Tips & Tricks: Saving To Invest

Bryce: [00:01:28] Equity Mates Episode nine, the podcast made by Nobodies for Everybody, where we break down the world of investing from beginning to dividend to make it more investable for you guys. Welcome with Ren. Hi, everyone, buddy. And we've got a pretty jam packed show for you guys today. We're going to kick off with our investment portfolio, our hypothetical investment portfolio that we haven't updated you on in a while. So we'll kick off with that and then go into some news, as always, straight into Stock of the week and then a bit of a basics, one or one to do with ways that you can start. Good habits for investing. Yeah. So what do you reckon, Ren? We'll kick it off with the portfolio. [00:02:18][49.5]

Alec: [00:02:19] Yeah, we've been pretty quiet about the portfolio of late, but you know, we've been preaching on the show that don't look at your short term results, invest with a long time horizon. But, you know, if things are going well, it's always good to talk about it, I guess. [00:02:34][15.7]

Bryce: [00:02:35] Yeah, exactly. It's always fun looking. [00:02:36][1.4]

Alec: [00:02:37] Yeah. I mean it's it's sometimes fun looking at your investment results. Yeah. [00:02:42][4.7]

Bryce: [00:02:42] They're in a very fortunate position in that all three stocks that we've chosen, the Stock of the Week have performed reasonably well since we did our purchase. Yeah, they're all they're all up, which is an unusual thing to happen. [00:02:58][15.8]

Alec: [00:02:59] Yeah. So why don't we just quickly go over what we've done is our Stock of the week. So far we've had we've had three Gateway Lifestyle Group, then a listed investment company and Capital Global Opportunities Fund and then Australian Agricultural Company. And then between the three of them we're up 11 percent [00:03:22][22.8]

Bryce: [00:03:22] and that Dollars. [00:03:23][0.7]

Alec: [00:03:24] So three hundred and twenty seven dollars and forty five cents of a cost basis or how much we invested to start with of about three grand. [00:03:33][9.0]

Bryce: [00:03:35] Nice. I'm pretty happy with that. [00:03:36][1.4]

Alec: [00:03:36] Yeah, very happy with that. So everything if you want to follow our Stock of the Week, jump on our website, Equity Mates dot com. We've got a live tracker up there. You can say all of our investments and how each of them are going. So we're really putting ourselves out there. And fingers crossed they don't take look, as we as we always say, we you know, we're not expert stock pickers by any stretch of the imagination. We're just doing this to show what consistent, disciplined investing can lead to. You know, if you're just investing a little bit every now and then, over time, the results will accumulate. And we just want to show that and have a bit of fun with some stock picks while we're doing it. [00:04:16][39.4]

Bryce: [00:04:16] Yeah, exactly. Not. All right. Moving on. News, there's a lot been going on this week, we've had, you know, the budget, it's been the end of reporting season in the US. We've had the French election. Yeah. So, yeah, it's been pretty jam packed and a lot of stuff that we could talk about. But Ren you want to kick off with something? Yeah. [00:04:46][29.4]

Alec: [00:04:46] So, look, we'll always try and keep the news pretty investment focussed on this podcast and there's no bigger time in the investing calendar than the Berkshire Hathaway annual meeting. Now, this has been nicknamed Woodstock for Capitalists. And what it is is Warren Buffett's investment company, Berkshire Hathaway. Every year has a weekend in Omaha, Nebraska, where Warren Buffett speaks. And they all the companies that Berkshire Hathaway owns, you know, have stands there. And it's like to be a festival of capitalism, as I like to say. [00:05:22][35.7]

Bryce: [00:05:23] What did you take out of this one? [00:05:24][1.0]

Alec: [00:05:25] So my big takeaway was Warren really pushing passive investment options. Now, we've spoken a little bit about passive investing on this podcast. That's when you sort of buy an index fund or an exchange traded fund, which is essentially you buy into a fund that holds a number of shares and doesn't buy and sell those shares. So, for example, you could you could buy into the ASX 200, which is just the 200 biggest companies listed in Australia. And regardless of how those companies are going, you just the fund just holds those shares. And so Warren called out the founder of a company that established a lot of passive funds. It's called Vanguard. He spent a lot of time ripping on the fee structure of hedge fund managers. And he had a quote that, unlike dentists and plumbers, hedge fund managers add no value. [00:06:19][54.2]

Bryce: [00:06:20] So he's been hiding them for a long time. [00:06:22][2.7]

