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The Fierce Girl's Guide to Finance

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investing

A small request not to freak the hell out about the world right now

Sure things aren’t perfect. Sure we are facing an outbreak of Coronavirus, but maybe it’s best to just sit yourself down like Elle Woods watching hot guys play sport. (On TV though, to be safe).

Of course, some people will get sick. A small proportion will sadly die from complications, in the same way people die from the flu every year. But this is not 1918 and we are not all going to perish from a Spanish flu pandemic.

What we are really witnessing on the markets, in the media and in the supermarket aisles is panic.

This is a downturn driven by emotion.

I suspect that in the face of a vague sense of existential dread caused by climate change and growing wealth inequality and political instability, the virus is something to focus our collective panic on. We can’t stop companies burning dirty coal but goddamn it we can buy some hand sanitiser!

For most people, the biggest threat is not to our health, but to our economic security. There is quite likely to be a recession or at least a downturn. (A recession is technically two quarters of negative economic growth).

The biggest consequence of a recession is that people lose their jobs. Employers create fewer jobs. Casual staff have their hours cut. It takes longer to find a new job.

A recession means people buy less stuff and use fewer services and that’s at the core of the employment market.

What does this mean for you?

Build your emergency fund.

Ideally you will have three months of living expenses tucked away in a place that’s neither too easy to access (like, on a night out), nor too hard. You don’t really want your emergency funds in the sharemarket in case it falls in value at exactly the time you need it (like now).

Having an account with a different bank to your normal one is a popular option. Remember that the Australian Government guarantees bank deposits (up to $250,000 per account, per bank) so it’s pretty darn safe.

Another good idea? Start dusting off your CV and kick up your networking a notch.

Even in good economic times, you never know when you might walk into work one day and be made redundant (God, isn’t that an awful expression?).

So it’s not a bad idea to keep your CV up to date, know some relevant recruiters and make sure you’re out and about at industry events.

I know, networking events are hard work, but they exist for a reason – not because we enjoy balancing plates and wine glasses in one hand and trying to remember four people’s names.

What about my investments?

If you’ve already made your emergency fund, and are worried about your investments, this is a perfect time to do nothing. Or buy more.

OK that’s my opinion, and I’m not an adviser. But the key thing to ask is: am I an investor or a day-trader?

If you’re investing for your future self, then you have to remember that market downturns are as inevitable as someone on Married at First Sight cheating on their fake spouse.

If you don’t need the money right now, it’s time to chill. Or as some market pundits (like this guy) are saying, it may even be time to buy.

I’ve been dropping money into my Raiz account (because I’m too lazy to pick things). My friend just bought a big chunk of bank shares. Another friend who recently bought Gold ETFs is boasting about how well they are doing.

I’m not saying any or all of us are correct, but what we have in common is this: we have taken a view and acted on it.

We also have our other ducks in a row, in terms of mortgages and emergency funds.

The worst thing you can do right now is look at your portfolio on a daily basis. The shorter time-frame you look at, the worst it will seem.

This is the ASX100 if you just look at it over 6 months.

ASX100 chart
ASX100 Chart. Source: asx.com.au Period: 9/9/19 to 9/3/20

But this is what it looks like over the last 10 years.

ASX100 Chart. Source: asx.com.au Period: 9/9/10 to 9/3/20

Sure it’s down now, but it’s still up overall. It looks even better over a longer period but the ASX tool doesn’t go longer than that and I’m too busy to find another one.

The point is this: investing is a long-term thing.

So what I’m basically here to say is:

  1. Be alert but not alarmed. The world isn’t ending;
  2. If you have spare cash you might buy some cheap investments;
  3. But if you need spare cash in case you’re out of work for a while, keep it in the bank.

That’s it Fierce Girls. Stay cool.

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:

 

 

 

 

 

Why investing is just like wearing false eyelashes: the pep talk you’ve been waiting for

A long time ago I bought a variety box from Sephora that came with a set of Huda Beauty false eyelashes.  I often looked wistfully at this wonderful creation.

If only I were that kind of woman. You know, the type who can skilfully apply false lashes and breeze out into the night.

Well dear reader, it turns out I am.

