Finance & Fury Podcast

Welcome to Finance and fury Financial Crash proof your Share investments There is no way to control the rise and fall of investments but focusing on what you can control makes all the difference! Behaviours lead to underperforming, or outperforming, the 'market' Firstly – What you buy and when Secondly – What you actually do when a "crash" occurs What is a correction or crash? Drop on prices – followed by mass hysteria – panic selling – further declines in investment values Shares can drop quickly – They are liquid Liquidity = How easy is it to sell shares and get your cash back The share market is a measure of crowd behaviour Positive feedback loops What triggers a crash? Prolonged periods of rising markets, excessive in the long term P/E far exceed long term averages Higher buying volumes Year on year large gains Then something spooks investors to think the good times are over If the markets think good times are done with, they will be Self-fulfilling prophecy – positive feedback loops What makes people sell shares at a loss? Myopic Loss Aversion – Fear of further losses – Losses (even on paper) are hard to bear, so people crystallise losses to avoid feeling further potential paper losses Shares are some of the most feared investments out there People feel like they can't see or touch them, but if you buy some Woolworths – just remember half of you probably visit a store once a week. They are hard to understand – Fear from the unknown History of share crashes and the drops – 1987, 2008 (worse than US) What happened before this? Markets rose – 2002 to 2007 = 226% rise What can you do? On the buy Diversification – Have one egg, it breaks, you have no eggs. If you have 1,000 eggs and one breaks, you're ok! Different segments – Not all banks, but across large, mid, and small cap, as well as different types of companies Different countries/economies – we make up 2% of share market – 98% of companies are off shore Don't overpay for investments FOMO – Bubbles in shares are pretty clear Market PE – Shares are valued mostly on expected future earnings (inherent values). Where are we at now? Gains - 194% cumulative rise in the market since 2012 – but still not above 6,700 in 2007 pre GFC PE – In line with long term average Don't buy rubbish – never invest out of hope into shares that might not be around tomorrow Shares are ownership in a company – Is it a good company? Will it be around in 10 years? Is it a fad, and not earning? They don't survive crashes as well – avoid speculative shares When the crash happens Don't panic sell! What happened the next year? After a crash there is rebound Why? Demand picks up the following year Buy more! If you are game! Why would you buy something going down? Why is it going down? You can buy investments on special – 2 for 1! Let me get the crystal ball out… The next crash – Will come in form of borrowings within debt instruments / levels of government debt especially in the US. The market freaks out because they think the government can't service their debts and default on their debts. Sad truth – free market gets blamed for government interference Nobody knows what will happen. Hold for long term In summary Markets work in cycles – they go up, they go down The long game – hold and buy – Next Sunday we talk about FEAR and avoiding emotions Thanks for listening – we need YOUR feedback! Leave a review, or ask your finance question at financeandfury.com.au/contact

Welcome to Part Two: Let's look at these claims: Means of production owned by the public or state This removed property rights – Which is the foundation of wealth accumulation Think of a group assignment – social loafing Property rights lead to incentives Zimbabwe – Took property rights away – expropriated land and property rights China – Introduced property rights – Incentivised farmers – reduced starvation Australia – Same thing – gave the convicts rights – as was only way to get them to work – Joke: 'pretend to pay us, so we pretend to work' Equal opportunity for all I have an issue with this – it is equal outcome for all, NOT equal opportunity (unless zero) The outcome is nobody can get ahead, so they have zero opportunity You want to start a business? You can't! You want to buy a house? You can't! You want to save for yourself? Well, you don't get paid…and the government can take all your savings anyway Economic activity and productions are planned by central planning There is no feedback system here – so no recourse for when things go wrong State gets it wrong – tough luck Free market gets it wrong – that person goes out of business and someone else prospers New Coke – That was a decision that was corrected quickly due to feedback from the market Forced Labour Uzbekistan – Cotton industry – Millions of people a year are forced to work on cotton fields – Doctors, teachers, businessmen Not just adults - Children aged 11-15 in September – Forced to Price Controls = Mass starvation Creates shortages as no incentives to create more Example – you are a farmer – it costs you $10 to produce a bag of apples, BUT the Government will only allow you to sell the bag for $5… will you continue to work for a $5 loss? John Oliver – Venezuela No facts – Funny guy, but he kept saying "if only", "If only" the oil prices kept going up, "if only" Chávez had stayed alive... He forgot one "if" – if only they hadn't destroyed the most productive oil company through having the government take control 'Epic mismanagement' – that is inevitable in a socialist society – free market isn't Give all the power to the top to control – the workers don't make decisions Socialism leads to lower inequality Sadly, again not true Creates higher inequality as power is centralised – no free market or ability to improve yourself And at the same time – wealth plummets and poverty sets in for the masses. No middle classes here – simply poverty and ultra-wealthy (the State) Heaven and hell I'm not religious, but I do believe in Heaven and hell – Look at some parts of the world – they are living in hell! Examples of Socialism/Communism implemented faithfully – Starvations and killings China – Mao – 61 million – Starvation lead to cannibalism in both Russia – 45 million North Korea – Forced labour camps – mass starvation Germany – Hitler was a socialist – Nazi = National Socialist German Workers' Party Unemployed promised work and bread Today: Venezuela – population has lost average of 19kg in weight per individual since Maduro took over Capitalism – I guess is responsible for deaths as well – Obesity and smoking – but it's the individuals choice at least! Unless you are Bernie Sanders – 'bread lines are a good thing' The unfortunate thing It does work in the short term (social proof) – but then stagnates as there is no incentive for further growth Venezuela - Poverty halved in the beginning due to taking all of privately owned business and giving it away – how did that work out? Oil rich having largest reserves in the world – but no means of getting it out of the ground – They have to import it Price controls and creating more money – that is what happens when State gets their hands-on the money supply Print, print, print = Hyperinflation and no ability to transact! Socialists are Hypocrites! Stating that there is "discrimination", but now they engage in it with socially engineered policies which discriminates against those who have something To get the outcomes they want, they discriminate against the rich through taxes Socialism works from manipulating the masses – take from those who, unfortunately, are the productive ones (hence why they have the wealth in the first place) Two fish Sail fish – fastest fish – over 100km per hour – if in a pond that dries up, it will die Sea Horse – Less than 1/100th of a kilometre per hour in a large ocean prospers Destroys society – nobody can swim faster than the pack Compared to Capitalism Capitalism affords economic freedom, consumer choice, and economic growth. Socialism, which is an economy controlled by the state and planned by a central planning authority, provides for a greater social welfare … As Thatcher famously and correctly said, "The problem with socialism is that you eventually run out of other people's money." Thanks for listening… Next Friday's episode – we'll look at why free markets lead to a better life for you and how to build wealth within that system.

Haven't Liked us on Facebook yet? Show some love This is going to be a bit of a longer episode in order to unpack this topic fully… You're probably going to need to relisten Book – Utopia Wishful thinking – the story described perfect, imaginary world. A complex, self-contained community set on an island, in which people share a common culture and way of life. Although this book was a work of satire, I was 13 or 14 at the time, so wasn't quite sure what satire was. There is no money, no external trade, so… everyone is happy, right? If your job is harvesting wheat, and another person's job is to distribute what you've produced, how long will it be until you resent them and their job? Even though we aren't speaking specifically about money, people will still be different! Times have changed – This book was written in 1516 when the world was ruled by Monarchy and Religions Once I started investing, studied economics and commerce, and started working – Things changed. This can be summed up best by Frenchman, Anselme Polycarpe Batbie, whose words are oft wrongly attributed to Winston Churchill, "If you are not a socialist (liberal) by 20, you have no heart. If you are still a socialist by the time you are 40, you have no head". This makes sense When we grow up, most things are provided to us. We are, for the most part, taken care of. And, in a wealthy society like ours, many of us don't get to see just how lucky we are compared to the rest of the world. If we have been taken care of, why can't everyone have it that way? We haven't experienced the 'real world' yet. I don't believe that those who lean towards socialist ideas are bad people – they just haven't seen it play out The ideologies are born out off feelings and rhetoric - so this episode will be pretty heavy with the underlying issues and outcomes from each Definition: Socialism - A political and economic theory of social organization which advocates that the means of production, distribution, and exchange should be owned or regulated by the community as a whole (Centralised by the State/Government). It is said that countries like Canada, Denmark, Finland, Norway are socialist, however this is incorrect – they redistribute through welfare, but they are still free market. The only reason they can do this is thanks to their free market and the wealth generated from this. The Prime Minister of Denmark asked Bernie Sanders to stop calling them socialist! They are free market, just have large redistributions of wealth – but still have property rights. Socialism is characterized in the following ways: The means of production are owned by public enterprises or the state, and individuals are compensated based on the principle of individual contribution. There is equal opportunity for all. Large-scale industries are cooperative efforts, and thus, the returns from these industries must be returned to and benefit society as a whole. Economic activity and production are planned by the central planning authority and based on human consumption needs and economic demands. Socialists believe economic inequality is bad for society, and the government is responsible for reducing it via programs that benefit the poor. How do we get to that from a free market? Production owned by state and population Taken by force Exterminate, imprison or just take it from those that have it It happens naturally when you put groups against each other The return of enterprises and business to the people Well, this doesn't ever happen The only way you can truly own a business is to buy the shares That is participating in capital – when everyone owns everything, it turns out that nobody owns anything It becomes a public good - Think of air and water… these are available for everyone, but do you own it? Production is planned by a central authority. This is a problem. Individual needs are ignored in favour of group needs. Land and production is taken and controlled by one group How do they manage to make decisions then? Soviet Union – steel worked well – steel production is consistent But farming – given weather and land/crop differences – impossible to implement one plan for all – as each is very very different And inequality – Is inequality bad? Well poverty is bad. What happens if we were all equal but all in poverty And how does the government ensure we are all equal? The argument – it just hasn't ever been implemented properly yet – I disagree... The level of control the State needs to enforce destroys everything – leaves everyone with nothing Example – If everyone is on UBI of $20k p.a. Someone spends all of it, someone invests $10k p.a. Give it 10 years, inequality again and you have to do another economic reset on society This is exactly what happened under the Agrarian reforms in Russia around 1880 – skip forward to Lenin pre WWI – inequality again This was a very heavy episode – and part 2 will dig deeper into this. Hold onto your hats! And remember... shoot through your comments and q

Welcome to Finance & Fury, Say 'What' Wednesdays! where we answer your questions on finance and economy. Today's question comes from Mike – 'Hey mate, loving the show, what's your view on Private health insurances, I keep seeing my premiums going up and am wondering if you think it is worth having or not'. Thanks Mike! Hikes in premiums over the past few years Media articles are stating that Australians are dumping their covers ...but are they? Roy Morgan Research – 265,000 Australians have dumped their covers for Private Health Industry body – Private Healthcare Australia say that more Australians have private health than ever An extra 50,000 Australians have taken out covers in 12 months – 13.58 million with hospital, extras or both Up from 13.52 million What is true? The percentages are down, but the number of Australians are up 55.2% in March 2017 to 54.6% in March 2018 Why are people dumping it? Getting too expensive obviously – not enough value in it unless you claim that value back…and how much will it pay back? Premiums have gone up an average of 72% in the past decade – greater than inflation and wage growth Looking for someone to blame? The greedy companies, or the system setup? Premiums rose 4% to $23.75 billion in 12 months Benefit payments rose 3% to $20.1 billion Gross margin - $3.65 billion Expenses - $2.21 billion Tax $441,000 and state ambulance levies of $226,000 Profits = $1.38 billion Why do a lot of younger people have it? The Government is this industry's enforcer One reason - If you are likely to claim on it Another reason - If you are going to be charged the additional tax Customers are pushed through the door – the cattle prod here is tax penalties Medicare Levy – Introduced 1984 at 1%, now 2% Lifetime loadings – Introduced in 2000 Lifetime Loading – Increase premiums by 2% each year above 31 Take it out at 35 – 10% loading, take it out at 65 – 70% loading Most people don't really start using it until their 50s Medicare levy Surcharge – 1997 MLS is levied on Australian taxpayers who do not have an appropriate level of private hospital insurance – Earning more than $90k, or $180k for families. Tax – 1% to 1.5% It is designed to 'encourage' individuals to take out private hospital cover and to use the private system rather than the public health But the Medicare levy they still pay…2% Over the years, as taxes go up, people have less money to spend on their own health, as they are paying for others. So, people rely more on Public than private in the end Behind the scenes Moral hazard – Economic definition for transaction costs, it has an incentive to take unusual risks in a desperate attempt to earn a profit Theory of if you get covers, you will change behaviours Try to maximise your use Behave in ways you wouldn't otherwise Example – phone insurance – Case/Protection or not? If you are sick – Are you more likely to get cover or less? Subsidising the sick – if you are going to claim, you get it and are willing to pay more The total costs are the same regardless of your health hazards, ages, extracurricular activities. A heroine junkie (if they haven't spent their money on the tar), would pay the same as you. Premiums are based on the likelihood of claims – But at the industry level! Claims go up – premiums go up Costs of health goes up – premiums go up As the number of people paying in decrease – premiums go up. The more that people ditch it, and the more the system is run with inefficiencies, the more that the price of insurance will increase. ESPECIALLY: with no incentives for companies to make it better, as there is the cattle prod provided by the government to round you all up. How to fix it: Healthier Australians…or change the process of getting cover - needs based on how healthy you are. Underwriting in the same way as Life, TPD or Trauma insurance covers to assess individual levels of risk Pre-existing condition exclusions Focus is always on insurance companies – greedy CEOs looking to make money If they can't, they go out of business though. To answer Mike's question - Is it worth it to have private health cover? If you are likely to claim on it If you are going to be charged the additional tax

Welcome to Finance and fury Financial-Crash proof your investments This is a flow on from the last Say What Wednesday, this episode talks about how to get yourself into a position to survive any market correction. We'll cover off on the two types of volatile investments – Property and Shares; today's episode will focus on Property, and in the next episode we will look at shares. What is a correction or crash? A decrease in prices, followed by mass hysteria and panic selling, which further decreases values Why prices go down? Something spooks the market – The market is just individuals like you When people get spooked fear sets in and with fear comes 'myopic loss aversion'. While this is a technical term, but we all know the feeling – seeing investments go down in value doesn't feel good so people sell to avoid further loss But what happens if you just don't sell? Those that don't sell haven't realised losses Property Property investing is all about your finances and behaviours – property is just the vehicle to create the wealth Property is a long-term play so you can set yourself up to survive the long term. The economy works in cycles – one criticism of the free market Ups and Downs are needed – remember volatility – downward movements need to be accepted to have access to upward movements in price What you can do: On the buy: One of the best ways is to make some smart decisions on the buy Buy below intrinsic value - look for something that isn't overvalued I avoid 'off-the-plan' - built in first home owner grant in price Don't overpay - emotions in auctions can kill this Overpaying also kills any future gains - don't get emotionally attached or let your emotions control you – Fear of Missing out (FOMO) The property itself: Future growth is all about demographics Look for something you would want to live in – as other people are like you Owner occupied properties are less volatile than speculative investments Ensure that it will have the best chance of being rented and not sit there chewing up your cash flow with no tenant High land to value ratios – land in property is important – not a massive block but getting the land value right is important History of long term – stable capital growth Desirable areas – infrastructure, transport, schools, nice area Can the property be improved to increase the value? Worst house on the best street When the crash comes: Get buffer! – Having a cash reserve will help you survive short term correction And offset account on property rather than savings – save interest Don't over leverage: Covers interest repayment increases. More debt = greater cash flow requirements This can force people to sell Covers massive losses Deposit of 10% = Loss of 100% if prices go down by 10%. Don't cash flow yourself out of existence If interest rates go back up, don't be forced to sell – stress test yourself Work off worst case (like the banks) and see what CF looks like at 8% Don't panic sell, or be forced to sell Thankfully property is harder to dump than shares, but people can be forced to sell with property (banks are the boss until the loan is paid off) Insurances – more to cover a "crash" in your personal life Cover your debts and cash flow in case of the unexpected Property is a long-term game Spread the risks out – diversification Focus on reinvesting the additional rent Either in an offset to build up the buffer, or Into other assets which can help diversify Summary Market sentiment – Consumer confidence is one of the key drivers of property cycles Positive sentiment leads to bubbles – overshooting during 'booms' Negative confidence leads to markets overreacting on the down, overshooting the other way and getting too depressed during slumps. Remember, each property boom sets us up for the next downturn, just as each downturn sets the scene for the next upswing. Demographics drives markets how many of us there are, how we live, where we want to live and what we can afford to live in What state is peoples' finances/the economy in? Macro factors like interest rates, consumer confidence and government meddling (first home owner grants have pushed up new build prices) Thanks for listening! Next Sunday's episode will be focusing on shares and avoiding getting wiped out in a crash "Like" our Finance and Fury Facebook page to keep up to date with episodes as the come out. If you have any comments, you liked the episode and want to hear more, hated it and have suggestions go to https://financeandfury.com.au/contact/

