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Investing In A High Inflation Market · She's On The Money

0:00
Speaker 1: Hello.
0:01
Speaker 2: My name's Santasha Nabananga Bamblet. I'm a proud yr the
0:05
Speaker 2: Order Kerni Whoalbury and a waddery woman. And before we
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Speaker 2: get started on She's on the Money podcast, I would
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Speaker 2: like to acknowledge the traditional custodians of the land of
0:14
Speaker 2: which this podcast is recorded on a wondery country, acknowledging
0:18
Speaker 2: the elders, the ancestors and the next generation coming through
0:23
Speaker 2: as this podcast is about connecting, empowering, knowledge sharing and
0:27
Speaker 2: the storytelling of you to make a difference for today
0:31
Speaker 2: and lasting impact for tomorrow.
0:33
Speaker 1: Let's get into it. She's on the Money.
0:36
Speaker 3: She's on the Money.
0:57
Speaker 4: Hello, and welcome to She's on the Money podcast for
1:00
Speaker 4: millennials who want financial freedom.
1:03
Speaker 1: Hello v Hello, are you ready to talk about investment?
1:07
Speaker 3: Yeah, I'm very ready. I'm very um. Would you say interested?
1:10
Speaker 1: Is your interest inflated? Its inflated?
1:14
Speaker 3: Believe it or not.
1:15
Speaker 1: People didn't come here for good jokes, Beck, No, which
1:18
Speaker 1: is good because we don't have any that turns out Yeah, no, terrible.
1:22
Speaker 1: We actually might get onto the finance content. Yes see,
1:25
Speaker 1: if that works out better, let's try it.
1:27
Speaker 3: Let's try it.
1:27
Speaker 4: Yeah, we're talking about investing? Am I getting this right?
1:31
Speaker 4: How to invest in a high inflation environment?
1:35
Speaker 1: Strap yourself in? Today's Gonna Get Wild. We are back
1:39
Speaker 1: with another investing episode. As you can tell, I'm trying
1:43
Speaker 1: my hardest to come up with as many topics related
1:45
Speaker 1: to investment as possible. Let me ask you a question.
1:49
Speaker 1: Do you think it is possible to invest in a
1:51
Speaker 1: high inflation environment? Beck?
1:53
Speaker 4: Okay, So I'm going to have to break this one
1:55
Speaker 4: down real quick because I did not know what high
1:57
Speaker 4: inflation actually meant? But it is it true that high
2:01
Speaker 4: inflation is the rising cost.
2:04
Speaker 1: Of living in jer Yeah? Amazing, that's right, Okay, amazing. Yeah.
2:08
Speaker 1: So I mean if you're not really affected by it,
2:11
Speaker 1: if you're making enough money to not really see a
2:15
Speaker 1: change or that much of a shift in your like
2:18
Speaker 1: how much you have to spend or how much you
2:19
Speaker 1: have left over at the end of the pay cycle.
2:22
Speaker 4: Then I don't think that there would be a big problem.
2:26
Speaker 1: Yeah. I'm getting on this topic. I hope early enough
2:29
Speaker 1: so that you guys continue to invest during this period,
2:33
Speaker 1: because I've seen some stuff online that says it's not
2:36
Speaker 1: worth it, and I couldn't tell you harder, harder? Can
2:40
Speaker 1: I tell? You harder. I don't know if that's the
2:41
Speaker 1: right terminology, but you can. You can do it back, right, Okay,
2:45
Speaker 1: stress highly enough that it is fine to invest during
2:48
Speaker 1: a high inflation environment. So obviously there's a lot of
2:52
Speaker 1: privilege in that because during the time of peak inflation,
2:56
Speaker 1: other people are struggling. And if this episode for some
3:00
Speaker 1: reason is triggering you into feeling like other people have
3:03
Speaker 1: things that you currently don't, maybe it's not the episode
3:06
Speaker 1: for you. Honestly, I think that mindset is going to
3:09
Speaker 1: derail your confidence and make you feel worse off. And
3:12
Speaker 1: I think that the best thing we can, I guess
3:14
Speaker 1: see for our community is that quote that I use
3:17
Speaker 1: all the time, arising hidlifts soulships. Even if you're not
3:21
Speaker 1: in the best position of your life right now, that
3:23
Speaker 1: doesn't mean that somebody else needs to downplay their circumstances.
3:27
Speaker 1: You know, obviously we don't exactly want it rubbed in
3:29
Speaker 1: our faces, but someone else should thrive because by some
3:33
Speaker 1: other female or some other human being in our community thriving,
3:38
Speaker 1: that opens up even more opportunity for you and I
3:40
Speaker 1: to be successful, Beck, And I think that is so beautiful.
3:43
Speaker 1: Yeahhaslutely so for anyone who has been listening to Chese
3:46
Speaker 1: on the Money, I think you guys knew I was
3:48
Speaker 1: gonna say it was always a good time to invest,
3:51
Speaker 1: And today we're going to be giving you some tips
3:53
Speaker 1: and tricks on how to invest in a high inflation environment.
3:56
Speaker 1: We're going to start off with a little bit of
3:57
Speaker 1: a recap of why inflation currently sits where it is.
4:01
Speaker 1: We'll look at the sorts of investments that are a
4:03
Speaker 1: little bit more sexy in this landscape, and we're going
4:05
Speaker 1: to be doing a little bit of an investment mindset
4:07
Speaker 1: check in too, So strap yourselves in.
4:09
Speaker 4: Oh my god, I'm kind of excited. But also if
4:11
Speaker 4: you do think that you are not in the place
4:13
Speaker 4: to be listening to episode, just know that I'm on
4:16
Speaker 4: this journey with you because I also have zero dollars
4:19
Speaker 4: all the time, So.
4:21
Speaker 1: We're getting better at it and getting better at it.
4:23
Speaker 3: I am, I am, I am.
4:24
Speaker 1: Can I get to sit down very soon and do
4:26
Speaker 1: her budget in cashlow And I cannot wait.
4:28
Speaker 3: I'm so excited.
4:29
Speaker 1: We're going to bring them budget cashlow masterclass to life
4:32
Speaker 1: like you're going to get it in real life.
4:34
Speaker 3: I am.
4:36
Speaker 1: She doesn't even know, I don't know what I guess
4:39
Speaker 1: I'm explained. Do you want to talk about in place
4:40
Speaker 1: I want to do? I want to you do? I do?
4:42
Speaker 1: All right? So first things first, I want to start
4:44
Speaker 1: off by saying that we are in a super stressful
4:47
Speaker 1: economic situation right now, but where possible, I kind of
4:51
Speaker 1: want you to try and zoom out and remember that
4:53
Speaker 1: the economy is like an ecosystem, or even like the
4:55
Speaker 1: seasons during a year. It is never stagnant and things
4:59
Speaker 1: are always che What we're in right now is the
5:02
Speaker 1: balancing out period of what was uncharacteristically low interest rates.
5:07
Speaker 1: They were actually never going to be low forever. And
5:09
Speaker 1: I feel like we heard that a lot. People would
5:11
Speaker 1: say things like, oh, Beck, that money's never going to
5:14
Speaker 1: be as cheap as it is today. Maybe I heard
5:16
Speaker 1: that a lot more because I worked in money, but
5:19
Speaker 1: people would always say, oh, money is cheap right now,
5:21
Speaker 1: it's great time to invest or. Money's cheap right now.
