She's On The Money - Constructing Your Perfect Investment Portfolio

Episode Date: August 8, 2023

With so many of you well on your way with your investment journey, on today's episode Victoria is running us though her top things to consider when constructing your perfect investment portfolio! Particularly the multifaceted nature of risk, and how to understand it when it comes to your portfolio. Acknowledgement of Country By Natarsha Bamblett aka Queen Acknowledgements. The advice shared on She's On The Money is general in nature and does not consider your individual circumstances. She's On The Money exists purely for educational purposes and should not be relied upon to make an investment or financial decision. If you do choose to buy a financial product, read the PDS, TMD and obtain appropriate financial advice tailored towards your needs.  Victoria Devine and She's On The Money are authorised representatives of Money Sherpa PTY LTD ABN - 321649 27708,  AFSL - 451289.See omnystudio.com/listener for privacy information.

Hello, my name is Natasha Nabanunga-Bamblett. I'm a proud Yorta Yorta, Kernai, Wolperi and Awadjeri woman. And before we get started on She's on the Money podcast, I would like to acknowledge the traditional custodians of the land of which this podcast is recorded on Awadjeri country, acknowledging the elders, the ancestors and the next generation coming through. As this podcast is about connecting, empowering, knowledge sharing and the storytelling of you to make a difference for today and lasting impact for tomorrow. Let's get into it. She's on the money.

She's on the money. Hello and welcome to She's on the Money, the podcast for millennials who want financial freedom. My name is Bec Syed and with us is the one and only Victoria Devine. You did not sound excited today. You sound like, bear, I don't want to be here. I don't want to talk about this. Victoria's used the word portfolio over and out. Oh, I know. So you can tell that I've checked out of this one. Yeah, you're already out.

Hopefully we can make it fun. Investing is literally my favorite topic in the entire world. I don't know how to reiterate that more. I have literally written a book on it. And then I'm also releasing, spoiler, an investing course very soon, which I'm really excited about. Oh my goodness gracious. I know, I'm just going to teach you all the things. Watch out. You do have a way of making it very, very exciting. But V, it is the first Wednesday of the month. So we are looking at an investment topic. And today we're talking about constructing your perfect investment portfolio. I don't know. Do we have structure that

means that on the first I guess Wednesday of every month we talk about investing like has that existed for this whole time and I haven't noticed and our producer's just a wizard I think it has I think so I didn't notice either that's very impressive that is very impressive we just have these big brainstorming sessions and I'm like what about this topic and this topic and this topic and then she's like smile and nod smile and nod and then she like organizes them what the heck like it's a job I bet nobody else noticed either I bet nobody else noticed but I don't think so. We've finally noticed, Annalisa. Thank you. I won't be able to unsee it now. Yeah, I know. How annoying. Are we now predictable? Oh, that sucks. But also good. One out of ten. Some people

love the comfortability of it. Now, V, you mentioned to me that you were at a speaking event recently and you talked about the idea that risk in investment has two facets. Could you tell us a little bit more? Yes, actually, I love a speaking event. And recently this has come up a few times because I just think it's really important. So when it comes to the investing world, I feel like we all get analysis paralysis, right? Like we feel so overwhelmed with this concept of where we start and what we should be doing and what our perfect portfolio looks like that we forget that things can actually be quite simple. And I mean, I'll get more into it later on, but I talk a lot, especially in person when I do like a speaking event, which for those of you

who don't know a lot of my time now, I'm a retired financial advisor. A lot of my time is actually spent in corporate. It's in corporate talking to, I guess, employees about their financial well-being and their financial wellness. And it's one of my favorite things in the entire world. But I often will say the phrase, I'm a conservative, aggressive investor. And that sounds very juxtaposition-y, right? Like it sounds like, wait, you can't be both, Victoria. If you've listened to all of our podcasts, you've probably listened to the episode that we've done on risk profiles where I talk about how there are usually like six or seven different risk profiles and they go all the way from capital stable, conservative, all the way up to high

growth or aggressive, which is language I don't particularly like in the investing world because it makes us feel a little bit overwhelmed, a little bit scared. Like the second the word aggressive comes out, you're like, hold up, that might not be for me. Like I'm not, I'm not so sure. However, I would say that I'm a conservative, aggressive investor, and a little bit later in the show, I'll explain to you exactly why that does actually make sense. Phew. Okay. So, V, you did ask me to gather some relevant data for this, and you know, I am not a money whiz, but I'm going to, I wrote some stuff down. But you are, get this, really good at Google. I'm very good at Google, and I wrote some stuff down. So, let's see. I'm ready. What have you brought to the table today?

Some of these are tongue twisters. Here are Bec's top tips on creating your perfect portfolio. All right. So I've got some information from Australian Investor Study for 2023, which focused on ASXs, Australian Investor Study. That's very true. That's big dog. That is.

