Hi and welcome to this week's episode of Money with Alpha. Today I'm buzzing a little bit because we had a workshop yesterday. I did one Practical Money for Entrepreneurs and it was with an accountant and a finance broker. So Nicola and Cassie who were on the podcast a few weeks ago and it went really well. We worked, you know, sometimes when you, you do a collaboration, you're not sure how you're actually really going to work together. But we worked very well together. What we said was aligned. Everybod was lovely. It was such, it was such a nice workshop. We've been asked to run another one so we'll see how it goes. So watch this space. But I would love to, but today I wanted to talk about a topic which came out a little bit at the workshop, which is why I'm mentioning it because it's, it's, it's relevant and it's to do with investing and there's a lot of fear and you know, apprehension about investing, especially for women because we don't want to make a mistake, we don't want to lose money. You know, we, you know, we, you know, we've worked really hard for, for the money that we've earned. So we really want to make sure that we, we make the most of it and try and do the right thing. So, but it was because this came up yesterday, but I, so I wanted to talk about investing to suit your personality as well and how that impacts. Because everybody's different. Our, and there's so many elements of, of who we are that make how we manage money difference and investing is, is no different to that. So I wanted to touch on a few things. Firstly though, I wanted to talk about Warren Buffett. He's retiring at the tender age of 95. One of the headlines I read said like shock retirement. And I was going, really? The guy's nearly 100 years old and he's still like heading up one of the most successful and biggest investment firms. I don't consider that much of a shock really. At some point it was going to happen. His, his right hand business partner actually passed away a year or two ago. So I want to talk about. Yeah, so, and in his sort of his retirement speech, he spoke about what he's going to be investing in and what he's advising his children to invest in. So that's, that's number one. Number two is looking at your risk appetite and that's not just in relation to investing, it's also in relation to debt because debt often goes with investing. So it's having a look at your risk appetite for both of those together. Then I also want to talk about investing versus trading because that's something else that, that gets often inter related and confused and that they are actually two different things. And then finally I wanted to talk about trusting yourself and trusting that you know what you want to do. Especially when we've come to a certain stage in life. I'm in my 40s, you know, entering the, the late 40s end of it. And you know, we have a, we have a ton of life experience. We've seen a lot, we've experienced a lot. You know, there's, there's so much wisdom and knowledge inside us that I think we often underestimate. So I wanted to touch on that too. So firstly, I want to talk about Warren Buffett's retirement speech. And, and it's, it's interesting because he's headed up Berkshire Hathaway for decades. You know, a single share is I think, something akin to like a hundred thousand US dollars. Like it's, and they don't pay dividends, so people just literally buy. He's never sold any of his shares, so he's just kind of bought and sat on like a, you know, a hen on his eggs, her eggs. So it's, it's a really interesting way, you know, when people are constantly buying and selling and prospecting and, you know, trying to guess what's going to happen. He's just been plodding along, sitting on those eggs and just buying and holding. And even in his, and he still lives in the same house in Omaha, Nebraska. He, you know, holds a shareholder meeting every year. People fly in internationally to, to physically be there at the shareholders meeting to sort of see even if they don't hold a share, people go as well. So he's, that's why he's considered the oracle of Omaha, because people go there for his wisdom. So it's interesting what he said in his speech, which is. And he's advising his children to invest in index ETFs, index funds. I was like, right, okay. And that, so that's. And it says simplicity, I think was the key message behind that, that sort of recommendation for his family. I was like, yep. And I'm all for simplicity, which is why I called my business Money Made Simple. So that really aligns with, with me. And, and it's how I invest. I invest in index funds that, that's what I do. And they pay dividends, some more than others, depending on the fund that you're in and you can choose if they're funds that focus. Like I've got some in infrastructure, then I've just got sort of broad based geographic ones. You can invest in green shares, sustainability recently and you can get gold if you want to invest in gold and you don't want to buy like the actual bullion itself. So there's, there's a lot of different ways but index funds themselves which cover, you know, a broad spectrum of assets and so you can, you get the ups and downs within it but it sort of is a bit evened out because you're within a bundle. So the index itself you can have like the, the S P500 which is standard and poor. You've got the ASX, which is the Australian Stock Exchange. There's the Nasdaq which is the tech, yeah the tech one in the U.S. there's the footsie. There's, you know, there's so many different indexes out there and they have a bunch of companies in there, you know, they're top companies, 500-hundred, 1/00. Like there's, there's a lot of, a lot of companies buried in there and you had to, if you're in one of those indexes you're likely going to have a bit of Apple, a bit of Microsoft, a bit of Amazon, a bit of Google, like the, so there's the big players in there too. But I just found that was an interesting, interesting approach that and recommendation that Warren Buffett, who is considered one of the best investors of all time has said so that was, that was number one. So when you're looking at your personality, just consider that if you want something a bit more active, this is where the risk appetite, which is number two, comes in. So if you look at, if you want to do property investing, for example. So I had looked into this a number of years ago with my mother and, and I just don't think I have the personality for it. It ended up not happening for a variety of reasons. But in the end I was like, I'm not sure that taking on that level of debt was something that either myself or my mother would have been comfortable with. So I was like, I don't think property development would necessarily work. It depends