Where to invest your $2,000 tax return, LIVE with Owen Rask

[00:00:00]Um, so if you can, welcome. Uh, it's hump day and it's the middle of the week. So, uh, it's my absolute pleasure to see you. Um, if you can hear me, jump in the chat, say, "I can hear you or I can't hear you or I wish I couldn't hear you." Um, but I can. So, um, we're talking about tax today. We're talking about a bunch of other things. We're going to talk about investing. Alice says, "I can hear you." Zoe says loud and clear. uh regrettably. No, she didn't say that. But thank you. Um welcome to hump day everyone. It is a Wednesday and um it's my pleasure to be back with you and we are over the tax year as well kind of. So it's time to get prepared for those tax returns hopefully. Fingers crossed. Sometimes it's kind of like you get the accountant to come over. you do your tax return and then you try and ply them with like really good food or you try and inadvertently bribe them to make the tax return look good. Um, but uh it's not always the case. We're going to talk a little bit about that uh today, how the tax returns actually work. And then we're going to talk about giving your money a purpose uh because uh if it's anything like my mother-in-law would always say that it's uh you you can't just let the money come into the bank account because otherwise it just goes into quote unquote consolidated revenue.

[00:01:25]Um so that's a bit of a drama and we don't want that. We obviously want to give money a um a purpose. Now, can a few people have said there's a bit of echo. So, what I'm going to do, ladies and gentlemen, is I'm actually just going to switch my microphone. So, just let me know if this sounds better for you. I'm actually recording from the studio in Melbourne today. If the microphone has got better, uh, let me know. Um, it's a bit hard when you can't hear your own voice. Uh, beautiful.

[00:01:53]Everyone's saying it's better. All right, we're good to go. Let's restart.

[00:01:55]We're talking about tax and investing.

[00:01:57]We are going to share some ETFs, some shares, some of that stuff. We're going to answer some questions. Uh, we've got some good stuff to get to today. Now, let's get some slides happening here.

[00:02:06]Um, here we go. We do record these via Zoom and um, I must admit I you can ask Wave from PA. I am the worstest in the world at Zoom. Don't ask me. I use Google Meet for everything and I think it's like us and Google that uses that and then everyone else just uses Teams and I'm still figuring that out as well.

[00:02:27]So, um, yeah, bear with me. Okay. So, uh, if you can hear, otherwise I'm just going to just jump off camera for one second.

[00:02:41]Okay, that should be better in the RA studios. Uh, here we go. Sweet. Okay, so invest in your tax return. We're going to talk about investing in just a second, but I want to know if the average tax return is say $2 to $25,000 per year, where does $2,000 take you?

[00:03:00]Tell me your holiday destinations. I'm not in the market because I'm not getting a tax return. Uh, regrettably, but or a tax refund, I should say. I'm doing a tax return. Where does a $2,000 or $25,000 tax refund take you if you had to spend it on travel? Where would you go? Give me some tips. Um, to the grocery store, says Zoe. New Zealand, says Anastasia. Um, Japan. Japan for two grand. Gabriel. Vietnam. Matthew. Good one, Matt. I must admit, I do like that.

[00:03:30]Greece, Nadia, I feel like Greece maybe, unless you're flying one of those um newer Chinese airlines or the Indian airlines that seem to be cheaper when I go online, doesn't really um doesn't two grand doesn't really cut it these days.

[00:03:44]Indonesia, says James. Yeah, that photo on the left there is um apparently Barley according to Canva. And that photo on the right is apparently New Zealand, also according to Canva. Um, maybe if someone just wants to chuck in the chat if they have spent on a holiday recently, where did you go and how much did it cost? Maybe that's the better way to do it rather than ask for for inspo for two grand and people say Europe for 5 weeks. Um, maybe just say uh just say where you have gone. Um, that would be probably uh and how much did you spend?

[00:04:15]That's this is kind of the gist of today's um discussion, but it um we're going to be talking about the investing side. So speaking of u general financial advice applies any of the information contained in this webinar or if you watch it back a video uh is strictly general in nature. We don't know needs goals or objectives. So it's not personalized financial advice. That's what you need a financial planner for.

[00:04:36]Uh you can find more information about what general advice means at ras.com.

[00:04:41]FSG for financial services guide. That is the legal document that tells you like what finance stuff applies under a certain license. U PA also has an FSG that's available on the PA website. Uh you can head to the footer section I believe is where you'll find it down the bottom. Port Douglas says Alice for a week and I'm too scared to add it up.

[00:05:01]Yeah, Port Douglas ain't cheap these days. Good food there though. Great food. Love me that se bean restaurant.

[00:05:07]Fiji family of four 10 nights all inclusive. Gemma says 10 grand. Family of four for 10 nights. That's pretty bloody good, Gemma. Good on you for spending that. Uh, I just spent $700 last weekend in Sydney with two kids.

[00:05:21]LOL says IB. That's a good one. Uh, Ubud says Shannon and Gabriel. A week cruise for 2,300. Good value for money across the board there. So, that's me before um the budget. Um, and you're watching me now after the budget. So, today's agenda, how tax works, uh, giving money a purpose, where I'd invest my $2,000 tax return if I had one. Um, we do this every month, so don't forget to come back in a few weeks. Subscribe to the Pear YouTube channel if you are watching on Pear now or on replay. Um, it'd be great. Just jump across there. There's heaps of content. It's not just from me doing the lives. Uh, there was one with Navar and Pear a few weeks ago. Navar from Nexa, which is the tax tool. Uh, then Hayden. Um, you'll see Anna on there. You'll see Dave G on there. You will see just the the Pearl crew doing some stuff as well. So, check it out.

[00:06:10]It's a Pearl YouTube channel. So how tax works, there's a lot of misunderstanding around how tax actually works. So let me just try and clear things up for you here on the chart or the the slide in front of you.

[00:06:24]I've kind of I've kind of outlined like imagine that you have like a monthly paycheck every month for 12 months. We go from July through to June. That's the financial year, otherwise known as the tax year.

[00:06:39]Most people wouldn't have seen this thing called P A Y, which man stands for pay as you go. The thing that's missing in here is the tax. So, pay tax as you go. It actually should look like this.

[00:06:54]Pay tax as you go or PTG. I don't know why they didn't go with that acronym, but pay tax as you go versus say what you see in the movies in the United States where you might pay tax as you buy things or um just of your own free will. You kind of go and pay your taxes.

[00:07:12]You probably heard people say that in the movies. That's not the way it works in Australia. You pay tax as you go, as in you pay tax as you earn a salary. Now the thing where people get confused is when you do your tax return. It's not just money from your salary that goes into that overall bucket. You also have money from say center link that may be considered or not considered depending on what it is. You'll get dividends from your ETFs and shares. Uh you'll get rental income if you own a property. If you've got a side hustle that you invoice people for or you're a contractor, that all gets stuffed in there into one big tax return under your own name.

[00:07:48]The confusion comes around the different types of income that you get and where the tax has already been taken into account when you receive that money in your bank account. So a good one is um someone that works in a salary for a salary. They have P A Y and effectively that means that the employer is sending money to the tax office, the ATO for you. But then you want to do some Uber driving or something on the side. Maybe you've got like a a stall that you have at the local market or something like that and you want to do it legitimately.

[00:08:23]You have to go get an ABN and then you collect money from people that can be done under your ABN and you're not obviously having tax taken out when you receive the money. So you need to put money aside from that. But if we just assume here that someone has a standard, you know, one job that's the only source of income, they don't even have bank interest. they have this kind of monthly income that's stable. The the blue here represents what you see in your bank account. The purple represents the tax that's withheld and sent to the ATO on your behalf. And this last bit is a bit confusing. I was trying to think about how you could show this visually.

[00:09:02]Effectively, this is the little bit that adds up at the end of the year and you get your tax refund. It actually looks like this little orangey kind of cream shaded bit. So bear with me as we go through this example, and I'm always happy to answer questions. This looks very stable. This would be like someone that has the exact same amount of money every single month paid into their bank account by their employer.

