Speaker 1: you can absolutely sell it. That makes sense, but there

307
00:14:53,440 --> 00:14:56,400
Speaker 1: is a bit more complexity behind it, which is why

308
00:14:56,560 --> 00:14:59,120
Speaker 1: some people in the shehese on the money community don't

309
00:14:59,240 --> 00:15:01,760
Speaker 1: lean on it in immediately as one of their first

310
00:15:01,800 --> 00:15:06,160
Speaker 1: investing decisions. Right. So obviously there are a whole heap

311
00:15:06,240 --> 00:15:09,040
Speaker 1: of other benefits. Another one of them is that the

312
00:15:09,200 --> 00:15:12,680
Speaker 1: fund manager's expertise plays into it. So I'm someone who

313
00:15:12,760 --> 00:15:15,520
Speaker 1: does own a managed fund, but the reason I own

314
00:15:15,600 --> 00:15:17,760
Speaker 1: the managed fund is because I'm a little creep beck

315
00:15:18,160 --> 00:15:20,960
Speaker 1: and I know exactly who that fund manager is, and

316
00:15:21,000 --> 00:15:24,120
Speaker 1: I've actually followed them from a couple of different asset

317
00:15:24,280 --> 00:15:26,360
Speaker 1: of houses. I've been like, I like that guy, I

318
00:15:26,480 --> 00:15:28,920
Speaker 1: like his decisions. I'm very interested to see what he

319
00:15:28,960 --> 00:15:31,800
Speaker 1: does at this new company, and that's why I'm following him,

320
00:15:31,840 --> 00:15:34,840
Speaker 1: and that's why I've invested. So if you like a

321
00:15:34,920 --> 00:15:37,640
Speaker 1: track record of a particular fund manager, you can go

322
00:15:37,720 --> 00:15:40,400
Speaker 1: with them. But that's obviously not that common to know

323
00:15:40,480 --> 00:15:43,360
Speaker 1: that information and it's quite in depth. But the benefit

324
00:15:43,400 --> 00:15:45,400
Speaker 1: of having a fund manager is that you don't have

325
00:15:45,440 --> 00:15:47,880
Speaker 1: to do any of the hard work of researching, of

326
00:15:47,960 --> 00:15:51,680
Speaker 1: identifying and tracking potentially high performing companies that might provide

327
00:15:51,680 --> 00:15:54,520
Speaker 1: outsized returns, because you'll be paying a manager and a

328
00:15:54,520 --> 00:15:58,480
Speaker 1: team to do that. Managed funds are more expensive than ETFs.

329
00:15:58,840 --> 00:16:02,760
Speaker 1: ETFs are usually automatically created, whereas managed funds have a

330
00:16:02,760 --> 00:16:06,240
Speaker 1: whole team of researchers behind them. Does that make sense?

331
00:16:06,320 --> 00:16:06,640
Speaker 1: It does.

332
00:16:06,680 --> 00:16:08,960
Speaker 4: And I assume that if you're putting, say one hundred

333
00:16:09,000 --> 00:16:11,800
Speaker 4: dollars into a managed fund, only a portion of that

334
00:16:11,880 --> 00:16:14,280
Speaker 4: is actually going to shares. Most of it will go

335
00:16:14,360 --> 00:16:16,680
Speaker 4: to shares, but the fees on that are going to

336
00:16:16,720 --> 00:16:20,920
Speaker 4: be higher. So managed funds normally charge management fees that

337
00:16:21,040 --> 00:16:24,280
Speaker 4: are more expensive than an ETF, So you need to

338
00:16:24,320 --> 00:16:27,080
Speaker 4: make sure that your fund is justifying their fees by

339
00:16:27,240 --> 00:16:31,800
Speaker 4: delivering consistent, market crushing performances, otherwise that fee does really

340
00:16:31,800 --> 00:16:33,400
Speaker 4: eat into your long term returns.

341
00:16:33,680 --> 00:16:35,840
Speaker 1: And I think it's really important to know the difference

342
00:16:35,880 --> 00:16:39,160
Speaker 1: between the two because sometimes it can be easy to

343
00:16:39,200 --> 00:16:41,680
Speaker 1: be taken away with, oh, well, that managed fund has

344
00:16:41,720 --> 00:16:44,400
Speaker 1: the same performance and it sounds cooler, but you haven't

345
00:16:44,400 --> 00:16:47,960
Speaker 1: actually looked at fees. Because apples are not apples. In

346
00:16:47,960 --> 00:16:51,800
Speaker 1: their circumstance. Does that make sense? Does make sense? What

347
00:16:51,880 --> 00:16:54,040
Speaker 1: else you got on that little list of yours? All right?

348
00:16:54,320 --> 00:16:57,160
Speaker 1: So the next list I have number three. I feel

349
00:16:57,160 --> 00:16:58,840
Speaker 1: like this is taking me ages to get through them,

350
00:16:58,840 --> 00:17:01,480
Speaker 1: but it's because I'm passionate. I am so sorry. The

351
00:17:01,520 --> 00:17:05,000
Speaker 1: next is an index fund, and this is really sexy

352
00:17:05,560 --> 00:17:08,439
Speaker 1: because it tracks an index. So an index fund is

353
00:17:08,480 --> 00:17:12,679
Speaker 1: basically a portfolio of shares or bonds that exists to

354
00:17:12,840 --> 00:17:16,480
Speaker 1: mimic or copy the composition and performance of a financial

355
00:17:16,560 --> 00:17:20,800
Speaker 1: market or index. So that sounds confusing, but essentially it

356
00:17:20,880 --> 00:17:24,960
Speaker 1: exists to copy something that already exists. So you might

357
00:17:25,040 --> 00:17:30,359
Speaker 1: create an ASX Top two hundred ETF and that will

358
00:17:30,440 --> 00:17:34,639
Speaker 1: take the top two hundred companies on the ASX list

359
00:17:35,040 --> 00:17:37,080
Speaker 1: and pop them into a fund and it will just

360
00:17:37,160 --> 00:17:40,000
Speaker 1: track the average of that. So the idea of an

361
00:17:40,000 --> 00:17:42,720
Speaker 1: index fund is not to outperform the market. It's actually

362
00:17:42,760 --> 00:17:46,360
Speaker 1: to meet the market returns and the market benchmarks. So

363
00:17:46,440 --> 00:17:50,360
Speaker 1: index funds usually have way lower expenses and fees than

364
00:17:50,440 --> 00:17:53,240
Speaker 1: actively managed funds because there's no one managing it in

365
00:17:53,280 --> 00:17:55,359
Speaker 1: the same way that a managed fund exists. So in

366
00:17:55,359 --> 00:17:57,880
Speaker 1: a managed fund, you've got somebody going out there doing

367
00:17:57,880 --> 00:18:00,480
Speaker 1: the work, maybe surveying the company, seeing if it's worth

368
00:18:00,520 --> 00:18:03,879
Speaker 1: putting into the portfolio. An index fund actually follows what

369
00:18:03,920 --> 00:18:06,680
Speaker 1: we call a passive investment strategy, where you just go,

370
00:18:06,720 --> 00:18:08,520
Speaker 1: all right, I'll take the top two hundred and get

371
00:18:08,520 --> 00:18:10,840
Speaker 1: the average of that. Wham bam, thank you, ma'am. That

372
00:18:11,040 --> 00:18:14,840
Speaker 1: absolutely makes sense. So an index fund is an investment

373
00:18:14,920 --> 00:18:18,439
Speaker 1: type that just wants to track the market average. And

374
00:18:19,119 --> 00:18:22,439
Speaker 1: usually if you're talking about an index fund, we're just

375
00:18:22,440 --> 00:18:24,720
Speaker 1: looking for the average of the average. That's all I want,

376
00:18:24,880 --> 00:18:27,480
Speaker 1: that's it. But I just want a consistent return. And

377
00:18:27,600 --> 00:18:31,520
Speaker 1: index funds typically invest in all the components that are

378
00:18:31,560 --> 00:18:34,439
Speaker 1: included in the index that they track, and they have

379
00:18:34,600 --> 00:18:37,359
Speaker 1: fund managers whose job it is to make sure that

380
00:18:37,440 --> 00:18:41,040
Speaker 1: the index fund performs the same as the index. So

381
00:18:41,119 --> 00:18:44,080
Speaker 1: the index is the measure, and the index fund has

382
00:18:44,200 --> 00:18:46,960
Speaker 1: basically cut and paste everything from the index to own

383
00:18:47,000 --> 00:18:49,760
Speaker 1: it in that asset. Does that make sense? I think

384
00:18:50,160 --> 00:18:52,760
Speaker 1: it's not making sense? Is that? I think so?

