Million Dollar Payday

Dear Scott,

I am 24 years old and I earn $40,000 a year working part time. Today I received a lump sum of $1,000,000 (after costs) due to being run over by a car seven years ago. I need to pay around $5,000 a year in ongoing medical costs. How should I invest this money, and is it worth setting up a trust and a ‘bucket company’ that reinvests in itself?

Max

Hi Max,

First up, you won’t have to pay tax on the payout itself, but you will pay tax on any investment earnings you earn on it. Now, would I invest the money in a trust and then distribute the investment income to a company?

Possibly. The trust will give you asset protection benefits, and the company acts as a ‘bucket’ to theoretically cap your tax rate at the company tax rate of 30 per cent. But know this: it’ll also gobble up a few thousand dollars a year in fees to your accountant.

However, let’s not put the cart before the horse.I

f I were in your shoes, I’d keep it simple:

I’d buy a nice little unit for cash (say $500,000).I’d put $15,000 into Mojo (high-interest online saver account).

I’d put $25,000 into term deposits with different maturities to cover any medical costs within the next five years.

I’d also kick $25,000 into your super.

Then I’d invest the rest ($435,000 or thereabouts) into good-quality Aussie shares (either via a trust, or in your own name), tick the ‘Dividend Reinvestment Plan’ option (so your dividend earnings are automatically reinvested rather into more shares), and let your money compound.

Scott

10 Years Without Money

Hi Scott,

Ten years I have been a monk and therefore ten years without money. Now, at age 52, I am leaving the monastic life and coming back into the regular world. (Scott, I notice you are a bit older, wiser and chubbier than when I last saw you on TV all those years ago.) I am earning $52,000 a year but have no assets or savings. I am not sure I will ever have the chance to buy a home, but I would really welcome your advice on how to build up some wealth. The world has changed a lot, I see.

Doug

Hi Doug,

My wife calls me her ‘Barefoot Buddha’ (mental note, when your wife and your work are commenting on your chubbiness, it’s time to hit the gym).

Anyway, you’ve got a couple of good things going for you:

First, you don’t have a wife, or children, so you can focus 100 per cent on yourself.

Second, you’ve spent the last decade without an iPhone, a butler’s pantry, or KFC. In other words, you’ve broken the chains of materialism!

Having said that, you still need financial security, so your priority should be to increase your income so you can sock away three months of living expenses in a Mojo account.

And the house? Well, if you’re willing to move to a rural area, you could eventually afford a cheap home, too. (They’re cheap in Manangatang, and if you can stick it out in monastery, you’ll be a shoo-in for Manangatang.)

Remember, you’ve got at least 20 years of full-time work ahead of you. Repeated studies have shown that, once you earn over $75,000 a year, money doesn’t make you any happier. But you’re only earning $52,000, so you have $23,000 worth of happiness to gain!

Thank you for reading

Scott

‘Zero Balance’ Is a Trap

Hi Scott,

I need your help as I am 34, on maternity leave and near broke … though still inspired by my five-month-old baby. I should be secure, relaxed and focusing my energy on the bub (despite the sleepless nights). The trouble is, in my 20s I racked up credit card debt to the value of $7,000. Years ago I took out a ‘zero balance’ transfer to another bank and it has now grown to $17,000! I am ashamed, but have come clean about it with my partner. He just handed me your book and I am now in ‘debt domino’ mode, gradually paying it down on my $88,000 wage. But what else can I do?

Natalie

Hi Natalie,

Well done for facing your debt demons. Trust me, everything gets easier from here.

Doing the Debt Domino (paying off your debts smallest to largest) will build up your self-confidence while systematically knocking down your debts.

However, before you start knocking down the dominoes, I’d like you to check how long it’s been since you made a repayment. Reason being, if you haven’t touched it for six years you may find that it’s a ‘statute-barred’ debt and you may not be legally required to repay it (note: your credit rating will be shot if you don’t pay, but that will eventually go away too).

Now, do me a favour and pass me over to your partner. Go on, do it. I’ll wait. Hey, Champ!

Well done for giving your partner my book -- it’s a great first step, but you need to do more.

See, this amazing woman is not only the mother of your children, but your partner in life. You need to work together on knocking out these debts as a team. There’s only upside for you: first, you get out of debt quicker; second, you build strong financial habits that will ultimately change (or prune) your family tree; and third, you’ll have a happier wife … and a happier life.

