Captain FI Podcast | SelfWealth

To reach Financial Independence, we all know we need to be investing our savings. 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, or even hidden fee structures which can seriously erode your returns.

To help de-mystify the investing landscape, I am going to talk about the share trading platform that I have personally been using for the last few years, and which is undoubtedly one of the most popular choices in the Australian FI community at the moment.

This is of course, Selfwealth. On board today is Jarrod Purchase, a general manager and marketing representative from SelfWealth. We talk all about the platform, its background, where it is today and the direction SelfWealth is headed in the future.

I ask Jarrod some tricky questions, but one of the most important things of the interview was hearing how Selfwealth plan to stay relevant and compete with newer entrants to the Australian Investing space like market disrupters Pearler and Superhero – two new fin-techs who both offer reduced and even zero brokerage on some ETFs.

So sit back, relax, and enjoy the episode. It’s about an hour long and of course due to COVID the beverage service has been suspended.

 

Show Notes

Jarrod from SelfWealth’s Top financial tips

  1. Earn a high income – all jokes aside, if you can up-skill, gain a promotion or find a higher paying job then this will help greatly in your pursuit of Financial Independence. See if you can track down some profitable side-hustles but make sure you know your worth and don’t accept a lower rate than you should!
  2. Educate yourselfRead as much as you can about finance especially online blogs.
  3. Don’t bust your gut – Remember to enjoy your life, there is no point burning out half way – make your journey sustainable.

Jarrod from SelfWealth’s Financial Independence reading recommendations

Jarrod had a couple of reccomendations for upskilling your financial knowledge, including reading the barefoot investor and online financial independence blogs.

The Barefoot Investor by Scott Pape

Check out my detailed review of the Barefoot Investor HERE

Online Financial Independence blogs

Check out my review of the best online finance blogs

General reading

Check out the Captains reading list for more inpsiration.

Transcript

Captain FI 0:08
Ladies and gentlemen, this is your captain speaking. Welcome aboard Captain FI the Financial Independence Podcast.

Good day, welcome to an episode of Captain FI, the Financial Independence Podcast where I open the copy to some of the best and brightest in personal finance, as well as those who have reached or are on their way to financial independence. Before we get started today, remember anything on the show is provided for general information only, and should not be taken as constituting a professional advice, you should always do your own research when making any financial decision. To reach financial independence, we all know we need to be investing. Now there are a wide range of financial products, investing tools and share trading platforms that are available today, which makes it difficult to know which is the right one for you. To make matters worse, many of these have outrageously high brokerage, or even hidden fee structures which can seriously erode your returns. To help demystify this investing landscape. I’m going to talk to you today about the share trading platform that I have personally been using over the last few years, and which is undoubtedly one of the most popular choices in the Australian fire community at the moment. This is of course, self worth. So on board today, we have Jared purchase a general manager and marketing representative from the company. We talk all about the platform, its background, where it is today. And the direction self wealth is headed in the future. I asked Jared some tricky questions. But one of the most important things that come up in the interview was hearing how cell phones plan to stay relevant and compete with new entrants to the Australian investing space. Specifically market disruptors like Perla and superhero who both offer reduced and even zero brokerage on some ETFs. So sit back, relax and enjoy the flight. It’s going to be about an hour long. And of course, thanks to COVID the beverage service has been suspended. Jared, thanks for making time to come on the show this morning.

Jarrod Purchase 2:38
No, no problem. Happy to be joining us.

Captain FI 2:40
First up night to set the scene. Why don’t you tell us a little bit about yourself and your background?

Jarrod Purchase 2:46
Yeah, sure. So my name is Jared purchase my titles. General Manager of marketing, although we’re a pretty small outfit, so people are typically wearing all sorts of different hats. Everything from moving stuff around the office, organizing social things, that sort of stuff. So in terms of my background, I’ve always been in marketing, I’ve been with self wealth for about two and a half years now more or less. Before that I’ve been in a variety of industries, everything from gaming pharmaceuticals, through to sort of consumer credit and finance, spent about five years over in London ply my trade and returned to Australia about three years ago, which worked for a small startup here and then join self wealth year about two and a half years ago. I guess in terms of like, personally, my hobbies. So I’m into into fitness, you know, going for a run, especially now that the COVID sort of shut down all the all the gyms and everything else we can do sports and that sort of stuff on Melbourne based is self wealthy is. So we’re still working through through our lockdown restrictions. Log cycling like sport, pretty sort of standard millennial in that regard. So yeah, that’s the stuff that keeps me entertained outside of work.

Captain FI 4:03
How have you guys found working through COVID?

