Expert Investor: George Lucas – CEO of Raiz (formerly Acorns Australia)

Bryce: [00:01:30] Equity Mates, the podcast where we break down the world of investing to make it easier for you guys Episode 21. And as always, I'm here with my equity buddy Ren. How are you going? [00:01:41][10.5]

Alec: [00:01:41] So I'm very good. Bryce how are you? [00:01:43][1.8]

Bryce: [00:01:44] Can't complain. Saturday afternoon. Good to be chatting to you after a while. We haven't caught up in a while. So it's [00:01:48][4.7]

Alec: [00:01:49] it's good. It's good. We got a big interview today which I played no part in but looking forward to hearing it. [00:01:54][5.2]

Bryce: [00:01:54] Yeah, well you'll be listening to it for the first time, just like our listeners. So, yeah, I hope you like it. This week we've got George Lucas, who, as you know, Ren is the CEO of ACORN's Australia. Do you use it? [00:02:06][11.5]

Alec: [00:02:07] No, I don't. But I've thought about it. The I have an issue with the the face, which I'm sure you talk about in the interview. Yes. But unless you're putting unless you're putting a lot of money into it, then the fees as a percentage of the amount of money that you're investing is quite high. So that's what stopped me doing it. [00:02:26][19.0]

Bryce: [00:02:26] Yeah, interesting. Well, yes, we certainly do discuss that in the interview because, you know, we've both seen quite recently there's been a chat about it in the media and it seems to be one of the talking points about the app. [00:02:39][12.4]

Alec: [00:02:39] So let's let's take a step back and just explain what the Icons app is. So it's probably the most famous of the micro investing apps. And what it is, is you connected to your bank account and it will round up any purchase you make. And whatever the amount it rounds up, it will invest that for you. So if you buy three dollar fifty coffee, it will round it up to four dollars and it will take that fifty cents and invest that for you and over time with every transaction you do. The idea is that almost without realising that you build up our share portfolio. [00:03:13][34.0]

Bryce: [00:03:14] Yeah, well in the sense that you don't get to choose what stocks you will be invested in the market. Exactly. Exactly. And it doesn't invest just in stocks. Gives you exposure to bonds and cash and and a few a few various asset types. But this is all stuff that we discuss in the interview. But unlike you, I do use it and I use it as a savings account in a way, and I see great benefit. But as you as you mentioned, I'm using it a bit differently to how it's originally designed to be used. But once again, we discussed this with George. But just to give a bit of background, George Lucas is the CEO of Alcorn's Australia. And as you said, Ren is that's one of the most recognisable and used micro financing apps in Australia. George has had a career in finance that has spanned over 30 years, working at numerous firms in multiple countries. And those firms have been at different stages of development from founding start-ups all the way through to working at some big investment banks. So he's pretty experienced and he's also very passionate about improving financial literacy of Australians. And this is one of his big points with icons and what he sort of believes that ACORN is a great tool to help improve financial literacy. So as well as ACORN, he heads up his business called Wealth Knowhow, which is a video based platform that focuses on wealth creation, education. So, yeah, he's a very laid back guy. I had a great chat with him. He's well read, very experienced, the CEO and investor, and he has some pretty interesting commentary and insight into what's going on at the moment. And, you know, he's he's more technically based in terms of his investment philosophy. But this is all stuff that we talk about in the interview. So I hope you guys enjoy the interview just as much as I did chatting with him. [00:05:04][109.8]

Alec: [00:05:04] That's one. Now, just before we get into the interview, we should give a plug to a couple of the things we're doing. So first of all, if you haven't signed up already, make sure you jump on our website or on our Facebook page and sign up to the Equity Mates, for starters. Yeah, when you sign up, you get five interesting articles delivered to your inbox every Monday. It's a good way to sort of say what investing resources are out there. Keep up with some of the news it's definitely worth signing up to. [00:05:33][29.1]

Bryce: [00:05:34] Yeah, definitely. I think it's a great little tool. [00:05:36][2.1]

Alec: [00:05:37] And then the other thing that we're that we want to plug is our YouTube channel. If you can't get enough of Equity Mates, we're waiting on YouTube for you. [00:05:45][8.6]

