She's On The Money - Growth vs. Dividend Investing

Episode Date: March 29, 2022

Half of Australians now own shares, and so today we're looking at the difference between Dividend and Growth Investing. Is it like comparing apples and oranges or Gucci and Kmart? What makes this such a sexy topic? Well...take a listen to find out!We’re so grateful to be working with our friends at Sharesies to create more investing content in 2022. Use the code SOTM when you sign up and you will get $10 in your account ready to invest! Head to Sharesies.com.au to snag your bonus! Terms and conditions apply.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. Victoria Devine is an Authorised Representative of Infocus Securities Australia Proprietary Limited ABN 47 097 797 049 AFSL - AFSL 236523.See omnystudio.com/listener for privacy information.

Just before we get started, we'd like to acknowledge and pay respect to Australia's Aboriginal and Torres Strait Islander peoples. They're the traditional custodians of the lands, the waterways and the skies all across Australia. We thank you for sharing and for caring for the land on which we are able to learn. We pay our respects to Elders past and present and we share our friendship and our kindness. 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. Half of Australians, an estimated 9.5 million people, now own shares. But if you don't know your divot beginnings from your dividends, then this is the episode for you. My name is

Georgia King and joining me as always to discuss growth investing versus dividend investing is financial advisor, Victoria Devine. V, how are we? You're funny this early in the morning, G King. I like it. I like it. Indeed, it is a hot topic. I mean, probably not a hot topic in our community yet, but a hot topic in my world and something that I really, really want to talk about. And low key, the reason I want to talk about it is because I've just finished writing the chapters in my book on dividend and growth investing. And I was like, we need to talk about this because they're both very different strategies. And I really think that there's so much value in really deeply understanding different strategies, even if you're not planning on

investing yet. Like I just want you to know when someone says, I'm a growth investor, you don't just go, that's your risk profile, right? Because it's not. But J. King, did you know that during the COVID-19 panini. We actually saw a surge in first-time investors. The panini, you say? The panini. A very delicious, disgusting sandwich that nobody wants to buy at the shop. Love it. Okay. Hang on. So you said we saw a surge in first-time investors through the panini? Through the panini. Yes. Why? Well, I would love to think it was because that's also when She's On The Money was finding its feet. Genuinely. I'm just correlation, not causation. So we'll just go with that. But what I think it is, is a lot of people were home thinking

about their wealth. There was a lot more journalism about it. There was more stuff in the media. And we've also seen a whole heap of brilliant new micro-investing and individual share investing companies pop up that are making investing so much more accessible. So I think it's pretty amazing, obviously, because this is what I'm passionate about, but also I adore that people are prioritizing their money. But it also tells us that a lot of people are now taking the leap into the investing world for the first time and putting future them first, which I love. And if you are in the privileged position of being able to do this, then yay, exciting for you.

And G, research done by our friends at Finder last year actually showed that Gen Z, so those people 25 and under, which we are not, Georgia King, they tend to find investing the least intimidating and they are more likely to give shares a go than any other generation, followed closely by Gen Y, which is us, those peeps who are aged between 26 and 40. So double yay. This makes me really, really happy. So I thought today, even though you don't seem that keen on it by the look on your face, I thought today we would take a look at two different types of investments and get to

know them a little bit deeper. 100%. Before we do move on, really shocked that people 25 and under are the ones that aren't afraid of investing. That is news to me. What's that about? I don't know. Like these are the ones that are on TikTok and they're just much cooler than us.

If you're under the age of 25 and listening to this podcast, you already know you're cooler than us. I reckon that's it. It's just the cool factor. Okay. Interesting, interesting take. So let's talk growth versus dividend investing. Can't wait. What are they? Is it like comparing apples and oranges? Gucci and Kmart perhaps? Talk me through it. That's a very big parallel. I like the Gucci Kmart kind of vibe because on the weekend- Your Gucci and Kmart. Oh, no, no, absolutely not. I wore a Kmart headband with a very expensive pair of designer shoes and I was just real happy about it. A gorgeous fusion. Yeah, a gorgeous fusion

that aligned with my values and also made me really happy because I liked both of those things equally. Perfect. Great. So let's bring this back to investing. No, I want to talk about shoes. Growth v. Dividend. Just what? So I wouldn't say it's like apples and oranges. I also wouldn't say it's like a Gucci Kmart comparison. It's actually just different strategies for different times in your life. So to quickly summarize, a growth investment is one where you're investing in that particular share because you are hoping that it increases in value. You're not looking at it going, oh my gosh, the dividends it pays out are so sexy. I really want to have some dividends in my life. You're actually looking at it going, hey, that company has

