INVESTMENT BULLETIN S T U D E N T W R I T E R S - S T U D E N T O P I N I O N S
S E P T E M B E R 1 3 T H 2 0 2 0 I S S U E N O . 1 1 The University of Auckland Investment Club Bulletin Research Team 2020
Nikhil Luthra Bulletin Editor-in-Chief
Jerry Ren Sam Jain Senior Writer Senior Writer
Sean Spires Kyle Quindo Senior Writer Senior Writer
Logan Rainey Kai Yun Gao Senior Writer Junior Writer
Shyam Prasad-Jones Sean Flower Junior Writer Junior Writer
Neha Kumar Saeyavan Sistabesan Junior Writer Junior Writer
Ananya Ahluwalia Tim Cross Junior Writer Junior Writer
Vignesh Nair Freelance Writer
Prices as at Friday 11th September 2020 Unless otherwise stated
THE UAIC INVESTMENT BULLETIN FOR 2020, IS BROUGHT TO YOU IN PARTNERSHIP WITH: Contents
The club
An update from the fund 2
Educational
Risk and diversification - part 3 3
Opinions
News media must be subsidised 5
Tesla: overvalued, or perfectly valued? 10
Personal finance for students 12
MYOB's Column 14 An update from the fund A RUNDOWN OF THIS WEEKS PITCHES WRITTEN BY IC CHAIRMAN NEHAAL RAM
SCALES CORPORATION ALTIUM
Pitched by Anna Marsden, Junior Altium (ASX: ALU) is an American- Equity Analyst: Australian electronics design software company specialising in Scales Corporation (NZX: SCL) is PC-based software tools for the New Zealand's leader in design of printed circuit boards Agribusiness, delivering value (PCBs). The company’s Altium across Horticulture, Logistics, and Designer software is the most Food Ingredients. Utilising a widely used PCB design software vertically integrated business worldwide with over 50,000 model and strong brand subscribers and 110,000 registered reputation to capture the NZ, users. Given the diverse Australian, American markets applications of PCBs across nearly (alongside current expansion into every electronic product and the the Chinese markets), Scales is well projected trajectories of smart placed to deliver a strong connected devices and industrial performance to their shareholders. automation, Altium is well-placed With a goal of being the foremost to see demand for its products investor and grower of New continue to rise. Additionally, the launch of Altium’s new cloud Zealand Agribusiness, Scales is platform Altium 365 will be a key poised to maintain future growth driver in helping the company trajectories via organic and reach its lofty target of 100,000 acquisition growth opportunities. subscribers and $500m revenue by Whilst Scales does emplace a 2025. The Investment Committee strong focus on brand reputation has voted in favour of Altium 14/16. and sustainability; concerns were The valuation team will consist of also raised on their singular focus Andrew Meng, Gabrielle Mackisack, on operations in Hawkes Bay. The and Nina Kashyap. Li. Investment Committee has decided to not pass Scales to the valuation stage, with the final vote being 7/16. ‘’Altium is well-placed to take advantage of the rise in AI, IoT, "This investment will scale up Industry 4.0 and every other your portfolio." - Anna tech buzzword you can think Marsden, Junior Equity Analyst of.” – Andrew Meng, Senior Equity Analyst.
2 / The Club September 13 2020 Risk and diversification PART 3 WRITTEN BY CHRISTOPHER WONG
THOUGH DIVERSIFICATION OFFERS VARIOUS BENEFITS, IN REALITY, IT IS QUITE DIFFICULT AND TIME-CONSUMING TO ACHIEVE FOR THE AVERAGE INVESTOR. THE FIRST ISSUE IS THE COST OF BUYING MANY INVESTMENTS IN SMALL PORTIONS BECAUSE THERE IS A COST FOR EACH TRADE AND OFTEN A MINIMUM FEE. THIS OCCURS WHEN AN AVERAGE INVESTOR FREQUENTLY BUYS AND/OR SELLS DIFFERENT HOLDINGS. THESE TRANSACTION COSTS ADD UP OVER TIME AND EAT INTO ANY PROFITS (IF ANY). SECOND, THE MORE HOLDINGS IN A PORTFOLIO, THE MORE TIME NEEDS TO BE DEVOTED TO MONITORING AND MANAGING THOSE HOLDINGS. FOR A NON-INSTITUTIONAL INVESTOR, THIS MAY BE IMPRACTICAL.
