April 29, 2025 • 29 mins
Interested in investing in shares but now sure where to start? Join Canna Campbell - a financial planner for 20 years - and Fear & Greed's Michael Thompson as they go through a step-by-step guide to getting started in shares.
---
The information in this podcast is general in nature and does not take into account your personal circumstances, financial needs or objectives. Before acting on any information, you should consider the appropriateness of it and the relevant product having regard to your objectives, financial situation and needs. In particular, you should seek independent financial advice and read the relevant Product Disclosure Statement or other offer document prior to acquiring any financial product.
Canna Campbell is a Corporate Authorised Representative and Corporate Credit Representative of Wealthstream Financial Group Pty Ltd ABN 35 152 803 113 Australian Financial Services Licensee AFSL 412079.
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
Welcome to How Do They Afford That? The podcast that
peaks into the financial lives of everyday Australians. I'm Uncle Thompson.
I'm an author and the co host of the podcast
Fear and Greed business news As always, I'm with Canna Campbell,
financial planner and founder of Sugar Mummer TV, the financial
literacy platform covering YouTube, podcast, books, Instagram threads, TikTok and more.
(00:22):
Did you hear me pause between financial and planner? Then
I just suddenly suddenly just hit me financial planner and
financial advisor. Is there a difference?
Speaker 2 (00:35):
Yes, a financial planner tends to be more experienced. Okay,
I may have had more qualifications and training behind them.
Normally a financial advisor is reserved for maybe a junior,
like someone who is new to the industry. Maybe not
necessary to have as much experience as many qualifications.
Speaker 1 (00:55):
Okay, Well, I will no longer hesitate when I get
to that, and I'll just jump straight in with financial
plan How are you going?
Speaker 2 (01:02):
I'm well.
Speaker 1 (01:02):
How are you I'm good? I'm good, Thank you, we
are we're going back to basics today. Yeah, this is good,
it's good. It is one of the most common questions
that we get here at how today afford that? How
do I get started investing in shares? So today we
(01:22):
are you going to put together a step by step
guide to investing in shares? If you're open to.
Speaker 2 (01:30):
That sounds good to me?
Speaker 1 (01:31):
Okay, all right, Before we do that, obviously, everything that
we talk about is general in nature. It is never
personal investment, strategic or product advice. It is purely financial
education purposes only. I'm actually going to rewind slightly and
say why shares? Why should an investor think about investing
(01:51):
in equities?
Speaker 2 (01:53):
All right? There are lots of reasons why you should
be investing, okay, So obviously before on shares today. So
having ownership of a business that is going to hopefully
grow over time and obviously means your money is growing
over time. It's also a source of passive income to you.
To give you that financial freedom. It is an opportunity
(02:15):
to grow wealth over the long run and try and
exceed or beat inflation. And shares are a lot more
liquid than say property. You know, if you have a
property worth say five hundred thousand dollars, and you need
suddenly fifty thousand dollars, you can't go and sell one bedroom,
whereas with a share portfolio you can fill fifty thousand
dollars shares and then the money will be in your
(02:36):
account within a couple of days.
Speaker 1 (02:38):
Okay, we will get to some more of the benefits
as we go through, as we go through our step
by step guide. But when you buy a share, what
are you actually buying?
Speaker 2 (02:49):
Buying a slice of the company.
Speaker 1 (02:51):
It is as simple as straightforward as.
Speaker 2 (02:53):
That you're own a percentage of that business, and it
doesn't matter how small, you still own a percentage, and
obviously you can build that over time with various different strategies,
but you also have right to some of the gains
through a dividend, and obviously the long term growth of
that share price, which is your represents your share of
the business. But obviously, at the same time you carry
(03:16):
the risks that that company may go through a tough time,
or the value may drop, or they may stop dividends
for a period of time. So it's like owning an
investment property when you buy shares, but instead of receiving rent,
you receive dividends, and of course you are hopeful that
the value of that property goes up. You're hopeful that
(03:36):
the value of that share your ownership and that business
goes up as well.
Speaker 1 (03:40):
Okay, so you're buying a share, a slice of the company,
and you are sharing in the fortunes of that company
moving forward, whether it goes up or down, whether they
make money, whether they lose money. That you are also.
Speaker 2 (03:51):
Bearing that you're like a business owner.
Speaker 1 (03:53):
Okay, shall we get to the steps. Why are you
laughing at that? Is it just because I like to
put everything into a list.
Speaker 2 (04:01):
I'm going to ask you a question in a second,
because I feel like there is an ulterior motive behind
the topic today. And yes, you're looking very.
Speaker 1 (04:08):
Scared right now. No, I just I don't I like
to ask the questions on this show. I don't like
it when you turn it back on me because I
never know where you're going to go with things, and
I don't like to get caught out. Step number one,
do you start with research? Yes, that was an assumption,
and I made a correct assumption for once. This is
(04:29):
a good day. Look.
Speaker 2 (04:30):
The golden rule but that it comes to investing is that
you never invest in something you don't understand. And that
doesn't mean that you go, oh, I don't understand this,
Therefore I won't invest in it means no, you need
to keep going with your research until you understand what
that is and then you can work out whether it
is the right investment for you. So a great place
to start is look at things that you were generally interested,
(04:51):
generally and genuinely interested in. And there is so much
free research online that is an amazing quality, you know,
such as like more Star and the AX has so
much brilliant online tutorials as well to help you get
started with investing. But look at brands that you use daily,
the supermarkets that you visit, or where you do your banking,
(05:11):
or you know where you buy your appliances from, so things,
you know, places that feel really relevant and real. That's
a great place to get started. And then of course
you need to think about well how am I going
to buy these shares and that's when you need most
of us need an online share training account unless you're
going to go through a user stockbroker.
Speaker 1 (05:29):
Okay. Can I also make one recommendation that in terms
of research, and that is go back and listen to
an episode that we have done previously where we spoke
to Roger Montgomery who took us through in detail what
he looks for in buying a quality company, and he
goes through in really plain English kind of how to
(05:52):
look at what the company is planning to do in
the future, whether it's making money, and what its future
prospects are, and whether that might make a good choice
to put some money into.
Speaker 2 (06:04):
So he's got his book as well.
Speaker 1 (06:05):
Yeah, absolutely, he spoke to us about twelve months ago,
so you will find that in the how to they
afford that playlist. Step one start with research. How do
you decide then what you are going to buy? And
this is quite broad because it's not just specifically which
company you are going to buy, because there's actually a
number of ways that you can be investing in shares.
(06:25):
You might not be just going for a particular company.
You might be buying an ETF, an exchange traded fund.
Speaker 2 (06:31):
Or even a listed investment company. So all right, you've
got lots of different choices out there, so you can
go with your individual shares. Obviously that involves a lot
more research, a lot more risk. You've got to make
sure that you quickly diversify because initially your first investment
might be solely in just one company, so you need
to make sure that as new money comes in, you know,
you diversify, so there is there is risk with that,
and if you're a beginner investor, that's where I would
(06:54):
strongly suggest starting to with your research around things like
ETFs and listed investment companies, even you know, maybe managed funds,
because it means you're buying a investment into an investment
portfolio that's already diversified for you. It's like grabbing a
shopping basket that's already been pre packed for you.
