Barefoot Investor: Three gifts you need to buy for loved ones this Christmas

A guaranteed 8 per cent return on a $10,000 investment sounds like a dream come true, but in reality it could cause you one hell of a financial hangover. Here’s how to spot a fake.

Scott Pape shares what he’ll be buying for his loved one’s this Christmas, Picture:

Last week we discussed what to buy kids for Christmas, so this week let’s deal with the oldies.

See, years ago, I cracked the Christmas code: I buy people books.

Gifting a book says, “I think you’re smart”. And it’s a smart deal for me too: books cost under $30, they don’t require a separate card (I simply scribble a Merry Christmas message on the inside cover), and my local bookstore will even giftwrap them for me.

Job done!

So, here are the books I’ve got in my Santa sack this year:

THE OBSTACLE IS THE WAY

Has life knocked the stuffing out of you?

That’s good!

The obstacles you’re facing provide an opportunity for you to become tougher, calmer and more successful.

This ain’t a new-agey self-help book. Author Ryan Holiday draws on the ancient wisdom of the Stoics and shows you how to turn your trials into triumph.

This is a great present for anyone who’s been up-ended by 2020, particularly struggling small business owners and young people looking out for their first job in a recession.

The Deficit Myth by Stephanie Kelton

The Obstacle is the Way by Ryan Holiday

THE DEFICIT MYTH

Are you concerned about all the money printing that’s happening around the world right now?

Don’t be, says Stephanie Kelton in her bestseller, The Deficit Myth.

The book serves as an introduction to Modern Monetary Theory (MMT), which is the hottest argument in economics right now. Essentially it argues that governments should embrace huge debt in order to grow the economy.

Seriously, how sexy a theory is that?

Especially for politicians who love spending other people’s money and winning votes!

While I loved the book, I don’t agree with the theory. Instead, I see MMT as a justification for the situation we find ourselves in, and a free pass for the monetary madness that will come because of it.

Still, it’s a fascinating read, and a great present for anyone interested in the future.

BEN HOGAN’S FIVE LESSONS

Have you ever tried your hand at golf and failed miserably?

Me too.

Golf pro Ben Hogan wrote this book in the 1950s, and since then it has taken on an almost reverential regard.

Self-help guru Tim Ferris described it as “the most perfect how-to book I’ve ever read”.

Maybe. Or maybe I’m a middle-aged white guy … so, well … golf.

A great present for anyone in your life who wants to crack 80.

And finally, you guessed it, I’ll be giving away a serve of double happiness: The Barefoot Investor: The Only Money Guide You’ll Ever Need and The Barefoot Investor for Families: How to Teach Your Kids the Value of a Buck.

The bulk of my sales come from people gifting it to their family and friends. Why? Because the Barefoot Steps work, and they keep you safe. And that’s a pretty cool Christmas present to give, right?

Tread Your Own Path!

READERS WRITE

TEEN ALERT ON RISKY WHISKY INVESTMENT

BRETT WRITES: I am a 16-year-old boy, and I love your work! Recently, after browsing Investopedia, I was targeted by an advertisement promising a guaranteed 8% return on a $10,000 investment. The investment opportunity is in whisky and is being offered by a local distillery.

This investment is being offered with no risk, allowing for an 8% return for each year plus cost price after 5–7 years. It is also being marketed as ‘SMSF approved’, which suggests to me that unsuspecting middle-aged superannuation investors are being viciously targeted.

These unsuspecting investors are likely to be enticed by the mention of a reputable valuer suggesting that exclusive whisky has seen a 580% return — which will most certainly not be occurring with this non-exclusive whisky from New South Wales. Would seriously love to see a piece by you on this. The wider public needs to be aware!

Avoid the risky whisky.

BAREFOOT REPLIES: You’re my type of teen. At an age where many kids would be working out how to raid their parents’ liquor cabinet, you’re warning oldies about the potential financial hangover from these (lubricated) investment schemes!

