Automate your investments & get on with 2023 | Summer Series

Bryce: [00:00:40] Welcome to the Get Started Investing summer series where over six episodes we're going through six steps to help you set up your finances for 2023 from budgeting and savings habits, emergency funds and superannuation through to more common mistakes and how to set up the ultimate core portfolio. This series will have something for everyone. While we are licenced, we are not aware of your personal circumstances. All information on this show is for education and entertainment purposes only. Any advice is general advice only. My name is Bryce and as always, I'm joined by my equity by Ren. 

Alec: [00:01:10] How are you going? I'm very good. Bryce is very excited for this episode. I think it's been a really refreshing, I guess, change of pace or maybe just a change of topic for us here at Equity Mates. We don't often talk about personal finance. No, but the biggest thing that any of us can do to build wealth is get our money right and maximise the amount that we can invest. So I think it's been a really useful series. Yes. As I've said in previous episodes, there's things that I have noticed with my personal finances in preparing this series that I've gone and changed my house. So it's been valuable to me. Hopefully it's been valuable to you. Yeah. And for people listening. But this episode is about putting it all together. 

Bryce: [00:01:52] Yes. We've spoken about getting our money sorted. We've spoken about our emergency fund, supercharging our superannuation, some of the common mistakes, how to build the beginner portfolio from a core point of view and getting that foundation the bedrock right. And today we're going to talk about how you can get out of your own way and automate the process from beginning to dividend. 

Alec: [00:02:15] Nights. 

Bryce: [00:02:17] And sit back and relax and get that core investment portfolio rocking and rolling without you having to lift too many fingers. So if you have just joined us for the first time, get back up to the first of these six part series. You might as well also go back to the very start where we talk about get started investing from the beginning, wherever you want to start. 

Alec: [00:02:36] Just put it on shuffle. Yeah. So it cracked. 

Bryce: [00:02:38] In. But Kiran, today we are talking about automation getting out of your own way. We've spoken about it from the point of view of sorting your money, transferring to accounts, etc.. And today we're going to talk about how we do it end to end. [00:02:52][13.7]

Alec: [00:02:52] Yeah, there has been a really exciting innovation come through maybe last, what, 12, 18 months. It's sort of emerged. I was saying it more and more and it really does allow you to be an investor for less than a minute a month, not even that, to be honest. And that is auto invest. So most people are probably familiar with auto transfer with their bank where they tell their bank once a month transfer my rent from this account to that account. It's similar with auto invest. You tell your broker, which is the online platform that by the way, you buy and sell shares. You say every x period I want you to buy this share or this fund and it will do it for you. And it means that we can we can set up our investing rules and then it will execute it for us and we can get on with our lives.

Bryce: [00:03:47] Love it. Take the emotion out of buying and well, you shouldn't be not not so much selling, but buying if it's just going to do it for you when you tell it to do it. Yeah, you don't have to actively think so. How do you do it? Ren. 

Alec: [00:03:59] Yeah. So rather than just talking about auto investing, we wanted to put all of it together, these, these last five episodes. And so this is how I manage my money and my investments. So we get paid fortnightly here at Equity Mates. Yes. Salary hits the account on a monday. If you've forgotten if you haven't forgotten to do payroll. 

Bryce: [00:04:18] Yeah, I know. When it hits. 

Alec: [00:04:21] Full credit, I don't think you've forgotten to do payroll once. So then on Tuesday I tell my bank I've got four automatic transfers set up, transfer to my spending account, a transfer to my house deposit savings account, a transfer to my travel savings account. And then finally and importantly for this one, a transfer to my brokerage account. [00:04:44][23.4]

Bryce: [00:04:45] And we spoke about that in the first episode. So if you want a bit more detail, you've just joined us. Ren speaks about how he sets up his accounts and so do I in the first episode. Yeah. All right, so that's on that's on Tuesday. 

