Have you noticed that your teenagers say “weird”
and “annoying” all the time? A friend pointed this out a while ago and ever
since then all I can hear at the end of their interpersonal communications with
myself or anyone else is things like this. That’s so weeeiirrd! She’s so
annoying. Mum, you’re just weird. And annoying.
And then, blow me down, if I didn’t start
hearing myself start sprouting these highly useful catch-all phrases. Like
yesterday for example. I actually said this. “How does Ian Macdonald sleep at
night with those weak responses to all those damning coincidences? He’s so
annoying.” Aaaarggghhhh.
It’s like how I started saying “random” when
my eldest hit high school. Following that it was the derisory laden “brrrt” he
used to impart every time his younger sisters said or did…well, anything. “Brrt” is not so much a word as it is a
sound. A sound that is an excellent way of making someone else feel completely crap
for something they’ve just expressed. Thankfully that pearler been relegated to
the teenager saying archives much the same way as daggy and groovy have
disappeared.
Anyhoo, Australian shares (via the All
Ordinaries Index) poked their head above the watershed mark of 5000 points
yesterday. It’s the seventh time it’s done this since mid 2008. I know this
because Alan Kohler showed us the graph on the ABC news last night. I love
Alan. He delivers his finance news with such a cheeky grin and twinkle in his
eye that you can’t help but listen to his insightful and fascinating
commentary.
To a lot of people (and many women) shares
are annoying…and weird. Not to mention scary. Their value bounces up and down
all the time (and in the last few years there’s been a lot of down) sometimes
for reasons beyond the company’s control plus the whole business of buying and
selling shares is so complex and jargon driven it’s impossible to get a handle
on it. These are valid points and I hear your pain.
But I think having some exposure to shares
in your portfolio, both in and out of super is awesome (another favourite).
Note that I said SOME exposure. Financial advisers and planners think in terms
of asset allocation. This is a fancy word for spreading your money across the
four main asset classes; cash, fixed interest, property and shares. So we’re
not talking here about ploughing every cent into the speccy share tip from your
brother’s wife’s sister’s husband.
It’s about working out (preferably with an
adviser) how you want to distribute your capital across the different
investments available and what you are comfortable with depending on your risk
appetite.
Shares have a great many things on their
side, too, that makes them a sick (confusing that one but still popular in my
household but apparently meant to hold good connotations) asset class.
They are highly liquid, meaning if you need
the money you can easily convert them into cash without significantly affecting
the price you receive for them. The costs of buying and selling are low with
zero “maintenance” costs of holding them and assuming you are buying a well
diversified block of blue chips shares you are also going to be receiving some
welcome tax effective income in the form of franked dividends.
There is a myriad source of education and
information on share investing for you to ramp up your knowledge (the ASX
website is a great place to start) plus there are some very simple ways to
invest in a managed diversified portfolio through a single investment like
units in a managed fund or Listed Investment Companies or Exchange Traded Fund
(ETF). Talk with your adviser about these. Go on, YOLO! (Google that one if confused)
I’m not here to advocate one asset class
over another. In fact, my whole point is one of diversification. Yes, that old
chestnut. Inflation eats away at the buying power of our money over time so we
have to give ourselves a fighting chance for our money to grow ahead of
inflation by taking a degree of calculated risk and direct some money into
growth assets like property AND potentially, shares. Diversifying smoothes the performance
of our portfolio and this reduces the ups and downs of the rollercoaster ride
that, at times, is investing.
So, whatever (that one, right there, uttered
by my teenage daughter, combined with a hair flick sets my teeth on edge like
no other teenspeak can). I hope that’s given you food for thought this week.
And just maybe, like most teenagers, who come
to realise in time, things that seem “weird and annoying” at first, are in fact
“heaps good” (perhaps the worst offence against the English language by sub 20
year olds), you will discover that investing in shares is, too.
Whaddya
reckon?