on the circumstances. So I'm not completely opposed to it. For me, it's just the circumstances have to be correct. And at that point they were not. So because one of the, the people who came to the workshop yesterday was considering that and I was like, well if it, and in that case there's a lot of alignment. There's a lot of knowledge, there's a lot of experience that can, can go into it for them. So it might actually be the right choice. So it's looking at like. And I remember having sitting down with the client one time and they were like, absolutely shocking, shaking, like their whole body was just, you know, fearful. And because of the amount of debt they were in. And thinking back now is like that level of debt has become normalized over time. Because I think in that, at that time, this was probably about a few years ago now it was. So I had over a million dollars worth of debt, which absolutely freaked the living daylights out of them. Whereas now, in order to buy a house to live in, people are taking on debt of around that amount. I have friends recently and the house that they just bought was 1.4 million. And I was like, oh, wow, okay. So, you know, even, Even with a 20% deposit, you're looking at a pretty hefty loan there. So it's. Yeah, so it's interesting. So times change, personalities change, our financial capacity changes. If you've got other properties you can use the equity in, things change. So there's, there's a number of variables that go into that, but you still have to fundamentally look at yourself holistically, look inward as to what you feel comfortable with, but look forward as well in terms of what is it that you're trying to achieve. And is there a time frame where you're prepared to feel a little bit uncomfortable because you know that there's going to be a bigger goal at the end of it? So again, this is where clarity on your vision as well becomes really, really important because when things get a little bit shaky, your vision will help see you through those, those tough times. So, yeah, looking at, so that's the debt levels and what time frame you've got as well. If you're in your late 30s, 40s, early 50, 50s, taking on that kind of debt, probably not such a great idea. If you're in your 20s and 30s, you've got longer to pay it off, you've got the ability to grow your income. Or if you're in a, in a state where you know you've got the equity, like you, you bought something when you were younger, it's exploded in, in value. So you could either sell that or use the equity in it to buy something. So it really, really is so in, in individual. Which is why yesterday at the workshop, all three of us, when we were presenting the word it depends came up quite a lot to the answer to the questions because it really does depend on so many variables. But yeah, so looking at how much time you've got, what your earning capacity is, what your actual tolerance for risk and discomfort is, what sort of support you've got, like are you investing with a partner? What is it that you're actually wanting to do and how can you sustain that and what kind of equity do you have to support it as well, because as we get older we do have a bit more equity to deal with. You know, like my husband and I have our house. I have to admit I don't like the idea of using the equity in our house for something else. But it depends on what that something else is. So it's. Yeah, it's, it really is, is a, you know, so many choices which I think is possibly what influences why it's, there's so much choice but keeping it simple. Just come back to basics. Look at your vision, look at what you're planning for. You know, you don't need to overextend yourself but at the same time you might need to push yourself a bit out of your comfort zone in order to achieve what it is that you want to achieve. And just as an example, even buying the house that we live in, for me that was out of my comfort zone. I don't really like debt. I don't like credit card debt. I look at my credit card, I'm like, oh, I just want to pay that off. And they're like no, no, wait till the end of the, the period and then you get the bill and you pay the whole thing off in one go rather than like constantly putting money on it. Because I was like, that's not an effective use of my cash flow. So I'm constantly having these conversations with myself because, and I know what I'm like. So it's, you know, it's, it's dealing with, with that. The little voice in your head as well then investing versus trading. This is, this is always an interesting one. So I, when I first started to, to look into investing, I took share trading courses. I looked at property. I belonged to a property investment meetup group. Yeah. So I did, I did a lot of learning. I, I still do a lot of reading. I read lots of books. I love books on all variety of topics whether it's business, professional, spirituality. So many different genres. I'm generally these days more of a non fiction reader. Used to, used to love crime novels when I was younger, but now I don't know, biographies and everything. Have Kind of taken over what I like to read as well as those other genres. But the investing side, this is where I learned that we share trading. What we often think of as trading is actually like investing is actually trading. So it's buying and selling. Whereas you know, going back to the Warren Buffett example, buy and hold, buy and hold. Sit on those acorns, sit on those eggs. A lot of the stories I've read over time where people have simply built wealth, it's just that they've just consistently bought, bought, bought. I remember the, the most inspiring story was of this janitor and, and I'm gonna hope the story is true because I've read it in, in like reputed from reputable places. But there was a, the time he was. And he never, he's always been, he'd always been a janitor. So I think from his 20s, I don't think he ever sort of was ambitious or aspired to anything more than that. He was just happy with what he was doing and he just invested consistently little by little. And by the time he retired he had $2 million. And this was, you know, a fair while ago now probably read this maybe 10 years ago and I'm thinking, goodness me, that, that's just demonstrates the power of consistency and compounding just it. There's nothing to, to negate that, you know, so that's, that's investing. You're buying and you're holding. The Warren Buffett method as well. Like buy, hold. The only time I, I started investing when I was sort of in my late 20s and then when we bought our house, I actually sold a lot of my shares to then use that as part of the deposit for our house. So I've been building back up again since then. But it's. Yeah, it was, it was good. I mean I look