Welcome to Furious Friday – These episodes aim to solve misunderstandings In this episode - Furious about the muckery of statistics used to perpetrate misunderstandings Misconceptions about the world when it comes to the world, the economy and what we are taught, by the media. Click Bait is the winner when we are too busy to fully look into an article! So, I did it for you – I'll go through two examples Article about 9 out of 10 Australians support Healthcare and Education being free Oxfam study of income and wealth inequality – how the rich suck up all the wealth Study one – The "Findings" (read: The Claims) About Support for universal access for free to healthcare and education 9 in 10 Australians believe those services should be provided free of charge. (88% for Education) (89% for healthcare) – Who doesn't like free stuff? Free services are a human right? 8 in 10 Australians agree the rich should be "taxed more" to support the poor. 8 in 10 Australians agree - every citizen should have the right to UBI Found that 49% agree that 'socialist ideas' great value for societal progress...for who? Digging deeper Grain of salt – The "Australians" surveyed was only an online Ipsos survey of 1,000 Australians who are working aged. Most people who are working don't have time to fill out 20-minute surveys…they are working. Free education – No Free lunch - And it isn't free, other people pay somewhere along the line. What about those who don't want to go to uni? They pay for those that do! But …what is to stop people just doing degree after degree after degree… "Van Wilder" style Healthcare – already subsidised by the rich – do you pay for blood tests? Tests? It's all Medicare funded! When something is free (public good) – it gets overused and the system is burdened Bulk billed – I feel for doctors in this system – work in 15-minute time slots. It's hard to help someone properly within this time restriction – healthcare declines If the costs go up, wages would be capped by the government If you study for 10 years, you are in that bottom 10% Sacrifice a lot to get higher income Study two – the findings Oxfam – Inequality report – Richest 1% are sucking up the wealth Top 1% of population has 22% of the wealth Income Growth – Between 1988 to 2011 Bottom 10% made up 3% of all growth Top 10% made up 27% of all growth Digging deeper Misrepresenting "inequality" as immoral – poverty is the issue not inequality. Focusing on inequality is economic resentment. The guy next door has a bigger house, so go steal his stuff? Income growth – this is not the same group of people over time – Just shows statistical spreads Remember our Student Doctor? They go from working for free to earning higher wages over time Income inequality means nothing – most people listening would be doing okay, you would have a computer, or phone. So does Bill Gates. But rather than trying to make Bill Gates less rich, we should be focusing on poverty. How much poverty do we have? Bill gates is rich because we use the stuff he helped get out to us at a low cost. And thanks to that we are better off than we have ever been! They ignore what a 'fair share' is – do the rich do their fair share? 3% of Australian income earners (only 399,000 people) – pay 30% of the tax bill The irony here is that Oxfam turns out to be hypocritical Chairman of Oxfam international was detained in February for corruption charges Senior staff members paid local Haiti woman for sex after the 2010 crisis. Talk about taking 'advantage' of the poor. Standing on a position of morality doesn't avoid reality Issue with this methodology Only focus on population distributions – broken up into percentages Doesn't look at age, their lives, how they got their wealth The 1% is a group – that can only ever be the 1% - so if the number of people who compete to get there get more and due to people trying harder, this group gets richer and richer There is always going to be a "1%" if you measure things in percentages It's dangerous to lump people into groups this way – as policies are designed to benefit one group, they destroy another group. We lose more and more of our freedoms the more policies are built around group think. Punishing one, for the benefit of another. I am not in the 1%...yet! But I do hope to be there one day I don't want to get there through stealing things, but through voluntary transactions – giving more than I get = VALUE Why don't people want to be there? What biases do you harbour that are telling you that having money is bad? All money does is provide freedom and stability. The Media's job is to sell fear. Not inform you – a good story sells better than the truth. The most ignored factor – Age! Someone who is a 24 year old head-of-the-household, will have half the income on average of someone who is a 45 year old head-of-the-household. Time is your friend here - Mobility of the wealth over time. Pareto Distribution Example – two individuals with the same income $90k ($67K n

This week's Say 'What' Wednesday is from my friend Adam. We were talking on the weekend about Harry Dent's recent visit He predicts a property crash - There is ALWAYS another financial crash coming! He claims that Australian property is set for a 50% crash - Or correction? Interestingly, Dent made similar prediction in 2011, 2012, and 2014 as did The Economistand Demographia. History: Lets go back in time 2014 - Dent came to Australia warning the China bubble would bursts in mid-2014 and Sydney house prices could collapse by up to 55%. What happened? Houses and units went up over 80% since then 2012- Dent was quoted in Forbes as saying: "The greatest housing bubble in developed-country cities starts with Brisbane, Australia …". What happened? Prices went up average 23% End of the world Just like those that predicted the end of the world – Mayan calendars – just read the tea leaves wrong. But Harry has doubled down in his conviction his timing was premature Forecast is correct because he has no doubt that we are in a bubble. Wait... bubbles are different to a guaranteed crash! I agree we are a bit of a bubble – when compared to the rest of the world Bubbles "can" crash isn't the same as bubbles "will" crash There's two options; either the price growth can crash, or the price growth can slow to a snail's pace, or have slow and steady declines (a small correction) Reasons Look at the areas with 'bubbles' Sydney, Auckland, Vancouver, NYC – High immigration + low supply What are the signs of a Bubbles? Sydney price-to-income ratios are the second highest in the world—above London and New York—but hey, Sydney is a great place to live. High incomes, employment, and family members of those moving here Supply is constrained by zoning laws, two national parks, a mountain range, and an ocean. Yet demand continues to grow, so prices tend to rise. Where Dent is confused – Australia is different to the US 1 - Our regulators are prepared (too much so?) APRA introduced several measures aimed at reducing risks in the mortgage market – investors and interest-only lending have been key targets. The number of investors in interest-only loans fell sharply as a result, and experts see a major recovery as unlikely in the near term. This is a long-term strategy. UBS economists argue the move "suggests a more rapid tightening of lending standards than our base case outlook", with the regulator preparing the marketfor more permanent measures 2 - Our economy is strong enough Our banking system is sound, mortgage arrears rates are low at about 0.5-0.6 per cent across the country Household budgets are in good shape as we've been paying down our debts Inflation is contained and interest rates are low and likely to remain so for a while. 3 - Real estate is different in Australia Because people don't just dump real estate. It gets very illiquid and hard to sell fast. The banks in Australia will come after you – Can't just leave the keys and walk away like in the US. That in conjunction with the incentives of the US Gov to lend to those that couldn't afford (thanks to guarantees) caused bad behaviour (Mortgage Backed Securities) Like any addict – don't incentivise them to indulge their behaviour Devil's advocate - To make our property markets crash we need one or more of the following four things. A major depression(not just a recession). Nobody, other than Dent, is suggesting this will occur; Massive unemploymentand people not able to keep paying their mortgages — unlikely; Exceedingly high interest ratesso that home owners won't be able to keep up their mortgage payments. Again, this isn't on the horizon; and An excessive oversupply of propertiesand no one wanting to buy them. Other than in a few spots this is not occurring in Australia. What the future holds Demographics how many of us there are how we live, where we want to live and what we can afford to live in property will always be in demand – people need somewhere to live interest rates, consumer confidence and government meddling. Prices (Source: SQM Research) – 2018 forecasts (down a lot from 2017) Perth 1-4% Sydney -4% to 0% Melbourne -3% to +1% Brisbane 0% to 3% Hobart 8% to 13% Canberra – 1% to 4% Maybe at some point he will be right, but what are the real risks to our economy? Government spending money – printing and not getting out of debt Fiat currency will lead to the devaluation of our money – inflation but thankfully, while being bad, aren't as bad as the US. Higher taxes – leading to unemployment Or if the Gov takes over housing – that would be a guaranteed crash Free market for housing allows choices – Government system wouldn't.

The debate! (it's not time for a math debate, there will be numbers) Please do listen to our episode "Pay yourself" first The choices are: Managed Funds, ETFs, LICs What they are and what they do Features and what works best Who will win? Disclaimer – Full disclosure, I own all three types. Bought shares first, Managed funds about 6 years ago (tech super longer), ETFs and LICs in past 3 years. Introducing the contenders: Managed Fund – more managed funds than shares on ASX. 31 December 2017, the managed funds industry had $3,389.6b funds under management (FUM), not FUN, FUM, fun for managers for fees. But some are worth it. Structure - Unit trust Price– Net tangible assets. All shares in UT are worth $1,000,000. units 1,000,000 = $1 Units Underlying investment ETF Structured as managed funds, but on the ASX – Unit trusts – Income and FC flow through based on holdings. Dividend may not be FF Price – Supply demand, but - Net tangible assets. All shares are worth $1,000,000. Shares 1,000,000 = $1NTA Underlying investment LIC Structured as company – Income determined by board, FC usually paid (due to tax) Price – Net tangible assets. All shares are worth $1,000,000. Shares 1,000,000 = $1NTA Underlying investment – Mostly shares – Different segments – small cap, styles Company V Trust – one has discretion, one is a flow through – value is the same, vs other company What are they? - Features How are they traded and when? End of day - MFs Intermarket - LICs, ETFs Diversification Index - Lots of shares, top heavy Active - 30-150 shares, select sectors/styles Asset classes - Managed funds allow greater access to alt. investments Costs MERs – percentage-based cost 1% of $100 = $1 passive MFs same as ETFs 0.18%, Active 0.8-1.4% p.a. – LICs/MFs Platform costs – Admin fees %, plus flat, sometimes built into platforms (AMP) Transaction costs – per $1,000, each year Buy sell – 0.2% = $2, 1 year = $24 Brokerage – $20 = 2%, 1 year = $240 Investment styles Active Passive Target investments Performance/Volatility Winners: Managed funds – transaction costs, investment styles, diversification ETFs – MERs, off platform, index diversification LIC – Investment style Losers Managed funds – MERs, platform costs, ETFs – brokerage LIC – brokerage In the end: How much will you invest? For how long? What is the end goal? How risky are you? – Costs and volatility – reduce your performance How active do you want to be or hands off? Summary I like all three – this is what I do... Managed funds – use for smaller monthly investment – as $100 minimums per fund. LICs – invest into when dividends come in ETFs – same as LICs - invest when dividends come in.

Welcome to ...Furious Friday! Today's episode is a special edition covering off on B!tching about the budget Why are people complaining? Well, I actually don't know…. The media kept harping on about Santa – The jolly guy who gives free things away in concept - but it isn't free, someone is paying for it (the parents). And isn't Santa a fictional fantasy we tell kids to behave? Sounds a lot like the Government, except you are the children in their eyes! Instead, this budget is letting people keep more of their own money, rather than taking it to give away. In this episode we will cover off on a few important topics: Lower taxes for all…who pay tax anyway Why people having more of their own money is better than the government having it We will join out friends in the bar again and look at their savings when drinks get cheaper. What the cuts will be from next financial year: What some are saying? And why do people oppose it?Why are tax cuts important? And who benefits? The flow on effects, comparing the 'Cashed up coke economy' of Florida in the 80's. Then to finish it off, the big announcement that from now on Friday's will have their own special episodes... Furious Fridays! Today we talked about The Laffer Curve...if you're keen to know more, Investopedia knows what's up

Today's question comes from Jake. He asks "should I sell my bank shares, given the recent fall out from the royal banking commission?" IMPORTANT: This episode comes with a general advice warning! I'm not telling you to buy or sell... Instead I'm going to run through what the future of banking might look like given what we have seen so far. But let's break it down. The nature of the beast – Where profits come from Banks are diversified revenue models – out of top 5, they make up top 4 Lending and banking – CBA 45%, NAB 92.8%, ANZ 49%, WBC 39% Wealth Management – CBA 9.3%, NAB 7.1%, ANZ 3.2%, WBC/BT 10.6% Banks are now selling off all the wealth management parts of their businesses. AMP (a diversified financial service company) generates 72.8% of their revenue from wealth management/financial services So, what does this mean? ... Prices are down Banks are at their 52-week low, CBA at a nearly 3-year low AMP – steady decline since 2015 from $6.83 to $4.15 – 37% What will happen to profits? Big 4 – getting out of selling financial advice Nab – MLC is being sold CBA – CFS is being sold WBC – still will have BT ANZ got out mostly in 2013, so likely the least effected. AMP – Obviously will be hit. may lose license if can be proven they have been criminal If they lose their financial services licence – 70% of revenue goes. Price: Supply and demand It's like fashion – Banks are "out of fashion" in the news Prices determined by how much demand there is for the shares v how many are available. There doesn't seem to be much demand for AMP. Dividend yields are where banks appear to have value! Current prices vs dividends BUT: Watch out for value traps! AMP at a 10% dividend yield seems awesome, but what happens if 70% of revenue disappears? All dividends will disappear as well! The Crystal Ball The future of the banks is always unknown – Big 4 aren't going anywhere People know them and are at least perceived as safe, so that helps. But it's going to be hard for them to attract much capital growth. BUT: AMP may be in trouble. Won't know the damage until September when the next round of information on earnings comes out. The takeaways: Just because prices drop, doesn't make shares great value to buy, especially if the inherent value (which is what's important) is dropping also. AMP might be forced to change their revenue model and be regulated out of the market. Remember – Ratios stay the same until the update in earnings/dividends come out. There is a lag in information and therefore ratios may not be accurate. The future depends on what the banks decide to do with the gains made in the sale of the wealth management parts of their business, and that is up to management … Thanks for listening to another episode of Finance & Fury. These questions have been great! Keep them coming….go to https://financeandfury.com.au/contact/

Pay yourself first! Keep your own money – why work for others, then have nothing left to show for it? You earn more over your lifetime with this strategy – you save more and get rich right? Income earners can be wealthy Where does money go? Hedonic Treadmill (or, hedonic adaptation) - The tendency of humans to return to a relatively stable level of happiness despite major positive or negative events or life changes. Money/goals - despite a change in fortune or the achievement of major goals. As a person makes more money, expectations and desires rise in tandem, which results in no permanent gain in happiness. To feel happier, we then need to spend more. MC Hammer – paid his entourage first…didn't work so well. Hold up, we already do this in the form of super. Government legislates that your employer must contribute 9.50% of your salary into your super account on your behalf. But, is it enough? $1M in super at the end of your working life (in 30 years, for example) Drawing 5% = $50,000 income $50,000 in 30 years' time though, is only $23,900 in today's dollars Can't access funds until you've reached preservation age (60)…or later, if legislation continues to change at the same rate... What can you do instead? Monthly savings = lame Monthly investing = better What to do? Don't trust yourself? Super – lock away until 65. Technically better return for same investment, depending on fees. But lower tax. Salary sacrifice can save tax. And tax saved can offset costs. Trust yourself/need earlier access – Invest it outside of superannuation (personally) Pay yourself before you pay others Set a limit and invest the surplus. If the surplus increases, say, along with a pay rise, then invest the greater amount rather than increase your discretionary spending Where to invest this? Property will be a different strategy (we look at that later). Doesn't work when paying yourself monthly. Hard to save a deposit month to month When doing monthly investing look for the following: Liquid – easy to buy Divisible – units easy to purchase at small numbers Low transaction costs Diversified The options Managed funds Exchange traded funds (ETFs) Listed investment companies (LICs) Why these? Divisible Easy to purchase Low transaction costs (depending on structure) Diversified Discuss these three options in more depth in the next episode (part 2), but for now we'll just focus on the strategy overall. What works and what doesn't? Some things work better in the long term It seems counterintuitive, but volatility is actually your friend when making monthly contributions. Example No. 1: Investing $100,000 today, allowing it to grow for 25 years. Australian Shares (ASX 300) vs a typical portfolio with a growth profile Growth AS IS AFI IFI Cash AP IP Weights 35% 30% 10% 10% 5% 5% 5% Investment Growth Australian shares Total value $1,005,291 $998,663 Annual ROI 10.13% 10.40% Average volatility 9.16% 11.49% Example No. 2: Dollar Cost Averaging (DCA) Investing a fixed dollar amount at a regular interval, regardless of share price, resulting in the purchase of more shares when prices they're at a lower price and fewer shares when their prices are high Investing $100,000 today, allowing it to grow for 25 years. Adding $1,000 per month for 25 years Growth Australian Shares Original Investment $100,000 $100,000 Total funds invested $400,000 $400,000 Total value $2,089,636 $2,124,140 Annual ROI 10.13% 10.40% Average volatility 9.16% 11.49% More volatility can be your friend! Over time – DCA! Reduces risks Reinvest income If you will be investing monthly forever, who cares if the market corrects tomorrow? - Buy cheap! Disclaimer: This is general information only and based on historical returns. In Summary Pay yourself first, you're worth it! Why work your whole life to not have anything left over? Invest the difference between what your set limits are and your income. Get off the hedonic treadmill! Next week's episode we'll run through managed funds, exchange traded funds and listed investment companies and have a debate about which works best and in which situations. Go to https://financeandfury.com.au/contact/ and send in your questions and feedback. We want to answer the questions on topics that are ACTUALLY important to you so don't be shy, get in touch 😊

Welcome to Say What Wednesday This week we're going to answer some of the burning questions that have been on a lot of peoples' minds around the banking royal commission…and rather than repeat everything you've been hearing in the media, we're going to approach this from a different angle. In fact, beyond doing this podcast and teaching personal finance courses, I am one of these financial advisers all painted with the same stroke by ABC and other media outlets. Banking Royal Commission A formal public inquiry into misconduct in the Banking, Superannuation and Financial Services Industry, established on 14 December 2017 - it's all anyone can talk about! Three facets Broking Financial Services Small and Medium enterprises What are the allegations? Fees for no service Investment platform fees – lack of transparency (fees hiding in products) Inappropriate advice – advice not in the clients' best interest Improper conduct by advisers – Sam Henderson and improper conduct What is involved with advice? Understand clients' goals, and their current situation Advice should focus on strategy first, and products last Unfortunately, most of the issues are with institutions and companies that are product focused where it's really just placing a client into a product. Advice becomes conflicted. Their internally managed products create conflicted advice AMP, Westpac/BT Financial/Colonial First State, CBA/CommInsure, ANZ, NAB They own the platform – and collect fees They own the investments – and collect fees They own insurance products – and collect premiums They own loan products – and collect commissions They have advisers – who are salesmen placing clients into products, to collect fees and are incentivised with volume-based bonuses. Welcome to the Wild West Prior to current times, where an SOA (Statement of Advice) is required in order to outline financial advice recommendations, you only needed to be RG146 compliant – and you could get it this certificate done in 2 days before technically being allowed to provide advice The legacy of this is a lingering culture and mindset whereby advisers don't truly want people to know what is going on as they have never had to disclose information of be transparent All products were commission based and clients paid little to nothing for advice…but you get what you pay for. Advisers are incentivised to push the products that paid them the highest commissions. Future of Financial Advice (FOFA) - They got rid of commission-based incentives and raised the costs and time it took for practices to provide advice This is, essentially, a great thing, but there were unintended consequences. The incentive was not removed for banks and industry funds to only recommend their own products. They just changed their KPI structure to incentivise their advisers to increase volumes of clients being put into their products. It pushed out independent advisers that weren't aligned with the banks as costs went up (government regulation costs), and the only ones who could cover these costs were the big end of town who were still making plenty of money through all their own products. Best Interest Duty (BID) – "Safe harbour conditions" No.1 - Identify the objectives, financial situation and needs of the client that were identified through their instructions No 2 - Identify the subject matter of the advice sought by the client No 7 - Take any other step that, at the time the advice is provided, would reasonably be regarded as being in the best interests of the client, given the client's relevant circumstances. – This is a catch-all that can catch out inappropriate advice every time This is a bit heavy handed though because, in effect it doesn't look after the clients, it just forces advisers to spend more time and effort covering their butts. Who are the winners and the losers? The advisers who are with institutions are still winning! Industry funds, banks, anyone with a product from which the company collects a clip. Adviser insight study - $2,500-$3,000 actual cost vs $700 cost clients would expect to pay. Independent advisers - The costs are high. PI is about $10k p.a. Costs that need to be passed onto clients in order for a company to remain in business. What will the end result be? Greater inequality – as the cost of advice goes up Cost of operating increases Needs to be passed onto the consumers Independent fee-for-service gets more expensive The options you have as an individual Go to bank/industry fund (product owners) – Cheap advice for the same situation Pay more – you might get good advice. You have to pay more for now to see benefits later, but when you receive the advice you should be able to understand how the advice will benefit you Creates inequality Those that need advice – those will little financial resources – can't afford it Those that have a lot of money – do they need advice? Yes, but they pay for better advice and continue to improve their situation and perpetuate inequality. Incenti