5:23
Speaker 1: It's a great time to buy property, because you know
5:27
Speaker 1: that makes sense. But in the same way, this season
5:29
Speaker 1: is also going to pass, and we are going to
5:32
Speaker 1: find a new status and a new update and a
5:35
Speaker 1: new I guess normal you could say, so it's compening
5:39
Speaker 1: it's comforting to know, but it's also just one of
5:41
Speaker 1: those things where I think, in every circumstance, and you know,
5:44
Speaker 1: my business partner Kate in Zella Money, because we run
5:47
Speaker 1: a mortgage broken company together. Kate and I talk about
5:50
Speaker 1: this all the time, and it's just this idea that
5:52
Speaker 1: there was this concept of money so cheap, and we
5:55
Speaker 1: would talk to people who'd be like, oh, but it's
5:57
Speaker 1: only two percent to borrow, you know, half of the
6:00
Speaker 1: million dollars, Maybe I should just got up to seven
6:01
Speaker 1: hundred thousand. And a good mortgage broker would have talked
6:05
Speaker 1: to you about your personal circumstances and whether you can
6:08
Speaker 1: go up to that or whether you shouldn't, or what
6:10
Speaker 1: that looks like, and takes your entire picture into consideration,
6:15
Speaker 1: Whereas I think a lot of people had a few
6:18
Speaker 1: cheeky mortgage brokers who were like, oh, yeah, Beck, if
6:20
Speaker 1: you want to take more, take more, money's cheap. Whereas
6:25
Speaker 1: you're broker, if they are a good broker, or even
6:28
Speaker 1: anyone dealing with you in a money situation, really shouldn't
6:31
Speaker 1: be pushing you to take more when it's unnecessary, or
6:34
Speaker 1: more when it maybe isn't the best financial decision because
6:37
Speaker 1: anyone who works in the money space knew we and
6:41
Speaker 1: equivocally knew that two percent wouldn't last. And I mean,
6:44
Speaker 1: I'm in that position where I have a mortgage it
6:47
Speaker 1: has now gone up. I think my mortgage interest rate
6:50
Speaker 1: made me nearly be sick the other day. Grateful that
6:53
Speaker 1: I'm in a position where we can still afford. That
6:56
Speaker 1: things have shifted, that is fine, But we're like five
6:59
Speaker 1: and a half percent now.
7:00
Speaker 3: I don't know.
7:01
Speaker 1: When we first got our mortgage back, it was at
7:04
Speaker 1: two percent. Okay, side mortgage repayments have more than doubled.
7:07
Speaker 1: Oh I see, I say that is absolutely not a complaint.
7:10
Speaker 1: I'm not complaining about that at all. It's just that's
7:13
Speaker 1: the way of the world, right, And I'm grateful to
7:16
Speaker 1: have been in a position where when my husband Steve
7:19
Speaker 1: and I took on that mortgage, we went, all right,
7:21
Speaker 1: how much can we afford? And Kate, who obviously you know,
7:24
Speaker 1: helped us out loss. Yeah, I'm going to abuse that
7:27
Speaker 1: relationship to it till the day I died. But Kate said, oh,
7:31
Speaker 1: you can borrow up to X. No, No, no, no,
7:35
Speaker 1: I don't want X. How about I've done my budget
7:38
Speaker 1: and cash flow. I think this is going to be
7:41
Speaker 1: more obtainable because if things go awry, then I can
7:45
Speaker 1: afford it. But then on the flip side, I'm just
7:47
Speaker 1: gonna have more free cash flow, more free cash flow sexy.
7:50
Speaker 1: I can go on holidays, i can still enjoy my life.
7:53
Speaker 1: I can still do heaps of things that I want
7:54
Speaker 1: to do. But I'm not in a situation where I
7:57
Speaker 1: am kind of like a slave to my mortgage. Yes,
8:00
Speaker 1: a lot of people got in the position where they're like,
8:02
Speaker 1: oh my god, two percent. I could afford that two percent,
8:05
Speaker 1: but hadn't conceptualized what if it doubles, What if it
8:07
Speaker 1: goes up to four percent, what if it gets up
8:09
Speaker 1: to nearly six percent? What if we actually are in
8:12
Speaker 1: a situation where our mortgage interest of payments double, Can
8:15
Speaker 1: we actually afford that or with that significantly compromise our lives?
8:18
Speaker 1: And a lot of people are in that circumstance right now.
8:21
Speaker 1: So it's important to zoom out when we're making any decision,
8:24
Speaker 1: but especially when we're talking about investment, because when in doubt,
8:28
Speaker 1: zoom out. That's a good phrase. But also, if you
8:31
Speaker 1: look at the Australian share market over any thirty year
8:34
Speaker 1: period of time. No one has ever lost if they
8:37
Speaker 1: stayed invested right thirty years though it is a long time. Yeah,
8:41
Speaker 1: I can find you heaps of examples of people that
8:44
Speaker 1: put their money in four years later they're like, oh,
8:46
Speaker 1: I've been investing for ages and have made no money
8:48
Speaker 1: and took it out and made a loss. That would
8:50
Speaker 1: absolutely happen. Stay in there, if you stay in the market,
8:54
Speaker 1: that is what The most important thing is, getting exposure
8:58
Speaker 1: to the peaks and troughs. They might feel really painful
9:01
Speaker 1: when the market's off and you're like, I'm not getting
9:03
Speaker 1: as much banged from my buck right now, And when
9:06
Speaker 1: the market's really on, you're like, oh, making hay while
9:08
Speaker 1: the sun is shining. It all averages out to be
9:11
Speaker 1: a good return, okay, But if you're exiting the market
9:14
Speaker 1: because that trough is really scaring you, that could actually
9:17
Speaker 1: mean a lot of financial harm to you. So it's
9:19
Speaker 1: actually all about and we'll talk about it later mindset,
9:21
Speaker 1: but it's actually all about really conceptualizing and understanding these things.
9:26
Speaker 1: And there's been a lot of conversation in our Facebook
9:29
Speaker 1: group on Instagram in my dms of victoria or inflation
9:32
Speaker 1: is so high, should I still be investing. I see
9:36
Speaker 1: if it works for you, my friend. Yes, if it
9:38
Speaker 1: works for you, if you can afford it, and everyone can.
9:40
Speaker 1: I suppose if you have like a couple bucks, Yes, spare.
9:43
Speaker 1: I could talk about this forever, Beck, but let's get
9:45
Speaker 1: into the nuts and bolts of it. You asked me
9:47
Speaker 1: about inflation.
9:48
Speaker 3: Yes.
9:48
Speaker 1: Inflation is the general rising prices in an economy over
9:51
Speaker 1: a specified period of time. The RBA, or the Reserve
9:55
Speaker 1: Bank of Australia, typically targets a low and stable rate
9:58
Speaker 1: of inflation of between two and three percent each year,
10:02
Speaker 1: which can signify a growing economy. So slow and steady
10:05
Speaker 1: wins the race. According to the RBA, inflation, though it
10:10
Speaker 1: can creep into the double digits and come as an
10:13
Speaker 1: economic shock. Really, Australians annual interest rate, Beck, you're not
10:17
Speaker 1: going to be surprised seven point eight percent, okay at
10:21
Speaker 1: this point in time, right right right, And it's still
10:23
Speaker 1: fluctuating and it's going up and down. So the RBA
10:26
Speaker 1: is the bank to the other banks. Sure, so Combank, NAB,
10:31
Speaker 1: the big four. They don't just automatically have money. The
10:35
Speaker 1: RBA is like the big dog government.
10:37
Speaker 3: Bank, Mama.
10:38
Speaker 1: They set the rules. They're the big dogs. The RBA
10:41
Speaker 1: says our interest rates two percent. But if one of
10:44
Speaker 1: the big four banks then says, all right, well I'm
10:46
Speaker 1: still going to be providing mortgages to our clients. Well,
10:50
Speaker 1: then they're borrowing money from the RBA two percent and
10:53
Speaker 1: they actually have to pass along that interest rate, and
10:57
Speaker 1: that's what dictates our interest rates here in Australia. The
11:00
Speaker 1: big banks, Yeah, they might have heaps and heaps and
11:02
Speaker 1: heaps of money, but they actually do borrow from the RBA.
11:06
Speaker 1: So if the RBA's cash rate, when that gets said,
11:09
Speaker 1: I think sometimes people like, oh, that's a bit confusing.
11:12
Speaker 1: That's the amount of money it costs our big banks
11:15
Speaker 1: to borrow from the RBA.
11:17
Speaker 3: Right.
11:17
Speaker 1: So by the RBA increasing their cash rate and saying, look,
11:21
Speaker 1: we're going to make borrowing money more expensive, do you
11:24
Speaker 1: know what they're doing in that circumstance.
11:27
Speaker 3: I don't.
