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RTC13: Twelve top tips when it comes to investing · The Curve

• 0:00
  Welcome to the Curve Podcast, a conversation for women who want to learn more about money,
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  their money for the future they want to have. We're all busy in the pursuit for financial
• 0:12
  confidence and increasing your wealth should be a simple one. That's why the curve was created.
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  This podcast is for women to learn about investing in a non-scary or intimidating way.
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  With short episodes, you'll have time to learn, digest and understand everything to do with the
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  world of investing. Don't expect to be an expert on day one. No question is a silly question.
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  If you're asking it, so is everyone else. So thank you for being here and for listening,
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  because together we really can raise the curve. Normally I'm somewhat prepared for these
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  episodes, but I haven't even looked at your notes. What are we talking about today? Well,
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  that's good because I'm really prepared, so maybe I'll just be a conversation with myself.
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  Okay, what are we actually learning about? So I thought I'd run through my 12 investing tips.
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  Oh, fun. These are my go-to things that I look for or that I try to remember when investing.
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  So it's all stuff to look out for. They're aware of. It's kind of just top-line tips.
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  Yes, but it's an investing bible. I think we need to come up with a more jazzy name than this.
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  Sorry. Okay, like the sound of that. So the timeless simple tips for your investing journey.
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  Did you write that? No, I like it. I think, you know what, stuff like this is really helpful when
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  it's really clear, because I think a lot of the time it's like the risk spectrum is very broad,
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  you know, it's all a bit like. It's like in the long term. Don't take too much risk. Do this.
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  Don't do that. You're like, oh my gosh. Yeah. Whereas this is like kind of nice, because it's like,
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  okay, cool. I can write down these tips and just stick to them. Yes. Let's start with number one.
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  This is one for you, Soph. I know. Oh my god. I can just see it. Number one, start today.
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  Honestly, I've just been real busy. It's so easy to put stuff like this off, isn't it? Yeah.
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  And that's the biggest response that we always get is I've just been too busy or I'll do it tomorrow
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  and there's just... Having thought about it for years, but still not done anything.
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  Yeah. And that's what we try to do at the curve is to give you small bite size pieces or bite
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  size tips that you can do so it doesn't seem overwhelming. So therefore there's not that procrastination
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  so that you can actually start today. It's making it priority, rather than saying, this is going to be
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  on my to-do list when I've got nothing else to do. So you're always going to be busy. So it's
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  exactly. It's deciding if your financial future is something that you do hold as a number one
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  priority or if you're going to continue to put it off. And every day that you don't do something
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  is just another day last when it comes to making yourself money. And that's due to what we're
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  talking about compound interest. So every day that you leave it or you don't actually act on it
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  means that you've lost another day of that compound interest. And a day turns into a month,
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  turns into a year, and then... Well that's a story of my life, isn't it? Now the second one is
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  only invest what you're willing to lose. Now this is key because a lot of people take on too much
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  risk and therefore invest too much. And then if they do lose it, then they're in a worse financial
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  situation. They get themselves into a bit of a pickle. So I guess it's looking at your cash flow,
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  looking at what you need from day to day, what you can actually survive on and be okay with.
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  And people always ask us, what amount should I be investing? And that's totally dependent on your
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  financial situation. 50 dollars for someone might be quite a lot. 50 dollars for another person
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  might be quite little. So it totally depends on your financial situation of how much you should
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  be investing. Do you have any advice, this is a slight tangent classic Sophie? Do you have any advice
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  for people to become a little bit more detached from their money? Because honestly for me, if I lost
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  a hundred dollars, I feel like I'd still be a bit gutted. Yes, yeah. And I think the best approach
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  would be to put away a bit for investing or put away a bit to save before you've even got it
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  if that makes sense. So say you get your paycheck straight away, put money into that
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  into your savings account, your investment account, because then you've never had it to spend
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  if that makes sense. So I guess you've got less attachment to it. I just think it's like with
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  Kiwi saver because it's deducted before you even get the money. There's this attachment to it.