This is how the wealthy get wealthy, how the rich get rich! We're discussing the two-tiered economy and leveraging – taking something that you don't have, investing it, and growing that over time. It's one of the tricks behind how companies and individuals can amass such great fortunes leveraging to generate additional returns. But, the higher the reward, the higher the risk. You can do it to! Only catch is you have to borrow at a higher rate than the Banks, so you better make it worthwhile! What the process is, how you can make it work to your advantage, and how to not mess it up. Debt – Leverage & Borrowing money to invest Agree or not – Is $100k worth more than $50k? – It's about the nominal increase in value Looking at returns as a percentage of the investment value – the greater investment value, the greater dollar value or nominal return at same percentage rate. We are locked into same percentages for ASX – however different amounts invested will earn different nominal returns in the same environment. The rich ARE getting richer – due to having larger amounts invested into the same stuff as everyone else, earning the same percentage return. Does debt go up with inflation in value? No, you pay interest instead This is why you borrow to invest in something that grows, rather than just keep it in your bank account. Time goes on, your investment increases, debt doesn't. Borrowing funds to invest is a strategy known as leveraging. Good Debt – not because you can claim a deduction for the interest payments but that you're investing in something that increases in value. Bad debt – you're simply paying interest to borrow money and the value isn't expected to increase The principle of increasing long term capital growth rather than investing in something for an income. How it works Options Home equity – Drawing on equity to buy shares, or managed funds Debt recycling - borrowing more each year and using the income from investments to pay down bad debt Leveraging works better for growth and not cash flow. Having it is neutral position to slightly positive is thing that max leverage. Loan to value ratio (LVR) is the loan amount divided by the value of your property Paying back your loan principal reduces your LVR = Lower multiple of growth, but lower repayments for cashflow. Increase loan with value = Increasing multiple of growth, but higher repayments. How to start Example: Property – Initial purchase and building equity Utilise equity of $100,000 to purchase a property for $500,000. This gives you a LVR of 80%. If the property value increase by 8%, you have an 8% return (8% of $500,000 = $40,000) Essentially you have put $100,000 in to get $40,000 back, or a 40% return. Interest payments – Have to repay interest on the borrowings. The borrowing of funds against a property for investment purposes. The process involves having the home revalued. Is it worth it to leverage? Hurdle rate - the minimum rate that you need to earn when investing. When borrowing to invest, your hurdle rate will be the cost of borrowing the funds (interest payments). Downsizing risks - Where it goes wrong Wrong investments, no diversification. Shares or managed funds? No liquidity, or not reducing investment time risk – Dollar Cost Averaging (DCA) Disposable cash flows low – job security Panic selling or being forced to sell Buffer account – lower LVR or surplus cash Example: Your property, valued at $500,000 has grown to $700,000, your mortgage is $450,000 If the value is $700,000 and the current loan is $450,000 The bank will currently lend up to 80% of the value – an 80% LVR This means that you can borrow more against the property, up to 80%, or $560,00. That's an extra $110,000 you're able to borrow against your property. Initially $30,000 is invested with monthly investments of $3,000 established. So, in summary; Leverage for growth This is a LONG-TERM strategy Risks can be worth it if done correctly We would LOVE to hear from you! There is only one way we can ensure that we're addressing the topics that are important in your world. Let us know that you are listening and what you want to hear. Ask a question, leave a review, comment on Facebook or email us at info@finance&fury.com.au iTunes Facebook Finance & Fury Website Remember – this is General Information only! This podcast includes general information only and does not take into account your personalised situation, including: Investment objectives Financial situation Particular needs You need to assess its appropriateness before you make a decision based on any general information. Share your knowledge!

Welcome to this week's 'Say What Wednesday' episode! Our question today comes from Anna …who was actually listening to our podcast while driving her tractor on a farm, which is pretty cool! Anna asks, 'how much is the economy of regional Australia worth? Is this growing faster or slower than metropolitan areas and what will it look like in the future?' We'll define 'Regional Australia' as all areas outside of metropolitan areas. Let's get started… Regional Australia - Population breakdown 69% of Australians live in major cities, 20% live in inner regional areas 9% in outer regional areas 3% live in remote or very remote areas What is it worth? Workforce – One third of employment in Australia Production/output - Regional Australia accounts for around 40% of national economic output Industries According to the National Rural Health Alliance Limited's online publication, "The little book of rural health numbers" (Nov 2015), "Approximately 67% of the value of Australia's exports comes from regional, rural and remote areas." The publication also cites the following data; Tourism in regional, rural and remote areas contributes about 1% of Australia's gross domestic product (GDP) ($16 billion) (Regional Australia Institute); agriculture contributes 3% (about $50 billion) to GDP (or 12% (about $150 billion) bring in around $40 billion in export income (around 13% of total export income). (National Farmers Federation); The resources sector (mining, oil and gas production) contributes around 10% of GDP ($150 billion (Minerals Council of Australia)), amount to around 50% of exports. BUT: Wikipedia asserts that mining (excludes oil and gas) contributes about 5.6% of Australia's GDP and around 35% of Australia's exports; You can read more here It's all related! How the economy works – The supply chain and flow of goods and services within the economy The Multiplier Effect – 1 tonne of Iron Ore; extracted, transported, produced into steel, sold, transported, used to manufacture something else Again, as referenced by the National Rural Health Alliance Ltd, "Research by the Reserve Bank of Australia has confirmed the extent of positive spill overs from the mining industry to the wider economy. The resources sector as a whole (including resource-related activities) is estimated to account for around 18 per cent of Gross Domestic Product (GDP) in Australia and almost 10 per cent of employment." National Rural Health Alliance's report discusses that in 2010-11 there were 307,000 people employed in agriculture, with 1.6 million jobs across the supply chain agriculture powers. (Data sourced from a previous National Farmers' Federation report. The most recent version of the report can be found here) Each Australian farmer produces enough food to feed 600 people, 150 at home and 450 overseas. Australian farmers produce almost 93 per cent of Australia's daily domestic food supply. Crystal ball - What will it look like in the future? For growth – For urbanisation – Population shifts A study by KPMG - mining is stimulating residential population growth The mining industry is boosting incomes, attracting families and reducing unemployment As always guys....get your questions in! go to https://financeandfury.com.au/contact/ No question is too big or too small. Today's References National Farmer's Federation (2017). Farm Facts | National Farmers' Federation. [online] Nff.org.au. Available at: http://www.nff.org.au/farm-facts.html [Accessed 20 Apr. 2018]. Minerals Council of Australia (2013). Analysis of the Changing Resident Demographic Profile of Australia's Mining Communities. [online] Minerals Council of Australia. Available at: http://www.minerals.org.au/file_upload/files/reports/MCA-13-ResidentialProfile0131-MYR.pdf [Accessed 20 Apr. 2018]. Regional Australia Institute (2015). Talking Point: The Economic Contribution of Regions to Australia's Prosperity. [online] Regional Australia Institute. Available at: http://www.regionalaustralia.org.au/wp-content/uploads/Talking-Point-The-economic-contribution-of-regions-to-Australia's-prosperity_to-send.pdf [Accessed 20 Apr. 2018]. Ruralhealth.org.au. (2015). Economic contribution of regional, rural and remote Australia | ruralhealth.org.au. [online] Available at: http://ruralhealth.org.au/book/economic-contribution-regional-rural-and-remote-australia [Accessed 20 Apr. 2018].

Welcome to Finance & Fury. I'm sure that everyone's heard the saying, "playing it safe" before. And in any game, it's generally a good idea. If you're playing a game or participating in anything, you want to make sure you don't get kicked out of the game too early. And that's where diversification comes in with investments. Its about covering your butt to make sure you don't get kicked out of the investment game or at a certain point where it's actually really essential to have your investments. We'll be running through today; why even bother, how to get it right (because that doesn't mean just spreading the risk around, it actually means increasing your returns as well) and then practically, how you can achieve that. Spread the risk Risk measurement - volatility Correlation Perfect correlated (move in the same direction by the same magnitude) – Australian to International about 80% or 0.80 Think about it as how related things are in their movements together For example, driving down the highway – cars going same speed in the same direction, measured as 1.00 Driving a bit slower: 0.90 Someone driving towards you, on the wrong side of the road – perfectly uncorrelated, maybe -0.60 The important thing is coming up with the right mix of correlation between investments helps to protect you from downside risk. Last 20 years of returns Best Worst Negative Cash 1 7 0 Fixed Interest (Bonds) 4 5 1 International Shares 4 4 6 Listed Property 5 3 3 Australian Shares 6 1 4 Example Water flowing down stream. Rocks stay in place regardless of the direction of the water. Salmon swim upstream against the current. The correlation between those three elements is a complete mess. If you're investments are all over the place it's really hard to get a targeted return. Diversify! Focus on increase in value, not just returns Would you prefer an average return of 11.40% p.a. for 25 years or 10.20% p.a. for 25 years? More is better? Not always…but why? Let's say 11.4% is the return on an international share portfolio. 25 years ago, you invested $10,000. This has now grown to $100,000. But! The returns are not compounding, they're "average" returns! With compounding this would have been closer to $140,000 rather than $100,000. Some years you gained, some years you lost, some years stayed the same. Let's look at the second half of that trick question. 10.20% average return. 25 years ago, you invested $10,000 into an investment with a "growth" profile. 40% Australian Shares 40% International Shares 20% Bonds (Fixed interest) This would be worth $106,000 now! You made $6,000 more on an investment with a 1.20% lower average return. The downside movement has been reduced, which means even after an investment has dropped, you have more money still sitting there ready to go up. Would you prefer to get a 5% return on $100? Or 100% on $5? – it's the same thing in value gained, but it's the risk that varies. You more you diversify, the more you have in investments – this shows progress The equations – You get more Can diversify more You get more out of that – plus it becomes safer The process If you're just starting out, you're probably not in a position to just go out and buy 100 properties, along with a few million in shares, and build yourself a nice big diversified portfolio so it can be hard to get right at the start with limited assets. Where to start? What have you go to work with? What is the outcome? How to determine what to invest in: Risk tolerance Required Return Time horizon of investment Just start! How many investments: First cover the bases mixing combination appropriate asset classes Then, diversify within an asset class Easy diversification Having a diverse portfolio can be an expensive and timely to manage. Financial indices can help to solve this. A financial index is a measurement of the asset class (or market segment) it is representing. Australian Share indices ASX20 – Top 20 companies (by market cap) ASX200 – Top 200 companies (by market cap) ASX300 – Top 300 companies (by market cap) All Ordinaries – Top 500 companies (by market cap) An index is a cheap way to provide diversification as it captures many investments in one holding. Risks of diversifying and where it goes wrong! Overdiversification – Can create a reduction in performance. Making a reduction in standards of investments. An increase in transaction costs. Holding many of the same type of investment. Not diversifying within asset classes. Summary - Diversifying is awesome Means you are buying more investments Grows your wealth in the process while protecting it As your ability to buy investments increases, your investments are more stable and secure Just start 😊 Finally, …thank you! The podcast has received tremendous support so thanks to you all. Great to hear all of your feedback and know I'm not talking to myself every week. Questions and feedback, go to financeandfury.com.au/contact

Let's take a look at a recent Press Club speech from the Australian Greens leader, Dr Richard Di Natale, "With the radical way that the nature of work is changing, along with increasing inequality, our current social security system is outdated…A modern, flexible and responsive safety net would increase their resilience and enable them to make a greater contribution to our community and economy. That's why we need a Universal Basic Income. We need a UBI that ensures everyone has access to an adequate level of income, as well as access to universal social services, health, education and housing. A UBI is a bold move towards equality... It's about an increased role for government in our rapidly changing world." You can find this Press Club speech on the Greens' website https://greens.org.au/npc-2018 What is Universal Basic Income (UBI) Here in Australia, it has been suggested the government might hand out somewhere around A$20,000 per year to every man and woman (with figures between A$10,000 and A$25,000 discussed). The UBI scheme proposes that the government distribute a flat-rate payment to every adult citizen, without work testing or individual level of participation in the labour market, without job-search requirements or even submission to drug tests and would be implemented as either a partial or complete substitute for social security and welfare programs. Where does it stem from? UBI has returned to the policy agenda as the result of concerns about technological change. Some commentators argue that new technology will permanently reduce the demand for labour leading to job losses, stagnant incomes and worsening inequality. Technological unemployment – a long history During the Renaissance period for example, where a lot of people were put out of work in transcription and textiles with the invention of the printing press in the 15th century and knitting machines in the 16th century Industrial revolution – Steam power, eventually engines Agriculture 1920s – Tractors – A decline from 65% average in the 1500's, down to 40% in 1800's. Now it's down to 1-2%. This is a massive displacement of employment wouldn't you say? Has employment gone anywhere? Employment at all-time high. More people on the planet than ever, lower unemployment rates. That means, there's lots of jobs - as tech increases, options increase, jobs increase. Okay, say we do get to the point tech can do everything for us…we may as well collect our income from these robot slaves. Just hope they don't become self-aware otherwise they might want to keep some of what they work for. How it might work? The numbers – population of 24 million 18+ at $22,000 (Age Pension rate) = $428 billion Is there a solution? Tax more (or borrow): Get rid of Tax free threshold? On top of what we earn? Cost money to collect, so they would have to take more to give back less …20% slippage on their collection costs. The tap will run out! Socialism doesn't work as eventually there is nobody left to take stuff from. Example – 5 friends in bar Guy #1 spent years working 80-hour weeks, good job now, banker Another went to Uni – comfortable job at 35 hours a week The other 3 are unemployed Every week the 3 who are unemployed ask the guy #1 to buy their drinks, guy #2 gets his own drinks, since he has a job. One week, guy #1 says no, so his friends start laying on the guilt …How long does he go and buy round after round for his friends? Then, when guy #1 stops paying, who is going to pay the bill? Guy #2? After a point, the 3 unemployed guys are suddenly in a much, much worse position because no one is buying the drinks. In the real world That one guy, or top 20% of people, pays 71% of income tax. How long would they keep footing the bill for their friends who are not working? The what about companies? When robots take over and production costs decrease, do they make a tonne more profits? Not necessarily. Lower production costs see in greater competition. Company profits don't increase in the long term, but prices of goods do drop! Going back to the quotes from the speech… "With the radical way that the nature of work is changing, along with increasing inequality, our current social security system is outdated," Needing a radical way that will assist everyone with our current social security system. I do agree that it's a bit outdated and might be looked at in the future…however… "A modern, flexible and responsive safety net would increase people's resilience and enable them to make a greater contribution to our community and economy." The part in the speech about being more resilient as a result of this income, its actually the complete opposite when you look at it. Its 100% reliance on the government. Some people may stop being self-reliant and making their own income - that makes you reliant! The government will (apparently) take care of everyone if only you give them the money to do it. In my experience I tend to know how to care for myself in better ways than the gov

Today on Finance & Fury, we're talking about …risky business! Why take risk at all when investing? There must be a reason some people are willing to expose themselves to unwanted troubles, to downward movement in their investments? As the saying goes, 'fortune favours the brave' but unfortunately you still have to get it right! You can be as brave as you like, but it can still go quite wrong. Getting it right with 'risk' without actually taking much risk, is really the smart, brave thing, rather than the blind silly thing of jumping 100% into an investment off the hope that it will go up. In this episode, we'll look at how to use risk to your advantage. Fortunes are built by those who have been brave investing in good long-term growth investments because you do not have to work as hard, if you're in the correct investment that's growing for you behind the scenes as opposed to something that might go down in value making you have to work harder and harder to build that fortune. Types of Risk Pure (Absolute) Risk Events that happen where the outcome is either loss or no loss - there is no potential for gain. Examples: A car accident, your house burning down, health conditions, or death. Speculative Risk The chance of a loss or gain in an investment. Measured by volatility, which is just a statistical measurement that can make things look 'risky', when they're actually quite a good investment. Why take risk at all? Why speculate? To win! You have to be in it to win it - staying out of this game, or never taking risk, is actually losing by default Volatility in daily life Volatility is the movement of the price of an investment – either up or down As humans we are 'volatile' with emotions for example Road rage A volatile partner; you get home one day to a pan being thrown at you for being late, or you get home the next day and the pan has been used to cook a meal waiting for you. Volatility in finance/investments (the boring 'Stats' definition) The changes in the price from the mean (average) Measured by Standard Deviation; the measurement of the average movement a share prices makes away (up or down) from the average price. A standard deviation of 1 means there's a 100% possibility of movement from its average. The good and the bad So, what's bad about volatility? The downside movement! The potential for downwards movement, or loss in value Though of course, volatility goes both ways - it also measures the upside movement, or potential gain For example - A2 Milk Shares (ASX: A2M) has a standard deviation of 421%, it can change in price by $2-$3 very quickly. Increased in price from $0.5 to $11.50 in 3 years. Gains are movements away from the mean, so as you increase the price quickly, the standard deviation also increases. Risk and Return Return = Total Income + Growth (minus inflation if looking at the real return in the long term) Growth = Volatility The increase in value of the investment itself The more volatile the portfolio is, the more it has the potential to grow – but it can also go down! You can choose to reinvest income or have it paid to you in cash. For example - You have an investment of $10k, paying an income of 4% ($400) p.a. If you're invested in cash, which is paying 4% income out to you every year, you may choose to reinvest this income. Over time, the income your investment is generating increases from $400 to $592 in 10 years, and $876 in 20 years. So, in 20 years you've more than doubled your income from your original investment, by simply reinvesting the income. This asset doesn't have any growth though it's just cash sitting in the bank. Now, let's introduce growth into the equation - You have an investment that is not only generating 4% p.a. income, but also 4% p.a. growth. You reinvest your income as in the previous example. Over time, the income your investment is generating increases to $868 p.a. in 10 years, and in 20 years it's $1,864. From a 4% increase in growth, you have an additional $1,000 per annum, which is more than double what you would have if invested in cash. The only difference between these situations is the volatility of the investments – one is considered risky, the other one isn't. What causes share price risk? Supply – Number of share listed/available to purchase Demand – How many people are buying or selling the share Price Factors: No crystal ball Business environments go through peaks and troughs (resources) Companies face competition Technology changes Poor management Legislation/Political Risk How to avoid it? Similar to relationships, you get to know the signs Never had a relationship? Well, you might not know the signs If you have gone through them over and over, maybe you either love volatility or you can't tell the signs either. But if you can tell over time, you are learning You invest in relationships, hard to know beforehand. Here's what to look out for with your investments: Ways to avoid Risk of loss Avoid over demanded companies – Bubbles Risky inv

Welcome to 'Say What Wednesdays' - Where we answer your finance questions. Today's question is from Rhys: "I've been seeing stories on the news about Trump putting tariffs on China and sanctions on Russia. What is the benefit for the US to do this?" Thanks Rhys Economic sanctions Economic sanctions are penalties applied by one or more countries against a targeted country Examples - trade barriers, tariffs, and restrictions on financial transactions Economic sanctions are used as a tool of foreign policy by governments. imposed by a larger country upon a smaller country for the latter is a threat to the security of the former nation or that country treats its citizens unfairly. They can be used as a coercive measure for achieving particular policy goals, e.g stopping Illegal trade or for humanitarian violations. Economic sanctions are used as an alternative weapon instead of going to war to achieve desired outcomes. Effectiveness of economic sanctions Studies Haufbauer - 34% of the cases were 'successful' Robert A. Pape re-examined their study, and only five of their forty so-called "successes" stood out, dropping their success rate to 4%. Types Import restrictions - consumers in the imposing country would have fewer choices of goods. Export restrictions - the imposing country could lose markets and investment opportunities to competing countries Some policy analysts believe imposing trade restrictions only serves to hurt ordinary people. Jeremy Greenstock - sanctions are popular "that there is nothing else between words and military action if you want to bring pressure upon a government" What is a tariff Tax on the imports or exports of something between countries. Example - Customs Duty - Tax on the import How it works Penalise other places for bringing goods in – but flow on effects – companies etc Free trade agreements – FTA. In summary, tariffs are a tool and hurt people on both sides.

