To reach Financial Independence, we all know we need to be investing. There are a wide range of financial products, investing tools and share trading platforms available today, making it difficult to know which is the right one for you. To make matters worse, many of these have outrageously high brokerage fees or even hidden fee structures which can seriously erode your returns.
To help de-mystify the investing landscape, today I talk with Kurt Walkom – one of the cofounders of Pearler, the Aussie brokerage platform dedicated to the Financial Independence community of long-term investors. Kurt has a double degree in Finance and Engineering, has years of practical experience in the finance sector, is a smart investor himself and puts his money where his mouth is – all publicly available, too. As one of the cofounders of Pearler, it’s a fairly safe bet to say he knows a thing or two about finance.
Verdict: Pearler is a cost effective way to automate your investing, and how I personally invest.
CaptainFI is reader supported, which means we may be paid when you visit links to partner or featured sites
Kurt from Pearler
Pearler is a share trading platform based in Sydney. The company has a strong focus on Financial Independence, and has built tools for you to use that help you invest to reach Financial Independence – such as their Auto Invest feature.
Pearler is so keen on Financial Independence, they even commissioned the Aussie Fire eBook to be written – which I had a lot of fun writing a chapter for back in 2020. If you want to have a read you can get a free copy when you sign up to the CaptainFI subscriber email list.
I signed up to Pearler shortly after helping write the book last year and have been using it to invest in ETFs – right through their beta-testing phase. I found a platform that was intuitive and easy to use, that had great technical support, and that seamlessly linked to my existing Sharesight portfolio tracking account.
So, what do I think of the platform, and how can you use Pearler to reach Financial Independence? Have a listen to find out. Kurt also grills me on my portfolio and targets, providing a great constructive critique.
Verdict: Pearler is a cost effective way to automate your investing, and how I personally invest.
- Invest like Kurt – Check out Kurt’s investment portfolio below
- ‘Gotrocks’ in John bogles little book of investing – “Trading is not just a zero sum game, it is actually a net negative game due to costs. Investing is not a zero sum game due to the growth of the market over time.” Another interpretation can be found here.
Kurt’s top tips
- Save more than you spend and invest that money – If you have the ability to, you should aim to save and invest at least half of your paycheck. That should be the starting point – not 10%, not 20%, but 50%. And then improve from there.
- There is no upper limit on income – Try to focus on increasing your income, rather than just cutting expenses in order to boost your investments and become financially independent.
- Try not to get lost pursuing FIRE – Enjoy the journey and make time to be with friends. Don’t forget to invest in your social capital, or you might find your ‘friends stocks’ going to zero!
- Check out diversified investment portfolios – These might be a great option for you if you are just getting started, and you can get over 2000 shares wrapped up in one fund for only around 30 basis points (0.3% Management fee) – Check out the Vanguard or Betashares diversified offerings.
- Index funds – Stock picking is a mug’s game – instead, broadly diversify your holdings with index fund ETFs.
- Be in it for the long term – Buy and hold for the long term to generate real wealth.
Kurt’s top reads
Kurt has read one or two finance books in his time. Check out his recommended reads.
The Little Book of Common Sense Investing by John C. Bogle
The Barefoot Investor by Scott Pape
Check out my detailed review of the Barefoot Investor
A Wealth of Common Sense – blog by Ben Carson (he also has a book of the same name)
Rich Dad Poor Dad by Robert Kiyosaki
Check out my review of Rich Dad Poor Dad
The Intelligent Investor by Benjamin Graham
Check out my review of The Intelligent Investor
Kurt’s top listens
Fire and Chill podcast
Check out the Fire and Chill podcast here
Aussie Firebug podcast
Captain FI 0:05
Ladies and gentlemen, this is your captain speaking. Welcome aboard Captain thought the Financial Independence Podcast.
Good day, welcome to an episode of Captain FI, the Financial Independence Podcast where I open the copy for some of the best and brightest in personal finance, as well as those who’ve reached or are on their way to financial independence.
Kurt Hagen good. Thanks,
Kurt Walkom 0:46
Captain FI. How are you?
Captain FI 0:48
I’m not too bad. I’m, I’m enjoying a nice sunny afternoon. It’s a bit quieter down my neck of the woods. Just before we were listening to the orchestra, obviously Carter’s around your house
Kurt Walkom 1:00
here. Thankfully, they’ve gone quiet. We’ve been sitting here chillin, waiting for a little while before turning the pot on. And I mean, Tom is our friend this evening, just like it always is. Interesting, huh?
Captain FI 1:11
Very good. First off. So I’ve been I’ve been using pillar for a little while now. What is pillar? And how can it help people on the path to financial independence?
Kurt Walkom 1:23
Yeah, sure. So I mean, a range of great questions. They’re really stepping back. I pearl is an online broker for long term Ozzie investors. And the short story is like, I was founded it with two friends. And we did so because we got fed up of only really having two bad options to refer friends to women like they wanted to start investing, whether that be like confusing trading platforms, or expensive micro investing apps. And so Perla just like other brokers, allows people to invest directly in Ozzy or US stocks, and ETFs. And where we differ though, is like instead of having a platform that’s based around the trading experience, we’re really dug deep and like, gone for the long term investing experience from the ground up. So trying to help people achieve their financial goals. You’ve probably already played with the features made the big ones auto invest goals. And then also we have shareable portfolios, share, sign integration, things like that, that just helped make it easy to hit your long term goals.
