Speaker 1: Hello.
Speaker 2: My name's Santasha Nabananga Bamblet. I'm a proud Yr the
Speaker 2: Order Kerney Whalbury and a waddery woman. And before we
Speaker 2: get started on She's on the Money podcast, I would
Speaker 2: like to acknowledge the traditional custodians of the land of
Speaker 2: which this podcast is recorded on a wondery country, acknowledging
Speaker 2: the elders, the ancestors and the next generation coming through
Speaker 2: as this podcast is about connecting, empowering, knowledge sharing and
Speaker 2: the storytelling of you to make a difference for today
Speaker 2: and lasting impact for tomorrow.
Speaker 1: Let's get into it. She's on the Money.
Speaker 3: She's on the Money. Hello and welcomed. She's on the
Speaker 3: Money podcast for millennials who want financial freedom. My name
Speaker 3: is Beck Sired and with me is Victoria Divine. Hello,
Speaker 3: Divine Victoria.
Speaker 1: I am very excited for this episode, but I'm not
Speaker 1: sure that that feeling at the moment is mutual.
Speaker 3: At the moment, you can see right through me, Yeah,
Speaker 3: like you always can.
Speaker 1: You're one of those people that definitely shouldn't be given
Speaker 1: state secrets.
Speaker 3: Yeah, that's true.
Speaker 1: Like if a ransom man came and kidnapped you and said, Beck,
Speaker 1: you need to tell us the code. You'd be like, oh,
Speaker 1: the codes one, two, three, four, don't worries. Why did
Speaker 1: you need to know? Again?
Speaker 3: Yeah, yeah, exactly exactly what.
Speaker 1: Oh it was a secret. Ah.
Speaker 3: So unfortunately my face and my body and my words
Speaker 3: can't keep a secret.
Speaker 1: But that's okay.
Speaker 3: And my secret today is that I do not care
Speaker 3: about ship structures, but I feel like I have a
Speaker 3: feeling you'll be able to explain it in a way
Speaker 3: that gets me excited.
Speaker 1: So you reckon, I think. So. I know.
Speaker 3: A couple of weeks ago, we were talking about this
Speaker 3: and we decided to do a part be because there's
Speaker 3: a lot of information that goes into this. We were
Speaker 3: talking about a few things that sparked my interests and
Speaker 3: seemed super important to chat about.
Speaker 1: It did, and it's one of those things where I
Speaker 1: was like, Okay, well I don't want to overwhelm people
Speaker 1: too much, but also we'll get into it. But there's
Speaker 1: like two different ownership structures that we wanted to talk about.
Speaker 1: So there was like personal ownership structures, so the way
Speaker 1: that you can set up your own personal ownership, and
Speaker 1: then the ownership structures that exist inside the assets that
Speaker 1: you purchase and those aren't really changeable. It's not like
Speaker 1: you can go, oh well with an ETF, I want
Speaker 1: the ownership structure to be different. No, no, no, that's just
Speaker 1: how an ETF functions. Whereas with your trusts or your
Speaker 1: sole trader or your individual shareholdings, like that's all your
Speaker 1: choice and you can hold it however you want. Whereas
Speaker 1: this is more what you need to consider when buying
Speaker 1: shares and what that actually looks like. And I feel
Speaker 1: like our community has said a number of times things like,
Speaker 1: oh well, if it's not Chess sponsored, you shouldn't be
Speaker 1: buying it, and I don't necessarily agree with that, So
Speaker 1: we want to, I guess, break down all of those
Speaker 1: things that I feel can be really overwhelming at the
Speaker 1: start of an investment journey where you're like, hold on,
Speaker 1: I was just going to buy an ETF. Well do
Speaker 1: you mean to have to think about chess ownership structure
Speaker 1: or what's this or what's that. That's what this episode
Speaker 1: is about to hopefully give you a bit more independence,
Speaker 1: but also I guess confidence to go no, no, no,
Speaker 1: like I am where I am and I'm starting here
Speaker 1: and that's okay, sure, okay, and all of those terms
Speaker 1: and everything. We will discuss a little bit later in
Speaker 1: the episode, but yes, we were speaking about this a
Speaker 1: couple of weeks ago. Basically the different structures we could
Speaker 1: set up personally to own shares, and you promise that
Speaker 1: you'd give us a part B and explain the different
Speaker 1: ownership structures that shares, ETFs.
Speaker 3: And managed funds use so we can understand them better.
Speaker 3: So I'm ready. Let's go all right, let's recap though,
Speaker 3: and strip it right back to the start fee. What
Speaker 3: exactly is a shit and why should I buy one?
Speaker 2: That is?
Speaker 3: Really?
Speaker 1: Really the start?
Speaker 2: Hey?
Speaker 1: I really like it. So shares also known as stocks
Speaker 1: or equities, same stuff. People just call it different things.
Speaker 1: Shares is a more of an Australian term, stocks is
Speaker 1: a more American term. Equities is more of a finance
Speaker 1: bro term. If people are like, oh, yeah, I've been
Speaker 1: buying equities, Sit down, sir, you just bought a share.
Speaker 1: But essentially all of those things represent ownership in a company.
Speaker 1: So when you own a share, you're essentially becoming a
Speaker 1: teeny tiny part owner of that company. My favorite way
Speaker 1: of looking at it is kind of like a pie chart,
Speaker 1: and you took a really tiny sliver of the pie
Speaker 1: and now it's your slither of the pie. And what
Speaker 1: that does is it actually entitles you to any of
Speaker 1: the growth and profit of that company because you're a
Speaker 1: little baby shareholder, like you're the owner of the company.
Speaker 1: So why should you care about that? Well, owning shares
Speaker 1: can potentially give you a chance to grow your money
Speaker 1: as the company's value increases over time, and hopefully that
Speaker 1: company is doing so well that they're paying dividends. A
Speaker 1: dividend is a profit that is distributed to the shareholders
Speaker 1: of a company, and you just reinvest that money. Compounding
Speaker 1: interest is what that is called. And over time, money
Speaker 1: that your money has made starts making more money and
Speaker 1: that becomes a really attractive beck.