Bryce: [00:05:46] Yeah, get around it. Tell anyone about it now. Nice one, Ren. And look, we've got some exciting things in the pipeline that we're looking forward to telling you guys about something a bit different as well that would give you guys the opportunity to perhaps get invested in the market yourself. But we won't reveal too much. But we can close out a few things later this week. And coming into the latter half of this year, we'll be able to give you guys some exciting news. [00:06:12][26.3]

Alec: [00:06:12] So stay tuned. All right. Well, without any further ado is George Lucas, the CEO of Icons Australia. [00:06:20][7.3]

Bryce: [00:06:25] Well, I'm here with George Lucas, ACORN's Australia. Thanks for having me. I really appreciate you coming on the show. Let's just kick off. We've had a 30 year career in finance and half that. And you've worked in numerous firms across multiple countries, different stages of development from founding start-ups to working at big banks from this experience to kick off the interview. Is there one thing that you wish people understood about financial markets and investing? [00:06:50][24.8]

George: [00:06:52] Yeah, that is it is quite difficult. And I mean, even I mean, we saw that in the GFC. You know, even the banks found it difficult to manage the risk associated with investment. And, you know, they're professionals. And at that time, they were the smartest guys in the room. And I think people forget how difficult managing risk can be. [00:07:09][16.9]

Bryce: [00:07:10] Let's go back to the start of your investing journey and what originally got you interested in investing in finance? [00:07:16][6.3]

George: [00:07:17] Yes, I you know, I was a bit of a wee kid. I was always interested in investing in finance. I can still remember at the age of 12, doing charts and looking at charts and trying to work out how markets were going to perform on a little calculator and stuff like that. So I've always been interested in markets, so I was really just a natural progression for me. [00:07:34][17.1]

Bryce: [00:07:35] So what were some of the hardest things that you found about getting started in the early days then, or you didn't find it? [00:07:41][6.3]

George: [00:07:41] Because I am so the wrong example. I mean, I actually didn't go into finance, like by studying finance at university. I actually studied computer science and mathematics. And at the time, because, as you said, I'm and old a new invention called the PC with the A of trading houses, especially in the UK. And I needed people who with skills to be able to programming them in with financial type calculations and models. And I had done by accident more than anything else, a lot of the right course of Dollars highly valuable, especially in the UK. And that's how I started in finance. [00:08:16][34.9]

Bryce: [00:08:17] Interesting. So then going off that, has that influenced what sort of style you invest with. Like what? What would be your philosophy of investing. [00:08:25][8.1]

George: [00:08:26] It does actually for myself, because I'm very I'm computer driven. So you're not built models that will ultimately trade the markets without very little human input once they get started. But, you know, and I've learnt a lot about how you build models, which you're going to trade the market over my over my time. So I'm very model orientated rather than, you know, off the seat of the pants or looking at earnings and whatever. It's more about looking at charts and looking at momentum. So I'm very much about high sell, low type of guy, which kind of doesn't make sense, except if you follow charts and then you start to get a feeling that, you know, you buy the breakouts so that when the markets start running that you're buying the high. Want to confirm the breakout and you let it rot until it starts turning and coming down. So when it starts breaking back down and lows of being made, that's when you sell. Well, it's kind of like just a different way of looking at it. [00:09:20][54.9]

Bryce: [00:09:21] So not something that the the average beginner investor can just jump right into [00:09:25][4.2]

George: [00:09:25] nice, you know? Well, they can. And there's a lot of books about it. I mean, about the technical trading and breakouts and whatever. And, you know, at the end of the day, the only thing that really has ever been proven that works really well as an indicator is these momentum indicators. But, you know, you do need to do it properly. You do need software, which you can pretty much get on the Internet pretty easily these days. [00:09:49][23.9]

Bryce: [00:09:50] As an everyday investor with the concept of momentum, is there any way that we can engage in that mindset? What are some of the things you look for, [00:09:58][7.9]

George: [00:09:58] all of those things like Magda's and RSI and all those technical indicators and you also looking for breakouts, you know, is it breaking out isn't making a new high? And that might be that of making you high over three months, six months, etc.. And if so, is it breaking out? Right. Yeah. [00:10:16][17.9]