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  It's out of sight, out of mind. Out of sight, out of mind, exactly. Yeah. Also investing is about
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  growing money. So try and look at it with a positive mindset and go, okay, I'm putting that
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  $200 away so that it can become $300 in the future. You know, don't try and think, I'm putting
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  that $200 away so that it can be zero. I mean, we always harp on about the risks involved in
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  investing and the fact that you can lose all your money. But the reason we're investing is to
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  grow our wealth for the future. So try and look at it that way. Yeah. But what I'm saying with this
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  tip number two is don't go take out a loan to then invest in a really risky investment,
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  because you need to be prepared to lose that or don't remalge your house or take on unnecessary
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  risk because you need to be able to live without that money because there is a risk within
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  investing. I totally see where you're coming from because at first I thought you were talking about
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  just in general small amounts, but you more mean invest within your means. Yes. Don't invest your
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  entire paycheck and then have to eat air for the rest of the month. Yeah, not a good call. Yeah,
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  just be a bit rational about it. So number three is take a long-term view. Gosh, we haven't heard
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  this one before. Have we? Oh, tell me please, I've never heard that. So this is just in regards to
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  compound interest. It sounds like my favourite word at the moment, but it just means compound interest,
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  you can earn larger and larger returns. So you need to take a long-term view.
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  I've got nothing to add. So number four.
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  And it also just means that markets are unpredictable. So your investment is likely to have some
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  volatility and go up and down in the short term over the long term, depending on what you invest in,
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  but it should it should increase over the long term. So therefore you have a smoother ride if
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  you take a long-term view. Number four. Always consider risk. And this is kind of coming back to
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  number two, even though the investing is all about maximising your returns or minimizing your risk.
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  You know, there is an element of risk in investing. And so you could lose some all of your money.
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  Eek. Yeah. Yeah. Always consider risk. Yeah. Always consider risk. Number five.
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  Diversify. You know what? This one means stuff. I do. It means different asset classes don't have
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  all your eggs in one basket. Exactly. A plus plus plus for me. So diversification means
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  the spreading of risk. It's kind of it's a good way to think of it rather than standing on the
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  edge of a jump like a diving board. You know, your halfway back where you've got like one foot
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  on either side, so it's like a balanced risk. Rather than taking all your savings and dumping it
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  into one situation, it's spreading it across all of these different potential opportunities
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  that could grow awful. I think diversifying is actually more fun because you can be like, hey,
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  I want to give you some of my money. I want to give you some of my money. I want to give you some
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  of my money. Instead of being like, oh, okay, I have to give it all to you. Yeah. Yeah. It's kind
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  of like being in a polyamorous relation here. You're getting multiple people at one time. You get
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  better both worlds of all worlds. Fine, it's just fun, guys. I've never thought about finance and
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  polygamous relationships, but yeah. Yeah. And it just means that you're less vulnerable to the
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  peaks and trops of the market or the peaks and trops of that company's sheer price. And it's just
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  again, means you get a smoother ride. Number six is invest in what you know. Some of our
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  avid curve listeners will have heard this one before and we'll know that it just means that invest
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  in businesses that you understand, invest in businesses that you use or products or services that
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  you use so that you understand what you're investing in a bit better. Yeah, you don't want to be going
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  and investing in something that's just so far beyond your realm of understanding, because
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  investing is confusing enough. You want to be able to at least understand Lululemon sales
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  tights. Yes. I don't know. The bakery sells pies. I don't think investing in my favorite bakery is
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  the best investment, but they do have good pies. You buy a lot of pies from there. You've got a lot
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  of research. One day last week, can you believe it? We were going to rename the curve the curves.
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  It had been a big eating week. Which is also fine. Fine, fine, but it is. So okay, investing in what
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  you know. The little taste I give myself is yeah, if I can't explain it to a friend or a family
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  member or give an elevator pitch about the company that I invest in, then I shouldn't be
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  investing because then if something goes wrong, you won't understand why because you want to
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  understand the business and it's just it's just a necessary confusion for you or a necessary
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  it's just like another blind spot. Yeah, because you don't need. Because also I guess it comes
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  back to if you're wanting to take your money out of the company if you don't understand what's
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  happening within it and if it's actually having a negative impact or a positive one,
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  the sides what's happening with the share price, then you can't probably make an educated
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  decision as to whether or not you keep your money or take it out. Exactly. And there's just so
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  many things to invest in. You don't need to worry about the ones you don't understand. Leave
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  that to someone else. Tech is not something you're going to go near. Not going near any kind of techy
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  in situations. I mean, I've had multiple friends come up to me and they're like, hey, Vic,
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  you know, what about Bitcoin? I don't know anything about it, but he friends talking about it and
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  it's just like, oh gosh, no, no, no, no, no, that is the worst. If you don't understand anything
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  about it, they don't invest in it. I'm not saying Bitcoin's a bad investment. I'm just saying
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  if you don't understand it, don't invest in it. Number seven. So this one I am definitely guilty of
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  is don't fall in love with the stock. How have you fallen in love with the stock, but not a guy?
