Global Investing 101: Everything You Need to Know to Get Started

Bryce: [00:01:07] 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 first time, though, or is this the very 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 you scroll up and started episode one. However, if you're feeling brave and just want to dive in, don't let it stop you. Here at JSC, we unpack all the jargon and the confusing bits here, your investing stories with the goal of making investing less intimidating. And of course, we want to have a good time along the way. My name is Bryce and as always I'm joined by my Equity Mates Ren. How are you going? [00:01:47][39.7]

Alec: [00:01:47] I'm very good Bryce very excited for this second part of this three part series on investing globally. But before we get there, I just want to make it note that it feels like your intro is getting longer and longer every every time. [00:02:02][15.0]

Bryce: [00:02:03] It's interesting you say that because I haven't changed it in some time here on get started investing. So maybe sometimes I skip out a few lines here or there. It's just what I'm vibing on the day. [00:02:14][10.5]

Alec: [00:02:14] But hey, how do you do you. That's what you [00:02:16][2.4]

Bryce: [00:02:17] will. [00:02:17][0.0]

Alec: [00:02:19] I'm just here. I'm just here for the day when your intro takes 20 minutes and I can really sit back and have a coffee. Just settle [00:02:27][7.6]

Bryce: [00:02:28] it. What do you mean? That's exactly what you do throughout any episode. Yeah, that's [00:02:31][3.2]

Alec: [00:02:31] right. [00:02:31][0.0]

Bryce: [00:02:34] You're right. Ren We are here to continue on the the global train. An exciting topic for us, really, because we just get so amped about the fact that we're able to invest in so many exciting companies, not only here in Australia, but all around the globe. And in this episode, we're going to continue on with the benefits of doing so. Look at why the world is less risky and really dig into how to actually go global. [00:03:01][26.6]

Bryce: [00:05:10] Let's get stuck into it. And we're here to talk going global. And it's pretty good timing, Ren, because, you know, we've seen and this is not sponsored, but we've seen recently superhero, one of the brokers here in Australia announcing that they are introducing US shares onto their platform stake, who are a US an Australian broker offering US stocks, announcing that they're going to add Australian shares to their broker platform. We've got shares. He's a New Zealand broker now in Australia offering Australia, US and New Zealand. So it's clear that the world is going global. And since you and I started investing many years ago, it's now incredibly easy to start investing overseas. So it's it's good to say. You love to say it. [00:05:55][45.0]

Alec: [00:05:55] Yeah. You love to say it. And you would love to see some of these players go a little bit more global, shout out superheros, steak shares. These are a number of other ones. Let's get some Europe. Let's get some Asia. Let's go. Let's get. Some Africa going let's let's go truly global. I mean, if we're not going to use our platform to to push for more, then what are we doing? [00:06:18][23.1]

Bryce: [00:06:19] True, true. Well, we'll continue on the journey of trying to get Africa onto as many brokerage platforms as possible. But for now, let's just celebrate that the US is opening up. So I guess this leads really nicely into today's episode, which is all about how to go global. And, you know, last episode we really spoke about the benefits of why you should be considering going global and why Australia is a great market, but a tiny market relative to the rest of the world. And that really leads Ren to the point around the world is less risky than if you're just investing here in Australia. [00:06:59][39.8]

Alec: [00:07:00] Yeah, and it all comes back down to that word that you learnt very early in your investing journey around diversification. And, you know, we are so tied to the fortunes of the Australian economy if we're living here in Australia. But the same applies wherever you are. If you're listening in Canada, you're tied to the fortunes of the Canadian economy. UK, you get it. We add jobs in Australia, we own if we own a house, we own it in Australia. And for most of us, most of our investments in the stock market are in Australia, which means that if something happens to the Australian economy, all of those things suffer. You know, you might lose your job, your house price might fall and your investments might fall. It's really hard to get a job overseas while living in Australia. It's really hard to buy a home overseas while living in Australia. But the one thing that you can do to diversify quite easily these days is to look outside Australia. When you're when you're investing, it's these days it's really just as easy as as buying something in Australia. But it just it's just all about diversifying your sources of risk. [00:08:09][69.0]

Bryce: [00:08:09] It is. And it's just so exciting. There's so many cool companies overseas that we can get into a little bit later. [00:08:15][5.6]

Alec: [00:08:15] But so that's the risk side. You know, diversification, reduce your risk. And but what you just said, it's the opportunity set. Australia is two percent of the global stock market. So from a risk perspective, it makes sense to look overseas. But from an opportunity set, it makes sense to look overseas. [00:08:32][17.3]