Speaker 1 (07:11):
In diversification. You ask anybody and they will talk about
the fact that that is a really important part of
your strategy. It is about spreading the risk.
Speaker 2 (07:20):
Exactly, and it saves you a lot of time as well,
because if you're new to investing, it is very overwhelming
and you want to get started. Do you want to
get hit a bit of a block and go, Okay,
I haven't invested yetuse I haven't worked at what stopped
be buying at. But if you look at something like
a listed investment company or an ETF, which are very
similar just different tax structures, this can mean that you
can actually get your foot in the door start building
(07:41):
that investment portfolio. You know, set up a regular investment plan.
But then you can in the meantime know that your
money is invested in working for you. But you continue
on your financial education journey and start maybe thinking, Okay,
I've got ten thousand into this listed investment company, I
want to go and cherry peak my next five stocks
I'm going to buy individually. So you aren't backed into
a corner where you can only go into ETFs or
(08:02):
listed investment companies. You can have a blend of everything.
And that's actually what I have.
Speaker 1 (08:07):
Yeah, And so in terms of listed investment companies, typically
there will be you are essentially buying a piece of
that company, which in turn owns a whole bunch of
other companies that are chosen by professionals working behind the.
Speaker 2 (08:21):
Scenes exactly up just eighty different companies, not.
Speaker 1 (08:23):
More, and they may have different themes to them as well.
And then ETFs the exchange traded funds. They might be
a fund that tracks a particular part of the market
to buyte track kind of the ASX two hundred of
might track the tech companies, or it might track companies
and stocks that are exposed to gold, for instance, And
you can really kind of pick where you want to
be putting your money by going with it, say ETFs
(08:46):
or listed investment.
Speaker 2 (08:47):
Companies, and you can look at their historical returns. Now,
obviously that does not indicate future performance, but also when
you look at these companies and read the research reports,
you can see the fees that they're charging as well
and in what dividends they're paying, and you know how
they've attracted in comparison to the benchmark. And they're very
easy to read. Just going to sit down and just
have a look, and there are lots of cheat sheets
(09:08):
available online as well.
Speaker 1 (09:09):
Yeah, you are right, it's a good place to start
for someone getting into it looking at these listed investment
companies or ETFs because they are they can be quite broad,
but you'll often find some good kind of research material
around it and explain the material as to kind of
what they are investing in and benefiting from the expertise
(09:30):
and the experience of the people that are actually running them.
What do you need then, So say you've kind of
made all of these decisions, you've done a whole lot
of research, what do you need in terms of an
app or a platform for physically buying these shares? Should
you be looking for something that is attached to your
bank or should you be going there's a whole lot
(09:51):
of different apps and platforms now to buy shares. What
do you look for?
Speaker 2 (09:55):
There are so many out there, and there are so
many great ones. Obviously making sure it's you're low or
I'm not going to say low, because they can sometimes
be a bit of a cash So you want to
look at cost effective brokerage fees. Don't necessarily go with
the cheapest because they may be making a profit in
an indirect way, which I think we've explained in a
(10:16):
previous episode. But also making sure that it's very user friendly,
like there's nothing worse than getting stuck and not understanding
about how to put a trade through or how to
pounce or something, or know how to access certain components.
So an intuitive you know what, they call it, a
friendly interface online platform. Then looking at making sure that
there's actually some really great free resources that are independent,
(10:39):
such as independent research, and then making sure you've got
updates so as to what's going on around the world,
you know news feed as well. But then this one
is missed by a lot of people, and it's actually
access to wealth building tools such as margin loans, and
this is you know, if you're someone who doesn't own
property and would like to borrow to invest, you're limited
(11:02):
as to how you can access loans to build your
share portfolio. Now. If your platform offers a marginal loan facility,
that's great because you can sometimes if it's the right
product for you, go through that. If they don't offer
a gearing facility like a margin loan, you then have
to find another one, which means moving your share portfolio
to a new account, which could be It's doable, It's fine,
(11:24):
but it can be a little bit fiddly, So think
about what you need immediately, but also what tools you're
going to be able to want to have access to
further down the track so you don't have to create
more paperwork for yourself and moving money around.
Speaker 1 (11:36):
It seems as though as soon as you start talking
about margin loans and things, it's a good time to
be going. Okay. Might get some advice on this, yes,
talk to a financial advisor or a financial planner and
just see if it is right for you and get
some information on how all of that works, because it
can be a val valuable tool as long as that's
(11:56):
right for you.
Speaker 2 (11:57):
It is I mean borring to invest is definitely a
high restray. It's not for everybody, it's for long term
game plan, so always go and get advice. And the
other thing you want to look for when it comes
to picking the right platform for yourself is what other
asset classes can you reach? You know, maybe you just
want to invest in Australian shares now, but maybe next year,
once you feel more confident with investing, you might want
to access international share markers as well. Is that still
(12:20):
going to be the right platform. Hence why I say
look at what you need now, but also make sure
you're taking into consideration your long term needs.
Speaker 1 (12:27):
Okay, are there this is what step number five? I
forgot to number the steps step four, step five. Are
there minimum amounts that you need to buy or are
there minimum amounts that you should be looking to buy
in order to maximize efficiency? Because I can't. I'd imagine
(12:48):
that you don't want to see all of your money
eatn up in brokery.
Speaker 2 (12:51):
Yeah, so obviously there are lots of micro investing platforms around.
I'm not a huge fan of micro investing at all.
Speaker 1 (12:58):
What do you mean by micro investing?
Speaker 2 (13:00):
So investing with small amounts of money? So you know
five dollars ten dollars look over time. You know, if
you've got a consistent strategy in place, it's great. But
as you know, I call it sort of the Friday
Flat of is share investing. You're never gonna build. It's
gonna take a really long time and highly unlikely you're
going to build a million dollar portfolio. When you're investing
with small amounts of money, you want to make sure
(13:23):
that your portfolio is growing along with your own financial literacy.
And obviously it doesn't mean investing constantly large amounts of money,
but you need your portfolio needs to grow and you
need to grow as well. So if you can only
afford to invest ten dollars a month, that's fine, use
that to get started. But the moment you find that
you're actually able to start investing a larger amounts of money,
(13:44):
you know, closer to sort of between five hundred and
thousand dollars at a time, great, that's when you've outgrown
those micro investing platforms, and that's when you are more
likely to build that million dollar investment portfolio because you're
investing larger amounts of money on a regular basis and
taking it a lot more seriously. Investing more time, thinking
about your goals, thinking about the strategy, thinking about the risk,
tracking your dividends. It's like it's sort of you know,
(14:07):
I speak to people about micro investing. They tend to
have a couple of different micro investing accounts with you know,
between a one thousand dollars and fifty dollars because there
isn't enough in there. They're not investing their time and
energy to make it grow and make it work for them.
So it's kind of a little bit inefficient. Okay, that's
my issue. It's it's still great to help people get started,
and that's hence why I call it the Friday flat.
(14:28):
You learn to get started like skiing on Friday flat.
Speaker 1 (14:31):
Okay, you learn the basics, basics.
Speaker 2 (14:33):
You learn how to how to move safely down the slopes.
But then you've got to get yourself onto the different
runs of the mountain and learn how to you know,
go down moguls and steeper runs and scare over ice
and we'll snowboard over ice. That's my issue with micro investing,
So keep going, just don't stop playing in the safe
kiddie pool.