Jarrod Purchase 4:07
Yeah, pretty much since the start of the middle of March, I believe it was. Yeah, we’re an online business. So we don’t have physical suppliers that we’re receiving goods from sending goods out to that sort of thing. So, you know, we’ve got a pretty sort of impressive online architecture and systems in place that that run the self health platform. And our teams have been able to transition from work in the office to working from home pretty easily. There’s some of the project work. It’s a little bit discernment disadvantageous to be to work online. You love to sort of throw ideas around a room is a whiteboard, that sort of stuff. But there was no you know, technical hinderance or slowing down of any process. Customers would have noticed a single thing throughout that period, but we do miss being in the office because we’re, as I said earlier, a bit of a smaller outfit. And everyone’s pretty close to the company and we’ve got a great, great office atmosphere. So A lot of us missing that. But in terms of COVID, you know, our way of working hasn’t changed that much. But as we all know, the markets took a bit of a hit, then people were looking to get into investing, which I’m sure you’ve seen yourself in terms of people listening to podcasts, visiting the site, all that sort of stuff. So that meant we had a lot more customers coming in through that March period. So we’ve been putting lots of more people on in terms of, you know, customer service, technology, all that sort of stuff. But but so far as his businesses thrive through that period, unfortunately, I know there’s a lot of businesses, obviously, they’re struggling, but because of the interest in the stock market, sell falls done very well. And because of our, what I like to think our digital presence through, you know, sites and podcasts and like yourself, where we, where we get recommended quite a bit. And we managed to get a lot of new customers through that. And we were happy to have them on board. And a lot of them are actually quite new to the stock market. And we’ve been, I think, enjoying actually having all these new people entering the market and helping them with their investment journey.

Captain FI 6:05
As he said, Yeah, there’s been a huge uptick in interest in the investing space. And, you know, we’ve seen the Fang stocks just absolutely dominate. I mean, I’ve personally are, I’m pretty sure the index investing strategies, the way our I should go, and then I, but I’ve seen these particular sectors just absolutely take off with

Jarrod Purchase 6:27
Tesla, over Amazon.

Captain FI 6:30
I’m just waiting for technology to catch up to the point where I can personally work from home and just fly people around on a UTV or something. But I don’t think that’s going to happen

Jarrod Purchase 6:40
with what the real interesting stats a little bit off topic. But I know when working from home came in, in in March, there was a lot of surveys saying about 75% of those that obviously work and work from home, were really happy working from home. But I think it was in the last month or so there was another survey done through one of the major news organizations that that had plummeted down to 35 40%. So there’s been a bit of change in sentiment about that. But I think everyone would probably agree it’d be, it’d be nice in small doses, and the flexibility is fantastic. But as humans, we we sort of crave that social interaction.

Captain FI 7:15
Yeah, and structure is really important, most of the most of the audience are probably going to be quite familiar with self wealth, they might have seen the review on the blog, but for the benefit of people that might be hearing this for the first time, what is self worth? And what are some of the features that you guys offer?

Jarrod Purchase 7:36
Yeah, sure. So that people might be intrigued as to why it’s called self wealth. You know, there’s a lot of names out there for trading platforms that are investing platforms that talk to more the practical side of it, it actually started out in 2012, Andrew Ward, the founder, who was working in the business and continues to to consult for the business, although not in his c roxi role at the moment. And he started out with the idea of being able to, there’s two approaches there was making investing more accessible for the average everyday Australians, which, which is happening so much more now. And it’s accelerated over the past, you know, 12 to 24 months, and obviously, doing podcasts and sites like your own makes it even easier. But back in 2012, when he started it, he worked for wealth wealth arm of, of Commonwealth Bank, and you know, a lot of that a lot of that knowledge was sort of trapped up in, in certain circles, and you kind of had to know people or talk to people and that sort of stuff that we’re in the know to get that stuff. So he actually through a partnership with a company called bgl, who, who administration, regulatory regulatory software, platform and company for self managed super funds. And Ron Lesh who runs that over there, decided to invest with Andrew to start this business and effectively pull together large amounts of information around what people were doing to invest with the idea of identifying Great Investors, who you could then follow and take out a lot of the guesswork to with with the goal of outperforming the market. So he started in 2012 There were all sorts of iterations of that it was a subscription service, but the people that were using the platform, then they would have to get all those insights and and, you know, see who’s doing well and what they’ve bought and what they hold, and then go somewhere else to invest. And I said we actually want to do this on your platform, it’s stupid, we have to go somewhere else. So he introduced the flat fee trading and had to be flat fee because as low as possible, because, you know, the the model that he found was typically the the portfolio size be about 2025 shares and ETFs and that sort of thing. So to then have, you know, extremely high or percentage based fees and expecting someone to rebalance at 20 stock portfolio every quarter, which has become too expensive, but that’s how you should. That’s how he found through his modeling was the best way to approach it turns out everyone wanted a flat fee share trading. platform. Yeah. So at that stage it was, it was very innovative. And it was, it was a game changer in terms of investing in shares Australia was, you know, it’s him based. So there’s, there’s no custodian model there. So it means you own directly, you own the shares directly, self wealth is just a means to, to buy and sell your shares, you know, on the chess registry, it’s, it lists you as an owner, it’s not self wealth holding on behalf of you, you own them directly. So to be able to offer it at such a low cost was a bit of a game changer. So we’ve seen phenomenal growth since since he introduced that and since I’ve joined, mainly because you can access the Australian stock market and through that through ETFs, the rest of the world at an extremely low cost, but also flat fee, so you don’t get penalized for growing your wealth and, you know, being a little bit richer and trying to buy and sell, you get the same service as any of the bank backed brokers. As someone that’s investing thousand dollars, if you’ve got $100,000 to invest, they just ask for some more money when you when you invest, so, which we think is a little bit rude. So ours is flat fee, regardless of whether you’re investing $800 or $2 million dollars, it’s still only Nanos 50 to invest.

