Change your mindset, change your life

Bryce: [00:00:28] Welcome to Get started Investing. This summer, we're taking a journey to financial freedom supported by CommSec. Over six episodes we'll be talking about the practical steps that you can take today to set yourself up for the ultimate goal: FIRE, financial independence, retire early. So if you're enjoying your summer break or dreading heading back to work, join us as we take the steps today to ensure we can build the life we want into the future. My name is Bryce, and joining me on this journey, as always, is my equity buddy, Ren. How are you? 

Alec: [00:00:56] I'm very good, Bryce. I'm very excited for this series. Over six episodes, we are going to be talking about fire, as you said, and I think it's important to stress from the outset that even if the fire isn't for you, even if the idea of retiring early is just a sign that you need to find a job that you're passionate about or, you know, yeah, like I think for us, financial independence is the goal. The first part of FIRE. And I think for everyone who's investing, their goal is some version of financial independence, building the flexibility and choice into your life that having money enables as sort of growth as it is. Just say it like that. It's like money does give you a choice. Absolutely. That's why we invest to give our future selves choice. And what we're going to be talking about over these six episodes are the steps we can take today to give our future selves that choice. 

Bryce: [00:01:49] Six episodes, six steps. I cannot wait to crack into it. And having the right support on this journey is important, which is why we're very proud to partner with CommSec for this series. If you're looking for more info beyond this podcast, CommSec have a wealth of content available to get you going. From stories of other young investors to sectors in the spotlight, there's free support and information to build your confidence and make the right money moves. Visit CommSec.com.au for more.

Alec: [00:02:15] And as we get started, we need to remind you that while we are licensed, we're not aware of your personal financial circumstances. Any information on this show is for education and entertainment purposes only. Any advice is general? All right.

Bryce: [00:02:28] Ren, well, let's get stuck in. What are we covering today? 

Alec: [00:02:31] Well, Bryce, in this first episode, we're focusing on building the right mindset. And by the end of this episode, we're going to be aware of the common limiting beliefs when it comes to money and investing how we recognise those beliefs in ourselves. Well, I don't know if you do, but I certainly see them in you all the time. How we think about money and investing today, how we've changed our mindset and then we want to leave with some actionable steps. Three key changes everyone can make to improve their money mindset in 2024. Now, we're not going on this journey alone. There are thousands of people listening to get started investing and taking similar steps to us. 

Bryce: [00:03:09] Yes, let's hear from them. 

Em Community: [00:03:12] Hey guys. My thoughts around the FIRE is it's really a great tool for young people to start getting investing skills in that thought. If they put their money away for a long time, that eventually the stock market will look after them into the future and then give them that financial freedom once they get to about 50 or 55 or whatever it is, they want to retire and move on to another part of their life. Whether that's working less or simply retiring and spending more time with their family and friends. Cheers guys. 

Em Community: [00:03:37] Hi Equity Mates. Big fan of the show. So regarding the farm movement, I'm definitely all for it because I'm an immigrant from Indonesia, where I see some of my relatives are still working well over 60 years old to still fund their family. So I definitely don't want to go down that pathway. If I could work as an optional by 40, that would be amazing. 

Em Community: [00:04:07] Hey guys. Josh here from WA. I think the financial independence part of it is the important bit. You want to be able to live life, how you want to live life and maybe work is going to be a part of that. So maybe you don't want to retire early. So I think if you focus on the financial independence bit and set yourself up right in the first place, you know, listening to a podcast like you guys, I don't think you can go wrong. And if you want to retire early, you can. If you don't, you can keep on working. Love what you do. 

Alec: [00:04:37] All right. So Bryce’s money mindset. 

Bryce: [00:04:40] Yeah we're talking money mindset. I think it's important. We must firstly understand what is money mindset. 

Alec: [00:04:47] I mean that was set up with just me saying, Oh, Bryce, money mindset. You could have just gone into that. But anyway. 

Bryce: [00:04:52] Money mindset is a set of beliefs and attitudes that about money that importantly then dictate how you think about money and the decisions that you make when it comes to money. And those decisions are based around spending habits that are based around how you think about investing there, things like your risk tolerance, the goals that you set yourself. It's all it's the it's what is your core belief that actually dictates the decisions you make financially?

