She's On The Money - How to invest part one: Is micro investing legit?

Episode Date: October 13, 2020

Micro-investing platforms: what are they and are they right for you? Perceived by many as the entry-level step to investing, today we unpack the pros and the cons of various platforms so you can decide if they align to your goals and values. This episode is part one of our two-parter on micro-investing, so we recommend starting with this episode for a more overarching understanding of what the platforms can do for you. Love the podcast sick and want more SOTM? We had a feeling that was the case. Join our Facebook page to share your money wins and money confessions, follow us on Insta for daily inspo to keep you on track and absolutely subscribe to our newsletter, the written recap of the pod’s key takeaways, including some bonus bits you won’t want to miss.Finally, if you’re in a money mess and need help untangling the muddle - we’ve got you sorted – simply record your question and send it through to us at [e-mail] and you may just end up on the podcast!Your hosts are Georgia King and Victoria Devine.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 Australia Pacific Funds Management Proprietary Limited ABN 34 132 463 257 - AFSL 339151.See omnystudio.com/listener for privacy information.

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 Georgia King. I'm a copywriter and journalism student. And every Wednesday, I sit down to chat finance with millennial money guru, Victoria Devine. Victoria, what are you doing over there? You're playing with your nails, doll. Yeah, I am, babe. Hi, how are you? I'm sorry, I'll continue. On today's show, we are going to be deep diving into micro-investing,

including what it is if you're completely new to the concept, as well as what the perks and potential flaws are, so you can decide if it's the right option for you. Now, this is a massive topic. And last week, Victoria posted in our Facebook group, asking for some opinions, questions, comments from you guys on the subject of micro-investing. And I think it's safe to say, that the post went a little bit viral it went a little bit off i mean in a closed community viral in that sense yeah absolutely could go but that kind of made us realize that this is a massive topic that you guys are really interested in so that's what we're going to be addressing today but instead of just doing our usual show we decided the easiest way to tackle it is to break

it down into two episodes give you two investing episodes exactly that is what the people want georgia exactly you've got to give the people what they want and that's what we're all about here at SOTM. So today's show, we'll be covering off the basics of what micro-investing platforms are and how they work. And then part two, which will drop next week, will be a Q&A addressing those questions that you guys are eager to have answered. So hopefully that all works out nicely for us. Victoria, before we do get into part one of micro-investing, the big extravaganza, let's chat money wins and confessions from the week. How are you? Georgia King I have had a banging weekend in isolation once again it's a new word I'm trying

to introduce to my vocabulary so I sound more hip more cool more fresh thank you love that trying to stay on the right side of 30 here yeah yeah I have maybe two money wins this week actually I spoke to you about one earlier and that was you know this isn't sponsored by the way this money win I just think that I'm really excited about it and want to share it and it's a genuine money win On the weekend, we, like every other Melbournian on a sunny weekend day, have been having picnics. And so I made a very good cheese platter from Aldi, given they were our sponsors last week. And we actually, Georgia, challenged our community to make an Aldi cheese platter for less than $25. And whilst I didn't actually, you know, maybe it's a money confession because I went over the $25,

I actually ended up spending about $60 for my cheese platter, which was incredibly bougie. and I'm saying cheese even though you guys know I don't eat cheese because I was sharing it with three other people who do eat cheese Georgia and including the wine it was less than 60 bucks and I was pretty damn happy with that so that was money win number one Georgia but money win number two is a little bit left field you guys know in ISO I have been painting my own nails and I'm very much about a DIY Manny and I'm getting better and better at it like I can promise you that I now no longer look like I've had a two-year-old paint my nails which I think is quite a progressive thing for me given now a six-year-old looks like they've painted my nails. Great it's an improvement

yeah thank you. The win is actually a nail polish by a company called Essie and I hadn't used this brand before in this style but they've got like a gel style polish and you don't need a light like I have been using you guys know I've been doing at home shellac but this is just like normal nail polish but it's lasted on me a good 10 days and i bought it on adore beauty for like 12.95 or something ridiculously good for such long wearing polish and i love it so that's my other money win because it's much easier than a light i can just get it off with regular nail polish remover i just feel like i'm their biggest fan now essie essie e double s i e fabulous but yeah beautiful little colors and uh very happy with that so moving on georgia king have you got a money win or commission

that is obviously going to rival my cheese platter and DIY manis at home because ISO. Yeah, well, look, I feel a little bit upset over here. I feel like you've kind of cut my grass in a wavy. I can paint your nails if you want. Like we're more allowed in the same room as each other. Yeah, I'll come up. Can't wait.

No problems, baby. My money win this week was the glorious La Mule Rosé from Aldi. Oh, Georgia, you're speaking to my heart. You had that at your picnic, didn't you? I did. I posted about it on Instagram first. No, well, I wrote this down first in the script, buddy. So, you know, ghoul.

Joke's on you. I don't read the script until it's two seconds before the episode. No, but see, the good news is here that we're both advocates for this rosé, which is literally, it's like mind-blowingly good. $10.99. Victoria, you said you sliced up some straws and popped them in for a bit of a gourmet touch. I did because I try to be really bougie on a budget. And I just feel like if you can get a really beautiful-looking glass

with some cheap rosé, some strawberries in there, if you want to get extra fancy, pop a mint leaf. You are bougie. Live your best life. And you have wine for four people and a cheese platter under $60. Back to what I'm doing. I'm here for it. So my comment there is also not sponsored,

but get some Lemuel in your gobs. Couldn't recommend it highly enough. Anyway, I'll be – Also, it's in a bougie container as well. Not container. Sorry, in a bottle. Like it's got gold foil. I just feel like it looks so much more expensive than it actually is.