Bryce: [00:10:17] Can you remember one of your first big investment wins? And it might not necessarily it doesn't have to be financial. It could be something that, you know, sent off a light bulb or like a moment. [00:10:26][9.3]

George: [00:10:28] Well, when I was, I guess, my biggest investment when I was young, when you look back on it in the days when there was a high inflation in Australia, OK, and you can use to better get Telstra bonds, which are then Telstra is owned by the government. So this government guaranteeing that bonds and they you know, you could get 18 percent on those as a coupon. So they're kind of like a no brainer in a lot of way. [00:10:47][19.5]

Bryce: [00:10:48] So you started your career in 87, which was obviously the tail end of the flying eighties. Have you seen markets changed significantly since then? [00:10:56][8.9]

George: [00:10:57] Oh, definitely. I'm a marketer always I'm always changing. I mean, when I started in, I you know, in the early, late 80s, I actually started for them. But, you know, passive investing, indexing and with a really especially outside America, with a very foreign concept. Yeah. Option trading models, back channels, people used to do option trading pricing options and the. From where they've been used by Charles and I can still, you know, barely remember, but I can remember how you price options without using a black Sholes model, for example, and just pricing them in your head. So using these kind of like rules of thumb that they all had. So we've definitely seen markets become, you know, to the point where they are today, where we've got high frequency trading, where it matters how close you are to the exchange, because having 300 milliseconds rather than three hundred and fifty milliseconds can be a matter of a lot of Dollars yet. [00:11:54][57.2]

Bryce: [00:11:55] Have you seen the people that are engaging with markets change over time as well? [00:11:58][3.1]

George: [00:11:59] Oh, definitely. So the people who engage are far more for one of the word, you know, professional. You know, they've got a lot more to I ever had. I never had a master's degree or a PhD, you know, but today, a lot of these guys are highly educated, highly numeric and highly disciplined. Yeah. [00:12:17][18.0]

Bryce: [00:12:18] So starting out in the 80s and seeing the 87 financial crisis. And then obviously since then, we've seen the Asian financial crisis, the tech collapse, GFC. Is there any advice that you could give to investors to help build resiliency in their portfolios? [00:12:33][15.3]

George: [00:12:35] Yeah, the hardest thing well, there are a couple of things. The first thing to build resiliency in your portfolio is don't have remained because the moment you have a moment, you kind of like stop panicking and get too emotionally attached to what you're investing in the market. You're going to take the money out to say, yeah. The second thing is not to follow the herd. It's always better to be contrarian because the herd will get it wrong eventually. So you do have to know when to ride the herd and when the herd is going to go straight up. And we're seeing that now kind of a little bit in Bitcoin, for example, where, you know, and the kind of like the cliche thing is when taxi drivers start talking about it. But for me, it was more when my daughter came in and started talking about it. It was never interested in investing. And then she bought Bitcoins. It was like, you know, in the next day it fell 20 percent. And it's just like, well, it's always away. And yet when everyone's talking about it, it's time to get out. When the stock when the, you know, a newspaper headline is stock markets are going to go up forever, it's the time to get out. So it's quite good. So A keep getting those new newspaper headlines that the housing market in Australia is going to collapse, is going to collapse because they'll get it wrong every time. [00:13:42][67.1]

Bryce: [00:13:43] So when you say don't live outside your means, is that meaning that you should ride the highs and lows [00:13:48][5.0]

George: [00:13:48] you should ride, you know, depending on your age group? Is that for your audience? They they've got 30 years in the market and in 30 years, the markets will be high even after the crashes. We've always seen them come back. Yeah. And even though the Australian market kind of if you look at it, doesn't appear that it's come back from the GFC. That's because you just look at the price of the Australian market and, you know, including the dividends in Australia. Market pays very high dividends, you know, five percent plus dividend. Well, in America, that two percent less dividend for the for the S&P 500. So once you start combining dividends back into what they if you're reinvesting dividends would be higher than we were in the GFC. Yeah. And you can't say, oh, dividends aren't part of the market return. They are part of the market return. Australia just happens to pay very high dividends compared to the rest of the world. [00:14:34][45.2]