385
00:18:52,960 --> 00:18:55,639
Speaker 4: I guess my question is what's really difference between ETF

386
00:18:55,880 --> 00:18:58,280
Speaker 4: and an index If the index is kind of trying

387
00:18:58,280 --> 00:19:00,199
Speaker 4: to mimic like an ASX two yea.

388
00:19:00,400 --> 00:19:03,880
Speaker 1: So essentially the biggest difference between ETFs and index funds

389
00:19:04,000 --> 00:19:06,280
Speaker 1: is that ETFs can be traded throughout the day like

390
00:19:06,320 --> 00:19:09,439
Speaker 1: shares can be, whereas index funds can be bought and

391
00:19:09,480 --> 00:19:11,960
Speaker 1: sold only for the price that is set at the

392
00:19:12,080 --> 00:19:14,480
Speaker 1: end of the trading day. So obviously for long term

393
00:19:14,480 --> 00:19:18,400
Speaker 1: investors this isn't an issue. But essentially something like the

394
00:19:18,440 --> 00:19:22,399
Speaker 1: ASX Top two hundred ETF could be bought and sold

395
00:19:22,720 --> 00:19:26,000
Speaker 1: throughout the day, whereas the ASX Top two hundred index

396
00:19:26,040 --> 00:19:30,640
Speaker 1: fund couldn't be, and both of them employ different strategies.

397
00:19:31,119 --> 00:19:34,879
Speaker 1: But essentially that from my perspective, is the main difference. Okay,

398
00:19:35,000 --> 00:19:37,720
Speaker 1: that is one of the main differences. The other thing is,

399
00:19:37,800 --> 00:19:40,400
Speaker 1: I would say, is fees and expenses. So the primary

400
00:19:40,400 --> 00:19:43,440
Speaker 1: difference between ETFs and index funds is, as I said before,

401
00:19:43,440 --> 00:19:47,240
Speaker 1: how they're bought and sold. But this actually translates to fees.

402
00:19:47,640 --> 00:19:51,160
Speaker 1: So ETFs, as we were saying before, trader on an exchange,

403
00:19:51,240 --> 00:19:53,360
Speaker 1: just like shares do, and you buy and sell them

404
00:19:53,400 --> 00:19:55,960
Speaker 1: through a broker, which means that you could potentially be

405
00:19:56,000 --> 00:19:59,879
Speaker 1: paying broking costs, whereas index funds are usually bought direct

406
00:20:00,160 --> 00:20:03,439
Speaker 1: with the fund manager, so there isn't that intermediate body.

407
00:20:03,720 --> 00:20:06,399
Speaker 1: So there's just different fees and charges that need to

408
00:20:06,440 --> 00:20:09,879
Speaker 1: be taken into consideration. And I don't think it's like

409
00:20:09,960 --> 00:20:12,080
Speaker 1: for like, but I also think that they can be

410
00:20:12,200 --> 00:20:16,000
Speaker 1: quite similar, especially to a beginner. And do not fear

411
00:20:16,160 --> 00:20:17,800
Speaker 1: if you're in a position where you're like, this is

412
00:20:17,840 --> 00:20:20,640
Speaker 1: a lot of information and I feel really overwhelmed. We

413
00:20:20,680 --> 00:20:23,280
Speaker 1: all do. I have a book that goes into this

414
00:20:23,440 --> 00:20:26,560
Speaker 1: even more comprehensively so you can digest it. And you

415
00:20:26,560 --> 00:20:28,840
Speaker 1: know what, there's absolutely no shame in listening to this

416
00:20:28,920 --> 00:20:31,000
Speaker 1: portion of the episode a few times so you can

417
00:20:31,040 --> 00:20:33,639
Speaker 1: really wrap your head around it, because lord knows, it

418
00:20:33,720 --> 00:20:37,040
Speaker 1: takes me like three or four goals to understand something

419
00:20:37,119 --> 00:20:38,960
Speaker 1: for the first time, and then it finally clicks and

420
00:20:38,960 --> 00:20:40,800
Speaker 1: I go, oh, okay, now I get it.

421
00:20:41,320 --> 00:20:43,800
Speaker 4: I think I'm going to be listening to this first

422
00:20:43,840 --> 00:20:47,880
Speaker 4: portion of the episode about twenty times. I said, what's

423
00:20:47,920 --> 00:20:48,800
Speaker 4: the next one on your list?

424
00:20:48,840 --> 00:20:49,040
Speaker 2: Fee?

425
00:20:49,040 --> 00:20:52,640
Speaker 1: What's an asset class? Okay, So in Australia there are

426
00:20:52,720 --> 00:20:57,360
Speaker 1: four main types of asset classes. There's cash, fixed interest, property,

427
00:20:57,440 --> 00:20:59,920
Speaker 1: and shares, which I'm sure you've heard of all of them.

428
00:21:00,200 --> 00:21:02,640
Speaker 1: So the first is actually an investment cash it would

429
00:21:02,680 --> 00:21:04,840
Speaker 1: be whatever's in your bank account right now, whether it

430
00:21:04,920 --> 00:21:07,359
Speaker 1: is one dollar or one million dollars, it is an

431
00:21:07,440 --> 00:21:10,200
Speaker 1: investment that might not be returning all of that much money,

432
00:21:10,240 --> 00:21:13,760
Speaker 1: but it is an investment nonetheless. The next is fixed interests,

433
00:21:13,800 --> 00:21:15,520
Speaker 1: so these are things like bonds or you would have

434
00:21:15,560 --> 00:21:17,720
Speaker 1: heard of a term deposit where you can kind of

435
00:21:17,720 --> 00:21:19,520
Speaker 1: lock your money away At the moment, it's not that

436
00:21:19,600 --> 00:21:22,040
Speaker 1: popular because obviously interest rates are going wild and the

437
00:21:22,040 --> 00:21:23,560
Speaker 1: bank is not going to pay you that much so

438
00:21:23,600 --> 00:21:26,359
Speaker 1: that they can hold onto your money. The next is

439
00:21:26,400 --> 00:21:28,720
Speaker 1: the Great Australian Dream. So that's property. We've all heard

440
00:21:28,760 --> 00:21:31,800
Speaker 1: of property investing, and we have an entire podcast called

441
00:21:31,800 --> 00:21:34,280
Speaker 1: the Property Playbook on property if you want to deep

442
00:21:34,359 --> 00:21:37,200
Speaker 1: dive more into that asset class. And the last, which

443
00:21:37,240 --> 00:21:41,960
Speaker 1: is unsurprisingly my favorite, is shares and shares essentially, as

444
00:21:42,000 --> 00:21:45,840
Speaker 1: we explained, makes sense, but each asset class is expected

445
00:21:45,880 --> 00:21:48,760
Speaker 1: to have different risk and return characteristics, and the right

446
00:21:48,840 --> 00:21:51,480
Speaker 1: asset mix for you at any given point in time

447
00:21:51,560 --> 00:21:54,080
Speaker 1: is actually going to really depend on how much time

448
00:21:54,160 --> 00:21:57,480
Speaker 1: you have to be investing. So obviously cash might be

449
00:21:57,560 --> 00:22:00,680
Speaker 1: better for a short term goal. You might be saving