Speaker 3: Wow, that's just a snowball effect. Yeah, that's investing to
Speaker 3: a t god it Okay, okay, okay, So now let's
Speaker 3: talk about ownership. You mentioned off air that it's simple
Speaker 3: and there are two ways to own shares directly and indirectly.
Speaker 1: I did. I also mentioned it on air, but like
Speaker 1: off air, absolutely, I've been ranting about this off air,
Speaker 1: like there is definitely a difference, and from my perspective,
Speaker 1: you're on the money, babe. But simply put, direct ownership
Speaker 1: is when you buy shares in individual companies, while indirect
Speaker 1: ownership often involves investing in funds that own the shares
Speaker 1: for you gossip. That's kind of like the difference between
Speaker 1: a direct share, like going I always use NAB. I
Speaker 1: don't know why, let's change it. You're going to buy
Speaker 1: a Combank share individually and Bechsaed is the owner, whereas
Speaker 1: you might go and buy an ETF or a managed
Speaker 1: fund that holds Combank. Combank doesn't know that Beck is
Speaker 1: the owner. What Combank knows is that ETF or that
Speaker 1: fund you've put your money into, they own a significant
Speaker 1: portion of that share. And that's how it's broken down.
Speaker 1: It's just an ownership structure. And as we'll get into it,
Speaker 1: we'll talk about I guess the pros and cons, but
Speaker 1: they are kind of much of a muchness in this
Speaker 1: day and age, like in theory. I do get that
Speaker 1: I do want to know more about the pros and cons,
Speaker 1: But why should I choose direct ownership? Okay, so I
Speaker 1: guess to summarize it, pros and cons are good. Direct
Speaker 1: ownership means that you actually get to choose the companies
Speaker 1: that you get to invest in well. Indirect ownership offers
Speaker 1: more diversification, being able to spread your investment across multiple
Speaker 1: companies so you can diversify your risk. Direct ownership, as
Speaker 1: I said, it kind of puts you more in the
Speaker 1: controls seat. You get to choose which companies align with
Speaker 1: your personal values and goals. Plus, if those companies perform well,
Speaker 1: your returns can actually be quite rewarding.
Speaker 3: Okay, and sorry if this is a really silly question,
Speaker 3: but probably not.
Speaker 1: This is She's on the money. No such things, dumb questions,
Speaker 1: sit down on, Thank.
Speaker 3: You very much, Victoria Albert. I want to know why
Speaker 3: doesn't everyone just do that?
Speaker 1: Why do you just do that?
Speaker 3: Why do you just do that?
Speaker 1: Sounds good right because you're like, especially the way I
Speaker 1: just explained it, I'm like, you've got so much control,
Speaker 1: you could make money. Beck.
Speaker 3: Usually cool.
Speaker 1: Why doesn't everyone just exactly? Because there's actually a number
Speaker 1: of downsides we need to consider as well. So with
Speaker 1: great power comes great responsibility, Beck. So they say direct ownership,
Speaker 1: it does come with higher risks because your returns are
Speaker 1: directly tied to the performance of individual companies. It also
Speaker 1: requires a whole heap more research and monitoring. To make
Speaker 1: sure that you are as an investor making informed and
Speaker 1: smart financial decisions. That kind of like onus, and the
Speaker 1: responsibility is far more on you.
Speaker 3: Ah, Okay, I got you. I got you. So I
Speaker 3: mean indirect shares have less responsibility.
Speaker 1: I mean, we could absolutely say it that way. That's
Speaker 1: how I personally feel about it. Indirect ownership, so things
Speaker 1: like managed funds or ETF they offer you far more diverseification.
Speaker 1: So essentially what you're doing is when you invest in
Speaker 1: a managed fund or in ETF, similar concepts. They're not identical.
Speaker 1: We'll get into that, but essentially what you're doing is
Speaker 1: investing in a basket of companies instead of just one
Speaker 1: direct company, which reduces the impact of you know, if
Speaker 1: one company isn't doing so well and you just went
Speaker 1: invested in that one, like you're going to feel all
Speaker 1: the losses, whereas if that one was one of two
Speaker 1: hundred beck it's a lot more consistent, it's a lot
Speaker 1: more level. You're getting more consistent returns. And to me
Speaker 1: as somebody who likes a more indirect approach to investing,
Speaker 1: because I think I've mentioned it before on the podcast,
Speaker 1: I do own ETFs, right, and I would argue that
Speaker 1: I don't want to say like one of the best investors.
Speaker 1: That's not what I mean at all. But like I'm
Speaker 1: very educated in this space. I used to do wholesale
Speaker 1: direct investing for ultra high netwalth clients. Well, I know
Speaker 1: how to do that. I don't want to do it.
Speaker 1: It's so much responsibility. Beck I love an ETF like
Speaker 1: it works for me and my personal situation because as
Speaker 1: much as I adore investing, don't get me wrong, don't
Speaker 1: tell anyone, but I do like to have a little
Speaker 1: bit of a punt on the side. I do like
Speaker 1: finding a share that makes sense to me and reading
Speaker 1: annual reports and investing. But that's such a small part
Speaker 1: of my investment portfolio because to me, that's fun. And
Speaker 1: if we look at the statistics, we know that index
Speaker 1: funds and edfs outperform investors who are trying to chase return.
Speaker 1: So like me chasing return and picking my individual stocks,
Speaker 1: it's not going to put me in a better position
Speaker 1: long term, so gotcha. Essentially, it reduces the impact if
Speaker 1: one of the companies that you pick doesn't perform well,
Speaker 1: and professional fund managers they essentially handle all of that
Speaker 1: for you. So say a company isn't performing that well
Speaker 1: in your ETF and it's one of two hundred, they
Speaker 1: might go, We're going to bullet it because they go
Speaker 1: and do all the research and they look into it
Speaker 1: and go, you know what, We're going to bullet that
Speaker 1: bank and replace it with this other one. It means
Speaker 1: that there's a more hands off approach and you kind
Speaker 1: of have some professionals in the background. Okay.
