The Journey Begins

Thanks for joining me!

Everything on this blog is fictional.

All of the personal examples, and all of the stories are fictional.

All of the funds named and any companies mentioned, even those which are based on real examples, are fictional.

By reading this blog, you agree that you read it under your own risk, and Gill’s Practical Bookkeeping is in no way responsible for any harm or prejudice to yourself, your business, or any fictional examples above.

I am not a financial advisor. I do not have an AFSL. I am a chick who likes to read, think, write, and has access to google. You should treat this blog with the same seriousness that you would treat anyone whose main qualification is access to google. This blog is for entertainment purposes only. It’s a little like watching Big Bang Theory for finance nerds.

Anything you take from this blog is your responsibility. Nothing in this blog, even if you are mentioned by name, address, and telephone number, pertains to your personal situation. Anything you agree with, or disagree with, you are welcome to comment on, but your opinions belong to you. You are responsible for your comments. If they are offensive, I will remove them.

Good company in a journey makes the way seem shorter. — Izaak Walton


More experienced Investors

What on Earth is an index fund, anyway?

How do I choose which stocks I buy?

That’s the big question on my mind when I’m thinking about investment. Warren Buffet recommends index funds. They beat 99% of mutual funds over a 40 year period (I believe that the only mutual fund that has fairly consistently beat the market over a 40+ year period is Berkshire Hathaway—if I’m wrong, tell me in the comments).

An index fund has low costs (less than 0.5% generally) and tracks the market. Overtime, the market goes up and down, but the long term trend is up. This means that the most important thing is the amount of time an investor has in the market. Noel Whittaker, in “Wealth Made Simple” quotes the figure that $20, 000 invested in an Australian Index ETF in 1980, would be worth around $1 150 000 in 2019.

Think about it this way: if I buy individual stocks, and that stock fails, I lose my money. If I buy index funds and a company fails, the index might drop in price but it will naturally come back when a new company takes its place. This means I am highly unlikely to ever lose everything and historically I will almost certainly make gains.

One potential problem with index funds, is if I only invest in one country’s index and that country has a bad run. So for example, if all my money is in Australian Index ETFs, and the Australian economy tanks, my income and assets will significantly drop. If my money is invested across several country’s index funds and bonds, property etc, and Australia’s economy tanks, I’ve got much less chance of losing lots of money through sequence of return risk.

The biggest Australian index fund is Vanguard Australian Shares Index ETF, worth $5 748 Million. BetaShares also has an Australian ASX 200 ETF worth $809 Million. VanEck has an equal weight ASX ETF worth $1 167 Million.

Index funds have some of the lowest fees on the market. Vanguard VAS has a MER of 0.10% per annum. BetaShares has a MER OF 0.07% per annum. VankEck is the highest, with a MER of 0.35% per annum.

The buy-sell spread, or slippage, of all of these ETFs is less than 0.05%, except VanEck which sits at 0.10%. VAS is the most liquid, with approx $17 Million of daily transaction value, VanEck MVW  is the least liquid, with approx $2.5 Million of daily transaction value. Over the last five years, VanEck has had the highest return at 8.98%. Next is Vanguard at 7.33%, and BetaShares has only been around for two years, and thus can’t be included in a five year analysis.

NOTE: I am not a financial advisor. This blog is for entertainment purposes only. I’m not a CPA. I’m basically just a gal who has access to google. You should treat this blog with the seriousness you would treat ANYONE who has access to google.

New To Finance

What should I do with my hard-earned cash?

This is a question that everyone has to answer. Are you working full-time? Part-time? Casual? Relying on the bank of Mum and Dad? Whatever your income source, one of the biggest questions you’re going to have to ask yourself, is ‘What am I going to do with my money?’

Conventionally, this is called a budget. Yeah! Pardon? You hate the word budget?

Hmmm… let’s say God waves her magic wand today and delivers you a job that pays a cool million dollars per year—what would you do with the cash?  Buy a great apartment ($700 000)? Brand new car ($100 000)? Spend the rest on the pokies at the local RSL? Congratulations, you just made a budget.  Budgeting just means you plan where to put your dough.

One of the most important rules of budgeting, is to decide how much you want to put into savings/investments, and then live within your means. Living month to month, or spending up big on credit cards, is the easiest thing in the world, but it will not help you to become financially independent in the long term. So decide how much you want to spend, and  stick to that limit no matter what.

Here’s a real example: An engineer client of mine earns a $100 000 package.

$9500 of this goes straight to super (Yeah! Long-term retirement savings!).

Around $20 000 goes to tax (this changes slightly year to year according to legislation, charitable donations, other deductions, etc).

He then has around $70 000 to live on.

He pays around $12 500 per year for strata, rates, and bills.

He pays around $5 000 per year for his car expenses all up (he drives a new-ish reliable hybrid–engineer, right!?).

He pays around $17 500 for all of him and his partner’s food.

He pays $2 000 per year for private health insurance.

He puts around $24 000 per year into savings and investments.

Leaving him $9 000 for fun, education, charity, hobbies, gifts, magazines, and holidays.

This is a basic example of a budget. “I can’t save $2 000 per month!”  you shout in distress. Well, I hear you. There are plenty of people in Australia, who work more than full time hours and will never earn more than around $40 000 per year. But what if you could be one of the people who invests $24 000 per year? Or more? Are you earning $100 000? It’s not actually that much by Australian standards. How much are you really spending on alcohol and nights out with friends?

