Sort Your Money: Improving your cash flow with Kylie Purcell | Finder

HOSTS Alec Renehan & Bryce Leske|24 August, 2021

Meet your hosts

  • Alec Renehan

    Alec developed an interest in investing after realising he was spending all that he was earning. Investing became his form of 'forced saving'. While his first investment, Slater and Gordon (SGH), was a resounding failure, he learnt a lot from that experience. He hopes to share those lessons amongst others through the podcast and help people realise that if he can make money investing, anyone can.
  • Bryce Leske

    Bryce has had an interest in the stock market since his parents encouraged him to save 50c a fortnight from the age of 5. Once he had saved $500 he bought his first stock - BKI - a Listed Investment Company (LIC), and since then hasn't stopped. He hopes that Equity Mates can help make investing understandable and accessible. He loves the Essendon Football Club, and lives in Sydney.

This episode is proudly supported by Finder.

Besides getting fit, sorting out your money is something that most Australians want to get right! So on Get Started Investing, we wanted to learn how to do just that! Over three episodes we’ve partnered with Finder, to talk about all things personal finance and getting your money sorted so you can start investing.  In this final episode we’re going to look at some of the best practices when it comes to personal finance, and how it can help your investing journey. And we have the pleasure of talking to one of Finder’s editors, Kylie Purcell. Kylie is the investments editor for Finder. She has a background in business and finance news and has previously worked at SBS, Your Money, Switzer Group and CCTV in Beijing. She specialises in cutting through messy financial jargon so that others don’t make the same investment decisions that she did in her misguided youth. When she’s not writing about the markets you can find her bingeing on long blacks.

To help you get sorted, Finder has launched the ultimate money app. With it you can see all your accounts in one place, track your net wealth, find out your credit score, and now, buy Bitcoin, all in one app. Check it out in your app store or with the link here. Finder is focused on helping Aussies save and grow their money. They provide the financial tools for you to achieve your goals. Whether it’s saving for a holiday, buying your first home or investing for your future, Finder will be by your side and empower you to live a rich life. 

Pre order the book on Booktopia or Amazon now. 

If you want to let Alec or Bryce know what you think of an episode, contact them here

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Always remember, all information contained in this podcast is for education and entertainment purposes only. It is not intended as a substitute for professional financial, legal or tax advice. The hosts of Equity Mates are not financial professionals and are not aware of your personal financial circumstances. Before making any financial decisions you should read the Produce Disclosure Statement (PDS) and, if necessary, consult a licensed financial professional.

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Bryce Leske: [00:00:29] Welcome to get started investing in this podcast, we cover all the basics that you need to start your investing journey. Are you joining us for the very first time or is this the very start of your investing journey? Well, before you dive into this episode, this feed is designed to go from the very beginning. So we strongly recommend you scroll up and start at episode one. However, if you're feeling brave and just want to dive in with us, then don't let us stop you here at Get Started Investing feed. We unpack all the jargon and confusing bits here, 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? [00:01:04][35.5]

Alec Renehan: [00:01:05] I'm very good. Bryce very excited for the final part of our three part series we find where we've been unpacking everything. Personal finance. Yes, I've certainly learnt a lot. We've uncovered a lot about, you know, I'm I about to go home, look in the mirror and just really think about some of my personal finance habits. So I'm excited to have another Soul-Searching moment after this episode. [00:01:32][26.6]

Bryce Leske: [00:01:32] Yeah, it's all going to be nicely, I guess, wrapped up for you at the end of this episode. And you can walk away with a few key things in place to sort of got the investing sorted. Sort your cash flow. So over the three episodes, we've partnered with Finder to talk about all things personal finance and getting your money sorted so that you can start investing, because, of course, there is no point trying to start investing if you don't have the basics sorted. First, Finder is focussed on helping Aussies save and grow their money. They provide the financial tools for you to achieve your goals, whether it's saving for a holiday, buying a first home or investing for your future, finde will be by your side and empower you to live a rich life and to help you get started. Fondas launched the ultimate money app. With it, you can say all your accounts in one place, track your net worth, find out your credit score and you can now buy Bitcoin all in the one app. Check it out just like Ren has in your App Store now. So as Ren said, this is the final episode and we're going to look at some of the best practises when it comes to personal finance and how it can help your investing journey. And we have the absolute pleasure of bringing in a fund expert, Kylie Purcell. Kylie, welcome. [00:02:39][67.4]

Kylie Purcell: [00:02:40] Thanks so much for having me. I'm excited to be here. [00:02:42][2.1]