DIVERSIFICATION THROUGH index. Investing in an index fund DOLLAR-COST AVERAGING INDEX FUNDS allows investors to diversify investments across all of the Another dimension of diversification Achieving an adequate amount of companies in a given index in an is time. If you invest everything diversification may sound like a easy and cost-effective manner. today, and tomorrow there is a complex task, but there is an easy negative event, then you may solution. Unlike active investing The key aspect to understand is unhappily capture the whole which aims to outperform the the investment strategy as to impact. If you transition over weeks market, index investing aims to or months you smooth the path and which index and how that is or mirror an index. Index funds are reduce that impact, admittedly also not diversified across industries, essentially funds invested in the missing some growth if the property companies, or factors such as low same companies and in the same market or stock market surges volatility, value, momentum, proportion as would an index. forward. dividends or size. For example, investing in both the NZ20 and This method is backed statistically One investor technique that is the S&P/NZX50 Fund would and is even endorsed by Warren popular especially with those Buffet himself. Over 5 years, duplicate 20 holdings and building up their long-term savings 78.52% of U.S. fund managers approximately 78% of the is dollar-cost averaging (DCA). underperformed the S&P500 holdings. Dollar-cost averaging is the method
3 / Educational September 13 2020 of investing the same amount brokerage of $120 while investing each week/month regardless of one lump sum would incur a cost of market performance. What is only $30. However, a lot of new-age great is this is offered through services do not charge transaction certain auto-invest features, fees for buying or selling their funds which combined with an which makes index investing automatic payment on payday, through auto-invest that much allows investors to put a set more attractive. amount into their funds. To illustrate, say I wanted to invest $1200 into an NZ Property fund. Instead of investing all of the money at the same time, I invest $100 every month over one year. Auto-invest facilitates the dollar- cost averaging strategy, allowing investors to benefit from various advantages.
Firstly, auto-invest can be a great way to invest during volatile or uncertain markets, eliminating worries like ‘Did I buy it on a dip?” or “Did I sell at the right time?” and associated timing stresses. Secondly, auto-invest suppresses the emotional component of the stock-picking process. No matter how much the stock price fluctuates between the investments, the value invested will always remain constant. Thirdly, an everyday retail investor including myself) may not have a spare $1200 lying around to invest. Therefore, auto-invest is a smart (way to accumulate without creating a financial burden or waiting until a substantial amount is saved.
One consideration against DCA is that it can incur brokerage fees and transaction costs higher than if an investor just invested a lump sum. For example, if a broker incurs a minimum of $30 per trade, then investing 4 times through DCA would incur a
4 / Educational September 13 2020 News media must be subsidised
WRITTEN BY SAEYAVAN SITSABESAN
JOURNALISM HAS BEEN AROUND FOR MILLENNIA, WITH IT ACTING AS A MEDIUM THROUGH WHICH GOVERNMENTS COMMUNICATE TO CITIZENS. FROM THE MEDIEVAL AGES WHEN TOWN CRIERS WOULD GO AROUND MAKING PUBLIC ANNOUNCEMENTS, TO THE WORLD’S FIRST DAILY NEWSPAPER IN THE EARLY 17TH CENTURY, ALL THE WAY TO THE BOOM YEARS OF PRINT MEDIA DURING THE 20TH CENTURY, IT HAS PLAYED A FUNDAMENTAL ROLE IN THE VARIOUS GOVERNANCE SYSTEMS.
NEWS MEDIA COMPANIES WERE ONCE POWERHOUSES, WITH THE RETURNS GAINED FROM OWNING BEING DESCRIBED AS ‘RIVERS OF GOLD’ BY MEDIA BARON RUPERT MURDOCH. THE COMPANIES WERE ABLE TO CHARGE HIGH FEES FOR ADVERTISING ON THE PAPER, AND CHARGE FOR BUYING THE PRINT EDITION. THE RISE OF TELEVISION IN THE POST-WAR BOOM, RESULTING IN THE PRIMARY SOURCE OF NEWS FOR NEW ZEALANDERS BEING FROM THE TV.