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  I know. This sums up my love life, doesn't it? You're two of a season of work. Have you actually
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  become too attached to one of them? I mean, love might be a bit of a strong word, but I find if I
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  do a lot of work on a company or an investment, then you almost have this vested interest and you
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  want to invest in it because you've done so much work in research. But the whole idea of research
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  in a company to invest in is to figure out whether it's a good investment or not. And a lot of times
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  you can come out and find that it's not a good investment. But your mindset is, well, I've spent
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  25 hours looking to the companies, of course, and then I put some money in. And you almost have a bias
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  within yourself of, well, I'm only going to look at the good things because I put so much of it,
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  and it's just, oh my, it's like, it is like a relationship though. I'm looking at it with
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  roast and devices because you forget all the bad stuff. Exactly, exactly. And then if you do
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  invest in it, the investment doesn't go well, then you don't want to sell because you fall in love,
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  although you've put so much work into it, you need to remove that attachment. You need to keep
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  looking at it objectively. So not getting emotional or just basically looking at it constantly
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  with a really with clarity and with clear mindset. Yeah, with a clear mindset with an objective view
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  and try to remove the emotion. And it doesn't know that you own it. So it doesn't really care
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  if you own the stock or not. So I don't reckon it's even that it's not like you're sitting there
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  being like, I love my stock so much. It's probably more, it's more the work side of things.
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  I mean, that's a really good example because it's wasted time if you decide to not go with it.
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  I understand we're all busy and we don't have that much time to research. You're by the time you've
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  done it and you thought it was going to be a good idea and then you get to the point where you're
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  like on the line of not sure. And really it probably is a no. Yeah, but it's also not wasted time
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  because you've you've learned what you shouldn't be investing in if that makes sense. So try and
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  think of the work even though you might not make the investment at the end. Try and think of it as
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  well, I've learned why I shouldn't make that investment. And then you take that learning
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  to the next investment that you look at and that one might be a yes or no, but you keep learning.
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  Number eight is don't try and time the market. This is one of the biggest mistakes. And again,
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  a question we get asked a lot is oh, should I invest now or should I wait for a market correction
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  or should I wait when markets aren't so expensive or haven't had such a good run? I mean, yes,
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  you could, but you could be waiting a week. You could be waiting 10 years. How long is the
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  piece of straight? Exactly. And if you are waiting for the market to to fall a bit or to correct,
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  you probably won't feel like investing then anyway. You know, I'm pretty guilty of this. I've got
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  money sitting in my Australian account. And when I first got that job and was saving the Australian
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  dollar was so much stronger, so much stronger. This was maybe five, six, seven years ago. So
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  comparatively earning 60 grand in New Zealand to 60 grand. Australia was actually way better.
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  And now it's basically on par and had my savings over there and I can't bring myself to bring it
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  back because I know the dollar is basically equal. But actually the downside of that is that I could
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  have invested that in something like years ago. Exactly. And actually made on it rather than
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  sort of just waiting because you're right, it could be 15 years before the Australian dollar increases
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  again. And there's an opportunity cost of you, yeah, like you say, you could have invested it and
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  grown and got a much greater return. But it's more around COVID, great example. A really quick
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  correction. Markets fell 30%. Depending on which market you look at, yes, they fell 30% in such a
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  short space of time. But then they rallied back so quickly. If you hadn't timed that perfectly,
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  which a lot of people didn't, if you're taking your money out at a pit, think it was going to get
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  even worse. Exactly. Yeah. Oh, no. So it's just, it's just so hard. Where is more rational people
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  that sat back and thought, no, this is just a correction. Markets will bounce back or look, I'm
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  taking a long term view. I'm not going to react to what's happening in the market. They'll be much
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  better off now. So it's just not getting caught up in fluctuations in the market. Yeah. Exactly.
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  And yeah, when you're waiting for a better entry point, it could be a missed opportunity.