Bryce: [00:14:34] So back to your point about if it's in the media, it's almost sort of time to get out or take note. You know, there's a lot of discussion at the moment about we're getting towards a critical point in the credit cycle. It's sort of been eight or nine years since the GFC. Are the markets getting overvalued? Do you have an opinion on where we're sitting at the moment? Sure. [00:14:52][18.0]

George: [00:14:53] There's a couple of things with so much negative sentiment around you're not going to see a market for. Yeah, you might say, you know, you might say come back five or seven per cent, but you're not going to see a 20 or 30 per cent fall in the market. Yeah, with everyone talking about the US tech stocks being overvalued. Yeah. 100 percent guaranteed that they're probably not going to go higher. Yeah, right. You know, so with all this negative sentiment around at the moment, we've been through quite a big rally, not just overseas, especially like the S&P 500 or the even the European markets and Japan. Enough don't pick up. The world is still nonbeliever's. You know, people have got a lot of cash. There's a lot of negative sentiment. We don't believe the market. And then every day we just come in and the market's going higher. Yeah. And until that sentiment changes, there's no going to be no big driving force to push the market down like 20 or 30 percent. The other thing, there's no sign of a recession in the in the horizon. In fact, we've just seen world growth pick up quite a bit this year. And so it's very unlikely that you see a major downturn in the US market, which would drive the rest of the world until there's a sort of a recession in the US and that just isn't in Australia. You know, we live in a world where everyone thinks the glass is half empty. But, you know, we've had consistently 40000 jobs put on for the last three or four months. That's like if that was happening in the US, whether it will be equivalent of like 400 to 6000 jobs created and the whole world would be cheering and pushing that market higher. In Australia, we got all the whole world's coming to an end and our housing market is going to. All down and but, you know, for that many jobs being created, businesses, you know, they're not great businesses that kind of jobs because they're charities, they actually making money and they're seeing that there's opportunities to make money. [00:16:34][100.9]

Bryce: [00:16:34] Where do you look for content and information when you're trying to find a stock to invest in? [00:16:39][4.7]

George: [00:16:39] Yeah, so I don't really do individual stock selection. So where would you look? Where will I look? Well, I would be very cynical because and that's why I don't do it, because I have never found a good information source. Right. For the stock. So brokers tend to be brokers tend to be, you know, behind the game. Yeah. OK, you know, for individual stocks, the only one that ever made money is like in 86 when this company introduced this fantastic product called Excel. And then and then suddenly within two years, everybody was using Excel and Lotus one, two, three, which half of you or probably all your readers don't even know about which. But was it dominated the whole market and pretty much gone. And it was like I bought Microsoft stock. Yeah. Yeah, right. And then today, the only one which is similar to that is kind of like Amazon is on you. Yeah. Everyone, you know, 40 percent of the web is going through Amazon Web Services. Everyone's woken up and gone, oh, my God, we didn't realise this was this big yet because they only started maybe two years ago reporting what the earnings were on the with 30 percent to 40 percent of all Internet traffic is coming in. The world is coming off, Awista. And, you know, just from my experience, you know, they know a lot of countries cannot keep up with demand for their product. Yeah. So, you know, when a company has a product that they can't keep up with demand, you know, you've got to think that maybe that's quite a good business model. [00:18:06][86.8]

Bryce: [00:20:00] You'll see Icons Australia apparently so. Which is a micro investing app. Yeah. Can you explain briefly to our listeners what micro investing is and how it's different? [00:20:10][9.5]