Alec: [00:06:23] And he didn't mince words at all. He's he's like passive investing for a while. And he said that when he died, he wanted 90 percent of the money he left for his wife to be invested in a passive fund. You know, that's that's something that he's really pushing as he gets into his later years in his life. And I mean, it's something that people who are new to the market, it's probably advice worth listening to if you want to dip your toe in passive investing is always a good way to go about it. [00:06:50][26.9]

Bryce: [00:06:50] Yeah, just for our listeners, in terms of when he's talking about low fees, he's talking about fees that are paid to the hedge fund managers, as well as frictional or transactional costings and fees that are involved in that. And one of the beauties of passive investing is that in leaving your money in the market, you avoid having to pay continuous brokerage fees for pulling out your money and putting your money back in. And over years and years, brokerage can add up to quite a significant amount. So the least amount of trades you can do in some instances, the better off you will be. [00:07:27][36.9]

Alec: [00:07:28] Yeah. Right. You have any any takeaways from the from it? [00:07:33][4.9]

Bryce: [00:07:33] No, I mean, I agree with all of that. I have, you know, just as yourself love Buffet and starting to read a lot about this passive investing. And because it's starting to come a big trend at the moment, almost like quinoa or kale. And it's interesting to see how hedge funds are now starting to react to the idea of passive investing because people are starting to pull large sums of money out of hedge funds and traditional forms of investing in the market and putting them into companies such as Vanguard. And of course, that's not going to make the fund managers very happy. So, yeah, I think it's a fantastic way of investing. [00:08:14][40.2]

Alec: [00:08:14] Yeah, definitely. All right. Now onto our next piece of news. The budget just got handed [00:08:20][5.9]

Bryce: [00:08:20] down this year has been obviously a mixed reaction as it is every year. A few of the big takeaways for ourselves and for you guys is that in this year's budget, they have created some measures to support first home buyers, because obviously at the moment it's a very political point with housing affordability in Melbourne and Sydney out of the reach of many. So one of the main things that they have done is allow up to fifteen thousand dollars a year in your superannuation. So essentially that means that you can sacrifice pre-tax up to fifteen thousand dollars of your annual income to a total of thirty thousand into a Ingeus superannuation account, which would give you a lower tax rate than if you were to save it after tax. Yeah, I don't know. What do you think about this? I think it's a negative sum game because I think that it's a good way to encourage people to put. Anyway, and it does give tax benefits, but I also think that it's not really answering the immediate or the most pressing issue, which is supply in the major cities. [00:09:36][75.5]

Alec: [00:09:36] Yeah, definitely. Look, I have a couple of thoughts on the first one is that you're right, it doesn't it doesn't address supply. But what's more, giving first home buyers these tax advantages is only going to incrementally drive up the price that first home buyers are able to pay. So, look, that in itself doesn't address house prices per say, but in some ways it levels the playing field for first home buyers. Yeah, the other interesting thing to think about is that the way people Sugiura is invested when they're young, which most first home buyers are, is that it's invested quite aggressively. So because we're young and we've got a long time horizon, there's a much higher tolerance for risk. And so it's an interesting dilemma because as a super fund, who's investing for someone who's in their early 30s, you are able to take risks because, you know, there's a lot of time to recuperate that if you lose a bit of capital and there's a lot of upside there. But as a first home buyer and when you're talking about someone's deposit on the house, your focus should really be on capital preservation, which is investing to not lose the money that you have. [00:10:53][76.7]

Bryce: [00:10:54] Yeah, you don't want to be saving 15000 of your income up to and then the market crashes in over 60 percent of it. [00:11:01][7.4]

Alec: [00:11:01] Yeah, exactly. So it's an overstated it's an interesting dilemma. And there are some obvious fixes for that. Funds can offer a separate investment option for your house deposit fund. Look, it's just something to be mindful of as young people who are looking to buy a first house and looking to take advantage of this budget measure, just look at how your super fund invests and look at the risk profile and just, you know, can consider that when you're doing it. [00:11:31][30.0]

Bryce: [00:11:32] Another thing that was interesting was that the government have introduced restrictions on foreign investors, which has also been driving the price up, a lot of money from overseas coming in and purchasing houses. And in some instances, they're purchasing property for investment and then they're not even living in it. They're just renting sitting money or even renting it. So the government have come in and said that we will tax on houses that are left empty. I think it's a five thousand dollar tax. Now, personally, I think I think this is nowhere near enough for it to even make us a solid impact. Five thousand dollars for someone who's bought a property in Vaucluse for 12 million is pocket change. Yeah. And and at the end of the day, you're going to get that five thousand dollars back on capital growth. More like most likely. I, I don't think it's enough to deter people from buying houses and sitting at I think it could have been a lot harsher or they could have done something else to discourage. I don't think it's a continuous tax. I think it's just a one off payment. If it was a continuous year on year, then that I think would have been a bit better. [00:12:43][70.9]

