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The Fierce Girl's Guide to Finance

Get your shit together with money

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January 2020

If you can shop for clothes, you can shop for shares

“Nobody in my family has ever bought shares. It’s all new to me. I’d like to be able to do it myself. Is there an ‘easy way’? Probably not.”

This is part of a message I got from an old friend recently. And I loved it!

I loved that she was taking an interest in investing. I loved that she was thinking about her future. I loved that she was stepping outside her comfort zone.

So … is there an easy way?

Yes and no.

The mechanics of it can be easy. Sign up to an online broker and make some trades.

A harder part is knowing what to buy (more on that below).

And the hardest part is feeling legit.

It’s a challenge, believing we have the right to be here, doing this thing that has always been done by “smarter/richer/more important” people – and mostly men.

But it’s time for you to join this world. And I’m here to give you your ticket.

I’ll admit: this post is kind long and involved. But hang in there.  

For many people, investing is a whole new world. New language, new ideas, new ways to think. It takes a while to feel comfortable.

It’s like learning anything though. If you ask the average bloke about the merits of skin serums vs moisturisers, he will look at you blankly. That’s because society hasn’t told men that skincare is important, or socialised them to believe that the way their skin looks is crucial to their social success. So they haven’t learnt about it.

But just because it’s new, doesn’t mean it’s beyond your skill or knowledge.

Don’t worry, Fierce Girl is here to help!

I thought a lot about my friend’s question and figured that if you’ve ever gone shopping for a particular outfit, it’s a similar process. Say you need something to wear to a wedding.

Step 1. The Brief

There are a bunch of things to consider. The time of year; the accessories you have and the ones you need to buy; if your stilettos will sink into the grass; the dress code (does formal mean a long dress?); how fat/skinny you feel right now. The list goes on.

There are also the practicalities. How much can you afford to spend? How many weekends do you have to go shopping? How many weeks do you have up your sleeve to buy online, get it delivered and return the five dresses you hate?

It’s a lot of thinking. But we do it, because we are competent, empowered women.

And that’s the energy we need to bring to investing.

This is my one and only ‘designer’ dress that gets dragged out for nearly every event. 

When you’re in planning mode, some factors to consider are:

  • Your goals – is the money for a general nest egg or ‘f*#k-off fund’; for a bigger purchase down the track (e.g. a home deposit); will it be part of your retirement savings? Being clear on that will help with the next point…
  • Your timeframe – are you likely to need this money in the next five years? If so, maybe just stick it in a high-interest savings account. Shares can be too ‘up and down’ for a shorter period. But for a longer period, you can possibly tolerate a little risk and volatility – i.e. you have longer to ride those ups and downs, and let them smooth out over time.
  • Your own mindset – financial advisers like to talk about ‘risk tolerance’. In one sense it’s determined by the timeframe – the more time on your side, the more risk you can handle. But there’s also your own personality. If the thought that your share portfolio could fall dramatically will keep you up  at night, then it’s probably better to go with a more ‘conservative’ portfolio. Don’t sell yourself short on this – some risk is needed to make money. At the same time, don’t go against your gut if it’s going to make you unhappy.

Step 2. The Research

Lady Gaga sorting through stock tips

The wedding outfit can require some serious thought, especially if you’re likely to see your ex-boyfriend or some chick from high-school who was mean to you.

Research is the answer. You scroll Instagram, makes wishlists on The Iconic, and wander the shopping mall at lunch. You also flick through a few fashion magazines for ideas – haha just kidding, what is this, 1997?

At some point you decide that ‘formal’ can definitely include cocktail length dresses, because, well, there’s a perfect one on sale at Rodeo Show.

You can apply this solid skillset to researching your investment options.

The first question is whether you want a DIY approach or someone to pick things for you.

The DIY Approach – Direct Share Investing

Nobody does DIY quite like Fifth Harmony

You can pick a few companies to invest in, then buy their shares (technically, they are called equities, but let’s stick with the common name here).  You do this directly through a real-life or online broker (discussed in this post).