Speaker 3: Also, I just realized how different we are as people.
Speaker 3: When you said punt. I was immediately like, slap at
Speaker 3: the pokeys.
Speaker 1: You know what, that's like what I meant. That's kind
Speaker 1: of what I meant. But I do it on the
Speaker 1: aox because sports that are not getting my money. In fact,
Speaker 1: every time one of their ads comes up, which I
Speaker 1: don't know why it does on my TikTok, I'm like,
Speaker 1: get off my feet.
Speaker 3: Okay, interesting feat. I respect it. Now let's do a
Speaker 3: quick recap. What is an ETF for any managed fund
Speaker 3: and are they harder to buy than shares?
Speaker 1: Yeah, okay, that's a good question. Because I keep talking
Speaker 1: about atfs and managed funds, we definitely should dive into it.
Speaker 1: So a managed fund is also known as like mutual
Speaker 1: funds or like a unit trust. These are investment vehicles
Speaker 1: in which a fund manager they essentially take all your money,
Speaker 1: pull it together from multiple different investors, and allocate those
Speaker 1: funds to a diverse range of assets. These could include shares, bonds,
Speaker 1: other securities that they want to hold. Managed funds are
Speaker 1: typically overseen by what they call a professional funds manager,
Speaker 1: so that one usually white dude, Like there are female
Speaker 1: fund maashes that aren't many of them. This is obviously
Speaker 1: something that the average investor might not do. You might
Speaker 1: just go, oh, this one performs really well, Like you
Speaker 1: might go to a particular managed fund and go, I
Speaker 1: want to know more about it, but you just look
Speaker 1: at the investments. I go and look at the investments,
Speaker 1: and then I go look at the fund manager and go,
Speaker 1: who is he? Where has he worked before? What are
Speaker 1: his values? What are his morals? What's his tenure look like?
Speaker 1: Has he been working with this particular company for a year?
Speaker 1: Is he new? Has he been there for ten years?
Speaker 1: I'm honestly, I can't be trusted, so I like to
Speaker 1: do that. But essentially, this usual dude actively manages investment
Speaker 1: decisions on behalf of the investors. So Becky you don't
Speaker 1: have to make that decision because they're going to do
Speaker 1: it for you. Sure, and the aim is to achieve
Speaker 1: that fund's objectives. So that fund might have different objectives.
Speaker 1: So a fund might have the objective to meet the
Speaker 1: industry benchmark, So they might go, look, this fund is
Speaker 1: just investing in the top two hundred different shares on
Speaker 1: the ASA, and our plan is actually just to stay
Speaker 1: on track with what the market does. Great, no worries.
Speaker 1: There are funds out there that have the aim of
Speaker 1: beating the benchmark. There are funds out there that have
Speaker 1: the aim of doing lots of different things. Make sure
Speaker 1: you know that aim before you get into a fund,
Speaker 1: because it might not align with your value. Sure, if
Speaker 1: you're someone who's like, you know what, I want a
Speaker 1: really low touch ETFU managed fund, I'm just going to
Speaker 1: pick one that has the top two hundred. Make sure
Speaker 1: that the two hundred that they're picking are trying to
Speaker 1: meet the benchmark, not exceed it, because that would be
Speaker 1: a different risk profile. Again, because obviously if they're trying
Speaker 1: to be way more aggressive, like that's going to be
Speaker 1: a different situation than just like, oh, I just want
Speaker 1: to track the average of the average so ETF's on
Speaker 1: the other hand, they're a type of fund that tracks
Speaker 1: the performance of a specific market index or sector. So
Speaker 1: I'll give you an example, and ETF might track the
Speaker 1: SMP five hundred, which is essentially the top five hundred
Speaker 1: companies in America. I've heard about this one. Yeah, that's
Speaker 1: really standard. Often when you're like watching the news, so
Speaker 1: like you know, like the little scrolling bar at the
Speaker 1: bottom of the news, the SMP will usually be reported there,
Speaker 1: and a lot of people will be like, I don't
Speaker 1: know what that means, And it might be like a
Speaker 1: little green arrow going up or a little red arrow
Speaker 1: going down, or the yellow bar that's telling you if
Speaker 1: the SMP five hundred went up that time or down,
Speaker 1: or if it just stayed on track. So they might
Speaker 1: track the s and P five hundred, or they might
Speaker 1: track like a technology sector and only invest in tech companies.
Speaker 1: Just like managed funds ETFs, they pull all of your investors'
Speaker 1: money together into one big bucket and they invest in
Speaker 1: a diversified basket of assets. However, instead of being managed actively,
Speaker 1: so there's no one like Grampooba who's like making decisions
Speaker 1: every day making sure everything's tracking ETFs are usually passively managed,
Speaker 1: and their aim is to replicate the performance of their
Speaker 1: underlying index or sector. So like if it's the technology
Speaker 1: sector that I mentioned just before, they just go, oh, well, Beck,
Speaker 1: we've put together this list of twenty tech com The
Speaker 1: plan is to just get an average return of what
Speaker 1: the tech industry returns. You're okay, no worries. That makes sense. No,
Speaker 1: they're not harder to buy. That was your question before. Yes,
Speaker 1: they're not harder. They're not more complex. In fact, they
Speaker 1: are identical to buying a share, Beck. They are listed
Speaker 1: in exactly the same way on the AX. You buy
Speaker 1: them on a share trading platform, exactly the same way
Speaker 1: you would buy an individual share. There's nothing more complex
Speaker 1: about the purchase of them.
Speaker 3: Okay, that's good to know.
Speaker 1: What you will find though, while I'm on this topic,
Speaker 1: is that a managed funds fees are usually higher than
Speaker 1: an ETF because managed funds are actively managed. Sure for
Speaker 1: you need to pay for that active management, and ETF
Speaker 1: is usually lower fees because there's more of a passive approach.
Speaker 1: Does that make sense?
Speaker 3: That totally makes sense.
Speaker 1: So managed funds usually a bit more expensive, usually a
Speaker 1: bit more aggressive, usually trying to like beat a benchmark.
