May 20, 2025 • 23 mins
We’ve seen some extraordinary volatility in markets this year. So how do investors cope with huge market fluctuations and plenty of fear? Join Canna Campbell - a financial planner for 20 years - and Fear & Greed's Michael Thompson as they look at investing in volatile markets.
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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.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:10):
Welcome to How Do They Afford That, The podcast that
peaks into the financial lives of everyday Australians.
Speaker 2 (00:14):
I'm Michael Thompson.
Speaker 1 (00:15):
I'm an author and the co host of the podcast
Fear and Greed Business News, and as always, I'm with
Canna Campbell, financial planner, founder of Sugar Mama TV, the
financial literacy platform covering YouTube and podcast, books, Instagram, threads,
TikTok and more. If there is a social media platform
out there, you will be on it.
Speaker 2 (00:33):
Canna, Hello, this.
Speaker 3 (00:35):
Looks sound like I'm like plastered everywhere.
Speaker 1 (00:38):
Okay, you're more selective than that. I might have misrepresented you,
and I apologize. It's always great to start the show
with an apology, isn't it such.
Speaker 2 (00:46):
On a good note?
Speaker 3 (00:47):
Great episode.
Speaker 2 (00:48):
Well, it's a serious.
Speaker 3 (00:50):
One today and this is very serious.
Speaker 1 (00:52):
I feel like we've now had too much kind of
fun frivolity. We've exceeded our fun quota already. Now it's
serious because we've seen some extraordinary volatility in markets this year.
We've had kind of huge swings one way then back
the other way. We saw it on the Australian share market.
It was even more pronounced on Wall Street in the US.
(01:14):
A lot of it was originating from tariffs announced by
the US President, but that was just one incident, right.
We have had plenty of market volatility before, kind of
major drops like the GFC or the pandemic, plenty of
other smaller peaks and troughs and movement in markets. So
(01:35):
today I wanted to get a feel for how you
coach clients as a financial planner through market volatility because
it is something that we have seen in the past
and we'll see again in the future. It is obviously
very important with this episode to understand that everything that
(01:55):
we are talking about is not financial advice. This is
for gen education purposes. Only. If you hear something that
you go, oh, okay, maybe that's worth considering, then please
get some professional financial advice that is tailored to your
circumstances because we do not know what they are.
Speaker 3 (02:12):
That is so incredibly important. Hopefully everyone knows that and
takes that seriously.
Speaker 1 (02:16):
Now, when markets are swinging wildly and your phone rings
and it is a client who is worried and this
is this has happened before, right, oh absolutely, and they
are worried. They are probably almost verging on panic. What
do you say to them, I.
Speaker 3 (02:33):
Say, take a deep breath in through the nose out
through the investment anxiety.
Speaker 2 (02:39):
And does that work?
Speaker 1 (02:40):
Yes, okay, just having someone tell you to calm down
actually does help.
Speaker 3 (02:45):
Well. The worst thing you can say to someone's calmed down.
Speaker 1 (02:47):
Yeah, I realized that as I said it deep breath.
Speaker 3 (02:50):
So I then remind them once we've taken out you know,
three deep. You call them rainbow breaths. Really, yes, a
rainbow breath.
Speaker 1 (03:01):
I have never heard the term. I will describe to
you for anybody listening what you were doing. You were
taking deep breaths and you are kind of flapping your
arms about wildly. Yes, like a chicken.
Speaker 3 (03:15):
It's very effective. Once you've done a rainbow breaths in
through the nose, out, through the investment anxiety, I then
remind them to revisit the reason why they came to
see me in the first place. Why do they start
investing and what are their long term goals? Now with
my investment philosophy, you know, as a financial planet, and
obviously is sugar mammo, it's all about passive income and
(03:37):
you know, drawing on that reliable income stream, you know,
for your eventual retirement and We're not here to try
and turn ten thousand dollars into one hundred thousand dollars overnight,
So you know, I'll come back to then some factual questions. Okay, well,
what are your goals and are we planning on retiring tomorrow?
And obviously the answer is no, so then we know
that we've got time ahead of us. And then after
(03:58):
that I'll ask them to look at focusing their fear
to the actual facts of the matter. You know, reviewing
the portfolio, do we need to maybe make a slight
rebalance of the portfolio? Is it still aligned to the goals?
Have your goals changed? And let's do another risk profile
to make sure that you know the investment portfolios up
to date, your risk tolerance on that before you.
Speaker 2 (04:19):
Go past that.
Speaker 1 (04:20):
Is there a danger of doing a risk profile in
the middle of a financial crisis that all of a
sudden they will be very reflective of the environment that
you're doing it in that if you were to say, okay,
what's what's your appetite for risk right now? When they've
just seen the market drop five percent something, then of
(04:41):
course they're going to say, no, no, I'm very conservative. Now
I don't want to lose any money or is it
better to kind of look at the long term trend
and look at what their risk profile was six months ago.