[00:09:26]What what you do when you actually get your tax refund, if you get one, is effectively what happens is the employer's withholding a certain amount of money every month based on the fact that they expect that same amount of money every month to continue for a full 12-month period.

[00:09:45]One common concern that people who get commissions or bonuses from work have is sometimes they see this say $10,000 bonus, but they might see, wow, $45,000 was taken out of that just as tax and they go, why did that happen? So, this might be say we got that one in December. Now, I'm just going to jump into Canva and just do a little bit of an edit here on the fly. If you haven't used Canva, it's amazing. could IPO soon at a $42 billion valuation allegedly. Uh we'll see. Won't be an Australian company by then. It will be a United States company. Very sad. But what can you expect when um what's happening in Australia? So say for example that one month you have more money coming in.

[00:10:29]Effectively what you might see is you might see this number go up to 30 which boosts that month. But you'll also see more tax in this column. So you might say it goes like this. Now what actually is happening in this regard is that in that particular month your employer is saying whoa John Smith you earn a lot of money this month. What we're going to assume and what the ATO tells us that we may assume is that you earn the same amount of money every month and we were with more tax. Now there are things you can do. So this is a very simplistic example. Your employer may not necessarily have to do that, but effectively this purple shade here is higher than the rest of the year. So in effect, what would happen if you did the full year's tax return is actually this 15 might only be 12 and there might be another three points added to this column here, which will be the refund.

[00:11:26]So some people get concerned when they have like a bonus or a dividend check or something like this. They think I'm paying so much tax. But what effectively happens is at the end of the year, I'll just change my color away from that red color. Effectively, what happens at the end of the year is the ATO or your accountant together assess the whole thing. So, some people complain. They're like, "Oh, I'm getting taxed so much."

[00:11:52]What happens is all of the different sources of income get added. Some of them without tax withheld, some of them with tax withheld. And at the end of the year, they tally it all up and they go, "All right, you paid this much in tax throughout the year, and you're only needing to pay us actually this much."

[00:12:10]So, this is actually how much tax you owe us. Therefore, this amount would become your tax refund. So, what actually happens behind the scenes is that even though you may have tax withheld throughout the year, it's actually a good thing because you can get it out and people will say it works out in the wash. That is what your tax refund is. Um, now I know that I've gone through this very quickly, but I just wanted to give people a sense if they had no idea at all how it works and where tax refunds come from. In general, I have a rule that if you're an investor, you don't get a tax refund.

[00:12:47]Now, that's not true for everyone, of course, but in general, if you're investing money and you have a job, typically you may pay tax, not get a tax refund. So, you're paying a tax bill, not getting a refund. Business owners, for example, often never get tax refunds because they're having to pay more tax than they are due to get back. And that's the most common scenario that I see. for example, I don't think I've had a tax refund since I started investing.

[00:13:18]I was also working for myself um in 2011 2012. So, what's that like 15 years now?

[00:13:25]I haven't had a I don't think I've had a tax refund. Maybe I have, but I can't remember ever seeing that money. Um which brings me to my next point. Give your money a purpose. If you're one of the people that um are going to get a tax refund in the next few months, effectively you're going to have money just appear in your bank account. The ATO says that from the time you lodge your tax return with your accountant or by yourself to the time you actually get the money in your bank account is typically 2 weeks. So say for example, you go to your accountant tonight, you hand them all your information and they go, "Okay, that's done." You'd probably be looking to get the money in about two weeks from now. So, say like the first week of August.

[00:14:07]Most people listening to this and watching this will know that that's not going to happen because you can't do it right now. You have to wait for ETFs to send you the tax statement which will come probably in about a month.

[00:14:18]But basically, from the time you do that to the time you get your money, you just see this free money appear. And a lot of us do think about it like free money, but really that is the shest way to not see any return for that money either in lifestyle dividends or in actual dividends for the long-term you. So my co-host on the Australian Finance podcast, Gemma Mitchell, who's a guru of um personal finance by the way, um one of the first things she ever said to me when we talked about budgeting was, "You need to give your money a purpose. You need a money system." She doesn't call them a budget. She doesn't call what we do, you know, around the dinner table or in a spreadsheet a budget. She says it's a money system. It's a place for your money to go. It's a purpose every month for your paycheck to go somewhere. I've um this is I used to call this the ras budget, FYI. Um and it was kind of a simplified version of how I thought about using your money effectively. Um, and the analogy here is that you've got a jar and what's the way that you maximize the space inside of a jar? You put the big things in first and then the little things fall around it. And so the big things when it comes to your money jar are paying off all your debts. This is called paying yourself, saving that emergency fund, and then starting investing.

[00:15:38]Step two would be you pay everything else. So this is like the the 80% and it's very similar to the barefoot budget if you've seen that. Um, that's all down the side here. Now, I can see Alice has just said AMT but Amit statements. LOL.

[00:15:51]So, just to recap on that, just for people that maybe don't understand that when you invest in an ETF, and we're going to talk about ETFs today, you will have to wait a little while before the ETF provider sends you the statement and says, "Hey, this is how much you got in dividends. This is how much you got in foreign income. This is how much you got in franking credits. This is how much you got in capital gains for the year."

[00:16:15]because of the way ETFs are taxed. Um, well, for now anyway, because of the way ETFs are taxed, um, you need to wait for that statement in order to do things really effectively.

[00:16:28]Um, some of you may know that, um, with your Pearllor account, are you still there? Yes, I am. Thank you very much.

[00:16:35]with your Pearller account. If you go into pear.com/scustointtegrations or just click on settings and go to thirdparty integrations here, I'll just bring up my screen. Sorry, I realize you guys can't see this. Um momento. So, um I think you may be able to see this.

[00:16:53]Tell me if you can see this now. I think you can. Um so, on this page here in 30 third party integrations, thanks I appreciate that. Um, you can see here where you can connect to your NEXA account or you can connect to your share site account. These are the two big portfolio tracking tools in Australia.

[00:17:11]The reason why I'm singling out NVEXA is that um there was recently a NVXA webinar that was done also available on the Pear YouTube channel. Um, and effectively you can get 20% off an annual subscription. It's just noxa.com/pellar.

[00:17:27]I'll put it in the I think maybe's way.

[00:17:30]Um, yeah, there you go. Or someone can pop it in the chat. Oh, there we go.

[00:17:33]Gabriel, thank you so much for that.

[00:17:34]You've done it. So, nxa.com/pear and you can sign up to this if you want to. I have no skin in or dog in this fight. It's just if you want to use it, cool. I use it. Great. Um so here um back in the the integrations effectively what would happen here is when you place a trade in your parlor account all of the um tax information would be recorded by NVEXA. Uh and then at the end of the year you can produce your tax statement.

[00:18:03]So you can see that kind of on the right hand side here. Uh you can see like different shareholdings and so on and so forth would produce a taxable outcome.

[00:18:12]RIP Wise Tech. Still down on Wise Tech, but I have faith. Uh, so feel free to ask me any questions about that. But effectively, you could download the tax statement, hand that to your accountant, and get your tax return. But there's a lot of steps involved, and it's not just as simple as, hey, my ETF sent me 10 bucks into my bank account. That's actually not how tax on ETFs work. And it's really, really important that everyone understands this. When I speak to the team at NEXA, they say the biggest mistake that everyone makes is this to use NEXA, you have to pay a subscription. I don't know what it is per year. Maybe it's down here somewhere. Uh maybe it's like 20 bucks a month or something like this. I don't know exactly what it is. What's the pricing? 25 bucks a month for the standard one. Say a lot of people when they're being Terry tired asses. Um what they do is they go and they buy the subscription for one month, import their stuff into NVXA, do the tax statement, cancel their thing, cancel the subscription and then hand the statement to the accountant. But there are so many things wrong with that because of the way ETFs are taxed in Australia. You have to keep in mind so many things and one of them is something called a costbased adjustment. Most people don't know that exists, but it could be really consequential to you in five or 10 years from now. Go and watch the the webinar on that if you want to get more information. But anyway, if you use those types of tools, tax time will be much easier for you. Just remember, you do need to wait till probably August to do your tax return if you're an investor. Once you get the money, you have a few choices of what you can do.