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  Just jump. Just take the leap. Just take the leap. And yes, you might take the leap in their markets
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  for, and you might fall. And you might be gutted, but just keep in the back of your mind. I'm taking
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  your long term view. I'm taking your long term view. And you know, Brunei Brown, and she's like,
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  you've got to be in the arena. You actually just have to, even like a lot of you've got to be
• 14:43
  in to win. If you don't, probably not the best analogy when it comes to investing, but the idea
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  that if you're just sitting there watching, well, you're not any better off anyway. So you may as well
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  get stuck in. And you're always going to hear a story of people like, oh, yeah, invested at the
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  bottom during COVID, or I invested at the bottom at the global financial crisis that I've made
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  XYZ. Personally, I think that's opportunistic or luck, to be honest, because nobody knows when
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  the bottom is just like, no, it knows where the top is. And that's from a professional ladies and
• 15:13
  gentlemen. Number nine is never chase a hot tip. I thought that's never wax your hot lip
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  from where I'm sitting. So I never wax the top lip. That's what I thought it was. You'll
• 15:26
  find these huge micro. I know I did it the other day. Got many pimples on my upper lip. Not
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  ideal. Never chase a hot tip. Yes. So this means don't listen to your hairdresser or your Uber driver.
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  No matter how good his writing is. It's just coming back to again, things we've harped on about
• 15:47
  before is do your own research. It's just like lying a car. You wouldn't you wouldn't buy a car without
• 15:52
  giving it a test drive. Don't invest in something without doing your own research. Or you wouldn't
• 15:56
  buy a car just because it's the same as your hairdressers and she says it's good. Yeah, exactly.
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  You're making a sacrifice and investing in something. You want it. You want to understand it.
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  You want to know it. You want you want a holistic view on what you want to make decision yourself
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  because that Uber driver that he just is probably not going to tell you when they're going to sell
• 16:14
  that stock either. So then you're going to be left, left hanging. If it doesn't work out. So it's
• 16:21
  just relying yourself. Can I tell you a quick side note? I did this once. I learned the hard way.
• 16:27
  This wasn't in regards to investing, but I took someone's word as gospel. I was just like, these
• 16:31
  these really great workout pre-workout things that I use and they're amazing and they're clean and
• 16:36
  natural. I was like, amazing. Like I was getting up at five in the mornings. It was super tired.
• 16:41
  Started taking these pre-workouts and they're two months later. They were on third degree. They had
• 16:46
  speed in them and they were taken off the market and I was like, oh my goodness. Thank you very
• 16:50
  morning. I will yes that. Also just how silly to listen to what she said, rather than going in
• 16:56
  researching and seeing what ingredients weren't there. That was so dumb. I can't expect everything.
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  Anything anyone really means you do your own research, especially if it's to do with your well-being
• 17:07
  or financial well-being, your healthy body, everything. I mean granted I was like 20, but still,
• 17:14
  it was such a hard lesson to learn. Okay, so don't chase a hot tip. Now we're nearly at the end.
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  Number 10, behave like an owner. Just remember what you're buying. When you're buying a stock,
• 17:28
  you're buying a part share of that business. Therefore you're becoming a part owner of that business.
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  So again, when you're deciding what to invest in, do your own research and invest in a growing
• 17:38
  business with a good management team. Number even, remember past performance is no indication
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  of future returns. I know this one too. This is a really good one because it's real easy to be proud
• 17:51
  of your achievements or to be like, look at this thing I did. It's all about looking at a stock
• 17:56
  today and thinking about what it's going to do in the future, not looking and going, oh wow,
• 18:01
  it's up 100% in the last 12 months. Therefore I'm going to invest because that performance is going
• 18:07
  to continue into the future. Yes, it might, but you need to do the research to understand why
• 18:14
  an effort is going to do that again in the future. So it's great to know that a stock has done well
• 18:18
  in the past just because it's good to know, I guess, but it's completely irrelevant when you're
• 18:23
  coming to look forward for whether or not you invest in it. Is that what you mean? Yes, it's
• 18:27
  sheer prices, but if you look at its earnings or its financial information and say it has consistently
• 18:34
  delivered earnings growth over a number of years, then that should give you some confidence
• 18:41
  that it'll do that in the future because that management team has driven that company to achieve
• 18:48
  those consistent returns, but it's just the futures unknown. This tip also comes back to fun
• 18:53
  managers. So if they've had a really good past year of performance, does it sound like you,
• 19:00
  for example? Yes, the first look at your portfolio and you've done really well.
