Why I believe the Government needs to educate citizens on investing.
Let’s face it; we’re all fucked.
Our generation, will not be able to afford a house outright without a mortgage or a loan; unless you have extremely wealthy parents, win a lottery, hit the jackpot at a slot-machine, or learn you’re the long lost love child of Howard Hughes.
My parents bought their first house when they were Thirty years of age. Outright. Without a loan or a Mortgage.
Which seems like a fairy-tale to me today.
As most of my conversations often revolve around giving people a sense of direction; I find it extremely frustrating of how little people actually do know about Investing or even managing their Bank account(s).
Renting seems to be the new norm; and there’s absolutely nothing wrong with that.
My friends seem content with not ever owning a house but renting for the rest of their lives; as they say to me “It allows us to be more free and feel less restrained to a certain place.”
Which makes sense if you’re a free spirit and wish to move for the rest of your life.
I do not intend to do that.
I like living in one place.
I like dogs.
And have no intention of having to leave my house unless its’ absolutely necessary.
Now I understand I may be an odd-example.
But even if owning a house is not one of your major priorities.
It seems that even an average job just won’t cut it for you, in the near future.
Unless you’re a Crypto-Millionaire, Lottery winner, Cousin of Howard Hughes, or better yet buddy buddy with Mr. Warren Buffet.
I myself find it hard to make ends meet even though I have three different sources of income; and I’m single.
Now I’ll admit, I do not have the spending habits of Mr. Johnny Depp.
I live a pretty standard, simple life. But even so every now and then there’s that looming fear that I have no sense of ownership, no sense of belonging; some THING to call my own.
Although, I will say that I am exaggerating when I say I have trouble making ends meet, point being that having three different jobs just to have enough money to save is a lucky deal.
Most of my friends do not have this liberty, they live pay-check to pay-check and have no plans to save up money; usually because there’s not much left to save.
It doesn’t take an individual of an excruciatingly high I.Q. to figure out the power of Compound Interest.
If any of my clients ever ask me what the single, most simplest, financial advice I can give them; it is usually this:
Put your money in an Index Fund.
An Index Fund is like a Box of Chocolates. (No Not the one Forrest Gump munches on)
But more like different flavours of companies that are known to perform well; usually an Index 200 Fund exists of the top performing companies within a Country’s Stock exchange into a nicely bundled package, which one can purchase in the form a single stock or more, depending on how much you wish to invest.
In exchange; if the companies perform well not only does the stock increase in value, you get what’s called a Dividend for your contribution.
For some reason, people find this concept very difficult to understand.
Especially when it comes to Re-Investing Dividend / Interest.
So why is it that we find it so difficult to understand the basics of Investing?
Is this a humongous conspiracy by the 1% to keep us all lousy poor people where we belong? Maybe.
Or maybe, it’s just that our generation (Me being the age of 25), just doesn’t seem all that interested in Investing or Savings.
Mostly because it’s boring and who wants to spend their weekend learning about Compound Interest and Index Fund.
I recently discovered that my Superannuation fund had been losing in value.
Had it not been for an accident, I probably wouldn’t even have noticed.
Because we’re not really meant to think about Superannuation funds until we retire.
The Australian Govt’ has been trying to solve this puzzle for some time now.
Because Sydney being one of the most expensive Cities to live in and the amount of Foreign Investment in Housing has made it nearly impossible for our generation to be able to afford a decent house.
Hence, we’ve become slaves to the Rental Process.
In Australia, the Index Fund of my choice is ASX: NDQ and ASX: STW.
Reason being that both of these funds all into my affordability range; the return is decent and the performance is stable.
The NDQ fund gives me access to America’s popular Nasdaq listed companies at a discount price, and the STW does the same for me in Australia.
So why is this all important?
Well because I think this should really be public education.
It should be knowledge that should be passed on much like safe-sex knowledge is on most campuses in Australia.
Because I believe we’re all naive and think our lives are like those of gypsies; free spirited and full of wonders.
Until one day, life slams us all right in the face and lets us know; that well..it kinda just sucks a bit.
I learnt everything I know about Investing from just the two videos linked below; so maybe skip that favourite show you’ve been binge-watching for a few hours and take the time to educate yourself.
It may just turn out to be the best decision you ever made.
As a great man once said, “What doesn’t make you dumb, can only make you smarter.”
If an idiot like me can figure out Investing; I’m sure you can too.