TIM ELLIS | The Dad Investor
TIM ELLIS | The Dad Investor
Some people leave notes for their kids on the fridge. Others start a blog. Tim Ellis is my guest in this episode. He is the author of the Dad Investor Blog. He wanted to leave little notes for his kids in the future – how to set a budget, save money, spend money, buy a property, save for a baby and more. The goal was to make it clear and concise on what he'd learnt about the most important aspects of personal finance and investing.
When Tim first started investing he quickly realised the importance of understanding why he was investing.
For me it was really the emotions and then understanding what I am actually investing for. So as much as you like to be putting money in and making money, you, it's, it's still a part of your financial life. So that's still your money that you've earned and it's now in an investment. But you've got to understand, well what am I doing this for? What's the ultimate aim? Is it just to put money in and hope that it does something or is it, do I have a goal for this money? And, and that's some of the themes of what I try and write about as well. There's, there's more aspects to invest in than just picking that stock. There's, you know, there's emotion, there's the aim of it, there's the why
He is a fan of micro-investing and how it has opened up investing for so many.
I think micro investing, or for me fractional investing has been a massive game changer because it changes the ability for you to invest from being on the stock market's terms to being on the investor's terms. So previously, or you still need $500 to start investing in an ASX share and you need to match the value of your investment with the, the number of shares and the value of those shares. So if you wanted to buy a thousand dollars share, you needed a thousand dollars. But micro investing changes that in that you don't need to have that much money to invest, you can buy a fraction of the share.
And what is the most important job of an investor:
As an investor, it's your job to build up the habits, build up the craft or investing so that you can repeatedly put yourself in a better position by repeatedly doing the same tasks and actions and they are investing more money and investing more often when you can. And so I find most of my success through my investing journey is because I've done it for such a long time and because I've been, you know, repeating the same things over and over again
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I knew the advantage to investors through micro investing because all of a sudden you don't need to worry about the price of stocks, how much money you have, you can just invest what you can afford. So if it's $5 a week, a month, whatever, you can start investing with that money. And I think that's a massive game changer, especially for people who are just getting started because you don't need to save up $10,000 and then drop it in and then worry. It's, you can start your investing journey sooner with a smaller amount of money. So there's obviously less to lose and, and a lot to gain in terms of education and understanding of how it all works.
G'day and welcome back to Shares for Beginners. I'm Phil Muscatello. Is there more to dads than Bad Jokes? If you're a dad, what do you wanna leave behind for your kids? My guest today started an investing newsletter to leave notes for his kids so that they'd have a financial blueprint for the future G'day. Tim,
Tim (1m 1s):
Morning Phil, great to be here. Appreciate being included in some esteemed company and a great podcast you have.
Phil (1m 8s):
Thanks very much for, like I was saying before, we want some ordinary guys like you to come on and talk about what they're doing and it's great. Now look, I I came across you because I was looking through a list of investing blogs and yours was very interesting. I mean, I, I just like the idea of dad investor and I should say at this point that you are Tim Ellis and you write the Dad Investor blog.
Tim (1m 29s):
That's right. So my name's Tim Ellis. I'm, I'm also a husband, a father, a, a digital professional and an investor as we are alluding to, and an author and creator of the website dadinvestor.com au. So I started Dad Investor at a few years ago back after the birth of my second child, my daughter. And back then I was, I'd been investing for a bit of time and it was sort of when I got the opportunity having paternity leave, I, I'd sort of got into it again or reinvigorated my, my passion for it. And I started really thinking about what kind of investor I wanted to be. And as it turned out I thought, well, I gotta start writing this down because I've been doing it for a number of years and it's only now that I've, I've caught on about what I think I should be doing and, and what actually makes more sense to me as an investor.
Tim (2m 19s):
So started making notes, started writing things down, and then I thought I'd just put 'em on a website and then I can share it with people and, you know, instead of having all these same conversations with people again and again and about investing, I can tell 'em here's the article I wrote on how to get started. And that's how it all began.
