Speaker 1: Hello, my name's Santasha Nabananga Bamblet. I'm a proud yr
Speaker 1: the Order, Kernie Whoalbury and a waddery woman. And before
Speaker 1: we get started on She's on the Money podcast, I
Speaker 1: would like to acknowledge the traditional custodians of the land
Speaker 1: of which this podcast is recorded on a wondery country,
Speaker 1: acknowledging the elders, the ancestors and the next generation coming through.
Speaker 1: As this podcast is about connecting, empowering, knowledge sharing and
Speaker 1: the storytelling of you to make a difference for today
Speaker 1: and lasting impact for tomorrow.
Speaker 2: Let's get into it.
Speaker 3: She's on the Money, She's on the Money.
Speaker 4: Hello, and welcome to She's on the Money the podcast
Speaker 4: Millennials who want Financial Freedom. My name is Georgia King,
Speaker 4: and joining me as she does each and every Wednesday,
Speaker 4: is Victoria Divine V.
Speaker 5: How are we I'm well, I just had a diet coach.
Speaker 5: I don't know how this option is thriving.
Speaker 4: With so many of our community members either interested in
Speaker 4: investing or active investors, there is nothing we love more
Speaker 4: than doing a deep dive episode into investing and all
Speaker 4: the various topics within that to help people along on
Speaker 4: their journey up on the show. Today we're looking at
Speaker 4: active and passive investing.
Speaker 5: Be this sounds very exciting for me, don't know about you.
Speaker 5: How are you feeling about it?
Speaker 4: Well, I'm curious to learn what it all means, So
Speaker 4: I'm excited.
Speaker 5: Sounds so apprecisive when we're not doing something that You're like,
Speaker 5: I am passionate about this topic. Well, lucky, I am
Speaker 5: really passionate about this topic. So there is going to
Speaker 5: be so much on this episode to unpack when it
Speaker 5: comes to investing, because your investment options and journey are
Speaker 5: arguably as unique as you are.
Speaker 2: Some of you real unique.
Speaker 5: However, most investors usually fit into two categories, and those
Speaker 5: categories are active and passive investors.
Speaker 2: So this basically refers to the.
Speaker 5: Two different ways of managing your investment portfolio, and today
Speaker 5: we are going to define what each of these are
Speaker 5: and look at some pros and cons for each to
Speaker 5: help you choose what path might suit your capabilities and
Speaker 5: your situation the best.
Speaker 4: I like the sound of passive investing better just my
Speaker 4: personal opinion of the top.
Speaker 5: But I don't really know, because you're more of a passive,
Speaker 5: caressive type of communicator.
Speaker 4: Who who whoa more just like a passive person yess
Speaker 4: like creature.
Speaker 2: It's a cube with that covered off.
Speaker 4: Now we know what I'm interested in. Let's talk about
Speaker 4: active stuff.
Speaker 5: On the sloth saying, have you seen that video by
Speaker 5: Kristen Bell or it's got Kristen Bell in it? Oh,
Speaker 5: kristin Kristen Bell. She's on Ellen and Ellen gets her
Speaker 5: a sloth and she just breaks and cries, what do
Speaker 5: you mean a sloth?
Speaker 2: Are you joking?
Speaker 5: And so Kristen Bell said that her face favor animal
Speaker 5: in the entire world was a sloth, and so she
Speaker 5: went on the Ellen Show and then Ellen gotterisloth and
Speaker 5: she's just there crying.
Speaker 2: I'll show you after the ap.
Speaker 5: Everyone should google it because it's real wholesome content. All right,
Speaker 5: speaking of good content, let's go back to our sloth
Speaker 5: versus like a cheater investing scheme.
Speaker 4: I like that scheme.
Speaker 2: Did you say that? Let's remove that worth? Yeap? Great?
Speaker 4: Moving on active investing, tell me all about it all.