Welcome to Finance & Fury! Is it better to actually make money or take money? Today we'll be discussing whether it's better to actually cooperate with companies or compete with them, and the best ways to actually make money of your own. And specifically we will be discussing shares and what to look for when you want to buy shares as well. Because when looking for the best companies to own and how to pick them, it's all about picking the best company to cooperate with. And we'll run through the different methods of people use, whether it's protest, plunder or profit. We'll discuss a lot of the metrics around which shares to buy and which should actually work better for what your goals are in the long term. So, to take us into it, Mr. Fury... Enough is enough. I have had with my personal finances being all over the damn place. Everybody's strap in - it's time for Finance & Fury. Firstly, what is a share? Share, stock, it's really all the same thing depending on which country you're in and what you call it. It's simply an ownership in a publicly listed company. And companies are a separate legal entity set up to operate (normally) businesses. Most companies that have listed on the ASX, which means that they've had a private company and they've reached a point where they can actually put that publicly available for everyone else to buy because they've got to a point where they're big enough to justify it. Because, to list on the ASX, it costs quite a bit of money. And most of the company is currently on there were small businesses that started off, grew over the years, and then got to the size that they could list and have external investors rather than just a few individuals who privately owned the business. And that's where most of these companies have come from, where they've been startups that have just grown really, really, well and provided a service that people really want. There are the exceptions to that, such as the previously state-owned ones like Telstra and the banks that got listed when they no longer were owned by the government. But, when you buy a share, what are you getting for it? Well you're simply owning the business. If you buy a share in a company, say Telstra, Commonwealth Bank, and any of them, you're technically buying a part ownership in that business. Because rather than being privately owned, it can now be publicly owned by anyone. And what you get for buying a share? Well, being an owner in a company, you're entitled to some profits. If the company makes profits then they can pay those out to you in the form of a dividend. So, you get some income from the share. You also get voting rights. If the board aren't doing a good job or there's something going on behind the scenes that the shareholders don't like, they can vote the board members out and they can actually have a quite a substantial influence over these companies. Then, the thing that you hope to get most of all from a share, is actually sharing in the company's success, where as they grow and increase their profits, you'll profit off that as well being the owner of the share. Before going further, we need to clear something up. The board of directors - they're the ones in control, really, of a lot of the decisions of the company - around who the management team is and a lot of the decisions they make. They have one job - it's making shareholders happy. If you own a share, the board of directors in the company by extension really only has one job beyond just providing what service they do, and that's to make shareholders happy. So, they're meant to provide the best service to the public to get the most amount of profit and do the best job that they can for the business, on the shareholders behalf. And that's through making the company do well. And they've got a lot of important decisions to make around what's the best use of the profits. Because if a company earns an income, pays its tax, then it has profit left over - and it can either reinvest that into the company, or pay you a dividend. And that's important for the board of directors to actually get right. Because if they don't shareholders aren't happy and when there's the choice of either investing internally in a project or paying investors a dividend, it really has to come down to what's going to get the best return. Where, if you as the board of directors, see a project to invest in, that could make maybe 10% in a year, or 12%...Or you could pay that out as dividend, which shareholders might value higher than that, it's better to pay them the money. And we've seen many, many, cases of poor, poor, management getting this decision very wrong. Where they think that it's a great new opportunity to go into - new and exciting fields outside of what the company actually specializes in - and the use of those profits into a poor investment decision actually really hurts the share price and hurts the shareholders. So, shareholders don't get happy and then that's when they sel

Welcome to finance and fury, the Say What Wednesday editions! Today's question comes from Dale: "My question refers to a point you and Jayden made a few times about recycling debt or using good, specifically using equity to purchase shares. I understand that you can claim the interest paid on the equity as a tax deduction. So, does that mean you have a second loan to pay down? And also, how does it look at the backend when you want to liquidate your shares? Great questions! Today we will run through each one of these covering off on Leverage. Leverage is when you borrow to invest money, and why do this? Well, is $100,000 more than $50,000? Agree or not? It is! And that is what leverage does. Borrowing fund to invest into something to increase the value of the investment. And it works off getting percent returns, where the greater the value of something, the greater your real return in dollar figures off the exact same percent when compared to a smaller investment. We are all really locked into the same return the ASX can give. If you put money into the ASX300, everyone invested in the ASX300 gets the same return. However, those with more money in it will get more of a dollar value of a return. That's the whole "Rich getting Richer" saying, where the same percent increase off a greater value will lead to a greater return. Now on to good debt. As Dale said, if you can claim the interest against the debt, it is generally considered good. And to make it eligible to do that it needs to be invested in an income providing asset. More importantly though, good debt is debt that is being used towards something that will actually go up in value. If it is on a personal loan or something that will actually go down in value, that is what it is bad debt with credit cards or personal loans. Plus, no deductions. But for good debt, if you take out $100,000 to invest in shares, the shares should increase in value while the debt shouldn't. It shouldn't go up with inflation, so using leverage can help to increase your overall wealth when your starting values are relatively smaller than what you would like. As a warning, when borrowing funds to invest both your positive and negative returns are magnified. This is general information only! But how borrowing-to-invest works in this case is from what is called home equity, where you borrow money out of your home to buy shares or managed funds. Equity it just money you have in the value of your home. If you have a $1m home, you can borrow up to 80% of that value. So, if you don't have any debt against your property and it's worth $1m, you technically have equity in that property of $800k which you can borrow to utilise to invest. And even though it is your own personal residence, because you are borrowing funds to invest in something that produces and income, then that will actually become a tax-deductible expense with the interest payments. As opposed to if you took money out to buy a second holiday home. And any investment that you invest in that produces an income, you can claim deductions against it. Either for the cost of the investment (management fee of the platform you are invested on) or the interest that you have to repay on the borrowed amount. Now, the process of borrowing money against the home going back to Dale's question. You do need generally to get a separate loan if you have bad debt attached to your home. So, if you have a home, again $1m, and there is a $500k mortgage on it, that 500k mortgage is your bad debt. But then you can create a separate loan (or second loan) and borrow money on that. The reason why you have to take out a separate loan is to keep track of the interest components of repayments. Because if you have one loan that is principal and interest that is bad debt, and you take out more money on top of that and invest those funds, it is going to be very hard on a month to month basis (especially if the rate is variable), to work out what component is interest of the repayments towards the investment and your mortgage. Mainly, accountants require a second loan and the ATO requires a second loan to actually make sure the interest being claimed is 100% accurate. And with the separate loan, it does mean that you have to pay it down……if you choose. But you have time! Like all loan you can take an additional 30-year loan on a separate facility on your home. But if you do want to pay it back, then yes, you over time will have to repay it. And the deductible interest you claim that at tax time. The way that works is during the year you earn your income, then when you lodge your tax returns you'll list on there income earned from investments and personally, and the interest you have paid on those investments to offset the income. Why it's great to have a separate loan as well, is that you can structure it differently to your bad debt. And one of the best waits to structure investment loans may be on Interest Only payments rather than Principal and Interest,

Welcome to Finance & Fury! Today we're talking about increasing your net income …and the way to do that is reducing tax. So, in today's episode we'll run through why we pay tax, where it goes and I'll break down all of those dirty little "loopholes" that you're hearing about, how the super wealthy tax dodge every single year, how they pay no tax…well, guess what! you're all entitled to do the exact same thing if you're in a similar position. So, to take us into it, Mr. Fury… Enough is enough! I've had it with my personal finances being all over the damn place! Everybody strap in…It's time for Finance & Fury. Before jumping into all the amazing tax dodges, I want to talk about monopoly again because there's a part of that that I really, really, enjoy and it's the fact that every single turn being forced to pay other players based around how many properties you have, is purely chance. Imagine that this specific card in monopoly where you draw it, and every home that you own, you have to pay other players twenty-five dollars for that. Well, imagine that it was guaranteed in monopoly every single turn rather than just based around picking up one random card, I worked up that from this card you're paying around 20% of tax, where the average cost of a house in the game is around $125 - so that ranges from $50 to $200. And if you're paying $25 on that average, it's 20% of tax and it's actually a really rare event to actually get that card because you're more likely to land in jail. Everyone's played Monopoly I'm sure. Imagined that this was a guaranteed outcome every single turn, how would you play? Would you go hard trying to get as many properties as you can, accumulate as many homes on them, or would you sit back and wait for your payments from other players? And taxes (beyond being a certainty compared with death) really, it's money that you pay to the government to spend, which in a lot of cases does just go to other players. The sources of tax in Australia you've got your income tax (which is based around marginal tax rates on what individuals earn) and that can range from 0% to 47% with the Medicare levy. That's also paid on capital gains tax and then you've got other taxes like sales tax (which is the GST on all goods and services produced), you've got state taxes as well, such as payroll, stamp duty tax, and at the federal level as well you've got company tax rates. So why do we pay tax? Well you go to jail if you don't. But beyond that it goes to help run the country with all the operations and services that the government provides. In the latest budget it was estimated that a spend of $464 billion's anticipated for the financial year. The tax revenue for the year was $433 billion. So, there's around a $31 billion or so deficit there. Of that spend of $464 billion around 16% of that goes to healthcare, 7% goes to education, 4% goes back to paying interest on debt that's accumulated, because if there's a shortfall in spending (such as that $31 billion in that previous example) the funds are borrowed and then that interest has to be repaid as well. And that comes from our taxes. But when you go to the overall spending picture 35% is spent on transfer payments to other people. That's a form of social welfare where it's actually decreased from just shy of around 40% over the past two years down to 35%, so, it's a good step in the right direction. However, it's still $430 million every day and the Australian tax policy, it's designed to be what's called "progressive" where the higher that you earn in assessable income, the more tax you have to pay at a %age. And there's a massive debate between politicians and economists over the role of tax policy in affecting the economy, where it can help mitigate or exacerbate wealth inequality. And, it also has effects on economic growth. And it comes back to the question of the "progressive" policy designed to be fair, but does it create fairness and equality? I looked up the definitions. The definition for fair is treating people equally without favoritism or discrimination. The definition for equality is the state of being equal especially in rights, status, and opportunity. And everything's equal when there's a uniform application or effect without discrimination on any grounds. Based on that definition it sounds like it's talking about equality of opportunity, where everyone has the same opportunity, while not being in the same position, but we're all granted the same rights and the same ability to do what others are as well. What the progressive policy is focusing on is equality of outcome, which is a massive difference to an equality of opportunity. Where the equality of outcome simply means that the more that someone else has, it has to be taken away to give to someone else to have, so everyone can have the same outcome. And unfortunately, with that policy of equality of outcome, the more equality is actually pushed for, the less equality is actually provided to

Welcome to 'Say What Wednesdays', this 'Say What Wednesday' is brought to you by Adam and Tate, they both asked separate questions about the Franking credit issues and just to help clarify around that because Labor's announced some proposed changes to the Individuals Wealth Policies, one of them includes a thing called, Changes to Franking Credits. This system for Franking credits was set up so individuals weren't taxed twice on any dividends that they received from companies that they owned. The other individual polices that Labor have introduced, or want to introduce, are to lower the income threshold for superannuation tax rates for contributions so, they want - if you're earning greater than $200,000 you are going to have to pay 30% on contributions to Super. They want to limit 0.5% increase to the Medicare levy for people earning over $87,000, lifting the top marginal tax rates by 2%, scrapping the first homeowners super savings scheme, restricting negative gearing for properties, halving capital gains tax discounts to 25%, removing refunds for the dividend imputation credits, which are the Franking credits, lowering non-concessional contributions to Super from $100,000 currently to $75,000 and remember a few years ago, $150,000. A few years before that it was unlimited, and they want to dump the ability to make - catch up contributions for any individuals with low superannuation balances and they want to remove the ability for anyone to make personal tax-deductible contributions. So, it's very much an attack on superannuation and those on the higher marginal tax rates but Franking credits is one that's actually going to affect everyone because if you buy a share in a company you technically own that company then that company makes money, they pay tax on the money they make and then they have some profits. With those profits they have two uses, they can either reinvest that money in themselves so they can purchase new stock or they can expand their business operations, hire new people or they can pay dividends, the profits, out to investors - all those who are in the shares in the business and the Franking credits were introduced to avoid the company paying tax and then paying profits out to the individual and them paying taxes as well. Because, say a company has a $100 revenue, they pay their company tax rate of 30% they're left with now $70 of profit. If they choose to pay the full amount of profit, that's $70 out to an individual, if they're on the highest marginal tax rate that $70 is 35 to that individual. So, what was $100 is really now being taxed at 65% that the government's taken and the individual is left with 35, so that's what Franking credits were introduced to avoid but with the removal of that there's two separate issues, which are actually dragging each other into different directions, where it's actually bad for all retirees and it's actually bad for poor people as well. Where if retirees are in a situation where they're drawing income from shares whether that be superannuation or personally they're going to lose a lot of their net incomes because their either are going to have to pay more tax or they're not getting those Franking credits in cash back. And anyone who's on low marginal tax rates as well, they don't have any other investment income to offset their dividend incomes, they're just going to be losing their Franking credits and increasing their effective tax rates from around zero to 30%. So, it's a big change that really has many - many losers and a very finite number of winners …and when looking at the winners you can sort of tell who's driving this policy. So, the losers - anyone who's invested in shares. That can be broken down, even Australian fund managers (people who professionally invest in shares for a living) they pass the Franking credits on to investors and that's a big incentive for people to buy Australian share funds. Also, the second biggest losers will be anyone who has a self-managed super fund or an individual wrap superannuation account where they receive Franking credits. You don't have to be a millionaire to have these, you can have a super balance with one hundred thousand and access direct Franking credits as an additional income to you. But it's being targeted as just, again, lies. Of just painting that the wealthy are the only ones benefiting off this. But retirees are really, and actually those on low marginal tax rates, are going to be the hardest hit because anyone who's done an accounting 101 course knows that if you receive a dividend of say $100, you're going to be assessed as owning an income of the dividend plus the Franking credit. So, what you're really getting taxed on $142 anyway and then you get $42 back, so it's not like these Franking credits for the ultra-wealthy are just, you know "free money", it reduces their tax a bit, but they still pay a lot of tax. The individuals not on high marginal tax rates, they're the ones really benefiti

Hey guys, and welcome to Finance and Fury. Today the misunderstanding we're going to be tackling is how to be wealthy. There seems to be a lot of "rich-hating" going on around at the moment, but why? I think it's just a lot of not understanding how people actually got to be wealthy in the first place. So, today I want to treat wealth, or building it, just like a game. Because most games are pretty fun to play, and it's all about just following the basic rules of games to actually win in the end. And generally depending on the game, it's who's accumulated the most by the end. And we'll be running through the best ways to win a game - whether it's actually through competition with others or cooperation with others. Because there's a lot of misconceptions around how the economy actually works, how building wealth works, and why the wealthy are actually wealthy, and whether they've competed to get there ie just taken everything from you, hence why, you know, there's all the hate directed, or if they're just cooperated better than others. And it's very important to figure out exactly how they've got there because if they've done it then you can actually do it too and we'll be running through how to use these forces to succeed and build wealth for yourself. So let's get into it with Mr. Fury. Enough is enough. I've had it with my personal finances system all over the damn place. Everybody strap in…it's time for finance and fury. I'm sure every one of you have played some form of game before. You'll have a preference about what types of games you like to play, whether it be a group game, or solo games, or board games. Depending on the games you like you might prefer different play styles. Solitaire has a much different playstyle compared to a game of monopoly and I'll be using monopoly actually, as an example to help illustrate what things work in games and what doesn't. And I like to use games here just for the fact that they can be fun. Because finance is fairly boring, so why not try to make it into a bit of a game where you can start winning more than you lose. And the funner it is the more likely you'll continue playing. Firstly, going through monopoly. Does monopoly provide any benefit to any players? If you've played before you're probably familiar with the rules of the game - you all start out with the same amount of money and you all get the same roll of the dice every turn. But when it comes to who gets the advantage, it's really only who gets to go first. It's a massive advantage. If you get the head start of the first turn and the first roll of the dice, it actually reduces your chances of landing on any properties that are previously been taken. However, after this first roll of the dice your advantage starts to diminish to zero. Let's use an example - if you're on your first turn, you go first, you roll a 5... You hit the railroad (you're probably going to buy it) but then on your second turn you roll a 4 then on your third you roll a 6, and on your fourth turn you roll an 8. By this stage if other players have rolled on in the first turn a 9, second turn 15, third turn 23 is a cumulative score, well you're just landing on other properties people have purchased. So, while you haven't actually been able to manage to buy any properties you've been losing money because you've had to pay other players rent. That's where life is fairly similar, where as soon as you have your first turn (or you're born). You might be very lucky born into an affluent family but if you don't take the necessary steps and keep doing the right things and following the rules of the game, you might not actually have the same end result as someone who has just rolled very well. The basics of monopoly, it's pretty easy to master. To win you simply don't allow any other players to build houses. That can be achieved by either not allowing them to buy three of the same types of property - so you don't allow trades to occur or you purchase them up when they become available, another dirty little tactic you can use is to only build houses and never actually build a hotel so if you take up the full supply of houses no one else can buy them. The other one is to build houses strategically on the most profitable for their cost. And that's actually the orange set, if you have the orange set, or the yellow set, or the red set, they've actually some of the most profitable ones to target for rather than those really expensive ones right at the end, like Broadway. Another basic is to manage your cash flow reserves well because the last thing you want to do is be in a position [where] you land on someone else's property and you have to mortgage one of yours to pay. Because if you mortgage one of your property you can't get rent off it, and that's your real only way of winning the game of actually getting rent off other players. There are a lot of other tactics which can help as well such as if you're in jail paying to get out early. Because if yo