Speaker 3 (04:52):
You kind of answered my question. So yeah, so that
is why you go back to the original. That's so
I said. You know, the first thing you ask is, well,
why did you sudden what your goals? Because you want,
you know, a passive income stream, you want financial independence,
So looking at that doing a risk profile, but starting
with looking at where what your risk profile looked like
when you first started. Because a good risk profile is
(05:14):
actually an educational tool. It's not just a matter of
serving someone you know, seven to twelve questions. It actually
is an educational tool as well. So if your financial
planner has done the right job, which I would hope,
so you actually understand the risks involved, so you're not
like you're not it's like you're turning up financially dumb
and doing a risk profile. Yes, you may have heightened
(05:35):
emotions and that's normal and that's okay, but that's where
the you know, the awareness that comes in. And by
no means this is about ignoring what's happening right now,
but it's actually about responding with a purpose. Not actually panicking.
Speaker 1 (05:49):
Okay, is panic? What you see is panic the kind
of the main emotional reaction that you are seeing during
times of volatility or is there confusion? Is it in action?
People going I feel like I need to be doing something,
but I just don't know what.
Speaker 3 (06:05):
Yes, so it's a mix and you know, anxiety, but
also a lot of people don't tell wrap is is.
I see a lot of excitement, a lot of relief,
and also a lot of exhilaration because this is now
quite possibly the opportunity that a lot of people have
been waiting for to get started. And they can see
(06:26):
that Okay, well, I'm able to buy the same quality
assets now at a discount. And if you are educated,
if you spend time understanding the risks involved and the
amount of time that's required, you know, to invest in
that particular asset class, they can actually see that these
are you know, blessings in disguise and actually seize them
(06:46):
to their financial advantage. And at the end of the day,
like money loves a calm head. So if you are
if you arm yourself with knowledge, you get some really
good quality independent advice, you can actually turn this to
be at a very powerful moment in helping you get
ahead potentially sooner in a more efficient way.
Speaker 2 (07:05):
I want to ask you.
Speaker 1 (07:06):
I've got a lot that I want to ask you here,
and so we need to keep moving. But one of
those things is about this concept of time in the
market versus timing the market, and we'll get to that
in a second. But younger investors are they generally, and
this is an assumption, are they generally more reactive to
(07:28):
market movements, and maybe because they are more open to
the opportunities that it presents, because they've got more time.
Speaker 3 (07:37):
You know, what is actually not about age, It's actually
more about education and experience. Now, I've seen obviously twenty
five year olds who are as cool as a cucumber,
and I've seen fifty five year olds who will panic
at every single you know, red candle. So what makes
the biggest difference is how well someone understands what they
have actually invested in and why, and understood the amount
(08:00):
of time that's needed to allow that investment to work
its magic for them. And you've also got to look
at how much money someone's got at stake. You know,
if someone's put their entire life savings into crypto or
single tech stock. Of course they are going to be
panicking and they're going to be refreshing their portfolios like
it's Instagram. But give that same person, you know, a
(08:26):
boring blue chip, you know, diversified portfolio with a long
term strategy, their reaction is going to be comparatively different
to that other person and they're going to be slipping
a lot better regardless of whether they're twenty to thirty
two or seventy two.
Speaker 1 (08:44):
Okay, And is that then where the idea of time
in the market is going to come into it, particularly
if you've got to say younger people, because they know
that they've got potentially forty years for it just to
like markets come and go, they swing, and they generally
thoughtistically keep climbing over the long period.
Speaker 3 (09:03):
No, the what you're saying is because time in the
market is like pitched to younger investors, but really time
in the market is appropriate for ninety percent of investors
because even someone in their fifties, they if they're planning
on living a long, healthier life, which I hope they are,
you know, with life expectancy you know, eighty five on average,
(09:26):
depending on you know, male or female. That's still you know,
a good thirty five years. That's still a long time
investment time, so you still have that time in market,
time in the market. So look, you know it's trying
to time the market is obviously a different thing else
when you're trying to like pick the blowest and I
think trying to time the market rather than timing the
market is fraught with dangerous kind of like jumping on
(09:48):
a treadmill that's already moving at a really fast speed,
and it's that's it's stupid, it's risky, it's dangerous, and
you're probably going to fall flat on your face and
come up with a few bruises or even broken back
bones and a pretty damaged ego. But time in the market,
which we all have, in my opinion, is safer. You know,
(10:08):
It's like getting on a treadmill that's moving, not going
particularly fast, it might even be a little bit boring,
but that speed like gradually increases and before you know it,
you're actually traveling quite a decent distance, and you know,
building up a financial fitness along the way, working up
a bit of a sweat, and actually feeling really good
about yourself. So you know, this is the a sorry
(10:31):
you're looking frowning at me with my lovely analogies O
that it was quite brilliant.
Speaker 1 (10:35):
Of the treadmill treadmill, but it sounds as at some
point they got off the treadmill and actually ran for
a distant somewhere else.
Speaker 3 (10:43):
No, they jumped on the treadmill that was going really
quickly trying to time the market, and fell flat on
their face. Because that is risky, dangerous and just lawsuit
waiting to happen.
Speaker 1 (10:56):
Can you explain to me we hear the term dollar
cost averaging a lot. Can you just explain kind of
what that means just as a piece of jargon and
whether that is something that will come up in conversations
with people during volatile periods in markets.
Speaker 3 (11:15):
Dollar cost averaging is one of my favorite investing strategies.
