Top 3 Investing Tips for Beginners

Bryce: [00:00:12] Welcome to get started investing in this podcast, we cover all the basics you need to start your investing journey. Are you joining us for the very first time? Is this the start of your investing journey? Well, before you dive into this episode with us, our feed is designed to go from the very beginning, so we strongly recommend that you scroll up and start episode one. But of course, if you are feeling brave and want to just dive in, don't let us stop you here. At GSI, we unpack all the jargon and the confusing bits. We hear your investing stories with the goal of making investing less intimidating, and we want to have a good time along the way. My name is Bryce and as always, I'm joined by my equity buddy Ren. How are you going? 

Alec: [00:01:47] I'm very good. Bryce Great to be with you for another episode, I should say in the intro. In a very long intro, you say, scroll back to the start. I think this episode in particular will be relevant for people who are at the very beginning of their investing journey because we've been speaking to a number of beginner investors recently, those that are just getting started or maybe haven't even got started yet, but one to and it got us thinking about what we were like one way or beginner investors. 

Bryce: [00:02:18] Yeah. Well, in the grand scheme of things that wasn't too long ago 

Alec: [00:02:21] for me, it wasn't too long ago. I'm still in my 20s and I started investing in my 20s. So you do the maths for you. I mean, you started investing when you were what? Six. No, not 

Bryce: [00:02:35] quite a bit older. Yeah, about 12 or 15. 

Alec: [00:02:37] But for this episode, we're going to say we've called it three things we wish we knew when we were getting started. We're not going to make you put yourself in the mind of 12 year old Bryce Leske. That's probably a dangerous place to be. But we're going to think about, you know, when we were living together in Canberra, when I was learning about investing, when we were both trying to figure it out, what we wish we knew. And it's not going to be the generic stuff. 

Bryce: [00:03:03] Yeah, it's just going to say we've done stuff like this before, and it's all it's easier than you think and all those ones. Yeah, yeah.

Alec: [00:03:09] A lot of ETFs exist like don't invest in Slater and Gordon and lose your money like we've Covered down. 

Bryce: [00:03:16] Yeah, so we have we've got three there. They're going beyond the cliche ones, and there's nothing wrong with all of those examples that we gave. They are all things that we did wish we know, knew so Ren. Before we crack into the three, there is some housekeeping and a reminder that there is plenty to listen to in the Equity Mates media network. We've got you are in good company comedian. Very economists talk money to me, crypto curious Equity Mates investing podcast, of course, and the late Mate Pay Love and the latest show The Dive Ren. 

Alec: [00:03:51] That's it. Three times a week, we will be bringing you one big news story. One business news story broken down. No jargon, well explained with a bit of fun along the way, so head over to the dive. Head over to any of those shows. There's plenty of content coming out, but Bryce. Let's get into this episode. What are the three things that we wish we knew? 

Bryce: [00:04:13] The first one is that you don't have to pick a side. The second is the difference between right and wrong. Isn't the difference between making and losing money. Looking forward to unpacking this one. And the third is to invest. You don't have to be an investor. Nice. So someone step aside. Thanks for listening. So let's start with the top one Ren. And that is you don't have to pick a side.

Alec: [00:04:40] If the media was to be believed, investing is a very adversarial game, meaning bull versus bear. Yeah, value versus growth active. Very passive Bryce a Ren chess v custodial ethical. The nonsensical do you believe in bitcoin or not? Is value investing dead or not? Everything is so binary in investing and everything is so adversarial. There's so much conflict in its life as a young investor. I got swept up in that, and I think a lot of investors do. What of all of these debates? Of all of those issues? I need to understand it, and then I need to decide what side I'm on. 

Bryce: [00:05:20] And you don't know you don't have to be a value or a growth investor. You can be both. Yeah, yeah. 

Alec: [00:05:29] You don't have to choose active or passive. You can take

Bryce: [00:05:32] both. Yeah. And I think we've spoken to plenty of experts along the way who have a bias towards one, but definitely encompass values and strategies from from many of the different types of investing. And I think about one we spoke Ren Equity Mates a couple of weeks ago and he was a value investor. But speaking about some of the growth stocks that we've all been investing in over the last five years or so, trying to pigeonhole yourself into one or the other early on and trying to understand it, it's too overwhelming and unnecessary. 

