Do you need a Financial Planner or Guru?
I believe not! Although I’ve studied Financial Planning I know that many of the future Australian millionaires (as quoted by an article on The Age newspaper recently) will be in the financial services industry. Why is that? Because of the performance fees and commissions that planners, brokers and agents take from your savings, share funds and superannuation funds.
How many Brokers, Real Estate Agents and Financial Planners have you seen lately driving around in broken down old cars? That’s right – it’s our money at work!
Do it yourself.
Anybody can decide to save money – the hardest thing is to make the decision. Even people on a modest income will earn more than $1 million dollars in their working life. The trap is not to increase your spending when your wage increases!
Discipline is the keyword here. Make the decision to start, have a plan to follow and stick to it without reservation. More about this in a later post.
Property v shares.
Then there is the decision on whether to invest in property or the share market. Although there are camps on both sides that spruik the advantages of one over the other, I can definitely state two facts that I’ve learnt over time. Both shares and property have returned roughly equal returns over the last 80 years, 11.5% p.a. (Dr.Shane Oliver, AMP Capital Investments) but shares are more volatile over short time periods.
I personally prefer shares for two reasons. Firstly, you don’t need much money to start investing in shares whereas property ties up very large amounts of money ($3-400,000 minimum). Also, shares are easy to buy and sell so you can have your capital back in your bank account within a couple of days but real estate can take many months to sell.
It’s not as hard as all the brokers make out to pick good performing stocks over a 20 year period. Look at the chart below that I found just by Googling “best performing Aussie stocks over last 20 Years”.
Commonwealth Bank of Australia is the fifth share down the list and it still managed 105% per annum over the last 20 years. Try and find an easy investment with that sort of return outside the share market!
There are plenty of other share examples both in the above chart and also in share magazines or in the national papers. If you want to find them, they are quite easy to access.
In a later post I will go into shares in more detail but I was using this example to show you that you do not need a Masters degree or a Guru to help you find good Australian Companies worth investing in via the Australian Stock Market.
DIY – Do It Yourself and use the KISS principle – Keep It Simple Stupid!!
Buy the stocks, keep them and let the profits and dividends compound over time.