Captain FI 11:31
That was the draw card that actually brought me across to the platform. Or rather, what are the big banks or conventional brokers offer that self wealth cat over the last few years? I honestly can’t see the difference. I know that you know, some places big ones are calm sick, they do have the majority of the market share when it comes to brokerage. And I’m an all I can think is that maybe they just have a big customer base that maybe trust the company name. But, you know, it’s it’s reassuring to see as time goes on. And as the message gets out there, I guess people are voting with their feet and moving across to basically control the fees that they pay along the way. I mean, was it the Barefoot investor? You know, Scott Pape said you can’t control the market, but you can control the fees. So getting

Jarrod Purchase 12:29
that same phrase. Yeah, exactly. You don’t know how the markets gonna go. But yeah, why pay 20 $30 when you can pay less?

Captain FI 12:37
Yeah, so the the $9 50 flight free trades that was literally, that was what got me across the door. And I’ve enjoyed using the platform, the apps really easy to use the web clients good. I try and limit myself logging in my personality, I can tend to get a little bit obsessive over my stock portfolio. And I can tend to log in too much and horkheimer shares. So I personally try and just limit myself to when I’m doing my, my monthly or fortnightly investment, or when I’m producing the network updates for the blog. But I found them really easy to use. So what do you what are your thoughts on I guess, the market share and how these fintechs and new share trading platforms are competing with the the conventional brokers,

Jarrod Purchase 13:28
it’s hard competing against banks.

resonating, they got a ton of money. So you know, they can advertise and spend a lot more than we can. But the main one is that there’s a lot of trust in banks that we you know, we talked about banks not being particularly trustworthy, but everyone knows that banks are almost too big to fail. So there’s, there’s always been, especially early on with self wealth, it was a concern as to you know, who you guys are going to be around ragers What’s How do you keep my money safe, what happens to my shares, all that sort of stuff. And we’re a publicly listed company. So we’ve had to work really hard to build that trust. We’ve got over 55,000 active Australian investors using us, which represents about 6% of the market. So we are the biggest, the second biggest non backed non bank backed online broker behind CMC who have been around for a long time as well. So So building that trust was was really hard for us and we fought for it. But at the end of day, like you’ve said, there’s there’s not much difference between the banks and us in terms of you know, features functionality, security, you know, the banks, you have your shares through the chair sponsorship on your own him, same with us, you know, the bank’s bank accounts, they’re covered by the government guarantee. Same with us. So, that’s, that’s like for like, so and the fact that we’re publicly listed we you know, we report quarterly, you can see how the company’s going. We’ve had Now had two positive cash flow quarters, which we were pleased to announce on the second of October. So there’s a lot of confidence in self health as a business, we’ve got a lot of institutional investors, and a lot of retail investors, a lot of people that use our platform invest in us, which is a fascinating concept that people that, you know, use your product, also by your company through your company. There’s not many other industries with something like that. It’s something like, I think last time I did the analysis, over a third of the company is actually owned by people on staff wealth, that is skewed by the fact that, you know, staff directors founder are all on self wealth. But it’s quite an interesting proposition. Yeah, back to sort of features and functionality. There are some things that we don’t have that, you know, lots of conseco 50 folks in the market don’t have. But we’re looking to add that stuff over the next six to six months or so we’re launching us trading in before Christmas is the company line. So I’ll stick with that. You said the apps good, but we actually think it can be improved quite a lot. And we’re launching a new app around the same time. So a lot of works been put into those two projects, the US trading has been worked on for 12 months, alongside fuel capital, or a massive global investing firm, there are partners for that. And then once those two things are launched before Christmas, we’re going straight into all sorts of different projects. You know, in improving data, we’ve got a new deal with refinitiv, who are the guys who provide all sorts of information data around his stocks, we’ve got a whole set of data that’s ready to go into the platform, things like you know, environmental, social governance, sort of measurements, you know, emotional measurements, all these sorts of things to help people invest better. We’re looking at live pricing, quicker funding, you know, all that sort of stuff. We know, we know, there are things that our clients are yelling and screaming for. And we’re very aware of those, and we’re looking to add those in. So if you like self worth now, it’ll only get better over the next next six to 12 months.

Captain FI 17:08
That’s a, that’s very reassuring to hear. I was gonna ask you like, what can we expect in the future, but that’s a, that’s a fantastic breakdown. So I just want to circle back to security. So the first thing I went out is I hundred percent agree having the company IP owed, that’s very reassuring for me, because I can now like, go and have a look at all the companies reporting. And I can feel comfortable that you’re also being regulated by asik. And it just I think it just adds a tear of trust that I don’t have to, you know, take it on your word that the company is actually growing and strong. And I’ve actually found that with my research on a number of investing platforms, particularly global platforms, which are privately owned, they they do, withhold a lot of information, and you end up just basically having to trust them. So that’s a that’s a really big positive in my book. And the The second thing I was going to ask Jared was, and you touched on him, or a holder identification number, which is to do with chess sponsorship, zoning, if you might be able to elaborate a little bit more on chess sponsorship versus custodian investing models and what which one’s self worth users?