Speaker 1 (14:53):
Hang on a week I sound all, now we could
be eating a snow melts melted. I'm enjoying this, and
please continue this crossed analogy here.
Speaker 2 (15:05):
I'll go back to Friday Flats. We're skiing on flat surfaces.
It's safe, it's can't hurt yourself. You're can't get too
much trouble.
Speaker 1 (15:11):
Are our clothes wet from being in the pool, because
that would be mighty cold.
Speaker 2 (15:15):
Well, if it depends how many times you've fallen down
in the snow, if you keep falling down the snow,
maybe stay on Friday Flats until you find yourself learning
how to ski safely, stop and start and make turns
and not smash into people.
Speaker 1 (15:27):
Okay, and then we get then we get into the pool.
Speaker 2 (15:30):
The tea bar and go, oh my god, Okay, we're
stopping the there's no more pool analogy. Sorry, I got
over excited. I diversified my analogy. Bring it back to
the skiing snowboarding.
Speaker 1 (15:40):
I understand what you are saying. I get it, and
thank you for indulging me.
Speaker 2 (15:47):
So can I recommend people speaking from experience? Because I
built a three hundred and something thousand dollars share portfolio
by doing this is parcels of one thousand dollars thousand
all the project. I literally hustled one thousand dollars at
a time. The moment I had a thousand dollars saved up,
I immediately invested it before I got time to spend it,
and I reinvested the dividends and it's grown and I
(16:09):
gamified it by just sticking to that. That's why it's
a three hundred and something thousand, three hundred and ten
thousand dollars diversified share port follow It was enough for
me to fathom and you know, actually see myself coming
up with that money didn't seem unreasonable. So I just
got on and did it. And because I've put more in, obviously,
it's grown significantly with the help of a small, very
(16:31):
small margin loan attached.
Speaker 1 (16:32):
Yeah, so you're in the lap pool now.
Speaker 2 (16:35):
Yeah, it's actually quite satisfying to think that's never come
out of my saving. I'm not biting. I'm not biting.
Speaker 1 (16:41):
You just ignored men, didn't you, Because.
Speaker 2 (16:43):
I'm sorry, I just got caught up in the moment
of prode like think you should.
Speaker 1 (16:46):
You should be proud of that. That is an amazing achievement.
Speaker 2 (16:48):
It is not single dollar has ever come from my
savings or for my salary.
Speaker 1 (16:53):
Really.
Speaker 2 (16:54):
Oh wow, Yeah, I've hustled hard.
Speaker 1 (16:56):
You certainly have. Okay, there's a few things as you
mentioned there that I want to follow up on. You
talk about dividends and at tracking dividends and reinvesting dividends
and a bunch of other things there. It will take
a quick break and come back, because that is our
first five steps, and we have three more steps to
go straight after the break. Canad Today we are doing
(17:22):
a step by step guide to investing in shares. We've
gone through the process of research and finding a platform
and the minimum amounts or the amounts the meaningful amounts
to invest in order to make a difference and to
help build your portfolio and hopefully get ahead into the future.
Next step, you've bought your shares. Now, what how often
(17:46):
do you check them?
Speaker 2 (17:48):
I would recommend people never check their portfolios daily or
even weekly, Okay, I would suggest either monthly or even quarterly.
Shares are naturally very volatile in a short to medium term,
so if you're looking at it on a regular basis,
you can become a little bit emotional and make knee
jerk reactions which can come with regret. So just look
(18:12):
at it every now and again, and what I strongly
suggest people do is instead of checking the value of
the portfolio, check the passive income. Is your investment portfolio
still paying you a passive income? Has that passive income grown?
You know, where are the sort which sources are they
coming from? Do we need to add more to help
diversify that portfolio? So look at the passive income. Otherwise
(18:34):
you can sometimes make regretful decisions. And then obviously you
want to stay informed what's going on in the world.
You know what's going on in particular industries and the
companies that you're investing in, and understand that there are
times where you know there are headlines. You know, these
headlines about billions of dollars being wiped off and calls
of a market crash. There are always going to be
(18:56):
those stories around. There's nothing new, but knowing what to
listen to and what to turn the volume down on
a brilliant resources. I recommend anyone tune into when they're
worried about whether they should sell, particularly at times like this.
Is a economist called Shane Oliver from AMP and he
is brilliant at explaining what is going on in the
(19:18):
world and what you need to do, and he helps
really calm your emotions and explain everything and also to
see the potential long term opportunity in what's going on.
So you've really got to think about like shares as
baking a cake. You know, once you put the cake in,
(19:40):
you're giving me these looks as then oh my god,
can it not again?
Speaker 1 (19:42):
It is high risk. We've just wasted a whole lot
of time with a skiing mix with swimming and baking
a gate. Where is the baking cake going to end up?
Is it going to end up in the zoo? Perhaps? Well?
Speaker 2 (19:54):
Building a sharebool follows like making a cake. Once you
put the cake in the oven, if you're constantly opening
the door every five minutes, you're probably going to ruin
the cake, or it's going to take a lot longer
to actually cook and be eaten.
Speaker 1 (20:10):
Is that it? That?
Speaker 2 (20:11):
Is it? My friend?
Speaker 1 (20:14):
You're not introducing another kind of unusual element.
Speaker 2 (20:17):
I promise there'll be no more analogies this episode.
Speaker 1 (20:20):
I promises you unable to keep What about dividends? How
do they work? And how do you reinvest them?
Speaker 2 (20:29):
Great questions?
Speaker 1 (20:31):
Two questions. I rolled them into one. I gave you
a bonus okay.
Speaker 2 (20:34):
Two for the press of one. So dividends. Dividends are
typically paid two times per year, and they get paid
as a percentage of the share price. So a five
percent yield means you earn five dollars and dividends for
say one hundred dollars invested.
Speaker 1 (20:50):
And so this is typically a share of the profits
of the company after they've reported their earnings the halfway
mark through the year, and then again at the full
and if they've got x amount of money that they've
made in profit, they may choose to pay a dividend
to their Yes.
Speaker 2 (21:06):
They look at their profits and they go, all right,
we need to reinvest into the company, employment more staff,
spend more money on marketing, product development, and so forth.
And we've also need to pay out some money to
our shareholders. So they'll split the profits a balance between
the two in whichever way they see fit. And that's
when you receive a dividend, which is the equivalent of
earning rent from an investment property. To reinvest your dividends,
(21:30):
which essentially means instead of taking that money for yourself
and spending it, you actually say no, don't pay me
that dividend. I want to have the money used to
buy more shares in that company. Now, there are various
ways of doing this. Some platforms actually will allow you
to set it up with an online broker, or you
have to go through the share registry online and tick
(21:53):
the box for dividend reinvestment.
Speaker 1 (21:56):
And that's all through that. You say, the share registry,
that's the that's the.
Speaker 2 (22:00):
Body link market services.
Speaker 1 (22:02):
They will be the ones that send you all the
correspondents in relation to when you purchase your shares. You'll
get it in the mail or you'll get a Vira
email saying you congratulations, you're in our shareholder in X company,
and we are the registry for it and we'll be
running this et cetera. And they are the ones that
you can talk to potentially.