Alec: [00:05:21] Well, let me give you a specific example from a really good book on, I guess, building financial independence. And we're actually going to talk about it a little bit through this series. The book is called Millionaire Next Door, and they profiled a number of people who have got $1,000,000. And you know what the spending habits are and importantly, what the relationship and mindset around money is. And one thing that they found is people that are under accumulators of wealth, people that earn high salaries but don't build a lot of wealth. They have this mindset that you can always earn more money. Money is a renewable resource. And so then they're not being more like intentional with the money they are earning because they're like, I'll be able to earn more later. But that's a mindset that affects how they, how they relate to money. And like we all have those mindsets in how much money we think we'll earn, what we think we can do with it, a whole bunch of things. 

Bryce: [00:06:15] Yeah. And the reason we've started this series focusing on mindset is because it is imperative that you develop a positive mindset that then sets you up to make the right financial decisions to help you get to your whatever you determine is your financial independence. 

Alec: [00:06:31] So the one of the more frustrating things, you know, we've just come off Christmas and one of the things that always gets me is what I'm saying to my cousins and stuff like that. They're always like, Oh, it seems like equity mates is going well. It's not for me. I'm not an investor. All like, you know, it's not I'm too young to start worrying about that stuff. The other one is like, I don't know enough to listen to you and it's like, that's a mindset that you need to recognise and change before the rest of this series becomes relevant. And the irony is because they have that mindset, none of them are actually listening to this episode about changing mindsets. But anyway.

Bryce: [00:07:06] So we're going to focus on the money mindset around investing. But even if you think about your group of friends, I'm sure you could identify different mind money mindsets within your group. Like there's the there's this grandpa who hates to dish out. There's the savers who want to just be in cash. There's the, there's the. I don't think about money. I just spend. 

Alec: [00:07:26] There's the Bryce's that never do your bathroom requests. 

Bryce: [00:07:29] That's not true. 

Alec: [00:07:31] There's the Alfs that never shout around at the park. 

Bryce: [00:07:34] Exactly. There's a lot of those. 

Alec: [00:07:38] Anyway. So I think some common limiting beliefs that I think we recognise in ourselves or in our friends, but. But they are quite common. I mean, the most obvious one is endowed with money.

Bryce: [00:07:49] Head in the sand. Bad. We're not going to deal with it. 

Alec: [00:07:52] Yeah. Or just like just it's like a fait accompli. Like it's just I'm not.

Bryce: [00:07:58] Yeah, yeah, yeah. Then there is. You've already mentioned that investing is only for those with money. You need to be rich to invest. I don't have enough money to invest. Very limiting belief when it comes to trying to set up your investments. Then there's the it's too risky. You'll lose money that's specifically related to investing, but a limiting belief around the risk that comes with investing in the stock market. And then is, I don't know enough. I think that's a classic one that we've experienced many times Ren, throughout the course of doing get started investing in equity markets. People just don't think they know enough to get started investing. 

Alec: [00:08:34] There's a few more that we've already mentioned in this episode. I'm too young. I don't earn enough. The I think one that you may not think is a limiting belief, but becomes quite limiting is I can always earn more. Yeah. And then another one that you say a little bit and I certainly was guilty of I guess pre equity mates. You know that the system, the stock market, the economy is all rigged, you know like it's just big, big corporations getting richer and screwing us and you know. Trying to get crumbs off a table that we can access. 

Bryce: [00:09:06] So. So if any of those relate to you or you're sitting there thinking, you know what, I know someone who suffers from these limiting beliefs, the good news is that you can change them and that you can make a positive difference. And we'll get to that in a moment. But Ren, before we do, do any of those resonate with you? You know, we've been investing quite seriously now for for many years. And I'm sure what we the limiting beliefs that we started with are perhaps different to the ones that we have now. What's your process?

Alec: [00:09:38] Yeah. I don't want to throw my family under the bus here, but I'm going to. Well, and so my grandparents, they had an individual stock investment that went quite poorly. And I think that call it our whole family's view around investing. It's probably genetic cause my investment with Slater and Gordon also in quite poorly. So, um, but I think because of that we had like there was a view that like doing well in investing isn't for, for us. It's like it's not something that we ever going to have. And that was just a limiting belief that it was like, it's not for us because of that. Like it kind of turned our family off it. And it was really only when we started doing the podcast that that changed. So it wasn't like a were bad with money generally, it was more just a view that like we're not going to have a good investment return, so why bother. Yeah.

Bryce: [00:10:37] I think it's a good point. Like I think my whole money mindset is entirely built off that I learnt from my family age like from a young age I think that would be the same with a lot of people like you. 