You could say, okay, So it's essentially when you are
buying on small amounts on a regular basis, and it's
particularly helpful for when you know the markets are a
little bit you know, wobbly and there's a bit of
short term uncertainty. So you have a fixed amount, say
(11:36):
one hundred dollars per month, and you are investing it
regardless of what is going on the markets, whether they're
up or down. And the beauty of it is that
when prices are down, you're actually getting more bang for
your buck because you're able to buy for the same
amount of money. You're able to acquire more shares, for example,
And obviously when the market is up, you're getting not
as getting as many, but over the long run, it
(11:57):
kind of evens out and smooths out your initial purchase
over time, kind of like buying chocolate bars each week
with the price varies.
Speaker 2 (12:06):
You just can't help yourself, can you.
Speaker 3 (12:08):
I feel like it makes sense when you use an analogy.
I know, I love an analogy, but you use so
many and an anecdot.
Speaker 1 (12:15):
Yeah, I find the anecdotes really illuminate the story. The
analogies kind of muddy the water a little, just a
little bit on occasion. So that's dollar cost averaging. How
often do you think people should be checking their investment
portfolios during these kind of rocky periods if markets are sliding?
(12:35):
Is it worth checking in or are you better just
to go? You know what, looking at it now is
going to evoke too much of an emotional response, and
I don't want to be emotional about this, you know,
I was.
Speaker 3 (12:47):
Actually having a conversation the other day with a financial
plan who I know really well, and we had conflicting
opinions on this. So it really does depend on your
own individual situation and your own investment strategy. Obviously, I
would recommend avoid checking it on a daily basis or
even weekly basis, but you also want to make sure
that you stay informed at the same time. So for
(13:09):
some people that might be monthly that is better for them,
but for other people might be quarterly, or for me,
I only check it when I actually want to invest.
I've got new money to add to the portfolio, That's
when I'll check.
Speaker 1 (13:19):
In, okay, And that way you're checking with purpose as
opposed to just checking for the heck of it, which
would probably start to worry you.
Speaker 3 (13:26):
Well, you become attached to it. It creates, you know,
these emotional knee jerk reactions. But can I add an
important tip when you do go and check your portfolio,
don't just look at the portfolio evaluation to check and
see what is the income that you have earned from
that investment, very easy to do, particular with your superannuation accounts,
you can see what last year's financial year's income was
(13:48):
how look good at what it is year to date.
Most of subernuation accounts. You can actually do this yourself
by running a check on the returns. If the income
hasn't dropped. Feel a little more assured because it means
your investment is potentially working for you. Obviously, get advice
when in doubt, but don't get caught up in the
actual portfolio evaluation because the share market doesn't necessarily reflect
(14:11):
the value.
Speaker 2 (14:12):
Okay, we'll come back in a second.
Speaker 1 (14:14):
I want to talk about diversification and products that people
use to reduce that volatility risk, and whether there is
actually a right time to actually pull out of the market.
We will get into that after the break. Can we
(14:34):
are talking about investing in volatile markets, and of course
this is not investing or financial advice. You should see
professional advice if you hear anything here that is relevant
to your circumstances.
Speaker 2 (14:46):
Are there products that.
Speaker 1 (14:49):
In a typical portfolio people use to help reduce the
volatility risk?
Speaker 3 (14:56):
Yes, and this is really important. So things like listed
investment company, ETFs, exchange shade of funds, talents manage funds,
and you know, bonds, fixed interest investments. They can be
used to help smooth out all of those you know,
nasty bumps. They don't obviously completely eliminate the risk involved,
but they can definitely cushion those falls and reduce those
(15:17):
like you know, gut churning swings that you know we're
seeing right now, and you know they are obviously to
help make sure that your money is working for you
and obviously in alignment to your risk profile. So always
check that.
Speaker 1 (15:29):
Okay, diversification, just how important is that in getting someone
through the ups and downs? And we're not necessarily talking
about the big fluctuations like we saw after the tariffs,
but just the day to day kind of movement within
the market. How important is diversification.
Speaker 3 (15:48):
It's everything. So diversification spreads your risk across you know,
a wide range of different assets. I know we talk
a lot about shares, but there's you know, so many
other things beyond shares and property. So it also means
that your money is not necessarily tied to one particular location.
So you think about different industries, different countries, and they're
not positively align necessary. So you might see volatility in
(16:11):
the Australian share market, but then you may see strength
in the property market and vice versa. So one area drops,
the other one held is perhaps holding steady, and then
maybe you know, some fixed interest investments are actually rising
depending on what the underlying investment is. So it's about
not putting all your eggs in one basket, but making
sure that it's actually working for you and what allows
(16:33):
you to have a good night sleep.
Speaker 1 (16:34):
Still, I'm really curious about the conversations that you have
with clients during these periods when there is volatility in markets.
How do you help a client distinguish between what is
a short term wobble in the market compared to what
might be a fundamental shift in markets. How do you
(16:57):
kind of help them sit down and go, all right,
this might be around for a long time.
Speaker 3 (17:03):
Look, you have to look at what's the actual underlying cause,
what is really going on, and that is when you
most financial plans will reach out to economists, you know,
go through a whole pile of research data, reports and
opinions and work with the client as to what they
think and also what they're feeling and what they feel
comfortable with. But you know, a financial plannerl always understands
(17:25):
what the client's goals are and what the time frame involves.
So they're not looking at necessarily being strategic and you know,
predicting the next crash or the next massive opportunity. So
really understanding the real risks involved and what is actually
in alignment to what the client wants.