11:27
Speaker 1: You're like, nah, you've lost me already. So when the
11:31
Speaker 1: RBA increases their rates, what that means is things are
11:35
Speaker 1: going to be more expensive for people, like the trickle
11:37
Speaker 1: down effect means that me, as a customer of one
11:40
Speaker 1: of the banks, because I have a mortgage, my life's
11:43
Speaker 1: going to get more expensive. My mortgage rates are going
11:46
Speaker 1: to increase. I'm going to have less disposable income, which
11:49
Speaker 1: means there's less disposable income going around in the economy,
11:53
Speaker 1: which means inflation can't creep up as fast. So the
11:57
Speaker 1: RBA are increasing their cash rates and saying, look, we're
11:59
Speaker 1: going to borrow money out at a higher rate because
12:02
Speaker 1: we don't want inflation to go wild. And after COVID,
12:06
Speaker 1: I feel like COVID put a little bit of a
12:08
Speaker 1: hold on inflation for a while there, and then everything
12:12
Speaker 1: went back to let's call it business as usual or
12:15
Speaker 1: our new normal or whatever everyone's calling it. Everyone was like, okay, cool,
12:18
Speaker 1: we are going to have to start pushing some of
12:20
Speaker 1: these you know, increases in price onto our consumers. And
12:24
Speaker 1: everything went like this, like travel has gone wild. Travel
12:27
Speaker 1: can't happen in my family as easily if I'm paying
12:30
Speaker 1: more on my mortgage. They're trying to keep our economy
12:34
Speaker 1: a little bit slower. We're trying to slow the growth
12:36
Speaker 1: of our economy. Does that make sense that I have
12:39
Speaker 1: or if you had less money to spend on things
12:41
Speaker 1: that were important to you and you really had to prioritize,
12:44
Speaker 1: maybe just the basics for a little while. Yep, the
12:46
Speaker 1: rest of the economy and the businesses around that they
12:49
Speaker 1: aren't growing as much because you're not funding them. Right,
12:52
Speaker 1: So if those businesses aren't being funded, the economy growth
12:55
Speaker 1: starts to slow. And if economy growth starts to slow,
12:58
Speaker 1: it gets back to that two and three percent that
13:00
Speaker 1: the RBA is trying to target to mean that we
13:03
Speaker 1: have slow and steady growth instead of such rapid growth
13:06
Speaker 1: that we can't afford things. Rental crisises happen, things that
13:10
Speaker 1: were previously affordable and not affordable anymore, and it gets
13:13
Speaker 1: out of control. So the RBA, as much as a
13:16
Speaker 1: lot of people online are like a, a'd awful, They've
13:18
Speaker 1: increased the cash rate again, it's the worst. That's them
13:21
Speaker 1: trying to do their best. Okay, it's them trying to
13:24
Speaker 1: do their best to make sure that our economy gets
13:27
Speaker 1: back to a more stable environment.
13:30
Speaker 4: Okay, that's good to know. I was going to ask
13:33
Speaker 4: why does inflation matter? But I guess you did kind
13:35
Speaker 4: of answer it in that it's inflation matters.
13:38
Speaker 1: It's an invocator of a growing environment and a growing economy,
13:41
Speaker 1: Like it can be a really sexy thing, right, Like
13:43
Speaker 1: looking at She's on the money. The rate of inflation
13:46
Speaker 1: in She's on the Money has been really beautiful four
13:49
Speaker 1: years ago the podcast started and it's kind of gone
13:51
Speaker 1: up and up and up from there. But what if
13:53
Speaker 1: absolutely every business in the entire economy did that. Where's
13:58
Speaker 1: the money coming from to fund that type of growth
14:01
Speaker 1: in every single business in Australia? Ah okay, I see,
14:05
Speaker 1: we just don't have the cash to support that. And
14:08
Speaker 1: when you do, it comes from other places. And when
14:11
Speaker 1: you have an environment where inflation keeps increasing, people kind
14:15
Speaker 1: of get greedy in a way, right, I see, And
14:19
Speaker 1: it's just it's not a nice environment to be in.
14:21
Speaker 1: So inflation matters because essentially it takes your dollar and
14:25
Speaker 1: makes it worthless. Let's talk about I recently gave someone
14:28
Speaker 1: in our team pay rise, right, and the way that
14:31
Speaker 1: I calculate pay rise is you know, I'm really proud
14:33
Speaker 1: of it because the way that I calculate it, I
14:36
Speaker 1: think is the way everyone should calculate it. And I said,
14:39
Speaker 1: all right, what's the rate of inflation? Seven point eight percent? Great,
14:42
Speaker 1: we'll start there. You get a seven point eight percent
14:45
Speaker 1: increase in your pay this year.
14:47
Speaker 3: That's very nice.
14:48
Speaker 1: It's not nice from my perspective, that for me is
14:51
Speaker 1: the bare minimum sure, because if inflation has increased by
14:55
Speaker 1: seven point eight percent, my team member is having her
15:00
Speaker 1: expenses increased by that. So today, if I had not
15:04
Speaker 1: given her a pay rise, she wouldn't be able to
15:07
Speaker 1: afford the same groceries that she was able to afford
15:09
Speaker 1: last year. Is that fair?
15:12
Speaker 3: Doesn't feel like it.
15:13
Speaker 1: No, I don't think it's fair either. So above and
15:16
Speaker 1: beyond that, we can then talk about what pay rice
15:18
Speaker 1: she deserved. But I thought, as an employer, I needed
15:21
Speaker 1: to go, Okay, well, if this individual can not afford
15:25
Speaker 1: to buy the same groceries and put the same roof
15:29
Speaker 1: over her head this year as she could last year, Like,
15:32
Speaker 1: let's pretend bread went up. It absolutely has. But let's
15:35
Speaker 1: pretend last year a loaf of bread was four dollars.
15:38
Speaker 1: This year it might be six dollars. That's two dollars
15:41
Speaker 1: less you have in your account for something else. Right,
15:44
Speaker 1: life is just more expensive today than it was last year.
15:48
Speaker 1: And that's essentially what inflation does. Inflation kind of erodes
15:53
Speaker 1: your purchasing power over time, and as it kind of
15:56
Speaker 1: takes hold, a dollar is going to buy fewer things
16:00
Speaker 1: then you could purchase previously.
16:02
Speaker 3: I see.
16:02
Speaker 4: Okay, well, I have so many questions right now, and
16:05
Speaker 4: I don't even know where to start. But if I'm
16:07
Speaker 4: just curious, this is silly. But if the inflation rate
16:10
Speaker 4: goes back down and the cost of living kind of
16:14
Speaker 4: like steadies out again, we take that money back from
16:18
Speaker 4: your employee?
16:19
Speaker 1: Yeah, of course, no, I will not, absolutely not, because
16:24
Speaker 1: it doesn't go backwards. That's scary. It might go backwards, right, okay,
16:28
Speaker 1: But like if you look at a graph over time
16:31
Speaker 1: and we started tracking it, it might go back down,
16:34
Speaker 1: but that's not going back down as in hey beck,
16:37
Speaker 1: stuff's actually just whole heap cheaper. Now the rate of
16:41
Speaker 1: growth of things increasing has just slowed. So that loaf
16:45
Speaker 1: of bread it's now six dollars. That's the base rate,
16:47
Speaker 1: but it's not going to creep up to seven dollars
16:50
Speaker 1: as quickly as it was the year before. Right, does
16:52
Speaker 1: that make sense?
16:53
Speaker 3: That doesn't make sense.
16:54
Speaker 1: It's not that. Okay, Well, now it's back down to
16:57
Speaker 1: two percent. No, no, no, that's seven point eight percent.
17:00
Speaker 1: Was a line in the sand. Now we're moving along
17:02
Speaker 1: and it's just going to take less time, and it's
17:05
Speaker 1: just going to mean that growth happens a little bit
17:08
Speaker 1: more slowly, so the RBA going back to them setting
17:11
Speaker 1: the cash rate. They want between two and three percent
17:13
Speaker 1: every year. Right now, things are growing way more than that.
17:18
Speaker 1: They're trying to drag us back down so that growth
17:20
Speaker 1: doesn't happen. I see so hearing this, Yes, I'm thinking
17:24
Speaker 1: this is awful, terrible, very scary. But are there any God, Yeah,
17:29
Speaker 1: I'm kind of like Okay. As I said before, inflation
17:31
Speaker 1: is actually a good thing. There's a reason the RBA
17:34
Speaker 1: actually has a target of inflation, not keeping things the same,
17:37
Speaker 1: because that is a good predictor of a strong and
17:41
Speaker 1: good and stable and reliable economy. We want to grow.