back now and I think, oh, should I have had it in, you know, just in a high interest bank account? But then in those days interest wasn't cash, wasn't earning much. So I actually did better by, you know, investing that money. Quite often though, when you're saving for a house, it, depending on how long it's going to take you, it's like put that money in a cash account. But if it's going to take you seven to 10 years, maybe it is better to put in an investment. That one becomes a very individual choice safety, especially if you're looking at purchasing a property to live in, might be better to just try and find this higher interest bank account as you can. But back to the investing so look at, unless you're prepared to do trading. I had a cousin who, he used to trade, that was, that was his job. And I remember he was constantly like grouchy and grumpy because he was tired because he was up all night for the different markets, you know, Tokyo and London and New York, any of the stock exchanges. So we're opening and closing. He had to sort of be there. He was trading foreign exchange, so currencies and, and while he enjoyed it, he, he, it just, it ruined his quality of life as well. Because we live in the southern hemisphere, all of those exchanges are in the northern hemisphere. So the, the time zones are quite different to our body clock. But yeah, but I remember just looking at him and going, oh my gosh. And it's a lot of work, it's a lot of knowledge as well. So unless you really know what you're doing. So timing the market is, even the professionals find that tricky. So look at, look at investing rather than trading. If you want simplicity and a bit more peace of mind. Investing for capital or, and, or dividends like income returns, that's, that's another aspect too. Like there's a, there's a high yield Australian shares fund that, that I invest in and, and it's actually really good. So my, my dad is in it as well. And every time I, I get like a bit of a boost of money in my bank account, it's like o must have paid out because it pays out every quarter. I was like, yep, sure enough, there it is. So, so from an income perspective it does pretty well. Capital is, yeah, it's all right, it's not, not super duper exciting. But over time it's growing. So yeah, so it's, it's again looking at those two sides of it. So even with investing, when people are constantly talking about how, you know, the, the markets are going up or they're going down and people are selling or buying and everyone's getting. I'm like, but ultimately these are companies, these are tangible businesses that are doing business making money and they're distributing some of their profits by dividends to their shareholders. So there's an income aspect to it as well, but that's not as newsworthy. So even if the value of a share goes down, if you don't need to sell it, it doesn't really matter. It's not realized loss or gain. Just leave it there and then just accept the dividends when they come so that you're really still getting the benefit of that income. So it's it's important to understand that the multiple sides to this and to work with the level of risk that you've got and the simplicity that you would like. Which leads me to my last point, which is to trust yourself. You are the, you know yourself better than anybody. Like people can tell you, you know, I, I sent me. I sometimes have goes with my husband because he tries to tell me stuff about me. I was like, look here, you don't know me as well as I do. You can assume, but assumptions are dangerous. So just let me do me. You do you. Generally the arguments are a little more heated than that, but you get my, get my point. But trust yourself, though. Like, you really, really understand what you want, how you want to do it. Have a vision for your life. You do need to have an aligned vision with your partner. Like my husband and I talk about that part quite a lot. And we, we are pretty aligned on that. I mean, there's still variables and things that change. He's 10 years older than me, so there's going to be different stagings of things. As you know, I'm in my sort of mid to late 40s, he's in his mid to late 50s. Priorities from a working perspective will change, which will then influence the investing style as well. And he's almost possibly a bit more conservative than I am. So, so that's why we, we manage our finances quite differently, especially from the investment side of things, because it just, it's more peaceful to do it that way. And it is still our, our money and our savings and retirement funds and all of that. So it is, it makes more sense that we each get to, to decide and control our own destiny in that regard. Which is why it's so important for women in particular to be aware at least of where their money is, understand enough about what they want to do, be aligned if they can be with their partner. In relation to where you're heading, how much gets put aside for what, where things are coming from, where things are going, what you're actually building towards, those sorts of discussions are really, really important. How you then do it, you can each do it slightly differently, as long as you're both heading to the same direction. If one's kind of going a little bit like this and the other one's going like this, that's okay. But eventually you have to kind of come together at, at a common point. But just trust that you will know what to do. And if you have an idea of something and you're not completely sure about it, ask you can ask me, and if I don't know the answer, I will point you in the direction of somebody who can answer it. I very rarely like to say to somebody I don't know and just leave it at that. I find that I don't like that because I like to figure things out. So it's really, really important to have that level of clarity and trust and faith in yourself. So I'll just recap all of those. So, firstly, we spoke about Warren Buffett and his retirement speech, around how he's advising his family to invest. Secondly, we spoke about your risk appetite for both debt and investing itself. And then the timeline that you've got for that. So how long have you got left sort of to invest in your, your working life? And then looking at the difference between investing and trading, making sure that you're very clear on what those two are and which side of those. Or which, which, yeah, which camp that you actually would like to be in, investing or trading. And then finally, trust yourself, take in information, you know, listen, listen to what people have to say. Learn and grow. But then ultimately trust that you know yourself better than anyone else. Okay. With that, I will leave you to have a lovely week and I will catch you again next week.
