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Australian Finance Podcast

How to Make Financial Plans During COVID-19

29 Jun 2020

Transcription

Transcript generated automatically by AI and may contain errors.

Chapter 1: What is the main topic discussed in this episode?

0.031 - 26.345 Owen

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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26.786 - 44.868 Owen

Gearing magnifies both gains and losses, so it's only suitable for investors with a very high tolerance for risk. You can learn more about the WealthBuilder range of ETFs at the BetaShares website. And don't forget to read the PDS and TMD to decide if it's right for you. BetaShares Capital Limited is the issuer.

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45.469 - 63.24 Owen

Here's something worth knowing if you've been meaning to make the switch to a better broker. To celebrate their fifth birthday, Perla are offering three free trades a month for five months if you transfer your portfolio across with a minimum of $1,000. For anyone investing regularly, that's meaningful savings on brokerage that can stay invested instead.

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63.721 - 87.227 Owen

Perla is chess-sponsored, built specifically for long-term investors, and now has over $3 billion invested on the platform. If you've been with a platform that doesn't quite fit your strategy anymore, it might be time to take a look. You'll find all of the details at perla.com slash LP slash Rask. That's perla.com slash LP slash Rask. Thanks for tuning in to today's podcast.

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87.207 - 101.926 Owen

Please remember that all of the information in this podcast episode is limited to general information only. That means the information is not specific to you, your needs, goals, or objectives. So you should seek the advice of a licensed and trusted financial professional before acting on the information.

102.347 - 115.324 Owen

And before you acquire or apply for a financial product, please read the PDS or product disclosure statement, which should be available on the issuer's website. Lastly, please keep in mind that past performance is not indicative of future performance.

120.637 - 139.004 Owen

In this episode of the Australian Finance Podcast, Kate and I are talking about all of the changes that have come about as a result of COVID to people's personal financial strategy, including our own. We also talk about and answer the question of whether or not it's still worth creating financial plans given everything that we've just been through.

139.024 - 151.691 Owen

I hope you enjoy this episode of the Australian Finance Podcast. Kate, welcome to this episode of the Australian Finance Podcast.

151.711 - 157.459 Kate

It's good to be back and we're recording our very first live episode, so no Zoom this week.

Chapter 2: What changes have occurred in personal finance due to COVID-19?

759.416 - 774.791 Owen

I think when you invest in yourself, I think it's one thing that you don't notice the benefits of until you are well away from having to do it. So, for example, what's the saying? We overestimate what we can achieve in one year, but we underestimate what we can achieve in five.

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775.372 - 784.861 Owen

And I think a lot of people, when it comes to lifelong learning, we say lifelong, but it probably takes three, four, five years to really feel the benefit of that. You've got a degree now, right? Yeah. And that took you quite a few years.

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786.102 - 794.011 Owen

But now you are more employable, right? But when you started that journey, it felt like an uphill battle.

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794.151 - 799.296 Kate

Yeah, and you don't really notice the effects of any of these qualifications immediately for most things.

Chapter 3: Is it still worth making financial plans during uncertain times?

799.757 - 810.649 Kate

Like I don't feel suddenly more skilled because I have the piece of paper, but over the next five to ten years, I'll actually be able to use those skills and they'll sort of filter through into my work.

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811.87 - 817.035 Kate

I've actually finally got a frame for my certificate, so that was one positive that happened yesterday.

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817.055 - 821.459 Owen

I don't even know where mine are. I've got three of these things that cost a lot of money.

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821.479 - 828.246 Kate

I found this small Australian business that actually makes the frames to measure and post them. And so, yeah. Oh, cool.

828.266 - 832.57 Owen

Maybe we can put a link in the show notes. There are probably some people out there like us that never got around to this.

832.59 - 846.769 Kate

Yeah, we'll share that business because they're a fantastic service. I wanted to find someone local rather than just going to Kmart. And yeah, it was delivered all, I think, handmade and delivered in about a week. Nice, good shout out.

846.789 - 848.892 Owen

We don't know the name of this business, but we will get it to you.

848.912 - 851.096 Kate

Something like Aussie Frames, but I'll find the link.

Chapter 4: How can flexibility improve financial planning?

1847.002 - 1863.709 Kate

A huge rally. And if they forget, which most people probably will, to actually go back in their super and turn it back onto balanced or high growth or whatever they want, they might be sitting in cash for years. Yep. And that's a huge opportunity cost. So I think it's...

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1863.689 - 1882.373 Kate

If you haven't been burnt, maybe reflect on that and make sure that you sort of reassess and work out a plan that works for you going forward. There's nothing wrong with being a balanced investor even in your 20s. You can have different goals and different targets and you don't have to be a high growth investor just because you're young.

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1882.453 - 1892.245 Kate

You've got to work out what works for you and what allows you to sleep at night so you don't really make these drastic decisions like changing your super to cash and leaving it there for the next five years.

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1892.393 - 1909.71 Owen

I reckon everyone would just be better off if someone else chose for them. Like honestly, um, in their super, because there was a lot of people moving to cash and it was absolutely disastrous. It was, I think we said it at the time, what a crazy idea that would have been. Like, where did you get that advice? Like who, how did you come up with that? Um,

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1909.69 - 1929.117 Kate

don't know I think one person says it and the next person you're like I've got to protect my super it's gonna be decimated and then people were sharing that idea yeah and then yeah most of them will forget to turn it back on to any type of investment they're just gonna be in cash for years which is really scary

1929.232 - 1946.236 Owen

And the other one that's sad is that people, there's this surge towards investing right now. A lot of people don't know what they're doing. They're just jumping the gun thinking that it's like a elixir or some sort of cure for their wealth. You know, they need this. Then they're going to get knocked around. They're going to lose a lot of money.

1946.737 - 1949.921 Owen

They're going to walk over their tail between their legs and they're never going to come back.

1950.222 - 1950.582 Unknown

Yeah.

1950.562 - 1969.042 Owen

And that's what we see all the time. I speak to these, particularly people that have a bit more experience. So that's another way of saying a bit older. They say, oh, no, the share market's gambling. Like, is it? Do you know much, if anything, about it? Or have you just had an experience that was negative? You can definitely make gambling. It's just what we're seeing at the moment.

Chapter 5: What role does an emergency fund play in financial security?

2036.252 - 2040.959 Owen

Okay. So it's about the importance of having a financial plan. Should you still have a financial plan?

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2042.081 - 2045.807 Owen

Okay. What is your financial emergency plan?

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2047.137 - 2067.135 Kate

My financial plan, having an emergency fund, sort of growing that for maybe two years. I'll see what feels right for me. I haven't quite worked that out. And just sort of working out different income streams and different backup plans career-wise and how I can sort of change and adapt to this new world.

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2067.555 - 2070.398 Owen

Okay. If you don't make a financial plan now, will you regret it?

2071.019 - 2071.279 Kate

Yes.

2071.619 - 2077.144 Owen

Okay. Last one. Do all financial goals need to be big goals?

2077.242 - 2096.061 Kate

no no i think that's definitely something you don't need to worry about you can have smaller goals and i think at the moment that's even more important just set yourself a goal for the next month of how much you want to save or something you want to learn or something you want to sort out you want to sort out your super you want to get your taxes done just set yourself small measurable goals

2096.041 - 2108.84 Kate

Especially at the moment, it might be way too overwhelming to have a 10-year plan. Just do it a month at a time. And then once you get out of this period, start to think about, well, what could the next year look like? And then go from there.

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