potential. I'm young. I have the power of time on my side and I'm going to see this grow. So at some point, my portfolio is worth a lot more than it was yesterday. Then on the flip side, we've got dividend investing. Honestly, Georgia, you could be a regular investor and investing in both of these types of shares because I actually own both of these types of shares. It's just important to know why you might pick one over the other and how that works. So a dividend investing strategy or a dividend share is actually a share that you purchase, not necessarily with the intention of it becoming super, super expensive on the ASX, you're actually purchasing it to get some income into your portfolio. So a good example of that is blue chip shares. And that sounds like a really

lame term for essentially really basic white collar shares. Like we're talking things like banks where, you know, you might look at a NAB or a ComBank or a Westpac share and they don't really fluctuate heaps in price, but they do pay a dividend because they distribute the profit that they make each and every single year to the people who are their shareholders. Whereas you look at something like an afterpay, which I'm using as an example because I feel like our community and our Facebook group last year were talking so much about afterpay shares and how much they went up, and that was really sexy. But afterpay never paid a dividend. So the only way in that moment to make money from an afterpay share was to sell them once your share price had increased in value.

So like the capital growth from it rather than during the process. And both of those things serve us really well in a portfolio because obviously we want our portfolio to increase in value. But the closer and closer we get to retirement, the more we don't want to have to sell our shares down, but we actually want to be able to generate an income. I want my share portfolio to be paying me for having it without having to dispose of any of it or sell some of it down. Like I want that to exist forever essentially so I can create a legacy as I get older. And, you know, maybe one day when I'm not around, my future children can benefit from that instead of having to sell your assets down over time. Does that make sense?

It does make sense. Good. We're done. That is the entire podcast, J.P. Question though, can you have a growth investment that also pays dividends? Yes, you can, my friend. So, J, yes, you can have a growth and dividend share, but they are arguably far more rare. Like a unicorn. They are what I would love everybody to have. Like I would love to think that you buy a share tomorrow, G. It starts paying you out a really nice dividend that you can either reinvest or use as income to fund your lifestyle. And in a couple of years time, it's worth a whole heap

more than it was yesterday. Sadly, they're not as common as we would like them to be though, because more often than not, when you're looking at a growth share, you've got to look at it as though, you're on the journey with that business as they are growing. It's not like you're buying, and I use this example all the time, just because it is a very common share, a NAB share or a CommBank share. Like they're not consistently growing year on year on year. Like they're just a big business and all the cogs are turning and you know that they're reliable and they're not going anywhere. Whereas an Afterpay, when they came into the market, everyone started talking about them and they had a low share price. And obviously that has increased significantly.

but to have that type of growth, businesses need to reinvest in themselves and they can't pay a dividend to you, i.e. they can't give the profits to you, G King, because they actually need to reinvest it into the business for it to grow. So it's usually one or the other but sometimes you do get unicorns that do both because they have increased significantly because they might have done something really sexy but also they're in a position to pay profits out to their shareholders but I wouldn't be banking on it. But they are my favorite type, right? Okay. So is it as simple as it's saying on the tin what is what? So for example, you go into the share shop and you're buying a share.

Like the ASX, the share shop? Yes, the share shop. Is it as simple as choosing like the one that says growth or dividend? Like how do you know what you're choosing if that makes sense? So you've got to do a little bit of research. You've got to look into the historics of the share. It's really easy, G. If you just go to the ASX website and look up the share, it will tell you whether or not it has paid a dividend ever and what those dividends look like. So let's talk pros and cons then, V. We'll start with growth investing. Growth shares, yes. Talk me through the benefits, why we should look at doing this, and then maybe the downfalls as well, what we

need to be mindful of. So there are a few reasons why you do both of them, right? And I actually think it plays a lot into one, your risk profile. So like how willing you are to take on risk, but a growth share is actually a bit riskier than a dividend share. And that's for obvious reasons, because there's significant fluctuations in the share price and it's due to the growth of the company. Whereas a share that actually just pays a dividend, like they're pretty tried and true and tested. Like they're the steady steed that keeps plodding along and you might be spending, you know, $60 or $70 a share, but you're actually buying a very small portion of income. And as time goes on, that income can do one of two things. As I said to you before,

