Money is a lot like energy – it is simply shifted. It’s like an energy source. Money doesn’t care whether you spend it on a holiday, give it to your kids, donate it to charity or set it on fire (but please don’t do the last one).
When Michael was at the tile shop looking for renovation ideas and being asked to choose between an assortment of different designs, he left in a haste and joined his kids in watching a Disney show instead. When it came to choosing tiles for his new bathroom, Michael was overwhelmed – and simply couldn’t envision what the tiles would look like on a wall. All credit goes to his wife Suzie, who has done all the hard yards and put up with him at the shop.
People put a lot of focus on the price of assets; specifically the price of shares.
Think about term deposits. What words or phrases come to mind? How do people often describe them? Safe. Secure. Low-risk. Guaranteed return... Today, we’re going to prove why these descriptions are problematic.
In our 88th podcast, we made a statement about how you can turn $100 a week into $100,000 over 10 years by making voluntary contributions to your superannuation. The trick for most people, of course, is to find that sum of money each week and make sure they put it away.
Are price and value the same?
Actually, price and value are very different. Take ‘the hamburger test’ as an example – the price of a hamburger has gone up significantly in the last 30 years, but the value has not. What that means is, if you buy a hamburger now as opposed to 30 years ago, you’re still just getting a hamburger, but now you’re paying a lot more for it due to inflation. The price is different, but the value is the same.
One of the biggest fears our clients have is that despite working hard to save their desired $1.5 million for retirement, they will lose that amount in a GFC-type scenario.
Being liquid describes how quickly someone is able to get to their cash. When we talk about the risk to liquidity, we mean any instance where the investor can’t buy or sell an investment as and when desired. In other words, they are unable to access cash when they need to.
Dallas Davison, Michael Hogue and Ali Hogue.