Jarrod Purchase 18:33
Yeah, sure. It’s,

it’s a very strange name to follow, people can say that. I really only got personally interested in investing. Once I joined self wealth, I didn’t know too much about it, I had a pretty sort of standard view of the stock market, it’s, you know, it’s gambling, I might as well go down to the tip and put some money down. It’s the same effect. So when I first learned about investing, and had to obviously know the product really well on the market, well, to be able to mark itself well, I had to learn all these these different terms. Chess is a very strange term To start off with, and it’s got nothing to do with the game. And chess is effectively which was disappointing because I like chess. Chess was it’s effectively a central rich registrar that, that, that lists who owns what, at any one stage and it’s it’s outside of the broker. So it’s got nothing to do with self wealth, so itself wealth to all the servers and all the office would have burned down tomorrow. There would be no doubt as to what self worth clients own. Who owns what, how much they own, all that sort of stuff because it’s not held with us. You can effectively look itself wealth as a portal to be able to, to access and view your shares and your ETFs and then to buy and sell them on the market where you access to the market. And you can’t really do that by yourself. You need. You need someone to help you with that. So that’s what we facilitate So the difference between that and a custodian model, and there’s all sorts of different models, and there’s new ones popping up now. And the custodian model means the company that your broker will effectively have the shares on your behalf, you’ll be listed as the beneficial owner for that. But the the broker will be the one that’s, that’s more or less buying and selling the shares on your behalf. So the the ownership is is structured is very different. And in the case, I’m not saying this will happen in the future, of course, but, you know, in the case of, of brokers that have that have collapsed in the past, there’s one about five years ago, baby why, you know, there’s there’s sort of certain things that have happened in, in the past that that make that not particularly desirable for Australian investors. We see anecdotally in our clients saying, I really like the Hindu structure. You know, I don’t like the custodian model. The advantage of the custodian model those typically you get, you get lower fees. So you’re actually trading off that, that that safety, net security, for a little bit of risk, but lower fees, so I can’t tell people what’s best for them. The fact that everyone still trades on all the banks, us and CMC, who are horrible in based and we have almost the entire of the market says that the overwhelming you know, almost the entire Australian investing market prefers a him based model, this may change in the future. custodian models are needed to trade us shares. So we’re introducing us trading. Before Christmas is long, I’m still sticking with and that’s the only way you can invest in us shares directly from Australia. There’s no way there’s no hidden based chess based system for investing us shares so so that that is necessary for that. But if you’re investing in the ASX, there’s there’s an option for more security. And that’s through chess sponsorship of your own hin. So not a shared hin or some sort of other system, the safest, safest way is to directly invest with your own hands. So if you’ve got a corporate account with us, and you’ve got a trust and SMSF, an individual and a joint, you will have four separate hinze for those accounts. So it’s very clear that SMSF owns this itself well through gone tomorrow, there’s no doubt as to who owns that shares.

Captain FI 22:27
So that was a, that was the second major draw card for me when I switched to self off. So I guess like the majority of Australian investors, I was previously with quantseq. And I learned about self worth and realize that I could essentially pull the rug out from underneath quantseq and take my shares and plug them into self worth, which is something which I’m not sure if you have that functionality under a custodian structure as well, I think you kind of have to play the game. And I’ve heard some horror stories about people having to wait a significant period of time to actually transfer their stocks. Yeah.

Jarrod Purchase 23:10
Sorry, that’s something I didn’t touch on. Yeah, you can move them, you can move them around easily. So, you know, we get, you know, we’re getting record amounts of hinze coming from other brokers at the moment, it just continues to grow. So we’re not just getting new clients that are new to investing, we’re getting people coming from other brokers in droves. So they can just literally pick up the handset come sick, you know, I’m taking my heat and I’m going somewhere else. And then you give that to self wealth, and then all your stocks come across with that, it’s sometimes not a particularly quick process, it might take a week, because, you know, we have to process the form, send it off to comtec. And then you know, you’re obviously leaving him leaving them. So they might not necessarily process that quickly. So there’s this sort of those two parties involved there. But absolutely, yeah, you know, if anyone that’s chess sponsored any broker that was chess sponsored were to go under, you literally just pick that one up and take it somewhere else. You know, we’ve had in Australia you know, sort of five years ago there was the collapse of of eBay which created a lot of headaches I personally was investing directly in the UK market with a with a UK based broker when I used to live over there. That broker went down went under in August 2019 and I literally actually just today have finally got my money out so it’s taken it’s taken a very long time to get out. So if you know if if that was a hin based system in Australia I presume it would be a significantly quicker because other brokers would just be very hungry to take that in from a from a collapse bro guides it’s the ownership was what made that process with this UK broker. A lot Messier because I have to go through line by line on this stock or who owns that or they received a dividend from these guys. You know, it was an absolute disaster. Not to scare But that’s that’s just you know that those these things have happened in the past.

Captain FI 25:04
Yeah. So I mean, with the custodian structure, you’re the beneficiary on the trust, and you still own the share. I mean, legally, you’re not the name, donor, but you are the legal beneficiary. And it’s, effectively it is your share. But without the third party, it can be a bit tricky to actually unwind that trust to make sure that you get what you’re owed.