Phil (2m 36s):
And it's, you're just a little bit difference from, from the fire movement because you know, we see so many people who are writing and blogging about financial independence retire early, but your focus is mainly on investing, isn't
Tim (2m 48s):
It? That's right. And, and it's really about investing being part of your overarching financial wellbeing and life. So I don't necessarily, you know, at at least personally have targets that I want to hit in terms of numbers or retirement dates or size of portfolio. It's really just fine tuning the process of being that investor so that you can live a bit more comfortably and be a bit more secure in your financial wellbeing.
Phil (3m 14s):
So how old were you when you first started getting in interested in investing?
Tim (3m 18s):
It takes me back to when I got my first full-time job back when I was early twenties, 2021. And back there, obviously the investing landscape was different. It was only sort of 15 or so years ago, but Oh,
Phil (3m 32s):
GFC investing right in the middle of the gfc?
Tim (3m 34s):
Yeah, absolutely. Well, I think it was a year before, so it might have been 2007 or something where I thought, you're making full-time income. I'm making more money than I ever have before, albeit not that big con in comparison now, but I thought I've gotta do a bit more with my money. So I thought why not have a look at this stock market thing? And back then it was all paperwork and picking stocks and online brokers were really hard to deal with. So it was a, it was a completely different landscape, but it was definitely an experience and a journey and having gone through that stage and the number of stages since sort of makes you appreciate how easy and sort of great the environment is now to invest in shares.
Phil (4m 16s):
Yeah, and it's amazing, isn't it, how much, how many tools are available, but not only that, how many investing blogs, podcasts and YouTube videos and how much, how many resources there are available for people now as well. So anyway, just what were your first investments? Like, what were you doing then?
Tim (4m 33s):
I had no idea what I was doing for starters. I, I didn't have an investor's mindset, it was just, I'll look at what's on the ASX, you know, 200 or whatever and, and find some names that I like. And so I know a couple of them. I was tossing up between a couple of banks and back then it was Westpac and St. George and I was, I was, I'm anari for a couple of months, which one should I buy? They're both similar, they both seem the same. I don't really know how to deep dive into the fundamentals, but in the end I went for Westpac and then I think a week or two later they announced they were merging anyway, so
Phil (5m 7s):
To, for the price award,
Tim (5m 8s):
Better off investing in St. George cuz they got the massive jump in share price. But that was my first lesson within, you know, a couple of weeks of what the stock market can do. So yeah, back early days it was individual stocks, it was banks and just stuff that I knew. So I thought I'd give that a go. What, what could possibly go wrong?
Phil (5m 28s):
What are some of the things that you started learning about? What were you able to, to bring to your investing knowledge at that stage? I mean, what were the first stages, like the steps and the ladders to learning about investing for you?
Tim (5m 40s):
Absolutely. So it's a very much an emotional journey. As much as we, we look at the numbers and the data and the fact that it's stocks and companies and underlying assets and holdings and things like that, it's very emotional and especially if you are younger and you are not making significant amount of, of money, that minimum investment at the ASX is $500. So even $500 as a 21 year old is sort of, well, I don't know what's gonna happen with this money. So it's very much a, there's a bit of anxiety, there's a bit of nervousness about putting your money into something that's a bit unknown and then the minute you buy it, it goes down and I find every time I buy something it pretty much instantly goes down. Yeah.