5 / Opinions September 13 2020 THE SIGNIFICANCE OF NEWS IN business model and declining stark contrast. The Industry has OUR DEMOCRATIC SOCIETY demand for news. Covid-19 and its lost close to 600+ jobs to date. economic impact have only We live in a democratic country accelerated an international trend. THE TRADITIONAL REVENUE and our governance revolves MODEL FOR NEWS MEDIA around three main branches, the Falling profits have forced many legislative, the judiciary and the news companies to cut back on The traditional revenue model was executive. Edmund Burke, an 18th reporting and journalism, with a based on running classified and century British political thought focus on investigative journalism other advertisements through leader, stated that “there were and less profitable reporting. newspapers and television. This three Estates … but in the Investigative journalism is a capital model does not work anymore. Reporters Gallery yonder, there intensive, risk heavy investment Before the internet newspapers sat a fourth Estate more that news companies have deemed and tv were the only viable form of important far than they all.”The non-essential. The focus on mass media around. Throughout reporters having the very profitability of each journalist by the eighties and nineties, the important role of maintaining media companies will eventually number of households who had transparency in any government lead to a strong decline in regional access to the internet in more and the distribution of unbiased journalism, which unsurprisingly developed nations rose news. A democratic country is not reaches a smaller audience. The significantly. able to reap the benefits of void in the stories and the loss of democracy and the freedoms it grants unless the constituents plurality of voices is a matter of This coupled with the can have informed debate. public interest, broadly to all New development of e-commerce Zealanders but even more platforms such as ebay, craigslist
From an economic perspective, important to the regions. and trade me, that allowed for our democracy is a public good, cheaper classified advertisements we subsidise our judicial, The impact of COVID -19 on the to reach a much larger audience, executive and legislative branches media industry has been removed this source of income. of our government through our conflicting. In an environment, This was the first nail in the coffin taxes. A struggling media industry where New Zealanders desire to be for the old business model, with has major ramifications for the better informed about our current the problem first identified in the quality of our democracy. The landscape and demand for early 2000s. "Sometimes rivers dry withdrawal of New Zealand journalism has increased, the loss of up" was the words of Rupert petroleum and natural gas jobs in the Media industry lies in Murdoch, in an interview in 2005, exploration industries from the market would induce a material economic impact regionally, but little social impact. The importance of a strong media industry, which is necessary to maintain a high-quality democracy, is a matter of public interest.
The NZ media industry has been in rough water for the better part of a decade. Internationally, Media hasn’t fared too well either in more developed nations. This can
be attributable to a failed Figure 1: Advertising Revenues from 1950-2012, source: Newspaper Association of America published data
6 / Opinions September 13 2020 presenting a stark contrast to his earlier remarks.
Google and Facebook had developed more effective and targeted advertising AI algorithms. This coupled with a strong decline in the consumption of print media and television by younger generations, led to advertising revenues plummeting for media companies. The effects of this are still felt by media firms in NZ, NZME has had its advertising revenue decline from $315 million to $268 million, between 2015 – 2019.
The failure of the business model used by the industry is apparent.
