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Four ways for you to invest in 2021 · She's On The Money

0:00
Speaker 1: She's on the Money. She's on the Money.
0:12
Speaker 2: Hello and welcome to She's on the Money, the podcast
0:15
Speaker 2: for millennials who want financial freedom. My name is Georgia King.
0:19
Speaker 2: I'm a copywriter and journalism student and every week I
0:22
Speaker 2: sit down to chat finance and money things with Victoria
0:25
Speaker 2: to find Melbourne based financial advisor Guru Lady.
0:29
Speaker 3: Do you lucky lucky lady? But there's two other people
0:32
Speaker 3: in the room that you haven't intruder. That's exactly delicious ways.
0:36
Speaker 2: We are also joined by the lovely Ryan John and
0:40
Speaker 2: the wonderful Jessica. Thank our community manager. We're all here
0:44
Speaker 2: around the table. It's quite it's quite nice. This is
0:47
Speaker 2: my first one with everyone.
0:49
Speaker 3: Really fun, you improved, She's on the Money right now.
0:53
Speaker 2: Today on our deep Dive episode, we're going to be
0:55
Speaker 2: talking through the four key ways to invest property, the
0:59
Speaker 2: share market, and fixed interest. So that'll give you an
1:02
Speaker 2: overview of all of the ways you can invest in
1:04
Speaker 2: twenty twenty one. Kick us off with property.
1:07
Speaker 3: So property is obviously the most popular type of asset,
1:11
Speaker 3: but the reason it is a good asset is because
1:13
Speaker 3: it generates regular income from rent and also as an
1:17
Speaker 3: asset it can increase in value and my favorite types
1:20
Speaker 3: of investments and investments that kind of do both of
1:22
Speaker 3: those for you. And I'll get into that in a
1:24
Speaker 3: little bit more detail, But there are a number of
1:26
Speaker 3: pros with property, right so, like capital growth over the
1:29
Speaker 3: long term really important. You've got the ability to leverage,
1:32
Speaker 3: which means that you can borrow against that property to
1:35
Speaker 3: get another investment property, and it can kind of act
1:37
Speaker 3: as a tool for you. You've got asset produced regular income,
1:41
Speaker 3: so rent you get an income stream that can help
1:43
Speaker 3: you pay off that mortgage if you've got a mortgage
1:45
Speaker 3: that essentially can be paid off with that, or it
1:48
Speaker 3: can help you along the way. And one of the
1:50
Speaker 3: things that I think is really important to take into
1:52
Speaker 3: consideration is that that asset is a physical asset, like
1:55
Speaker 3: you can see it, you can touch it, you can
1:57
Speaker 3: taste it, like you can sit on the front lawn
1:59
Speaker 3: and you can eat a pizza. It is not something
2:01
Speaker 3: like a share in that kind of feels a little
2:03
Speaker 3: bit elusive, and often it's a more attractive asset purely
2:06
Speaker 3: because people love physical things. And at the end of
2:09
Speaker 3: the day, a house is worth a house if you
2:11
Speaker 3: ask every baby booter.
2:13
Speaker 1: Yeah, So we're obviously going to do a deep dive
2:15
Speaker 1: episode into property investing in the next month or so,
2:18
Speaker 1: but just quickly, what would be the one biggest pro
2:21
Speaker 1: of property investing and maybe the one biggest con or
2:24
Speaker 1: just something to keep in mind or to look out for.
2:26
Speaker 3: So biggest pro would be the ability to generate income
2:30
Speaker 3: via rent and capital growth and the ability for it
2:33
Speaker 3: to increase in value over time. The biggest con for
2:36
Speaker 3: me would actually be liquidity, which fancy word just means
2:39
Speaker 3: you can get your cash out. It takes a while
2:41
Speaker 3: to get cash out. And as much as people like,
2:43
Speaker 3: oh my gosh, the share prices fluctuates so often, what
2:47
Speaker 3: we don't see is property prices fluctuating because there's not
2:49
Speaker 3: like dollar sign over the top of each house that
2:51
Speaker 3: fluctuates and says, oh, this week, you know, something bad
2:54
Speaker 3: happened on the streets, so it's you know, decreased in
2:57
Speaker 3: value by fifty grand like that doesn't happen. The house
3:00
Speaker 3: is only ever worth what somebody is willing to pay
3:02
Speaker 3: for it at the time of sale, so you actually
3:04
Speaker 3: have to have a buyer, whereas you can just sell
3:06
Speaker 3: shares and be out within three business days, and often
3:09
Speaker 3: it takes upwards of ninety days for you to even
3:11
Speaker 3: get any of your capital back from a property, and
3:14
Speaker 3: that's assuming you have a really smooth sailing sale.