George: [00:20:10] Yeah, it's any different in that there are a lot of barriers to investing. You know, minimum's, you know, if you open a stockbroker account, you know, you can open it for small amounts of money, but the ticket side for a trade is quite high. You know, if you buy a Vanguard type unit trust, for example, you know, the 5000 dollar minimums. So the minimums tend to be quite high. The fees tend to be very transparent. You know, you get three free trades with us. And so you start getting hit with the trade money after that. And Acorns tries to break down these barriers so you can invest for a minimum of five Dollars. Yeah, it helps you. You know, it's very simple. Like there's only six portfolio choices, OK? Five of them are risk adjusted portfolios from conservative to aggressive and then social responsible portfolio. And they're the only options you've got and a diverse, well diversified portfolio. And when and then you can do things like dollar cost averaging, which is a great strategy to do with the way we do. Dollar cost averaging is by linking Akko and your spending habits to your investing. And so through the round up concept, if you spend three dollars fifty coffee, fifty cents will be rounded up and put into your account account. And so by doing that, you don't actually get you get a. How much can I afford to say or invest and people are waking up and going, oh, I can actually save money and invest money without affecting my lifestyle. Yeah, and, you know, I might save six hundred or nine hundred dollars a year, which for some people will go, well, that's not very much, but it's like, well, these are people who said, I can't save full stop ever. And they're waking up and going, you know what, I actually can save and and I allows us to. And then it's for your fifteen dollars a year flat fee or a dollar. Twenty five a month. You only get charged when you've got a balance. You know, if your balance is zero, you don't get charged and you can take your money out at any time. You can put money in at any time. It's very transactional in that way. [00:22:02][111.5]

Bryce: [00:22:03] I'm an avid user of icons. I really think it has great benefit. I use it almost as a savings account in terms of I put a lot of my money in additionally to the roundworms. But, you know, there's been recent news articles about copping a lot of flak for with your fees as a proportion to what some people may be putting in. So firstly, do you have a comment on that? And secondly, do you have advice on maybe what the best way to use icons is like? How can you really maximise to use? [00:22:32][29.1]

George: [00:22:32] You know, at the end of the day, if anybody thinks a dollar twenty five a month. Yeah. Or fifteen dollars a year, which is half a pack of cigarettes or a beer and a half one night at the pub. Yeah. Is a lot of money for the four icons then they really shouldn't be using the icons product. Yeah. And Aikens has a lot of you know, a lot of value for that. You know, it's about this constantly filling up through roundoff or a recurring savings plan or whatever with direct debit money out of your account in small amounts of money so that you can't see it affect your lifestyle. But you're getting invested into the icon's account. And, you know, that cost a lot of money doing all that direct debit. And the operations of banks don't don't give direct debits to me for free. Yeah. If you're going to use a card and you're going to put fifty dollars away and you're not going to you and you're not going to do the benefit of using the round up feature, you're setting up a savings plan or whatever account is not for you, but if you set up a savings plan to run round ups or not, but to have this constant recurring investment, that's the way to go with Eikon. [00:23:34][61.6]

Bryce: [00:23:34] Yeah, so that's the key. A bit of additional money in. Yeah. [00:23:39][4.1]

George: [00:23:39] On top of the dollar cost averaging kind of dollar cost averaging, if not only about showing you that you can save money, but it is a great way to learn how to invest in markets because you don't have to pick tops and bottoms. I mean, you know, to prove kind of like a proven technique that, you know, you do OK in markets. You're not going you know, you're not going to pick the bottom, you're going to pick the top, but you're getting the average. [00:24:00][21.0]

Bryce: [00:24:00] Exactly. Which is the best way to do it. Yeah. So who who's acorns specifically trying to target is their target market in [00:24:07][6.8]

George: [00:24:07] case there's no real target market. But obviously because it's on an app and it's easy to use and whatever, it's been adopted very quickly by the millennials they call it is also not an either or product. We're not going out saying that if you've already got stockbroking, you can't get rid of your stockbroking account. We've already got, you know, fund in a managed fund or whatever. Get rid of the acorns can actually be part of that savings plan because it just shows you can save money without affecting your lifestyle. Yeah. And, you know, we've got features of acorns. For example, you can click your money over to the super fund when you feel like you've got a enough. And that's quite going to be quite beneficial this year, because when you push money out of the super fund, that money is tax deductible because of the new rules that came in in July. So, you know, for people, that's quite beneficial, obviously, with the normal disclaimer that you have to check your own tax circumstances because it does cap out at twenty five thousand people that you need to talk to a tax adviser. But, you know, you can it's not an either or product. I can't. [00:25:05][58.0]