Speaker 2 (22:17):
About It's all done online. And I mean you have
to do this anyway because you need to upload your
tax file number and your bank account details. How I
will say, sometimes companies might not necessarily offer an automatic
dividend reinvestment opportunity, which means you have to take it
as cash. That doesn't mean you can't reinvest it just
means you need to manually reinvest it so you get
receive a dividend, I say a hundred dollars, hold onto
(22:39):
that one hundred dollars, and then go and buy physically
yourself one hundred dollars worth more shares. Okay, Dividend reinvestment
is very powerful because you don't have to pay brokerage,
so it actually can help you save money. But you
need to make sure your portfolio is diversified also on
that not dibidends. Some companies may go through a period
of time where they have to pause a dividend reinvestment plan,
which means you have to take it as cash and
(23:01):
you still have to pay tax in coome tax that
is on that dividend, whether it's reinvested or not as well,
which a lot of people sort of miss.
Speaker 1 (23:08):
Yeah, and I want to talk to you then about
the tax implications because this is and you've talked about
that in the past, about people not realizing that they
still need to pay tax on these dividends, these earnings.
But there's also like franking, credits and all kinds of
other elements that come in when we're talking about dividends,
(23:28):
and it is helpful to have a good accountant when
it comes to all of this.
Speaker 2 (23:33):
Yes, definitely because you need to look at the dates,
so you know how long have you held that particular
asset forward, do you qualify for any of capital gains,
tax discounts? Really important? And then there's things like franking credits.
We almost need to do I think an episode purely
on franking credits because it's it sounds a lot more
complicated than what it is, but it's incredibly valuable, particularly
for people who are approaching retirement or are retired.
Speaker 1 (23:56):
Yeah, it's one of the main kind of benefits to
investing in Australia as opposed to investing overseas. The franking
credit system we have here.
Speaker 2 (24:03):
That's why I love Australian industrial shares. But you know,
having knowing your franking credits, the tax credits that is
attached to each of them, is really important. And then
obviously being I wouldn't say meridiculous, but you need to
be organized with keeping a record of what date you purchased,
what dates you know, how much was reinvested at what
share price, you know, what if the costs, how much
(24:25):
you've spent on brokered all those sorts of little things
that you need to do and be on top of.
Speaker 1 (24:31):
Did you have a question for me earlier. I remember
earlier in.
Speaker 2 (24:34):
The episode, had you reminded me? Because I wish you
would have forgotten.
Speaker 1 (24:37):
Well, I'm just thinking of potentially listeners who are hanging
out for this question to hear me put on the spot,
and if we didn't deliver, that would be an unsatisfied customer.
Speaker 2 (24:48):
Have you as you know? Now to go back, We've
been doing this podcast for how many years?
Speaker 1 (24:52):
What? Three or three and a half four?
Speaker 2 (24:56):
I think it's three. It feels like a it'll be
approaching three. So have you started an investment portfolio? Well,
started investing at least?
Speaker 1 (25:10):
Ah, I taught you. You have taught me a lot.
You know what I have done? Yes, you know what
I have done. I have started seeing a financial planner, Okay,
and investing is all going to come as part of that,
all right, all right?
Speaker 2 (25:27):
All right?
Speaker 1 (25:28):
So if you have taught me nothing else, and you
have taught me a lot of things, the number one
lesson I have taken from you is the importance of
getting professional advice, all right, all right, So therefore I
think I've managed to evade any kind of trouble from you.
Can I ask you one more question? Yes? And I've
(25:48):
left you no time to answer this. There's this whole
principle of with shares, the idea being that that time
in the market is so much more important than trying
to time the market itself. How do shares then work
as a long term, long, long term, potentially investment strategy,
(26:09):
that it's not so much about trying to find the
right time to buy into the market, that it is
about kind of how this is going to play out
over ten, fifteen to twenty plus years.
Speaker 2 (26:17):
Well, when you look at the historical performance of all
the different asset classes, and if anyone wants to get
a quick, easy free resource, go to the Vanguard website
and type in Vanguard chart because you can actually see
all these different color lines. They're really easy to read.
But time in the market wins, so historically the share
market rises over the long run. So staying the course,
(26:39):
going the distance reduces your risk of trying to miss
the best market days. And even experts who've been doing
this for ten, fifteen, twenty, thirty forty years still get
this wrong. And you also look at the when you
do get it right, the capital games attacks that comes
off your profit and then obviously the cost of getting
back into the market and then timing to try and
get back in the right point. So there's a lot
(27:01):
of danger in this. So if you had invested ten
thousand dollars into the AX two hundred and twenty twenty
and left it untouched, it would be worth significantly more
than it would be worth significantly more today. So investing
is like growing a tree. You know, you I promised
there wouldn't best no.
Speaker 1 (27:22):
More analogies, and now we are. We have gone from
skiing into the kitchen to bake a cake. Now we
are growing a tree. Go on, plant those seats, all right.
Speaker 2 (27:32):
It's like planting growing a tree. You plant the seat
and you see nothing for maybe a couple of years,
and you think, oh my gosh, I planted. It's done nothing.
And then you might see a little sprout and you think, oh,
is that all I've got? That's nothing. It looks like
a weed. You would get tempted to pull it out
and start all over again. But if you just trust
the process, make sure it's got some sunlight, some water,
(27:57):
you know, watch the pests, then the elements, let it
do its thing, and over time it grows into fruit
tree and it gives you back fruit berries, apples, peaches, pears,
whatever you like, as you can enjoy the fruits of
your patients, your dedication and your commitment because you've just
(28:19):
not tried to time the right time to plant, but
you've just let it's time work. It's magic for you.
Speaker 1 (28:25):
Are you using those fruits in the cake that you're making?
Speaker 2 (28:28):
I could make I make a really good brownie and
I sometimes put raspberries in that. So if I can
filt me use raspberries, it's hay packup mix, I will.
Speaker 1 (28:37):
Okay, And that's good fuel for skiing.
Speaker 2 (28:40):
It is, But I don't go and open the door
all the time and I'm checking the brownies.
Speaker 1 (28:46):
God, this is just one of those episodes where you'll
have to listen to it three times just to make
sense of all of the various analogies, which I'm sorry
I have actually just deliberately tried to confuse you there
At the end. I think, I think that's a great job.
You know what?
Speaker 2 (28:59):
That was?
Speaker 1 (28:59):
A what eight step program to investing into shares? I
think gold star to us? Can we do that? Yes?
We can award ourselves a gold star. If anybody wants
more information from you, Canna, where do they find you.
Speaker 2 (29:15):
If you're a confused by all my different analogies, please
feel free to reach out to me on Instagram at
Sugar Mama TV and I'll happily come back to you
as soon as possible with.
Speaker 1 (29:23):
A personalized analogy.
Speaker 2 (29:25):
Yes, so I will even jump on a call and
help I explain something.
Speaker 1 (29:29):
To confuse you even more. You can hear me every
day with Sean Aylmer on Fear and Greed, daily business
news for people who make their own decisions. Thank you
for listening to how Do They Afford That? Remember to
hit follow on the podcast, and the best thing you
can do is to tell somebody else. Send them a
link to this episode if you think they might be interested,
spread the word about how do they afford that? Thank
you for your company. Join us again next week
Welcome to How Do They Afford That? The podcast that
peaks into the financial lives of everyday Australians. I'm Uncle Thompson.
