Understanding investing with Justin Baldori and we take the helm to learn about sinking funds.


Justin Baldori from Youtube joins us to talk all things investing and how to start your 2021 strong. We also take the helm to talk sinking funds, what they are and how they can improve your budget.

The following is a transcript taken from episode 10 of the We Talk Cents podcast. The transcript is created by AI software so it might not be perfect - please forgive any imperfections or grammatical errors.


Dan Jovevski, Justin Baldori, Blaize Pengilly

Blaize Pengilly  00:09

Personal finance, budgeting, cash flow, and investing don't have to be scary words. The We Talk Cents podcast is here to help you learn more about money and take control of your personal finance. We Talk Cents podcast is not a financial advisor. This podcast is made for entertainment and educational purposes only. All information shared is of a general nature and does not take into account your personal situation. You should consider whether the information is appropriate for your needs and where appropriate seek professional advice from a financial advisor.

Dan Jovevski  00:45

For more information, please check out wemoney.com.au/disclaimer. Good  day and welcome to another instalment of We Talk Cents a podcast presented by WeMoney. I'm Dan, your resident finance expert,

Blaize Pengilly  00:59

and I'm Blaize your resident spendaholic.

Dan Jovevski  01:01

If you're curious about investing, or you have no idea where to start, then don't do today we're joined by Justin Baldori, who you all know as the stock guy from YouTube to chat investing for beginners. We also jump on board the learning ship and sell towards sinking funds. Blaize I think you've also got some other news for us as well.

Blaize Pengilly  01:22

Yes, then it's our 10th episode of We Talk Cents! 10th episode still counting.

Dan Jovevski  01:30

I know tell me about who we thought we would arrive here and maybe for listeners of the show that have followed us on our journey, all the way from Episode One. This was like an experiment for us. We had no idea whether or not this work or isn't with people. But the overwhelming feedback that we're getting, I think it's fair to say places that people are enjoying the content that we're producing. And we're incredibly grateful for their listeners. And whilst we have a big audience in Australia, I think we're also attracted listen from somewhere else.

Blaize Pengilly  02:02

Hello to whoever is out there listening from Spain. Thank you. We see tuning in every week. And also thank you to our listener. We have one listener in Michigan in the United States, which is so exciting. It's pretty amazing. Like Dan said, thanks for tuning in and providing your feedback. We love making the show. If there's anything you'd like us to ever cover on the show, feel free to get in touch via Instagram, which is at get way money. And then you know what? I love doing the podcast, but there is one downside about a podcast is that we're celebrating our 10th birthday. And we can't have cake because we're all separated by and only connected by the internet.

Dan Jovevski  02:41

No, well, please don't let that be an excuse. I'm ready to jump in my car and hit the Coles right now and buy myself chocolate mud cake and go head first. If you do it too, then I think I think we're okay.

Blaize Pengilly  02:55

All rightColes mud cake it is. Now Dan, before we get into this episode, let's talk news. We have 17 days to Christmas. And I have a question for you. Because last week, Cole logic released some data showing that and house prices increased in both October and November nationwide. But we're in the middle of a recession. Dan, what's happening? Yeah.

Dan Jovevski  03:19

But it's absolutely super fascinating that the traditional spring buying season has not been affected by COVID. The economy is getting back on track. And people are feeling really buoyant about their prospects. I think coming from a really dark place within COVID. People have seen this as an opportunity to get back out there and start raising their hands and all these crazy auctions and making offers on properties. So this is fascinating until that, you know we're getting right now that people are feeling really, really in a much better position than they did at the start of the year. which is which is fascinating. So yeah, it totally caught me by surprise. How about you ?

Blaize Pengilly  04:01

I'm I'm definitely surprised that the house prices are increasing, especially seeing as we saw such an emptying of rental properties in the thick of COVID when a lot of people are returning home or moving in with other people save costs. So very interesting to see that the house prices have increased. But I suppose you know, people withdrawing from their supers. The cash rates really low interest rates are really low. Maybe like we said in an earlier podcast, a lot of people saved up money for big, big events like weddings and traveling internationally and maybe everyone's looking at putting those big chunks of funds towards a long term investment like a family home.

Dan Jovevski  04:41

genius think it's crazy that's also happened the last three to four months.

Blaize Pengilly  04:46

No, what is it?

Dan Jovevski  04:48

You're not gonna believe this. But he knew about cars that think that use cars. I want to give this example taken Nissen patrol 2006 Nissan Patrol for doing sand dunes over the over the weekends. The price of these cars has gone through the roof as an example a 20006 Nissan patrol is silly. About $15,000. More in September 2020 was in 2019. Yeah, absolutely. Can you believe it? And


Blaize Pengilly  05:35


Dan Jovevski  05:36

I know

Blaize Pengilly  05:37

I thought car price are meant to depreciate? That's everything I know it causes value over time.

Dan Jovevski  05:42

Absolutely. But the hypothesis is is that people who are cashing out what superannuation have got more money, and it is a finite supply of so these vehicles out there, people are really bidding up to buy the second end vehicles, which Who would have thought that would be the case? It's pretty interesting, hey,

Blaize Pengilly  06:02

yeah, I suppose as well for something like a forby. Until recently, until last week, the borders were very well shot, especially here in wha where web is. Now I guess a lot of people are looking at investing outside of their regular city cars so that they can see more of the country that we're sort of trapped in momentarily. So perhaps that's part of it as well, as well as the injection of cash, as well as the borders. I think that all of the elements together make a big recipe for investing in fun cars, and cars that we can use to get around our local areas.

Dan Jovevski  06:36

Yeah, absolutely.

Blaize Pengilly  06:38

All right, then. That's enough news. Let's get into it. Dan,

Dan Jovevski  06:47


Blaize Pengilly  06:48

what is something like the the internet's an amazing place, right? So I want to know, what have you learned from YouTube

Dan Jovevski  06:59

If it isn't going down some dark rabbit hole on cats or some funny material? In the morning thinking myself what I spent the last five hours watching YouTube, just incredible. These days, I'm really into my how tos and the things that I probably should have learned about early 20s or the things that my parents didn't teach me. I'm now starting to learn on YouTube. And that's ranges all the way from how to remove stains off shirts, to physics, which I completely flunked in high school, which I'm now rediscover. I know. But I am the partial to a lot of funny videos and get myself in quite knots. How about you?