Yeah, and it does, and it tastes more expensive than it is. It has a little picture of the mule on the front, which is a good time. Love a donkey. Yeah, yeah, exactly. Do you know what? Let's stop getting off track and move forward. Well, let's. Okay, Facebook community, Victoria, we're cusping 100,000 people in there

at the moment. There are so many friends in there, which is the best thing ever, honestly. I feel like every post gets so much love, like every money win, someone's like jumping straight on it, and I'm like, yes, I don't want anybody to post in the group and not have the same amount of love that gets thrown at other people. So for me, I just think it's so kind when I see other people being like, oh, congratulations. I'm like, you don't even know each other and you're so here for each other.

I love it. Anyway. Big on the warm and fuzzies. But yeah, I was going to ask, did any posts stand out to you this week? Yes, I have one today that I just think is a money win. Absolutely worth celebrating. And it is from our friend Charmaine. she said today I paid off my personal loan four and a half years early I originally had a seven

year personal loan with a stupid interest rate to buy a car in January 2018 and after a lot of budgeting and calculating I was able to pay that baby off in 2.5 years it is such a relief to be debt-free again I just think that that's so important because not only is she debt-free but she's not paying additional interest for the rest of that loan and I just think that that's so inspiring and so exciting and yeah it got like 500 likes in 0.2 seconds which i thought was really cute love it i'm totally here for people paying off their debts early and just like how exciting is that because you can start saving the amount she was allocating towards debt exactly so exciting yeah anyway what have you got for us georgia king okay so this one is from shannon and it's a smaller

win but i think we celebrate all wins at cheese on the money it's also a kombucha focused money win which we've had before on the show and i'm i'm here for it i feel like you just say kombucha and little hippie georgia king is like oh that's my vibe i'm here for kombucha people always say i'm a hippie it's because you don't wear pants and you drink a lot of kombucha right oh mate anyway uh back to the post so it's from the lovely shannon who has written in kombucha money win coles was clearing these out for the new glass bottles so they were 38 cents each she got five for a total of $1.71. She is also staffed, so she got the 10% off there as well.

So that takes off $0.17, I think. You know, everything's a win. That's actually a whole $0.19. That's nearly a solid $0.20 piece. Right. That is absolutely a money win. It all counts. From little things, big things grow,

and that's the theme of this week's show. So I just feel like it is so important to celebrate the small wins as well as the big ones because if we can't celebrate the small ones, the big ones don't feel big. like they just feel like yeah something that happens and i just i'm here for the small money wins yeah i'm here for audi wine i'm here for kombucha that cost you 38 cents a container and i am definitely here for getting out of debt early agreed good on you shannon um all right let's move on to the main topic of today's show kombucha okay sorry maybe next time uh what is

micro investing and is it right for you now for those hearing the concept for the very first time micro-investing platforms help you invest small amounts of money frequently, building you a neat little investment portfolio, offering you the potential to earn more from that money rather than it just sitting stagnant in your savings account. Now, in Australia, we have Spaceship and Raise. I think they're the main ones that most of our community uses and are familiar with. And then over in New Zealand, where we have a pretty strong listenership as well, shares is, is the main one over there. So Victoria, to start today's chat, tell me what micro-investing is and why it is such a popular thing in our community. So you're right, Georgia,

Rays and Spaceship are the two predominant ones in our community. It does by no means mean that they are the only ones or that, you know, Georgia and I are actually recommending it. And I think that we really need to preface that upfront. It's very hard for me as a financial advisor to have these conversations often because I cannot give personal advice but what we can do is just talk about the products talk about how they work what they do and why you might be interested in them and you know we obviously have a disclaimer at the end of this podcast but I really wanted to put it up front again that this is not personal advice and you know if you're going to start investing you really need to go and talk to a financial advisor and get some advice they're

not one size fits all just because I use raise and spaceship does not mean that you should be using Raise and Spaceship. You might choose to do that, but that is completely your choice. So back to your question, because I was just off on a little rant. Micro-investing, Georgia, essentially allows you to invest really small amounts of money, like a dollar here or a dollar there, or a roundup from a coffee over an extended duration, which helps build up a profitable fund. Usually these are either really low cost or cheap or free apps, and they're very user-friendly. And I think that they know that they're targeting a younger demographic who may be using these micro-investing platforms for the first time because it's like kind of the first step into

the investing world. So they're often not very overwhelming. They're really clean. They're really clear. They are able to be understood. And they're really about making small contributions to the share market in a fairly controlled way without you having to think much about it. You haven't gone and had to do a whole heap of research onto the ASX. You haven't had to understand each and every single part. And to be honest, I really like them personally as a way to kind of dip your toes into the investment world so that you can get an understanding of what an investment portfolio looks like, what performance looks like over a period of time and kind of experience the highs and the lows before you go kind of like gung-ho and go, all right, well,

I'll save thousands of dollars and start investing. So for me, it's really important to understand investing as a basis. So I would never say just download it. You'll learn as you go, like understand it before you make these decisions. But I do think it's kind of like a dip your toes in the water kind of way of getting into investing. When I say it's kind of like controlled, I mean, because micro-investing platforms often invest in ETFs or exchange traded funds on your behalf, which means you're investing in a fund which has multiple shares rather than just like one single company, not spaceship but we can talk about that a little bit later and also if an exchange traded fund or that term feels overwhelming to you what I want you to do is go straight back to season one and

listen to our episodes there I go into detail about what a share is what an ETF is how that works and what that means because we had two banging investment episodes and I think that you know it's always worthy of doing a bit of a refresh to just kind of be on the game especially now that we're talking about a specific type of investment like we're talking about micro investing platforms but if investing as a topic is feeling overwhelming which mate I know it can like it is not something that we can easily wrap our heads around I think it's really important to just like understand that as a basis before we start understanding you know the different asset classes and the different types of investments that are out there because at the end of the day