Alec: [00:04:55] That's on Tuesday, then on Wednesday. Great to say that. There's like it's instant transfer as well to my brokerage account. No, like 2 to 3 day waiting period. I'd love to say that. So then on Wednesday, I have five orders set up in my brokerage account and every second Wednesday it takes the money that was transferred to it on a Tuesday and splits it into five orders and buys five ETFs. Vanguard Australian shares, various Vanguard US Total Market that's betashares footsie 100 F 100 Betashares Europe ETF ticker is H, a, u, r and then Vanguard Asia ex-Japan. Yeah. And I split the money that I transferred to my brokerage equally across those five. And so Wednesday morning market opens at ten and at about ten, ten in the morning, I get a succession of texts. Your order has been completed. Your order has been completed. Your order has been completed. Five texts for the five ETFs I've told it to buy. All of that money is touching it.

Bryce: [00:06:01] How good is that?

Alec: [00:06:02] That is set. Forget investing. 

Bryce: [00:06:05] Yes. So there is a bit of jargon that I want to introduce here called dollar cost averaging, which is an investment strategy that at its core really says that you invest the same amount at the same period of time into the same investment time and time again. Yeah. And that, that, that way you evened out the volatility and even out I guess the price at which you buy it. 

Alec: [00:06:27] Bit of jargon, that little bit of jargon. 

Bryce: [00:06:30] But it just means as prices go up, you're averaging in, as prices come down, you averaging in. 

Alec: [00:06:34] I think there's what it what it sells for is this classic feeling of am I buying at the right time. Yeah. Is the market going to go lower? Should I wait? Is the market overvalued? Should I wait? Yeah. Dollar cost averaging says to that you should invest as soon as you have money to invest because that makes sense over a long period of time. And if you're consistently investing, you'll sometimes invest when the market is too hot and too overvalued, you'll sometimes invest when it's crashed. Most of the time you'll invest somewhere in the middle. But over time, your average entry point will be decent and you'll get the benefit of compounding over a long period of time. 

Bryce: [00:07:16] Yes. And so when you couple that with building a core portfolio with five ETFs or whatever it may be, you can see that every fortnight, same amount of money going into the same investments every fortnight, fortnight after fortnight after fortnight. Ren's not thinking about what price is buying it rents not thinking about what the market's doing right. Not getting scared about whether the market's too hot or too cold. Rent is not even looking at it. No. 

Alec: [00:07:41] And it's our job to look at it. 

Bryce: [00:07:43] Well, outside of that. Outside of that. But you're not making an active decision every fortnight to buy and letting your emotion get in the way. And actually, I'm just going to say that this is going to sit out more down. Maybe I'll wait a couple more days. Oh, damn, I forgot to do it. I haven't actually invested for three months yet because I've completely forgotten to. And now I'm going to put $500 in rather than $50. And it's. You've just put in a large sum of money. 

Alec: [00:08:06] Yeah, I think that's a big thing for a lot of people that live busy lives and don't really want to think about investing is that you'll forget to do it. Yeah. If it's not as if it's not automated and it's not a priority, it won't get done. Yeah, yeah, yeah. 

Bryce: [00:08:22] So mine's no different to yours. Ran in fact we've spoken about this on some previous episodes in late last year and you really championed the auto invest functionality and we were both using the same brokers, but I'd been doing this process manually and it was as much as I'd like to say a consistent process, I would say it was broadly consistent, but there were definitely fortnights where I'd forget there are definitely fortnights where I'd get too emotional and be like, It's too hot. There are definitely fortnights where I'd play the other game, you know, or I'd, I'd favour one ETF over others and not just consistently put in the same amount to H. So whilst in theory I was, I was probably doing it to 60 or 70%, this makes it 100% without fail time and time again. So I'm no different to you. And the salary comes in Monday. Tuesday. I'm transferring to all the accounts that I spoke about at the start of this series and then Thursday. Mine's a bit different. I've chosen Thursday to buy it. Don't know why it's not Wednesday, but Thursday I make the investments across my five.