Speaker 1 (17:39):
Are you saying then that really shouldn't let the volatility
affect your long term plans. That keep your eyes on
whatever the goals are that you set when you first
sat down and started discussing, Just focus on those rather
than trying to be too reactive in the short term.
Speaker 3 (17:57):
What's the headline versus what's the act rule factually happening
right now, So not getting caught up in the noise
and arming yourself with the right amount of information so
that you understand and if you need to make a
sudden change, you're prepared. But really, again coming back to that,
why what is your ultimate goal? And looking back in
(18:18):
history to see, well, what happened previously when similar things
like this happen, and you know, human endeavor always prevails.
You know, if you look back over a twenty thirty
forty year period, you know the markets are always recovered.
Speaker 1 (18:31):
I feel a bit silly asking you this next question,
but I have never shied away from asking asking you
potentially silly questions on this podcast, Is there ever a
time when pulling out of the market is actually the
right move?
Speaker 3 (18:44):
Yes, So when the strategy isn't right, the investments aren't
aligned to your goals, your time frame, or your risk profile,
it can definitely be the right time to go. You
know what, enough enough, this isn't actually working for me,
And that's why you need advice because they're also consequences
of selling, like triggering capital gains tax or locking in losses,
and then there might be strategic ways that you can
(19:06):
help minimize those things. So it's not actually about you know,
panic selling, but it's actually about consciously reassessing and making
value based decisions on choice. And it takes a lot
of courage, particularly if you've designed your own financial strategy yourself,
to actually go, you know what, I thought I was
doing the right thing here, but I've stuffed it. I've
done the wrong thing, and I need to undo this
(19:29):
and start all over again. And that's when obviously you've
got to go see a financial plan so that you
don't have any regrets and you get proactive advice that
is strategic as well as about the underlying investments.
Speaker 1 (19:42):
So what you're really saying is that that was actually
a very good question.
Speaker 3 (19:45):
It was very good.
Speaker 1 (19:45):
Yeah, thank you entirely. Unprompted praise just then from you,
very quickly, because we are out of time now. Have
you seen it happen where someone has panicked and perhaps
may made a poor financial decision, maybe just gone independently
of the advice that you were giving them, and might
(20:06):
not even be a client, made a poor financial decision
because of volatility in markets.
Speaker 3 (20:13):
Yes, me.
Speaker 2 (20:15):
Wow. Yeah.
Speaker 3 (20:16):
So when I was at university, before I started studying
financial planning, I had invested a lot of money, which
was a lot of money at the time for me,
into a international fund and there was a short term
pullback and the value of the investment dropped significantly and
I panicked and I sold the whole entire thing and
(20:36):
I locked in those losses. Wow.
Speaker 1 (20:38):
Yeah.
Speaker 3 (20:39):
Do I regret it, Of course I do. But it
was a really powerful lesson for me at the time,
and I have never made that same mistake again, And
you know, it's part of my own financial story, and
I've made peace with that, and you know, we all
make mistakes. The thing is not to make the same
mistake again.
Speaker 1 (20:56):
Okay, flip side. Have you then seen someone who stayed
the core through volatility and it really paid off in
the long run, is it you?
Speaker 2 (21:04):
Again?
Speaker 3 (21:06):
Well yes, But actually, all my financial planning clients, like
I've been a financial planner for twenty something years, I've
never had a client sell their portfolio during you know,
a market correction, crash or pullback. Yes, I've had phone
calls and meetings about what should we do? You know,
do we even buy more? Do you know how can
(21:26):
we manage this? Yes? Absolutely, and that that's all part
of being a financial planner. But I've never actually had
a client who's sold during a pullback, And every single
person has said, thank goodness, we didn't. You know, I
listened to your advice, Thank goodness. And that's not to
always smoke at my own backsize, but it is important
to remind yourself as to what is the big picture here?
(21:47):
And you know, if it means just taking a step
back and turning down the noise, that's okay, as long
as you're still informed. You know, we want to make
sure that we have no regrets, and if we do
need to make a decision, we do it with all
the information that we need so that we can feel
good about what we've decided to do.
Speaker 1 (22:05):
I really like where you started, not obviously the rainbow
breaths that was quite odd, but I did like the
idea of just just stop, take a moment, think about it,
and go back to the reasons why you were investing
in the first place. It feels like that would really
kind of center you and maybe take a little bit
(22:27):
of the reactive element and the emotional element out of
it and help you refocus back on the long term goals.
Speaker 3 (22:34):
And it's funny, you know, people always say the markets,
you know, they haven't started investing yet because it's too expensive,
but then when these pullbacks happen, they then get scared.
It's like, welly have you been saying it's too expensive.
Now you're able to buy those things, those investments now
at a significant discount. You're now too scared. So this
I think this is a really exciting opportunity for a
lot of people who have, you know, long term financial
(22:56):
goals in place.
Speaker 1 (22:57):
And it is a very good time to be getting
financial advice.
Speaker 3 (23:00):
Yes, this not buying advice, is go get professional advice
and jump on this opportunity. In an educated and informed
manner with a financial planner that can help you and hold.
Speaker 1 (23:09):
You around absolutely all right, how do we find you
if we want more information?
Speaker 3 (23:14):
If you want to hear more about my rainbow Breath,
so you can reach out to me at a Sugar
Mama TV.
Speaker 1 (23:19):
On Instagram and 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 very much
for listening to how do they afford that? Remember to
follow on the podcast. That's very important, and the best
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tell them about this podcast, send them the link to
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(23:42):
how do they afford that?