Scott

Burning Through the Bucks, Baby

Dear Barefoot,

I am 35 and engaged to the most generous guy, who I love. But we have spent $31,000 in two months! We earn $330,000 p.a. combined and have equity of $850,000 in our two properties, which we will sell next year so we can get a nice home with a small mortgage. Recently I did an audit and found we had spent $31,000 on … nothing! Meals out, weekends away, events at home, clothes, bond, removalists, some double rent for a period. I want to be debt-free in five years. Kick us up the pants!

Amanda

Hi Amanda,

Honestly, on your income you probably don’t need a kick up the pants -- you’re going to be fine ...… so long as you continue earning $330,000 a year. But if the money dries up, things can go into reverse pretty quickly.

It’s a three-step trap that I’ve seen plenty of high-income earners -- doctors, lawyers, footballers -- fall into:

First, buy expensive toys (boats, cars, and cash-draining McMansions).

Second, spend like a Kardashian -- and only invest in money-losing ventures that ‘lower my tax!’.

Third, get hit with one of the big D’s: divorce, disease, disability … or a downturn where you lose your income.

It’s more common than you’d think: recent research from Digital Finance Analytics (DFA) found that 30,000 households living in wealthy suburbs like Sydney’s Vaucluse (median price $4.5 million) and Melbourne’s Brighton (median price $2.6 million) are at risk of defaulting on their debts.

Truth is, wealth isn’t what you earn, it’s what you save.You want to impress me?

Don’t humblebrag about the $31,000 you’ve peed into your Prada handbag over the past couple of months.

As financial philosopher Shania Twain says, “That don’t impress me much”.

Instead, buy a house you can afford, pay it off, then show me your plan for how you will eventually replace some of your income through passive income, i.e. your investments.

Thank-you for reading.

Scott

Your Book is a Joke, Barefoot

Dear Barefoot Investor,

I had three separate friends recommend that I read your book, so I gave it a try. I have to admit I was enjoying it, until I got to page 79. That’s when you started talking about credit cards, and you showed you have no idea.If you really area money guy, surely you could make credit cards work for you? If you like, I could teach you how to use the banks to get serious rewards. Maybe you could join me in first class … or maybe they don’t let people in without shoes?

Matt

Hi Matt,

Bang! You sure schooled me.

The truth is that I have my own rewards scheme going on -- but it’s got nothing to do with flights, or toasters.

Let me explain:It’s no secret that the banks have been playing hokey-pokey with the value of rewards points for years -- but right now it’s just getting ridiculous. These days, getting a reward from your credit card is almost as hard as getting a reward from your wife after seven years of marriage.

Case in point: over the past 12 months, the banks have been secretly shutting down, or radically reducing, the value of their rewards cards. According to financial comparison site, Mozo, the banks have yanked the value of their rewards points, on average, by a staggering 63% in the past year alone.  Bottom line: the value of the points, and the restrictions on redeeming them, will only continue to go one way -- down. So what’s my rewards program?

Well, it’s not having to bother playing the rewards point shuffle. It’s not having to worry about innocently missing a repayment and being slugged with back interest for the month. It’s not having to pay a hefty annual fee. But Matt, do you know what the platinum-titanium-reward-of-them-all is? I’m modelling good habits for my kids. They’ll grow up knowing Dad doesn’t do credit cards. That’s a powerful message, and for me that’s the ultimate reward.

Thank you for reading.

Scott

Greetings from a Maximum Security Prison

Hi Scott,

I am a teacher and run IT classes at a maximum security prison. Having just read your book, I’ve been incorporating some of your principles into the classes. For example, we set out 60% ‘living expenses’ and 40% ‘other’ on an Excel spreadsheet and worked out the compound interest.

I mentioned the book, and one of the young men (it’s an all-male prison), who is 28, asked for the title and wrote it down. I then remembered I had a copy in my prison-issue, clear-plastic bag, so I read them the part of your book called ‘Letter to My Boys’.

He said, “You know, I’ve been feeling fairly depressed the last couple of weeks. This has given me some hope for when I get out.”I said to another young man in the class, who has a six-year-old son: “If you had something like this that you could use to educate your boy when you get out, would that give you something to focus on other than drugs and the criminal life that goes with it?”

He responded, “Absolutely, I can’t wait to hear more, and I would love to set my son up so he doesn’t follow my path”.

I felt like a proud mother! Isn’t it nice to know that your book is touching people in the most unconventional circumstances. I love my job, I love the young (and older) men I work with in prison. But I get disappointed when I feel we are not really giving them skills to change their lives – though I try. I am there with them, and I know some of your simple principles will be too.

