There’s an email that’s just come in … you need to read it.

“There’s an email that’s just come in … you need to read it”, said Wally, my long-suffering editor.

Wally has been working with me for nearly 20 years, so I knew it was important … and possibly grim.

The subject line was: “Terrified.”

It was written by Kate, a 31-year-old mum of two kids (4, 2), with another on the way.

She’s a teacher, her husband is a chippy, and they work remotely in Western Australia with BHP. Because there are no birthing facilities in their mining town, they’d travelled 1,400km to have their bub in Bunbury.

However, while she was being admitted, the doctors noticed a lump on her breast. After the tests came back, the doctors delivered Kate the heartbreaking news: she had a very aggressive form of breast cancer … which would be very difficult to treat.

And, while she was processing this, she was told she had to have the baby the very next day so she could begin treatment immediately.

Kate’s head was spinning. Her husband, the main breadwinner, would soon have two toddlers to look after, plus a newborn, plus a wife with cancer!

So, from her hospital bed late that night she emailed me.

After reading her email, I did what anyone would do: I picked up the phone and called her.

She burst into tears.

Kate told me that she didn’t have her wider family around her, and that she was totally overwhelmed at what lay ahead of her.

What could I possibly say?

Well, I’ve helped a lot of people in these situations, and the one thing I’ve learned is this: when you’re going through a tough time and you think you’re all alone – you’re not. The world is full of kind and generous people. And so I told Kate I’d spend the next few days connecting her with them.

My first call was to the global head of media at BHP, and I explained to her what was going on.

What could BHP do?

A lot, it turns out.

The benefit of being with a huge company is that it’s well resourced to help, in the form of counselling, carer’s leave, and flexible work arrangements.

Next up, I spoke to her private health fund. I asked them to give Kate and her husband a forecast of her out-of-pocket expenses for the next 12 months, so they could manage their outgoings.

Finally, I called a number of lawyers (who owed me favours) and asked them to help Kate look into any total and permanent disability (TPD) payment she may be able to claim via her superannuation.

It was a busy and emotionally draining day – but the best was yet to come. At dinner time on the farm, we all share our ‘high, low, and Buffalo’ of the day. I said my ‘low’ was learning about Kate’s situation. The kids listened, got out their Give jars, and collectively donated $12.80 to their GoFundMe page.

Every bit of kindness helps.

Tread Your Own Path!

P.S. A message from Kate:

“I’m a fit 31-year-old mum of three beautiful children. There is no history of breast cancer in my family. I didn’t expect this to happen to me, and I don’t want it to happen to you. So, please, check your boobs.”

The Financial Dominatrix

Dear Scott,

Your column gave me an idea for a novel! Do you remember the question you answered yonks ago from the lady who said: “I’m a financial dominatrix. Do I have to pay tax?” I just had to find out what a financial dominatrix was! I found it so fascinating (a fetish where someone wants to be cursed and dominated financially), I just had to write a novel about it. My novel is called My Human ATM and it can be found on Amazon. It’s about Liza, who goes from financial doom to financial dominatrix. So thank you for the inspiration! Your column helps and enlightens in so many ways.
 
Rowena
 
Hi Rowena
 
Well, that was unexpected.
 
So this morning I downloaded your book and gave it a read. It’s like fifty shades of finance!
 
As a middle-aged house-husband, the closest I come to romance these days is looking longingly at the nuts on my trees. Your book was the spiciest stuff I’d read in … well, ever.  
 
It didn’t exactly poke my goat, but then again I don’t think I’m the target market!

Scott

*&*# you, Barefoot!

So … it seems that many readers are worried about the state of my mental health.
 
Like Raffy, who wrote:
 
“Last week’s column on interest rate hikes was a bit more adversarial than normal. Given you’re out helping the community, I just wanted to ask how YOU’RE doing?”
 
Thank you, Raffy – I’m doing okay, though I certainly copped it in the inbox this week.
 