Alec: [00:12:43] But no, I think it is I think it is continuous. [00:12:45][2.1]

Bryce: [00:12:47] It is year on year. [00:12:47][0.7]

Alec: [00:12:48] Yeah. It wouldn't it wouldn't really make sense if it wasn't year on year. Yeah. Yeah. I actually I should, I know we should, we should probably should have done more research. But look I, I take your point that it's not a whole lot. But the important thing is for some foreign investors, it might change the incentives because, you know, if it's going to cost, say, five thousand dollars a year to pay this fine, essentially, or it will cost a couple of grand to just engage property manager and let them deal with renting it and all that, then that might that incentive structure might change and they might go to the effort and get the property manager in to do it, whereas before it wasn't worth the effort. But look, I, I think that any any move in the direction of insuring that property investors still allowing people into the homes that they own to rent them is a good thing. And hopefully it's the start of a real concerted push by the government. [00:13:53][65.7]

Bryce: [00:13:54] Definitely. OK, cool. So a bit of a fun news story to finish it off is to do with Apple. And we've mentioned before that they have a huge amount of cash sitting offshore. Two hundred and twenty billion dollars of cash that they are waiting to repatriate back into the United States, which Donald Trump's hopes that he can achieve. And Ren, I know you enjoy talking about this. So what's what's the story here? [00:14:20][26.0]

Alec: [00:14:20] So Donald Trump in. His campaign was constantly talking about this money that a lot of companies have parked overseas. Apple is leading the charge with a quarter of a trillion dollars parked overseas. And essentially the reason that it's parked overseas is because American multinationals get taxed on the overseas profits when they bring that money back into America. And the corporate tax rate in America is something like 35 percent. So for Apple, it doesn't make sense to bring that money back into America and have to pay 35 percent tax on it. Why don't they just keep it overseas? And then what they've been doing in America is raising debt and just letting this cash pile build overseas. Now, the Donald wants to get American companies to bring that money back in, the hope of creating some American jobs out of it. And so what he's offering is a one time tax holiday of a 10 percent tax rate if they bring their money back. And so Apple has I think it's these days like two hundred and fifty five billion overseas. So if they bring that back, they're going to have a very nice chunk of change to make some investments with them. [00:15:36][75.4]

Bryce: [00:15:36] So what's the story? [00:15:37][0.4]

Alec: [00:15:37] So Citigroup have bought into that hype a little bit and put together a list of seven companies that Apple might try and buy. Now, look, no one realistically thinks that this is what Tim Cook is thinking of actually buying, but it's nice to imagine and some of them actually do make a little bit of sense. So the first one, which everyone has heard of is Netflix. Now, just to give you an idea of how Big Apple is Netflix market cap. So if you bought every single one of their shares, shares of their company at the market price, right now it's 67 billion dollars. So Apple could buy Netflix and still have about one hundred and fifty billion dollars in cash left over. Now, the reason Netflix makes sense is because Apple has been making a push into online streaming and haven't seen a lot of success thus far. Some of the other ones, Tesla, Elon Musk's car company. Apple also are trying to make a push into self-driving cars. Tesla's market cap is 52 billion dollars. So hypothetically for [00:16:50][72.7]

Bryce: [00:16:50] Tesla's, [00:16:50][0.0]

Alec: [00:16:51] yeah, Apple could buy Tesla and Netflix and still have a lot of money left over. The last one that I thought was quite interesting was Disney. Now, Disney are a huge company. When you look at everything they own, like obviously the the main Disney brands, but then also Pixar, also ESPN, a bunch of other cable channels. They are a huge media conglomerate and yet their market cap, one hundred and seventy six billion. So Apple could pay cash and have some leftover. [00:17:21][30.2]

Bryce: [00:17:23] They could pay cash and buy a Tesla. [00:17:24][1.5]

Alec: [00:17:25] Yeah, yeah. They could say, look, no one actually reckons that Apple will buy Disney. And if they were going to buy Disney, Disney shareholders would demand a huge premium. But it just it just shows how Big Apple is. It's the biggest listed company in the world. It's competing with the government owned Saudi oil company to actually be the biggest company in the world. But it is just huge. [00:17:53][28.6]