we need to get our foundations you know really solid you really need to understand those things so that when you are looking at another platform like a micro-investing platform, you can really easily work out if that's going to work for you or not. In terms of why a lot of Aussies are using them, I think it's because they're honestly a pretty easy way to make that first step into investing, which for a lot of people, as I mentioned before, is a pretty overwhelming concept. It's a great choice for younger investors more often than not who are just looking to try something new because you don't need big initial contributions. You do not need to save thousands of dollars to get started in fact for most of these platforms you

can literally invest a minimum of five dollars to get the ball rolling it is completely up to you and that's what i love being in complete control being able to dip your toes in the water while not risking your life savings yeah so that's a good thing yeah love it okay so it's user-friendly it's a gentle way to kind of dip your toe into the world of investing uh what would you say the other main draw cards to micro-investing platforms would be? As I said before, they're not complex. The first thing for me is that they're easy and understandable and a lot less daunting for a lot of people who are just starting out on their investment path. They're not only easy to navigate and use, but all of the information is in one place. And it's in one place that us as

millennials and Gen XYZ, I don't know where we're up to now, but we all have phones in our hands and we all really like phone-based platforms. It's not often that, you know, a millennial actually jumps on a computer to have a look at things. We really like having things at our fingertips 24 seven and these platforms give you that freedom and that access. So I think that's a really great feature.

As I said before, most micro-investing apps invest in ETFs or index funds. So it's all pretty risk averse. And that means essentially that you don't need to be an investing genius to make the most out of this platform. when we talk about risk you know we're talking about spaceship and raise with spaceship you don't actually get to choose a risk profile you just have their fund whereas with raise you

actually get to choose what type of investor you are so you could be a conservative investor you could be a really aggressive investor it doesn't actually matter which one you choose because you'll be able to see each option and pick the one that aligns most closely with your values and your goals and your investment timeframe, which I think is really important to understand and kind of start wrapping your head around because these are the types of questions that you're going to be asked by a financial advisor if you ever go to invest bigger sums of money. They're going to go, cool, let's talk about risk. And you'll be like, oh my gosh, what is that? Whereas if you've been using a micro-investing platform, you're more likely to just understand the terminology and

the different phrases and, you know, what it actually means. And I think that that puts you in a more powerful position to make decisions that are, you know, really well aligned to you in your goals. As I mentioned before, as well, I think the second great thing, as we mentioned before, is there's no deposit required. So you don't need to take a thousand dollars out to start investing. You can literally start with five bucks and that's a money win for me. But then also, given you don't need to invest thousands, it just means that there is just so much more access for this. Everybody is able to access these platforms and it's no longer something where the investment world was seen as, you know, only for rich people. And I just, I want to break that down

so desperately because it is not, and it is going to be in the future. Investing is the key to financial freedom. It is the key to creating wealth. It is the key to literally breaking free financially. And these are really great steps in the way of ascending, standing them, or, you know, if you're at uni getting started when you're really passionate about it. But for me also, there's no big lifestyle change involved. It's not like you have to go And, you know, like we spoke about on the pod last week, we spoke about fire, which means you need to have like ridiculously high levels of sacrifice to absolutely nail it. But with micro-investing, nothing really changes. Sometimes it's just the cost of a cup of coffee.

In saying that, your contributions are obviously going to compound over time and the cost of a cup of coffee might compound, but that's definitely not going to sustain your entire life. So I think that, you know, you can't just think that micro-investing platforms are the key of the future and you're going to be in this epic financial position because you download an app and, you know, put five bucks in it. Like that isn't going to create financial freedom. What we're talking about here is starting to really understand the concepts that help you create financial freedom. That's what we're trying to nail here.

Yeah, love it. Well said. Would you say that those few reasons are the main reasons that you have them be? Because I know you use both Rays and Spaceship, which is interesting. were there any other reasons that you use them I use them mainly because I'm a bit of an investment nerd let's be honest like I have a bigger investment portfolio that I invest in with just different stuff that aligns to my goals and my values but you're right I do use raise I do use spaceship that is by no means a recommendation for other people to use it unless it you know

aligns to their goals and their values but I use them both for different reasons so first things first i use raise because it rounds up and it attaches to the bank accounts that i have and every time i spend four dollars fifty on my oat latte g i end up in a position where 50 cents of that four dollars fifty has been invested on my behalf into my investment portfolio with raise and over time that compounds like i'm a very big believer that from little things big things grow and we're in a position where you know what like i didn't feel that additional 50 cents and i'm all about making as many investments as possible because that's in line with my values so you know over time I might find that at the end of the year I have a couple of hundred dollars in that account

or a thousand dollars in that account and I can cash that out and put that into my bigger investment portfolio and it's kind of a bonus that I didn't have before or I get to Christmas time and I go oh my gosh I didn't budget for this and this is probably a good one that we'll have on an episode in the near future about Christmas budgeting I promise it's coming but I get to Christmas and I'm like great that's an extra thousand dollars I didn't know where present money was coming from and it's kind of like chipped away at during the year but then spaceship for me I have purely out of interest if I'm honest I've put some money into it and I just like watching it tick over I like looking at their fund I like looking at their performance and also because of she's on

the money when other people are asking questions I really want to feel like I can actually just jump into the app and understand it and go yep nope this is why this works this way instead of being like oh I don't know I don't have that app I don't yeah yeah like for me it's all about education and just understanding what our community you're up to and if something has been overwhelmingly spoken about I'm very likely to download it and just check it all out and that's why I have too many bank accounts love it question on that so you said you have spaceship out of interest you mean out of curiosity not because of the interest right just checking no not because of the interest rate purely because I'm curious like curiosity killed the cat though

and I think that is really important to understand that more investing platforms do not equal better like having one really solid investment plan is going to trump anything else and you know diversifying you know too too too much can be a problem so I think it's important to you know pick something and have conviction in it I have both because I use them both very differently but I'm a little bit more flippant about it than other people should be purely because it isn't my main source of you know future wealth creation I have a different investment portfolio managed by a financial advisor who is not me so I think it's really important to point that out as well like I'm a financial advisor who has a financial advisor as much as I really know what's going on