Speaker 5: Right, Before we jump into defining exactly what those two
Speaker 5: things are, Georgia King, let's do a little comparison. So
Speaker 5: a big difference between these two different ways of managing
Speaker 5: your portfolio. Is that generally an active investor is they're
Speaker 5: trying to beat the market, whereas a passive investor is
Speaker 5: trying to track the market. So we get a pinpoint
Speaker 5: that there, so that you know right off the bat
Speaker 5: there is quite a big difference between the two. It's
Speaker 5: not just how you act towards your portfolio, it's also
Speaker 5: about the types of returns you are anticipating as an investor.
Speaker 5: Back to your question, what is an active investor? So
Speaker 5: active investors tend to pretty keenly watch the market. They
Speaker 5: are very likely to trade as they see fit, so
Speaker 5: they will be in and out of their chase's portfolio
Speaker 5: quite often, buying and selling assets because they have usually
Speaker 5: a better education than the average bear. When it comes
Speaker 5: to what the share market is doing, active investors are
Speaker 5: generally chasing shorter term gains i'd say so quicker profits
Speaker 5: from their investments. Let's remember what happens when you want higher.
Speaker 4: Profits though, gee higher risk I'm not even needed.
Speaker 5: And some active investors they choose to engage with professional
Speaker 5: fund managers to actively manage their investments on their behalf.
Speaker 2: So just because you're an.
Speaker 5: Active investor doesn't mean you're going straight to your shares's
Speaker 5: or your share trading platform and buying and selling shares
Speaker 5: on your own. You might actually choose a managed fund
Speaker 5: to put your money in. That's actively investing on your behalf.
Speaker 5: Keep in mind here, active investing is usually more expensive
Speaker 5: than passive investing. I'm sure we'll get to this later
Speaker 5: with the questions that you've got, but I'm just pinning
Speaker 5: it here for good reference. And the reason is because
Speaker 5: active investing requires a lot more work than just passively
Speaker 5: tracking or just going and buying an ETF or just
Speaker 5: tracking the index of a market, whereas active investing is
Speaker 5: really about buying and selling and trying to get a
Speaker 5: really good profit. And again more risk, but also more work.
Speaker 2: Okay, it makes sense.
Speaker 4: It's interesting. Yes, this makes sense. It sounds slightly exhausting,
Speaker 4: but that's okay. Tell me, first off, the pros of
Speaker 4: active investing, please.
Speaker 2: Be all right.
Speaker 5: So, because investors are trying to beat the market, as
Speaker 5: we said before, when they succeed, it can pay off,
Speaker 5: which is nice. They have usually higher than average returns. However,
Speaker 5: that obviously I'm going to keep going back to, it
Speaker 5: goes back to their risk profile. So this might not
Speaker 5: be for everyone. This approach obviously, also, George requires a
Speaker 5: bit more experience, a lot more confidence when it comes
Speaker 5: to investing, and a higher level of engagement. So when
Speaker 5: I say a higher level of ink agent, we're not
Speaker 5: talking about rings here or if you'd like to see mine,
Speaker 5: just ask any time. I'm willing to show it off.
Speaker 5: But it's more about the time, energy and effort that
Speaker 5: you need to put into looking at the markets and
Speaker 5: your portfolio, whereas passive will be a bit different then
Speaker 5: it would typically involve, as we said before, higher risk.
Speaker 5: I need to disclaimer this a million times because if
Speaker 5: we're going to talk about strategies, the higher the reward,
Speaker 5: the higher the risk, which should always be taken into account. Obviously, George,
Speaker 5: this is for a lot of people a con but
Speaker 5: it can also be a pro that it involves higher
Speaker 5: risk because with higher risk comes higher reward, which does
Speaker 5: need to be taken into consideration, which is why some
Speaker 5: people actually choose to engage with an active fund manager
Speaker 5: to oversee their investments instead of taking all of that
Speaker 5: on themselves. And I mean, I don't think it's the
Speaker 5: worst idea to outsource it instead of being a direct
Speaker 5: share investor, because if I'm trying to be risky. Who
Speaker 5: am I going to trust to help me? Probably a
Speaker 5: fund manager who does that forty hours on them. It's
Speaker 5: not forty hours, they work like sixty hour weeks being
Speaker 5: fund managers. But I'm probably going to look at a
Speaker 5: fund manager instead of me, who might be a nurse
Speaker 5: or a midwife, Like, how on earth would you not
Speaker 5: as how would you.