Speaker 2 (23:43):
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.
Speaker 2 (00:14):
I'm Michael Thompson.
Speaker 1 (00:15):
I'm an author and the co host of the podcast
Fear and Greed Business News, and as always, I'm with
Canna Campbell, financial planner, founder of Sugar Mama TV, the
financial literacy platform covering YouTube and podcast, books, Instagram, threads,
TikTok and more. If there is a social media platform
out there, you will be on it.
Speaker 2 (00:33):
Canna, Hello, this.
Speaker 3 (00:35):
Looks sound like I'm like plastered everywhere.
Speaker 1 (00:38):
Okay, you're more selective than that. I might have misrepresented you,
and I apologize. It's always great to start the show
with an apology, isn't it such.
Speaker 2 (00:46):
On a good note?
Speaker 3 (00:47):
Great episode.
Speaker 2 (00:48):
Well, it's a serious.
Speaker 3 (00:50):
One today and this is very serious.
Speaker 1 (00:52):
I feel like we've now had too much kind of
fun frivolity. We've exceeded our fun quota already. Now it's
serious because we've seen some extraordinary volatility in markets this year.
We've had kind of huge swings one way then back
the other way. We saw it on the Australian share market.
It was even more pronounced on Wall Street in the US.
(01:14):
A lot of it was originating from tariffs announced by
the US President, but that was just one incident, right.
We have had plenty of market volatility before, kind of
major drops like the GFC or the pandemic, plenty of
other smaller peaks and troughs and movement in markets. So
(01:35):
today I wanted to get a feel for how you
coach clients as a financial planner through market volatility because
it is something that we have seen in the past
and we'll see again in the future. It is obviously
very important with this episode to understand that everything that
(01:55):
we are talking about is not financial advice. This is
for gen education purposes. Only. If you hear something that
you go, oh, okay, maybe that's worth considering, then please
get some professional financial advice that is tailored to your
circumstances because we do not know what they are.
Speaker 3 (02:12):
That is so incredibly important. Hopefully everyone knows that and
takes that seriously.
Speaker 1 (02:16):
Now, when markets are swinging wildly and your phone rings
and it is a client who is worried and this
is this has happened before, right, oh absolutely, and they
are worried. They are probably almost verging on panic. What
do you say to them, I.
Speaker 3 (02:33):
Say, take a deep breath in through the nose out
through the investment anxiety.
Speaker 2 (02:39):
And does that work?
Speaker 1 (02:40):
Yes, okay, just having someone tell you to calm down
actually does help.
Speaker 3 (02:45):
Well. The worst thing you can say to someone's calmed down.
Speaker 1 (02:47):
Yeah, I realized that as I said it deep breath.
Speaker 3 (02:50):
So I then remind them once we've taken out you know,
three deep. You call them rainbow breaths. Really, yes, a
rainbow breath.
Speaker 1 (03:01):
I have never heard the term. I will describe to
you for anybody listening what you were doing. You were
taking deep breaths and you are kind of flapping your
arms about wildly. Yes, like a chicken.
Speaker 3 (03:15):
It's very effective. Once you've done a rainbow breaths in
through the nose, out, through the investment anxiety, I then
remind them to revisit the reason why they came to
see me in the first place. Why do they start
investing and what are their long term goals? Now with
my investment philosophy, you know, as a financial planet, and
obviously is sugar mammo, it's all about passive income and
(03:37):
you know, drawing on that reliable income stream, you know,
for your eventual retirement and We're not here to try
and turn ten thousand dollars into one hundred thousand dollars overnight,
So you know, I'll come back to then some factual questions. Okay, well,
what are your goals and are we planning on retiring tomorrow?
And obviously the answer is no, so then we know
that we've got time ahead of us. And then after
(03:58):
that I'll ask them to look at focusing their fear
to the actual facts of the matter. You know, reviewing
the portfolio, do we need to maybe make a slight
rebalance of the portfolio? Is it still aligned to the goals?
Have your goals changed? And let's do another risk profile
to make sure that you know the investment portfolios up
to date, your risk tolerance on that before you.
Speaker 2 (04:19):
Go past that.
Speaker 1 (04:20):
Is there a danger of doing a risk profile in
the middle of a financial crisis that all of a
sudden they will be very reflective of the environment that
you're doing it in that if you were to say, okay,
what's what's your appetite for risk right now? When they've
just seen the market drop five percent something, then of
(04:41):
course they're going to say, no, no, I'm very conservative. Now
I don't want to lose any money or is it
better to kind of look at the long term trend
and look at what their risk profile was six months ago.
Speaker 3 (04:52):
You kind of answered my question. So yeah, so that
is why you go back to the original. That's so
I said. You know, the first thing you ask is, well,
why did you sudden what your goals? Because you want,
you know, a passive income stream, you want financial independence,
So looking at that doing a risk profile, but starting
with looking at where what your risk profile looked like
when you first started. Because a good risk profile is
(05:14):
actually an educational tool. It's not just a matter of
serving someone you know, seven to twelve questions. It actually
is an educational tool as well. So if your financial
planner has done the right job, which I would hope,
so you actually understand the risks involved, so you're not
like you're not it's like you're turning up financially dumb
and doing a risk profile. Yes, you may have heightened
(05:35):
emotions and that's normal and that's okay, but that's where
the you know, the awareness that comes in. And by
no means this is about ignoring what's happening right now,
but it's actually about responding with a purpose. Not actually panicking.