it can fund your lifestyle. So by that, I mean, it just becomes income in your bank account that you can spend. But on the flip side, you could reinvest those dividends into your share portfolio, which is an option when you invest. And those dividends purchase you more shares, which ultimately result in you having more shares and more income, which is really sexy. A growth share though, as I said before, you're purchasing with the intention of it increasing significantly in price because you believe in that company or you believe in the growth of that company and see a future with them. Sometimes growth shares turn into dividend shares. So a share might be relatively cheap on the ASX and then over time it significantly increases and

maybe for the first 10 years they don't pay a dividend, but then they flip over to being like, oh my gosh, we're so stable as a business. Now we're able to share the profits with our shareholders. And as a shareholder, you'd then get given your dividends, which is very exciting. I suppose the differences there are quite obvious, but when it comes to downfall, if you are closer to retirement, holding growth shares might not be aligned to the value or the strategy that you're trying to implement. Because when I'm retired, G, I want to have income. Like, it doesn't actually matter what your share is worth if it's not making you any money that you can spend and fund your lifestyle with. So they have pros and cons on either side, and I think

it's more about your life stage. So are you happy to invest in a growth share? If so, what does that mean? Obviously, with a growth share, if you then decide to sell it, you will have capital gains tax to pay. Just as an FYI for those people who like trading shares on a short, you know, period of time, if you buy a share and then sell it within the same year, your tax is far higher than had you held it for an entire year. And a lot of people actually in our community even found themselves in a little bit of a pickle because they either bought Afterpay or they were buying things like Bitcoin and they were buying assets that had significantly increased in value. And they were like, oh my gosh, I got to get out. Like, I don't want to be invested in this.

They didn't think about their tax consequences, sold it. Whereas if they'd held it for another three months or so, they would have ended up with a whole heap more profit because they didn't have to pay, you know, exorbitant tax rates. So I think it's really important to know what that means. And there was a really good quote actually by our friend Warren Buffett, fancy guy. He's arguably a growth investor. He's probably the most famous growth investor in the entire world because he purchases shares when they are significantly undervalued and then they blow out of the water. I don't know what this guy does, whether he has a crystal ball or whether he's just a wizard, but he is arguably the only person in the entire world that I have seen be

able to time the market. If I could do that, I've said on the pod before, G, I'd be a really rich woman. You would be. But I can't. So I have a different investing strategy than him. But he actually said, if you aren't thinking about owning a stock for 10 years, you shouldn't even think about owning it for 10 minutes. And I think that's really powerful here because I think too often, And we've had this conversation, G, between you and I and Annalisa offline about how a lot of people think the way to make money in shares is to kind of be flipping them and buying them. When they increase in value, you sell them and then you buy more.

Like, it doesn't have to be that active. Yes, some share traders do that. But I just really feel like if you're listening to a She's On The Money podcast, you're probably not a share trader and neither am I. And just trust Warren Buffett. Yeah, I mean, I don't know if I'd trust him. He's worth $123.5 billion US dollars. He's got a couple of dollaroos.

Just a coupler. Do you know what my favorite part about him is, though? His cute little muffin face. Oh my gosh, yes, that. But have you looked at his house and his car? Nope, Googling. Oh my gosh. House and car?

House and car, G. Google his house and car. I don't know what to expect here. Live on the pod. Okay. Oh, it's quite modest. Yeah, he lives in the house he bought for his wife before he even started being like a massive share trader.

Look, is he a cross that he is incredibly wealthy? Yeah, he just doesn't see the value in purchasing that. He has a car that works and a house that works. No, assets don't matter to this man. And I really respect that. He is arguably one of the richest men in the world. He has everything at his disposal. He could buy mega mansions with his change.

Yet he's like, the house my wife and I bought, like it does the job. Good on you, Warren, if you're listening. Should we move on now to dividend investing, Vae? Talk us through the pros and the cons there. I love a good dividend share. And the reason I do is because I love being paid to own things. Like, how cool. Like, gee, if you own that water bottle, I'll give you 20 cents every year.