My friend Amara provided encouragement and coaching. I watched Huda herself apply them in an Instagram video. She made it look not that hard.

And so, with a wedding to attend, I figured it was now or never.

First attempt was clumsy. They seemed huge, I could feel them attached to my eyelids, and they obscured my vision slightly.

But by the end of the night, having consumed at least an entire bottle of champagne and taken about 347 selfies, I was telling anyone who’d listen that they had become part of me.

‘I’m actually a cyborg now: part human, part eyelash’. You’re dead right, I am an entertaining wedding guest.

Wedding Selfie no. 243

So anyway, I pulled them out again for Cup Day, because well, why not look good if work is paying for your lunch and booze?

Cup Day selfie no. 67 – please note my crown

This time it was much easier; they stayed in place easily and I quickly activated cyborg mode.

Then this week, I lashed up for a Fierce Girl photo shoot (more to come on this). By now, I managed to do it no-stress, first time and at 6am. Kim Kardashian, eat your heart out.

The reason I am telling you this otherwise tedious story, is that it proves a point about life, cosmetics and investing.

I had previously approached the issue with a lack of confidence. I was overawed. “I’m not the type of person who does that”, I told myself.

But I’ve almost mastered it now, thanks to gentle encouragement, online research and a first attempt that felt, frankly, clumsy and uncomfortable.

I also chose a quality, trusted brand. (Surprisingly, the $3 ones from Daiso are vastly inferior to the $40 ones from Sephora. Who knew?)

If you’ve thought about investing, but been overwhelmed by it, you should take heart from this story. And the next one.

I met a bloke at the ASX Investor Conference in Brisbane last week. I call him a ‘bloke’ because that’s what he is: a salt-of-the-earth fellow with a broad Queensland accent.

If this were a meme, the conversation would go:

Nobody:

Absolutely nobody:

Queensland bloke: You know what, I’ve made an average of 7% a year since 1999 by investing in shares.

Consider: if old mate had invested $10,000 back when Britney was singing Hit Me Baby One More Time, then added another $500 per month, he’d have made up to $285,000 by now. (That’s an estimate only and doesn’t allow for the sequencing of returns, but you get the picture).

If he does the same for the next 10 years, it could jump to over $600,000, thanks to the magic of compound interest. As the Backstreet Boys said in 1999, I Want it That Way.

 

Oh baby, baby, how was I s’posed to know that I should have been investing in 1999, instead of drinking cheap wine and flirting with boys?

Following this unsolicited disclosure, I asked my new friend some questions. He holds about 25 stocks at one time (pretty standard). He picks them based on broker reports, media articles and a good old dose of gut instinct. His best performing pick was Blackmores – bought in at $10 and it’s now over $200 per share. Part of his rationale? He saw the products in the pharmacy and knew the brand.

He also picked some dogs, like Slater & Gordon, where he threw good money after bad. (Nothing about investing in a law firm sounds attractive to me, but … each to their own.)

He lost a lot in the GFC, but hung in there and the portfolio recovered over time.

And that, my friends, is how you make money in equities.

I’m here to tell you, if old mate Queenslander who lived on a farm for twenty years can do it, you can too.

There are different ways to access listed investments. A fund manager can do it for you, you can buy a low-cost ETF, a roboadvice provider can hook you up, or you can just choose them yourself. I’ve written a whole post about it here.

The overarching message is this: anyone – including you – can build their wealth through listed investments. You need some baseline knowledge, a willingness to try and a good deal of patience.

You can always start small – exchange-traded products don’t have a minimum investment. (Well, technically buying one unit is the minimum).

Of course you need to be mindful of risk and time horizons. A rule of thumb is that shares suit investors who have at least a five-year time horizon. That allows the ups and downs to balance out over time.

And diversification is important. Old mate had actually lost money on the property he owned (it was in the country) so was happy he had his wealth spread across different asset classes.

Long story short, if I can nail false eyelashes, you can totally nail the stockmarket.

From Arts student to Finance nerd: if I can invest, then you can too

I’m the least likely finance blogger.

I dropped maths in Year 12. Messed up chemistry because ‘I didn’t know there’d be so much maths in it!’.

Picked a university course devoted to History, English, French and Latin. Because of course employers want to know if you can decline a Latin noun (I can, but it hurts my head these days).