Alec: [00:06:05] Yeah, unnecessary point is the important one there because it feels like. A lot of these things are debates that you have to understand and get to the right answer to, to then really be an investor and especially for me thinking back to those early days when we were living in Canberra. Value vs growth for me was one that I spent a lot of mental energy looking back, unnecessary mental energy, trying to figure out which side of the debate was right. You'd be reading books about Warren Buffett's early days and, you know, value investing and trying to buy a stock for less than it was it was worth. And then you'd read about growth investors and you know, you'd come across people that have early on tech and stuff like that and you'd be like, Oh, well, what's the next growth industry? And I remember at that time we were then looking at, you know, like China and, you know, the Blackmores and the A2 Milk sort of like these big growth stories in Australia. And you know, there were these two conflicting philosophies, and I think I spent a lot of that time trying to figure out what was the right one and where I sat on it. And looking back, it's like there's merits of both, and you don't have to figure out where you sit on all these debates because a lot of these debates are kind of sideshows to what really matters. 

Bryce: [00:07:22] Yeah, exactly. You just want to make cash. It doesn't matter how it's made, I think anyway. I completely agree. Early on, though, it was I was very influenced by Buffett. And then there was the Joel Greenblatt book that we read and a bunch of other books that sort of try and talk you through their process. But there's so much more that goes into it than within what they write in the book. And so even just doing have a filter or a screen online and finding companies that do match a bunch of ratios, it's kind of like, then what? Yeah. So yeah, you don't have to pick a side. 

Alec: [00:07:55] And I think, you know, today in our Facebook group, chess custodial gets a massive a lot of people spend a lot of energy having that argument in our Facebook group and beyond. That isn't what matters. No. Make a decision that's right for you and then move on and focus on what matters. You don't have to pick a side in every debate. 

Bryce: [00:08:16] Yeah, finance. Well, I guess quickly to close this this one out. What? What if someone sitting there feeling like they're in in this moment right now and rating value versus growth and try to understand which is best for them? What is the way out of this? But what what would if we were to have our time again? How would we avoid? 

Alec: [00:08:35] This I think this is easy to say and hard to do, but it's I think about what matters. All you are trying to do is make investments that will make you cash, as you eloquently said. And there's clearly like you can look at professional investors and you can say that people have made money from both value and growth and or you can look at the active investing vs passive investing debate. And you can look at that and you say, well, people have made money in both ways. And so really like that unknown variable that will determine whether you make money or not? Yeah. 

Bryce: [00:09:08] Yeah, agreed. I think it's just you have a very open mind and don't feel like you need to pigeonhole. 

Alec: [00:09:15] Yeah, yeah. And like, it's easy. It's easy for us to say. With hindsight, I don't know if we would have got through to twenty 21 year old Bryce analogy, but. 

Bryce: [00:09:23] Well, that's why we're doing this right here. 

Alec: [00:09:25] Yeah, yeah, to 

Bryce: [00:09:26] have all of those out there. So the second one, Ren is the difference between right and wrong isn't the difference between making and losing money. So let's unpack the first half the difference between right and wrong in terms of what a right and wrong investment thesis. 

Alec: [00:09:43] Yeah, yeah. Like you know is, is this going to be a good investment or is this asset class going to do better than this one? Is property going to be better than stocks and bonds going to be better than gold? Or, you know, is a particular company going to do well? Yeah. When I started investing, it was like I thought I had to be right, and if I wasn't right, I would lose money. Yes. But what I've subsequently learnt is that historically, and you know, history isn't a guaranteed future, but historically most investment assets have had a bias for going up. So you look at the property market, you look at the stock market, you look at the price of gold, you look at like just because of, you know, there's a bunch of reasons why, but you know, the economy gets more productive. People have more money. Inflation like markets, assets have a bias to trend upwards over time. Yeah. So when you read about investors being right or wrong, that doesn't mean that they made or lose money. It generally means, did they outperform the average or not? Yeah. And in the stock market, the averages been like seven or eight percent a year. For Australia's property market, the average is probably been like, I don't know, 30 percent a year or something so much. I guess what I've learnt over time is that plenty of people that are wrong are still make money, and they may not make as much money as they don't make as much money as they would have made. They don't make as much money as the average person made, but a lot of times they make more money than they would have got from the zero point two five percent interest in their savings account. Yeah, yeah. We've spoken to some of the guys from Magellan on Equity Mates investing before and they have been they've been criticised a lot in the media for, I guess, being wrong on China amongst a few things. Yeah, but then being wrong, they still own like nine percent returns a year. Yeah, that's that's being catastrophically wrong in the investing game. 