3:18
Speaker 2: Is there a basic rule V when it comes to property?
3:20
Speaker 2: You know, with investing, you can kind of generally say
3:24
Speaker 2: that whatever you invest in in ten years will what
3:26
Speaker 2: is it double double?
3:27
Speaker 1: Yeah?
3:28
Speaker 2: So is that similar with property or is it just
3:30
Speaker 2: a completely different space.
3:31
Speaker 3: So it's interesting and we'll definitely get into it in
3:33
Speaker 3: the property investing episode. But it's not what it used
3:37
Speaker 3: to be. Over the last thirty years, we've seen the
3:39
Speaker 3: property market have a raga of a time in Australia
3:42
Speaker 3: and I think it's been really great.
3:44
Speaker 1: I do great for people older than us, great for
3:47
Speaker 1: us want to buy it exactly.
3:48
Speaker 3: It's great for people older than us who are not
3:51
Speaker 3: currently looking for their first homes. But I also think
3:54
Speaker 3: it's really interesting because I do think property is still
3:57
Speaker 3: a really great asset if you're buying the right thing,
3:59
Speaker 3: and that is harder to do than it is to say.
4:03
Speaker 1: All right. The next one, which is probably the biggest,
4:05
Speaker 1: the juiciest, the most asked about, is shares.
4:08
Speaker 3: So these are arguably my favorite, and I don't think
4:10
Speaker 3: that that is a surprise to anybody. Shares are an
4:14
Speaker 3: asset class which is very exciting. A share is when
4:17
Speaker 3: you become a tiny stakeholder in a company. So a
4:21
Speaker 3: share is you buying into that company and let's call
4:24
Speaker 3: you a shareholder, and you become like a mini owner.
4:26
Speaker 3: So when you become a mini owner, that means that
4:29
Speaker 3: you are entitled to some of the profit that that
4:31
Speaker 3: company generates, but you are also entitled to the growth
4:35
Speaker 3: of that company. So say you bought Sheese on the
4:37
Speaker 3: money a couple of years ago when everybody was like,
4:40
Speaker 3: oh my gosh, lam your Facebook group has five friends
4:43
Speaker 3: and three of them are your family. You bought it then,
4:46
Speaker 3: and then over time it's increased in value. You would
4:49
Speaker 3: be eligible for that growth should you sell your share
4:52
Speaker 3: in that business. So that is one of the reasons
4:55
Speaker 3: why it is my favorite type of asset because you
4:57
Speaker 3: actually have both of those things. Obviously, there are a
5:00
Speaker 3: number of pros liquid it is high. Back to what
5:03
Speaker 3: we're saying, it's easy to dispose of a share, and
5:05
Speaker 3: I know that saying something like dispose of a share
5:07
Speaker 3: sounds a little bit complicated, but it just means selling
5:10
Speaker 3: a share and you can have your money back in
5:12
Speaker 3: your bank account within three business days, which is very cool.
5:15
Speaker 3: Your capital actually grows and you don't actually have to
5:18
Speaker 3: have a lot of capital to start, So a lot
5:21
Speaker 3: of people will say, oh, my gosh, I'm saving for
5:23
Speaker 3: my first home, like I need to get to x
5:25
Speaker 3: amount or I need to save one hundred thousand dollars
5:27
Speaker 3: before I can get into that, Whereas you can start
5:30
Speaker 3: investing on the share market with as little as five dollars,
5:32
Speaker 3: which I think is really cool. The value of shares
5:35
Speaker 3: is also always known, like the share market is going
5:38
Speaker 3: to tell you exactly what your share portfolio is worth.
5:41
Speaker 3: Really important to mention there is that when you're talking
5:44
Speaker 3: about what a share is worth, it is only worth
5:47
Speaker 3: that if you sell that. So I think it's really
5:50
Speaker 3: important to understand that if the market dips and you
5:53
Speaker 3: currently have ten shares, you still own ten shares. They're
5:56
Speaker 3: just currently valued it less should you exit the market
5:59
Speaker 3: and sell. And a lot of people and that obviously
6:02
Speaker 3: gets into emotional investing, which I'm super passionate about and
6:04
Speaker 3: we're going to do an episode this season about it.