Jarrod Purchase 25:29
Exactly yet late legally, you’re, you know, you’re safe, but realistically in the real world, and logistically how that will happen. who’s who’s to know, it’s, it’s a bit of an unknown. And we’ve seen things in the past where it hasn’t worked out too well, but that you people need to do their own research into that. But like I said earlier, most of the people investing in Australia, almost everyone is in based in terms of market share of you know, there are there are other custodian models in Australia have been around for a while that is slightly cheaper than itself well, but there’s a reason they’re not as popular as ourselves or the banks, or CMC.

Captain FI 26:08
So with the rise of a sort of a number of these competing smaller share trading platforms, fintechs, like, superhero, and Perla that are using the either actually either a custodian or a hidden structure, how to self off plan to stay relevant or competitive?

Jarrod Purchase 26:33
Yes, that’s a really good question, actually, um, when I’m actually personally excited about competition, Rob, Rob, the managing director of self wealth gets a lot of questions or have a concern going all these, you know, there’s, you’ve got competition now, we actually like it. And to be honest, I personally thrive off it. So I welcome the competition at all, it’ll mean self well has to be work harder, we have to be more innovative, we have to show why people continue to use self wealth. I guess in terms of those two, two examples, you’ve given it, the three of us together a different offerings. Superhero is a custodian based, more or less, they’ve got a shared him. So the company I guess, is chest sponsored. But they’ve got a shared him, so you don’t have your individually in there. So that allows them to offer cheaper brokerages or all sorts of different means. pillar pillar has has a market that they aiming for, and obviously aiming for the fire audience. Who, who might want to might want certain conveniences such as, you know, calculators, fire calculators, inside the platform, automatic investing all that sort of stuff, we can do that. So so I’m not too worried about them doing that. And that’s not being able to, we will look at that in the future. It’s been discussed many times in the past. I know everyone on fire, the fire community and Reddit once auto investing. So that’s something that we’ll definitely consider. So we’re not too concerned about that. And the fact that we’ve been operating a business for this long, we’re a successful business with, we’ve built up trust and credibility. We’re not too worried about competitors coming in. But it means that our customers will probably be a little bit more demanding in terms of why shouldn’t I go somewhere else, because there’s lots of options. And I think that’s great, because I’m an Australian investor, myself, I invest. And I think, you know, the more competition there is, the better for the consumer. So it’ll just force us to be better. So fortunately, we’re launching us trading, have said like a few times, now, we’re launching us trading soon. And I’m not intending just to plug us trading, but it will be somewhat disruptive to other providers out there. It will be in one place to be convenient, we’ll have a massive selection of stocks, there’s over 7000 foreign stocks, you’ll have a US wallet. And so you’ll be able to transfer funds between Aussie dollars and us US dollars. So that’ll be a key differentiator. I don’t know if any if you’ve used concept to invest in international shares, but I actually don’t know how to use their platform. It’s that archaic. And so. So we’re just going to continue to innovate and just make sure the experience is great as possible that the app on personally running that project so I’m really excited about that. The app that’s coming out hopefully everyone is but it’ll be a continuing project that will evolve over time. So making sure a customer service is great experience is great and people are getting value for money through us.

Captain FI 29:29
Just on that us share trading. I did create a Pershing account with concept which is how you how you invest there it was it was very complex. It was quite different to the actual concept platform for the ASX. And I was you know, I don’t mean to bash anyone but I was quickly turned off of it and stopped doing it. My intention was I just wanted to buy Apple stocks because I at that phase of my investing career, I thought that picking individual stocks was the strategy for me. And I guess circling to how I do it now. I personally use a ETF. I invest using the vanguard total us share market VTS, which is a Australian listed ETF, which then holds the US stocks. So that’s how I’ve personally got over the issue of how to invest in the US market from Australia. I have seen a lot of us trading apps. You know, for example, steak, and also you know, etoro, or I think CMC and IHG, who offered as well. They allow you to trade, you know, in base USD, whilst a lot of them offer, say brokerage free trades, the the transaction fees, or the spread on the Forex is actually where they make quite a lot of money. And it ends up being quite expensive. So you think you’re getting free brokerage, but you’re actually paying quite a lot on foreign exchange fees, which ends up sort of Danya, which sort of just makes me circle back and think I’m glad I chose an index approach. But I acknowledge that not everyone is interested in an index, passive ETF style investing. But that’s just what works for me, in my personal circumstance.

Jarrod Purchase 31:27
Yeah, absolutely. And it’s in brokerage in investing is never as clear cut as the giving me free brokerage. I’ll go with those guys. And we pride ourselves on being transparent about everything. So you’ll never find us hiding behind in terms of conditions or ambiguous wording or anything like that. So I’ll be admit, I’ve not looked into etoro too much. But I do know the nature of their product probably isn’t suited to our clients, that they’re probably trying to get you on board with free free trades. For us stocks, potentially might be taking a little bit more of a cut through the effects spread. And they’ll also be wanting to cross over to all sorts of different other products they’ve got where they’ll make probably a bit more money. And same with a lot of steak steaks, great. I love their products love their brand. They do offer free brokerage, but also they’ve got to make money, somebody said effect spreads a bit higher than ours. So we might be offering free brokerage, it’ll be nice to see brokerage will be very clear as to what you’re getting, we’re not aiming to necessarily be the cheapest out there for us broke us investing, but in a lot of a lot of scenarios, it will be cheaper to use us than others, if you do that research into into, you know, exchange rates and all that sort of stuff. But at the end of the day with us, you’ll have one place, you only have to log into one account, it’ll be very clear, you’ll be dealing with the same Client Services team for Aussie equities, US equities, and in the future other other international markets.

