Latest / The Curve / Should You Be Investing in Fixed Income?

Transcript

Should You Be Investing in Fixed Income? · The Curve

• 0:00
  Welcome to Raising the Curve, a podcast designed to teach you everything that you need to know to be better with your money.
• 0:06
  Come and learn alongside me, Sophie Hallwright, a total beginner from the finance expert Victoria Harris.
• 0:12
  So I've asked all of the questions you wish you could so that finance, investing and growing your wealth actually makes sense.
• 0:18
  Yes, it's expert education but with promise will not be boring. And in the wise words of sheer...
• 0:22
  My mom said to me, you know sweetheart, one day you should settle down and marry a rich man.
• 0:28
  I said mom, I am a rich man. Come and talk and learn and laugh with us because together we really can raise the curve.
• 0:36
  I don't know if I've ever interviewed sisters on the podcast before but this conversation is with Ali and Gabi Rosenberg,
• 0:44
  who are the sister duo behind a really amazing product called Blossom.
• 0:50
  It's an Australian fintech, so like financial tech.
• 0:54
  Product that's making it accessible for everyday investors like me and you to invest in fixed income.
• 1:00
  This is one of those asset classes that doesn't get heaps of air time because for... maybe it's my influence, I'm not sure.
• 1:08
  But for me, it feels like a slightly more boring investment.
• 1:12
  But do you know what it is? It's stable and it's consistent and you actually have somewhat guaranteed returns.
• 1:18
  And that's because it's fixed income. So unlike something like a stock or investing in the stock market,
• 1:26
  fixed income gives a lot more peace of mind for people who don't really like the ups and downs of the stock market.
• 1:32
  And this is something that we're going to speak to more on the podcast.
• 1:35
  Vic and I are going to do a deep dive on bonds and sort of explaining them in a bit more detail.
• 1:40
  But this was a really cool conversation, particularly with everything going on in the market right now.
• 1:45
  But neither of them planned to have a career in finance.
• 1:48
  Like they worked for venture capital and startups and in the tech space.
• 1:53
  They basically saw this gap in the market, which was there weren't that many products that were serving like everyday investors.
• 2:01
  It started in Australia. It's now come to New Zealand. But it's kind of like... I don't want to say it's like a shazies for fixed income because that's totally not really what it is.
• 2:12
  But it's basically a way where you can set goals.
• 2:15
  You can funnel money in like a set amount, however much you want or you can do one off payments.
• 2:20
  And you're investing just in fixed income.
• 2:23
  This is an asset class that I've not even thought about honestly like I've got no money in fixed income.
• 2:29
  And this really opened my eyes up to like how it could have a really good place in my portfolio.
• 2:36
  It probably comes as no surprise that two female founders have a really philanthropic side to their business, which I just love.
• 2:43
  But yeah, just the way that they approach money and investing was really interesting.
• 2:48
  And I went into this conversation thinking I don't think fixed income is for me.
• 2:53
  I know that it's a really great way to build like long-term wealth and it can be an amazing strategy for people who don't really like the risk or the up and downs of investing in the stock market.
• 3:03
  But what it really made me realize is even if I like investing in the stock market and in stocks and companies or crypto or whatever.
• 3:12
  Even if I have quite a high risk appetite, let's just say investing in fixed income is a really amazing way to diversify and to see a place that you can do that in a really easy way is just like tick tick tick.
• 3:27
  So these girls are amazing. They know what they're doing. And yeah, I loved this conversation.
• 3:33
  So without rambling on for too long, here are the two amazing founders of blossom, Ali and Gabi Rosenberg.
• 3:43
  Great job.
• 3:44
  Don't you regret it's great. This was a find from like a vintage shop.
• 3:49
  It was like maybe $30 and I saw this a couple of years ago and I thought this honestly looks quite expensive.
• 3:56
  Like it looks so well made. It's so warm. And because I've been in New Zealand for way longer than expected, like I was only meant to be here for like six weeks and it's now like on month four or something.
• 4:06
  I didn't come with any like enough clothes for the season change.
• 4:10
  And I went to see my grandma who lives on Y heke and I just shoved a whole lot of shit under her house before I moved to London.
• 4:17
  Being like I kind of don't want to throw this stuff out, but also like as if I'm going to get like a container ship to send all this to London.
• 4:23
  And it was just like you know how people say hide toys from kids because it feels like a new toy.
• 4:31
  This felt like I feel like I'm a new wardrobe. I'm like it's such a hack.
• 4:35
  It's actually quite funny that we started this interview talking about clothes because don't you reckon it's sisters.
• 4:40
  It's like the number one thing. Well this is the number one thing that me and my sisters always fight about.
• 4:45
  She'll be like she'll borrow a really nice top or something and she'll tell me she's given it back and then I see her like posting something on Instagram two years later and I'm like that.
• 4:54
  So Gabi and Ellie you guys are obviously sisters you're not twins but you come from a family of two sets of twins which in itself is like so cool and different.
• 5:06
  Do you think of each other as business partners at this point. Do you think of each other as like friends as sisters.