Speaker 4: Keep up with it exactly?
Speaker 5: How are you going to allocate that much time, energy
Speaker 5: and effort into tracking the markets? I just I'm a
Speaker 5: very strong believer in seeking professional advice where you can
Speaker 5: afford it.
Speaker 4: Yeah, Okay, I was going to say, this does seem
Speaker 4: too complex to kind of do yourself unless you're someone.
Speaker 5: Like Cant, But I also have lots of friends who
Speaker 5: are just really interested in it, right YEA, Like since
Speaker 5: we've been working with Chasy's. Absolutely not a shameless plug,
Speaker 5: but since we've been working with Chazy's, I feel like
Speaker 5: a lot of our community and a lot of my
Speaker 5: friends have felt as though it's a bit more accessible
Speaker 5: than it used to be to like download an investing
Speaker 5: upp like Jess ask her. She now has her own
Speaker 5: little chaseas platform and she buys shares that she wants
Speaker 5: and believes in, and I think that that's kind of cool.
Speaker 5: And this goes back to we've spoken about it on
Speaker 5: the podcast before, about the strategy you employed, and if
Speaker 5: we're going to talk about Jess, she has what's called
Speaker 5: a core satellite approach, and I'm only talking about it
Speaker 5: because I know we've mentioned it on the podcast before.
Speaker 5: And that's why she has a core portfolio of tried,
Speaker 5: true products that she doesn't really manage herself and then
Speaker 5: shares is for her. Is her like dabble in things
Speaker 5: she's really interested in and keep up with the market.
Speaker 5: But she's never investing as much on that platform as
Speaker 5: she is in her actual investment account. So investment account,
Speaker 5: I would argue, is more of a passive investment, but
Speaker 5: she's still actively investing on the side. And I think
Speaker 5: that's important to mention here because you might see pros
Speaker 5: and cons on both sides of the table. That doesn't
Speaker 5: mean you have to only sit on one side of
Speaker 5: the table, because that's actually kind of how I employ
Speaker 5: my own investment strategy as well. Most of my wealth
Speaker 5: or most of my share portfolio is sitting in a
Speaker 5: relatively passive investment type but because I am who I am,
Speaker 5: and I'm obsessed with the markets. You best believe I'm
Speaker 5: having a bit of fun on the side. So I
Speaker 5: think it's interesting to just talk about it in that way,
Speaker 5: because as much as you might be more of a
Speaker 5: passive or you might be more of an active investor,
Speaker 5: doesn't mean you can't have a look at both and
Speaker 5: find a way to make that work for you. Because
Speaker 5: who am I, I'm Victoria, I'm a arguably quite passive investor.
Speaker 5: Am I actively investing to well, yes, but we need
Speaker 5: to have a talk about that structure and how it
Speaker 5: might work for you or not work for you, because
Speaker 5: it depends on your ability to take on risk. So
Speaker 5: the last point I want to mention there is we
Speaker 5: talked about active fund managers managing your actively invested portfolio,
Speaker 5: and one of the other benefits to having a fund
Speaker 5: manager if you're in that circumstance is often fund managers
Speaker 5: have access to products that the average person can't get
Speaker 5: access to.
Speaker 4: That doesn't seem fair.
Speaker 5: Look it's not fair, but it actually makes sense. So
Speaker 5: often in that circumstance, your active fund manager plays the
Speaker 5: third party, and when it comes to different asset types,
Speaker 5: often with the more active when they're issued by the.
Speaker 2: Product issue, you are.
Speaker 5: The product issue is like, I don't want to deal
Speaker 5: with George from down the street. I don't care George
Speaker 5: if you've got five hundred dollars to invest I'm a big, active,
Speaker 5: billion dollar company. I just want to deal with big
Speaker 5: dogs because it makes my life a whole lot easier.