That's fun. That's fun. Like, that's what a share does. It's very, very exciting. But with dividend shares, you actually are a winner in arguably two ways. I mean, you're a winner with gross shares as well. So it's not to say one is better than the other, but they both have underlyingly different strategies.

so when a share rises in value and the company cuts you a check they're basically giving you a portion of the profits so they're saying look gee you've owned this company and you're basically a mini company owner therefore any money that we make you get a percentage of so the better that company does in a financial year the better your dividend is going to look but the same is true if that company doesn't do well so if they don't turn a profit you don't get a dividend so there's a little bit of risk there when you are purchasing these. But if the share price of an individual stock decides to rise by, let's say, 4% and the company then pays you a 3% dividend out, you're going to pocket a 7% profit minus taxes. So for me, one of the main benefits is essentially

you securing a steady stream of income for yourself. So it's not something that we can all afford to run out and buy enough shares in a dividend company to replace our incomes. that takes a long time. But the benefit of the dividend share is that over time, when you get paid a dividend, when you are young or you are like me and you're not looking to make money in the short term from your investment portfolio, I'm doing that for future me. I reinvest all of my money and the power of compounding interest is wild. So say in the first year, you know, you get a 7.5% return G and you've got, you know, $1,000 in the market. You'll be like, well, B, that's like not that much money in the grand scheme of things. I can't retire. But over time, that 7.5%

that your money made the previous year is now going to make money the year after for you. So the money that your money made is now making you money. And if you then stretch that over a period of like 30 plus years, that's a lot of money and a lot of good return. And one of my favorite examples, which if you've listened to this podcast before, I do apologize, but I want it battered into your brains, and that is if you're investing for a 30-year period, so say you're 21 and you're like, you know what, V, I really want to invest all the way up until retirement. I'm going to do $500 a month every single month until I retire at 65. I'm going to have an average rate of return of 7.5%. Over that period of time, had you saved that money, you'd have $240,000 in your savings

account and you go, that's pretty sexy. But G, due to compounding interest, if you had put that into the share market at that 7.5% return, you'd have $1.2 million. So you're basically making a million dollars by riding out the investment journey for the long term, but also making use of those dividends that are being paid to you to reinvest them. So when I say, oh, it's the money that your money makes, like that sounds small when it's only a 7.5% return because you go, well, 7.5% on my $1,000 V, that's not actually that much. But over time, that obviously grows into something that is so much bigger than what a lot of us are able to comprehend. And I say that not because I'm like, oh my God, you don't get it. You totally get it. But as humans, we are

actually wired to think in a linear way. So we go one plus one equals two, whereas compounding interest is not linear. It is one plus one equals three, pretty much. And you kind of go, well, that doesn't make sense. No comprehendo, not going to happen. So I think we need to reframe the fact that a lot of us are like, oh, I don't get it. I'm not smart to know investing is actually very hard for the human brain to comprehend because we are actually wired to just be very linear in the way that we think. So that's why I think a lot of people are overwhelmed by investing and overwhelmed by this conversation because it's just not something we can comprehend. There is nothing else in our life that works in the same way.

Yeah. I mean, as someone who still hasn't invested, I think just remembering that exactly what you said there, if you saved $500, was it $500 a month for the rest of- $500 a month if you are 21 all the way until retirement. Yeah. So would you rather $250,000 or $1.2 million? Exactly. I know where I'd rather be. And the power of compounding interest over a long period of time is honestly insane. So we're talking about $500 a month. And if you're in the privileged position of being able to save that or

invest that, that is fantastic. We are not saying everybody is, it is just an example. But if you then jump a couple of years in advance and go, all right, G, you haven't invested, that's totally okay. There's no such thing as too late. But if you are 40 and you want to achieve the same outcome of that $1.2 million investment portfolio, you're going to have to cough up about $4,000 a month to achieve the same goal. That's insane. That's so much more money. And to comprehend that, because I think a lot of us are like, oh, well, I'll just invest when I have more money. Like, I'm not in the position where I can compromise that at this point in my life. When I'm older, I'll be rich. I'll have four grand a month that I can put into anything. I'm sorry, you won't,

because you'll have more financial commitments. You'll have lifestyle creep unless you're Warren Buffett, because apparently he doesn't have any form of lifestyle creep, but also you're far more likely to have financial responsibilities. You're far more likely to have a mortgage that needs paying off. You're far more likely to probably have car loans and stuff like that, and also children. And I'm not saying that everybody's going to have children and our journeys are cookie cutter, but I think it's very common for that demographic of people to have more financial commitments and the amount of people I sit down with and go, hey, to achieve this goal, we have to sacrifice significant amounts of money, when you could have just done that with 500 bucks a

month. So even when you're 40, you're just investing that 500 bucks a month. And hopefully in a perfect world, you do have more disposable income. So that $500 a month becomes, you know, $1,000 a month or more, or, you know, when you get birthday or Christmas or, you know, bonuses from your job that you're obviously going to be excelling at, you invest that and that $1.2 million portfolio could be more like $4 or $5 million. Now we're talking. Yes. Also, but to add to that, because I know you're going to try and like segue me into a break. Gee, let's talk about why it's important to have a $1.2 million portfolio. Because you go, great, I get to that point and I've got $1.2 million invested. V, do I just start spending it? No super yachts.