Best wishes,

Kelly

Hi Kelly,

Thanks for your amazing email.

I’ve spent a bit of time in prisons myself.(Helping young inmates with their money, not doing time.)

For readers who haven’t read my book, the ‘Letter to My Boys’ is a letter I wrote to my boys (in the future, when they can read) explaining the power of compound interest.

Briefly:

A teenager gets a job on a farm and invests $5,000 a year from age 15, then stops at age 25, then lets the compound interest tick over. Total outlay: $50,000.

His mate doesn’t start investing till he’s 25, but then invests $5,000 a year for the next 35 years. Total outlay: $180,000.

At age 60, who has more money?

You’d think it’d be the guy who put in $180,000, right?

Wrong.Even though the teenager has put in less than a third of his mate, he ends up with 50% more ($2.7 million, versus $1.64 million).

The power of compound interest, along with discovering the joy of hard work, is one of the great levellers in life. It doesn’t matter what your family background is, how smart you are at school … or whether your father has been in jail.

Everyone needs hope, especially the children of prisoners, so I’m sending you 20 signed books. Keep up the good work!

Scott

Your Barefoot Book Doesn’t Work for Us

The other day I was doing an interview with Mia Freedman, the founder of Mamamia.

I told her that, if I printed out all the hate mail I got, I could bale it.

Mia: “Are you seriously suggesting you have people who hate you … you, the Barefoot Investor?”

Me: “Absolutely.”

Sure, I’ve got the best-selling book in the country this year — but it hasn’t been all bookmarks and semicolons.

Take this online review of my book:

“All in all, if I had to describe the book in one sentence it would be,‘The more I read, the dumber I felt’ — not because Scott made it so simple, but because it was apparently clear he really has no idea.”

Ka-Pow!

That is a superb sledge that even the great Rodney Marsh (ask your father) would be proud of.

That and many other awful things are live on the interwebs for all eternity. My customers could read it. My nanna could read it (well, probably not). My kids could (eventually) read it.

How would that make you feel?

Not great, is my guess.

Yet the only way to avoid criticism, as the old saying goes, is to say nothing, and do nothing …

But where’s the fun in that?

So, let me tell you a simple trick I use to deal with haters …

Care With Both Hands

Truth is, most people worry about what other people say about them.

Yet here’s the rub: if you’re doing brave things — working hard, starting a business, kicking arse with the Barefoot Steps — chances are you’re going to make someone around you feel uncomfortable. And they may try to bring you down a peg or two … back to their level.

If you listen to them — or worry about what you think they’d think — it’ll eat away at your self-confidence. And that will keep you in jobs you don’t like, relationships you’ve outgrown, cars you can’t afford. Worse, it’ll waste the precious time you have on this planet.

What’s the answer?

Care with both hands. I can count the number of people I care about on two hands — chances are you can too. And when you think about it deeply (and I have), these are the only people who matter.

If you’re being a jerk, or hurting people, or behaving like a Kardashian — they’ll pull you up on it. And that’s the only time you need to worry about someone’s else’s opinion. For the rest, just talk to the hand.

Tread Your Own Path!

My Partner’s Secret Debt

Hi Scott,

I have read your book and love it. Using your formula I have already paid off a long-term debt. Unfortunately, my partner and I have separate finances (her choice) and I recently found out that, in the time I paid off my debt, she racked up another for twice as much. Frustrating! We both earn OK incomes (combined $200,000), but are still renting at age 37. As we have three kids, I really want to get into our own home in the next four years … how do I convince her?

Jake

Hi Jake,

Uh-oh.

So you two have made the ultimate commitment -- three puppies -- and yet she’s still keeping you in the kennel when it comes to sharing her bank account with you?

As Dr. Phil would say: “Hmmm”.

And now you want me to tell you how to convince her?

Honestly?

I only have one party trick. I wrote about it in my book. It’s called a monthly Barefoot Date Night.

And I can tell you that, over 450,000 copies later, it works unbelievably well. Not only will it get you on the same (financial) serviette, but you two will be stronger and happier when you’re working towards a shared financial goal -- especially when it’s something as amazing as buying your own family castle.

That’s how I’d sell it to her anyway (and then I’d bribe her with great food and wine).

And if that doesn’t work?

Well, maybe it’s time to stop talking and start watching: after all, money talks and bulldust walks.

I’ve learned that if you want to know what someone values, look at what they’re spending their dough on.

So the question is, Jake, what’s your partner spending her dough on?

