Hi, and welcome to this week's episode of Money with Alpha. Today, I'm going to bust another money myth. So this is myth number two. Last week, I spoke about the first myth, and this week I am talking about investing and that belief that "I'm too old to invest," or "It's too late," or whatever the ors are about investing. Mostly it's to do with, "I'm too old or it's too late." That is, for the most part, nonsense. And I say for the most part, because everyone's situation is slightly different, and it really depends on your lifestyle and what you want to achieve. But when I have women in their late 40s, early 50s, even mid-50s come to me and say that, I'm like, that that is no No, no, no. You can still invest. It just depends what you want, and there's a number of steps that I'm going to go through. But it is a myth. I would like you to stop buying into it and be open to the possibility of something different. So the five things that I'm going to talk about today about busting this myth are, firstly, clarity. You need some clarity. Secondly, you need some knowledge . Thirdly, you need to understand yourself. Fourthly, you need to make a plan. And fifthly, that's the word, you need to take action. So there, that is those are the things holding you back, and that's the gap between where you are potentially right now and where you would like to be if you want to invest. And investing is the pathway to wealth. It's the only way you're ever going to get to a position where you're going to have a comfortable retirement, even just an enjoyable life where you get choices, which is ultimately what money is about. It gives you choices, the freedom to choose what you want to do, how you want to do it, where you want to do it, with whom you want to do it, and how often you want to do it So that's essentially what money does. And the investing is the way to help you get there. So first of all, let's touch on number one. Number one is clarity. Now, you'll if you listened to me before, you'll hear me harp on about clarity. It's generally my first step for most things . But when it comes to investing and thinking or believing that it's too late or that you aren't smart enough or that you don't know or whatever it happens to be, it's often because you're not clear. What is it that you actually want money for? How much do you even need? What is the lifestyle that you want? Because until you know that, it's difficult to get a number to attach to that lifestyle. Because we hear all these arbitrary things, and quite often, you know, there's numbers thrown out there. Like, I've heard and I hear so many numbers, but recently also, I've heard so many numbers about, "How much do you need to have a comfortable retirement? How much do you need to have a dignified retirement?" I was like, "I don't even know what that means. What do they mean by 'dignified' that you've got clothing and food? Like what what does that mean?" And the thing is, even with "comfortable," that means different things for different people. Do you want to be able to go on international holidays every year, or do you want to buy a caravan, or do you what do you want to do, and how do you want to do it? Because there's also going to be other... I mean, the money is part of it, but there'll also be other implications, potentially tax-wise and other things, too. So there are other things at play. However, the first thing you just need to know is what is it that you want. I just finished delivering a workshop on investing, actually, but for business owners with an accountant that I think is fantastic and a finance broker I think is amazing at what she does. And that clarity piece, every time somebody asked a question, they're like, "Well, it depends on what you want." And so every time I said that, I was like, "Oh my gosh, I feel like I'm being so vague." But it it is true, it's real, and it's the most important step of the process. Because once you understand the lifestyle that you want, that you want to fund... And the thing is, is that lifestyle may change. Like, in the first perhaps, say, if you're looking at retirement, for example, in the first 10 years, you might want to do a lot more traveling. You might want to go on longer trips, so you're going to need a lot more money in that first part. And then down the track, who knows? Physically, you might not be quite as capable as you were. You might not be able to climb mountains or do as much physically, so the things might slow you down, and you might not want to go out as much. You know, you might go, "Oh, you know, I just want to stay home," or, "I'm comfortable having a little picnic by the water," or, you know, whatever it happens to be. Your needs may change a lot. I know, like, even for my husband and I, during COVID obviously we couldn't go out much, so we got used to doing sort of things where we did, like, picnics or little outings, we actually came to really like it. So we don't even really go out much or even do takeout as much as we used to, because we've actually come to like that sort of simpler, somewhat cleaner also as well world and life and the way we sort of go out, and we get to do things more as a family. And we have to get a bit creative about it, which is actually kind of nice. So things will morph and change over time, so it's understanding what that is. And even pre-retirement, do you want to go on a big holiday? Do you want to be able to go to Europe every... Like, we do a Europe trip every two years. Admittedly, that's driven by the fact that we want to see my father-in-law, who lives in Germany, and we want to make sure that we're visiting him as regularly as we can. And so it's driven by that. But even still, I think we would still do something. Like, I used to travel quite a lot in my younger years. it slowed down a little bit after I had my daughter, 'cause traveling with a baby, toddler, infant , infant-toddler, is not necessarily easy. And I also wanted it to be experiences that she may eventually remember and... Before the age of about eight, like even now she's 10, she doesn't really remember much of some of the trips that we did. She'll see photos, and that's pretty much the memory. Which, you