0 Introduction

So, many people have asked me about investing - despite me being an absolute novice in this game. I think I just give the illusion of intelligence because I like talking about money so much. In any case, what I have done is spend hundreds of hours researching and investigating ways to make money. At the very least, I can share what I’ve learned and the resources I’ve collected. This guide is primarily for my friends & family in Australia but I hope whoever stumbles upon this gets some value from it.

If you’re reading this guide, you’ve heard friends and family talk about stocks, bonds and various financial instruments - and you thought - “I’m an adult. Should I be doing that?” In short - yes, you should but you should be lazy and inattentive about it. In my opinion, as a prudent investor, it’s your job to set up systems and allow them to run for the rest of your life, whilst you focus on more interesting aspects of life. However, if you - like me, find the subject of money absolutely interesting and want to maximise your returns, I can share some resources for that too.

I have not included property in this because I haven’t touched that space and I don’t understand it! If someone wants to help teach me and write the section - hit me up! If there’s anything else I’m wrong about or you think I could do better, please tell me.

Contents

Subscribe

I write about various things and update my collection of models & questions. If you want to hear about that, you can subscribe:

1 High-Interest Savings Accounts

A high-interest savings account is a type of savings account that earns higher interest than a standard bank account. The interest is typically compounded daily, monthly, or annually, and deposited into your account automatically, allowing your savings to grow over time. Sometimes there are conditions on how to earn interest so pay attention to that.

For the latest bank accounts that you can get with the highest interest, look on Finder:

https://www.finder.com.au/savings-accounts

The goal here is to keep risk as low as possible. What’s the point of using a savings account instead of investing if it’s risky? So I usually try to bank with someone who has a good reputation, a long history of operations etc.

2 Stocks & Shares

What is a stock?

This sounds silly but it's important to know what a stock is.

It is a security that represents ownership of a fraction of an issuing company.

There are many exchanges across the world that a stock can list on.

• NYSE → New York Stock Exchange
• ASX → Australian Stock Exchange
• TSX → Toronto Stock Exchange

For this section, it’s important to decide how you want to play. If you’re unsure, just start with level 1. For context - I do both. I have a passive account that dollar costs averages every month and then a bit of money when I make more active bets.

• Level 1: I’m not that interested in stocks
• Level 2: I want to maximise returns and I enjoy playing the game

Level 1: ETFs

An ETF, or Exchange Traded Fund, is a type of investment fund and exchange-traded product, traded on stock exchanges much like individual stocks. An ETF holds assets such as stocks, bonds, or commodities, and aims to track the performance of a specific index. ETFs are attractive as investments because of their low costs, tax efficiency, and stock-like features.

For an ETF portfolio, here are the things you need to consider:

• Dollar Cost Average (DCA)

Buy every month no matter the price so you can average the price. You need to do this automatically and take the emotion out of it. You can double down when prices are down if you'd like and this can help with return but then you need to know about leading valuation indicators.

• Fees, Fees, Fees: Most ETFs you’re looking at are done algorithmically - i.e. they hold a basket of stocks that don’t require active management. So - you want an ETF that has low management fees. This comes up as Prospectus Net Expense Ratio (which is essentially the expenses used to operate the fund.

If you compare:

1. VOO: Vanguard S&P 500 ETF → 0.03% fees
2. SPY: SPDR S&P 500 ETF Trust → 0.09% fees

You may ask, okay then why does anyone go for SPY? Well just because it’s S&P 500 doesn’t mean it’s exactly the same. As they can hold different concentrations of each company etc. However, for us, let’s not worry about that - let’s focus on lowering our fees.

• Diversification: Consider ETFs that offer broad exposure to different sectors or regions. This helps in reducing the risk associated with investing in a single sector or region.
• Performance: Look at the past performance of the ETF, but remember that past performance is not indicative of future results.

How to Buy ETFs & Stocks

Pearler (Easy, Best for ETFs)

With Pearler, you can setup automated investing which is useful and just use their off the shelf portfolios.

Stake (Easy, Best for Individual Stocks)

With Stake, you can easily buy US & Australian stocks without too much difficulty.

