Life Hacks, More experienced Investors, New To Finance, Review

On Marshmallows and Will Power

What’s this big fuss about Marshmallows anyway?

In the series of Marshmallow books, Joachim de Posada and his co-writers describe the life of a man called Arthur, who learns the advantages that delayed gratification can give to individuals who are able to develop this skill.

This doesn’t just have applications in corporate life, it also has applications for study, exercise, diet, hobbies, financial life, and can be applied to reduce all addictive behaviours.

Often when I want something, I really want it.

Chocolate.

Coffee.

Shopping.

Fair enough.

But what if I were able to minimise my coffee consumption so I only had one cup per day?

Would that improve my life?

In some ways, certainly: I’d have a lot of personal satisfaction from the fact that I was less addicted to caffeine; I’d have the dopamine-hit gladness that comes with achieving any goal; and I’d be exercising my ‘delayed gratification muscles’.

What about shopping?

What if I were to limit my spending on un-necessary items to $50 per fortnight? What if I were to put the rest of that money into long-term savings or investments? What if I kept doing that for 15, 30, 45 years? Would that make a difference in my life?

You bet your Granma’s sweet red dressing gown it would.

Joachim de Posada describes an experiment that took place in the years leading up to 1990, where researchers at Stanford University put a marshmallow in front of a pre-school age child, told the child that they would give them two marshmallows if they waited 15 minutes, walked out of the room, and left the child to decide whether to eat one marshmallow or wait for two.

The children who were able to wait for two marshmallows did better across a range of indicators 20 years later. They were happier. They did better socially. Their grades were better. They were more successful at work.

It’s interesting.

Delayed gratification is interesting. It’s a muscle you can exercise. It’s a habit you can learn. And most importantly, be gentle with yourself. Just do a tiny bit at a time. One step then the next then the next, but Tiny steps. Be kind.

Comment below what you would change in your life, if you set your mind to it, gently.

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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.

http://www.nuancedtruths.com

https://www.patreon.com/gillspracticalbookkeeping

Beauty
F.I.R.E., More experienced Investors, New To Finance

What am I going to do with myself when I retire?

For some people, retirement is a slow, depressing slide towards death. That’s certainly one option. But for others, retirement is the second flowering of their life. For those in the FIRE (Financial Independence, Retire Early) community who can expect to spend 40-50 years in retirement, they spend it pursuing their own interests and becoming better at things they choose to do, instead of things they’re forced to do by the need for money.

Many people in the FIRE community still work part time—not because they need the money, but because they find passion projects to keep them young and fresh. Or because they find a cause they’re interested in volunteering their time to. Retirement is the best years of their lives, and they live happily pursuing hobbies, interests, exercising, cooking, socialising, travelling, and generally enjoying themselves.

So here’s a list of some of the amazing things you can do when you reach your financial goals and retire (or not) but when money doesn’t count any more.

  1. Create Art—Yeah! Have you ever wanted to learn to draw? Or paint? Or create sculptures? Why don’t you take a class? Or just grab some materials and practise. Retirement is the perfect time to get lost in creativity.
  2. Learn a musical instrument—Wouldn’t it be great to be able to play piano like Bill Murray in Groundhog Day? Enjoy your sensitive side, and the subtlety and mystery of good music. Even if it’s all squeeks and squwaks at first, you’ll improve over time, and eventually you’ll sound amazing.
  3. Learn a language—Want to be able to speak Pu Tong Hua to your Chinese neighbours? Want to go to South America on holidays for 6 months and be able to speak in Spanish or Portuguese to the people there? Want to be able to bargain in Hindi in an Indian market? The world of languages is your oyster. Go for it!
  4. Exercise—There’s no reason you can’t take up surfing or run a marathon if you want to. Or just go for a long walk every day, and lift a few weights once per week. Developing your fitness and increasing your body’s endurance and flexibility is a great goal for retirement.
  5. Cook—Good food is good at any stage of life, but when you’ve got time to savour and really take the slow path to food which tastes great and is healthy, life becomes amazing.
  6. Grow a garden—Have you always wanted to feel the earth in your hands, and cultivate new life in your home? Never had time? Guess what? Now’s your time!
  7. Travel—Want to live 6 months per year in Thailand? Or split your time between Australia and Europe? When you take the need to earn money off the table, this is entirely possible.

These are just a few ideas of what you can do when you retire. Put your own ideas in the comments below, and start yourself thinking about FIRE.

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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.

http://www.nuancedtruths.com

https://www.patreon.com/gillspracticalbookkeeping

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.

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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.

http://www.nuancedtruths.com

https://www.patreon.com/gillspracticalbookkeeping

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.

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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.

http://www.nuancedtruths.com

https://www.patreon.com/gillspracticalbookkeeping