I agree, it sounds too good to be true. In fact, it sounds a lot like another outfit, Nant Whisky, that I uncovered a few years ago. They too were touting high returns and encouraging SMSFs to ‘invest’ in barrels of whisky which (they promised) they would buy back after the maturation period.

The problem wasn’t with the whisky — it was awarded as one of the world’s best — but that they sold more barrels than they’d actually created.

ABC News stated: “The ensuing scandal of Nant’s collapse would wipe out small investors who ploughed in up to $20 million. It would spark the largest fraud investigation in Tasmanian history.”

Will this distillery suffer the same fate?

I have no idea.

Whisky aficionados give things a good hard sniff before they imbibe. That sounds like wise advice to me.

Finally, the fact that a 16-year-old wrote this warning warms the cockles of my heart … like a fine old aged whisky.

HOW TO DEAL WITH DEBT DIFFICULTY

JANE WRITES: My husband and I run a demolition business with seven full-time employees.

Unfortunately, one of them got into financial difficulty and some sharks called Panthera Finance bought his debt. They now have a garnishee order on his wages and harass me (as office manager) to pay the instalments — or they ‘reserve the right’ to order me to pay the entire $25,000.

The employee has had a rough trot the last few years, and I have taken less per week from his pay than they are asking for, to keep them at bay without pushing him to breaking point.

Is there any advice you can give me regarding garnishee orders or this delightful Panthera Finance crew?

BAREFOOT REPLIES: Tell them to bugger off with their bullyboy tactics.

There is no way they can ‘reserve their right’ to order you to ‘pay the entire $25,000’.

That is total bollocks!

Now, you are required to pay the amount set by the court. However, each state sets limits on how much a debtor can take from someone’s salary, which is known as the ‘protected earnings rate’. In Victoria it’s 20% after taxes.

Why? Because, while people need to repay their debts, they also need to eat.

Panthera Finance has a reputation of being super-aggressive: in March this year the Federal Court whacked them with a $500,000 fine for undue harassment.

And if they’re getting under your skin, can you imagine what sort of pressure they’re putting on your employee?

The bottom line is this: it’s time to hit them with a wrecking ball. Make a complaint to the Australian Financial Complaints Authority (ACFA) on 1800 931 678. And I suggest your employee call the National Debt Helpline on 1800 007 007 so he has a professional in his corner to help sort out his mess.

THANKS FOR THE TIP, THE SAFE WAS SAFE

JENNY WRITES: I followed your advice and bought the Bunnings portable safe that you wrote about in your column a couple of weeks ago.

However, when we were faced with our fire I was so panicked I forgot to grab it … however it was the only thing that survived in that room!

And because it survived I now have everything I have been asked to produce for insurance, quotes, and house plans. Thank you for your old-fashioned good advice to this generation.

Jenny's safe was a worthwhile purchase.

BAREFOOT REPLIES: Goodness gracious, great balls of fire! Still, having all your docs will make the often painful insurance process that much easier, (and if you have ‘before’ pics on your phone of your house, that’ll help too).

And while you’re the perfect case study for the importance of having a safe, I view our safe just as much as a communication device: if something should happen to me, my wife knows that the keys to our financial life (or at least the copies of our keys), are all set out in one place.

Truth-be-told I got a huge reaction to my column (especially from the mysterious safecracker, who didn’t like me joking that he could come back and open my safe).

In fact, many parents wrote to me saying that they plan to buy the cheap fireproof safe for a Christmas present for their adult kids (though it appears Bunnings has now sold out of the $69 version!). Now that is a practical present … you could even put some gold chocolate coins in them … and a copy of my books.

Pre-order The Barefoot Investor 2020 (The only money guide you’ll ever need) updated version now to make sure you get it before Christmas. John Wiley & Sons Australia, RRP $29.95.)

Information and opinions provided in this column are general in nature and have been prepared for educational purposes only. Always seek personal financial advice tailored to your specific needs before making financial and investment decisions.

If you have a money question, go to barefootinvestor.com and #askbarefoot.

Originally published as Barefoot Investor: Three gifts you need to buy for loved ones this Christmas