1 00:00:00,640 --> 00:00:04,880 Speaker 1: Hello, my name's Santasha Nabananga Bamblet. I'm a proud yr 2 00:00:04,920 --> 00:00:08,639 Speaker 1: the Order Kernie Whoalbury and a waddery woman. And before 3 00:00:08,640 --> 00:00:11,119 Speaker 1: we get started on She's on the Money podcast, I 4 00:00:11,160 --> 00:00:14,280 Speaker 1: would like to acknowledge the traditional custodians of the land 5 00:00:14,400 --> 00:00:17,639 Speaker 1: of which this podcast is recorded on a wondery country, 6 00:00:18,120 --> 00:00:22,240 Speaker 1: acknowledging the elders, the ancestors and the next generation coming 7 00:00:22,280 --> 00:00:26,960 Speaker 1: through as this podcast is about connecting, empowering, knowledge sharing 8 00:00:27,040 --> 00:00:30,080 Speaker 1: and the storytelling of you to make a difference for 9 00:00:30,200 --> 00:00:32,599 Speaker 1: today and lasting impact for tomorrow. 10 00:00:33,280 --> 00:00:34,080 Speaker 2: Let's get into it. 11 00:00:34,760 --> 00:00:54,040 Speaker 3: She's on the Money, She's on the Money. 12 00:00:57,760 --> 00:01:00,880 Speaker 4: Hello, and welcome to She's on the Mune, the podcast 13 00:01:00,960 --> 00:01:04,800 Speaker 4: for millennials who want financial freedom. Today, we're chatting all 14 00:01:04,840 --> 00:01:09,039 Speaker 4: about passive investing, an extremely popular investing method which is 15 00:01:09,040 --> 00:01:12,000 Speaker 4: famous for its laid back approach and gradual returns over 16 00:01:12,040 --> 00:01:14,120 Speaker 4: the long term. But what do we need to be 17 00:01:14,200 --> 00:01:16,880 Speaker 4: mindful of and how exactly does it compare to its 18 00:01:16,920 --> 00:01:21,120 Speaker 4: exact opposite method of active investing. My name is Georgia 19 00:01:21,200 --> 00:01:25,080 Speaker 4: King and joining me is Victoria devine Phi. We spoke 20 00:01:25,080 --> 00:01:29,320 Speaker 4: about passive and active investing fairly recently a few monpular 21 00:01:30,760 --> 00:01:34,199 Speaker 4: very popular topic for anyone who did miss that episode 22 00:01:34,520 --> 00:01:36,880 Speaker 4: or who can't remember who might be a little bit 23 00:01:36,920 --> 00:01:40,360 Speaker 4: like me. Can you please remind us exactly what passive 24 00:01:40,400 --> 00:01:41,280 Speaker 4: investing looks like? 25 00:01:41,360 --> 00:01:43,400 Speaker 2: Do you reckon you were a goldfish in a past life? 26 00:01:43,480 --> 00:01:45,440 Speaker 4: I think maybe? Yeah? 27 00:01:45,600 --> 00:01:49,000 Speaker 5: No, no, like in the most endearing way. I don't 28 00:01:49,080 --> 00:01:51,840 Speaker 5: know goldfish was really mean. I'm sorry, but it's kind 29 00:01:51,880 --> 00:01:54,080 Speaker 5: of true. Sometimes I'm like, yeah, so this is a 30 00:01:54,080 --> 00:01:55,520 Speaker 5: good idea, and you're like, never heard of it, and 31 00:01:55,680 --> 00:01:59,520 Speaker 5: I'm literally told you yesterday. But okay, so let's recap this. 32 00:01:59,600 --> 00:02:01,200 Speaker 5: But I all, so, I think it's really important to 33 00:02:01,240 --> 00:02:03,840 Speaker 5: always start an episode on exactly the same page, because 34 00:02:03,840 --> 00:02:05,720 Speaker 5: if you haven't listened to it, like, you'll be on 35 00:02:05,760 --> 00:02:06,280 Speaker 5: the back foot. 36 00:02:06,440 --> 00:02:06,920 Speaker 2: I'm on that. 37 00:02:07,440 --> 00:02:10,280 Speaker 5: So passive investing in a nutshell is a buy and 38 00:02:10,480 --> 00:02:13,720 Speaker 5: hold investment strategy. So we buy our shares and then 39 00:02:13,760 --> 00:02:16,440 Speaker 5: we hold onto them for a long time, with very 40 00:02:16,520 --> 00:02:19,920 Speaker 5: little trading along the way. It's, from my perspective, a 41 00:02:20,000 --> 00:02:22,800 Speaker 5: very slow and steady approach to investing. And because we 42 00:02:22,840 --> 00:02:25,560 Speaker 5: are buying and holding, there are fewer fees involved. Money 43 00:02:25,600 --> 00:02:27,920 Speaker 5: win because you aren't selling and trading and being really 44 00:02:27,960 --> 00:02:31,799 Speaker 5: active all the time. It's the opposite of active investing, George, 45 00:02:31,800 --> 00:02:34,360 Speaker 5: which is far more involved and is ultimately over the 46 00:02:34,400 --> 00:02:36,560 Speaker 5: long term. It is great for people who have time 47 00:02:36,600 --> 00:02:39,160 Speaker 5: on their side, so not time when it comes to trading. 48 00:02:39,200 --> 00:02:41,840 Speaker 5: But we're talking about time in the market, because that's 49 00:02:41,880 --> 00:02:44,760 Speaker 5: way better than timing the market, Georgia King. 50 00:02:45,440 --> 00:02:47,160 Speaker 2: So if you're looking to invest over a. 51 00:02:47,120 --> 00:02:50,040 Speaker 5: Long period of time instead of just a few short years, 52 00:02:50,720 --> 00:02:53,560 Speaker 5: the aim isn't actually, when it comes to passive investing, 53 00:02:53,600 --> 00:02:55,800 Speaker 5: to beat the market, but actually just to ride the 54 00:02:55,800 --> 00:02:58,880 Speaker 5: ebbs and the flows of the market and experience consistent 55 00:02:58,919 --> 00:03:03,440 Speaker 5: gains along that investment journey. People who invest passively also 56 00:03:03,480 --> 00:03:06,400 Speaker 5: generally have a lower risk tolerance, especially when you compare 57 00:03:06,400 --> 00:03:09,360 Speaker 5: them to active investors who tend to take bigger swings 58 00:03:09,360 --> 00:03:10,040 Speaker 5: along the way. 59 00:03:10,520 --> 00:03:15,000 Speaker 4: Yep, okay, you mentioned it just their VD active investing. 60 00:03:15,320 --> 00:03:17,519 Speaker 4: It's the opposite of passive investing, and we did speak 61 00:03:17,560 --> 00:03:19,120 Speaker 4: about it on that episode. But just so I have 62 00:03:19,200 --> 00:03:22,440 Speaker 4: it really clear in my head, what actually is active investing. 63 00:03:22,520 --> 00:03:25,400 Speaker 2: So active investors, as you said, the opposite. 64 00:03:25,960 --> 00:03:29,200 Speaker 5: Well, passive investors adopted buy and hold strategy and they 65 00:03:29,240 --> 00:03:32,600 Speaker 5: don't trade often. Active investors they're there to try and 66 00:03:32,680 --> 00:03:36,080 Speaker 5: beat the market. They're chasing shorter term gains. They're selling 67 00:03:36,120 --> 00:03:39,000 Speaker 5: things when they're up, buying things when they're down, and 68 00:03:39,040 --> 00:03:42,720 Speaker 5: trying to be really good traders, which in theory sounds 69 00:03:42,760 --> 00:03:46,240 Speaker 5: like a good method. Yes, but the performance doesn't vary 70 00:03:46,400 --> 00:03:51,040 Speaker 5: over the long term that much. Surprisingly, Okay, Active investors 71 00:03:51,160 --> 00:03:54,400 Speaker 5: are far more hands on and therefore usually need to 72 00:03:54,440 --> 00:03:57,120 Speaker 5: be a little bit more experienced, and it is a 73 00:03:57,160 --> 00:03:59,840 Speaker 5: bit more of an expensive method, especially if you have 74 00:03:59,880 --> 00:04:02,520 Speaker 5: a fund manager helping you, because they are additional fees 75 00:04:02,520 --> 00:04:05,840 Speaker 5: and charges involved. But it honestly it can yield higher 76 00:04:05,840 --> 00:04:08,480 Speaker 5: short term returns. So it's up to you what you 77 00:04:08,560 --> 00:04:10,240 Speaker 5: find best for your situation. 78 00:04:10,560 --> 00:04:14,720 Speaker 4: Ryan, Okay, so active sounds exhausting, passive a little more relaxing. 79 00:04:14,880 --> 00:04:18,080 Speaker 5: I would agree with the more agree more Georgia King Vie. 80 00:04:18,120 --> 00:04:20,680 Speaker 4: When I was reading ahead of today's episode, because we 81 00:04:20,800 --> 00:04:23,080 Speaker 4: like to be prepared, we're reading my new book I 82 00:04:23,120 --> 00:04:26,440 Speaker 4: actually want it's good. Guys can confirm. 83 00:04:26,200 --> 00:04:28,599 Speaker 5: I'm like, this feels familiar these words you've put in 84 00:04:28,640 --> 00:04:29,600 Speaker 5: this doum. 85 00:04:31,080 --> 00:04:34,320 Speaker 4: So. Index investing was something that came up time and 86 00:04:34,400 --> 00:04:38,080 Speaker 4: time again as the most common form of passive investing 87 00:04:38,440 --> 00:04:41,160 Speaker 4: once again. I'm sure we've spoken about it before, but 88 00:04:41,240 --> 00:04:44,640 Speaker 4: what does index investing mean and why is that the 89 00:04:44,760 --> 00:04:46,360 Speaker 4: best way to invest passively? 90 00:04:46,560 --> 00:04:50,000 Speaker 5: So we've explained index investing before that from my perspective, 91 00:04:50,040 --> 00:04:52,159 Speaker 5: it's the average of the average, like you're just chasing 92 00:04:52,200 --> 00:04:54,800 Speaker 5: the average of the average. Index investing is all about 93 00:04:54,839 --> 00:04:59,080 Speaker 5: emulating the returns of the benchmark financial index, which sounds 94 00:04:59,120 --> 00:05:01,200 Speaker 5: really complicated, but but I promise it is not. It's 95 00:05:01,240 --> 00:05:03,520 Speaker 5: basically just going, all right, we're going to take these 96 00:05:03,560 --> 00:05:06,040 Speaker 5: top two hundred shares and then we are going to 97 00:05:06,120 --> 00:05:08,240 Speaker 5: put them all in one basket, and then you're going 98 00:05:08,320 --> 00:05:11,440 Speaker 5: to get the average returns of those top two hundred shares. 99 00:05:11,680 --> 00:05:14,840 Speaker 5: So say one is up ten percent, one's down ten percent, 100 00:05:14,839 --> 00:05:17,400 Speaker 5: and one's up two percent and one's down one percent. 