Phil (6m 19s):
What is that, that's like a law of the universe, isn't
Tim (6m 21s):
It? It's just, it's just one of those unwritten rules that whenever you buy something that has to drop, so even if it's gone up for days and weeks on end. So for me it was really the emotions and then understanding what I am actually investing for. So as much as you like to be putting money in and making money, you, it's, it's still a part of your financial life. So that's still your money that you've earned and it's now in an investment. But you've got to understand, well what am I doing this for? What's the ultimate aim? Is it just to put money in and hope that it does something or is it, do I have a goal for this money? And, and that's some of the themes of what I try and write about as well. There's, there's more aspects to invest in than just picking that stock. There's, you know, there's emotion, there's the aim of it, there's the why and, and a whole nother a number of factors beyond just what,
Phil (7m 6s):
And you like a juicy dividend as well. Was that why you were looking at banks in those
Tim (7m 11s):
Days? Yeah, yeah. Well actually that, that takes me into sort of the, the second phase of my investing where I got started in move to more index funds. So I, I moved on from trying to pick stocks and trying to find the next sort of resource, you know, mining stock that was gonna boom and I thought, what's this Vanguard thing? So this is a sort of back when index funds weren't a thing or even ETFs, it was probably 10 plus years ago. And I thought, well, Vanguards well-known overseas. I had a look at them in terms of their index fund options or their products. And I thought, well, everyone talks about this, at least those who have been investing for a while. A lot of famous investors talk about index funds. It wasn't that common back then.
Tim (7m 51s):
So I thought it'd get started with Vanguard Australia and, and they had the option to invest in index funds and, and back then they only had a handful available and I decided to pick the high dividend index fund back then, it's the equivalent of the VHY ETF now. So I thought that's a safe bet. So I started drip feed into that. That's the beauty of the index fund model with the, the unit trust system there where you can put money in at a lower cost on a regular basis. And I did that for a number of years and sort of continued on my journey watching that grow and, and change over time.
Phil (8m 24s):
Did you participate in a, a drip DRP dividend reinvestment plan?
Tim (8m 28s):
Yeah, yeah, absolutely. So the beauty of the index fund as well was that it was easy to set up, you know, dividend reinvestments and you know, me being at the stage it was, I didn't need an income taken out so I just reinvested that money and back then it was, you know, you'd be paid in, you know, additional investments, which is what I did on a regular basis. And so over time I just slowly watched that grow over a number of years in the old traditional index fund.
Phil (8m 53s):
Do you still own that etf?
Tim (8m 55s):
No, I actually got out of that a couple of years ago and that was more for simplicity, but I found it of a great vehicle over a number of years in particular because it was one of the only ways you could invest a smaller amount of money. You didn't have to cover the exact cost of the share, you can just invest based on how much you had available and the minimum of a time was a hundred dollars per transfer. So that was a great opportunity for me as a younger person to invest a small amount but more regularly so I don't have to build up and wait to have that $500 to drop into the asx.
Phil (9m 27s):
And, and now that you've got shitloads of money, you can yep,
Tim (9m 30s):
Money everywhere. So it doesn't matter, you know, pick and choose how much I wanna put in. So no, it did that, that brings me another point though. It does get very messy after, after a few years of investing while it's clean cut picking stocks and one index fund, it can get messy. So like I said, I've been trying to simplify my investments so it's not all over the place and easy to understand.
Phil (9m 51s):
Do you still invest in individual shares?
Tim (9m 54s):
I do. So I do have what is considered the, the core slash satellite approach to an investor's portfolio where I have that core proponent of it being made up of these passive type ETFs and that's 80, 85% of my overall share portfolio. And so they're the mainstream type ETFs that you see people invest in. And then I have the satellite part of my portfolio, which is made up of, yeah, individual stocks, volatile cryptocurrencies, some leveraged ETFs being who I am, being the sort of DIY investor that I, that I aim to be. I, I find that I need that portion of my portfolio in something that I can be a bit more active in because as much as it's obvious to just invest in a, you know, ETF and something simple and, and and boring, I still want to try and have a bit of fun.
Tim (10m 49s):
And so for me it's the core portfolio part of the portfolio makes up the safe, secure wealth building part of it over time. And then the satellite is the fun, make as much money as possible, see what you can do and go wild with whatever you feel like. So that's how I break up my investing. There's, there's two different sort of tiers to it.