Bryce Leske: [00:02:43] Yeah, it's we're looking forward to this episode. If if you haven't come across Kylie before, she is the investments editor at Fanda. She has a background in business and finance news and has previously worked at SBS, Your Money, Switz Group and CCTV in Beijing. She specialises in cutting through messy financial jargon so that others don't make the same investing decisions that she did in her misguided years. She's when she's not writing about markets, you can find her bingeing on Long Black's right up Rinzai. [00:03:16][33.4]

Kylie Purcell: [00:03:19] I've changed that growth. [00:03:20][1.3]

Alec Renehan: [00:03:21] All right. [00:03:24][3.6]

Bryce Leske: [00:03:25] That's good. That's a good one. [00:03:29][4.0]

Kylie Purcell: [00:03:30] It's all pretty sure that down a bit. [00:03:34][4.2]

Alec Renehan: [00:03:36] Well, Kylie, we we want to start this interview by, I guess, hearing a little bit about your background so we might get to touch on some of those investing decisions you made in your misguided youth. But let's start let's start at the very start of your investing journey. Can you tell us the story of your first investment? [00:03:54][17.6]

Kylie Purcell: [00:03:54] Yeah, absolutely. Well, it was it was a few years ago now. And I've been writing about the stock market for a bit, and I've been using the CommSec app for a bit just to help draw data for articles and stuff like that. But I haven't got any shares. And so I don't think you needed like five hundred bucks to invest at a minimum. You still kind of do for ASX stocks. But there are other options, though. So, you know, when you're younger, that seems like a lot to potentially lose. But I did eventually bring, you know, bring myself to get the courage to do it. And I ended up doing exactly what you do. And I went on a stock tip from a trader. No, love it. Yeah. It was a you know, I did so much research. And, you know, it's so funny because I I've been writing about stocks and I still went online and started looking at YouTube videos. And and after all my planning and research, I was like, my first stock has to be special. I wanted to be something boring. I want to be like CBA. I don't want them to be like stocks that everyone said you meant to invest. You know, the government with a future to stock it with a lithium stock. And pretty shortly after I bought it, it crashed. I know. I think a pretty classic story. [00:05:16][81.6]

Bryce Leske: [00:05:17] Have you subsequently been making your investment decisions based on YouTube? Have you taken a more appropriate approach? [00:05:22][5.1]

Kylie Purcell: [00:05:24] I'd like to think I learnt my lesson. Well, yeah. I've become a bit more sensible and I'm not talking to you. That being said, that's actually been probably my top topic now. [00:05:38][13.9]

Bryce Leske: [00:05:40] So you held it? [00:05:40][0.5]

Kylie Purcell: [00:05:41] I held it. Crash so badly that I thought, I'm not going to just you know, there's no point cashing this and it's next to zero now. Yes. Subsequently, it's it's boomed with all the lithium stocks doing really well. [00:05:54][12.4]

Bryce Leske: [00:05:54] Well, Alex, first investment crashed so hard that it's now not enough in there to actually afford brokerage houses. [00:06:01][7.5]

Alec Renehan: [00:06:05] And it's not in my account for a couple of years. And I couldn't afford the brokerage on it. But thankfully, my company cleaned up its share register and bought me out. And I think why would all of six Dollars amazing. Kylie, do [00:06:21][16.4]

Bryce Leske: [00:06:21] you have an investing philosophy? [00:06:23][1.6]

Kylie Purcell: [00:06:24] Yeah, I'd like to say buy low. Sell high. That's about it. I'm not I don't really have a philosophy exactly. But I would say that it's best to take a holistic approach to investing. You always get the big picture in mind, invest for the long run and incorporate your investment strategy into your overall financial strategy. So, you know, it's about saving as much as investing. It's about planning and goal setting. So it shouldn't be considered a separate a separate part of your life. It's it's a holistic, holistic view, definitely. [00:07:00][36.0]

Alec Renehan: [00:07:01] I think that's a key thing that we're taking away in this three part series, that investing shouldn't be seen as this separate bucket. It's you know, it's part of your overall, like, money journey. And it's just one of many good money habits. And another critical one is saving, obviously. And in many ways, getting your savings habits right is a precursor to supercharging your investing. But a lot of people in the Equity Mates community are in that position where they're, you know, this they're saving for an emergency fund. They might be saving for a house, but they're also hearing Bryce dulcet tones and slowly being convinced that they want to start investing when when thinking about that choice between investing and saving. What are some of the factors that you would consider? [00:07:50][49.1]