• 5:11
  You must be the most like intense relationship in each other's lives surely.
• 5:15
  So I think the beauty is we're so different and I mean we we are two out of four. I have a twin sister.
• 5:21
  She has a twin sister. The dynamic has changed our whole lives but in business.
• 5:26
  I mean we're definitely more sisters than business partners but as I said the beauty is we're so different.
• 5:32
  We very much have our soul focuses in the business. We have our own lanes. I'm more focused on the business side.
• 5:40
  Gabi's more focused on the retail side. We've learned a heap from each other.
• 5:44
  Gabi's the most disciplined person I've ever met in my entire life and I think the challenge is that if I call her on a Sunday it's a gamble as to whether she's going to answer my phone
• 5:54
  because she doesn't know if I'm calling about work or then she doesn't know if I'm calling to invite her for dinner on my couch.
• 6:01
  And so we just have to go with it but you can't be working with family. I mean we've got so much positive in terms of trust and alignment and we know we're in up for the long haul together.
• 6:13
  I mean you can't you literally can't get rid of each other.
• 6:16
  The interesting thing that when you just said like oh she doesn't know if I'm calling for dinner or for work.
• 6:21
  Do you separate out your comms because this is something that Vic and I have recently done because it was just getting so messy.
• 6:27
  Being like how was your date? What was your Saturday night like? Was the wedding fun?
• 6:31
  Also can you make sure you send me that invoice for blah blah blah. You know like it was just getting a bit like whoa.
• 6:36
  We should keep it more separate. It's a good idea but I think we try and use WhatsApp for personal stuff and then we'll use Teams or Email for Work Stuff.
• 6:45
  We've gotten better. I think I've learned that I need to put things in Teams if they're not urgent.
• 6:50
  You're so the Sophie. Oh my god. And you're like no no no I must get answered this right now.
• 6:57
  In fact it's like not urgent.
• 7:00
  Yeah that's amazing.
• 7:02
  On the clothes there the clothes is funny because we are sisters.
• 7:06
  And Ali's wife actually is like the biggest fashionista on planet earth. She's just like our style queen.
• 7:13
  And she takes me shopping once a year. It gets me my entire wardrobe. Ali comes too.
• 7:18
  And then I basically like walk into the shop. I go straight to the changing room. Kate her name's Kate.
• 7:24
  She does like a full once over. She has like two armfuls of clothes. Chucks them to me in the changing room.
• 7:30
  And then we go out with half the shop and I do not online shop. Don't buy anything.
• 7:35
  And I just don't touch clothes for the rest of the year. Happens once a year every year.
• 7:39
  It's actually such a good strategy. I've got a friend who works in finance. She works in fashion.
• 7:45
  And she's got the most amazing style. And she's also so good at picking things out that are suitable for my body and skin tone.
• 7:53
  It's not just about like oh this is cool. It's like well looks good. When someone's good at that.
• 7:58
  It is I honestly reckon it's almost the point now where I'm like maybe I would pay for that as a service.
• 8:05
  Like maybe it would be once a year. And it's like cool. Here's the things you buy for like all of the different seasons.
• 8:11
  Do it once and be done with it. Like I couldn't think of anything more awesome.
• 8:16
  I would pay for that in a heartbeat if I didn't have a built-in system or who was just the queen of all queens.
• 8:22
  I went to the hairdresser today and my hairdresser's also a friend and she was like I love your pants.
• 8:28
  And she's like I've been looking at these really cool ones that are on ASOS at the moment.
• 8:32
  And I literally just opened it up and I was like can I buy them? Do you care who I am? I really like them.
• 8:36
  She's like no go for it. I'm like stunning. You know like anyone that does a bit of research and development for my wardrobe, I'm here for it.
• 8:42
  Amazing.
• 8:44
  Okay so you guys you started business together. First the congratulations, what you're doing is amazing.
• 8:50
  And the inspiration it gives me seeing two women founders, not just women founders but in the FinTech space.
• 9:01
  So for anyone that's like what is that word? Financial technology. That is quite rare like very very rare.
• 9:09
  The finance space doesn't have a whole lot of women spearheading new products and neither does tech.
• 9:14
  So firstly thanks for doing that. What was the moment where you realised?
• 9:18
  Okay like this is the business that I want to build or that we're going to build or where there's this giant gap in the market.
• 9:25
  Whilst heading into the finance technology from tech space, always something that you'd thought about or had this idea or opportunity kind of just like come up one day and you're like let's try it.
• 9:36
  We had both interesting journeys into finance. Mine I actually tried to get into physio and then I didn't get the marks for it.
• 9:46
  And I really didn't know what to do. So I was like Dad what do you think I should do? Mom what do you think I should do?
• 9:52
  And then he basically said just go try do a commerce degree. It's a good old round. You'll learn a little bit and then you can decide what you want to do from there.
• 10:00
  And I was like oh okay I guess I'll go do commerce so I plot it along and got my commerce degree.