Warren Buffett doesn't have one. You can have a super yacht when he has one. He could have so many. I know. He could be like the king of super yachts, yet he's choosing not to be. And that's real cool. Is it? I like that. If I was Warren, I'd tell you the things I'd be doing. Oh my gosh. What would you do? What would you do first? I'd buy a super yacht, man. I'd get to the Mediterranean. It's not happening. Also, I just feel like you're not a yacht girl. I, well, I don't think I've been on a yacht. I've just seen that below deck show. No, no, no. That speaks to me. Yeah. All right. I think we should go on a super yacht. She's on the money tour around Australia, but on a yacht. Stop it. Let's hit up, let's hit up below deck

and ask them if they'll let us on their boat. Perfect. But do you want me to answer the question? Yeah, I can't even remember what it was. Okay, so the question or the thing I was trying to get across here is that when you have a $1.2 million portfolio, we don't just start spending that because hopefully we have dividend yielding stocks that are paying us to own that And a 7.5% return G on a $1.2 million portfolio is about $60,000 a year. So what you then have is an asset that is paying you 60 grand a year just to exist. You don't have to go to work. You don't have to sign timesheets. You don't have to do anything except for watch your bank account grow. And I think that's really cool, but it's also really important to set realistic goals

in retirement. So if you're like, oh, V, like 60 grand is not going to be enough. Okay, cool. maybe you need more than $500 a month. But it's all about making sure that you know what that contribution is and how that works and then working backwards to achieve. Bloody brilliant. I reckon we'll leave it there. I knew you were going to take us to a break. On the other side, we will be chatting through a little comparison of the two and what gets you what. So we'll see you on the other side. Straight back into it, VD. Now we've gotten the lowdown on both growth and dividend investing. I just forgot there a little bit.

Can you actually, here, recap it? What's a growth share? What's a dividend share? So a growth share is one that you hold on to for the long haul, which let's be real, guys. Let's remember what Warren said. You should be doing with most of your shares. He's with me. Yep.

So that is growth. And the idea there is that you get your growth from the end when you sell it because that's how it works. But it might also turn into a dividend share. Correct. Sexy. Because that's what happens when the company makes enough money to be able to pay its people, its investors. I love that.

Yes. And then dividends, sure, they might not make you really rich, but also maybe they will. They will. No, they will. Because compounding interest, you king on two R. They will, but they'll also pay you along the way. So I feel like they're both good. They're both very good options.

And like one is not necessarily better than the other. And I wouldn't want you guys thinking that I'm in one column and not the other. I think it's really important for you to understand why you'd hold the different ones. But also recently, I've seen a bit of confusion because people are like, when do I get paid my dividends? And I'm like, well, what do you hold? And they're like, I bought all of these shares of X company. I'm like, babe, they don't pay a dividend. There isn't one coming. I'm sorry. So as someone who really wants to talk about investing deeply with you, like I really think you deserve to know that before you get into it because there's so

much research to be done. But at the same time, these are really easy points that you can learn along the way. So return wise though, what's the difference? What looks better or does it really just depend on the individual? No, it really depends on the individual. And to be honest, I wouldn't ever, ever, ever recommend putting all your eggs in one basket and just go, oh, well, I'm just going to go buy nab shares because Victoria mentioned a nab share one time, which is not a recommendation to purchase on the podcast. Like you wouldn't have any level of diversification. Like you are going to buy individual shares, which from my perspective is a very risky way of starting your investment journey because how are you diversified? How are

you educated enough to be making these big share decisions that are usually reserved for fund managers? I would be looking for something that really helps you get a whole heap of diversification in the first place. Okay, so if we do want to invest then, is the best way to be as diverse as we can? Incorporate some growth shares and some dividend shares? Is that the way to do it? Yes, absolutely. But also completely aligned to your values. Like I have a number of incredibly conservative clients who are only dividend shares. They will only buy tried, true, tested, blue collar shares. They don't want ETFs. They don't want anything. So I manage a direct portfolio of probably 10 to 12 shares on average that can fluctuate depending on whether I've made the