6:06
Speaker 3: But I think that that's really important and back to
6:09
Speaker 3: my favorite part. It does produce income and it has growth,
6:12
Speaker 3: so that's pretty sexy outcome.
6:14
Speaker 1: A pretty common question in the group. A lot of
6:16
Speaker 1: people start investing by using the micro investing apps like
6:20
Speaker 1: Spaceship and rays, which are really great, but a lot
6:22
Speaker 1: of people say things like, oh, and when I get
6:24
Speaker 1: enough from that, or I save up a bit more,
6:26
Speaker 1: I'll start investing in inverted commas properly or into actual companies.
6:30
Speaker 1: So what would be and I know there's maybe not
6:32
Speaker 1: a hard fixed it, what would be the minimum that
6:34
Speaker 1: people need to actually invest that's not micro investing, that's
6:38
Speaker 1: you know, what's the what are we calling that proper investing.
6:41
Speaker 3: Or yeah, like it's kind of like graduating from micro investing.
6:45
Speaker 3: I think it's really important to note that micro investing
6:48
Speaker 3: is really investing, and it is one of those things
6:51
Speaker 3: that I think a lot of people aren't too clear
6:53
Speaker 3: on that, Like, you are actually investing. It is money
6:56
Speaker 3: that you're putting into the share market. It's just on
6:58
Speaker 3: a different platform, and that platform is just owned by
7:01
Speaker 3: lots and lots of people. So the next step would
7:04
Speaker 3: be to I would say, have about five thousand dollars saved.
7:08
Speaker 3: But the important thing there is to be able to
7:11
Speaker 3: regularly commit to investing, So whether that is on a
7:14
Speaker 3: monthly basis or a quarterly basis, having an amount that
7:18
Speaker 3: you are putting into the share market, whether that is
7:21
Speaker 3: five hundred dollars or three hundred dollars or even one
7:23
Speaker 3: hundred dollars, like, you just need to make it a
7:25
Speaker 3: priority because that is what is going to play into
7:28
Speaker 3: the magic of compound interest and help your money grow
7:31
Speaker 3: over time significantly.
7:33
Speaker 2: So atfs V they come up in the Facebook group
7:35
Speaker 2: a lot as well. Can you flush that throws out
7:38
Speaker 2: a little bit more?
7:38
Speaker 3: I can. Atfs are one of my favorite ways to invest.
7:41
Speaker 3: I'd be like all shares are, like they're just a
7:43
Speaker 3: really fun asset class. So an ETF is an exchange
7:47
Speaker 3: traded fund, and an exchange traded fund is a low
7:51
Speaker 3: cost way of earning a return that is very similar
7:53
Speaker 3: to an index or a commodity, which is essentially just
7:56
Speaker 3: a share, right, So they also really help you to
7:59
Speaker 3: diversify your investment portfolio immediately. So when you buy a
8:03
Speaker 3: direct share, so say I went and bought Woolworths, I
8:06
Speaker 3: would not be well diversified because I would have one
8:09
Speaker 3: asset in one asset class, and I would only be
8:13
Speaker 3: exposed to one type of industry in Australia and whilst
8:18
Speaker 3: that's not the worst thing, I would feel everything So
8:20
Speaker 3: say will worst went completely bust, we would find ourselves
8:23
Speaker 3: in a position where we lost to all that money.
8:25
Speaker 3: And ETF is essentially a basket and this is what hey,
8:28
Speaker 3: I always explain it is not because it's dumb down,
8:30
Speaker 3: it's literally it is what it is. But essentially, an
8:33
Speaker 3: ETF is a big basket that is full of different
8:37
Speaker 3: shares that is run by a fund manager and he
8:40
Speaker 3: has or she has or they have filled their basket
8:42
Speaker 3: full of different shares that they've picked for really good
8:44
Speaker 3: reasons to create diversification. So because they have heaps and
8:48
Speaker 3: heaps of money to play with, they have been put
8:50
Speaker 3: in a position where they are able to have a
8:52
Speaker 3: whole heap of different industries and asset classes and often
8:55
Speaker 3: global versus Australian shares. So when you buy into an
8:59
Speaker 3: ETF with the one hundred dollars, you instantly get diversification.