[00:19:56]You could put it in a consolidated revenue. Um, you could pay for bills, which is okay, too. Um, you could top up your emergency fund. So, that would be like step two down here. Or you could start investing. I mean, there's probably an extra one here, which is go on a holiday, which is probably great for a lot of people, too. Um, but you could invest, go on holiday, do all these types of things. Today, we're going to talk about um investing. So, the five things that I the five investments that I wanted to bring to your attention today are these five things. Um, I wonder if anyone expected me to mention any of these. Let me know in the chat. So, we've got Vanguard Australian Shares Index ETF or VAS for short. Uh, Global X Fang Plus ETF. We talked a little bit about this last time. Uh, Beta Shares Emerging Markets Complex ETF, I'll explain what that is.

[00:20:43]Wes Farmers, I'll explain what that is.

[00:20:45]And Promedicus, which is a share that I own. Uh, for disclosure, just off the top of my head, I own Prometicus. And I think I own VAS. I'm pretty sure. I know we have it in our investment accounts and investment portfolios, but I think I have both. I may also own Wes Farmers actually come to think of it off the top of my head, but just for disclosure purposes only.

[00:21:08]Um, Benjamin, you said Reise Techch early thoughts on the FRDM.ai acquisition. I haven't dived into it that much. Um, Benjamin, um, let me just bring it up just real quick in the Pear platform.

[00:21:26]I haven't actually seen the announcement to be fully frank with you. Um, but I can have a look at that in just a second. Um, once we go through announcements, I'll just grab them uh, in a second. Um, and then we can go through it. But I want to go through these companies so everyone can ask questions and stuff. But bring me back to that, Benjamin. Like re me back in.

[00:21:44]So a few weeks ago, I think it was maybe say six or seven weeks ago in one of the sessions we talked about a core and a satellite approach. We talked about how you can build a portfolio and have two different types of investments. The core simple sleep easy at night investments.

[00:22:00]Those are the core and then you could have the satellite investments and those are the ones that are like a bit more spicy or a bit more kind of keep your hands um on the wheel so to speak. Um those are the ones that maybe are a bit higher risk, maybe they have higher fees attached to them or something like this.

[00:22:17]I've got a question for the group. Um, would you consider this ETF, the Fang Plus ETF, which we'll get to in a minute if you're unfamiliar. Would you consider this ETF a core or a satellite position?

[00:22:30]And secondly, would you consider Beta Shares Emerging Markets ETF, core or satellite? Would you consider Wes Farmers core or satellite? I would love to know what you think and we'll pop the consensus down here once we all disagree or agree. And while you're getting that into the chat, I'm just going to go and source this um announcement.

[00:22:54]I maybe it's a bit sad, but I know the exact URLs to type into to get announcements and these types of things.

[00:23:02]Uh okay, let me just have a quick look at this for Benjamin.

[00:23:12]Ah, okay. So, I would have to look at this a bit more closely, Benjamin.

[00:23:20]But given that it's an investment of $10 million in shares uh and a maximum of $14 million, I would not think about this more than I need to because while this is an important acquisition for sure, the reality is it's $14 million and the whole of Wise is 11 billion. So that would be a lot less than 1% of the value of the company. Um the biggest thing that I'm watching for Benjamin coming up is actually the annual report which should be out next month like is in August. I think this will be a humongous uh moment for Wise Techch. I think it'll be the most important annual report it's done since it listed on the stock exchange. Uh and to give you a sense of why for everyone that doesn't know this business, it's a software company. That's probably why I think it will be the most important because this is the biggest fall that we've ever seen from this company. Um, and there's a lot going on. So, I think this next annual report will tell us a lot about AI impact. It will tell us about how they're going with their latest acquisition, the biggest acquisition of all time, which is E2 Open. It will tell us about how they're going with some of their other efficiencies. Um, so they've done a lot of cost reduction and they've got a new pricing structure as well. So, there's a lot to go on. Um, happy to answer wise tech questions. But back to this. Craig says uh he has um BMG as a core. So I'm going to go with that. Um we've got Anastasia saying Fang is a satellite and said that BMG is there too. Core is west farmers. I'll go with you Anastasia.

[00:25:02]There we go. Um and at says that they're all satellites as they are thematic and possibly not west farmers so much.

[00:25:09]That's a good one. So I will go satellite with you then, but you're the kind of one that um is the decider there at all. So let's talk about these a little bit about how you construct a portfolio.

[00:25:24]I've got a question for everyone that I want to ask again and sorry for asking you so many questions, but that's kind of that what I do is ask questions.

[00:25:32]At the moment, the way you invest, don't include super, don't include like if you're a property investor or anything like that kind of wizardry, but if you are an investor in ETFs and shares and these types of things, how much of your portfolio is ETFs and how much of it is individual stocks? We'll say individual stocks and managed funds. So, ETFs one side and then the other side is managed funds and stocks. like how much is it across both? And it's okay if you're just getting started and you say 100% ETFs or I got 100% stocks. That's totally fine. Joel says 6040. Uh that's kind of good balance. Very historic number of at least pairing Joel. 6040.

[00:26:16]Zoe says 100% ETFs. Anastasia 100% stocks like it. Uh Mary 8020 Men 9010.

[00:26:24]Tony all ETFs. Evette uh 100% ETFs and just starting. Cool. Craig 7030 7030 from Kure Gemma all ETFs. So nothing at the moment says just getting into it.

[00:26:38]Fantastic. Okay. So for those just getting into it um general advice only of course but in general the easiest way to start investing is to use ETFs. Uh and you don't need to take my word for it. It's literally like everyone on the Pear platform. Um, I think it's pear.com. I'm going to go to limb here and say community is the link and that's not it. Um, is it down the bottom? There it is. It's learn- community. So, what we can see on this page once it loads, uh, this is not the one. Maybe way you can chuck it in the chat for me if you've got it hand. Oh, here it is. What our community looks like. Um, okay. So, here what what we will be able to see is who's involved in the business. I love this chart, by the way.

[00:27:22]this interactive chart of who's invested and where they're from based on their postcodes, which kind of blows me away.

[00:27:28]I wonder who's got more investors.

[00:27:30]Sydney, Melbourne, Newcastle looks like a concentrated bunch. What's in here? What is this?

[00:27:39]Tamworth. Tamworth's got some pearlers.

[00:27:41]There we go. That's pretty cool. But anyway, that's not what I came here to show you. Um, okay.

[00:27:48]Can you maybe do me a favor my good sir and can you share the the page that shows where people are invested? Maybe it's here. No. Okay. So I can't find it but basically the data from Pear shows that effectively 87% of people's investments go into ETFs. So you can see here for Tash's uh followers it's 89% and there's about 11% with super. I think that's the way I interpret this. So maybe a way you can correct me, but effectively n out of $10 goes into ETFs. Only one out of $10 goes into individual shares. And I think that's a really important way to think about the way the way investing is going.

[00:28:36]Most people I speak to nowadays, whether they're in their 60s, 50s, 20s, whatever, they're using ETFs as the core position of their wealth. It's simple.

[00:28:46]it's diversified, it's lower cost, etc. The second step for most people, and this one's optional, I want to stress that, is that you use individual shares.

[00:28:55]So, here we've got um an example of Promedicus, and here we've got an example of Wes Farmers. Um, but this is where the line blurs a little bit. Some people, as we just saw in the chat, consider Wes Farmers, which owns Bunnings Office Works. It has like a fertilizer business. It has a like a industrials business, and has a bunch of other stuff, which we'll get to in just a sec. People think that Wes Farmers is both a core potentially a satellite. So it kind of just depends on how you define what is core and satellite. But for me, I would consider Wes Farmers a core holding. Even though it's an individual share, it's very diversified in what it does. We'll bring up the Wes Farmers um annual report so you can get a sense of it and feel free to ask uh questions. I'll bring up the latest annual results. Here we go.