Speaker 5: So I'm going to put this product on the market.
Speaker 5: I'm then going to put an entry point on that
Speaker 5: product to say, all right, this is a actively managed product
Speaker 5: and you need a minimum of thirty thousand dollars to
Speaker 5: invest in it. Some of them are even more so
Speaker 5: wouldn't be accessible for you if you wanted to get
Speaker 5: into it, although I know you're a pretty good saver,
Speaker 5: so maybe it would be.
Speaker 2: Who knows.
Speaker 5: However, an active fund manager might go all right, no problems.
Speaker 5: Product provider will buy fifty of those, They put that
Speaker 5: in their fund, and then when you bring your money
Speaker 5: to your fund manager, they go, hey, here's an ETF
Speaker 5: or here's a product that we've made up, and we
Speaker 5: will give you access via us to that product that's
Speaker 5: usually inaccessible. So you're five hundred dollars now can be
Speaker 5: invested in that product, but it could never go directly
Speaker 5: to the product issuer.
Speaker 2: Does that make sense?
Speaker 4: Yeah, yeah it does. Okay, thank you for covering that up.
Speaker 2: No problem.
Speaker 4: These tell me about the negative side to active investment.
Speaker 5: Right, long story short, George, you still need to do
Speaker 5: your due diligence, like you don't get out of that.
Speaker 5: You need to make sure that you are making a
Speaker 5: good decision when choosing a fund manager. Because you're placing
Speaker 5: a lot of trust in them. It's a bit more risky.
Speaker 5: Human error is still possible, and basically they could misjudge
Speaker 5: the market and choose underperforming stocks l DR. That's what
Speaker 5: could happen, and that could be a pretty negative outcome
Speaker 5: for you because there's usually a little bit more to
Speaker 5: lose in active stocks because risk return reward chart.
Speaker 4: In terms of choosing a fund manager, though, v is
Speaker 4: that as simple as plugging it into Google and seeing
Speaker 4: what comes up. How do you actually find someone?
Speaker 2: You could google it.
Speaker 5: Another way to do it would be to just go
Speaker 5: to the ASX website and see who is listed as
Speaker 5: a fund manager. They actually have a full page that's
Speaker 5: called fund Managers and Responsible Entity and they've got names
Speaker 5: on there that you've probably heard of before. So you've
Speaker 5: got amp Capital, you've got Antari's, you've got Antipdes, you've
Speaker 5: got os Bill, Australian Ethical. You might have heard of
Speaker 5: equity trustees before. You might have heard of in Sync
Speaker 5: or Investo or JP Morgan. They've got Macquarie and MLC.
Speaker 5: I'm perpetual. I'm not recommending any of those, but they
Speaker 5: are brands that you've arguably heard of before that you
Speaker 5: could look into as an option for you. Something I
Speaker 5: would say first is, before you go, I want to
Speaker 5: be an active investor, sit down and write a list
Speaker 5: of your values and what you're actually looking for, because
Speaker 5: it can be so overwhelming going to platforms and going okay,
Speaker 5: well what does Alan Gray do? Alright, look at this, this, this,
Speaker 5: and this. You can probably wipe off more than half
Speaker 5: of them to begin with, because you might have written
Speaker 5: down on your list of you know, non negotiables, that
Speaker 5: you don't want to invest in fossil fuels, and that
Speaker 5: you wanted ethical portfolio, and you want all.
Speaker 2: These other things.
Speaker 5: So from my perspective, i'd get my values in line
Speaker 5: before a go and find a product, because it's much
Speaker 5: easier to find a product that aligns to your values,
Speaker 5: then look at every single product and go would I
Speaker 5: accept this or not? So that's what I would be
Speaker 5: doing when it comes to picking a fund, having chats
Speaker 5: with friends, understanding what they're doing. Seeing a financial advisor
Speaker 5: if you're planning on being an active investor, I do
Speaker 5: think it's really important to consider advice if it's within
Speaker 5: your financial realm of capabilities. If not, obviously I get it.