9:03
Speaker 3: And diversification is really important because we never want to
9:06
Speaker 3: put all of our eggs in one basket because if
9:09
Speaker 3: we do and we drop that basket, we've broken all
9:11
Speaker 3: of our eggs.
9:12
Speaker 2: Yeah, so that kind of makes it easier. I guess
9:14
Speaker 2: if someone's kind of diversifying it for you, it takes
9:17
Speaker 2: the thinking out of it. Is that what happens when
9:20
Speaker 2: we invest in those microinvesting platforms is that are they ETFs?
9:24
Speaker 3: Yes and no? So it depends on where you're going
9:27
Speaker 3: and what you're doing. The two most popular platforms in
9:29
Speaker 3: the Shees on the money community are Raise and Spaceship.
9:33
Speaker 3: Raise operates with ETFs and has a number of different
9:36
Speaker 3: ones in their portfolios, whereas spaceship is a managed fund.
9:40
Speaker 2: Like it sounds like almost too good to be true,
9:42
Speaker 2: like are they making are they getting a cut out
9:44
Speaker 2: of it?
9:45
Speaker 1: Okay?
9:45
Speaker 2: So what the books that look like?
9:46
Speaker 3: So fees on an ETF often you'll have to pay brokerage,
9:50
Speaker 3: So it depends on how you've purchased them. And the
9:52
Speaker 3: way you purchase these funds is through a platform, right,
9:55
Speaker 3: So it could be through like comsac or nab trade,
9:58
Speaker 3: it could be through things open markets, it could be
10:01
Speaker 3: through a number of different just platforms. Those aren't recommended platforms,
10:04
Speaker 3: by the way, they're just platforms that I've thought of,
10:06
Speaker 3: But essentially you can buy an ETF through them. You'll
10:09
Speaker 3: have to pay brokerage for that platform, but then you'll
10:12
Speaker 3: also pay a fee. Now, fees on ETFs are usually
10:15
Speaker 3: below one percent, but they will definitely depend on how
10:18
Speaker 3: the ETF is structured and who manages it, and what
10:21
Speaker 3: their expected performance is going to be, So they would
10:24
Speaker 3: vary from anywhere between point two percent. And they call
10:27
Speaker 3: these basis points, but we just call them percent So
10:30
Speaker 3: point two percent of your portfolio all the way up
10:33
Speaker 3: to like maybe zero point nine percent of your portfolio.
10:36
Speaker 3: Anything above that for ANYTF I'd think is wildly ridiculous.
10:39
Speaker 1: Does that mean obviously their percentages, But is that why
10:43
Speaker 1: it's important to have a fair bit to get started,
10:45
Speaker 1: because that can eat away your money if you don't
10:47
Speaker 1: have much in there.
10:48
Speaker 3: Yeah, absolutely, and so can brokerage. So brokerage on some
10:51
Speaker 3: platforms can be like thirty dollars. So I think it's
10:54
Speaker 3: really important to make sure that you know, if you're
10:56
Speaker 3: putting one hundred dollars into the share market but you're
10:58
Speaker 3: paying thirty dollars brokerae, well you just lost thirty percent
11:01
Speaker 3: of your portfolio by investing, and it just doesn't make sense,
11:05
Speaker 3: which is why we would recommend higher amounts so if
11:08
Speaker 3: you're then investing one thousand dollars instead, for example, that
11:11
Speaker 3: becomes three percent. And obviously things decrease when you introduce scale,
11:15
Speaker 3: which is why it's really important to also have a
11:17
Speaker 3: platform that doesn't charge exorbitant brokerage fees because you don't
11:21
Speaker 3: want essentially to buy yourself in the butt before you
11:24
Speaker 3: even start.
11:24
Speaker 2: So a lot of pros with investing in the stock
11:27
Speaker 2: market v but what about the negatives or of the cons.