I think it's also important to point out that, hi, I am an emotional human as well. I don't always make decisions that are, you know, pragmatically the best. Yes, I can do that for clients. But when it comes to your own portfolio, I think it's really important to just have that third party. And my financial advisor keeps my head screwed on. Yeah. But in saying that, you, of course, don't need a financial advisor to get involved with

the micro investment platforms, right? Absolutely not. You just need an app store. Crazy. Crazy. um okay so there's quite a few pros there is there anything that you think we need to be mindful of I think that when it comes down to it it's really important to not just go oh my gosh this is great I'll just download it like you really need to think about this it does take up time to build

wealth via these platforms obviously because you're not investing as significant an amount as if you were investing thousands of dollars in the share market and had a financial advisor in this massive investment plan right so if you're an investor who knows what you're doing you might end up you know not feeling as empowered because you're actually investing a lot less in these platforms unless you choose a massive amount to invest in which case you really need to look at how much it's going to cost to invest on these platforms and assess what is the best option for you because it might not be that platform. I also think it is really important that if you are planning on seeing bigger returns as in you're investing a large sum of money like 10 grand or

20 grand and you're still a little bit fluxed by the whole investing thing then you might be better off to just chatting to a financial advisor so you can make sure that your investment strategy actually fits with your goals and values. Like this is so important because I also see a lot of people in our Facebook community and they comment on things. They're like, oh, I had raised and then I deleted it because the returns were terrible. It's like, how long were you invested for? And they're like, oh, I had it for like three weeks and I lost money. It's like, guys, the investment rules of investment world apply here too so if you have a micro investing platform that doesn't mean for micro amounts of time like you still need to have plans to be on these

platforms for five plus years to see proper compound interest starting to kick in compound interest is magic but it isn't magic overnight there is absolutely no such thing as a get rich quick scheme and i think it is so important for you to remember that like if you're planning on downloading this and only having it for six months, you might see negative returns over six months. That doesn't mean that the fund is performing badly. It just means that that six month period of time, the share market has gone down. For example, if you downloaded, and I'm sure there's a fair few people thinking about this right now and going, Victoria, my platform's off at the moment. It's like, well, we're in the midst of a global pandemic. So if you downloaded one of

these micro-investing platforms in like January or February here in Australia, yes, of course, your share portfolio is going to be off we've been through so much but you also need to remember that there is a very big chance that is going to come back off soon once everything kind of settles down so in exactly the same way that I would make recommendations about normal investing do not invest for short periods of time invest for long periods of time if you're looking at anything under five years I think it's really important to really reconsider what your strategy is. But in saying that, I also have clients who use it for short periods of time. You just have to understand what the risks associated are and the fact that yes, you could lose some money if

you're planning on taking it out in December and you only got it in January. Like it could happen and that's okay, but you need to be in a position where you're not only willing to risk that, but also ride it out. If it is off, can you leave that money invested for a little bit longer so that it can come back off. So I think it's really important to consider these things. And then also there are fees attached with certain platforms that can make a difference to your return. So usually there'd be something like $2.50 or $3 a month, but these incentives are there to keep you contributing. So Georgia, the investment fee for raise sits at about $2.50 a month. And that doesn't seem like much yes it's less than a cup of coffee but it's still worth thinking about because in investment

land I would want to see you be paying always one percent or less for fees for an investment platform that's just my guide yes there are always going to be platforms that are more expensive but they might carry higher risks or just different investment strategies that you're interested in but that's kind of like the rule of thumb I would say so one percent on a monthly basis of $2.50 is $250, right? But that fee happens each and every single month. So that means that you have over the course of 12 months, $30 in total worth of fees. Now, exciting bonus, Georgia, we actually are able to claim that $30 on tax because it is an investment fee, which is very exciting. But if you are then looking at $30 worth of investment fees, that means that over 12 months,

you need to invest about $3,000 to make that a really effective platform. In saying that, if you are not investing that amount, that is totally okay because often when you're investing more, the fees do start to come down over time. But I also think it's really important to understand why you are using these platforms. Are you using these platforms because they have the cheapest fees to invest or are you using these platforms to dip your toes in the water of financial literacy and understanding what the share market is and how the share market works and what that's going to look like for you? Well, then arguably over 12 months for me, the cost of $30 and being able to claim that on tax is actually money well spent. So yes, in terms of fees, you know, and you only

had $500 in that account for the 12 months that you had it, obviously the percentage of fees would be higher and therefore it would seem expensive. But for me, I also think you really need to take into consideration what else you're getting out of that platform. And if that means that for 30 in an annual year, you are in a position where, you know, you're far more confident to invest in the future and create financial freedom. Like, I just think that's money well spent. And I'm not saying that about one particular platform. I'm just saying like, really understand what those fees mean. Because for me, yes, it might seem scary if you're like, wow, like that's a lot of money. But at the end of the day, are you getting that much value out of it? Arguably, yes. And