Captain FI 2:29
Can you tell us a little bit about yourself and your background? Yeah, for
Kurt Walkom 2:34
sure. Well, I so me personally, I’ve I’ve always been like a finance nerd. And a little while, I was interested in money going up, like I used to sell rabbits to a local pet shop. And then we just have chokes and other things like that I come from kind of like country town called golden. But I’d say the real thing for me happened when I was like, 14, and I read the Barefoot investor. I was second edition back in the day and really just changed. It helped me make sense of the journey that I went on as a kid from like a suburban, almost working class style, upbringing to definitely a more comfortable upbringing, where we’d like go on regular overseas holidays and family moved from like, a duplex in the middle of town to like some house on the fringes of town like with some acreage. And that barefoot investor, what it did for me was just really opened my eyes to how people’s financial habits kind of changed their life goals, not their life goals, their ability to achieve their life goals. And their outcomes. What I mean by that is like, Collins, I can’t I couldn’t believe like, when I found out about it, people would sign up to these depreciating assets. And especially they didn’t need them to get to work and you know, for brand new car versus handcar, things like that. personal loans, credit cards, like that was never a thing in my family. It was always like investments. To be fair, though, mostly property. And yeah, that was kind of like the, the frame that I grew up in. And I think I think that’s kind of where it all started for me was that, Ah, that’s why it makes a difference, then the kind of interest grew into a passion. And away I went,
Captain FI 4:19
how did you guys decide to get together and do this?
Kurt Walkom 4:24
Yes. So Nick and I met while working for an investment office. And long story short, I was like mid mid 20s. At the time, Nick was early 30s. And even though we had 10 years between us, our mates, were still having the same issues. And that was they were like, Oh shit, like, how do I start investing? How do I start doing things with my money, and the only difference was that my age it was my friends had just started working for a couple of years. And they had a bit of money saved when they’re like, Oh, I’d be interested in doing something whereas you side of the fence like five years later, they were more like, Oh shit, I just don’t have a family. I’ve started to have obligations, I need to get my act together. So there was like a big urgency switch there, if that makes sense. Yeah. I mean, that was how Nikki and I kind of started really working on Pearl in the in the early days and then had to not we we met at knee college, even SW with hadn’t is the smartest developer that that I know and have known for free unreal. And so we just reached out to him really said, Hey, Mike, can you help us try to put this together? And I was like, you know what I think I want to, I think I want to really help you out. Right? How have you found? Have you found the auto invest function? And even just the new search experience?
Captain FI 5:46
Yeah, well, look, I must admit, I’m still pretty new, I only recently dipped a toe. You know, I picked up a good chunk of my favourite Ozzie ETF. And that was just like a once off. So I still have yet to fully set up my auto invest. But that’s, that’s going to be the plan going forward. But it all looks pretty straightforward. I have set up my share site integrations go really well. So that my, my 1800 purchase that reflected across onto my share site account. And I think I recently just got the letter from the registry. So that should all it’s sort of all coming together.
Kurt Walkom 6:32
Yeah. Unreal. Did So did you find that it seemed Alright, with with your existing portfolio holdings that you had elsewhere on cesa? Well, actually,
Captain FI 6:41
it’s funny you say that when I set it up, it didn’t look like it worked properly. And I was like, Ah, so I reported that as a bug to the support desk. And, and it turns out, it actually synced perfectly behind the scenes. So it’s Yeah, it’s replicated onto my portfolio. And it just turned out, it was just a very minor graphics displaying issue on the on the website, which I went check it out recently. I think you guys have squashed that bug already. So
Kurt Walkom 7:12
yeah, we do have a pretty, pretty fast turnaround on bugs. But there are quite a number of bugs still, it’s still in beta, I guess. So we just, we just got a team up and running and going a million miles an hour. And I mean, it’s mostly all graphical stuff these days. But yeah, that’s, I mean, it’s just great on our end, that you can hook it up, you can get started on power, you don’t need to worry about tax, you already got chairside, it syncs up directly. If you don’t, you can just create a free account and get going. All your tax reporting their performance reporting tools, like super simple, and it’s free, obviously, if your first 10 holdings. So that’s all. I mean, personally, I love it. Because tax is the nightmare. The other thing too is like once people get comfortable, hopefully your self made with Perla, you can just roll over the whole portfolio and it’s already kind of synced up, they’re ready to go. So you don’t need to take that one big leap.
Captain FI 8:07
That’s what I really like about the the chess sponsorship on the share trading platform. And that’s, you know, on any share trading platform that is chess sponsored, is that you don’t really have to trust the actual broker, and you can just yank your shares across. So you know, you’ve, you know, my previous broker pisses me off or something’s going wrong. Yep, I can just move it across to pillar. And there’s very little risk in having an impeller because, you know, if, for whatever reason, I want to move back or, you know, God forbid, for some reason, I’d go back to one of the banks. You know, I can just move that across straightaway as well. You guys can’t really stop me from doing that.
Kurt Walkom 8:47
Yeah, exactly. That’s the beauty of the whole chess model. It’s, it’s, you know, your shares are attached to your hand, you can take him to harder identification number. And you can just move that across with you wherever you go. And it’s called direct ownership, as opposed to like the custodian model which has beneficial ownership, which essentially means like, the broker technically owns title to your equities, and then they assign the benefits of that ownership to you. It can get a bit it can get messy, it has got messy, messy in the past. Halifax and baby wire the two most recent examples in Australia, Halifax was just last year baby was 2015. The money still haven’t been paid from baby Why? They were Australia’s biggest private broker at the time they went under. So, I mean, there’s, there’s good cause to be concerned. But at the same time custodian is the dominant model overseas. So it’s, it’s not all like, What the hell’s going on. I guess if you’re going for a custodian but Australia has chess and it’s it’s actually cutting edge even though it was developed in 1994. That’s because custodian was developed in like, 1960.
Captain FI 10:06
Oh, that’s good. Hey, so coming, growing up in rural New South Wales, buying and selling trucks and rabbits, that’s great entrepreneur spirit established quite young. With that in mind, what has your journey to financial independence look like so far?