• 10:05
  And then I actually got an awesome opportunity to join a tech startup and then I from there I went to another tech startup and I loved that you could kind of just marry whatever your passion was with tech and then do you have a tech startup?
• 10:19
  Such a cool idea.
• 10:21
  It was really cool and I love sport exercise and fitness. So the first tech startup I joined was a wellness tech startup for endurance athletes and endurance events.
• 10:30
  And I was like this is cool. I really like this small team fast moving. Everyone's important. Everyone has a say.
• 10:38
  And then from there went to another one and then COVID hit and we all got stuck at home and started passing ideas around the dinner table and the stock market had crashed on the crypto bubble burst and interest rates were really at all time lows.
• 10:53
  And we just didn't know what to do with our money. We spoke to friends and colleagues. They were also scratching their heads not sure how to beat inflation at the time.
• 11:03
  And we started looking into fixed income. Okay, wait, wait, wait, one moment because we've got a lot of people who maybe don't know what fixed income is who might not even follow the idea of like low interest rates mean what happens in the stock market.
• 11:19
  So I mean like we've we've spoken a lot on the podcast on the curve weekly and fixed been like we need to speak about fixed income and we actually haven't got there yet.
• 11:27
  So it's a really good opportunity to break it down for anyone that doesn't actually know so before we go on can we just do a little disclaimer on the reason why at that time fixed income felt like a good opportunity and what it actually means like where your money is going when you invest in fixed income.
• 11:44
  So fixed income is a defensive asset class and it's a type of investment that pays a fixed return until the end of the investment period.
• 11:54
  So I think the easiest comparison is shares because they're definitely more popular. So it shares shares is performance based. So let's take let's do Nike.
• 12:04
  So you have Nike shares and one year they might be worth 8% or one year they might be worth 2% if Nike've had a bad year and then the next year they might be 5%.
• 12:16
  So it fluctuates and it's performance based depending on the performance of the company but with fixed income as it says in the name your returns are actually fixed.
• 12:26
  So for example if you have a fixed income investment that is a 5 year maturity date so that it ends after 5 years. So after year 1 if it's paying 5% you get 5% then after year 2, 5% after year 3, 5% so it's actually fixed instead of fluctuates with that performance.
• 12:46
  It's like a guaranteed number. So it's almost would you say like a good example would be like almost like an IOU. So it's like I'll give you this money and I will guarantee that I will give you $5 every week to say thank you for giving me the money.
• 13:02
  Yeah that's how it works. Obviously there's not a lot of guarantees in life but yes if you for example the fixed income instrument is a bond so if you want to invest in a bond you get the 5% at the end of all the 5 years plus after the 5 years you get all your initial investment back as well.
• 13:21
  And just to explain a bond it's a debt instrument so you're loaning money to someone. God I honestly I'm so uninspired by the idea of that like I'm like oh my gosh.
• 13:33
  Stick to the Nike story and imagine we need to build a Ferns stadium in New Zealand for New Zealand Ferns.
• 13:43
  So if we needed to build a stadium and you needed to lend the money for building that stadium they would commit to the interest that you would be receiving each year plus you'd get your money back at the end of that term of the investment.
• 13:58
  Stunning example lover. So sorry so bonds are not the only fixed income that's so funny because I always just thought that was the only type.
• 14:06
  No no there's a couple other types but bonds are definitely the most common and especially for our fixed income portfolio semi government government and corporate bonds.
• 14:15
  And that just means that sometimes you're loaning money to the government or sometimes you're loaning money to a corporation like Nike you could also loan Nike money maybe they need to build a new factory in the states.
• 14:26
  So you'd loan the money they have the money to build their factory they pay you interest every year it takes them to build and then at the end of the five ten years they have their factory and you have all your money back plus you get to keep the interest.
• 14:39
  So why why did you think in 2021 when covid was happening and where you didn't really know where to put your money you were saying.
• 14:49
  Why at that time so when the economy is essentially really uncertain and not doing particularly well why is fixed income such a good investment at times like that so we we liked it for ourselves because there was extreme volatility in the share market.
• 15:07
  So you didn't know how the share was going to perform maybe you had a share that was paying eight percent and then it dropped down to two and then it went back to five and then it went back down to zero you just don't know.
• 15:18
  And the reason that we like fixed income is because of that fixed return so that you know that you're getting the five percent year and year and year.
• 15:27
  Obviously where we're cruising over this there's lots of risks involved and maybe the company goes under and then they can't pay the money back to return the money for the bond there's heaps of risks we can talk about them later.
• 15:40
  Disclaimer disclaimer you know basically most of the time and look I know that we're not financial advisors here this is not financial advice but essentially if you're doing fixed income and my right and saying because you're going to really well established companies or governments the chances of that happening whilst they're not impossible.
• 16:03
  There's way less risk than a Nike share that's going from two to negative five to 25 to you know it's a completely different experience for an investor right.
• 16:13
  Yes, especially if you're buying a government bond or investing in a government bond if you loan the New Zealand government money chances are the New Zealand government aren't going anywhere and they're going to be able to pay back.