Bryce: [00:17:54] Huge. All right. Well, that brings us to our Stock of the Week. So this week's Stock of the Week is a company called Afterpay, small Australian company that floated on the Australian Stock Exchange that became publicly listed in March 2016. And it floated for one dollar ticker purchased stocks at one dollar. And I think it's now trading at around two point fifty five after hitting some highs of about three dollars. So it's had some pretty good growth in the last at just over 12 months. It's a small Australian company that is in the online payments space. It was founded in 2014 and it is one of Australia's leading retail payments innovators. [00:18:44][49.2]

Alec: [00:18:44] All right. So what what Afterpay do? [00:18:46][1.9]

Bryce: [00:18:47] Well, essentially that they are an e-commerce business that facilitates payment transactions between merchants and their and customers. So essentially, it's a platform that links up with, say, a business such as Myer or the iconic, and they provide a service for customers to pay for their products without having to pay for their products. What Afterpay do is they offer a buy now, receive now, but pay later service that. She doesn't require end to end or that doesn't require the customer to enter into any sort of loan or pay any upfront fees. [00:19:31][44.4]

Alec: [00:19:32] So simply it's it's layby. [00:19:35][2.2]

Bryce: [00:19:36] Yeah, that's. Yeah. [00:19:37][0.9]

Alec: [00:19:38] Yeah. [00:19:38][0.0]

Bryce: [00:19:38] So you're not paying any extra for the product. You're not engaging any loan or taking on any credit. But the difference between this and Labour is that you get the product right now layby. You don't get the product until you finish off paying it, whereas this is you get the product sent to your door, you get it exactly as if you had paid for it in full. But you you can engage in a I think it's usually for payments of X amount of dollars. Yeah. So that's one side. The second side is that you can also get at Afterpay app on your phone and to all of the retailers and merchants, not necessarily just fashion, but they've hooked up with a Telstra and a few of the banks as well. You can get an app and going to these stores and you can say walk in and say, oh, I want to spend one hundred dollars on clothes. You then going to your app and tell Afterpay that you want to spend one hundred dollars, it will give you a barcode to the value of one hundred dollars and then you can use that barcode at the cash register to pay for your items. And then Afterpay will work out how many payments from there on and you need to make back to them in order to pay off that, that item of clothing or Taffet or whatever it may be. [00:20:56][78.2]

Alec: [00:20:57] OK, great. So I guess the big question is, if they don't charge people using like if they don't charge consumers fees to pay in instalments, how do they make their money? [00:21:10][13.2]

Bryce: [00:21:11] So they've got two forms of making money with the main form is the merchant fee. And then I think they take a small percentage of the sale fee as well. So just like if a merchant is using an EFTPOS facility, they pay per transaction to use that EFTPOS facility. That's the same situation here. And also Afterpay scheme, a bit of the transaction percentage as well. So obviously the higher the transaction, the higher the amount of money that they can skim from that. Yeah, so that's how they make their money. And to give you an indication of how many retailers they've got signed up at the moment, they've got three thousand seven hundred merchants that are transacting live with them at the moment. And that's had some significant growth since they last posted some figures. And 15 percent of the processing is online retail fashion. So it's a pretty big market for them. If you think about iconic and they've teamed up with Myer and Tara Cash, for example, factory Rothman's, they've got a huge list online of all their retailers. And as retailers are now having to become more online, this is a very good opportunity for Afterpay to start consolidating their position in the Australian market. I think and I think it's a very good idea. What I like about it is that it encourages people to buy more and I don't know if that's a good thing or but I don't know if that's a good thing or a bad thing. But I think that [00:22:51][99.9]

Alec: [00:22:52] was a good thing for Afterpay. [00:22:52][0.7]

Bryce: [00:22:53] It's a good thing for Afterpay. It's a good thing for the the merchants as well and the retailers. But yeah, it's it's an interesting one. I, I think it's potentially a bit of a step in the dark. I recognise that there are a number of factors that could prevent it from being as big as I think it could be. But I think one of the things I like about it is that there hasn't been anything specifically like this on the market or as definitely as visible as it is now with leading online retailers. And I know that you can do similar things potentially in a similar way through payment service such as PayPal. But this one, I like the way that they appear online. I like the retailers that they are partnering with. I like how they make it seem so easy to do for instalments of fifty dollars rather than the psychological Afterpay two hundred. Now, I think that the merchants themselves are going to benefit a lot from this. [00:23:55][61.1]