Here’s a cracker from Linda:
 
*&*# YOU Barefoot
 
Dear Scott,

As you enjoy your perch high up without mortgage stress, you won’t join in our ‘pity party’. Yet my heart breaks telling my kids they can no longer do swimming lessons, no longer go to birthday parties, and no longer afford new shoes (cue the Supa Glue advert), among countless other sacrifices. Meanwhile my husband and I have added second jobs in our evenings and weekends to deal with the devastation caused by the rate rises and cost of living. For the first time in my life, I’ve started lining up at food banks each Tuesday so our children can have fruit and bread.
 
We can no longer do the Buckets. Our Fire Extinguisher account is extinguished. Our Mojo has no mojo. And so, despite our best efforts, here we are. *&*# you.

Linda
 
Hi Linda,
 
I understand where you’re at right now … and just how stressful, and scary it is ….
 
… though it’s not that stressful or scary for your bank.
 
They would have modelled the scenario we find ourselves in – where 800,000 borrowers will see their home loan rate go from 2% to 6% – but they decided to err on the side of their … bonuses.
 
Let me explain:
 
At the height of the pandemic the RBA flooded the banks with billions of dollars at the super-low rate of 0.1% to support the economy.
 
The banks shovelled out this money as quickly as they could … and for that round of limbo lending they made it super simple for borrowers to shimmy across the line: they assessed them on the rosy scenario that rates wouldn’t go higher than 3%.
 
Wrong!
 
So are the banks fretting about their stuff-up?
 
Nah.
 
Do you know the old saying, “The bank wouldn’t lend me money if they didn’t think I could pay it back”?
 
Well, it’s true.
 
The banks know that the vast majority of their customers are like you, Linda – they will sell off their kidneys to keep their house.
 
Yet it gets worse.
 
If you recently borrowed more than 80% of the value of your home – which I have always advised against! – you’ll find that you are effectively trapped. And your bank knows it.
 
Why?
 
Because the bank made you buy a very expensive insurance policy in case you defaulted – called Lenders Mortgage Insurance (LMI) – which can cost (you) upwards of $15,000 and is not refundable if you move to another lender.  
 
Realistically, if you don’t own at least 20% of your home, you’re about as popular as Malcolm Turnbull at a Liberal Party fundraiser: it’s highly unlikely another bank will offer you a better rate than your current bank. And that means once your fixed term ends they don’t have to do you any favours. After all, where else can you go?
 
Nice, eh?
 
Linda, I’ve spent years in the financial trenches with people who have their backs to the wall.
 
And I can tell that you’re going to make it.
 
Reason being, you’re doing whatever it takes to keep food on the table and a roof over your head. And it takes a lot of stress, and shame, and sacrifice, and bloody hard work to get that banker off your back.
 
So you’re right, I don’t pity you. I admire you and the grit you’re showing.
 
You got this.
 
Tread Your Own Path!

A Question For Missus Barefoot

Hi Scott (and Liz),
 
Since 2017, I’ve followed Barefoot to a ‘T’ and managed to purchase a home at the ripe old age of 25. And then in walked the man of my dreams and – BOOM! – love struck! So should I sell my house, or should we borrow on the equity to make our family home dreams come true? I’d do anything for him but I have this little Barefoot voice in the back of my head: safety, safety, safety! Everyone I speak to says, “Never sell”, or “It’s our biggest regret!” I know Liz sold her home to buy the family farm, but does she regret it?

Tina

Hi Tina,
 
First a disclaimer: my wife is a television producer, not a financial adviser (and, even though she’s married to the Barefoot Investor, she cares as much about money as I do about reality television).
 
Still, I dutifully asked her whether she regretted selling her (tiny) studio apartment.
 
Her response: “No, not really.”
 
I’ve often thought it would be nice to still own that tiny little dogbox (with an oven her brother found on the side of the road). Not because it was a good investment, but because it was such a huge achievement … and a great lesson for our kids, especially our daughter.
 