know, even stuff now she may not remember too much of. But nevertheless, it's a little bit easier and she enjoys it more as well, because she's a bit older and can actually understand a lot more of what she's seeing. So that's where now the traveling has started to kick back in again, which means I've had to bump up my travel fund because I'm using it more often. So, and also because as she gets older she gets more expensive, so she's no longer considered a child for flights or for entries to things in some cases. So yeah, so I have to budget that in. But that clarity is really important.So then what happens after that is knowledge. And this is often the part, even if we are somewhat clear on what it is that we want, we don't feel like we've got enough knowledge. And research shows women make far better investors. We're actually more well, we're actually less emotional, which I thought was really, really interesting because we're always told, "Oh, women are just so emotional." Like, really? Yeah, sometimes perhaps. But when it comes to investing, the research shows that we're actually less emotional than men are . Which is quite interesting. So the knowledge factor, we get put off by the fact that we don't want to make a mistake we don't really know what risk kind of profile we are, which which will bring me to number three shortly where we're not really sure what to do. Like, what, what... There's so many options, we get bamboozled by it, so we just do nothing which is overwhelm. And that's, that's, you know, what my... My myth number one was that money was complex and overwhelming. But as... if you listened to that one... So if you haven't yet, go back to my last podcast podcast episode, and I will bust that myth as well. But investing does not have to be complex, and it's understanding what is right for you. What is it that you actually want to do? And number two and number three are going to have to go a little bit more in, in parallel because the knowledge also links to your understanding of yourself, because you need to understand what your tolerance for risk is. Are you happy to see the market crash, for example, and know that it will eventually come back? You don't need that money right now because you've structured things in a way that that amount, you don't need to live on day-to-day. So it can sit there and build back up again over time. Or do you panic and sell, and then you've really lost money because you've now sold for less than you bought for, and that's, that's... you've realized the loss? Or does the idea of a lot of debt buying buying a property just, like, freak you out, and you're like, "Oh my gosh, how am I ever gonna service all this?" So have a think about what actually sits well with what you want to achieve, so that... again, that clarity. What kind of life, what kind of number do you need to have in order to enjoy the lifestyle that you want to achieve, and what sorts of investments will get you there? And that knowledge then comes from talking to some of the different professionals, like talking to financial planners about what's possible about the share investing, talking to property specialists to understand what's share... what's, what's possible with property. Keeping in mind that when you talk to each of those specialists, they're going to have their own interests in those as well. So you're going to have to take the information, be able to look at it side by side. And to be honest, that's a lot of the stuff I do, is we'll bring that stuff together, and we actually look at what is the pathway and what is... what are the future possibilities based on each of those choices that you can make? But it's... You've got to have that information first. And then you can make some assumptions, because the past is not going to be the future. The future is uncertain by nature anyway and there's a lot of uncertainty in the world anyway as well. So it's going to be a little bit of, "Well, let's look at what's happened in the past. Let's try and project a a... an amount that seems possible over time to be able to make the decisions," and go, "Okay, well, on this basis, I'm going to do this. I'm comfortable with that. Let me see those sort of different scenarios, sit with it, and go, 'What actually feels right for me?'" And I'm talking from experience here as well, because I've had to do this recently where I was contemplating doing some different types of investing, and, and it would have required taking on quite a bit of debt. And I have to admit, the idea of it, at first I was like... I looked at all the numbers on paper, and the numbers all looked good. And then, then I felt the, like, the... I kind of played out what it would be like and what, what my life would be like with it, and I just... I was, I was like, "Okay, whew, this is not feeling good in my body. I'm not liking this feeling at all." I was like, "No, I can't play that scenario out." So I had a look at some other scenarios and I was like, "Okay, these feel a lot smoother and I don't have an emotionally negative reaction to them, so I'm gonna go with that one, 'cause that's what feels better for me." So that's that understanding piece. So the knowledge and the understanding kind of have to come together. And the understanding of yourself comes from not just your personality. There are Well, there's... Age is a factor as well. So you look at sort of, what do you want to achieve within a certain timeframe based on your age? And then you've also got to wonder too, are there some beliefs and stories buried in there? And if there... if there are, and this is what I always have to do a check on myself too, is like, "Am I scared of this because it's gonna put me out of my comfort zone? Yes. But is it gonna put me out in a way that's going to, like, genuinely stress me out? Or is it just testing some of my beliefs and stories?" So this is where you have to pair the mindset in with it as well. If it was... the latter, as in the beliefs and stories, then I was like, "Okay, I have to go back and do some work on that." If it's actually... like, I, I know this isn't about beliefs or stories, this is genuinely about, you know, me as a person and what I want