Phil (11m 9s):
So what are k some of the kind of individual shares that you look to invest in and what's the reasoning behind what's the, your methodology for getting into those ones?
Tim (11m 19s):
I'm the, I'm no pro, I'm definitely an amateur at this, but you know, I have been doing it for a number of years so I, I skip back and forth around how I feel that I should invest. So I know you talk to the value investors where they, you know, look for undervalued companies that are, that are at a good price and look into grow quite significantly. So I do spend a bit of time valuing companies looking at them, but then also look at different factors. So one I've done recently is looked at the momentum type factor where it's, it's less about the companies or the underlying company's performance and it's more around the momentum that, that anyone given stock or two stocks is, is getting on the, of the stock market and anyone at the moment.
Tim (12m 3s):
So you look at moving averages and things like that to say, well what's the hot stock at the moment? And so, you know, recently, you know, a lot of those tech stocks have been given a, a decent ride. So you look at them and go, well, irrespective of what the underlying company is doing, this is a hot stock, so maybe we'll hop onto that and see how we go. So frankly as well, I just get ideas based off what I read. So I read articles, I, I ca read forums, Facebook groups, see what people are talking about and just sort of generate concepts of what might be a, a good idea and do some research and see how I go with that. So it's a bit of a sandpit for me, the old satellite portfolio. But yeah, I have good fun with it and it keeps me busy so I'm not affecting everything else in my, you know, sort of financial life.
Tim (12m 46s):
Phil (12m 47s):
That, that's interesting. So are you using a bit of technical analysis? I mean, you're just looking at moving averages, is that the kind of thing that you use to identify momentum?
Tim (12m 54s):
Yeah, moving averages. So 50 day moving averages, 200 days, see where they sort of line up and see the differences and, and it's a bit hard without sort of pointing to charts and, and showing you how it all works. But this might be an article I put together and throwing the website cuz I love sort of explaining what I do. But looking at momentum factor type stocks, it's all about what they've been doing on the stock market and, and how their price is tracking over certain periods of time and the different indicators of the stock market in terms of volatility highs, lows, overweight and underweight and things like that. So just little indicators that you look at and, and combined you go, well this might be a good option for me, so keeps me busy, but there's, there's no guarantee that what I'm doing is, is going to come into place.
Tim (13m 41s):
Sometimes I have good days, I have good bad days, good months, bad months. So that's just the name of the game though.
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Phil (14m 4s):
Well, it sounds like you've really taken to it and you really have a passion for it and that and always quite other guests. And one of my other guests once said, you can't teach passion and you obviously do have a passion for what you're doing. Yeah. And you're enjoying yourself and the people that do make money in the market actually enjoy the process.
Tim (14m 24s):
Absolutely. And I think a lot of people get nervous about investing because I, I think the underlying reason is they don't actually know what they're doing it for. And so for me it was, I, you know, I've talked about the history of it and tried it out and then the more I'm a numbers kind of guy and that's just a characteristic of me being sort of, you know, a problem solver, a numbers guy, and so maybe that suits, you know, the investing that I'm talking about. So I do find it fun and, and you know, it's good to make money, like it's good to, to turn on, open up your broker and go, ah, yes, stocks, stocks jumped up, you know, 10% over the last week and stuff like that. So it feels like you're accomplishing something. So irrespective of the actual dollars in that are coming in, it sort of feels good to, to do some work and get rewarded for it.
Phil (15m 9s):
So with the core part of your portfolio, describe that for us. Is it Australian or are you in the US as well or the rest of the world?
Tim (15m 16s):
Yep. So at the moment my core portfolio is just the one the one ETF it's an ASX ETF called IOO, which is the iShares global 100 ETF. And for me, I find that's just the best for my situation, my core, my my safety, my security. To me, if we wanna unpack it a bit more, it's a hundred of the best shares in the world. And for me that's a great number. It's not too many, it's not too light. And we've, you know, I know on your podcast you've talked about diversification over diversification before, so I know a lot of ETF's gonna hold thousands of companies within them. So I find a hundred within an ETF is a great number to have diversified.