17:45
Speaker 1: As we said before, slow and steady wins the race,
17:47
Speaker 1: so we actually want it to be between two and
17:49
Speaker 1: three percent. Sometimes it goes backwards, sometimes like right now,
17:53
Speaker 1: it is higher. Low and stable inflation is a good indicator,
17:57
Speaker 1: or can be a good indicator to be a little
17:59
Speaker 1: bit more economically correct of a growing economy. It benefits
18:03
Speaker 1: holders of fixed rate debts like mortgages. So a lot
18:06
Speaker 1: of people have been messaging me recently, like about to
18:09
Speaker 1: come off my fixed rate, and I don't know what
18:10
Speaker 1: to do. Talk to mortgage broken, my friend asap. It
18:14
Speaker 1: encourages consumption today rather than later, so we're not like
18:18
Speaker 1: saving up for things as we were before. So like
18:21
Speaker 1: the holidays and stuff, they kind of come to a
18:23
Speaker 1: grinding holt because we can't afford them. But then there
18:26
Speaker 1: are obviously a few cons As you said, it does
18:28
Speaker 1: feel a little bit negative. Inflation reduces your purchasing power
18:32
Speaker 1: since essentially every dollar that you have purchases less stuff,
18:36
Speaker 1: higher prices throughout the economy ends up hurting retail consumers.
18:41
Speaker 1: It's very tough on retirees that are living on fixed incomes.
18:45
Speaker 1: If you've predicted that you're going to have X amount
18:48
Speaker 1: every single year, obviously when things absolutely spike, that's unforeseen
18:53
Speaker 1: and you just have a fixed income, and then it
18:55
Speaker 1: does prompt action by the RBA. So the RBA is
18:58
Speaker 1: the Reserve Bank of Australia that we've been talking about.
19:01
Speaker 4: Yes, absolutely, So back to the idea of seasons, every
19:05
Speaker 4: season has its possibility. Then what are the possibilities of
19:07
Speaker 4: this high inflation environment.
19:09
Speaker 1: Well, inflation is a great season I think to kind
19:13
Speaker 1: of re examine your portfolio and what your strategy is doing.
19:16
Speaker 1: I think any economic pressure is good for you as
19:20
Speaker 1: an individual to kind of like re prompt how you
19:23
Speaker 1: feel about things, because when we start our investment journeys,
19:28
Speaker 1: often we're really gung ho and we're so excited about it.
19:31
Speaker 1: And I get it because I am too. Like I
19:32
Speaker 1: remember starting investing out, I'm like, I'm going to be rich.
19:35
Speaker 1: I am setting myself up for a very secure financial future,
19:38
Speaker 1: and I cannot wait. But then, like the economy starts
19:41
Speaker 1: to take hold and you kind of see the effects
19:43
Speaker 1: of had in your portfolio, and you feel a little
19:46
Speaker 1: bit uncertain, or you feel a little bit unsure, and
19:48
Speaker 1: things get rocky and you're not sure if you should
19:50
Speaker 1: exit the market or stay, or do I put some
19:53
Speaker 1: more in. But we really shouldn't be burying our heads
19:55
Speaker 1: in the sand at this point. We need to re
19:57
Speaker 1: examine our portfolio to make sure it's actually a lot
20:00
Speaker 1: to our values and our goals and what we're trying
20:02
Speaker 1: to achieve. One of the best strategies in a time
20:05
Speaker 1: like this is actually to ensure that you're properly diversified
20:09
Speaker 1: and fully invested. Money invested into shares tends to outpace
20:13
Speaker 1: inflation in the long run, so you might be looking
20:16
Speaker 1: at your portfolio today am the I don't know what
20:18
Speaker 1: you're talking about. My portfolio has returned five percent and
20:21
Speaker 1: you just said inflation is seven point eight percent. I
20:24
Speaker 1: think I'm going backwards. But when we look at the
20:26
Speaker 1: numbers and we actually look at the data, yes, for
20:29
Speaker 1: a point in time, that might be absolutely true, and
20:32
Speaker 1: I will not argue with you on that. But again,
20:35
Speaker 1: when in doubt, zoom out and look at the bigger picture,
20:37
Speaker 1: and usually it ends up or most of the time,
20:40
Speaker 1: it ends up outperforming what inflation was because this rate
20:43
Speaker 1: of inflation will not exist for as long as the
20:47
Speaker 1: rate of growth in your investment portfolio. So we know
20:51
Speaker 1: that over the last twenty years, the average rate of
20:55
Speaker 1: return of the Australian share markets about eleven percent, right, Okay,
20:59
Speaker 1: So obviously that's just the Australian shair market. There's lots
21:01
Speaker 1: of different share markets and that's not a promise that
21:04
Speaker 1: your portfolio will return that. It's just that's the fact
21:08
Speaker 1: of the matter when it comes down to the data.
21:10
Speaker 1: So yeah, I think it's very pretty So now's the
21:13
Speaker 1: time to maybe have a think about some additional things
21:16
Speaker 1: that you could add to your portfolio that might make
21:19
Speaker 1: sense if you only have shares, and if you've got
21:21
Speaker 1: some cash, maybe you would consider things like maybe some
21:23
Speaker 1: investments in real estate. You can invest in real estate
21:26
Speaker 1: via shares if you want to do that. You don't
21:29
Speaker 1: have to go out and buy a family home or
21:31
Speaker 1: an apartment to do that. Commodities or even Treasury indexed bonds,
21:35
Speaker 1: they often serve as a further diversification support for your portfolio.
21:40
Speaker 1: Cash on the sidelines is essentially guaranteed to lose money.
21:46
Speaker 1: Not that sexy. So right now, if you've got ten
21:49
Speaker 1: thousand dollars in a cash account just sitting there, absolutely
21:52
Speaker 1: no interest rate on their bank account, it's working at
21:56
Speaker 1: negative seven point eight percent, like having a desk. It's
22:00
Speaker 1: costing you seven point eight percent per anm right now
22:03
Speaker 1: to not have that money working for you. But people
22:06
Speaker 1: don't see it that way, no, Because right now I
22:10
Speaker 1: can see ten thousand dollars in that account, and let's
22:13
Speaker 1: pretend I have absolutely no fees on that account, and
22:15
Speaker 1: I just let it sit dormant for the next twelve months.
22:18
Speaker 1: I'll go back in twelve months that account will have
22:21
Speaker 1: ten thousand dollars exactly in that account. It's not going
22:23
Speaker 1: to have seven point eight percent less but that ten
22:26
Speaker 1: thousand dollars will buy you seven point eight percent less
22:29
Speaker 1: of stuff than it was able to today when you
22:31
Speaker 1: had the opportunity to invest it and you didn't.
22:34
Speaker 3: That is a.
22:35
Speaker 1: Really, really good I'm realated, dramatic. Thanks for coming.
22:38
Speaker 4: Oh I love this because I was going to say
22:40
Speaker 4: I should not be doing this, but I started putting
22:44
Speaker 4: money in a piggybank thinking that that was a.
22:46
Speaker 3: Good It's a good start. I'm going to not do that.
22:49
Speaker 1: No, but looking at your financial circumstances, that works. Does
22:54
Speaker 1: it mean that I'm not sitting on some cash. Absolutely not.
22:57
Speaker 1: I absolutely have a savings account. You're not going to
23:00
Speaker 1: touch that. I'm not going to invest that. I have
23:02
Speaker 1: an emergency fund. I will not be investing that because
23:05
Speaker 1: the entire purpose of an emergency fund is to have
23:08
Speaker 1: access to quick cash and capital, and that's that money's job.
23:12
Speaker 1: I don't want you to take from this that every
23:14
Speaker 1: single dollar you have needs to be invested and you
23:17
Speaker 1: need to be getting a return otherwise it's not worth it.
23:19
Speaker 1: That's not what we're saying. But I think we need
23:22
Speaker 1: to drive home this. If you've been thinking about investing,
23:25
Speaker 1: then yeah, like it's a good time to have a chat.