Blaize Pengilly  07:36

Before I before I answer that physics? Isn't that one of those subjects that you kind of just go through high school doing and then you're like, Alright, cool. Never have to do that again. Why are you revisiting this? What? Were you practically applying this? 10? Oh, I

Dan Jovevski  07:50

don't think I'll practically play anywhere. I think I think it might be just by that I've missed out on life and the second law of thermodynamics, and it sounded really scary in high school but oh, my God, it's, it's it's a wacky to curiosity of your name in your head. So I'm gonna I'm gonna follow that rabbit hole.

Blaize Pengilly  08:07

Oh, you  You you've totally lost me. Yeah, I'm the same I love I like living arts and crafts. I recently made a dinosaur tail costume. So not quite physics, but I yeah, let's just say a dinosaur tail costume from YouTube. But the reason I asked is because there is such a wealth of information on the internet. And today's guest is a 25 year old savvy investor, based in Melbourne, Australia, who runs a super successful financial channel on YouTube. He's knowledgeable, he's full of energy, which he serves up regularly on his channel. He shares tips about investing, he talks stocks, finance and banter. He believes that personal finance and investing should be open to everybody and it's never too late to stop learning. One thing I love about his channel is that is pretty much the opposite of what you'd think when it comes to finance guys like the like pretty much the total opposite of Kashi. He joins us now via video link. Welcome Justin Baldori.

Justin Baldori  09:11

Great. Thanks for having me on. That was the best intro I think I'll ever get in my life. So I'm going to replay that to myself a few times. That was you've said the same but now I've got to deliver but yeah, just to flow from that. I mean, you said a little bit different to some of the other guys out there and that's what I try and be I try and be myself and show that anybody. You don't have to have a big fame and wear fancy suit to be smart with your money start investing and take control of your life. I'm just like random 25 year old from Melbourne and hopefully I can inspire some people that's that's basically Yeah, the reason I started and flowing on so I'm going to answer that question. I was listening to what you said and you guys are watching like physics and cat videos and all that I watch a lot of fitness content. So if you go through my like recommended it's all just like fitness channels which is weird. You think I would start a fitness channel without a finance All right, it's all crazy but I get lost in in fitness rabbit holes there once in a while

Blaize Pengilly  10:04

maybe that's your next foray. Maybe it'll be stock market and push up. Star jumps in stock. That's a good channel name star jumps and stocks. Justin, so you like fitness? You're into investing and personal finance? Can you tell us a bit more about yourself and how you got started in investing? How did everything start for you?

Justin Baldori  10:27

Yeah, sure. So I've been investing. So I'm 25. I've been investing for about four and a half, five years. And I studied commerce at uni. So I guess that was a good little start. And you know, I've found a bit of an interesting business and and whatnot. Didn't don't necessarily think my commerce degree, I don't say has helped me too much. But looking vesting, compared to my commerce degree was complete opposite it just set the scene. And yeah, one day, I was reading some stuff online, watching some videos, very American based stuff. And I'm like, Why? Why can I do this? I why, you know, I'm 19. I've got so many years ahead of me, I should start learning. And so I started watching videos, reading books, listening, podcasts, all that sort of stuff. And then about a year later, it took me about a year just to sort of build up the courage because none of my friends were talking about it. Everyone was talking about, you know, going out on the weekends, and all these young people stuff, which I would love doing, don't get me wrong, but I knew that I had this passion for investing somewhere in there. I just needed to get it out. And yeah, long story short, made my first investments. There's a huge release of huge relief that came off my shoulders. And I was like, this actually isn't too bad. Like, why aren't other young people doing this cool thing that we call investing? So yeah, I've been investing for many years. And then after uni, got a job in aviation actually, working in like a finance sector, realised I didn't love it. So I ended up getting a full time role still in aviation, but as a project management role, where I get to travel around and, you know, do some pretty cool stuff and get to say a lot of cool places, which is really great. But you know, being an aviation 2020 has had its challenges. And in April, I was stood down from that role. And I was like, a bit bit rough, isn't it? It's not, you know, it is what it is, though. So I could either get another job. And, and which is fine, which I had a few lined up or was like, You know what, I have so much time now to work on this channel and build a YouTube channel and do TikTok and all these weird stuff where I'm probably gonna get bagged out for but I believe there's a huge gap in the market. And so many young people, you know, have the power to change their lives with like, such small changes. And so I did that I decided to make a YouTube channel where I get paid absolutely nothing, and had the best fun and what are we November, eight months later, still here still loving it and you know, love it now more than I ever did so. And that's also flowed onto my investing creeks. I've, you know, researched a lot more I become such a better investor this year by being held accountable from the channel. It's just been, it's just been awesome. So yeah, I guess that's a quick little spiel about the last four or five years and more So recently, 2020 has presented challenges, but how I've tried to overcome them.

Dan Jovevski  13:10

That's wonderful. Justin, and what would you say your philosophy is life investing? And how did you start that sort of process? Are you persons a long investor or short investor? What What is your investment strategy? How do you view the world of investing?

Justin Baldori  13:23

It started off the first few, I guess, finance influencers, you can call them were fire bloggers, like the financial independence, retire early. And I was like, Oh, this is so sick, like, what's this retire early thing? What is financial independence? Like, what 40 years? How can you compound an interest? So all these questions, were going through my head, so I stuck to sort of long sort of ETFs for about three years. And then I was like, Yeah, I love it. And I feel like I've got a bit of a knowledge base behind me, I feel like I'm getting pretty good at it. I want to start learning and researching companies and how I can, you know, maybe find the next company that may outperform the market or try to stock peak a little bit, not like a speculator of any sorts, but just find businesses that are valued to me where I want to put my money into still for that long term, you know, 10 plus years down the track. So you're more of a long term investor. And I think with my age, I've got so many more years ahead of me. I'm in the driver's seat by starting now. And I hope that a lot of other young people can do that too. Because we have time, slaves and time is, I guess, the greatest asset as investors can have. So yeah, definitely, definitely more long term investor but swaying to more short ish style of investing as of recent times.

Blaize Pengilly  14:41

Justin, I love that you mentioned time because time is obviously really important in the world of investing. And you've mentioned before in your videos about the magic of compound interest. And I know I think Einstein refers to compound interest as the eighth wonder of the world. What makes it so magical and why Is what can you explain to someone who doesn't really understand compound interest? Or why time is important? Can you delve into that a little bit?