Kurt Walkom 10:24
Well, so I got started investing at 15. I read the Barefoot investor at 14, I had 15 grand saved up of that, I think more than half would have been gifted to me. So it wasn’t like I was a Super Saver as a kid. But I did do a bit of work and earn a bit of money, and then read that barefoot investor and got sold on the magic of compound interest in the eighth wonder of the world. So propaganda, if you will. And yeah, from there, I went and invested in three stocks that is stockbrokers recommendation. My parents obviously vetted it too and was caught it was under their name. And, yeah, that was 2007. And then it went pretty much all bust from there. It went to zero for two of them, and that one kinda went half its value eventually bounced out of it. It was a pretty steep learning curve as a kid to kind of get your life savings wiped away. Oh, brutal. Yeah, yeah, it was. It was, it was like, I can’t I do remember it really clearly. But it was, it was like I was watching it. Like it went up for the first like, two, three months. It’s like, Oh, yeah, this is cool. This is cool. And then the GFC hit. And I was keep on thinking, you know, it’s, it’s, it’s a long term game. If I read all this stuff, you just gotta hold on. Yes. Got to ride it through. The thing I didn’t really know at the time was the importance of diversification. Well, actually, I did, I just didn’t know how to get low cost access to it. I didn’t, I hadn’t read about ETFs. I wasn’t, I didn’t understand how they work that I should have been in that instead of three stock picks. And then, once I did learn about them, I thought it was downright unethical that a financial advisor could put someone in anything that wasn’t an ETF is their first as their first equity purchase. And I still do you know, and that’s, that’s really the driving factor behind, you know, how we ended up where we are today, with per day in the financial independence community, pushing this like mantra that is long term investing in diversified portfolios to achieve goals, like, that’s, that’s what we stand for, you know, the lesson was, was birthed in at a young age, right? Well, you
Captain FI 12:49
know, some was, it might have felt really horrible at the time. You know, some, some might even say, looking back, that sounds like a bit of a bit of a trial by fire. But ironically, some might even say, looking back, though, that was $15,000 is, is a what, for, you know, a young boy to lose? It’s a very, very powerful lesson. And like you do say you had that burnt into now about the risks and the benefits of diversification.
Kurt Walkom 13:26
Yeah, absolutely. You know, in it, it’s a great lesson to learn at that age. It’s, it’s, I think, a great lesson, then that, you know, I can kind of shared also did a lot of the driving sort of motivation to make sure that my friends and family don’t make the same mistakes. And hey, also, I’ve benefited from that sense, because, you know, just to give you some hard numbers, obviously started, kept saving rather, and kept investing and just started doing smaller since then. And so, I got to the stage where portfolio went past 150 K, and then, and then Perl came along, so essentially have that and stoked up a bit of the seed capital. And, and that’s, that’s where we are today. You know,
Captain FI 14:15
hey, that’s awesome. Or, you know, Charlie Munger, say that first, the first 100 k is the most difficult to get. And then, you know, once you start getting above that point, you know, you really start to get that benefit that compound interest.
Kurt Walkom 14:29
Yeah, right. I haven’t seen that quite a bit. I can imagine. He’s an astute bloke.
Captain FI 14:33
It’s a little less PG than what I said. But, you know, I don’t want to get kicked off Apple, iTunes or whatever. Well, you know, that’s really interesting. You bet you learn that lesson then.
Kurt Walkom 14:47
So So what do you reckon is probably going to have a mandatory ETF as your first first transaction are we we’re definitely pushing hard on the guidance route, and so you know, you log into power At the moment and the first kind of buckets, you’ve First of all, it’s not just search by three letters like the ticket code, it’s you got a browser, go to the shares and then you’ve got your most popular ETFs is like one of the first ones most popular licks is is one soon after that, and actually the first one at the moment a bucket called free tips, because we’ve we’ve partnered with three ETF providers in Australia, so Vanek, ETF securities and invest, and essentially, they’re paying for your purchase brokerage, if you’re a long term investor with power, speaking of
Captain FI 15:39
perler, and some of the tools, what are what are some of the other main tools and features of the pillar platform?
Kurt Walkom 15:49
So we’ve got auto invest. So that’s the big one, the big draw card, so I’m sure many of you listeners are aware of the benefits of dollar cost averaging. And set and forget paying yourself first. Like all these all these one liners that do really ring true, they wonder on us for a reason, dude, does should we dig into any of the the explanations there or just dig into Autodesk straight up?
Captain FI 16:14
Yeah, yeah, go for my I’m all ears, you’re the expert.
Kurt Walkom 16:18
I don’t know about that, might you go toe to toe with me. So dollar cost averaging is the premise that if you just set up an automated sort of payment, or your you know you regularly invest is actually the specific style, then what you’ll do is you’ll buy more shares when the market is low and less when the markets high. And so therefore your average purchase price would be lower than it might be otherwise. And essentially, it also takes out that whole premise of trying to time the market because you’re already going to get an average lower costs, it also is going to mean that you’re in the market for longer, because you’re getting in as soon as you hit whatever money threshold it is that you’re willing to invest for the brokerage amount. And that’s essentially it. In terms of paying yourself first, it’s a principle it’s like, if you actually set the money aside, when you get paid as soon as you get paid, then it becomes a lot easier to develop a savings habit. So essentially, you can just link those two things up dollar cost averaging and set and paying yourself first. And that’s how that works. And I guess in Paul’s context, where it gets really exciting for those who want to be do this is you can literally set it up so that when you get paid, we will direct debit money from your bank account and invest it into a set of shares. And or ETFs, that you’ve specified in the percentages that you want, and in the manner that you want. So does that make sense?
Captain FI 17:57
Yeah, absolutely. It took me years to fully get the message out of Rich Dad, Poor Dad. I read that book, and pay. So first, it kept coming out and I’m like, What the hell does that mean? Like? What? pay yourself first? Of course, like, anyway, it took me a long time to realise what he actually meant was invest at the start of the month, or just invest as soon as you get paid.
Kurt Walkom 18:27
Captain FI 18:28
Yeah, it’s quite funny. You know, we talk often about dollar cost averaging and lump sum investing. And what’s really ironic in I found in my journey, is that as I learn more, I’ve actually found that for me, those two strategies are actually the same thing. Because like, if you think about it, if you’re paying, you’re you’re buying investments as soon as you’ve got paid, well, that’s a lump sum, invest, right? Because you’re not like withholding and waiting, trying to time the market. But then if you’re getting paid regularly, and regularly lump sum investing, well, that’s the definition of dollar cost averaging as well. So if you pay yourself first and regularly invest, then you’re getting the best of both, right?
