It's time to learn how to manage your money and understand investing
In Sort Your Money Out: and Get Invested, former financial adviser and host of the money money money podcast (formerly my millennial money ) Glen Jamesshares a life-changing approach to the major milestones of your personal finances. Learn how to deal with debt, embrace a realistic spending plan that works, buy your first home, invest in shares and create the plan you need for long-term financial success. You'll get the accessible and friendly help you need to get smart with your money and equip yourself with the skills and tools to understand and secure your financial future and invest in a property, in shares and in yourself.
Written in a matter-of-fact style perfect for anyone who just wants to know what works for them, you'll also learn about:
Realistic ways to increase your income and help balance your budget
The methods that lead to a safer, more stable financial future
The smart way to invest in real estate and purchase a home or investment property
How to understand the share market, ethical investing, and your superannuation
Getting out of debt and getting the most out of your life
Ideal for anyone trying to get a handle on their personal finances and get started building a portfolio, Sort Your Money Out is a one-of-a-kind must-read book filled with practical and entertaining financial help to make sense of an intimidating, but crucial, part of everyone's lives.
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To be great at investing you need to have the mindset of an investor.
You will learn about basic share investing concepts.
We will look at asset allocation and diversification as well as risk.
You will understand a variety of different investments and investment styles.
I'm starting this chapter with a case study on my own stupidity / ignorance / not knowing what I was doing. Regardless of which one you pick, you'll end up in the same place!
I remember my first investment. I was about 18 years old; it was $2000 and it was a hot tip. I honestly forget the company or exactly what they did, but it was something like a bio-tech company that was developing some type of vaccine for pigs for the factory farming industry. So bad. The āhot stock tipā was that once this company got government approval for its product, it would have the only vaccine in the market, along with a patent. All of us shareholders would then become millionaires and because we would by then be sophisticated investors, we would find the next unicorn and do it all again!
You could say my first investment was a flop. I think I ended up just selling out at a loss (maybe around $1200), losing almost 50 per cent of my money.
Time for an autopsy on my first investment. What did I die from? How can this be prevented in the future?
I'd like you to understand that I am now an experienced investor compared to the 18-year-old Glen. You must remember that back in the old days, you couldn't invest into apps or stocks āfrom $5ā. You really had to invest at least $2000 to make it worthwhile with brokerage costs (I explain brokerage in chapter 6).
Coroner's formal report on cause of death
Cause of death: no idea what he was doing
The victim did not have a clear strategy in place. He started investing without financial foundations.
He saw this investment as more of a gamble after following a āhot tipā.
He didn't really know anything about the company he was investing in.
The investment was not aligned with his values. If he had actually looked into factory farming, he may have decided that he didn't want to support anything to do with that industry.
He took on a single stock risk: he invested everything he had in the one investment. There was no diversification whatsoever.
He took on industry-specific risk and niche within the industry (bioātech for animals).
He was exposed to legislative risk (waiting on government approvals).
He didn't have the view that investing was actually for the long term; it appeared he was speculating.
He invested in a āmicro capā company (can be very volatile and higher risk than established companies).
He may have taken on some key person risk within the company he invested in (that is, the main person/s died or left the business).
Coroner's findings
āThe coroner believes that the deceased would have had half a chance of survival if he had done the opposite of every point in my findings. At a very minimum, he would have benefited from a diversified portfolio with the majority of his wealth. If he did have a personal interest in such a company and understood the risks, I would suggest no more than 10 per cent of his wealth be invested in such. May he rest in peace.ā
Mindset of an investor: how to be great at investing
Investors have the mindset that it's a long-term game. Investors have the mindset that they are willing to take on some level of risk to achieve a return, but are more concerned about a smooth return for their portfolio over the long term. Investors are not swayed by weekly, monthly or even yearly market fluctuations: they understand what they are invested in and know that markets behave in certain ways at certain times. Investors have a plan for their wealth and financial future. Investors are not gamblers. Investors are not daily traders of stocks. Investors are not swayed by uneducated commentators passing on individual āstock tipsā from the friend of a friend at a BBQ. Investors know the benefit of compounding interest and returns.
If an investor was a gardener, they wouldn't plant a tree and then three weeks later dig it up and check the roots.
Do you want to be an investor or do you want to be like the 18-year-old Glen James? I don't mind what you do ā but you should now know the difference between the two after reading the scathing coroner's report.
There are many people who waste money and do exactly what I did ā over and over ā and are trying to crack it. These people aren't 18; they're in their 20s, 30s, 40s and 50s ā and older.
I like to say to these people, that's fine, you do you and let's compare notes in 20 years.
Ella, 24
Brisbane
After finishing uni and gaining a graduate job, I became interested in financial literacy. When I got my first pay as a registered nurse it was over double what I earned previously as a casual worker while studying at uni. I remember feeling excited as it was the most I had ever earned in my life but also knew that I didn't want to waste this privilege of having a consistent income. I read a few finance books that taught me the basics of budgeting but still wasn't sure how to create financial security for myself. Then I heard about investing in the share market.
At first I didn't understand the concept of long-term investing. I thought investing in the share market looked like Leonardo DiCaprio in The Wolf of Wall Street ā flashy businessmen trying to make some quick cash. Glen's podcast flipped my perception of investing by introducing the concept of investing for the long term.
Listening to the show and doing my own research I learned about creating a share portfolio to suit my risk profile. I worked out a budget and allocated a percentage of my savings towards investing. I started micro-investing to dip my toes in. I then opened a brokerage account, buying $2k of my first ETF, which contained 90 per cent growth assets and 10 per cent defensive assets. My aim now is to regularly invest in my portfolio. I feel dialled into my finances. By having control and an understanding of my finances in m...
Table of contents
Cover
Table of Contents
Title Page
Copyright
Dedication
hi, I'm Glen!
introduction
let's get this party started!
can we fix it? yes, we can!
getting invested
looking at important topics
where to from here?
money myths, hacks, luxury items and digital assets
