Investing On A Low Income

Order Kerni Whoalbury and a waddery woman. And before we get started on She's on the Money podcast, I would like to acknowledge the traditional custodians of the land of which this podcast is recorded on a wondery country, acknowledging the elders, the ancestors and the next generation coming through as this podcast is about connecting, empowering, knowledge sharing and the storytelling of you to make a difference for today and lasting impact for tomorrow.

of those other important things. Like you know, we're not going to talk about it too much, but I genuinely think we should be setting up our financial foundations right like it's making sure that your car is serviced and you are safe on the roads, making sure you have an emergency account and building that up because if anything does happen, you've got something to pull back on. And if you've always lived on a low income, that emergency fund is going to feel like financial freedom wrapped up

in a little bundle. That makes you feel so empowered because you've just never had that before. Yeah, Like you've just never been in a situation where if something happens, you end up in a circumstance where it's like, oh well, actually, Beck, that's fine because you've got savings for that tot doesn't seem sexy. But I mean, that's not what we're talking

about today. But like I think we should really address before we talk about this, This investing on a low income comes after all the basics have been met, and you know what, it's okay to not be able to invest at this point in life. I do think that this content is really about educating you so that you have the best opportunities and you know what investing is.

But there are so many people in our community right now who are struggling with the rising cost of living or how much their mortgage is gone up, or how much their rent has gone up, or just putting food on the table, or they might be struggling with employment. And I think that content like this, if not framed properly, could make you feel really bad because you go, oh my gosh, I listened to this podcast and it said that I had to be investing otherwise I'm not doing the right thing financially.

also not about judging and going, oh my gosh. Well Victoria is talking to Beck and has a good salary so she can doesn't have kids, so she doesn't know what it's like. Sure, my experience is not your experience, and that is totally okay, But we should be celebrating the fact that we're all in a position where if one of us is successful, we're all successful. Like a rising kite is going to lift all ships and we should all be educated on this. That is beautiful.

financial literacy. So one day you're going to go, oh, I'm doing this, and I cannot wait for the day where you're like, yep, and I own this ETF doing this, and I'm just gonna be like bare clock where you've come from, Like, warn't that be wild dubbing it? Not only are you investing, because like, investing can be really transactional, right, Like you could become an investor, and I mean you

are already because you've got superannuation. But you could go download the shares exapp and pop five bucks on an ETF or in an ETF sorry, and go from there, and that would make you an immediate investor. But the important thing to me is actually that you understand that you understand the concept of investing. You understand what you've put your money in and why you've put your money in there, and you understand what potential dividends and yield

that's going to have, and that doesn't come overnight. But at the end of the day, the question you're asking is Victoria is at worth investing small amounts of money? And the answer is unequivocally yes. And there's a few reasons for this. So investing small amounts of money sets you up for the best possible financial security and financial success long term. It's not going to be a secret that five bucks every single month is not going to create a secure retirement, right, But you know what it

does do educates you on the process. It puts you in control of having a platform that you know has that power behind it. It means that that platform already exists. Should you come into some extra money that you do want to invest, you know how to invest it and

what that means. It puts you in a position of power where every single time your income increases, instead of falling victim to lifestyle creep and being like, oh my gosh, I just don't know where all my money is going back, you can go all right, well, actually I've gotten a pay rise. I'm going to contribute this to my pre existing portfolio, and there's not a lot of thought about it. It puts you in the position where you are not only educated on the topic, but you've walked to the walk.

You know exactly what it means and how it works and how it makes you feel. You know, oh my gosh, I've been in this particular ETF. But I've now changed my mind and I want something a bit more ethical because my values aligned differently, and like, that's a really cool position to be in. I want you to and perfectly on a lower income, because like, the less you're investing, the less risk there is.

that that's negative. Right, But then when I stay invested over the long term, that increases again and it builds itself back up. I want you to have that experience before we get to the big dollar amounts, right, I want you to be okay with investing five bucks and then going all right, well, I mean it's down four dollars this week, that's kind of okay, that's all right because it's not four thousand dollars instead of five thousand dollars.