decision to sell down some of their stock or buy something new to introduce it to the portfolio. but they just want to hold direct shares. And I totally get that. But the reason they want that is they want to hold the West Farmers, the BHP. They want some of the big banks. They want to hold Woolies. They want to hold Coles. Like they are just buying very tried and true blue chip stocks. And that is okay. That is absolutely fair. But the reason they are doing that is because they're getting closer to retirement and they are prioritizing income. But also they're just a bit more conservative. Like at the end of the day, a blue chip stock is not a growth stock. It is not something that is going to skyrocket into being the most successful share of the year because at

the same time as you know Afterpay increasing so significantly in share price a whole heap of other shares that people bought at the same time as Afterpay because they saw the same value in them and they saw the same potential plummeted so I think it's important to realize that investing is a journey and that's why we want to invest in a diversified portfolio because if Afterpay is returning, you know, 60% and then another share that you've bought actually completely plummeted, you're going to end up with a pretty good average instead of only being exposed to one of those percentages. Okay, that makes sense. Obviously, the market has been really volatile of late. Would you say, based on what you just said, that this would affect growth investments more than

dividend because dividends may be a little safer? Yes and no. So, it really depends because obviously if a dividend share is decreasing in price and it's experiencing the same volatility, they might not end up having the same profits that they had the year before. So when you look at the market as a whole, there's usually some kind of trigger or reason why that volatility exists. And volatility is essentially just how much the share price increases and decreases over time. And we know it goes up and down. But when a panini happens, Georgia King, and we all are thrown into a bit of a storm that we're not sure how to navigate, most companies on average don't make as much profit as they were the year before. So your dividend might be decreased. However,

I was having this really interesting conversation with someone the other day and they're like, oh my God, my shares have decreased significantly. And I was like, yeah, but you're still going to get paid really good dividends because they had really good profits that year. So even if your share price decreases, you still own the same amount of shares. So if you bought 10 shares in a bank and you bought them for $10 a share, you've got $100 as your investment portfolio. And maybe those shares, they pay you a 10 cent dividend each and every single year. And that's really exciting. But if those shares decrease in value, Jean, now they're worth 50 cents each in your portfolio. Oh my gosh. When you log into your platform and have a look at it, you only have 50

bucks worth of shares. You're actually still being paid the same amount of dividends because you still have the same amount of shares. So it's not as significant. Whereas if you're buying a growth stock and then your portfolio has significantly decreased in value over time, what else are you getting out of this? Like no one's paying you any of the profits. Like are they going to increase so that you can make profit or has it gone below what you originally purchased it for? But again, they make up a really good part of a well-diversified portfolio, both of them. Mm-hmm. Slightly off topic, but if you did have a gross investment and it did fall below what you paid for it, I feel like usually we'd be like, hold on, ride out that wave. Yes, of course.

But how do you know if you should or not? That's the general advice, but what if it's just a dodgy share and it's going downhill? How do you know that as just a regular punter? Research. Research. And that's why we're not punters in the share market, Georgia King. This isn't a gamble. This is something that you would make a very well and very educated decision on. And if a share is going down, I don't want anybody to ever be super reactive. That's what created a lot of loss during the GFC. So we're not saying that that's the reason the GFC existed. But during the global financial crisis, a lot of people lost a lot of money because they saw their share portfolios absolutely plummet and they freaked out and they were like, oh my gosh, I've got to get my money

out while it's still there. But what they didn't think about was like, oh, I bought those 10 bank shares. I still own 10 bank shares. They're just valued at less today. And the value is how much you would get if you sold them today. So today you might only get 50 bucks. But if we ride that wave out over time, we know on average money should double every 10 years. If it's not a quote terrible stock and it's just the market being reactive, then we should ride it out. But there is a lot of research to be done into a share that you go, this hasn't been performing well for a while. I'd be using some research from different investment houses and having a look at potentially what we could do instead. And sometimes you just have to bite the bullet and