“But I’ve got a mortgage!”  Yep. Hear that, too. If you’ve got debt, use your savings money to pay it off as fast as possible. Once you own your property or you’ve paid off your personal loans or credit cards, use that money to invest. Don’t put any charges on your credit cards that you can’t pay off by the end of the month. $500 shoes are a want, not a need (not that I’m judging, if you can afford it out of your ‘fun money’– go for it).

NOTE: I am not a financial advisor. This blog is for entertainment purposes only. I’m not a CPA. I’m basically just a gal who has access to google. You should treat this blog with the seriousness you would treat ANYONE who has access to google.

New To Finance

Investing for Noobs

What do I need to begin investing in stocks and ETFs?

The first thing you need to do is to educate yourself about the financial markets.

ASX has free courses available here:

This will give you a basic understanding of financial markets and how to invest.

You could also read: Millennial Revolution

Which is a kick-arse blog by millionaires Kirsty Shen and Bryce Leung and has a beginner investing workshop for free (my favourite price).

You could also read: Afford Anything

Which is another excellent blog and podcast by Paula Pant, who writes about the tension between dividing scarce resources such as your time, your money, and your life.

The second thing you need is a brokerage account.

Stocks and ETFs are bought and sold from within brokerage accounts. These are generally free accounts that charge a fee to buy or sell shares (generally between $10-$30 per transaction).

How do you decide what brokerage account to buy?

I suggest contacting your everyday bank. ANZ, Commbank, Bendigo Bank etc all have the option to create brokerage accounts that let you buy and sell shares. If you already use netbanking, you will generally  be able to login to your brokerage account from your banks netbanking platform.

That’s it!

You’re ready to buy and sell shares.

You know what you want to buy (based on your education) and you know how to do it (with an online brokerage account).

NOTE: I am not a financial advisor. This blog is for entertainment purposes only. I’m not a CPA. I’m basically just a gal who has access to google. You should treat this blog with the seriousness you would treat ANYONE who has access to google. This blog was written in response to a question from Neko Loui. If you have financial question, I’m happy to try to answer it.


How to be Happy (Yes, even you).

I have lots of great relationships. I have good friends. I have good relationships with my family. I keep in touch with people. I give Christmas presents. My life is full of great relationships.

And my sister doesn’t talk to me.

In his book, Hardwiring Happiness, Rick Hanson argues that negative experiences are like Velcro, but positive experiences are like Teflon. That one negative experience will stick more, and take up more of our mental space than all of the positive experiences. That one difficult relationship will bother me more, than all the good from all the good relationships I have. Luckily, Rick Hanson provides an antidote to this.

He argues that whatever you don’t want to feel you need to spend 12 seconds to one minute feeling the opposite, as often as you catch yourself feeling that feeling you don’t want to feel. So, if you often feel afraid, you could spend 12 seconds feeling safe and secure several times per day. You could spend time remembering when you’ve been safe in the past, or imagining when you’ll be safe in the future. The aim is to deeply experience safety and security.

Neuro-plasticity is a new buzz word, but this is an excellent example of the mind and body’s ability to change itself and grow. You can literally change your brain’s defaults; your emotional reality, just by working on it for 12 seconds several times per day. So what’s the opposite of your regular emotions? Do you feel anxious and afraid all the time? Practise feeling safe and secure. Do you feel alone or like a failure? Practise feeling a sense of achievement or a sense of connection. Do you feel unloved or unappreciated? Practise feeling like other people adore you, or you’re fine just the way you are.

The point is not to ignore reality—reality might be that you need to be afraid of something real. This is for people who have “Velcro” negative experiences and want to get out of their innate negativity.

I’ve tried it, and I definitely felt better. Rick Hanson, Hardwiring Happiness: Highly recommended.

More experienced Investors

Review: ResiFund

ResiFund is an Australian residential real estate investment fund. On their website, they quote a return of 10.8%. However, if you read the fine print, they are actually quoting a 10.8% return for Open Corp, the company’s sister company. Open Corp provides financial education, and finds investment properties for investors. So it’s unclear where the 10.8% return is for investors who have bought and sold their investment properties through OpenCorp or if OpenCorp are keeping tabs on the properties they sell to other people.

ResiFund states that a significant proportion of their returns will come from quarterly distributions. However, they do not quantify what a “significant proportion” is. They also do not quote historically, what the yield is. This means that it is unclear what the anticipated capital growth is vs the anticipated rental returns are.

Resifund’s gearing policy is 50% of the current value of the assets. This means that should the fund be wound up, investors will not get anything. Of course, the intention is not for the fund to be wound up, and Resifund do anticipate a good return.

However, doesn’t everyone who starts a fund anticipate good returns? And wouldn’t everyone who starts a fund state that on their website (except Warren Buffett who famously stated to the public that Berkshire Hathaway was overpriced)?

ResiFund also sells by getting people to come to seminars on real estate investing. In my head I worry when I hear this. I feel that anything that can’t be sold on math alone, shouldn’t be sold.

Resifund is an Australian residential real estate investment fund. As with all investments; you need to do your homework, and make decisions as to what is best for your own interests.