101 00:05:17,600 --> 00:05:20,560 Speaker 5: You end up with an average, so you don't feel 102 00:05:20,560 --> 00:05:23,120 Speaker 5: the super highs and you don't feel the super lows. 103 00:05:23,160 --> 00:05:26,360 Speaker 5: You end up with an average return across the market. 104 00:05:26,560 --> 00:05:29,400 Speaker 5: And that's why I say it's the average of the average, 105 00:05:29,640 --> 00:05:31,919 Speaker 5: because you're not looking for like, oh my gosh, I 106 00:05:32,040 --> 00:05:35,160 Speaker 5: just want these, you know, specific shares, and the top 107 00:05:35,279 --> 00:05:38,200 Speaker 5: ten in this area. You're usually taking a bigger basket 108 00:05:38,480 --> 00:05:40,880 Speaker 5: so that you can track the index, and the index 109 00:05:41,000 --> 00:05:42,680 Speaker 5: is basically the average. 110 00:05:43,000 --> 00:05:43,840 Speaker 2: Does that make sense? 111 00:05:43,960 --> 00:05:44,480 Speaker 4: Makes sense? 112 00:05:44,480 --> 00:05:45,520 Speaker 2: I hope it makes sense. 113 00:05:45,960 --> 00:05:49,279 Speaker 5: It can be achieved by using so many different investment funds, 114 00:05:49,279 --> 00:05:53,200 Speaker 5: including managed funds, super funds, sometimes ETFs or exchange traded 115 00:05:53,240 --> 00:05:56,640 Speaker 5: funds as they're very commonly known in our community. Index 116 00:05:56,720 --> 00:05:59,880 Speaker 5: funds are comprised of. As I mentioned before, various stocks 117 00:06:00,080 --> 00:06:02,360 Speaker 5: make up an index. So another example of this, you 118 00:06:02,440 --> 00:06:04,440 Speaker 5: know how I said before, you might take the top 119 00:06:04,480 --> 00:06:08,599 Speaker 5: two hundred stocks. There's literally the ASX three hundred, which 120 00:06:08,720 --> 00:06:12,280 Speaker 5: is Australia's top three hundred companies. Or you might have 121 00:06:12,320 --> 00:06:14,040 Speaker 5: heard of the all odds. I feel like they talk 122 00:06:14,080 --> 00:06:16,640 Speaker 5: about that on the news basically every night at six pm. 123 00:06:16,640 --> 00:06:18,800 Speaker 5: They're like, and the all Lords. That's just a white 124 00:06:18,800 --> 00:06:20,480 Speaker 5: male being like, oh my gosh, look at this. If 125 00:06:20,480 --> 00:06:22,920 Speaker 5: we just go all odds, people would think it's really fancy, 126 00:06:22,960 --> 00:06:23,839 Speaker 5: but it's actually. 127 00:06:23,560 --> 00:06:25,360 Speaker 4: Just the top five hundred in Australia. 128 00:06:25,440 --> 00:06:27,960 Speaker 2: Yeah, there's nothing that complicated about it. 129 00:06:28,080 --> 00:06:29,960 Speaker 4: No, that's good to know. I feel like when I 130 00:06:30,000 --> 00:06:32,200 Speaker 4: hear all odds, I think of like the national rugby 131 00:06:32,200 --> 00:06:34,120 Speaker 4: team or something I do. All Lords. 132 00:06:34,120 --> 00:06:36,040 Speaker 2: I don't know, oh, I don't. 133 00:06:36,200 --> 00:06:39,080 Speaker 5: Remember when I was younger, and I would watch the 134 00:06:39,120 --> 00:06:42,400 Speaker 5: news and be really confused and basically zone out when 135 00:06:42,440 --> 00:06:44,880 Speaker 5: they're like, oh, the stock market today, and then they'd 136 00:06:44,920 --> 00:06:47,159 Speaker 5: like put this chart up and they'd have like the 137 00:06:47,200 --> 00:06:49,680 Speaker 5: green arrow up and something like the red arrow down 138 00:06:49,680 --> 00:06:52,839 Speaker 5: and then be like, the all Lords is trending xyzer, 139 00:06:52,960 --> 00:06:54,839 Speaker 5: and you'd just be like, what are you talking about? 140 00:06:55,160 --> 00:06:56,680 Speaker 5: But if you hear it on the news, the all 141 00:06:56,720 --> 00:06:59,560 Speaker 5: Odds just means the top five hundred companies in Australia 142 00:06:59,600 --> 00:07:02,360 Speaker 5: and it's the average, and the all Oords is seen 143 00:07:02,440 --> 00:07:05,840 Speaker 5: as a pretty good indicator of the health of our country, 144 00:07:06,000 --> 00:07:09,440 Speaker 5: right because five hundred companies in Australia is a lot 145 00:07:09,440 --> 00:07:11,640 Speaker 5: of companies, right, like the top five hundred. We're not 146 00:07:11,720 --> 00:07:13,360 Speaker 5: a massive country at the end. 147 00:07:13,280 --> 00:07:13,760 Speaker 2: Of the day. 148 00:07:14,280 --> 00:07:16,960 Speaker 5: So if the all Odds is down, that means the 149 00:07:17,000 --> 00:07:19,840 Speaker 5: economy is a little bit down. It's an indicator of 150 00:07:19,920 --> 00:07:22,920 Speaker 5: how we're doing as a society, right, So if the 151 00:07:22,960 --> 00:07:25,520 Speaker 5: all Odds is up, the economy must be doing pretty well. 152 00:07:25,760 --> 00:07:29,120 Speaker 5: If things are happening in Australia in their negative like COVID, 153 00:07:29,720 --> 00:07:32,120 Speaker 5: it would be expected that the all ords might be down. 154 00:07:32,560 --> 00:07:35,360 Speaker 5: So it's an indicator of the economy, and how it's 155 00:07:35,400 --> 00:07:37,880 Speaker 5: performing today is basically what I would see it as. 156 00:07:38,160 --> 00:07:38,960 Speaker 4: Okay, that's quite hot. 157 00:07:38,960 --> 00:07:39,800 Speaker 2: You can also buy it. 158 00:07:39,880 --> 00:07:42,240 Speaker 4: So how do you buy it? Though? So is that 159 00:07:42,520 --> 00:07:45,640 Speaker 4: when we're buying into an index fund, are we buying 160 00:07:45,720 --> 00:07:47,800 Speaker 4: a small portion of five hundred companies? 161 00:07:48,120 --> 00:07:48,720 Speaker 1: Yes? And no. 162 00:07:48,840 --> 00:07:51,200 Speaker 5: So in ETF, I mean sidetrack, we've done a whole 163 00:07:51,200 --> 00:07:53,720 Speaker 5: investment series. Please go back and listen to that. I 164 00:07:53,720 --> 00:07:55,480 Speaker 5: mean you were on it, so can. I hope you 165 00:07:55,560 --> 00:07:58,120 Speaker 5: remember it. But when it comes to an ETF, that 166 00:07:58,240 --> 00:08:00,640 Speaker 5: is actually bought and sold in exactly the same way 167 00:08:00,640 --> 00:08:02,440 Speaker 5: as share was. So say you want to buy a 168 00:08:02,440 --> 00:08:05,080 Speaker 5: Wooly's share and you go on to your platform. You 169 00:08:05,160 --> 00:08:07,560 Speaker 5: might pick as shares is or a superhero, or you 170 00:08:07,640 --> 00:08:09,880 Speaker 5: might be going to a self well, because it doesn't matter. 171 00:08:09,920 --> 00:08:12,560 Speaker 5: You're on a trading platform and you've decided to buy 172 00:08:12,600 --> 00:08:14,800 Speaker 5: a share. You go and you go to that profile 173 00:08:14,880 --> 00:08:17,720 Speaker 5: you pick I would like to buy one share of Woolies, right, 174 00:08:17,840 --> 00:08:21,160 Speaker 5: So you've done that. Transaction to buy an ETF is 175 00:08:21,240 --> 00:08:25,040 Speaker 5: exactly the same because ETFs actually listed in exactly the 176 00:08:25,080 --> 00:08:28,640 Speaker 5: same way as share is on the share market. However, 177 00:08:28,760 --> 00:08:32,600 Speaker 5: an exchange traded fund is basically just this big bucket 178 00:08:32,640 --> 00:08:36,640 Speaker 5: of shares. So instead of purchasing a Wooly's share directly, 179 00:08:36,800 --> 00:08:39,040 Speaker 5: you would be like, all right, well, a ETF is 180 00:08:39,080 --> 00:08:41,000 Speaker 5: more in line with my goals and values at this 181 00:08:41,040 --> 00:08:44,120 Speaker 5: point in time, and I would like some more diversification 182 00:08:44,480 --> 00:08:47,200 Speaker 5: because if you bought that one Wooly's share, you're just 183 00:08:47,240 --> 00:08:49,440 Speaker 5: buying into that one company. And you know how we're 184 00:08:49,440 --> 00:08:51,880 Speaker 5: talking about ebbs and flows of the market. If Woolies 185 00:08:51,960 --> 00:08:54,120 Speaker 5: goes down five percent, you're going to feel that entire 186 00:08:54,200 --> 00:08:56,240 Speaker 5: five percent. If it goes up ten percent, you're going 187 00:08:56,280 --> 00:08:59,440 Speaker 5: to feel that. But you also don't have any exposure 188 00:08:59,480 --> 00:09:03,440 Speaker 5: to any area of the market, right, So an ETF 189 00:09:03,760 --> 00:09:07,000 Speaker 5: is a good way of getting instant diversification. And when 190 00:09:07,040 --> 00:09:10,559 Speaker 5: we say diversification, women not putting our eggs in one basket. 191 00:09:10,600 --> 00:09:14,640 Speaker 5: So you're getting instantly a range of different share options. 192 00:09:14,679 --> 00:09:16,920 Speaker 5: So you'd be getting maybe some Woolies, but you'd also 193 00:09:16,960 --> 00:09:19,440 Speaker 5: be getting some other areas. So you might be getting 194 00:09:19,480 --> 00:09:21,440 Speaker 5: some mining depending on what you're up to. You might 195 00:09:21,440 --> 00:09:24,600 Speaker 5: be getting some infrastructure, you might be getting some clothing businesses, 196 00:09:24,840 --> 00:09:26,600 Speaker 5: so you're not just picking one. 197 00:09:26,480 --> 00:09:27,480 Speaker 2: Area of the market. 