Justin Baldori  15:07

Yeah, I've got a really good example, which I try and use all the time. And I'm not sure you know, like here in Melbourne, I go to the snow lots and it's a bit cold up here. And I think of compound interest as a snowball. So the way I'm going to say it is when you roll a snowball down the hill, what happens to the snowball, right, it just grows because it picks up more snow gets bigger and bigger as it hurtles towards the bottom. So think about compounding interest, you can kind of use that same example with compounding interest. So you as the is the person with the snowball in your hand, you walk up a hill, and you're like, you know what I'm gonna roll this little teeny, tiny snowball that's not really relevant to me right now. And it's not much there. But I could have something when it rolls down the hill. as it rolls down the hill gets faster and faster, picks up more snow. And as it gets towards the bottom, it is a huge snowball of snow, obviously. And we haven't really, I wouldn't say you haven't done anything. But you've used in this case, the time of rolling down the hill to make the snowball bigger. But in terms of compounding interest you've used, you know, years and decades to compound your wealth into a big snowball. That's not snow, it's actually money. So the higher up the hill, you start, like with everything, you push it up from really, really high, snowball gets bigger. If you start halfway, still big, but not as big as it could be. So that's why they say the best time to start investing was yesterday, to start that snowball and push it down a hill.

Dan Jovevski  16:33

That's really incredible. Justin, I think, where a lot of young people in particular think about investing because they think about it as like an old person's game, right? It's a it's old to investing when the time is right where I've, you know, got married, had kids and you know, bought a home and then I'll have some spare cash to go into this. But what we see now is a complete shift away from that mindset. And maybe a lot of your points on to things, especially for young folks right now listening is investing is a long term game, right. And as you've rightly mentioned that if that snowball is going to grow and grow and grow over a very long period of time, you may not really reap the benefits of this investment for maybe 1015 or 20 years. And if you're someone in your 20s now, that will actually be in your 40s and 50s. And even beyond. How do you What advice would you have to listen to the show? If they're thinking about, Hey, I'm this is some type of forced savings. I'm taking money out? Can I'm looking after my sort of future? Have you wrap your head around that in terms of planning for that long term? It could be seen yourself as ra strategy and what advice would you have to young folks listening to the show around that concept?

Justin Baldori  17:39

The hardest thing now I would find it I've seen it more so this year than ever is like in March, the stock market crashed and you could have jumped on anything in March and April and you would made hundreds of percent right. So what do you see in the news and on Facebook and on Instagram, you say, you know, some random dude has just made 400% on their money. Like they're rich, like what you can do it if you just do it. And I'm like, great, like some people get lucky. But the hardest thing now with investing is that it's plastered everywhere, how you can just get rich quick. And you want to be that you want to be that person that get riches get rich, that gets rich quick, I mean, I'm Stumbling on my words. And you see that and you instantly compare yourself to them and you don't know their story. But the key for young people is to it's okay to get inspiration from that and whatnot but try and filter it out and think about the sacrifices I make over the next 1015 years whatever is really going to pay off when I least expect it when I'm 20 years down the track. Now that's difficult because we all want you know a Ferrari to land in our garage tomorrow obviously. But the the thing for young people is that time and the more we can filter out and be like You know what, I'm setting myself up for future success, the better it is and along the way though you still don't cut out you know having fun because you know we like to have fun we like to have for dinner go on holidays, I love traveling and all that. But is to just filter out the noise and be like You know what, I know what I want in 20 years. This is how I'm going to get it.

Blaize Pengilly  19:07

Justin I really like that. Okay, first of alll I went to Ferrari is not maybe like a Ferrari and a Porsche. But no, it's something that you get stuck on is something that you've also discussed in one of your recent videos is about the comparison like you don't know other people's story and you shouldn't compare yourself to anyone else. But for someone like when I think investing my first thought is Wolf of Wall Street, you got to have a lot of money and you've got to wear a suit and you have to know a lot of stuff and be able to you know, pick the right stocks and to someone who wants to start out like do you have to have a lot of money to start, how can you start if you've only got a spare, you know, 50 bucks or 100 bucks like how do you how can you start out and do you have to be one of these big business suit types with heaps of cash to share it to flip throw around.

Justin Baldori  19:59

Well, actually You want to Tesla as well, not a Ferrari. So maybe I should use the Tesla analogy, not the Ferrari.

Blaize Pengilly  20:04

Take all three!

Justin Baldori  20:06

Well, why not? It's a great point you raise there because we're often thrown out. Yeah, like you will get watchable for wall street and I show some madness movie and a lot of the New York Stock Exchange is depicted as that day's rich, you know, I hate to say, but rich men walking around in suits and throwing 1000s and $1,000. It's like it's not, you know, it's not that the ordinary person can't do that. But we're also lucky in this day and age as we have a lot of technology. And we pretty much all of us have a phone with an internet connection. And that is the tool to get started investing like these days, we have micro investing apps, we have, you know, obviously great app such as way money that helps you prioritize what you're spending and putting more aside for that. There's so many different ways. But all in all, you can get started with, you know, your loose change in that or you can get started with a minimum $500 in most brokerage accounts. So while still $500 is a lot to some people, it's a lot more manageable than $100,000. And having three Rolex watches and having two holiday homes in the Bahamas, it's so accessible to young people these days. It's not funny, and actually, I was talking to an investor the other day, and he said, when he made his first investment, it was like 2530 years ago, he had to travel in on the tram to the city in Melbourne, find a broker, hey, $150 to execute his trade, and then get on the tram, and go back home. Whereas now I bought, I bought stocks yesterday, like on my phone it was it took me two seconds, you know, so it's very accessible. And that's a great thing that we have here, as Aussies. And in living in this day. And age is doesn't take a lot.

Blaize Pengilly  21:43

No tram rides?

Justin Baldori  21:44

No, I hate the tram. It's really hot and sweaty on that thing. So I'm glad I don't have to go on that.

Dan Jovevski  21:51

And in terms of information, or good credible sources, and maybe even some bad information that you've seen out there. How do you? What recommendations would you provide to people out there to get started? And where should they source their initial information from? And then what are some of the things they wanted to stay away from?

