Share the learning of country life
GROWING up in the country can really pay dividends: a solid work ethic, business smarts, and a foundation in blue chip share investing, says Barefoot Investor
Barefoot Investor
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GROWING up in the country can really pay dividends: a solid work ethic, business smarts, and a foundation in blue chip share investing, says Barefoot Investor.
Susie says: My kids (15, 13 and 9) have raised calves and sold them each year. How do I put their money into shares? Do I have to do it under my name or can I put it under their names? Thank you Scott — you and your team have helped me get back on my feet.
Barefoot replies: You should buy the shares in your name and designate the child as the rightful owner (e.g. Susie Smith for Jenny Smith A/C). What your kids are doing is absolutely awesome, but if you really want to give them an education that will last them a lifetime, I’d encourage them to go from being primary producers to retailers. In other words, I’d encourage them to sell their wares (eggs and other types of produce) at the local farmers’ market: you want them thinking creatively about how to market their wares, how much profit they can earn, and how to reinvest it back into their “business”. That’s how growing up in the country can really pay dividends: a solid work ethic, business smarts, and a foundation in blue chip share investing!
POCKET THE MONEY
Nell says: I know I am looking for a miracle, but here goes. We are in our seventies, rent, are on a full pension, and have our money in term deposits ($60,000 and $75,000) which subsidise our monthly pension so we can continue to live comfortably (certainly not extravagantly, just an occasional dinner out and golf club membership). Is there any safe way to earn a little bit more interest?
Barefoot replies: You sound like Oliver Twist! Please sir, can I have a little bit more yield!? There is no safe way to earn a higher return than a bank will pay on your savings (which is guaranteed by the Government). Here’s the thing: chasing a higher return has been the undoing of many people — you’re exposing yourself to risk, regardless of what anyone says. The safest way to increase your “yield” is to go out and create it yourself. What can you do for a few hours a week that pays you some pocket money?
DOWN THE TUBE
Brett says: I recently watched a YouTube clip called “The Hidden Secrets of Money” which is about how every paper-based currency in history has collapsed sooner or later. It pretty much says that gold will re-emerge as the new currency, and that paper money will not be worth the paper it’s printed on. I’d be interested to know your thoughts and whether you share the narrator’s pessimism.
Barefoot replies: If I had my way YouTube would only be used for viewing cute kittens, and pimply teenagers covering Justin Bieber songs. Alas, there are alleyways of the interwebs that peddle this tin-foil-hat stuff. Mostly they’re a fear-driven pitch to sell a high-priced newsletter. The truth is, we will face another economic collapse at some stage. In the short term the markets can do anything; history has proven that. Yet over the long term you will grow incredibly rich by investing in the world’s biggest businesses. Let’s switch off the hype and give you the facts: the Wharton Business School keeps long-term (inflation-adjusted) returns of various asset classes, dating all the way back to January 1802. It found that $1 invested in gold would have grown to $3.21 by 2013, whereas if you’d invested that dollar into the sharemarket it would have compounded to a staggering $930,550. The lesson is simple: don’t worry about things you can’t control, and watch cute kittens.
SORT IT OUT NOW
Sarah says: I feel like I’ve shot myself in the foot. I’ve had a neurological condition most of my life (but always worked) and it is worsening. It is not a question of if but when I will have to give up work. Currently I would not qualify for the Disability Support Pension due to my partner’s income and rent from my investment property. I have always had my own money and feel ashamed that I will have to ask my partner for money even to buy a drink! What should I do?
Barefoot replies: Let’s start with the practical stuff first: you should check and see if you have any existing insurance in your super fund, which you shouldn’t overlook (note that it will be very costly to get new insurance with your pre-existing condition). Second, make your financial life as uncomplicated as possible: you’re preparing to lose your income so you need a well-stocked Mojo account (if you don’t have one, that’s your goal while you’re still working). If I were you, I’d think about selling your investment property and investing in managed share funds. And now the elephant in the room: where do you stand with your partner? Will he look after you when you’re ill? What does the future look like? Heavy? You betcha. But now’s the time to ask them, when you’re fit and able.
The Barefoot Investor holds an Australian Financial Services Licence (302081). This is general advice only. It should not replace individual, independent, personal financial advice
Originally published as Share the learning of country life
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