198 00:09:27,559 --> 00:09:29,720 Speaker 5: But when you buy an ETF, you're actually putting your 199 00:09:29,720 --> 00:09:33,520 Speaker 5: money into a big bucket, and then that bucket buys 200 00:09:33,559 --> 00:09:37,560 Speaker 5: shares because obviously a share can be quite expensive, like 201 00:09:37,640 --> 00:09:39,520 Speaker 5: some shares and more than one hundred dollars, some are 202 00:09:39,600 --> 00:09:42,760 Speaker 5: less than a dollar, and across the market, these are 203 00:09:42,800 --> 00:09:45,160 Speaker 5: ebbed and flowed. And if you've got five bucks and 204 00:09:45,200 --> 00:09:48,560 Speaker 5: you're putting it into an ETF, that doesn't necessarily mean 205 00:09:48,880 --> 00:09:51,280 Speaker 5: that you'd be able to buy the shares directly. So 206 00:09:51,320 --> 00:09:55,040 Speaker 5: it's basically, in a way, fractional investing, but you're just 207 00:09:55,040 --> 00:09:58,920 Speaker 5: getting bits of the entire market, and it gives you 208 00:09:58,960 --> 00:10:02,080 Speaker 5: one better diversify. But it also means that you don't 209 00:10:02,120 --> 00:10:04,880 Speaker 5: have to be as active in your strategy, and they are, 210 00:10:05,160 --> 00:10:08,320 Speaker 5: in our shees on the money community a very popular 211 00:10:08,360 --> 00:10:11,560 Speaker 5: way of getting into the market and picking an asset 212 00:10:11,760 --> 00:10:14,640 Speaker 5: that you go. I'm really comfortable with this because I'm 213 00:10:14,640 --> 00:10:16,600 Speaker 5: not the one always calling the shots. 214 00:10:16,640 --> 00:10:17,600 Speaker 2: Now, does that make sense? 215 00:10:17,679 --> 00:10:17,880 Speaker 6: Yeah? 216 00:10:17,960 --> 00:10:20,120 Speaker 5: Yeah, a bit of a side track because I know 217 00:10:20,200 --> 00:10:22,320 Speaker 5: that none of that was in our script for today. 218 00:10:22,720 --> 00:10:24,800 Speaker 5: I feel like it's important to talk about this stuff, 219 00:10:24,800 --> 00:10:26,920 Speaker 5: and I know we've talked about it before, but to 220 00:10:26,960 --> 00:10:28,880 Speaker 5: be honest, you guys need to hear it over and 221 00:10:28,960 --> 00:10:31,840 Speaker 5: over again, so it really reiterates and you become really 222 00:10:31,840 --> 00:10:34,280 Speaker 5: comfortable with it, and it kind of just becomes second nature. 223 00:10:34,280 --> 00:10:36,199 Speaker 4: And that's the point of what we do, right. Yeah, 224 00:10:36,200 --> 00:10:39,480 Speaker 4: I couldn't agree more so. Beyond that, though, are all 225 00:10:39,480 --> 00:10:42,160 Speaker 4: index funds ETFs or not? 226 00:10:42,160 --> 00:10:42,319 Speaker 1: Not? 227 00:10:42,360 --> 00:10:43,840 Speaker 4: Necessarily tell me, mom. 228 00:10:43,800 --> 00:10:45,800 Speaker 5: So no, at the end of the day, but I 229 00:10:45,840 --> 00:10:49,439 Speaker 5: feel like people in our community are often using them interchangeably. 230 00:10:49,520 --> 00:10:52,680 Speaker 5: But not all ETF funds and not all index funds 231 00:10:52,679 --> 00:10:54,640 Speaker 5: are ETF, but most of them. 232 00:10:54,679 --> 00:10:55,880 Speaker 2: Are in Australia. 233 00:10:55,920 --> 00:10:56,240 Speaker 4: Okay. 234 00:10:56,360 --> 00:10:58,960 Speaker 5: The key difference between the two is that in ETF, 235 00:10:59,080 --> 00:11:01,320 Speaker 5: as I mentioned before, can be traded on the share 236 00:11:01,400 --> 00:11:04,839 Speaker 5: market like a stock, but an index fund can only 237 00:11:04,880 --> 00:11:07,800 Speaker 5: be bought or sold at the end of a trading day, 238 00:11:08,200 --> 00:11:10,760 Speaker 5: so it can only be bought or sold once a day. 239 00:11:11,160 --> 00:11:14,840 Speaker 5: So not all indfs are index funds, but most index 240 00:11:14,920 --> 00:11:15,920 Speaker 5: funds are ETFs. 241 00:11:16,000 --> 00:11:16,840 Speaker 2: Does that make sense? 242 00:11:16,880 --> 00:11:17,360 Speaker 4: It does? 243 00:11:17,600 --> 00:11:19,240 Speaker 2: It doesn't? It does, it doesn't. 244 00:11:19,600 --> 00:11:22,960 Speaker 5: So basically, an ETF could be a plethora of things, 245 00:11:22,960 --> 00:11:25,839 Speaker 5: and ETF is an exchange traded fund, as I said before, 246 00:11:25,880 --> 00:11:28,600 Speaker 5: a bucket. In that bucket, it could be an index 247 00:11:28,640 --> 00:11:31,959 Speaker 5: of just the top five hundred, or the ETF might 248 00:11:32,000 --> 00:11:35,200 Speaker 5: be a bit more active and it could actually have 249 00:11:35,320 --> 00:11:37,840 Speaker 5: you know, a different sector of the market in it, 250 00:11:37,840 --> 00:11:40,280 Speaker 5: where it just has ten stocks of you know, tech 251 00:11:40,320 --> 00:11:42,199 Speaker 5: companies that you want to invest in, and they might 252 00:11:42,240 --> 00:11:44,520 Speaker 5: not just be the top there might be a certain 253 00:11:44,600 --> 00:11:47,640 Speaker 5: select few that you want to purchase. I've mentioned it 254 00:11:47,640 --> 00:11:50,520 Speaker 5: before on the podcast. There's also an ETF you can buy. 255 00:11:50,559 --> 00:11:53,200 Speaker 5: I just think it's really cool because the world is wild, 256 00:11:53,640 --> 00:11:55,640 Speaker 5: or I think the world is wild, and I obviously 257 00:11:55,679 --> 00:11:58,720 Speaker 5: love investing, but there's literally an ETF George that you 258 00:11:58,760 --> 00:12:00,640 Speaker 5: can buy that only has women on the board of 259 00:12:00,679 --> 00:12:02,320 Speaker 5: the companies that you're investing in. 260 00:12:02,440 --> 00:12:03,720 Speaker 2: Really, isn't it cool? 261 00:12:04,120 --> 00:12:07,679 Speaker 5: So even if you are a passive investor, I feel 262 00:12:07,679 --> 00:12:10,840 Speaker 5: like in twenty twenty two, you can still find ETFs 263 00:12:11,080 --> 00:12:15,040 Speaker 5: and passive investments that align to your personal values, Whereas 264 00:12:15,200 --> 00:12:18,000 Speaker 5: historically and when I started in the industry, like these 265 00:12:18,000 --> 00:12:21,120 Speaker 5: things weren't as accessible. I remember sitting down with clients 266 00:12:21,120 --> 00:12:23,400 Speaker 5: and being like, well, if you want your values upheld, 267 00:12:23,440 --> 00:12:26,439 Speaker 5: we actually need an erect investment portfolio and that small 268 00:12:26,520 --> 00:12:29,719 Speaker 5: time energy effort money like it's much harder to do, 269 00:12:29,920 --> 00:12:32,679 Speaker 5: whereas nowadays it's like, all right, well, G and I've 270 00:12:32,679 --> 00:12:35,800 Speaker 5: explained this on the podcast before about doing your values 271 00:12:35,840 --> 00:12:38,439 Speaker 5: first and then working out what type of strategy works 272 00:12:38,440 --> 00:12:40,920 Speaker 5: for you and whittling it down kind of like an 273 00:12:41,000 --> 00:12:43,959 Speaker 5: upside down pyramid so that you actually end up at 274 00:12:44,000 --> 00:12:46,760 Speaker 5: one solution. And my new book, not to promote it 275 00:12:46,800 --> 00:12:48,720 Speaker 5: too much, but my new book literally takes you down 276 00:12:48,720 --> 00:12:50,680 Speaker 5: the garden path of doing that because I'm like, all right, well, 277 00:12:50,720 --> 00:12:51,760 Speaker 5: what's your risk tolerance? 278 00:12:52,040 --> 00:12:53,959 Speaker 2: What are your values? How does this work? 279 00:12:54,080 --> 00:12:57,320 Speaker 5: Because I think that especially as women, we get really 280 00:12:57,480 --> 00:13:00,880 Speaker 5: overwhelmed and we get analysis paralysis, and I know you 281 00:13:00,960 --> 00:13:03,720 Speaker 5: get this in particular where I'm like, gee, like start 282 00:13:03,760 --> 00:13:04,920 Speaker 5: investing you like I don't know what. 283 00:13:04,920 --> 00:13:06,840 Speaker 2: To pick, Like I don't know how to do it. 284 00:13:07,320 --> 00:13:11,040 Speaker 5: And to be honest, we need to be reverse engineering 285 00:13:11,080 --> 00:13:13,240 Speaker 5: it in a way where it's not like, gee, don't 286 00:13:13,280 --> 00:13:15,679 Speaker 5: tell me you don't know what to pick, because if 287 00:13:15,720 --> 00:13:18,400 Speaker 5: you've done your process, it will actually tell you what 288 00:13:18,520 --> 00:13:21,079 Speaker 5: to pick. Like you'll go through the process and you'll 289 00:13:21,080 --> 00:13:23,440 Speaker 5: answer questions like, g do you want to be really involved? 290 00:13:23,480 --> 00:13:25,320 Speaker 5: And you'll be like, no, all right, well maybe a 291 00:13:25,400 --> 00:13:29,400 Speaker 5: passive portfolio is better for you. Let's look at passive options, 292 00:13:29,480 --> 00:13:31,199 Speaker 5: Whereas if I put them all on the table, you're 293 00:13:31,200 --> 00:13:32,920 Speaker 5: gonna be like, oh my gosh, I'm so overwhelmed. Do 294 00:13:32,960 --> 00:13:35,240 Speaker 5: I go direct or do I not? Whereas if your 295 00:13:35,240 --> 00:13:38,680 Speaker 5: friend is saying, oh, I'm actually a passive investor, you know, 296 00:13:38,800 --> 00:13:41,600 Speaker 5: really low risk tolerance. If they're then saying, oh, I 297 00:13:41,640 --> 00:13:44,040 Speaker 5: went and bought all these direct shares, you'd be like, wait, 298 00:13:44,120 --> 00:13:47,120 Speaker 5: what that doesn't actually align to what your strategy should 299 00:13:47,160 --> 00:13:50,040 Speaker 5: be based on your personal values. Right, anyway, let's not 300 00:13:50,120 --> 00:13:52,920 Speaker 5: go on and on. This is all about passive investment. Yeah, 301 00:13:52,920 --> 00:13:55,840 Speaker 5: not how to shut together an investment portfolio in general. 302 00:13:56,080 --> 00:13:56,920 Speaker 5: That's covered in my. 303 00:13:56,880 --> 00:13:59,240 Speaker 4: Book exactly right, which you could pick up at dimmis 304 00:13:59,360 --> 00:14:01,120 Speaker 4: nineteen ninety and I don't know how much it is, 305 00:14:01,160 --> 00:14:04,520 Speaker 4: but thank you, you know what I think. On Amazon 306 00:14:04,600 --> 00:14:05,800 Speaker 4: it goes down to nineteen dollars. 