Be sensible, keep it simple: Lessons learned after 24 years in personal finance

After 24 years of writing about personal finance for this masthead, the last 12 years as personal finance editor, I raised my hand for voluntary redundancy and will join others leaving The Sydney Morning Herald and The Age.

As someone whose first job in journalism four decades ago was on a typewriter, I know better than most the impact the information revolution has had on the media and audiences.

The need for trusted sources of personal finance information has never been greater.Credit: Jessica Hromas

Consumers have an unlimited range of ways they can be engaged, leading to audience fragmentation. While there are benefits to that, there are also increasing costs – whether being misled by social media “finfluencers” or falling prey to a scammer in whom trust was misplaced.

I hope the trust you have put in this masthead and my part in it has been repaid. Enjoying total editorial freedom and working with talented colleagues are chief among the reasons why this has been such a long and satisfying gig for me.

Personal finance coverage is being read more and more, thanks in part to the “financialisation” of the economy – a long-running process that is, itself, being accelerated by technology. It has meant that we each bear much more responsibility for our finances than our grandparents did.

Each of us has to make financial decisions that previous generations did not – whether it is picking a super fund or avoiding paying over the odds for a mobile plan.

With this comes an appetite for journalism that can explain how to make the best financial decisions and prosper, from the opportunities that free markets create. The cost of being ill-informed and making bad money decisions has never been higher.

The marketing departments of financial service organisations can have a field day in making their products complex and hard, if not impossible to compare with peers.

Even the seemingly simplest products, such as savings accounts – where you would think nothing too tricky would be going on – often come with conditions the saver has to meet to earn higher interest.

Personal finance editor John Collett, signing off after 24 years.Credit: Janie Barrett

These conditions may include requiring that money be added to the account each month, otherwise the saver forfeits the bonus and earns next to nothing on their money. The providers know that many people – leading busy lives – are likely to miss one of the conditions.

Our superannuation system is second to none, but fund members, if they are to get the most out of their savings in retirement need to take control of how their savings are allocated rather than putting their heads in the sand, thinking that retirement is still a long way off, and it can be thought about later.

Most workers, for example, would likely be better off taking more investment risk with their retirement savings, at least for the first couple of decades of their careers in the expectation of earning a higher return over the long term.

Many people fall prey to tricks that have been around for a long time. Run a mile from “blue sky” investments – if the returns spruiked sound too good to be true, they are.

Be aware of fees, costs and taxes and how they can gobble up gross returns. And please, please remember that complexity is the enemy of small investors. Keep it as simple as possible and choose options that are easy to understand, where fees and charges are not easily hidden.

Leave the too-clever-by-half investments to the smarties who can afford to lose money, and never invest for reasons that are fundamentally to do with tax. Technology and financialisation are increasing the demand for reliable information and balanced reporting.

I hope my contribution has helped, if only by making you realise why you need professional advice. If you would like to drop me a line, you can at [e-mail].

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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