11:30
Speaker 3: So obviously it can make you feel emotionally a little
11:34
Speaker 3: bit taxed. Seeing what something is worth all the time
11:36
Speaker 3: can induce a number of levels of stress. It can
11:39
Speaker 3: make you feel anxious or you know, if you feel
11:41
Speaker 3: like your friends are getting into something, you can have
11:43
Speaker 3: a little bit of fomo. I think it's really important
11:45
Speaker 3: to take that into consideration. But then when it comes
11:47
Speaker 3: to things like ETFs, the important thing to remember there
11:51
Speaker 3: is they are fantastic for diversification, but you are not
11:55
Speaker 3: the underlying owner of that asset. So say you decied
11:58
Speaker 3: you don't want to own a Z for some reason anymore,
12:01
Speaker 3: you don't actually have the option of removing that from
12:03
Speaker 3: your ETF. It just is a part of that ETF.
12:07
Speaker 3: But not being the underlying owner means you could also
12:10
Speaker 3: own something that you love and have it sold without
12:13
Speaker 3: you having any say in it, but also something that
12:15
Speaker 3: you don't like could have been added to your portfolio.
12:18
Speaker 3: So I think it's really important to understand that. Whereas
12:20
Speaker 3: with direct shares it's completely in your control, like you
12:23
Speaker 3: would be the underlying owner of that, with ETFs it
12:27
Speaker 3: can be a little bit more murky. I think maybe
12:29
Speaker 3: murky is a little bit too dramatic, but it definitely
12:31
Speaker 3: is that you are not the underlying owner of that asset.
12:35
Speaker 3: And for me as an investor, ETFs are great. Yes,
12:38
Speaker 3: I currently do own ETFs, but in the future, once
12:41
Speaker 3: things do get larger, I do really want to move
12:44
Speaker 3: to owning direct shares because it means that I can
12:46
Speaker 3: one own less companies and have a little bit more
12:49
Speaker 3: conviction in the companies. I'm not talking about just owning
12:52
Speaker 3: two or three I'm talking maybe like ten or eleven
12:54
Speaker 3: or twelve different companies, but I have complete control over
12:58
Speaker 3: every single one of those. That will only be after
13:01
Speaker 3: I have a couple of one hundred thousand dollars invested
13:03
Speaker 3: in my friends. We are not there yet.
13:06
Speaker 1: You often talk about you need to be willing to
13:09
Speaker 1: invest in the long term to ride the ups and downs. Yes,
13:12
Speaker 1: just real quick in your definition and when you talk
13:14
Speaker 1: to your clients, what's your definition of short term, midterm,
13:18
Speaker 1: long term? How long is actually long term?
13:20
Speaker 3: So short term i'd be talking like less than three years,
13:23
Speaker 3: in which case I would say, please don't invest, go
13:25
Speaker 3: look for a high interest savings account if you can
13:27
Speaker 3: find one that is still high interest in this current
13:30
Speaker 3: market place. Medium term would be like five to seven years,
13:34
Speaker 3: in which case investing is a bit risky because we
13:38
Speaker 3: don't have a whole heap of exposure to time to
13:41
Speaker 3: you know, compensate for the risk that we are taking.
13:44
Speaker 3: And then I would say long term investing is anything
13:46
Speaker 3: above ten years.
13:47
Speaker 1: We'll get to cash and fixed interest in a moment,
13:49
Speaker 1: But first, a message from some friends of the show.
13:55
Speaker 2: Alrighty VSA, we've chatted property, stock market. We've got a
13:59
Speaker 2: few more want to get to to continue these conversations
14:02
Speaker 2: as well. Guys, don't forget about our amazing Facebook group
14:05
Speaker 2: which is popping off. How many people are in there now,
14:07
Speaker 2: like two hundred thousand. We're getting there, we get at it.
14:09
Speaker 3: We're definitely not there yet, but we are at one twenty.
14:13
Speaker 3: That's pretty uguly. Yeah, and we officially guys have a
14:16
Speaker 3: community manager Jessica say hello, Hello, that's so dramatic, probably
14:22
Speaker 3: because she's busy managing it.
14:25
Speaker 1: So the next one, are we doing cash or fixed interests?
14:28
Speaker 1: All right?
14:28
Speaker 3: So let's do cash next, because I feel like everybody
14:31
Speaker 3: understands cash at a base level. Cash is literally what
14:35
Speaker 3: I'm saying it is. It is cash. It is a
14:38
Speaker 3: great asset to hold when you need easy access to
14:40
Speaker 3: your capital really quickly. So we're talking about if you're
14:43
Speaker 3: planning on buying a home in the next two years,
14:45
Speaker 3: I get this message a lot. Actually, Hey, Victoria, what's
14:48
Speaker 3: only you investing for the next two years? I want
14:50
Speaker 3: to buy a property. It's like, do not invest that cash.