And basically, I'm going to focus today on female identifying people, investors, I should say. Also, what they call next-gen investors. Which are the babies. The little tiny babies. The little tiny babies who have so much opportunity to create wealth. They do. And I'm very happy that they're starting young.

So basically, I'm going to give you the data on the female identifying investors first. Yep. So the average age of female identifying investors is 47. Is that surprising? I don't know. I have no idea. Is that surprising? I feel like we're dragging it down slowly.

I feel like 47 is a good number because obviously it's before retirement. Sure. But I like want the average age of an investor to be younger because it means they've got more opportunity to create wealth. Ideally. Ideally. But they could be a bunch of 24-year-olds and a bunch of 100-year-olds and then that makes the average age.

Actually, that makes me want to define the difference between the mean, the median and the mode. Do you want to do it for me or do you want me to do it? I think it, yeah, I don't, I have no idea. But yes, let's, I can do that for you. Absolutely. Yeah. So it's important to understand when we talk about data that there are actually three ways

that people might report on it, right? So there's the mean, there's the median, and then there's what's called the mode. And we're just going to take a quick dive into a statistics lesson for a hot second because I do think it's really important to understand these things because so many times we see data and I know from your notes you're about to talk about the median. So let's start there. So the median is actually the number that is smack bang in the middle. So if you got every single data point, like if there were 10 people in this data set,

we would order them from smallest to largest number and then smack bang in the middle. That is what the median is. So the median is if we got every single data point, put them in a row and then hit the smack bang middle one. That's just the middle number that occurs, right? Then you've got the mean. And the mean is, from my perspective, it's interesting to see what's smack bang in the middle, but it's also interesting to see kind of what the average is. And I would say the mean is

more of an average. So what you do with the mean is you take all data points, add them together, and so plus, plus, plus, plus, plus, and then you divide it by how many data points there are in that set to get the average number. So if you added them all together, you'd end up with a really high number maybe and a really low number. And then there would be an average that comes out of that. And so from my perspective, to get a really good idea of what data is looking like, I kind of want both of those numbers because in a perfect world, both of those numbers are really similar, but you might have smack bang in the middle. The median might be five, right? Because you've got 10 data points and they go from one all the way through to 10. Smack bang in the middle

happens to be five. What a dream, right? However, if you had a more diverse data set where the lowest number is one and then five was still in the middle, but then the highest number was a hundred, if you had divided all of those, your mean is going to be higher. And that's going to give you a good indicator of whether they're on par or not. So it's just nice to know those things. And then the third one I mentioned is the mode. And essentially the mode is just the number that occurs the most. So you might have 10 data sets and five of them happen to be the same number. That's the mode. It's just the most common number to occur in a data set. Gotcha. I actually cannot believe this is the first time I'm really understanding what that

means. Median kind of seems a bit useless, but maybe there's a reason for it. But like we find that most surveys and most reports will use the median because it's seen to be the average. That's why when we talk about things like salary, I don't particularly like the mean. I much prefer the median because when we're talking about the mean and we've added everything together, if I said, what's the average salary of a female identifying person in Australia, right? You've got all your CEOs, then you've got all of your stay-at-home mums who don't particularly have a high income, but we're not saying they don't have any value. We're just talking about finances here. We add them all together and then Beckett comes out as an average

of about $85,000. Right. That's not normal. Like that's not the normal income. Whereas if we lined everything up and took, you know, what is actually the middle of what these people are earning and what do female identifying people in Australia actually earn? What does that look like? It's more like $65,000. Sure. And that's a really big difference. Like if we're making decisions based on data. And this is why I think it's so important for us to understand it just so we know what's going on. But it's so important that, you know, like our government takes this into consideration because if they're using the mean or the median to make decisions about our healthcare or what we can afford or what we can actually do with our finances, there's a big difference when we're

talking about a cost of living crisis when it comes to someone who earns $85,000 versus someone who earn $65,000, right? Right. So if we aren't using the right data point or we're not looking at both of them, we're actually doing people a disservice. That makes so much sense. I hope so because I tried to make it make sense. Yeah, that's a great explanation, V. Thank you so much. Tell me more about female identifying investors. Speaking of median, the median trade size for female identifying investors is $4,005. That's big dog. Yeah, that's pretty good. And the median portfolio size is $95,990. Now, V, I want to know, and maybe I should know this already, what's the difference between trade and portfolio? Yeah, okay. So trade is how much they might, so

trade each month. So you might go, hey, Bec, I really want to start investing. So trade is important when we talk about, so let's get a little bit deep for a second. If you're an investor and you download any platform, there's going to be usually some type of brokerage fee. And a brokerage fee is a fee that you pay for your trade to be carried out. So let's say on average, it's 20 bucks. So you sit down and go, V, I really want to invest. However, if I'm investing $20 today, is paying $20 for that privilege making the total trade worth $40, is that worth it? Absolutely not from my perspective. So what a lot of people do is they kind of bundle their money up. So you might have a savings account to the side where you put money into