Kurt Walkom 19:17
Yeah, for sure. I’ve The, the key difference comes up with what happens if you get an inheritance or some other windfall, how what’s the best way to invest that? You know, something that isn’t just your typical routine investment cycle?
Captain FI 19:34
It really depends on your personal risk tolerance, doesn’t it?
Kurt Walkom 19:37
Yeah, it does. Absolutely. Absolutely. I think that’s the key thing. It comes down to, I think the numbers that like, you’re 60% more likely to get a better financial outcome if you did the lump sum, I guess, even if you didn’t invest it at all in the Li, but your standard deviation, which means like the volatility was something like two times so you will like twice as long way to get a really bad outcome to. And so, at the end of the day, like you, I think you have to, personally anyway, I struggle to justify doing a lump sum, why not just break anything into 24 chunks if you’re talking about like, $100,000 investment, or something of like, or plus. And actually, there’s a great article on this written by Ben Carson, a wealth of common sense, which is, which is my personal favourite, favourite blog, really dissecting, you know, the flaws in the whole Vanguard and Morningstar analysis
Captain FI 20:40
came out 60% of the time, every time.
Kurt Walkom 20:45
Captain FI 20:47
All on? Oh, I actually haven’t read the Ben Carson. Article. So I’m primed. I’m actually excited to go and check that out. I’m gonna link all of it in the show notes as well, for anyone listening if they want to dive in. But Awesome, thank you for bringing that up. I actually didn’t know, standard deviation thing.
Kurt Walkom 21:04
Yeah, it’s, um, I mean, it makes sense for you to think about it, right? If you invest something in the market in a big lump, and the market generally goes up over time, then of course, getting in earlier is going to increase the average outcome. But of course, if you dump it all in at once, then the range of outcomes is going to be much broader. Looking at a rolling time period, so
Captain FI 21:29
yeah, it’s um, it’s certainly something that sort of wrack my brain and caused me a bit of anxiety in the past. So one of the things that I sort of really like about my personal investing strategy at the moment, is I just buy these ETFs I’ve, you know, I’ve got to talk about it a lot. on my blog, which particular ones on
Kurt Walkom 21:49
top of your target portfolio? I want to know. Okay, so now,
Captain FI 21:54
I don’t really know a lot about this, and I really don’t feel qualified to even be talking about it. At the moment, all right, I have a lot of Australian ETF is where the bulk of my money is in the beta shares at 200. And that was because it’s got, you know, the lowest murder, and I could see that tracking the asset, or the Select selective 200 index is very similar to the ASX 200. Index.
Unknown Speaker 22:22
There’s like 300, it’s like, there’s like, there’s, like 3% difference between the top 200 companies in Australia and the top 300 by market cap.
Captain FI 22:32
Yeah, exactly. And I drank barefoot kool aid, and I and I was like, Cool management fees. They’re really important. So that was the main reason why I went with the a 200.
Kurt Walkom 22:42
Yep, go. And,
Captain FI 22:44
and so and the reason I’ve got most of it in A200, was because I had a really strong bias towards home bias towards Australian shares. Just because, you know, I could see, they’re pretty strong dividend producers, I think I was looking at the share site reporting. And my portfolio on average has given me something like 4% in dividends. And I think I want to say maybe nine? No, not at somewhere between six to 9%. capital growth, I’d have to go and have a look at the afterglow, and I do publish the monthly net worth update. So you can you can check it all out. I’m not just making making enough on the spot, I promise.
Kurt Walkom 23:31
Haha yep I seen them mate, its solid
Captain FI 23:32
I do still invest in overseas. So I was inspired a lot by what the Aussie Firebug had done, you know, splitting, essentially rolling his own version of the vanguard diversified fund, you know, the Yep, yeah. Ah, yeah. Or you can or you can roll roll your own.
Kurt Walkom 23:54
Again, taking the lowest.
Captain FI 23:58
Yes, yeah. Trying to get the lowest m er, but also subconsciously, indulging my, my love of Australian shares because they were paying higher dividends. And, you know, I was kind of thinking, well, I want these dividends because I want to build a growing snowball of passive income, which was strongly influenced by my reading of Dave from strong money, Australia’s about building building up passive income, I guess, the tax implications of you know, dividend versus growth investing, to be honest, I think they’re both awesome. And, you know, I’m getting more growth from, you know, the US stocks and the global x US stocks as well. Yeah. So I only invest in those. Those three ETFs. Yep. But I also do, again, from reading strong, Australia, I do have a bit of a soft spot for the lacs listed companies. EFI and that was my first ever share purchase. All right. Not what I thought it was a concrete company when I bought it makes a
Kurt Walkom 25:08
foundation investment. It’s like building a foundation
Captain FI 25:14
investing in Portland concrete, long answer, but I think my portfolio is a split between three ETFs. At the moment for me, that’s, you know, the beta shares. And then the vanguard, VTS and Wii U. Yeah. With I do have four Li C’s that I like, I don’t hold off for right now. Yep. Those of how I break that down. I’m strongly into Australian equities. I think I’m like, I’m like at 1010. Yeah, Australia, us and global. I think I’d like to see that come down to something a bit more sensible, like a 60 2020. But yeah, maybe I need you guys to educate me a little bit more on how to set that up?
Kurt Walkom 26:07
Well, it’s pretty easy to set up. I mean, getting the optimal balance, though, is completely down to personal preference and personal circumstances, you know, like it, dividends are more stable form of capital return, they’re slightly less tax efficient. And so depends really, like, how important that is to you. Also, in terms of the mentality around taking your return, it’s a lot easier to take a dividend payment, that people will have a lot more difficulty, like, selling down religiously. capital gains, once they hit their, like five days, or they’re trying to take some take some, some earnings off the table. So, you know, that’s kind of two things to take into account, I think that are worth thinking about when when doing this. But like, does that make sense? First of all?