The important point here is that contrary to popular belief, you don’t need to be good at maths to be good at money.

The maths can be handled by the calculator in your phone or the Excel on your computer. All those times spent crying over an inability to do long division? Wasted. (Serves me right for being such a geek.)

Having observed a bunch of people in the finance industry, and quite a few rich people, I can tell you there are qualities that make you good with money that have nothing to do with your grasp of trigonometry.

Let me share a few of these qualities.

Confidence.

This is the big one. In the finance industry, it often veers off into arrogance, and while that can make people insufferable in conversation, it does help them to take action. 

Let me be clear, I’m not talking about being reckless. What I’m advocating is a willingness to educate yourself, do your research, form a view and then take action.

As long as you’re following the basic principles of investment, taking action is generally better than doing nothing at all. (Basic principles like don’t put all your eggs in one basket, don’t chase ‘get rich quick’ schemes, don’t borrow more than you can afford).

You can always start small until you build your comfort factor. Basically, if you can operate with even half the confidence of a mediocre white man, you’ll be fine.

Curiosity.

There is no one, single way to get ahead with investment. Some people swear by property , others love a managed equities fund and some think ETFs are the way to go.

Personally, I think a bit of everything is good – it’s pretty much how I think about dating: spread the risk and reward, and avoid catching feelings for anyone in particular.

But the key is to do your homework. Read about the things you might invest in; hear from different commentators and sources; pick up magazines or newspapers that cover new topics. Always keep learning.

One of the world’s best investors, Warren Buffett, spends five to six hours per day reading five newspapers and 500 pages of corporate reports.

I mean, if I were that rich, I’d probably allocate at least half of that time to watching Rupaul’s Drag Race and drinking martinis* … but you do you, Warren B.

Clarity.

It’s hard to get excited about anything if you aren’t clear on the ‘why’. Too many of us just stumble around with our money, hoping for the best. Will we have enough stashed away for Christmas, next year’s holiday, or some far-off but vague retirement? Fingers crossed!

Ladies, I want you to be crystal-fucking-clear on what you’re trying to achieve. If you’re saving for a specific thing, write it down, give it a timeline, give it a spreadsheet.

If you’re investing for the future, get down and dirty with what that future entails. Is it a lifestyle? A destination? A few years out of full-time work to raise kids?

Whatever it is, the more you can picture it and feel it, the more motivated you’ll be to work towards it.

Right now, I’m in a period of transition, and my old goals are giving way to new ones. (Hot tip: you can always change your mind about your goals). So now, I’m focused on a short-to-medium term lifestyle goals.

When I was in Year 12, my bestie and I would keep ourselves sane during the HSC by picturing the cute outfits we’d be wearing clubbing (picture Sporty Spice circa 1996).

Right now, I’m getting pumped about the ability to wear jeans, feminist-slogan t-shirts and a pair of Air Max 90s from my (possibly-excessive) collection. The more I can push those smart, corporate Review dresses to the back of the wardrobe, the better.

Sure, wearing trainers isn’t everyone’s jam.

But that’s the fun of it right? We all have different goals and dreams and views on footwear. But having clarity about your own goals is one of the best damn motivators around.

And guess what, I even made you a worksheet to help you work out some goals. You’re welcome!

So there you have it Fierce Girls. The Three C’s of Getting Rich.

That’s totally just something I made up then by the way. But it sounds convincing and who doesn’t love a listicle, huh?

Long story short, you can get on top of all these investing stuff, with a bit of time, attention and a touch of fake-it-til-you-make-it attitude.

*Probably have already overallocated my time to these pursuits, to be honest. 

The ultimate ‘get started’ guide to investing (and stuff)

So, you’ve made the decision.  It’s time to put on your serious-lady-suit (Romy and Michelle style) and get busy with money.

Whether daunting, exciting – or both – you need to start somewhere.

And that’s where it can come undone. What do I choose? How do I choose? What should I ask?

All very good questions. I can’t promise I will answer all of them, but let me give you some starting points on your journey.

I want to invest in ETFs

Exchange-traded funds are a popular, low-cost way to invest in a range of asset classes, from shares to bonds. I’ve written more about them here.