Bryce: [00:11:42] It's like so to give it a I like a I guess a clear example. It's like you're saying, you know, if you were to choose a make a bet on Uber or Lyft being the number one passenger carrier or whatever, they are rideshare and you've taken the bet on Lyft, both could go up in price. But Lyft might not perform anywhere near as well as Uber and not perform as well as the market. You've still made money, yeah, but it's a tough 

Alec: [00:12:11] example because both of those stocks are down a lot. 

Bryce: [00:12:13] Yeah, they are. But you know what I mean? Like, you didn't choose the winning horse, but you haven't lost money on the on the Lyft investment. Yeah. Well, you have. You don't like reality. 

Alec: [00:12:23] Yeah, but you know, that's probably the second part of this is that you definitely can lose money. Like Slater and Gordon, I was wrong and I lost all of my money. Yeah, yeah, yeah, yeah, yeah. 

Bryce: [00:12:34] But but it's not a it's not a black or white, as black or white as if you're wrong, you lose out. 

Alec: [00:12:39] It's not the same. Yeah, yeah. Yeah. If you bought a house in the wrong suburb in Australia in the last 15 years, chances are that rising tide still lifted your boat, even though other boats were lifted on a tidal wave a lot more. So, yeah, I think for me, it's been a big learning that just investment markets have a bias to trend upwards over time. And that's and that's why passive investing works. That's why you can just index invest and it just takes along in the background.

Bryce: [00:13:09] Yeah, one of my biggest learnings from this is was understanding the benchmark and that everything is measured against that market return. No, not to zero, as you said. And then feeling comfortable then that actually taking that market return in the benchmark is just absolutely fine. Yeah. And it's incredibly hard, 

Alec: [00:13:28] I think, to form

Bryce: [00:13:29] over a long 

Alec: [00:13:29] period. I think a simple way to to label this rule would have been. An average the average isn't zero. Yes. Yeah, yeah, yeah, yeah. Like the average is still heading in the right direction. Yeah, yeah, it's really good. 

Bryce: [00:13:43] But the return, an average return. Yeah, over a long period

Alec: [00:13:46] of time, they shouldn't call it the average person. I guess that's why they call it benchmark. Sometimes true? Yeah, because average, it's like especially in Australia, it's got like a negative connotation. It's like, Oh, I feel pretty average. The average, yeah, the average in investing is like average. 

Bryce: [00:14:03] And for those listening, Rangers put two thumbs up. All right. Well, before we jump into the final one, we're just going to take a very quick break to hear from our sponsors. Sir, in the final one is one that I think we've spoken about in some form or another. Plenty of times, but to invest, you don't have to be an investor. Yes. Yeah, how good how I remember speaking to one of my favourite guests we've ever had. And if you if you haven't listened, go over and check out both. You're in good company shoes on your own good company and Equity Mates investing podcast. Emma Fisher. She works for early funds, and she made it very clear that you don't need a degree in finance. In fact, I'm pretty sure, she said if she could tell her younger self something or advice to a younger self, it would be that you don't need a finance degree. Something along those lines to to be a successful investor. You go and it's just like, Wow, well, if she can do it, so can we. Yeah. What's your take on this one? 

Alec: [00:15:09] I'm just now thinking that we can achieve M official levels of success. Well, maybe. But look, I think if you asked 20 year old Bryce Ren Ren what it took to be an investor, we probably would have started with, you know, Warren Buffett sitting in his room reading 500 pages a day. At the very least, we would have thought about some investment bankers in Sydney and Chuck done some R.M. Williams and chinos. And oh, what were you at there with? We're away in finance. Well, we're not with finance adjacent finance adjacent, but everyone has these ideas of what it takes to be an investor, both in terms of like, mainly in terms of the work that you have to do. Like, I have to read Strachan education, I guess I have to subscribe to the AFA and I have to get the calculator. Yeah, yeah, yeah. And while we were uni, the idea that we we could have just put a little bit of money into the market and then going on with our lives probably would have led to even more fun uni experience. Yeah, big time. Yeah, I would have cancelled. I have a subscription probably 

Bryce: [00:16:22] would have 

Alec: [00:16:23] had one. It probably wouldn't have made the mistake and invested in Slater and Gordon. True. I don't know if we actually had one or as that Chrome plug in to remember that 

Bryce: [00:16:31] I was going to say, because isn't it the most expensive Typekit in the world? It was the chrome plug. It was the about it which was awesome. 

Alec: [00:16:37] No longer exists. If if you're listening, we now do subscribe.

