BARE­FOOT IN­VESTOR Easy to fol­low the recipe for suc­cess

Sunday Tasmanian - - NEWS - SUN­DAY OC­TO­BER 7 2018

NTwelve years ago (May 2006), you wrote an ar­ti­cle talk­ing about why you were buy­ing shares in War­ren Buf­fett’s Berk­shire Hath­away. I know the date be­cause I fol­lowed your ad­vice, and I am very glad I did!

I re­mem­ber look­ing at the share price at the time and was as­tounded that a sin­gle share could be worth $59. Well, it is worth $217 a share! Even bet­ter, the Aussie dol­lar has gone down since my pur­chase, so I am sit­ting on a 350 per cent to­tal re­turn.

I am won­der­ing whether I should sell, be­cause I could use the money to pay off my mort­gage.

And War­ren Buf­fett, now 88 years old, is older than my grand­mother. How long can he go on for? What are you do­ing with your Berk­shire Hath­away shares?

I hope you bought a lot of shares!

If you thought the Berk­shire Hath­away’s shares were ex­pen­sive, just re­mem­ber that what you bought was “Class B” shares. The orig­i­nal “Class A” shares are cur­rently trad­ing for $450,000 per share in Aussie dol­lars. That’s for just one share.

Yes, Berk­shire is cur­rently trad­ing at all-time highs, for two main rea­sons:

First, Buf­fett’s de­ci­sion to in­vest in his own shares, via a share buy­back. In other words, the great­est in­vestor in his­tory is essen­tially telling in­vestors that he thinks his stock is cheap. (Who are we to ar­gue?)

And sec­ond, the US stock mar­ket is also at all-time highs. Berk­shire is sit­ting on around $US111 bil­lion in cash. For all th­ese rea­sons, I’m not go­ing to be sell­ing mine. How­ever, I’m in a dif­fer­ent sit­u­a­tion to you, and I don’t have a mort­gage. Just make sure you need to fac­tor in cap­i­tal gains tax (CGT) when you even­tu­ally de­cide to sell your shares.

My 14-year-old son wants a debit card. He is a good saver and has a few thou­sand dol­lars in his bank ac­count. But he cur­rently saves with Bankwest and they have an age re­stric­tion of 16 years for debit cards. I am think­ing of chang­ing his sav­ings ac­count over to Sun­corp, as I think their in­ter­est for sav­ings ac­counts is 2.6 per cent. Any sug­ges­tions for in­sti­tu­tions that will of­fer a debit card to a boy of 14 years?

Ah, the Bankwest Kids Bonus Saver! It’s like a slip­pery dip on a hot sum­mer’s day … with a dog turd wait­ing for you at the end. It cer­tainly looks good earn­ing 4.75 per cent*****, but then you get … as­ter­isked. * In ad­di­tion to set­ting up a Bankwest Kids Bonus Saver, you also need to set up an­other Bankwest ac­count, the Chil­dren’s Sav­ings Ac­count (which has a much lower in­ter­est rate). ** You only earn the bonus in­ter­est when you de­posit $25 to $250 per month and make no with­drawals. *** In any month that you don’t meet th­ese con­di­tions, the stan­dard in­ter­est rate (cur­rently 0.01 per cent p.a.) ap­plies. **** Af­ter 12 months ev­ery­thing over $1 in the ac­count will be swept into your linked Chil­dren’s Sav­ings Ac­count, “so you can start afresh”, says Bankwest. Yes, you can start afresh … with all your kid’s cash in the lower in­ter­est rate Chil­dren’s Sav­ings ac­count. Slip­pery! OK, so the ac­count you men­tion, Sun­corp, pays 1.4 per cent, and a bonus 1.2 per cent if you de­posit at least $20 each month and make no more than one with­drawal each month, so a to­tal of 2.6 per cent. They also al­low kids over the age of 11 to get a debit card. It’s OK, I guess.

But I’d be tempted to go with the CUA Youth eSaver, which pays 4 per cent p.a. with no pesky hoops to jump through, and link it to the CUA Ev­ery­day Youth Ac­count, which will give him fee-free bank­ing and a debit card for kids over 14.

(Note: I get paid noth­ing for men­tion­ing CUA, though I do get a kick out of be­rat­ing Bankwest.)

I know you are prob­a­bly be­ing in­un­dated with emails and mes­sages about your new book (which is just freak­ing amaz­ing!) but I wanted to share our ex­pe­ri­ence.

To­day we did the Grand­par­ents’ Din­ner Party from Chap­ter 3. Our el­dest, 11-year-old Zeek, in­vited his grand­par­ents for din­ner. I showed Zeek the Bare­foot Burg­ers recipe and he was su­per keen, so he wrote his list and off we went to Coles.

He got his own trol­ley, and had his list and $30 to feed seven peo­ple. Not only did he clearly see where the cheap­est items in store were, he came in nearly $6 un­der bud­get!

That night he turned the burg­ers into ris­soles with a pasta side dish, steamed veg, plus the most divine choco­late cake I’ve ever tasted!

Zeek then brought the cake to the ta­ble and said, “I have an an­nounce­ment: tonight’s din­ner was bought, prepped, cooked and served all by me!”

The grand­par­ents gasped, then he showed them his re­ceipt, and how he’d suc­cess­fully made seven meals (with some left­overs for dad’s lunch) for $24.25. We all cheered while he cut and dished his cake to us all.

With­out your book I don’t think I’d ever have given Zeek the op­por­tu­nity to do what he just did at his age. This has to­tally changed my view!

He has re­quested that he cook din­ner ev­ery Wed­nes­day (“Money Meal” night). And we are all for it.

I can­not thank you enough for the head-start our boys are get­ting. We are proud “cult” mem­bers for life!

P.S. Your mum’s ris­sole recipe is just wicked! This is to­tally awe­some.

Par­ent­ing is a tough and mostly thank­less job. Yet what you’re do­ing is not only build­ing up Zeek’s fi­nan­cial con­fi­dence, but cre­at­ing mem­o­ries that you’ll have long af­ter he (suc­cess­fully) moves out. So please keep tak­ing pics!

Zeek, good on you mate. Keep work­ing your way through the en­tire Bare­foot 10 check­list, and keep me up­dated on how it all goes. Catch you round like a ris­sole (and I’ll pass on your mum’s kind words to my mum.)

Thank you for reading.

EARLY BUD­GET LES­SON: Zeek the 11-year-old cooks a meal for seven for un­der $30.

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