Kylie Purcell: [00:07:51] Really, these two things should be working together for you. You shouldn't be either saving or investing separately. You should be doing both. The first thing you should think about is do I have enough savings? Do I have enough cash in my savings account as a high interest savings account to tide you over for a few months without work if something were to happen. And then when you're trying to decide how much you should allocate to investing in important factors are really timing. You know, when will I need to access the cash that I'm saving or investing? How long can I keep that money locked away for? And what happens if I need to access it sooner? And then you need to think about your goals. What are you saving for? When do you need that money? Do you need that money for a deposit in a year or less? Then probably the best place for that money is in your savings account because you don't want to invest your money into the stock market and then watch that money go down or lose the value of your portfolio over maybe twelve months and then you'll need to withdraw it for a deposit. And and how risky is investment versus savings? Those are kind of the main factors to think about, really. If you're trying to decide what should I do with my cash, basically, I actually think of savings as a type of investment anyway. It's just a very, very low risk savings. That's if you've got it in a high interest savings account. [00:09:10][79.0]

Bryce Leske: [00:09:11] Well, good Segway because it's find to do a good job, but at least helping people find high interest savings accounts. But I actually went to open a open one for the business the other day and for the business savings account, they offered a rate of a rosy rate of zero point zero one per cent [00:09:29][18.9]

Kylie Purcell: [00:09:32] like, are you kidding me? [00:09:33][1.1]

Bryce Leske: [00:09:34] So for those for those that have just joined the Get Started Investing feed community and I'm hearing a lot about interest rates and and inflation and looking for a high interest rate and and comparing that to what you can get in the stock market, why does any interest rate matter for savings and what's the implications of everything being so low at the moment? [00:09:59][24.8]

Kylie Purcell: [00:10:00] Yeah, it matters now because you can't just stick your money into a savings account and expect that you're getting any kind of return or that it's working for you with the cash rate, the official cash rate being at zero point one percent at a record low, but also means that savings accounts rates are really low. So, you know, it's not like the good old days of the past when you used to be able to put your money into a savings account and you'd expect to get a six percent return on. Or maybe a term deposit, that's no longer the case at all. So you really need to do your homework and and find that find the savings account that will work for you. That is at least beating the rate of inflation. You know, if your savings account isn't beating the rate of inflation, that means it's actually going backwards. So your cash actually becomes less valuable over time. So that's definitely not an investment that's slightly better than sticking cash under your bed. [00:10:55][55.4]

Alec Renehan: [00:10:56] Yeah, we talk about find a high interest savings account, does find to have like a threshold where they say this is high interest. Like is is like is like two and a half percent now considered high interest or is there no way that's high interest, just as high as possible? Yeah, that's [00:11:13][17.1]

Kylie Purcell: [00:11:14] a really good question. My colleague Alison, who looks after savings accounts, would be able to help you out on that one a little more than May. High interest would definitely be two point two percent. Now, you'd be happy if you were getting over one percent now from your savings account. [00:11:29][15.0]

Alec Renehan: [00:11:29] It's just it's unbelievable. But the [00:11:31][1.6]

Bryce Leske: [00:11:31] inflation rate is higher than [00:11:32][0.8]

Kylie Purcell: [00:11:32] that, right? Inflation is around one point one, I think, at the moment. So if you manage to get even that, then then you're doing pretty well. But the idea is definitely to to get above that inflation rate as possible. So definitely I mean, it's about doing your homework and comparing and and find it does have comparison tables that you can use to find those high interest savings numbers. So definitely check this out. That's one way to do it. [00:11:57][25.5]

Alec Renehan: [00:11:58] Well, clearly, one of the things that I have decided to do in after recording this three part series and doing research for this three part series is to separate out my savings and transaction accounts. I currently have them with the same bank, making it too easy to transfer between the two. So I will be checking out find is comparison tool and finding finding a good, hopefully high interest savings account outside my existing bank. [00:12:25][27.2]

Kylie Purcell: [00:12:25] Yeah, that's a great idea to have to have those two separate and just to always have cash going from your transaction account or straight from your employer actually straight into your savings account so that you don't touch it. And yeah, it doesn't have to be the same account that you use to transact. [00:12:41][15.2]

Alec Renehan: [00:12:41] Yeah. Yeah. Now one one question. We also get a lot here at Equity Mates is like, when's a good time to start investing or how do I know when I'm ready to start investing? Obviously everyone's personal financial journey is different, but do you think there's some sort of like general rules of thumb where people know they're ready to stop just saving and start investing? [00:13:06][24.6]

