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The Fierce Girl's Guide to Finance

Get your shit together with money

Month

July 2019

Two insider tips from the finance industry that may just make you rich

Haha sorry about the clickbaity title. But it’s kind of true. These two things may just help you get past your fear and lack of confidence about investing.

You see, there are a lot of vested interests who like to make investment seem haaaard and scary and complex. (So you pay them to do it for you, ya see?).

But it doesn’t have to be that hard, I swear. So, here I offer you two truth-bombs to consider.

1. It’s all about the big picture, not the details.

There’s an investment concept called ‘asset allocation’, and before you hit the snooze button, let me explain why it’s important. It refers to the big ol’ mix of investments you have, like a  recipe.

A bit of property here, some shares there, here’s a parcel of bonds, and here’s a pinch of alternatives!

Each ‘asset class’ has its pros and cons, and when you mix them all together you get a delicious mixed fruit cake. (psych! fruit cake isn’t delicious at all).

People selling you investment products will often tell you theirs is the best. Performance this, fees that. But you know what’s more important than the separate ingredients? The recipe you start with.

(Actually that assertion is a hotly contested debate in the industry, on a par with the great Kimye vs T Swift battle).

Broadly speaking though, having a good, diversified mix of investments is pretty damn effective for building wealth. The recipe should be matched to your goals and timeframe.

When you go to a robo-advice service like Six Park or Stockspot, they are helping you choose the right recipe for you. They’ll also help with the ingredients, of course, through ETFs and Index funds (more on that below). So robo-advice can be a good (low-cost) way to get your head around the whole shebang.

The takeout: Don’t worry about finding the ‘perfect’ fund manager or picking the ‘hot’ stocks. Just make sure you have the right mix of investment types (i.e. asset classes) to meet your goals. 

2. Investors do stupid things … all the time.

That’s why markets are so choppy. At the moment, some of the most valuable stocks on the ASX are trading way beyond their intrinsic value. Take Afterpay – the favourite frenemy of the cash-strapped millennial shopper.

It’s currently overpriced because investors are piling into it in a frenzy.

The stock is currently trading at an astronomical high – a Price Earnings (PE) ratio of over 180 forecast earnings. You don’t need to know what a PE ratio is, you just need to know that even hot-tech-fave Google only has a PE of around 20.

Basically this stock is as popular as a fidget spinner in the playgrounds of 2017 (and personally, I think it’s heading for the same fate).

Markets boom and they bust. Particular stocks are in fashion, then they aren’t. Investors get caught up in ‘irrational exuberance’, and pile into the same companies, based on a good feeling and  some comforting projections in an Excel sheet.

When a professional investment manager does this, it’s called ‘active management’, and they charge handsomely for it. Unfortunately, they aren’t always worth the money.

But you can avoid these professionals and their big bets by just ‘tracking the index’. You see, there’s an alternative to active and it’s called – surprisingly – passive!

Rather than picking particular investments, you just follow the market. The passive-vs-active debate is a long-standing one and I’m not here to adjudicate. (Unlike Kim vs Taytay, where I am team Taylor to the death).

I will say, this week the New York Times published a piece (which I stumbled across today – after I’d planned this post), where the author opines:

I had accepted the imperfect choices and high fees imposed by so-called active mutual funds, and I had compounded those liabilities by buying and selling at the wrong times.

“The Dalbar data leads to the inescapable conclusion that most investors, this one included, are bunglers: We panic and exult at the wrong moments, impairing our chances of success.”

He goes on to conclude:

“Most people, including me, would be better off if we gave up on being smart and stuck with a simple approach: long-term holdings of diversified, low-cost index funds, using only money we can afford to tie up for years.”

So if you are wondering how to get in on this passive investing gig, you could do worse than read my aptly titled post ‘WTF is an ETF‘, or check out Canstar here. If you want to dip your toe in the water, I like Raiz, because you can invest a small amount.

The takeout: there are simple, low-cost ways to access investments like shares, and they are totally within your reach and skillset. 

Ever feel like finance isn’t your thing? It’s not you, it’s them

Sometimes I just can’t keep my mouth shut.

Working in finance, I’m constantly surrounded by a majority of men. It’s not my ideal but it’s a fact of life.

But last week I couldn’t hold myself back. I opened a financial advice industry magazine and was confronted by what I can only describe as a sausage-fest.

It’s an ‘industry roundtable’ organised by a major life insurance company. Don’t be fooled by the two women in the photo; only one was actually allowed to be part of the roundtable. I assume the other was rounded up to give some gender balance to the pic. FFS.

So I got fired up and emailed the editor to complain about this. Something of a risky move, given I have to pitch stories to him occasionally. But hey, when the feminist fire is burning within you…

He was actually great and accepted that it’s not a good look, and as I suspected, it was the paying client who made the call. He said they normally have a minimum 30% females at their events. I’ll take him at his word.