[00:29:45]Um, okay. So, Craig, you say, "Can I chuck in an aside?" You can always chuck in an aside. That's what these live shows are all about. My NDQ ETF, which is the B shares NASDAQ 100 ETF, FYI, folks, um, is up 60% and about 10% of my portfolio.

[00:30:01]Given the tech valuations, is it sensible time to rebalance and put the profit into a different sector? Craig, I'll come back to that because I want to talk about that with Fang in just a minute. Rachel says, "What does core and satellite mean?" Simple. If you can see me off to the side of the screen for a second, my hand gestures will help you understand this. Rachel, think of the core as like the the earth in the middle. And then the satellites are like the moon going around the outside. The the earth in the middle. This is all about sustainable kind of long-term focus. This is the ETF part of your portfolio. It's the thing that does, you know, what it's supposed to do. Helps you sleep at night. Um the stuff that goes around the outside, that's a bit more risky. Those are smaller positions there for and those things tend to be the things that maybe you don't want your whole portfolio in but you are happy to have a little bit in there. I don't like the phrase but some people say the word dabbling to talk about individual stocks or in different investments they don't really understand but those are the types of things that go around the outside. Um, and that's that's a really important um element for some people but not for everyone because what's a lot of research shows is that the most important thing that people can do is build their core portfolio. The other stuff is optional and we can go and spend seven hours talking about the research behind this. But in general, the way it works is that the the core portfolio tends to be the most powerful way to invest over the long run. Even though it's not really sexy, even though it's not really interesting, like you don't walk up to your friend and say, "Hey, I just put $100 into VAS, you know, the Australian share market. Ask me anything." But you might walk up to them and say, "Hey, I just bought this really exciting biotech stock that is going to try and do this thing with Huntington's disease or something like that." That second one is the one that goes in the satellite. The first one is the boring lowcost thing, but it tends to work. That's why it goes in there.

[00:31:59]So, happy to keep answering follow-up questions to that. Don't think that you're the only one asking that question because there'll be a lot of people asking that question. But let's have a look at Wes Farmers. So in here, um, this is a one of Australia's true iconic companies. It's been around for a very long time. Some people call it West Farmers with a T. It's actually Wes Farmers with an S, no T. Uh, even though it may be in WA. Um, so that's a really important uh thing. So you can see what it owns. Bunnings, Kmart, it's got this other business which is like industrials and they do like fertilizers. They do all of these types of things. They get involved in mining. This is what we call a conglomerate. So effectively, it's a business that has businesses inside of it. This is what kind of makes it an all-w weather kind of friend in that when one of the businesses isn't doing well like Kmart, it's got another business that does do well, say like Bunnings or something like that, and they kind of complement each other. A good example, this company used to own Coohl's. It bought Coohl's in 2007, took it over, and then made Coohl's way better, and then it sold Coohl's maybe two or three years ago now, and Coohl's is now back on the stock exchange, and it's a much better business. And in the meantime, Wes Farmer has made all heaps of dividends and money from having Coohl's as a better business. And that's effectively their kind of modus operandi. That's their MMO. It's how they run is they buy businesses or they invest in businesses, grow them up, sell them or keep a hold of them. In the case of Bunnings, like I think when they got involved with Bunnings, it had like virtually no stores. I would say no more than 20. Um, and so that's, you know, the evolution through time. And we can see like there's a bunch of boring reporting in there. We can see the metrics. So for the half year, revenue grew 3%. The profits from the business, this is this one here. This is um a fancy word. So for folks that don't know um in Australia we say profit, right? In the United States you would say earnings.

[00:34:09]But because we're all Americanized, kind of like cornflakes, we have EBIT. And this what this stands for is earnings before interest in taxes, earnings, which is another word for profit. So you we use those words interchangeably. So when you see the E, it's earnings before profit and tax uh interest and taxes. So this is another word for profit. You might also see like PE ratio. This is a common metrics that that's used on stock exchange websites or these types of things like PE ratio right here in the middle of the screen. That stands for price earnings ratio or price to profit if you use the Australian lingo. But because we're all Americanized, we use PE ratio. Just as an FYI for people that are a bit confused about that, this business obviously hasn't grown very well in the last little while, but it's still growing, which is really positive.

[00:35:01]You can see the profits are going up.

[00:35:03]This line here is another version of profit. You can see that that's gone up.

[00:35:07]And realistically, what we want to see from a big business like this is that we do just want to see consistent profits.

[00:35:14]We don't want to see huge swings from profit to loss, profit to loss, profit to loss. We want to see consistent blue chip like profits and that's what we're seeing with West Farmers. So, you wouldn't buy this company expecting it's going to invent something for Huntington's disease and then it's, you know, an amazing company all of a sudden. It's not like that. It's Kmart.

[00:35:35]It's Bunnings. It's a fertilizers and industrials business. It does some mining here or there. That's kind of what it is. Um, and so this is why I kind of think even though it's an individual share, it might go in to the core of someone's portfolio. I know a lot of like retirees own this stock for example uh and it's very very popular for that reason. Let's bring it up in Pear real quick. Where's Farmers? And by the way, I'm not saying for everyone to go and buy these. It's really important.

[00:36:01]We just use these as um examples of companies that you can use for further research. Um one thing that I like to see is how many pearlers as in Pearller investors own this. So we can see the median investment into West Farmers is $2,296.

[00:36:18]That's pretty cool. Uh, we can see 1,300 Pearllor investors own Waste Farmers.

[00:36:26]Huh, cool. That's right. The last person to invest in it was 19 hours ago. Cool.

[00:36:31]So, good example of an Australian business that is has really kicked goals for a long time. Real quick before I move on from this, um, over the next 20 years, as more people embrace ETFs, I think what's going to be lost, particularly for parents and grandparents, is the ability to properly educate your kids about money. This is why I think having some shares in your portfolio may actually be a good idea simply to help them understand what the share market is. Let me give you an example. you've got kids or grandkids or nieces and nephews and you want to help them understand the world of finance. If you try and explain to them that yes, you invest in the share market through a diversified portfolio of 300 shares via something called an ETF, some people call it an EFT, and you can head to the Vanguard website and figure out how that works. They don't care. They could not give two hoots about what the heck you just said. But if you say, "Hey, guess what? You own part of Kmart."

[00:37:32]That's what you get when you have Wes farmers. Very, very different way to educate. And sometimes money's purpose is not just to maximize the return, but to engage the next generation. And giving them your education is way more powerful than giving them a few grand in one ETF. So, a little subtlety, as Craig said before, it's like an aside to our main point today. Maybe you treat your $2,000 that you've got um from the ATO, that's your money that you've got back as a ret as a return. You maybe take that and you use it as, hey, I'm not going to put all of it in one thing, but I'm going to treat some of it differently. I'm maybe going to start a kids account or I'm going to start a grandkids account or I'm going to, you know, do something different to help educate rather than just invest for the best possible return. Uh, sticking on the theme of individual shares, we'll quickly dance across to Prdicus. So, full disclosure, I do own this. However, I did buy in 2017, so I've held it for a while. Um, Promedicus I think is one of the highest quality companies in Australia. Hence why I talk about it all the time. Um, this is a healthcare company and what it actually does, we'll bring it up.

[00:38:41]What it actually does is it has the world's most advanced technology called Viz. This thing here on the left for helping um, hospitals and radiologist clinics interpret medical information.

[00:38:55]So, you can kind of see here. I don't know if I can zoom in or if I click this what's going to happen, but you can kind of see it on the screen here. This website looks like it was made in the 1970s, but it's actually for a company that's worldleading technology. And this is the actual software that you can kind of see mapped onto these frames here, which is a broken leg by the looks of it and something else, maybe an ultrasound on the left hand side there. Um and effectively what they do is they have this software, not hardware, software, so the computer code that gets installed at hospitals and allows doctors and radiologists to send and receive and view imagery faster than anything in the world and um more reliably and securely.