it each and every single month. And then when it hits $1,000 or it hits $2,000, you invest that all in one go. That's what a trade is. It's like a transaction, essentially. so it's genuinely smarter to have higher amounts per trade which obviously there's a lot of privilege in that because you need more money to have a higher trade amount but what that means is it brings down the percentage of your brokerage fee so if you said i have 20 bucks to trade and i go great no worries your brokerage is 20 that's a hundred percent of the fee which means if your money is then invested, Bec, it has to make another $20. So it's got to double in order to break even for what it costs you to invest. So that's not that sexy. But if I said to you,

all right, it's $20, but you've invested four grand, you'd be like, that's fine. It's not going to take that long for my $4,000 portfolio to return $20 and then some. And so many times, and I'm obviously wildly passionate about this, but so many times people just forget about their brokerage and how much their portfolio costs them. So you might look at a portfolio and be like, well, I've got $1,000 invested. Oh my God, it made me my first $20. I'm making money. And you go, hold up there. How much was your brokerage? Have we taken that into consideration? Like, have you made back what it costs you to get in the door? So that's what a trade is. And then total portfolio is the total amount that you have invested. So from all the trades that have added

up. Okay. It's honestly, and obviously this is just stuff we've never talked about, Bec. Like you didn't learn this in school, so it makes sense you don't get it. Sure. But it's pretty simple when you go, well, what's a trade? Oh, you traded it. Yeah. All right. No worries. What's a portfolio? Oh, it's everything you own. Oh, okay. Not so scary. Exactly. And I feel like the more we talk about this stuff, and this is why obviously we do do so many investing episodes, I just want it to make sense so that you feel super comfortable with it. And obviously this topic is about constructing your perfect portfolio. And to me, spoiler, there's no such thing, but we're going to help you feel comfortable with that idea. I just think it's so important to

have these conversations because they make me feel so much more confident in my own portfolio. But also I can see you go, ah, V, that actually makes sense. Like this makes sense and I think I could do it. And that's my favorite thing ever. Yeah, absolutely. Well, my last point for that one was that 55% of people do prefer stable returns. I'm not surprised by that. Yeah, I think that's, so that's like more of a comfy sort of thing. Like it's maybe like low, but it's stable and it's consistent. Women take less risks than men. At the end of the day, women are less likely to want a riskier portfolio. However, I think that that's also about education because as we're going to get into, the more educated you are, often the more likely you are to take on very

comfortable risk. Sure. So we're not saying go invest in Bitcoin or cryptocurrencies or things that are inherently very risky. What risk often means is that you're putting more of your money into the share market as opposed to just holding it in cash. And the second you can understand that, the more likely you are to go, actually, maybe I am a growth investor. Maybe I am a little bit aggressive and you didn't know it. Okay. I really like that actually. So the next thing I'm going to go through the top five types of investments for female identified people that are outside of super. So this does not include super. No. And also on that, super is not an investment. Super is a tax structure in which you invest in. You can invest the money that is sitting in that

tax structure. And I could not be more passionate about that because it's your money. Right. It's 11% now, Bec. Do you know how many people listening to this podcast have still not pulled their finger out and had a look at their own portfolios to be like, oh, I wonder if this is working for me. If you're listening to this episode, this is just like a little bit of a side note, personal attack to you. I do love you. That is why we are saying this right now. That is why I think it's really important. But if you are listening to us because you've clicked on an episode to learn about how to construct your perfect portfolio, but you haven't taken the time to go and look at what portfolio your superannuation is sitting in, turn off this

episode, go look at your super. Mate, actually don't do that. Listen to the rest of this episode and then go look at your super because that is 11% now of your income. Bec, are you saving or investing 11% of your income every single month? I wish. You are in super. Oh, true. You are in super. So like, why aren't we caring more about it? It is so much money. It is your money. Go and take control of it. Go and look at what it is. Do you know what the most, and I like have said this before a million times, but like, if anything, I am a broken record, Bec. Do you know what the most underutilized resource I believe is? Our hearts. Oh, honey. Yes. Yes. But also the call center at superannuation funds. I used to be a call center at superannuation funds. I know,

but like your fund, I would call you. That's so nice. Thank you. But like you had access to all the information to tell me what my super fund was doing, what it was invested in, what my risk profile looked like, how that worked. And if you couldn't answer the question, you'd send me to someone who could. You're paying the fees on your super fund so that you can access that. And so technically it's free to call because you can't not pay your super fund fees. YOLO. Call them. Abuse that system. Make sure you know it inside out because at the end of the day, it's your money. And to be really dramatic, but also it's not dramatic, it's just true. The difference between you not making a decision and not looking at your super today and just retiring is hundreds