14:52
Speaker 3: It needs to be sitting in your bank account so
14:54
Speaker 3: that you have easy access to it. I want you
14:56
Speaker 3: to have a high interest bank account where possible. And
14:59
Speaker 3: if you've got fees on you bank account, my friend,
15:01
Speaker 3: it is twenty twenty one review that asap, go visit
15:04
Speaker 3: my friends at our bank. That's not sponsored. I'm just
15:06
Speaker 3: obsessed with them.
15:07
Speaker 1: Or usually if you call and just say, oh, another
15:09
Speaker 1: bank's got no fees, that would waive them like it's
15:11
Speaker 1: pretty flexible.
15:12
Speaker 3: Yeah, I just feel like, ask and you won't. Don't
15:15
Speaker 3: ask and you won't get. Don't get Yeah, don'tuts, don't
15:18
Speaker 3: get Go ask them to take their fees away, or
15:20
Speaker 3: you will take your business away goodbye.
15:22
Speaker 1: Just to confirm, cash means cash in banks and savings account.
15:25
Speaker 1: It doesn't mean under the matter.
15:27
Speaker 3: No, it doesn't mean under the mattress. That is very
15:29
Speaker 3: nineteen seventies of you. But I also think it's really
15:33
Speaker 3: important to note that cash is a really important part
15:36
Speaker 3: of a well diversified investment portfolio. So cash could be
15:40
Speaker 3: cash in your bank account that you currently have, whether
15:43
Speaker 3: that is you know, just what's in your savings account
15:46
Speaker 3: or what is just in your transaction account. But it
15:48
Speaker 3: is also an asset class that in an investment portfolio
15:51
Speaker 3: we would hope we would hold as well. But it
15:53
Speaker 3: would depend on your risk profile. So when I talk
15:56
Speaker 3: about your risk profile, that's you know, how risky you
15:58
Speaker 3: want to be. Are you conservative or are you a
16:01
Speaker 3: risk taker who wants to take over the world and
16:04
Speaker 3: you don't particularly care about the ebbs and flows of
16:06
Speaker 3: the share market. So first, before we invest, we really
16:09
Speaker 3: need to understand that we're going to do an Entiger
16:11
Speaker 3: episode so that we can understand our risk profiles together.
16:15
Speaker 3: But cash can also be a part of that. And
16:18
Speaker 3: some ETFs actually carry cash, so you might see on
16:21
Speaker 3: their list of what they actually hold, they might just
16:24
Speaker 3: say cash three or four percent, and that is literally
16:27
Speaker 3: money sitting in their account so that they can have
16:30
Speaker 3: a really low return, but it kind of makes things
16:32
Speaker 3: a little bit more stable.
16:34
Speaker 1: Is there anything like? Cash is pretty basic?
16:35
Speaker 3: R Cash is super basic, But it's something that I
16:39
Speaker 3: think you guys need to understand because when you do
16:41
Speaker 3: get into investing, it is an important part of an
16:44
Speaker 3: investment portfolio, and you will see it on things like ETFs.
16:48
Speaker 3: You will see you know, if you go see a
16:49
Speaker 3: financial advisor, they might recommend that you hold a certain
16:52
Speaker 3: percent of cash because of your risk profile, and you
16:54
Speaker 3: might go, yeah, okay, that makes sense, all right.
16:57
Speaker 1: So the final one is fixed interest? What is in general?
17:01
Speaker 1: And then I guess people who are considering this as
17:03
Speaker 1: an investment choice, what are they looking at it for?