Yet, at the time, we couldn’t comfortably afford to keep both. We were starting a family, and the wisest financial decision was not to take on additional debt and financial stress.
 
We sat down on a Barefoot Date Night, ran the sums, and made an emotional but sensible decision together. That’s the story we’ll tell our kids when they’re older.
 
So that’s the first thing to discuss after you order wine at your next Date Night!

Scott

You Have Been Warned

Hi Scott,
 
Over the last few months, in the face of rising interest rates and inflation, I've noticed a pretty significant increase in anger from your readers. So my question to you is, why do you think so many Australians have put themselves in these difficult financial situations thinking that the good times would never end? After all, you've been telling the Australian public this for years!
 
Thanks to you, I have a nice little nest egg, I'm comfortable with my mortgage payments if rates continue to rise, and I’ll be sure that, no matter what, I keep treading my own path. I’m sure I speak for many when I say you’ve helped prepare us financially for the good times and for the bad times that inevitably follow. I owe you a beer.
 
Dan
 
Hi Dan,
 
The truth is it’s been hard to cut through.
 
Most people’s lived experience is interest rates going down and house prices going up.
 
Remember, less than a year ago our government was campaigning to ‘help’ low-income single parents buy a home with just a 2% deposit!

Good on you for battening down the hatches. I hope you enjoy a few frothies on me from your Splurge account!

Scott

Barefoot the Beetroot

Hi Scott,
 
I’m the librarian at Mornington Primary School. A Grade 5 student named Liam nominated Barefoot Kids for our book of the week. His reason was “because this book changed my life and made me want to start a business”. Now I imagine you get lots of mail from our younger generation, but Liam is a very quiet, shy student. I know it’s a big ask, but even a reply from yourself that I could show him would be such a confidence-booster.

Anna
 
Hi Anna,
 
Thank you for getting in touch. I’ll address this one straight to Liam.
 
Liam, thank you so much for getting my book into your school!
 
And because you’ve read the book, you’ll know about the secret I never told anyone before:
 
I’m actually pretty shy myself.
 
When I was your age and had to talk to anyone, I’d stare nervously down at my feet, my mind would go blank, and my face would turn as red as a beetroot with embarrassment.
 
And that’s why I came up with a little saying to help me when I got nervous. It’s called S.E.A. (Smile, make Eye contact, and Ask questions like “How’s your day going?”).
 
It really works!

Even better, the more you practise it, the easier talking to people gets.
 
Now I don’t know what your Barefoot business is, Liam, but I’m hoping it gives you the chance to spend a lot of time swimming in the S.E.A. Doing that will really change your life! 

Scott.

A Super-Simple Way to Stop Rate Rises

Hi Scott,
 
If inflation is a society-wide problem, why is our only reaction to take money from a specific group (mortgage-holders) and give it to a specific industry (banking)? I read an ABC article that suggested it would be fairer and more effective to let people stash that money in something like super (which reduces people’s spending) so it still belongs to them and can flow back into the economy through spending once the crisis has passed. What are your thoughts?
 
Doug
 
Hi Doug,
 
I think it’s a deliciously simple solution …   and it will absolutely not work.
 
Mainly, and most boringly, because the level of our interest rates – relative to other countries – determines the value of our dollar. If we keep our rates low, our dollar will likely be hit, which will make everything we import more expensive.
 
My view is that the real problem we’re grappling with is that money should never have been priced at zero. That decision – which was driven by central bankers around the world, not just the RBA – was pure madness. It fuelled a mania in housing and the sharemarket (and, in the late stages, even in rubbish like Dogecoin). The net result? The rich got richer, the poor got screwed, and an entire generation has been priced out of the property market.
 
And now you want low income earners to bail you out?
 
Because that’s effectively what would happen. Those people at the bottom of the income ladder, who are struggling with the cost of soaring grocery prices and rent, would be forced to take home even less in their weekly pay packet (because they would be forced to put more into super), so they can save homeowners’ (and their landlord’s!) backsides.
 