Justin Baldori  22:08

Lack of talks a little bit with the power of the internet can be good and can be really bad. I mean, even if you look at my channel, you can maybe take some of my information as bad and whatnot. But anything you say, is always a starting point. To have a think about, you know, how does this relate to me? How can I learn a little bit more about, you know, whatever it is, this person on the internet is talking about? I mean, tic tocs great, but it's so easy to go viral. So you really have to be careful there YouTube's fantastic, but again, you know, information for in the wrong hands is dangerous. And I try to be very wary of that in my videos too. But if you do come across something that's very, I think your alarm bells will go in the first minute or two, the way they present themselves. And if they're, you know, trying to promise you hundreds of percent return, like, that's so illegal, and it's so not going to happen. It's not funny. But even in that sort of stuff, you should always be able to draw a couple of messages from it. For example, if I'm talking about a particular stock, then that's just based on the research I've done, and what I'm comfortable with sharing. So that's not the full picture. But what it is, it's a starting point for you to be like, you know what, stock XYZ this really interests me, this business interests me, I think they're going all right, I want to take some of this information and build on it myself. And if I don't know it, then I'm going to take it upon myself to learn a little bit more. I think the the number one thing and the one piece of advice I will give not a financial advisor, but I will give this advice is that to never trust anybody on the internet. And I say that about my channel too, because I'm looking to help. I'm not looking to tell you how to you know what to do with your money that's only up to you. So all the information should be a really good starting point. I'm guilty of that too. Like I use the internet to find my information. But I try and stick it to you know, the ASX website, it's got some great information on each company. Each ETF provider has obviously the full rundown of what they what they want in their funds. There's the Money Smart websites that the government runs, which is you know, very good information there. So if you can stick to those credible information after after doing you know, your initial research on the internet, you'll be a lot better than a lot of people out there.

Blaize Pengilly  24:16

That's a really valid point. And the government websites are usually pretty good. What I know for myself when I'm googling, I usually try and go for not the recommended ads or the top page ads in the search. But yeah, any any site that's run by the government usually has pretty much the best information that can be really reliable and non biased. And it's not, you know, a comparison site trying to get your money or it's not a business trying to trying to get your money. Speaking of money, Justin, I would love to know for what are your thoughts on apps like rays and spaceship for someone who wants to start ad investing. So for those that are listening at home and haven't don't know what the apps are, they're their apps. That round up your purchases on everyday spending. So say you spend 40 or 50 on a coffee, the spare 50 cents will go into an investment account on and it will round it up to that to that whole dollar. What are your thoughts on apps like that for someone who wants to start out in the investing game?

Justin Baldori  25:16

I think they're fantastic, as a great start to learn initially about how maybe companies work, how the stock market goes up and down, what it's like when my money's in these funds, I guess, essentially, they're managed funds, that it's not always going to be like, stocks always don't go up, stocks go up and down, they go left, they go, right, they go backwards, they go everywhere. So it's a really great starting point to show that investing is accessible for pretty much everybody like with rage, you can connect it to your bank account, you buy a coffee, the extra money goes into there, and you see that grow over time through compounding interest. The the point that I will raise here is while they're great to, to educate and learn about the markets, I'll use an analogy he I'll hit you with an analogy, right? So all right, I don't know if you want to watch the Tour de France, but I love it. And you don't necessarily see them winning a race with training wheels on, they have to break free from the training wheels, do their own thing put in the work, and then maybe they'll win the race. So I say Marco invest in playing in that space, it's a really great tool for beginner investors to learn, get started showcase the true power of investing. But it's when you break free from those training wheels that you're really gonna say some huge, huge results, you know, 10 2050 years down the track. So that's my little analogy, but I think they're a great great place like I I use one at the moment just because you know, it's better than bank interest. But predominantly, I've used it as an education piece to go into the markets and our own some of the ETF or companies that do my research on so fantastic. do recommend them for beginner investors, great way to learn.

Dan Jovevski  26:57

Great point, Justin on that thread of ETFs that would probably people have heard before. And some people may know what that what that terminology is. But for the listeners, Justin, can you describe what an ETF is? And then maybe could you also talk about some of the concepts behind that which is active versus passive investment and what that might mean for folks as well?

Justin Baldori  27:18

Yeah, it's, it's a term that gets thrown around a lot like I felt around a lot of my channel, I just assume, like a lot of people know. But really, ETF stands for exchange traded fund, it's basically an investment product that you can buy and sell on on the stock market through a brokerage account on your phone, however you do it. So the true power of ETFs come in here, this is this is where I think they come in. So let's say you want to invest in one company, right? So you do your research, you put your money in there, and unfortunately, the company goes south, well, you put all your eggs in one basket, and well you would have lost your money. Really great thing about ETS is that you can own a range of companies, it can be 10, it can be 20, there's ETFs out there and like three and a half 1000 different companies. So what that means is that your money is spread out across a bunch of different companies, lowering your risk when it comes to investing because as investors, we want to we want to make the we want to be you know, risks and we don't want risk, it's not good for us. So ETFs really fit that, you know, build of long term investing. So an example is, you can get an ETF that tracks the top 300 companies in Australia. Now you don't need to know every single, top 300 companies in Australia. I mean, it helps if you have a little bit of background, but all you need to sort of be aware of is that this ETF is tracking these top 300 companies when one dropped out of the top 300 the next one comes in. So you're betting on these 300 companies in Australia are going to continue to grow into the future, rather than I think one company is going to, you know, 10 x my money in 10 years and something like that both serve their purpose. But ETFs are a really great product and very accessible to new investors beginner investors for like I said, they're less risk, they don't require much work because you don't have to read through 6000 company reports and listen to all the investor presentations and like people don't want to do that anyway. So you know, it is what it is I like doing it, but some people don't. And they're low cost. So if you were to buy all these 300 companies individually, you'd have to pay a brokerage fee fee every time 10 bucks, 20 bucks, whatever it is, it all adds up but you just pay one brokerage fee to get access to all these different companies. And you can kind of say you're an owner of the top 300 companies in Australia as a rough example so yeah, I use them in my investing a lot of investors use them just for the stability and long term nature that they provide.

Dan Jovevski  29:40

That's incredible Justin and you're just narrowed down because activist is passive, you know active you're probably doing a little work yourself. Passive you're letting somebody else do that, which is absolutely awesome. But I think what I've seen on YouTube recently is that there's a lot of people that love talking about stocks and some of the analysis that you do on stocks as well so be useful but What's one company that you're in love with at the moment in terms of the stock and why?