Other Options:

• CommSec
• Superhero
• Charles Schwab
• Interactive Brokers

Level 2: Stocks, Shares - Value Investing

This is the second level - actually picking stocks and value investing. I’ve beaten the S&P 500 since 2022 (which is when I swapped to Schwab) hitting 27.1% annualised.

Considering the S&P 500 did 23.2%, it’s up to you whether you think it’s worth the effort to make a little bit extra. I think it’s fun and I’m rewarded slightly for it so I do it.

What is value investing?

An investment strategy is when you find stocks that appear to be trading less than their intrinsic value.

Technically this is the only real strategy for investing when you try to predict the growth and trajectory of a company.

A common misconception is that value investors are not 'growth' investors. NOT TRUE.

I believe the ONLY real investing one can do is value investing.

Valuation Oscillates Around VALUE

We're so swept up by valuation that we ignore the value of a company. Investing isn't gambling, it's buying a piece of a company that has real world value.

In the short term, stocks are a voting machine, in the long term they are weighing machine

‣

Benjamin Graham

You need to understand financial metrics

I used to invest based on great companies, great products, and trends. If the price dipped 50-60% then I thought, great this is a fire sale.

However, there are ways to invest considering future cash flows, growth, etc. Then you use that information to buy at a good price.

How do I learn to value invest?

I’ve listened to dozens of finance gurus on the internet and the ones who actually know what they are talking about (because they show their numbers and calculations in detail) is the guys from Everything Money. After a few tutorials, it can be worth it to pay for their software. I used it for a few months, placed my bets then didn’t check my stocks for a year.

Follow their beginner play list: https://www.youtube.com/playlist?list=PLoR9krGgHlYi48ZEw24gFn7koHTJkr85w

3 Bonds

A bond is a financial instrument that represents a loan made by an investor to a borrower, typically corporate or governmental. The borrower (issuer) of the bond agrees to pay the investor (holder) a specified amount of interest for a fixed period of time, and to repay the principal amount of the loan at the end of this period, known as the maturity date. Bonds are used by companies, municipalities, and national governments to finance projects and operations. There any many entities that can issue bonds to raise funds which is why there are different types of bonds. These include corporate bonds, treasury bonds, mortgage bonds etc. You can also buy bond ETFs.

Bond ETFs are a type of exchange-traded fund that exclusively invests in bonds. They are designed to provide investors with the flexibility of stock trading and the diversification of bond investing. Bond ETFs can include government bonds, corporate bonds, and municipal bonds. They can be a good way to gain exposure to the bond market without having to buy individual bonds. This is typically a way that most people engage with bonds to have a diversified portfolio.

The other great way to get return is by buying Treasury Bonds.

Treasury bonds are long-term, interest-bearing securities issued by the U.S. government or any other government. They are considered one of the safest investments, as they are backed by the full faith and credit of the U.S. government. The interest on Treasury bonds is exempt from state and local taxes. If the bond fails then you have much more to worry about than your return. (The government collapsing lol)

For treasury bonds I followed these guides to buy:

4 Cryptocurrencies

What is a blockchain & cryptocurrency?

Typically when we transfer money to someone, the bank is the one saying “Okay!” - I’m keeping track of this for you. However in 2009, Satoshi Nakamoto said - What if we had tens, hundreds, thousands or millions of people keeping track of these transactions? This way we don’t have to rely on the bank, we can rely on many people coming to ‘consensus’ on what happen. In this case Alice sending $100 to Bob.

That’s all a blockchain is.

A cryptocurrency is the currency used to facilitate those transactions on the blockchain. When we pay a transaction fee that is used to pay all the people that helped keep track (they are called miners). Then in 2013, Vitalik said - What if instead of people keeping track of transactions they could validate any piece of code. Typically we rely on software providers to do things for us behind closed doors, but what if now everyone runs the code and says “Okay, great this code is working as instructed” and it’s all transparent. This is what exploded the genesis of thousands of different coins, projects and companies.

Okay so what about ‘investing’?

This entire thing is a weird game and unless you’re in the space it’s hard to figure out fact from scam. My personal thesis is just to buy bitcoin and maybe back one of the projects who are building an interesting developer ecosystem: Ethereum, Solana, Avalanche and the list continues. So I don’t really want to tell you what to buy but I will say I just have BTC & ETH and stopped paying close attention to space after 2019.