Speaker 1: ETF's usually a basket of the top performing shares in Australia,
Speaker 1: passively managed cheaper to purchase. Both are purchased on the
Speaker 1: share trading platform of your choice, listed in exactly the
Speaker 1: same way as a share would be cool. Does that
Speaker 1: make sense.
Speaker 3: Yeah, I'm really shocked actually that I comprehended all of that.
Speaker 3: Oh my god, I did say, thank you very much.
Speaker 3: That was fantastic. Now, as we've been talking, I've been
Speaker 3: writing down little bits and pieces, so I'm hearing terms
Speaker 3: like hin SRN.
Speaker 1: Ches's sexy. It's not the game, it's not the game
Speaker 1: the game. Do you know how to play chess? Yeah?
Speaker 3: Oh I love chess.
Speaker 1: I'm not smart enough for chess. I only know how
Speaker 1: to do chess through the share market.
Speaker 2: Huh.
Speaker 3: Well, you know, I think that's just as important.
Speaker 1: I would say, maybe more important, Probably the more important,
Speaker 1: unless you're like a competitive chess and you make lots
Speaker 1: of money. Drew.
Speaker 3: I'm fortunately I'm not at that level yet, but.
Speaker 1: I never will be. Don't worry.
Speaker 3: But no, I do think I need a little bit
Speaker 3: of time to break it down. Let's go on a
Speaker 3: really quick break and when we come back. We'll discuss
Speaker 3: it all.
Speaker 1: I'm excited.
Speaker 3: Let's go cool, we have back fee.
Speaker 1: I'm excited about this.
Speaker 3: We just knocked out the quick game of chess.
Speaker 1: Definitely did not it definitely did not say such thing
Speaker 1: as a quick game of chess.
Speaker 3: Actually, probably not. That's probably never exist.
Speaker 1: I reckon it does exist if it was like a
Speaker 1: really smart chess person playing against me, because they just
Speaker 1: go bam bam bam, Victoria, you're out.
Speaker 3: Yes, okay, I.
Speaker 1: Thought that chess was a like reflection of intelligence as well.
Speaker 3: Yeah me too.
Speaker 1: I'd always be like, oh, if you can play chess,
Speaker 1: you must be real smart. Yeah, and I never could
Speaker 1: so yeah, I could always felt really something self conscious
Speaker 1: about that.
Speaker 3: Oh no, it's not the case of chess. Yeah, absolutely, Yeah.
Speaker 1: Why you're drinks at the bar, you bring the chest
Speaker 1: out perfect.
Speaker 3: Now, I know exactly what I said before the break
Speaker 3: was that we're going to go into a few different terms.
Speaker 3: But I'm curious. I know that you were talking about
Speaker 3: how like when you're watching the news, you see that
Speaker 3: little bar at the bottom, and I always wanted to
Speaker 3: know what the all odds are.
Speaker 1: Yeah, okay, that is a good one. It's very similar
Speaker 1: to the SMP so all odds if you want to
Speaker 1: look it up on the ASX, which is the Australian
Speaker 1: Stock Exchange, its code is x AO and so essentially
Speaker 1: the XAO. It tracks the top or the largest five
Speaker 1: hundred companies in Australia that are listed on the AX
Speaker 1: according to their market capitalization, so basically how big they are,
Speaker 1: and that will change over time, like if a company
Speaker 1: decreases in value, they might drop off the All odds
Speaker 1: and another company that's worth more comes on, So essentially
Speaker 1: the top five hundred largest companies in Australia. It's commonly
Speaker 1: referred to as the All ords because it's actually considered
Speaker 1: the benchmark index for gauging the performance of the broader
Speaker 1: Australian market. So the All Odds was originally calculated in
Speaker 1: I think it was nineteen eighty with a starting level
Speaker 1: of five hundred and represents close to ninety percent of
Speaker 1: the AX, so it's not like a little bit of
Speaker 1: the ASEX, it's a lot of the ASX and it's
Speaker 1: essentially a good way of quickly checking in and seeing
Speaker 1: how's the Australian market doing. If the all odds are
Speaker 1: down right, it means that ninety percent of the ASX
Speaker 1: is on its way down. There must be something going
Speaker 1: on in the economy that is, you know, pushing it down.
Speaker 1: If the all odds is up, it means the economy
Speaker 1: is doing really well. So it's kind of like that
Speaker 1: one number that's like a really good sense check or
Speaker 1: a pulse check to see what's our market doing. Is
Speaker 1: it okay? And it's a good idea to track this
Speaker 1: if you're an investor, not because you're going to invest
Speaker 1: in it, but because you want to have your finger
Speaker 1: on the pulse. And it can be really jarring. Right
Speaker 1: as a baby investor you've just started, You're like, oh,
Speaker 1: my gosh, my whole portfolio is completely off. Do you
Speaker 1: know what makes you feel a lot better? Looking at
Speaker 1: the all odds and saying, ah, the broader economy is
Speaker 1: a little bit off. Sure, this makes sense. So this
Speaker 1: is one of those things. I'm in the middle of
Speaker 1: writing my investing master class, and this is something that
Speaker 1: you know, I asked the community a little while ago,
Speaker 1: just in the Facebook group, because I haven't announced it
Speaker 1: publicly that I'm doing that. Listening to this on the pod,
Speaker 1: You're welcome, But we're writing an investing mask glass, and
Speaker 1: I said, what do you want to know? Like, obviously
Speaker 1: I can write everything that I know about the stock
Speaker 1: market and what that actually looks like, how to do it?
Speaker 1: What to start? And someone's question, I can't remember who
Speaker 1: it was, so do apologize? It was my favorite question?
Speaker 1: Yet She's like, what does it actually mean to do
Speaker 1: your research? So I go back, you know, before investing,
Speaker 1: do your research? What the heck can is invest in research?
Speaker 1: How do I do that?
Speaker 3: Great question?