of thousands of dollars you could be hundreds of thousands of dollars better off because i told you to be true that's a big i'm gonna take credit for that i love that i love that i'm gonna personally give you all the credit if that's okay thank you thank you so i would like to personally take all the credit yeah perfect yeah thanks it's working out so well for us it's a great transaction all right so v 54 of australian shares held directly oh okay i do you know what i'm not surprised by that oh i'm not surprised by that like if that's the i guess let's say the number one investment for female identifying people held outside of super i feel like that makes the most sense because to be honest that's the like i don't know what would you say it's like

the gateway drug of the investment world because they're the easiest to get your hands on yeah Yep. All right. What's next? Okay. So next is we have 35% in residential investment property. Who's surprised? Zero people. The Australian dream. But 35%. Yeah, might be nice. What's next? Okay. Next we have 30% in term deposits. Not surprised. Term deposits, especially at this point in time because of what our economy is doing, very attractive. Yeah, absolutely. I'm I'm not saying go invest in them, but they have become increasingly attractive. The other thing that's increased in attractiveness recently, Bec, apart from you. Ah, we're so smart.

We are so smart. We did not plan that. That is so crazy that they're having this meeting. We just think each other are looking good. Okay, sorry, sorry. Is just high interest savings accounts. Ah. You're better looking than a high interest savings account, Bec.

Thank you. That is the nicest thing anyone's ever said to me. I know. Okay, next we have 13% in ETFs. Oh, I'm surprised by that. And 11% in international shares held directly. I'm not surprised by that. So I'm surprised by the exchange traded funds being only at 13%.

Because if you look at our community, a lot of people, when you start an investing conversation, you'll say, well, you know, Bec, you've got your first $1,000. $1,000 to get straight into the share market is very easy. From my perspective, what you need to do is have a think about, there's like a laundry list of things. We've done episodes on this before, but what you're going to do is think about your values. And I know that sounds really fluffy, but you actually need to think about your values. You go, well, what kind of investment do you want, Bec? Like you live over Brunswick way, yeah? You're a bit hippy dippy, like you're fine. You're probably going to be a little bit more

ethical than the average bear. So like, we're going to start thinking like, do you want to invest in BHP? What's that? It's the oil company. Oh, I should know that. No, just say no, because I know you don't. Do you want to invest in like gambling or tobacco or like, you know, all of those things that you actually spend a lot of money on? Like, you know, I should say no, but I wouldn't mind. Yeah, you wouldn't mind. But I think it's really important to talk about your ethics first and like, do you want to hold those things or not? Yeah. Let's say you say no and you want to go down the route of a more ethical portfolio and you go, all right, well, I want it to be ethical. All right. We've got some guidelines here. That's really good. Do you want to pick

your own shares. In that case, if you do want to pick your own shares, I'm going to be real blunt and say to get diversification on an entire portfolio with just a thousand dollars is incredibly hard because of the purchase price shares exist at. So to buy a NAB or like a bank share of any kind, you're looking at more than $50 per trade. Sure. So what are you going to do? buy one share and then another share in a different bank and then another share in a few different asset classes to get diversification, in which case you only have one share per asset? Or are you going to look at an ETF, which is an exchange traded fund, which is essentially a big basket of shares that a fund manager has picked and put in the basket and you go, I want to own

that because it gives you instant diversification. So I'm not making recommendations here. I'm just very surprised to hear that of all Australian female identifying investors, only 13% of them are holding ETFs. Because that ETF is basically instant diversification. And if you look at our community, I would say that's one of the most popular asset classes to talk about. Like people aren't saying, oh, should I buy this particular share, Bec? They're saying, oh, have you used this ETF? Are you with Vanguard? Are you with beta shares? What does this look like? And I feel like that's the conversation we're having the most as opposed to what shares should we hold directly. In saying that, let's go back to the data that you gave me before. You said the average age is 47.

now i'm not so surprised that an etf isn't as popular because if you're 47 that's not old like i'm not throwing you under a bus but the entry point in the investment world was very different when you started investing let's say if you started investing in your 20s and you're now in your 40s sure so it wasn't an etf an etf was much harder to get into whereas a direct share might be something that your parents taught you to buy or they owned and you just replicated their portfolio. So I'd be interested to hear what you think. And I know it's coming up. I just can't see the data. But I reckon when you tell me about these younger investors, I think that the stats for ETFs are going to be higher. Let's have a little look-see. Let's have a little gaze.

Well, just really quickly, I want to say we do have an episode, Basics of Investing, that we did a few months ago. I've done so many investing things and also low-key keep an eye out because I am dropping an investing course really soon. Yes, true, true, true. We've got our money masterclass. We're going to do an investing masterclass. And you know what? It's kind of embarrassing because I've been being asked for this for years and I haven't done it. Hey, that's quite all right. You'll be secure. Better late than never. Exactly right. So just in case you're listening and you're like, I don't know what any of these things mean. I actually just want to. Like, this is actually one of the reasons I retired as a financial advisor, Bec, because

I legally couldn't have done this masterclass if I was licensed to give personal advice. Yeah, I had to wait. So as much as... That makes sense. Yeah, it wasn't because I was being lazy, but no. Sounds more clickbaity if I say it that way. Hey. Oh, a little bit.