Captain FI 27:00
Yeah, absolutely. The, for me, the psychological power of the dividends were massive. So, you know, when I see, you know, it’s, um, you know, about $1,000 a month, on average, coming in from dividends? Like, that is really exciting. And that motivates me to invest more. Yeah, I sort of acknowledged it, you know, it is probably slightly less efficient than just rolling all up in in capital gains. I do see massive benefits. And I know, Dave talks about this quite a lot. Is the, as you say, the stability of the capital return, like in the crisis, I think the share prices tend to drop, yet the dividend payments don’t tend to kind of drop as much. Exactly. Yeah, so I think a balance between everything is, is the way to go. And, you know, it’s still a learning process for me, you know, I’m still, I’ve been doing it for a few years, a few years now, but it’s, um, you know, I’m still far from being anything close to
Kurt Walkom 28:03
experience. But hey, that’s the other thing too, when you are in the early days, it’s not like you’re making these decisions that are going to be locked in for life. Because, you know, you can quite easily tweak your portfolio and not even tweak but make a large percentage changes in like Target allocations, if you and then just invest more in those stocks over the next year or two, you know, and then then they’ll balance out in time. So whenever you someone’s, you know, in that early stage of their fi journey, even all the way up to like, you know, it’s like you can still make really significant allocation tweaks along the way. So you don’t need to get an override in the first goes.
Captain FI 28:43
Yeah, I’ve been sort of focusing on my rebalancing or asset allocation through just buying yet. So that’s where I guess the auto invest feature, you know, buy into the least holding is probably the most attractive for me.
Kurt Walkom 29:02
Captain FI 29:04
So that’ll be at the moment, once I set my portfolios up, that’ll probably just be buying the ETFs, you know, the Wii U and the VTS. Even, that is my least. Having said that, I guess letting that run on its own, you do have also the vacancies of the currency markets as well given that, um, you know, if the Australian dollar is falling in power, then that’s another thing that’s sort of influenced where I’m looking to invest money in the long term evens out
Kurt Walkom 29:43
exactly what I was gonna say.
Captain FI 29:46
So that’s, that’s exactly right. So I don’t I don’t think I would use the auto invest feature for buying listed investment companies yet because so I’m gonna, I’m gonna deviate from the Gospel here. I mean, okay. Now what I do don’t advocate stock picking and trying to time the market. Yep. So I kind of when I’m doing my monthly investments, I have a bit of a quick scan, and I see if any of the Li C’s are trading below value. And if they are, then I’ll look at buying those. But if otherwise, if they’re expensive, then I’ll just, you know, jump onto an ETF. So, in that respect, I don’t think I could fully automate my investing strategy shopping. But I could certainly automate all of the ETF purchases.
Kurt Walkom 30:35
Yeah, sure. Sure. Yeah, exactly. And then that’s exactly how it fades in. That whole, like looking for the whether the lyxor discount or premium. I mean, yeah, that makes it makes sense. I think it is on the margins, though, in terms of how effective it is like. But again, I haven’t done that I haven’t done the numbers, I haven’t done the studies, personally, I, I’m really passive in my investment approach. And so I prefer to not have to go doo doo dee on on that. And then also, I find that ETFs just tend to be a bit more capital efficient. That said, grandfather leaks, super low costs. So honestly, and even like individual shares, like a power, we’re like, as long as you’re investing for like, 12 months or more, you’re a long term investor, we’ll have you. If it’s below that you’re a trader, we don’t want you you know, that’s pretty much our attitude towards how people go into should go into making their investment. And, and sure hate people circumstances change, and sometimes they need it. So within the 12 month period, and that’s fine. It’s voiced. When people go into when people go in, and everyday people go into making investment, the only way they win is if they’re going in for the long term. Because the end of the day, I’m not sure if you’re seeing the god rock story in john bogles book, The Little Book of Common Sense investing, but it’s an absolute Golden One, kind of paraphrase from Buffett to and said, okay, at the end of the day, in trading is a zero sum game, because essentially, you’re trying to take money from other people. And this is before costs, there are winners, and there are losers, if you don’t take into account the benefits of growth over time. And so when you introduce costs, it actually becomes a net negative game, because the broker at the end of the day is taking money out of the pot every time a transaction is made. And so for an everyday person who’s playing a negative net negative game, it’s not their full time job, you know, it’s they’re not doing all the research then. And I know I’m preaching the choir here. But really, that’s why it makes sense for if you’re just trying to achieve your long term financial goals, you don’t need to be dipping the finger in the in the pond every, every day, every month, stick into the long term and watch it grow.
Captain FI 33:12
Yeah, I think it’s probably it’s probably given me a bit of food for thought, and I probably shouldn’t be stuffing around, you know, trying to hunt around for the best deal. And, you know, I guess if I look at the amount of time I’m spending on it, it’s probably better to just just put it into an ETF and completely automate it, and not even spend the time.
Kurt Walkom 33:31
Okay, that time analysis is really worth doing, hey, like, what’s the value of your time and, and also, like, when it comes to like picking individual stocks versus just going for an ETF I know, like, people, and may two, I definitely do it for shares that I really believe in. I’ll put a bit of cash aside into them. But it’s just it’s more like a belief that rather than a, I’m trying to go for the this is a key part of my portfolio, if that makes sense. Yeah.