Speaker 5: Many financial advisors are aligned with institutions though, so I
Speaker 5: would be quite aware of that when seeking financial advice
Speaker 5: here in Australia. I would say, not everyone's going to
Speaker 5: agree with me, but you guys will probably get a
Speaker 5: bit out of this. There's three types of financial advisor.
Speaker 5: There's insto advisors, so they're financial advisors who might work
Speaker 5: for a specific institution. So you might go down to
Speaker 5: one of the big four banks and say, hello, big
Speaker 5: four bank, I'd like to speak to one of your
Speaker 5: financial advisors. And that doesn't mean that they're not qualified.
Speaker 5: They absolutely are. But the product access they have is
Speaker 5: always within the silo of that bank. So if you
Speaker 5: went to Westpac, they're only going to offer you Westpac
Speaker 5: products because that makes sense right. Then you have the difference,
Speaker 5: and I think a lot of people get confused here
Speaker 5: because you go, are you independent or not? If you
Speaker 5: ask me that question, I hate answering it because I'm
Speaker 5: technically not an independent financial advisor because I am signed
Speaker 5: through a licensee. So you guys know that at the
Speaker 5: end of every single episode you would hear our disclaimer
Speaker 5: about general advice and that I am signed within Focus
Speaker 5: in Focus hold my financial services license and I pay
Speaker 5: them a fee each and every single year to make
Speaker 5: sure that I meet compliance that I'm doing the right thing.
Speaker 5: They're kind of like my financial guardian. They do a
Speaker 5: lot to make sure that I'm safe and my clients
Speaker 5: are safe. And they have what's called an APL so
Speaker 5: they have an approved products list, but that products list
Speaker 5: is not just one product, it's basically everything in the
Speaker 5: market that meets their criteria for being safe to invest
Speaker 5: in that they go, we'd be comfortable with you doing that. However,
Speaker 5: as a financial advisor working with them, if I then decide,
Speaker 5: all right, well, I've looked at Georgia king circumstances, and
Speaker 5: I've done a whole heap of research, and what I
Speaker 5: found is that her circumstances lead me down the track
Speaker 5: of picking this product that's not on my apl I
Speaker 5: can actually go have a chat within Focus be like,
Speaker 5: this is G's situation, this is the product I want
Speaker 5: to put her in. Here are the reasons, and they go,
Speaker 5: no problems at all. We will do what's called a
Speaker 5: non core approval, and so that is where they approve
Speaker 5: me to give advice to you because it's putting you
Speaker 5: in the best possible position, but it's not part of
Speaker 5: their core offering. So in Focus are always trying to
Speaker 5: put my clients in the best possible position where I
Speaker 5: can use whatever I like as long as I can
Speaker 5: justify it and put my clients in the best possible position.
Speaker 4: Right.
Speaker 5: Then you have traditional independent advisors. That's where they have
Speaker 5: their own license, so the compliance and all the management
Speaker 5: is on them and they run it and they can
Speaker 5: basically do whatever they would like. And there's always been
Speaker 5: this er towards wanting a financial advisor who's independent, But
Speaker 5: from my perspective, I just don't want someone who's aligned
Speaker 5: to a particular type of product. I want someone who
Speaker 5: doesn't take commission or my investment product at all, because
Speaker 5: I find that very unethical and I want someone to
Speaker 5: put me in the best possible position. So whether you
Speaker 5: go with someone who has a financial services license through
Speaker 5: a third party or you go with someone who's completely independent.
Speaker 5: To me, it's more about are you going to put
Speaker 5: me in the best possible position, do you have great reviews,
Speaker 5: have you put clients in the best possible position for
Speaker 5: a while, and are you not clipping the ticket on
Speaker 5: my investment product? Because to me, that's ikey. Does that
Speaker 5: make sense in terms of those three level they're not
Speaker 5: levels really, it's just like three ways that financial advisors
Speaker 5: exist here in a yep.