I'm an author and the co host of the podcast
Fear and Greed business news As always, I'm with Canna Campbell,
financial planner and founder of Sugar Mummer TV, the financial
literacy platform covering YouTube, podcast, books, Instagram threads, TikTok and more.
(00:22):
Did you hear me pause between financial and planner? Then
I just suddenly suddenly just hit me financial planner and
financial advisor. Is there a difference?
Speaker 2 (00:35):
Yes, a financial planner tends to be more experienced. Okay,
I may have had more qualifications and training behind them.
Normally a financial advisor is reserved for maybe a junior,
like someone who is new to the industry. Maybe not
necessary to have as much experience as many qualifications.
Speaker 1 (00:55):
Okay, Well, I will no longer hesitate when I get
to that, and I'll just jump straight in with financial
plan How are you going?
Speaker 2 (01:02):
I'm well.
Speaker 1 (01:02):
How are you I'm good? I'm good, Thank you, we
are we're going back to basics today. Yeah, this is good,
it's good. It is one of the most common questions
that we get here at how today afford that? How
do I get started investing in shares? So today we
(01:22):
are you going to put together a step by step
guide to investing in shares? If you're open to.
Speaker 2 (01:30):
That sounds good to me?
Speaker 1 (01:31):
Okay, all right, Before we do that, obviously, everything that
we talk about is general in nature. It is never
personal investment, strategic or product advice. It is purely financial
education purposes only. I'm actually going to rewind slightly and
say why shares? Why should an investor think about investing
(01:51):
in equities?
Speaker 2 (01:53):
All right? There are lots of reasons why you should
be investing, okay, So obviously before on shares today. So
having ownership of a business that is going to hopefully
grow over time and obviously means your money is growing
over time. It's also a source of passive income to you.
To give you that financial freedom. It is an opportunity
(02:15):
to grow wealth over the long run and try and
exceed or beat inflation. And shares are a lot more
liquid than say property. You know, if you have a
property worth say five hundred thousand dollars, and you need
suddenly fifty thousand dollars, you can't go and sell one bedroom,
whereas with a share portfolio you can fill fifty thousand
dollars shares and then the money will be in your
(02:36):
account within a couple of days.
Speaker 1 (02:38):
Okay, we will get to some more of the benefits
as we go through, as we go through our step
by step guide. But when you buy a share, what
are you actually buying?
Speaker 2 (02:49):
Buying a slice of the company.
Speaker 1 (02:51):
It is as simple as straightforward as.
Speaker 2 (02:53):
That you're own a percentage of that business, and it
doesn't matter how small, you still own a percentage, and
obviously you can build that over time with various different strategies,
but you also have right to some of the gains
through a dividend, and obviously the long term growth of
that share price, which is your represents your share of
the business. But obviously, at the same time you carry
(03:16):
the risks that that company may go through a tough time,
or the value may drop, or they may stop dividends
for a period of time. So it's like owning an
investment property when you buy shares, but instead of receiving rent,
you receive dividends, and of course you are hopeful that
the value of that property goes up. You're hopeful that
(03:36):
the value of that share your ownership and that business
goes up as well.
Speaker 1 (03:40):
Okay, so you're buying a share, a slice of the company,
and you are sharing in the fortunes of that company
moving forward, whether it goes up or down, whether they
make money, whether they lose money. That you are also.
Speaker 2 (03:51):
Bearing that you're like a business owner.
Speaker 1 (03:53):
Okay, shall we get to the steps. Why are you
laughing at that? Is it just because I like to
put everything into a list.
Speaker 2 (04:01):
I'm going to ask you a question in a second,
because I feel like there is an ulterior motive behind
the topic today. And yes, you're looking very.
Speaker 1 (04:08):
Scared right now. No, I just I don't I like
to ask the questions on this show. I don't like
it when you turn it back on me because I
never know where you're going to go with things, and
I don't like to get caught out. Step number one,
do you start with research? Yes, that was an assumption,
and I made a correct assumption for once. This is
(04:29):
a good day. Look.
Speaker 2 (04:30):
The golden rule but that it comes to investing is that
you never invest in something you don't understand. And that
doesn't mean that you go, oh, I don't understand this,
Therefore I won't invest in it means no, you need
to keep going with your research until you understand what
that is and then you can work out whether it
is the right investment for you. So a great place
to start is look at things that you were generally interested,
(04:51):
generally and genuinely interested in. And there is so much
free research online that is an amazing quality, you know,
such as like more Star and the AX has so
much brilliant online tutorials as well to help you get
started with investing. But look at brands that you use daily,
the supermarkets that you visit, or where you do your banking,
(05:11):
or you know where you buy your appliances from, so things,
you know, places that feel really relevant and real. That's
a great place to get started. And then of course
you need to think about well how am I going
to buy these shares and that's when you need most
of us need an online share training account unless you're
going to go through a user stockbroker.
Speaker 1 (05:29):
Okay. Can I also make one recommendation that in terms
of research, and that is go back and listen to
an episode that we have done previously where we spoke
to Roger Montgomery who took us through in detail what
he looks for in buying a quality company, and he
goes through in really plain English kind of how to
(05:52):
look at what the company is planning to do in
the future, whether it's making money, and what its future
prospects are, and whether that might make a good choice
to put some money into.
Speaker 2 (06:04):
So he's got his book as well.
Speaker 1 (06:05):
Yeah, absolutely, he spoke to us about twelve months ago,
so you will find that in the how to they
afford that playlist. Step one start with research. How do
you decide then what you are going to buy? And
this is quite broad because it's not just specifically which
company you are going to buy, because there's actually a
number of ways that you can be investing in shares.
(06:25):
You might not be just going for a particular company.
You might be buying an ETF, an exchange traded fund.
Speaker 2 (06:31):
Or even a listed investment company. So all right, you've
got lots of different choices out there, so you can
go with your individual shares. Obviously that involves a lot
more research, a lot more risk. You've got to make
sure that you quickly diversify because initially your first investment
might be solely in just one company, so you need
to make sure that as new money comes in, you know,
you diversify, so there is there is risk with that,
and if you're a beginner investor, that's where I would
(06:54):
strongly suggest starting to with your research around things like
ETFs and listed investment companies, even you know, maybe managed funds,
because it means you're buying a investment into an investment
portfolio that's already diversified for you. It's like grabbing a
shopping basket that's already been pre packed for you.
Speaker 1 (07:11):
In diversification. You ask anybody and they will talk about
the fact that that is a really important part of
your strategy. It is about spreading the risk.
Speaker 2 (07:20):
Exactly, and it saves you a lot of time as well,
because if you're new to investing, it is very overwhelming
and you want to get started. Do you want to
get hit a bit of a block and go, Okay,
I haven't invested yetuse I haven't worked at what stopped
be buying at. But if you look at something like
a listed investment company or an ETF, which are very
similar just different tax structures, this can mean that you
can actually get your foot in the door start building
(07:41):
that investment portfolio. You know, set up a regular investment plan.