If you’ve done your research and want to get started, first thing you need is a broker. As the ‘exchange-traded’ name suggests, ETFs trade on the Australian Securities Exchange. While the days of guys shouting at guys on chalkboards are over, brokers still need to do the trade for you. There are lots of well-known online ones like CommSec, but the nerds in the forums I hang out in reckon Selfwealth is the cheapest.

Speaking of brokers – a great opportunity to appreciate Leo in Wolf of Wall St

If you don’t want to go down that road, you can consider an app like Raiz or a Roboadviser (see below), and they do that part for you.

In terms of choosing which ETFs, you really need to spend some time with your friend Google.

I want to invest in a Managed Fund

Rather than buying or selling units on the ASX, like with an ETF, you apply for units in a managed fund, directly to the company. There is usually a form to fill in (online or paper), you give them money and they give you units in the fund.

There is also an ASX service called mFund, which allows you to bypass the old form-filling grind. It does require a broker or financial adviser though – so if you have neither of those, probably not worth the effort.

In terms of how to choose a managed fund, it’s kind of like saying ‘how do you choose a dress?’. Do your research, have a clear idea of what you want, keep a keen eye on prices (fees), and get recommendations from friends. There is a handy tool on the mFund site to get you started.

Pretty sure Gaga did some solid research on this dress.

I want to get Financial Advice

First up, be clear on what you want and how much you want to spend. (This post may help).

Money Coaching – this is the mani-pedi of the advice world. It helps you with goal-setting, budgeting, cashflow, saving, and everyday money goals. It’s more like a life coach, in that it’s not regulated by ASIC and they can’t legally tell you what to do with your savings – they mainly help you accumulate the money. Sometimes they have affiliated services to take you to the next stage.

I see a lot of people who think they want financial advice, but really want money coaching. It’s way cheaper because there isn’t a bunch of expensive compliance sitting behind it.

People like Vivian Goh are leading the charge in this area.

The most iconic manicure of them all

Robo Advice – Let’s call this the fractional laser treatment of advice: yay technology!  These services use powerful algorithms to give you an investment plan. You tell them your goals, and the friendly robot builds a portfolio to achieve them. Stockspot and Six Park are two of the bigger players in Australia – they have lots of helpful articles on their websites, with more information.

Comprehensive Financial Advice – This is the full day spa treatment of advice with a price to match. It looks at your whole financial picture: goals, retirement planning, risk tolerance, tax issues etc. But it takes a lot of time and compliance on the adviser’s side, so you’re looking at upfront fees or $3000-4000 or more, with the option of ongoing service (and fees).

How to find an adviser? Check out this post. 

I want to sort out my super 

Sorry but this is the only pun that makes super interesting

So, you want to merge multiple accounts, check your insurance, review your investment options or generally find out WTF is going on with your retirement savings (yeah girl!).

Call your main super fund. If you want to roll multiple accounts into one, the fund will do the heavy lifting for you. If it’s other questions, they are generally pretty helpful and can often provide ‘limited advice’ at no cost.

Don’t know which one you should pick? The big-name industry funds are pretty solid, but you can also check out this website for more information.

It’s not you, it’s them: why finance seems boring AF, and what you can do about it

If finance seems about as exciting to you as a relationship with Aidan, I’ve found one of the reasons why.

I had this insight while witnessing one of the beloved rituals of the investment industry: roadshows.

It goes like this: you have an investment product to sell. You want stockbrokers and financial advisers to sell it, so you go around town presenting to them. There is a PowerPoint that’s been through 20 versions. A slightly weary senior management team who has given the same spiel three times that day. And a group of finance people who vie to ask the smartest-sounding questions.

I’ve  been at a couple of these briefings lately, and holy hell, what a sausage-fest they are.  At the first one, there were no women in the audience. At the second one, there was just one among about a dozen men.

So, there are all these statistics about women’s lack of participation in investing. Women invest less, feel less confident about their decisions and often leave it to their partner (some good stats here).

And when I look at who’s running the show, I think ‘well, duh’.

What’s does ‘women’s investment’ look like?