Just kidding. Carry on, carry on. What have you got for me? Tell me about NextGen Investors. So yes, we are going to touch on NextGen Investors now, between 18 and 24 year olds, tiny babies. So, first up. Just a baby. Just a tiny baby.

The average age is 21. Little baby. That's so sweet. The median trade size is $5,259. That's higher. That's very exciting. That's higher than women on average. That is so good.

Big dog energy. Yeah, that is very, very impressive. And the median portfolio size is $45,500. For a 21-year-old? Yeah. Isn't that lit? That is so good. That's like literally half of what the average is for women.

They've got a bright future. Give me 20 years. I want to see this data again. It's going to be so good. Curious to know what the high, if that's the middle. Yep. Then I'm curious to know what the highest is. Oh my gosh.

I see so many. We ask a lot of people in our community, like, what do you earn? What do you spend? What do you earn? What do you owe? Like all of that. And I think it's so interesting. Like there are a couple of people and it blows my mind.

And do you know what, Bec? There's a whole heap of privilege that plays into it. But we've had them on the show before, if you listen to our money diaries, where young girls are like, yeah, I'm 21 and I have $150,000 in investment portfolio. So what? Yeah. How? How did we get here?

Is it black magic? Yeah, it must be. I don't think it could be anything else. Was it from your trust fund? It must be nice. It's not. It's not. They're actually saying it.

It usually is not. So to give them credit, it's really nice. Of course. Yeah. So, the top five investments outside of super for this bracket of people. Oh, I'm excited. I'm excited. Tell me.

Some of your predictions might be right. So, first off, we have... I'm actually really excited to hear these because I love being right. So, 43% is held in Australian shares held directly. Okay. That's a little bit lower. Mm-hmm. Mm-hmm.

33% in ETFs. Yes, that was correct. Yes. I told you. You were absolutely spot on. I feel like the tiny babies, i.e. most people who listen. Do you know what? I was about to say, i.e. most people who listen to our show,

but do you know the average age of our listener? I'm going to say 40. No. No. I don't know. There's 1.6 million of you, so the average age is actually, and it's not an average age because I don't have the median, I actually just have, like, the mean, which is all the numbers added together

and then divided by the total number of listeners, and that is 29. Oh, really? Yeah, isn't it good? Yeah, wow. So if you like took it for a bracket, it's between the ages of 28 and 34. Isn't that cool? Okay, that is really cool actually. Because I thought it was just tiny babies listening because so many times we talk to

these like super young, super passionate like investors who I'm like, how are you better than I ever was? Yeah. And yeah, no, it's just people like us, Bec. Well, welcome to all our 29-year-olds and everyone else. Hello, friends. Love you. Love you guys.

Next up, we have 32% in residential property. That's interesting because I'm pretty sure you told me that the average of female investors is 35. So like that's not that far off the mark. True. Yes. Impressive. The difference here, I think, is that there's 35% of residential investment property for

maybe the older generation. Yeah, okay. And that's actually just maybe their first homes. This is probably first homes, I would say. I could go on a rant here where I do not believe that your family home is an investment, but we're going to save that one for another day. Yes, absolutely. And then we have 31% in crypto, which is interesting.

Big dog energy, all right. Yes. I would like to see your portfolios. I'm always so interested, Bec, when it comes to people who buy crypto. No shade, absolutely no shade. As you know, I don't care what you invest in. I just care that it comes from an educated place. I care that it is in line with your values and that you are feeling really confident

with the decision that you've made and you've like looked at everything but the fact that crypto is one of the riskiest assets knowing that so many women and women are usually more conservative to be a little bit stereotypical to know that so many people are investing in crypto before they're investing in shares which are inherently less risky right blows my mind yes very interesting I find that very interesting. And then lastly, V, we have 25% in international shares held directly. How cool. Yeah.

Wow. I'm really, really excited. I'm really excited for the future of these people. I think it's an interesting, I guess, thing to go through and just talk about. Do you know what? The next-gen investors, give them another 10 years, they're going to be running rings around every other person. And quite frankly, they can.

I will let them. I will let them. I'm giving them full control. We'll give them the podium. They can have this podcast all day. They can take it. Absolutely. Anything they want.

All right, Bec, let's go to a really quick break. Let's have a quick break. Good idea. I need a coffee frappe. And on the flip side, we're going to dive into exactly why I always say that I'm a conservative but aggressive investor. Don't go anywhere. Can't wait.

Okay, V, we are back. You were saying at the start that risk in investing is multifaceted. Let's discuss that a little bit. Multifaceted risk. That feels like it makes it much smarter than it actually is. Yeah. I like it. It's a bit multifaceted.

Tongue twister. No, it just makes me feel intelligent. We should use it more often. Yes. All right. So let's talk about risk. So risk, essentially, like if I drew a little risk reward chart, the more risk you take on, the more you could potentially lose.