[00:39:39]That's what's made it so good. Let's I dare risk pressing this button and something that looks like it's built in the 2000s is going to come up, but we will see.

[00:39:48]Okay. Okay. Yeah, that's definitely 2000s. Um, but fortunately for Promedicus, they don't sell YouTube videos. They sell actual software that goes into hospitals and these types of things. Uh, I'm going to bring up uh a different tool really quickly. So, if you're really interested in doing stock analysis, one of the tools you can use is this tool that I'm using here. It's like 30 bucks a month. It's called Ticker. T I KR. like the stock ticker except it doesn't have a C and it doesn't have an E which is very startup technology person-esque to name something like that and just remove the E and the C. Um but over the long term this is this has proven to be a wonderful business uh for a very simple reason. Now I don't have the the full premium version of Ticker so you're going to have to deal deal with what I'm about to show you from 15 years ago. This is why the share price has done so well. So what you can see on the screen in front of you is the revenue from this business over the long term. So you can see it's gone from 11 million to 213 million.

[00:40:55]That just doesn't happen, right? This business has actually been around since the 1980s, but it wasn't until the early 2010s that it really started to take off. This has proven to be I think was it Bloomberg or someone called this one of the greatest stocks in the world. I think it was maybe Boston Consultant Group. And the really fascinating thing and the thing that most people don't understand about this company. So imagine you get um an ultrasound or an MRI or something really powerful done at a hospital and you go inside one of those things that look like a donut, those big machines and then there's an image that somehow gets interpreted and then shared with some radiologist and then shared with maybe an oncologist and then maybe shared with the surgeon in real time. That's the software that Prometicus does. Very important, very crucial to hospitals to get it right and never ever fail. Now, that particular piece of software, and this is a crazy thing, absolutely blows my mind.

[00:41:55]That software wasn't actually invented or built by Promedicus.

[00:42:00]Prometicus actually bought a company that was trying to get money to create this thing. and they had a prototype. It was a bunch of PhDs from Europe actually uh and they built this thing and the CEO and co-founder Sam of Promedicus, he tells the story of getting a call one morning in the GFC saying, "Hey, would you want to invest in this idea and this company that we have?" And then they were like, "No, we'll just buy the whole thing." And so from memory, Prometicus um the company bought that software and the team behind it from memory I think it was was it $10 million or something like this in the GFC or thereabouts and it had kind of two parts to this thing that they bought. They sold one part for 10 million or thereabouts and they kept the other part of it that they wanted to keep. So let's just think about that for a second. along comes these people um who have this great idea and Sam who's a medically trained doctor um he said, "Oh, that's a really good idea. We we we could do that. We could take this you could take your company and make it into something amazing." But there's this other side of your business where we're going to buy it for X. We're going to sell the bit that we don't want for X so it pays for our investment and we're going to keep the bit that we like.

[00:43:21]Well, the bit that they like and the bit that they've kept is this thing, Viz Pro or Viz. And it is now a company, if I bring it up on Pear, that's done this.

[00:43:35]Now, this is over a very long period of time. Keep in mind everyone, but this is a company that over 10 years has gone, this is just 10 years, from $5 all the way up to $300 a share and now back down again. If we even go back further, let's bring it up in Google.

[00:43:51]This is what the share price has done.

[00:43:54]So, we can see since around the time it bought that, it was like 40 cents. Then it fell back to 20 cents, up to 40 cents. Then from basically there, it's gone from 80 cents, it went up to $300, and then back to uh what is it now? 173.

[00:44:10]So, this is a really good lesson in a few things. one is like what it takes to actually grow a company, how long it takes, like decades. Uh, and also the importance of a management team that can identify these things. This is like kind of like a one in a 100 company. And I just bring it up because it's a really true Australian success story that no one really talks about, but as um at just said, has it been down over 45% over the last year? Any fundamental reasons? Good entry point?

[00:44:41]So, this is a great question and one of the reasons why I wanted to bring it up in today's show at all. So, thank you for asking that question. Um, if you look over the past year, the company's been absolutely smoked. It has fallen so hard. And there could be many reasons for this. One is that um it was overvalued before. So, if something was if someone tried to sell you a croissant for $100, just an ordinary croissant, you'd be like, "No way." And then they come back and they're like, "All right, now it's 50." you probably still wouldn't buy because you'd be like, "Well, it's not worth 50. It's worth five." Um, everyone would buy a croissant. They would buy a croissant, Gabriel.

[00:45:19]But if the croissant was just a standard Woolworth's croissant, they might be like, "Well, I'll give you two bucks for it." And this is the difference between price and value. And this is where people get mistaken in the share market.

[00:45:29]They think that the share price equals the value of the company. And unfortunately, there's no true rule for if X then Y. Like there's no formula that says share price must be this every day of the year. This is the crazy thing about the share market is people can have opinions, but there's no one right answer. Say for example, I bought Promedicus in 2017. I think I paid like $760 or something. So that was like here. It's currently $170. So, I'm like, "Sweet." Right? But if someone bought it at $300 a year ago, basically today for $320, it is not sweet. And so, what really happens under the surface is when I bought it, I was like, "Oh, maybe it's worth, you know, $15 um and I'm only paying $750 or so. I'll do it." And then it's grown, grown up, gone up, gone up. And there might have been points in time where the share price was above the actual valuation that I assumed. But I was like, "Okay, I'll keep that." You know, I'd have to pay tax and whatever.

[00:46:35]But someone else might come along and be like, "Oh, I think it's going to grow way faster than you think, Owen. I think it's worth, you know, $300." And this is where the opinions in the share market really make a difference. Um, Gabriel says, "Kind of what we saw with SpaceX.

[00:46:49]Um, similar but different. SpaceX is just a was a ridiculously expensive stock when it came to the stock exchange. not profitable. Loads of quote unquote potential um data centers in space. Yo, that's what they're selling.

[00:47:07]Prometicus, if we come back to a tools comment from before, let's go a little bit further into this just real quick and then we'll get into our ETFs as we close out the day. So, Promeicus, PME is the ticker symbol, down 3% today.

[00:47:21]So, um they've made a bunch of announcements recently. They're not really interesting. Um, if we just go to the latest kind of see the dollar signs here. This is what we call market sensitive. I'm just on the market index website. Great website. Um, so say if we grab I don't know like this one here.

[00:47:38]And then we'll go back and we'll grab an annual report say from 2025.

[00:47:43]So when um just for people's understanding when a company is on the stock exchange it's very different to like a private company. So say like Pearl is a private company um Prometicus is a public company.

[00:47:56]When your company is on the stock exchange and it is public, if something material happens to that business, the company must inform the share market.

[00:48:05]That's what we call a material market sensitive announcement, pardon me. But say if something material happens to pear, like pear, I don't know, it's revenue went down 20%. They don't need to tell everyone cuz it's their own company. They don't need to like go, "Hey everybody, revenue down 20%. I don't know what happened, but you know, here we are." Um, but Prometicus, if everyone's thinking that the share price is going to go up or the revenue is going to go up 30% and it goes down, they have to tell people. We call that a market sensitive announcement. Just so people are aware, you have to, if you're a public company, you have to constantly keep the market informed. And every year you have to do an annual report. Um, and when you have that those market sensitive announcements, you have to release an update. It doesn't have to be a full report, but it can just be something like this one here. And so what we can see and this is directly related to a tools point before. So they've come out and said we've got all of these customers um and this is where we're at and Sam Huppet who's the CEO Dr. Sam Hubbet he says this new contract the one that they're announcing in here says brings our total renewals for the financial year tax year to $141 million maintaining our track record of client retention. This underpins our belief that our solution provides unparalleled return on investment from both a financial and clinical perspective. So this is a very strong statement from Sam and he's basically said we're pretty darn good and you don't need to take our word from it. The hospitals, our customers are renewing. So you can maybe just trust them. If you don't really know this stuff, just trust them. Uh and you can see he also did this announce this interview. It's very unique that um they do this, but I like it. Um so they actually play like uh the question and answer session kind of like this live show, but um they do it with the CEO and they release it every now and again. And here's a good one. This is from the CEO, mind you. Prometica stock is down 60% from its all-time highs. How much of this is due to fear of AI impacting technology companies? Uh and if so, what are your comments about this trend? Uh, share price is always determined by the market, says Sam. There is little doubt that the SAS apocalypse fear has affected the share price the most, if not all, of software companies globally, including PME. I am on record as saying that I believe this is a knee-jerk reaction, and I believe we have seen some moderation of the bearish market sentiment that occurred around early January this year. I think that our most recent wins and recently announced long-term contract renewals tend to disprove the theory that all software com companies will be negatively impacted by AI. And I'll leave you to keep going and read this if you want to.

