#4 Our portfolios | Investing convos every millennial should have

Maddy: [00:00:19] Hello and welcome to You're in Good Company's summer series. Over the six weeks of summer, where delving into the investing conversations every millennial should have. We still here are close friends and family say that they don't know how to start honest conversations about money, and it makes them feel like they're not in control of their financial future.

Sophie: [00:00:36] So this is our answer. Six Conversations on the topics that you wanted to hear

Maddy: [00:00:42] this summer series is brought to you by Super Superhero allows you to buy Aussie and US shares and ETFs with no monthly account fees, and you can now earn Qantas points with superhero. Are you for just to learn more? Eligibility criteria, terms and conditions and fees and charges apply.

Sophie: [00:01:01] So Mads, I think, like one of the most relatable things and you speak to anyone about investing is this concept of analysis paralysis. I know that you have also felt it because you've spoken about it a lot.

Maddy: [00:01:13] And it's this idea that you are enthusiastic. You want to start. You want to buy new shares. And when you start researching and you start looking into it, you just get overwhelmed by all the different opinions or research pieces out there. And it basically means that instead of doing it, you just do nothing. Yeah.

Sophie: [00:01:31] And it can even be like on the day you like where it is today, the good day to buy and wait till tomorrow, like

Maddy: [00:01:36] it's my life.

Sophie: [00:01:38] It's a compilation contemplation compilation compilation. Anyway, we move on. So I think one of the things that really helped the two of us was hearing about someone else's portfolio or a portfolio kind of mock build up to help you understand like what people do. We always get questions about how many ETFs is too many? What stocks should I be buying? And this isn't to say you have to buy any of these, but just kind of like a bit of a model.

Maddy: [00:02:05] Well, I guess just getting some insight into what other people are actually buying and how they're setting their portfolio up to like match, their risk profile can be really helpful to actually visualise what it should look like.

Sophie: [00:02:15] Just a little reminder that we are definitely not financial advisors. And anything that we talk about on this podcast is not financial advice. It's really just for educational purposes and just to kind of get you thinking outside of your box. So, Mads, what does your portfolio look like?

Maddy: [00:02:31] So I split my portfolio kind of into two parts and one part I think of as my core portfolio, and that's about 50 percent. And then the other part I think of as my satellite. So in the core part of my portfolio, I really just have passive ETFs. For example, I've got the ETF base, which tracks the top 300 companies on the ASX. I've got VAE, which tracks the Asia-Pacific region. I've got VEQ which is Europe, and IVV, which is U.S. and then I've also got gold in there.

Sophie: [00:03:03] This seems like a real stable kind of set. And forget part of your portfolio, I guess, like, you know, those black pair of pants that you just never get rid of, but you can like jazz up with anything else.

Maddy: [00:03:13] 100 percent. I think this is the part of my portfolio that I'm just constantly putting spare money into building it up with the hope that, as you know, the global economy grows over time, my stocks will grow with it.

Sophie: [00:03:26] And so, in contrast, what's in your satellite? Where are you funky accessories at?

Maddy: [00:03:30] Yeah. So I just want to note, I guess, first of all, if you do follow this approach, like you can set up the percentages to be what I guess aligns with your risk profile. So I said I've got 50 50 for me. Like, you know, I'm still quite young, I've got time on my side and I don't want to access my stocks any time soon. So I've got half my money invested into sort of, you know, more higher risk assets, I guess you would say. And I feel like that's appropriate for me and for where I am in my life. If I was a little bit older or if I had a family, I might adjust those percentages accordingly.

Sophie: [00:04:02] So you've dodged the question what actually the stocks here invested in?

Maddy: [00:04:06] So in this part of my portfolio, I've got Macquarie Group, Afterpay, CSL and Pay W.R. Holdings, which is one that MFK Fisher added to our watch list, which I loved. I've also got the Ark Innovation ETF, which has ticker ARK. It's a Cathie Wood one, and it's actively managed. So even though it is an ETF, I wouldn't consider it part of my core. It's also hasn't got many stocks in it, so they're all based on disruptive innovation, and I consider it to be a little bit more high risk. So I guess to fill you in, you know, I've got it's got a 10 percent holding in Tesla, seven percent in Teladoc Health and also higher concentrations in companies like Coinbase, Shopify, Spotify and Square.