Bryce: [00:08:33] Yeah, I mean, the Australian market here is predominantly miners and banks. You know, there's certainly no Apple or Microsoft over here, here in Australia. [00:08:42][8.7]

Alec: [00:08:42] So to be fair to Australia, there's some great companies here in Australia. Let's not get it twisted. But, you know, like there are companies taking on the world from Australia, Afterpay, Zere, Brez, Medda, there's cockily like there's a bunch of great companies taking on the world. There's a bunch of great Australian companies, Saqqara Group, you know, so let's not get it twisted. There are some great Australian companies, but there are some great global companies. [00:09:14][31.4]

Bryce: [00:09:15] So we're going to discuss the key ways to invest overseas. And in our minds, there are three so we can buy shares directly in overseas companies. We can invest in Australian listed products that give you access to markets overseas, or you can back the professionals and let them do the investing on your behalf. So let's start with the first one, Ren, and that is buying shares directly straight into the Amazon. Straight into the Microsoft. [00:09:44][28.9]

Alec: [00:09:45] Yeah, well, it's funny that you say Amazon because buying shares directly is similar to buying something on Amazon these days. The the user experience is very similar and it is just like buying Australian shares these days. There's a there's a potentially a form or two that you need to fill out that you can do online through your broker. But aside from that, it is literally the same functionality. You jump on to an online broker, you search a stock, it comes up, you click buy, you check out. [00:10:21][35.5]

Bryce: [00:10:24] Wow. Yeah. [00:10:26][2.2]

Alec: [00:10:26] Yeah, it is. It is mind blowing. I know you're say wow to the functionality and not the quality of my explanation that I am. [00:10:34][7.9]

Bryce: [00:10:34] I'm I'm blown away with the ease at which you've just explained how you can buy shares. I say but that's pretty much it. You, you are right and it's all luckily you can do it through brokers here in Australia available to anyone really to sign up to me. [00:10:51][16.7]

Alec: [00:10:52] There's two key differences I sort of touched on there. One is you obviously have to convert the money to whatever currency it is, but all these online platforms find a way to do that in a very easy way these days and then. Secondly, that his tax form that you've got to fill out, but again, you can do that all on the broker's website, but that's that is really the only difference these days. Those two things, you take them away and it is just as easy to buy Wells Fargo as it is Commonwealth Bank or Wal-Mart as it is Woolworths. Yeah, which which is pretty exciting. [00:11:33][41.0]

Bryce: [00:11:34] Very exciting. I mean, a real life example. Even last night, my partner, Harriet, she's been investing in a bunch of ETFs and her platform superhero, not sponsored, have just released US shares. And within an instant, she's buying Airbnb, Spotify as as easy as she's been buying skincare online. So it was it was it is amazing to see how easy it is. [00:11:58][24.4]

Alec: [00:11:58] So is skincare online a company or other purchases? Fair enough. Fair enough. So, look, there's this so many different platforms out there that offer different markets. And that's probably the key thing to think about here. If you do want to invest overseas, it matters which broker you sign up with because they all offer different markets and we've pulled out a few. Just to give you an example, some of the more popular platforms in the Equity Mates community. But I think when we last counted, there was, what, over 30 online brokers in Australia. So, you know, we're not we're obviously not going to just start reading out the list. So whatever broker you with, jump on, do some research or if you want to compare some of those sites like Finde and Canstar can help you compare what markets you can access. But I think and tell me if if you disagree Bryce spot. OK, I'm going to I'm going to say interactive brokers might have the most markets, but I think of the commonly used platforms in the Equity Mates community, COMSEC probably still is number one in terms of the markets it offers. [00:13:20][81.5]

Bryce: [00:13:21] Yes, but I would say the ease at which you can invest in those markets through CommSec is is not as as straightforward as some of the other brokers that just have us or whatever. I'm pretty sure. [00:13:33][12.0]

Alec: [00:13:33] Well, you've just you just you just taking the words right out of my mouth. [00:13:37][3.7]

Bryce: [00:13:37] Oh, great. Well, luckily we think today that's good. [00:13:40][2.7]

Alec: [00:13:41] Cigar and say, OK, so you've got you've absolutely nailed it for CommSec. I was reading that trades last night. You can you can buy or you can obviously by Australian shares online, you can buy us shares online and then they have a number of other countries that you can buy shares from Canada, U.K., Japan, Hong Kong, Indonesia, Philippines, Singapore, Thailand, basically all of Europe. There were like 14 countries. I couldn't be bothered to write them all down. New Zealand, Israel, that's a lot of markets. So you can access, but you do have to call up. And and as millennials, you know how much we hate calling people on the phone. [00:14:18][37.5]