You know, if I can teach you with the small amounts the big amount it's not going to be stressful, like you're setting yourself up for future success and at the end of the day, like it does financially benefit you. So if you're investing over a ten year period with an average rate of return of six percent, which is really low because we know the average rate of return of the Australian share market over the last thirty years has been nine point eight percent. Right, I've just gone

with six because we're pretty conservative in this house. If you're investing twenty five bucks a month, which I think is for a lot of people a start point because they just go all right, well, I can't afford a whole heap, but I want not five dollars and I don't want ten. I want maybe twenty five. I feel like that feels comfortable, comfortable, It feels comfortable. If you had saved twenty five dollars each and every single month

for ten years, you'd have three thousand dollars. But if you had invested it with an average rate of return of six percent, you'd have four thousand and ninety seven dollars. Oh wow, that's one thousand and ninety seven dollars more than you wouldn't have had before. Right, Like from little things, big things really do grow. And I mean the power of compounding happens one with the scale of what you're investing, but two with time. So if you went from ten

years to twenty years, that would probably double again. Because money on average based on the rule of seventy two, which is a finance concept that basically says that money doubles. Let's call it every ten years, that in another ten years from now, that one thousand's going to be worth two thousand, and then in another ten years that two thousand is going to be worth four thousand, and then in another ten years that four thousand's worth eight thousand.

So the power of compounding is actually in time. But hypothetically, if you were investing fifty bucks a month, if you'd saved that, that would be double what you were doing with twenty five, So that'd be six grand, But if you invested it, it'd be eight thousand, one hundred and ninety four dollars. That's a difference of just over two grand.

That's sick, pretty sweet, that's sick. Like So I feel like we really need to normalize investing small amounts because I think so many times, and you guys would have heard me on the pod before being like, oh, well, if you invest five hundred dollars a month, I use that as a good example to educate you. Not because I immediately think everyone can afford five hundred bucks a month, No way, like in this economy.

stages in those journeys. Yes, and I would hate for you to go, oh my gosh, well, if I'm not investing five hundred dollars a month, because that's Victoria's like go to example, that means it's not good enough. No, it's just a really sexy number. To be honest, it is. It's nice, like it's a clean it's a round number. Yeah, and it compounds over time, you know, at the end

of the day. I've used this example. But if you were twenty one and you started investing over the long term, and you invested five hundred dollars each and every single month, all the way through to retirement. If you had saved, that would be two hundred and forty thousand dollars that you'd saved. But if you'd invested, that would be more than one point two million dollars. That's sexy money, but a fairy nice. That example makes you go, aw, that's

a bit more powerful than just talking about this. Oh, if I invest twenty five dollars. It's not to say the twenty five dollars isn't powerful. It's so powerful, I promise you. But beck the word a million, Like the second you tip over that, you go, I'm capable of that. Yeah, yeah, you are. You absolutely are capable of that. And a lot of us who are in full time employment are actually contributing about that or just over towards superannuation. So

you're already doing it. And that's why I care so much about you guys checking up on your super and making sure that your super's doing the right thing, because if it's not invested properly, you know, short changing yourself for about a million dollars. It's a lot of dollars, a.

they actually are. Like how flippant You're at brunch and you're like, look over to the table beside you, and there's guys and they're sitting there at brunch on Saturday morning wearing suits, and you're like, I don't know what you think you are.

You might feel a bit more secure with that decision, and it just is kind of like a list of different investments that are going to be way more affordable to purchase because you're just buying fractions of that share as opposed to going in and buying, you know, a whole BHP share or a whole A and Z share, Like I couldn't afford to own every single thing in an ETF outright, but if I put my money into that ETF, I could have exposure to all those things immediately. Yes,

that's a good thing. That's really sexy. And if you are somebody who is interested in the share market and you're like, oh my gosh, I want to invest five bucks a month fee, maybe have a look in an ETF. Maybe have a look at something that gives you the exposure to a particular asset class or gives you exposure to a particular market, because I mean you could go to the ASX two hundred, which is the Australian share

market's top two hundred companies. That seems pretty simple. Yeah, if you don't want your investment journey to be complicated, it doesn't have to be. I think so many times we give ourselves analysis paralysis, right, Like I need to make the right investment decision. We can change it later, babe, Like it doesn't matter. Just get your feet into the water, because it starts getting a little bit more comfortable the longer your feeder in.

maybe today is a good day. But as a very good ex financial advisor beck, past performance is not indicative of future performance. And we know that that is true. But what we can do, because unfortunately, timing the market isn't a thing unless you're Warren Buffett and you somehow have this insane ability to vest really well. The average person doesn't have that. So the next best thing we can do to timing the market is have time in

the market. And so when we have time in the market, that means instead of dumping that twelve hundred bucks in in all one lump, you might choose to put one hundred dollars in each and every single month. And that means if you, you know, bought ten shares that are worth ten dollars this month, well next month they actually might have gone down a little bit, and so you have the same ten dollars to invest. But you know, let's be dramatic, the share market's dropped by fifty percent.