Speaker 2: Yeah, So that's a little bit of a tangent.
Speaker 5: So a few more cons of active investing before I
Speaker 5: let you go to a quick break because I think
Speaker 5: you need a breather after I'm like throwing.
Speaker 4: This at you.
Speaker 5: But it does cost more money for you to actively invest.
Speaker 5: As we said before, often fees for managed funds include
Speaker 5: management and administration because it does take a bit more.
Speaker 5: But remember that performance can greatly differ between managed funds,
Speaker 5: so the fees they charge are important to take into consideration.
Speaker 5: But as somebody who works with a lot of active investors,
Speaker 5: I'm happy to pay a higher fee for a better
Speaker 5: quality product. I'm happy to pay a higher fee for
Speaker 5: a better fund manager. So I think it's just all
Speaker 5: about not finding the cheapest but finding the best outcome
Speaker 5: for your particular circumstances. And then, obviously, active investing is
Speaker 5: a highly involved strategy, so you need to be quite
Speaker 5: aware of the time you need for stock analysis and
Speaker 5: keeping up with market movements if you choose this strategy
Speaker 5: and you're not going to go with a fund manager.
Speaker 5: But I reckon we can leave it there because I
Speaker 5: feel like, do you get what active investing is and.
Speaker 2: How it works and what that means?
Speaker 4: Yep, I get the gist. But on the other side,
Speaker 4: we're going to talk about passive investing.
Speaker 2: So let's let's do.
Speaker 4: It already, be straight back into it. Let's talk about
Speaker 4: passive investing, the exact opposite of active investing. Tell me
Speaker 4: all about it.
Speaker 2: We can work in seeing. Okay, yeah, there are two kinds.
Speaker 5: You don't have to be one or the other, but
Speaker 5: you will fall into one category. Doesn't mean you can't
Speaker 5: go across the road and have a turn at their path. Sure,
Speaker 5: it's all right, grass is always screener. You can go
Speaker 5: over see how they muld. I like that you can
Speaker 5: go over there whenever you want, but let's get into
Speaker 5: the needy gritty of it. Passive investing tends to suit
Speaker 5: those who would rather take more of a set and
Speaker 5: forget approach in saying that it's not set and forget.
Speaker 5: No type of investment is ever set and forget. You
Speaker 5: don't just get to drop it over there and then
Speaker 5: wait until you're sixty five. So set and forget is
Speaker 5: just a term that is used in the financial services industry.
Speaker 2: Because it's less active.
Speaker 5: Yeah, in general, I'd say that passive investors have a
Speaker 5: lower risk tolerance when compared to active investors, and passive
Speaker 5: investors are often investing for long periods of time, so
Speaker 5: they adopt a buy and hold tactic and they're very
Speaker 5: likely to go, you know what, I'm just trying to
Speaker 5: make use of compound interest over the long term, which
Speaker 5: makes sense. And a lot of people who passively invest
Speaker 5: will pick something like an index, so like a market index,
Speaker 5: or they might pick an ETF that has the top
Speaker 5: two hundred shares in Australia and they go, I'm happy
Speaker 5: with that because I'll get the average returns of those
Speaker 5: two hundred companies and I'm just going to track that
Speaker 5: over time feels a little bit more stable. They tend
Speaker 5: to keep an eye on the price, which is very nice,
Speaker 5: and ignore short term setbacks. So someone who is a
Speaker 5: passive investor wouldn't be too concerned about the market downturn
Speaker 5: we've currently gone through because I'd be like whatever, Like,
Speaker 5: over the long term, this will.
Speaker 2: All work out. But if you're an active investor, you
Speaker 2: might have been like, oh my gosh, like I've got
Speaker 2: to be way.