But then you can in the meantime know that your
money is invested in working for you. But you continue
on your financial education journey and start maybe thinking, Okay,
I've got ten thousand into this listed investment company, I
want to go and cherry peak my next five stocks
I'm going to buy individually. So you aren't backed into
a corner where you can only go into ETFs or
(08:02):
listed investment companies. You can have a blend of everything.
And that's actually what I have.
Speaker 1 (08:07):
Yeah, And so in terms of listed investment companies, typically
there will be you are essentially buying a piece of
that company, which in turn owns a whole bunch of
other companies that are chosen by professionals working behind the.
Speaker 2 (08:21):
Scenes exactly up just eighty different companies, not.
Speaker 1 (08:23):
More, and they may have different themes to them as well.
And then ETFs the exchange traded funds. They might be
a fund that tracks a particular part of the market
to buyte track kind of the ASX two hundred of
might track the tech companies, or it might track companies
and stocks that are exposed to gold, for instance, And
you can really kind of pick where you want to
be putting your money by going with it, say ETFs
(08:46):
or listed investment.
Speaker 2 (08:47):
Companies, and you can look at their historical returns. Now,
obviously that does not indicate future performance, but also when
you look at these companies and read the research reports,
you can see the fees that they're charging as well
and in what dividends they're paying, and you know how
they've attracted in comparison to the benchmark. And they're very
easy to read. Just going to sit down and just
have a look, and there are lots of cheat sheets
(09:08):
available online as well.
Speaker 1 (09:09):
Yeah, you are right, it's a good place to start
for someone getting into it looking at these listed investment
companies or ETFs because they are they can be quite broad,
but you'll often find some good kind of research material
around it and explain the material as to kind of
what they are investing in and benefiting from the expertise
(09:30):
and the experience of the people that are actually running them.
What do you need then, So say you've kind of
made all of these decisions, you've done a whole lot
of research, what do you need in terms of an
app or a platform for physically buying these shares? Should
you be looking for something that is attached to your
bank or should you be going there's a whole lot
(09:51):
of different apps and platforms now to buy shares. What
do you look for?
Speaker 2 (09:55):
There are so many out there, and there are so
many great ones. Obviously making sure it's you're low or
I'm not going to say low, because they can sometimes
be a bit of a cash So you want to
look at cost effective brokerage fees. Don't necessarily go with
the cheapest because they may be making a profit in
an indirect way, which I think we've explained in a
(10:16):
previous episode. But also making sure that it's very user friendly,
like there's nothing worse than getting stuck and not understanding
about how to put a trade through or how to
pounce or something, or know how to access certain components.
So an intuitive you know what, they call it, a
friendly interface online platform. Then looking at making sure that
there's actually some really great free resources that are independent,
(10:39):
such as independent research, and then making sure you've got
updates so as to what's going on around the world,
you know news feed as well. But then this one
is missed by a lot of people, and it's actually
access to wealth building tools such as margin loans, and
this is you know, if you're someone who doesn't own
property and would like to borrow to invest, you're limited
(11:02):
as to how you can access loans to build your
share portfolio. Now. If your platform offers a marginal loan facility,
that's great because you can sometimes if it's the right
product for you, go through that. If they don't offer
a gearing facility like a margin loan, you then have
to find another one, which means moving your share portfolio
to a new account, which could be It's doable, It's fine,
(11:24):
but it can be a little bit fiddly, So think
about what you need immediately, but also what tools you're
going to be able to want to have access to
further down the track so you don't have to create
more paperwork for yourself and moving money around.
Speaker 1 (11:36):
It seems as though as soon as you start talking
about margin loans and things, it's a good time to
be going. Okay. Might get some advice on this, yes,
talk to a financial advisor or a financial planner and
just see if it is right for you and get
some information on how all of that works, because it
can be a val valuable tool as long as that's
(11:56):
right for you.
Speaker 2 (11:57):
It is I mean borring to invest is definitely a
high restray. It's not for everybody, it's for long term
game plan, so always go and get advice. And the
other thing you want to look for when it comes
to picking the right platform for yourself is what other
asset classes can you reach? You know, maybe you just
want to invest in Australian shares now, but maybe next year,
once you feel more confident with investing, you might want
to access international share markers as well. Is that still
(12:20):
going to be the right platform. Hence why I say
look at what you need now, but also make sure
you're taking into consideration your long term needs.
Speaker 1 (12:27):
Okay, are there this is what step number five? I
forgot to number the steps step four, step five. Are
there minimum amounts that you need to buy or are
there minimum amounts that you should be looking to buy
in order to maximize efficiency? Because I can't. I'd imagine
(12:48):
that you don't want to see all of your money
eatn up in brokery.
Speaker 2 (12:51):
Yeah, so obviously there are lots of micro investing platforms around.
I'm not a huge fan of micro investing at all.
Speaker 1 (12:58):
What do you mean by micro investing?
Speaker 2 (13:00):
So investing with small amounts of money? So you know
five dollars ten dollars look over time. You know, if
you've got a consistent strategy in place, it's great. But
as you know, I call it sort of the Friday
Flat of is share investing. You're never gonna build. It's
gonna take a really long time and highly unlikely you're
going to build a million dollar portfolio. When you're investing
with small amounts of money, you want to make sure
(13:23):
that your portfolio is growing along with your own financial literacy.
And obviously it doesn't mean investing constantly large amounts of money,
but you need your portfolio needs to grow and you
need to grow as well. So if you can only
afford to invest ten dollars a month, that's fine, use
that to get started. But the moment you find that
you're actually able to start investing a larger amounts of money,
(13:44):
you know, closer to sort of between five hundred and
thousand dollars at a time, great, that's when you've outgrown
those micro investing platforms, and that's when you are more
likely to build that million dollar investment portfolio because you're
investing larger amounts of money on a regular basis and
taking it a lot more seriously. Investing more time, thinking
about your goals, thinking about the strategy, thinking about the risk,
tracking your dividends. It's like it's sort of you know,
(14:07):
I speak to people about micro investing. They tend to
have a couple of different micro investing accounts with you know,
between a one thousand dollars and fifty dollars because there
isn't enough in there. They're not investing their time and
energy to make it grow and make it work for them.
So it's kind of a little bit inefficient. Okay, that's
my issue. It's it's still great to help people get started,
and that's hence why I call it the Friday flat.
(14:28):
You learn to get started like skiing on Friday flat.
Speaker 1 (14:31):
Okay, you learn the basics, basics.
Speaker 2 (14:33):
You learn how to how to move safely down the slopes.
But then you've got to get yourself onto the different
runs of the mountain and learn how to you know,
go down moguls and steeper runs and scare over ice
and we'll snowboard over ice. That's my issue with micro investing,
So keep going, just don't stop playing in the safe
kiddie pool.
Speaker 1 (14:53):
Hang on a week I sound all, now we could
be eating a snow melts melted. I'm enjoying this, and
please continue this crossed analogy here.
Speaker 2 (15:05):
I'll go back to Friday Flats. We're skiing on flat surfaces.
It's safe, it's can't hurt yourself. You're can't get too
much trouble.
Speaker 1 (15:11):
Are our clothes wet from being in the pool, because
that would be mighty cold.
Speaker 2 (15:15):
Well, if it depends how many times you've fallen down
in the snow, if you keep falling down the snow,
maybe stay on Friday Flats until you find yourself learning
how to ski safely, stop and start and make turns
and not smash into people.