Welcome to the first episode of Finance and Fury and today we're going to be setting the scene for the rest of the podcast. The whole podcast is about helping to solve misunderstandings… and one really big one is actually how to get what you want financially! So, today we'll be running through two underlying factors that you can actually use to get what you want financially and to do so, we'll actually be talking about a few hot or explosive topics, so as a bit of a warning if you are offended by sensitive things this might not be the right episode. But it's not meant to be offensive in any way, it's purely helping to provide some illustration on a few factors behind what actually causes a bit of a disparity and financial pay and a few other things. And the most important thing is actually going to be covering through what they really mean for you and how to use them, because fortunately these same underlying factors can be really applied or harnessed by anyone when they know how. So, to take us into it, Mr. Fury. "Enough is enough. I've had it with my personal finances being ALL over the damn place. Everybody, strap in, it's time for Finance & Fury." Before covering the factors behind how to get what you want financially, let's cover the hot topics. If anyone's been paying attention to the news, or I actually saw it in my Facebook feed, an article about a pay gap between the stars of a Netflix show, The Crown. So, the male actor and female actor in that are apparently being paid separate amounts… with the male earning more. Does this mean that Netflix is sexist? Well, if we only look at the difference between these two as being the gender then it's actually probably the correct answer. Unfortunately, the issues of this nature tend to have many actual causal relationships and it's almost impossible to put the blame at the feet of just one. The problem with that line of thinking as well is what's the next step, if there's not another reason between genders as to why they're owning a different amount then you can break it down where regardless of the position that they have if they're costars, main star, even just the extra that walks… Shouldn't everyone get the same? Even if another actress at similar level is in one episode, should she be paid the exact same amount as the recurring star of the show? So, it's gets very hard when factors are brought in without actually picking up the cause and treating them like symptoms and distributions happen everywhere. The 80/20 principle is actually seen when you look at rugby or soccer or cricket, any professional sport. The best players get paid the most money and that's all due to people wanting to watch them. Music as well, a very tiny proportion of people sell the majority of records or even sell the most amount of theatres around the world. Even athletics. It's all relative to the individual inequality people have, so inequality itself isn't inherently a bad thing. The bad thing about it is it's used to measure bad things. So, income inequality in this regard, if people are in poverty that's awful and that should be the focus not that Bill Gates has a billion dollars every single year in addition to, you know, your standard average Australian income because if everyone's doing okay then who cares how much he has. It's more about focusing on solving the underlying cause and not looking at the symptom and there's always going to be bad situations to measure with inequality but treating the fact that inequality exists is the enemy and focusing on one factor to solve it can lead to some issues over time and especially when the policies to solve equality really means just to have the same outcome for everyone, which will always be at the expense of someone else. So, what are some factors? Well, let's break it down. I spent a lot of time covering economics, so why not use demand and supply here again. Even in entertainment going back to Hollywood, even T.V. hosts, people watch shows for most of the time the stars that are on them, therefore the T.V. production companies or show producers they are going to want actors that are going to have "eyes to the screen". So, they're going to pay them more to incentivize them and if viewers have a problem with them getting paid different amounts, well it's pretty hard to change our preferences on who we like to watch, because if some individuals like certain actors more, they're going to see those movies… and if those actors might be a different gender then that gets a little hard to change your individual preference on what movie type you actually prefer. It's a touchy subject the next one but as a great example of one place where women actually dominate men in the industry of pay (and in just more ways than one apparently!) …is porn. Demand here creates a lot of viewers (which are men) so I actually got to research a little bit of this around who the top-ranking porn stars are for income and current assets. It was more enjoyable

Hey guys! Welcome to the wrap up party for this little intro series Well done if you've made it to this point listening. I know a lot of it could have come across pretty confusing …and don't worry I was quite confused myself by this point. So, I decided to do a bit of a summary on everything that's covered; all of the problems that we covered and talked about, and then also the potential solutions that we hope to be able to provide. The first one we went through was, where are you aiming, and why? There's a bit of a problem if you're not quite sure what you want to aim at. And, without an aim, it's hard to actually put a value to it, to not only put in place a strategy to get you there, but measure progress as well, and help provide some positive motivation along the way. You can constantly tick off little achievements say, every month, of reaching that target (because you've got a figure on it) and you know how much you've got to do to achieve it. It'll actually help provide some forward momentum towards the goal, and that's the only way to start. So, without that motivation behind it as well, it's hard to keep going …especially when there's the new shiny thing that will give us the same satisfaction (really just momentarily). And it's very fleeting because you get something that satisfies, any really, and the next day another problem takes over, and life and is back on track, and that thing that we had that was making us happy yesterday is now just a thing that is "good to have". And slowly over time there's [another] new thing that comes around. [By] defining the aim, it's really just about having a clearer idea about where you want to be and why. And helping define the aim as well, actually means that you don't need to know as much. So that's the second puzzle problem solving piece – where if you have the knowledge and understand what you need to do and how to do it (back in one of the earlier episodes we used the translation analogy) then that will go a long way to actually getting there as well. So, we want to help provide this - through not only the podcast - but also through just some education online material as well; few calculators and tools just for you to be able to work out simple savings targets of how much you need to do consistently to get there. And rather than trying to reinvent the wheel, we just picked what works. And that's just between making the correct choices and having the ability to follow a structure and plan so you don't get lost along the way…and trusting yourself to make that happen, as well. So, the next one - number three - is having the ability. Which comes in the form of a clear idea about what you're doing and how. And then lastly choices. Making the correct choices and sticking on track. So that's the forth one. So, if we could come up with a solution; to build a system, to help you define your aim, what your goals are and why you're planning to achieve them, exactly what you need to get there, how you'd do it (so, with some strategy), providing a framework and the knowledge to help put it all in place, and then allowing you to monitor and actually keep track of the progress… That's generally the aim behind the whole concept of "F.U.R.Y". FURY is a little acronym for Financial Understanding and Responsibility Yields… independence… and the whole framework (the podcast will make up a small amount of that) is really designed to help reduce misunderstanding. Because misunderstanding is where a lot of problems come from. We do things not really knowing what the long-term outcome will be. And that misunderstanding really is the first step that we're going to try to solve. So, that's built up of defining the aim, and providing the knowledge. Financial responsibility is the second part. And it's not meant to say that responsibility (in terms of, "you're obliged to do something 'cos you have to") is because you really want to, and you're able to, do it. It's not trying to say that you're bad people or any negative connotations normally involved with "responsibility", instead it's meant to really give a message that you're in control. Because no one else, unfortunately, will take the journey for you to give you financial independence. You can structure everything and have everything sorted… but unless you take that first step… it's really hard to get there! So, the next part we'll deal with and I'll talk about a bit in the next episode is the responsibility side of the picture, which is having the ability and making the correct choices. What we'll cover for the rest of this is just mainly the financial understanding side, and having an aim and the knowledge, because that will be the first thing that we'll be targeting to try to solve. The misunderstanding piece - what this podcast will be about - is just trying to reduce a few misunderstandings, and complications, and problems that people run in to. And we misunderstand things all the time. It's actually very easy to misunderstan

What do you normally think about before you go anywhere? Anyone who has ever left the house before has probably had to think about something before taking a step out the front door. Anyone who hasn't, this analogy won't really apply to you but for those of us who have, what was the last thing you thought before going to the shops? Probably fairly common - you need to do a list of what you're going to buy. And sometimes it's a spontaneous trip of just going to get one item. Thankfully, for this a lot of habit and routines kick in to take over the duty of actually getting to the shops, because it is a relative common occurrence. But say you have to drive to your relative's house and they live around 8 hours away. It's probably going to take bit more planning than just popping down to the shops or even driving to and from work every day. But generally, an 8-hour drive in the modern age (with cars) you'll not need to put too much planning in to it. Say for instance you're 15 minutes down the road after you leave your house on this 8-hour trip, then all of a sudden you realized you forgot a gift that you were taking to [your] relative. You probably would just turn home and grab it, because is a lot easier then actually try to find a new one. But say for instance you are an hour into the trip; the car breaks down, you wait for RACQ to come, they tell you that it's either going to have to be towed away and repaired, or they can just lend you a car a now, they'll deal with it, and you can drive on. Either way, what decision you make is actually all around why you are going, because if you are going to take the additional resource and spend money on not only fixing the car, but having it towed away, and having a hire car, plus the additional hassle of trying to come back, and at the same time trying to figure out what's wrong with the car... If you're not going for a reason that means a lot to you, you might just be likely to take the first taxi back home and just have the car repaired and pick it up in the morning. If you're going for your cousin's 21st birthday you might call and just apologize… but, say it was someone's funeral. You're much more likely to still proceed with the journey. So that analogy is really just finishing off from last time where, the "why" you take the journey really matters more than anything. And depending on the reason as well, it would trigger different responses based around what the incentives are. So, if you're hungry for instance, or you're thirsty even, that's just a basic need. Beyond a basic need though would you prefer to receive something now or something later? And it really depends how big is that thing, and how quickly do we get to have it. Years of behavioral studies really show that, there's [a tendency] to prefer something right now even if it's a smaller reward than something we would get in the few days' time. And it's all about what we perceive the value of it to be. So, if you perceive something as very valuable (even though it might not be valuable to others) you pay more for it, you'll go to much greater effort to obtained it, and that's part of your "why". What you perceive to be in the future and what you want to achieve has a perceived value. So, imagine you're hungry again and you couldn't leave where you are. You're stuck there for say 6 hours or so. Someone offers you a sandwich or even tells you that you can wait and then have two sandwiches, what option do you go for? So, if you've got 6 hours to wait and someone says that you can have one sandwich now, or you can wait and have two in 30 minutes (depending on how hungry you already are) just wait that 30 minutes out and then have two sandwiches, and that might get you through the 6 hours. However, they said that you can have 17 sandwiches in 8 hours, would you still take them up on the offer? The offer itself seems far less attractive because technically, if you're really hungry now, in 8 hours you would be out of where you're stuck and you'll be able to get your own food and not be forced to have a sandwich. It's the exact same rate of return; a sandwich every 30 minutes but it becomes much, much less attractive because it's in the future and we need that sandwich now. So, it's been experimented on a lot in the past - and there's a thing called the Stanford Marshmallow Experiments (they've done recreations of these studies a lot, but just go to YOUTUBE and checkout a video) it shows children put into a situation where they can do exactly that, they can get one treat now or they can wait out until the researchers come back and the researchers will give them two treats so, the expected value of what the kids thought of around having two treats is preferable to one. It was shown that those kids that could distract themselves and could focus more on the greater value rather than the instant reward, did fairly better in a lot of metrics even later in life, even getting into high school, getting into college and

To start off, do you think that having a map to financial independence would be the ideal solution? Compared to a puzzle it actually would be far better than trying to pieces together something, if you could just have a map to take you to where you needed to go. We've all used maps before. We've probably even used those old maps that are a few hundred pages long and you've to look up "G3 to E6" and compared that to the iPhone today where you've got a GPS – all you need to do is jump on the phone as long as you know the address, enter that in, and you can get there fairly easily And even if you're in a car that has blue tooth the car will talk to you and tell you where you need to go But unfortunately, that still runs into a few issues - the phone not have updated with the new internet location, it tells you to go down the wrong street or even a street that's a dead end or a no right turn that you have to make... so eventually you have to pull over, stop, and figure out where you need to get to from where you are. And that can be fairly distressing if you're in the middle of the highway, you have no idea where the next turn is. That is a fairly bad situation to find yourself in but if you're in a residential street you can pull over and generally the internet will come back on fairly soon and most people have been in this situation however if you're in say, another country, and you don't have internet and no body speaks the language either it can be much more difficult to deal with a situation like that and it's because there are too many decisions involved. If you're fairly familiar with being in the city, being in your car, the only things you need to wait for is the internet to kick back in and readjust and look at the new direction that the car will tell you to go. Then that's not really much of a burden as far as making a decision, however in the previous example in another country, you'll have to think about new ways of actually achieving what you need to do - and that's figuring out where you are and where you need to be! With more decisions comes a thing called "Decision Fatigue", and decision fatigue actually occurs to us all the time. Every single day you're going to need to make decisions. The more you need to make the more fatigue you'll have. So, think about just going to the gym. If you do 100 push ups you might not be able to do many more after that, and that's because your muscles are fatigued. And, it can be very costly to make the wrong decision when you're too fatigued to do anything more. So, if you're in the gym and all of a sudden someone needs help to lift something and you've already exhausted yourself you might not be able to help so well. With decision fatigue the best thing that you can do is try to hone in on what your goal is first. Because, when you have a clear idea of what financial independence really looks like, your choices are much narrower. However… now you have to choose which one is the correct one. And unfortunately, a lot of the strategies that are online or that are taught, they generally teach [that] all financial independence can be gained by this strategy, or dream to financial independence. And it's a bit confusing because if every single strategy will get to financial independence then there's almost no wrong strategy. It still fails to meet a lot of individuals' goals. So, by that logic, if every strategy meets your goals it doesn't matter which one you choose. You'll likely see one that's popular amongst friends or family and pick that. Or if you don't have any guidance in that direction, and you're not sure still, and everything looks like it's a good option, then you might actually not make one… and have "Decision Paralysis". It actually becomes tomorrows task then. So, the more information that you actually get (and the longer that goes on for) your brain's building up many, many, many, many stockpiles of different choices, different decisions, and it can cause people to freeze and not actually ever make a decision. There's a pretty interesting study that was done on farmers markets where they set up stalls with 3 options compared to 20. And the ones with the 3 options basically sold out their stock every single time because it was very easy for people to go up and actually just select the one that they wanted. However, if you've got 20 different options it's going to be hard to stand there and puzzle at which one's actually the best. I'm sure everyone's experienced a similar thing if you've had to go to say, the supermarket, and pick out a dip for someone. And they just asked you to get "dip". If you don't know what type of dip they want it might be a bit of a risk to not call them first and ask. And say you do just make a decision. Upon searching, all of a sudden, there's many, many, many, options and you see all the negatives about them. And that's what you see most in the news. Every time you google something it's more likely to be something negative or

Welcome to the 3rd part of the intro series for Finance and Fury Today let's start with a bit of time travel. Picture 1500's, London. All the guys have hipster like facial hair, accessories, the big beards, the little curly moustaches (wearing some frills instead though, maybe that's going to be the new trend?). And women were wearing those big wire frame silhouetted dresses, trying to make their butts look bigger rather than getting implants. Times they looked very, very different but people were still doing similar things. If you really want to picture it, just think of Shakespearean times. It was around this time where modern English was starting to take form. Imagine that you're actually now back in those times when Shakespeare is having his plays put on at The Globe Theatre. I'm sure most people have read a bit of Shakespeare or heard some of those sentences and words that are actually in there. And while it's pretty hard to interpret the meaning of what's actually being said we know that the words are, we know generally what the gist is - especially once we read it a few times it explains it. But, now go back a further 500 years. So, 1000 AD, London. They were speaking a totally different version of English, and we'd really have no idea what they're saying. So, I looked up a few words from back then, and 'danger' (I'm not quite sure how to pronounce this, again that's how little I know about this language) I think is said 'béot'?? That's how someone would cry out 'danger' in 1000AD. Imagine if someone cried out 'béot!'… and we stand around looking at them weirdly while a raiding party is just riding into town. So, life would be quite difficult to operate under those conditions. Even worse, times were different - what skills do we actually have that are applicable? So, most of society was built off agriculture-based farming systems and majority of this was manual labour, so there was no power, no running water, no phones, no computers and there was a very limited amount of information of what's actually going on in the world and all you had to work with was some very basic tools to farm some produce. And if you got dumped back then (unless you're already quite skilled up with the farming procedures, crop rotations, everything like that) it would actually be very, very, hard for us to pick that up without being able to understand what people are saying. And that would make life very, very, difficult. That's where we ended the last episode, trying to solve that translation problem. But it doesn't fully answer the "why", and that previous example just gives the answer of, "even if you can translate and someone can tell you, you still might have a hard time picking up what to do with that information". Say for instance, business owners. They can translate their own business very well but they might not need to translate the share market, or ways of building their own financial independence outside of the company, because the company can do that for themselves. It's important to speak the language of really what you want to do and what you're trying to achieve. The translation theory alone here doesn't hold because, while you can translate it, you need to know what you can actually do with it as well. And helping build that is the next step of the how we want to provide a system of financial independence. So, this got me thinking about the world of personal finance looking a bit like a jigsaw puzzle. I'm sure some people love solving puzzles and I'm sure some hate them, so let's just say that you either want to or you actually need to complete jigsaw puzzle. But the catch is you only have a set amount of time…and you've got to get it done regardless of how much you enjoy it. Generally, jigsaw puzzles come in a box. There'll be an image on the front of the finished product of what it's meant to look like and each piece has a little identifiable image on it that you can piece together eventually. And the box may contain 6 pieces to thousands, depending on how difficult you want to make it. So, if you have a puzzle though which has no image on the box, and the pieces come, (thousands of them!) with no image, it may be a little harder to actually figure out how to finish this puzzle. And don't forget time's limited so the more time you spend trying to figure out what pieces go where (because you've got no frame of reference as far as a picture to follow) its going to take many, many, more hours/days/weeks to actually put that together than if you just had that reference picture in the first place. In reality though, what happens is that sometimes the box is missing pieces. So, if you have no picture on the box, and you aren't sure that there's actually the right number of pieces in there, you might not even give it a shot to solve that problem. In this analogy the image of what the picture looks like is what you want the future to look like (so, the big picture financial independence) and then the individual im