So instead of buying ten shares for ten dollars, you're now able to buy twenty shares for ten dollars. So you've increased how many shares you have with the same amount of money that you're investing, right, And then we extrapolate that out, and then maybe the month after that, the share market's up and you go, okay, cool, well now it's up fifty percent. Because we're just using averages and like being dramatic about our example here because I

think it makes the most sense. Share market's up fifty percent. So now you can only buy five shares instead of the ten shares that you originally got for ten dollars. So one month you bought ten shares, another month you were able to buy twenty shares. A month after that you're only able to buy five shares. But you put the same amount of money in every month, right, Right.

But that means that if we averaged it out, like let's say over twelve months, the average kind of becomes a lower price point than what the higher of the market is and what the lower of the market is. So we only end up on average paying the average amount that the share market is worth. Because as I

said before, first month, we paid the average. Second month, we kind of weore onto a winner because the share market was a bit down, so we made more of the money that we invested the month after that share market was up, but we still invested because you don't know if it's going to go up any higher than that, and that's still a good opportunity. You don't know if

the month after it's going to go down. But over time, the market ebbs and flows, and what that means is we end up with an average line that gets drawn between the ebbs and flour and that's what we end up paying. So if we extrapolated that out, instead of paying one dollar for each share, which you were doing at the start, if we averaged that out, you're actually paying seventy five cents per share in the example I've given.

Because sometimes you're paying more, sometimes you're paying less. But by consistently being in the market, we've saved ourself money. And that means that we're not trying to time the market, because no one can do that. I've said before on this podcast. If I could have timed the market, I have the knowledge I used to be an investment specific financial advisor, like I would work with people worth tens

of millions of dollars. And that's not a flex that's just me saying I had that experience and I still couldn't time the market. So I don't mean to have too many tickets, but I don't know how other people are thinking that they can time the market when I was in such a privileged position, like I had access to clients with heaps of money, I had access to the best brokers in the country because people with lots

of money can afford the best brokers. I had access to the best investment houses in the country, and those investment houses so they're basically people who do a whole heap of research on the markets. And when you get to a level of financial advice where your clients have heaps of money, you can pay a lot for the research. And I love that because I'm super interested in it. But even with all of those resources accessible to me,

still can't time the market. So I don't know how the average bro at brunch, she's like, oh, yeah, the market's going to be done. It's going to be a sick thing to buy next week. Mate, you don't know anything. Sit down, drink your oatmeal claste that you asked for to be a little bit extra week because you had a big night last night. Like I'm done with you. Like no one can time the market. End of story.

That's the wrap on this part of the conversation. That's why dollar cost averaging is important, Beck, and that's why we want to consistently invest instead of thinking that we can time the market and put our twelve hundred bucks in immediately.

oh my gosh, does that make sense? Beck, as though I didn't know what I was talking about? Like, oh, Beck, did my example make sense? I knew I made sense?

investment platforms have been created equally. And I kind of framed that different levels of investing kind of in context of like primary school, high school, university, except we kind of called it entry level and then like advanced investing, and like I wanted people to understand that from my perspective, not that this like legitimately exists, Like people don't go, oh, we have a basic platform, well we have a super advanced one, Like I wanted you guys to understand, I

guess from my perspective as an ex financial advisor, the entry points and what the different entry points look like. Because from what I deemed to be an entry level platform, I said, look, I reckon micro investing platforms where you're depositing minimal amounts of money, like you're able to invest like one cent or a dollar or something small, is probably where at a beginner level is at. Obviously, when

it comes to micro investing. That is different than a direct share platform, where you're able to go and pick the actual share. A micro investing platform, while you might be able to pick your risk profile, you don't have any control over the actual investment. Meant options that are available to you. You can pick, oh, I'm a conservative or an aggressive investor, or, you might even be an

ethically conscious investor. But what's in that profile is just the set by the platform, and it's not actually controllable by you. And obviously it's going to depend which micro investing platform you choose, but like lots of them actually now have the ability to round up your spare change, which is kind of cool if you're not a massive investor and kind of want to dip your toes in the water. But you also don't know what to spend each month and you know that your oat latte is

going to cost. Get this, I paid five dollars fifty for an oat latte the other day. Where was that gross? I'm not going to tell because last time I ended up creating a daily mail drawer and coffee gate Heaven, so we're not going to talk about that. But I paid five dollars fifty for a Latte, and I still do play with micro investing platforms because I just find them interesting and I kind of because I exist in this sphere of cheese on the money, I kind of