then on top of that Georgia it's also worth making use of most micro investing platforms have like sign-on bonuses and referral codes which I know are rife in our community if you're looking for them but you can sign up with one of them and I know that most of them have like a five dollar sign-up bonus so you get let's just call it your first two months of fees are covered but then I think that's really important just to talk about as well you know don't just sign up because you get free money like it is a commitment and is an investment like really understand that it's nice if you were always going to plan to do that but don't do it just because you get free five dollars like that's not a good reason to do it yeah yeah what would you say if someone was coming to you

and they had fifty thousand dollars in the bank and they were wanting to invest would you say hey sweets go with the micro investing platform option or would you say get on the stock market doll like i mean i'm assuming you would use slightly more professional kind of uh no that's what I say I also answer the phone like yo like that's just so what I do Georgia no I think it's really important to understand their goals and what they're trying to achieve and it's actually quite interesting because I obviously have a lot of people coming to me and saying oh Victoria I have fifty thousand dollars I'd like to invest or I have a hundred thousand dollars I'd like to invest I think you need to understand when where how how long for all of those things about that

money before you do it because more often than not I'll have someone like you Georgia come in and they'll say, Victoria, I really want to invest. I have $50,000. And I was like, wow, that's incredible. Congratulations. Let's do it. Do you want to invest that full amount? And they're like, yes, but I also need to take it out in two years because I want to buy a house. And I'll be like, okay, well, we're not investing, are we? Because that is a terrible idea because that is too short a period of time to expose that money to the market. And there's just too much risk associated with that. I'm not doing it. And they go, oh, but it's sitting there. I'm like, yes, because it's going to an, because it's going to a different asset class. The plan for that is

property. And I think we really need to be clear on why we are investing. So if you have $50,000 and you come to me and say, I want to invest it, I would assume that you wanted to invest that full amount. So it's really important to understand what that means. I also think that it is really important when you start investing to be super comfortable with the concept of it. So if that means that you don't invest for another 12 months, that is fine. If you just want to use, you know, a micro-investing platform and invest, you know, $10 or $15 a month and be really conservative about it just so you can kind of dip your toes in the water and get an understanding of it before you, you know, commit your life savings to an asset that can feel really overwhelming. Because

the worst thing I can do as a financial advisor is take someone on and be like, oh, you'll just get comfortable with it once we get into it. Like, no, I don't want that. I want you to say, Victoria, but like, why can't we invest now? And I go, okay, now is the time. I want everybody to be on the same page. I want to be as excited about it as you are because I want you to be able to sleep at night. I don't want you to be scared or worried or, you know, concerned about your asset. I want you to have as much conviction in that as I do. And that takes time. So if someone came to me with $50,000, I'd say, okay, well, what are we actually trying to do here? You know, what's your timeframe? How is this going to work? What does this actually look like? And how can we

create that for you? As opposed to, all right, there's no one size fits all approach. It's not Oh, $50,000. Right. Well, this is the stock I'd buy. Like it doesn't work like that because everybody's investment strategy is different because we all have different goals and we all have different things that we want to achieve. So sorry that I'm, you know, being a little bit evasive there, but that's just the cold hard truth of it, my friend. No, well, it makes sense. And I mean, life would be so much easier if it was just like clear cut and we knew how much of a percentage of our income we had to invest to be filthy rich by the time we retire. Like it'd be nice but it is different for everyone. 100% and this is something that I've been going on and on

and on about because we've just released our budgeting and cash flow course and people keep saying like well what percentage should I be saving or what percentage should I be investing or what percentage should I be spending on clothes and shoes and alcohol and I just go that is such a redundant way of looking at things that actually just makes us feel bad about ourselves. If you earn $40,000, it is not reasonable to assume that you can allocate 20% to savings. You don't have that much to save because living is expensive. And I think it's unnecessary, like it's super unnecessary pressure to put on yourself when doing a budget or doing cashflow. Whereas if Georgia, you had an income of $400,000 and I mean, I'm sorry, she's on the

money does not pay you that well. So sorry about that. Doesn't pay anybody that well. But if you had that income, you best believe I want you to be saving more than 20% of your income because you have a lot of disposable income in comparison to somebody else. So for me, percentages, sometimes they're nice to have because you can just use them as a tool to understand what your cash flow is when it comes to budgeting, but it is not something that I would use as a benchmark. I would be looking at your situation personally and going, okay, this makes sense because of A, be c and d like stop putting so much pressure on yourself to conform to a percentage that some middle-aged white guy recommended yeah love it um i feel like i still have so many questions but

you do that's why we're doing two episodes because i just feel like this would be a three-hour rep in the end if we didn't you know cap ourselves exactly so before we go to the listener question i wanted to ask you if there are any micro investing misconceptions you'd like our community question. I think there are a few. So the first is that you should only be investing if you already have a decent amount of money in your savings account. Yes, I think we should all have an emergency fund before even considering investing. It doesn't mean you have to have a, you know, full-time high paid job, but you do need to have emergency funds because your investment portfolio is absolutely not your emergency fund because in a situation where you need to rip it out and pay

for some spare tires, you don't want to be losing money in the process of making that decision. I also think it is a misconception that you should be investing if you are in personal debt. So if you're in personal debt, you need to get your budget and cash flow sorted so you can start allocating the money that you've been paying off to debt towards your investments, but you don't do them side by side. Unless your debt is a hex debt where it doesn't actually carry any interest rate in which case I'm like yep gung-ho let's go but if you have personal debt at like 14 or 15 percent girl I wish I could promise that to you on the investment market like I if I could lock that in that's fantastic but paying debt off in itself is an investment because you are saving