Alec: [00:10:51] Yeah. But I think it, I think it's beyond money. I think Oh yeah that's.

Bryce: [00:10:55] That's parenting. Yeah. Welcome to Values podcast. 

Alec: [00:11:02] Do you have any like we've made a lot of hype about the way that you were brought up with like investing when you're young and building good money habits when you're young, do you feel like you have many limiting beliefs when it comes to money?

Bryce: [00:11:14] Oh yeah, definitely. I still I think I'm I think I'm quite conservative for what I could pay right now, if that makes sense. 

Alec: [00:11:21] Being Scott Morrison voter that kind of conservative. 

Bryce: [00:11:26] No. Yeah it's taken me a long time of you know the last few years post uni to really get comfortable with taking riskier decisions to sort of create wealth faster. And I think about how my parents taught me about money and that was obviously with through the lens of investing, but it was with a conservative lens. So it's not a bad limiting belief. I think it's probably better with money to be on the conservative side perhaps. But I think secondly, right now there's still a level of just general knowledge and, you know, like once you move up the risk curves and start thinking about different asset types, there's just that like, do I know enough to actually make these decisions? And so that's something that now that that knowledge do I know enough is a limiting belief that I need to just keep reminding myself of that 95% of fund managers out there don't seem to to really be able to beat the market. And and what we're doing is, is more than enough. So I also think fear of losing money is still one that I really battle with. Yeah. Like I know that I'm at an age where it's okay and I know that how broadly you you can, if you're not being stupid with how much you're putting into markets, you can limit how much you lose. But still the fear of losing money is a limiting goal.

Alec: [00:12:46] So I guess then the question becomes how are you changing those mindsets and changing mindset might be the wrong framing because in some instances you can't change a mindset, but it's about like recognising and controlling for that mindset.

Bryce: [00:13:03] Yeah, good point. I think I don't want to lose the fear of losing money because then I'll probably be more reckless. But I think the way I tackle that is just being conscious of the downside and how much I'm putting in to that said asset class. Let's, let's take crypto for example. Like yes, there's the fear of losing the money, but what I'm putting into that, I need to be comfortable losing that. And so it just comes down to asset allocation. I think at the end of the day and just taking bets in the market that, you know, are reasonably safe like ETFs and those sorts of things like the probability of losing money in those versus spec lithium spec stock or whatever, that that's how I kind of manage manage it is in asset classes that have traditionally not lost everyone, a whole bunch of money. So yeah, I don't think I'll ever get I don't think I'll ever lose that. But it's just knowing that it's there and actively making decisions that try and reduce that fear. 

Alec: [00:14:03] Yeah, I think like listening to that, the, the underlying thing that you didn't say there is that like your answer around like getting into asset classes that traditionally have done well like underlying that is like being more educated on true like the different risk levels and returns over time. And all of that stems from like education. Yeah, that's true. 

Bryce: [00:14:23] Do you have any right now?

Alec: [00:14:26] Limiting beliefs? Oh yeah. I mean, I feel like I'm in a pretty good place from a financial mindset. I certainly. I've had them over time. I think for me, the biggest thing, like obviously education, you know, we're in a really lucky position where we've been able to make this our full time job and we get to speak to a lot of experts. And you know, we have some of Australia's best financial advisers coming through the doors and like that. That gives us a real privileged position and a lot of people don't have. But I think the thing that got me over a lot of those mindset challenges wasn't just the education, but it was the actual experience of it. And, you know, we've now started to we've now invested long enough that we've gone beyond that, beyond that initial excitement and like understanding what compounding is in theory. And like, I don't know about you, but I'm like starting to say it in my brokerage accounts. It's like all like. And it is the eighth wonder of the world. And I think I think that experience of like first of all, early days investing. Well, I mean early days for me, I lost everything. But then like after that early days saying how the market worked and understanding just understanding it a little bit more, not just from reading about it, but actually seeing it in action. And then over time, you know, dollar cost averaging in compounding, buying individual positions. So I'm going, well, I'm not going well. Just that lived experience starts to overcome when you start to, like, have a new mindset and it starts to override that pre-existing mindset. And so the family history of losing our shirt and that sort of coming down like now, that is sort of being overridden by my own experience where you start to see compounding work and it's like, Oh, okay, this, this isn't as scary as we sort of thought it might be. And, you know, the level of risk on a broad based market index is entirely different to the level of risk on an individual stock. And you don't understand that from the outside because they both look the same when you log into your brokerage account, they both show up as lines on your brokerage account and both have stock charts and they both have tickers. But again, like this education point, you start to understand that they're entirely different things with entirely different risk and return profiles. So I think for me it's like, yeah, just education and experience, which is hard for people who are new to get started investing and new to the stock market because they don't have that. Yeah. So I guess just take it on. Trust that you'll get there. 

