937 first time investing, CGT changes explained, passed in at auction, buying first home + more

Glen James (0:06)

Today on the show, we are talking Reddit Edition. Now, I jumped onto Reddit and all the questions we're going to talk about and answer today are from Reddit.

They're anonymous and there is a bit of a theme about investing for the first time. Should I see a financial advisor buying a first home? And I'm sure we'll get into some trouble along the way. Today, however, I am joined by Vince Scully from LifeSherpa Invest. G'day, Vince.

Vince Scully (0:36)

G'day, Glen.

Glen James (0:37)

And your favourite property mogul, John Pidgeon.

John Pidgeon (0:42)

Hello, Glen. Hello, Vince.

Vince Scully (0:43)

G'day, John.

Glen James (0:44)

Okay, John. Do you want to read the first question there?

John Pidgeon (0:49)

Help with investing for the first time. I know this will have been asked a million times, but I'm a 21-year-old uni student. I have about 35k saved, and it's currently just sitting in a ComBank Goal Saver account. I'm not going to need it for a while since I have four years of uni left. I know you're not meant to have this much cash sitting when it could be earning more interest, but I don't fully understand how these apps work. Which brokerage apps do you use? What percent do they take for both buying and selling? Is that even something worth worrying about? And what are the best things to buy? Should I just put it all into one ETF, spread across multiple, get individual stocks or a mix?

And also, should I stay domestic or also buy into other markets like the US?

Are there extra costs or risks associated with that? Sorry for the basic questions. I've just been finding it hard to understand.

Glen James (1:46)

It's actually a good question because I was writing down, we've got four kinds of parts of this. One, our goals, two, how do we buy it, three, what do we buy, and four, what asset allocation do we use? So it's actually a really good question.

My initial thoughts on that one, particularly for uni students, I'm half okay if you want to keep Cash AB for four years until you finish uni, because that's okay.

Vince Scully (2:14)

Yeah. I mean, if I were a 21 year old uni student and I had 35 grand, I certainly wouldn't be investing in.

Glen James (2:21)

No.

Vince Scully (2:21)

I'd be having a good time.

Glen James (2:22)

Yeah.

John Pidgeon (2:23)

I didn't have 35k when I was at uni.

Vince Scully (2:25)

They didn't have 35k when I was at uni.

John Pidgeon (2:28)

Was it in the pound?

Vince Scully (2:30)

It was pounds.

Glen James (2:32)

Was that at the old-

Vince Scully (2:33)

Punts, Irish punts.

Glen James (2:34)

Was that in the Irish University?

Vince Scully (2:39)

The world's oldest engineering school, I don't know if you know.

Glen James (2:41)

Is it really?

Vince Scully (2:42)

Yeah, it is. The oldest continuously operating one.

Glen James (2:45)

Look, so I don't know, with anything, you've got to go back to your goals. In the first instance where I'm, and it's so funny because we talk about having an emergency fund, right? Which could be three to six months worth of expenses. Now for this guy here, there could be, depending where they're living, if they're at home or in a boarding house, the emergency fund could be $6,000, like it might not be huge. So I think if he's got $35,000 saved, or she, we don't actually know, I'm probably saying $15,000, my emergency fund done, locked in. Because when they graduate, it's just, it's going to be around that in the real world anyway. So I'm probably taking $15,000 off the top of it to start with. Then the question is, what do we do with it? Well, if you don't have any goals of travel or partying, like you suggested, Vince, and you genuinely don't need to buy a new car over the next four years or anything like that, well, there is an argument that it can be put to work.

The thing that I reckon where people can trip up on is we know that interest in a bank account could be 5.5% and maybe the average return on the share market could be 8%.

People see that, but what you could say is, well, that 3% discount over three or four years in real terms based on your 35 grand, and we don't know if there's a savings rate there, it's very material and immaterial, and it could be, well, this is just an insurance policy that I'm absorbing by not putting the money at risk, or put in the market, go for gold, and then in four years' time, if you decide you do need to travel and the market's tanked, well, you might have to pause your travel if you don't want to sell at a loss.