[00:50:45]But in effect, what he is saying and what the company has been saying for a while is that yes, AI is amazing. Yes, AI can do all these wonderful things, but maybe not so fast. Everyone, maybe it's not as powerful as um everyone thinks for a hospital to adopt some vibecoded software that people don't really understand how it works. They just trust Claude or ChatJBT to create that software. We don't think hospitals are going to do that because there's people's actual lives on the line. So, long story short, um, and this is just my opinion, but I think over the next few years, if Prometicus can keep growing its sales and keep renewing all of its hospital clients, I would say the better days lie ahead. I don't think that necessarily means that the share price is going to be going up straight away, but my I'm pretty optimistic. I'm I'm a pretty optimistic type of guy in general, but I would say that over the long term, um I think it's still one of the best businesses. Only 352 people hold Prometicus. So, next one. Uh just real quick, uh we're going to go through the most boring one on the list, which is a great ETF, an absolutely fantastic ETF, which is the Vanguard VAS ETF. If you're in the chat, tell me if you hold Vanguard VAS or if you hold one of the other ones, let me know. 32,000 per investors hold VAS. The average holding per investor is 2500.

[00:52:12]Um the average time between investments is 49 weeks. 4 hours ago was the last investment. Pretty darn impressive.

[00:52:20]Mostly females which is fantastic to see there. It's actually really good to see the split more and more um female investors on Per. And probably this is a generalization for Per, but I would say that in my experience, I'd say that Pellar is tends to be one of the most um like you tend to see the most dense um female investor cohort like as in you go through these statistics and I can't think of really any other investment platforms where it's um like you'll see majority um female investors. So I just think it's fantastic. It's absolutely amazing. Um wow. So like so many people own it. Um, says me exclamation mark. Um, that is so wonderful. Uh, Jared, you say I hold IOZ instead of VAS. Um, that's great. Uh, Lauren, you said you own V500, which is also a good one. Slightly different.

[00:53:10]I'll explain that one in a sec. Uh, Hannah A200 and VAS on Yeah, on Pearl started investing last year. Best decision ever. I'm so happy for that, Hannah. That's that's actually legitimately music to our ears, all of us. Okay. So, what does it do? This ETF is if you I don't know about investing, you could just buy this one. Um, because this one, what it does, this is this one here in the first column. Uh, it is the biggest ETF in Australia, which stands for exchange traded fund, FYI. Here's what it does. It's going to be this simple. I'm going to get my Mr. Squiggle out. Um, here's you as the investor. You got a big smile on your face. You just got your tax return. You don't know which investments to make. So, you go and you buy VAS.

[00:54:02]And VAS is like a big bucket like this.

[00:54:07]And inside that bucket is a bunch of shares. And there are 300 of them from Australia. And what happens is Vanguard, who manages this, I'll just do VG for short. Vanguard goes and gets those 300 shares and then puts them back in. And then so even if you hold say $1,000 of this ETF, what effectively is happening is you own $1,000 divided up into all of these different investments and that is your ETF. Simple. Um that is literally it. So it is good because you have 300 different shares. You don't need to go and pick all 300. Uh it is pretty low cost. It only cost you on $1,000. I think it would be 70s for Vanguard to manage this for you. Uh you can get some big companies, you get some small companies. It's like that. Uh and it's like that. It is legitimately like that actually. Now this is available in the Pear platform. You can actually see the biggest holdings are BHP, CBA, CSL. It's basically all Australia. If we click on this link here, these are the top 10 positions, uh, it's got over 300, but you can see BHP, CBA, CSL, NAB, it's all those generic ones that you know, and you don't have to pick which one's the best. You just let the ETF do it, and uh, it just goes and buys the biggest ones, and it does it low cost. Someone did mention V500 before, which is one of new Vanguard's new ETFs. Uh, this this one is very similar. It's still a basket, but the only difference is that it invests in 500 US companies, Nvidia, Apple, Microsoft, Amazon, Google. This is a very new one.

[00:55:50]It's not the most popular one. The most popular one for this is IVV rather than V500, but they're both really good. Um, okay. So, good question here. Angelica says, "Love the easy to understand explanation with drawings." Well, I'm happy about that because yeah, I mean, who doesn't love Mr. Squiggle throwbacks? Nadia says, "How much does it increase per year?" Well, past performance is not always indicative of future performance, Nadia, as they say.

[00:56:17]For good reason. No one knows what the future holds, but let's see what happens when we click this table. Uh, so we can see here over 10 years, this is 5%, but this is just the share price. It doesn't include the dividends. So, the easiest way to determine what the past performance is. Vanguard VAS ETF. You can go to their website and you can see beep beep beep performance if I don't like those charts. I like these ones. So, if you go to the table, you can see how much it's grown per year. So, over 10 years, which is a good kind of long section. Uh we've got 9.37%.

[00:56:57]Which is per year, right? So, that's um I think that's pretty good like for the long term. It hasn't always been straight up like it's not a savings account. really important to understand.

[00:57:07]It goes up and down. Sometimes it goes down for a while. Um so, uh Atul says, "Good question.

[00:57:15]Earlier on, you said uh would you buy all these shares of ETFs assuming we buy from the tax refund money or savings or debt recycling also from a tax perspective in future?" At all, I did do an email that went out to the RAS community the other day. I'm a big fan of debt recycling, but debt recycling isn't available to everyone. Um, debt recycling is a complicated thing, ladies and gentlemen. I can do a whole session on that. We can get Dave Gowing to come have a chat. He's a big debt recycling dude as well. Um, debt recycling is like the tax and money situation. The actual investing, which is the other part of your question.

[00:57:50]When I come to you all here with the live show, which if you haven't again, subscribe to the Pearl YouTube channel because we're doing it every month. Um, when I come and bring these ideas to you, I'm obviously not going to throw some speculative crazy stuff in here. Um because I don't want people to take me the wrong way. Like I can say, "Hey, don't go and buy these things. Just go and research them and then come back with questions next few weeks. Um but people still go and buy them anyway.

[00:58:12]They just don't really listen to the disclaimer. Um it's kind of like the T's and C's. But like if people just put all of these on their watch list, I think that's a good place to start and go and read about them. in terms of like most risky to least risky. Um basically is the uh probably the order in which I've put them um is like least most um these two here are a bit different which we'll get to in just a sec. Um th will this presentation be available via email? Appreciate the detailed drawings and explanations. I love that.

[00:58:45]But you can find it on the YouTube channel. Always available for replay. Um okay. Um good. Thanks for everyone um who is helping each other out in the chat. Anastasia, last question then I'll move on to the next ones. Uh if you're buying VAS every month to uses dollar cost averaging, does NVEXA work with the tax time? Yes, it does. That's the whole point of why you would pay a software provider because it links in with your it reads what happens in your brokerage account and it automatically syncs up.

[00:59:14]And then at the end of the year, you go into NEXA and you click a couple of buttons. You say, it basically just asks you. It says, "Hey, Anastasia, did you receive that dividend?" We think you did. It looks like you did, but we just want you to confirm that. Yes or no?