Anyway, it got me thinking about my Fierce Girls. No wonder so many of us feel like finance isn’t our thing. No wonder we don’t feel inspired to work with investment professionals, when they are largely white guys in suits.

In case you (or the men’s rights activists, who take a strange interest in this blog) think I exaggerate, check this out.

I went to two of the ‘go-to’ finance industry sites to get a feel for the visuals. Here’s a panel of ‘investment experts’.

Oh hey there white guys in suits. But wait, maybe I’m just picking one example. Here’s another.

I mean, sure there are more white guys in suits, but maybe I am just being selective. Here’s one more.

Don’t be fooled by the glasses or the bald heads; these are all different people. The only diversity is the depth of their tan and the choice of whether to wear a tie.

I’m not blaming the publication completely for this. These are the spokespeople that the investment managers put forward.

Anyway, just to round out the example and test my hypothesis a little more, I jumped onto another industry website. Here’s a list of the ‘industry expert’ articles.

You guessed, more white guys! Surprising, I know.

But I’m not just here to throw shade at the ingrained gender imbalance of the finance sector. Although that is fun.

And I have nothing against white guys in suits personally. (Let’s be honest, they form a significant part of my dating portfolio).

What I want to say is this.

If you feel excluded from the financial world, IT’S ABSOLUTELY NOT YOUR FAULT.

If you feel like money, investments and finance are complicated concepts, remote from your life, IT’S TOTALLY UNDERSTANDABLE.

If you don’t identify with the blue-suited, white-shirted men of the finance industry, IT’S COMPLETELY REASONABLE.

There are definitely smart and talented women in finance. I know a bunch of them.

There are wonderful female advisers and money coaches like Vivian Goh.

There are boss-lady investment managers like Catherine Allfrey (ok I don’t know her personally but she works in my building and I secretly fangirl her from afar).

There are great female executives running super funds like Deanne Stewart (I fangirled her at an event once, in person).

There is even an amazing woman on the Reserve Bank of Australia Board! I’d go so far as to say I know Carol Schwartz, but I don’t think she knows me.

There just aren’t as many of these women as there are men. And it’s taking aaaaages to address the imbalance.

In the meantime, what can you do in the service of smashing the financial patriarchy?

  1. Search out like-minded women and their businesses. Women supporting women is obviously the best way to start. There are so many great women, so ask around or get Googling.
  2. Be conscious of the bias, then ignore it. Feel totally free to reject the notion that finance is a white guy’s game. It’s totally open and accessible to women who want to get acquainted. Resources like the one you are reading are evidence of that.
  3. Call out gender imbalance when you see it. Like I did to the poor editor mentioned above, if you see events or articles or even companies that are far too male, comment on it. We accept the behaviour we walk past. Also, feel free to take your business elsewhere.

And if all fails, just create your own squad, Taylor Swift, Bad Blood-style. That’s my master plan. Are you in?

Just a conversation with a (very) sassy friend who has mastered the art of life

So that title is a quote about me. I love it, but feel a little fraudulent because I have definitely not mastered anything.

Anyway, it’s by the awesome Erika Jonsson, and we are having a bromance, but the girl version. (Why isn’t there a female version of that concept? Oh that’s right, because it’s socially acceptable for women to admire and be supportive of each other. Yasss gurrrrl!)

She interviewed me for over an hour and somehow made sense of my feminist ramblings, publishing it on the Six Park blog. So, here I am, spilling the tea. Enjoy.

WHAT WAS THE FIRST THING YOU REMEMBER SAVING FOR? HOW LONG DID IT TAKE?

I didn’t really get proper pocket money as a kid, but when I was 13 I started working at a printing shop for $5 an hour and I saved up for a boom box – it was a double-cassette plus CD player, so I could use it to make mix tapes. I reckon it took me about six months and I had it until well after I moved out of home, so it was a pretty good purchase!

WHAT PROMPTED YOU TO START THE FIERCE GIRL’S GUIDE TO FINANCE?

I was doing work on what was then called Money Smart Week, and one of the things they asked everyone to do was have workplace events. So I got a bunch of PR girls together and ran these lunchtime seminars preaching the gospel of superannuation and it went from there.

In terms of launching the blog, I started out treating myself as though I was a client and considering my objectives and channels. But perfect is the enemy of done, so I just ended up starting and building the site myself (which is why it’s not very fancy).

Not that long ago I was listening to Gloria Steinem in conversation with Oprah, and her advice was: “Do the thing that only you can do.” There are so many strands to unpick before we can get close to gender equality, but the thing that I can unpick is helping women realise it’s not unfeminine to be good with money. I want to change that thinking that says we’re all about spending. Money is at the core of how much power we have.

