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Chapter 1: What is share investing and how does it relate to the stock market?
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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. Hello and welcome to this Startup Pack episode, Kate.
It's always my pleasure to have you with me.
Great to be here, Owen, to talk about one of our favorite topics.
Yes, that's share investing. And just real quick, for those of you that are watching the video, can you see what that is behind me there?
It is a bell, Owen.
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Chapter 2: Are shares considered risky like gambling?
That's why I have a job. That's why basically Rask exists is to try and find those companies. But it's very hard.
Yeah. And how do you prepare yourself to invest in shares? Because there's more risks, more things to know about. Like, do you have to be watching that share every day?
You don't have to watch it every day, although when you're new to investing, you will. So you will watch what your investments are doing for probably the first two or three years of your investing journey, to be honest. You'll be so addicted to it and you'll be almost kind of super sensitive to rises and falls in the share price that it may become a bit overwhelming.
What my advice would be is, it's actually quite simple, just take your time, start small, so prepare yourself by starting with small amounts of money. Don't go in all guns blazing, just put all your money into one thing. I would say start with ETFs, so you get familiar with the process, then go to shares. Or if you are going to go straight to shares, Find, you know, maybe five names of companies.
So let's just, you know, think of the supermarket or even down the street. You might see something to do with Disney. You might see Coca-Cola. You might see McDonald's. You might see KFC, which actually is owned by Yum! Brands. And you might see Nike. Those are all kind of US companies.
Yeah, just walk around Melbourne Central or the Westfields or whatever supermarket is in your state.
Yeah, and you'll be able to see all of the different companies that are available. And chances are, one way or another, they might not go under the same name on the stock market, but they'll be available to invest in. And so I would say create a list of those companies. I'd also say write down with a piece of paper why you're investing. It might only be on one piece of paper.
Why do I want to invest my money? How much am I going to invest? And just go from there. Because if you don't have that kind of goal in mind, you might be a bit lost. Some other things that I would say is there are places and ways that you can trade without using actual money. So sometimes you can set up fake accounts like with what we call paper money or digital money.
So strawman.com is one of these resources where you can go there and you can create an account and allows you to buy and sell shares. And there's no actual money behind it, but you can just track it. The other thing is called paper trading. This is a thing that parents used to do with kids, which is where they'd get like fake money. And they'd say, okay, you've got a fake $10,000.
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Chapter 3: How do I buy shares and what is the process?
That's a great way to do it. There are other memberships in the market. We have free share investing courses, some of our most popular. Go and check those out. There are some others available particularly on YouTube. There are some great courses on there too. There are many different ways we can go.
One of my favorite things is subscribing to fund managers, subscribing to their monthly reports and monthly letters. So fund managers are required to disclose what they invest into their investors up to a certain extent. So you can go to their website and see what they're writing to their investors and you can do that for free. You can just head to a website and find that out.
We've actually done a separate episode on this so you can go and check out the managed fund episode that we've done and there are some resources there to get you started. Finally, we have some forums, blogs that you can get started on. So forums, I would say things like strawman.com. Full disclosure, I own some shares in the company behind that.
There is another website called Hot Copper, which I don't really frequent, which is a bit, to be honest, in my opinion, a bit more trashy, but you can use that too. In the US, there's the Motley Fool website, which has a system called CAPS. Facebook groups. Facebook groups, Twitter. We're big users of Twitter.
um the other thing that you can do is you can find bloggers who have done done been there done that so aussie firebug who we've had on the show before matt from aussie firebug check out that episode he's also got a podcast um there's dividends down under there are a heap in the fire community so go and check those out um there is just almost endless amounts of information in fact so much information that we've done an episode on how you can filter the information that's available
Yeah, there is a lot out there and that comes back to that knowing the incentives, knowing the skills, knowing the reason why people are talking about certain things because there's a lot of money to be made in promoting particular companies in any market really. There's ways that you can kind of legally manipulate stock prices by putting out certain information about them.
Yeah, there's a lot of dodgy behavior out there.
Yeah. Yeah. ASIC do try hard to get on top of this, like stock forums and groups that are promoting different companies, but just be aware and be careful. And I know, Owen, one of your biggest takeaways that you always love people to keep in mind is that you're actually buying a piece of a business. So you want to buy a great business.
Are there any other takeaways you want to share with listeners?
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Chapter 4: What are the advantages of investing in individual companies versus ETFs?
It's very easy to do once you know what you're looking for. We have a free course on this, a valuation course. It's totally accessible. It's totally approachable for anyone. If you've listened to this podcast for three years, hey, that's wonderful. Go and research a company. Find an idea. Go and find out everything there is to know about it. Start with the annual report. Read through it.
We've got that free course. We've also got the Australian Investors Podcast, which is our yellow podcast. If you want to learn more about the nitty-gritty of investing, that's the place to go.
And I might just say you don't have to go from zero to hero with being an analyst straight away. You don't have to go straight into the annual report and looking at the financial statements. You can just start by looking at their website, learning about their management team and background. What are the products and services? What are the online communities supporting that company?
And I think sometimes people think, oh, it's look at the annual report and understand the balance sheet or nothing.
No, you don't have to, no.
And so I mean I personally love looking at those broader aspects of a company but I find it quite difficult to look at the balance sheet and the cash flow statement. So I don't think you need to be able to do that immediately.
No, no. So when I suggest read the annual report, what I would say is read what the CEO has to say. Don't worry about the financial stuff. If you're not at that point, don't worry. Read just what the company does. That's the exciting bit to be honest and that's where we spend most of our time. And I think if you can watch an interview with the CEO or the founder or the chairman. Or a podcast.
Most of them have probably been on a podcast now. Just get a sense of would I trust this person with my money? If they're really cheesy, you don't understand what they're saying, don't invest with them. Just find the one that does make sense. Imagine listening to Jeff Bezos in the 2000s and he was like, yeah, we have this website.
It's called Amazon and we make it really great for people to buy stuff online. Yeah. That sounds great. I'd invest in that. Well, that might be all you need. And to be honest, those softer skills everyone has, and that's actually a great way to get an edge in investing. So Kate, this is a wonderful episode on Share Investing 101. We've covered a lot of ground.
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