Welcome to Part 2 of this intro series to Finance & Fury. Today I wanted to start this episode off with getting you to imaging you've hit the lotto jackpot! Say for instance, you've got a guaranteed million dollars per annum in future income, perhaps it's one of those "Get rich for life" programs where for every year of the rest of your life you're guaranteed to get a million dollars. So, what are you doing? Where are you? And how are you living your life? This might be pretty hard to think about for some (or, actually pretty easy for others) and it just depends on much time you've actually spent thinking about it before. If you had unlimited financial resources how would you spend your time? and what would you do? and would all your problems be solved? More importantly how much would you actually be spending? If you were getting a million dollars a year, would you just spend that million dollars per year, or would you have a different expense requirement in mind to just do what you want to do? And this is a two-sided problem to tackle with financial independence. First because it doesn't really matter how much money you have, it more so matters how you much you need to have. And, what would you do with your independence? And how much would that cost? So, as we went through at the end of the last episode, I think that financial independence is really reached once you have the ability to choose how you spend 100% of your time and maintain the life that you want to live in doing that. The first focus is mainly on the finance though before defining what actually independence is. And that's an issue to really tackle because if you are just aiming for that million-dollars-a-year of income, and it's only going to cost you $80,000 then financial independence is almost something that may never be achieved - if you think it's a million dollars a year. To tackle this a little further, we're focusing on a thing called 'the economic problem'. It's where we started and this is the definition of really what economics is as a class or theory is trying to achieve...and that it is how to best meet our unlimited wants with the finite or limited resources actually available. So the more I thought about this the less it actually made sense because while the second part of this is really true; that we all have limited resources or we all have a finite amount that we can actually use to put towards financial independence, the first part of having unlimited wants is what gets in the way a lot of the time. Because it's a really, really big hurdle. And, we've got really powerful imaginations so we can imagine how we would spend that million dollars pretty easily I believe, but trying to get there is quite a different story! Because, if you're trying to achieve a million per year in passive income it's going to pretty hard, and if that's what you're aiming for in independence it's going to be pretty disheartening. So, it's that very thought that made me change my mind around financial independence as a target because, with a million dollars a year (which is really more money than what anyone could want to be able to provide most of their actual needs and independence goals) you'll still probably not be meeting your unlimited wants because unlimited wants are, unlimited. And it's doesn't meet the criteria of being independent because while you're earning a million dollars a year, it depends on where it's coming from… Say you're employed as CEO of some company, getting a million dollars a year, could you walk out the door at any minute and never return? And also, be able to survive financially and meet the same level of requirements that you were before. So, say you're on a million dollars and you walk out the door, would you have enough to survive if that million dollars dried up? And if it's the case that you can walk out the door and you'd still be fine then obviously you're financially independent and you're staying on working because it's your choice. But what happens when the cost of maintaining a lifestyle is greater than the income that you'd receive if you stopped working? Then really even if you're earning a million dollars meeting your unlimited wants definition, is it actually independence? and I don't really think it is. Because you meet the criteria of being able to fill almost unlimited wants but you don't have the independence side which is really what everyone is trying to achieve. So, by this definition though would someone who lives in a forest and somehow manages to survive off no income being totally self-sustainable, would they be financially independent? Well yeah, if that's what they want to do and that's how they want to live their life. Then, as long as money isn't a barrier (and they're there out of choice) then that actually meets the definition of being financially independent. So technically even if you earn income from being self-employed, while you have no boss in the classical sense, the people that yo

Welcome to the first part of this intro series to "Finance and Fury". This series is brought to you by THINKING, as thinking is where this all started! Thinking about the easiest solutions to reaching financial independence. And, in doing so, helping to give you greater value in the time you spend listening to us. But trying to solve a problem where we would need a lot information and different perspectives to actually get to the root cause, we needed to start asking listeners and people that we deal with day to day what are the common set of problems that they face are. Because if there's a common set that everyone has, then that would be a pretty easy thing to focus on first to try to solve. But like most people, most of their goals and the problems they faced to meet these were all different, and not only that, they had different ones over different time periods. One thing though that they had in common was being frustrated that these were all still problems. So, frustration seemed like a pretty good place for us to start then because, just like a runny nose it is a symptom of an underlying cause. Frustration is a good sign that something's wrong. At lot of our frustrations come from knowing what can be, versus what is. Getting frustrated that we aren't in the position of what we know can be. I get pretty frustrated with my headphones when I get them out of my gym bag after they have been rolling around in there for a week or so, they tend to resemble a rubber band ball, and I get frustrated trying to untangling them because, I know what their functional state looks like and the longer it takes to untangle them, the more frustrating the situation becomes. But hey, if I didn't want tangled headphones, I probably shouldn't leave them in a gym bag. Seeing stories of those who appear to have reached financial independence so easily has really shown a lot of society what can be. But it's also really disheartening because for us, it's not what is. Especially with the majority of people that we are exposed to on TV, movies or music and just the entertainment industry, generally have little to worry about financially, and subconsciously I think we know it. So, with these frustrations we had something to work with, and it's a pretty good starting place to look for a common cause across all. To kick the process off, we wanted to take a step back to look at maybe if the cause could be a macro issue, something that's inbuilt into society affecting everyone. Because, if that is the root cause it's going to be pretty hard to come up with a solution to it In today's society when we have greater access to investments, and the systems that allow us to actually accumulate wealth we have greater access than ever to laws to protect us, property rights to keep what we have, banks to save money, online access to buy a share just with the click of a button. So, if we have the ability to purchase investments, be protected to keep what we have under the law, have places to deposit that and hold it securely, then society has the underpinnings of what it takes to actually be able to maintain and keep wealth. Obviously, this doesn't hurt trying to reach financial independence, and especially with the fact that the world is actually becoming wealthier off the back of this. And the proof of this comes from a study by the world bank where it shows that poverty's been cut in half over the past 30 to 15 years depending on how they measure the time period. So, in most of our lifetimes at this point, more people have been lifted from poverty than during the whole of human history. In the last 15 years alone more than half of the world's population has been lifted out of the standard definition of poverty so there's more wealth being generated across the board for everyone. But is there someone who is taking the majority of this, or getting in our way? For these people in society, we might look at the notorious 1% But… you may know some of the people in this shadowy group. Because the latest figures for Australia show that to make it, all you need to do (beyond learning the secret handshake) is earn above $237,000 a year. So, if you're earning $237,000 per year, your take home pay after you pay tax is about $152,000. It's a pretty decent income after tax. But does it really give you the wealth you need to have private jets and yachts and be this elite 1%? And are they actually sucking up all of the wealth, as a lot of studies and publications are actually claiming? To look at this we really need to break it down because I see two answers to the question, depending on how you view wealth is created, and more importantly, who should receive it. Say for instance, every year a pre-set amount of money was just gifted to the population – cargo jets come in during the middle of the night and just drop trillions of dollars onto the population and the fat cat 1% dip their hands in, grab it all, grab as much as they can and by the time they're done,

Were back! Sorry for keeping you waiting for quite some time, but our absence hasn't been wasted. As you can probably tell the podcast looks a little different, but don't worry, you're not lost. To help avoid any further confusion this is a quick announcement introducing "Finance and Fury", and also the reasons why for the change and the rebrand. We started the Rentvesting podcast with one purpose in mind, to help you become financially independent. Our goal was to do this through helping educate on property and investing, plus making smarter financial decisions to achieve your OWN financial independence… rather than following the masses. However, we reached a point where we felt there was actually little additional value that we could provide with education on "rentvesting" as our sole focus. Plus, there's no shortage of property or investment education online. So, while we felt that while we were meeting our goal of educating, would this actually help you achieve your goal of financial independence? While we think it definitely helps, we realised there were still many other factors that we still needed to focus on. Because if education alone was going to provide financial independence, then anyone who took the time to educate themselves would make it, right? So, we went back to the drawing board but this time we knew that our 'how' had to be beyond education as the sole focus and I wanted to share our progress on trying to solve this problem over the past few months. It's mainly to help to clarify what we think the key factors involved with reaching financial independence are. And this is really important as it's going to be our focus going forward. Also, we'll try to help explain the system for financial independence we're trying to implement for you to remove each one of these problems. The whole purpose of it is to make it as simple as possible as well, so anyone can use it. This has been a focus of ours for quite a number of years now so pretty shortly we hope we can overcome it. Sadly, this whole process isn't that easy to explain. I originally had it just in one podcast, but it was way too incoherent to follow. So, its now become 6 …in a nice easy sequential order. These six are a little different compared to what you're used to with the Rentvesting podcast. These aren't produced at all, they're just raw audio recordings, and that's just purely to get these all out to you without any further delay. Starting from the next episode, we work our way through some 'whys' to the complex financial independence problem, discussing all the solutions along the way. At the end of these 6 episodes I try to tie all of the problems back together with the solutions together into one workable program. We aren't claiming that this is perfect, as nothing is, but from our experience, it is workable. And not just by professionals but anyone who puts the effort in. If you are up for listening to me puzzle though this piece by piece for the next 6 episodes, join for the next where we start the journey.

Today we will discuss three things that have really helped me in my life, so I wanted to share these with you. They are three daily practices which help me to reduce stress, increase concentration and my general health as well. Meditation I started meditating about 2 years ago. At first, I was really sceptical. I always had in my head that this was something monks did under a tree, until I started trying it. Now I think of it as a bit of quiet time with some massive benefits being both mental and physical, as follows: Reduces stress – Time to switch off. All phones, computers, emails, all switched off. Studies have shown an improved ability to regulate the emotions in the brain from meditating, helping to reduce the levels of stress. Improved concentration - Meditation has been linked to a number of things that lead to increased ability to focus and improves memory. Greater concentration is related to the increased energy meditation provides to the prefrontal cortex which also helps impulse controls. Increased happiness - Studies have shown that brain signalling increases in the left side of the prefrontal cortex, which is responsible for positive emotions, while activity decreases in the right side, responsible for negative emotions. Slows aging - Studies show that meditation tend to have more gray matter in their brain, literally, more brain cells. Meditators also have longer telomeres, the caps on chromosomes indicative of biological age (rather than chronological). While meditation won't lengthen life, the increase in longer telomeres reduces stress and its effects on the body. Improved cardiovascular and immune health - Meditation induces relaxation, which increases the compound nitric oxide that causes blood vessels to open up and subsequently, blood pressure to drop. One study, published in 2008 in the Journal of Alternative and Complementary Medicine, showed that 40 of 60 high blood pressure patients who started meditating could stop taking their blood pressure medication. Meditation also improves immunity. So how do you meditate? There isn't one right way to do it, however if you are unsure you can follow this general outline: Sit or lie comfortably. Close your eyes. Make no effort to control the breath. Just take normal deep breaths. Focus your attention on the breath breathing in and out. That's it! It really is that simple so try to go for a few minutes to start with and built up over time. If you are having trouble getting started, there are plenty of options to help. There are applications which do guided sessions for beginners and also brainwave frequency applications to help as well. At first, random thoughts will pop into your head however try to just let them go and focus on your breath again. Breathing exercises Breathing exercises in conjunction with meditation can have some great effects. I use two regularly between box breathing and the Wim Hof method. Box breathing is a technique used in taking slow, deep breaths. This can heighten performance and concentration while also being a powerful stress reliever. The technique involves breathing in deeply for four seconds, holding this breath for four seconds, releasing the breath over four seconds then holding for four seconds. That is one repetition which can be repeated for minutes at a time. It is recommended that this be done for at least five minutes to get the full effects. I learnt about this when listening to a Navy SEAL talk about how they do this in their training to help remain calm in stressful situations. According to the Mayo Clinic, there is sufficient evidence that intentional deep breathing can actually calm and regulate the autonomic nervous system. This system regulates involuntary body functions like temperature. It can lower blood pressure and provide an almost-immediate sense of calm. This will also reduce stress and improve your mood. The Wim Hof method involves something called power breathing. I heard about Wim, also known as the 'Ice man' through his amazing world records, with a few being: He can stay immersed in ice for 1 hour 13 minutes He can reach the top of Kilimanjaro barefoot wearing just shorts, in only two days. He also completed a full marathon above the polar circle in Finland where the temperature was as low as -20 degrees, dressed in only shorts. He says that his breathing technique is the major reason he has been able to overcome such demanding physical challenges. How this technique works: 1) Get comfortable - Sit in a meditation posture, whatever is most comfortable for you. Make sure you can expand your lungs freely without feeling any constriction. It is recommended to do this practice right after waking up since your stomach is still empty or before a meal. 2) 30 Power Breaths - Imagine you're blowing up a balloon. Inhale through the nose or mouth and exhale through the mouth in short but powerful bursts. Keep a steady pace and use your midriff fully. Close your eyes and do this around 30 times.

There is a quote by the Roman Politician, Cicero. "What then is freedom? The power to live as one wishes." In this episode, we will discuss how to gain freedom through financial independence. As Cicero said, what is freedom if not to live your life the way you want? This means not being beholden to a job, being able to travel, live where you want and go after what you want. So, what does it take to achieve financial freedom? It is really simple, having enough passive income to pay for your expenses. If you have investments which can pay a passive income to cover your expenses, then your only reason to work is because you enjoy it. This is where money can buy happiness through doing what we enjoy and is meaningful. If you want to have financial freedom, you need to decide what this looks like for you and plan on how to achieve this! This can be broken down in to six steps to work through and then implement: Determine what income you need to cover your costs. How you generate a passive income? Reverse engineer to meet your goals Do some planning Implement your strategies Review regularly Step 1) Determine what income you need to cover your costs. This first step is where you decide what financial freedom looks like to you. So how much income would you need to live comfortably? This can sometimes be tricky as your expenses change over time. You might have a mortgage and school fees which will inevitably cease at a certain point. There are two ways to work this out. The first is to look at what you would spend on yourself without those temporary expenses through completing a budget. Another way is to look at ASICs assumption on what retirement costs the average Australian. Just remember that holidays and travel costs will be extra costs on these levels. Having an idea of when you want to be financially independent is also important. This will help plan and also account for inflation. Time will be either your biggest friend of worst enemy. If you have a long period of time it will be easier to achieve. Step 2) Figure out your asset base that can get your level of income. There is the Rule of 20. This is based off if you can generate 5% per annum in income, then you simply multiply your desired income by 20 to work out the investments needed. For example, if your target level of passive income is $50,000 per annum, then your asset base would be $1,000,000. However, inflation will need to be accounted for as well. This is where time is of importance as it allows to work out what level in future values is required. If you wish to be independent in 15 years, then this $1,000,000 would be closes to $1.45 million. Step 3) You know the target, so time to set some goals on how to achieve this. In this step, you need to work out how you will reach your target level of investments. Working out how much you need to put away into investments each month can be a little difficult. This can be done using the PMT formula in Excel or through calculators on the MoneySmart website. It is best to work off a relatively conservative return on long term growth investments of around 8.5% per annum. Say your target it $1.45m in 15 years, then you would need to invest $4,000 per month to reach this. This monthly figure can sometime be daunting especially if you are having trouble saving in your current position. Try to start out small with the 'pay yourself first' strategy and build up to your target over time. Step 4) Plan and look at alternatives to invest in to meet your criteria. Once your target on investments and monthly savings is worked out, look at the investment options available to you. This can range from investment platforms with managed funds, direct shares, properties or any asset which will pay you enough of a passive income. Just remember there is no point investing into shares or a property that won't eventually be able to pay a passive income. Historically, growth investments have performed better than income only assets in the long term. This is due to the return equation being income plus growth. Therefore, cutting out half of the equation will limit how the funds perform in the long term. Just remember that the investments need an income as well and should be well diversified. Step 5) Start your plan! Success takes planning but not following through on your plan is pointless. Once you have your plan in place, it is time to start saving and investing. Set up your investments to be well diversified and to reinvest the income over time. Volatility is your friend when it comes to long term investing, especially when making regular investments. Try to make this process as automated as possible, setting up regular direct debits or investments. Step 6) Review Regularly The final step is ongoing reviews of your progress. How are the saving targets going? How are your investments performing? This will help to keep you accountable along with being able to change your plan over time as needed. For further information on gainin

The saying goes that 'Money can't buy happiness' – I'm sure you have all heard this. Well it has been proven to be kind of right, and kind of wrong. The studies around this have shown once you have a certain level of income (around $75,000 per annum), the returns of happiness decrease significantly for any additional income that you earn. Once you can pay your bills, not worry about money and use money to convert into experiences, then you are set, right? Well, why is 'affluenza' a thing? This is what we will be looking at today through the sources of happiness and some ways to boost your happiness. There is a general consensus that there are three primary sources to happiness, as follows: 50% baseline genetics - Since happiness is an emotional state dictated by specific neurons in the brain, it follows that happiness would be a heritable, genetically-regulated trait. This can be referred to as 'the cortical lottery'. 10% Life circumstances – How much money you make, social standing, where you live. 40% Intentional activity: Thoughts and Actions – What you think of yourself and the world and how you interact with it makes up the remaining 40%. If you think the world sucks along with your place in it, chances are you are less happy than others. As 40% of happiness comes from your thoughts and action, we will be focusing on how to increase this area as this is the easiest to change! Being happy is important after all. Without being happy what is the point of getting up every day? Not only is being happy great, a number of studies show that it leads to being able to achieve more in life. Actions you can take to increase your happiness: The feeling of happiness is triggered inside your brain through four primary Neurotransmitters. These are Dopamine, Serotonin, Oxytocin, and Endorphins, also referred to as the 'quartet' responsible for your happiness. The following are some actions you can take to help hack some of these neurotransmitters: Dopamine Dopamine is the 'feel-good' hormone which is responsible for the reward-motivation feeling. Dopamine helps to provide motivation to take action toward your goals and gives you the good feeling when they are finished. Having lower levels of dopamine lead to increased procrastination, self-doubt, and lack of enthusiasm. This was discovered through studies on rats, where those with low levels of dopamine always opted for an easier option (i.e. less reward/food) compared to those with higher levels of dopamine. To constantly get this release, break your big goals down into little pieces. This will allow your brain to celebrate on a more frequent occasion rather than once. Just remember to actually celebrate whenever you meet a small goal. You can also try to create new goals before achieving your current one. That ensures a consistent pattern for experiencing dopamine and craving this reward over time. This will help to build motivation along with being happier. Serotonin Serotonin is known as the 'happy hormone'. It is the 'happy hormone' which regulates your body's sleep-wake cycle and temperature along with providing the feeling of feeling satisfied. Serotonin flows when you do something that makes you feel significant or important. When serotonin levels are low, the feelings of loneliness and depression are more likely to be present. It has also been shown that being a part of a culture and 'community' facilitate serotonin release. To help increase this, try to reflect on your past achievements more. This allows your brain to re-live the experience and get the feeling of importance. This is where reflecting on your 'wins of the day' will help to boost this as well. Even focusing on future achievements you haven't met yet will help. Your brain has trouble telling the difference between what is real and what is imagined, so it produces serotonin in both cases. Gratitude practices are popular for this reason, they are reminders and mental pictures of all the good things you've experienced. Another thing that you can do is to join a group that you are interested in to experience the community feeling. There are thousands of groups on MeetUp so try one out! Oxytocin Oxytocin is known as the 'Love Hormone'. It plays a role in bonding and falling in love in both sexes. This can easily be increased by just smiling at someone or giving them a hug. Maybe not a stranger or someone's child but you get the point. Endorphins Endorphins are responsible for helping to reduce stress and provide the feeling of euphoria. They are released in response to pain and stress to help to alleviate anxiety. Similar to morphine, it acts as an analgesic and sedative, diminishing your perception of pain. Also, the euphoric "runners high" is all thanks to endorphins. Exercise has been proven to be one of the most efficient ways of releasing this, especially high intensity cardio workouts. Try going for a run up a hill or do some sprints to help boost this. Along with exercise, laughter is one of th