307 00:14:05,880 --> 00:14:09,679 Speaker 5: Get it onside it whin What would you say. 308 00:14:09,520 --> 00:14:12,800 Speaker 4: The main goal of passive investing is? Is it just 309 00:14:12,840 --> 00:14:13,920 Speaker 4: to get rich? 310 00:14:14,400 --> 00:14:18,479 Speaker 5: Get rich, get rich, retire? From my perspective, it's genuinely 311 00:14:18,600 --> 00:14:21,880 Speaker 5: just wealth creation, like it is long term sustainable wealth creation. 312 00:14:22,400 --> 00:14:25,720 Speaker 5: We know that not investing is a choice, like it's 313 00:14:25,760 --> 00:14:28,080 Speaker 5: actually quite funny when people are like, oh, like, I'm 314 00:14:28,120 --> 00:14:30,200 Speaker 5: not ready. I don't want to do it, but I 315 00:14:30,240 --> 00:14:33,000 Speaker 5: think you need to actually take the plunge into investing 316 00:14:33,040 --> 00:14:36,120 Speaker 5: if it makes sense for you, because having money in 317 00:14:36,200 --> 00:14:39,640 Speaker 5: cash is actually going to put you backwards. And I 318 00:14:39,640 --> 00:14:41,960 Speaker 5: did a little comparison while I was on the plane 319 00:14:42,000 --> 00:14:44,080 Speaker 5: coming back from America, because this is the kind of 320 00:14:44,080 --> 00:14:46,280 Speaker 5: stuff I get up to when I'm bored or just shop, 321 00:14:46,640 --> 00:14:48,960 Speaker 5: and I was like, I wonder what ten grand invested 322 00:14:49,800 --> 00:14:52,680 Speaker 5: ten years ago would look like compared to keeping it 323 00:14:52,720 --> 00:14:55,640 Speaker 5: in a savings account, Like the current value of a dollar, 324 00:14:55,920 --> 00:14:58,960 Speaker 5: so we know that a dollar today is not worth 325 00:14:59,000 --> 00:15:02,160 Speaker 5: what a dollar tomorrow is worth because obviously, when it 326 00:15:02,200 --> 00:15:05,080 Speaker 5: comes to inflation and CPI and the rising cost of living, 327 00:15:05,680 --> 00:15:08,200 Speaker 5: what a dollar can buy me today is not what 328 00:15:08,280 --> 00:15:11,040 Speaker 5: a dollar can buy me tomorrow. It's usually less. So 329 00:15:11,080 --> 00:15:12,880 Speaker 5: I don't have the exact stats in front of me, 330 00:15:12,920 --> 00:15:16,560 Speaker 5: which I absolutely should, But ten thousand dollars ten years 331 00:15:16,600 --> 00:15:20,640 Speaker 5: ago invested, I think was worth eighteen thousand dollars, and 332 00:15:20,720 --> 00:15:23,440 Speaker 5: ten thousand dollars just in a savings account was worth 333 00:15:23,440 --> 00:15:27,000 Speaker 5: six and a half thousand. So you're literally losing money. 334 00:15:27,080 --> 00:15:28,920 Speaker 5: And I'm not saying that you wouldn't still have that 335 00:15:29,000 --> 00:15:31,040 Speaker 5: ten thousand dollars in your heads. You're probably like the 336 00:15:31,240 --> 00:15:33,280 Speaker 5: if I put ten thousand dollars in an account ten 337 00:15:33,360 --> 00:15:35,960 Speaker 5: years ago and didn't touch it, ten thousand dollars should 338 00:15:36,000 --> 00:15:38,800 Speaker 5: still be there. Yes, but it will not buy you 339 00:15:38,880 --> 00:15:41,080 Speaker 5: as much as it would have ten years ago. So 340 00:15:41,200 --> 00:15:43,040 Speaker 5: ten years ago, you know you would have gone to 341 00:15:43,080 --> 00:15:45,880 Speaker 5: the supermarket and filled up a grocery tolley with one 342 00:15:45,920 --> 00:15:49,040 Speaker 5: hundred dollars worth of groceries. It would be far more 343 00:15:49,160 --> 00:15:52,240 Speaker 5: full than it would be today. Does that make answer? 344 00:15:52,360 --> 00:15:55,400 Speaker 5: It's all about inflation. It's not necessarily change. Gee, you 345 00:15:55,400 --> 00:15:57,760 Speaker 5: will lose money, Like, no one's going to come and 346 00:15:57,760 --> 00:15:59,280 Speaker 5: take money out of your account put in the bin 347 00:15:59,280 --> 00:16:01,840 Speaker 5: because you have it in savings. It's gonna stay there. 348 00:16:01,880 --> 00:16:05,240 Speaker 5: But ten thousand dollars loses value. And I'm not talking 349 00:16:05,280 --> 00:16:07,640 Speaker 5: monetary value. I'm talking about the power of what it 350 00:16:07,680 --> 00:16:10,960 Speaker 5: can buy you. So it's actually putting you behind by 351 00:16:11,040 --> 00:16:13,720 Speaker 5: not investing. At the end of the day, it's really powerful, 352 00:16:13,800 --> 00:16:16,400 Speaker 5: but it's also really sad when we, you know, come 353 00:16:16,440 --> 00:16:18,440 Speaker 5: down to it, because at the end of the day, 354 00:16:19,000 --> 00:16:21,600 Speaker 5: you're putting yourself behind by not putting investing. 355 00:16:21,640 --> 00:16:22,280 Speaker 2: As a priority. 356 00:16:22,440 --> 00:16:26,000 Speaker 4: Yeah, well that has blown my mind. It's crazy talking 357 00:16:26,000 --> 00:16:26,440 Speaker 4: about that. 358 00:16:26,480 --> 00:16:30,240 Speaker 5: We are talking away, you are not a podcasts, but 359 00:16:30,400 --> 00:16:33,040 Speaker 5: it's crazy to think what that means. And it's also, 360 00:16:33,560 --> 00:16:36,160 Speaker 5: like I've spoken about this on the podcast before. When 361 00:16:36,160 --> 00:16:40,600 Speaker 5: it comes to human behavior, humans are literally wired in 362 00:16:40,640 --> 00:16:43,600 Speaker 5: a linear way. So to you, one plus one equals 363 00:16:43,600 --> 00:16:46,320 Speaker 5: to two plus two equals four. Right, But if I 364 00:16:46,480 --> 00:16:49,960 Speaker 5: talk to you about compounding interest on paper, it looks 365 00:16:50,000 --> 00:16:52,920 Speaker 5: really sexy, but your mind doesn't work that way. Your 366 00:16:53,000 --> 00:16:56,760 Speaker 5: mind goes in a really straight line slowly up, whereas 367 00:16:56,760 --> 00:16:59,320 Speaker 5: compounding interest it kind of goes in that really straight 368 00:16:59,360 --> 00:17:02,240 Speaker 5: line going up and then it starts to peak as 369 00:17:02,360 --> 00:17:06,080 Speaker 5: compounding really takes power. And that's something that it's not 370 00:17:06,119 --> 00:17:08,960 Speaker 5: because we're silly. It's because of the way our brains 371 00:17:08,960 --> 00:17:12,280 Speaker 5: are wired that we can't really comprehend or harness that, 372 00:17:12,560 --> 00:17:14,879 Speaker 5: so it takes us a while to actually go hold 373 00:17:14,880 --> 00:17:17,200 Speaker 5: on the power of that is actually wild and this 374 00:17:17,240 --> 00:17:19,280 Speaker 5: is how it works, and this is how it impacts me. 375 00:17:19,520 --> 00:17:21,880 Speaker 5: It's not because we're not explaining it clearly enough. It's 376 00:17:21,880 --> 00:17:25,959 Speaker 5: because our brains are literally wired to not properly understand that. 377 00:17:26,119 --> 00:17:28,359 Speaker 5: Because at the end of the day, we're creatures who 378 00:17:28,400 --> 00:17:31,440 Speaker 5: are just trying to survive, and surviving is very different 379 00:17:31,480 --> 00:17:34,760 Speaker 5: to thriving. Thriving is a choice. Thriving is something you 380 00:17:34,760 --> 00:17:38,120 Speaker 5: actually have to put active energy into doing, and investing 381 00:17:38,200 --> 00:17:40,080 Speaker 5: is part of that journey. Does that make sense? 382 00:17:40,119 --> 00:17:42,480 Speaker 4: That does make sense. I wonder if maybe all the 383 00:17:42,480 --> 00:17:44,720 Speaker 4: shees on the money listeners in one hundred years time 384 00:17:44,760 --> 00:17:46,760 Speaker 4: we check back in, most of us will be dead. 385 00:17:47,000 --> 00:17:49,119 Speaker 4: Our brains might have changed, though, and maybe we'll grasp 386 00:17:49,119 --> 00:17:50,800 Speaker 4: it better anyway, I hope so. 387 00:17:51,080 --> 00:17:54,760 Speaker 5: But get essentially summary of that question that you asked me. Yes, 388 00:17:54,840 --> 00:17:57,800 Speaker 5: it is to create wealth, but it is also really 389 00:17:57,840 --> 00:18:00,800 Speaker 5: important to make sure that you're on that journey because 390 00:18:01,119 --> 00:18:03,800 Speaker 5: investing is a priority. And we're not saying that passive 391 00:18:03,840 --> 00:18:06,160 Speaker 5: investing is the way. We're just saying here's another way 392 00:18:06,160 --> 00:18:08,080 Speaker 5: to do it. Because at the end of the day, 393 00:18:08,359 --> 00:18:11,520 Speaker 5: t l DA investing is really important and if you 394 00:18:11,600 --> 00:18:14,800 Speaker 5: have a job and a super account, you're already an investor. 395 00:18:14,880 --> 00:18:16,199 Speaker 2: Georgia King, beautiful V. 396 00:18:16,359 --> 00:18:18,280 Speaker 4: I think now is probably the right time to take 397 00:18:18,320 --> 00:18:21,399 Speaker 4: a little break. Let that a little break in, but 398 00:18:21,440 --> 00:18:24,480 Speaker 4: on the other side to give me be chatting about 399 00:18:24,520 --> 00:18:27,640 Speaker 4: the best parts of passive investing, what the returns really 400 00:18:27,680 --> 00:18:30,800 Speaker 4: look like, and how you can actually set yourself up 401 00:18:30,840 --> 00:18:33,200 Speaker 4: with one. So please don't go anywhere. What a time, 402 00:18:38,080 --> 00:18:41,720 Speaker 4: let's dive back in V tell me what the returns 403 00:18:41,840 --> 00:18:44,240 Speaker 4: actually look like when we're investing this way, because my 404 00:18:44,320 --> 00:18:47,440 Speaker 4: mind would say, surely active investing, because it's so much 405 00:18:47,440 --> 00:18:50,320 Speaker 4: more involved, we're trying to beat the trends of the market. 