Where do I buy?

Coinbase

You can’t go wrong with an exchange like Coinbase since they are audited, publicly traded and compared to the others, relatively low amount of issues.

https://www.coinbase.com/en-au/

There is also CoinSpot but I have not used them in many years. (Friends of mine have used them recently and haven’t had much to say)

How do I store my coins

There is a prevailing saying - “Not your keys, not your coins”.

It means that keeping your coins in an exchange provided or with anyone means you’re not actually owning them and thus at risk. I personally keep my coins in ‘cold storage’ which means it’s not connected to the internet. (It’s kind of like a USB drive).

With crypto, scams and hacks are more of a risk than the coins just losing value in my opinion.

Typically though:

• Metamask: if you’re transacting with them frequently, a browser wallet like Metamask is convenient and easy. However you are at risk of phishing attacks etc.
• Trezor: This is one of the hardware wallet options where you can store your coins
• Ledger: Another hardware wallet option. This is what I use - purely because I saw them first.

I think if you’re going to have more than a few thousand dollars in crypto, you may as well get a cold storage wallet.

Warnings:

• Scams & tricks are rampant in this space. However if you’re logical, check emails and web URLs you go to and DON’T share your private key with anyone, you should be okay
• Transactions are irreversible. I’ve had friends lose a lot of money because they typed an address off by 1 letter or number. If you do this, there is no one to complain to or contact. You are in full control of your assets.

5 Alternative Assets

Alternative investing is becoming more popular with items that typically where just consumer purchases are now having increasing value over time. Think of wine, art, cars, coins, trading cards and more!

In these sections, there are assets that are not traditional securities by any means and the regulation behind them is very loose. However new companies are aiming to provide services to make them more investable.

Here are some of the issues with these investments

• Expensive: there are fractional tools to allow you to buy a part of an item but typically they are expensive
• Illiquid: This is the worst part that people don’t consider, they are actually very hard to sell. I personally have a strong ebay store with a good rating but for most people this is very hard to move product.
• Custody/Safekeeping: Some items may require actual holding/safekeeping which can increase damage, theft and loss.

Here are some areas I find interesting:

Whisky and Alcohol

• A great asset class that has also outdone in the S&P 500 over the last decade. However, personally I’ve found this to be fairly illiquid as a market.
• Whiskey sales need to be done in a way that you keep it upright during shipping to prevent cork damage. However, P2P sales it's hard to ensure for sellers to do this correctly.
• An example of this is when I bought the Macallan Concept 2, 2019 for $220. It should have been sold at $450 but after fees, selling quickly and shipping → which you have to be careful with, I only netted $250. ($30 for all that effort!)
• I bought this because it was a limited edition airport launch for a Whiskey. Anything limited edition CAN (not always) do well.
• There will be more platforms that provide liquidity and custody for investors.

Fine Art

Relatively new to retail investors but has great historical returns. I think retail investors coming in will just increase the liquidity and the amount of money coming in. Art is also a good tax haven for many wealthy individuals and that shouldn’t change for some time.

If you’re interested you can check out Masterworks.

Collectibles

As many of you know I have a collection of trading cards and other items. These can be a good investment if you’re thinking about it the right way. However, this has a big barrier to entry with education and understanding what collectibles you can buy. If you’re interested - you can learn more by looking at https://alts.co/

For buying things:

• Ebay
• RallyRd
• Goldin Auctions
• Facebook Buy/Sell Groups

6 Portfolio Construction

Examples of Good Diversified Portfolios

All Weather Portfolio: https://portfoliocharts.com/portfolio/all-seasons-portfolio/

Pinwheel Portfolio (Better): https://portfoliocharts.com/portfolio/pinwheel-portfolio/

From here, you just find ETFs that follow a portfolio you like and accessible to you in Australia. If you really want you can google “Pinwheel Portfolio + COUNTRY” and it should give you a list of what to buy. However, I would just use Pearler to automate this for you! Then if you want to throw into alternative investments, cryptocurrencies etc. You can just do this based on your personal convictions. 10-20% in these areas when you’re young - wouldn’t be the worst idea.