THE NEWS MEDIA INDUSTRY, IN ORDER TO SUSTAIN ITSELF FINANCIALLY RESORTED TO HYPER COMMERCIALISATION. customers largely from a corporate with opinions in columns leading to Media companies have tried background, with subscriptions the rise of commentariat. Political increasing the demand for news included. journalism increasingly delivers and journalism. Most prominently clear cut opinions, a stark contrast in the US and the UK, the media Robert McChesney, an american to governance which often involves started reporting on topics the psychologist, in his book, Rich balancing conflicting interests, general public wanted to hear. Media, Poor Democracy, highlights leading to the sensationalisation of More prominence was given in two increasingly dominant journalism. The sensationalisation Newspapers to celebrities, sports, principles in the fourth estate. The of journalism led to these papers crime stories, instead of public- author then emphasises the two taking political positions on news interest journalism. Ordinarily this dominant principles of stories; ridiculing politicians and would have increased sensationalism and simplification demanding resignations while consumption of news and solved resulting in ‘hyper omitting and ignoring key facts, the problem of falling revenues, commercialisation,’ leading to a misinforming the constituents. This however the internet and consumer demand for ‘dumbing down’ of content. The of course not only blurred the lines convenience forced papers online. undramatic boring, complex nature between journalism and gossip Web-based subscription systems of politics with a bill taking months magazines igniting the issues of have largely failed, with to become law, conflicts the 24 fake news, but also a collapse of the consumers far less willing to pay hour mindset of news media. This fourth estate of democracy in for journalism than ever before. has led to the way politics being various countries. There is nothing Financial outlets such as the covered in media changing more important in a democracy economist and the financial times significantly, News media no longer than a well-informed electorate, but have been an exception, with ‘report’ the news rather present it when constituents are misled
7 / Opinions September 13 2020 and/or uninformed a democracy time the rest of the industry started economic analysis, in which has failed. Misinformed fighting for a smaller and smaller journalism, left to the private constituents will hamper any slice of the pie, it isn’t an efficient market, would be under-produced. attempt to have a well-informed market outcome. A subsidy will enable increased debate on where we want to go as production to the socially desired a country. Other funding models have been equilibrium. suggested and implemented but ALTERNATIVE FUNDING MODELS failed to fruit results. In Spain, THE MEDIA RELIEF PACKAGE AND SOLUTIONS regulatory authorities started charging licensing fees for the news In late April the government ‘The Spinoff’ uses an alternative snippets that the google search provided a 50 million dollar funding model to other main- engine displayed with the searches. ‘adrenaline shot’ for commercial stream media outlets in NZ. It This resulted in google withdrawing media. The package included $21 relies largely on sponsored that feature from its Spanish million to completely cut content, in which advertisers pay domain. Others have suggested transmission costs for 6 months to have stories written about other ways for tech companies, and $17 million to cut contributions them, and a much smaller amount such as Google and Facebook to to the NZ on Air fund. $11.1 million from NZ on air government share revenue from ads with has been set aside for company- funding and donations from journalism. This is because the specific relief when necessary. A patrons. While this business model entire funding model fails to charge further $1.3 million is provided for has produced strong growth for consumers for value gained. central government agencies to the company, during the same Instead, the primary revenue source buy news media subscriptions in was from an additional source of advance and encourage further value, advertising. The primary uptake of news media source of value generated from subscriptions. Much of this package journalism is for both the goes to television and radio-based immediate consumer and our media companies, as opposed to democracy which benefits from a the struggling publishers of well-informed constituent. newspapers, who employ a far greater proportion of the country’s A market solution of consolidating journalists. At the time, the major players, such as the Broadcasting minister highlighted propositions of NZME and Stuff a second package would follow would not only be ineffective at within weeks. Budget 2020 in May addressing the long-term industry yielded little support for issues of a failing business model. It commercial media companies, with would provide short term benefits a sole announcement of a relief of reduced cost through package being developed over the consolidation for the shareholders coming months. Stuff Columnist of the company, but falling Luke Malpass, highlights in his revenues will erode these benefits opinion piece ‘Govt won't bail out in the medium-term. Furthermore, media, but Stuff has other dance consolidation will result in the loss partners’ that any relief package of a plurality of voices.As a higher wouldn’t involve handouts to quality democracy is a public good, commercial media companies. As it then journalism, much like would be politically unpopular and education, is also a public good and would induce moral hazard, a view should be subsidised. This is also held by many in the industry. the conclusion that arises from