like knowing what's going on. Like if you guys are talking in a Facebook group about a particular investment platform, I'm going to be like, yeah, I understand and exactly what they're talking about because I have personal experience with

this because I put fifty cents there. But essentially, if you round up your purchases, that five dollars fifty late goes up to six dollars to the nearest dollar and invest fifty cents on your behalf, which is kind of cool to know that every single platform is kind of like looking after you. But then you step up right

and the next was intermediate level. We're talking about DIY investment platforms, but some of them give you the ability to invest with azulla as one cent, So like our friends from Charesas, we talk about them quite often because

we work with them quite closely. Use the code so SotM for a free ten dollars when you sign up, which I just think is a really good money in I don't make any money off that code by the way we talk to them, And I want to say that clearly because I don't want people to think, like, oh, she's using a referral code that means she'll get ten bucks. Sure, No, we talked about it. It could be five dollars each.

Or I could have given you guys ten bucks to sign up, and I'd prefer you guys to have ten bucks to sign up, because I don't want you to think that I'm recommending something because I'm being paid. Does that make sense? Like I only work with brands that I genuinely know, trust and think are going to put

you in a good position. Right anyway, Sidetrack you can invest with them for as little as one cent, whereas if you went over to another platform that's quite popular in our community, self Wealth, you need a minimum of five hundred dollars to enter that platform and start investing, which is fine because if that's what your progative is,

that's what your prerogative is. But they have different bells and whistles that Shareszy's might not have, So like Chasey's gives you like base level of information it's really digestible, whereas self Wealth it actually is far more technical, and it gives you like insights and guidance and like reports on each company. It's going to be a bit more deep. Some people want that, Some people get analysis paralysis when they go on a platform like that, but I think

we deserve to have the transparency of understanding where it is. Anyway, go listen to that episode because I won't, you know, redo the whole episode here. And I think that that could be quite powerful for you to understand because there's actually a lot of different platforms that are accessible to people who are investing with a low income. So there's micro investing, and there's investment platforms that are able to be invested on with one cent. But then there are

also ones. Let's be honest that if you discovered them first, you might assume that you are just out of the market because you don't have that five hundred dollars to start right back, Like if you did your research and just said top investing platforms in Australia and self wealth came up first, and you hadn't listened to Cheese on the Money and you didn't understand this market, you go, oh, I don't have five hundred bucks. I thought investing might have been for me and it's not, and then the

conversation ends there. Whereas if we give you everything on a platter and I say, okay, here's your education, please

absorb all of this. Now here's a table which is actually in my investing book, and I think I also have it for free download on my website, or make sure it is if it's not by the time this episode comes out, though, And it's basically a table that compares all of the platforms, their features, their benefits, how much they cost, what their minimum investments are, and what other like bells and whistles and information you need on it, because I couldn't find one place that wasn't an advertising

platform that compared them. Because I was like, all right, well, you deserve to be able to see the fees on Rays versus Spaceship if you're planning on micro investing and have it be really transparent. Everywhere was a paid advertising platform or like you go onto the Raise website and they're talking about the Spaceship fees, I'm like, well, that's not going to be the best place to get information

about whether Spaceship's good for me or not. Right, So I think it's all about doing your research, but then also not feeling overwhelmed because investing in twenty twenty three is super accessible and you can do it and it is absolutely worth doing it, Like it is not something that we do because you need millions in retirement. Do not feel that pressure, like discount that completely, but like

start building your financial literacy. I've had people ask me, oh, Vie, I'm just so excited about my investment journey, but I'm still in a bit of personal debt. If that's what's going to motivate you, and you already have your emergency fund and you are up to date on your pains five or ten bucks invested on an investment platform, so that you feel like your life is progressing and you feel like you are getting ahead financially, that's a good

investment from my perspective. Yeah, Like you need to make the right decision for you though, and I can't tell you what that is because for a lot of other people, they'd be like, oh my gosh, I don't even want one share or one one cent edf before I'm out of debt, because that will give me anxiety because that money could have been getting me out of debt. But at the end of the day, it's a completely personal decision, and I think that you guys need to make that yourselves.

But my job is to just give you all of the resources that you deserve to have access to to make those decisions properly for yourself.

keep on keeping on going, to keep on coming. That is all we have time for today. If you want the investing conversations to continue, feel free to join our Facebook group where we have judgment free conversations about money and investing every single day. Join us, I would love it. We're also really active on TikTok. At the moment, we're not that good at it, but we appreciate your support.