Research Reveals Global Struggles to Personal Investing
Earlier this month it was stated that 81.3% of Australians could fall short when it comes to affording a comfortable retirement, and now research out of the US highlights how 57% of Americans have less than $1,000 in their savings accounts, and 39% have no savings at all.
These numbers are shocking but unsurprising, says respected finance industry thought leader Vanessa Stoykov. Vanessa, the Founder of No More Practice Education and Evolution media group, and the creator of Channel 9’s Learn from the Money Masters – The Investment Series, is on a crusade to save Australian Gen X and Y from a doomed financial future.
Vanessa explains, “Australians can’t afford to get to the same stage in terms of savings for retirement as Americans, but unfortunately that’s the direction we are heading in. Outside of our compulsory super, more than half of Australians’ financial wealth strategy is wrapped up in property. This is simply because property is tangible and people are able to see their asset, but it’s also because it’s what we’ve grown up believing is the best option. However, especially with the Australian property market slowing down, it’s important that people explore other investment strategies that are more diverse in order to succeed. To do this effectively, people need to unlearn what they know about money, and be willing to consider strategies that are outside of their current comfort zone.”
Kerr Neilson, one of Australia’s most successful investment managers, Co-Founder and Managing Director of Platinum Asset Management and one of the experts featured on Channel 9’s Learn from the Money Masters – The Investment Series adds, “It’s important that people – no matter what their salary or financial situation is – just start reading. To understand the nature of investing, you need a knowledge base that’s been built up over time, rather than a lack of understanding and blind trust. This is especially true as events like the GFC have eroded trust and created the opposite: mistrust in the financial services industry.”
So, apart from property, what are your options?
Vanessa explains some of the most common investing terms that you need to familiarise yourself with before getting started on your financial journey. A good understanding of these common concepts will give you a head start to familiarising yourself with the industry and the options available to you, as well as a starting point when talking to your adviser or broker.
Australian Equities. Equities are defined as a stock or any other security representing an ownership interest. Investing in Australian equities (also known as Aussie shares) is a common approach as many investors feel more comfortable investing in companies and brands which they are familiar with and which they can see and experience every day at the shops or through advertising. The recommended timeframe to be invested in this asset class differs depending on the particular equities you’re invested in, so it’s always best to check with your broker or adviser as to which shares are best suited to your own financial circumstances.
Global Equities. Global equities are shares or securities which represent an ownership interest in international companies. Although you live in Australia this doesn’t mean that you can’t access investment opportunities in other countries and investing in global shares is one way to do this. Investing in markets outside of Australia can also help to diversify your portfolio and ensure all your eggs aren’t in one basket. Speak to your adviser to see if this investment class is right for you.
Contrarian Investing. A contrarian investment approach can be defined as going against market trends and buying assets which are seen to be undervalued by the market. A number of fund managers apply this approach when looking for companies and stocks to invest in, but it takes a lot of research and sometimes stocks can dip even lower than the purchase price before climbing back up again. Even for professional fund managers, this approach requires time, patience and the ability to stick to their guns.
Microcaps. A microcap is a publicly traded company which has a market capitalisation value between $50 million to $300 million. As the companies that fall into this category are often small and new they can carry with them increased volatility, which means they’re not suitable for all investors. Your financial planner will be able to advise if microcaps are an asset class which may suit your financial needs and goals.
These asset classes and approaches are explored in more detail during episodes 2 – 5 of Learn from the Money Masters – The Investment Series which airs on Channel 9 at 12.30pm every Saturday. The show, using celebrity Blair McDonough (famed for his roles in Big Brother and Neighbours) as the case study, allows viewers to learn from industry experts about how to make the most of their investments, and demonstrates how anyone can think like an investor.
Vanessa adds, “Everyone’s financial plan needs to be different, based on their specific sitatuion and desired outcome, however the common denominator is that everyone needs financial advice. Choosing a financial adviser or planner can be overwhelming, but it doesnt have to be, you just need to know the right questions to ask.“
To download a list of questions to ask a financial planner, and to take a free diagnostic test to discover what you need to unlearn about money in order to secure a better financial future, visit www.vanessastoykov.com.au
To find out more about the investment philosophies discussed above, download an eBook on understanding how to become an investor, or to learn more about Learn from the Money Masters – The Investment Series, visit theinvestmentseries.com.au