Bryce: [00:16:41] Yeah, now we do. But it was so much. Yeah, I agree. And it was so much. Um, there was a lot of kind of noise at the time in our heads of what it would take to be an investor. And I think being able to have blocked that out earlier and understood that you don't need all of that stuff. You don't need to understand all the ratios. You don't need to feel like you have that strategy in place would have helped a lot.

Alec: [00:17:12] Yeah, yeah. Yeah, we wouldn't have been like downloading PDFs of company reports and like trying to read through them and make heads or tails of them. 

Bryce: [00:17:20] What are we doing now? Not that, that's for sure.

Alec: [00:17:26] And you know, like we celebrate and invest like Buffett, who reads five hundred pages a day. And I think we should celebrate the real investors. So the next generation of twenty one year old prices and runs aren't wasting their unis trying to read annual reports. 

Bryce: [00:17:46] Oh no, they're doing 500 tik-tok. So that's, 

Alec: [00:17:51] you know, the investors that take a percentage of their salary in dollar cost averaging or add four per cent to their super above what their employer pays and then gets on with their day. Like, that's just as much investing as as Warren Buffett is. And so I think it's an important learning that like investing, investing is a skill like driving is a skill and it can fit into your life however you want it to be. But it's just an important skill to 

Bryce: [00:18:19] have crucial life skill. I would say 

Alec: [00:18:21] just as important as driving and just as people get ridiculed available, which is units, which is more important 

Bryce: [00:18:28] investing. Oh well, I don't think you're going to need to know how to drive in the future. 

Alec: [00:18:35] OK. I mean, sure. Sure. Drive. We'll say, had 

Bryce: [00:18:38] to choose one or the other. I think driving is not going to set you up for life. 

Alec: [00:18:43] I feel like this is the stuff we clip and then we put on social media. Yeah. Put it on tik-tok and then say what people say 

Bryce: [00:18:49] driving or investing? 

Alec: [00:18:51] Yeah, yeah. Yeah, I'll give this a look. Let's let's compromise and say it is at least as important. Maybe in the future it will be more important investing. 

Bryce: [00:19:00] Yeah. Yeah. Well, sure, let's show. We'll make the video. 

Alec: [00:19:07] But yeah, look, I think looking back, we could have really saved ourselves some time and some angst, some noise and some mistakes. Yeah. If we had just understood what you needed to know and then what was us trying to pretend to be something that we weren't? 

Bryce: [00:19:25] Yeah. And I think I think all three of them, you don't have to pick a side. A lot of noise in picking sides. The difference between right and wrong isn't the difference between making and losing money and to invest. You don't have to be an investor. The industry for a long time has constantly thrown a lot of jargon and noise and stuff out there. One could, I guess, cynically say to confuse the mums and dads, and the Ren Ren Bryce is so that we would give our money to professionals and some

Alec: [00:19:56] good science with some could 

Bryce: [00:20:00] say that. And there's nothing wrong with giving money to the professionals in. No. 

Alec: [00:20:04] In fact, there's a lot right with giving money to professionals, but there's even more right with having the investing skills to ask the hard questions and to know what the professionals are doing because we've heard some horror stories. If it's right for you, you should see professional, but you should go in armed with the knowledge that 21 year old Bryce and Ren did not have. 

Bryce: [00:20:23] That's it. That's it. So I hope we've been able to, I guess, clarify a couple of misunderstandings or points that we felt sort of confused us or made us more nervous and overwhelmed than we should. 

Alec: [00:20:36] The thing was, though, at the time we weren't really nervous, but we didn't think we were overwhelmed. We just didn't realise we didn't 

Bryce: [00:20:44] know how true it could have been. It could have been smoother sailing. I would have lost less money. 

Alec: [00:20:49] Oh, 100 percent. Yeah, I would have lost so much less money. 

Bryce: [00:20:52] But there's also nothing wrong with losing money, going to lose 

Alec: [00:20:55] money better to lose money than, I think, because we would have probably pissed that money away some other way. 

Bryce: [00:21:01] So let's not talk about how. But anyway, if you have some key takeaways or lessons that you've learnt, we'd love to hear them. Send it into our email contact@equitymates.com. And as we said at the top of the show, there's plenty of content at Equity Mates Media. The dive daily is three times a week. Business news show you're in good company. Savvy comedian v economists talk money to me. Get started investing. Is this one? Of course. Equity Mates Investing Podcast and mate pay love. Go and check them out. Crypto curious as well. So plenty going on. Hit us up Equity Mates dot com as well. You can catch all the transcripts, videos of all the episodes that we do, but Ren greater chat and we can pick it up next week. 

Alec: [00:21:46] Sounds good.