406 00:18:50,640 --> 00:18:53,520 Speaker 4: Surely that is going to yield better returns. But is 407 00:18:53,560 --> 00:18:54,240 Speaker 4: that the case? 408 00:18:54,440 --> 00:18:54,760 Speaker 6: All right? 409 00:18:54,800 --> 00:18:58,160 Speaker 5: Good question, Georgia King, because so many times it comes 410 00:18:58,240 --> 00:19:00,600 Speaker 5: up in our community. Should I be active? Should be passive? 411 00:19:00,600 --> 00:19:02,600 Speaker 5: Should I buy an ETA? Should I buy direct shares? 412 00:19:02,640 --> 00:19:04,960 Speaker 5: What's the difference? Should it be chess sponsored? Does chess 413 00:19:04,960 --> 00:19:07,920 Speaker 5: sponsorship matter? Tild I No, But it's one of those 414 00:19:07,960 --> 00:19:11,200 Speaker 5: things where the debate has spawned side arguments like whether 415 00:19:11,320 --> 00:19:14,480 Speaker 5: some passive funds are actually really active management in disguise, 416 00:19:14,560 --> 00:19:17,480 Speaker 5: or whether they should be debated as reframing along high 417 00:19:17,480 --> 00:19:19,879 Speaker 5: cost versus low cost funds. I get's a pickle of 418 00:19:19,960 --> 00:19:22,480 Speaker 5: a topic because you know, the deeper you get into it, 419 00:19:22,520 --> 00:19:24,359 Speaker 5: the more meaning it has. But at the end of 420 00:19:24,359 --> 00:19:27,199 Speaker 5: the day, the good news is one you don't have 421 00:19:27,280 --> 00:19:29,680 Speaker 5: to be active or passive. You can be active and passive. 422 00:19:29,840 --> 00:19:32,000 Speaker 5: I think I've discussed before. As much as I'm not 423 00:19:32,040 --> 00:19:34,960 Speaker 5: allowed to tell you what I own legally, I can 424 00:19:35,000 --> 00:19:37,399 Speaker 5: tell you that I have a mainly passive approach, and 425 00:19:37,440 --> 00:19:40,199 Speaker 5: then I'm active in some areas because it interests me. 426 00:19:40,560 --> 00:19:42,320 Speaker 5: And you could do something similar. You could be like, 427 00:19:42,359 --> 00:19:44,960 Speaker 5: all right, well, my core portfolio is passive, and then 428 00:19:45,040 --> 00:19:47,600 Speaker 5: I can be a little bit active when it comes 429 00:19:47,640 --> 00:19:50,960 Speaker 5: to the returns, though, which I think is people's main priority, right. 430 00:19:51,040 --> 00:19:52,480 Speaker 5: They're like, well, if I'm gonna win best, I want 431 00:19:52,480 --> 00:19:56,520 Speaker 5: the highest returns. Ever, with more risk comes more return. 432 00:19:56,840 --> 00:20:00,440 Speaker 5: But often from my perspective, it's about making hey, while 433 00:20:00,480 --> 00:20:02,560 Speaker 5: the sun is shining, and if the sun is shining 434 00:20:02,600 --> 00:20:07,000 Speaker 5: and we are able to create consistent returns. From my perspective, 435 00:20:07,040 --> 00:20:10,639 Speaker 5: I much prefer consistent returns over the highest returns that 436 00:20:10,760 --> 00:20:14,960 Speaker 5: are maybe possible because nothing's guaranteed. Right. But according to 437 00:20:15,080 --> 00:20:19,640 Speaker 5: Vanguard's matrix on active versus passive based on ten years 438 00:20:19,680 --> 00:20:23,639 Speaker 5: worth of data, obviously, the more risk averse the investor is, 439 00:20:23,680 --> 00:20:26,480 Speaker 5: the more difficulty they have choosing low cost options because 440 00:20:26,480 --> 00:20:29,160 Speaker 5: they are far more expensive, and when it all comes 441 00:20:29,160 --> 00:20:32,000 Speaker 5: out in the wash, the difference is minuscule. Like you 442 00:20:32,040 --> 00:20:34,400 Speaker 5: look at some articles and some graphs, and I'm currently 443 00:20:34,440 --> 00:20:37,399 Speaker 5: on Barons dot com. They have a really cute graph 444 00:20:37,440 --> 00:20:40,760 Speaker 5: of active versus passive portfolios, and to be honest, the 445 00:20:40,760 --> 00:20:43,359 Speaker 5: difference is less than one percent over a ten year period. 446 00:20:43,840 --> 00:20:46,960 Speaker 5: And I find that really interesting because obviously we could 447 00:20:47,040 --> 00:20:50,880 Speaker 5: compare so many different things, but it's not comparing apples 448 00:20:50,880 --> 00:20:53,720 Speaker 5: with apples. So if I go, hey, Georgia, you've got 449 00:20:53,720 --> 00:20:57,960 Speaker 5: this really high risk portfolio that is currently returning you know, 450 00:20:58,080 --> 00:21:02,520 Speaker 5: fifteen percent or something along the lines, and your passive portfolio, 451 00:21:02,960 --> 00:21:05,800 Speaker 5: it's one not apples with apples. But we also need 452 00:21:05,840 --> 00:21:09,639 Speaker 5: to remember the different risk profiles associated and someone who 453 00:21:09,760 --> 00:21:12,520 Speaker 5: has a different risk profile and is, you know, maybe 454 00:21:12,720 --> 00:21:15,680 Speaker 5: more of a moderate growth than a high growth investor, 455 00:21:15,880 --> 00:21:19,359 Speaker 5: they're actually chasing lower returns anyway. So it's not which 456 00:21:19,440 --> 00:21:21,920 Speaker 5: is better, it's which is going to serve you better 457 00:21:22,000 --> 00:21:24,800 Speaker 5: in the long term. And from my perspective, as I've 458 00:21:24,840 --> 00:21:28,399 Speaker 5: said before, I am more of a passive investor. But 459 00:21:28,480 --> 00:21:31,240 Speaker 5: I'm more passive because I just don't want to stress 460 00:21:31,280 --> 00:21:34,840 Speaker 5: every night, Like I'm so lucky that I am so 461 00:21:35,119 --> 00:21:38,000 Speaker 5: young and got to start so early and as much 462 00:21:38,000 --> 00:21:41,879 Speaker 5: as I'm wildly passionate about this investing space, I'm also 463 00:21:41,960 --> 00:21:45,280 Speaker 5: acutely aware that I can't time the market. So what 464 00:21:45,280 --> 00:21:47,159 Speaker 5: I'm going to do is make sure I have the 465 00:21:47,200 --> 00:21:50,240 Speaker 5: most time in the market so that I am just 466 00:21:50,359 --> 00:21:53,639 Speaker 5: investing consistently over the long term. Because even if you 467 00:21:53,680 --> 00:21:55,840 Speaker 5: look at it right, like in the investment world, you 468 00:21:55,880 --> 00:21:58,760 Speaker 5: know people obviously chasing sick returns and we want like 469 00:21:58,800 --> 00:22:00,920 Speaker 5: the highest ever and all all of this other stuff. 470 00:22:00,920 --> 00:22:03,480 Speaker 5: And we know that the Australian share market over I 471 00:22:03,480 --> 00:22:05,520 Speaker 5: think it's the last twenty two years or something, has 472 00:22:05,600 --> 00:22:07,119 Speaker 5: returned eleven percent. 473 00:22:07,200 --> 00:22:08,560 Speaker 2: That's pretty sexy, I reckon. 474 00:22:08,960 --> 00:22:12,119 Speaker 5: But when I do my calculations with my clients and 475 00:22:12,160 --> 00:22:14,080 Speaker 5: I sit down and I say, all right, Georgia, like, 476 00:22:14,119 --> 00:22:17,040 Speaker 5: what what returns you looking for? You're going to go, 477 00:22:17,240 --> 00:22:19,720 Speaker 5: all right, well, I just want to average return. I 478 00:22:19,840 --> 00:22:22,440 Speaker 5: just want to make sure I'm okay. I usually either 479 00:22:22,520 --> 00:22:24,960 Speaker 5: use five percent as a guide or seven and a 480 00:22:25,000 --> 00:22:27,920 Speaker 5: half percent. I'm never looking at that eleven even though 481 00:22:27,920 --> 00:22:32,120 Speaker 5: it's the average, because I would rather underpromise, over deliver 482 00:22:32,240 --> 00:22:35,800 Speaker 5: and make sure that we achieve our financial goals instead 483 00:22:35,920 --> 00:22:39,479 Speaker 5: of putting you in a position where we're expecting the world, 484 00:22:39,600 --> 00:22:41,639 Speaker 5: and then I can't put it on the platter for you. 485 00:22:42,160 --> 00:22:46,119 Speaker 5: So I think it's all about under calculating performance and 486 00:22:46,160 --> 00:22:49,199 Speaker 5: then being impressed later down the track. It means that 487 00:22:49,200 --> 00:22:51,439 Speaker 5: you're not as disappointed when there are dips in the 488 00:22:51,440 --> 00:22:54,000 Speaker 5: market because you can obviously go, all right, well, last 489 00:22:54,040 --> 00:22:56,800 Speaker 5: year my performance was eleven percent. Like I remember, back 490 00:22:56,840 --> 00:23:00,280 Speaker 5: in twenty nineteen before covid G, we were talking about 491 00:23:00,280 --> 00:23:03,320 Speaker 5: my investment portfolio, you know, privately, and I can say 492 00:23:03,320 --> 00:23:06,640 Speaker 5: this now because it's not current, and my investment portfolio 493 00:23:06,720 --> 00:23:09,960 Speaker 5: that year returns seventeen percent woofed and it was doing 494 00:23:10,320 --> 00:23:12,840 Speaker 5: really well, and I was really stoked. I was like this, 495 00:23:13,040 --> 00:23:16,120 Speaker 5: you know, obviously isn't what was planned, but the assets 496 00:23:16,160 --> 00:23:18,240 Speaker 5: that I'm holding are doing really well. And that's just 497 00:23:18,359 --> 00:23:21,560 Speaker 5: one year in isolation, Like that doesn't mean that that's perfect. 498 00:23:21,600 --> 00:23:25,359 Speaker 5: My clients were stoked, George, because I had seventeen percent. 499 00:23:25,440 --> 00:23:28,000 Speaker 5: I had some of my clients where their entire portfolio 500 00:23:28,160 --> 00:23:30,320 Speaker 5: had returned twenty two to twenty five percent. 501 00:23:30,359 --> 00:23:32,520 Speaker 2: Holy, like what, that's amazing. 