Tim (15m 58s):
It's not over the top. And there's some great companies within there that are truly global. And I find at any given time you just wanna hold a hundred of the best. So for me that's just seems like a, it's got a good track record, it's got good liquidity, good everything, and it's just one of the better ETFs that I've found.
Phil (16m 16s):
And of course, this is not a recommendation for anyone to buy research, get a financial advisor and all of that. But if just to explore it, is it actively managed, like do those hundred stocks change over time and are they equal weighted? Can you dive a little deeper into that? Yep.
Tim (16m 31s):
So the way the, the global 100 ETF tracks an index, which is the, it's an S&P tracked global etf. And so what that includes is a hundred of the truly global companies. And by that I mean the company has to have revenues across the world. So for example, you need to have 30% of your revenue come from the Asian region, 30% of your revenue come from Europe and, and at least 30% come from America. So you have to have a truly global company. So think of the biggest, you know, players in the world really. You've got the apples, you've got Amazon, you've got Nestle, and those types that, that are spread everywhere. So wherever you go in the world, a company within the top hundred is gonna be well known.
Tim (17m 11s):
They're not equally weighted, they're weighted by size. So they've got the, the biggest companies in the world will take up the biggest weightings of that portfolio. So the top 10 make up, I think just over a quarter of that portfolio. So you've got, like I said, the Apples, the Amazons BHPs in there as well. So I think there's a bit of a couple of Australian companies in there as well. So you've got a hundred pretty strong large cap companies and they would just interchange based off their market cap and their ability to be global. So you'll find companies like Tesla are not within the global 100 and that's purely just due to their revenues across the world not matching up with what the index sets. So I do have a, an article explained a bit more on this ETF and why and all those parameters about why I chose it, but for me it was just a bit more niche than just saying this is a total market covering cap, but also it's diversified without being over the top and including too many
Phil (18m 8s):
Companies. Oh, that's great. We'll put a link in the blog post to the article as well, we'll reproduce it or something like that. So you're also very interested in micro investing because that's something that's changed in your time as being an investor that now you can start with five bucks.
Tim (18m 23s):
Absolutely. And I think micro investing, or for me fractional investing has been a massive game changer because it changes the ability for you to invest from being on the stock market's terms to being on the investor's terms. So previously, or you still need $500 to start investing in an ASX share and you need to match the value of your investment with the, the number of shares and the value of those shares. So if you wanted to buy a thousand dollars share, you needed a thousand dollars. But micro investing changes that in that you don't need to have that much money to invest, you can buy a fraction of the share.
Tim (19m 3s):
So if you wanted to buy a thousand dollars share and you only had a hundred dollars, you just buy 10% of that share. And that's how the micro investing or the fractional investing works. And, and for me, day one, when the tools like RAIZ and that came out, I was on them because I knew the advantage to investors through MicroVest because all of a sudden you don't need to worry about the price of stocks, how much money you have, you can just invest what you can afford. So if it's $5 a week, a month, whatever, you can start investing with that money. And I think that's a massive game changer, especially for people who are just getting started because you don't need to save up $10,000 and then drop it in and then worry. It's, you can start your investing journey sooner with a smaller amount of money.
Tim (19m 44s):
So there's obviously less to lose and, and a lot to gain in terms of education and understanding of how it all works.
Phil (19m 50s):
And that can be part of the education process as well for investors that they, they can start with very minimal risk and use that as a starting point to start learning about the landscape.
Tim (20m 2s):
Absolutely, and a lot of first time investors get nervous because they think they have to put a large amount of money in and into something that they don't know and then just wait and see what happens. But I think with these new tools and, and micro investing in particular becoming more prominent and available to us, it, it's such a great opportunity for people to start, like you said, $5 is all you need to get going. And yes, you can look at the numbers and work out the fees and the costs and stuff like that, but until you have some skin in the gamers investing, you don't actually know what to expect. You can, you can build it up and you can be as nervous as you want, but until you get started you don't actually know what's gonna happen. But in the best way I've found is to actually be in the market and be in the game and go, well this is what investing's really like, what's my next move after that?