Justin Baldori  30:08

Controversial, I think it's hard to go past Tesla at this point in time. If you don't know what Tesla is, and probably look out, look outside, it's probably Tesla driving past or you know, you've heard it quite a lot in the media lately. I think what Tesla's doing for the future is just phenomenal. They're not just trying to make self driving cars, but they're a software company that build cars, and really trying to change the future. In not five years, not 10 years, but 20 years down the track, Tesla is going to change the future. So that's a company that I'm definitely watching on there's people love Tesla, people hate, it's worth, I think 500 billion in market cap is $500 billion right now. So huge, bigger than any company in Australia. And some people think it's not even worth 50. Other people say it's worth 2 trillion. So a lot of split critics on it. But I think it's really changing the world for the better. And when I think about it, that's a company that I want to be aligned with. Because, look, I want to be around for the next 50 years. And I want companies better in the world in terms of sustainability, you know, clean energy, electric vehicles, and whatnot. And I see Tesla nailing all those points already here in 2020, compared to 2017, or something like that. So yeah, I'd say Tesla is definitely one that's you know, I love it. But, you know, I'm sure you to have your view on Tesla as well.

Blaize Pengilly  31:31

Well, I'm just thinking, if I say Tesla a couple more times, do you think that we all might get a little Tesla? Could we do some direction if we put it out there, you know, some free marketing for Tesla here, good. Christmas, just around the corner.

Justin Baldori  31:46

Let's get Elon on the podcast.

Dan Jovevski  31:50

He's  been known to do some crazy things. Justin I think is absolutely great. And I think you've really given a really good theme. Your end point is even though it might be subconscious, a lot of people don't realise it is that I think Gone are the days that most investors are ignoring some of the social responsibilities a lot of these companies are facing. And I think Tesla is really leading the pack and being the poster child for a lot of these stocks, and really setting the benchmark on how companies should be run. And that's really improving everything. I'm not sure how you're familiar with this. But one thing that I've really noticed right now is particular funds divesting out of things like fossil fuels, different areas of the market, where has, you know, really bad consequences to the environment. Those funds are not investing in those companies. And therefore it's forcing those companies to actually change their business practices. So it is a net benefit. And that's something if we harken back to an example of the Wolf of Wall Street, the good old days of the 80s, we just invested anything as long as it makes money. Those days, are well and truly behind us. And now there is a much more social element to investing, which I think is absolutely amazing.

Justin Baldori  32:57

And if we talk about we take that point, and we talk about the ETF, so we just talked about incorporate Tesla, and if there are ETFs, now that have just burst onto the scene the last year or so that are focused on like you said, Those ethical companies. And they go through a screening process, it's called, it's called ESG, environmental, social and governance. And what happens as this ranking system in the background and the business gets ranked based on how they align with those values. Now, I'm not going to go through them, because that'll be quite boring, but it is important to familiarise yourself with them. And those companies will filter into this ETF that is investing in companies to make a future. So if you look at the top 300 companies were heavy in like the mining and financial space here. But if you were to look into an ethical ETF, then you can get access to you know, your Tesla's your apples and Microsoft and all those huge mega corporations that are hopefully changing things for the better. And it's very popular with young investors, because, you know, I talked to a lot of people and they're like, you know, I'm putting my money where I want the world to be in 2030 years. And where I see it going so huge burst onto the scenes. And I think tech plays a lot to do with that, as well. I call the companies I mentioned, they're all tech heavy. So yeah, I'm excited that there's a lot of opportunities, and there's a lot to learn. But there's also a lot of room to, to sort of venture outside the stock standard market checking stuff to find products that align with your values, that often gets overlooked a lot. But by aligning with your values, you'll be there. Your 10 year returns automatically, because you'll be so much more invested and involved, that you'll just love it every day you wake up super excited to learn a little bit more.

Blaize Pengilly  34:34

That's awesome. I didn't know that though. I didn't know about the ESG. That sounds incredible. It'd be interesting to see now the the sort of expected returns that you get through ESG versus regular companies and then see how that changes over time, like you say, because these companies are so tech driven. It would be interesting to say how they change it changes over the next 10, 15, 20 years.

Justin Baldori  34:57

Yeah, exactly. And I was just going to add to that. That's because You know, obviously tech this year has gone absolutely bonkers. It's not going to be like that every single year for the next 50 years. So there is that risk there that when maybe, you know, health care, or, you know, yeah, your financials are doing really well. Maybe those funds won't perform as well. But look, the only thing you can do to combat that is do your own research and be comfortable with your investments. And then, you know, the rest is history.

Blaize Pengilly  35:22

Yeah. And like you say, it's, we can't, we can't predict. And if there's, if there's anything we learned from 2020, it's that we really have no idea what's just around the corner. Justin you clearly are really motivated, driven individual. And you It's what I love about your channel is that you're so enthusiastic, and you love sharing information, as well as finding your own information and, and you really sort of really take life by the handlebars and really do. It's inspiring to see someone with so much energy attacking laugh like you do. So I'd love to know, for 2021 What, what's a healthy habit or a tip? Or what would your advice be to someone who wants to really make the most of 2021? And really, yeah, get the most out of it.

Justin Baldori  36:09

I think this is going to be a unique one. I've been thinking about this for a while. And what I'm going to say is, a lot of the time, there's a lot of emphasis on sort of, which is why I've talked about this podcast many times it's like educate yourself, take a course read a book, you know, you watch a video, you listen to a podcast, so you, you you, but what about your mate who's probably you know, leaving the house next door, or you never talked about investing with them, who really wants to start investing, but a little bit scared to open up and learn because, you know, the group of mates are talking about non invest in topic, let's say that. So for 2021, I tried to do it a lot in 2020 with the channel and I hope I've done so. But in 2021, I'm really going to make a focus to, you know, share YouTube videos with a friend who I think may get some value out of it, share books with people have a coffee with someone who I think, you know, let's talk about investing. It's a skill that often gets overlooked because we wanted the best for ourselves. And that's great. But by talking to somebody and helping them on their journey, you will also learn a lot more and you know, build these concepts even more. So it is a fine line because you don't go to somebody like I hate put $10,000 on stock x y Zed, you're going to 10 extra money that's completely irresponsible and silly. But there's no harm and getting getting a coffee with someone holding each other accountable. learning some new concepts with each other. So yeah, 2021 that's probably what I'm gonna try and do a lot outside of the channel. Hopefully the channels done it. But you know, really go and talk to my mates and be like, hey, look, this is this is the position we're in. Let's get it.


