751 success vs. luck, DHHF or GHHF, debt recycling, shiny objects + SMSFs
Dec 16, 2024
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John Cachia, recognized as Advisor of the Year from Thriving Wealth, and Deline Jacovides, Inspire Women’s Advisor of the Year from Mazi Wealth, dive into the interplay between luck and strategy in financial success. They discuss the risks of geared ETFs and why chasing shiny objects rarely leads to success. Deline and John also explore debt recycling and whether self-managed super funds really are the best choice, emphasizing the need for personalized financial advice and careful investment strategies.
Financial success is influenced by a combination of personal effort and luck, challenging the notion that hard work alone guarantees wealth.
Investors should approach the concept of geared ETFs with caution, acknowledging both their potential for amplified gains and significant risks involved.
Self-managed super funds may not be suitable for everyone, as traditional super options often provide more manageable and cost-effective investment solutions.
Deep dives
The Impact of Social Media on Financial Decisions
Social media platforms, like Facebook and Instagram, exert significant influence on financial decision-making, often leading individuals to adopt strategies without sufficient caution. The podcast emphasizes the need for a critical assessment of advice found online, particularly when unqualified individuals promote their successful financial strategies as universal solutions. Caution is particularly important when engaging in discussions in financial groups, where misinformation can spread rapidly, making individuals vulnerable to harmful advice. Participants advocate for personal evaluation of online suggestions, comparing it to seeking medical advice from a qualified professional rather than relying on anecdotal experiences.
Understanding Gearing and Its Risks
The concept of gearing within investment, especially through geared ETFs, is unpacked to highlight both its potential benefits and associated risks. Gearing amplifies exposure to underlying assets by borrowing funds to invest, which can lead to significant profits during market uptrends but equally devastating losses during downturns. The podcast explains that a 50% drop in an investment requires a 100% gain to return to its original value, underscoring the compounded nature of both gains and losses. Caution is urged for investors considering this strategy, with recommendations to maintain diversified portfolios rather than overexposing to volatile assets.
Tailoring Financial Plans to Individual Needs
Financial planning is presented as a unique process tailored to individual circumstances, with the podcast's speakers stressing the importance of personalized strategies. Each financial situation is distinct, and thus, there’s no one-size-fits-all approach to investment or financial planning. The guests emphasize the significance of understanding client behaviors and goals before recommending specific investment products or strategies. By focusing on personalized planning rather than following popular trends, advisors help clients make informed decisions that align with their long-term objectives.
The Risks of Chasing Trends in Investing
The conversation highlights common pitfalls associated with chasing trends, such as high-risk investments or the allure of speculative assets like cryptocurrencies. Many individuals, driven by recent success stories or social media hype, may overlook the foundational aspects of solid investing, such as risk management and diversification. It’s emphasized that essential financial principles often wane in favor of potential short-term gains, leading to rash decisions that can jeopardize long-term financial health. The speakers advocate for a balanced approach to investing that prioritizes stability and a well-structured financial plan.
Self-Managed Super Funds and Their Considerations
The episode addresses the complexities surrounding self-managed superannuation funds (SMSFs), suggesting that they may not be suitable for most individuals. While SMSFs offer greater control over one’s investments, the speakers note that the costs and responsibilities of managing these funds can outweigh the benefits for the average investor. There is caution against investing through SMSFs unless there’s a clear, beneficial strategy in place, such as direct property investment linked to a business. The consensus is that traditional superannuation options often provide adequate management and cost-effectiveness for most individuals, reducing administrative burdens and risks.
Is financial success down to hard work & skill or luck? In today's episode Glen sits down with financial advisers Deline Jacovides from Mazi Wealth and John Cachia from Thriving Wealth live at the Financial Advice Association of Australia's National Congress to chat about this and more, touching on:
👉🏻 geared ETFs — what they are and the risks involved
👉 how John and Deline invest for their clients (and themselves)
👉🏼 why chasing shiny objects online rarely works out
👉🏽 debt recycling and gearing
👉🏾 do you really need a self-managed super fund?
Thanks to Sphere Home Loans for supporting the Tuesday show! Need a mortgage broker? Connect with the team here
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