Finance & Fury Podcast

In this episode we discuss the magic trick to paying off a mortgage in a shorter time frame, to save thousands in interest costs. The trick is that there is no magic trick - plain and simple. Like the dream of 7-minute abs, or 6-minute abs.... (but what about 5-minute abs!) it takes a bit of work to get it done.       In this episode we discuss: One simple strategy is to make your mortgage payments weekly, in addition to increasing your repayments. With this formula you can halve your mortgage from a 30-year term into 15 years.  We’ll deep dive into ways to do this, but start with the single simplest and most effective way to crush debt.  Doing this can save literally thousands in interest payments and increase your financial freedom.  We also discuss different interest rates. Obviously with higher interest rates, you save a lot more. Finally, we run through whether it’s worth investing the money instead, or repaying your debt.   Here’s a link to the Pay Yourself First Episode      

Today we’re going to run through the very first implementation of Communism on a mass scale. Our last few Furious Friday episodes are a lead up to this. If you didn’t catch those episodes, it’s not the end of the world but if you did manage to have a listen it will provide a bit of context to this episode.   Russia – 1917 under Vladimir Lenin & the Bolsheviks (Spoiler alert! It didn’t end well!) Firstly, it’s important to understand Russian History, pre-1917, as a prelude to the events that occurred. 1861 - Tsar Alexander II passes the Emancipation Edict, ending serfdom in Russia Alexander II was a pretty good guy (as far as leaders through history go) Sold Alaska to the USA 1867 for $200m in today’s dollars. Favoured an economic system similar to that in other European countries; Capitalism and free trade. Promote development and to encourage the ownership of private property, free competition, entrepreneurship, and hired labour Most Serfs were free (a third of the Russian population) They had rig

Welcome to Finance and Fury’s ‘Say What Wednesday’. Today’s question comes from Braden, “What are the tools for young people to invest in exchange trading funds or the wider share market? Can I only use Commsec or Nabtrade, or are there better options out there?” Let’s start by considering the following features of competing online share brokers; Fees You’re charged brokerage for every buy or sell transaction, with many fees around the $20 mark. Fees may be calculated as a percentage of the transaction amount for larger trades. Also charge an ongoing annual or monthly fee on top of this, especially with the more feature-dense platforms.   What can you trade?  Shares – Australian and International shares (Direct, LICs, ETFs) Others - CFDs, forex, indices, currencies and much more, so look for this functionality if it's important to you. Research & Access to market data Daily market reports, buy and sell recommendations and company financial reports can all provide useful information. Trade options Y

Welcome to Finance and Fury  In today’s episode we’re talking about property - Commercial vs Residential. It’s often a question people ask when they’re looking to start investing in property and considering which is the best type to get in to. What is best to buy? Residential or commercial? What do you want to achieve? They aren’t the same beast – Whilst they’re both ‘property’ they aren’t really the same thing and behave quite differently   Residential Property Homes or apartments Rent to individuals   Commercial property Three different property types Office Retail Industrial Rent to businesses   Commercial property to residential Pros Costs – Commercial can have lower costs Upfront – Technically cheaper per square meter than residential Ongoing – Tenants cop some of the costs (maintenance, etc.) Higher Rental Yields 8-12% on yields Residential has about 3-4% on yield Long leases Leases for 3-5 years are more common. Can go to 10 years. Provides certainty Cons Lower capital growth Su

Welcome to Finance and Fury! If you haven’t listened to last Friday’s episode go check it out, it’s a prelude to this episode. Today we are going to discuss the founder of Communism – Karl Marx, along with his ideas.   1848 – Karl Marx, along with Friedrich Engels, brought the philosophy of Communism to the masses. We’ll start with a brief outline of his life. Whilst we could go on for a while about him, I’m more interested in looking at his ideas, which are more important. We will talk more about he and Engels’ character, too, to form a good understanding about their ideologies.   Why is this important to cover? The Communist Manifesto is one of the most read books – still today. Research conducted by the Open Syllabus Project - 15 years of over 1m course curricula in Colleges and Universities The Communist Manifesto is number 3 in most assigned, 2nd in History, Number 1 in Sociology The top 10 Economics books are written by New Keynesian Economics Assumes rationality and economic efficiencies – Wants t