17:05
Speaker 3: So fixed interest is also a really interesting asset. Is
17:09
Speaker 3: very similar to cash in that it is lower risk
17:12
Speaker 3: and lower return. The most well known types of fixed
17:15
Speaker 3: interest is a bond. So a bond is essentially when
17:18
Speaker 3: the government or companies borrow money from investors and then
17:21
Speaker 3: they pay them a rate of interest in return. Now,
17:24
Speaker 3: we are known in Australia for having really good returns
17:27
Speaker 3: on bonds because the Australian government has never to date
17:30
Speaker 3: defaulted on a bond, which makes it quite a secure asset. Essentially,
17:34
Speaker 3: they'll say, hey, Victoria, we really want to build some
17:37
Speaker 3: new roads, but we need to raise some capital. Put
17:40
Speaker 3: your money into our account, buy a bond and they
17:43
Speaker 3: essentially hand over a certificate that says bond and the
17:45
Speaker 3: amount that you lent them on it, and it also
17:49
Speaker 3: says plus you'll get three or four percent. So it's
17:52
Speaker 3: not something like the share market, which on average has
17:54
Speaker 3: returns of about between seven and a half and eleven
17:57
Speaker 3: percent depending on what you're investing in, but it is
18:00
Speaker 3: a lot more secure. Often your capital is tied up
18:03
Speaker 3: for a period of time, so a bond might be
18:05
Speaker 3: issued and it's a ten year bond, so essentially for
18:07
Speaker 3: you to get all the money that you're promised, you'll
18:09
Speaker 3: have to wait ten years and it'll get paid back
18:11
Speaker 3: at that point. But essentially the government will give you
18:14
Speaker 3: your money back.
18:15
Speaker 1: So what kind of person would consider fixed interest as
18:19
Speaker 1: a good idea for them, Because I feel like, as
18:21
Speaker 1: much as it seems simple, not a lot of people
18:24
Speaker 1: talk about it, Like, I don't.
18:25
Speaker 3: Know, I think bonds are really cool and there, and
18:27
Speaker 3: I say again, a bond is a really exciting part
18:30
Speaker 3: of a well diversified investment portfolio. I own bonds as
18:33
Speaker 3: a part of my portfolio, and it's something that gives
18:36
Speaker 3: me the stability in my portfolio so that, you know,
18:39
Speaker 3: if my shares are performing, you know, not so well,
18:42
Speaker 3: it's the thing that kind of like lifts the rest
18:44
Speaker 3: of the portfolio up. So I don't on average ce
18:46
Speaker 3: negative returns. But for me, a bond is a really
18:49
Speaker 3: great way to start investing. If you're super conservative, like
18:52
Speaker 3: if you don't want to take risks, the idea of
18:54
Speaker 3: the share market terrifies you, Like that is something that
18:57
Speaker 3: you know, maybe you should look into if you're still
18:59
Speaker 3: not happy with your cash sitting in your bank account.
19:01
Speaker 1: Yeah, ll Georgia. From all the money diaries we did
19:03
Speaker 1: last year, how many times do you think you heard
19:06
Speaker 1: something along the lines of I've saved up heaps, I
19:08
Speaker 1: want to invest I'm a bit scared and don't know
19:10
Speaker 1: where to stay r.
19:11
Speaker 2: I feel like that was most of them. It's like,
19:12
Speaker 2: I'm a B plus, but I give myself an A
19:15
Speaker 2: if I knew how to invest, Like that was everyone's goal.
19:18
Speaker 3: And that's what we're going to do this year. We
19:19
Speaker 3: are going to get you guys so excited to invest
19:22
Speaker 3: and so empowered to invest that you will know what
19:25
Speaker 3: the difference between an ordinary share and a preferential share
19:28
Speaker 3: is and you will be able to tell me.
19:29
Speaker 1: So are we saying that fixed interest for those people
19:31
Speaker 1: that have the money that are a bit scared is
19:33
Speaker 1: maybe a good way to get into it because it
19:35
Speaker 1: is a bit safer. Yeah.
19:36
Speaker 3: Absolutely, And I think it's also I think it sounds
19:38
Speaker 3: really lame, but it's also an older person asset because
19:42
Speaker 3: you'll often see people who are in the retirement phases
19:46
Speaker 3: of their lives picking things like bonds because they're super conservative,
19:50
Speaker 3: but they have really good, generally stable returns. So if
19:55
Speaker 3: you buy a bond, you are pretty much guaranteed and
19:58
Speaker 3: like we say, pretty much not actually guaranteed, you know
20:01
Speaker 3: that three or four percent return. Once these people are
20:04
Speaker 3: at retirement age, often they're talking about, you know, maybe
20:06
Speaker 3: having a million dollars or having three hundred thousand dollars
20:09
Speaker 3: that they put into a bond, and they just want
20:11
Speaker 3: consistent cash flow, and you're happy to, you know, not
20:14
Speaker 3: be so risky because when you are in the retirement
20:16
Speaker 3: phases of your life, you do not want to be
20:18
Speaker 3: taking massive risks because the loss of capital is going
20:21
Speaker 3: to significantly hurt you. Whereas if you're a twenty year
20:24
Speaker 3: old thinking about starting to invest, taking a massive risk
20:27
Speaker 3: and losing everything you've earned, and I know that sounds
20:29
Speaker 3: really dramatic, but you've got five grand, You've got heaps
20:32
Speaker 3: of time to make that back. So we actually have
20:34
Speaker 3: the ability to be a bit more risky, not that
20:35
Speaker 3: we want that to happen, but that's me boiling it down,
20:39
Speaker 3: all right.