[00:59:27]Yes. Okay. And then you can do the tax um report and that sort of stuff. Hope that makes sense. Um is this least and most risk? Yeah, that's meant to be an L mic and that's meant to be an M for most. Um so um effectively think about it like um like a risk and return chart and it's going like this. Um so less risky more risky there's always some risk in investing. Really important like there have approximately 20% of years over a 100red years approximately one in five or 20% of those years this thing right here has been negative. And sometimes it's been negative for two or three years. Like in the 1970s, the Australian stock market went backwards three times in a row. Like we all know that like over the long term it does well, but there are times where it's negative. And some people can't hack that frankly. Um now I know I've got two more things to get to, so I'll be really quick. Um and Puna, I can see your question. You've put it in a couple times. I will get to that real quick in just a moment. Um so with with this, there's always some risk. Keep that in mind. And that's why we have diversified portfolios. You don't just buy one ETF.

[01:00:39]You buy a handful. You don't just have satellite positions. You also have core and satellite. You know, that's this is just prudent um as they say. Okay. So, let's quickly go to this one. I did talk about this in the last live show. So, go and check that out on the YouTube channel on PA. But effectively, instead of 300 different investments inside of it's got 10. And this ties in with Promedicus and our other ETF chart.

[01:01:08]So this just has 10 investments inside it. This has all of these companies you see here. Yes, that's right. Um so it's got Facebook or Meta, Apple, Amazon, Palanteer, which is a big software company if you don't know it. Does a lot of defense stuff FYI, uh Microsoft, Google, Netflix, Nvidia, Broadcom, and Micron.

[01:01:32]So these companies are all massive, massive, massive tech companies. But notice that there's only 10 as opposed to 300. So it's more concentrated. It's like the when you get Cotty's cordial and you haven't mixed it. That's what you're getting. You could skull it and you'd be like, "Oh my god, that's a lot.

[01:01:48]That's effectively what this is." So you could choose 500 more diversified or NDQ, which is NASDAQ from Beta Shares.

[01:01:55]That's 100. This is 10. So yeah, it's an ETF, but there's 10 stocks and they're all in tech and they're all basically AI companies these days. So this is a bit more of a wild ride, but these companies have performed very well. And I use this as an example of like this is like the concentrated raspberry cordial from Cotties. If you put it in your portfolio, you just want to dilute it with some other stuff. You don't just want to have like one of these things.

[01:02:22]And that's probably um an important consideration. Yes, these companies have done really well and they give a really concentrated focused exposure in the United States, but that doesn't mean they will always do well. So, you can blend it in with other stuff. Some people put this in their core. Some people because they say it's really like concentrated. It's really it's only 10 positions. It's all United States, which is just this info up here. I don't know if that's like a core position. Maybe it's like something that I It's a bit riskier for me. I put it over to the side. Um, so 1,800 people hold this versus the 20,000 plus that had VAS, just as an FYI. Um, Sophia, is there a minimum about if you wanted to buy this?

[01:03:08]Not sure if it's the question. So, the way the Pear platform works, Safia, um, like you can read the legal docs and whatever, but there's effectively a few different things in here. It's not just like one um I don't know if I don't know how to phrase it, but effectively there's like different accounts within accounts. So, for example, you can have a micro investing thing here, and this is like a portfolio that you can do with smaller amounts of money, but then you can have like the the main Australian shares account, and that's where you have like $500 chunks.

[01:03:43]Then you can have the US account as well, and you can have international shares in here. So say for example um Apple is a good example.

[01:03:52]Um this is not personal advice by the way. I'm just kind of explaining how it works. Um so here's US companies, right?

[01:04:00]So you could have like the US account, the Australian shares account which is minimum 500 and then the micro one which is a limited number of investments but it might be I don't know 10 bucks, 20 bucks or something like that. Um join accounts. I mean, just so we know, Lorine, I'm not from support, but if I was, I would say yes, I believe you can have joint accounts. It's very common to have joint accounts. Um, good to get uh tax suggestions.

[01:04:25]Um, Rachel asks a very peculiar question.

[01:04:29]Any popular ETFs out there that weed out the Earth destroyers and defense? Um, yes, there are. There are many ETFs that do that. Um, and where is my screen?

[01:04:41]Here it is. The most popular ETFs uh for that in Australia like they have their pros and cons. So the best place to go is to go and read the PDS the product disclosure statement. The two most popular that I can think of off the top of my noggin is this ETF fair F A I R and Earth E T RH I think it is. This is the other one. Um so these are mostly for climate change innovation or like sustainability.

[01:05:10]So, I don't want to misconstrue it as quote unquote ethical investing because ethical and like ethical beliefs are actually personal. They're not something that can like someone else can tell you.

[01:05:22]Um, and this is not just me espousing things. It's actually the way the industry's constructed it. So, a lot of them say things like innovation, responsible investment, um, these types of things um, instead of quote unquote ethical. And they what they do is they just kind of like remove the things that are like commonly considered not we call them sin stocks as an industry but I don't want to characterize it like that.

[01:05:48]They commonly remove those companies that you might some people might not want. So that's one. Um Gemma asks a really good question about Fang versus NDQ. So remember this one has 10. This one has 300 in the US. I mentioned one before V500 that's 500 right many people own this one N DQ which equals 100 this and this both United States this United States this Australia Australia mate that's Australia this is Australia this is Australia this one here is neither of those things and it's the final thing that we'll talk about today.

[01:06:36]This is a relatively new ETF from Beta Shares. Um, and this ETF is what we call an emerging markets ETF. So, this ETF invests in the countries that you probably don't normally associate with stock market investing. So, you can see it's got Taiwan Semiconductor.

[01:06:55]No surprises here. It's from Taiwan.

[01:06:58]Samsung, it's from Korea. SKH Highix, Korea. Tencent, China. Alibaba, China, no idea where Media Tech is. I've come across I can't remember. Um, and so on and so forth. Now, if you look here, you've got 27% in China, 20% in Taiwan, and 15% in India. If we scroll down, only 133 investors hold this ETF. The average holding is slightly higher, which is interesting because it tells me that people who hold this ETF invest with more conviction. So they maybe they're more sophisticated in the way or they're more advanced investors in that way. Really um interesting is this ETF hasn't been around that long and there are alternatives to it. The alternatives are M as a popular differentiator. EM is the symbol for that one. IM and it's a Vanguard one. I think it's VGE. Um but if we scroll down you can see this one also has China, Taiwan, etc. uh 394 own this one. But why would you consider an ETF like this one anyway?

[01:08:07]This is probably the the thing I wanted to educate everyone on today.

[01:08:11]So made in China is what you see at the bottom of every Kmart product. So made in China. Um and people want to invest in these parts of the world because they think that these economies like China, India, Korea to a lesser extent um but these types of parts of the world which we call emerging markets in the finance lingo these countries tend to exhibit long uh longer and more significant economic growth. So there the economies tend to grow fast. There's a lot of people. The countries are getting richer. The individuals are getting wealthier. Technology is like growing in those countries. Infrastructure like water, electricity, transportation, um it, healthcare, these things are all improving slowly but surely. And so investors think, I want to be part of that now.

[01:09:15]the not to switch from U 101 investing to 401 but the basic gist of it is that that doesn't always work.

[01:09:27]So these countries like China, India and so on. These countries actually do grow real fast in their economies but that does not mean that their stock markets grow as fast.

[01:09:43]And the simple reason is that these mostly in China's case these types of countries do not necessarily reward um the investors in the community. They tend to reward the state i.e. the government or they tend to reward the individual.

[01:10:04]A good example of this would be say for example um you have like a medium-siz company that you work for in Australia. If you work for a company that has like 20 to 30 employees, typically as that company grows, the owner of that business does really well, that's what you tend to see in more developed countries. The profits kind of going to the owner of the business or the shareholders of that business. In developing countries, you get a lot of agricultural work, so a lot of farming, a lot of that sort of stuff. Or you get a lot of state sponsored companies. So companies that are backed by the government that are kind of like quasi private companies and those companies while they create a lot of value for the society they don't necessarily put that on the stock exchange. So you don't always get the full benefit. But what we're starting to see is over the long term these companies are starting to be on the stock exchange and the governments are opening up. And a good example is China. Um, and you can see the kind of performance of that here.