yourself in the long term that 13 14 18 22 percent or whatever interest rate you're paying and that's better than the share market so honestly get out of debt before you consider any of these things I honestly don't want to see you investing and you know listening to this episode and going right well I'll download my portfolio and then you're going backwards in another area of your life not an option my friend and also if you're in that position like get out of debt I'm so excited for you these are the things that you have to look forward to like we can achieve so so much I think there's also a massive misconception that it's complex and too hard to consider which is absolutely not the case like we're all in this together and the more you learn the more you are inquisitive

the more you just read bits and bobs here and there and you know over the next two weeks we're going to be obviously dropping these episodes but we are going to be dropping blogs and you know some pointers and i'll be posting in the facebook group and you know doing a whole heap of other things so hopefully you guys feel really empowered and understand these concepts i've had a number of questions over the past couple of you know months where people are saying oh but if i invest um and put my money in micro-investing platform B. I'll have to pay more tax. And you just go, yes, if you realize the gains, which means, yes, you will pay tax because anytime you make money, you will pay tax. You won't have to pay tax on the money you just put into the portfolio,

but any money that you do make, yes, you pay money on. So I think it's really important to be in a position where you understand that. And you also only pay tax on realized capital gains. and that sounds really complex like memorize that though because it can make you sound really important and really smart when you're at brunch so like get that in your head but it means that capital gains are essentially profits on an investment and when you sell an investment at a higher price than what you paid for it that's what a capital gain is when you realize it realizing it means you sell it so that that cash goes straight into your bank account then you will owe taxes on any profit. So you won't owe taxes on the minimum amount that you put in, but you will

owe taxes on, you know, the profit. So say if you put $100 in and you made $10 that year and you pulled $110 out of your investment portfolio, you'd owe tax on your $10. So I think it's important to understand that you are only going to be taxed when you are making money. And at the end of the day, Georgia, I want to be the highest taxed person in the entire world. Well, that's what you were saying before yeah tax is a good thing exactly tax means you're making money my friend it is a good thing to pay and the last thing there is that people believe that you only choose one asset class like you only invest in shares or you only invest in property but you can absolutely do both and you can do it at the same time and micro investing can be a really great fit if you're

in a position where you are saving for a home or you've just purchased a home and you know you don't have hundreds and hundreds of dollars each and every single month to be investing so I think There are lots of reasons why these things could work for you, but then yeah, there are also a number of misconceptions, but I feel like I've ranted for a long time and I could do more. So Georgia King, let's segue into the next segment. Hi there, you've reached the She's on the Money mailbox. Do you have a money problem you want help solving?

Do you have a money dilemma you just want to chat about? Victoria is here to help. Every week, we'll be playing your questions to help make sense of the money mess you may have found yourself in. Make a quick recording on your phone and send it through to podcast at she's on the money.com.au and you might even find yourself on the show. But for now, here's today's listener question. Hi, Victoria and Georgia, I'm about to start investing for the first time, which is super exciting because I feel like a year ago, it's something that I wouldn't have even considered. But I'm wondering if I should start micro investing or go straight

into a proper share market? Or is it a good idea to do both at once? Thanks. What do we think, Victoria? I feel like I already answered this question earlier in one of my rants, but that's a bit awkward. Maybe I should have listened to the listener question before now, but that is okay. I think it's a really valid question. Personally, I do both. I don't think there needs to be a mentality of one or the other. As I said, I use them for different reasons and still have a quote proper share portfolio but I think it's really important for you to understand anything before you start investing so if your plan is to you know invest your first ten thousand dollars then fantastic but really understand that micro investing can be a great place to start but

it can also put you in a position where you feel more empowered when you do speak to a financial advisor but as you guys know I'm a really big advocate of reaching out to financial advisors early so that you can set something up that really works for you. So in this situation, I think that have a bit of a dabble, understand it, do your research, but also get in contact with a really good financial advisor who can kind of hold your hand and be like, yeah, yeah, do this, this and this, or here's your priority right now, because this is a great question, but I have no idea what your other priorities are. As I was saying before, I don't know how long you're planning on investing for. Like, do you want to buy property? Is that something that

you want to do in the future, the near future, in the far future? Do you want to have kids? Like what kind of financial constraints are those going to apply to you? So I think it's really important to just, you know, sit down and really think about your situation and a financial advisor knows how to create clarity on that for you. Two questions for you, V. Yes. One, do you think a lot of people think that they can only see a financial advisor if they're earning like 200k a year? And I don't know why I always put on that cinematic voice apologies I like it it's my favorite voice of yours thank you um you're welcome do you think that's the thing though that people and obviously a lot of people in our community are that younger generation so they're probably not meeting those

massive incomes yet would you say that there is no time to be like you can't be too young to see a financial advisor or you can't have um there's no limit on the amount of money you need to see financial advisor that was a very long I know sorry that question but that's cool I think that there is no way like whether you earn thirty thousand dollars or whether you earn three hundred thousand dollars you will benefit from seeing a financial advisor and there is a financial advisor out there that helps you and your situation you just need to find them so I have said it before on the podcast the AFA website is a very good place to find a financial advisor who is in that community always look on the ASIC platform and have a look and make sure that they are a

registered financial advisor on the ASIC registered financial advisor portal and do your research often word of mouth is a really great way to be connected with a financial advisor but you know I've said this before as well if you want me to hook you up with a financial advisor fill out the form on our website and we'll get back to you and hook you up with somebody who fits your profile and you know the info you've sent through and I think that that's potentially a really good way because the people on that platform are literally people that I don't get paid for. I don't get paid a commission for that, but I just have this panel of beautiful people who are beautiful financial advisors who have all different things. Like if you say, oh, I want this, I'll send you to a