Kylie Purcell: [00:13:07] I like to say that the best time to start investing is always just now, because that's because time is really the most important factor when it comes to investing. Obviously, you have to take your life circumstances into account. You know, have you paid off high interest debt, high interest debt, like, for example, credit card debt? If you're paying 20 percent interest on your credit card, it's unlikely you're going to beat that by investing it. So just pay that off first. You obviously have to be over 18 to start investing unless you've got your parents helping you out with a minor account. But, you know, these days you can invest really small amounts. You don't need to save up a huge amount and start investing. You can invest in micro investment apps like Rise or Spaceship. And that's kind of a good way just to get you started and to help you get the feel of the stock market. So I really do think you can you can start investing, start investing. [00:14:03][56.7]

Bryce Leske: [00:14:04] Now, we spoke in the last episode briefly about emergency funds while we're still on the cash savings side of things with all of the research and reporting that you've done on the investing side and obviously with the colleagues you've got there speaking about interest rates and cash accounts as well. What's your opinion on, I guess, the need for an emergency fund and rule of thumb for how much you actually need in there? And then how should we be thinking about it with rates so low? Like, I look at my emergency fund and it burns me to see it sitting there in cash. How can we maximise that? [00:14:46][41.9]

Kylie Purcell: [00:14:46] So an emergency fund is necessary. Everyone should have an emergency fund, emergency fund. It's cash that you can access very quickly. In the case of emergency, for example, you've lost your job or the family medical emergency. Your house burns down and ideally you'd want to have the kind of general rule of thumb, at least, is to have at least three months, but ideally six months. And that savings emergency fund or any other savings goals that you have outside of that should sit separately to your emergency fund. So, you know, if you're saving up for a holiday, that's that's not something that's included in the. Emergency fund, that's totally separate, but it does come natural circumstances as well. So, you know, if you're quite young and you're living at home and and you've got a lot of support from your family, maybe three months sitting in your emergency fund is fine. I'm in my 30s, so I like to have at least six months. That's just a personal preference. So it does come down to your circumstances? Definitely. Um, what an emergency fund is not is, for example, a stock market crash or a stock market opportunity. You'd want to move your money into the stock market to take advantage of the situation and should absolutely just be a life emergency if you if you really need it, how to [00:16:16][89.3]

Bryce Leske: [00:16:16] how to use and how can we maximise it. I know we've spoken about I know we've spoken about high interest accounts, but to me, that's really the only way if we're talking about, like, risk free. Yeah, but how do you view it? [00:16:29][12.8]

Kylie Purcell: [00:16:29] Yeah, absolutely. An emergency fund. You should have your money sitting in a totally risk risk free account. So that would be a high interest savings account or a term deposit, although term deposit rates are a crazy low at the moment. So probably a high interest account is the best place for it. You don't want your money exposed to any risk. So really, the best way to maximise your emergency fund is to compare your high interest savings account options. And like we spoke before as well, the idea is to make the rate of inflation. You don't want that money going backwards either, and you certainly don't want it invested into any kind of high risk account or into the stock market, because if you need to cash that money in for an emergency, you know, and the stock market crashes, you might find that you don't have enough money to cover what you need it to cover. [00:17:21][51.9]

Alec Renehan: [00:17:22] Now, I must confess that when I was younger, I did have a growing emergency fund that may have been tapped into to cash into the stock market a little bit. But I promise you, clearly, I won't do that again. But I guess it does beg the question. Know, we talk about an emergency fund, Scott, Peiping in the Barefoot Investor talks about having an emergency fund in the context of his house burning down. Clearly an emergency. But I guess for a lot of people, they may be wondering what does constitute an emergency, like when, um, when can I access it? And I guess for a lot of Australians, especially young Australians, is the opportunity to buy a house and emergency [00:18:09][47.7]

Kylie Purcell: [00:18:10] the opportunity to buy a house. And I wouldn't consider that an emergency. That's definitely an opportunity similar to investing your money into the stock market. And that should that should be seen as a separate investment goal, but not an investment. I'm confused about that to be seen as a separate savings goal. So if you're saving for a deposit and you want to buy a house, that's one of your one of your money goals. It's certainly not an emergency. And an emergency fund should be separate to that. An emergency would be if you bought the house and it burns down like Scott. [00:18:41][30.3]

Bryce Leske: [00:18:44] Well, speaking of setting goals, we are going to jump in to the investment side of things and chatting about goals and risk tolerance and then also asset allocation. But before we do, we'll just take a quick break. So, Kylie, let's move to goals, planning and and actually matching investments to both of those so we often talk about investing goals, but it can be a bit of a confusing topic, I guess, for people who've just started that journey, because often when you say what's your investing goal, everyone just says, well, obviously it's just to make money. Right, and be rich. So no doubt that is everyone's goal. But how do you think about setting investing goals? [00:19:23][39.1]