Tim (20m 48s):
So for a lot of first time investing is that first step so difficult, but now the barriers to entry are just being pulled down so that you just don't need the significant amount of money to get started.
Phil (20m 60s):
You like to write about famous investors and what you've learned from them. Who are some of your favorites and what have they taught you?
Tim (21m 6s):
Look, I don't have anyone famous investor, I don't follow anyone religiously like that, but I do appreciate the wisdom that comes from a number of the more prominent ones that we, we see and read about. I will make one point about them though is that they have one thing in common is, and that's, they've done it for a long time. Every single investor that I read about or hear about has done investing for a long time. And that just paints a picture that while we can listen to the Buffetts and the the Barefoot Investors and you know, all the, the Peter Lynches of the world and stuff, talk about what they're investing, how they build portfolios, I think you just gotta look at them and go, these people have been doing their craft for such a long time and that's so important to invest in.
Tim (21m 50s):
So yeah, look for me, I've mentioned those names. Peter Lynch is a great one. I think he has some great wisdom. Locally as well peter Thornhill is a great individual. I went and watched him speak in person a few years ago and he gives a great perspective on investing for income and he's got a book as well. I think some that's a fantastic read. So for me it's, I just love hearing perspectives from people who have done things for a long time. So, you know, you've got the famous overseas investors as obviously there's some local people here that have some great insights, but I think the common theme is listening to people who have done the same thing and effectively for a long period of time is a great way to build up your understanding of investing and your education as well.
Phil (22m 36s):
And what about surrounding yourself with a good network? What, what do you mean by that?
Tim (22m 39s):
Yeah, so for me, I am someone that people come and talk to about money. So it's not to say I'm some kind of guru or anything, but people just know I'm into investing. I have a, you know, I have this site that I write about investing. So for me, a lot of people come to me and just don't have anyone else to talk about in terms of money or investing or numbers and things like that. And so for me, I encourage people to really go and, and build a solid group of people where you can, it's not always possible, but where you can try and find some like-minded people who are interested in, not necessarily money, but just sort of, you know, that wealth-building concept where you're looking to, to do something more with your money.
Tim (23m 21s):
And it, and it goes not just for investing, but a lot of many aspects of your life where you are the, the average of the people around you, aren't you? So for me, I make sure that, you know, I am, I'm having conversations with friends and family about things and, and having more of them with the right people. So yeah, I think it's just gravitating to the people who are gonna be good for you in terms of your financial life is a good way to learn a lot as well. So whether that be in person or online or people you follow or read about or podcasts you listen to, if you build a habit of just listen and, and understanding perspective of people you want to grow with, then I think you'll put yourself in a good place as well.
Phil (24m 0s):
But don't you find that you get that position where you become a, a kind of a, a minor authority, I guess we're both minor authorities in our own way. Yep. And all that people wanna do is they want to come up and say, what do you think about blah, blah, blah?
Tim (24m 13s):
Oh, I love this question. I love it when people come up to me and say, oh, have you got an investing tip? What should I invest in? And, and they, they come up to me, they rub their hands, oh, this guy knows how to invest and, and they, they look at me and they go, oh, have you got an investing tip? And I go, and I know exactly how to answer this question. And they rub him their hands going, oh, he is gonna tell me to invest in Netflix or, or Nvidia and, and you know, it's gonna take off. And I tell 'em, I go, I'll give you two bits of advice, invest more often and invest more money. And they look at me and they go, what do you mean? I said, well how much money do you invest in at the moment? And they go, oh, I put a thousand dollars in an ETF three years ago and it's sort of done something and I can't remember, I don't, it was with a broker, I don't even know the name anymore.