Speaker 5: More active in my investment portfolio and sell things or
Speaker 5: trade things, or you know, see an opportunity. It can
Speaker 5: actually be quite a frenzied period of time for active investors,
Speaker 5: whereas passive investors are very likely to be like, ah
Speaker 5: gking this you will pass. Yeah, And that's kind of
Speaker 5: the different mentalities they adopt. And you have to adopt
Speaker 5: those different mentalities to actually adhere to your strategy, right, Like,
Speaker 5: if you're a passive investor and you buy into that frenzy,
Speaker 5: you're compromising your strategy. If you're an active investor and
Speaker 5: you're like, yeah, this too shall pass, like your strategy
Speaker 5: is not going to be like you're meant to be
Speaker 5: buying and trading guys, You're shooting yourself in the foot.
Speaker 5: So there's different mentalities that surround these type of investing
Speaker 5: profiles and then kind of a money win. I suppose
Speaker 5: passive investing is a more low cost and low maintenance
Speaker 5: way to invest, which involves way less time analyzing the
Speaker 5: market and costs when it comes to buying and selling.
Speaker 5: Like you're not so concerned about brokerage or sell out
Speaker 5: fees because you're not really doing that all too often.
Speaker 4: Brilliant, Okay, So the low cost and low maintenance were
Speaker 4: definitely be one of the pros of passive investing. What
Speaker 4: else would be the potential positives?
Speaker 5: It involves less time commitment. As we said before, you
Speaker 5: don't have to jump in and become an automatic shared trader.
Speaker 5: It can be a way more affordable way to access
Speaker 5: the market. So, as you guys know, you can jump
Speaker 5: on and buy an ETF and that's a pretty easy
Speaker 5: entry point because you're not paying the fees that come
Speaker 5: alongside active fund managers. Also, passive investors generally have complete
Speaker 5: transparency over their investments. You know exactly where your money
Speaker 5: is and you can remove it and reinvest it as
Speaker 5: you please. It's very easy when you are a active
Speaker 5: investor with that third party in mind, sometimes it's a
Speaker 5: little less transparent. There are very transparent active options, please
Speaker 5: don't get me wrong, but there can be a lack
Speaker 5: of transparency sometimes. And sometimes that's just because the fund
Speaker 5: managers doing what.
Speaker 2: They do best. And that's okay. It's not saying they're
Speaker 2: doing the wrong thing.
Speaker 5: But if you are, I really want to be in
Speaker 5: control of this, and I want to hit a button
Speaker 5: and sell down all my shares if I wanted to,
Speaker 5: active might not be it because it can be a
Speaker 5: little bit more of an arduous task. And then you
Speaker 5: don't have to worry about whether you've chosen the right
Speaker 5: professional fund manager, because most of them don't actually have
Speaker 5: fund managers because they're just the top two hundred stocks
Speaker 5: in the country or the top two hundred tech companies,
Speaker 5: or it might be tracking an index of the average
Speaker 5: of the market, so it's less about human error and
Speaker 5: more about averages and indexes.
Speaker 4: Perfect, okay, tell me the negatives to passive investing.
Speaker 2: All right.
Speaker 5: So there are fewer products available that suit passive investing
Speaker 5: as an approach. Investors are basically limited to index funds
Speaker 5: like an index ETF and an index managed fund, keep
Speaker 5: in mind that just because we're talking about ETFs here
Speaker 5: in passive investment, that doesn't mean they aren't actively managed
Speaker 5: ETFs because there are. Just because you're looking up ETF
Speaker 5: does not mean that it will automatically be passive. You
Speaker 5: need to actually look at that. When I said an
Speaker 5: index ETF, though, that will always be a passive asset
Speaker 5: because indexes track the average of the average. Right, Yeah,
Speaker 5: you will also never beat the market at the end
Speaker 5: of the day. A passive approach means that you ride
Speaker 5: the lows and the highs of the market because you're
Speaker 5: tracking the market. But that also means you're never going
Speaker 5: to overperform it bonus of that though g not a pro,
Speaker 5: it's a con.
Speaker 2: You're never going to underperform the market.
Speaker 1: Either.
Speaker 2: That's good, that's not bad. So that's not bad.