Captain FI 33:00
As you know, I’m looking forward to seeing how it turns out and, you know, potentially dabbling in a couple of Apple Apple shares like I wanted to back in the day.

Jarrod Purchase 33:13
Everyone wants to do that. Yeah, we’ll be testing it out over the coming weeks, and I’m going to be a tester. So I’ll be I’ll be investing in Amazon or Apple or Netflix or something like that for a bit of fun that year, we’re really excited about the product, when our clients are chomping at the bit to get onto it, we get asked every every day 20 times a day when it’s coming. So we’re keen to get it out at clients who came for it to go out. So it’ll be an exciting product.

Captain FI 33:37
Awesome. So I guess like that’s a perfect segue, since you’ve started working with self wealth. How has your investing journey changed? And, you know, would you classify yourself as an active or a passive investor? And what’s your strategy?

Jarrod Purchase 33:54
Yeah, that’s a great question. I don’t think my story is too different to yours. The thing that I found is I’m disappointed I didn’t know about it a lot earlier in my life. So for your younger audience that’s listening to this world on on, on thinking about investing and listening to stuff like this. You know that the best thing you have on your side is time and investing a 20 even if it’s only $1,000, you know, every few months, every half a year or something like that. I think that’s a great step. Yeah, so So I took the same approach to you, I thought I’ll try and pick the idea of a few stocks and, you know, get 200% return over over one year or something like that, which you learn very quickly is not easy to do. There’s a lot of a lot smarter people out there that are trying to do the same thing. So personally, for me to think that I’m smarter than those people out there. I’m not when it comes to investing, I don’t read balance sheets day in day out and talk to CEOs and all that sort of stuff. So and I’ve I’ve gone from learning very early that I can’t pick stocks although you know, self worth was obviously one I got invested in pretty early because I joined the company wanted to own part of the company, I buy ETFs myself, so I just take the thinking out of it, and I take the emotion out of it too. I’m only ever buying, I don’t rebalance that often. So while I don’t rebalance at all, if I’m rebalancing, I’m just buying some, some of the the ETFs, that might be a little bit down to sort of bring that weight up a little bit more. So onboarding, pretty vanilla, you know, 30% in, in Aussie equities, you know, via something like the banishes pay 200, which is obviously low fees. And then the rest pretty much in global slash US markets. In terms of, I guess, financial independence, I’ll probably be a fat fire, if that’s a term that’s thrown around much at all, in terms of wanting financial independence, but also wanting, you know, wanting a relatively good lifestyle, I’m not going to be eating beans and rice, so I can get to financial independence. But I would like to do it before on obviously, the age of 60. So hopefully, that covers off mostly questions around financial independence. But I think it’s a fantastic movement. And there’s a great reasons as to why people are getting involved in something like this,

Captain FI 36:17
the fire acronym financial independence, retire early, I mean, that’s not always going to be appropriate to everyone, I kind of like to think of it as financial independence retire, eventually, I just giving you a bit more control and choice over your life. You know, I’m similar to you, as well, Jared. So I’ve got a alleen fire or a single fire, as I call it, which will sort of just cover my cost of living. But I’m working towards a fat fire myself, or I call it a family fire, where I’m actually able to generate a bit more passive income to be a stay at home dad, rather than, you know, continue to fly cargo operations around the world, because, you know, I tend to be away from home quite a bit. And, you know, I’m looking forward to one day buying a farm of my own and raising some some kids. And the only way that’s gonna happen is with ongoing, sensible investments.

Jarrod Purchase 37:14
Absolutely. Yeah, I think it’s, um, you hit the nail on the head there in terms of financial independence is extremely empowering to know that you’re not beholden to, to an employer, you’re allowed to move outside of that. And if you’re not enjoying a job or not enjoying a place, you’re not, you’re not tied down to that. So I think the financial independence part’s key for me. But I enjoy working I find the challenge, but fantastic, and being productive is a great feeling. I don’t know if I’ll have 133. I don’t know if we’ll have that same feeling in in 1520 years time. But yeah, I think it’s, I think it’s a great a great concept. And I think a lot of people should strive towards it.

Captain FI 37:52
It sounds like you’ve got a pretty good company culture regarding financial independence as well. You mentioned a lot of employees, taking advantage of the company investment schemes as well. So it sounds like that’s a really good part of the team behind self-worth.