life to be like now and in the future, then that's a different story. And this is, again, you have to understand yourself and understand the signals that your body is telling you. And sometimes being able to talk to someone about it helps as well. So whether you've got a partner or a friend that you can talk to, you can always talk to me if you want to as well but it's understanding where is... where is the ... comfort coming from? Is it serving me kind of get out of my comfort zone discomfort? Or is it warning signals telling me that I'm going to actually feel so stressed that I will just not enjoy life, and I'm going to encourage dis-ease in my body, if that's the case? I remember talking to, to a client once who when she came to me, she was just, like, so stressed to the point of, like, shaking. She's like, "I've got, I've got all this debt. I just, I, I can't..." she even had difficulty like, speaking it. And when we sort of looked at the scenarios around what she was going to do... And she already knew what she wanted to do. That's the thing. Quite often we already know what the right path is. We just need maybe a little bit more information or just, like, a little, like, nudge to go, "Okay, well, just do the thing. You know what you want to do, just do the thing." And in her case, it was to, to sell a block of land that she'd had, dial down the debt, continue... Anyway, she, whatever she ended up then doing was best for her. And the next time I saw her, she was just so much more relaxed once everything had been kind of played out and had, had been completed. And she was like, "Oh my gosh, and now I actually have more money to play with. We can go on holidays. I've got investments still going. It's all just so much easier and calmer." And her whole body was just more relaxed. She wasn't, like, tensed up and stressed. So we've got to make sure that we stand ourselves well enough to know that it's the right path. And having the knowledge at least to do that is important. Speaking of knowledge, it's also important to understand that investing is necessary, and there is a power of compounding that goes with this. So, I've I'm gonna read it off here, 'cause I want to make sure I get the numbers right. So there's, there's... If you ever want to do some of these calculations yourself, you can go to the moneysmart.gov.au website. It's the Australian government's website. They've got a lot of really good information about money on there trying to like, encourage financial literacy, but they've also got some really good calculators on there. So you can calculate some stuff and go, "What would happen if I did this?" So just as an example, if you started with... And this is just a basic compounding scenario. If you started with, say, $10,000 and you put a regular monthly deposit of $200 into... And we're gonna assume an investment fund for, to start with, because the, the rate's gonna be a bit higher. And then, say that compounding impact... Actually, gonna, At the moment it's monthly. I'm gonna change it to annually, 'cause it's... let's see how that goes. And over 10 years. And, okay, no, let's do five. Let's do five years first, and we'll see what that looks like. And I'm gonna put in an 8% annual return, because eh, it's probably semi-conservative as far, like, over, over a period of time to, in order to get a annual return. So starting with your $10,000, after eight years of doing this $200 a month, you would have $28,773. That's not bad. So that's... You've put in... You've done an initial deposit of 10,000. You've put in another 12 over time, and you've earned $6,700. So that's $6,700 that you wouldn't ordinarily have had if you hadn't done this. That's over five years. Let's see what happens if I up that to 10. So we haven't changed anything else. All I'm doing is changing the amount of time. So... I've forgotten already the number that I had. Goodness me. So it was 28, almost $29,000 over five years. So 10 years, would it be double? No. It's $56,357. So we've gone from 28... So yeah, it's, it's more or less double. Okay. So that, that one hasn't changed too much. Let's see what happens if we do 15 years. So over 15 years, then it becomes 96,000. So it's now gone up more than that initial. So the first 10 years, when you're looking at compounding, can feel a bit slow. And I know that sounds like a long time to be doing something, but this is the benefit of time. And even 10, 15 years, even if you're in your early 50s, if you're investing an amount of money that you don't need day-to-day, that money just sits there and grows and grows, this actually starts to become really, really, like, valuable. So in 15 years time, you could have nearly $100,000. That's an, an extra $100,000, and that's just from starting with 10 grand and putting 10... sorry, $200 a month away. So that's, that's possible. It could even be more. It could be less, of course, as well. But that's just to give you an understanding of the power of compounding. I feel like I've got something my teeth there. So it's really, really important to, to at least get that started. So let's then look at what would happen if you put, say, $500 into the account. Let's just up it. So over five years, still 8% return, that gets you nearly $50,000. So that's putting 500 months $500 a month away. In 10 years time, that would give you just over 100... yeah, over $100,000. Hang on. What's going wrong there? Yeah, so 50. Sorry, yeah, just over 100. So it's actually increased even more. And then if we get to 15 years, that's only $200,000. Like, that, that's a lot. So if you could put $500 away into an investment fund, it could be a bit more, like, it could be less as well, but you're gonna end up with getting so much more money than you would have had if you had done nothing. So this is why I'm saying it's not too late to actually start the investing journey. You can start to do this without... with not a huge amount of money. So if you can scrounge out... And you don't even have to start with $10,000. I started there 'cause I was like, well, you most of us will by this age will probably have about 10 grand that we can find. So if you can find $10,000 and then put $500 and work