Sophie: [00:04:51] So when we talk about portfolios, our portfolio build up, we've obviously spoken now that you have some stocks and some ETFs, you also have gold, which is considered a defensive asset. Are there any other assets in your life? No, you don't have a house that you would also consider a part of your portfolio.

Maddy: [00:05:09] I mean, superannuation is a massive one, and it's really, really important. So my super I have on a high growth setting because again, I'm young. I'm not anticipating needing to access it for quite a while. I mean, that's something that I'll plan. I plan on changing as I get a little bit older. But at the moment I've got time on my side and I want that compounding and growing as much as I can whilst I'm still young.

Sophie: [00:05:31] What a nice little sneak peek into your life, getting to know you a little bit more every day.

Maddy: [00:05:36] Well, you are definitely not off the hook, but we are going to take a quick break responses and we are going to hear all about your portfolio after the break. So sorry, if I've given everyone a little bit of insight into what my portfolio looks like, but as we said, you are not off the hook, so I'm keen to get into yours. How do you go about building up your portfolio?

Sophie: [00:05:57] Yeah, so I am a little bit more. I look at like the ETFs and shares that I invest in, rather than necessarily like looking at the core and satellite. But you could definitely put portfolios in either kind of light, and I tend to really focus on, you know, how I'm diversifying. So whether it's across industries or regions or companies, that's usually my main area of focus and making sure that I'm kind of spread across so that my risk is spread as well.

Maddy: [00:06:23] Whoa. So you went through that very quickly. I need a little bit more detail on how you're actually diversifying your portfolio. Yeah.

Sophie: [00:06:33] So for, for example, one of the ways you can diversify through asset classes. So for me personally, I own shares, which is an asset class and I own crypto, which is an asset class. I don't own any gold, which is a defensive asset class, nor property. So at the moment, I guess I'm just in two asset classes,

Maddy: [00:06:50] but I may be one of your goals is to buy a house one day. So at that point you'll get into the property as well.

Sophie: [00:06:55] Yeah, striving for diversification just can't really estimate right now. But then, you know, you can also diversify in other ways to one of the ways that I look at is for regions. So in my portfolio with my ETFs, I have v h y, which is exposure to Australian companies that pay high dividends. This one's very similar to the. For example, I also have an India ETF that I and a betashares one, which has exposure to companies, has exposure to the Indian region. I also have the Ark F. So the Ark Fintech are just, like you mentioned, both Cathie Wood fans, but this one is exposure to US companies and fintech companies specifically. So even though it is a bit of a thematic and it is actively managed, I'm still getting that exposure to the U.S. region.

Maddy: [00:07:43] OK, so you've taken us through how you diversify. Any other ideas that you really think about when you're building your portfolio?

Sophie: [00:07:49] Yeah, definitely. I'm a keen fan on thematics, so I've mentioned that I had those three ETFs, but I also have two other ETFs. One of them is Earth, which is all about sustainability, because I know that I want to be investing in companies that are creating climate change solutions. And the second is the crypto ETF, which is the new one. It's not actually investing in crypto currency itself, but kind of all the companies that backed the blockchain technology and also cryptocurrencies such as like brokerage apps and and whatnot. So when building out a portfolio, I do like to look at the as well.

Maddy: [00:08:23] So you've given us some insight into ETFs. What about individual shares,

Sophie: [00:08:28] individual shares or is just based on interest and often like conversations that I have with people around what's happening in the world at the minute, what's happening in

Maddy: [00:08:36] my life? That your way of telling me you take stock picks?

Sophie: [00:08:39] No, it's not. I know everything about all the shares that I own. No, but I have Disney because I'm a Disney lover. I've seen us. If you haven't listened to our thesis episode, I talk all about Sonos. I have some cloud companies like Megaport, a medical company called Opera, which looks into breast screening technologies. And then also, I had to put a little bit of Tesla in there just because the Ark Fintech ETF that I invest in doesn't actually hold Tesla. So I was like going to have a tiny bit of it in my portfolio.