23:27
Speaker 1: But if you have an emergency fund that's doing its job,
23:31
Speaker 1: it's not meant to be there. Yeah, And I know
23:34
Speaker 1: you're in the circumstance because we talked about it openly
23:36
Speaker 1: before where you're like, I just need to start saving.
23:38
Speaker 1: That's a bloody great start.
23:40
Speaker 3: Cool, Okay.
23:41
Speaker 1: I don't want you to think that me having this
23:44
Speaker 1: conversation about it now is a good time to invest. Like, yes,
23:47
Speaker 1: if you're in the financial position to invest, it's gonna
23:51
Speaker 1: cost you a lot more long term if you invest
23:54
Speaker 1: at a time that you can't afford, because what happens
23:57
Speaker 1: twelve months from now you have to pull that money
23:59
Speaker 1: out to afford something else, and you lose money because
24:02
Speaker 1: the sheer market might not have recovered yet. That's a
24:05
Speaker 1: really bad outcome, right, So I think it's really important
24:08
Speaker 1: to make sure that you're making decisions that are based
24:10
Speaker 1: on you, not the way that that example came across.
24:13
Speaker 1: So that example, I still stand by it. It's a
24:15
Speaker 1: great example because the purchasing power of ten thousand dollars
24:18
Speaker 1: today is going to be less if you don't do
24:21
Speaker 1: anything with it in twelve months. And if that motivated
24:24
Speaker 1: you to go and invest, that's sexy. Yes, But if
24:28
Speaker 1: you were like, yeah, but the that ten thousand dollars
24:30
Speaker 1: is my emergency fund, I'll go get it quin leave
24:33
Speaker 1: it there. That makes absolute sense. But what we want
24:36
Speaker 1: is the education to know that every dollar in your
24:40
Speaker 1: account has been thought about and has been allocated a job.
24:43
Speaker 1: If that money's job is to make you money, then
24:46
Speaker 1: go get it. But if that money's job is to
24:48
Speaker 1: keep you feeling safe, leave it there. Yeah, does that
24:51
Speaker 1: make sense?
24:52
Speaker 3: That makes so much sense.
24:52
Speaker 1: I love that.
24:53
Speaker 4: Okay, thank you so much for that. I think it's
24:55
Speaker 4: a really good place to leave it for Now. Let's
24:57
Speaker 4: stick have a little break and come back and talk.
25:01
Speaker 1: More about it.
25:06
Speaker 3: Okay, we're back, and welcome back to you.
25:08
Speaker 1: I always get so fired up on these episodes.
25:10
Speaker 4: I'm like, let's talk about investments, and then I know
25:15
Speaker 4: it's time for you to have a little tea, a
25:16
Speaker 4: little breather.
25:17
Speaker 1: We all know that was a fake break. Again. Back,
25:21
Speaker 1: I've got to pay you. No one on this team
25:24
Speaker 1: doesn't get paid.
25:25
Speaker 3: That's true, that's true. It was a fake break. Okay,
25:27
Speaker 3: it was a fake break.
25:28
Speaker 1: It was a fake break to get to talk about
25:30
Speaker 1: Chairsya's and like I do feel like Chazy's are a
25:32
Speaker 1: part of our team, like ten out of ten, very
25:36
Speaker 1: good team, very good people. Do you know what they
25:38
Speaker 1: love my dog? Oh yeah, well.
25:40
Speaker 3: There's a place at our table for them.
25:43
Speaker 1: Exactly.
25:44
Speaker 3: Let's get back.
25:45
Speaker 4: To the investment chat. Exciting, exciting, fun investment chat.
25:50
Speaker 1: All right, let's make this conversation a little bit more confusing. Okay,
25:56
Speaker 1: have you heard of like hedging an investment hedging? Yes? Yeah,
26:00
Speaker 1: like hear it on like the show's like suits. Yes,
26:03
Speaker 1: where you.
26:03
Speaker 4: Like plot your session in several different areas and some
26:09
Speaker 4: that are competing, like say, for example, I can't actually
26:12
Speaker 4: I'm really doing probably.
26:13
Speaker 3: A bad job.
26:14
Speaker 1: No studies study? Is that?
26:17
Speaker 3: Just forget everything I see?
26:18
Speaker 1: No, I really liked where you were going with that.
26:20
Speaker 1: Let's maybe talk about inflation hedges in the case. So,
26:25
Speaker 1: a hedge in finance means to take an offsetting position.
26:28
Speaker 1: Who are absolutely correct? You kind of like you know
26:31
Speaker 1: hedge a bet? You might go, oh, well, what if
26:33
Speaker 1: it doesn't work out? So in real estate, single family
26:37
Speaker 1: homes financed with low fixed rate mortgages tend to perform
26:40
Speaker 1: well during periods of inflation. Do you know why we
26:43
Speaker 1: know that because TikTok's going wild about how much they
26:46
Speaker 1: are costing to lease out at the moment. A right like,
26:49
Speaker 1: I always talk about TikTok because I basically live on TikTok.
26:52
Speaker 1: Am I creating enough content on there? Hell? No, am
26:55
Speaker 1: I just consuming the content mindlessly scrolling my life away.
27:00
Speaker 1: Hell yes, that's what I'm doing. As inflation climbs, your
27:03
Speaker 1: property is likely to appreciate in value while the monthly
27:07
Speaker 1: service cost of your mortgage either stays the same or
27:09
Speaker 1: slightly increases. This is at the core of home equity,
27:13
Speaker 1: which can rapidly increase your net worth very very sexy.
27:17
Speaker 1: By purchasing real estate, you'll also they call it insulating.
27:20
Speaker 1: You're also insulating yourself from rising rents, as they are
27:23
Speaker 1: likely to rise during inflation surges. We do need to
27:26
Speaker 1: take into consideration. They're obviously the rising costs of mortgage repayments,
27:30
Speaker 1: because as I said before, might have more than doubled.
27:33
Speaker 1: And that makes me feel quite sick because I know
27:37
Speaker 1: that it's not just me that's happening too. Again, super
27:40
Speaker 1: grateful to be in a position where that is not
27:43
Speaker 1: putting significant stress on our lives. We just had to
27:46
Speaker 1: reshuffle a few things maybe push a few goals off
27:49
Speaker 1: a little bit, and I feel grateful that we're in
27:52
Speaker 1: that position. But for some people, mortgages right now are
27:55
Speaker 1: absolutely destroying them. Let's just be honest about that. The
27:59
Speaker 1: second thing we want to talk about is what's called
28:01
Speaker 1: a value share or a value stock if you're a
28:04
Speaker 1: little bit more American. Some research has shown that value
28:07
Speaker 1: shares tend to do better than growth stocks during periods
28:11
Speaker 1: of inflation, which I think is interesting because we have
28:14
Speaker 1: done a whole series on what a value share is,
28:17
Speaker 1: what a growth share is, how all of these things work.
28:20
Speaker 1: So if you haven't listened to that, please go back
28:21
Speaker 1: and have a listen, because I feel like there was
28:23
Speaker 1: so much information in that that people said was really
28:26
Speaker 1: powerful and really helpful. But value shares are companies that
28:29
Speaker 1: have strong earnings relative to their current share price. They're
28:33
Speaker 1: also known to have like really good cash flows, which
28:36
Speaker 1: investors typically value when prices are rising. When prices a
28:40
Speaker 1: rising and things are getting more expensive, you know what's
28:42
Speaker 1: really sexy knowing that the company you're investing in has
28:45
Speaker 1: lots of money coming in the door. That makes me
28:48
Speaker 1: feel really good. Probably not if you're poor. To Davis
28:51
Speaker 1: Holmes like, that's not going to work out. I heard
28:54
Speaker 1: about that. Yeah, not great. But do you know what
28:55
Speaker 1: it is great about that? And I said to you guys,
28:58
Speaker 1: this would happen is that all of those Porter Davis
29:01
Speaker 1: contracts have been bought or transferred over to another company
29:04
Speaker 1: to finish. So people aren't going to be left in
29:06
Speaker 1: the loach. What is I treat hold on, hold on,
29:10
Speaker 1: It's going to be okay. Someone is going to want
29:12
Speaker 1: those contracts to finish your houses. It is okay. But
29:15
Speaker 1: a company like Porter Davis as a good example of that,
29:18
Speaker 1: because I feel like it's been all over the media
29:20
Speaker 1: and we've all heard about it had terrible cash flow
29:22
Speaker 1: and could not keep up with the rising cost of prices.