20:39
Speaker 1: So just to recap the four main types of investments
20:42
Speaker 1: investment properties, shares, cash, and fixed interest, and we will
20:47
Speaker 1: be doing an individual episode on all of those.
20:49
Speaker 3: Four as well as risk profiling so that you guys
20:52
Speaker 3: understand what might be the best asset for you. And
20:54
Speaker 3: I think we can make a really fun questionnaire to
20:57
Speaker 3: go along with it that you could fill in.
20:58
Speaker 1: Yeah, well, I was going to say, jes do you
21:00
Speaker 1: want to put it in the Facebook group, maybe a
21:03
Speaker 1: post about each of the for say, what are your
21:04
Speaker 1: questions about this? So then in the episode we can
21:06
Speaker 1: answer everyone's question.
21:07
Speaker 3: Yes, I love that.
21:08
Speaker 1: Let's definitely do that. Awesome.
21:10
Speaker 2: Alrighty, fab chat today guys, And just to give you
21:13
Speaker 2: a little bit of a tease, a little bit of
21:15
Speaker 2: a sample of things to come, we will be all
21:18
Speaker 2: chatting on Friday about the investments that we have. Spoilers.
21:23
Speaker 2: I don't have many, but that's all right. We'll talk
21:25
Speaker 2: about that on Friday. I think we've got some Guava
21:27
Speaker 2: cruisers lined up, so I know. I'm excited, guys.
21:30
Speaker 3: I mean, you'll be there with Belles. I knew I
21:33
Speaker 3: had to tell you that I would organize something special
21:35
Speaker 3: to get you there. It was just so worried that
21:37
Speaker 3: you'd you know, yeah or a Guava Cruises have got
21:41
Speaker 3: me back. All right, But just before we head off,
21:43
Speaker 3: we'd really like to acknowledge and pay respects to Australia's
21:46
Speaker 3: Aboriginal and Torres Strait islander peoples. The traditional custodians is
21:50
Speaker 3: the lands, the waterways and the skies all across Australia.
21:53
Speaker 3: We thank you for sharing and for caring for the land,
21:55
Speaker 3: on which we are able to learn. We pay our
21:58
Speaker 3: respects to elders past and present, and we share our
22:00
Speaker 3: friendship and our kindness.
22:02
Speaker 2: The advice sheared on she is on the Money is
22:04
Speaker 2: general in nature and does not consider your individual circumstances.
22:07
Speaker 2: She's on the Money exists purely for educational purposes and
22:10
Speaker 2: should not be relied upon to make an investment or
22:13
Speaker 2: a financial decision. And we promise Victoria Define is an
22:16
Speaker 2: authorized representative of Australia Pacific Funds Management Propriety Limited ABM
22:21
Speaker 2: three four one three two four six three two five
22:23
Speaker 2: seven AFSL three three nine one five one.
22:26
Speaker 3: The numbers make us sound really legit.
22:28
Speaker 2: Yeah they do, and that's because you are also big.
22:32
Speaker 2: Thanks to Ryan John and beg our producer Angels and
22:36
Speaker 2: also just in the studio with us today. Just thanks
22:38
Speaker 2: to everyone.
22:39
Speaker 3: You're all pulling it all together. Absolutely sound a lot
22:42
Speaker 3: shinier and a lot better than we really are in
22:45
Speaker 3: real life.
22:45
Speaker 1: Well, this comes out Wednesday morning. It's currently eight thirty
22:48
Speaker 1: on Tuesday night, so it might not be as shy.
22:51
Speaker 3: As we came here to party, all right, See you
22:55
Speaker 3: on Friday, friends, See you guys, Ah
23:01
Speaker 1: The York to the d