Scott

Wife vs Husband

Hi Scott

My wife and I are having a disagreement about fixed vs variable home loan rates. I have your book and I notice that Rule 2 is “Don’t Fix Your Rate”. Well, my wife just threw your book against the wall! Currently we have a variable rate loan (discounted from the standard variable rate), but let’s say we fixed our rate for three years. After that time, would we be transferred back to the discounted standard variable rate or would there be some issue?

Matt

Hi Matt,

She threw my book against the wall?

Spicy!

Most banks will flick you back to their standard variable rate after your fixed term ends. There’s nothing stopping you from fixing again, of course, but it will be at the rate on offer at that time.

Personally, unless you’re eating sausages each night (things are really tight), I don’t like fixed rate loans, for the same reason that mortgage brokers and bankers love them -- they lock you in!

Listen: get the cheapest variable rate you can, and repay as much as you can, and you’ll come out ahead.

Bottom line: I like the flexibility. Right now I’m seeing sharp variable rates: Citibank has a 3.48% rate (inclusive of a 0.15% cash back with rebate mortgage broker), and UBank are sitting at 3.74%.P.S. I’m ducking!

Scott

Reminder: I first wrote about this years ago and highlighted the low fees. Today there are better bank accounts on offer. How do I know? Because my readers constantly email me about them! So before you do anything, google the best accounts on offer now.

Your Steps Can’t Work for Us

Scott,

I have a bone to pick with you. I have been a loyal follower for years, have ALL the newsletters, and have just bought your book. I have read it and re-read it and now am more confused and frustrated than ever!I am a stay-at-home mum. My husband is a self-employed tradie who relies HEAVILY on a $9,500 business overdraft. He earns between $45,000 and $55,000 after tax to ensure we can still get Centrelink ($10,000). His income is so sporadic that, when it does finally come in, it is gone on living expenses, suppliers and a bit of savings. Your steps can’t work for us.

Deb

Hi Deb,

Are you seriously happy living your life playing Centrelink limbo?

The problem with that game is that, even if you manage to earn as little as you can to get under the bar, you’re still … in limbo.

If your husband is earning only $45K a year as a tradie running his own show (with debt!), that’s the universe telling him it’s time to seek out a regular job and then focus on paying off his overdraft.

And another thing: a good tradie doesn’t blame his tools ... my steps work, but they need the right materials: in your case, cash!

Scott

Climb Every Mountain

Hi Scott,

I just wanted to say thank-you for your book. Your advice has pulled me through some uneasy times, and in October this year I am set to build my legacy … by climbing Mt Kilimanjaro solo to raise money for the Cancer Council. You have taught me that spending my hard-earned money on giving back and helping others is so rewarding; I see it as a reward for finding financial control. Know that, as I reach the summit with my Cancer Council flag in hand, it was funded through the advice you provided, and that I will raise a beer for you -- if I can sneak one to 5,895 metres!

Jack

Well done, Jack!

The beer will be nice and cold at that elevation.

Thank you for reading.

Scott

Borrow to Buy Shares?

Hi Scott,

My husband and I are both 40, have two very young girls, and have owned our home outright for three years. We are now down to one wage ($100,000), but have also managed to also put away $90,000 in savings. With an eye to growing our wealth, we have borrowed to invest in shares -- on the advice of our financial adviser. But we are worried that the interest each month is less than the dividends received, and think we could have been saving this money instead and investing our own cash. What is your take on this?

Natalie

Hi Natalie,

Getting the banker off your back is (financially) the best thing you could have done for your family.

Well bloody done!

Truth be told, you’ve got the one character trait that almost no broke people have: a savings mentality.

Now, the strategy your financial advisor has you on is negative gearing (in this case shares, not property). And while the gains from borrowing to buy shares can look awesome on a spreadsheet, the truth is that most people don’t have the ticker to stomach a stock market crash with borrowed coin.

There are two major purchases that money can buy you from hereon out: the financial security of never having to worry about money again, and the freedom to spend time with your family and friends. Here’s how to achieve them:

First, save up three months of living expenses in a Mojo savings account.

Second, max out your pre-tax super contributions of $25,000 each year. That’ll give you both a tax deduction and a secure retirement. If you go back to work, do the same (i.e. $25,000 for each of you).

Third, set up a long-term share investing program to fund your kids’ education, awesome family adventures, and weird hobbies. Invest in the lower-earning spouse’s name and, if you’re a nervous investor, do it without debt.