I’m not sure, really. One of my inspirations, Sallie Krawcheck, is a serious boss-lady who has thought about it a lot. She used to be CEO at a giant finance company, and these days she runs a women’s investment firm called Ellevest. (It’s in the US, so I haven’t invested with them, but I totally would.)

Sallie has a lot of data and insights into why a female-focused investment firm needs to exist, which I won’t replicate here. Check out the website here.  Broadly, we have different goals, income patterns and attitudes to money – so why not have our own approach to investment?

But nearly all women have worn men’s clothes before. Maybe you stole a perfect t-shirt from your husband, shopped in the men’s underwear section, bought a pair of Cons, or inherited your dad’s 1970s maroon tuxedo jacket and worn it out on the town (thanks dad!).

So you would know that just because something is designed with a man in mind, doesn’t mean it’s wrong for women. And investing is the same.

Sure, most investment products were created by a bunch of guys with a serious Excel spreadsheet addiction. And yeah, they are packaged up and sold by a bunch of guys in suits. And the language and marketing around them is created without women in mind.

Who cares? Invest anyway!

Let’s not wait for the finance industry to achieve gender diversity. I’m not sure it ever will. Instead, let’s take matters into our own hands. Here are three things you can do right now to take control of your finances and low-key smash the patriarchy.

  1. Educate yourself – Take time to understand the basics of money management, investing and financial lingo. This website is a good start (of course!) but there is also a wealth of information out there (pun intended). Start at www.moneysmart.gov.au, get to know The Barefoot Investor, head on over to www.financy.com.au, or just ask your smart, financially literate friends where they learnt about money.
  2. Make a plan – You don’t have to go and drop a few thousand on a financial planner. Set a SMART goal, map out a plan to get there and then allocate your funds accordingly. This is literally the basis of all financial planning, so if you can do this for your next goal, you’re streets ahead. (Some goal setting tips here)
  3. Dip your toe into investing – Not all investments need $50k in cold hard cash to get started. Microsaving apps like Raiz (formerly Acorns) can get you acquainted with investing on a small scale. You can buy an Exchange-Traded Fund (ETF) for a few hundred dollars (learn more in my post here). If you love property but can’t afford your own place, you can buy a little bit with companies like BrickX (I haven’t invested with them so I’m not endorsing it, but you can always do your own research). The point is, you don’t need to be a baller in a suit, wearing a Rolex, to get started as an investor.

Remember: just because  the finance industry is dragging its feet on gender diversity, you don’t have to miss out  on making money. Take charge and take your seat at the table!

If financial planners are greedy, dishonest or stupid, who should we trust?

That’s a big call, I know. But it’s what the Royal Commission (RC) into financial services seems to be suggesting.

Not all financial planners, just the ones who’ve been blowtorched by bad-arse special counsel Rowena Orr, affectionately  nicknamed ‘Shock-and-Orr’ by the media. (Pictured above, showing  strong side-eye game).

I’ve been following the RC  closely this week. Partly for professional interest and partly because it’s car-crash viewing – i.e. hard to look away from the wreckage.

So far we’ve heard about greed and dishonesty at the top. AMP management all but confessed to charging fees for no service, then lying to the regulator about it. So far, the CEO and head lawyer have taken the fall, but there will be more, I suspect.

We’ve also heard about incompetence and greed at the frontlines.

An adviser who told a couple they could buy a property within their self-managed super fund, to live in. Anyone with even the slightest knowledge of SMSFs knows you can’t do this: only investment properties can be placed into super. That couple ended up with no home of their own to live in.

There was another adviser who suggested his clients change super funds, even though they’d be slugged with a $16,000 exit fee – or a quarter of their (fairly meagre) savings. Because it would make him money.

Then there was a high-profile, TV-star adviser, who told a client to leave her super fund and join his firm’s. Even though it would cost her $500,000 to do so.

This was after his staff had impersonated the client to contact her super fund (which is absolutely not required, because you can easily give an adviser authority to call on your behalf).

Turns out he was confused about whether his client was in a ‘deferred benefit’ fund or a ‘defined benefit’ fund. Those two things are in no way similar; it’s like saying you’d like a pinot noir and being serve a pinot gris. When a girl wants red wine, she does not like getting white.