Bryce: [00:14:19] So whether it's a simple WhatsApp or. [00:14:24][5.9]

Alec: [00:14:30] Yeah. So so, yeah, they offer a lot of markets. But one thing that we want to look for is that online shopping functionality. And so then there are a bunch of others, atra. They offer an eclectic mix of market share. I say they've got the standard ones US, Europe, Hong Kong. They also have Saudi Arabia, which I was surprised by. Wow. Yeah. Wow. [00:14:54][23.7]

Bryce: [00:14:54] OK, go eat. Or what what the biggest company ever in Saudi Arabia is the what's it called. The Oil one. Saudi Aramco. [00:15:02][7.6]

Alec: [00:15:03] Saudi Aramco. Yeah. [00:15:04][1.0]

Bryce: [00:15:04] The only one I know. But look Ren this there are a bunch of others as well that of the international markets. So one of one of our favourites that we have been using for a while now is IGY that have Europe, US, Europe and Australia and New Zealand. Um, surely they might. [00:15:26][21.7]

Alec: [00:15:26] Yeah. Look honestly, if I can give a message to all the online brokers out there, make it easier to find out the markets that you offer like IJA, I'll use this as an example because we were talking about them. They make it very easy to say what CFD you can trade, but they don't just have a clean list or it's not easily findable. A clean list of these are the markets you can buy stocks in. Yeah, good corporates. Again, just just using our platform to make things a little easier for the retail investor. [00:15:54][28.0]

Bryce: [00:15:55] For the retail investor. Yeah. Then then you've got those companies that have just come to Australia. So we mentioned chaises there in New Zealand, Broka. They offer us New Zealand and Australian markets self. Well, have just launched us. They also have Australia and then steak and superhero steak off Australia, New Zealand and US and superhero is US and Australia. So a lot of competition coming in Ren. Again, we love to see it here at Equity Mates because at the end of the day, it just gives more choice to to the Equity Mates community. [00:16:29][34.6]

Alec: [00:16:30] Yeah. And I think you can say the commonality there is that basically all of these brokers that go international will start with the US. And that makes sense, because if you think back to our last episode when we were talking about the size of the US market, I think North America as a continent is like forty one percent of the global stock market and the majority of that is in the US. So if you if you have access to, you know, Australia in the US, that is a massive opportunity set there. Obviously, you know, Asia, Europe, there's a lot more opportunity there. So hopefully we see those platforms continue to expand. But there's there's a lot of choice out there. There's no one right choice when it comes to picking a broker. I think it's important to know that you don't have to be restricted to just Australian stocks these days. [00:17:24][53.6]

Bryce: [00:17:24] Yeah, exactly. So Ren, that is that's really a nice tie up of buying shares directly. You can do it. You just need to make sure your broker offers the markets that you're interested in buying in. So before we jump in and have a look at using Australian listed passive products and also backing the professionals,So Ren, if you're not feeling comfortable investing directly in overseas companies yourself and and making those investment decisions and putting in the time the research, the good news is that you don't have to limit yourself to that to invest overseas. There are a number of products listed on the Australian Stock Exchange that actually give exposure to foreign countries. And we're going to have a chat about that now. [00:19:26][122.5]

Alec: [00:19:28] Yeah. So if we take a step back, it's a fund or company that is listed on the Australian stock market. So people buy and sell that company or that fund via the Australian Stock Exchange. But what that company or fund holds shares in global companies, so shares outside Australia. So, you know, it means for people who only want to buy and sell things in Australian dollars and buy and sell things on the ASX, they can get they can buy things that then hold international shares and that way get exposure to the to the performance of international shares. [00:20:13][45.3]

Bryce: [00:20:15] And how do I find these products? Google nice. [00:20:20][5.9]

Alec: [00:20:23] So so we'll talk about things that are like managed by professional fund managers in a second. So put a pin in that. But the main type of investment here are just index funds or ETFs that track an index. And so, you know, when we talk about an index, we just talk about a basket of stocks that represents the majority of a stock market. So in Australia, we have the ASX 200 index that has a little bit of the two hundred biggest stocks in Australia and just holds them and makes no decisions about buying or selling or trading. And if you buy an ASX 200 ETF, you get you get a little bit of all those two hundred companies in one easy trade. And then if though, if the Australian market goes well, that goes well. If the Australian market goes poorly, that goes poorly. But all it does is track the market. And there are there are indexes for every major stock market. So there's the S&P 500, which is the 500 biggest American stocks. There's the NASDAQ one hundred, which is one hundred of the biggest stocks on the Nasdaq, which is more technology focussed. The FTSE. One hundred is the one hundred biggest UK stocks so that they all track that particular countries. Then there's also things like the MSCI All World Index that buys a little bit of most companies in the world. I think it's like twenty. Yeah, it's about 50 countries. It has has some shares in. And so it basically is like we're going to try and track the global stock market. [00:22:13][110.2]