Alec: [00:23:55] So yeah. And look, it makes sense. They, they talk about, you know, the big shifts in the labour market and, you know, the sort of gig economy that we're in nowadays where a lot of people have casual jobs and then they supplement it with things like Uber and TaskRabbit. It's more and more likely that you're going to be paid casual wages. And in those cases, it's great to have a service where you can pay. Small amounts in instalments. It fits more with weekly or fortnightly casual wage rather than, you know, getting a monthly paycheque every month and being able to make big online purchases. Yeah, that's true. So, yeah, look, I like it. My my big reservation is if Afterpay becomes a big hit in Australia, what's to stop apple pie or PayPal saying that they're doing it well and offering a similar service. But, you know, there's a lot of companies where you probably could have made a similar argument that have done quite well for themselves. [00:25:01][66.0]

Bryce: [00:25:01] So, yeah, look, I don't have a specific reason that apple pie or Amazon aren't going to come and do something just like this. In fact, I wouldn't be surprised if they do. I just think that there is value in them being in the market at this time and getting their name out there and foot in the door and getting as many customers and merchants as they do already is is definitely a big step forward because the cost of acquiring customers is a metric that a lot of these big tech companies look at. And it's more often than not a better option for bigger companies to actually just buy these companies and all the customers and and merchants that come with them rather than try and create a platform that is similar in a new market and compete and compete that way. So fingers crossed they do. Well, I think I've got a gut feeling is that they will be bought out at some stage by one of the bigger players, which would be a good thing for those who invest. But yet, in terms of Afterpay and that sort of stuff, I don't think there is anything that is severely preventing the big players from coming into the market. [00:26:16][74.4]

Alec: [00:26:16] Yeah. All right. Well, we'll add that to our hypothetical portfolio. [00:26:21][5.1]

Bryce: [00:26:23] Yeah. Two dollars and fifty five cents. Yeah. [00:26:25][2.3]

Alec: [00:26:25] OK, so we'll put that up. We'll put a little write up summarising some of our thoughts. Everyone should jump on to Equity Mates and check it out. As we we've saying before, the ones we've picked so far for Stock of the Week have done okay. So it's definitely worth checking back every now and then and seeing how it's going and thinking about, you know, how you can apply the lessons through that fund every now and then, just saving a bit and putting a bit into the market how that can grow over time. That leads us nicely into next week's one on one. [00:28:52][146.7]

Bryce: [00:28:52] Yeah, great little Segway. I'm going to keep this pretty short because there's not much to harp on about, but the lesson is very important, and that is that there's a lot of value in consistency and time when it comes to putting away money for investing now putting something away every pay that you get paid fortnightly, monthly, weekly or even inconsistently if you're at uni and you're working the three day job or whatever. It is whenever you get a pie, I think it's very important that you can split that pie up and dedicate a proportion of it towards saving and investing, a lot of people often get scared about, oh, you know, I need a thousand dollars or I need three thousand dollars to start investing. And then they get out that calculator and work out how long it's going to take them to save three thousand dollars if they're putting away twenty dollars a week. And it's daunting when it appears that it's going to take them two years to save thirty thousand dollars at twenty dollars a week. And so they just completely give up on it. And I think that's a really poor way of looking at how to tackle the saving for your first investment and can and consistently saving from there on in. [00:30:07][74.2]

Alec: [00:30:07] Yeah. The other thing is, even if you decide you're going to commit to that savings goal, you know, you might get part of the way there, have a big weekend and blow a lot of that cash that's just been sitting in your bank account and try and save up. [00:30:21][14.1]

Bryce: [00:30:21] Exactly. Which is half full. [00:30:24][2.7]

Alec: [00:30:25] Exactly. Or you might go in and Afterpay binge and all the stuff online that you then have to pay off. So yeah, it's always dangerous just to just to have cash sitting around in your bank account. Yeah. And that's where the benefits of just continuously building your portfolio and growing it over time can really pay dividends. [00:30:48][23.7]

Bryce: [00:30:49] Punya literally. So there's three things that I want to mention and your input as well. Ren on what you sort of do from your end. But I want to talk about very briefly what I do with my pie, some habits in terms of setting goals and then what options are out there for you to get into the market that don't require a minimum five hundred dollars or saving up to a thousand. So firstly, in terms of pie allocation, as I said before, it's really important that you do split your pay. I would certainly I personally have a separate account, completely separate to my card account, so I can't blow it at the pub and I have a set percentage of my pie that I put towards investing. And I do that every time I get paid and I don't touch it until I get to my allocation. And then I put it straight into the share market. [00:31:42][52.3]