So we have four different recognized asset classes here in Australia, and I'm not going to get into every single nuance about each and every single one of them. However, we have cash, essentially the money in your bank. We have fixed interest, which is things like term deposits, high interest savings accounts where you lock your money away, and bonds. We have property, which is the great Australian dream. And then we have shares, which arguably is, from my perspective, the sexiest of the four asset classes, right? So you've got those four asset classes. And a good portfolio is made up of a good mix of all four of those. So when you're talking to the idea of risk, the more risk you take on, the more you could potentially return,

but as we've said, the more you could potentially lose. So we know in Australia, Bec, that the lowest risk asset class is technically cash, right? So the cash in your bank, like you're not necessarily going to lose it. In fact, we live in Australia and we have government guaranteed bank accounts, which means hypothetically, if the world flipped upside down and your bank went down back and it became completely bankrupt, the government guarantees that they will give you back up to $250,000 of what you've got in your savings account. So that feels pretty comfy, right? Yeah. So it's like your bank, for some reason, went absolutely down the gurgler. It's all right. The government's got you back. That is so cool. I did not know that.

Very cool. But also, let's be honest, if one of the big four banks goes down, Bec, I promise there is so much more to worry about than your savings. And I know that that sounds dramatic, but if one of the banks is going down, our economy is absolutely rancid. And I know, and this hasn't happened before, but I can almost guarantee that if one of the big banks was going to go down because of how much it props up the economy, the government would basically jump in, give them a little bit of a life raft and make sure that that didn't happen because of how impactful those big four banks are on our economy, right? But in saying that, makes us feel really safe. The flip side of cash though, is that a dollar today is not worth a dollar tomorrow.

And we know this because of inflation. As you know, inflation, and we knew when we got kicked in their absolute guts when our HECS and HELP debts went up by 7.1%, inflation's really high at the moment. And then that essentially means that what we could buy on this day last year, Bec, is more than what we could buy today. And essentially, CPI or Consumer Pricing Index is essentially where, in the most simplest terms, a whole heap of economists, they go, Bec, let's go shopping. And they have a basket of goods just from Woolies or Coles, and they go and fill their basket full of all of these essentials. And then they go, what does this cost? And last year it might've cost $35 and this year it might cost $45.

So that's the increase in consumer pricing index or CPI or inflation, how much stuff is going up, right? So it means that if you're going to put all your money in cash and go, do you know what, the other asset classes, real risky, I'm not so sure about them. It means that because inflation this year went up by 7.1%, you would need to be making on your savings account at least 7.1% to have the same amount of money that you had last year. We're not saying that if you dumped 10 grand in a savings account, you won't have it next year. You'll have 10 grand. It will stay identical. But to purchase the same amount of stuff that you could have purchased last year with 10 grand, you're going to need $10,700 because it's increased by 7%. Does that make

sense? That does make sense. So you're going to need more because unfortunately, the world is increasing in price and 10 grand today is not worth what it is tomorrow. And that means that unfortunately, if you're going to have all of your assets or all of your money tied up in cash, it's going to cost you more over the long term and you're actually shooting yourself in the foot, which is not that sexy right then we've got and we're not going to go too much into it but bonds and fixed interest and stuff like that higher return but also relatively stable and it's going to depend on what type of asset class you get into then we've got property the great australian dream it's not going to go up in the same way that it has over the last 30 years but

that's absolutely okay because it doesn't mean it's a bad asset class it means we just need to be smart about what we're purchasing and where we're purchasing and as i've said before we are only talking about that in investment terms. I'm not talking about your first house or your first apartment. To me, that is a hygiene factor. Not that you need to have one, Bec. I don't think that anyone needs to purchase property if they don't want to. Renting is totally acceptable as an outcome for putting a roof over your head. Like, it doesn't matter if you own property or not. That's not the point. But if you choose to buy a property to live in, that's not an investment. because if you've chosen it to be an investment, you would have to sell it for that money to

actually have an impact on your life. So don't get me wrong. It's an absolute privilege to pay off a mortgage completely and not have to be paying rent each and every single month. But we also need to look at the flip side of that, where if you go, yeah, but it'll increase in value. That's that old school concept of downsizing, right? It's like the stereotypical two lawyers, they get married back. They have a lot of income. They go buy the biggest house in a very fancy suburb, right? They work until they retire. They retire at the ripe old age of 60, five years early because they're lawyers, right? Big dog, right? Yeah. Their property is now worth like $5 million. Oh, yeah. Big dog. But all their money is tied up in that $5 million property because it was a big

mortgage and they've spent their entire lives paying that mortgage off, right? For them to live comfortably in retirement because they've used their family home as their main asset, you know what they have to do? They have to sell their family home. Because you don't just have $5 million, like your house might be worth $5 million. But if you've worked your entire life to build up this beautiful big home, it doesn't matter if it's big or small, this is just the example I'm using. You've worked your whole life for this, right? You've built it up. You've done all of this stuff and you're so excited about it. But now it's all designed the way that you want it designed and you've brought up your kids in there and now your grandkids come over for you

