Financial Autonomy

I started this podcast in 2017 with the desire to put myself out there on what I felt was important in money management and wealth creation,gaining choice.My hope was that in putting that message out into the world, in time I'd attract people to our Financial Planning practice who shared this worldview. It took a while but I'm very pleased that this did indeed work.

Why am I taking a break now? There's a few factors.

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It's not uncommon I find, for people to arrive at the desire to achieve Financial Autonomy in their 40s or 50s. Particularly for those with kids, until this point in life it's largely just been survival mode. Money in equals money out. First it's saving a deposit for a home, then it's getting the mortgage under control. Usually either the first home isn't the forever home, or else renovations and improvements are required. Then you've got the costs of raising children.

Layer on top this is the potential for divorce, and it's not uncommon for me to have people reach out wanting to achieve financial security but worried that it's too late for them.

If you’re worried that it might be too late for you build wealth and achieve financial security, this episode is for you.

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In this episode, we talk with David Tuckwell of Global X about a few interesting potential satellite ETFs.

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I received a question recently for my Ask an Expert column where the reader was comparing the annual income they received from their investment property, against the growth in the value of this superannuation fund. Their conclusion, looking at the numbers, was that they should sell the investment property and shift all the money to super.

But their comparison was flawed on multiple levels. So in this week's podcast I thought I'd talk you through the differences across the main investment options to help you consider what the best path might be in your particular situation.

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Investing is all about risk and reward. In endeavoring to build our wealth and gain choice in life, we take on risk with the expectation that we will be rewarded for taking on that degree of uncertainty.

The Oxford Dictionary defines risk as the “possibility of something bad happening at some time in the future”. As investors that typically means a loss of our capital, either partially or in full.

We think a lot about the potential rewards and the long-term outcomes that derive from the gains made by our investments, but this week I wanted to spend a little bit of time digging into some detail on the risk side of the equation. I've identified 8 different types of risk that are relevant for us investors.

To be fair this list probably has more of a bias to stock market investors. I haven't included things like credit risk which would be relevant for bond investors, or risks that are unique to property investment.

I'm hoping that as I go through these eight types of investment risk you mentally tick them off against your portfolio and reflect on whether you were comfortable with the level of risk that you are sitting at.

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The starting point is to consider why you might choose to be a business owner. Certainly it's not the right option for a lot of people. There's risk, extra stress, and a requirement for a broad skill set. A great analogy I think is comparing a decathlete at the Olympics to an athlete in a single pursuit. A decathlete isn't good enough to be a gold medalist in any one single event. But they are better than average across a whole variety of events such that when they combine their results they produce an impressive outcome.

A business owner needs to be like a decathlete. They need to be able to understand marketing, the finances, people management, planning, pricing and operations.

If you are the Usain Bolt of you are field, then chances are you're better off as an employee than a business owner. As an employee you can just focus on doing what you're good at, and let others worry about all the other cogs in the machine. Pursuing the business ownership path is best suited to the all-rounder.

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Most of us, when we start investing, will buy Australian shares. We typically gravitate towards businesses that we recognize, perhaps one of the miners, a bank, or a retailer that we walk past at the local shopping centre. Before long we stumble across exchange traded funds, and most people tend to gradually invest more and more in these vehicles over time due to the lower level of mental energy required in making the investments, and their significantly lower level of volatility.

Having a home country bias within portfolios is not something unique to Australia. Almost every country in the world sees the same thing. In some cases the portfolio bias can take on a degree of patriotism.

My question though is whether as investors, aiming to grow our wealth and in so doing achieve the choice and flexibility that enables us to lead interesting lives, this bias makes sense? Or should we look overseas to international shares?

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Tax cuts are coming for anyone earning over $45,000 a year. For those earning between $120,000 and $200,000, the changes are particularly meaningful. This week I wanted to explore some strategy considerations you might wish to think about in the lead up to these very significant changes.

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Given this week's episode is our first for the new year, I thought I'd take a look at the typical areas to focus on with reference to your stage of life. Now of course there's a wide range of normal, so feel free to adapt these thoughts to your own situation. Hopefully, they can help to give you some direction as you make your plans for an amazing 2024.

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Recently I've had several planning discussions that centered around inheritances. Despite this common core, each discussion was very different. So in this week’s podcast I thought I'd share with you some of the things I'm seeing, and the discussions I'm having with clients. Perhaps they might help you in navigating this area, which can be challenging, with the emotional elements that are often a feature.

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