Bryce: [00:22:13] And I remember when we spoke to Lards CRIA on the Equity Mates Investing podcast and he was a fund manager from London, and he said that his strategy was to just buy the all world index for the next 40 years, throwing a couple of bonds. And that was his strategy. And so, look, it's it's an interesting index, 50 countries there. But you're right, Ren [00:22:38][25.0]

Alec: [00:22:39] before before you move on like that, that's not an uncommon strategy. Warren Buffett has often said that when he dies, his suggestion to his his heirs, I guess, is to put 90 percent of their money in an S&P 500 index fund, which is, you know, the five hundred biggest US stocks. And then I think the last 10 percent in cash, and that should be their investment strategy. So buying these indexes is is a pretty populist strategy. [00:23:07][28.5]

Bryce: [00:23:08] So, yeah, again, how do you do this? All of these ETFs are available through your broker platform because they're going to be Australian listed. Then obviously you need to be signed up to a broker that has the Australian markets. So if you are investing, if you are part of the community overseas, the same would apply to the markets that you're of your home country. They will be ETFs that allow you access to many markets around the world. But there are plenty of providers as well that offer these products. So if you're looking at the S&P five hundred ETF you've got here in Australia, beta shares will have one. Vanguard will have one, iShares, we'll have one. Pretty sure your ETF Securities is a bunch of ETF providers that all offer very similar products when it comes to these. So I just have a little bit of a look around in terms of phase in those sorts of things, which we've discussed plenty of times on the show, [00:24:07][58.9]

Alec: [00:24:08] and just in terms of when we say they can be bought and sold like shares or we literally don't mean that. So, you know, Commonwealth Bank Research CBA, which is the ticket code, and you buy shares in Commonwealth Bank, all of these ETFs similarly have a three or four digit ticker code that you type in and you buy in exactly the same way you buy shares. [00:24:31][23.6]

Bryce: [00:24:32] Yeah, super easy. So the final way that you can invest in international markets. So spoken about buying shares directly through your broker, then there the Australian listed passive products, those ETFs that we've spoken about, the third and final way that that you can invest overseas is to actually back the professionals and and give your money to professional Australian based investors who will then take that money in their own fund and invest it around the world or in sort of specific foreign countries, India, South East Asia, other geographies around the world. And this is where you might get a bit more of a strategy around the type of investments that are made compared to, say, an ETF of the S&P 500. So, um, yeah, Ren something that we're both doing. [00:25:26][54.4]

Alec: [00:25:27] So, yes, I think that we're both doing now. There are a few different ways that you can actually do this. So the traditional way would was called sort of unlisted funds. And that was where you saved up your money, you know, got a certain amount of money to get filled out a bunch of paper forms set, faxed them maybe maybe seven to eight mile of paper. So they want know much. Yeah. And then you basically sent a cheque with all the paperwork to this fund manager. They took your money, invested it on your behalf when you wanted to get the money back from the fund manager. Hopefully it was bigger than when you gave it to them. You filled out some more forms and they probably sent you a cheque back. So and that still exists. And there's a there's a number of fund managers that do that. Bryce and I have actually slogged through the paperwork. So so, you know, it's it's an option that people can consider. But for people who are just getting started in their investing journey, perhaps don't have as much money to invest, you know, some of the minimums for these funds are like 10 grand, 20 grand, some up to like two hundred and fifty grand. That's the one that Bryce is in [00:26:49][81.8]

Bryce: [00:26:50] that it [00:26:51][0.2]

Alec: [00:26:51] must be nice. But for people who don't have as much money or don't want to put like ten grand with one fund manager to begin with, you can now also buy and sell units in these in these professionally managed funds through the stock market in the same way that you can buy and sell shares. [00:27:14][23.1]

Bryce: [00:27:15] Yeah, that's right, Ren. It's a trend that we're actually seeing a lot at the moment. And that is a lot of these funds are creating what we call active ETFs, or there are a number of listed investment companies that you can also buy and access through the Australian Stock Exchange. So, for example, you and I have invested in an unlisted funds through Magellan. It was their Global Fund MJF But what they've now done is turned that fund into an ETF, active ETF as well, and made it available on the Australian Stock Exchange. So just like you and I have our money directly in Magellan, you can now buy through the ASX just like any ETF units in the Magellan Global Fund managed by Hamish Douglass and his team, and trade that ETF just like you would any other stock or ETF on on the on the stock market. And of course, then you're getting access to Magellan, investing that money right across the globe. So it's pretty good what what's happening at the moment in terms of all these fund managers now making their funds somewhat available through these active ETFs and Elyse's. [00:28:30][74.9]