to have a comfortable retirement, you have to sell that house. You have to move potentially into a different suburb because you can no longer afford the suburb while still having retirement savings. You might go and buy a house for $2 million in a different area and now you have access to the additional cash to retire comfortably. So from my perspective, Bec, why did we save all our money and invest it technically into this big family home for us to then dispose of it if it is our one favourite true asset. Right. Like if you've worked your entire life for your dream family home

but all your money is tied up in it, well, do you want to have to throw your family home down the drain so that you move to a smaller place? Like don't get me wrong, that's a very valid investment strategy if that's aligned to your family values and what you want to create. Totally. I'm telling you right now, I have only just finished renovating, it's not even finished, don't even start me, my first home.

I'm so excited about it but I also know that it's not my forever home however having gone through this whole process of picking things and doing my own bathrooms and oh my god I got to pick the carpets and the lights in my bedroom if I get to my big family home one day and I do that I don't want to sell that yeah I want to bring my kids up in that house I would want my kids to bring home their kids and that's their grandparents house do you know what I mean like everybody has different values. And I'm not saying that you need the same ones as mine, but I think that we need to reframe this idea that your family home is an investment because from my perspective, it's only an investment if you're willing to dispose of it. Does that make sense? That makes so much sense.

Okay. So other house rant aside, we now move on to shares and they are, from my perspective, one of the most attractive investment types. Do you know why I think they're real sexy? Why? Because they do two things, Bec, in this day and age. Two things, I know, we love a flexible gal. They can increase in value, nice, but they can also pay you a dividend. Oh my God. I know, I won something that is worth more tomorrow and also paid me for the privilege. Hot girl shit. Anyway, so shares I think are relatively attractive, but we know that they're more risky. So because they're more risky, people tend to shy away from them, but they usually shy away from them because they don't have the education around what we're

building. I see. So when I say I am a very conservative, aggressive investor, I say I'm willing to take a lot of risk by exposing most of my money to the share market. So I'm happy for my money to all be in shares. I do have my emergency fund. Please don't get me wrong. Never invest your emergency fund back. They're the rules. I made them. So you've got to follow them. I have to follow you have to follow them like absolutely no investing of your emergency fund however as a conservative risky investor i'm not picking crypto i'm not picking shares that have just joined the market i'm not picking do you remember when everyone was talking about after pay shares and they were just like super excited about buying after pay yeah that does ring a bell

yeah i feel like it was maybe like 2018 2019 everyone was like oh my god i bought after pay and I was like, oh, big dog energy, wow. But Afterpay weren't paying dividends. So I was like, I'm not buying that because I want to be paid for the privilege, baby. Yes, queen. So to me, that was not a share that I purchased and the only way people were making money by buying

Afterpay shares back then was to buy them, have them increase in value and sell them. I'm laughing at a joke that I was going to make. No, I want to hear your joke now. Okay, well, you were going to say they don't pay dividends. So I was going to say, it's a selfish, not a share. Yeah, that's true. Okay.

Anyway, that's so dumb. I feel so embarrassed. I love that you tried. Thank you. And thank you for laughing, even though it was so dumb. That's why I laughed. I think everyone's like, Bec, what was that? Really, really bad.

She's usually really funny. I can vouch for you. Thank you. You're welcome. Sorry, continue. I want assets that, to me, are really stable. so as much as to quote uh every investment professional ever past performance is not a reliable predictor of future performance well i do not want to be buying things that don't have

good past performance as much as we can't use it as a predictor of the future to me it's what's making me feel comfortable about the future so if a share has been on the australian share market for the last 50 years has for the last 50 years paid out a dividend and has consistently increased in value. We're not saying doubled every year because that's unsustainable. Just bopping along, going up, maybe in line with inflation. That would be good. Just keeping track. We love a girl that just keeps up. Wouldn't hate it. We're not trying to go fast. We're just trying to get to the place safely, right? So for me, I would much prefer that type of share than a risky one. So when I say that I'm conservative but aggressive, I have most of my assets tied up in

shares. But Bec, those shares are so boring, it's not funny. Like those shares are the most conservative shares I could buy. They are what is called blue chip shares. And I have them spread across a few ETFs because again, love some diversification as much as I could and have managed my own direct share portfolio before. Just love a good ETF sometimes. They do good, they be good. They've got good fund managers involved with them. They're from good companies. I've got a little bit of Australian shares, like I've got some Australian stuff. Lovely. I've got some international stuff as well.

Wow. She doesn't discriminate. I love some international stuff in an ETF too because the tax obligations, they're not as complicated as if I owned them directly. Sure. So I just, I'm a low maintenance kind of girly in the share market. She doesn't want much. Yeah, I love that.