Justin, you hit a really important theme there. And this is something that I've observed over the last four to five years is that there is a now a tectonic shift away from where people would consume traditional advice. Gone are the days where you're walking into your bank branch, seeing that financial planner, the backroom sitting there with, you know, his or her suit on with a whiteboard in the background, telling you about investment. And just look at the glazed over eyes of the people they talk to. And now you're seeing the explosion of people like you and others on platforms like YouTube, which are heralding a new era of the way that people go about investing. And I know this is from firsthand experience, Justin, is that the amount of times and I don't want to get all generalisations on everybody. But you know, boomers and boomers, boomers right now, or people in that sort of age category have absolutely got no idea of the concept of this huge, massive wave of millennials, which are now going to be the newest investing class that are absolutely exploding. What have you seen in your journey as a participant in this community? And how, how do you think that will change in 2021, as that community strengthens around user generated content for people like you that are helping other people invest and then sharing that message to more and more people? What do you think will happen in 2021 and beyond?

Justin Baldori  38:58

I think we've seen like a huge shift, obviously, to YouTube's podcasts and articles and whatnot, that people aren't getting, like financial advice from them, but it's really influencing decisions they make, and where they want to invest in the future. Like, you know, it's using the Tesla example, again, there's so many Tesla YouTube channels that are popping up all the time, there's more channels like myself, where there's young people trying to, you know, educate and do all that sort of stuff. So I think YouTube is playing a huge part in in shaping that future. And what I think 2021 is going to say, with the sort of younger generation people coming through is that people may have just jumped into the market for the first time in 2020. Right, and you could have got on pretty much any stock in March or April and you would have 100 200% no questions, really. But 2021 is probably not going to be like that. So this is where we're going to see those new investors that it would just you know, like odd kind of don't really know what's going on, really going to hone their skills and become a stock picker and try and pick, you know, companies that again, attendance and money or not that much, or we're really going to see them, you know, build those pillars in their portfolio and have a portion where they still stop again, and educate themselves that way. And I think a lot of that's going to be done from YouTube channels yet podcasts, sometimes books are a bit slower to get out. But YouTube's a huge one. And I know I get some of my information from YouTube. But like I said, you know, 20 minutes ago is I can't rely on it, because you don't know the background of that channel. So yeah, I think it's going to be pretty crazy. And I do personally see that more young people want to stock peak, then necessarily get that ETF product. But it's a fine line. If your investment strategy says go either way, then, you know, I'm not here to debate that. But for me, personally, I'll give a bit of personal insight, I stick around 70 to 80% in long term, sort of ETF passively managed investments where I just sort of add to each month and, you know, thanks. So I'm going to check back in on this in 40 years. And then I leave a small portion of my portfolio to do stock peeking to see how I go to put my research to the test. And I think a lot of investors are going to be locked that, too. So yeah, I'm excited. I'm pumped. 2021 it's going to be a really awesome year. And I'm just excited that more people you know, are out there talking about I'm here on this podcast, like I never thought I'd be here on this podcast talking to you about investing. So I love it and I can't wait to see cr 2021 guys.

Blaize Pengilly  41:23

Justin, Christmas is just around the corner. So to finish off, I have one last question for you. For someone who receives a little bit of Christmas cash in the car from Nan on the 25th What would you suggest they do with it?

Justin Baldori  41:39

For me for me, I mean it would be to invest it in some way shape or form and and do all that but there's also other things where you can go on a holiday it's been a rough year for a lot of people so maybe you know spending the money back in the economy that's also an investment but you can also take that money and purchase a book or purchase a course something really small that like I hate using like you know 10 x 20 extra money but really instantly reading the book is going to give you just like some phenomenal gains that probably anything more than you'll ever get out of the stock market. So a little quick little stat I want to share with you and why that could be important to sort of somebody listening who gets that cash is that there's a study done in January this year from the ASX I did this you know cool study is that there's 19 point 4 million adults in Australia like to say with me, I just hang on for two seconds 9.4 million, but only 9 million investing outside of super or their property so not even half right. So that means there's literally more than half that on investing in some way shape or form with that stock market invest in real estate investing or you know, whatever it is that they're just relying on Super and your home which is not wrong. Like I'm not here to tell you it's wrong. But there's so many people that can really benefit from you know, educating themselves buying a book putting that money aside to to educate themselves and invest in that I think there's a lot of room for growth. And I'm excited and if we look back on ETFs and what we've all talked about the stock market over here in Australia like literally This is just just Australia not America, not China, not New Zealand, just Australia the stock market over the last 120 years I think it is has averaged around a 13% return every year now some years has been 50 some years has been negative 20 but very bringing the whole podcast back in and rant and Olean is that playing the long game, you're most likely to see these average returns over a long period of time it's not going to be tomorrow it's not gonna be next year when we extracted out the stock market is a pretty cool place ETFs make that accessible so yeah with that loose change their spare cash you get from nano whatever it is, I think I'm going to challenge people out there is to is to take upon themselves to educate themselves in this space and become a better investor and you know kick goals in 2021 and beyond because it's only the start

Dan Jovevski  43:57

That's absolutely great Justin so Nan play the long game in life and so should you great. Justin, we're gonna wrap up the show Now where did people find you and was the best way they can get in touch?

Justin Baldori  44:16

I find on YouTube to search by name Justin Baldori on the only Justin Baldori had this so you can't find anybody else. Don't search for Justin Bieber though. Definitely different different networks their buds so yeah, mainly YouTube. I do a bit of stuff on TikTok. I did that a lot in lockdown. And that seemed to be going really well go to the Instagram but yet, keep that kind of personal, but mainly mainly YouTube. That's where I post I try and post every second day. It's just tough drives me crazy sometimes, but I'm holding myself accountable for every second day. So yeah, jump over on YouTube. See me there and we'll chat through that through the comments.

Blaize Pengilly  44:53

Great. We'll find you on YouTube. Justin, thank you so much for joining us today on we talk sense I feel really Inspired after chatting to you, you inspire me about investing and your enthusiasm for personal finance totally rubs off. So I really appreciate you joining us today. And it was really interesting, having a deeper chat with you and understanding how you're not just choosing random companies, but seeing your values shine through in your choices, as well as not just when it comes to stocks, but when it comes to educating other people and encouraging people to educate their friends as well. So I really appreciate you spending the time to talk to us today. Thank you so much. We would love to have you back on way talk sense. And yeah, all the best for Christmas and 2021.