450
00:22:00,760 --> 00:22:02,640
Speaker 1: for a holiday or a car, but if you're working

451
00:22:02,720 --> 00:22:04,960
Speaker 1: towards financial freedom back and you're like, oh, my gosh,

452
00:22:04,960 --> 00:22:06,680
Speaker 1: I really want to be investing for the next thirty

453
00:22:06,760 --> 00:22:09,760
Speaker 1: forty years. Well, cash is probably not the best place

454
00:22:09,800 --> 00:22:12,879
Speaker 1: to put your money because you've got a larger time horizon,

455
00:22:13,119 --> 00:22:15,919
Speaker 1: and if you're investing for the next twenty thirty forty years,

456
00:22:16,240 --> 00:22:18,879
Speaker 1: maybe shares is a better option for you. And the

457
00:22:18,960 --> 00:22:22,120
Speaker 1: same goes for fixed interest and property. It all depends

458
00:22:22,160 --> 00:22:24,680
Speaker 1: on who you are and how much risk you want

459
00:22:24,720 --> 00:22:27,720
Speaker 1: to take on. And that leads me, actually beck into

460
00:22:27,760 --> 00:22:29,960
Speaker 1: the last thing I wanted to talk about, and that

461
00:22:30,119 --> 00:22:32,840
Speaker 1: is actually the word portfolio. I feel like it gets

462
00:22:32,880 --> 00:22:36,080
Speaker 1: thrown around a lot, and the second you maybe sign

463
00:22:36,160 --> 00:22:38,720
Speaker 1: up for shares Is, or you might have signed up

464
00:22:38,760 --> 00:22:40,920
Speaker 1: for six Park, or you might have gone through self Wealth,

465
00:22:41,000 --> 00:22:42,560
Speaker 1: or you might be with Rais, or you might be

466
00:22:42,600 --> 00:22:46,119
Speaker 1: with Spaceship. It really doesn't matter what one. But you

467
00:22:46,200 --> 00:22:49,280
Speaker 1: might assume that that's your only portfolio because you go, oh,

468
00:22:49,280 --> 00:22:53,439
Speaker 1: they've used the term portfolio. But essentially, a portfolio is

469
00:22:53,440 --> 00:22:56,880
Speaker 1: a collection of financial investments. Like it could be shares,

470
00:22:56,960 --> 00:22:59,120
Speaker 1: it could be bonds, it could be commodities, it could

471
00:22:59,160 --> 00:23:01,560
Speaker 1: be cash, it could be your jewelry. But essentially it's

472
00:23:01,600 --> 00:23:05,480
Speaker 1: everything that Beck individually owns. So my personal portfolio, it's

473
00:23:05,520 --> 00:23:08,400
Speaker 1: made up of some shares, I own, property, I have,

474
00:23:08,520 --> 00:23:11,240
Speaker 1: you know, some assets at home that I ensure through

475
00:23:11,240 --> 00:23:13,479
Speaker 1: my home and contents. I have a car, and all

476
00:23:13,560 --> 00:23:17,000
Speaker 1: of that collectively becomes my portfolio. And I think a

477
00:23:17,000 --> 00:23:18,399
Speaker 1: lot of the time, and it was the reason I

478
00:23:18,480 --> 00:23:21,919
Speaker 1: wanted to include portfolio in this list, is we just

479
00:23:22,000 --> 00:23:24,800
Speaker 1: assume it's only referring to a share, or we just

480
00:23:24,840 --> 00:23:28,480
Speaker 1: assume it's only referring to one asset class, whereas that's

481
00:23:28,560 --> 00:23:31,119
Speaker 1: not the case. So, for example, if you bought an

482
00:23:31,119 --> 00:23:34,439
Speaker 1: investment property, that would become part of your portfolio. And

483
00:23:34,480 --> 00:23:36,639
Speaker 1: when we talk about that, I think it's important to

484
00:23:36,680 --> 00:23:39,080
Speaker 1: take into consideration because a lot of people will say

485
00:23:39,320 --> 00:23:42,280
Speaker 1: I have nothing. It's like, well, let's actually step back.

486
00:23:42,359 --> 00:23:44,439
Speaker 1: Do you own a car, do you have jewelry, do

487
00:23:44,480 --> 00:23:45,639
Speaker 1: you have this? Do you have that?

488
00:23:46,119 --> 00:23:46,199
Speaker 2: Go?

489
00:23:46,320 --> 00:23:48,880
Speaker 1: Yeah, okay, well that's actually made up of what your

490
00:23:48,920 --> 00:23:51,680
Speaker 1: net worth is. And I think we really need to

491
00:23:51,680 --> 00:23:54,720
Speaker 1: see it from a more holistic point of view. OKAYV

492
00:23:54,880 --> 00:23:56,439
Speaker 1: I think we need to go to a quick break.

493
00:23:56,560 --> 00:23:56,880
Speaker 2: We do.

494
00:23:57,040 --> 00:23:59,120
Speaker 1: I feel like there's a lot of information to digest.

495
00:23:59,200 --> 00:24:01,760
Speaker 1: I literally just vomited all over you guys. I need

496
00:24:01,840 --> 00:24:04,359
Speaker 1: to go clean up. Sorry, sorry, sorry, see you on

497
00:24:04,400 --> 00:24:04,960
Speaker 1: the flip side.

498
00:24:04,960 --> 00:24:11,960
Speaker 4: See soon. We are back in going back to basics

499
00:24:12,000 --> 00:24:14,320
Speaker 4: on investing. At the end of the day, V isn't

500
00:24:14,320 --> 00:24:16,160
Speaker 4: it safe to have money in a saving.

501
00:24:16,000 --> 00:24:22,280
Speaker 1: No, sit down. Absolutely, Look, it's true. Savings accounts and

502
00:24:22,359 --> 00:24:26,639
Speaker 1: term deposits are a less risky type of investment, and

503
00:24:26,680 --> 00:24:29,840
Speaker 1: it's generally recommended that you keep some of your money

504
00:24:29,880 --> 00:24:32,560
Speaker 1: in these assets. So when it comes to and you

505
00:24:32,600 --> 00:24:35,440
Speaker 1: and I have talked about this a lot, emergency savings,

506
00:24:35,560 --> 00:24:39,640
Speaker 1: emergency fund that is always in cash, we never invest

507
00:24:39,760 --> 00:24:42,439
Speaker 1: that because we never want to lose or have no

508
00:24:42,680 --> 00:24:45,520
Speaker 1: access to that. I want you to have access to

509
00:24:45,560 --> 00:24:48,600
Speaker 1: your emergency fund, day or night, anytime of the day.

510
00:24:48,640 --> 00:24:51,199
Speaker 1: You shouldn't have to sell something down to access that.

511
00:24:51,960 --> 00:24:55,720
Speaker 1: But investing in shares can give your money the chance

512
00:24:55,760 --> 00:24:58,240
Speaker 1: to earn better returns than it would have if you

513
00:24:58,320 --> 00:25:00,760
Speaker 1: left it in your bank account over the long term.

514
00:25:01,160 --> 00:25:04,480
Speaker 1: So over ten years, the ASX two hundred index, which

515
00:25:04,480 --> 00:25:07,040
Speaker 1: we discussed in the first half of this episode, had

516
00:25:07,040 --> 00:25:11,480
Speaker 1: an average total return of nine point three percent each year,

517
00:25:12,080 --> 00:25:15,720
Speaker 1: and the total return combines the price return, so the

518
00:25:15,800 --> 00:25:18,639
Speaker 1: capital growth, So how much that asset has increased in

519
00:25:18,720 --> 00:25:21,920
Speaker 1: price over time? And the income yield, so how much

520
00:25:22,000 --> 00:25:26,159
Speaker 1: you got paid for owning that Almost half the total

521
00:25:26,200 --> 00:25:29,240
Speaker 1: return came from yield. So how much you got paid

522
00:25:29,520 --> 00:25:32,399
Speaker 1: for owning that shared, not how much it increased in value.