Hacking your brain to become more productive, or to stop bad behaviours doesn't require a computer chip! Instead it can be done through implementing good habits, or rewiring bad ones. What are habits? Habits are your brain's own internal productivity drivers. Your brain has a lot to do each day between controlling your bodily functions and actions along with your though process. Thankfully, it is constantly striving to become more efficient in doing this through transforming as many tasks or behaviours as possible into habits. This allows you to do things without thinking, freeing up more brainpower to tackle new challenges. If you are like 98% of people, your habits each morning will remain relatively unchanged. These habits may be to wake up, have a coffee, shower, have breakfast and go to work all without thinking. In doing all of this without thinking your brain has conserved resources to put towards your daily activities. While this mechanism allows us to become more efficient, it occasionally works against us in forming bad or unproductive habits. It may seem impossible to break bad habits or integrate new ones, but once you know what's happening inside the black box of your unconscious it becomes far easier. How habits are formed? When we first engage in any new task, your brain will have to work hard to process all the new information to complete the task. But as soon as you understand how a task works, the behaviour starts becoming automatic and the mental activity required to do the task decreases dramatically. Think about how much brainpower and concentration you had to use when you were a child to tied your shoelaces for the first few times. Now I bet that you do this without even thinking. This exactly how habits work in your favour, to save you time and mental effort! This process is known as The Habit Loop! The habit loop is a neurological loop that governs any habit. The habit loop consists of three elements: a cue, a routine, and a reward. Understanding these elements will allow you to change bad habits or form good ones. MIT researchers first discovered the habit loop while experimenting with rats in mazes. They discovered that the first few times a rat ran the maze, its brain generated a great deal of activity in the cerebral cortex (the area in the brain responsible for information processing). However, after the rat had run the maze a number of times, the activity in the cerebral cortex reduced significantly. This was due to their brain converting the sequence of actions, "chunking" them to the primitive basal ganglia (an area partially responsible for automatic movements). This allowed their cerebral cortex to be reserved for more intensive functions. This is the mechanism that operates when you are driving home at the end of the day without actively thinking about the route to take. The Habit Loop Elements: The Cue: The cue for a habit can be anything that triggers the habit. Cues most generally fall under the following categories: a location, a time of day, other people, an emotional state, immediately preceding another action. This trigger then sets off the chain of events of entering into the routine to get the reward your brain as come to expect from the habit. For example, if you suddenly crave chocolate, this could be set off by the time of day, finishing dinner and wanting a sweet treat, really it can be anything! As children one of the most power cues we ran into was the ringing bell from the ice cream truck going around the street. 2. The Routine A habits routine is the most obvious element and easiest to identify. It is simply the action that you wish to change (e.g. smoking a cigarette or biting your nails) or reinforce (e.g. taking the stairs instead of the elevator, or drinking water instead of soft drink). 3. The Reward The reward is the reason that your brain decides that the cue and routine are worth remembering and following in the future. As the reward provides positive reinforcement for taking action, this helps to reinforce the behaviour and engrain this to become a habit. This reward can come in the form of something tangible (e.g. chocolate), something intangible (e.g. a half hour of television or endorphins). So how do you break the habit loop? As the habit loop governs a lot of your actions, it takes some self-analysis to overcome any bad habits, or a game plan on how to implement new habits. I read a book by Charles Duhigg called The Power of Habit which suggests the best framework for reshaping bad habits I have seen so far. If you want to get rid of a bad habit, you have to find out how to implement a healthier routine to yield the same reward. In the book, he says that once habits are formed you cannot remove them, however you can rewire them to achieve what you would like. The reason for this is that if you remove the routine which would then yield no reward, you'll likely be unhappy and fall back into the old habit. The trick is to keep the cue and the re

It can be hard to get effective work completed, and stick to the GSD model thanks to a little thing called 'procrastination'. This episode is to give you a guide behind the science on why we procrastinate and to share proven ways to beat it! Procrastinating is a part of humans and creeps into our lives without really consciously thinking about it. One of the worst parts about procrastinating is that we justify this behaviour as well using some very clever tricks: Avoidance and distractions – Looking for other tasks to do instead of taking action on what we need to. Blaming – We external events as the cause of why we delayed in doing a task. Denial – We can tell ourselves that what we are doing is more important now, or that we will do what we need to do tomorrow. Comparisons – Other people haven't gotten round to do this, so why should we? Sadly, while these may make us feel better in the short term, all that they do is delay the inevitable pain we will feel. What is procrastination? Procrastination has been around for as long as humans have been alive. Socrates and Aristotle wrote about this in Ancient Greece, describing it as a state of acting against your better judgement. Put a little simpler, it is delaying doing important tasks for less important ones. It is much easier for us to still feel productive by getting through easy non-urgent tasks in preference of doing demanding ones. Also, it is much easier to do something fun compared to something hard. Therefore, if we are given a choice we will often choose the fun thing over the hard thing, even if it will benefit us. This is the difference between inaction and action which is the way I like to think of it. Why do we procrastinate? Behavioural psychologists have a term called 'time inconsistency' which helps to explain why we procrastinate. This refers to us as individuals valuing short term rewards more highly than future rewards, even if these may be greater in the future. All goals and plans are for your future self. So based on this, you sabotage your future self by seeking rewards for your present self, even if it is not really that great a reward. This internal battle between your future self and present self can be said to be the key cause for procrastinating. The fact that your present self is the one that needs to take action and it can be hard to make your present self take action. As you cannot rely on long term rewards or consequences to provide motivation, you need to implement strategies to either provide some immediate reward or consequence for procrastinating. Achieving any tasks comes in two phases as well. The first is procrastinating and then taking action. The longer we delay, the greater the pain we feel from procrastinating. However, the longer the time is away until we absolutely must take action, the less pain we feel delaying. It is funny however, as generally as soon as you go over the breakeven point you will see that taking action isn't that painful at all. Have you ever had a small task to complete, delay it for a few weeks then when you get around to doing it, it only takes you 10 minutes? So the act of delaying causes more mental pain in most cases than just taking action. How to stop procrastinating? Option 1 – Make the reward of action immediate through temptation bundling. The concept behind this option is to only do what you love while doing what you are procrastinating about. The reason this has been proven to be so effective is that you are rewarding your present self for taking action to benefit your future self. I do this myself. If I am doing house chores, I listen to music or watch something on my tablet while doing it. So figure out what is something that you enjoy doing and add it to your routine. This reward can also be something more tangible, such as giving yourself a treat for completing a task. Option 2 – Make consequences of procrastination more immediate. This relies on having a system in place where there are real consequences for not taking action for your present self. This is similar to following through with goals, where having someone or something to keep you accountable drastically increases your chances of succeeding. You can either have a 'bet' with someone or with yourself where if you don't complete what you need to by a certain time, some negative consequence comes in to play. This may be in the form of money or now allowing yourself to do something else you really enjoy. Option 3 – Follow your action plan without thinking or delaying. In the last episode, we talked about setting a daily routine, which is exactly what an action plan is. This is a very powerful tool to use as it allows you to get more done through focused work and limits any delays as you don't have to think about what to do and when every 5 minutes. It sounds fairly easy to just 'follow the plan' however it takes some habits to form around this. How to make this stick? Once you have your action plan in place, see what works

To be successful in any part of life, you need to learn how to control your time, not just manage it. This is what this episode will focus on, or put bluntly, it's about Getting Shit Done! You can GSD by being able to control your time and reduce procrastinating (which is the next step). When it comes to controlling your time you need to implement habits to work smarter, not harder. It is about what you get done, not how long you spend doing it. The reason this is important is that time is limited. Whether you are a CEO or retired, we each have 24 hours a day. So how do some people seem to get so much done working with the same time constraints? They do this by creating and controlling time. When I first heard this it took me a while to fully comprehend. How do you create time? Easily, you can either free up tasks or get through them quicker, however focus is the key. Tim Ferris has his 4-hour work week through unlocking potential to achieve as much in a few hours as what it takes others a week to do. I believe that the 9-5 work day has killed productivity. Most people if they really wanted could get what might take a full eight-hour day in far less time. This has led to habits in the workforce that have flown through in to lives. Even if you are at work and there are tasks to get done which someone else is providing to you, you control how you do these. The more you control time, the more you will get done and the more valuable you will be. This then leads to a greater output and greater chance of pay raises and promotions. Plus, you will have more free time! So how do you get started? Implement the 'time management loop'! Start your day with a clear focus. This starts the night before with a review of your tasks the next day. I used to waste so much time figuring out what the plan for the day was when I would arrive at the office. I used to get in to the office, spend the first 20 minutes organising tasks and reading emails, then go get coffee. To do this, organise your time by chunking up your day in to blocks. This helps to set limits on how long you have to finish something, helping to reduce the overall time spent on the task. A book called Deep Work explores flow and productivity that recommends exactly this. Having chunks of time set for one task and one task only leads to much more being produced. But focusing on the important tasks should be your priority. There is no point in chunking your time to spend on tasks that make you feel busy but achieve little. Focus on high-value activities. What is a high-value activity? It is simply something that will move you towards your goals more so than any other activity. To determine what is of the highest value, you need to align these tasks with your goals and priorities. It helps to focus on outcomes more so than the individual tasks. So, ask yourself 'what must be done now to get to my end goal?'. Becoming goal orientated when deciding on what to spend your time on will give you the clear focus you need to become as productive as possible. But what happens to other tasks that you don't get around to? There is a concept called comparative advantage. This works in economic terms where if one country can produce something at a lower cost (or better) than another, it should do this task and then trade for the other goods it foregoes producing. We can do this as individuals through outsourcing by getting someone else to do what you aren't great at or don't enjoy doing. To help with this, try to complete an 'Activity Audit'. List what your weekly tasks include and what takes most time each week. This helps to determine how you spend your time and on what. Then you can potentially look at what can be outsourced and what can you only do to increase your income or fee time. Say your goals is to start a side business, then you need to focus on the tasks that will achieve this. So, if there is the option between watching TV or working on setting up the business (website, registering, marketing) then the choice should be clear. However, there are some things that you cannot outsource such as spending time with family or friends. Sure, you could hire someone to take your partner out to dinner but you get little enjoyment from this. Focusing on your highest priority tasks helps to redefine time so you can control how it is spent and is the basis of the 80/20 rule. Minimize interruptions and unimportant things. Minimising interruptions is between external interruption and also then ones you create through multi-tasking. Just focus on one thing at a time, don't let things distract you from your priority. Trying to perform too many things at once is the best way to reduce your overall productivity. This usually comes in the form of switching from one task to another without completing the first task. We've all been right in the middle of focused work when an urgent task demands our attention; this is one of the most frustrating kinds of multitasking, and often the hardes

Achieve your goals and overcome the fear of failure! To do anything new can be scary due to the unknown. Our brains paint a dramatic picture of possible outcomes and we psych ourselves out from ever pursuing these goals. This mental picture can create anxiety due to the fear of failing so we remain in our comfort zones and never try. This type of fear is something that effects a lot of people, I know I used to be one. When I first started working in financial services even calling a superannuation fund to get clients information caused a bit of anxiety in me, god forbid calling a client to discuss their personal situation. Over time I learnt how to get rid of fear and with it, the fear of failing. The irony of this situation is that you are guaranteed to fail if fear stops you from ever trying! This in conjunction with procrastinating (which we will cover later) are the biggest causes of not reaching your goals. What is fear? Fear is a vital response to physical and emotional danger. This response has led us to protect ourselves from legitimate threats to survive. Fear causes a physical change in metabolic and organ functions and ultimately, changes your behaviour. Anyone heard of the fight or flight response before? Early humans who were the quickest to fear dangerous situations were more likely to survive and reproduce. From this a theory called preparedness emerged where through natural selection, modern humans have developed a heightened sense of fear. Our heightened sense of fear created another element to add to fight or flight, which is freeze. This is now known as the fight, flight or freeze response. In society today, we rarely (if ever) face a situation that is life or death. There aren't many terror birds or sabretooth tigers running around. When we think about trying something new there is normally no immediate danger to us, so we have no need to fight or take flight, so we freeze. Major Fears can be broken down in to two categories: Physical – Flying, heights, death, spiders, etc. Emotional – public speaking, failure, commitment, criticism, poverty, etc. These can be broken down further into Rational or Irrational fears. To give an example, I am not petrified by snakes, but I almost stood on a red belly black snake one day and boy did the flight response kick in. This can be a perfectly rational response to this situation. However, fearing to go outside for the possibility of running in to another snake would be an irrational fear. Fearing failure is another irrational fear as the outcome of what we are afraid of is totally unknown. However, we are still hardwired to respond to fear which we will avoid at any cost, so we do nothing. The funny thing with this type of fear is that it is entirely self-created. The term Fantasied Experience Appearing Real (F.E.A.R) has also been coined when describing irrational fears. We automatically think that we will fail in the worst possible way and of course, fear this outcome enough to never try. Failure is a good thing. I know it may not seem like it, but treat it as a learning curve and failing can become your best friend. It may seem like a dirty secret, but everyone fails. Most people just don't like to talk about their failures. I have failed plenty of times at many things and no doubt, will fail many times in the future. The first time I spoke to an audience of 50 people I was really nervous, you could even call it fearful. Because I was so nervous, I spoke to quickly and forgot some points I wanted to go over. It was ironic that in this experience, fearing the worse lead to a worse outcome than if I was completely calm. Nothing bad happened, expect when I expected it to. Instead of fearing the worst, treat every failure a great opportunity to grow. As an infant, you didn't just jump up and run a marathon when learning to walk. You fell down a lot, but kept getting back up and eventually learnt to walk. Now you do it without even thinking. This same principle can be applied to anything! This occurs when investing as well. I made plenty of errors in my early days of investing and rather than never investing again, I just learned from the experience and became a better investor out of the process. A great example of the best attitude towards failure comes from Thomas Edison. He made 1,000 unsuccessful attempts when he was trying to invent the light bulb. When asked, "How did it feel to fail 1,000 times?" Edison replied, "I didn't fail 1,000 times. The light bulb was an invention with 1,000 steps." So how do you avoid this fear? Our minds tend to paint the worst-case scenario when it comes to failure, but this is completely in your own mind and we are incredibly creative when it comes to this. Successful people have fear, they just don't let it control them. So, what are you worried about? Step 1) The first step is to review your goals and action plans from last episode. If there are any immediate fears that spring to mind, then write these down. If your

Welcome episode 5 in the steps to success series! This week we chat about the 'building blocks' of your vision, which are goals. You might really like doing goals, or you may hate doing them, either way most soon end up on a piece of paper in a draw which we find when we move houses. New Year Eve goals are typically treated in the same way. We say we want to lose weight, start saving or investing, generally anything we can think of to better ourselves. The trouble is that these aren't really goals, they are just good ideas. Also, arbitrary goals that don't align up to our vision typically fail to be achieved as where is the motivation to keep going at the first sign of resistance. This is why having your vision and knowing what you want is so important. You can't achieve something if you don't know what it is. As soon as you know what you want though, you can hone your inner GPS to get it. This is where goals come in, they will be your map or navigation system. For every vision that you have, you need to put a goal against it. Last week you took an inventory of seven areas of life and how you want each to look. This allows one of the best ways of achieving your vision in the following steps: Where I want to be: Vision Where I am: Personal inventory Fill in the gap! Reverse engineer it. Setting Goals is how you fill in the gap. Just remember, nobody is going to make your dreams come true. But action on your goals will! So how do you set these goals once you know what you want? I am sure most of you would have heard of SMART Goal. If not, SMART is simply an acronym on how to help define and write a goal. The summary of this can be see below: S – Specific: Who, what, where, when, how & why? M – Measurable: Something measurable on what you want to achieve. A – Attainable: Believe that your goal is attainable, developing the skills and attitude to achieve them. R – Realistic: Must represent something that you are willing and able to work towards. The bigger the better – This can create a high motivation! T – Timely: This anchors a timeframe by when your goal will be achieved. Putting a date on a goal allows for you to break this time down and with it, the goal in to smaller segments. This is where knowing exactly what you want to achieve really helps as the more definite your vision is, the more details you can use when defining your goal. This system of setting goals really helps. It turns what is a 'good idea' in to an actual goal. We all have good ideas about things we should or want to do. For instance, a lot of us say we want to lose weight. This is a great idea, but it isn't a goal. A goal would be closer to 'I will lose 10kg by exercise and diet in 12 months to be healthier'. This would be the overall goal. From there you expand on this by the activities that you will need to do in smaller chunks to get to the goal of losing 10kg. This really works with anything. Instead of saying "I want to be rich", put this in to a goal. Define what rich means to you and then make it SMART. If having $1,000,000 in investments is your idea of being wealthy and you know when you want to achieve this by; set a goal! This would look like the following: 'I will invest $1,720pm in to a portfolio of shares for 10 years that get an average return of 8.5% p.a.'. If your goal is to achieve financial freedom, you need to decide what this looks like for you! If your living costs are $60,000 per annum, what investments do you need to fund this? This is where it gets trickier, as to work out your goal of 'financial independence' has a lot of additional layers. We will spend a whole episode on this, how to work out what you need in income, working out what asset base you need to get this done, then working out how to do this in a timeframe. Now it comes time to do an action plan on your goals. The last part is the hardest, especially if you don't know how to. However, what you are trying to do is likely what someone else has done, or knows how to do. So you can ask for help from them. Isaac Newton (guy who discovered Gravity) used a metaphor from a philosopher of the time when asked how he achieved so much in his life: 'If I have seen further it is by standing on the Shoulders of Giants." You need to use knowledge that already exists to create your action plan to achieve the goal. Just remember to break each long-term goal in to smaller achievable ones. It is easier to eat an elephant one bite at a time. Recap: For each of your ideal visions, you need to set one goal. Set this as a long-term goal and then break this down in to yearly goals, monthly goals, weekly goals. You get the idea! Then you need to put an action plan in to place on how to achieve this. So say you wanted to save $5,000 in one year, this would be 12 goals of saving $417, or 52 goals of $96, or 365 of around $14. The action plan would simply be to transfer $14 a day in to a savings account. Best ways to keep goals: Share it with one other person who will keep you a