Maddy: [00:09:10] I love that. You know how people say that they look like their dogs?

Sophie: [00:09:14] Yes, I do. Where are you going with this?

Maddy: [00:09:17] I feel like you look a lot like your portfolio. Like, I can really say your interests coming out in your portfolio.

Sophie: [00:09:24] That's because we speak 24 hours a day. So, you know, like every single one of my interests,

Maddy: [00:09:29] pretty much only speak about investing

Sophie: [00:09:32] Mads. I thought we should address also a question that we get asked a lot in our Facebook community, which is how many ETFs or even shares are too many because we bring in this concept of diversification. But then it can seem overwhelming if we are maybe true, diversified. Yeah. How do you approach building up your portfolio?

Maddy: [00:09:51] I guess my thoughts around this is like, there's no hard and fast rule. Like, No, there's no right or wrong number around how many ETFs you should have. I think what's important is that you are conscious of the holdings in your ETF. So for example, I talked before about how I own Vice, which is the top 300 companies in Australia. I probably wouldn't then go and buy A200, which is the top 200 companies in Australia, because I'm basically just buying the same thing in two different ways. Another good example is you talking about how your ETF didn't have Tesla, so you wanted to buy that separately,

Sophie: [00:10:29] whereas yours does. So maybe you wouldn't be buying Tesla on the side, depending on whether you want that exposure or not. Because at the end of the day, if you wanted more exposure to Tesla than, of course, buy the company.

Maddy: [00:10:38] Yeah, I think that's the key message here is like overlap is OK, duplication is okay, but what's important is that you're aware of it. Because if I didn't have high conviction in Tesla and I was exposed to it in three different ETFs that probably doesn't align with my risk or what I want out of my ETFs, whereas if I know that that's the case and I'm comfortable with that and I really love Tesla, then perfect. OK. Wrapping up and every episode, we're going to leave you with some content recommendations because it's summer. We need recommendations for what to listen to when they're lying on the beach or by the pool. Or maybe if you're in the northern hemisphere on the ski slopes.

Sophie: [00:11:16] Oh, fence here. Love to get to some ski slopes, but also content with this hot, sometimes rainy weather in Melbourne. Yeah.

Maddy: [00:11:24] Well, I mean, maybe you can invest to get yourself to the ski slopes. Is that on your vision board?

Sophie: [00:11:29] It's nuts. But maybe let's put it there as 2020 you recommendation, it's 2022. You know, I got I think they will get it without the Thieu. It's still there anyway. What are you adding today to the recommendations today?

Maddy: [00:11:47] I am bringing you a podcast called The Daily by New York Times. It's a daily podcast. Each day is a deep dive into the biggest news story of the day. But when I say a story like I really made it, they really paint this beautiful picture and I find the episodes super engaging. I listen to a great episode a little while ago now, and it was cold. The economy is good, so why do we feel so terrible about it? It was so interesting. It talks about how the economy is currently tracking like better than most of us ever could have anticipated, like after Covid and unemployment and all of those kind of things, people losing their jobs. And yet people seem to feel pretty pessimistic about where we are right now.

Sophie: [00:12:29] I feel like it's that mentality, like if everything's going well, it's like, when's the penny going to drop? So turn the

Maddy: [00:12:35] host interviews and economics and business reporter from the New York Times. And they really just discuss like why there is such a gap between reality and perception at the moment.

Sophie: [00:12:44] And do you think this podcast is good for your investing lens like your? Does it give you a broader outlook on, I guess, business or the economy? Yeah.

Maddy: [00:12:52] Well, so not all of the episodes like finance or economy related. We listen to a great one a little while ago now, and it was all about the ageing population in Japan. So I think what's so great about this podcast is like the general knowledge that you get from it and what's going on in the world at the moment. And I think it just makes me a much more like well-rounded, more switched on and like better investor because it's not just about the numbers or anything like that. It's more about like, you know, spotting the broader opportunities and having a look at what's going on around you. So very good podcast.