29:26
Speaker 1: And that's not a reflection on them having terrible work
29:31
Speaker 1: or being a bad company or any of those things.
29:34
Speaker 1: But if you don't have money coming in the door,
29:36
Speaker 1: you can't pay your contractors, you can't pay your stuff.
29:39
Speaker 1: The business has to end. Like that's just a matter
29:42
Speaker 1: of fact. I suppose, on the other hand, something like
29:45
Speaker 1: a growth share it tends to be a little bit
29:47
Speaker 1: more sensitive to change in interest Over the past decade,
29:51
Speaker 1: when inflation has been conspicuously absent. Growth stocks have enjoyed
29:56
Speaker 1: a pretty good period, but lately value shares have been
30:00
Speaker 1: I guess staged for a comeback. The current environment makes
30:04
Speaker 1: their continuing success likely, though, So would you say what
30:08
Speaker 1: is better? I mean, I think that's a question that
30:11
Speaker 1: might pop up. B Is a value share better than
30:14
Speaker 1: a growth share? The answer is no, nothing's better. Like
30:17
Speaker 1: different things perform well in different economies and different periods
30:21
Speaker 1: of economic change, it does not mean one should be
30:25
Speaker 1: preferenced over the other. That's why we promote having a
30:28
Speaker 1: really well diversified portfolio. It's why we talk about, you know,
30:32
Speaker 1: having some here, having some there, making sure that you
30:35
Speaker 1: don't have all your eggs in one basket. Because if
30:37
Speaker 1: you've got some growth stocks that are good companies, maybe
30:40
Speaker 1: they're not performing as well as they could during this period.
30:43
Speaker 1: They're just chugging along doing their best. Your value stocks, though,
30:47
Speaker 1: they're the ones like pulling away. They're the ones putting
30:49
Speaker 1: in the hard yards during this period of time, so
30:52
Speaker 1: that you know, if the value stocks or the value
30:55
Speaker 1: shares are doing really well up here and there, your
30:57
Speaker 1: growth shares they just trying their best. They're just trying
30:59
Speaker 1: to get in this economy. Over time, the average of
31:03
Speaker 1: your overall return is going to be a good average.
31:07
Speaker 1: You're not going to get the highs of the highs,
31:09
Speaker 1: You're not going to get the lows of the lows.
31:10
Speaker 1: Everything will kind of balance out, and that is what
31:13
Speaker 1: we want from investment. We just want to be safe.
31:16
Speaker 1: I don't want to just have one thing that does
31:18
Speaker 1: really well in only one economy. So like playing board games,
31:22
Speaker 1: you just want a little bit of everything. In your
31:24
Speaker 1: next role, you don't know what you're going to get,
31:25
Speaker 1: but you're probably going to have a good.
31:27
Speaker 4: Shot exactly, Exactly, like Monopoly, you've got to buy the
31:30
Speaker 4: light blues and the dark blues exactly.
31:34
Speaker 1: I've recently got into a board game called this is
31:37
Speaker 1: just showing how nerdy I am. It shows how nerdy
31:40
Speaker 1: I am. Like, take us to the next level. Okay,
31:43
Speaker 1: I've paid for and download an app on my phone
31:46
Speaker 1: so that I can play the board game all my
31:48
Speaker 1: floes katan.
31:49
Speaker 4: Oh my god, same v serious the eight dollars one?
31:56
Speaker 3: Can we play?
31:56
Speaker 1: Can we play Togain? I did not know you were.
31:58
Speaker 4: Into katan okay O Tess, But it's like that.
32:01
Speaker 1: Right, like you don't know what's going to happen next,
32:03
Speaker 1: Like you don't know if you're going to need to
32:04
Speaker 1: build a road or you're going to be able to
32:06
Speaker 1: buy a car, Like you don't know if you're going
32:08
Speaker 1: to be able to build a city, because like on
32:10
Speaker 1: the next roll, you could be given a whole heap
32:12
Speaker 1: of different resources. But like it's good to just have
32:15
Speaker 1: like one in the bank freach because like or if
32:17
Speaker 1: you can't really do much, well I just build a road, you.
32:19
Speaker 4: Know, exactly, don't exact all your eggs in the brick bus.
32:22
Speaker 1: Exactly, you don't want to. And if you do have
32:25
Speaker 1: six bricks, do you know what you do? You go
32:27
Speaker 1: into the trade and you trade four bricks for one straw.
32:31
Speaker 3: Anyway, we can definitely talk exactly excited.
32:35
Speaker 1: Alright, alright, you can come over. We can have a
32:37
Speaker 1: wine night where we play Katan real life.
32:41
Speaker 3: Ktar real life.
32:42
Speaker 1: I have the board game. I bought it online. Okay, cool,
32:44
Speaker 1: let's go to the easter. One of our friends brought
32:46
Speaker 1: it down and I was like so skeptical, right, No,
32:49
Speaker 1: I was skeptical. Oh yeah, I don't know about this game.
32:52
Speaker 1: Was one of Steve's mates. So I just thought it
32:54
Speaker 1: was like.
32:55
Speaker 3: You know, dumb boygo, dumb boygo.
32:57
Speaker 1: I am the dumb boy for it.
33:01
Speaker 3: Unfortunately we are the dumb boys now, all right.
33:02
Speaker 1: Well, you know what dumb boys like to do. They
33:05
Speaker 1: also like to use complicated words like commodities. Yeah, that
33:09
Speaker 1: is the next thing I want to talk about, So
33:11
Speaker 1: to commodities, complicated word for what is essentially things like
33:16
Speaker 1: gold and other precious metals, Like can you just say
33:20
Speaker 1: you're invested in gold? Yeah, Like it'd be a lot
33:24
Speaker 1: easier than gold and other precious metals, as well as
33:27
Speaker 1: things like raw materials and various natural resources, which are
33:30
Speaker 1: critical to production. As demand increases, prices rising the economy,
33:35
Speaker 1: and the cost of production to meet that demand typically
33:38
Speaker 1: rises accordingly. So I can tell you this is true
33:41
Speaker 1: because the steel in my house is double what it
33:45
Speaker 1: was when I got quoted to pay for it last year,
33:49
Speaker 1: and now I have no other choice but to pay
33:51
Speaker 1: double for the renovation we're doing. And that's okay, again,
33:54
Speaker 1: very privileged position to be. But man, I'm feeling it.
33:58
Speaker 1: I'm a little bit salty about it.
34:00
Speaker 3: Yeah, but can you go no steal or you have?
34:03
Speaker 1: You?
34:03
Speaker 3: Is it?
34:05
Speaker 1: You? You got to you got to get the steal.
34:07
Speaker 1: You gotta get the steal, I feel you. Even though
34:09
Speaker 1: commodities don't pay dividends or represent any underlying business, they
34:14
Speaker 1: are disconnected to the traditional asset classes like shares and bonds,
34:18
Speaker 1: and they actually tend to move in an unrelated direction.
34:21
Speaker 1: So they're a good way of diversifying. Treasury indexed bonds.
34:25
Speaker 3: Yes, good.
34:26
Speaker 4: I was going to ask you about this one.
34:27
Speaker 1: Bonds are sexy. I think they're really hot. They're really underrated. Actually,
34:31
Speaker 1: I feel like a bond is like a happy medium
34:35
Speaker 1: between if you're not willing to take on as much
34:38
Speaker 1: risk as a share, but you also don't want your
34:41
Speaker 1: money just sitting in cash. There's something that if that's
34:44
Speaker 1: your circumstance, you might consider. So Treasury indexed bonds, very specific,
34:50
Speaker 1: are medium to long term securities where the capital value
34:53
Speaker 1: of the security is adjusted for movements in the CPI,
34:57
Speaker 1: So in the Consumer Price Index, just paid quarterly hot
35:01
Speaker 1: at a fixed rate on the adjusted capital value at maturity.
35:06
Speaker 1: So maturity just means at the end of the time
35:08
Speaker 1: that you agreed to invest for mm.