Bryce: [00:17:07] I mean, yeah. Before we discuss ways in which we can change our mindset, we want to say a massive thanks to CommSec, the home of investing, who give you knowledge at your fingertips that educational content helps break down the things that can impact your money and investments. Get $0 brokerage on your first ten trades for Australian markets When you sign up, visit com Secondary value. CommSec tenancies and other fees and charges apply. 

Alec: [00:17:40] Welcome back to our Get Started Investing Summer series. We are on our journey to financial independence. We're taking the first step here. One of six steps. Change your mindset, Change your life, Bryce. So lofty ambition, but that is the power of investing.

Bryce: [00:17:56] Amazing.

Alec: [00:17:58] Before the break, we spoke about money mindsets like some of the limiting beliefs that we have and that I mean, everyone has them in different aspects of life, but especially when it comes to money, that it's too risky, that it's not for me, that I can't do it, that I don't need to do it yet. And we spoke about how we have overcome some of those beliefs in ourselves. And really it's come down to jumping in and educating ourselves and experiencing it and starting to understand this whole world a lot better, which is great for us, who are six years into doing an investing podcast for us to sit here and say that. But what about for people who are not six years into their investing journey, who are at the beginning, they're trying to overcome those cognitive biases or limiting beliefs? What are some things people can do from day one to recognise and confront those limited beliefs? 

Bryce: [00:18:56] Well, I think firstly recognise and recognise your biases and limiting beliefs holistically. Don't just think about it from an investing point of view because there are probably things that you're doing in other money areas that impact how you then think about investing i.e. if you're thinking that I don't have enough money to invest or get started. But you're an impulse buyer and you're out there spending like crazy. It's probably worth actually looking at your spending habits before you then think about how can I invest in the stock market? So it's understanding you're spending. Are you impulse buyer? Are you buying for gratification right now? Maybe you should think about how you can delay gratification. Should you be budgeting more and isolating money so that you're you're not accessing cash. So there's. I would start by looking holistically at how you think about your total money set up and recognising where you can make changes there to then allow you to start investing in the stock market. That's the first thought about you, Ren. 

Alec: [00:19:55] And I think there's a group of limiting beliefs that you could sort of cluster in. Now's not the time and it's like, I don't earn enough, I'm young, I can deal with that later. You know, now's not the right light, but the economy's looking shaky. Now's not the right time. There's a lot of like, I'll deal with that later. And I think now is the time and there's no there's no way to overcome that other than to, I guess just to say it and to to say it over and over again. Like there is one superpower when it comes to investing, and that is starting early. And so, like, it's so hard to catch up if you don't start early. In our latest book, Don't Stress, Just Invest. We did some work examples that really tried to illustrate that, starting early is the only superpower you have. So even if it's small, now is the time. I guess that's an education. Understanding the power of compounding helps you overcome that. Yeah. Yeah. 

Bryce: [00:20:52] Well, you might have to show everyone your portfolio broke, so we can see the impact of compounding.

Alec: [00:20:57] That's pretty amazing. 

Bryce: [00:21:01] Some other ways that you can change your mindset just to close out there. Are you? We've spoken about it on the show tools and tactics around automating and organising your money so that it removes the emotional aspect from it. It removes your negative mindset. 

Alec: [00:21:14] Yeah, I think this is probably the most important one for me. It's like especially early days, like the negative self-belief and the limiting beliefs and all of that stuff. It's all still there. And so like you build the habits to not have that stop you. Yes. And like automating it is the best way. And again, to plug the same book again, Don't stress just invest was really designed to that for that how you can automate your investing and get out of your own way.

Bryce: [00:21:43] And then finally, I think find your own way. I think it a limiting belief for when people when they first start is that there's only one way to invest or that, you know, you hear about value investing or you hear about growth investing. And I think understanding who you are, your personal goals, your risk tolerance, tolerance, your time horizons, and not comparing yourself to others can help you then form a more positive mindset about yourself and not looking at how others are doing it. There are many, many ways to make money in the stock market. The ultimate goal at the end of it is for you to make money your way. That is completely different to the person next to you. That is fine, so don't compare and find your own way to invest, which does honestly take a bit of time. It's not something that you decide on day one. This is who I am as an investor. You might think that's who you are, but it'll take time. 