Speaker 1 (05:49):
Okay, is panic? What you see is panic the kind
of the main emotional reaction that you are seeing during
times of volatility or is there confusion? Is it in action?
People going I feel like I need to be doing something,
but I just don't know what.
Speaker 3 (06:05):
Yes, so it's a mix and you know, anxiety, but
also a lot of people don't tell wrap is is.
I see a lot of excitement, a lot of relief,
and also a lot of exhilaration because this is now
quite possibly the opportunity that a lot of people have
been waiting for to get started. And they can see
(06:26):
that Okay, well, I'm able to buy the same quality
assets now at a discount. And if you are educated,
if you spend time understanding the risks involved and the
amount of time that's required, you know, to invest in
that particular asset class, they can actually see that these
are you know, blessings in disguise and actually seize them
(06:46):
to their financial advantage. And at the end of the day,
like money loves a calm head. So if you are
if you arm yourself with knowledge, you get some really
good quality independent advice, you can actually turn this to
be at a very powerful moment in helping you get
ahead potentially sooner in a more efficient way.
Speaker 2 (07:05):
I want to ask you.
Speaker 1 (07:06):
I've got a lot that I want to ask you here,
and so we need to keep moving. But one of
those things is about this concept of time in the
market versus timing the market, and we'll get to that
in a second. But younger investors are they generally, and
this is an assumption, are they generally more reactive to
(07:28):
market movements, and maybe because they are more open to
the opportunities that it presents, because they've got more time.
Speaker 3 (07:37):
You know, what is actually not about age, It's actually
more about education and experience. Now, I've seen obviously twenty
five year olds who are as cool as a cucumber,
and I've seen fifty five year olds who will panic
at every single you know, red candle. So what makes
the biggest difference is how well someone understands what they
have actually invested in and why, and understood the amount
(08:00):
of time that's needed to allow that investment to work
its magic for them. And you've also got to look
at how much money someone's got at stake. You know,
if someone's put their entire life savings into crypto or
single tech stock. Of course they are going to be
panicking and they're going to be refreshing their portfolios like
it's Instagram. But give that same person, you know, a
(08:26):
boring blue chip, you know, diversified portfolio with a long
term strategy, their reaction is going to be comparatively different
to that other person and they're going to be slipping
a lot better regardless of whether they're twenty to thirty
two or seventy two.
Speaker 1 (08:44):
Okay, And is that then where the idea of time
in the market is going to come into it, particularly
if you've got to say younger people, because they know
that they've got potentially forty years for it just to
like markets come and go, they swing, and they generally
thoughtistically keep climbing over the long period.
Speaker 3 (09:03):
No, the what you're saying is because time in the
market is like pitched to younger investors, but really time
in the market is appropriate for ninety percent of investors
because even someone in their fifties, they if they're planning
on living a long, healthier life, which I hope they are,
you know, with life expectancy you know, eighty five on average,
(09:26):
depending on you know, male or female. That's still you know,
a good thirty five years. That's still a long time
investment time, so you still have that time in market,
time in the market. So look, you know it's trying
to time the market is obviously a different thing else
when you're trying to like pick the blowest and I
think trying to time the market rather than timing the
market is fraught with dangerous kind of like jumping on
(09:48):
a treadmill that's already moving at a really fast speed,
and it's that's it's stupid, it's risky, it's dangerous, and
you're probably going to fall flat on your face and
come up with a few bruises or even broken back
bones and a pretty damaged ego. But time in the market,
which we all have, in my opinion, is safer. You know,
(10:08):
It's like getting on a treadmill that's moving, not going
particularly fast, it might even be a little bit boring,
but that speed like gradually increases and before you know it,
you're actually traveling quite a decent distance, and you know,
building up a financial fitness along the way, working up
a bit of a sweat, and actually feeling really good
about yourself. So you know, this is the a sorry
(10:31):
you're looking frowning at me with my lovely analogies O
that it was quite brilliant.
Speaker 1 (10:35):
Of the treadmill treadmill, but it sounds as at some
point they got off the treadmill and actually ran for
a distant somewhere else.
Speaker 3 (10:43):
No, they jumped on the treadmill that was going really
quickly trying to time the market, and fell flat on
their face. Because that is risky, dangerous and just lawsuit
waiting to happen.
Speaker 1 (10:56):
Can you explain to me we hear the term dollar
cost averaging a lot. Can you just explain kind of
what that means just as a piece of jargon and
whether that is something that will come up in conversations
with people during volatile periods in markets.
Speaker 3 (11:15):
Dollar cost averaging is one of my favorite investing strategies.
You could say, okay, So it's essentially when you are
buying on small amounts on a regular basis, and it's
particularly helpful for when you know the markets are a
little bit you know, wobbly and there's a bit of
short term uncertainty. So you have a fixed amount, say
(11:36):
one hundred dollars per month, and you are investing it
regardless of what is going on the markets, whether they're
up or down. And the beauty of it is that
when prices are down, you're actually getting more bang for
your buck because you're able to buy for the same
amount of money. You're able to acquire more shares, for example,
And obviously when the market is up, you're getting not
as getting as many, but over the long run, it
(11:57):
kind of evens out and smooths out your initial purchase
over time, kind of like buying chocolate bars each week
with the price varies.