8 / Opinions September 13 2020 Australia’s Short term relief that these views are independent, Switzerland, strongly opposed to package presents a greater focus the threat to companies of the the idea of compromising media on regional news media possibility of retaliation from independence through subsidies, publishers. Along with the relief politicians will perverse has focused on indirect subsidies package announced in April, A$50 independence and forcing self- providing huge financial support for million was allocated for the censorship by news media journalism training and education, Public Interest News Gathering companies.It is worth noting that funding investigative journalistic Program, to support the delivery political influence on the media efforts through various foundations, of public interest journalism. cannot be eliminated. Public and significant reduction of sales agencies advertising efforts, acting taxes on Print media to encourage NEWS MEDIA SUBSIDIES principally through local media are the industry. in effect a form of public subsidies Introduction of subsidies would presenting a material challenge to A combination of indirect and encourage new smaller entrants media independence. Selective direct subsidies could be used in to enter the market, addressing subsidies have been introduced in New Zealand to bolster our news some of the key issues of the France, Norway, Sweden, Austria. media industry. Any direct inability of the industry to capture subsidies, to be cost-effective, must smaller segments of the market. The French system provides direct be targeted, but at the same time The smaller segments are subsidies of around 77 million euros must be independent to maintain currently served by online blogs, a year, through the ministry of media independence. A system of which are criticised as a major culture and communication, and direct subsidies similar to the contributor to fake news, due to indirect subsidies in the form of Norwegian system, would assist the uncertain credentials and reduced sales tax and distribution objectives of media plurality and politically biased points of view. assistance totalling around 1 billion maintain media plurality. This The Introduction of smaller Euro. Proponents have argued that combined with a broad range of entrants would serve the needs of it has resulted in a financially stable indirect subsidies similar to the the smaller segments of markets media industry. Detractors of the Swiss system, would provide much- while maintaining credibility. A scheme have pointed out that it needed relief for the entire industry. media-plural New Zealand would benefits large successful papers as introduce voters to different ideas, much as it benefits small struggling If we value our democracy, we must highlighting conflicting opinions papers, perpetuating the existing have a strong news media industry. and encouraging debate. problem of a lack of support for small independent media. Maintaining the editorial independence of the media is crucial, as a threat to their Norway’s System of subsidies independence will turn media enables any newspaper in any city companies from propagators of to receive subsidies if it doesn’t transparency to channels for state have the largest circulation in its propaganda. Herein lies the distribution region. These clear problems of selective subsidies. criteria eliminate the need for a Selective subsidies in previous committee and eliminate the need models implemented have relied to compromise media on politicians selecting companies independence. This system also that receive the funding. addresses the key problem in the Politicians are given the power to industry of a lack of support for fund outlets that share their small players, leading to positions and provide favourable consolidation and preventing a courage. Even when it is claimed multi-plural nation.
9 / Opinions September 13 2020 Tesla: Overvalued, or Perfectly valued? WRITTEN BY KYLE QUINDO
IF YOU HAVE LISTENED TO ANY OF THE MOTLEY FOOL PODCASTS FOR THE PAST 3 YEARS, YOU WOULD HAVE HEARD JASON MOSER RECOMMEND A STOCK COUNTLESS OF TIMES – TELEDOC. APTLY NAMED, THE FOUNDERS CREATED THE COMPANY TO SOLVE THE PROBLEM OF SKYROCKETING DOCTOR FEES IN THE UNITED STATES BY PROVIDING BASIC GP VISITS TO BE DONE ON YOUR PHONE. OVER THE YEARS, THEIR NET LOSS SHRUNK UNTIL THEY FORECASTED A NET PROFIT IN 2020. HOWEVER, SOMETHING HAPPENED THAT WOULD INCREASE THE DEMAND FOR A VIRTUAL CHECKUP: THE CORONAVIRUS PANDEMIC. FOR MOST OF 2019, THE STOCK HOVERED AROUND $70 TILL NEAR THE END OF 2020, WHERE IT STARTED ITS METEORIC RISE. AT ITS PEAK AT THE START OF AUGUST, IT REACHED $249 A SHARE, A 250% INCREASE.