Captain FI 33:59
So just on that, I guess you you mentioned earlier that your first foray into the investing world was gone all in on three, three pick stocks, and it didn’t really turn out great. Yeah. So what do you do now? I’m assuming you’re big on ETFs. But how do you structure your portfolio? Yeah, what do you
Kurt Walkom 34:20
So? So my portfolio for quite a while was super similar to yours. It was a 200 VTS and Wii U so the BitShares Australia then Vanguard x, US Vanguard us. I had it sitting at about 5025 25 for for a while, and that was that was where I was at. Then I just started. It was it months ago getting interested in how this leveraged ETFs work. The issues that come out with and essentially, they The reason I got interested in them is because they’re structured differently to how other leveraged ETFs work most leveraged ETFs, rebalance daily. And they’re like, fundamentally trading instruments. These ones have a rebalance range, which means that they don’t rebalance very often, and therefore, could be somewhat appropriate for long term investors. And I actually did a really deep dive into this before like starting investing in them. And it’s on pillars blog, it’s just like can internally geared ETFs accelerate my time to fi is what I think the title is. And you know, just like looking at the Sharpe ratio, which is I’ve got my degree in finance and mcaninch. So I quite like numbers. And the Sharpe ratio is kind of how you determine the risk reward trade off, basically. And so it looks at volatility versus return and whether it’s worth it. And in the case of these both gear and GD us to get Australian and us they came out positive on like, as in have a better Sharpe ratio than just your typical ETF after costs. And so I was like, You know what, I’m gonna test this out, because I don’t have access to cheap capital, I’m keen to leverage, I don’t have access to capital because I don’t own a home. I think if I owned a home, I would always use debt recycling. I think I haven’t say that without owning a home or doing a deep dive into it. But it does seem like the most cost effective way. But I was looking for ways outside of that, how do I do it? How do I get access to it, etc. And this seemed like a decent way. So I’ve added in 10% of each of those into my target. So now I’m 40, a 210. year and I actually recently subbed out both the vanguard ones with ven x, sustainable, global sustainable, because why should I care deeply about renewable energy, but to also Vanek has free brokerage on and it just makes a lot of sense from a money point of view, like a cost point of view, that $10 every time that I’m making investment, or $9 50 is our brokerage fee. It’s like, well, if I don’t have to pay that every time I buy two different things. Yeah, well, now I can just increase my frequency, I can increase, I can invest in $1,000 increments. And I’m not paying any brokerage on it. So even though it’s a higher end, it makes sense for me to do that. Does that make sense?
Captain FI 37:40
Yeah, absolutely. I am getting I’m going to be doing a bit of a dive into some of the ethical, ETF funds soon, because I’ve heard a lot of really good stuff about the fund you mentioned. Was it ESG AI, and also the ity as well as another one? Yep. I’ve heard the guys talking about. And I must admit, I haven’t looked into them. I don’t know a lot about them. But they were the way the world’s going. Some of the ethical investing does really align to Y values. Yep. Things that were holding me back for that was just the AVR. And just, I guess, a fear that I was tinkering. As you sort of mentioned, if you’re not paying the fees, not paying the brokerage, then
Kurt Walkom 38:34
it sort of cancels the out, doesn’t it? Yeah, it absolutely does in this case. So like, I mean, I think investing in a way that aligns with people’s beliefs is just becoming more popular. There’s increasingly more products out there to allow you to do it. So evannex Royce a good range. ETF securities to I know actually BitShares have just released and diversified portfolios that are sustainable. So all these products are coming out. They’re actually helping people like get set up, just align more elements of their life and not even find it. I don’t even find it. It’s actually going across the board. Like, you’re talking like energy plans, phone plans, like I signed up to belong the other day, and it had like, carbon neutral phone plan. I was like, awesome. And yeah, it’s just across the board becoming available at a decent rate. It’s not like you’re paying an arm and a leg to
Captain FI 39:28
Yeah, that’s the next question, isn’t it? So like, what’s the bottom line like with your ethical ETF like how’s the returns been? against, you know, what you would have got with VTS
Kurt Walkom 39:41
axe surface. There is there is a small sort of any difference essentially, that gets eaten out of it. But as I said before, I don’t really pay that anymore because I’m not paying the brokerage right now. And then also, I’m kind of happy in a way to say that it’s worth it. At the end of the day, it’s like it’s not huge. You’re paying virtually. If you compare between the two, you’re paying I think 20 pips, assuming you’re paying the same brokerage, I’m doing it. So, I mean, it sucks that the individuals are safe that that justifies it for them. And that’s just comparing the set of ETFs. But yeah, that’s, to me, it adds up even even with the brokerage being the same. So it’s a bit of a bit of a knock, touch.
Captain FI 40:29
So what about the What about the performance? Like, I know, we always say investing is a long term game. I mean, have you seen a difference in performance at all? Like were these? assuming these ethical funds may outperform?
Kurt Walkom 40:42
Oh, sorry. Um, yeah, what I was saying was that the only difference in performance, I like the five, how’s ESG been around, but I think it’s about five years it’s been around. But is has just been like, there’s really minor and minor to the point of, it really just seems like it’s the additional little bit of management fee. That’s changed it. Like, I don’t think you’re getting a big swing either way, right now, as how, as far as markets have been performing on sustainable versus not. But hey, we may see that changes. You know,
Captain FI 41:21
we’re seeing like, obviously, the green renewables we’re using it’s becoming more of a part of our life. The same, you know, Tesla becoming huge with electric vehicles. Yeah, it’s definitely an area to keep keep an eye on so cool. Well, oh, now, can we can we see your
Kurt Walkom 41:42
portfolio or app pillar? Like, do you? Yeah, absolutely. So we, we’ve got the portfolios up, you can actually link the URL, and you can just say, my toggle portfolio as it is today. Check it out. And it’s Aaron, essentially, you can even invest like Kurt if if, essentially, our concept is to have templates that people can use to get started. And it’s not meant to be Mirror, mirror investing by any stretch, but it’s just meant to make that first decision point easier. I’d also recommend that if people are just trying to get started that they check out diversified portfolios like these diversified ETFs. Vanguard and beta shares both have a range of these diversified ETFs where they like we’ll have up to 2000 securities underneath them for like 30 basis point fees. And it’s just a really good way to to not make any mistakes when someone’s starting. At the end of the day, the thing that matters most is just the Getting Started part. Hey, like,
Captain FI 42:41
so good. I’ll say that Perl is a low cost investing platform. Yep. We have seen a couple of platforms springing up with, yeah, some even even lower costs. So for example, we’ve seen superhero and open trade and both offering $5 trades. Yeah. How do you How does pillar plan to compete with these companies and what makes Perla different,
Kurt Walkom 43:10
I guess, to hit the second one off really quick. It’s, it’s all these companies are trading companies. So fundamentally, they help people buy and sell shares. It’s the behaviour they’re encouraging is casino like. And it’s what gives investing the bad rap, because it’s really trading. And to give you some tangible examples, like they built the interface around the buy sell process, there’s a lot of market depth there, the defaults, intraday price changes, etc. On our ends, you know, where the price change default is 10 years, we’re looking at only having like, well don’t don’t leave it at default is market orders will allow people to make an investment any time of day. You don’t have to be during market open hours. And we have automation set up so that you can actually just be completely price agnostic, because the price really doesn’t matter when you’re investing in these diversified portfolios if you’re doing it over a long period of time incrementally. So fundamentally, were the anti Robin Hood, if you want to sign someone up in a sentence, where where is superhero self welfare, very much Australia’s version of Robin. How do we compete with $5? Well, we’ve got all those features, obviously. But we’re also trying to be cost competitive. And so we’re working on this freemium service at the moment, the very first version of this is a free ETFs with the ETF partners for long term investors. So if you buy one of their ETFs then and you hold it for more than 12 months, then you don’t need to pay any brokerage. If you sell it before. 12 months is up then you just paid brokerage you would have paid when you when you make the sale. And so that’s the first version of that. The second version, which we hope to launch it next year is, is more of a general like free investment brokerage for long term investors for both au and us investment ETFs. Not all stocks, but ETFs. We still got some work to do around this. So I can’t give too much away or keep keep my cards close to the chest for now. But keep the eyes out for that on the horizon. But yeah, that’s the other big competitive things that we’re working on, I guess, on top of all the just pure features that are built for helping people actually achieve their goals, rather than feel like investing in a casino.