• 16:24
  And also if the New Zealand government is going somewhere there's probably a lot more happening that you're stressed about than your money you let them I'm imagining.
• 16:33
  That's what we always say as well we're going to have bigger problems on our hands if the government bonds can't return the funds exactly.
• 16:39
  And do you do both invest a lot in fixed income?
• 16:44
  Through blossom we both do a lot like I have 90% of my investable assets in blossom and that's because I'm saving for home deposit and I think it's it's really perfect for my sort of investment time horizon at the moment.
• 16:59
  So yeah I have 90% of my money in blossom and then a bit elsewhere and I believe Ali's the same.
• 17:05
  These days every dollar I earn goes into my blossom account for good reason because I'm saving for home.
• 17:11
  So why so for anyone that's like thinking okay well I hear that actually stocks or like shares is a really good investment too.
• 17:21
  Like what would the difference be between the type of invested that would be a perfect candidate for fixed interest.
• 17:29
  So let's think about like more like sort of the company space because a lot of people listening to our podcast interest in the stock market so can you explain at what point in your investing journey or for what reason you would opt whether that's personally or just general like knowledge around investing sort of like time horizons and how much money you have.
• 17:59
  How do you figure out a fixed income or the stock market is the right thing for you.
• 18:05
  So as you said before we're not financial advisor so this is a financial advice but there's a whole bunch of schools of thought I think the one that we love the best is that a diversified portfolio just includes everything.
• 18:17
  Oh I love that. I'm such a fan of that.
• 18:21
  Really the only way to spread your risk properly and I think if you have a little bit of your portfolio and everything then you're setting yourself up for a really solid performance.
• 18:31
  So a little bit in stocks whether that's Australia and the New Zealand stock exchange and the US stock exchange and then a bit in fixed income and then you don't want to go into property but if you want to have a little bit in property too.
• 18:43
  And then if you're getting some FOMO like we both have FOMO you put a little bit in crypto just so you can learn how it works.
• 18:50
  I think there's another school of thought that says with fixed income specifically you should have the same percentage of fixed income in your portfolio as the age you currently are.
• 19:02
  So if you're 30 you have 30% what 40 you have 40% oh my god it makes sense. Explain why Gabby so I'm getting too excited but explain why.
• 19:12
  That's because it's generally more predictable and stable asset class and obviously you don't have time the older you are to make back potential stock market corrections.
• 19:23
  And so you just want to be more defensive less growth focus because you have less time to make back what you're losing potentially on bad stock investments.
• 19:32
  That's actually genius because when you're younger you need if you're zero you don't need any money in your fixed income.
• 19:39
  But if you're 100 you probably want 100% of your money in fixed income because it's way smoother of a ride it's less returns but it's way more consistent and safe.
• 19:48
  And then the third approach exactly right though the third approach is more of blossoms approach as well and it's basically that you need to think about what you're actually saving towards like what are your investment goals what are you what are you saving up for.
• 20:02
  Because so I'm 28 and I don't have 28% of my portfolio on fixed income because I'm saving for home and my time horizon is two years so I want to have a I want to buy a home which means I need a home deposit within two years so 90% of my portfolio is in fixed income because in those two years if I put everything into stocks I might not have the money when I need it.
• 20:24
  Did you make that decision before the stock market totally shed its pants or that's good because I did not do that.
• 20:34
  I think now though probably most of your stocks have corrected or almost fully corrected themselves but by the dip everyone by the dip anyway.
• 20:44
  By the dip go shopping and shopping and the dip.
• 20:48
  Yeah so it's different everyone's different but yeah I have maybe 1% in crypto 90% in fixed income and the other nine is in stocks so that's me at the moment.
• 20:58
  Yeah I think from my personal perspective it's definitely about risk tolerance and how much sleep you want to get at night.
• 21:05
  So I mean I really like to sleep peacefully and so knowing that my majority of my portfolio is in something that is predictable is definitely worth while but personally as I said I've got most of every dollar that I'm earning is going into my blossom account saving up for a home one day please God.
• 21:26
  But yeah it's for me investing in individual shares definitely takes more time out of my day to research to feel comfortable with the investment.
• 21:36
  I also know that up until recently there was a bull run and the stocks were performing so well and to expect that to continue is quite unlikely so that was the reason for shifting away and having more of a focus on fixed income personally.
• 21:51
  This is the coolest thing I've ever done.
• 21:53
  We have an app. Can you believe it?
• 21:55
  I know quite cool.
• 21:57
  If you told me that even 3 months ago I feel like as if I feel like when you have an app you're an actual business.
• 22:04
  I know yeah.
• 22:05
  We haven't really talked about this much I don't know why but the investing club it's an app basically so you can download it from...
• 22:13
  You can watch all of the investing ideas, you can chat in the community, you can speak directly all on the go and the reason that we went down this path is just like we've had so many students go through our courses and stuff but when you have to be sitting at your laptop you can't do it on the go.
• 22:30
  It is kind of immediately for our own busy and we can notify you when things in the stock market happen.
• 22:37
  Yeah so it's really really great.