523
00:25:32,520 --> 00:25:35,480
Speaker 1: In fact, you could own a sharebeck today that is

524
00:25:35,560 --> 00:25:38,040
Speaker 1: worth ten dollars, and you could own that same share

525
00:25:38,160 --> 00:25:40,520
Speaker 1: in twenty years and it could still be worth ten dollars,

526
00:25:40,720 --> 00:25:42,680
Speaker 1: but it might have paid you one hundred dollars over

527
00:25:42,720 --> 00:25:45,119
Speaker 1: that period of time just for owning it, because you

528
00:25:45,200 --> 00:25:47,359
Speaker 1: get a portion of that profit. But the company was

529
00:25:47,440 --> 00:25:50,200
Speaker 1: just consistent, it didn't increase in value. Because maybe they're

530
00:25:50,200 --> 00:25:52,680
Speaker 1: a potato chip company. Yeah, and they just make these

531
00:25:52,680 --> 00:25:55,600
Speaker 1: great potato chips and they have the same customer base

532
00:25:55,680 --> 00:25:58,679
Speaker 1: over that you know, ten twenty years. They buy their

533
00:25:58,680 --> 00:26:01,960
Speaker 1: potato chips regularly, they make it profit, they distribute it

534
00:26:01,960 --> 00:26:03,960
Speaker 1: to their company. But is that company worth more in

535
00:26:04,040 --> 00:26:06,479
Speaker 1: ten years than it was today if they haven't increased

536
00:26:06,480 --> 00:26:09,040
Speaker 1: their customer base. Now it's still worth ten bucks a share.

537
00:26:09,720 --> 00:26:12,080
Speaker 1: But you got paid every year for owning that share.

538
00:26:12,480 --> 00:26:14,800
Speaker 1: So we need to take that into consideration because a

539
00:26:14,800 --> 00:26:17,760
Speaker 1: lot of people might look at their portfolio and go, oh,

540
00:26:17,800 --> 00:26:19,920
Speaker 1: I bought that share for ten bucks and it's still

541
00:26:19,960 --> 00:26:23,160
Speaker 1: only worth ten dollars, and they completely forget the dividend

542
00:26:23,240 --> 00:26:25,720
Speaker 1: that was paid out during that time, which is the

543
00:26:25,800 --> 00:26:27,879
Speaker 1: money that you get paid to own that share.

544
00:26:28,160 --> 00:26:31,919
Speaker 4: Right, Okay, okay, So let's talk about money in a

545
00:26:32,000 --> 00:26:33,080
Speaker 4: savings account.

546
00:26:33,480 --> 00:26:37,680
Speaker 1: Yeah sexy. Have we spoken about compound interest before?

547
00:26:37,840 --> 00:26:43,439
Speaker 4: Beck, notn you, but I've talked about how sexy it

548
00:26:43,520 --> 00:26:46,240
Speaker 4: is before, right, Like you've heard me say yeah, because

549
00:26:46,320 --> 00:26:46,600
Speaker 4: it is.

550
00:26:46,760 --> 00:26:49,520
Speaker 1: Right. So, compound interest is the money that you made

551
00:26:49,720 --> 00:26:52,280
Speaker 1: making money, and then that money making money, which is

552
00:26:52,320 --> 00:26:55,879
Speaker 1: obviously very very attractive. So compound interest is when you

553
00:26:55,960 --> 00:26:58,760
Speaker 1: earn interest on both the money that you've saved and

554
00:26:59,040 --> 00:27:02,000
Speaker 1: the interest that you you earned. So it is literally

555
00:27:02,080 --> 00:27:04,760
Speaker 1: your money working for you, which we love. We want

556
00:27:04,760 --> 00:27:06,600
Speaker 1: all of our dollars to be working as hard as

557
00:27:06,640 --> 00:27:09,080
Speaker 1: we did for it, if not harder. Let's be honest.

558
00:27:09,160 --> 00:27:11,920
Speaker 1: I want it to continue making money while I'm not working.

559
00:27:12,280 --> 00:27:14,040
Speaker 1: And I will make sure that we link to the

560
00:27:14,040 --> 00:27:16,960
Speaker 1: money Smart Compound interest calculator in the show notes because

561
00:27:16,960 --> 00:27:18,680
Speaker 1: I talk about it all the time and it's basically

562
00:27:18,680 --> 00:27:21,080
Speaker 1: my favorite resource on the internet. I have a bookmarked.

563
00:27:21,240 --> 00:27:23,720
Speaker 1: If I start typing in my search bar compound, it

564
00:27:23,760 --> 00:27:26,800
Speaker 1: will literally come out compound Interest Calculator, Money Smart, and

565
00:27:26,880 --> 00:27:28,760
Speaker 1: like it knows what I'm looking for because I go

566
00:27:28,840 --> 00:27:32,320
Speaker 1: on there so often. But I did a little example

567
00:27:32,359 --> 00:27:35,240
Speaker 1: for you. So let's say, Beck, you invest five hundred

568
00:27:35,240 --> 00:27:38,040
Speaker 1: dollars and then every single month you go and invest

569
00:27:38,080 --> 00:27:40,440
Speaker 1: fifty dollars into this account for the next ten years.

570
00:27:40,520 --> 00:27:42,639
Speaker 1: And we're going to use the example before of the

571
00:27:42,680 --> 00:27:46,320
Speaker 1: asx two hundred index of nine point three percent return

572
00:27:46,400 --> 00:27:49,000
Speaker 1: over the last ten years, because that makes sense. That's

573
00:27:49,000 --> 00:27:52,679
Speaker 1: where we're pulling our stats from following following. So at

574
00:27:52,720 --> 00:27:55,639
Speaker 1: an annual interest rate or an annual rate of return

575
00:27:55,680 --> 00:27:58,920
Speaker 1: of nine point three percent over that period of time, Beck,

576
00:27:58,960 --> 00:28:00,800
Speaker 1: if you just saved it and put that money, that

577
00:28:00,880 --> 00:28:03,040
Speaker 1: five hundred dollars and then fifty dollars each and every

578
00:28:03,040 --> 00:28:05,879
Speaker 1: single month into your savings account, you would have saved

579
00:28:05,920 --> 00:28:09,800
Speaker 1: six thousand dollars. Wow, that's pretty good. But if you

580
00:28:09,880 --> 00:28:12,520
Speaker 1: had invested it at a rate of return of nine

581
00:28:12,560 --> 00:28:16,280
Speaker 1: point three percent, you would have eleven thousand, one hundred

582
00:28:16,280 --> 00:28:20,800
Speaker 1: and four dollars, which is four thousand, six hundred and

583
00:28:20,920 --> 00:28:24,840
Speaker 1: four dollars more money than if you had saved it instead.

584
00:28:25,520 --> 00:28:29,879
Speaker 1: That is four thousand, six hundred dollars from my perspective,

585
00:28:30,200 --> 00:28:33,480
Speaker 1: free money that you didn't have to work for money

586
00:28:33,640 --> 00:28:36,760
Speaker 1: exactly because the money that your money makes makes money,

587
00:28:36,760 --> 00:28:40,560
Speaker 1: and then that compounds, and the power of compounding actually

588
00:28:40,600 --> 00:28:43,880
Speaker 1: doesn't exist just over ten years. Ten years is about

589
00:28:43,920 --> 00:28:47,280
Speaker 1: the time frame from my perspective. It's the minimum timeframe

590
00:28:47,400 --> 00:28:51,040
Speaker 1: when compounding actually starts to take in effect. So if

591
00:28:51,080 --> 00:28:53,440
Speaker 1: we look at it, maybe let's zoom out a little

592
00:28:53,440 --> 00:28:56,000
Speaker 1: bit further and look at twenty years. So let's just

593
00:28:56,080 --> 00:28:59,640
Speaker 1: double the time frame. Your initial deposit was five hundred dollars.