Today’s episode is just a quick one. I’ll be going over a couple of questions I have had over the past few weeks about the personal finance course we’re launching. Plus, we have an exciting announcement at the end. First off, why does the course exist to begin with? There is almost no financial education at any level of the schooling system.  Unless you teach yourself, or someone else teaches you, it is almost impossible to completely understand personal finances or investments. This has created a problem where something that we all rely on very heavily has become misunderstood, and underutilised. We will all encounter money at some point in our lives, or pay taxes, so why not do everything possible to maximise the former and minimise the latter? I want to create a platform with everything you will need to know, or may ever want to know. Plus, tools that go along with each topic to put your newfound knowledge to use. Most of these things seem complicated – until it is explained I had great feedback from thos

Today we will talk about the fundamental principle of being wealthy. It’s very basic, and, if you get it right, you will start to accumulate wealth…which is the whole concept behind actually being wealthy. You don’t get dumped with a truckload of cash and all of a sudden find yourself wealthy – those who are wealthy tend to have accumulated their wealth over their lifetimes.   It’s about keeping more of your money, and investing it to grow over time.   The big dream: Have millions of dollars and being able to purchase anything. This revolves around spending money You need the money in the first place to do this though   I want to talk about the allure of getting everything that we want in one go – the get rich quick schemes Lottery winners, or massive inheritances – do they never have money worries again? Well, it’s been shown that they do. And this goes back to the fundamental principle of spending more than is sustainable. The money is going to run out pretty quickly if you don’t have any discipline.

Welcome to Finance and Fury, Furious Friday Have a think about how much you know about history? Are you familiar with the big events, like WW1 and WW2? Events that have been re-enacted in movies like Saving Private Ryan? Did you study it at school? Have you done your own research and study on these events as well? I’ve been listening to a lot of history podcasts: Dan Carlin’s Hardcore History is one of the best, the History of Rome podcast, as well as History on Fire… basically anything with ‘history’ in the title. The more I listen to these podcasts, the more I realised that even the general gist of an event in my head was way off in terms of accuracy. It’s eye opening learning about history from the view of those who were actually there. Soldiers on the front-line writing home about conditions, speeches from leaders and their political dealings behind the scene. This seemed so different – When was the last time you listened to a news story that shows you more than a 5 second clip of what someone said? The

Today’s Say What Wednesday question is from Linus. Linus asks, ‘I was just wondering what you think the ideal weighting of Australian (ASX200) ETFs, similar international ETFs and Bonds is in an investment portfolio? Love the show, thanks.’ There’re a few things to cover off here! The ideal weighting of Asset allocations; that is, how much you have allocated to Australian Shares, to International shares, to Bonds, etc.   To determine the ideal weighting there are 3 questions that need to be asked: What is the purpose of the investment portfolio? What are you trying to achieve? Long term growth – Trying to maximise the balance Short term stability – Well diversified portfolio with low exposure to growth Drawing an income or reinvesting – which determines the type of investment held How much time do you have? Longer timeframes allow for more planning and take advantage of long term growth How much risk do you need? Returns come in two parts = Income + Growth If there is growth in the equation, the inves

  To start today’s episode, I want you to think about if there is something that you keep putting off. A nagging little task, like paying a bill, lodging a tax return, doing a budget and so on. Does this cause you stress? Little things in the back of your mind actually tend to build up over time, taking up your brain function bandwidth. When you actually get around to doing it though, it’s never as bad as what we think. We build things up to be a big problem in our minds, but they really aren’t. Once it’s done it wasn’t as bad as we thought. Today we are going to talk about financial stress, and what can be done to avoid it and prosper. Financial stress is a major issue for many Australians – We worry about money more than anything   The Australian Psychology Society- research shows financial issues are the leading cause of stress - Stress and well being in Australia Survey (2015) Financial issues - leading causes of stress (49 per cent in past five years) Others items included: family issues (45%), health i