Kylie Purcell: [00:19:23] Yeah. So your investment goals should really be helping you to achieve your life goals. And they should be aligned with your other financial goals, such as saving for a house deposit or even saving for a holiday. So some of the questions you could ask yourself, what do you plan to be doing in the next five, 10 or 30 years? And I know that's a really hard question to answer when you're when you're young and you don't know what you want to be doing in 10 years time, but those goals can change as well. They're not they're not fixed. It's just a good idea to have a general idea. And then, of course, what age do you want to retire? So your investment goals would really be helping you to achieve those things. And really, I'd say the key is to check back with you. So, for example, if your plan was to retire by 50 to make that happen, you'd need approximately how much money and you'd need to earn X amount over the next 20 to 30 years and work that out. You need to save X amount over that time and to boost those funds your age, your funds to X percent. So your investment goals would be helping you to achieve those those long term goals that you have in mind as well as your savings goals. [00:20:30][66.2]

Alec Renehan: [00:20:30] So I think if the general goal is to get rich, this specific goal for a lot of young Australians is to own a home. If that was I was about to say if that was Bryce and my goal. But let's be honest, it is Bryce and my goal at some point. So how would how would you match your savings and investments with that goal? [00:20:53][22.9]

Kylie Purcell: [00:20:54] Yeah, absolutely. Everyone wants to own a home. So if you if your goal is to own a home, you'd need to incorporate that as part of your overall investment strategy and your goal setting. Like, for example, say you want to buy property in the next two years. So in mind, you need to ensure that you're not investing too much of your money into riskier investments, like you wouldn't want to have the money that you're trying to save for your deposit sitting in the stock market. You wouldn't want to even have it invested in an ETF necessarily. You'd want that to be growing in your cash account, into your savings account. So that's definitely something to consider. And then outside of the deposit that you're trying to save for your house, you could put money into the stock market after you've paid off your bills and your debt, of course. [00:21:37][42.9]

Bryce Leske: [00:21:37] So basically, if I've bought the house and prior to that, my focus was obviously cash in into the account and then invest. If I have anything left over, I then want to turn my attention to, say, retirement, or maybe it's fi, you know, that independence retire early. How would I think about, like, my investments from if that is my goal [00:21:59][22.1]

Kylie Purcell: [00:22:00] as far as your goal and you've already bought a house, you're doing pretty well. Yeah, very well. The fire goal is that, as some people will know, certainly by your 30s or 40s, I actually like the Feigel. I think it's a it's a really good way to start setting some goals, even if you're not as aggressive as that. But I like the fact that it uses the four percent rule where it assumes that you can withdraw four percent of your retirement portfolio each year to live a pretty comfortable life. I think that's a great way to look at it. Yeah, well, basically, if you've invested into like a relatively safe investment portfolio and would be returning an average of, say, seven percent, that's like a stock market average, then if you subtract as well, you also have to remember that remember inflation, if you're subtracting three percent for inflation, that gets you to four percent. So if you're planning to retire, so by your 30s or 40s, you need to think about how much money you need to have grown by that time. [00:22:57][57.3]

Bryce Leske: [00:22:58] The one the one thing that I find interesting about fire is setting a goal of retiring in your 30s or 40s. And then it's like, OK, I'm going to live off four percent. But how do you like is that setting the goal that you're going to have kids and your wife's on the journey or your partner's on the journey with you? And I'm going to be paying off a mortgage as well. Like it's it's a massive goal to try and set, I guess. But I agree with your colleague that the principles of it and setting that as a goal is what I think I like about the fine movement. I'm not with [00:23:31][32.1]

Kylie Purcell: [00:23:32] you. [00:23:32][0.0]

Alec Renehan: [00:23:33] You you define movement. You say like I don't want to live off rice and beans in my 20s and 30s. That's your that's your common refrain. [00:23:43][10.1]

Bryce Leske: [00:23:43] I would never I would never approach it as aggressively as other people in the community, but each to their own. [00:23:50][6.1]

Kylie Purcell: [00:23:50] I can I completely agree. [00:23:51][1.1]

Bryce Leske: [00:23:52] But I think the principle is the most important. Part, which is setting that goal to build wealth over the long term so that you can eventually, whatever time that comes, be financially independent. [00:24:03][10.5]

Kylie Purcell: [00:24:03] Yeah, definitely, yeah. [00:24:04][1.0]