502 00:23:32,640 --> 00:23:34,480 Speaker 5: And every time I had a conversation with a client, 503 00:23:34,480 --> 00:23:36,359 Speaker 5: as much as I was super excited about it, I 504 00:23:36,400 --> 00:23:38,480 Speaker 5: was also like, all right, but take this with a 505 00:23:38,480 --> 00:23:41,240 Speaker 5: grain of salt. I know it's looking really sexy. This 506 00:23:41,320 --> 00:23:42,919 Speaker 5: is going to make up for the years in the 507 00:23:43,000 --> 00:23:44,720 Speaker 5: future that we might have a little bit of an 508 00:23:44,760 --> 00:23:46,320 Speaker 5: air but or the market might be a bit down, 509 00:23:46,320 --> 00:23:48,200 Speaker 5: and they'd always be like, yeah, yeah, bab we get it. 510 00:23:48,240 --> 00:23:50,919 Speaker 5: Don't worry, don't worry. Obviously, I had no idea that 511 00:23:50,960 --> 00:23:53,640 Speaker 5: COVID would then come. Yeah, COVID then came, and some 512 00:23:53,680 --> 00:23:57,800 Speaker 5: of my clients had underperforming portfolios or stocks, and I 513 00:23:58,000 --> 00:24:01,240 Speaker 5: was as a financial advisor, who you know. I graduated 514 00:24:01,240 --> 00:24:03,600 Speaker 5: in two thousand and nine, and obviously the Global Financial 515 00:24:03,680 --> 00:24:07,800 Speaker 5: Crisis was the last big financial crisis that financial advisors 516 00:24:07,800 --> 00:24:10,000 Speaker 5: had to go through, so I didn't experience that, but 517 00:24:10,080 --> 00:24:11,640 Speaker 5: I heard all about it, and I was like, oh 518 00:24:11,640 --> 00:24:13,439 Speaker 5: my gosh, this is the first time I'm really going 519 00:24:13,480 --> 00:24:14,800 Speaker 5: to have to sit down a client and be like, 520 00:24:14,840 --> 00:24:18,400 Speaker 5: Georgia King, I am so sorry because your performance isn't 521 00:24:18,400 --> 00:24:21,280 Speaker 5: where it should be. And I was so anxious, and 522 00:24:21,320 --> 00:24:23,719 Speaker 5: I did way more research than I usually would like. 523 00:24:23,760 --> 00:24:24,640 Speaker 2: If a client had a. 524 00:24:24,600 --> 00:24:28,440 Speaker 5: Direct portfolio, I was going through obviously I do this anyway, 525 00:24:28,600 --> 00:24:31,040 Speaker 5: but I was going through annual reports. If they're holding 526 00:24:31,200 --> 00:24:33,720 Speaker 5: with a far finer tooth than I was before, trying 527 00:24:33,720 --> 00:24:36,919 Speaker 5: to find every reason why this had happened. So if 528 00:24:36,960 --> 00:24:39,280 Speaker 5: my clients mentioned anything, I'd be like, all right, well, Georgia, 529 00:24:39,359 --> 00:24:40,240 Speaker 5: this is what this means. 530 00:24:40,280 --> 00:24:40,720 Speaker 2: Don't worry. 531 00:24:40,720 --> 00:24:42,800 Speaker 5: I'm completely on top of it. I wanted my clients 532 00:24:42,800 --> 00:24:46,080 Speaker 5: to feel safe. Every meeting I went to with clients, 533 00:24:46,080 --> 00:24:47,040 Speaker 5: they're like, yeah, no worries. 534 00:24:47,320 --> 00:24:47,920 Speaker 2: I was like, what. 535 00:24:48,320 --> 00:24:50,080 Speaker 5: They're like, you said this would happen, Like you set 536 00:24:50,119 --> 00:24:53,280 Speaker 5: our expectations that market would at some point go down. 537 00:24:53,320 --> 00:24:55,040 Speaker 5: We had a really good couple of years, but like, 538 00:24:55,080 --> 00:24:56,199 Speaker 5: we're just gonna write it out, and I. 539 00:24:56,240 --> 00:24:58,320 Speaker 2: Was like, I've wasted so much time research. 540 00:24:58,359 --> 00:25:00,960 Speaker 5: I mean, I don't regret it, but I think it's 541 00:25:01,000 --> 00:25:03,560 Speaker 5: really important to talk about this stuff as well, so 542 00:25:03,640 --> 00:25:05,760 Speaker 5: that you guys understand that, you know, over the last 543 00:25:05,800 --> 00:25:08,440 Speaker 5: few years my portfolio has been doing really badly. Makes 544 00:25:08,480 --> 00:25:11,280 Speaker 5: me feel really sick. I actually hate logging in and 545 00:25:11,320 --> 00:25:13,720 Speaker 5: seeing it. But at the same time, I always tell 546 00:25:13,760 --> 00:25:16,399 Speaker 5: you guys, it's about looking at it as if the 547 00:25:16,440 --> 00:25:18,399 Speaker 5: shares are on sale and going all right, well, the 548 00:25:18,400 --> 00:25:20,119 Speaker 5: shares are on sale. If I buy more now, I'm 549 00:25:20,160 --> 00:25:22,919 Speaker 5: getting better value, which is a money win, right, So 550 00:25:22,960 --> 00:25:25,560 Speaker 5: I think when it comes to passive investing, it's not 551 00:25:25,680 --> 00:25:29,639 Speaker 5: really about the performance. Like, if you're chasing performance and 552 00:25:29,680 --> 00:25:32,520 Speaker 5: you're really wanting the highest of the higher, then yeah, 553 00:25:32,560 --> 00:25:36,320 Speaker 5: you're probably more of an active investor. Passive investment strategies 554 00:25:36,359 --> 00:25:38,919 Speaker 5: are the slow and steady steed that are arguably going 555 00:25:38,960 --> 00:25:41,119 Speaker 5: to win the race, and you might not end up 556 00:25:41,160 --> 00:25:44,480 Speaker 5: with millions upon millions of dollars, but like that was 557 00:25:44,520 --> 00:25:45,520 Speaker 5: always going to be a risk. 558 00:25:45,760 --> 00:25:46,520 Speaker 2: Does that make sense? 559 00:25:46,800 --> 00:25:46,960 Speaker 4: Yeah? 560 00:25:47,000 --> 00:25:49,359 Speaker 5: And when I use that example which I've used on 561 00:25:49,400 --> 00:25:52,080 Speaker 5: the podcast a million times that we've talked about five 562 00:25:52,119 --> 00:25:54,359 Speaker 5: hundred dollars each and every single month from the age 563 00:25:54,359 --> 00:25:57,280 Speaker 5: of twenty one up until retirement. If you had saved 564 00:25:57,280 --> 00:25:59,680 Speaker 5: that money, it would be two hundred and forty thousand dollars. 565 00:26:00,040 --> 00:26:02,840 Speaker 5: If you had invested that money, it would be one 566 00:26:02,880 --> 00:26:06,960 Speaker 5: point two million ECHE dollars in an investment portfolio. Money win. 567 00:26:07,280 --> 00:26:11,520 Speaker 5: That generates a passive income stream of about sixty thousand dollars. 568 00:26:11,920 --> 00:26:15,200 Speaker 5: But gee, that's calculated as seven and a half percent return, 569 00:26:15,760 --> 00:26:18,600 Speaker 5: and we know that the market has performed higher than 570 00:26:18,600 --> 00:26:21,119 Speaker 5: that over the last few years. Does that make sense? 571 00:26:21,240 --> 00:26:24,320 Speaker 5: So when we give examples. I'm always trying to under 572 00:26:24,400 --> 00:26:26,919 Speaker 5: promise over deliver, and I think you should do that 573 00:26:26,960 --> 00:26:29,840 Speaker 5: for yourself as well. So when you're looking at is 574 00:26:29,840 --> 00:26:33,080 Speaker 5: an active portfolio better returning or is a passive portfolio 575 00:26:33,119 --> 00:26:35,840 Speaker 5: better returning, I don't think it's about that. I actually 576 00:26:35,840 --> 00:26:37,959 Speaker 5: think it's about picking something that will get you to 577 00:26:38,040 --> 00:26:39,400 Speaker 5: your goal safely. 578 00:26:39,680 --> 00:26:41,040 Speaker 2: Yeah, does that make sense? 579 00:26:41,040 --> 00:26:44,080 Speaker 4: It does make sense. Sorry, Ranch, No, No, I loved 580 00:26:44,119 --> 00:26:46,720 Speaker 4: I absorbed at all just on that v The one 581 00:26:46,720 --> 00:26:49,159 Speaker 4: thing you didn't touch on there was the difference in 582 00:26:49,240 --> 00:26:53,320 Speaker 4: expense between servicing a passive folio versus an active folio. 583 00:26:53,359 --> 00:26:56,679 Speaker 4: I'm assuming active will be more expensive, especially if you're 584 00:26:56,720 --> 00:26:58,680 Speaker 4: paying for a fund manager, because it's more hands on. 585 00:26:58,800 --> 00:27:00,480 Speaker 4: Can you talk through that different as well. 586 00:27:00,520 --> 00:27:03,960 Speaker 5: Absolutely, So when it comes to active, there's usually more 587 00:27:04,040 --> 00:27:06,800 Speaker 5: hands involved, there's usually more people in the mix, and 588 00:27:07,000 --> 00:27:09,720 Speaker 5: usually when it comes to investing, those people are very expensive. 589 00:27:09,800 --> 00:27:11,920 Speaker 5: So that could be a financial advisor, it could be 590 00:27:11,920 --> 00:27:14,200 Speaker 5: a fund manager if you're picking an active fund, it 591 00:27:14,240 --> 00:27:18,040 Speaker 5: could be anybody. But essentially, an ETF just baskets everything 592 00:27:18,119 --> 00:27:20,600 Speaker 5: into a fund. Yeah, there'll be a manager that looks 593 00:27:20,640 --> 00:27:23,600 Speaker 5: after that ETF or an ETF manager, but they won't 594 00:27:23,600 --> 00:27:27,280 Speaker 5: be as actively trying to chase returns as a fund manager. 595 00:27:27,320 --> 00:27:30,439 Speaker 5: In an active portfolio, you do pay for it. But 596 00:27:30,480 --> 00:27:33,400 Speaker 5: that's why I said it's hard to compare apples with apples, 597 00:27:33,640 --> 00:27:37,040 Speaker 5: because funds have different prices in different returns, and then 598 00:27:37,200 --> 00:27:39,480 Speaker 5: things that are more active sometimes come out in the 599 00:27:39,680 --> 00:27:40,960 Speaker 5: wash exactly the same. 600 00:27:41,280 --> 00:27:44,320 Speaker 2: So, to be honest, it really boils down to what 601 00:27:44,359 --> 00:27:45,120 Speaker 2: are your values. 