F.I.R.E., Life Hacks, More experienced Investors, New To Finance, Uncategorised, Uncategorized

Beyond Barefoot: Five Great Books About Investment and Money:

The Barefoot Investor By Scott Pape is a great book. So what’s next on the to-read list?

Quit Like A Millionaire by Kristy Shen and Bryce Leung

What year are you going to retire? Is it the year you turn 31 like these two? This book covers Kirsty’s journey from living on 33c per day to being a millionaire—just like the title says, no gimmicks, luck or trust fund included.

Smell the roses

The Richest Man in Babylon by George S. Classon

Do you have the soul of a free man or a slave? Are you willing to do what it takes to start your purse to fattening? And what is the benefit of working hard and saving money anyway? These simple fables share timeless wisdom about investment and personal growth; they’re as relevant today as they were in ancient Babylon. Best $10 I ever spent.

See the big picture

Making Money Made Simple by Noel Whittaker

What should an Australian know to gather wealth? What are the principles of investing? Noel Whittaker has an AFSL and has been writing on money in Australia for longer than I’ve been alive. This guy knows his stuff; he’s credible and experienced. Check out his other titles for extra info. 

Get inspired

Millionaire Teacher by Andrew Hallam

Another 30 year old millionaire. This guy was a teacher, who learned about compound interest and decided to put it to work. He paid of his entire student debt within two years of graduating and had investments equal to one million dollars soon after that. His simple, no-nonsense style is appealing and his life story is inspiring.

Re-invent yourself

Banker to the Poor by Muhammad Yunus

What are you going to do to make the world a better place? What mark are you going to leave? Muhammad Yunus has brought more people out of poverty than any individual I can think of except Bill Gates. He started Grameen bank which lends as little as 8c to people in desperate need. He started a social movement in Bangladesh that has spread all over the world. A very inspiring read, and he has many other titles which teach people how to build social business and how to combine capitalism and community to help society.

Support the system that supports you. Photo by Pixabay on Pexels.com
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 The Good Place 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.