Scott

When Dad Is a Mum

Dear Scott,

We are two mothers -- a couple wanting to have a baby. We finished reading your book a couple of weeks ago and have started implementing the strategy. The trouble is, I have never wanted to have kids until I had enough money, but my partner wants them as soon as possible. And I admit the biological clock is ticking. We both work but have next to no money. I thought you may be interested in a same-sex couple. We too have financial troubles ... it is not easy, that’s for sure.

Annie

Hi Annie,

On one hand, you wouldn’t be the first broke parents to decide to have a kid.On the other hand ... what the bloody hell are you thinking?

Look, I don’t care if you’re gay, straight or polygamous -- you need to take responsibility for your financial situation before you can take on the ultimate financial responsibility of having a child. You’ve read the book, so you’ve got your road map -- now it’s time for wine, garlic bread … and action.

Scott

Can I Buy a Corvette?

Hi Scott,

I am 31 and earn $120,000; my wife earns $90,000. We have a $750,000 mortgage on a house worth $1 million, $10,000 in index shares, and $20,000 in Mojo. Can I buy a $40,000 1970 Corvette Stingray? Or is that totally irresponsible? I would save up and pay cash for it, I promise!

Rob

Hi Rob,

Years ago my wife got a bloke in to measure up some curtains.

As he was up on his ladder, she asked him, “Will this fabric give full block-out?”

He looked at her, then turned to me -- the man -- and gave the answer. (“Well, mate, you have to understand that total block-out is not …”)

This little game played out for the next five minutes -- my wife getting increasingly testy, me trying to play sexist charades with the curtains guy (raising my eyebrows and nodding to my wife) ... and the curtains guy being totally oblivious as to who really wore the pants (and the curtains) in our household.

Bottom line?

The curtains bloke didn’t get the job … and it looks like it’s curtains for your Corvette. Now that’s got nothing to do with whether you can afford it, and everything to do with the fact that you’re writing to me about it, rather than discussing it with your wife on a Barefoot Date Night.

Scott

Fish’n’Chips and a Smile

Hey Scott,

I would just like to say a massive thank you. I have just had the best holiday in Exmouth (WA) with my kids and it was all paid for from our ‘Smile’ account! While we were treating ourselves to a fancy fish’n’chips dinner, the bloke behind the bar commented on the word ‘Smile’ written on my card. He said it was the second one he had seen in a week. I got to tell him all about the Barefoot way. So thanks again!

Frank

Hey Frank,

That brought a smile to my face!

For readers wondering what the hell Frank is on about, let me explain. In the Barefoot world, you allocate your pay into separate (zero-fee) accounts: 60% for daily stuff (‘Expenses’), 20% to put out financial fires (‘Fire Extinguisher’), 10% for fun (‘Splurge’), and 10% to save up and spend on longer-term things (‘Smile’) … like a good old-fashioned family holiday where you have fish’n’chips with your kids.

Who needs New York or Paris, when you’ve got fish’n’chips with Dad on the beach!

Thank you for reading ... and happy Father’s Day!

Scott

I’m a Single Woman Earning $210,000 … How Do I Pay Less Tax?

Hi Scott,

I am a 40-year-old, single, professional woman with no dependants (other than my pets). I have recently increased my income to $210,000 and so have moved into the top tax bracket -- a double-edged sword. I am following your steps, claiming deductions where I can, and saving for a home. The trouble is, most of my income disappears through tax! I have seen you recommend family trusts, splitting income, etc, as ways to reduce tax. What options are available for employees like me who do not have a traditional family?

Jessica

Hi Jessica,

I don’t think earning $210,000 is a double-edged sword … it’s more of a diamond-encrusted poker.

So let me poke you a bit.It’s not true that most of your income disappears through tax. The Australian tax system is based on marginal rates, so you are only paying the top rate of tax of 45 cents in the dollar, excluding Medicare, on each dollar you earn over $180k. The total tax payable on your $210,000 is around $71,932 per year, roughly one-third of your income.

My advice?

Put away your violin, and start swinging from the chandeliers!

You still have $11,503 after-tax income is hitting your bank account each month. and you have no debt and no dependants to share it with. Life is good! However, the truth is that you’re working a very demanding job, so my advice would be to keep your financial affairs simple and build up your financial security.

Here’s what I’d do over the next decade:

First, save up a 20 per cent deposit and buy yourself a nice home. You deserve it, and you can afford it.

Second, add to your employer’s pre-tax super contributions so that you round it up to $25,000 per year.

Third, build up a Mojo account of three months of living expenses.