Alec: [00:28:30] Yeah, you're right, Bryce a lot of it. This is a real trend with fund managers at the moment realising that retail investors like you and I want the easy availability of just being able to buy and sell units in their fund just through the stock market with one or two clicks through our online brokers rather than 10 or 20 pages worth of paperwork and paperwork and a fax machine. I think so. You said Magellan was MJF, I think there are active ETF is actually MJ Osei MGF is closed, so that's a listed investment company. Let's not worry too much about the difference here, but it's a trend that we're seeing more and more. The amount of fund managers that are making they're making their funds available on the stock market is increasing. And for retail investors, that's a really good thing, because gone are the days where you had to have, you know, a ten thousand dollar minimum to get access to these, you know, professional fund managers. You can now do it with as little as five hundred bucks, I guess, sometimes even less, depending on your broker. And and basically, what what what happens when you buy a unit in an active ETF of a professional fund manager is they get that money and then they invest it on your behalf. And if their investment strategy does well, the price of the ETF goes up and you can sell that at any time for more than you bought it for. If if if the strategy isn't so good or isn't doing too well and they are losing money, then the the price of the ATF goes down. So it's just a different way to back the professionals than the traditional way. But the outcome is the same. You're putting your money with them and you do. Well, if their strategy does well, [00:30:33][122.7]

Bryce: [00:30:34] it's a great way to get a little bit of different exposure and some smarts, potential smarts behind the money. I think. Keep in mind, though, just because they are professional fund managers, it doesn't mean they always outperform the market. So make sure you do have a look at the performance of these fund managers before you dive in. [00:30:53][19.3]

Alec: [00:30:54] Sorry, just before we put a bone to people might be wondering, well, how do I find what fund managers are available to me? There's a number of, I guess, publications or websites, PDF documents embedded on websites. I don't know what you would classify that as, but if you want to say a list of like all the different professional fund managers that you can look at, look at investing, put it, putting your money with Morningstar, have some great resources and the ASX themselves have some great resources. So they're probably two places to start your research, if you're interested to find out what professionals are out there [00:31:36][41.8]

Bryce: [00:31:37] certainly worth having a look at. Yeah, I've I agree. Ren Morningstar. I would be probably the best place to start. [00:31:43][5.9]

Alec: [00:31:43] Plenty, plenty of stuff they do like they do a monthly report. That is probably a good starting point, but yeah. So I think, look, if we just sum up the three ways how we conceptualise the three ways to invest overseas in terms of talking about the actual how the first is the do it yourself, do your own research, find companies that you like and buy those shares directly. So that's number one. Number two is just by just track the whole market just by ETFs that track indexes of overseas markets. And then you just exposed to how that overseas country stock market goes, whether it's America, whether it's a country in Europe, a country in Asia. You can just say, I don't want to make a decision myself. I just want to track the overall market to get exposure to something outside Australia. That's option number two, the passive option. And then option number three is to find someone to do it for you. Option back to the professionals, find a fund manager that invests overseas and give them the responsibility of doing the research and making the decisions about making the right investments overseas. [00:32:55][72.3]

Bryce: [00:32:57] Nice Ren. Well, I think a good way to close is just to remind the get started investing community that if you are wanting to invest overseas and we've just put three ways to do it in front of you, similar to when you're investing in Australian shares, there is no right or wrong way. There's no perfect answer. It's it's really up to you and where you're at in your investing journey, your risk tolerance. But there are plenty of options as we've just walked through, to at least get you on your way and get your investing overseas. And in the next episode to close out these three POTA on Going Global, we're going to talk about some of the factors that you should consider beyond just how to invest overseas. So we're going to talk about currency risk. We're going to talk about actually finding information and then some thoughts on building a portfolio around the world. So some key things to consider in the next episode if you are looking to get out of Australia. So Ren. As always, great to chat stocks. Um, just a reminder to anyone in the get started investing community to help us find more potential investors and to continue growing, get started investing. We would really appreciate if you could write and review us on your podcast app. I'm pretty sure only Apple allows you to do so. But, you know, it would be really appreciate if you are an iPhone user to to write us on on the Apple podcast app. Five Stars would be amazing. So Ren always good to chat stocks and we'll pick it up next week. Sounds good. [00:32:57][0.0]

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