Alec: [00:22:34] Yeah, and I also don't think you need to have that before you start. Like if you feel like you need to figure out how you what what works for you as an investor before you start, you'll never get started because the only way you figure that out is by starting. So, Bryce, before we get to the three key actions that everyone can take to kick off 2024 in the right way, I think let's put a bow on the mindset side of it by what is the what is the investing mindset that we're all striving for? Like, what are the what? When we are thinking about investing in 2024, what should we be thinking? 

Bryce: [00:23:11] That I can take a positive step in building wealth over a long period of time and that there are tools and resources available no matter my situation, from me to to to make progress towards that goal, regardless of what I think about how much I earn or how much it if I'm rich enough or I don't know enough, the mindset should be that there are tools and resources and education and everything you need at your fingertips to actually get started.

Alec: [00:23:43] Put that on a bumper sticker. Yeah, I think. I think like distil it down. You can make $1,000,000 in the stock market. You have enough money to get started. The time is now. 

Bryce: [00:23:59] You can make $1,000,000 in the stock market over time. 

Alec: [00:24:02] Well, yeah, Yeah. Um, what else? It's not as risky as you think. Or there are ways to do it where it's not as risky. You know enough. You can learn enough and you have good enough money habits to get started. And there's nothing you need to do before you take that first step. 

Bryce: [00:24:26] You don't need a degree. 

Alec: [00:24:27] Yeah, you don't need to have, you know, a certain amount. Well, I mean, it's good to have an emergency fund, so put it in that. But, um, you know, you can start today. There are no hoops you need to jump through. No boxes You need to take, like, you can get started and you can start building wealth. And building wealth is within your grasp. 

Bryce: [00:24:47] You can invest your way to the lifestyle that you want. 

Alec: [00:24:51] Put that on a bumper sticker. There we go. All right, Bryce. Well, if we want to invest our way to the life we want, what are some key actionable steps that we can take to start the year? 

Bryce: [00:25:03] Oh, I think this one encompasses what we've just spoken about, but make a small start to something that you've been putting off all year. Anything. 

Alec: [00:25:10] First, just start at 2024.

Bryce: [00:25:13] Last year, 2023. 

Alec: [00:25:15] I've been putting it off for two weeks. 

Bryce: [00:25:17] It make a small start to something you've been putting off last year and that could be the smallest thing, i.e. signing up to a brokerage account. That's all you need to get downloading an app. Buying an book, listening to one more podcast, just something that you've been putting off. Make a really, really small start to that. What else?

Alec: [00:25:39] I think continue to educate yourself is a big one, but be mindful that the best way to educate yourself is through experience. 

Bryce: [00:25:49] Get started. 

Alec: [00:25:50] So we get started. Yes. We sounding like a broken record. 

Bryce: [00:25:58] And then I think finally, if you're feeling confident, set a goal, it could be any goal. But goals generally will lead to a bit more focus and a bit more motivation. So set that goal. If it is just to download an app or whatever it may be. Read five Investing books this year. Have a goal, have a focus and you'll probably be surprised how enthused you will become once you get going. 

Alec: [00:26:21] Yes. Yes. What was your bumper sticker again?

Bryce: [00:26:24] We can invest our way to the lifestyle we want. 

Alec: [00:26:27] Invest the way to the life that you want. 

Bryce: [00:26:29] Invest, something like that. Damn it. We'll have to really invest your way to the lifestyle you want. Something like that.

Alec: [00:26:37] That's good because it also includes it. It encapsulates it's personal, investing your way to the life that you want. Yeah.

Bryce: [00:26:44] Nice. Alright, well, we will leave it there. 

Alec: [00:26:47] Bryce, that is one step down, five to go. The journey to whatever destination starts with a single step and where you have started. So as we go through these next six episodes, we want to say a massive thank you to our partner on this journey, CommSec. Hopefully together we'll be showing you a path to how you can tap into the world of investing to build wealth over the long term. CommSec provides all the support, information and resources you need to build your confidence and make the right money moves. Sign up today to get $0 brokerage on your first ten trades for Aussie markets and invest with as little as $50 through the CommBank app. Visit CommBank.com.au for more CommSec agencies and other fees and charges apply. 

Bryce: [00:27:26] Stick around because next episode we're going to be talking about going from debt ridden to debt free.