Alec: [00:09:23] It's nice. All right. Let's take a quick break and then close out with some concluding thoughts, some next steps and anything else we want to talk about. Bryce, So we are putting it all together here. We are talking about automating our investments, making it not mindless, I guess. Money. Yeah. Effortless. Effortless is a better term. The term that I was throwing around last year. You can invest without being an investor. Yeah. And what we mean by that is there's so many negative connotations that come with being an investor that boring Joe to the pub that keeps talking about his stock picks. Yeah, that's me. The guy that listens to Equity Mates. Yeah. It's like you have this idea that there's a real time commitment that's required to do it. 

Bryce: [00:10:10] Well, I studied it. Yeah, understand the jargon. [00:10:12][2.4]

Alec: [00:10:13] But the really important thing that we want to get across is that you can do it well without ever listening to our voices again, without ever reading our book, without ever following us on Instagram. You never have to think about Bryce and I again. You can set this up, you can automate it, and you can do well. You know, you're not letting yourself down if you just do those basics well and you have a strong core portfolio. Yeah, that's the key message that we want to get across. 

Bryce: [00:10:41] It's so it's so exciting as well. Like when we first started five years ago that not all of this was sort of lining up and we didn't have auto investments. Fractional shares weren't a thing. And it was always like we knew the concept of dollar cost averaging, we knew the concept of consistently putting money in, but it never quite it never quite worked end to end, but now it does, which is awesome.

Alec: [00:11:02] The idea that investing was for the wealthy, it was founded on something that was true. It's just that in the last ten years, technology has changed, though. And you and I and everyone listening are lucky enough to live in the moment where we can invest with a very small amount of money very cheaply. Yeah. So we've both spoken about one way to automatically invest. There are other ways to automatically invest, and it's probably worth us nodding to something that a lot of people have probably tried, which is micro investing. 

Bryce: [00:11:35] Yes, micro investing is probably one of the more common ways that a lot of people now start their investing journey, which is awesome. I started with it. You've been on it at some point. A lot of our office is on micro investing. 

Alec: [00:11:47] Yeah, I've got a spicy view on it though, which is I don't think it's a necessary business model anymore. 

Bryce: [00:11:53] That's for another episode, but it is a great way to get started. In essence, all micro investing does is you sign up to a micro investing platform. Let's take rays as an example. One of the more common largest micro investing platforms here in Australia. Acorns over in America. You think it up to your spending accounts and for every transaction you make it will round up to the nearest dollar. You buy a coffee for 4.50, it will round up $0.50 to $5. It will take that $0.50 and invest it into a broad based market exposure, very similar to what we've spoken about in terms of a core portfolio. The great thing with that is you're starting in the markets with super small amounts of money. You can understand what it feels like to get started and from there you can then exploring by choosing your broker and doing it yourself. Yeah. So that is one way that you can do it. It does take the emotion out of it as you're not thinking about it, it's rounding up and it's throwing it in every time you get five, $10 in the account. [00:12:47][53.9]

Alec: [00:12:48] And I should say, like, it has helped a lot of people get started and a lot of people are investing because of it. So I'm not trying to I'm not try have a go at the business model, but purely from a functionality perspective, platforms like Shares and Super Hero are doing a lot of what micro investing used to do, which is automating your investments. But they're also just doing it at a lower cost. Yes. Than micro investing. So whatever works for you is great. But the main thing is it's just another easy way to do it. Micro investing. So if if you would prefer to do it that way, right. So Bryce, we've really been talking about the benefits of auto investing, but there are some things to watch out for when you're setting this up, when you're thinking about it. What are you looking out for? 

Bryce: [00:13:36] Two key things for me, Ren. The first is the cost of doing this, the cost of brokerage, and then secondly, it's the amount that I'm putting in and what that actually allows me to do. So every time you make an investment, there's generally a brokerage cost now for stake here in Australia and and super hero they do have $0 brokerage on ETFs listed over in the states and hero is all ETFs and shares is has a low brokerage but you've got to consider that if you're putting money in every fortnight and buying stocks every fortnight, if you have to pay to do that each time, you just definitely need to consider the impact that that is going to have on on your investments. Fortunately, with ETFs here in Australia in our core portfolio, brokerage is zero. So that makes it super accessible through the superhero platform. Secondly is fractional shares. I'm sure you're finding the same here. And is that with our current set up, if I want to invest $100, but the ETF is 101. It won't actually let you do it until you have more than 101 boys in there. 