Luckily, this client is a smart and savvy lawyer, so she picked up the error, rejected the advice and complained to his professional body. In the planner’s response, he called her ‘nitpicky’ and ‘aggressive’.

I don’t know about you, but if I’d picked up a $500K error in advice I’d just been charged several thousand dollars for, I’d feel a little aggressive.

And if knowing the difference between ‘defined’ and ‘deferred’ is nitpicky, then sure, sign me up for pedant of the year.

These are just some examples of the train-wreck that is the Royal Commission. And while there is some schadenfreude in watching it, mostly, it just hurts my heart.

It hurts because these are everyday people who have done the right thing and sought professional advice about something important. Then been totally screwed over for it.

It hurts because, for every dodgy and stupid and incompetent planner, there are many more who care deeply about their clients and give solid advice that’s in their client’s best interests.

But sadly, it’s hard to sort the good from the bad.

When you get a bad hairdresser, you know straight away. Your partner will no doubt declare the shitness of your new ‘do as soon as you walk in the door. Ah well, six weeks and you can move on.

But bad financial advice can take a long time to emerge and even longer to fix. In fact, many of the people affected by bad advice don’t even know it yet. Seriously, AMP admitted that they haven’t quite got around to telling a bunch of clients that their adviser is a chump who’s cost them money.

I’m at a loss to know what to make of it all. How can I sit here and tell all my Fierce Girls to get professional advice? What if you end up with one of the spivs who send you off in the wrong direction?

What if you get sold crap products and solutions just because it puts money in the pocket of the adviser and their company?

You can look for recommendations from family and friends, but what if they have also been given bad advice and just don’t know yet?

I honestly don’t know the answers to these questions. It’s mindblowing to me just how devastating the RC’s findings have been. From the Prime Minister through to the average woman on the street, we are all left shaking our heads at the breathtaking combination of greed and stupidity that appears to infect the financial planning industry – or perhaps the finance sector more broadly.

Take charge of your own money

The only advice I can offer in light of these revelations is this: you can make plenty of good decisions about your money without financial advice.

The first thing to do is get a handle on your spending. Good money management is the biggest challenge for most people; working out how to invest comes later on.

So before you do anything, check out my take on Guilt-free spending and how to wrangle your bank accounts into order.

Beyond that, financial advisers mostly help you in three areas: personal insurance, investments and superannuation. Here are some DIY ways to improve them.

Insurance – You normally get insurance through your super fund without even asking – mostly it’s just death cover and TPD (read this post for more detail). Call them up, check how much you’re covered for, talk to them about whether it’s too much or not enough. Most funds are allowed to provide this ‘limited advice’ as part of your membership. And you should definitely look at adding income protection if you don’t have it already.

Investments – Knowing where to invest your surplus savings is a good problem to have. However, many of us could do great things just by paying extra off our mortgage (and therefore saving thousands in interest over the life of the loan).

We could easily start small with an exchange-traded fund (read more here) or a micro-investing app (like Acorns, which this week rebranded itself to Raiz). Investing doesn’t have to be scary and complicated – and a bit of self-education goes a long way.

Super – With the RC findings ringing in our ears, I’m gonna make a call: a big-bank super fund may not be the best option. I’ve worked with lots of super funds over the years (as clients) and have found that industry funds and values-driven funds (like Australian Ethical) really do approach things with one purpose in mind: their members.

If you’re already in a bank fund, I’m not saying you need to bail out of it. But if you want to roll all your super into one fund (which you totally should, to cut out duplicate fees and insurance premiums), pick one that aligns with your values.

And consider putting a bit extra into super, as it’s a good way to cut your tax bill and keep money aside for the future.

Another thing you can do is speak to your fund about which investment option is best for you. Again, this advice is often part of your membership, so it’s worth seeing if your risk profile is right for your age and situation.

In some cases, the ‘default’ option they put you into is one-size-fits-all. And as anyone who has been entangled in a cheap, Chinese-made ‘one-size’ top in a change room can attest, one-size does not actually fit all.

Take charge

To sum up, I would reiterate what I say on here all the time: you are responsible for your money. Educate yourself. Pick up the Barefoot Investor. Read http://www.financy.com.au or the Money section of the newspaper. Get engaged and involved. The more you know, the more control you have.

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