594
00:28:59,720 --> 00:29:02,160
Speaker 1: You know, over ten years, we said that you'd earned

595
00:29:02,200 --> 00:29:04,840
Speaker 1: six thousand dollars in your savings account. If we doubled it,

596
00:29:04,880 --> 00:29:09,000
Speaker 1: that's twelve thousand dollars. That makes sense. But if you

597
00:29:09,280 --> 00:29:12,320
Speaker 1: had invested it at that rate of return of nine

598
00:29:12,320 --> 00:29:16,080
Speaker 1: point three percent each year, beck, you'd have thirty seven thousand,

599
00:29:16,160 --> 00:29:19,520
Speaker 1: eight hundred and eighty five dollars over that period of time,

600
00:29:19,920 --> 00:29:23,000
Speaker 1: which compares to that twelve thousand dollars you would have saved. Otherwise,

601
00:29:23,120 --> 00:29:26,120
Speaker 1: we're just twenty five thousand, five hundred and eighty five

602
00:29:26,200 --> 00:29:31,360
Speaker 1: dollars more horee money that you have. Whoa, isn't that cool?

603
00:29:31,560 --> 00:29:34,800
Speaker 1: And if you extrapolate it out even further, because you're young,

604
00:29:35,200 --> 00:29:37,600
Speaker 1: you're in a position where you know, I wouldn't say

605
00:29:37,600 --> 00:29:39,960
Speaker 1: that you're retiring in the next ten, twenty or thirty years.

606
00:29:40,000 --> 00:29:43,000
Speaker 1: I'd say there's a minimum of forty years before you

607
00:29:43,040 --> 00:29:45,800
Speaker 1: consider that because you're a young dog, right, you're a baby.

608
00:29:46,080 --> 00:29:49,120
Speaker 1: But if we did that over the long term and said,

609
00:29:49,160 --> 00:29:51,160
Speaker 1: all right, well it's going to be forty years in

610
00:29:51,200 --> 00:29:55,240
Speaker 1: the sheer market, that first year of you earning six

611
00:29:55,280 --> 00:29:57,560
Speaker 1: thousand dollars, if you'd saved it, then we had twelve

612
00:29:57,640 --> 00:30:01,080
Speaker 1: thousand dollars over forty years, would have saved twenty four

613
00:30:01,120 --> 00:30:03,600
Speaker 1: thousand dollars if you just kept doing that, right, Like,

614
00:30:03,640 --> 00:30:07,400
Speaker 1: that's basic maths. Compounding is actually really hard for the

615
00:30:07,480 --> 00:30:10,440
Speaker 1: human brain to understand because it kind of goes along

616
00:30:10,600 --> 00:30:14,280
Speaker 1: level and then it projects upwards. And we don't think

617
00:30:14,320 --> 00:30:16,640
Speaker 1: that way. We actually think in a really linear way,

618
00:30:16,640 --> 00:30:18,840
Speaker 1: which is one plus one equals two, and then two

619
00:30:18,920 --> 00:30:21,600
Speaker 1: plus two equals four and four plus four equals eight.

620
00:30:21,920 --> 00:30:24,520
Speaker 1: And like we think in a linear way, we don't

621
00:30:24,520 --> 00:30:26,920
Speaker 1: actually have the mental and I'm not saying we're silly.

622
00:30:26,960 --> 00:30:28,920
Speaker 1: It's not the case. It's just the way our brains work.

623
00:30:29,160 --> 00:30:32,240
Speaker 1: We don't compound in our brains, right, So I think

624
00:30:32,240 --> 00:30:33,800
Speaker 1: this is really going to shock you, and it makes

625
00:30:33,840 --> 00:30:38,120
Speaker 1: me so excited because over forty years, just starting with

626
00:30:38,120 --> 00:30:40,800
Speaker 1: five hundred bucks, we're just talking about fifty dollars per month,

627
00:30:40,880 --> 00:30:43,520
Speaker 1: which if you're in that position, that is fantastic. The

628
00:30:43,560 --> 00:30:45,280
Speaker 1: sooner you can start, the better. If you're not in

629
00:30:45,320 --> 00:30:47,760
Speaker 1: the position to start yet, that is totally okay too,

630
00:30:47,840 --> 00:30:50,000
Speaker 1: because we can always come back to this at a

631
00:30:50,040 --> 00:30:53,280
Speaker 1: time that suits you. But had you saved over that

632
00:30:53,280 --> 00:30:55,040
Speaker 1: period of time, it would have been twenty four thousand

633
00:30:55,080 --> 00:30:58,120
Speaker 1: dollars back. Had you invested it instead, it would be

634
00:30:58,120 --> 00:31:02,160
Speaker 1: two hundred and seventy six three hundred and eighteen. Really,

635
00:31:02,600 --> 00:31:05,680
Speaker 1: that is two hundred and fifty one, eight hundred and

636
00:31:05,760 --> 00:31:10,120
Speaker 1: eighteen dollars free money for waiting. That is so our

637
00:31:10,480 --> 00:31:12,920
Speaker 1: is so much money. And see the like I'm just

638
00:31:13,000 --> 00:31:15,960
Speaker 1: showing Beck the graph. If you look at the graph

639
00:31:16,320 --> 00:31:19,440
Speaker 1: this down here, so the bottom blue part on your

640
00:31:19,520 --> 00:31:22,480
Speaker 1: money smart calculator is going to show you how much

641
00:31:22,520 --> 00:31:25,400
Speaker 1: you saved. And that's that linear line that we expect

642
00:31:25,600 --> 00:31:28,440
Speaker 1: one plus one equals to two plus two equals for right.

643
00:31:28,760 --> 00:31:31,480
Speaker 1: But you can see that above that it has what

644
00:31:31,600 --> 00:31:35,479
Speaker 1: compounds because the money that your money makes starts making money,

645
00:31:35,800 --> 00:31:38,000
Speaker 1: and then that money starts making money, and at some

646
00:31:38,280 --> 00:31:41,760
Speaker 1: point the money that your money makes actually becomes more

647
00:31:41,760 --> 00:31:45,520
Speaker 1: money than what you're contributing. So what you're contributing does

648
00:31:45,560 --> 00:31:48,760
Speaker 1: compound a little bit, yeah, but what your compound interest

649
00:31:48,880 --> 00:31:53,720
Speaker 1: does is actually compound massively over time. So the light

650
00:31:53,840 --> 00:31:56,000
Speaker 1: blue bar that you can see above and if you

651
00:31:56,080 --> 00:31:57,960
Speaker 1: guys go and have look at it, it'll make sense.

652
00:31:58,280 --> 00:32:01,200
Speaker 1: You can see in the very last year that your

653
00:32:01,240 --> 00:32:05,680
Speaker 1: initial deposit is still fifty dollars, but you're literally making

654
00:32:05,840 --> 00:32:09,040
Speaker 1: twenty four thousand dollars on that in a year. So

655
00:32:09,120 --> 00:32:12,480
Speaker 1: it's one of those things that over time we think

656
00:32:12,480 --> 00:32:15,320
Speaker 1: it doesn't matter, but from little things, big things really

657
00:32:15,320 --> 00:32:17,479
Speaker 1: do grow. Because if we strip that back to that

658
00:32:17,680 --> 00:32:21,320
Speaker 1: ten year example again, I go, it's eleven one hundred

659
00:32:21,320 --> 00:32:23,920
Speaker 1: and four dollars. Back go, that's pretty good, but like

660
00:32:24,400 --> 00:32:26,960
Speaker 1: not life changing. But if we go back to that

661
00:32:27,080 --> 00:32:31,720
Speaker 1: forty years, that's life changing. Yeah. So the power in

662
00:32:31,720 --> 00:32:36,040
Speaker 1: investing isn't necessarily in getting the highest interest rate it's

663
00:32:36,160 --> 00:32:39,960
Speaker 1: actually having time in the market, which a lot of us,

664
00:32:40,080 --> 00:32:42,080
Speaker 1: especially if you're listening to Sheese on the Money, have

665
00:32:42,160 --> 00:32:46,000
Speaker 1: the grace of that is mind blowing. It's fun right

666
00:32:46,080 --> 00:32:48,720
Speaker 1: when you start extrapolating it out and go, Wow, this

667
00:32:48,800 --> 00:32:51,440
Speaker 1: is what I could do, This is what I could create,

668
00:32:51,600 --> 00:32:54,480
Speaker 1: And that example is fifty dollars a month, and for

669
00:32:54,560 --> 00:32:56,640
Speaker 1: some people that might not be enough. For some people

670
00:32:56,680 --> 00:32:59,960
Speaker 1: that's actually inconceivable. They just don't have that available right now.