602 00:27:45,200 --> 00:27:48,520 Speaker 5: G what's gonna you know, spark joy in you? And 603 00:27:48,560 --> 00:27:52,520 Speaker 5: I know that sounds so lame sometimes, but if you're like, yeah, 604 00:27:52,560 --> 00:27:54,199 Speaker 5: I just want to invest to put myself in the 605 00:27:54,200 --> 00:27:58,320 Speaker 5: best possible financial position in the future, then maybe passive 606 00:27:58,480 --> 00:28:00,080 Speaker 5: is for you. But if you're like, oh my gosh, 607 00:28:00,119 --> 00:28:02,760 Speaker 5: I'm so excited. I love investing. I want to be 608 00:28:02,800 --> 00:28:04,360 Speaker 5: a part of it. I want to be trading. Oh 609 00:28:04,359 --> 00:28:06,200 Speaker 5: my gosh, I've been doing this research on this fund 610 00:28:06,280 --> 00:28:09,800 Speaker 5: manager and I'd really like to follow their portfolio, then great, 611 00:28:09,920 --> 00:28:13,120 Speaker 5: maybe that is for you, But different strategies can also 612 00:28:13,200 --> 00:28:15,400 Speaker 5: be chopped and changed. As I've said before, I mix 613 00:28:15,480 --> 00:28:18,480 Speaker 5: strategies for me personally because I am really passionate, but 614 00:28:18,520 --> 00:28:22,040 Speaker 5: I'm also really passionate about that. You know, tried and true, 615 00:28:22,119 --> 00:28:24,840 Speaker 5: steady Steed who's going to hopefully win the race for me. 616 00:28:25,280 --> 00:28:28,239 Speaker 5: And so that's where passive comes into it. So it 617 00:28:28,320 --> 00:28:31,520 Speaker 5: really really depends on what your values are as a person. 618 00:28:31,800 --> 00:28:35,440 Speaker 5: But yes, active is more expensive in general because usually 619 00:28:35,480 --> 00:28:39,080 Speaker 5: you're paying for a fund manager across the board. In 620 00:28:39,280 --> 00:28:43,600 Speaker 5: the financial advice industry, I find that financial advisors scoff 621 00:28:43,640 --> 00:28:46,280 Speaker 5: a little bit when you say that an ETF costs 622 00:28:46,320 --> 00:28:50,000 Speaker 5: more than one percent of your funds under management. I 623 00:28:50,080 --> 00:28:52,880 Speaker 5: might use terms like basis points, but basis points can 624 00:28:52,920 --> 00:28:57,000 Speaker 5: basically be you know, converted straight into a percentage. So 625 00:28:57,320 --> 00:29:00,320 Speaker 5: less than one percent I think is fair for an 626 00:29:00,360 --> 00:29:03,200 Speaker 5: ETF that doesn't have an active fund manager. But you 627 00:29:03,240 --> 00:29:05,760 Speaker 5: can pay way more than that when it comes to 628 00:29:05,800 --> 00:29:08,760 Speaker 5: having an active person on your portfolio, because they need 629 00:29:08,800 --> 00:29:09,640 Speaker 5: to pay the bills. 630 00:29:09,800 --> 00:29:14,240 Speaker 4: Yeah, okay, perfect. They talk me through the very best 631 00:29:14,280 --> 00:29:17,000 Speaker 4: parts of passive investing, apart from like the hands off approach, 632 00:29:17,040 --> 00:29:18,680 Speaker 4: which I'm very drawn to personally. 633 00:29:18,680 --> 00:29:20,480 Speaker 5: I haven't sold you on it yet, You're like, I 634 00:29:20,520 --> 00:29:22,560 Speaker 5: want more more, is there, Victoria? 635 00:29:22,760 --> 00:29:26,320 Speaker 2: You need to pitch this harder, all right. So obviously very. 636 00:29:26,280 --> 00:29:29,960 Speaker 5: Low maintenance, more of a hands off approach, less responsibility 637 00:29:30,000 --> 00:29:32,400 Speaker 5: on you, which to be honest, I find real sexy. 638 00:29:32,840 --> 00:29:35,600 Speaker 5: But passive investing is really just like as I said before, 639 00:29:35,720 --> 00:29:38,280 Speaker 5: setting and forgetting and not having the constant angst or 640 00:29:38,320 --> 00:29:41,400 Speaker 5: exhaustion of monitoring the market, and can be quite freeing. 641 00:29:41,600 --> 00:29:42,880 Speaker 2: From my understanding. 642 00:29:43,280 --> 00:29:45,600 Speaker 5: It doesn't mean you don't need a financial advisor though 643 00:29:45,640 --> 00:29:48,360 Speaker 5: contrary to popular belief, as much as you can absolutely 644 00:29:48,360 --> 00:29:51,120 Speaker 5: go and do it yourself. It's funny because I actually 645 00:29:51,160 --> 00:29:53,840 Speaker 5: have a whole heap of clients that have passive investment strategies, 646 00:29:53,840 --> 00:29:56,240 Speaker 5: and I mainly work with them individually on goal setting 647 00:29:56,240 --> 00:29:58,560 Speaker 5: and actually budgeting and cash flow because they're the things 648 00:29:58,600 --> 00:30:00,800 Speaker 5: they struggle with, and they're the things they see value 649 00:30:00,800 --> 00:30:03,760 Speaker 5: in me in and it's not actually investing. So we're like, yeap, 650 00:30:03,840 --> 00:30:06,320 Speaker 5: let's set up a passive portfolio. We'll put that over 651 00:30:06,320 --> 00:30:08,280 Speaker 5: to the side. It'll tick along, do its thing, and 652 00:30:08,320 --> 00:30:10,800 Speaker 5: we'll focus on these things. Whereas I then have other 653 00:30:10,880 --> 00:30:13,280 Speaker 5: clients and this is where I usually play a little 654 00:30:13,280 --> 00:30:16,520 Speaker 5: bit more actively, where they have direct share portfolios and 655 00:30:16,560 --> 00:30:18,040 Speaker 5: I'm far more active in that, and they're like V, 656 00:30:18,120 --> 00:30:20,080 Speaker 5: I don't care about my budget and cash flow. They're 657 00:30:20,080 --> 00:30:21,800 Speaker 5: either really reached or they're on top of it. And 658 00:30:21,840 --> 00:30:23,600 Speaker 5: they don't need my help when it comes to budgeting 659 00:30:23,640 --> 00:30:26,960 Speaker 5: cash flow. So each financial advice relationship is actually going 660 00:30:27,040 --> 00:30:29,160 Speaker 5: to be really different based on how you frame it 661 00:30:29,200 --> 00:30:31,320 Speaker 5: with your advisors. So I don't want you guys thinking, oh, 662 00:30:31,320 --> 00:30:33,080 Speaker 5: if it's passive, you just do it yourself, you don't 663 00:30:33,080 --> 00:30:35,880 Speaker 5: need an advisor. It will really depend on what your 664 00:30:35,920 --> 00:30:38,440 Speaker 5: goals are for seeking financial advice. 665 00:30:38,720 --> 00:30:41,560 Speaker 2: Everyone's is different, right. Obviously, as we. 666 00:30:41,560 --> 00:30:44,160 Speaker 5: Mentioned before, it's cheaper if you've got someone investing on 667 00:30:44,200 --> 00:30:47,080 Speaker 5: your behalf and looking at your portfolio, their fees obviously 668 00:30:47,120 --> 00:30:49,880 Speaker 5: are likely to be higher because it's active investment, as 669 00:30:49,960 --> 00:30:53,360 Speaker 5: we said before, so much more involved. So cheaper is 670 00:30:53,360 --> 00:30:56,160 Speaker 5: a nice thing, a bit of a money win. Capital 671 00:30:56,240 --> 00:31:00,560 Speaker 5: gains tax is also avoided sometimes because you're not selling 672 00:31:00,600 --> 00:31:03,680 Speaker 5: when you hit a profit. So often with the more 673 00:31:03,840 --> 00:31:07,640 Speaker 5: active investing, you're selling and buying and selling and buying, 674 00:31:07,640 --> 00:31:10,680 Speaker 5: and you really need to take into consideration capital gains tax. 675 00:31:10,920 --> 00:31:13,120 Speaker 5: So that's a tax you pay on the profit you 676 00:31:13,200 --> 00:31:16,960 Speaker 5: make from the asset you sold. Say you had a share, George, 677 00:31:16,960 --> 00:31:18,440 Speaker 5: and it was a dollar when you bought it, and 678 00:31:18,480 --> 00:31:20,680 Speaker 5: then it was two dollars when you sold it. You 679 00:31:20,760 --> 00:31:23,040 Speaker 5: now have to pay tax on that one dollar that 680 00:31:23,080 --> 00:31:26,320 Speaker 5: you made, and if you sell it within twelve months, 681 00:31:26,360 --> 00:31:29,160 Speaker 5: so in under twelve months, you're actually going to be 682 00:31:29,200 --> 00:31:32,440 Speaker 5: slapped with a fifty percent capital gains tax, so that 683 00:31:32,560 --> 00:31:35,920 Speaker 5: takes your profit down to just fifty cents, so it 684 00:31:35,960 --> 00:31:38,680 Speaker 5: really strips it away. Otherwise, it is taxed at your 685 00:31:38,720 --> 00:31:41,840 Speaker 5: marginal tax rate, which is really fair because we pay 686 00:31:41,920 --> 00:31:44,040 Speaker 5: tax on money we earn, and basically, if you're earning 687 00:31:44,120 --> 00:31:46,280 Speaker 5: it in the share market, you are earning that money 688 00:31:46,280 --> 00:31:49,560 Speaker 5: and it needs to be taxed. Totally fair, totally understandable, 689 00:31:49,720 --> 00:31:52,840 Speaker 5: but people don't seem to understand that. Whereas with a 690 00:31:52,880 --> 00:31:56,600 Speaker 5: passive portfolio, you're just buying, holding, buying holding, and capital 691 00:31:56,600 --> 00:31:58,840 Speaker 5: gains tax isn't something you would have to play with 692 00:31:58,960 --> 00:32:03,240 Speaker 5: too often because the whole plan is to buy and hold. Yes, no, 693 00:32:03,360 --> 00:32:06,040 Speaker 5: buy and sell, and you're not trading often. When it 694 00:32:06,040 --> 00:32:07,880 Speaker 5: comes to passive investing, and to be honest, this is 695 00:32:07,920 --> 00:32:10,080 Speaker 5: across the board, there's usually a really good level of 696 00:32:10,080 --> 00:32:13,880 Speaker 5: transparency in what you're invested in because it's expected, it's 697 00:32:13,880 --> 00:32:16,600 Speaker 5: twenty twenty two. There's not a lot of things you 698 00:32:16,680 --> 00:32:19,480 Speaker 5: can't disclose like you have to be These are the 699 00:32:19,520 --> 00:32:21,640 Speaker 5: holdings This is why we have the holdings. These are 700 00:32:21,640 --> 00:32:25,440 Speaker 5: the percentages, and even ETFs nowadays are a lot more 701 00:32:25,440 --> 00:32:26,840 Speaker 5: transparent than they used to be. 702 00:32:27,960 --> 00:32:31,960 Speaker 4: Okay, so they're the pros, vikid, But can you talk 703 00:32:32,000 --> 00:32:35,400 Speaker 4: me through any potential considerations we need to think about 704 00:32:35,520 --> 00:32:37,080 Speaker 4: any negatives or downsites? 