Tim (24m 57s):
I said, well, I tell 'em it's, look, it's not about what you're investing in you people just constantly chase. They, they think the investor's job is to chase the best and find the best, invest in and to look for the next best option. But the reality is, is as an investor, it's your job to build up the habits, build up the craft or investing so that you can repeatedly put yourself in a better position by repeatedly doing the same tasks and actions and they are investing more money and investing more often when you can. And so I find most of my success through my investing journey is because I've done it for such a long time and because I've been, you know, repeating the same things over and over again.
Tim (25m 38s):
It's not worrying about what I invest in, it's not trying to find a cryptocurrency that's unknown, that's gonna beat someone else because it's really about those habits that form your investing journey.
Phil (25m 50s):
I'm a bit more of a hard task master in that when I, I get that sort of question. I had an uncle who was a bookmaker and every year I'd say, what should I put my money on in the Melbourne Cup? And he'd say, keep your money in your pocket. And I I just say to people, if you're gonna ask that question, keep your money in your pocket. You've gotta go and learn, you've gotta invest in learning yourself, don't you? And that's what it comes down to. You gotta learn and actually know just even a little bit about what you're
Tim (26m 19s):
Doing. Absolutely. And people love shiny things and so they love the products, they love the investments, the stocks, the cryptocurrencies, the new ETFs, the tools, the platforms, they love that stuff. And so that's in a way the most popular stuff that people find on my website and that's the stuff that they read the most. But I try and gravitate them towards the topic of investing, becoming an investor, because it's not about investing in shares, that's the task. The craft is be becoming an investor and it's made up of so many things and it's made up of you determining not just what to invest in, but what not to invest in and when to invest and when not to invest. And so, you know, people don't like to hear that you shouldn't be doing anything, you know, especially with, you know, which horse to pick.
Tim (27m 5s):
So for me to tell people that they should be building habits is, is hard to digest because, you know, it's something that they need to put time into. You can't just magically pick a stock and just become a millionaire overnight because it doesn't work like that. So it's very much a behavioral thing and, and as while it's not as flashy as talking about products, it's something that's so important and probably underserved in terms of what we see and read about a lot.
Phil (27m 30s):
I found you on the Sharesight site, which was about the their favorite investing blogs. And what's your thoughts on benchmarking? Because for me to suddenly see it's starkly in there, what you are trying to do compared to if you just went into a, like a, we've been talking about an index etf and it can be so deflating when you see if I just put my money just in this thing and just sat back and didn't do anything, I would've been so much better off.
Tim (27m 57s):
Phil (27m 58s):
How do you, how do you approach
Tim (27m 59s):
Benchmark? Yeah, Sharesight's a great tool. I've been a user of Sharesight for a number of years. It's got that great feature where you can benchmark against a common ETF or, or fund and and and see how your portfolio performs in comparison. So for me, I track at the moment against the S&P 500, so it's the ETF IVV that's been fairly decent the last five or 10 years. And so that in many aspects does overshadow my portfolio performance. And you're right, it is deflating when you put in so much work and effort in towards investing and then you look at something like the S&P500, one of the cheapest ETFs you can get is doing a better job at the at you than you.
Tim (28m 44s):
And while it is sort of dele to look at it, it is also a great reminder for me and for many investors that the market does not care how much more effort you put in in. So it doesn't ma matter how much time or effort you are putting into researching stocks, finding the cheapest or most actively managed et tf the market will do its own thing. You are just there for the ride. So it's, it, it doesn't really impact your investing results, how much effort you put in. It might, you might like to think that, but for me at least more effort has not, has not turned into more results. I have fun with it, but for the most part like that talked about the core part of the portfolio that just sits there and does nothing and it builds me wealth without me having to do anything.