• 22:39
  We'll do one this morning.
• 22:41
  We do a little update, stock market update in three weeks so you can be on the pulse.
• 22:47
  Wherever you are going about your daily lives.
• 22:50
  We got you.
• 22:51
  If you want to try we've got a free trial for seven days and yeah jump in and have a look around.
• 22:57
  Comment, talk to us, share your ideas, it's a really cool space and yeah we've got all of the...
• 23:02
  link in the podcast show notes you can find out more.
• 23:07
  So then okay can we talk about the idea that fix income is often not associated with younger and restores because if I'm being totally honest with you I love the
• 23:21
  theories that you shared.
• 23:22
  I love the idea of like however old you are you should have that amount and I mean I know it's not you should but that's a school of thought.
• 23:28
  I love that I love the idea of put a bit of everything in.
• 23:32
  What would you say to people who because this is something I think that's taken ages for me to build my confidence
• 23:39
  up to go and invest in the stock market or in shares is that now I realize I'm young I've got heaps of time.
• 23:45
  It's okay for things to like dip and go through the floor because I'm holding them for a really really long time
• 23:51
  and I would rather with a decent amount of my money be getting better returns.
• 23:56
  Is there any I guess just like thoughts on that are your own personal approaches to how you are with your money.
• 24:03
  I know right now you've got like particularly for you Gabby like the fact that you're wanting to buy house in two years
• 24:08
  it's total sense to me that you have like almost probably a hundred percent of your investments into fixed income.
• 24:14
  But Ali if you're like I eventually want to buy a house or you know whatever you're other massive goals I wish I'm sure there are many.
• 24:22
  Is there a part of you that like how do you not buy into the idea of like I don't know how I'm trying to say basically I get really excited
• 24:31
  by the idea of not a quick win but I'm kind of like look I'm not interested in taking 500 years for me to get a three percent return.
• 24:38
  You know like I'm comfortable with what it means to invest in the stock market I understand that I'm leaving my money for a long time.
• 24:45
  I understand like I've really had that drilled into me for like five years from back.
• 24:50
  Yeah so like if we're thinking about bottom and like how that could fit into someone's portfolio.
• 24:58
  Can we just speak to that more and like maybe Ali for you like because you're obviously you haven't got a super like close goal.
• 25:05
  What's your decision for 90% of it being in there?
• 25:07
  I still think it's just the peace of mind peace for me personally.
• 25:11
  I mean I probably should have more in a listed ETF or a fund that is you know tracking the market and over time those returns
• 25:21
  hopefully should come back to me but yeah given I really don't have a clear timeline on when I would like to buy a house.
• 25:27
  So the liquidity is important to me the current returns are important to me and just from a peace of mind perspective.
• 25:34
  Like I'm very happy getting the return that I am through my blossom account and again this is just entirely personal.
• 25:41
  I have confidence in the approach I have confidence in the strategy and I'm very yeah from a risk adjusted perspective.
• 25:48
  I'm very comfortable with with what I am getting for now and thankfully looking at how the markets performed in the short term.
• 25:55
  I probably would not have slept as well in the last few weeks which has been important to the development of our business.
• 26:01
  Well it's actually really it's so important and actually what you said before really struck a chord with me because when the market totally had a meltdown.
• 26:10
  Recently I went because we've got an investing club we talk about different investing ideas and I went and bought a bunch of stuff that you know Vic had done so much of the research for me.
• 26:21
  So I was really lucky and that she wasn't like going by zero or going by the era what even the thing was I bought.
• 26:28
  It was just that I had that like peace of mind because I knew someone that knew what they were doing had done the research.
• 26:34
  But even then like I would be totally lying if I said I wasn't sitting there being like oh am I doing the right thing.
• 26:41
  You know like it's like it doesn't really I think unless you're a professional active investor that lives and reads the markets all the time and I can look at everything.
• 26:50
  If you're picking an individual stock or you're doing like the S&P 500 or ETFs whatever ETFs they guess is different.
• 26:58
  But if you're like choosing companies you've got to be pretty confident if you're not checking it all the time that it's like a desert island investment.
• 27:06
  So I totally understand the concept of like how you're investing and have I been totally stress free in the last few weeks no like definitely not.
• 27:14
  That's my whole investing thesis like I want to choose funds that I want to choose individual stocks because if you choose a fund all you have to choose is the asset class and the fund manager.
• 27:23
  And then you have so much more confidence because you're letting the professionals do what they do you still got a DD the asset class you still got a DD the fund manager.
• 27:32
  But that makes me feel comfortable for example crypto like I didn't go and just buy shit coins I'm investing with the crypto fund manager.
• 27:40
  I still know I'm going to lose all my money but I'm like at least I'm not doing this in a stupid way and I've done as much research as I can because it's as far as I understand.
• 27:49
  Yeah I was just going to say I think it comes down to genuinely what you understand and there are some things out there that we are just not going to understand you know there's some asset classes that I'm not even going to try to understand.