particular person. And I think it's really nice sometimes, even if you haven't got a good recommendation from a friend to just know that that person's been vetted by someone that you kind of already know when that might be me so for me yeah I would be going and seeing a financial advisor regardless of what your situation is because even if you are you know not a massive income earner or you're in personal debt like there is a plan for you out there and it will arguably impact your life for the better over the long term perfect you actually answered my second question oh really yeah in asking how you actually find a good financial advisor so you find us on the interweb exactly we can move on to money diaries now i think dog what a time

all right let's take a sneak peek into the financial lives of perfect strangers is that what you usually say yeah you're on it let's do it it's time for money diaries friends hi i'm 28 and scared to invest this is my money diary what good would a money podcast be without the pervy bits it's time for money diaries my attitude to money i guess growing up me and my sister are three women she taught us from a very young age that you need to be independent you need to do things yourself you can't rely on anyone whether that's family or a man so you know seeing my mom not struggle but you know really have to work hard to give us everything we needed so I guess that kind of instilled values that me and my sister have from a young age so we never asked

our mom for anything she would give us whatever she needed you know I'd see kids at the supermarket asking for chocolate you know all these extra things because that's I guess what they've learned from their parents and you know we would never not ask out of any other reason and we didn't want to add that pressure to our mom and then you know as soon as we could start paying for things ourselves so like you know from the age of 35 all our clothes my mom always got us our school things and you know took us to our sport but anything outside of that you know phones going out with friends completely was all on us and I think that even if my mom had you know millions of dollars in the bank she still brought us up in a very similar way because it's the

lesson that I guess she learned and the lesson she wanted to instill in us. What does 28 and scared to invest do for a living? How much does she earn and how much is sitting in her bank accounts? So I'm a human resources professional. I'm currently earning $75,000 a year plus super and at the moment I have $138,000 in savings which has taken me six years to save in addition to that I was recently gifted $30,000 from my mum. She gifted that same amount to my sister when she got married so in total I have $168,000 at this point in time. What happens to her income once it hits her account? I mean I'm pretty basic, logical, straightforward with how I run my life particularly with finances so as soon as the money comes in I'll pop it into some accounts so

obviously savings, rent and bills and things like that but for me personally it basically all goes into savings. And then whatever is left in my Axis account, which is what I use for day-to-day, I know I can spend. So if there's $2 in there, I can spend it. If there's $20, I can spend it and not feel bad about that because I know I've already put money away that I need to put away. How does she feel about investing? To be honest, I feel super overwhelmed and scared to make a bad decision when it comes to investing. So to date, I have not invested in anything. I can save really well, but I just don't know what to do with my money you know now that I've saved it so that's obviously why I've reached out to

Victoria I want to get put in touch with someone who can advise me on what I need to do so I think I'm halfway there from that aspect you know I can save the money it's just I need that help with what I need to do with it because at the moment I'm working hard I'm not working smarter so that's why I think investing will actually make my money grow. Does she have any debts? So I have no debts I've never had a debt. I've never had a credit card, never had a loan, never had an afterpay account. Basically, I only think you should get into debt for big ticket items. If you don't have the money for something, you shouldn't be spending the money that you don't have. And I guess my motto is to live within your means. That was instilled from quite a young age. What are her

best money habits? Again, yeah, my ability to save. So consistently month on month, year on year. So a bit of background, I grew up in a single parent household. So it was just me and my mom and my sister so I knew the value of a dollar from a very young age. My mum worked her butt off to give us everything that we needed and then from the age of 13 I would do after-school jobs so I could pay for the extras, the clothes, socialising with friends. Then when I finished school I had a gap year, worked two jobs so I could put myself through uni. Then obviously once I got through uni like most graduates I was making peanuts first year out so I had a second job just so I could save living in Sydney paying rent transport all of that there was no rate really to save unless

she had that second job so yeah I've always paid my own way since I've been living at home for seven and a half years so if you can pay your own way and still save I think you're doing pretty well and what are her worst money habits like I know it's so ridiculous but I don't think I have a bad money habit and the only reason I say that is because there's two things that I'll spend money on which i do not feel bad about it in any way shape or form so the two things that i'll splurge on um is my beautiful fur baby who's four years old so i'll happily drop you know 750 bucks or a thousand dollars on his birthday christmas and easter which sounds ridiculous but honestly it brings me so much joy to see him have a great day so for his birthday he'll obviously get

heaps of presents but i'll organize like a birthday party so his daycare friends can all hang out and I'll have a pinata and I'll you know have the best day and I'll look back on those photos and I was like I'll spend double just to like see how happy and excited they all get. And what would you grade her money habits? I originally said B but I moved it to an A and the reason I moved it to an A is because I think I can save really well if I say you know I'm going to do something I'll do it no matter what but so that's only half of the way the other half of the way is then investing it I have no idea what to do in that space so there's always that room for improvement and definitely for me to develop my knowledge. Georgia King what do you think about this

week's money diarist um I usually have to answer first but I thought I'd jump in before you. I know I love this role reversal um okay so doing a little bit of role play on the she's on the money pod this week um okay so I guess my take was that she's bloody amazing to be honest I agree 28 with $168 in her bank account. I mean she had $168,000 in her bank account. Did I say $168,000? Yeah look I'm honestly really glad that you're just as impressed at $168 as you are at $168,000 but you know what? It all counts. It does it absolutely does. But that is so impressive and I think it was just a really kind of girl power empowering story like she learned so many good habits from her mom who really set her up to have a financially prosperous future purely by being educated

and yeah I think she's done an amazing job on like a pretty moderate salary I guess to have that much on 75k yeah yeah that's like it's a good salary she's obviously making a fair bit of sacrifice to get that done for her life and you know what like I love these stories and I think it is so important for us to share these stories with you as kind of like inspiration for what we can achieve and I know that you know like let's be really real here Georgia there is a lot of privilege that goes into this there's educational privilege there's probably geographical privilege there's probably even white privilege in this and being able to achieve these things is not achievable for everybody and we're not sharing these stories thinking that it is achievable for