However, more famously, another for electric cars that would justify market cap is $835 Billion – company saw a similarly meteoric Tesla’s current stock price? coincidentally, precisely double rise in its stock price: Tesla. Tesla’s.Facebook generated over TESLA: OVERVALUED BY ANY 5.2 Billion dollars in earnings last Tesla sells electric cars – mostly in METRIC YOU’LL FIND IN YOUR quarter, at a valuation of $835 the United States but have recently FINANCE TEXTBOOK Billion. With half the market cap, expanded into Europe, China and logic dictates Tesla should here in New Zealand. Fully kitted I am sure you and your dog have generate around half of Facebook’s out, their most expensive car the heard the insane rise Tesla has had earnings, right? Tesla generated Tesla Model Y sells for $124,000 US this year. Year to date, the stock is $110 in earnings in the last Dollars ($184,300 New Zealand up 420%. If you had the balls of a quarter.Other key metric investors Dollars). Tesla did not see the bull to buy Tesla stock in the use to value companies is the price exponential increase in demand for middle of March, the peak of the to earnings ratio. In a nutshell, it their vehicles like Teledoc did for recessionary period, you would be shows you how much it costs an their virtual doctor’s service to up a staggering 520% this investor for $1 of profit. Facebook’s justify their stock price. In year.Facebook, on the other hand, price to earnings ratio is 37 times unprecedented times like these, is up a minuscule 40% year to date. earnings, meaning it costs you $37 where the Coronavirus Pandemic If we do some comparative for $1 of profit. Teslas? 1,152 times continues to ravage the world, has analysis, Tesla’s current market cap earnings. there been an increase in appetite is around $417 Billion; Facebook’s
10 / Opinions September 13 2020 To put it in another perspective: genuine excitement over the stock the stock. However, in Tesla’s case, Tesla delivered around 91,000 cars whereas for example, Bitcoin, investors are already bullish on the in the previous quarter. With people were excited not of the coin stock – the question becomes how earnings of $110 Million, they but the gains. However long will investor sentiment stay generated on average around oversimplified this theory sounds, bullish? If you can answer that $1,208 per delivered car in the last it is present in other sectors of question, you may argue that quarter. To match Facebook’s investing. Tesla’s stock price perfectly values valuation, Tesla would need to sell Tesla because it perfectly 2.15 million vehicles soon. For Gold and the Japanese Yen have represents how investors feel reference, Tesla has sold 891,000 been generally touted as a haven about the company. cars since 2012. asset/currency – However, I am willing to bet not a lot of people So is there any place for investors That’s not to say Tesla makes a bad know the actual quantitative and here? It depends. If you’re an old product. People like their cars, qualitative reasons as to why Gold fashion, Warren Buffet type they’re generating a profit (even and the Japanese Yen are touted investor then possibly stay well though it is not a lot, at least it is as safe havens. Therefore in the risk away from Tesla. It is the opposite not a loss) and they have over $8 of episodes, Gold and the Japanese of “buying low, selling high.” What Billion in cash when analysts 2 Yen rally due to the market “is in if you’re just a regular investor who years ago were wondering how favour” of these safe havens. wants exposure to the electric car they were going to pay their debt. market? Tesla may still be too They are just overvalued, by any Similarly, with Tesla – the market is expensive to add to your portfolio. textbook measure. currently in favour of Tesla. And Something diversified like the what part of the market has seen KARS ETF, which includes stocks Throw away the textbook – how is the biggest rise as of late? Retail up and down the electric car their valuation looking? investors. With retail investors market’s distribution chain, maybe nowadays having essentially no a better bet. However, what if you As you can see, Tesla needs to barrier to entry when it comes to believe in Tesla’s business model achieve something almost investing with $0 Brokerage and and believe that their target impossible soon to justify its stock fractional shares, it is easy for audience will continue to buy their price. However, let’s say it does not anyone to come along and invest cars? Or you think that Tesla’s reach those targets – is the stock $500 into Tesla because their stock price will continue to price valuing something else? If friend did it. Retail investors have increase due to what essentially is the stock price is so overvalued, given rise to investing in a way that a mirror of the Tulip mania in 1636? why are investors still ploughing does not include any research Then Tesla might just be the stock their money into Tesla?A rational, whatsoever. Influence Investing? to charge you up. and frankly the best explanation is Maybe a better term will come up that investors like the stock and in the future. that investors are willing to pay more to own the stock in the Throw away the textbook valuation expectation that the price will go methods – if investor sentiment is up because they believe other bullish on the stock, does it matter investors like the stock too. if the valuation is crazy or not? If Chances are, a retail investor has you think about it, valuation using heard about his friends’ insane metrics, comparable etc tries to gains over Tesla stock and decides find stocks that investors are to buy in, pushing the price up. I currently not bullish on. Cheap would say bigger fool theory, stocks, value stocks etc, in hopes however, Tesla has a different that the investor can buy the stock feeling to it – I believe there is before the market turns bullish on
11 / Opinions September 13 2020 Personal finance for students WRITTEN BY SEAN FLOWER
I AM NO EXPERT IN FINANCE. ALL VIEWS, OPINIONS, OR ANY OTHER INFORMATION AND MATERIAL DO NOT CONSTITUTE A RECOMMENDATION TO ENTER INTO ANY FINANCIAL ACTIVITY, OR LACK THEREOF. ANY THOUGHTS AND OPINIONS EXPRESSED HERE ARE MY OWN AND DO NOT CONSIDER YOUR PARTICULAR CIRCUMSTANCES. WE RECOMMEND YOU SEEK INDEPENDENT ADVICE FROM A FINANCIAL ADVISOR BEFORE TAKING ANY ACTION.