Jarrod Purchase 38:07
Definitely, yeah, there’s a lot of people who’ve been there for a while. So they’ve gone through, you know, tough times as a startup, you know, to as a 12 through it, and now is a long time. And it’s quite impressive that they alongside Andrew Ward, the founder has managed to go from nothing all the way through to a publicly listed company that is now generating cashflow, positive quarters, like that’s not many companies do that. So the fact that the the people have been around for a long time speaks great spring speaks of a great culture in the company, which as we grow, we’ve grown quite significant over the last 12 to 24 months, we’re trying to retain that. I think it’s also a great thing for our clients, because we have genuine people that care about our clients. And we’re nice people that are here to just make money off individuals. So we actually in the name, self wealth, we’re trying to generate, help people generate wealth for themselves. We’ve got low fees, we’re trying to always be have reasonable products, things that if we look at things in the future, like options, and CFDs, and all that sort of stuff, we would not be going down the route of of pushing those on people when they’re not educated, when they’re not comfortable, that sort of thing. We always want to give options to people and features to people if they want that. those are those are things that people are asking for. But we’re also very conscious of being a responsible provider in this market. We think there’s been a bit of a lack of that in the past few decades, and definitely still is. And we want to be one of those organizations that people look to and they go Yeah, they’re genuine. They’re, you know, they’re Australian based. They’re a small group that actually cares about Australian investors and their coins. You

Captain FI 39:53
kind of touched on it initially about the social aspect of the platform. Could you just talk a little bit about the self wealth social side of the house?

Jarrod Purchase 40:05
Yeah. So that yeah, that’s, that’s how the company started out. So it was founded on that idea of, there’s so many investors out there. And obviously, people are doing a great job. How do you identify good investors. So there’s, there’s a lot of work that goes behind that concept. So there’s two main things, there’s a wealth check score and a safety rating. safety rating. One is easy, it just talks to diversification. So, you know, if you don’t want a high risk, it’s like trying putting all your money into one stock, you wouldn’t do that. Most people listening to this will probably know about diversification your eggs in one basket, if that goes up, great. But also, if it goes down, that’s all your money in there. So a height, the height and individual the high safety rating. And if you’re on the self wealth platform, you get all these ratings. from the get go, it might take a little while for, for the system to understand your performance over time, where you’re missing performance, it’ll use kind of a community average. So the longer you with self wealth, the more accurate this thing becomes. So safety ratings easy. Someone will either have a high safety rating, they’re diversified, they’ve either got lots of individual stocks, or they’ve got an ETF in there, which as we know, an ETF contains lots of stocks. So an ETF, by default is diversified. And then the wealth check score, which has been worked on over years and years. So wealth check school looks at a few things, the main one is time weighted performance. So the performance of an individual over the past month, the past three months, the past six months, the past 12 months, and then annualized after that, like I said before, if if we don’t have all that data for someone will use community averages, so someone’s wealth check score will be more accurate over time, have got to put the disclaimer out there past performance does not necessarily indicate that someone’s going to perform well in the future. But this is the this is the system that we try and use to identify that depends how much time you’ve got, but I can also go into the depart around target portfolios. So the the this is before all the trading part took off, we set up so you could effectively follow some individuals you chose if you want to customize it, and plenty of people do do that. But most people use the default option, which is the top 20 people by wealth check scores, so time weighted performance and diversification.

It puts them into a little group, and then it takes the 20 the 20 top stocks in that group, and equally balanced it. So equally weighted funds. So if you’ve got $200 every stock in there, we’ll have $10 against it, it won’t be it won’t put more money towards larger companies or small companies. So that is that has been shown to outperform the market over different periods we have all sorts of our I’d say we’ve got over 100 internal indexes that follow all these different options like rebalancing, monthly rebalancing annually, taking the top 10 people, you know, taking different time weights, all that sort of stuff. And we’ve found the best best performing index is the is the one that looks at the you know, the top few people time while equally weighted 20 stocks or ETFs. And then rebalanced quarterly. So So that’s, that’s like all that data. And that information is is core to self wealth. And once again, it’s trying to give that knowledge and information to to average investors who would have to pay a financial advisor or something like that to get that sort of same content. The the informations anonymized, so no one should be worried about being able to you know, find find me Jared purchase on the you can’t find my full name, you can find me if you know my, my nickname on it. I’m not going to give that out. But you can, you can see what I own, you will not see the values and you’ve just seen a weighting of what I have. So, so there’s a massive anonymized part of it. The final part is we receive a data feed in a similar way it’s anonymized people from the company will bgl. So there’s so many portfolios in there. They’re not necessarily using self wealth. So you might see some strange names in there because the system generated people haven’t chosen them themselves. But they are real people real portfolios. So typically, I think last time I looked at the top few people that are actually self worth clients and self worth users, so you’ll see this and people consistently ranking at the top there so I guess a great story for this is my dad uses it a lot. He’s, he’s 61 and he absolutely loves it. He’s the premium feature is a is a an annual subscriber usually in June we have a promotion where you can sign up for an annual 12 month subscription, you get a few trades along with it. Otherwise you just pay $20 a month, but he loves it. He goes through and finds Testing ideas, follows a few a few people on the on the site just sort of increases knowledge as to what high performing investors are doing.