671
00:33:00,320 --> 00:33:02,760
Speaker 1: And it's not about shame. It's not about whether you

672
00:33:02,800 --> 00:33:05,120
Speaker 1: can or can't do it. It's not about what is

673
00:33:05,320 --> 00:33:08,720
Speaker 1: quote enough because from my perspective, even if you have

674
00:33:08,800 --> 00:33:12,160
Speaker 1: a dollar a month to invest, from my perspective, that's

675
00:33:12,280 --> 00:33:14,880
Speaker 1: enough because I want you to be investing because you

676
00:33:15,040 --> 00:33:19,160
Speaker 1: understand compound interest, because you understand what that can create.

677
00:33:19,520 --> 00:33:21,760
Speaker 1: And while today you might only have a dollar, well,

678
00:33:21,840 --> 00:33:23,960
Speaker 1: next month you might be able to find two. In

679
00:33:24,000 --> 00:33:26,120
Speaker 1: a couple of months, you might be able to find five.

680
00:33:26,440 --> 00:33:28,080
Speaker 1: In a couple of years, you might be in a

681
00:33:28,120 --> 00:33:32,400
Speaker 1: different situation where fifty dollars a month is conceivable. So Beck,

682
00:33:32,520 --> 00:33:35,280
Speaker 1: that's why I'm so passionate about it, because from little things,

683
00:33:35,320 --> 00:33:38,600
Speaker 1: big things really do grow. And if we even just

684
00:33:38,680 --> 00:33:41,680
Speaker 1: take it back to what women earn in general, we

685
00:33:41,760 --> 00:33:45,000
Speaker 1: already know we're at a disadvantage. We already know that

686
00:33:45,160 --> 00:33:49,479
Speaker 1: women are retiring with less superanuation than men and less

687
00:33:49,520 --> 00:33:52,800
Speaker 1: to actually retire in general. And given that number I

688
00:33:52,960 --> 00:33:55,600
Speaker 1: just gave you, do you know that women who are

689
00:33:55,640 --> 00:33:59,280
Speaker 1: seventy five years and older on average retire with only

690
00:33:59,320 --> 00:34:03,160
Speaker 1: three hundred fourteen thousand dollars in superanuation. And if you

691
00:34:03,200 --> 00:34:06,400
Speaker 1: strip that back to what quote retirement age is, and

692
00:34:06,440 --> 00:34:10,439
Speaker 1: retirement age is usually sixty five, the average female who

693
00:34:10,480 --> 00:34:13,319
Speaker 1: is sixty five years old has a superranuation balance of

694
00:34:13,360 --> 00:34:16,359
Speaker 1: three hundred and eighty one thousand dollars. By investing five

695
00:34:16,440 --> 00:34:19,560
Speaker 1: hundred dollars and then potentially investing fifty dollars each and

696
00:34:19,640 --> 00:34:22,240
Speaker 1: every single month, you double that. Is that not wild?

697
00:34:22,360 --> 00:34:25,680
Speaker 1: To think that with education we could change our lives?

698
00:34:25,719 --> 00:34:27,960
Speaker 1: That is wild. I can't believe it's not more commonly

699
00:34:28,000 --> 00:34:31,040
Speaker 1: known exactly. So for me, this is why I'm so

700
00:34:31,160 --> 00:34:33,839
Speaker 1: passionate about it, but also why I don't think that

701
00:34:33,840 --> 00:34:36,400
Speaker 1: there is a minimum amount that's quote not worth it.

702
00:34:36,440 --> 00:34:39,759
Speaker 1: I don't think it's ever not worth investing, because it's

703
00:34:39,800 --> 00:34:43,120
Speaker 1: actually about mindset and creating that mindset of abundance and

704
00:34:43,120 --> 00:34:46,239
Speaker 1: going well, actually, I might not have a lot, but

705
00:34:46,520 --> 00:34:49,520
Speaker 1: what I do have is working for future me. And

706
00:34:49,560 --> 00:34:51,680
Speaker 1: what I do have is putting me in a position

707
00:34:51,760 --> 00:34:54,640
Speaker 1: where in the future I can invest more. And instead

708
00:34:54,640 --> 00:34:56,960
Speaker 1: of going all right, well i'll invest when I have money,

709
00:34:57,040 --> 00:34:59,040
Speaker 1: you're already doing it today. So if ever you do

710
00:34:59,120 --> 00:35:01,680
Speaker 1: come into money, or if ever your situation does change,

711
00:35:01,680 --> 00:35:03,360
Speaker 1: you go All I have to do is change my

712
00:35:03,400 --> 00:35:05,600
Speaker 1: contribution amount because I know who I am, I know

713
00:35:05,680 --> 00:35:08,399
Speaker 1: what I'm investing, and I know where I'm investing, as

714
00:35:08,440 --> 00:35:10,799
Speaker 1: opposed to having to start from scratch. Quote, when you

715
00:35:10,840 --> 00:35:13,680
Speaker 1: have money, that's the same thing as going, yeah, i'll

716
00:35:13,719 --> 00:35:16,719
Speaker 1: start dating when I get married. Like that makes no sense.

717
00:35:16,760 --> 00:35:19,960
Speaker 1: Why would you start investing once you're rich. You're not

718
00:35:20,000 --> 00:35:22,919
Speaker 1: going to get rich unless you start investing, right right,

719
00:35:23,560 --> 00:35:25,560
Speaker 1: This is really motivating me. I hope so, I hope

720
00:35:25,600 --> 00:35:28,200
Speaker 1: so because I really love investing, and I also have

721
00:35:28,320 --> 00:35:31,000
Speaker 1: just started redating my husband and I can recommend it. Yeah,

722
00:35:31,040 --> 00:35:32,960
Speaker 1: take your husband on dates, so V.

723
00:35:33,080 --> 00:35:34,920
Speaker 4: A lot of my friends have said that shares are

724
00:35:34,960 --> 00:35:37,560
Speaker 4: a little bit risky because some risks go up and down.

725
00:35:37,640 --> 00:35:40,640
Speaker 1: Everything carries risk, But yeah, prices do go up and

726
00:35:40,680 --> 00:35:43,919
Speaker 1: down over time. That's how the market performs, and it's

727
00:35:44,000 --> 00:35:47,160
Speaker 1: actually not something that you should worry about in the

728
00:35:47,160 --> 00:35:50,560
Speaker 1: short term. So when I first started investing, I checked

729
00:35:50,560 --> 00:35:52,960
Speaker 1: my share portfolio literally every day, and I was so

730
00:35:53,000 --> 00:35:55,040
Speaker 1: stressed if I saw it go down by even zero

731
00:35:55,080 --> 00:35:57,600
Speaker 1: point one percent, because of it's on the way down,

732
00:35:57,760 --> 00:35:59,480
Speaker 1: like what have I done? I've made the wrong decision,

733
00:35:59,480 --> 00:36:02,000
Speaker 1: And that's just not the case. The advice I have

734
00:36:02,120 --> 00:36:05,600
Speaker 1: here is zoom out. Investments should be for a long time,

735
00:36:05,840 --> 00:36:08,880
Speaker 1: and don't worry if your stock does go down. The

736
00:36:08,920 --> 00:36:10,920
Speaker 1: one thing that you need to remember is if you