Speaker 2 (12:06):
You just can't help yourself, can you.
Speaker 3 (12:08):
I feel like it makes sense when you use an analogy.
I know, I love an analogy, but you use so
many and an anecdot.
Speaker 1 (12:15):
Yeah, I find the anecdotes really illuminate the story. The
analogies kind of muddy the water a little, just a
little bit on occasion. So that's dollar cost averaging. How
often do you think people should be checking their investment
portfolios during these kind of rocky periods if markets are sliding?
(12:35):
Is it worth checking in or are you better just
to go? You know what, looking at it now is
going to evoke too much of an emotional response, and
I don't want to be emotional about this, you know,
I was.
Speaker 3 (12:47):
Actually having a conversation the other day with a financial
plan who I know really well, and we had conflicting
opinions on this. So it really does depend on your
own individual situation and your own investment strategy. Obviously, I
would recommend avoid checking it on a daily basis or
even weekly basis, but you also want to make sure
that you stay informed at the same time. So for
(13:09):
some people that might be monthly that is better for them,
but for other people might be quarterly, or for me,
I only check it when I actually want to invest.
I've got new money to add to the portfolio, That's
when I'll check.
Speaker 1 (13:19):
In, okay, And that way you're checking with purpose as
opposed to just checking for the heck of it, which
would probably start to worry you.
Speaker 3 (13:26):
Well, you become attached to it. It creates, you know,
these emotional knee jerk reactions. But can I add an
important tip when you do go and check your portfolio,
don't just look at the portfolio evaluation to check and
see what is the income that you have earned from
that investment, very easy to do, particular with your superannuation accounts,
you can see what last year's financial year's income was
(13:48):
how look good at what it is year to date.
Most of subernuation accounts. You can actually do this yourself
by running a check on the returns. If the income
hasn't dropped. Feel a little more assured because it means
your investment is potentially working for you. Obviously, get advice
when in doubt, but don't get caught up in the
actual portfolio evaluation because the share market doesn't necessarily reflect
(14:11):
the value.
Speaker 2 (14:12):
Okay, we'll come back in a second.
Speaker 1 (14:14):
I want to talk about diversification and products that people
use to reduce that volatility risk, and whether there is
actually a right time to actually pull out of the market.
We will get into that after the break. Can we
(14:34):
are talking about investing in volatile markets, and of course
this is not investing or financial advice. You should see
professional advice if you hear anything here that is relevant
to your circumstances.
Speaker 2 (14:46):
Are there products that.
Speaker 1 (14:49):
In a typical portfolio people use to help reduce the
volatility risk?
Speaker 3 (14:56):
Yes, and this is really important. So things like listed
investment company, ETFs, exchange shade of funds, talents manage funds,
and you know, bonds, fixed interest investments. They can be
used to help smooth out all of those you know,
nasty bumps. They don't obviously completely eliminate the risk involved,
but they can definitely cushion those falls and reduce those
(15:17):
like you know, gut churning swings that you know we're
seeing right now, and you know they are obviously to
help make sure that your money is working for you
and obviously in alignment to your risk profile. So always
check that.
Speaker 1 (15:29):
Okay, diversification, just how important is that in getting someone
through the ups and downs? And we're not necessarily talking
about the big fluctuations like we saw after the tariffs,
but just the day to day kind of movement within
the market. How important is diversification.
Speaker 3 (15:48):
It's everything. So diversification spreads your risk across you know,
a wide range of different assets. I know we talk
a lot about shares, but there's you know, so many
other things beyond shares and property. So it also means
that your money is not necessarily tied to one particular location.
So you think about different industries, different countries, and they're
not positively align necessary. So you might see volatility in
(16:11):
the Australian share market, but then you may see strength
in the property market and vice versa. So one area drops,
the other one held is perhaps holding steady, and then
maybe you know, some fixed interest investments are actually rising
depending on what the underlying investment is. So it's about
not putting all your eggs in one basket, but making
sure that it's actually working for you and what allows
(16:33):
you to have a good night sleep.
Speaker 1 (16:34):
Still, I'm really curious about the conversations that you have
with clients during these periods when there is volatility in markets.
How do you help a client distinguish between what is
a short term wobble in the market compared to what
might be a fundamental shift in markets. How do you
(16:57):
kind of help them sit down and go, all right,
this might be around for a long time.
Speaker 3 (17:03):
Look, you have to look at what's the actual underlying cause,
what is really going on, and that is when you
most financial plans will reach out to economists, you know,
go through a whole pile of research data, reports and
opinions and work with the client as to what they
think and also what they're feeling and what they feel
comfortable with. But you know, a financial plannerl always understands
(17:25):
what the client's goals are and what the time frame involves.
So they're not looking at necessarily being strategic and you know,
predicting the next crash or the next massive opportunity. So
really understanding the real risks involved and what is actually
in alignment to what the client wants.
Speaker 1 (17:39):
Are you saying then that really shouldn't let the volatility
affect your long term plans. That keep your eyes on
whatever the goals are that you set when you first
sat down and started discussing, Just focus on those rather
than trying to be too reactive in the short term.