Justin Baldori  45:36

I just want to say a massive thank you for inviting me on. Like, I love talking. So apologies if I rambled a bit too much. But I'm just so excited to inspire other people that sometimes when I'm on a roll, I can't stop. So you know, this podcast is fantastic for that. And yeah, thanks to you both. And hopefully we'll see you again soon on the show.

Dan Jovevski  45:53

Thanks. Awesome.

Blaize Pengilly  46:00

Then it is time to grab the helm and be on the lookout for any icebergs ahead because today we are making like the Titanic and talking about sinking funds. You expect wait talked about emergency funds. But now it's time to look at sinking funds. Now until very recently, I was unfamiliar with the term. So, Dan, what exactly is a sinking fund?

Dan Jovevski  46:27

It's a great question. And I think a lot of people have heard the term sinking funds before, certainly if you're a fan of any budgeting guru out United States, the sinking fund terminology is used quite a lot. But now it's really seeping into the Australian vernacular and use quite often, quite simply, or a sinking fund is, is money that you set aside for a predetermined expense. So if you know that you have an expense that is coming up, where maybe big lump sum, if we take a expense like say, your annual insurance review or your rights notice or your land tax, that's probably a bigger expense that you have to carve out potentially multiple have 1000s of dollars to pay. And what a sinking fund does is allows you to save that money in piecemeal to take care of that expense when it arises.

Blaize Pengilly  47:18

Alright, so predetermined expense. How is it different to an emergency fund?

Dan Jovevski  47:26

plays in emergency fund is typically used for unexpected expenses. So expenses that, you know may catch you by surprise, for example, hubby breaks his leg during work, and he takes three months to recover. And he's currently a carpenter who may be on reduced income for a period of time and therefore, an emergency fund, it helps in situations where you tackle those unplanned expenses, the car breaks down the hot water system blows, all the things that just happen in life where they catch you by surprise, where you've now got some money to tackle those situations. Where's the sinking fund, it's really planning ahead and looking at what are all your planned expenses that you have that are coming up and allocating money towards those expenses, and then paying them when they are due and having enough money to do so. Historically sinking funds were used in Great Britain in the 18th century to reduce the national debt. And that's where the the term comes from. Seeing if we're also using businesses also, but they can also be applied to personal finance also.

Blaize Pengilly  48:30

Okay, so let me get this straight. So a sinking fund, the difference between sinking funds emergency fund, sinking fund is known predetermine expenses, and an emergency fund is the Oh crap, I didn't plan for these expenses. So say if like, I guess going to cause like we discussed earlier, I just bought a car and an unplanned x. And thank you. I hope I didn't pay way more than I would have paid back in 2009. Like you've just mentioned, but i think i think i got a good secondhand one. Anyway. So in regards to a car or an emergency, I would have an emergency funds and unplanned expense, like say it breaking down touchwood hopefully that doesn't happen. And then a sinking fund would be something that I know is a planned expense with my car like my car wreck Joe or a new set of tires, which would happen annually. Is that the right way to look at it,

Dan Jovevski  49:23

Blaize that is spot on. That's what I'm saying correct? You do when you wake up one day and you think yourself, Oh, goodness, that expense, that little thing that was just in the back of my mind of just as nails. And I've been looking at the fridge for like a whole year and all of a sudden you know, it's come up again. And a sinking fund is really to alleviate all that stress and anxiety that comes to Japan really, you know, massive expense at one time having the money to do so.

Blaize Pengilly  49:54

Alright, so what other types of events or things are you saving for innovation? In fact,

Dan Jovevski  50:01

it could be absolutely anything Blaize. So the common examples are things like gifts. So coming out of Christmas time, a lot of people decide to save up early, and then set money aside to buy the kids gifts, family members gifts, and so they're not caught caught by surprise and happy to look for additional dollars or even, you know, borrow money during this period of time. Back to School expenses. So when the you know, the kids start school into the February and March and they're getting all their useful uniforms, getting all this stationery, so things like a laptop. So for example, if they're going to upgrade every single three to four years, they've got enough money to do so. Things like replacing the couch, you know, buying clothing or allocating clothing expenses each and every single year. It could absolutely be anything Blaize that is a planned expense that doesn't catch you by surprise.

Blaize Pengilly  50:54

Wow. So I was really thinking more so on the lines of more practical emergency style, things are not not emergency. But practical is in like insurances and new car tires. But yeah, gifts, of course, would fall into that, like you said furniture, I guess any sort of big expense that you know, will be coming up. So if you're moving house even, you could really be saving up in advance for your bond or for your new furniture or anything like that using a sinking fund.

Dan Jovevski  51:24


Blaize Pengilly  51:26

Now, okay, so what's the I get that it's a plan and save for the future. But what's the actual point of a sinking fund?

Dan Jovevski  51:34

The actual point was, is that you don't want to be caught, unawares. When you have all these expenses Come come due. For a lot of people who think about planning the years ahead or their budgets, they're often thinking about the day to day testicle fix, I'm thinking about my groceries, I'm thinking about my utility bills and things that happen on a very regular cadence. But when it comes to those bigger expenses, then those are the ones that often cause a lot of anxiety in people's lives where they can't make ends meet. And this is probably this goes for most people into the show. For most people, as into the show, buyers, people are very interested. And we would think around the topic of budget advisory services, they probably already have some grasp of it. But for the folks that don't ever see he founded and just going through life and making and paying their bills as they come due, those people are more likely to do things like pay things on credit cards, which may attract high interest costs later on. even worst case, potentially take out a payday loan, in order to cover an expense that is coming through. For example, if you haven't paid your bills, and you're getting to the point where maybe somebody is about to list the default from your credit file, or potentially even worst case, even take you to court over that because you can't come up with the funds to pay for something, then that that causes a lot of Mayhem in your life. So really, to live a stress free life, when it comes to your money. You know, how much you earn and where your money is going to say the next month or so. But don't forget about those hidden expenses that come up during the year that you have to plan for that you can take care of as when they come due.

