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

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).

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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

New To Finance

How on Earth do I learn how to invest, anyway?

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:

https://www2.asx.com.au/investors/investment-tools-and-resources/online-courses

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

You could also read: Millennial Revolution

https://www.millennial-revolution.com/

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.

…………………………………………………………………

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