Bryce: [00:25:06] No, I agree. And that's how I used it as well. It's just a nice little supplement. [00:25:08][2.6]

George: [00:25:09] It's a supplementary thing to what you're doing for your savings. [00:25:11][2.2]

Bryce: [00:25:12] So with the uptake, you've what you've now got about to 300000 users, roughly. [00:25:17][5.2]

George: [00:25:17] So we've got about three hundred and forty thousand people signed up and 150000 active monthly users on the app. [00:25:25][7.4]

Bryce: [00:25:25] What's the average balance for a user? Are you allowed to disclose that? [00:25:29][3.4]

George: [00:25:29] Yeah, yeah. On The Sydney Morning Herald. And so we'll go to that. It's around nine hundred dollars. The average monthly user on average, people save about fifty dollars a month. Okay. Yeah. And so some of those users and it depends on what they got, some of those users will save up to two hundred dollars and then take it out and then start again. Yeah, some people will save up to three or four thousand. Take it out, start again. Others will just keep saving forever and never take the money out. Yeah, but it is a very it has changed the way investment markets work because you can get your money out so quickly one time. Yeah. [00:26:02][33.0]

Bryce: [00:26:03] So it's it was a pretty frenetic uptake, I would assume in the first few months. [00:26:06][3.8]

George: [00:26:07] It hasn't stopped. It has accelerated. Yeah. [00:26:09][2.5]

Bryce: [00:26:10] Do you have any reason for this? Do you know, do you have an idea because [00:26:14][3.7]

George: [00:26:14] it actually adds it actually adds value to people. That's the only reason why, because it's being pushed by word of mouth. If it didn't add value to the people who are pushing it, they wouldn't. We were talking about it. They want to say, you know what, and it's because I can't is more than just investing. People got a lot of financial education. I mean, and we've been hopping on about one of them, which is a savings and loan that you can save without, you know, without affecting your lifestyle. But the other one also is that you get to see how market moves and you get to see it in real time and you get to see things like, oh, I've seen all this bad news in the press for the last six months about everything, but the markets keep going higher. What's going on here to that kind of financial that, um, you know, hands on financial education is very valuable to people? [00:26:58][43.6]

Bryce: [00:26:58] Yeah, it is. Well, I'll skip ahead. You're the co-founder of the financial education company Wealth No. Hell, yes. So do you think Australians generally have a good level of financial literacy? And is there anything that you think our listeners should or could do to improve the financial literacy? [00:27:14][15.6]

George: [00:27:15] It's going to be different from everyone, Australians in general. Australians have quite a high level of financial literacy. Financial literacy spreads across quite a broad range, like I don't buy from what I see on my econ Jesus. I don't buy this thing that millennials are poor savers. OK, OK. They like they may like to spend like go overseas or whatever as well, but when they want to spend big, they know how to say to get to that point. Yeah. And I'm not a big believer in that. So that kind of financial and everyone and then you talk to people and they all have their own special way that they make sure that they and spend within their means. We don't say, for example, the millennials are huge up taking credit cards, for example. They're very you know, they're much more in some ways a lot more conservative around debt. And, you know, the older people are so I don't know, you know, from their spending habits and they've all got their little tricks of how they manage that spending habits. And, you know, they're all personal what works for them. And that's fine to throw in that sort of financial literacy. You know, can they value an option? You know, probably not. Do they need to value an option? Probably not ever. You know, I mean, can they can they fill in a form to apply for a loan if they needed or apply for a housing loan? Yeah, they sure can. Yeah. The thing is, you know, that's going to change to you know, in the thing about icons, if you would have it all online and it's very little information as possible and everything, everything else is being done in the background to fill out. So, you know, the four large financial institutions don't get on board and start having the interest just all online. And you walk in and push a button, push a button and give some details and then the rest is all filled out. It's going to fall behind. Yeah, it's going to be different. A different world [00:29:05][110.5]

Bryce: [00:29:07] from what you've seen with acorns. You mentioned that there's five degrees of portfolios, conservative, up to quite an aggressive. Yes. Especially in the millennial side. What side did I swear to in? [00:29:18][11.7]