Alec: [00:14:38] Yeah. Or on the flip side, if you say invest $100 in this ETF and it's $51, it'll buy one unit for $51 and you'll have $49 left over in cash. Yes. Which is not really what you intended. 

Bryce: [00:14:52] Yeah, it's not really what you intended. It is frustrating so that, you know, next month you might go in and have to deploy the spare cash yourself if it doesn't add up. But there are brokers like shares who allow you to buy fractional shares. So if you had $100 and you wanted to buy a stock that was $200, you just buy $100 worth. So it means that you can access most sort of investment opportunities around the world at fractional shares is do it and stick to it. 

Alec: [00:15:19] So for me, the choice when I was setting up auto invest was shares is and superhero are the two that I am pearler. I think I'll perla do as well. I'll be honest, I didn't really think of them as much. Their brokerage is a bit more expensive so superhero no cost to invest but you don't get fractional shares. Shares is a small cost to invest, but you do get fractional shares. I went with the superhero because I already had an account. Yeah, but the great news is if I ever decide to change, there is zero switching costs. I do have an account with shares is I could just redirect my auto transfer to shares these rather than superhero and set up auto invest there as well. If I ever get a pay rise from Bryce I could do both. 

Bryce: [00:16:05] Good news either in 2023. The pay rise. 

Alec: [00:16:09] I could have auto investing with shares and with superhero and that's absolutely fine if you've got the money. Must be nice. You could have auto invest going with multiple brokers. 

Bryce: [00:16:19] That's it. That's it. Shuffle. Right. All right. Well, let's close it out there. And it's been a great six part series going from sort of the beginning of sorting your money out through to hopefully now having some clear takeaways on what to do to get a core portfolio started. Some of the brokers that you can use and how to actually automate three key takeaways from this episode automate your transfers to your savings accounts, automate your transfers to your brokerage account. The third one is to automate your investments in your core portfolio. Daisy Easy. That's it. 

Alec: [00:16:56] Yeah, that is it. 

Bryce: [00:16:57] I'm hoping that by the end of this, we have made something that could seem daunting and overwhelming, seemingly less complicated. 

Alec: [00:17:05] Yeah. Yeah. I think the important thing that a lot of people will be left with is it doesn't feel like it's enough. It feels like I need to do more. I hope we've explained why that isn't the case and if we haven't, there's heaps more content that we've produced that other people have produced that talk about why dollar cost averaging into index funds is enough. But it is. That's probably the key thing that you don't have to do more. Yeah. 

Bryce: [00:17:32] Now, Ren, before we finish, we want to say a massive thank you to the get started investing and Equity Mates communities for all the support over the number of years. One of the biggest things and most valuable things we do here is our community survey gives us the opportunity to hear directly from you guys about what type of content you're enjoying, what you'd like to get out of Equity Mates who you are so we can create better content for you that helps you on your investing journey. We would really appreciate it if you jump into the show notes or our bio on our Instagram too to fill out the survey, anyone who enters will be eligible for one of our prises as well. For more information, just click the link in the show notes, but we would really appreciate it if you did it. It won't take more than 5 minutes. And we hope you've enjoyed this six part series. I'd be feeling ready for 2023. 

Alec: [00:18:19] Hope you stick around and keep listening to get started investing. We have eight podcasts in the network, so there's heaps of finance content for you to listen to. But if this is all you needed, if you're ready to sell out your investments and get on with your life. 

Bryce: [00:18:33] Job done. 

Alec: [00:18:34] Right? Yes. Glad we could help Ren. 

Bryce: [00:18:36] It's been great fun and we'll be back next week. 

Alec: [00:18:38] Sounds good.