• 19:03
  Yes, there's nothing to say that I will do that in the future because nobody knows what's going
• 19:08
  to happen with markets or what's going to happen in the future. But we do say when when you're
• 19:12
  looking at a fun manager or a Kiwiserv provider and you're trying to choose who to go with,
• 19:17
  that performance risk and fees are three things to look at. So you might be a bit confused when
• 19:23
  we're sitting here. Past performance is no indication of future returns. If you're looking at a
• 19:27
  fun manager and they have consistently delivered on average above 10% for the last 15 years,
• 19:34
  then that does give you an element of confidence of what you can expect in the future. It just
• 19:40
  plays into your decision making. It's saying that there's no guarantee of those future returns.
• 19:45
  And it's like with anything, if you see a billboard on the motorway that says 10% return guaranteed,
• 19:52
  then you should be asking questions of how they can guarantee that return, particularly if they're
• 19:56
  investing in the stock market because that's a very high return to be able to guarantee that.
• 20:01
  On the flip side, a term deposit, for example, they can guarantee a certain percentage for a
• 20:06
  separate period of time because it's very, very low. So it's like one for the fluctuations,
• 20:12
  but being really high and being really low so they know they can guarantee it. Yeah, and guaranteeing
• 20:18
  such a low investment means you kind of don't have to do much to get that return if that makes
• 20:22
  sense. There should be flashing morning signs if someone's guaranteeing in the future a really high
• 20:28
  return. Drum roll number 12 is invest in yourself. So this just means take the time to the research
• 20:36
  and read about your investment before making leap. Invest in yourself, improve your knowledge
• 20:42
  and investing. So therefore you can make better decisions. Spend time learning and getting
• 20:49
  clued up and improving your knowledge so that you are continually learning and investing in yourself
• 20:55
  so that you can make these better and better investment decisions. And don't be afraid to make
• 21:00
  mistakes. I've made plenty. And as sad as it sounds and as cliches it sounds, that's when you
• 21:08
  learn the most about yourself. I.e. uploading a podcast to a cast and Spotify and Apple that has
• 21:15
  not been edited like I did. But it's true. As soon as you do something and you put a foot out of
• 21:21
  line and you're like oh no, I never want to do that again. You do learn from it. Yeah. And when
• 21:25
  you're learning with investing it can be hard because you you may lose money and that can hit hard,
• 21:31
  but trust me that's when you learn the most and you'll be learning about what you did wrong or what
• 21:37
  you missed in terms of your decision and therefore you'll take that forward when you next make an
• 21:43
  investment. And also we've only invested what we're willing to lose. Exactly. Exactly. Not that big of a
• 21:48
  deal. Exactly. We should probably write these down somewhere, shouldn't we? Yes. So just to summarize
• 21:56
  for all of you that are still listening. Maybe people want to take notes. Yeah. Number one,
• 22:02
  start today. Number two, only invest what you're willing to lose. Number three, take a long-term
• 22:08
  view. Number four, always consider risk. Number five, diversify. Number six, invest in what you know.
• 22:16
  Number seven, don't fall in love with a stop. Number eight, don't try and time the market. Number
• 22:23
  nine, never chase a hot tip. Number 10, behave like an owner. Number 11, remember past performance
• 22:30
  is not an indicator of future returns. And number 12, invest in yourself. Feel like doing a
• 22:37
  bookie. That was so we didn't even mess up once. We got from one to 12 with no hiccups. High five
• 22:43
  for us. Okay, great episode. Thank you so much, Vic. No worries. What are we talking about next time?
• 22:49
  We're going to start our stock story series. Oh, this sounds exciting. And this is where
• 22:54
  soft picks are stock. Oh, no. And as soon as I roll to play, it's scary. And we discuss my view about
• 23:02
  whether it should be a buy, a hold or a sell. Oh, this sounds fun. Okay. We'll be back next time. See you.
• 23:10
  Bye. Thank you so much for joining us on today's episode of Raising the Curve. Please subscribe
• 23:16
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• 23:22
  about the curve, the work we do and how you can learn more, head to thecurve.co.nz or find us on
• 23:28
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