Some challenges with this are:

  • you don’t know if you’re paying a fair price  – unless you go deep into their financial statements and think about things like price-earnings ratios.
  • It’s harder to spread the risk. The more companies you invest in, the less it matters when one goes badly. ‘Diversification’ is a key investment concept, and it’s hard to achieve it unless you have a lot of money to plough into shares.
  • It can be more stressful – Related to the above point, owning just a handful of companies means you watch them more closely and get emotionally invested in their ups and downs.

Personally, I’m not a fan of direct investing. But some people are really attracted to it because they like the control it gives them, or they enjoy all the research and trading.

But if this doesn’t sound like you then, another option is a managed fund.

Pay someone else to be smart

Back when I got married, I would never have pulled my wedding dress off the rack when I was shopping for it. But the lady at Baccini & Hill has dressed a few brides in her time, and she knew exactly what would look good on me, because she’s a professional.

Belinda wedding dress
Please enjoy this photo of me eating a party pie in my expensive wedding dress. But it looks good right?

If you want your shares to be professionally managed, you have two main choices:

  • Active Management – someone (usually a team) does all the research, selects the companies to buy and then does the buying/selling at the appropriate time. You pay fees to the manager for doing all this work (usually a percentage of the amount invested). Picking a fund manager is a whole topic in itself, which I’ll save for another time.
  • Passive Investing – This is where your portfolio mimics the performance of the market, instead of someone picking the best shares for you. It means costs are much lower, but you don’t have a chance to ‘beat the market’ (i.e. make more than the average investor).

Passive investing – through Index Funds and Exchange Traded Funds (ETF) – has grown in popularity in recent years. It could be worth considering if:

  • You’re not fussed about beating the market and are happy to earn the average
  • You don’t like paying a lot in fees
  • You want to start with a small amount (like, a spare fifty bucks or so)

It’s not as DIY as direct investing, but it’s also not as hands-on (or costly) as active management.

The cheapest way to access this type of investment is through an ETF provider – such as Vanguard, iShares or BetaShares. If this appeals to you, I recommend reading ASIC’s explanation, so you understand what you’re getting into.

You can also invest in Index Funds through a manager like Vanguard – i.e. you put in an application directly with the manager, rather than buying on the exchange. The difference between these approaches is subtle – check out this article for more details.

Still confused/scared/intimidated?

If you are baffled by how many products are on offer, and which one is right for you, a roboadviser can help.

Companies like Stockspot, Six Park and Raiz put together a basket of ETFs for you, based on your needs and preferences. There is a fee, but it’s generally a lot lower than paying a human adviser.

Speaking of humans, don’t rule out getting an adviser if you are really serious. Just like a personal trainer can get you over the fear or walking into a sweaty weights room full of men, an adviser can guide you through the world of investing.

You’ll pay for the privilege, but if they give you the confidence to step into investing, you could potentially make that money back over time.

Step 3: Get cracking!

I know this is a lot of information, and I’m not recommending you jump online and buy, buy, buy right now!

Do some more reading (or watching videos) to get your head in the game.

However, don’t wait to be an expert. Perfect is the enemy of done.

You can get started with a small amount of money, find your comfort factor, and then build from there.

And remember, if you can go shopping for clothes, you can go shopping for shares.

If Julia Roberts can do it, so can you!

Here are some more of my articles to help you get started:

 

 

 

 

 

Want to nail your finances in 2020? Start with these 3 questions

Hey, Happy New Year! How was your New Year’s Eve?

Did you party like it’s 1999 and spend 1 Jan on the lounge, feeling sorry not sorry?

Did you buy the kids sparklers, let them run around, and hoped they crash out before midnight so you could sneak in an early night?

Personally I’m a low-key NYE kinda gal. This year I stayed up and drank espresso martinis with good friends. I also made the lovely Amy Pearson take a bunch of photos of me looking festive. You like?

Anyway, we are all hopefully waking up to the new year and the new decade with a spring in our steps, a positive attitude and nothing more than a slight hangover.

And gurrrrl we are ready to OWN IT on the financial front. AMIRIGHT?