Speaker 1: So I've made a whole unit on how to quote
Speaker 1: do your research and what to look at and what
Speaker 1: can make you feel a bit more comfortable because investing
Speaker 1: is one thing. Yes, I can show you how to
Speaker 1: do your research to check if a share or a
Speaker 1: ETF is a good investment for you personally and whether
Speaker 1: you would choose it or not with the right you know,
Speaker 1: technology behind it. Sure, but also like what about a
Speaker 1: bit of a sense check? Beck, Like, what if you're
Speaker 1: a bit stressed, how do I do a bit of
Speaker 1: research to make sure that I can just still feel
Speaker 1: a little bit comfy in the market? The all odds
Speaker 1: is something that I would look at first to go
Speaker 1: what's the broader economy doing If that's off, what makes
Speaker 1: sense that your shares are off? Beck because the whole
Speaker 1: economy is a bit messed up, right now, gotcha? That
Speaker 1: might make you feel a bit more comfortable. But yeah,
Speaker 1: the all odds is actually really important, and I'm glad
Speaker 1: you brought it up.
Speaker 3: Oh great, I've shocked that I finally figured out what
Speaker 3: that was, because I feel like it's something that we
Speaker 3: joke about in like high school. The all odds are.
Speaker 1: You don't know what it means, but essentially TLDR it's
Speaker 1: the top five hundred biggest companies in Australia and it's
Speaker 1: a benchmark to see are they doing well? Are they
Speaker 1: not doing well? It's why you'll see the all odds.
Speaker 1: The numbers aren't massive when they move right. It's always
Speaker 1: like the all lords are ze point one percent, right,
Speaker 1: like you never hear twelve percent. Yeah, because that's five
Speaker 1: hundred companies and the average is going to have to
Speaker 1: be pretty significant to have a bigger than a you know,
Speaker 1: a one or two percent jump, gotcha. But it'll always
Speaker 1: be small amounts and it's just like slow fluctuations. And
Speaker 1: then if you look at it over the broader, like
Speaker 1: you know, scale of time, because we say on the
Speaker 1: pod lame that it's my favorite saying when in doubt,
Speaker 1: zoom out, like look at the bigger picture back. You
Speaker 1: might see that the all lords over time are just
Speaker 1: slowly tracking upwards. That's reflective of a really healthy market.
Speaker 1: Or you might see it tracking downwards, like going into COVID,
Speaker 1: we saw the all lords track downwards. Going into any
Speaker 1: type of recession, we see it track downwards, and you
Speaker 1: can see how fast or slow that is and go, oh,
Speaker 1: that's happening pretty quickly or that's actually really slow. It's
Speaker 1: interesting once you know what it is. Yeah, Okay, I
Speaker 1: won't go on and on about it because I totally
Speaker 1: go it.
Speaker 3: And I could totally listen all day, but we do
Speaker 3: full of it an episode to get to all, right,
Speaker 3: what on Earth is h SRN and chess? Are these
Speaker 3: online games?
Speaker 1: Online game? Let's do one at a time. Can I
Speaker 1: break it up? Because I'm not gonna answer all three
Speaker 1: at one time because I think that would be irresponsible.
Speaker 1: And while my job often is to completely overwhelm you,
Speaker 1: it's funny someone slid into my DMS and the like utoria,
Speaker 1: this is so embarrassing, But sometimes I have to listen
Speaker 1: to your episodes three times to get them. It's not
Speaker 1: embarrassing embarrassing, that's smart. Yeah, it is like do you
Speaker 1: know how much research I often do on these episodes
Speaker 1: tojam pack them full of information that hopefully you get. Yes,
Speaker 1: I can't expect you to walk away. It's like going
Speaker 1: to a lecture. Did you listen?
Speaker 3: Probably not watch it three, four, five, six, seven times?
Speaker 1: Yeah, and on like double speed, Yeah, and not spend
Speaker 1: that whole time doing it. But it is not embarrassing
Speaker 1: to have to go back and listen to it again.
Speaker 1: In fact, hard to watch a Barbie movie three times
Speaker 1: before I got everything in it, Yeah, exactly, So like
Speaker 1: the same should be true for my podcast because like
Speaker 1: they're basically on part with a Barbie movie. Right, Oh yeah,
Speaker 1: oh absolutely. All right, So let's start with chess, okay,
Speaker 1: because it sounds the most like a game, and I
Speaker 1: feel like it's most spoken about in our community as well.
Speaker 1: So put simply, chess is clearing house electronic subregistered system,
Speaker 1: oh sexy. So essentially that means that the AX is
Speaker 1: just keeping a list of who owns what chess. That's
Speaker 1: what chess means. Okay, So it's the clearing house electronic
Speaker 1: subregister system. It's just registering everybody who owns shares in
Speaker 1: the ASEX. So if you go and purchase a share
Speaker 1: on the ASEX, they want to keep track of everybody.
Speaker 1: That's what CHESS does. So if your shares are quote
Speaker 1: Chess sponsored, it means that when you buy or sell
Speaker 1: shares on the ASEX, it has a record of you
Speaker 1: owning the shares directly or not. And this is the
Speaker 1: main way in Australia that people buy and sell shares
Speaker 1: because they go to a broker, They might go to
Speaker 1: an online platform purchase a share and then they will
Speaker 1: get a whole heave of paperwork, usually from computer share
Speaker 1: that says you now own this, here's your chest number,
Speaker 1: here's this, here's that, and it's just tracking that you're
Speaker 1: the actual underlying owner of that asset. Just be aware
Speaker 1: when it comes to choosing a broker for buying and
Speaker 1: selling these because some brokers are and some brokers aren't
Speaker 1: Chess sponsored. Don't mean they're worse or different. It's just
Speaker 1: something that you need to understand and we'll obviously get
Speaker 1: into those different arrangements soon. Okay, So I'm not going
Speaker 1: to go on and on about it now because I
Speaker 1: know I've got a round coming soon.
Speaker 3: Yeah, you can feel it bubbling up. Okay, So this
Speaker 3: is if you're I'm assuming the owner of the share.
Speaker 3: But what if you're in an ETF or a managed fund?
