Recalling our best decisions
There are critical moments in life – often you don’t realise it until you look back, but it can be instructive
LIFE IS such a rollercoaster and managing its critical moments has a fundamental impact on living quality and your future.
Whether it’s bagging a great bargain, pulling off an incredible job deal, or limiting the damage from a financial blunder … key moments have major consequences on life.
For example, we’ve never made much money out of any family home we’ve owned. We hear the stories of friends and relatives who have doubled, or tripled, their money on selling a home … not us.
All our houses have been fantastic family homes for their stages of our life … we just made no money on them.
But, thankfully, we’ve snagged our fair share of bargains or deals elsewhere to offset our property funk.
LIFE AND INCOME PROTECTION INSURANCE We’re big believers in insurance cover and, given the size of our mortgage and risks of being in the media, have always erred on conservatism in this area. But, like most, we fell into a habit of simply renewing the premium every year.
Our bank approached us last year and said they’d noticed our annual premium going up. They asked whether they could look at the policy and offer an alternative. We were sceptical because we know how insurance companies can fiddle with terms and exclusions.
They explained we had a very old policy and insurance contracts had become a lot more streamlined and efficient. We went through the new deal carefully and saved 30 per cent on the premium for a like-forlike policy.
BARGAINING THE HOME LOAN RATE DOWN
Years ago, we were chatting with our banker about new credit cards when they casually said “and don’t forget this will entitle you to a discount on your home loan rate”. What?
They explained it was more profitable to entice existing customers to buy more financial products from them (insurance, credit cards, super etc) with a rate discount than trying to lure new customers.
Initially the discount was 0.1 per cent, but that has grown over the years.
Since, we’ve recommended friends, relatives, readers and viewers to ask for a discount. Most have been pleasantly surprised.
Seven years ago we were seeing major disruption in media and music from digital start-ups and decided to learn from new tech entrepreneurs and change our way of thinking in our own family business. We figured the only way to mix in this community was to have ‘skin in the game” and invest.
We studied the area, talked to a lot of people and invested a small amount in start-ups primarily in the financial space in which we were comfortable. It is risky, so we invested only a small amount of “fun” money.
Of the five start-ups, we Illustration: JOHN TIEDEMANN
tripled our money on one, two are lineball and we lost everything on two. In total, we’re even, but it has been an invaluable development opportunity and changed how we think in business.
STRAW HATS IN WINTER Think of investment markets as a herd of migrating wildebeest. A bunch of investors following the leader … even over a cliff.
It takes guts to go against the herd. Counter-cyclic investing is about identifying ugly stocks in the market that no-one likes but are likely to turn around.
This is where a good adviser, and their detailed research, can be a great advantage. We’ve done this a few times when the likes of Telstra, AMP and Woolworths were out of favour for various reasons. We try and stick with blue chip companies with a dominant market share.
FOCUSING ON YIELD DRIVEN INVESTMENTS
We’ve always been conservative investors; probably because we’ve been through lots of financial shocks. From the 1981 gold collapse to sharemarket crashes in 1987 and 1991, the Asian crisis, the Dot Com boom and bust, and the GFC.
As a result we rarely negative gear and, while we focus on capital growth investments, we love good dividend payers. We’ve found yield investments can cushion the impact of a financial shock.
BONUS SCHEME ON SUNRISE Initially I was asked to fill-in for three months as host of the Sunrise program. Next week will mark 15 years.
Back at the start our audience was just 10 per cent of the Today show’s and no-one really cared about us. The pay wasn’t very good so I asked for a bonus when we reached 50 per cent of the Today audience and then another bonus when we beat them. The Seven MD said no. I was stunned. She explained she didn’t want it to demoralise me as I would never qualify for the bonus as our audience would never get that large. I insisted, and we beat them within two years.
CREATING PERSONAL INVESTMENT MAGAZINE
In the 1980s average Aussies didn’t care about investing because there were really no options outside of a term deposit and shares. But then Treasurer Paul Keating floated the dollar, deregulated financial markets and brought in compulsory super and we suddenly had a thirst for knowledge in this area.
There were no personal finance sections in newspapers or TV coverage and the staid Stock Exchange Journal was going broke. I bought it and turned it into Australia’s first personal finance magazine … Personal Investment.
It was a huge success and started my career in this area … which I’ve loved ever since.