Having a purpose is the reason to get out of bed each day. Having a vision, allows you to complete a picture of your ideal life. When combined together, these will be the measure of what 'success' means to you! A vision is an ideal picture of how you want your life to look. It is what you want the future to hold for you. But you have to make it happen! Your vision should show you where you want to head and provide some motivation and focus to help achieve this. Life happens, there will always be setbacks but the best way of overcoming setbacks is keeping your long-term vision in mind and working towards this. To expand on this a little further, imagine that you are about to go on a road trip. You start your journey and have your destination in mind. There may be speedbumps along the road, maybe some potholes as well, but if you really want to reach your destination you will keep driving. So how do you build your vision? Last episode we did some lists to work out a purpose statement, this week it is no different. Again, you have to know what you want to be able to achieve it so the first step is to make three lists, broken in to three headings at the top of the page again. What I want: This list is for the material things you wish to have in your life. From houses, cars, even owning a business. What I want to be: This list is for the type of person you want to be, from happy and positive to being a leader in your field. What I want to achieve before I die: This list is practically a bucket list where you can think about the things that you want to achieve in life. Under each heading, you need to list 20 things for each one so once you are done you should have 60 in total. It may be hard to come up with 20 things for each, so listing small things or expanding on larger 'wants' can help. So instead of just saying 'I want to be successful', list out individual items which mean success to you. Once you have a list of 60 things, it is time to move to the next step. This first exercise is to get the brain juices flowing and to clarify the ideal vision of your life! The next step involves sorting through your lists and placing each in to seven areas of your life. This covers off 7 areas in total. For each one you need to have a clear picture of what each area should look like! Work/career – What are you doing for your career? Is it something that you enjoy? Is it something you can have freedom? Can you make a lot of money from it? Finances – What does your financial situation look like? Are you out of debts? Do you have a portfolio of investments, paying you an income? This is the key to financial independence after all. You need to have enough in finances to give you all the free time in the world to focus on everything else. Free time/Recreation – What do you do in your free time? Do you r .Are you going on holidays each year? Health/Fitness – What is your ideal fitness? Are you 80 still in great physical and mental health? Relationships – Marriages, kids, parents, everyone etc. Contribution to the world – Do you give back to society? Personal goals – What do you want to do before you die? Travel to every country on earth? Swim with Great White Sharks? I may be projecting some personal goals here but you get the point. You will most likely find that after doing your list of 60 things, these all fit nicely in to one of the key areas of a personal vision. If you find that these don't fit in to any of the above categories then have a think about how you want this area to look like. Remember, that your personal vision is where you want to be – so you need a clear picture on what it looks like, what it feels like, you should almost be able to taste it! Once you have your vision in place, you need to hone your Inner GPS – this is your internal navigation system which will allow you to plot a course and follow the road map to get you there! This is what you can build your goals and actions around which we will cover in the next episode. To help this, you can start taking a personal inventory of where you are at in each of the areas. This will help to fill in the gaps and reverse engineer some steps to build your ideal life. All of this will be covered in the next episode. But in summary, before you start working on your ideal life you need to get your vision in place! The best way to expand on this is to create a vision board. This is where you place pictures or statements of what your ideal life looks like! I have my own vision boards, one for each of the main areas in life. There are pictures and statements on each while provide me motivation and focus for me to work towards obtaining these. Lifestyle: Property in country with lots of rescue dogs. So, I built a goal around this. What the time period was, what the property looked like, even down to the number of dogs. This allowed me to figure out what passive income I would need to achieve this, what the approximate cost of the property would be, really everything. Fi

Behaviours that kill your investments: Do you suffer from these? Sitting wondering where the year has gone and that you are no wealthier for it? Or what has happened with your financial goals of building wealth? It's time to sit down, take 20 minutes and think about if you may be suffering from one of the following behaviours! This episode is on four behaviours that will destroy your ability to grow wealthy through investing. 1) Myopic risk aversion Myopic risk aversion is one of the greatest behaviour traps that people repeatedly fall into leading to investment losses. While it is a fancy title, it simply means the fear of loss in the short term which occurs regardless of intelligence or skill level. Loss aversion is completely rations, however it's the myopic or in other words the short-term part which is irrational. There is a saying in the share market that the Bulls take the stairs and the Bears take the window. A Bull market is when the market is going up (like a bull bucking its horns) while a Bear market is one that declining in value (like a bear swiping down with its claws). This can be seen in charts of any index where gains occur slowly while declines occur quickly. This is because investors feel the pain of losses far greater than they feel the pleasure of gains. We all have a natural and healthy aversion to losing money, helping us avoid falling for financial scams and protecting our capital. But short term loss aversion is different. It happens when we temporarily lose sight of the bigger picture, and focus too much on what lies immediately in front of us. For investors, this usually means panic selling during sharp market declines. Think back to 2008 in the GFC when everyone was selling shares out of the fear that the share market was going down. This created a self-fulfilling prophecy that caused markets to go down further. A lot of company's earnings didn't decrease however their share prices fell by up to 40%. Rationally, if their earnings didn't decrease then their prices shouldn't have either. Economists have found that investors who check the performance of their portfolios too frequently suffer from this at a greater rate. If you check your investments on a daily basis, you will experience many days of losses which will create a greater fear of loss. Given that investors feel the pain of losses far greater than they feel the pleasure of gains, you may start to feel greater levels of pain and panic and sell investments, resulting in guaranteed long term losses. This has become a greater problem now with the internet, as most investors now have the capability to check on investments in real time. This can easily cause investors to stray from a well-thought-out investment plans causing investments to be sold at low prices which is the best way to lose money consistently in investments. So, what can you do? It is simple, don't freak out and sell investments when they suffer short term losses all because of a declining market. Volatility (upward and downward movements) will always occur in any liquid market, however if you have quality investments there is no reason to sell. Stop checking on the performance every day as this will compound the feelings of loss. Invest in quality assets and hold on to these for the long term. 2) Prospect Theory A major investment mistake is created through erratic behaviours like changing your risk tolerance based upon what financial markets are doing. Making emotional decisions rather than sticking to your long-term wealth building strategy is one of the greatest ways to lose money when it comes to investing. Prospect theory is a behavioural economic theory that describes the way people choose between probabilistic alternatives that involve risk, where the long-term probabilities of outcomes are known. If you're the type of person who takes big risks in one area but takes almost none in another with similar likely outcomes, you might be suffering the effects of prospect theory. For instance, you are okay placing a bet on the Melbourne Cup but are afraid of investing as you may lose money. The theory states that people make decisions based on the potential value of losses and gains rather than the final outcome and these outcomes are determined by your individual bias at the time. If the media is reporting on the next crash (before it occurs) then some people may become very conservative and sell investments or avoid investing. The best way to avoid this is to always focus on what your long term outcomes are and to stick to your plan! 3) Herd behaviour and following the crowd A financial market is made up on thousands of different assets which millions of people regularly buy and sell. The behaviours of either buying or selling these investments is what causes these markets to move in a certain direction. If more people are selling investments than are buying them, then the market will likely decline in value. If more people are buying investments than are s

If you take 100% responsibility for your own life, you are more in control of your success than if things just happen to you. But what is success and how do you reach it? In this episode, we run through finding your purpose and coming up with a clear idea about what you want to achieve in life. This is what you are responsible for to make real and how you can define success for yourself. This doesn't have to be purely financial, but ranges in any area you want; your finances, relationships, health and free time. It is important to find your purpose as if you don't know what you want, it is impossible to get it. This starts off with the question of 'what is the meaning of life?'. You can ask Siri and you will likely get a smart-ass answer, like chocolate. There is no one overall meaning to life except to exist and eventually die. But there is a meaning to your life. You just need to find it and live up to your potential. To get your purpose, you need to decide what you want and what is important. You have to Be clear why you are here! It is said that The Australian dream is to buy a house which will lead to a better quality of life. Pretty simple, right? Buy a house and be happy. Buying a house is great, but it won't really provide financial security or happiness. This is a societal norm, which is slowly changing. The house affordability issue is killing this dream for many. Most people spend their lives conforming in to societal dreams like this. Programming in life slowly changes our real purposes to conform to the new social norms. This leads to taking actions in life which will get the approval of others rather than ourselves. We are told from childhood the word 'no' and 'don't do that'. While this was said to help protect us, it has led to crushing dreams. While conformity has been important in evolution (by not sticking out and getting ousted by the tribe), it has lead into conforming to a normal level of life or living someone else's dreams. Just remember, if you aren't working towards your dreams, you are working towards someone else's! This is why you need a reason to get out of bed in the morning which is your purpose. If you have this purpose, something to work for, you will be successful and happier along the way. What is your purpose? By now, hopefully you are convinced of the importance of finding your purpose. So how do you find out why you are here? To figure this out requires a bit of brain storming. First, you need to write some lists of things that are important in your life. At the top of a blank piece of paper, write the following three headings: I care about What I am great at I love doing Draw two lines down the page to make 3 columns under each heading. Then write 20 things for each under each heading. 20 for what you care about, 20 about what you love doing and 20 for what you are great at. For those who are entrepreneurial, you can use the things in the the what I love doing category and ask, "how I can make a living off this"? You can use this to determine what you can make a living off, but we will cover this in a later episode. Now that you have 60 things on the page, beside each one put a plus or minus against it. If it is something you really enjoy or are great at, put a plus against it. If it is something that you just put in there to make up the numbers, put a minus sign against it. Now, with the three categories, write another list with only the things with a plus sign against them. From each section of; what I care about, what I am great at, what I love doing, select two things from each category. This will leave you with 6 things in total. You might find that the things you are great at are the things that you love doing, because you care about them! It is common to see this sort of overlap as generally, if you enjoy doing something, you are normally pretty good at it! Also, if you are great at something you can use that to your advantage. There is a thing of general knowledge versus specialised knowledge. This is how you find your purpose in life. It will take some playing around with to get right. Be honest with yourself. For example, here are a few from my list: I care about: Making a difference in lives, I am great at: personal finance, I enjoy doing: Teaching From these, I built my first purpose statement for myself: 'I will help others by teaching personal finance', so I started teaching personal finance courses. Then that led to the Rentvesting Podcast and now to Self Made Millennials. You need to use language that suits you as well! This is a personal mission for you, so make it personal. It really is that simple and needs to be refined over time, but what is really important is action. Taking action towards your purpose will be the difference between following your purpose versus following someone else's. We will cover off on the action steps in the next episode. Once you have your purpose statement, you need to know what you want out of it: This will be covered i

This week, we build on this through taking 100% responsibility for your life! To be successful you need to be 100% responsible for your own life. Ask yourself this question: Who is in control of your current situation of income, debts, relationships? Is it Politicians, your boss, your spouse or parents? It is a common thinking among a lot of people that they are entitled to a great life, great relationships, health, incomes and always being happy. This couldn't be further from the truth. Everything great in life needs work to achieve. So, what happens when we fail to live the life we dream of? We turn to blame – blaming the Government our family member and even ourselves. It is a bit like drinking too much and then throwing up and blaming food poisoning. Even blaming alcohol as the cause isn't true. The alcohol didn't force its way in to you. Most people make the conscious (then unconcise after drinking) choice to drink. To have a great life it takes work which we are 100% responsible for. The sooner we realise that every decision we have made has led us to where we are (incomes, debts, etc), the sooner that these can be changed. In reality, your thoughts and actions are the only thing in life you can control 100%. You can't control the weather, the Economy or day turning to night but you can control the quality of life you have. The past is the past. All that matters now is that from this point forward you choose—that's right, it's a choice—you chose to act as if you are 100% responsible for everything that happens to you. You have the power to make your life different and to produce your desired result. For whatever reason—not knowing what to do, fear, not wanting to be outside of your comfort zone—you chose not to exercise that power. Every great successful person preaches about this. Jack Canfield, the author of the Success Principles was the first person I head this from. We normally own our wins as by claiming responsibility here, but rarely do we do this when something bad happens. I'm not saying bad things don't happen, like cancer or car accidents. But the majority of your conditions are self-created, so if you have constructed them you can reconstruct them. How to start taking 100% responsibility: Step 1) Give up all excuses – To take 100% responsibility you have to stop playing the victim. Don't make excuses as to why you haven't done something, just give them up. It takes a lot of less mental energy by giving excuses up. They don't matter. Past is the past. That means giving up all your excuses, all your victim stories, all the reason why you can't and why you haven't up until now, and all your blaming of outside circumstances. You have to give them all up forever. Jack Canfield has an equation on getting the best outcomes in life: Event + Response = Outcome This equation says that every outcome in life is a result of your response to any event. If you don't like the outcomes you are getting you normally go straight to the event as the reason for failure. This results in the common response in doing nothing except making an excuse or complaining. You can't control the event, but you can control your response which leads to a better outcome. Successful people wouldn't be where they are if they let their excuses take control. We normally defend ourselves with excuses which is natural but instead, if something doesn't turn out as planned, ask yourself, "What do I need to do differently next time to get the result I want?". Blaming and excuses are a waste of time. It may make you feel better in the short term, but it doesn't solve the problem and takes away energy. Step 2) Change your response - This step comes back to getting in the right mindset as this is a habit which takes time to change. To do this you need to regain control over your mindset which will determine your behaviours in responses to the event. The first question should be "what can be done to get the best outcome?". If you get stuck in a traffic jam, normally people have two responses: 'I hate this traffic, this sucks' or 'It isn't a big deal in the grand scheme of things'. One will lead to a better outcome than the other by reducing your anger at the situation. If the traffic was the problem, then everyone would have had the same response, but as you can respond in the way you want, you can get a better outcome. It is important to change your responses if your current ones aren't getting you the outcomes you are after. If you continue the same behaviour (responses) then you get the same results. Step 3) Give up complaining! We are all guilty of complaining, either voicing complaints to others or mumbling them to ourselves. The truth is that we complain about events that we know can yield a better outcome than our current situation. We don't complain about things that just exist. For instance, we don't complain about gravity being gravity. To give up complaining, change is needed in your response. We normally don't though as changi

This is the first episode of many in a series called 'the steps to success'. What is success? Everyone has an idea about what success means to them. What we will be talking about here is success on all areas of your life. This includes the level of your achievements, the results you produce, the quality of your relationships, the state of your health and physical fitness, your income, your net worth, your happiness or anything that is important to you! This is not easy. Over the next few episodes we will break down the key elements which have been proven to deliver great success in people lives. Hopefully you will gain a lot of knowledge through this series. They say that knowledge is power, however I slightly disagree. You can have all the knowledge in the world, but if you do nothing with it then it is useless. This is why I want to give you the practical tools as well to use the knowledge gained in this series to make an impact. So, what causes success? Intelligence, drive, taking risks or luck? I thought that surely these would be what it takes. However, Stanford Psychologist found that the predictor of success in life is someone's Mindset. Today, we start with the first building block – which is your Mindset! The first step to overall success requires getting the right mindset! When I first heard this years ago, I was sceptical. I was doing a lot of research into key elements of success and mindset kept coming up. Mindset determines your view of yourself and the world. But, why is viewing the world differently important, isn't it what you do that matters? This is very correct, but your mindset controls what you do and how you act in most cases such as failures or setbacks. What is a mindset? Basically, it is the sum of knowledge and experiences to this point in your life. So, you have spent you whole life to develop your current mindset. If you think the world is awful, you will have an awful life. We see a lot of information now with the internet. This is great as you can access all the information you could ever want, however a lot of information we see is negative. News story are typically negative so seeing the news of 7 billion people can be overwhelming. Seeing more negative information over time will slowly seep into your mindset. There is a theory created by an Anthropologist called Dunbar's number. This is meant to be the number of people we can maintain a stable relationship with, which is only 150. So even taking in the news feed from your Facebook friends can exceed this. There are two types of mindsets: People either have a Fixed or Growth mindsets, or sometimes a little bit of both depending on the situation. If you were to try sometime new, your fixed mindset would say; 'What if you fail?' Or 'I can't do that!'. Your Growth mindset would say; 'Everyone fails, if I do I can learn from it so how can I do it?'. The way you interact with you Mindset is your internal voice. On average, we speak about 125 words per minute. We can listen to around 400-500 words per minute. However, we can think to ourselves around 1,300 words per minute. Based on this, you technically talk to yourself more than anyone. So, if you have a negative internal voice you have a negative mindset as on average you will put yourself down. Now that we have run through the basics, here are the steps to change your mindset: 1) Learn to hear your inner voice. The first step is to pay attention. Your mind is a bundle of thoughts and interpretations which form your mindset. It is hard to change your inner voice if you don't know what it is saying. If it is being negative then it is important to first realise this before any change can be made. Take a journal of your thoughts every day for a week. Just write it down on your phone if you think something negative. 2) Examine your current beliefs and track what you talk to yourself about! We all have beliefs. Beliefs about ourselves, our place in the world and the world itself. Along with our good beliefs, we have self-limiting beliefs as well. Some self-limiting beliefs are around money. Through your own upbringing and relationship with money, you can develop a limiting belief to money. What is money anyway? It is simply a median of exchange. Should it change the way you think? Well hopefully it doesn't because there is nothing bad about it, it allows you to do more. It's about what you do, not the money you have. We also have self-limiting beliefs about ourselves. This comes back to that internal voice we were discussing earlier. Think about the way you talk to yourself. If you make a mistake, do you just blame yourself, or do you think about how it can be avoided in the future? Belief in yourself is important. This helps determine what you think is true and possible. Believe you can do anything you want! 3) Recognise that you have a choice. How you react to any situation is a choice. Therefore, you have a choice to change your mindset and the way you think. While your current m