For many of us students, University First off; budgeting. This is the first innovative solutions that will is the first time we have had to rung on the ladder and is the become apparent after a quick manage our finances. It can be foundation of personal finance. The google search; take your pick. Find intimidating, but it’s all right. essence of this is to gain control one that you perceive to be University is the time to learn, over your incomings and enjoyable. Yes, that includes Excel, develop, and prepare for what’s to outgoings. Starting from the top; if you’re that kind of person – it’s come in the future – I believe the your weekly income and expenses. what I use. Take a couple of weeks same goes for personal finance. At this stage generally, the most to collect this data. After that, adaptive variable is expenses. The scrutinise it, why am I spending For the sake of simplicity, I adopt a key here is understanding them. I $100 on coffee a week? Why is my four-stage approach: understand, find the best way to do this is largest expense Uber Eats? plan, save, and invest. This may be using a budgeting/spending overly simplified for some of you, or tracker, there are a plethora of cool For example: foreign for others. However, the benefit lies in between the lines and in your own lived experience. This article is created to be critiqued. Everyone is different.
12 / Opinions September 13 2020 Now comes the fun part – the back discretionary spending. Meal Further along, when you have a planning. Develop a plan that fits prepping for example offers great solid grasp of how to manage your goals. In the short-term, goals expense management (and health) spending, plan, and budget; could include getting a bit of a benefits as opposed to eating out. investing may come into mind as a safety net in a savings account or There are many approaches to this, means to assist in reaching your paying down that overdraft. Mid- but I would find the balance goals. Although perceived as being long term may include saving for between what you are willing to for those with mass amounts of an overseas trip when we return to give up and your lifestyle, whilst capital sitting around, it is now normal, getting started on that first being realistic. Use these cut-backs more accessible than ever. home deposit, and so on. These to feed into your goals, extending Incorporating an investment goals must be achievable and those allocated savings! strategy could be a fun and realistic, but it comes down to interesting way to take steps what motivates you. Try to fit these The resultant budget could look towards your long-term plan. I plans into your budget, whether similar to this: refrain from getting into detail the amount is $5 a week or $500, about how you may approach this building the habit is crucial. An oversimplified budget. The as your reading this bulletin is format and platform are evident of you have an interest in Given that likely the only variable dependent on what works best for the topic already. Keep reading able to be changed at this stage is you! Again, there are plenty of apps those educational pieces and think expenses, managing these is next. and websites available; the world is about how it could play out for Now that you understand yourself your oyster as far as format goes. your future. But in short, platforms and your goals, find ways to cut such as Sharesies and Hatch are a great first step, and a fun way to experience equity investing if you have a solid foundation of education.
That’s my approach. A very brief overview does not do justice the nuanced topic of personal finance, but I hope I have got those neurons firing in some of you. Further education and getting started are the next steps. I highly recommend checking out sorted.co.nz for some awesome tools and resources to provide clarity. Great leaps start with small steps, so start making those small steps early!
13 / Opinions September 13 2020 MYOB's column
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14 / MYOB's column September 13 2020