705 00:32:37,200 --> 00:32:37,840 Speaker 2: Yeah, of course. 706 00:32:37,880 --> 00:32:41,640 Speaker 5: So obviously with every pro there's usually a con associated 707 00:32:41,680 --> 00:32:45,440 Speaker 5: in every aspect of life. Passive investing is subject to 708 00:32:45,440 --> 00:32:48,200 Speaker 5: total market risk. So when the overall stock market falls 709 00:32:48,240 --> 00:32:50,000 Speaker 5: or when a bond price takes a little bit of 710 00:32:50,000 --> 00:32:53,080 Speaker 5: a dip and slide, so too will index funds. But 711 00:32:53,120 --> 00:32:54,920 Speaker 5: that's as we said before. You know how we're talking 712 00:32:54,960 --> 00:32:57,840 Speaker 5: about the odds and it's like a good indicator. 713 00:32:57,280 --> 00:32:59,520 Speaker 2: Of the market. Yes, that's just going to. 714 00:32:59,560 --> 00:33:02,360 Speaker 5: Happen because if the market is going down, obviously, if 715 00:33:02,400 --> 00:33:04,480 Speaker 5: you're holding a really big part of the market, your 716 00:33:04,520 --> 00:33:07,080 Speaker 5: shares are going to go down to So it makes 717 00:33:07,080 --> 00:33:09,720 Speaker 5: sense part of the journey though, so don't stress when 718 00:33:09,760 --> 00:33:13,880 Speaker 5: this happens. It's obviously not as flexible as active investing 719 00:33:13,920 --> 00:33:16,840 Speaker 5: because you're not hand picking individual stocks and being completely 720 00:33:16,880 --> 00:33:19,440 Speaker 5: in control of it. In saying that, that's why we 721 00:33:19,480 --> 00:33:21,240 Speaker 5: want to take a little bit more time to pick 722 00:33:21,280 --> 00:33:24,640 Speaker 5: the right ETF or right passive investment strategy for you, 723 00:33:24,960 --> 00:33:27,920 Speaker 5: because I'm sure that there is one that comprises of 724 00:33:27,960 --> 00:33:29,960 Speaker 5: things that all align to your values. Am I just 725 00:33:29,960 --> 00:33:31,600 Speaker 5: take a little bit more time being like, all right, 726 00:33:31,640 --> 00:33:33,040 Speaker 5: well it has to be ethinic, all, it has to 727 00:33:33,040 --> 00:33:34,480 Speaker 5: be women has to be this, has to be that, 728 00:33:34,880 --> 00:33:35,440 Speaker 5: and that's okay. 729 00:33:35,480 --> 00:33:38,360 Speaker 2: We just need to find it. And you might not get. 730 00:33:38,160 --> 00:33:41,800 Speaker 5: Above market returns because obviously with an ETF, the goal 731 00:33:42,000 --> 00:33:44,239 Speaker 5: is to mimic the average of what the market in 732 00:33:44,280 --> 00:33:47,040 Speaker 5: general is returning. You're not trying to pick, oh, the 733 00:33:47,120 --> 00:33:49,840 Speaker 5: next up and coming text stocks or the next up 734 00:33:49,840 --> 00:33:52,480 Speaker 5: and coming XYZ. You're literally going, I'm going to buy 735 00:33:52,480 --> 00:33:54,400 Speaker 5: a basket of shares and I hope to get the 736 00:33:54,480 --> 00:33:57,000 Speaker 5: average return from the sense. 737 00:33:57,000 --> 00:34:00,600 Speaker 4: That makes sense, It makes sense. I'm on board passive 738 00:34:00,640 --> 00:34:01,400 Speaker 4: investing me. 739 00:34:02,160 --> 00:34:03,520 Speaker 2: Well, let's get you started. 740 00:34:04,000 --> 00:34:06,600 Speaker 4: Well that leads me to my final question for today. 741 00:34:07,000 --> 00:34:09,440 Speaker 4: How do we actually set ourselves up with a passive 742 00:34:09,520 --> 00:34:13,160 Speaker 4: investment folio. I'm assuming we're just calling the big guns 743 00:34:13,200 --> 00:34:13,919 Speaker 4: getting some help. 744 00:34:14,080 --> 00:34:17,319 Speaker 5: I'll just call a big financial advisor, send all your 745 00:34:17,320 --> 00:34:20,239 Speaker 5: money their way, pay an exorbitant amount of money, and 746 00:34:20,320 --> 00:34:23,279 Speaker 5: you be right. No, there's heaps of waste. Honestly, that 747 00:34:23,360 --> 00:34:25,480 Speaker 5: is not true. Do not take that. You can obviously 748 00:34:25,480 --> 00:34:28,160 Speaker 5: do it via fund manager. You can do it via broker, 749 00:34:28,200 --> 00:34:30,600 Speaker 5: you can do it via an online share trading platform. 750 00:34:30,760 --> 00:34:33,000 Speaker 5: You can literally just log into an app like shares 751 00:34:33,120 --> 00:34:35,960 Speaker 5: Use and buy an ETF and bam, you're a passive investor. 752 00:34:36,320 --> 00:34:39,000 Speaker 2: Like what a dream. It is actually so easy. 753 00:34:39,520 --> 00:34:41,399 Speaker 5: Before you do, though, there are a couple of things 754 00:34:41,400 --> 00:34:43,640 Speaker 5: to keep in mind. So the first is to really 755 00:34:43,680 --> 00:34:46,879 Speaker 5: ask yourself what your personal strategy is, what your values are, 756 00:34:46,960 --> 00:34:50,080 Speaker 5: and what you're hoping to get out of your investment experience. 757 00:34:50,480 --> 00:34:53,080 Speaker 5: If you're chasing those really high highs and you're really 758 00:34:53,160 --> 00:34:55,960 Speaker 5: keen on having a hands on investing experience, well perhaps 759 00:34:56,040 --> 00:34:57,920 Speaker 5: active investing is a better option for you. 760 00:34:58,560 --> 00:35:00,000 Speaker 2: Understand it. Honestly. 761 00:35:00,440 --> 00:35:02,560 Speaker 5: I think the other thing I would really say here 762 00:35:02,800 --> 00:35:06,800 Speaker 5: is trust yourself because I think as women in particular, 763 00:35:06,840 --> 00:35:09,560 Speaker 5: and I keep saying this because it's an investing piece 764 00:35:09,600 --> 00:35:13,080 Speaker 5: of content, but we really doubt ourselves and our ability 765 00:35:13,120 --> 00:35:16,360 Speaker 5: to make a good decision, and often we get analysis paralysis, 766 00:35:16,440 --> 00:35:18,800 Speaker 5: and that stops us from even getting into the market. 767 00:35:19,000 --> 00:35:21,920 Speaker 5: I'm not asking you to put every single dollar of 768 00:35:21,920 --> 00:35:24,600 Speaker 5: your life savings on the line. Even if it means 769 00:35:24,600 --> 00:35:27,000 Speaker 5: you go and spend ten dollars on an ETF to 770 00:35:27,040 --> 00:35:29,400 Speaker 5: get in the market and start watching it plod along 771 00:35:29,680 --> 00:35:33,120 Speaker 5: and feel comfortable with it. That is literally better than 772 00:35:33,200 --> 00:35:35,399 Speaker 5: not getting in at all. So I think it's all 773 00:35:35,440 --> 00:35:38,200 Speaker 5: about being in the market to get an experience, because 774 00:35:38,239 --> 00:35:40,120 Speaker 5: how many times, Gee, and I've said this to you 775 00:35:40,160 --> 00:35:42,359 Speaker 5: a million times, people like, Oh, I went to Union 776 00:35:42,360 --> 00:35:44,719 Speaker 5: and I studied marketing for four years and I did 777 00:35:44,719 --> 00:35:46,759 Speaker 5: my honors, and then I went to work and all 778 00:35:46,760 --> 00:35:48,719 Speaker 5: of that went out the window. All my research, yeah, 779 00:35:48,760 --> 00:35:50,680 Speaker 5: went out the window, and I learned on the job. Yep, 780 00:35:50,880 --> 00:35:52,560 Speaker 5: same thing can happen in the investment world. 781 00:35:52,600 --> 00:35:53,960 Speaker 4: That's a good way of looking at it. 782 00:35:54,040 --> 00:35:55,320 Speaker 2: I think it's a good place to leave it to. 783 00:35:55,400 --> 00:35:58,600 Speaker 4: Yeah, a perfect VD. Also, I'm going to throw a 784 00:35:58,640 --> 00:36:01,319 Speaker 4: shameless plug out there if anyone wants to know more 785 00:36:01,320 --> 00:36:05,320 Speaker 4: about investing in general or passive investing specifically. Vicki D's 786 00:36:05,320 --> 00:36:09,440 Speaker 4: book is out. It's thriving, Its fabulous, So well, she 787 00:36:09,520 --> 00:36:13,439 Speaker 4: looks really esthetic on your book. Pop her beside the bed. 788 00:36:13,640 --> 00:36:15,960 Speaker 2: People think you're really impressive exactly. 789 00:36:15,760 --> 00:36:18,600 Speaker 4: So definitely check that out, guys, But for now, VD. 790 00:36:18,719 --> 00:36:20,840 Speaker 4: Can you please wrap the boring but important stuff? 791 00:36:20,880 --> 00:36:21,799 Speaker 2: Of course I can. 792 00:36:22,440 --> 00:36:24,960 Speaker 5: The advice shared on She's on the Money is general 793 00:36:25,040 --> 00:36:28,920 Speaker 5: in nature and does not consider your individual circumstances. She's 794 00:36:28,960 --> 00:36:32,400 Speaker 5: on the Money exists purely for educational purposes and should 795 00:36:32,440 --> 00:36:35,600 Speaker 5: not be relied upon to make an investment or financial decision. 796 00:36:36,000 --> 00:36:38,600 Speaker 2: If you do choose to buy a financial product. 797 00:36:38,280 --> 00:36:41,800 Speaker 6: Read the PDS TMD and obtain appropriate financial. 798 00:36:41,400 --> 00:36:43,200 Speaker 5: Advice tailored towards your needs. 799 00:36:43,520 --> 00:36:47,480 Speaker 6: Victoria Divine and She's on the Money are authorized representatives 800 00:36:47,520 --> 00:36:51,400 Speaker 6: of money. Sheper pty Ltd ABN three two one IS 801 00:36:51,440 --> 00:36:55,319 Speaker 6: six four nine two seven seven zero eight AFSL four 802 00:36:55,400 --> 00:37:03,680 Speaker 6: five one two eight ninety