Tim (29m 31s):
And so that is the benchmark really. Just that average return that you are looking to achieve over time is something that you can get without putting any effort into it at all. So there's a lot of noise out there, but the reality is it doesn't matter because the market keeps moving and you can grab those average returns.
Phil (29m 50s):
That's something that in the course of making this podcast, which I've found quite interesting is that we all talk about ETFs, and ETFs Loom large in all our investing strategies, but when you look at it against managed funds, it's tiny in comparison to the amount of money that's sloshing around in managed funds.
Tim (30m 8s):
That's right. And that's because people like to think that more effort is more valuable and esp especially when it comes to financial advice, financial advisors funds, managed funds, active funds, people in all aspects of life look at effort and think that is value. It takes, you know, like a, you go and make a get a coffee made by barista and you think because they heated up the milk and because they cranked them a coffee machine that's better than you pressing a button and getting a coffee. So you, you value that coffee higher because someone's handmade it. And similar when it comes to all those, you know, financial professionals, people believe that cuz someone's sitting at a desk or wherever, a number of hours a week, they're gonna get a, that they value that higher.
Tim (30m 53s):
And so they're willing to pay for that. And that's, look, I'm gonna say it's unfortunate, but that's just our nature in that we value people putting in effort and we're willing to pay for it. So it's up to you, I guess, as an investor, as an individual to see what your comfort level is. Are you willing to pay for that kind of service? There's options there. We don't need to anymore, obviously through ETFs and, and passive type investments or low cost investments. So that's just part of what you, what you come across as an investor and, and you find you need to make decisions on what you pay for and what you don't.
Phil (31m 27s):
What you're saying brings me to the point about how few financial advisors there are in Australia and how expensive they are, and presumably someone who's listening to this podcast or going to your blog has started to take an interest in this, which is great. We, we congratulate you that you're taking an interest, but it really is becoming a necessity nowadays because financial advice, unpromised financial advice is beyond most people's financial reach.
Tim (31m 58s):
Absolutely. And I, I, I was listening to that podcast where you, where you talk about sort of the gap in financial advice or advisors and how we're losing the them to the industry and it's unfortunate, but I think there's also an opportunity for advice or the position of advice to be, to be rebuilt or reimagined because I think there's a bit of a misconception in terms of what people believe they get when it comes to financial advice and, and a lot of people I have conversations with or get in touch with me through my site, aren't necessarily there for a full review of their finances.
Tim (32m 39s):
They're not looking for that statement of advice, that big document of needing to do everything to everything in their financial arsenal. It's really about people wanting help making their next decision. So people come and go, I just got this huge inheritance, or I just sold my house, or I've just paid it off. What do I do next? So I think there's opportunity for the financial advice industry as a whole to tailor or cater more towards what people are looking for because I think it's been, up until recently, very much a, you go to a financial advisor, you get it all mapped out, you get the statement of advice and that's how it works. So there's a, I feel like though there's a sliding scale of actually what people need and want.
Tim (33m 23s):
And so look, they're willing to pay, but they're not looking willing to pay for things that they don't want. So they don't need their superannuation reviewed or their mortgage reviewed or what they're doing with their money re just, it's just one aspect of their finances that they need help with. So I think yeah, there is that opportunity for the financial advice industry to cater to different behaviors or different needs of people who are looking for it. But who's gonna deliver that? I'm not sure.
Phil (33m 49s):
So Tim, how can listeners find out more about you?
Tim (33m 52s):
Yep. So I've got a website as we've talked about, dadinvestor.com.au. I've got plenty of articles there on my investing journey. A few how to guides as well. I've got a newsletter, an email newsletter you can sign up where I send out some more information as well. I don't have social media.
Phil (34m 8s):
What's wrong with you?
Tim (34m 10s):
I don't post theater to social media. I do have YouTube. I have a few videos up there. You'll find them in my articles anyway, but it's mostly through my website.
Phil (34m 18s):
Tim Ellis, thanks very much for joining me today. Appreciate it Phil.
Chloe (34m 22s):
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