737
00:36:10,960 --> 00:36:13,960
Speaker 1: went and bought ten shares in a company, and you

738
00:36:14,080 --> 00:36:17,120
Speaker 1: spent one dollar on each share, so you had ten

739
00:36:17,160 --> 00:36:19,759
Speaker 1: dollars worth of stock beck and then in a couple

740
00:36:19,800 --> 00:36:23,239
Speaker 1: of months, because we have a predicted recession coming up,

741
00:36:23,560 --> 00:36:26,879
Speaker 1: that stock has dropped down to being worth five dollars,

742
00:36:27,200 --> 00:36:30,240
Speaker 1: You're gonna absolutely worry, right, you go, Oh my god,

743
00:36:30,680 --> 00:36:33,600
Speaker 1: I bought ten dollars worth of stock. I got ten shares,

744
00:36:33,640 --> 00:36:36,319
Speaker 1: and now it's worth five bucks. It's worth half of

745
00:36:36,360 --> 00:36:39,400
Speaker 1: what I paid for it. What you're not remembering is

746
00:36:39,480 --> 00:36:42,520
Speaker 1: that's just what the market's valuing it at today. They're

747
00:36:42,520 --> 00:36:45,200
Speaker 1: not saying, Beck, you only have five dollars. They're saying, Beck,

748
00:36:45,600 --> 00:36:49,000
Speaker 1: you will have five dollars if you sell this asset today.

749
00:36:49,440 --> 00:36:53,000
Speaker 1: What you own right now is ten shares in this company.

750
00:36:53,239 --> 00:36:55,520
Speaker 1: And the market might be off, it might only now

751
00:36:55,600 --> 00:36:58,480
Speaker 1: be worth five dollars instead of ten dollars today. But

752
00:36:58,640 --> 00:37:01,160
Speaker 1: if you wait and the market it recovers, it might

753
00:37:01,200 --> 00:37:02,759
Speaker 1: get back to that ten dollars. It might even go

754
00:37:02,800 --> 00:37:05,960
Speaker 1: to fifteen or twenty dollars, but you still own those

755
00:37:06,120 --> 00:37:09,480
Speaker 1: ten shares. It's really important to understand that. During the

756
00:37:09,480 --> 00:37:12,560
Speaker 1: global financial crisis in two thousand and eight two thousand

757
00:37:12,600 --> 00:37:15,359
Speaker 1: and nine, obviously a lot of people lost a lot

758
00:37:15,400 --> 00:37:17,520
Speaker 1: of money for a lot of different reasons, but one

759
00:37:17,520 --> 00:37:20,880
Speaker 1: of the main reasons was people being really scared of

760
00:37:20,920 --> 00:37:23,920
Speaker 1: the market, and if they had shares, they sold it

761
00:37:24,080 --> 00:37:25,880
Speaker 1: because they were like, I just want to save whatever

762
00:37:25,920 --> 00:37:29,239
Speaker 1: I have. And one of the best investment opportunities was

763
00:37:29,280 --> 00:37:32,680
Speaker 1: actually when the market was completely down because shares were

764
00:37:32,680 --> 00:37:36,120
Speaker 1: on sale Beck, So essentially the market crashed, everything was cheaper,

765
00:37:36,280 --> 00:37:38,600
Speaker 1: and those who were in the market for the long

766
00:37:38,680 --> 00:37:41,040
Speaker 1: term saw it as an opportunity to stock up on

767
00:37:41,160 --> 00:37:44,239
Speaker 1: stocks that they liked for a little bit cheaper. So

768
00:37:44,320 --> 00:37:46,840
Speaker 1: I think before you sell a stock, I would really

769
00:37:46,880 --> 00:37:48,759
Speaker 1: do a little bit of a check and go, why

770
00:37:48,800 --> 00:37:50,920
Speaker 1: am I selling this stock? Is it out of fear?

771
00:37:51,040 --> 00:37:53,640
Speaker 1: Am I selling this because I'm anxious? Or am I

772
00:37:53,719 --> 00:37:55,839
Speaker 1: selling this because I need the cash? Those two are

773
00:37:55,840 --> 00:37:59,880
Speaker 1: different conversations. If it's because you're anxious, please before you

774
00:38:00,200 --> 00:38:02,960
Speaker 1: do that, cell do a bit of research to make

775
00:38:03,000 --> 00:38:06,400
Speaker 1: sure that you aren't just triggering something. That means in

776
00:38:06,480 --> 00:38:08,360
Speaker 1: six or twelve months, when you go I want to

777
00:38:08,360 --> 00:38:10,680
Speaker 1: invest again, you don't then have to buy back in

778
00:38:10,719 --> 00:38:13,319
Speaker 1: at a dollar per share again and have lost five

779
00:38:13,360 --> 00:38:16,120
Speaker 1: dollars in the process. Does that make sense? Yeah, that

780
00:38:16,160 --> 00:38:18,719
Speaker 1: does make sense. I was also watching on Netflix at

781
00:38:18,719 --> 00:38:21,319
Speaker 1: the moment, you know, that Bernie Madoff documentary that you've

782
00:38:21,360 --> 00:38:25,560
Speaker 1: probably got absolutely no interest in, but I was so excited. Right, Okay,

783
00:38:25,640 --> 00:38:29,280
Speaker 1: So there's this documentary about essentially the biggest Ponzi scheme

784
00:38:29,360 --> 00:38:32,800
Speaker 1: on Wall Street, and it's, from my perspective, very interesting.

785
00:38:32,840 --> 00:38:34,920
Speaker 1: I don't think I could pay you to sit through it.

786
00:38:35,239 --> 00:38:39,240
Speaker 1: But essentially one of the red flags that investigators found

787
00:38:39,239 --> 00:38:42,480
Speaker 1: when looking into this made Off case was actually that

788
00:38:42,640 --> 00:38:46,319
Speaker 1: he had never reported a bad year. It was impossible.

789
00:38:46,360 --> 00:38:48,440
Speaker 1: Over the period of time. I think it was seventeen

790
00:38:48,520 --> 00:38:50,880
Speaker 1: years that he said he was investing. They were like,

791
00:38:50,960 --> 00:38:53,520
Speaker 1: he just never had a bad year, and even the best,

792
00:38:53,560 --> 00:38:56,759
Speaker 1: if the best investors over a seventeen year period, have

793
00:38:57,480 --> 00:39:01,720
Speaker 1: bad years. A flag. Yeah, it was a Ponzi scheme.

794
00:39:01,960 --> 00:39:05,200
Speaker 1: He never actually invested any of his investors' money. It's

795
00:39:05,280 --> 00:39:08,400
Speaker 1: actually wild, like he stole so anyway, it's actually cooked.

796
00:39:08,440 --> 00:39:10,439
Speaker 1: I'll tell you all about it after something I would

797
00:39:10,480 --> 00:39:14,080
Speaker 1: want to watch. Yeah, I think you would find no, no, no,

798
00:39:14,320 --> 00:39:17,319
Speaker 1: there's no financial nous that needs to exist there. He's

799
00:39:17,400 --> 00:39:19,680
Speaker 1: running a Ponzi scheme. He's doing the wrong thing. There's

800
00:39:19,760 --> 00:39:23,520
Speaker 1: lots of money. It's very interesting, but essentially the best

801
00:39:23,560 --> 00:39:28,040
Speaker 1: investors actually expect to lose money over time, but they

802
00:39:28,160 --> 00:39:31,759
Speaker 1: know that it will come back because over our lifetime,

803
00:39:31,840 --> 00:39:35,640
Speaker 1: back over the average human beings lifetime, they will see

804
00:39:35,680 --> 00:39:39,960
Speaker 1: seven very large market dips. They'll see things like the GFC,

805
00:39:40,000 --> 00:39:42,759
Speaker 1: they'll see things like the recession that our market is

806
00:39:42,800 --> 00:39:46,560
Speaker 1: currently talking about, and the best investors try to keep

807
00:39:46,680 --> 00:39:49,320
Speaker 1: up and try learning and get up when they fail,

808
00:39:49,560 --> 00:39:52,520
Speaker 1: not run away when they're anxious. So I think it's

809
00:39:52,520 --> 00:39:55,359
Speaker 1: really important to talk about the fact that if in doubt,

810
00:39:55,440 --> 00:39:58,000
Speaker 1: zoom out. Instead of looking at what's going on for

811
00:39:58,080 --> 00:40:00,279
Speaker 1: this year or what the performance on your p follow

812
00:40:00,320 --> 00:40:03,560
Speaker 1: you was for the last six months, let's look at five, ten, twenty,

813
00:40:03,640 --> 00:40:05,880
Speaker 1: even thirty years into the future, and I promise it

814
00:40:05,920 --> 00:40:08,680
Speaker 1: looks a lot more bright. Okay, they I am so ready.