George: [00:29:19] They also. I know. Aggressive. Yeah, modularly aggressive. Aggressive, which we laugh because we read this ASX report that they did and the ASX report said millennials are quite conservative. Yeah, I read the same report. Yeah. Yeah. It's like, oh no, no, no, no. We say they, you know, they want to they way they want to take the risk. But again, I'm not on a Dollars they're not taking huge amounts of [00:29:41][22.1]

Bryce: [00:29:42] might be to do it the sum of money. [00:29:43][1.4]

George: [00:29:44] That's right. Yeah. It's not like they've got their whole life savings [00:29:47][3.1]

Bryce: [00:29:48] back to maybe the way that acorns was set up in Australia. Not many people would probably know that it is actually a bit of an offshoot of us. Yeah, and you're actually a fifty fifty partner. Correct me if I'm wrong with Acorns Australia. So did you approach them and convince them to bring it to the Australian market or how did that how did that work? [00:30:07][18.4]

George: [00:30:07] They were looking to come into Australia and they were introduced to me. Yeah. And we went, yeah, it is quite a difficult thing to set up in Australia. The software part was a lot easier to set up than going to the regulatory hurdles. We love ethic and getting the legal structure, though, correct? Right. As I say, they're not really that many people who knew how to do it. Yeah, and that's why it's a catch 22, because it was hard for us. But now we don't see many competitors coming to the market because they haven't worked out the tricks. But and they're not tricks. But they haven't worked. I haven't gone through you know, they haven't budgeted for and thought about all the legal ramifications of what they do. But we knew how to do that. That's what we that's one of the core strengths of industry with this financial structure. [00:30:53][46.5]

Bryce: [00:30:54] You mentioned again that Aikens has five sort of portfolios to choose from. And one of the things that I guess a lot of users might not know is exactly where that money goes. Can you give an idea of when someone does invest the fifty cents or the fifty dollars a week or whatever, how is it just in stocks? Is it across asset classes, [00:31:11][16.4]

George: [00:31:11] across asset classes? So it's it's Australian stocks or the top 200 Australian stocks, the top 500 US stocks, the top six hundred. European stocks, the top 50 Asian and Asia kind of emerging markets. That's. And Singapore, South Korea, Hong Kong and Taiwan and the top stocks, 50 stocks out of them, and then government bond and corporate debt like Telstra and then into term deposits. [00:31:45][33.8]

Bryce: [00:31:46] You're right. And I know in the app you can actually go in and have them say that. So drill down further. Yeah. So it's a really good tool to just at least get an understanding of what it means to be diversified. I noticed recently you've set up the Emerald portfolio [00:31:59][13.0]

George: [00:32:00] as socially responsible [00:32:00][0.8]

Bryce: [00:32:01] for a socially responsible portfolio. So firstly, can you give us an idea of what that's about? And secondly, is there going to be any more thematic portfolios coming to icons? [00:32:12][10.8]

George: [00:32:12] Well, at the moment, there's no plan for any more thematic type of socially responsible is one of the largest of profile. We do get requests for text stock, but I don't think people. You know, I really have no desire to deliver that at the moment to people just because of the risk associated with some of those tech stocks. I think they're going to go up. But if they they don't go up in a straight line and the tech stocks and socially responsible portfolios actually are heavily weighted to tech stocks, that they tend to be very socially responsible, socially responsible. He does the things that removes gambling. You remove tobacco, alcohol, and then on top of that, it also looks at other things like carbon footprints. Yeah, right. [00:32:59][46.9]

Bryce: [00:33:00] Yeah. Along those lines, Acorns invests in ETFs and on a wide variety, depending on your risk preference. And as mentioned before, recently we interviewed Alan Koula and he was actually quite scathing about the market's growing a preference towards ETFs and passive investing. Do you think that this massive shift towards passive investing will continue or what do you think the trend for this [00:33:25][25.4]

George: [00:33:26] is, is that is his game against passive investing or Skyring against ETF [00:33:30][4.9]

Bryce: [00:33:31] ETFs and the analyst guy at the company that's not even bigger and bigger than [00:33:35][3.9]