Speaker 3 (17:57):
What's the headline versus what's the act rule factually happening
right now, So not getting caught up in the noise
and arming yourself with the right amount of information so
that you understand and if you need to make a
sudden change, you're prepared. But really, again coming back to that,
why what is your ultimate goal? And looking back in
(18:18):
history to see, well, what happened previously when similar things
like this happen, and you know, human endeavor always prevails.
You know, if you look back over a twenty thirty
forty year period, you know the markets are always recovered.
Speaker 1 (18:31):
I feel a bit silly asking you this next question,
but I have never shied away from asking asking you
potentially silly questions on this podcast, Is there ever a
time when pulling out of the market is actually the
right move?
Speaker 3 (18:44):
Yes, So when the strategy isn't right, the investments aren't
aligned to your goals, your time frame, or your risk profile,
it can definitely be the right time to go. You
know what, enough enough, this isn't actually working for me,
And that's why you need advice because they're also consequences
of selling, like triggering capital gains tax or locking in losses,
and then there might be strategic ways that you can
(19:06):
help minimize those things. So it's not actually about you know,
panic selling, but it's actually about consciously reassessing and making
value based decisions on choice. And it takes a lot
of courage, particularly if you've designed your own financial strategy yourself,
to actually go, you know what, I thought I was
doing the right thing here, but I've stuffed it. I've
done the wrong thing, and I need to undo this
(19:29):
and start all over again. And that's when obviously you've
got to go see a financial plan so that you
don't have any regrets and you get proactive advice that
is strategic as well as about the underlying investments.
Speaker 1 (19:42):
So what you're really saying is that that was actually
a very good question.
Speaker 3 (19:45):
It was very good.
Speaker 1 (19:45):
Yeah, thank you entirely. Unprompted praise just then from you,
very quickly, because we are out of time now. Have
you seen it happen where someone has panicked and perhaps
may made a poor financial decision, maybe just gone independently
of the advice that you were giving them, and might
(20:06):
not even be a client, made a poor financial decision
because of volatility in markets.
Speaker 3 (20:13):
Yes, me.
Speaker 2 (20:15):
Wow. Yeah.
Speaker 3 (20:16):
So when I was at university, before I started studying
financial planning, I had invested a lot of money, which
was a lot of money at the time for me,
into a international fund and there was a short term
pullback and the value of the investment dropped significantly and
I panicked and I sold the whole entire thing and
(20:36):
I locked in those losses. Wow.
Speaker 1 (20:38):
Yeah.
Speaker 3 (20:39):
Do I regret it, Of course I do. But it
was a really powerful lesson for me at the time,
and I have never made that same mistake again, And
you know, it's part of my own financial story, and
I've made peace with that, and you know, we all
make mistakes. The thing is not to make the same
mistake again.
Speaker 1 (20:56):
Okay, flip side. Have you then seen someone who stayed
the core through volatility and it really paid off in
the long run, is it you?
Speaker 2 (21:04):
Again?
Speaker 3 (21:06):
Well yes, But actually, all my financial planning clients, like
I've been a financial planner for twenty something years, I've
never had a client sell their portfolio during you know,
a market correction, crash or pullback. Yes, I've had phone
calls and meetings about what should we do? You know,
do we even buy more? Do you know how can
(21:26):
we manage this? Yes? Absolutely, and that that's all part
of being a financial planner. But I've never actually had
a client who's sold during a pullback, And every single
person has said, thank goodness, we didn't. You know, I
listened to your advice, Thank goodness. And that's not to
always smoke at my own backsize, but it is important
to remind yourself as to what is the big picture here?
(21:47):
And you know, if it means just taking a step
back and turning down the noise, that's okay, as long
as you're still informed. You know, we want to make
sure that we have no regrets, and if we do
need to make a decision, we do it with all
the information that we need so that we can feel
good about what we've decided to do.
Speaker 1 (22:05):
I really like where you started, not obviously the rainbow
breaths that was quite odd, but I did like the
idea of just just stop, take a moment, think about it,
and go back to the reasons why you were investing
in the first place. It feels like that would really
kind of center you and maybe take a little bit
(22:27):
of the reactive element and the emotional element out of
it and help you refocus back on the long term goals.
Speaker 3 (22:34):
And it's funny, you know, people always say the markets,
you know, they haven't started investing yet because it's too expensive,
but then when these pullbacks happen, they then get scared.
It's like, welly have you been saying it's too expensive.
Now you're able to buy those things, those investments now
at a significant discount. You're now too scared. So this
I think this is a really exciting opportunity for a
lot of people who have, you know, long term financial
(22:56):
goals in place.
Speaker 1 (22:57):
And it is a very good time to be getting
financial advice.
Speaker 3 (23:00):
Yes, this not buying advice, is go get professional advice
and jump on this opportunity. In an educated and informed
manner with a financial planner that can help you and hold.
Speaker 1 (23:09):
You around absolutely all right, how do we find you
if we want more information?
Speaker 3 (23:14):
If you want to hear more about my rainbow Breath,
so you can reach out to me at a Sugar
Mama TV.
Speaker 1 (23:19):
On Instagram and 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 very much
for listening to how do they afford that? Remember to
follow on the podcast. That's very important, and the best
thing that you can do is actually tell somebody else,
tell them about this podcast, send them the link to
this episode if you think that it's something that they
might be interested in, and help spread the word about
(23:42):
how do they afford that?
Speaker 2 (23:43):
Thank you for your company. Join us again next week
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