Alec Renehan: [00:24:05] We had a chat to someone in the U.K., Andy Hart, a little while ago. And apparently fire is just so much bigger over there than it is here. I'm like, he made the point that if you if you believe in fire or you want to live a luxurious twenty's like Bryce has regardless, like the the lessons inherent in the movement around really understanding your money and being very deliberate about your money, decisions are broadly applicable. [00:24:31][26.3]

Kylie Purcell: [00:24:32] Yeah, but it is I mean, it's very aggressive. And I agree I'm not going to live quite so minimally required by the movement. But I actually worked as an example just recently for a video idea of how much you made and how much you need to save. So like, for example, if you're 20 years old now and you want to retire at 30, it's like the dream. And then you think about your minimum retirement living costs would be, say, 40 per year. And that's that's not living luxuriously. You're not living the high life as a retiree. At that point, you'd need to have saved about a million dollars by then at four percent of one million 40. And you'd need to have saved seventy five thousand per year for 10 years, compounded annually at seven per cent. That would get you one million dollars. So even if you earned one hundred K at that time as a 20 year old, you'd be doing pretty damn well. That would still leave you twenty five thousand dollars to live off in the lead up. [00:25:30][58.5]

Alec Renehan: [00:25:31] Well, yeah, and that's one hundred Tik-tok as well. [00:25:33][2.2]

Kylie Purcell: [00:25:34] Yeah. Yeah, exactly. Exactly. So it's a massive challenge, but it's that being said, I agree. It's the principle of it. So if you think of it in that way, you might think, no, that's not possible for me. What is possible for me from that point? [00:25:48][14.4]

Bryce Leske: [00:25:49] Yeah, even 40 grand a year when you're 30, I mean, you're probably paying 300 bucks a week in rent in Sydney. So that's 15 grand. Doesn't leave you a whole lot. [00:25:59][9.9]

Kylie Purcell: [00:25:59] So I honestly, I think it assumes that you need to be sitting with your parents friends, and I don't think you could do it and be affording that the rent. [00:26:11][11.6]

Alec Renehan: [00:26:11] Yeah. So Bryce and I have grown up as investors in pretty much straight bull markets. Love to say yes. And I think for us and for a lot of people in our generation is probably risk management and understanding your personal risk tolerance is probably under discussed. So what should we know about risk? How should we think about risk and how should we factor it into our investing decisions? [00:26:43][31.7]

Kylie Purcell: [00:26:44] It's a really important part of investing and saving. You could generally split into three kind of main categories when you think about risk, and that is conservative, moderate or aggressive. Those are risk profiles and they're used by super funds to decide what type of super fund you should be investing into. So to understand what your risk profile is, you sort of need to think about how old are you, how long before you plan to retire, how long can you keep your money invested for? And can you lose the money? So when you're in your 20s or 30s or even 40s, you'd be thinking about your investment choices as being growth or or aggressive types of assets. And that would be like stock market assets. And then if you're nearing retirement, maybe you're in your 60s or maybe you just plan to retire pretty soon, then you'd be thinking about investing into more conservative or defensive assets. So those kind of assets, for example, let's say conservative, would be like bonds and then and cash as well. And then aggressive assets would be more like stock market assets, like stocks or even an ETF. And the reason that sort of divided into conservative versus growth and why it's so important to understand your risk profile is because if you're investing into the stock market, either into individual stocks, which is quite high risk, or into an ETF which is still relatively considered high risk or it's aggressive, at least then you'd need to know that your money is invested for at least a few years, if not ten years or more. And that's because the stock market goes up and down all the time, but generally a trend upwards. So, you know, if you'd invested into a stock market ETF just prior to the GFC, you would have seen the value of your portfolio go down. That would have been terrible for somebody who was planning to retire in the next year or so or the next few years, but. If you were able to keep your money invested for 10 years or more, then you would have seen the value of your portfolio rise over time. So even even though the losses, even though you see volatility year on year, basically, then over the long run, you'd expect it's a lower chance of losing your the wealth that's in your portfolio. Yeah. Yeah. So it's about volatility. Definitely. [00:29:20][156.7]

Bryce Leske: [00:29:21] So we've spoken about goals and also understanding your risk profile. So I guess it is now time to actually start building out a portfolio. Everyone would have heard asset allocation or diversification. But are there any general lessons or rule of thumb from your point of view that we should consider when making asset allocation decisions? [00:29:44][23.0]