on your cash flow. If you can't find that $500 right now, work on your cash flow to see where in your personal cash flow you can find this $500. It could be through reducing insurances. And this is $500 a month, so that's So what are we looking at there? Just over it's about $6,000 a year. It's not a huge amount, really. I'm sure you could find that. Like, I literally just saved about $3,000 on my insurance, just household insurances at the beginning of the year.And then, looking at other things as well, you can look at maybe eating out a little less, maybe dialing down some of the other outings and things like that. Like, you can find ways to do it and try and find that $6,000. Because if you can do that year on year, over 10, 15 years, it can make a substantial difference to the amount that you're gonna have. At the same time, if you can be putting money into your superannuation as well, so this is, so this is happening in parallel, and you keep your, your home loan ticking away too because, you know, there's you're already used to paying that, so keep on paying it. If you can try and find a little bit more to put into investments, keep your super going, and depending on how much you're paying in super, look at upping that. They're your three main levers: investing, superannuation, and paying down your, your debt so that you can become debt-free by the time you retire. You can start to do those things. You will change the trajectory of freedom in your life, both now and in retirement. But your current 'cause the thing is, is that that current you is going to thank future you. And the more disciplined you get around this, and the more you can see the purpose of your money, the more you're gonna start to find the momentum that goes with it. And you'll be like, "Oh, this is really exciting. I wonder how much more I can do." And then you'll, be, you'll be looking for other opportunities. Like, the idea of, you know, budgeting or, you know, reducing expenses or whatever, that that won't even be part of the conversation anymore because you'll just manage to find ways to earn more money, to streamline spending, to actually make things work for you in a way that suits you better. You'll feel more aligned with who you are. You'll be aligned to your values. If you know what your values are, then that's a fast track process. Even if you don't, you'll start to just feel more authentically you. And like I said, that, that conversation that I have sometimes with people when they ask me, "How do I stick to a budget?" I was like, "That's the wrong question." There's no good or bad questions or wrong questions really, but it won't be even a question after a while once you start to see the benefit of this. But then, like the, like I said here, make a plan. So if the plan is $200 a month into, into investing or putting money or, or using an And, because if you're going to go and get, say, an investment property and you can use equity in your home as a deposit, you're probably still gonna have to, to put more money into the loan every month because a lot of properties in Australia now are negatively geared. There's not much opportunity for positive gearing. So if that $200 to $500 a month means you have to top up a, an investment loan, then that's what it is as well. So it depends on your, on your method of, of how you wanna do it. And then if you're looking at investment properties as well, you've got capital growth. There'll be a tipping point for them too in terms of when they become, at some point, they will turn and become positively geared. But for the first, I'm guessing, 15 to so, plus years, and this is something you'll have to work with your finance broker on to understand, where that tipping point is, you're gonna have to look to find extra cash flow. But then after that, you have a positive cash flow coming your way. So it's recognizing that you can do this and that it isn't too late. If you wanted to get an investment loan and you're in your 50s, then you might have to get moving. Investing in other ways, like in shares where you're using sort of smaller amounts, then that's open to you anytime, and then you get that benefit of compounding over time. So the longer you wait, the less time there is, the less stability you have to take advantage of compounding. So make your plan, look at your cash flow, find that extra cash, decide on what you're going to do, and then take the action to actually do it. That is the myth I want to bust, is that you actually then have to take the action to implement this. But and if you feel like whichever of those five that you're stuck on, you might have clarity, you might have the knowledge, you might have the understanding of yourself, but you haven't made a plan. Make the plan, and then take the action. So wherever you are in those five, they do have to come in that sequence. So if you're at number one and you need clarity, start there, and then work your way through, so it's to the point where you get a bit more knowledge about what specifically you want to invest in. Understand yourself and your risk profile as you're doing that 'cause those two do overlap a bit. Make the plan, take the action. But wherever you are in those five, figure that out, start there, and work methodically through until you've actually taken the action because that is where you're actually going to get the benefit. Just thinking about it and mulling over it, it's gonna stay there, and then you're gonna go, "Oh, wish I did that. Oh, I wish I did that then." we can all say that. "I wish I bought property five years ago. I wish I had done this. I wish I'd, you know, bought this then. I wish I'd bought Apple when it first came." You know, there's so many things that we could say though if we had a crystal ball or if we had a time machine. But we can't, so we can start with where we are now and then pick one of those spots and then move forward from there. So that's it. Myth number two, busted. And if you're still feeling stuck and unsure, please reach out because the whole point of this is if it actually helps you get unstuck and move forward. So I'll leave you there. Have a wonderful week, and I will catch you next episode.