Fourth, focus on paying down your mortgage as quickly as you can.Fifth, then start building up your investments, inside and outside of super.

Disclaimer: I understand that none of this is as sexy as taking out a whopping big loan, investing in something exotic, and then running a spreadsheet of how much tax you’ll save each year.

But my plan is simple, and it works.

And if you continue earning big bucks, you’ll retire a very wealthy woman, no doubt about it.

Scott

My Husband Is My Banker

Hi Scott,

I am a 31-year-old stay-at-home mum of two kids. My hubby has a new job (paying $130,000 p.a.) and has arranged for payroll to pay the money into his account each fortnight. Once paid he direct-debits money into my account to pay all bills for the fortnight. He also has a (maxed out) credit card on his online banking which he adds to. He works long hours and deserves some spending money, but I honestly do not know how much he spends each fortnight! Please help me address this issue without ruining us.

Eliza

Hi Eliza,

This is going to sound like a blatant plug (because it is), but the easiest way to address this issue is to get a copy of my book. The book is set around Barefoot Date Nights, where the two of you sort out your finances as a team (with a wine in your hand). The book explains why married couples should share the same account. If he baulks at the idea, well, he has the rest of the dinner to explain why he doesn’t trust you enough to share money with you. Good luck!

Scott

Am I Foolish to Pay off My Home?

I owe about $80,000 on a house worth a bit over $500,000. I am 29, earn $100,000 p.a, have a wife and two kids, and no debts other than the house. A person I respect said it is stupid to have equity sitting in a home and even stupider to own a home outright. He has used the equity in his home to buy real estate and make about $600,000 for ‘doing nothing’, as he puts it. He said at my age it is foolish to pay off my home. I must admit I am tempted, but what do you think?

Tom

Hi Tom,

Dude! Well done! You’ve got yourself in a position that most 59-year-olds would like to be in -- at age 29!

(I’m so impressed with you, Tom, I’ve pulled out three exclamation marks! What the hell, let’s make it five!)

Okay, so now let’s deal with your friend.

You need to understand that they’re talking about their own personal experience … yours may be different.

So let me share with you my personal experience.

The day I paid off my home was the proudest (financial) moment of my life.I don’t want to get too Oprah on you, Tom, but it really was a life-changing moment: life became a lot simpler.

See, whether you admit it or not, debt always makes things more complicated, and more stressful.

But once you’ve got the banker off your back, you have the freedom to call the shots. For me that meant being able to ‘invest’ more time into hanging out with my kids, and less time stressing about ‘stuff’.

And being around my family is what makes me truly happy … that’s what makes me feel rich.

My advice?

If you can wipe out your mortgage in the next few years, you’ll then have the ability to redirect your repayments into building up your long-term nest egg, via pre-tax super contributions. It’s simple. It’s tax effective. And if you stick at it over your working life, you’ll end up seriously wealthy.

Scott

My Niece is Winning!

Scott,

I bought a copy of your book for my niece, who has told me it is the best birthday present she ever had. She has thrown away her credit card and is talking to me about banks and super, and she is excited! A remarkable financial turnaround for a beautiful young woman who has had a difficult path through life, through circumstances outside her control. I love this girl so much and now I can see a more positive future for her. Thank you.

Karen

Hi Karen,

I’m sending your email straight to my grandmother in Ouyen (okay, I’ll print it out and post it ... she doesn’t have email). Thank you so much for helping me spread my message, and pass on my congratulations to your niece. She’s got this!

Scott

What’s Wrong with Ethical Investing, Barefoot?

Hi Scott,

I am currently reading your book. It interests me to read how lovingly you speak about your family, yet I have not come across any mention in the book of investing ethically, socially or environmentally. You suggest readers should switch to indexed super and stock funds, but do these align with your values? Having said that, I am currently getting ripped by high fees on a well-known ethical super fund. So what is the best and cheapest way to invest ethically?

Helen

Hi Helen,

Your ethical fund is ripping you with fees? That doesn’t sound too … ethical.Still, as an investment option within superannuation, socially responsible investing (SRI) is so freaking hot right now. It’s the financial equivalent of a paleo-approved, gluten-free, organic kale and almond milk combo shake (and you get charged through the nose-ring for both!).

My view? I think you need to be careful about outsourcing your ethics to a bunch of … finance guys. That being said, I strongly believe in ethical investing, so much so that I have an ethical fund: it’s called the Pape family portfolio, where we make our own investment decisions, based on our own convictions.

Scott