Alec: [00:31:42] Or what's your magic number? How much do you save before you put it into the market? [00:31:47][4.7]

Bryce: [00:31:48] So that is changing over time. I used to save up to obviously the minimum five thousand five hundred sorry, up to a thousand. Usually once I would hit a thousand, I would just put that in the market. Now, that didn't mean I would be buying different shares every time I'm a strong believer of cost averaging, which is buying the same shares, obviously just at different prices, which in the long run can give you benefit. So, yeah, I would say [00:32:14][26.3]

Alec: [00:32:15] just to just to explain that to our listeners, you know, if a stock prices move, obviously, and if you're buying a thousand dollars of a share, you know, every three months and over a year, you buy it at, you know, a dollar a dollar fifty and then it drops to 50 cents and then a dollar again. That means even though you have paid a dollar fifty for it at one point and you got a bargain at 50 cents, at the end of the day, your average price across the whole year is a dollar. And so that's a good way of averaging out the highs and lows of the market as you buy more and more the stock. [00:32:51][36.8]

Bryce: [00:32:52] Exactly. And yeah, we'll definitely talk about that later on. So to give you an idea of how I allocate my pay, I roughly split into thirds. Obviously, I've set myself a budget and I know how much I need to spend each week on the necessities. So bills and food and all that sort of stuff that I know how much I need to save and I know how much like my living costs with rent and that sort of stuff. And that just happens to come out at about a third of my pay, roughly give or take here or there. And obviously, if you put a third away for savings, that can be split half savings for holiday. But obviously, I encourage you to really put it into at least some into the stocks as well. So that's the first thing. And that leads into habit and consistency. Doing it every pay into an account that you can't touch or that has high interest, that's not related to your card is a is a good way for you to start understanding the value of time, because before, you know, it's six months go by, you go by and you'll have, you know, quite a considerable sum in that for really effort. It's also really important, I think, to have a goal that you are trying to achieve. So say, for example, a great goal would be saying on a five hundred dollars to invest in the stocks first time, try and save for that without breaking your bank and aim for that and just try and stick to that by being consistent. And I think that working towards that goal will give you a sense of, you know, it through. Working towards a goal, and it's not going to be as daunting than taking it five hundred out straight from your pie and then not being able to live for the rest of the fortnight. How do you do yours, Ren? How do you split yours? [00:34:34][101.7]

Alec: [00:34:34] So unlike you, I am terrible at saving and budgeting, so I would love to be able to stick to a third rule, but unfortunately I can't. So what I do, I set up a saving account with with my bank and I transfer. So whenever I get paid I try and transfer into that. The problem is it's too easy to transfer out of that. But look, there are definitely resources out there that can help you. So one of them that I quite like, it's called it's an app called Pocketbook. And what it does is you can link it with your bank account and it will look at all the transactions that are going on your spending account, and it will, you know, sort of categorise them and it will give you some insight into it. It breaks down how much you're spending, what you're spending it on, and when when you know, you say you've spent like 40 percent of the money you had this month on, you know, like food and booze or, you know, whatever. You know that. All right. Maybe you need to just call it a bit. So it's a good way of really visualising your spending and your saving and you can put, you know, your goals in the app. So, yeah, like that. I have like a saving goal and I put all my bills and one of my rents due and when I get paid and it sort of calculates it all for me. So look, it's it's by no means the only one. Like I'm sure there are hundreds out there on the App Store and the Google Play store. So do a bit of research. But Pocketbook works well for me. [00:36:13][99.0]

Bryce: [00:36:14] I like that because it's still teaching the principles of allocating your money and that you're putting in a goal and and how much you need for X, Y and Z. And it's just doing the creation of the figures that need to come out the other end for you. Yeah, it's also I like it because it's giving you an understanding of where you're spending your money. The worst thing that as we started this is that you got the pub or go on holiday for the weekend and then blow it all and you think, oh, man, I'm back to square one. If you can recognise where your money's going and take it, then you're halfway there. [00:36:46][31.6]