Speaker 1 (15:27):
Okay, and then we get then we get into the pool.
Speaker 2 (15:30):
The tea bar and go, oh my god, Okay, we're
stopping the there's no more pool analogy. Sorry, I got
over excited. I diversified my analogy. Bring it back to
the skiing snowboarding.
Speaker 1 (15:40):
I understand what you are saying. I get it, and
thank you for indulging me.
Speaker 2 (15:47):
So can I recommend people speaking from experience? Because I
built a three hundred and something thousand dollars share portfolio
by doing this is parcels of one thousand dollars thousand
all the project. I literally hustled one thousand dollars at
a time. The moment I had a thousand dollars saved up,
I immediately invested it before I got time to spend it,
and I reinvested the dividends and it's grown and I
(16:09):
gamified it by just sticking to that. That's why it's
a three hundred and something thousand, three hundred and ten
thousand dollars diversified share port follow It was enough for
me to fathom and you know, actually see myself coming
up with that money didn't seem unreasonable. So I just
got on and did it. And because I've put more in, obviously,
it's grown significantly with the help of a small, very
(16:31):
small margin loan attached.
Speaker 1 (16:32):
Yeah, so you're in the lap pool now.
Speaker 2 (16:35):
Yeah, it's actually quite satisfying to think that's never come
out of my saving. I'm not biting. I'm not biting.
Speaker 1 (16:41):
You just ignored men, didn't you, Because.
Speaker 2 (16:43):
I'm sorry, I just got caught up in the moment
of prode like think you should.
Speaker 1 (16:46):
You should be proud of that. That is an amazing achievement.
Speaker 2 (16:48):
It is not single dollar has ever come from my
savings or for my salary.
Speaker 1 (16:53):
Really.
Speaker 2 (16:54):
Oh wow, Yeah, I've hustled hard.
Speaker 1 (16:56):
You certainly have. Okay, there's a few things as you
mentioned there that I want to follow up on. You
talk about dividends and at tracking dividends and reinvesting dividends
and a bunch of other things there. It will take
a quick break and come back, because that is our
first five steps, and we have three more steps to
go straight after the break. Canad Today we are doing
(17:22):
a step by step guide to investing in shares. We've
gone through the process of research and finding a platform
and the minimum amounts or the amounts the meaningful amounts
to invest in order to make a difference and to
help build your portfolio and hopefully get ahead into the future.
Next step, you've bought your shares. Now, what how often
(17:46):
do you check them?
Speaker 2 (17:48):
I would recommend people never check their portfolios daily or
even weekly, Okay, I would suggest either monthly or even quarterly.
Shares are naturally very volatile in a short to medium term,
so if you're looking at it on a regular basis,
you can become a little bit emotional and make knee
jerk reactions which can come with regret. So just look
(18:12):
at it every now and again, and what I strongly
suggest people do is instead of checking the value of
the portfolio, check the passive income. Is your investment portfolio
still paying you a passive income? Has that passive income grown?
You know, where are the sort which sources are they
coming from? Do we need to add more to help
diversify that portfolio? So look at the passive income. Otherwise
(18:34):
you can sometimes make regretful decisions. And then obviously you
want to stay informed what's going on in the world.
You know what's going on in particular industries and the
companies that you're investing in, and understand that there are
times where you know there are headlines. You know, these
headlines about billions of dollars being wiped off and calls
of a market crash. There are always going to be
(18:56):
those stories around. There's nothing new, but knowing what to
listen to and what to turn the volume down on
a brilliant resources. I recommend anyone tune into when they're
worried about whether they should sell, particularly at times like this.
Is a economist called Shane Oliver from AMP and he
is brilliant at explaining what is going on in the
(19:18):
world and what you need to do, and he helps
really calm your emotions and explain everything and also to
see the potential long term opportunity in what's going on.
So you've really got to think about like shares as
baking a cake. You know, once you put the cake in,
(19:40):
you're giving me these looks as then oh my god,
can it not again?
Speaker 1 (19:42):
It is high risk. We've just wasted a whole lot
of time with a skiing mix with swimming and baking
a gate. Where is the baking cake going to end up?
Is it going to end up in the zoo? Perhaps? Well?
Speaker 2 (19:54):
Building a sharebool follows like making a cake. Once you
put the cake in the oven, if you're constantly opening
the door every five minutes, you're probably going to ruin
the cake, or it's going to take a lot longer
to actually cook and be eaten.
Speaker 1 (20:10):
Is that it? That?
Speaker 2 (20:11):
Is it? My friend?
Speaker 1 (20:14):
You're not introducing another kind of unusual element.
Speaker 2 (20:17):
I promise there'll be no more analogies this episode.
Speaker 1 (20:20):
I promises you unable to keep What about dividends? How
do they work? And how do you reinvest them?
Speaker 2 (20:29):
Great questions?
Speaker 1 (20:31):
Two questions. I rolled them into one. I gave you
a bonus okay.
Speaker 2 (20:34):
Two for the press of one. So dividends. Dividends are
typically paid two times per year, and they get paid
as a percentage of the share price. So a five
percent yield means you earn five dollars and dividends for
say one hundred dollars invested.
Speaker 1 (20:50):
And so this is typically a share of the profits
of the company after they've reported their earnings the halfway
mark through the year, and then again at the full
and if they've got x amount of money that they've
made in profit, they may choose to pay a dividend
to their Yes.
Speaker 2 (21:06):
They look at their profits and they go, all right,
we need to reinvest into the company, employment more staff,
spend more money on marketing, product development, and so forth.
And we've also need to pay out some money to
our shareholders. So they'll split the profits a balance between
the two in whichever way they see fit. And that's
when you receive a dividend, which is the equivalent of
earning rent from an investment property. To reinvest your dividends,
(21:30):
which essentially means instead of taking that money for yourself
and spending it, you actually say no, don't pay me
that dividend. I want to have the money used to
buy more shares in that company. Now, there are various
ways of doing this. Some platforms actually will allow you
to set it up with an online broker, or you
have to go through the share registry online and tick
(21:53):
the box for dividend reinvestment.
Speaker 1 (21:56):
And that's all through that. You say, the share registry,
that's the that's the.
Speaker 2 (22:00):
Body link market services.
Speaker 1 (22:02):
They will be the ones that send you all the
correspondents in relation to when you purchase your shares. You'll
get it in the mail or you'll get a Vira
email saying you congratulations, you're in our shareholder in X company,
and we are the registry for it and we'll be
running this et cetera. And they are the ones that
you can talk to potentially.
Speaker 2 (22:17):
About It's all done online. And I mean you have
to do this anyway because you need to upload your
tax file number and your bank account details. How I
will say, sometimes companies might not necessarily offer an automatic
dividend reinvestment opportunity, which means you have to take it
as cash. That doesn't mean you can't reinvest it just
means you need to manually reinvest it so you get
receive a dividend, I say a hundred dollars, hold onto
(22:39):
that one hundred dollars, and then go and buy physically
yourself one hundred dollars worth more shares. Okay, Dividend reinvestment
is very powerful because you don't have to pay brokerage,
so it actually can help you save money. But you
need to make sure your portfolio is diversified also on
that not dibidends. Some companies may go through a period
of time where they have to pause a dividend reinvestment plan,
which means you have to take it as cash and
(23:01):
you still have to pay tax in coome tax that
is on that dividend, whether it's reinvested or not as well,
which a lot of people sort of miss.