Speaker 3: Will used to be chess sponsored? Does that?
Speaker 1: So that's where remember at the start of the episode,
Speaker 1: I said there's two ways to hold shares. There's indirect
Speaker 1: and direct. Yes, So a chess sponsor, if it is
Speaker 1: in your name, that would be direct.
Speaker 3: Gotcha.
Speaker 1: ETFs and managed funds are essentially indirect, and that means
Speaker 1: you are absolutely correct, Beck. If your shares are chess
Speaker 1: ASX sponsored, it means that you personally own them directly,
Speaker 1: so like the name on the certificate would say becksayed,
Speaker 1: rather than someone else holding them on your behalf like
Speaker 1: an ETF or a managed fund in the pool that
Speaker 1: we were talking about before, So you would receive dividends
Speaker 1: directly if you're the underlying owner of them. So that's
Speaker 1: essentially the profit the company pays to its owners, i e.
Speaker 2: You and you.
Speaker 1: Actually, if you're the underlying direct owner, you have voting rights.
Speaker 1: Not many people care about their voting rights, and let's
Speaker 1: be honest, if you only own one share your voting rights,
Speaker 1: they're not going to have the biggest influence. But that's okay.
Speaker 1: Some people really really want to have them. Is it
Speaker 1: bad that you don't own them directly? Is the next question.
Speaker 1: I think people are probably thinking no, not necessarily. Some
Speaker 1: people are honestly, wildly passionate about this. You might see
Speaker 1: it all over the internet if you are someone like
Speaker 1: me who is this embarrassing. Might be troll's reddit forums
Speaker 1: about like what shares are being bought and sold, in
Speaker 1: people's opinions on different ETFs, like I'm gonna need to
Speaker 1: know all of that information, right, But a lot of
Speaker 1: people will be like, it's terrible because it's not chess
Speaker 1: sponsored and you're not the direct owner of it. Rare anyway,
Speaker 1: I could not care less. But some people, as I said,
Speaker 1: are wildly passionate about it. But as someone who does
Speaker 1: arguably know the industry very well and invests in ETFs
Speaker 1: and managed funds directly, it doesn't worry me because all
Speaker 1: my investments are still safe and are still secure, and
Speaker 1: essentially what my shares in my ETF and managed funds
Speaker 1: are operating under is what's called a custodian model. So
Speaker 1: that all sounds very complex, you could say, but a
Speaker 1: custodian model essentially means that someone else is currently holding
Speaker 1: that share certificate on my behalf. It's all above board
Speaker 1: if either of those companies, like let's say the shared
Speaker 1: trading platform that I have picked, operates under a custodian model,
Speaker 1: which means that the etf I board or even sometimes
Speaker 1: the share that I buy isn't going to be my
Speaker 1: direct name. It's under this custodian model. You might go,
Speaker 1: but what if they go bankrupt, Victoria, what if they
Speaker 1: lose all their money?
Speaker 3: True?
Speaker 1: Are you going to lose your shares back?
Speaker 3: It's a good question.
Speaker 1: You're not, because it's held under a custodian model, which
Speaker 1: means that the owners of that company that you're investing with,
Speaker 1: they don't actually have access to that. They can't just
Speaker 1: transfer it to their name. Custodian means they're the custodians
Speaker 1: of it, not the the lying owner. The share owners are,
Speaker 1: and essentially the owner of the share. It isn't as
Speaker 1: clear as if it was responsored, but there still is
Speaker 1: a direct line of working that out, and that company
Speaker 1: can't just yeed off with your shares, Like, you're not
Speaker 1: going to lose out in that circumstance. The only way
Speaker 1: you would lose out, and you know there might be
Speaker 1: an issue with your share is if your share actually
Speaker 1: loses value, but it wouldn't have anything to do with
Speaker 1: your broker. However, in that custodian model, your shares are
Speaker 1: actually held within a trust. So remember in the first
Speaker 1: episode we were talking about trusts and direct ownership. Companies
Speaker 1: can set up trusts to hold their client's assets. So
Speaker 1: my shares are currently being held in a trust by
Speaker 1: my custodian, which is my broker, and they're not going
Speaker 1: to go missing if that company goes bankrupt or they
Speaker 1: shut down. So you're okay. And I think a lot
Speaker 1: of people get really worried about that because they're like, oh,
Speaker 1: but someone's going to, you know, take off with my
Speaker 1: shares because they've got my share certificate and I'm like,
Speaker 1: not so quick, Like, that's not how it works.
Speaker 3: Okay, how it works.
Speaker 1: So you're safer than you might think you are.
Speaker 3: That's good to know. It's always good to be safer
Speaker 3: than you think.
Speaker 1: Exactly.
Speaker 3: What about HIN and SRN, are they equally.
Speaker 1: Like I'm overloading this episode, but like, I feel like
Speaker 1: this all needs to go in the same episode, so
Speaker 1: I do apologize, but no, thankfully. So historically shareholders, you
Speaker 1: actually would have received like a share certificate, like a
Speaker 1: legit one in the mail to prove that you are
Speaker 1: the underlying owner of that asset. You can still receive
Speaker 1: those if you really want to. I get mine by email.
Speaker 1: Shares are now automatically held digitally on what's called a
Speaker 1: hi N if you go with a stockbroker, So a HIN.
Speaker 1: It's actually very simple. It means hold up identification number. Again.
Speaker 1: It's just a number that tracks who owns what and
Speaker 1: when and where, which is essentially like an ID card
Speaker 1: or an ID number for your shares. It's not super complex.
Speaker 1: You don't need to be super across it. Just know
Speaker 1: that each time you would buy, you would be, you know,
Speaker 1: given a HIN. It's essentially just to track your shares
Speaker 1: so the ASEX knows who owns what and when and where.
