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Chapter 1: What are Exchange Traded Funds (ETFs) and why are they important?
Property investors often talk about using debt to build wealth. In the share market, that's called gearing. With the BetaShares WealthBuilder range, investors can access moderate gearing into shares, and with the newly launched GG-BL, That means exposure to a diversified portfolio of around 1,300 global companies excluding Australia, all with no loan applications, credit checks, or margin calls.
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This podcast contains general financial advice only. That means it's not specific to you, your needs, goals or objectives. So don't act on the information until you've spoken with your financial advisor. You'll find our full disclosure, disclaimer and link to our financial services guide in the show notes. Kate, what is the most popular course we've ever had on our education site?
I'd have to say by a long way, Owen, it's our ETF, Exchange Traded Fund Beginners Course.
Yep, so this is the course where we teach people everything there is to know about ETFs, everything you should know about ETFs before you invest.
Yeah, there's a lot you can know. You could study this for thousands of hours, but at the end of the day, there's really just some simple fundamentals investors need to know before they get started with exchange-traded funds, which is what we cover in that course.
Yep, so ETFs, Kate, you said exchange-traded fund. Just really quickly, because we've covered this in our other Startup Pack episodes, what is an ETF?
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Chapter 2: How can I start investing in ETFs?
And so that might be like $10, for example. So if you, just to be clear here, if you buy this, this is added on top. So for example, if you want $500 worth of shares, you need to have $510 in your brokerage account so that the $10 covers the brokerage. Yes. And that's basically because the minimum is $500 for most brokers and for most investments. So $500 is what you need plus the $10.
And that's automatically taken out.
And the other fee, Kate, that management fee, which doesn't go to the broker, it goes to the company that provides the ETF. of 0.07 per year so if you invested a thousand dollars in a200 you'd be paying just 70 cents a year and that comes out of the unit price so you don't have to pay an invoice for this fee they automatically take it out for you how nice of them
yes so that's automatically adjusted so when you log into your brokerage account if you just had the a200 etf and you put a thousand dollars in it today and the price of that did not change from 12 months from today you would be 70 70 cents less rich so you would have you would have that 70 cents automatically adjusted uh the the a200 share price would automatically fall by 70 cents
and so that's automatically taken out so you don't have to worry necessarily about that fee at all like other than just picking an etf that is low cost and by the way zero point zero if you're seeing over one percent yeah i'd start to question what they're doing and are you actually getting a benefit for this some we haven't mentioned it but there's some more active etfs that take a slightly different approach and they might be charging above one percent but i definitely think twice before just automatically investing in one of those if you're
Looking for some low cost ETFs that just track the top 200 Australian companies or the top 500 US companies, it should be under 1%.
Definitely. So Kate, real quick, why do we like ETFs? Like what are the, I guess, four or five things that you think of when you think of ETFs and why they're good, particularly for newer investors?
The first reason I love ETFs is because they're super easy to get started investing with. Instead of having to make a million decisions on what companies you want to add to your portfolio, you can just say, I actually, I like Australia. I like Australian businesses. I want to invest in the best, best of the best. the top 200 Australian businesses that are listed on the market.
So instead of having to make a million and one decisions, I can just place one trade and bam, I'm invested in the Australian market. And I can do that with any other market. And broadly, they do what they say they do on the tin. So if it says it's invested in the top 200 Australian companies, it's generally invested in top 200 Australian companies.
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Chapter 3: What are the costs associated with investing in ETFs?
You basically build your core out of strong, low-cost ETFs and then you build the more risky options around the outside, which is this last thing, which is number seven. If you're thinking about alternative type investments or more risky investments, there are these things called thematic ETFs. Can you explain what a thematic ETF is and why this is important?
Absolutely. So a thematic ETF might be a particular industry or theme that you think is really going to do well over the next couple of years. And they're a way you can take a little bit more of a, I don't know, a active approach to investing, but still using ETFs. So there might be one, well, there is one in Australia, Robo, that invests in robotics companies.
There's one called ACDC, which gives you exposure to the lithium industry, I believe. Yeah. There's even like there's gold. I mean, some might call that thematic. There's like beta shares have just launched a crypto ETF. So there's a lot of different things out there that you can have your core ETF and just have your staple, your exposure, Australian, US, maybe some bonds.
And then you can maybe with 10% of your portfolio, you can invest in, you can have a little bit more of an opinion, like express your point of view a bit more.
Yeah, so this is basically saying have your plan B, which is like the boring stuff, and then have your exciting stuff on the side, which is what we call thematics. So if you're investing in a thematic, you'll know it when you'll see it in the wild because it will look exciting, it will sound interesting, and it'll have really good marketing.
Yeah. And the chart might look very different. There might be a lot of ups and downs in a thematic ETF and they're not always the things to be in forever. Sometimes that theme might work really well for five or 10 years and then it might not be the place to be for the next 10 years after that.
Yeah, that's the thing. So what we find is that thematic ETFs are good for a good time, not a long time. So what that means is if you're investing in something, say like robotics, robotics is really interesting now, maybe it's not interesting in the future.
And this would be like if we go back to our supermarket example, this would be like going down the dairy aisle and picking out all the camembert cheese because camembert cheese is really interesting right now. But it might not be interesting tomorrow. Pick the kind of all-rounders for your fridge at home. But then, you know, on occasion, you can go and splurge on some of those individual things.
So, Kate, the key takeaway from this episode is basically get started now. And so how do you get started in ETFs now?
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