Speaker 1 (23:08):
Yeah, and I want to talk to you then about
the tax implications because this is and you've talked about
that in the past, about people not realizing that they
still need to pay tax on these dividends, these earnings.
But there's also like franking, credits and all kinds of
other elements that come in when we're talking about dividends,
(23:28):
and it is helpful to have a good accountant when
it comes to all of this.
Speaker 2 (23:33):
Yes, definitely because you need to look at the dates,
so you know how long have you held that particular
asset forward, do you qualify for any of capital gains,
tax discounts? Really important? And then there's things like franking credits.
We almost need to do I think an episode purely
on franking credits because it's it sounds a lot more
complicated than what it is, but it's incredibly valuable, particularly
for people who are approaching retirement or are retired.
Speaker 1 (23:56):
Yeah, it's one of the main kind of benefits to
investing in Australia as opposed to investing overseas. The franking
credit system we have here.
Speaker 2 (24:03):
That's why I love Australian industrial shares. But you know,
having knowing your franking credits, the tax credits that is
attached to each of them, is really important. And then
obviously being I wouldn't say meridiculous, but you need to
be organized with keeping a record of what date you purchased,
what dates you know, how much was reinvested at what
share price, you know, what if the costs, how much
(24:25):
you've spent on brokered all those sorts of little things
that you need to do and be on top of.
Speaker 1 (24:31):
Did you have a question for me earlier. I remember
earlier in.
Speaker 2 (24:34):
The episode, had you reminded me? Because I wish you
would have forgotten.
Speaker 1 (24:37):
Well, I'm just thinking of potentially listeners who are hanging
out for this question to hear me put on the spot,
and if we didn't deliver, that would be an unsatisfied customer.
Speaker 2 (24:48):
Have you as you know? Now to go back, We've
been doing this podcast for how many years?
Speaker 1 (24:52):
What? Three or three and a half four?
Speaker 2 (24:56):
I think it's three. It feels like a it'll be
approaching three. So have you started an investment portfolio? Well,
started investing at least?
Speaker 1 (25:10):
Ah, I taught you. You have taught me a lot.
You know what I have done? Yes, you know what
I have done. I have started seeing a financial planner, Okay,
and investing is all going to come as part of that,
all right, all right?
Speaker 2 (25:27):
All right?
Speaker 1 (25:28):
So if you have taught me nothing else, and you
have taught me a lot of things, the number one
lesson I have taken from you is the importance of
getting professional advice, all right, all right, So therefore I
think I've managed to evade any kind of trouble from you.
Can I ask you one more question? Yes? And I've
(25:48):
left you no time to answer this. There's this whole
principle of with shares, the idea being that that time
in the market is so much more important than trying
to time the market itself. How do shares then work
as a long term, long, long term, potentially investment strategy,
(26:09):
that it's not so much about trying to find the
right time to buy into the market, that it is
about kind of how this is going to play out
over ten, fifteen to twenty plus years.
Speaker 2 (26:17):
Well, when you look at the historical performance of all
the different asset classes, and if anyone wants to get
a quick, easy free resource, go to the Vanguard website
and type in Vanguard chart because you can actually see
all these different color lines. They're really easy to read.
But time in the market wins, so historically the share
market rises over the long run. So staying the course,
(26:39):
going the distance reduces your risk of trying to miss
the best market days. And even experts who've been doing
this for ten, fifteen, twenty, thirty forty years still get
this wrong. And you also look at the when you
do get it right, the capital games attacks that comes
off your profit and then obviously the cost of getting
back into the market and then timing to try and
get back in the right point. So there's a lot
(27:01):
of danger in this. So if you had invested ten
thousand dollars into the AX two hundred and twenty twenty
and left it untouched, it would be worth significantly more
than it would be worth significantly more today. So investing
is like growing a tree. You know, you I promised
there wouldn't best no.
Speaker 1 (27:22):
More analogies, and now we are. We have gone from
skiing into the kitchen to bake a cake. Now we
are growing a tree. Go on, plant those seats, all right.
Speaker 2 (27:32):
It's like planting growing a tree. You plant the seat
and you see nothing for maybe a couple of years,
and you think, oh my gosh, I planted. It's done nothing.
And then you might see a little sprout and you think, oh,
is that all I've got? That's nothing. It looks like
a weed. You would get tempted to pull it out
and start all over again. But if you just trust
the process, make sure it's got some sunlight, some water,
(27:57):
you know, watch the pests, then the elements, let it
do its thing, and over time it grows into fruit
tree and it gives you back fruit berries, apples, peaches, pears,
whatever you like, as you can enjoy the fruits of
your patients, your dedication and your commitment because you've just
(28:19):
not tried to time the right time to plant, but
you've just let it's time work. It's magic for you.
Speaker 1 (28:25):
Are you using those fruits in the cake that you're making?
Speaker 2 (28:28):
I could make I make a really good brownie and
I sometimes put raspberries in that. So if I can
filt me use raspberries, it's hay packup mix, I will.
Speaker 1 (28:37):
Okay, And that's good fuel for skiing.
Speaker 2 (28:40):
It is, But I don't go and open the door
all the time and I'm checking the brownies.
Speaker 1 (28:46):
God, this is just one of those episodes where you'll
have to listen to it three times just to make
sense of all of the various analogies, which I'm sorry
I have actually just deliberately tried to confuse you there
At the end. I think, I think that's a great job.
You know what?
Speaker 2 (28:59):
That was?
Speaker 1 (28:59):
A what eight step program to investing into shares? I
think gold star to us? Can we do that? Yes?
We can award ourselves a gold star. If anybody wants
more information from you, Canna, where do they find you.
Speaker 2 (29:15):
If you're a confused by all my different analogies, please
feel free to reach out to me on Instagram at
Sugar Mama TV and I'll happily come back to you
as soon as possible with.
Speaker 1 (29:23):
A personalized analogy.
Speaker 2 (29:25):
Yes, so I will even jump on a call and
help I explain something.
Speaker 1 (29:29):
To confuse you even more. You can hear me every
day with Sean Aylmer on Fear and Greed, daily business
news for people who make their own decisions. Thank you
for listening to how Do They Afford That? Remember to
hit follow on the podcast, and the best thing you
can do is to tell somebody else. Send them a
link to this episode if you think they might be interested,
spread the word about how do they afford that? Thank
you for your company. Join us again next week
Popular Podcasts
On Purpose with Jay Shetty
I’m Jay Shetty host of On Purpose the worlds #1 Mental Health podcast and I’m so grateful you found us. I started this podcast 5 years ago to invite you into conversations and workshops that are designed to help make you happier, healthier and more healed. I believe that when you (yes you) feel seen, heard and understood you’re able to deal with relationship struggles, work challenges and life’s ups and downs with more ease and grace. I interview experts, celebrities, thought leaders and athletes so that we can grow our mindset, build better habits and uncover a side of them we’ve never seen before. New episodes every Monday and Friday. Your support means the world to me and I don’t take it for granted — click the follow button and leave a review to help us spread the love with On Purpose. I can’t wait for you to listen to your first or 500th episode!
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com