As Chief Fierce Girl, I’m here to be your head coach and head cheerleader, because I’m multi-talented like that.

We don’t need to make unrealistic resolutions. We don’t need to put our credit cards in the freezer. We don’t need to makeover our entire financial situation.

But let’s all do things a little bit better in 2020, starting today! Ok, maybe tomorrow if you need a burger and a nap.

And here are some questions to help you on the way.

1. What habits am I going to break?

We all have our pitfalls when it comes to spending. I’m sure you know yours. You don’t have to commit to fixing all of them. But maybe pick one or two.

This is mine: when I go to the shopping centre to buy groceries, I can do it all on the lower levels. I have zero need to get on the escalators and yet, I convince myself that I just need to ‘look’ in K-Mart in case there is something I’ve forgotten I need.

And then, not only do I go broke saving money in that bargains black hole, I see all the other shops. Like, once you’re up there, you may as well go up to Sephora. And so on…

So, this year, no K-Mart check-ins. If I haven’t written something on a list ahead of time, I am anchored to the boring grocery level. Sigh.

The key here is to start small and realistic. I’m lying to myself if I think I will not buy any new makeup this year. But I can definitely achieve the goal of not going up some escalators.

What are your bad habits, and which one/s will you tackle?

2. What habits am I going to create?

One of the keys to getting on top of money (or anything in life) is to slowly build good habits, which eventually add up.

Last year I committed to tracking all my spending for a while. Every coffee, every snack. Not gonna lie, I didn’t do it all year. But I did commit it to it for a couple of months to get a better handle on where my money goes. It was a useful exercise. (I used TrackMySpend app and recommend it. The part where you have to decide if it’s a want or a need is particularly illuminating. Like, is coffee a need if you’re a dirty caffeine addict like me?)

Other small habits you might consider, depending on your situation:

  • Committing to making your own lunch at least four times a week
  • Checking your bank statements at least weekly to see your spending and check there are no dodgy transactions
  • Learning something new about money regularly – perhaps it’s reading the Money section of the newspaper, subscribing to a blog like this one, or following some interesting money people on social media
  • Having a regular money date night – either with yourself or your partner. This is a chance to review spending, bills, goals, investments. Sure there are hotter date nights in the world, but at least you don’t have to try and stay awake for sexy time later on.

This is not an exhaustive list. I suspect you know which good habits you’d like to build. So, pick one and go for it. Then when you have nailed it, pick the next. Head over to my home boy James Clear and read his stuff on habits – he’s the best.

3. Am I treating myself or cheating myself?

Spending can be just like any other vices, such as drinking booze or eating junk food. It feels good, briefly soothes our soul, but ultimately takes us further from our goals.

But just like food and booze, it’s all about the dose.

It’s probably ok to treat yourself to a nice restaurant, a new outfit or a good facial if you have done it thoughtfully.

Like, you set a goal and achieved it. Or you want a special night out with your partner. Or you have finished a particularly stressful period at work and want to unwind.

But if it’s constant and mindless, you might be veering into ‘masking my pain and stress’ territory.

If you think you’re more in the latter, I’d urge you to think about your spending traps. Look at your bank statements, track your spending, listen to that annoying friend who guilt trips you for buying stupid stuff (apparently I’m one of them).

And then work out if there is a better way to handle your feelings or stress. (Yoga anyone?).

You can also put in place rules and hacks to help dial it down. I am a fan of filling my online shopping cart, then leaving it for 24 hours. In 9 out of 10 cases, I don’t buy it.

Or set up a dedicated ‘treat yoself’ account and limit your mindless spending to that

I personally would put most expensive beauty treatments in this category. Nobody needs eyelash extensions, botox or fillers. But I’m not here to tell you how to spend your cash – I just want you to really think about it. What’s driving it and is it taking you away from your goal?

And that’s all the friendly advice I’m gonna drop on you this New Year’s Day. I hope 2020 is a great year for you. And if you want to come along on the ride towards financial freedom, fill in that ‘subscribe’ box up top and stay tuned for more fun times!

Fierce Girl Finance

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