Captain FI 45:48
I think that’s a really good, really good take on it. So I’m interested to hear about, you know, the development about this freemium model. So what’s in store for pillar over the next, you know, 12 months, let’s say, Can you give us any sneak peeks on how this might change?
Kurt Walkom 46:08
Right? I Well, you we’ve got the free ETFs at the moment. And essentially, we want to build that out. And we want to build that out across not only your Australian space, but also the US ETF space. So essentially, there’s, there’s this free access to to investing in some of the assets that are on our platform. And then there’s kind of a subscription price that someone could pay for unlimited investments, assuming they hold them for 12 months. And then that’s, that’s what we’re looking at. And then of course, we want to then take it to the next level to this, this step after that for us is actually you can start to include superannuation in your balance of super in the pillar platform, we also will help you compare against other super funds, roll over to the best one that for you if if there is a better one to you like a clear winner, as well as give you some of the benefit of rolling over, like, share the profits there with you because at the moment, the thing that’s wrong with the finance industry is everyone gets paid by the product provider. No one’s really aligned with the customer’s interest. And we’re trying to flip that on its head. So supers is a clear one also help make it easier and more cost effective that people make their own SMSF if they’re, if they’re keen on doing that moment and nightmare to do it, but the control is valued by a number of people and it’s a bit costly to so if we can pull the costs down, maybe it becomes more reasonable for those with instead of a I think the number at the moment to 250 k balances when it starts being maybe worthwhile doing so maybe we can pull that number down 200 or something like that, and and then people can have a control. That’s just one other option. And then also we’re looking at Okay, can we can we then include micro investing apps or rubber on the platform so your razors and your spaceships so that you can do things like roundups and, and other just like everyday investment stuff? If that makes sense.
Captain FI 48:14
Yeah, so kind of looking to expand and and have basically a spectrum of investing to kind of cover the life cycle, whereas people sort of learn about it, maybe get into micro investing, build up their brokerage, and then also looking at their retirement phase with superannuation.
Kurt Walkom 48:32
Yeah, exactly. So we want to be the wealth app for every one. So to cover, not only investments in stocks, but also cover investments in any micro investing, or any superannuation fund and have it all in one place. So you’ve got one unified view, so you understand everything with your money. That’s, that’s where we’re working towards over the next two or three years. And we’ve already got like, super integrated into the platform in a little way. And that’s the next step for us step after that is trying to get round ups to kind of be these round up platforms. And then who knows after that the the worlds are always still we maybe we can even help people to find better loans, more accurate insurance for their needs, things like that. But now I’m talking big pipe dream sort of stuff where we’re trying to be the Amazon of finance, but
Captain FI 49:32
that’s great. It was awesome to know that you certainly got that long term focus. And yeah, it’s it’s not your conventional share trading platform. When you’re dealing with Perla.
Kurt Walkom 49:44
Not at all. It’s it’s really trying to help people get better with their money and that’s the other side that we really haven’t covered that much. But there is a genuine like helping people connect and achieve their goals together side to to what we’re doing. So In an ideal world, it’s like people will, will share their goals with one another, they’ll kind of be able to congratulate each other on achieving milestones, whether that’s saving for that home deposit or hitting five, or whatever it may be, and just essentially get rid of the money taboo that exists in society, because it’s such a massive driver of inequity. It’s like, it’s, it’s, it’s one of the biggest things that if we can solve that, then I think we’ll do a really good thing for for the country. So my favourite book on investing is the Little Book of Common Sense investing by jack Bogle or john Bogle, the founder of Vanguard, it recently passed away, but he essentially invented the index fund. He didn’t essentially he did invent the index fund, which is then they kind of transformed the ETFs that most more people use today. And it’s just an it’s a great book, it’s just phenomenal on like, the ups and downs of investing as a whole and the benefits of passive obviously, he’s he’s got a, he’s got a seat at the table. And there’s a there’s gonna be some bias there. But there’s some strong stats, he’s an academic sort of writer and I quite enjoyed that. Other thing I mentioned before wealth of common sense, it’s, it is my favourite, General sort of investing blog for like cago information. I follow all the fire blogs. So obviously your readers would be well acquainted with those in Australia that is, in terms of other books, getting started, I still think the Barefoot investor is a great reader. I know people will knock it, but I think it’s good. I really liked the rich dad poor dad to actually that kind of focus on the benefits of cash flow. I think I never really cut through to me until I read that book. That was maybe the the big ones. I think I’ve done a lot of other stuff too. Whether it be like value invest like the Intelligent Investor by Benjamin Graham, but I mean, I can cut to the chase there for you and your his listeners rather if they hadn’t haven’t read it before inside it. Graham is being quoted as telling Buffett and Bogle that if he had his time, again, he would recommend to the average person to just invest in index funds. So yeah, that’s the father of value investing saying that
Captain FI 52:41
powerful stuff, isn’t it?