• 27:59
  So to Gabby's point you pick the manager if you want to try if you want exposure to it and you make sure you get a level of information that you're comfortable with.
• 28:08
  But I've been burnt so many times just you know trying to dip my toe into something that I'm never going to understand or something that sounds too good to be true and it's just a lesson that I've learned is is not the way that I need to be investing.
• 28:21
  It's you know double down in what you understand have confidence that you're making the right decision if it's the wrong decision you'll understand why on your learn from it next time.
• 28:32
  Ellie can you speak to even just one example of when you are like wow I really wish I hadn't done that like what was something you tried to dip into or invest in and you're like yep yep won't be doing that one again.
• 28:43
  There was a crypto coin and I've dabbled in crypto I say mostly I say mostly just to be educated and to understand what's going on in the space and to follow the trends I got really deep at one point I was in like a telegram channel reading what people are writing about.
• 29:04
  Yeah it was it was exciting but equally horrifying at like the way people speak about the asset class and what people were essentially gambling on and you know I was playing with significant money I mean it was a couple hundred dollars because I thought if it a thousand next it was going to you know be significant.
• 29:22
  But really it was just it was to learn but it was a big loss of money and silly and I never understood what it was even about and there's still no real you know substance behind any of those things except type which if you're lucky and if you're monitoring at all times you know you could benefit and you can do really well and good on those people I don't have the time energy or risk appetite to do any of that anymore and so.
• 29:46
  We have a rule at home that if I start talking about it on my wife's allowed to you know go buy something herself knowing that I'm making a really poor decision.
• 29:55
  I love that it's such it's so good to have little rules like that also makes your ears break up when she's like yeah I bought a new skirt and you're like oh it's because I'm doing that thing I'm doing that thing which is big silly with my money yeah okay I would really love to speak about the phrase that you've both coined the idea of saving like a girl.
• 30:15
  What have you learned since starting blossom when it comes to saving putting money into fixed interest so that it's saving more than what you would in a bank account it's a brilliant concept and it's an amazing product and it makes sense to me why originally you would have thought this is probably a perfect product for women but what you've seen is actually it I think was it 62% of users are women but then there's 38 my math is so bad men I guess why initially did you think that it was more female skewed and what has been quite
• 30:45
  interesting and I write in thinking that someone went and put in like I don't know 400 grand or something into their account without even thinking or contacting you you know like there's obviously something there about the concept of saving and the way that you've positioned this product where it really resonates with people.
• 31:00
  We are 62% women totally right and in terms of this saving like a girl points that you were touching on previously.
• 31:09
  We go through the data often and we found that women are using automation and goal setting and long term planning within the blossom up to build lots of financial security and then we did compare the data the women on the platform to the men on the platform.
• 31:26
  And the women compared to the men they were making frequent smaller transfers and they were automating their savings at a higher rate and they were setting clear goals so you can go into the app choose a savings goal home deposit holiday wedding baby we've seen it all haircut and then they were also locking away funds into blossom plus like products and blossom plus you can lock your funds away for three months and then you get a higher return.
• 31:54
  And so yeah we were just finding all this amazing stuff in the data about how men were using the platform versus how women were using the platform basically they would just had this awesome consistent and intentional approach and they just made it really effective.
• 32:09
  Go the girls on a say and on your 400 K example that was a man and what we do find when it comes to man is they just go they start harder and faster and that's the difference.
• 32:21
  Does he think more true ever been said about the whole male species like well they're just bigger risk takers and they're willing to go you know dive in deep from the start and then you know their first initial transfer is that large amount and then they keep topping up.
• 32:38
  Whereas women just have that consistent steady approach and we hope that over the long term you know we start to bridge the gap but for now that's just the behaviors we're seeing.
• 32:48
  What do you even spend the most interesting learning when it comes to what you've seen through the data of like that you've almost been like hmm that's so interesting I'm going to go and make this change or like have you learnt from your users because I feel like you're in this really unique position where you're seeing.
• 33:07
  Tens of thousands of people are making decisions with their money and where they're putting it and what they're saving for like what if some of the most interesting insights been.
• 33:16
  We learn from our customers every day we're always chewing through the data so we're fascinated once a week and I think for me it's.
• 33:25
  You hear a lot about how millennials aren't saving and our average ages 31 so that's still millennial.
• 33:31
  People aren't saving and everyone's getting themselves into trouble and all disposable income is going up the door the average savings in this neck of the woods is 30k per Australian how can you live on that etc.
• 33:45
  And I think what we've seen in the data is people savings goals and what they're saving towards so a lot of it is rainy day funds and they're just squirreling money away for a rainy day being super responsible taking their own financial.
• 34:00
  And so I think we feel like really proud of our users and our audience and it's like people know what they're doing people absolutely know what they're doing.
• 34:12
  And then the second thing is home ownership everyone says it's the Australian dream it's the the kiwi dream and we're seeing that time and time again the most saved towards goal on our platform by far is a home deposit.
• 34:26
  And it just shows everyone you just want to work towards owning your own home.
• 34:30
  What's the weirdest one?