Alec: [00:36:47] I mean, we've all we've all had the thought, like, where did that paycheque go? Like, I only got paid three days ago or a week ago and somehow I've blown a lot of it this way. At least you can say, you know, I like the four Hubers. I took that. That was one hundred bucks. And like all my phone bill came and that was another hundred bucks. It's a good way of just keeping track because no one likes scrolling through bank statements. So getting a nice little pie chart changes it up a bit. [00:37:13][26.3]

Bryce: [00:37:14] Yeah. [00:37:14][0.0]

Alec: [00:37:14] And then look, when I, when I do save my my general rule is I try and pay only one percent brokerage for my investment. So I now have a CMC account which pays which charges eight dollars brokerage. So that means I want to invest at least 800 hundred at at a time just because if you're paying one percent brokerage, then the stock has to appreciate or go up in price one percent just for you to get back to Avon. So, you know, if you're if you're doing 500 dollar hits and let's say you're paying 50 dollars brokerage, that's 10 percent of your investment. And so that means the stock has to rise 10 percent just for you to break even. So I yeah, that's my general rule. Obviously, different people have different rules, but that's something that I try to stick to. [00:38:11][56.7]

Bryce: [00:38:11] Yeah, interesting. It's a that's a good point and definitely something that you probably thought about after you've had a bit of experience with investing as well. You came to understand that brokerage as a percentage does actually have an impact on how much profit you can make later on down the track. [00:38:27][16.0]

Alec: [00:38:28] But look, don't don't get scared off by that. [00:38:31][2.7]

Bryce: [00:38:32] Definitely not like not being in it is better than being. [00:38:34][2.4]

Alec: [00:38:35] Yeah, definitely. And over the long term, one percent isn't going to make you lose any sleep at night, not be in the market. [00:38:41][6.5]

Bryce: [00:38:42] So secondly, I think it's also important to note that having a high interest account is very important, that these sorts of things, for example, I know I g- I g-, I and I and Jay have a good high interest account. I think it's paying about three, three and a half percent at the moment. So having your money in there, working for you, even though you might be getting small amounts of money, it all adds up in the end. [00:39:07][25.4]

Alec: [00:39:08] And most of those banks have like gold saver accounts or the equivalent where if you put X amount of money in and don't take any money out, then you get bonus interest or bonus payments. Look, just look at your bank and look for stuff. Because they're out there [00:39:22][13.4]

Bryce: [00:39:23] and definitely and look, what we're saying is nothing new, this is like every single personal finance book, but I think it's just important that you just got to do it. That's the thing. [00:39:33][9.7]

Alec: [00:39:33] There's a reason it's in every personal finance book. It's a good rule and [00:39:36][2.9]

Bryce: [00:39:37] it works, works without fail. And you will be surprised how quickly life goes by, how quickly your weeks go by. And you forget all of a sudden about the money that's going into these accounts and all of a sudden you click over and that if you were to put fifty dollars a week away, you have two thousand six hundred dollars by the end of the year to invest. And I'm sure if you said to someone flat out try and save two thousand six hundred dollars, you know, they'd be like, oh, come on. Like, I don't have the ability to do so. Whatever it takes is a small amount. So the other thing is there are alternatives to getting into the market without having to save large chunks of money. And they're all coming through fintech at the moment. Some great apps that are available. I'm a big fan of an app called Acorns. Now, this allows you to get into the market with as little as five of Dollars. I like this app for a number of reasons. One, because it teaches the discipline of not necessarily the discipline, but it gives you a very good idea of compound interest and consistency in putting money away. Essentially what Aikens does is you attach your cards and bank accounts to it, and then every time that you do a transaction, it will round up that transaction to the nearest dollar and take that rounding and put it into the share market. So, for example, I buy a coffee for three point fifty. It will round up to four dollars and it will take 50 cents out of my account and put it into the stock market. Now, the monthly fees on this are quite high as a relative proportion to how much you would be putting in if you are just relying on the sense that we're going in, because it literally is, since you might be putting in five, five, 10, 15, 20 dollars a week or a month, but it is literally cents. I think, though, it's great if you combine that feature of the app with adding in your own money. So what it allows you to do is you can put in either a recurring amount of money and it will withdraw that money from your account, either monthly, fortnightly or weekly. You can set that amount or whatever you like, as little as five dollars, or you can put in a lump sums as well and use it essentially as a trading, as a savings account, keeping in mind that the money in that is invested in the stocks so it is exposed and can fluctuate. It's not as safe as putting it into a bank account, but the returns on getting on it at the moment are far greater than what I would be getting from interest in a bank account. I personally am putting in my own money each week as well, and I think having it set for a consistent amount is a really good habit. And as I said before, you know, you've got hundreds and hundreds of dollars in which you can then take and invest yourself in the market. [00:42:24][167.1]