Welcome to Finance and Fury, Furious Friday! I saw an ad this week for a movie called ’Wizard of Lies’ – Bernie Madoff movie – 2008. He was a stockbroker, investment adviser and financier who made headlines around the world when he was arrested for one of the largest accounts of financial fraud in U.S. history. What he was operating was known as a Ponzi Scheme (named after Charles Ponzi, who became notorious for using the technique in the 1920s)   For those who aren’t aware the definition of a Ponzi scheme is a form of fraud marketed as an investment – the usually have high, guaranteed returns – “too good to be true” Fraud - a thing intended to deceive others through wrongful or criminal deception intended to result in financial or personal gain. The success is reliant on new inflows from investors, as that is where returns come from. In other words: A Ponzi scheme is a system where the investor thinks their money is invested in something which is generating the returns, but are actually just used to pay oth

Today’s question comes from Richie, who asks, “Have you been following the Bitcoin ETF at all? If so, are you able to do an episode on this and if it is worth looking into?” Thanks for the question, Richie…and yes in fact I actually have been following it. I noticed that the price jumped up about 20% on the news that the SEC in the US was considering allowing ETFs for Bitcoin. Crypto currency fascinates me, but not as an investment option. That is, I like the technology but haven’t bought any as an investment option. To start with why, I want to break down the ‘currency’ part in crypto currency – Currency is money: Comparing Bitcoin to money Functions of money Unit of account – Divisible, identifiable amounts Medium of Exchange – Can you use it for transactions for the purchase of goods and services Store of value – Is worth something now and will be in 10 years (food isn’t a good currency long term). Can I hold onto this to be able to exchange it in the future? Characteristics of money fall under this D

Today’s episode stems from the question last week from William about investment bonds (an investment vehicle, kinda like a life insurance product). Today however, we’re talking about the asset class of Bonds   What are bonds? A bond is a debt instrument - a form of lending. Part of the ‘Fixed Interest’ asset class (ever seen a multi sector asset allocation, like inside a Super Fund) Financial Product designed to raise money for the entity that issues the bond I liken it to an interest only loan – If you need money, you borrow it (like a mortgage) which you pay back along with interest too. When a company or the Government needs money, someone (you) purchase that bond – Essentially loaning money to the issuer who then pays you interest (coupons) At the Bond Maturity – you get the initial loan back (unlike a PI loan)   Basic Terms Face value: This is the nominal value of the bond, typically $100. It also refers to the principal lent to the bond issuer which they commit to repay to investors when the

Welcome to Finance and Fury! The main aim of our Furious Friday editions is to clear up misconceptions. We’ve been seeing a lot of news stories lately about companies underpaying staff – 7-Eleven, hospitality businesses, celebrity chefs etc.   The incidence of this has risen over the past few years – why can’t these people just pay the legal wage? This episode may be a bit upsetting depending on what side of the coin you’re looking at…we’re talking about wage controls, that is, Minimum Wages. Are they good or bad?   What are minimum wage laws? Regulation/body of law which prohibits employers from hiring employees for less than a given wage Australian History Basic Wage since 1907, which wasn’t quite as strict as what it is now. More of a prescription, or suggestion, rather than enforced legislation. 14 December 2005, the Australian Fair Pay Commissionwas established  The Australian Fair Pay Commission was replaced by Fair Work Australiain 2010, and since then there’s been a significant rise in the minimum wa

Welcome to Finance and Fury’s ‘Say What Wednesday’ where we answer your questions on personal finance. Today’s question today comes from William who asked us to do an episode on Investment Bonds. Investment bonds - What are they? Investment vehicle - Not to be confused with bonds which are a (Debt instrument) investment (just in case the question was asking to cover these, I’ll do another episode on these too) An investment bond is technically a life insurance policy Nominate a beneficiary It is a long-term investment with features similar to a managed fund money is pooled with money from other investors and invested Designed to be held for at least 10 years Types Traditional Investment Bonds – what we will focus on in this episode. There are also, Education Bonds, and Funeral Plan bonds   Tax Treatments Tax effective for individuals with higher Marginal Tax Rates Internal Tax of 30% - Tax paid at company rate by the insurance company Net income reinvested If no withdrawals are made in the firs