Blaize Pengilly  53:09

Yeah, interesting. And I guess this goes back to our conversation that we had with syrup data from Curtin University, and we're talking about the four common debt traps. If you're planning ahead and having these sinking funds, and you're, you know, having the foresight and the the dedication to put the money aside, then you're avoiding the need to borrow money and you can keep yourselves out of this debt traps where it was so interesting when we showed it to him learning about the different ways that people fall into debt, after they've exhausted the main options, which is you know, personal loan or credit cards and then turning to the fringe, sort of lenders or ways to to borrow money, which have I've seen so many people end up in in bad debt traps, like having the payday loan or the credit card manager. Absolutely. Dan, how do you set up sinking funds? what's the what's the best method to work one into your budget?

Dan Jovevski  54:03

Pretty simple. So you can use the envelope method, which is setting up separate savings accounts for within your bank. Some banks actually buys allow you to set up what's known as sub accounts. So you have one BSB and account number, but what you will also have is a sub account where you can actually see a breakdown of your money put into small little buckets. So you could have say one account, which is A or C but account but underneath that, you can in some cases up to 10 different sub accounts that allow you to allocate things to like rates, Christmas, back to school fees, etc. That probably be a good place to start to see if your bank and financial financial institution offers the ability for you to have sub accounts. Make sure that money is going somewhere where you can exit easily so you don't have to jump through hoops when you spend it. This is really important because a lot of people think that by creating new accounts, they're setting up a savings account or they want to earn interest, some of those savings Accounts do come with a few restrictions if you want to withdraw money, and some of them may even have penalties. So there's another things that people need to watch out for, but they're setting up these accounts within their own financial institutions. The next step blazes, once you've got the accounts already set up is going through the process of planning, what your expenditures are going to be throughout the year, and how you want to allocate your sinking fund dollars in dividing that up into weekly, fortnightly and monthly chunks to coincide with how you generate income, and then each paycheque, putting the allocated amount to those appropriate funds. So you know that when you get paid, so $1,000, maybe 15% of your salary is going towards your sinking funds or 150 bucks, and then that money will be dispersed into those accounts, that then save up for the things that are important for you to clear off, as as big expenses come out throughout the year. That will utilize to recap, number one, figure out your own banking situation and figure out if you can get smart with sub accounts. If it is possible, if it's not just look for other transaction accounts, you can open up and make sure they don't have any fees attached to them. Number two, estimate all your expenses. And this is going through a brainstorming exercise and figuring out right, Christmas time school fees, rates notices all those expenses, estimating what they are and then dividing that by your weekly, fortnightly or monthly pay cycles. And then considering how much you're going to put inside those vans, and then doing the work of actually transfer that money into those accounts. And then watching those funds grow. So that's that's in a nutshell.

Blaize Pengilly  56:40

Yeah, nice. I suppose that So you mentioned about How you can have sub accounts and sub Savers, which is one of the bank accounts that I use, I have multiple savers because you can make as many as you like. And I suppose, without even realising I've already been making sinking funds, because at the moment, I have one for an upcoming holiday holiday that I'm going on. And then I have another sinking fund for another big event that I have coming up. So I think I've, without even realising been doing sinking had sinking funds. And I think perhaps if you've never heard the term sinking fund before, and you're listening to this, you're probably realising if you've saved up for a specific event that you know is coming up in the future, you've unknowingly used sinking funds in the past,

Dan Jovevski  57:25

isn't that cool  Blaize that you're already doing something that's very, very popular. And that's put forward by a lot of budgeting gurus. So that's absolutely amazing news, congratulations.

Blaize Pengilly  57:40

I don't know if I could I don't know if I deserve that much of a good rapport. And I'm just excited that it's good to name now. Dan, are there any downsides to using sinking funds?

Dan Jovevski  57:54

The downside of sinking funds, they can be a little more time consuming to set up. And you've got to figure out a lot of the details about all your expenses and figuring out where money's gonna go to. And so that can be a con for setting up sinking funds, because it adds a little bit more complexity to your life. But my personal view plus is that it's totally worth it. If you think about all those other expenses that sort of come up, then why would you want to run the risk or potentially for a shorter time where you probably don't want additional stress in your life be that Christmas time or when the kids go back to school, or things like that. So a little bit of effort. But the payoff is, you know, putting you in a much better position. So you can tackle these expenses when they come to you.

Blaize Pengilly  58:37

I suppose it's the same with anything, if you want to take control of your finances, if you would like to get a better picture of your financial wellness, you will have to put a little bit of effort in it might be the small a small amount of effort such as dividing your pay into percentages or it might be something more intense like zero based budgeting, we're giving every dollar a job. Or it might be as much effort as telling up your predetermined expenses throughout the year and then working backwards to figure out how much you need to put aside each pay. But it's sort of it's one of those things that if you leave it, you're not gonna if you plan if you're not planning you, you're planning to fail. So as far as the little bit of effort is really worth the payoff of having that comfort. And knowing where you sit with your finances in the end and also having that the comfort of knowing that when those expenses do come up, you're not going to have to call someone up to borrow some money.

Dan Jovevski  59:29


Blaize Pengilly  59:35

Thank you for joining us for another episode of We Talk Cents. If you've got any questions you'd like us to answer or if there's any topics you'd like us to cover on the show, feel free to get in touch throughout Instagram at getwemoney, or we really mean that.

Dan Jovevski  59:49

I think some of the awesome things that we've heard on their app or views about our podcasts are awesome, but if there's anything else that you guys want to see on the show or things that we have not covered, things you will hear more about What's about, we would love your feedback, we're very open to any feedback that you have be that good or bad. It's a learning opportunity for us to make the show better so we can deliver more value to you in the future.

Blaize Pengilly  1:00:13

Also, if you're interested in gaining the full picture of your financial health, why not give WeMoney app ago, you can download it for free, and it will give you access to all of your bank accounts in one place. You can look at all of your investments, your loans, and even your credit score all in one app. It's available for free download on the Apple or Google Play Store or head to wemoney.com.au to download. We'll be back next week for more money chat

Dan Jovevski  1:00:39


Blaize Pengilly  1:00:40

See you later.


The author is not a financial advisor and the information provided is general in nature and was prepared for information purposes only. This article should not be considered to constitute financial advice. Accordingly, reliance should not be placed on this article as the basis for making an investment, financial or other decision. This information does not take into account your investment objectives, particular needs or financial situation.

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