George: [00:33:35] most large funds yet will be, you know, with a lot of money in them and in the Australian market will be what they call index Huggett, that they tend to be very close to passive funds anyway, to charge you a lot more than if you're just in straight S&P ASX 200 index fund. Yeah, while their performance is really not that much better. Yeah. From the outside really. And you know, from an ETF side, all it is, is a fund that is listed. So it just means that you have liquidity during market hours from 10 a.m. to four and you can get in and out at any time. But there is an underlying ETF on the ASX 200 is made up of the underlying 200 stocks. So if people are buying more, they just go and buy those stocks that people are selling them. They sell the whole 200 stocks into the market. So it just happens more quickly and in real time. So it's just the same thing for the people are holding the portfolio. Yeah, yeah, yeah. It's just liquidity is quicker. Yeah. [00:34:47][71.7]

Bryce: [00:34:48] So you recently did a six million dollar capital raise through ACoNs to fix me up to six million caballeros in icons through Icons Australia. Given the crowdfunding equity raising is becoming more and more popular these days with companies like equities and our crowd. Do you think this is something that you look to do again for other companies and financial products? [00:35:10][22.3]

George: [00:35:12] So it was industry who actually did it. This is a 50 percent joint venture and raise the money and set up a little vehicle that invested into ACORN right directly at their own investment. [00:35:21][9.6]

Bryce: [00:35:22] And in Straight is your company here? [00:35:24][1.5]

George: [00:35:24] It's a 50 percent owner of. Yeah. Here and. You know, crowd funding is just going to get more popular. Here's the bottom line. Yeah, and that crowd funding was done because there were, you know, X amount of our customers said we want to invest in the iconic company. All right. Yeah. And so we just tried to make that name, right. Yeah. [00:35:45][21.2]

Bryce: [00:35:46] All right. Well, to to wrap up, we're getting towards the end of the interview, George. So, I mean, what's one of the best pieces of advice you've been given related to investing, if you can recall, [00:35:55][9.0]

George: [00:35:56] you know, the best places in the country, if you don't believe. Definitely don't believe what you read in the press, the general press. You can believe what you read in the Financial Times, more financials like a Financial Times or Wall Street Journal, but not necessarily The Sun Herald. [00:36:10][13.6]

Bryce: [00:36:11] Well, to wrap up, we always finish with two questions. The first is, is there a must read book that you would recommend, financial or otherwise? [00:36:18][7.8]

George: [00:36:20] A must read book, maybe The Fountainhead. OK, and what's that about? The Fountainhead is about an architect in America during the 20s and 30s. Contently you know, I think the inspiration or the Frank Lloyd Wright, it's about being an individual. [00:36:34][14.2]

Bryce: [00:36:34] Interesting. We put that up on our site. [00:36:36][1.2]

George: [00:36:36] It's something that some people consider to be very right wing. [00:36:39][2.4]

Bryce: [00:36:39] OK, interesting. Is there any advice that you give to our listeners out there who may be interested in investing but haven't yet started the idea of a [00:36:47][7.5]

George: [00:36:47] perfect product so that they can go to great. As I said, financial literacy is the you after the obvious one is the main reason people using to improve the understanding of markets to improve their financial literacy. So, you know, if you want to risk 100 or 200 dollars and be fully invested in the market and you can afford to risk, you know, there's nothing else out there that can do that at the moment. [00:37:12][25.1]

Bryce: [00:37:13] Now, I agree, as I said throughout the interview, and avenues are always a great benefit in it as a supplementary tool, as a learning tool. And just to prove that putting little amounts away consistently, [00:37:25][12.0]

George: [00:37:26] I think dollar cost averaging is a very good habit to understand and get into for the rest of your life. [00:37:31][5.0]

Bryce: [00:37:31] Yeah, very much so. Yeah. Well, George, really appreciate your time. I've learnt a lot. Thanks for having me. Really appreciate it. [00:37:38][6.7]

George: [00:37:38] Not a problem. [00:37:38][0.2]

Speaker 5: [00:37:39] Equity Mates and the people appearing in this programme may have positions in the company's pension. This is general advice for me. Please speak to a financial professional to understand how they pertain to your individual situation. [00:37:39][0.0]

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