Kurt Walkom 52:43
Yeah, exactly. And both Buffett and Bogle have said the same thing, by the way, Buffett’s even put in his will, that he’s gonna it, I think and his wife’s assets when he dies to be invested in, like it’s 90% s&p 500 index and a 10%. US Treasuries index. So, again, like, it’s pretty compelling when you start digging into this stuff. I could probably rabbit on for days about different things. But I think the ones I’ve covered are the ones that are most compelling. For me. I clearly like to read a lot. So that’s kind of been my key source, although more and more I’m doing driving and listening to pods. And, and that’s been fun, too. I think the best pods in Australia would be in file and to yours. Dave’s David Pat’s rather, and I do like yeah, only five bucks. One, two, they’re probably my favourite. Like deep five pods. Again, depends on how I pay for consuming content, I guess.
Captain FI 53:59
Yeah, there’s so many good ones, too. There’s so many good ones to choose from these days, specifically the the podcasts. And a lot of them very tailored to specific audiences as well. So yeah, get out there and make sure you have have a listen, I’ll put the link in the show notes to all of the books and podcasts that Kurt’s referred to. And yeah, check him out, particularly the podcast, have a listen to a few episodes and see if they’re for you. So I’m finally may end up and I’m very thankful to have taken out so much of your time. And, you know, we did chat for you know, a couple hours before we started recording. Really interesting night and yeah, I love what you’re doing.
Kurt Walkom 54:43
We had a we had a lot to cover. And a lot of common grant.
Captain FI 54:48
Yeah, absolutely, mate. So now I was actually absolutely stoked to, you know, have spent so much time chatting to you this afternoon. Now, one thing I would like to ask on one final question, And this is often referred to as the cruellest question that I asked, I’ll ask every single person that comes on the show, based on everything you know now about money, finance, investing psychology. If you could distil all of your knowledge into three helpful tips would they be? Oh?
Kurt Walkom 55:27
Well, I think the top one would be that I’ve seen if you can save more than you spend and invest that money, then I like they’re the ones who’ve got to get get to fight a fastest. And I can’t say that I do that on my ramen wage at the moment. But that’s the big one, the 50% savings rate in in fires is the golden goose. And as far as I understand, you’re you’re way above that night. So no lessons needed from me there. Number two, would be there’s I think there’s a lot of emphasis on on like, you know, cutting costs in fi like, no expenses of fixed expense sort of mindset. But I think that the potential for earning more often gets missed, like there’s no upper bound on income. And in fact, only Firebug read a really good article on this one that might be worth throwing into that just focusing on how can you increase income rather than cut expenses, I think, is not only probably a better way to accelerate your date, but can also be a better way to live. Instead of saying no to more things, you kind of saying yes, and you’re like increasing earning capacity, etc. Which brings me to tip number three, it’d be just enjoy the journey, like, people get so caught up chasing a goal. And I’ve done this to myself a number of times in my life, but I try not to get lost pursuing a goal is really, I think, important time just enjoying the life you live enjoying the journey today. Because like, you know, you might get to the goal and have no friends to have left to enjoy it with other words. So that rounds out my throat.
Captain FI 57:25
I think that’s some. That’s some great advice. And I wish I wish someone had told me those three things when I was in school.
Kurt Walkom 57:34
Yeah, well, that’s why you gotta live a little. I didn’t know me, though.
Captain FI 57:39
It’s great night. Hey, I’ve had an absolute blast recording with him a forum for anyone listening who you know, wants to learn a little bit more about Perla or get in touch with with yourself or maybe have a bit of a sticky beak at your investments? How can they get in touch?
Kurt Walkom 57:55
Yeah, for sure. Well, first of all, I can, if I really want to get the jump on and test it out, I can’t, I can even skip our waitlist using using your unique code mate, your special exclusive one. It’s just Captain FI beta. And we should just add in the URL to the show notes too. So I can click on that. And that’ll take them straight through skip our whitelist. And they can open an account opening accounts free are just a way to explore and do it yourself. And you can go for it. Of course, if you have more questions, you can also shoot us an email at [email protected]. We’re earning me an email at COVID gmail.com. And that’s really about it. We’ve got so many channels of ways to get in touch. It’s It’s It’s more like we’re just we’re pretty set on making sure that we hear our community that we’re building a platform for them. But even got like a public roadmap that we just launched the other month that shows people kind of what we’re working on plus allows them to add in feature requests and then other people to upload it so that we know genuinely what people are after. So we’re pretty, not pretty. We’re very set on community led development. So right people want to get get in touch sign up. I think that’s the best way to get your hands dirty, and then ask any questions from there. So your code Captain five beta or one word? Everyone like it in the show notes?
Captain FI 59:18
Yeah, awesome. Well, everything we’ve talked about today will be will be gone in the in the notes on the bottom. There’ll be links to how you can get into the beta test, as well as links to Yeah, my thoughts on the platform and my sort of review of my experience using it so far. So it could be wonderful to chat. My thanks so much for making time on the show. And I’ll get back to pestering you guys tagging you on Instagram and various other posts
Kurt Walkom 59:48
might love your work. Thanks so much for
Captain FI 59:52
thanks for listening to another episode of the Captain FI Financial Independence Podcast to read the transcripts or check out the show notes, head over to www dot Captain fi.com for all the details. If you have a question for the captain, make sure to get in touch. You might even make it on the airwaves. You can reach me online through the captain fire contact form, or get in touch through the socials. I’m active on Facebook and Instagram as well as a number of online finance and investing forums. And finally, remember the information presented on the show and the links provided for general information purposes only. They should not be taken as constituting professional financial advice. You should always do your own research when making any financial decisions and make sure it’s appropriate for your personal circumstance.