I don't want much except all of the returns. I want those. Exactly. We wouldn't hurt. So when I say that I'm the type of person, I don't really like taking on risk that's unnecessary. For me, I just want to be that slow and steady horse that wins the race. She's not making a fuss. She's no bother. I want to look at my portfolio. And as much as like this is hypocritical,

I'm so happy to share it with all my friends, which are you. I still, when I log into my platform to have a look at my shares, if my portfolio is down, I get that like hit in the chest, you know, and you're like, oh, when you know that feeling that you get, if you're not an investor, you get that feeling when you check your bank account and you thought there was a hundred bucks more in there than there actually was. It's that feeling when you're like, but that's just the emotional investing journey. And we have to be aware of that. And the reason I'm sharing that with you right now is because I genuinely get a little bit stressy about it, regardless of how much education I have. But that's why we need to be educated because then

I go, actually, Victoria, put your ex-financial advisor hat right back on and tell yourself that it's just a reflection of the market. The market's not doing so well at the moment. So it kind of makes sense that your portfolio is reflective. Makes sense. So if your portfolio is reflective of the market, like you can't be too mad. No. However, if your portfolio is tanking and the market is doing really well, we need to have a look at what you've done.

Absolutely. But usually it's not you, it's market. Exactly. Especially if you've chosen assets that are well diversified. Yes. And diversified can be really scary, but Bec, it's basically just not putting all your eggs in one basket. So if you've got $1,000 and you're trying to invest for the first time, buy a few different options or an ETF or a managed fund or something that is going to give you that instant diversification because if you went and just bought one bank, I promise that's not good diversification.

Sure. In fact, it's really bad diversification and I could not recommend it. That is solid advice, V. Bec's an investor. I think I'm almost there. V, I feel like it's a really good place to leave it for today. Is it a good place to leave it because we've run out of time or you've run out of like energy for me? Mental capacity. Yeah, okay. That makes sense. But I can rant on another episode because honestly, when it comes to investing, essentially all of this is just trying to make you feel as

comfortable as possible when it comes to getting started. And I feel like the hardest thing is actually just taking the first leap. And I think when it comes to getting started on your investing journey, I know we've talked about trades and how, you know, it's not worth investing $20 if your trade is $20, right? But if that's what gets your foot in the market and it actually gives you exposure to an ETF so you can follow the market, go up and down, and you can get that emotional investing journey in, maybe it's an investment into your financial literacy so that you get exposure to the market and you feel really comfortable with it. Would I recommend that all the time? Absolutely not. Maybe find a share trading platform that makes sense for your

investment amount. Like Beck, if you were talking about, oh, I have my first 50 bucks to invest, well, I'm not going to say go with self-wealth because they've got a minimum investment amount of $500. That's not going to work for you, is it? But you might consider something like sharesies where you can invest with as little as one cent. And that's not me trying to promote a platform at all. I just think if you are looking to get invested, there is going to be an option for you. In fact, just to do a little shameless plug, I wrote a book. It's called Investing Where She's On The Money. I did a chart in that book. So maybe if you don't even want to buy it, just like head down to Kmart, open the book, take a photo of this chart, run away, pretend it never happened.

But it's a comparison of all the fees, all the charges, all of the bells and whistles, what exposure you get for a whole heap of investing platforms that are most popular in our community. So we go through Spaceship, we go through Raise, we go through Sharesies, we go through SelfWealth, we go through Perler, like literally everything that is really popular in Australia at the time that I wrote that book, I've compared. So all you have to do is go through it and go, all right, well, do I want a micro-investing platform? No. Okay, next, I want a share trading platform. I really want exposure to Australian shares. Okay, well, these are the ones that give me access to that. Oh, look, here are the fees. Here are the

charges. Oh, I don't know if I want that particular bell and whistle or I do want some more research or I don't want some more research. So you can make the best decision for you because picking a platform, from my perspective, one of the hardest decisions when it comes to starting your investing journey. Right. Well, now's a really good time to leave. Yeah, you're done with me. You are done. I need to absorb all of this. We can talk about it over lunch. Oh, Oh, thank you. You're like, absolutely not. We could talk about a multitude of other things,

but let's talk about this again. No, that's a really good place to leave it, baby. Sorry, not sorry. Well, we love you. Have a good week. We will see you on Friday for Friday drinks, and then we'll see you on Monday for another Money and Money Day. And I can't wait.

Can't wait. See you guys then. Be good. Bye. Bye. Bye. The advice shared on She's On The Money is general in nature and does not consider your individual circumstances.

She's On The Money exists purely for educational purposes and should not be relied upon to make an investment or financial decision. If you do choose to buy a financial product, read the PDS, TMD and obtain appropriate financial advice tailored towards your needs. Victoria Devine and She's On The Money are authorised representatives of MoneySherpa, PTY LTD ABN 321 649 27708 AFSL 451 289.