Speaker 5: So V you did say earlier that we can do
Speaker 5: a little bit of both, but again or last star exactly.
Speaker 4: But if you are trying to decide which strategy works
Speaker 4: for you better, what kind of tips would you have?
Speaker 5: Look It really comes down to personal preference and what
Speaker 5: suits you and your investment goals. So as I gave
Speaker 5: you an example before of you might want all right,
Speaker 5: I'm really not willing to take a risk, but I'm
Speaker 5: so interested in this fee. All right, maybe a passive
Speaker 5: core approach makes the most, said Yen's for you. That
Speaker 5: doesn't mean you can't go and download Jazy's and have
Speaker 5: a little play with it on the side. Right, It's
Speaker 5: all about what makes sense to you. We need to
Speaker 5: talk about time frame, so that's going to be really important. Obviously,
Speaker 5: if we have a really long period of time, we
Speaker 5: don't need to take as much risk. If you're investing
Speaker 5: for the next forty years, gee, why would we risk
Speaker 5: it when we have time on outside, Like, let's make
Speaker 5: decisions that make sense for our actual situation, not what
Speaker 5: looks sexiest. Because I know a lot of you are
Speaker 5: going to look at this and go ohm active investing
Speaker 5: is glad sexy.
Speaker 2: I get it.
Speaker 5: That's why I also actively invest, But I have my
Speaker 5: head screwed on and I've picked a strategy that works
Speaker 5: for my personal circumstances. Then consider how old are you,
Speaker 5: how quickly do you need access to these funds, what
Speaker 5: are they actually going to be used for? And how
Speaker 5: confident are you around the markets? What does that actually mean?
Speaker 5: How is that going to work?
Speaker 2: For you.
Speaker 5: But at the end of the day, I would go
Speaker 5: back and listen to our episode on risk profiles. Understand
Speaker 5: that google how to maybe work out your own risk
Speaker 5: profile and write down your goals and what you're trying
Speaker 5: to achieve, and then pick your strategy. And once you've
Speaker 5: picked your strategy, then we can talk about product. The
Speaker 5: number one question I get around investing is what do
Speaker 5: I invest in?
Speaker 2: I don't know.
Speaker 5: There's a whole heap of steps we need to go
Speaker 5: through before we talk about product. And I can't even
Speaker 5: talk about products with you because I can't give you personality.
Speaker 4: Because it's illegal. It's illegal, right, Okay, perfect feed. This
Speaker 4: is one of our investing episodes. And if you are
Speaker 4: someone who's new to investing, or you're curious and you
Speaker 4: want to know more, we have been talking about investing
Speaker 4: for almost three years now.
Speaker 5: We haven't guessed what comes On the twentieth of September.
Speaker 2: I have a whole investing book.
Speaker 5: It is no secret that I'm shamelessly going to plug that.
Speaker 5: But I have been over the last few weeks recording
Speaker 5: the audiobook version of that, and I don't know.
Speaker 2: I've got a few tickets on myself.
Speaker 5: Oh look, I knew it was all right because I
Speaker 5: spent so much time, energy and effort and crying on it.
Speaker 2: I was like, oh, this is pretty good. Like I'm
Speaker 2: very happy with the product.
Speaker 5: Now I'm reading it aloud, I'm like, I think the
Speaker 5: community is gonna be happy with this product.
Speaker 4: I'm excited to listen to it.
Speaker 2: But I think that's all we have time.
Speaker 4: That is all we have time for. But let's wrap
Speaker 4: with the boring but important stuff, George. The advice shared
Speaker 4: on She's on the Money is general in nature and
Speaker 4: does not consider your individual circumstances. She's on the Money
Speaker 4: exists purely for educational purposes and should not be relied
Speaker 4: upon to make an investment or a financial decision. And
Speaker 4: we promise Victoria Divine and she Is on the Money
Speaker 4: are authorized representatives in Focused Securities Australia prior Toary Limited
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Speaker 5: You're a fancy go thank you so much on Friday, guys.
Speaker 4: You will Bye, guys,