Kylie Purcell: [00:29:45] Yeah, definitely when deciding what type of assets to invest into. Like I said before, it comes down to your risk profile. So, for example, for equities, definitely about risk management, equities being stocks and even ETFs. If you're investing in individual stocks, only invest what you can afford to lose. When I invested in that terrible Lithium's stock, based on the clip from the YouTube, I knew I knew that I could afford to lose that money if you're investing in a diversified portfolio. So 20 stocks or more or an ETF, then don't expect that you'll need to cash it in for another 10 years. So don't put your house deposit into an ETF if you plan on cashing that in within the next couple of years, which also shows that you should consider diversifying with higher and lower risk stocks or dividend payers and growth stocks, that you get the best of both worlds because there are higher risk and lower risk types of stocks and assets in the stock market when it comes to property. I'd say, for example, I don't know if we're considering that as an asset. Yeah, yeah, yeah. I'd say don't overextend yourself. Always have a plan should the worst occur. For example, if your job disappears, if interest rates go up or if there's a medical emergency, will you be able to continue to pay your mortgage because it's a leveraged asset? Unless you can afford to pay the entire amount out, which I've not met or I don't know anyone that's been able to do that, you have to get a loan. You're obliged to continue paying that no matter what happens in your life. So it can be quite risky. The bank might lend you more than what you can actually afford to pay off. So you really need to do your homework. And then there are other assets as well. For example, I've got cryptocurrency is just going crazy at the moment. It's everyone's favourite asset, I think. Yeah. [00:31:43][118.3]

Alec Renehan: [00:31:44] Well, let's let's touch on crypto for a moment, because the finde up amongst a lot of personal finance, I guess, features checking your credit score, stuff like that, also allows you to buy crypto. So I guess I guess why the decision to include crypto on the platform? And how do you think about including crypto as part of a portfolio? [00:32:06][22.6]

Kylie Purcell: [00:32:07] Yeah, look, it's it's no secret that crypto has been pretty volatile in the past year and in fact, since its inception. Well, Bitcoin anyway. So if you are going to invest and crypto currencies definitely have a plan, do your research and understand that it can swing wildly in either direction. You know, there are many people that are betting long on Bitcoin, but just as just as many other people will tell you that it's going to crash. So it is considered one of the riskier types of investments. But that being said, it has performed phenomenally well. Not all cryptocurrency, sorry, I'm speaking broadly about Bitcoin and a theory and as well as other cryptocurrency. There's so many digital assets at the moment and you really need to be really careful. It's similar to stocks. I think that's a really good way to think of it. You know, you've got really high risk speculative penny stocks and then you've got your blue chip type stocks. So I guess in the cryptocurrency world, you'd think of Bitcoin and Ethereum as your kind of blue chips. I mean, a lot of people are bullish about the future of these two cryptocurrency and other cryptocurrency. So so like I just say, do your research and understand understand the risks. And, you know, you can start by investing a small amount similar with a micro investment EPS, for example. Yeah. On the calendar app, we do allow you to buy or sell Bitcoin or a theory, and you can start with as little as twenty five dollars. So if you want to sort of start to get a feel for how these cryptocurrency work. Or if you just want to add a little bit to your portfolio, I've added a bit to mine, not a lot. So I definitely you don't put your life savings into it? Certainly not. Don't touch it. Don't touch your emergency fund to jump at the opportunity [00:34:11][124.1]

Bryce Leske: [00:34:12] to do it with the emergency fund, who I was very bullish on at the start of the year, made the bold prediction that Bitcoin would hit ninety three thousand US by the end of the year. Subsequently, it's fallen to what I think about 30 something. [00:34:23][10.8]

Alec Renehan: [00:34:24] It was it was in the high 20s yesterday, high 20s, 30s now. Yeah. [00:34:28][3.9]

Bryce Leske: [00:34:28] So I'd like to go to hit the ninety three. But anyway, [00:34:32][3.7]

Kylie Purcell: [00:34:34] that's not an emergency opportunity [00:34:35][1.1]

Bryce Leske: [00:34:38] cyclically to close out the conversation. A lot of the time superannuation is overlooked by a lot of people when it comes to thinking about your title, I guess investing goals and it's just sort of pushed to the side and people don't consider it as actually an investment. So how do you think about superannuation? And I guess more specifically, the questions we get around, how do you think about adding more to superannuation versus investing outside of super? [00:35:10][31.8]

