Glen James is a former adviser who now mentors others, He’s just written a book called “Sort your money out and get invested” (Published by John Wiley & Sons $32.95.)
What do people need to know about share investing?
I think people need to know it’s not as confusing or as hard to access as people think and they also need to know the basic laws of the universe, around don’t put all your eggs in one basket. Share investing is for the long term and if you’re looking to make a quick buck it’s not for you, if they’ve already got a super account they’re already investing in shares in superannuation.
What advice would you give to millennials?
Stick away from buy now pay later and do the absolute opposite of what society tells you to do with your money. My advice to millennials is you need to have caution with the advice that your family may give you because we’re living in a different world because the rules that apply today may not apply to a future generation because house prices are absolutely off the charts in relation to average earnings so that may mean you need to rent where you want to live and then invest elsewhere.
Not buying a home?
I could say there may be opportunities in regional areas outside of capital cities that have a good economy and so it could be worth looking elsewhere if you want to buy but you don’t have to buy a house if you don’t want to. My advice is that you’re doing things because you want to and because it’s aligned with your values, not because someone else is telling you to do it.
How can you get started on the sharemarket?
So there’s a variety of different platforms that enable people to get started. You can get started for as little as $5 on Raiz, Vanguard personal investor, so the days of needing $2k before you start are long gone. I would caution that if someone is getting started they need to understand how the funds work like these start ups like Spaceship and Raiz and that’s what I want to help people understand, how portfolios are made and understand the basic principles of how things work and then we can apply that to anything.
What advice would you give a 22 year old?
I’d first make sure they have their goals. What do they want to do in the medium term. If they want to buy a house they shouldn’t start yet, because we should invest 6-7 years so set goals before we put huge amounts of money.
The good thing about the apps is that people can still learn and invest the principles while they’re setting bigger goals, so they won’t be without knowledge and understanding so when they’ve met goals they can start to invest. I’d say the biggest trap is not the investing itself.
The biggest trap is that people don’t have a clear plan and their goals set out, and if you don’t have your goals set out you may start investing in your world and then 5 months later you get an idea you want to do this or that and you may need to sell down and they may have dropped in value so I’m big on setting goals and strategy. “Have a strategy, however small. The investing part is just the execution because you can set up an account tomorrow but it’s really important to have your goals in order.
What about debt?
From the mathematical point of view and if you’ve got consumer debt with a 14%, the best investment you can make is to pay money down because the 14% paid down is 14% is saved, the hard and fast rule is not to do large amounts until debt is paid, but it comes down to if you want to do $10 a week to get started, I certainly would suggest people consider that because we know people win with money is because they’re fired up and have a goal so investing smaller amounts so learning how the investment world works, will hopefully empower people to pay debt down so they can put that down into investment.
Should you DIY or hire a broker for advice?
CommSec I think basically have written the book about starting out and getting your strategy together and then over time you’ll outgrow your knowledge. At the start you don’t need professional advice and that’s why I wrote the book. The reason is if you went and got professional advice it may cost you $2500 so unless you’ve got significant money coming in, it’s better to learn and invest yourself, until you’ve got more and you’re at the point where you know the basics and have your goals and want to turn it up a notch.
What should people invest in?
Again the basic laws of the universe, it doesn’t matter how much you’ve got. You still need to invest in different stocks, countries and currencies and some people hear about Afterpay going to the moon, there’s more companies who didn’t do that. If you invest in a diversified portfolio you will have exposure to the safe companies like healthcare anyway.
How much should people be investing as a percentage of their income?
I’ve got an exact answer, as much as possible. The best also, it’s a bit cheeky, once you’ve got your goals nailed out and your basic needs met and in my book I talk about doing things in the right order, and then it’s about retirement and that’s as much as possible whether it’s super or outside of super, focus on the you of tomorrow, today.
People just need to be focused on doing the you of tomorrow, a favour today, you could die today and then what’s it worth not living. I’m not prescriptive to saving x amount, in the book I talk about living life on your terms. So I’m not prescriptive and we need the latitude in our life to make sure our needs our meet and that the us of tomorrow is taken care of and then within however you want to cut that cookie, once you know and if you get to retirement age and you don’t have enough, you’re reading this article, the only one you can bank on is the person in the mirror and there’s going to be no excuses.
What fees should people pay?
I think it comes back to understanding the investment and what it’s investing in and in the book I do a fees matrix and you may need to pay for more complex management, whereas an index fund could be under 0.5%. I would suggest for passive investing, you should really be paying 0.5 % for the product itself. But again you get what you pay for so if you want something that’s sexy and contrarian, well you may need to pay 1%.
Any other comments?
If it excites you and it gives you a daily high and low you’re probably not investing. Investing in the main is a slow boring game and your primary focus is to generate money with your career and focus on putting as much money in the investment account, rather than looking at the returns every single day because as a millennial you’ve got more bang for your buck, living on less than you earn and then investing. The best return is the saving you can put into the account.