35:10
Speaker 3: Hmm, Well, what's it?
35:11
Speaker 1: All these confusing more ridiculous? Isn't it? Like I get
35:15
Speaker 1: it that you get it? Now, but the fact that
35:17
Speaker 1: I have to explain something that shouldn't need explaining, Like
35:20
Speaker 1: why can't we just be like, yeah, okay, at the
35:22
Speaker 1: end of the term that you agreed to invest, so
35:25
Speaker 1: at the maturity of the loan or at the maturity
35:28
Speaker 1: of the investment. In this circumstance, investors receive the adjusted
35:33
Speaker 1: capital value of the security. So do you know what
35:36
Speaker 1: that means? Means you get your cash back, oh, initial
35:39
Speaker 1: investment back, but it will be adjusted based on CPI.
35:44
Speaker 1: So that's okay, We're all right with that. The value
35:46
Speaker 1: adjusted for movement in the CPI is done over the
35:49
Speaker 1: lifetime of the bond, not just like what it is today.
35:53
Speaker 1: So if you were pulling it out today, like let's
35:55
Speaker 1: say that your bond matured today, it wouldn't be at
35:59
Speaker 1: seven point eight percent. It would be you know, if
36:01
Speaker 1: you were in a ten year bond, it would be
36:03
Speaker 1: averaged out over those ten years. So it's a little
36:05
Speaker 1: bit more palatable than that seven point eight So it's
36:09
Speaker 1: not as scary as you think it is.
36:10
Speaker 3: But yeah, gotcha, gotcha, gotcha.
36:12
Speaker 1: Okay.
36:13
Speaker 4: The podcast before, Yeah, you know what we have spoken
36:16
Speaker 4: about and you haven't mentioned yet, and I'm.
36:18
Speaker 3: Kind of getting concerned. You usually talk about Warren Buffett.
36:22
Speaker 1: Yeah, because he's real hot.
36:24
Speaker 3: I haven't seen him. Can you show you a picture
36:25
Speaker 3: after this?
36:26
Speaker 1: I'll show you a picture now so I can get
36:27
Speaker 1: your response.
36:28
Speaker 3: Okay, let's do it.
36:29
Speaker 4: Oh No, honestly, I thought he's kind of cute.
36:35
Speaker 3: I mean, I.
36:36
Speaker 1: Mean, Beck, he's like the type of guy that he
36:40
Speaker 1: just looks like he would line up behind you at
36:43
Speaker 1: the supermarket and you'd let him cut in line. I
36:45
Speaker 1: wouldn't let a single soul. Yeah, okay cut in line.
36:51
Speaker 1: You know what that's because you're not very nice. But
36:52
Speaker 1: I reckon, he's pay you bill if he was behind
36:54
Speaker 1: your supermarket. He know what he's worth. What do you
36:58
Speaker 1: want to guess what that man? Look at it.
37:00
Speaker 3: He's sound familiar.
37:01
Speaker 1: Yeah, yeah, yeah, he's going to say yeah because he's
37:04
Speaker 1: see it. Oh. He's the most famous investor in the
37:08
Speaker 1: entire world.
37:09
Speaker 3: Eleven billion no oh.
37:11
Speaker 1: You read that role That was one hundred and thirteen
37:15
Speaker 1: point eight billion dollars is what he's currently valued. He's
37:20
Speaker 1: ninety two years old for those of you playing along
37:22
Speaker 1: at home, and is basically an American businessman and investor
37:27
Speaker 1: who has a very, very big following. And he is
37:31
Speaker 1: very rich because of his investment decisions, not because he
37:35
Speaker 1: has built super good businesses or came from family wealth.
37:38
Speaker 1: He's essentially made all of his money by relying on
37:41
Speaker 1: time tested rules of value investing if you are interested.
37:44
Speaker 1: And I just think that's really really sexy. Like I mean,
37:48
Speaker 1: he's one of the most frugal people in the entire world.
37:51
Speaker 1: He still drives his original car, original car.
37:54
Speaker 3: That's cute.
37:55
Speaker 1: So he Yeah, he still drives his original car. And
37:57
Speaker 1: I'm just getting up a picture for Beck which you
37:59
Speaker 1: guys can google and I might even put it on
38:01
Speaker 1: my Instagram stories today. But that's his house. It's all
38:05
Speaker 1: he needs. Cute, little modest I do wonder sometimes, like
38:10
Speaker 1: he does have a very modest family home in America,
38:13
Speaker 1: and that's very exciting. But what kind of security do
38:16
Speaker 1: you reckon he needs on that given who he is
38:19
Speaker 1: and what's going on?
38:20
Speaker 3: Oh true, I just.
38:22
Speaker 1: Go hold up, hold up. If you're worth one hundred
38:24
Speaker 1: and thirteen point eight billion dollars, like you don't just
38:27
Speaker 1: get to walk home without any type of risk kind
38:30
Speaker 1: of overarching that circumstance. Well, he's a dude, so yeah,
38:33
Speaker 1: you're right, And I need two year old guy who
38:35
Speaker 1: he can defend himself to defend himself. No, he probably
38:39
Speaker 1: needs some help. But that's a very good question. Actually, yeah,
38:41
Speaker 1: so google it. We both agree that we'ren Buffett. Oh
38:44
Speaker 1: sexy smash.
38:46
Speaker 3: Yeah, yeah, smash for sure.
38:49
Speaker 1: You're right. I'm going to do a TikTok of all
38:51
Speaker 1: the famous investors and it'll be just like one of
38:54
Speaker 1: those Smash or past serieses.
38:55
Speaker 3: Yeah, let's do it.
38:56
Speaker 1: Yeah done.
38:57
Speaker 3: Okay.
38:57
Speaker 1: So, so since we're talking about Warren Buffett, Yeah, it's a
38:59
Speaker 1: real yeah, real hottie. What does it usually say in
39:03
Speaker 1: trying times like this? So he has so many good
39:05
Speaker 1: quotes and if you've ever heard me say, oh my gosh, yeah, look,
39:10
Speaker 1: I've just stolen a lot of things that he said.
39:12
Speaker 3: Can't you.
39:13
Speaker 1: Yeah, he's inspirational. Yeah, he says, all right, So the
39:16
Speaker 1: first best thing you can do to protect against inflation
39:18
Speaker 1: is to invest in yourself and your skills. He says,
39:21
Speaker 1: if you're the best teacher, if you're the best surgeon,
39:24
Speaker 1: if you're the best lawyer, you will get your share
39:26
Speaker 1: of the national economic pie, regardless of the value of
39:30
Speaker 1: whatever the currency may be. Isn't that interesting?
39:33
Speaker 2: Hmmm?
39:34
Speaker 1: I feel like it's just like you've just been like,
39:36
Speaker 1: I don't get what he means.
39:38
Speaker 3: It was too fast for me.