Speaker 1: M mmm, beck. You also asked about an SRN, So
Speaker 1: you're gonna have an SRN if you buy shares with
Speaker 1: the registry, So youon know how I said before, you
Speaker 1: get a HINT if you go with a stockbroker. If
Speaker 1: you go directly with the registry, you're actually gonna get
Speaker 1: an SRN, which stands for Security Reference number. Again just
Speaker 1: another ID number, okay, which is unique to each company's
Speaker 1: shares that you own. So both of which are honestly
Speaker 1: just acronyms for numbers you're gonna get when you register
Speaker 1: your investments. So no matter which way your shares are held,
Speaker 1: you remain ultimately the beneficial owner even if the stockbroker
Speaker 1: or the registry goes bankrupt. Oh so you're okay, you
Speaker 1: safe safe. These are tracking numbers, So if you get
Speaker 1: them in the mail, or you get them in your emails,
Speaker 1: save them somewhere important, in a folder in your emails,
Speaker 1: or like my favorite, I don't care paper in my house,
Speaker 1: I'm gonna lose it. But you know what if I
Speaker 1: don't lose pieces of paper in my house, I I
Speaker 1: have been on the phone and I flip them over
Speaker 1: and I draw all over us lists and then I
Speaker 1: rip them up like it is not a good idea.
Speaker 1: So I actually take photos of all of mine and
Speaker 1: just save them in an album in my phone, or
Speaker 1: I email them to myself. But definitely keep track of
Speaker 1: these numbers because ultimately they are important, but you're not
Speaker 1: going to use them every day when you're doing share trading.
Speaker 3: Great idea, d I don't know if you do the
Speaker 3: same thing as I take photos. I send it to
Speaker 3: myself and I put like a trillion different keywords in
Speaker 3: the email.
Speaker 1: I'm like, hi, n identification number for XYZ share share trading,
Speaker 1: stop broking investment account, like exactly, because what if I
Speaker 1: forget what to google email?
Speaker 3: What future are me going to think about?
Speaker 1: And I can't trust future me. I have proven to
Speaker 1: myself I can't be trusted. I agree.
Speaker 3: Okay, so I just want to quickly wrap my head
Speaker 3: around this all because it is a lot.
Speaker 1: It is a lot. I'm sorry, but I okay, you've
Speaker 1: gotten across it really quickly.
Speaker 3: Thank you so much. I mean, there might be gaps
Speaker 3: in my knowledge.
Speaker 1: But so the episode was so that we listen to it.
Speaker 3: To us exactly, if I buy shares directly in my
Speaker 3: own name, my own name will be listed down on
Speaker 3: the share register. Yeah, I'll be able to buy and
Speaker 3: sell individual shares whenever I want. My dividends will be
Speaker 3: paid directly to me, and I have voting rights.
Speaker 1: WHOA Yes, exactly. You're the money.
Speaker 3: Thank you so much.
Speaker 1: You're on the money.
Speaker 3: That is so sick. Okay, So while I'm at it,
Speaker 3: when you indirectly invest, yes, the name on the share
Speaker 3: register is the ETF or the managed funds company. Yes,
Speaker 3: not my name, not your name. But they hold the
Speaker 3: assets on my behalf and manage what the ETF or
Speaker 3: managed fund is made up of. So I don't have
Speaker 3: to worry about buying and selling, yes, but I do.
Speaker 3: I still get my dividends though. What happens if the
Speaker 3: share makes a profit. Oh that's a good question. I
Speaker 3: like that you're thinking about this thing now. It makes
Speaker 3: me so proud. I'm like, oh, so you're just worried
Speaker 3: about where a dividends is going to go?
Speaker 1: Thank you something the profit still goes to you, do
Speaker 1: not worry, okay, So it will just be filtered directly
Speaker 1: through your et or managed fund. It does get distributed
Speaker 1: in a bit of a different way, but it's still
Speaker 1: there for you. You are not missing out. Often when it
Speaker 1: comes back in the fees that you've agreed to pay
Speaker 1: for your ETF or managed fund to get taken out
Speaker 1: of that amount and then it gets distributed to you
Speaker 1: or through your etfor managed fund. You might have picked
Speaker 1: what's called a dividend reinvestment plan, which means they never
Speaker 1: give you the cash. They actually just reinvest it back
Speaker 1: into the same ETF for you. So it's all automated,
Speaker 1: which can be really helpful because if you're planning to
Speaker 1: invest over the long term and you own a share,
Speaker 1: you know, and let's pretend it paid you ten dollars
Speaker 1: this year, you don't want that ten dollars this year.
Speaker 1: You want it reinvested into the share market so that
Speaker 1: it can grow over time and then when you reach
Speaker 1: retirement you can make use of it. But that's what
Speaker 1: I mean when I say the money that your money
Speaker 1: makes makes money is because the money that your money
Speaker 1: made gets reinvested, and then that money makes money. So
Speaker 1: that ten dollars that gets reinvested, then you know, might
Speaker 1: make a dollar next year, and then that dollar makes
Speaker 1: money and it just compounds from there. Okay, So it
Speaker 1: doesn't necessarily mean that you're missing out, but it might
Speaker 1: get filtered through a different way, but those profits are
Speaker 1: still yours. And like, for example, if Combank says that
Speaker 1: they're paying a dividend to investors, that is still going
Speaker 1: to come to you. Sure you don't miss out?
Speaker 3: Good to know, very good to know.
Speaker 1: Don't miss out.
Speaker 3: Don't miss out.
Speaker 1: And arguably the most important thing about investing is making money.
Speaker 1: So like, I'm not going to let you miss out.
Speaker 1: Oh joking, I'd be like, don't do that. That's terrible.
Speaker 1: You won't get paid. That would be silly, that would
Speaker 1: be so dumb.
Speaker 3: I trust that you're not done with teaching, but I
Speaker 3: probably amn you're done.
Speaker 1: Okay, don't worry.
Speaker 3: But before we wrap up, how do we pick which
Speaker 3: option works best for us?