815
00:40:08,760 --> 00:40:10,520
Speaker 1: So what do I do? First? Do I pay off

816
00:40:10,520 --> 00:40:14,720
Speaker 1: debt or just start saving? All right? So first things first,

817
00:40:14,800 --> 00:40:17,279
Speaker 1: I would make sure you have your financial house in

818
00:40:17,400 --> 00:40:20,360
Speaker 1: order before you start investing, because there's no point investing

819
00:40:20,400 --> 00:40:22,520
Speaker 1: money that you then have to pull out for something else.

820
00:40:22,880 --> 00:40:24,920
Speaker 1: So the first thing I would get in order is

821
00:40:24,960 --> 00:40:28,000
Speaker 1: making sure you have an emergency fund. And I genuinely

822
00:40:28,080 --> 00:40:30,480
Speaker 1: believe that whether you are in debt or not in

823
00:40:30,560 --> 00:40:32,759
Speaker 1: personal debt in a mortgage, I don't care what you are.

824
00:40:32,840 --> 00:40:35,680
Speaker 1: I still think you need an emergency fund as a priority,

825
00:40:35,960 --> 00:40:38,880
Speaker 1: because to me, that is the first ticket to financial

826
00:40:38,920 --> 00:40:40,920
Speaker 1: freedom is making sure that you don't have to go

827
00:40:41,080 --> 00:40:44,279
Speaker 1: further into debt fund expected expenses, that you don't have

828
00:40:44,360 --> 00:40:46,760
Speaker 1: to rely on anybody else for money, that you don't

829
00:40:46,800 --> 00:40:49,240
Speaker 1: have to ask for things, and that you feel completely

830
00:40:49,239 --> 00:40:52,560
Speaker 1: empowered in your financial journey, so having an emergency fund.

831
00:40:53,120 --> 00:40:55,919
Speaker 1: The next thing I would do is prioritize paying off

832
00:40:55,960 --> 00:40:59,920
Speaker 1: consumer debt first. So paying off debt, from my perspective,

833
00:41:00,280 --> 00:41:03,080
Speaker 1: is an investment in itself because you're not paying interest

834
00:41:03,120 --> 00:41:06,600
Speaker 1: on that and most consumer debts actually carry really high

835
00:41:06,640 --> 00:41:09,040
Speaker 1: interest rates. So we're not talking about, you know, the

836
00:41:09,080 --> 00:41:11,880
Speaker 1: four percent interest rate you have on your mortgage, because

837
00:41:11,920 --> 00:41:14,920
Speaker 1: as we said before, the ASX index has averaged a

838
00:41:14,920 --> 00:41:18,520
Speaker 1: total return of nine point three percent, so obviously one

839
00:41:18,600 --> 00:41:21,640
Speaker 1: of these things is not like the other. But if

840
00:41:21,680 --> 00:41:24,800
Speaker 1: you have a credit card that's fourteen to twenty two percent,

841
00:41:24,840 --> 00:41:28,120
Speaker 1: I would absolutely prioritize paying that off because the sooner

842
00:41:28,120 --> 00:41:30,640
Speaker 1: you pay that off, the less interest you're paying, and

843
00:41:30,680 --> 00:41:33,320
Speaker 1: that's money win. So I would get rid of that first.

844
00:41:33,360 --> 00:41:35,880
Speaker 1: And then once you've got that rid of and you

845
00:41:35,920 --> 00:41:39,200
Speaker 1: have your emergency fund, from my perspective, if you want

846
00:41:39,239 --> 00:41:42,239
Speaker 1: to invest, my friend, you are ready to invest. The

847
00:41:42,320 --> 00:41:44,719
Speaker 1: thing I would do, though, is making sure that you

848
00:41:44,840 --> 00:41:47,600
Speaker 1: have enough education. But you're listening to this podcast, so

849
00:41:47,640 --> 00:41:50,439
Speaker 1: you're on the right path, aren't you amazing. I feel

850
00:41:50,440 --> 00:41:52,040
Speaker 1: like I've got a long redhead of me, but I

851
00:41:52,080 --> 00:41:55,239
Speaker 1: am pretty bloody motivated after all of this. I'm really

852
00:41:55,280 --> 00:41:57,200
Speaker 1: excited because I feel like you've just clicked on what

853
00:41:57,320 --> 00:41:59,719
Speaker 1: compound interest is and the power it has to change

854
00:41:59,760 --> 00:42:01,560
Speaker 1: your life life over the long term. So I'm very

855
00:42:01,600 --> 00:42:03,160
Speaker 1: excited to continue this conversation.

856
00:42:03,320 --> 00:42:06,480
Speaker 4: Absolutely, let's do it. I think that's plenty for today.

857
00:42:06,800 --> 00:42:07,440
Speaker 4: What are you reckon?

858
00:42:07,680 --> 00:42:11,600
Speaker 1: I am definitely all investing basics out, So as always,

859
00:42:11,600 --> 00:42:13,799
Speaker 1: we would love it if you joined the conversation on

860
00:42:13,840 --> 00:42:16,520
Speaker 1: our Facebook group, where our community shares money tips and

861
00:42:16,600 --> 00:42:20,560
Speaker 1: investing tricks every single date, free of judgment. So She's

862
00:42:20,560 --> 00:42:22,520
Speaker 1: on the Money on Facebook and join us. And if

863
00:42:22,520 --> 00:42:24,520
Speaker 1: Facebook's not you think you find us on Instagram Roots

864
00:42:24,520 --> 00:42:27,040
Speaker 1: She's on the Money aus also on TikTok A. She's

865
00:42:27,040 --> 00:42:29,239
Speaker 1: on the Money. Please join us. We cannot wait to

866
00:42:29,280 --> 00:42:31,440
Speaker 1: see you on Friday. See later, guys. Bye.

867
00:42:37,960 --> 00:42:40,520
Speaker 3: The advice shared on She's on the Money is general

868
00:42:40,560 --> 00:42:44,440
Speaker 3: in nature and does not consider your individual circumstances. She's

869
00:42:44,480 --> 00:42:47,920
Speaker 3: on the Money exists purely for educational purposes and should

870
00:42:47,960 --> 00:42:51,120
Speaker 3: not be relied upon to make an investment or financial decision.

871
00:42:51,520 --> 00:42:53,960
Speaker 3: If you do choose to buy a financial product, read

872
00:42:54,000 --> 00:42:58,120
Speaker 3: the PDS TMD and obtain appropriate financial advice tailored towards

873
00:42:58,160 --> 00:42:58,680
Speaker 3: your needs.

874
00:42:59,040 --> 00:43:01,280
Speaker 1: Victoria divine and she's on the money.

875
00:43:01,280 --> 00:43:04,759
Speaker 3: Are authorized representatives of money sherper P, T y L

876
00:43:04,800 --> 00:43:07,439
Speaker 3: t D A b N three two one six four

877
00:43:07,520 --> 00:43:10,520
Speaker 3: nine two seven seven zero eight a F s L

878
00:43:10,640 --> 00:43:14,839
Speaker 3: four five one two eight nine