I am absolutely over people losing their money. Way back in the late 1970s and early 1980s I started writing and doing radio segments on investment. A lot of this was about the positive aspects of saving and investing: using savings to pay down high-interest personal debt, saving to buy a home, paying off your home loan, buying a well-located investment property or some good quality shares.
Over 40-plus years, these commonsense ideas have generally worked a treat. I say generally, because none of us has a crystal ball and with investments there are inevitable disasters. At a personal level, most of my property investments have worked out well. But along with a few of my university buddies, in about 1984, I bought a property for the grand sum of $21,000 in Tawonga, near Mt Beauty, Victoria. We thought we’d build a ski lodge to enjoy as a group. We knocked down the house, made no further progress and after a decade of spending over $1000 a year on rates and blackberry slashing, we sold it for $10,500, achieving the near impossible. We paid cash for the place, had no debt and after allowing for our running costs lost in excess of the $21,000 we had bought it for!
With shares I have always encouraged people not to take stock-specific risk, meaning owning just one or a few shares. This is a mug’s game. Diversifying risk with shares by owning many companies across many sectors, such as banking, retail, health and mining, is a no-brainer. And, sure, quite a number of companies I have owned over the years have failed or been a dud. But the average rate of return on a decent share portfolio, including the inevitable duds and failures, has been around 10%pa.
Different types of loss
Denne historien er fra July 2021-utgaven av Money Magazine Australia.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
Allerede abonnent ? Logg på
Denne historien er fra July 2021-utgaven av Money Magazine Australia.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
Allerede abonnent? Logg på
An outrageous, beautiful monopoly
Telstra's mobile business is a cash machine with few competitors, giving it the highest returns in the world.
Drop the anchor to judge value
Buying and selling decisions should be based on where a stock price is going, not where it has been.
Powering the AI boom
Beyond the software and chipmakers, where will the energy come from?
Get into life
Tucked inside super are products that can protect you from life's inevitable uncertainties.
Paths to home ownership
Taking the road less travelled can sometimes deliver unexpected benefits.
Sold! Quick ways to add value
Small, strategic changes can have a big impact on the look and feel of your home. And get you a better price on auction day.
Money lessons the kids need to know
Your children can learn a lot from your past money mishaps. Here are eight financial conversations I have had with mine.
Property-investing rules: are they likely to change?
The pressure for the government to curb the tax benefits of tax concessions, such as negative gearing and the capital gains tax discount, is unrelenting. Most recently, independent senators David Pocock and Jacqui Lambie proposed five options for paring back investment property tax concessions, with savings to the Federal budget of up to $60 billion over the next decade.
What's love got to do with it?
A rollercoaster of emotions could be driving poor crypto behaviour.
Are we ready to be cash-free?
Saying goodbye to our piggy banks too soon could leave small businesses in the dark when problems arise.