[01:11:10]But let me just quickly pop this into um a chart where it compares two different ones. So where can I do compare? Here we go. So S snp 500. So what we're going to do is we're going to compare Chinese stocks to US stocks really quickly. So if we go max chart here, we can see uh well this is not a great chart because it's only started about here. Why don't we go just 5 years? Maybe that tells the story. So here we can see on this chart in front of us, very simple chart. We can see even though China has been growing so fast, still the United States stock exchange has done better. This is only 5 years, but if you go back like 20 years or whatever, it's pretty much the same story. And the idea here is like one country rewards capitalism more than the other c country. And how do people benefit from capitalism? Via the stock market. So that kind of encapsulates it.

[01:12:09]And I know we went from like 101 investing to like wa that's like economics and a lot of things I don't really understand. You don't need to understand it too much. But both basically what tends to happen is when people invest in ETFs like this like professional investors this is more so how they would do it. So one final chart crime for today. If we go like this imagine that this is a professional investor's portfolio. This is just very loose examples. They might have 30% in Australia. So I'll just do a for Australia. They might have another 30% in say I'm just going to use simple examples USA.

[01:12:48]Then they might have like 30% or just under in say defensive investments. So this would be like cash bonds and these property and these types of things. So I'll just put D for defense. And then they might leave like 5 to 10% for emerging markets.

[01:13:09]And um effectively that's kind of the little bit that they have of their overall portfolio cuz they say, "Oh, well I think it's, you know, China is growing a lot. It's a good place to invest, but I'm still not 100% sure how my investment is going to turn out based on history." So I'm going to have a little bit there. And um this little allocation to emerging markets um is what we see is very common. So I just wanted to kind of bring this across everyone's desk and explain how this works. But these are what we call emerging markets. The reason why this one's called complex is because it does it gets it's an ETF, but it does it in a way that's kind of unique. Uh so you can go and read the PDS, but hopefully that explains everything. And hopefully I didn't lose too many people in that last bit. Um I did promise one person that I would get back to them on a question from earlier on. Um Penith, you said, "How do you rate A200 plus BGP plus IM?"

[01:14:00]IM is the comparison to this one. Um so in I have to be careful what I say here beneath because you've asked me a very specific a question about portfolio construction but just generally speaking a lot of people do invest in a similar way where they have the Australian building block the global shares ETF and then they kind of fill in the blanks with like smaller positions in emerging markets as I just said but as I did just say a lot of people are still unsure about investing in these countries from Australia because they're not 100% sure of like how's the political environment?

[01:14:38]We hear all these stories about China.

[01:14:40]Is that good or bad? You know, all of these types of things. So, they tend to position that that investment smaller.

[01:14:46]Tend to make these ones bigger. Not saying that's right or wrong all the time, but it's just, you know, an individual preference that people have.

[01:14:53]One thing we didn't talk about today, ladies and gentlemen, um but we did talk about in previous sessions is um this side of the portfolio, which is the confusing side for most people. Um, but if you're ever in doubt, a really good resource, just to recap today is one, you can use the Pearlla website to get these kind of facts and just see what people are doing and it's really interesting and you can just add them to your watch list. You don't have to invest in everything. And in fact, you shouldn't invest in everything we've talked about today, but you can just go and read about them. You can just learn and as you do your tax returns, you can think, well, maybe I just build my own watch list and and so on and so forth.

[01:15:29]So, if you go back to your main dashboard, um, you can put things on your watch list like this. See how there's no investment in them? You can just put things on your watch list. You can go, okay, well, here's my watch list over on the side. I've got these companies over here, and you can just learn about them through time. Um, I introduced you to tax reporting and how tax works. You can use NEXA if you want to, um, or any other tool. It is important for ETFs that you do understand how your tax return is done. You can't necessarily do your tax return until next month or the month after. You're waiting for the ETF provider to send you your annual tax statement. Um, in the next session, I mean, we've got a lot of stuff to cover.

[01:16:08]I'm hoping to get Gemma on the show soon. Remember, money should have a purpose. Whenever you get your tax return money or you get a bonus or something like this, give it a purpose.

[01:16:17]If it's paying down debt, maybe it's investing in a micro account, maybe it's investing for kids, maybe it's going on a holiday. Um, I went to Bali a few years ago. Didn't get Bali Bali, which I was very happy about. Thank you very much for asking. Um, but, uh, it's a great place to spend a few dollars and to, um, that is a purpose, you know, that's making memories. You get memory dividends, so to speak. Um, okay. So, I'm just going to stop sharing my screen just for one second as we finish up today. Thank you to the 160 odd people that have stuck around. Um, so, um, Annie, with the assumed $2,000 tax return, choose one share/ ETF to invest or break it up. Um, I'm always a fan of breaking up investments. Annie, um, with all of these, remember that it's not about going and buying them all. It's just about getting ideas for your watch list and helping you learn how to interpret these things. Um, remember, I always have this philosophy that you should start small and invest regularly.

[01:17:12]Start as small as you can. So, some of the micro investors, they might only put in 20 bucks or 30 bucks for the first few months to figure out how it kind of feels. People that, you know, are happy to invest $500 just to learn. They might go $500 is my minimum and I'm going to invest that. Uh, and like for me, I always say that investing is a three-year apprenticeship.

[01:17:33]It's not something that you learn in a textbook. That would be a degree. This is an apprenticeship. Learn by doing.

[01:17:40]And the safest way to do that is to invest small amounts in things that you've researched and understood. Um, so we'll be back in a few weeks. Uh, we've got so many more to do. Um, I can't remember what the next one is. I should have put it on the screen so I remembered. Um, yeah. So, final one from Jane. You mentioned waiting for tax statements to come through uh to make sure you avoid problems. Um, so the the Amit statement is what you're waiting for, Jane, and that comes from so it's like an ETF statement and it comes from your ETF providers like Vanguard, Byshares, Global X, Eyesshares. These are the companies that send you the tax statement and it typically comes in say the earliest ones would be starting soon and it could be up to September. Um, and they have all the information on them and if you use like NVXA it get you can put it in there but there's a particular part in that which is really important called the cost base adjustment.

[01:18:37]Costb adjustment. There'll be heaps of information on NEXA or share site or one of those websites. But in short um that's how you need to account for your long-term investments in ETFs especially if you're dollar cost averaging and doing all that. A lot of people don't understand this. Even the accountants regrettably don't always understand this. So, um yeah. Uh I keep saying last question. Um Mary said, "Can you get help with putting um stuff into NEXA?" You can actually pay NEXA. They have a a team that um they they do like this service, I think, um where you can like pay them and then they'll help you put the software in because obviously it's good for them, right? You're putting your software in there. You're putting your info in their software. that'll help you do that. Um, uh, okay. And there's a few people have asked this question, the second of this question from Joseph.

[01:19:29]Ah, Joseph, real quick, you've said, would the proposed tax changes in capital gains steer your decision away from individual companies and towards ETFs? Absolutely, Joseph. We're already seeing that in real time. I didn't want to get all political this week, but um yeah, that we're already seeing that the biggest flow of money and investments in Australia right now is going to ETFs, the income or the dividend ETFs. They're getting the most attention, which, you know, longer term, I mean, it's good for people doing that for sure, good on them. But longer term, that could have issues because we want people to invest in growth companies, too, right? Um but I'm not saying I'm doing that.

[01:20:08]understand that's what people are doing.

[01:20:10]So anyway, next week or next time we may tackle um debt recycling. Um if you think your friend or family member can benefit from this live show, tell them to skip the first two minutes where my audio was stuffed up, but tell them, "Hey, this is pretty good. Go and check this out and subscribe." Thanks everyone. Thank you way behind the microphone as well. Really appreciate it. Everyone have an absolutely wonderful month. Stay tuned to the PA newsletter because we will be doing another one soon. Bye for now. Onwards and