Alec: [00:42:25] Yeah, definitely. So they charge they charge a dollar a month. So if you're just rounding up your coffee a couple of times a week and say, you know, they're investing five dollars a month, then, you know, it's 20 percent of your investment in fees. So then then the maths just doesn't work. But if you're doing what you're doing and using it as a sort of weekly or whatever, you get paid like investment savings mechanism as well as well as your spare change. That's what that's when the dollar a month fee starts to make sense. And it's a good, cheap way of getting into the market without a lot of capital. [00:43:02][37.5]

Bryce: [00:43:03] Yeah, yeah, exactly. You're definitely right. If you do it without putting money in it, it's it's an expensive way of getting access to the market. It also allows you to have a fiddle around with portfolio weightings so you can have a look at what an aggressive portfolio looks like or a conservative portfolio. And they do it in a nice, fancy way and a modern look on the fun and you can click around on the train and all that sort of stuff. So it's great. I'm I like it. And I think if people can do it in the right way, it teaches some great habits. I also think that there I also like to add at stake and first step on that path stake in particular is a macro investing app. And what it allows you to do is similar to icons use small amounts of money to invest in pots of of stocks. So say, for example, you want to buy Google, it's currently over twelve hundred Australian dollars. That's way too expensive for someone like who's just starting out. Stake allows you to buy a proportion of a stock of Apple so you can pay ten dollars, for example, and you'll get the equivalent of a ten share an Apple Apple stock. So it's just a good example of. Another way that you don't have to save up the minimum five hundred to get to get access with [00:44:25][81.7]

Alec: [00:44:25] those ones, though, so obviously part of owning a share is is getting the capital appreciation so that you keep growing in price. You being able to sell it for more than you bought it. With apps like that, though, what happens with dividends and stuff like that? [00:44:41][15.5]

Bryce: [00:44:41] I think it's still proportionate because. [00:44:43][1.6]

Alec: [00:44:44] Right. OK, so if you are one percent of a stock, you get one percent of the dividend. That's right. [00:44:48][4.3]

Bryce: [00:44:48] Yeah, because I have a feeling what happens is that you're going through this company which owns the stock, just to say that they're just a broker, [00:44:57][9.0]

Alec: [00:44:58] like, well, they're like a holding company for million micro investors. [00:45:01][3.7]

Bryce: [00:45:02] That's right. That's right. Yeah, right. Right. They will distribute any dividends accordingly to whatever percentage of the of the stock you hold. Yeah. So just another it doesn't encourage you to put money away or anything like that, but it's a way in which you can access the market without needing hundreds and hundreds of dollars. You don't have to save that minimum of five hundred. You can get it straight away. Obviously, I encourage everyone to look at the terms and conditions in the face with these sort of things, because the smaller these companies are, the more likely the feds are on the higher side. But a great way to get international exposure and to not have to spend huge amounts. You can just have a around the other day. [00:45:45][42.4]

Alec: [00:45:45] Yeah, definitely. And there's heaps of apps like that. You know, some of the other ones out there, like Robin Hood clink like there's a bunch. So, you know, do your research say say what you like, good weather better in the market. [00:45:57][11.7]

Bryce: [00:45:58] Yeah, well that's it. Put something away consistently getting into the habit of doing it. Time is on your side. That's the main thing. Be patient and you will get to where you want to be. Set it set a goal, set up an account that's high interest and that you can isn't attached to a card that you go and buy class or go to the pub with. Yeah. And and just get in there before you know it. You realise how easy it is and you won't look back. So that's that for the habits. For continuous investing. Yeah. We might do a blog post on it. [00:46:29][31.3]

Alec: [00:46:29] Yeah, definitely. All right. Well, that brings us to the end of Episode nine of Equity Mates. Well, we're ripping through the episodes. We're almost double digits. [00:46:38][8.7]

Bryce: [00:46:39] You'd have to have a party. [00:46:40][1.1]

Alec: [00:46:41] Yeah, thanks. Thanks for sticking with us and make sure you subscribe. Give us a writing. Tell your friends about us last really loud while you're driving with the windows down and spread the word. Because, you know, the more people we can have engaging with the show and, you know, we can help on their investing journeys, you know, makes it worthwhile for us. Yeah. Yeah. So thanks for listening. And until next time, equity out. [00:46:41][0.0]

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