Speaker 1: Okay? So this is a good question, but also a
Speaker 1: really personal question because like, I can't tell you what's
Speaker 1: going to work best for you. From my perspective, it's
Speaker 1: really important to consider your goals and your risk tolerance
Speaker 1: and your lifestyle. Like some people might want to be
Speaker 1: individual share traders and consistently, you know, rebalance their own
Speaker 1: portfolios and manager that way. If your hands on and
Speaker 1: you want to pick your own companies, like direct ownership
Speaker 1: might actually be your own style, Beck, But if you're
Speaker 1: looking for diversification, maybe a little less involvement, maybe a
Speaker 1: little less risk. Because when you diversify more, Beck, you're
Speaker 1: lowering your risk. So the more diversification you have, the
Speaker 1: more risk you have. Maybe indirect ownership is a better
Speaker 1: fit because you go, well, I can get instant diversification
Speaker 1: less involvement if I go and buy a top two
Speaker 1: hundred asx ETF, And that might make you really comfortable.
Speaker 1: But again, you might be widely passionate about picking your
Speaker 1: own shares, or maybe you don't want the top two hundred,
Speaker 1: or maybe you just want a bit more control. So
Speaker 1: it's really going to depend on who you are and
Speaker 1: what you do. And as I've said, you know this
Speaker 1: is what I do, but I do both. I'm not
Speaker 1: saying that both is right for you. I do both
Speaker 1: because let's be honest. Direct share investment for me is
Speaker 1: me having a good time in the share market. I
Speaker 1: love it, Beck It's so lame, like I love not
Speaker 1: my research. I love looking at new companies and what
Speaker 1: they are made up of, and what their board looks like,
Speaker 1: and what their CEO has done historically and how they've performed.
Speaker 1: That is not everybody's cup of tea. Everybody else in
Speaker 1: our community, or a lot of people in our community
Speaker 1: might turn around and be like, V we hear you,
Speaker 1: we see you. We understand the importance of investing. We
Speaker 1: know that to create financial freedom, we want to invest.
Speaker 1: But I just want to send some money into an
Speaker 1: investment every month and not think about it again. Ye,
Speaker 1: you're a psychopath. I am not going to be looking
Speaker 1: at the annual reports of each and every single company,
Speaker 1: because one, I don't comprehend them, but I also just
Speaker 1: don't care. That's fair and that's so fair. So I
Speaker 1: think that understanding the difference between indirect and direct investing
Speaker 1: is going to be a really personal decision. But I
Speaker 1: think the crux of this episode is helping you to
Speaker 1: understand that when we talk about HIN or SRN or chess,
Speaker 1: those things are not as important as a lot of people,
Speaker 1: you know, jump up and down about and say, Oh,
Speaker 1: it's so important. That's chess sponsors so you have direct control.
Speaker 1: I personally don't need direct control. What I want is
Speaker 1: to know that if everything goes south, my investment is
Speaker 1: going to be safe, irrespective of who was the custodian
Speaker 1: of that. And I know I'm safe, so I'm fine.
Speaker 1: And I think that a lot of people in our
Speaker 1: community wanted to hear that, because you go, well, if
Speaker 1: it's not chess sponsored, maybe it's less secure, and that's
Speaker 1: not the case at all. So that's where I'm at.
Speaker 1: But it's going to be a personal decision, not a
Speaker 1: decision that I can make for you, because I don't
Speaker 1: know you well enough. I wish I did, so let's
Speaker 1: hang out.
Speaker 3: I guess, like, lastly, are there any regulations we need
Speaker 3: to be aware of?
Speaker 1: A look at you with your questions, all right, So
Speaker 1: owning shares obviously comes with lots of different rules and regulations.
Speaker 1: But don't worry. We won't dive right now because I
Speaker 1: really want to go home now into the technicalities of them.
Speaker 1: But just know that direct ownership, as we've been talking
Speaker 1: about it means that you have to stay informed and
Speaker 1: you have to actively manage your investments, so like you've
Speaker 1: got to be across it. You've got to do all
Speaker 1: the reporting. Yourself managed options like a managed fund or
Speaker 1: an ETF, they actually handle most of the regulation for you.
Speaker 1: So that's kind of an attractive thing. We won't Maybe
Speaker 1: I'll do a whole episode one day on regulation, but
Speaker 1: it won't be that sexy. Sure, maybe will do it
Speaker 1: as a bonus for people who are just like me,
Speaker 1: because I know you will not give two flying fruit bats.
Speaker 1: I've already yeah, you're like, no, I don't even know
Speaker 1: why I asked you the.
Speaker 3: I actually have done now, But to make sure everyone's
Speaker 3: on the same page, just give us a really quick
Speaker 3: overview of one more over, you're like, really drill in envy?
Speaker 2: All right.
Speaker 1: So, obviously today we have covered the basics of direct
Speaker 1: and indirect ownership of shares. We have talked about direct
Speaker 1: ownership when it comes to investing directly in shares on
Speaker 1: the AX or any stock exchange, to be honest, and
Speaker 1: we've talked about indirect ownership through managed funds and ETFs. Obviously,
Speaker 1: these are not the only asset classes that exist in
Speaker 1: the world. These are just two really good examples of
Speaker 1: how these work. I think we need to also remember
Speaker 1: there's no such thing as a one size fits all approach,
Speaker 1: and as I said before, choose the method that aligns
Speaker 1: to your goals and your values, not just what someone
Speaker 1: on a Reddit thread said was the most important thing. Honestly,
Speaker 1: great advice. Don't take Reddit as gospel.
Speaker 3: I'll have to remember that you done done, I'm done done.
Speaker 1: Oh, I think we deserve some cheeky mickeyde's.
Speaker 3: Let's do it. Let's go.
Speaker 1: We have a good week, guys.
Speaker 4: We love you.
Speaker 3: Bye bye, guys.
Speaker 4: The advice shared on She's on the Money is general
Speaker 4: in nature and does not consider your individual circumstances. She's
Speaker 4: on the Money exists purely for educational purposes and should
Speaker 4: not be relied upon to make an investment or financial decision.
Speaker 1: If you do choose to buy a financial product.
Speaker 4: Read the PDS TMD and obtain appropriate financial.
Speaker 1: Advice tailored towards your knee.
Speaker 4: Victoria Divine and She's on the Money are authorized representatives
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