• 34:32
  A haircut's pretty good like to go and put money into a fixed interest account to save for a haircut is kind of iconic but are there any other funny ones?
• 34:42
  We had engagement ring which is nice because we know when people are about to get engaged which is really sweet.
• 34:48
  That's so sweet how much were they saving by the way like I've got no clue what people's been on engagement ring.
• 34:54
  I don't know in that scenario but our rule of thumb is always three months salary.
• 34:58
  God that's a lot of money.
• 35:00
  It's too much money I'm not spending three months salary me on engagement ring that's for sure.
• 35:05
  We've had funny plastic surgery someone had boobs.
• 35:09
  Also get a like save your money for whatever you want like I'm kind of like good on you she's of I'm assuming it's she.
• 35:16
  Obviously knows what she wants and she's like do you know what I'm going to get to that goal faster.
• 35:22
  Yeah and so if I think to your point earlier like people just want to feel savvy about their savings and they really like they make that heard.
• 35:30
  And we've got such creative other other creative scenarios you know people putting their tax money in an account just to earn money on the money that they know they're going to have to pay away to tax.
• 35:41
  But at least it's sitting separately so that they're prepared for the future and we've got you know accountants doing nifty things.
• 35:48
  So it's just yeah we get to see savvy smart savers and I guess we just feel proud of everyone as Gabi said.
• 35:55
  It's so cool to see and you said the average age is 31.
• 35:59
  Do you think that fixed income has a place like would you like to see that changing in terms of there being a more broad or less consistent age
• 36:09
  and for it to just be people of any age have a percentage of their portfolio in blossom or investment income.
• 36:17
  Is that kind of what is driving the product and the growth and like wanting to speak to different audiences in educate.
• 36:24
  It's like old people young people anyone can benefit from this asset class.
• 36:28
  Absolutely and it's also something that is isolated in Australia and New Zealand.
• 36:35
  Like if you take a UK market or a European market or the US market retail investors there like normal everyday investors like you and us
• 36:45
  and they know what fixed income is they have access to it.
• 36:49
  It's in the broad conversation but for some reason in Australia New Zealand it's just in the conversation of high networks and institutions.
• 36:57
  I reckon that's honestly any kind of wealth building but are you saying basically more so in the southern hemisphere it's almost like even less spoken about than other parts of the world.
• 37:09
  100% and there's also a few reasons why in the southern hemisphere and especially Australia and New Zealand
• 37:17
  there's really big barriers to entry for an everyday investor to access a fixed income product and the best the most sophisticated fixed income products the one you really want to invest in.
• 37:27
  They have high minimum so maybe you have to start with 250k or they won't talk to you.
• 37:33
  High lockups you might have to lock your funds up for six 12 months or even two years and then there's also on top of both those hurdles there's high fees for someone else to manage your money.
• 37:44
  So not only is it more the reason we could say that a lot of it is not talked about is because we can't access those opportunities anyway.
• 37:53
  So what we want to do with blossom is we want to work to democratize the space to tear down those barriers to entry and then to try and bring it back to the conversation
• 38:03
  because we really do think it is an awesome option and it should be part of your invested toolkit and it's the best way to diversify your portfolio.
• 38:11
  I would love to finish with one final question which is probably going to be the most long would do question ever but for those who are listening who are still thinking okay yeah cool I think I should probably be putting some of my money into fixed income.
• 38:28
  But now we've got the same issue that I've had when it comes to the stock market or property where I'm just like where the hell do I start or how would I even know what type of fixed income is right for me.
• 38:41
  Are there some guardrails or information like obviously we're not saying go and put $30,000 in ex.
• 38:50
  But what would be some key things for invested to think about when it comes to like okay cool with I've said to myself in my head tick I want to have some money and some fixed income it feels like a great way to diversify the markets absolutely all over the show and it kind of freaks me out but I don't want my money just sitting in the bank.
• 39:07
  What are some ways that they can like think about the options that are on blossom.
• 39:12
  Outside of just fixed income as an asset class how can you think about like where you put your money is it as simple as just like I put all of it in one.
• 39:21
  I have no idea I would have no idea where to start and imagine there's a lot of people probably feeling the same yeah for sure I think yeah just trying not to give any financial advice I can maybe speak personally what I would do and it would be amazing.
• 39:35
  It's the same thing as what I want to go to the stock market and pick a stock or what I want to go to a stock market and invest in an index fund where I can invest in 100 products that will fluctuate with the market as it normally does instead of put all my ex in one basket and potentially watch the stock drop.
• 39:53
  So it's the same thing in the fixed income world you can go and buy a bond but they're really hard to afford you might have to pay $250,000 to make a single bond investment or you can go and find a fixed income fund manager that's going to manage a hundred different fixed income investments and all you need to do is make a single investment into that fund.
• 40:15
  So if you wanted to do that, the first thing I would do is go and do my due diligence on the fund manager, check the return that I'm going to make on the fund, check how much I'm going to pay in fees to make sure that I'm still making like it's worth it for how much the fees are.