go, do you know what? This wasn't a good investment. I'm going to sell this particular asset. So I might sell, you know, this particular brand that I have bought and buy something else to replace it in my portfolio. But if you are being a good, well diversified investor, that's not your entire wealth. That's not going to matter in the grand scheme of things. You'll sell it down and be like, oh, that was pretty terrible. They didn't have a good return. But luckily all the other shares that I've got, they do have a good return and I'm going to buy something else that over time is going to benefit me. And that's why I'm so passionate about diversifying your investments and not just going, yeah, I own three different shares. I'll be like,

babe that's not enough yeah like that that exposes you to if that company does really badly like you're gonna feel that you're kind of putting a buffer between yourself and the share market by having a number of stocks it's kind of like spreading it out so they fall softly instead of all in a big lump do you ever think about how blessed you are to be you and just have all of this knowledge in your brain obviously you worked really hard to like learn to get bullied a lot at school yeah but like I can imagine everyone is cool now because I put a peachy brand on it but like I just wish I knew what I was doing as much as you did my girl maybe if you listened to our podcast recordings sometimes um let's round out this chat v by quickly chatting about

tax is there a difference in how how they work with each a lot of people get really frustrated they're like, oh my God, I'm not going to invest because I'll have to pay tax. Yeah, girl, if you're paying tax, do you know what that means? You made money. And I think that we need to reframe how we view tax. Like, yes, absolutely, you need to consider tax and what that means for you and how that works. And as I said before, there are different rules and regulations on the tax rates for different holding periods, i.e. if you hold a share for less than 12 months and then sell it and you've made a good profit, you're going to have to pay more tax on it than if you held it for more than a year. So I think it's important to understand that, but then also you're going

to be taxed at your marginal tax rate if you hold those shares individually in your own name. So G, whatever tax you're paying now, that's the amount of tax you will pay on the profits of your share portfolio, which is very exciting. But the other thing that I think is really sexy when it comes to tax, and I'm not an accountant, so that's why I'm not giving you specific advice on what to do and what not to do. Only you can work that out. But the other sexy thing, G, franking credits. Our old friends. Our old friends franking credits. And so essentially, franking credits are sexy and a lot of you already have shares in your superannuation funds that are franked. And that's very exciting. But the benefit of franked shares is essentially when a dividend gets paid

out of the profits that have already been subjected to tax, right? So that business has already paid their 30% tax rate. You get a little credit. It's like a little sticky note that comes on top of the share. So when the tax office see it, they go, oh my gosh, this share that she's made some money on has a little sticky note on it and that's a franking credit. And that means that shareholders can actually get a rebate for the tax that was paid by the company on the profits that were distributed as dividends. That was a mouthful. It was. It was pretty impressive though. thanks thanks for coming to my ted talk loved it but essentially that means that you kind of get a refund so you're paying less tax because the company's already paid 30 of it so that's a bit

of a money win and you're entitled to receive a credit for any tax the company's paid for you which i really really like and if your top tax rate is less than the company's tax rate which a lot of us would be so a lot of you won't be paying more than 30 in tax you actually get a refund from the ATO. That's really nice. And that's more money in your back pocket. And the benefit of that, and the reason why I'm talking about this is not because it's super sexy in the individual shares you're buying, but because it's super sexy in your superannuation portfolio. And do you know why I say that? Because the tax rate in your super portfolio is 15%. That's right. And G, how much tax did we just say that the company paid? 30. So what's 30 minus 15? It's

half. So you get 15% back, which makes those shares, even if your dividend was absolutely tiny, that's automatically a return of 15%. Huge. Money win. Okay. So that's very sexy. But yes, there are always going to be tax questions that we need to address. But I think the most important thing here is just to be aware of them and not be evasive of them. Because if you're paying tax, my friend, it means that you're making money. And that's exactly what we plan to do with investing. Yeah. I think that is probably the perfect place to leave it today, V. Well, thank you for coming to my TED Talk slash deep dive into dividend and growth shares. I'm very excited that you're now allowing me to do this on the podcast, but I hope this

was fun and I guess we'll see you next week. Do you want to tell them that I'm an authorised rep or something? Yeah, let's do that. That'd be good. All righty. 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 a financial decision. and remember guys that victoria divine is an authorized representative of in focus securities australia proprietary limited abn 4709779049 afsl 236523 and as always we would adore it if you joined our facebook group where our community shares money tips and tricks every single day free of judgment search she's on the money on facebook and join us if facebook's not your thing we're also on instagram at she's on the money aus and i'm also on tiktok making terrible videos so find us there and don't forget if you are adoring the podcast to rate review and subscribe see you soon guys bye

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