Finance & Fury Podcast

  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 feed

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, Ans

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…an

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 v

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

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 n

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 Un

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 ‘Cash

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

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

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? Under

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 environm

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 an

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 –

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 dis

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 (Absolut

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 ‘suc

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

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

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 player