WHY DO YOU THINK EXPENSIVE SHOES (THINK LOUBOUTINS AND MANOLOS) HAVE BECOME SUCH AN IMPORTANT REFERENCE POINT IN TALKING TO WOMEN ABOUT MONEY?

My theory is that it’s women signalling success to other women. I think women are particularly socialised to talk about how we spend money but not about how we make it or invest it. But money itself doesn’t signify power; it creates power by giving you choices and opportunities. If you’re spending that money on shoes that aren’t even very comfortable, you’re not taking control of that power fully.

One of the things that troubles me a lot at the moment is the obsession with cosmetics and injectables and really expensive beauty treatments. I’m not judging women who use these services, by the way, but every time you’ve got a 26-year-old woman getting Botox, it’s a way to disempower her, because she’s now embraced a spending pattern that will last through her 20s and beyond. We’re talking about hundreds and hundreds of dollars being spent, mostly by women, who think this is what they need as a minimum to show up in the world. It’s fine if you have all the money – great, go get a facial – but don’t do that before you’ve paid your bills and set yourself up for a life that will give you power and opportunities.

FIERCE GIRL IS FULL OF GREAT POP CULTURE REFERENCES, INCLUDING ICONIC FILMS AND SERIES SUCH AS LEGALLY BLONDE AND SEX AND THE CITY. WHO ARE YOUR FAVOURITE CHARACTERS AND INFLUENCES WHEN IT COMES TO MONEY?

One of the biggest singers in the world at the moment is Billie Eilish, who’s quite androgynous, and I find that really exciting – she’s giving a different version of femininity that’s not all about crop tops or high heels. When it comes to money, though, the women I admire the most are probably Beyonce and Rihanna. They’ve kept control of their business decisions and their empires and they’ve flipped the narrative. I know that’s a very capitalist way to look at things but if women can take away even a small amount of the thinking that says money isn’t about what you can spend but about the choices and opportunities it gives you, we’d all be better off – we’d all be a bit more Beyonce, right?

YOU WROTE A POST ON SPENDING LESS AND SAVING MORE THAT WENT “LOW-KEY VIRAL” – WHAT ARE THE MOST POPULAR POSTS ON THE BLOG, AND WHY DO YOU THINK THEY’VE RESONATED THE WAY THEY HAVE?

The one I wrote about how to structure your bank accounts was wildly popular – it’s not rocket science, but it was a great simplification of how to think about things. By far the most popular ones, though, are the ones that are the most personal, including a recent post about the single biggest risk to your money. As someone who’s come out of a divorce, I’m fortunate to have an income and a career, but I didn’t come out of that situation in what I thought was a very fair way. If I could go back in time I would have protected myself a bit more. I think people really resonate with the authenticity of those kind of blogs. People connect with people, not instructions or tables – they want to hear stories.

(Erika’s note: one of my personal favourites, and the one that introduced me to Fierce Girl, is the Mindful Spending Manifesto, which doesn’t decree that you shouldn’t buy anything, but that you shouldn’t buy everything.)

WHAT WAS THE FIRST INVESTMENT YOU MADE OUTSIDE YOUR SUPER?

I’ve been putting extra into my super since I was 21 – though I lost a decent chunk of that in my divorce – and everything else has gone into my house. Other than a little Raiz account, I’m probably overweight in property! A lot of my wealth has gone into my home, but I’ve done that quite consciously because I do have a decent amount of super so I just really want to smash my mortgage while I can. When I feel like I’ve done that a bit more, I’ll probably go outside and invest in ETFs.

HAVE YOU EVER WRITTEN ABOUT BUYING FEWER COFFEES?

No! I’m not going to tell you how to write your Mindful Spending Manifesto! You need to decide what’s your splurge and enjoy it – then be clear about what you’re having and not having. You should see my premium spirits sideboard – there’s nothing on there that’s less than $70 or $80 a bottle, but I won’t buy cocktails at a bar. Everyone has their own thing that they have to work out. You shouldn’t have to feel bad about the things that make you feel good about your life, but you should put time and effort into thinking about them. Ask yourself whether the behaviours you’re engaging in bring you closer to your goals or push you away from them.

WHAT’S THE ONE THING YOU WANT EVERYONE TO KNOW ABOUT MONEY?

The thing I really want women to believe is that perfect is the enemy of done. There’s no perfect investment, there’s no perfect way of doing things – just do something. Don’t wait to be a perfectly informed investor – you don’t have to be Warren Buffett; there are so many small things to do like reviewing the dull insurance and consolidating your super. Get in there and have a go. You can always do a little bit better without having to be perfect.

Final note from Chief Fierce Girl: this isn’t a sponsored post or anything, but if you are wondering how to get started with investing, Six Park is totally worth checking out.

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