• 40:31
  Read the risks in the disclosure document or the fund fact sheet and then I talked to my financial advisor and see if they think it's a good idea as well.
• 40:41
  Okay, can I ask you for those people who are like I wouldn't know where to start in terms of like where would I even find the fees.
• 40:51
  How do I figure out what a good performance is like there's a lot of people that haven't worked you guys both have been in like the scene of study economics like there's a lot of people who don't actually even that is probably like fuck.
• 41:03
  So like if we were thinking about blossom as an example if they were on blossom is it easy to find those things in terms of like you know and also is it mainly funds or fund managers of bonds that feature on blossom or is it yeah sorry I feel like now I'm like the last question actually I got 75 more.
• 41:25
  So it is easy to find that information on blossom or you need to do is go to our website and we have a live chat and an FAQ center so you just type your question in and then it will serve you the answer.
• 41:36
  So ask it what are our fees what are the returns who's the fund manager these are all really important questions and in terms of the products that blossom has so we have two products.
• 41:48
  One's called blossom save and that targets a 5.7% per annum return. It's really really good for fixed income. It's very competitive and one is blossom plus which is a three month lock up but targets a 6.75% per annum return.
• 42:05
  It's amazing.
• 42:06
  And we are funds so we have an underlying investment in both those products of 413 different investments so we have a fund manager we make the investment decisions for you so you don't have to go and choose one bond and then potentially watch a plummet.
• 42:23
  Oh so you guys have like actual analysts and like you're basically a funds management company exactly and we choose fund managers so people send money to our bank account and then we invest that into the products it's managed by experts fixed income experts been doing it for 30 years and then we offer returns back to our clients.
• 42:44
  I feel like it's going to listen to this and be like why didn't you ask that's why didn't you ask that.
• 42:49
  But for people who are also listening and who might have been thinking the same thing if they want to like get in touch and they're thinking okay like I want to do fix income still not really sure where to start like just go to the website is that kind of just step one.
• 43:02
  Yeah absolutely can we quickly just finish with sorry I know I've been like absolutely just being like don't worry guys you can go back to enjoying your life now I'm like one more.
• 43:12
  Like the markets are all over the show right now you're in a family full of many financial experts and people that are kind of living and breathing what's going on in the finance space.
• 43:24
  I'd love to just hear your own personal investing thesis or how you feel about what's going on in the world or if you made any decisions or none because of it like it just would be interesting to hear because I think you're obviously surrounded by a lot of people that know a lot about the economy and investing.
• 43:40
  For me it's just to not panic I think nothing's ever as bad or as good as it seems and if you look at on ASX at least the Aussie stock market the average yearly return for the last 30 years is 9% and so you should be investing for the long term if that's what you're doing.
• 44:01
  So if you just keep adding small amounts over time if you want to choose an index fund you can maybe not in the two years there might be two years of volatility but if you expand your time horizon which is really what equities are for and you keep to your guns you don't panic sell you add small amounts over time you're going to be fine.
• 44:23
  You're going to be fine so yes there's tariffs yes the stock market is going to crash but I think for people who are just sticking to their guns and contributing small amounts over time you're going to be fine.
• 44:36
  Sorry you just said gonna crash are we thinking it's going to be crashing more than it has been the last little while like are we thinking it's going to be a full online.
• 44:44
  No yeah you're saying don't panic at me literally.
• 44:50
  I think it's still going to be volatile but we had GFC and COVID type stock market volatility in the last two weeks so I think hopefully it's going to get a little more steady and predictable from here.
• 45:05
  Mine's a bit boring because I just told myself to put my head down and block out the noise and I love it.
• 45:11
  I think if I had time I think we're in a very busy period for blossom right now and so I wanted that to be my main focus but I think if we had time I mean we've had some chats recently with a couple of people that you know backed their or just had conviction and really bought the lows and had a bit of spare capital to be able to do that.
• 45:32
  I like to think that if I did have the spare capital at the time to do that I would have done the same but it's always should have could have would have and yeah I really just wanted to block out the noise knew it was going to recover and then just try and make a plan long term like Abby said.
• 45:47
  It's been so awesome to meet you both like what you're doing is amazing.
• 45:51
  I can totally see the yin and yang. I know that's like a very overused word but I think that's what makes a successful business partnership is being able to celebrate the differences and like lean into each other's strengths and help out when the other person is weak and yeah I feel really excited to see what blossom does and I can't wait to put some my money in.
• 46:14
  I think that I can be a little bit like bull out of the gates like a bit excited goes probably too risky for like someone that's just learned about investing for five seconds so I think putting some money in fix income for me is on the horizon.
• 46:27
  So yes thank you for opening my eyes up to a completely new asset class that in all honesty I don't think I would have considered otherwise so thank you so much.
• 46:35
  Thanks for having us so for really enjoyed it.
• 46:38
  Thank you so much for listening to Raising the Curve.
• 46:40
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• 46:48
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• 46:55
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• 46:59
  Yeah yeah so please do it.
• 47:01
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• 47:03
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• 47:09
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• 47:18
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• 47:28
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