everybody but I think us being able to celebrate everybody is incredible and us being able to share these stories for everybody to learn from and go wow like she's gonna do this and she saved this much like I just love that someone's 28 and done that like 50 years ago that wouldn't have been a thing because a female wasn't even allowed to have her own bank account without having it co-signed by a man like this stuff is incredible like let's celebrate it for what it is not look at it and go oh i could never achieve that this is obviously unrelatable like no like exactly we're all so passionate like you could tell she loved her dog i mean a thousand dollars a month on or a thousand dollars per birthday party for her dog like that's a lot more but i'm so glad

it aligns to her values there's honestly there's no judgment there for me like you go girlfriend you've obviously got more than enough money and done more than enough good things to actually get that done but i think it's also really cool to point out she said she was really interested in starting to invest. And last week on the podcast, Georgia, we spoke about investment a fair bit. We spoke about what it actually means and how we can achieve that and what financial freedom actually looks like, right? It's not just investing and then selling it down once you have a certain amount of money. It's actually investing it so that we can create an asset that produces an income for ourselves in the future. And if she invested, and I'm always quite conservative when

making predictions if she invested a hundred thousand dollars at an annual interest rate return of seven and a half percent which is pretty conservative for the next 30 years because let's just assume she's going to return return no she's not returning anywhere she's retiring in 30 years maybe if she just took a hundred thousand dollars of her savings right now and invested that she would arguably have nine hundred and forty two thousand dollars when she retired which is epic and that's not with any regular deposits at all but if we actually looked at it I mean I'm going to use her thousand dollars as an example because she said she spent a thousand dollars on her dog each birthday and Christmas so I'm going to make a grand assumption that she's investing a thousand

dollars a month she might be able to afford that she might not it is what it is it's an example here friends if she invested a hundred thousand dollars today and then regularly deposited a a month georgia king she would have 2.289 million dollars by the time she retires and like that's not even the best bit like the best bit is that generates a passive income for her of more than a hundred thousand dollars a year like that's what we're here for she won't ever lose that money it won't ever you know have to be spent because it'll sit in her investment and each and every single year, her dividends will pay her an income. How cool is that? It is really cool. The fact that we can create our own incomes. So one day we don't even have to go to work anymore. And like you said,

she earned $75,000 a year just before. That's a good income. Arguably, if she continues to invest and save in the same way she has been, she's going to have an income higher than what she currently has when she retires. Like if that's not financial freedom, I don't know what is. And I think that that's really inspirational. Yeah. So she is set to go. Would you say, V, that micro-investing for her because she is scared to invest is the way to go? Or would you be saying, head to the financial advisor, girl, and let's go? I don't know. If you're looking at investing more than $100,000, just go to an advisor. Yeah. Like it is not worth the risk associated with making a bad decision or, you know, investing in a platform and picking the wrong risk profile

that doesn't actually suit you or your goals or just get some advice, it will absolutely be worth its weight in gold. And I just think it's so important to have someone on your side when you're creating wealth in that way. Like regardless of what you're investing, like I just think professional advice,

I know I'm obviously quite biased, like it's absolutely worth its weight in gold. Yeah, well, it'll give her that peace of mind. Before we wrap the show as well, Victoria, I just wanted to add that it was Ryan John laughing in that little voiceover part when she was chatting, just in case you guys were like, who the devil? Who is that?

What is he doing? He couldn't edit it out, so apologies if that offended anyone's ear holes. He won't do it again. Yeah, look, he might not be invited back to be the producer of our show at that rate. But, yeah, Ryan John actually did that interview for us, which was very kind of him, but turns out he's not

the greatest interviewer because he laughed through it. But it turns out the people interviewed by him actually really like him, so he might stick around. Yeah, he's all right. Anyway, I think that that's enough on our money diary though, Georgia. But just before we head off, we'd like to acknowledge and pay respects to Australia's Aboriginal and Torres Strait Islander peoples, the traditional custodians

of the lands, waterways and skies 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. now let's scoot over to the boring bits the advice shared on she's on the money is general in nature and does not consider your individual circumstances no it doesn't georgia king as we said earlier 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 stress less we promise victoria divine is an authorized representative of australia pacific funds management propriety limited abn 34132463 3-2-5-7-A-F-S-L-3-3-9-1-5-1. I think I said I was going to wrap that this week. Yeah, disappointed. Next week. I'm holding you to it next week, though. If you don't get some wrap guidance.

Actually, if anybody has a tutorial for Georgia to learn to wrap, that would be very good. Pop that in here. Me wrapping is just putrid. Always, as well, we like to say a big thank you to Ryan John, the aforementioned giggling dirty. Thank you to the big man for putting together today's podcast. hope your trip to the great ocean road was awful um just kidding i hope it was good but i was pretty

jealous sitting here in my 5k radius yeah not fair also shout out to our friends in sydney who had arguably a better weekend than we did but we would so love it if you guys joined our facebook group where honestly nearly a hundred thousand of you share 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 though you can also find us on the gram we're at she's on the money aus and also please don't forget we have recently launched our budget and cash flow masterclass which george king is getting absolutely glowing reviews and i am i know right like i've got no tickets on myself but like my god these people are actually eating it up and i'm so here for this but that has just dropped and

if you keep an eye out on the instagram this week there might be a cheeky little discount code for you all oh a little money win there doll a little money win for us all to have midweek i love that for us gorgeous um also don't forget to rate review and subscribe if you love the show love you dearly and i guess we'll see you next week bye