Captain FI 45:11
So I must say I previously hadn’t had really any experience with the premium features. I just basically thought not, I like the chair sponsorship, I like the flat fee. And that’s what I’m here for. And I’m not gonna I’m not gonna knock around. I, I’m just having a look now. So I’ve got a five star safety rating. So that’s awesome. So thanks. Thanks, Jerry, that’s a pat pat on the back. For me. My wealth check score is a, b, and I am a member ranking top 39%. So if anyone wants to follow me, go ahead. I’m at Captain FI. So you can see what I’m investing in. But for those people, it’s just gonna see the same on the blog, is we as your strategy is buying ETFs you’ll never be in that top part. Because obviously ETFs

Jarrod Purchase 46:09
following the market, so in terms of your wealth, check score, you’re never going to be in the top. But but that’s, that’s fine. And some people think that we have this system, try and get people to trade more, and then all that sort of stuff. That is not it at all, if people have this strategy, and I want to stick to just buy an ETF that’s 100% fine, there is actually there’s there’s a target portfolio just made of ETFs. So if you want the top people that and want to know what ETF they’re buying and just invest in ETFs, there’s an option for that. So if anyone’s on the trial, or or has premium, feel free to have a poke around in that and and see what the most popular ETFs are in the community because you know that there is there is, is over 100,000 portfolios in the platform. So you’ve got a great subsection of the Australian investing community. So to understand trends around what ETFs people are using, like I said with the example of my dad, that’s that’s what he uses it for use inspiration to other people doing so

Captain FI 47:06
inspired me. I’m going to jump on and give it a go. Yeah, you’ll probably see some more stuff on the on the blog about it. just finishing up, I would you know, I always love to ask all my guests. What would be your top three tips for someone on the path to financial independence today?

Jarrod Purchase 47:28
That’s a good question. And my tips, earn lots of money is a pretty good one. That that’s, that’s obviously a joke. And it’s hard to do. But you know, educate yourself read the fact that people on your blog is and your podcast is, is fantastic. Like these people are obviously already educating themselves and learning. I think having a great budgeting systems, good and discipline. But that’s not to say that you should shouldn’t enjoy life like, you know, we don’t know if we’re all going to be around when we’re a lot older. So saving and putting away money every single cent means you’re not enjoying life at the moment. But that’s that’s some people but I guess my main one is, is education. Yeah, keep yourself informed as to what’s going on in the market, especially when it comes to investing in ETFs. It’s a massive, massive area. And you want to come in at all the time, which might be lower fees, or more, more interesting or more suited thematically to something you’re interested in investing in.

Captain FI 48:36
I really do resonate, and I really appreciate your advice there about enjoying life. I know I’ve personally been guilty at times of being really over the top and really extreme about being frugal and trying to maximize my investments. But even right now I’ve actually taken time off work I’m actually off work for the rest of the year, spending more time at home with my family, reconnecting with my friends and yeah, just I guess loosening the purse strings a little bit. And I’m already feeling a lot happier. And do you have any any favorite books? Say investing personal finance or self help books it

Jarrod Purchase 49:17
what’s got papers done with the Barefoot investors? Fantastic. I think if you’ve read that, or you already have a similar philosophy to that then then you’re miles ahead of most people. So I’m sure a lot of your listeners have heard of or read have read the Barefoot investor. The concepts in there fantastic. And fortunately for me, I just happen to already do a similar thing. I guess in terms of you know, continuing to educate yourself. Obviously like your blog, I follow strong money divert straw money’s great. He has very easy to consume content in there. He answered a lot of questions similar. I guess what Scott Pape does but In a little bit of a different format, so that’s a, that’s a great blog, he really easy to consume simple sort of concepts that he goes through. So they’re my main ones Other than that, I’m probably too busy to be working to be to be reading too much of that stuff myself, I read a lot of fictional fictional stuff to unplug from, from the finance world, because I live and breathe it, you know, nine to five, five days a week, even more than that.

Captain FI 50:27
So, um, Jared, if people want to learn more about self wealth, how can they get in touch with the company and learn more?

Jarrod Purchase 50:34
Yeah, sure. So we’re an online only business. So self welltok Comdata. You, for those that need operatives, for those that need phone support. We don’t offer that because it’s quite expensive to offer that to have all these people sitting on phones. So we’ve got live chat on the website. So if you just on your computer, go to self wealth.com, that are you, there’ll be a live chat option down the bottom right, which you can access as a client or not. Typically, during trading hours only, so kind of 10am to 4pm. We’ll be looking hopefully to increase that those periods when us trading is introduced. But we also do have you can access us by email, you can just email [email protected] today, but the website has a lot there. You obviously have your own review of self welfare. So there’s plenty of reviews of us out there with with tons of information as to what self love is about. But we’re really open and transparent. So there’s no harm in you jumping on live chat and asking the guy some of the hard questions.

Captain FI 51:35
Yeah, actually, I use that live chat function quite a bit when I was chewing my fingernails deciding to switch from concept to to self Well, back in the day. So yeah, it’s great. Awesome it. Well, Jared, thanks so much for taking time out of your really busy schedule to answer some questions today. Really appreciate it. And yeah, look forward to seeing some of the exciting changes with the new app in the US trading in the next few months.

Jarrod Purchase 52:02
Thanks for having me on.

Captain FI 52:05
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 FI 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.

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