It’s no secret that property is expensive in Australia – it can be pretty disheartening for those trying to get into the property market especially if you’re trying to buy your first home. So, in today’s episode we’ll be covering off how to buy property using what’s called a fractal investment. It’s about getting into the property market in small increments rather than the traditional way. Getting into the property market can be risky, costly, time consuming. Rather than buying a full property yourself, you buy a portion (fraction) of a property – “Fractal property investments” There has been an increase in fractal investing over the past few years as people have been having trouble getting into the property market by buying property outright. People struggle to Build deposit – most cases $60k to $100k in cash savings Getting a loan – banks are tightening requirements Have time to find property (want to make sure it returns) or manage it Option of Buyers agents Property managers All of these together go

For the last few weeks we have been talking a lot about the economy; the Reserve Bank, printing money, and now we will be finishing off by talking about the final effect of this – Interest Rates. Today, we ask the question; Are low interest rates actually a good thing? Well, I guess it depends on who you’re asking… The Economy as a whole e.g. Business The population – you and I Retirees – Low rates don’t look so good – they’re trying to save money in cash to live their lives out. But they’re not really getting ahead when accounting for inflation – the real return on money is close to zero. They’re actually going backwards Younger people – it’s great for borrowing because it’s cheap to do so. But in the long run it’s not so good for affordability. As people borrow more money, they can artificially afford to buy more…affordability over all isn’t as good, so the real value of money decreases. Interest rates Nixon in 1971 – Ended the Bretton Woods system and the last days of currency being tied to gold.

Welcome to Say What Wednesdays – Where we answer your questions about personal finance and the economy! This week’s question comes from Michael. His question related to interest rates, and to not give away his details I’ll paraphrase: “With interest rates at the moment being currently fairly low on my personal home, do you think it is a good time to lock in a fixed rate, or should I keep it variable?  I can’t give a yes or no answer on this one without knowing more about your personal situation, but can speak generally. To answer this, we will run through three players in the game; RBA Cash rate Interest rates of the banks Deposit rates of the banks All three of these are related RBA cash rate is the core, which then leads on to what banks lend out at, and then also what they offer on deposits placed with the bank. RBA Cash rate – what the RBA set as monetary policy through OMO and the supply of money We have been talking about this in recent Furious Friday episodes. We are coming up to 2 years of having t

Alternative investments and what they can mean for property and the economy Classical Car Index The CommSec Luxury Vehicles Index lists the following as luxury vehicle makers: Audi, Aston Martin, BMW, Bentley, Ferrari, Hummer, Jaguar, Lamborghini, Lexus, Lotus, Maserati, Maybach, Mercedes-Benz, Morgan, McLaren, Porsche and Rolls Royce Wine index – Liquid assets Art or Luxury Property   Characteristics Almost like an asset backed security - No income, gains come from the increase in price of the good that backs it Capital growth focused rather than income Pretty volatile – Based around demands   Luxury Investment Index Subjective pricing – Good example of ‘elastic’ and ‘inelastic’ demand Imagine Demand supply cure Demand slopes down, supply up Demand – very vertical = Inelastic (remember through I being vertical) Inelastic – necessities, price changes don’t affect demand Elastic – horizontal – responsive to changes in demand, change in price, due to close substitutes Financial crisis – luxury

Welcome – Last Friday we looked at the stock market crashes of 1907 and 2008 Difference between them was the crash of 1907 had no intervention by any central bank in the USA – because no central bank actually existed yet. But this crash lead to the creation of the US Central Bank (Federal Reserve). This made way for the intervention by central banks in 2008 to try to advert more of the crisis in the banking sector than what was experienced in the past. So, today we will be talking about Central Banks, and more importantly, the interventions they take in the economy. Why? Some economists put banking crisis (estimated around 100) at the feet of Central Banks and not banks. Let’s look at if it is the case or not:   Central banks – responsible for monetary policy Monetary Policy: (Central Banks) Money supply, interest rates and inflation Fiscal policy: (Government) Govt. spending and taxes Every country has one, but not many people know what they do! Almost like a brain, everyone has one, but few know how it