Sophie: [00:13:24] Little funny quick story about that ageing population in Japan episode. I actually used the knowledge I got from that episode in a job interview about a company, and I say, you know, one factor could be they weren't have enough farmers

Maddy: [00:13:37] like, really apply it to you. Got the job, got the job. Are you listening to any good daily podcast at the moment?

Sophie: [00:13:46] Oh, I'm a bit of a creature of habit when it comes to podcasts. I always listen to the news briefing. It's not a day love that. Yeah, it's just about the news of the day. Are the daily ones? Not really. At the moment. I'm trying to do more reading.

Maddy: [00:13:57] Oh, I love it. Yes, good summer activity. Yes. What are you adding to our recommendations today?

Sophie: [00:14:03] Although I just said I'm trying to get more into reading. I'm not. If you got a podcast, I'm adding a podcast today. This one is like, hands down. I think my favourite podcast ever can.

Maddy: [00:14:14] I guess what it is? Yes. Business Yes.

Sophie: [00:14:18] Yes, Business Wars is done by Wondery. They produce it. So incredibly, yeah, it's like you're listening to an audiobook, but better because they've got like sound effects and like everything. Anyway, they do also do have a daily one, which the short little five minute deep dives into different topics actually know that. Yeah, so they've got business was daily and business was I'm recommending probably business was or both. But pretty much they do like these little series and now kind of dive into something different every time. So to that I would recommend, is the crypto series so good?

Maddy: [00:14:53] So they got me on to this?

Sophie: [00:14:54] Yeah, I think it's season sixty two. So every season is just a based on one story, and they talk about the evolution of the crypto space, you know, from when the first trade happened, to how it happened, to setting up brokerage platforms like Coinbase to even, you know, the Winklevoss twins.

Maddy: [00:15:10] I loved that because you talked about the social network, the movie when you learn about the Winklevoss twins because of their interaction with like Facebook and how they got booted out.

Sophie: [00:15:19] Yeah, I think it's just fascinating and it's not like it doesn't have to be like you're sitting there being like facts like this is the story. I listen to the whole crypto series in one go when my partner run a marathon. Oh wow. Riding behind you on a bike, just listening to crypto. And then also another one, which I think a lot of people would find really interesting is season 61, which is all about the fast fashion industry. So, you know, all about the names are forever. Twenty one, how they've I guess, how they set up a lot of environmental stuff in there. Good one for people. They're wanting to make more conscious decisions about their fashion purchases.

Maddy: [00:15:56] So I guess similar to the daily, then it's just a good one for like good general knowledge understanding, like what's going on around you. And I guess because that little mini series gives you an opportunity to sort of Deep Dive on a thing that you're interested

Sophie: [00:16:09] in 100 percent and very industry specific as well. Like there's one on like aviation. And so if you're looking into, I guess, in investing opportunity in a specific space, there's probably something on there for you.

Maddy: [00:16:20] Well, those are our recommendations, but we would love to hear what you are listening to or watching or reading at the moment. Jump into our Facebook group. Why I say investing podcast discussion group and let us know.

Sophie: [00:16:33] And if you are liking this little series, please pass it on to a friend who you think will also like it. And everyone's on summer holidays at the moment. Or maybe winter if you're overseas, but take a picture where you're listening and share on Instagram and tag us @YIGCPodcast.

Maddy: [00:16:49] Today's conversation was brought to you by Superhero. Superhero allows you to buy Aussie and US shares and ACF's with no monthly account fees, and you can now and Candace points with superhero. Is it superhero dot com dot a forward slash Candace to learn more. Eligibility criteria, terms and conditions and fees and charges apply next week. Sophie: [00:17:09] We're actually going to dig a little bit deeper. You heard me mention Megaport before, and I'm actually going to run you through how we value those companies and choose them as investments. Maddy: [00:17:18] We'll catch you next week. Goodbye.