Kylie Purcell: [00:35:11] Yeah, it's funny. Some people don't realise that they actually are already investing in their already invested in the stock market. That's super super is an investment. Definitely. And everyone should be considering adding extra to the super account salary. Sacrificing is something everyone should consider doing. Salary sacrifice, for example. The reason being that you get the tax benefits, you're only taxed at 15 percent and you can salary sacrifice up to twenty five a year. So that salary sacrificing is where it comes directly from your employer into your super account. So you're not taxed at the rate that you normally would be unless you're adding a small amount and you're not getting taxed more than 15 percent anyway. It's a really great idea. The other problem is that you're investing in a portfolio that's managed by professionals. Obviously, you have to choose the right super fund. There are super funds that perform very, very well and there are super funds that might charge higher fees and not perform as well as we saw during the royal commission. And it also means that you're not you're not obviously able to touch your super. So it takes the anxiety out of investing. Really, if you think of super, it's an investment portfolio that's being managed by professionals. That being said, the downside is that you can't touch it. The downside is that you can't access it if you need it. So you can't think of it as an emergency fund. You can't happen to it. If you want to jump on an opportunity or you want to put down a deposit for a home. That being said, there is the first time since I was 17. So that's a good idea to be planning on doing that. So there are pros and cons definitely to just investing more into super funds versus investing out. Um, my partner, he's a firm believer that everyone should just be investing in this fund. I'm a bit more bullish on investing outside. I do go personally. So I invest into individual stocks. I sell a great sacrifice to the max investments in individual stocks, which are high risk. And then I invest a large chunk into a safer. [00:37:23][132.6]

Bryce Leske: [00:37:26] Yeah, I guess it's each to their own when it comes to everything that we've spoken about. But there's no doubt that there are plenty of ways to maximise. I guess your investment opportunity and superannuation is certainly one of those those ways to do so. [00:37:41][15.1]

Kylie Purcell: [00:37:42] Definitely, definitely consider as one type of investment option for sure. [00:37:46][3.9]

Bryce Leske: [00:37:46] Well, I think the first thing is recognise that it is an investment and you can do something about it. And, you know, even if you're not invested in the stock market outside of that, it's important to remember that you are investing in the stock market through superannuation. [00:37:59][12.1]

Kylie Purcell: [00:38:00] Yeah, exactly. Exactly. [00:38:01][1.0]

Bryce Leske: [00:38:02] Secondly, that that brings us to the end of today's episode and also the end of the series. We find just to kind of recap what we've spoken about over the last three episodes, we spoke with Graham Cooke about sorting out your debt and all things personal finance when it came to the broader picture here in Australia. We then had a conversation around getting your money right, making sure that you're sorting out your cash flow and making sure that you're having a look at maximising your income, reducing your expenditures and getting ahead that way and also tracking what you are doing in terms of building wealth and tracking expenses. And then we've just closed out with a discussion around maximising your investment once you or in your investment opportunities, once you have sorted all of your money. So it's been a great. Three episodes, Ren has certainly uncovered a lot about himself. I have Kylie, if we were just to finish with one question for you, and we did the same for Graham, what would be your number one personal finance tip? [00:39:08][66.5]

Kylie Purcell: [00:39:09] Honestly, I've already said it in the episode. I'd say the time to investors as soon as possible. You know, time is really the most important thing when it comes to investing. We did an article recently looking at what you could do with your 1080 tax cut and what these options would lead to over 20 years if you'd invested into the stock market. $1080 each year we worked out that you'd have 70 I think it was seventy six thousand dollars, fifty five k interest earned just by investing into the stock market, taking a stock market average and that's twenty one K saved if you kept in a high interest savings account you'd have twenty three thousand saved in total. Just so these small amounts that you can invest each year, but it's just a small amount. That's ninety nine dollars a month turned into seventy six thousand dollars really does add up but is about the time, it is about how, how long you've got your money invested for. [00:40:11][61.6]

Bryce Leske: [00:40:12] Well great way to close out. I think for many people in the Get Started Investing feed community, they may not have taken the first step, but if if anything I hope that encourages them to just get started and get stuck in let compounding do its work. Well, if you feel like that, you want to take more control of your money and actually know where it is all going, it might be worth checking out. Find this app. You can sign up with finder.com.au/equitymates. It is the ultimate money app now featuring Bitcoin trading as well. You can effortlessly manage your money in the palm of your hand, see all of your accounts in one place, buy bitcoin and track your credit scores all in one app. So check it out in the App Store now. But as I said, that does bring us to the end of today's episode and to the end of today, the three part series on sorting your money with Fanda. So, Kylie, thank you very much for your time. It's been an absolute pleasure chatting as always. And we would encourage anyone listening to get on that that train of sorting money and then start investing. [00:41:17][65.2]

Kylie Purcell: [00:41:18] Thanks so much for having me, guys. [00:41:18][0.0]

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