39:39
Speaker 1: So essentially, he says, if you're the best in your field,
39:43
Speaker 1: you're always going to be valued and be able to
39:46
Speaker 1: generate a good income, regardless of what the economics at
39:49
Speaker 1: the time are doing. Right. So, like, if you prove
39:52
Speaker 1: your value and you invest in yourself and you invest
39:55
Speaker 1: in your skills to become the best of the best,
39:58
Speaker 1: that is not going to betray you because you're in
40:00
Speaker 1: trying times. We see, you know, we've got the tech
40:02
Speaker 1: redundancies going on right now. They're not going to lose
40:05
Speaker 1: the people that are integral to their companies, are they
40:08
Speaker 1: very true? They're going to try and cut the people
40:11
Speaker 1: that they go Okay, cool, we could get another XYZX
40:14
Speaker 1: at some point in the future. Yeah. The second best
40:17
Speaker 1: protection is a wonderful business, which means a company in
40:20
Speaker 1: which the products are in demand even if the company
40:23
Speaker 1: does have to raise their prices. Companies that tend to
40:27
Speaker 1: withstand an inflationary environment quote must have two characteristics. The
40:32
Speaker 1: first is an ability to increase prices rather easily even
40:36
Speaker 1: when the product demand is flat and capacity is not
40:39
Speaker 1: fully utilized without fear of significant loss of either market
40:42
Speaker 1: share or unit volume. And the second is an ability
40:46
Speaker 1: to accommodate large dollar volume increases in business often produced
40:51
Speaker 1: more by inflation rather than by real growth, with only
40:54
Speaker 1: minor additional investment of capital. So those two things are
40:58
Speaker 1: really good. So rather than trying to pick individual stocks,
41:01
Speaker 1: whether we're in an inflationary period or not, you should
41:04
Speaker 1: go with this tried and true method, the index fund
41:08
Speaker 1: to have and to hold. Ah Warren Buffett also talks
41:12
Speaker 1: a lot about it's time in the market, not timing
41:15
Speaker 1: the market. He has been known for identifying companies that
41:20
Speaker 1: are on his watch list, which is public. By the way,
41:23
Speaker 1: it becomes a public thing. If he's looking into a company,
41:26
Speaker 1: he talks about it and shits that. But he has
41:29
Speaker 1: been known to watch a company for ten twenty thirty
41:33
Speaker 1: years before investing in them. The patients are patience, ain't
41:37
Speaker 1: and people being like you're missing out on these things,
41:39
Speaker 1: like you're not getting in and he's like, yep, no worries,
41:42
Speaker 1: but I'm going to make sure that I'm making the
41:43
Speaker 1: right decision for me. And then he does and it
41:46
Speaker 1: always works out. No, don't know how he knows what
41:48
Speaker 1: he's doing. Everyone's given to it. He's a billionaire. And
41:52
Speaker 1: is this something that you say it or does Warren
41:54
Speaker 1: Buffet say this? From Little Things, Big Things Grow? No,
41:58
Speaker 1: I believe that was the very regal Paul Kelly, Ah,
42:02
Speaker 1: Paul Kelly, Yeah, yep, yep, yeah, yeah. I believe that
42:05
Speaker 1: was his very very well versed song.
42:08
Speaker 3: Yeah, sounds familiar to me.
42:11
Speaker 1: So little Things Things gross, it's beautiful, that's gonna be
42:14
Speaker 1: stuck in my head or study stunning.
42:16
Speaker 4: I really recommend people go back to listen to our
42:18
Speaker 4: recent Investing Small Amounts episode That works.
42:23
Speaker 1: Oh, that was wildly popular, Like I didn't expect it
42:27
Speaker 1: to be as popular as it was, but the amount
42:29
Speaker 1: of beautiful messages you guys sent me, and let's be honest,
42:32
Speaker 1: the spike in download, so that was pretty good. So
42:35
Speaker 1: I feel like it was a good EP though, where
42:37
Speaker 1: he had good vibes to throughout the.
42:39
Speaker 3: Good vibes is a really really nice day.
42:40
Speaker 1: That was on the fifth of April, So April go
42:43
Speaker 1: and have a listen to that. But there are also
42:45
Speaker 1: a few things that I want to leave you guys
42:47
Speaker 1: with today. One is from Little Things being skill growth.
42:51
Speaker 1: The next year is the average investor will experience. Get this,
42:55
Speaker 1: beec approximately seven market corrections during their lifetime, and the
43:00
Speaker 1: last was the GFC. Ah, do you know what a
43:02
Speaker 1: market correction is? No, it's where it absolutely crashes. You're
43:06
Speaker 1: going to experience your portfolio look like trash seven times.
43:10
Speaker 1: I'm so sorry.
43:11
Speaker 4: Oh man, that's a really pretty name for something that's
43:14
Speaker 4: so diffictating.
43:15
Speaker 1: Yeah, but it's not devastating if you understand and your
43:19
Speaker 1: mindset is good, and you're in a position where you're like, okay, cool,
43:23
Speaker 1: the market is off, My portfolio doesn't look the best,
43:25
Speaker 1: but if I hold on to this roller coaster, it
43:28
Speaker 1: will go back up right. And we know that after
43:32
Speaker 1: the GFC, which was a global financial crisis which happened
43:35
Speaker 1: in two thousand and eight two thousand and nine, we
43:37
Speaker 1: know that some of the best investment returns have come
43:40
Speaker 1: after that, Like our market and our economy has more
43:44
Speaker 1: than recovered since the GFC, and people talk about that
43:47
Speaker 1: as the worst thing in history. And if you go
43:50
Speaker 1: on my favorite website is the Vanguard website at the moment,
43:54
Speaker 1: I mean, there's a lot of favorite websites I have.
43:55
Speaker 1: Isn't there too anyway, TikTok, TikTok's and app's TikTok is
44:01
Speaker 1: currently being overtaken by Katan though oh god, yeah, yeah,
44:05
Speaker 1: Like I'm I'm gonna lose my pop culture references and
44:08
Speaker 1: I'm just going to be starting to talk about how
44:10
Speaker 1: many bricks and shape you'll trade me for a piece
44:12
Speaker 1: of awe. Honestly, I won't complain, You'll get it all right.
44:15
Speaker 1: So I think it's really important to understand that if
44:18
Speaker 1: you go onto the Vanguard website and have a look
44:21
Speaker 1: at their interactive Investor chart, you can actually slide around
44:25
Speaker 1: and have a look at the different asset classes and
44:27
Speaker 1: how they've provided. But that graph is my favorite graph
44:30
Speaker 1: for showing people how the GFC at the time, if
44:34
Speaker 1: you cut back, the chart looks like the scariest drop
44:37
Speaker 1: in the entire world. And then if you add all
44:41
Speaker 1: the way up to twenty twenty three, it becomes this
44:43
Speaker 1: little blip ah in the roller coaster and you go,
44:47
Speaker 1: what's that? It's a GFC when in doubt, zoom ow
44:51
Speaker 1: exactly fair. You are learning. And the second thing I
44:55
Speaker 1: want to leave you with today is my favorite thing
44:57
Speaker 1: to harp on about. Have your emergency fund pump it up.
45:02
Speaker 1: Make sure financially you are in an okay position right
45:05
Speaker 1: now is uncertain for so many people, and so many
45:08
Speaker 1: people think, oh, something won't happen to me. It's fine
45:11
Speaker 1: if you have some extra cash pumping up your emergency
45:14
Speaker 1: fund is never going to go astray. Pay your bills
45:16
Speaker 1: on time, hopefully, stay on top of your mortgage. And
45:19
Speaker 1: if you don't feel like you're on top of your mortgage,
45:21
Speaker 1: please sign into the Xella Money Instagram DMS or email
45:25
Speaker 1: them or shoot me a message or you know, get
45:27
Speaker 1: in contact because they can review it and make sure
45:30
Speaker 1: that you're in the best possible position moving forward, and
45:32
Speaker 1: make sure you're getting paid well for your job. I
45:36
Speaker 1: know that that can be a very hard one, and
45:38
Speaker 1: we are going to be creating, in hopefully the near future,
45:41
Speaker 1: a lot more career episodes because I feel like I
45:44
Speaker 1: can tell you to invest until the cows come home,
45:46
Speaker 1: but you know what, you can't do invest if you
45:49
Speaker 1: don't have a good income. So we're going to be
45:51
Speaker 1: building up on the career kind of vibe to be like,
45:53
Speaker 1: okay cool. I just feel like there are so many
45:55
Speaker 1: people in our community who I want to shake and
45:58
Speaker 1: be like, babe, do you know your worth. You are
46:00
Speaker 1: worth so much more, and his how to achieve that
46:03
Speaker 1: or here's how you can create a pathway to that
46:06
Speaker 1: without feeling awful about it. So I just I'm really
46:09
Speaker 1: excited for that stuff. But we're done here today. I
46:11
Speaker 1: love that we're going to talk about Katan. Yes, and
46:14
Speaker 1: we'll see you guys on Friday.
46:15
Speaker 3: See you guys then.
46:22
Speaker 1: The advice shared on She's on the Money is general
46:24
Speaker 1: in nature and does not consider your individual circumstances. She's
46:28
Speaker 1: on the Money exists purely for educational purposes and should
46:32
Speaker 1: not be relied upon to make an investment or financial decision.
46:35
Speaker 1: If you do choose to buy a financial product, read
46:38
Speaker 1: the PDS TMD and obtain appropriate financial advice tailored towards
46:42
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Speaker 4: The imputed the diffect of day