Good luck with that!

Scott.

You’re a Total Jerk

Scott,
 
Your answer to last week’s question from the 90-year-old man, wanting to see whether he should implement your financial plan (‘Old Dog, New Tricks’) would have to be the most insensitive, egotistical slap-back I have ever read in your column. The man is asking a question about finance, not asking for family therapy. He genuinely wants to get a sense of purpose, build his nest egg, and still feel there’s a reason to go on. Telling him to focus on his family and friends not only doesn’t answer the question ... it implies: “What’s the point of looking forward? You’re nearly dead anyway.”
 
Angie 
 
Hi Angie
 
My answer to the old fella’s question was the most insensitive and egotistical thing you’ve read in my column?
 
Hold my beer.
 
So you think the reason for him to go on is to … make more money?
 
He already told me he was financially secure. His problem – which he admitted to – is that he’s nearly dead.
 
That’s life. He’s probably not buying long-dated milk these days!
 
Yet what you got right is that he wants a sense of purpose. And that’s why my financial advice was – where it is prudent – for him to give away some of the excess money he was planning to leave in his will to his loved ones while he’s still alive. That way he gets to watch the joy and hear about the experiences his gifts bring.
 
After all, Angie, we all want a sense of purpose. Some people get it by giving away money to their loved ones in the golden years of their lives. Others get it from writing angry emails to strangers on the internet.

Scott

Launching a Class Action Against the RBA

My inbox is still melting from last week’s column on interest rates!
 
It seems that right now everyone wants to stomp on RBA Governor Philip Lowe’s spectacles.
 
One of my readers was so ‘alpaca angry’ that he’s actually talking to his lawyer about launching a class action against Phil and his funky bunch of bureaucrats.
 
Here’s what he said…
 
Launching a Class Action Against the RBA
 
Hi Scott,
 
Why is there no class action being taken out against Philip Lowe and the RBA? How can the head of the RBA make unequivocal statements (not predictions) that interest rates will not rise until 2024 and then wash his hands and take no responsibility for the trauma (financial and mentally) his words have caused? Thousands of people, myself included, proceeded to purchase property based on these statements and are now in serious financial stress. To my mind, Philip Lowe’s statements were grossly negligent and have caused serious financial stress to thousands of hardworking Australians.

I have contacted my lawyer to investigate what options are available, but I am surprised that I have not heard of any legal action. I will willingly join in any class action that might be looming. What are your thoughts?

Ben
 
So I have a couple of thoughts.
 
First, Philip Lowe deserves to be benched.
 
He is, after all, one of our most powerful and highest-paid officials, and he stuffed up right royally.
 
(And, in doing so, ‘the Guv’ actually proved something I’ve said for years in this column: no one can predict where interest rates are going … even the bloke who sets them!)

Yet what he doesn’t deserve is the ugly media pile-on that’s happening right now. Apparently, there are paparazzi camping out at his home. What juicy pic are they thinking they’ll get? A snap of Old Filthy doing his morning sudoku over a cuppa on his porch?
 
However I agree with you: as taxpayers we should hold our highly paid (unelected!) officials accountable.
 
But while we’re talking about accountability, Ben … where is yours?
 
Did you really base a significant long-term financial decision on a relatively short-term prediction from the Reserve Bank?
 
And did you even read the published RBA statements before you went in paws and all?
 
If you had, you’d have realised there was incredible uncertainty around Covid, and that the global economy was in a state of flux (which is why Phil should have known to put his crystal ball away).
 
Instead, what most people did was listen to the pundits in the media who took Phil’s soundbite and shouted it from the rooftops. The same people who are now calling for his head. It’s not financial advice, it’s financial porn, plain and simple.
 
Look, no one put a gun to your head and told you to borrow too much money when interest rates were at their lowest levels in recorded history. I’ve written about this every week for the last decade, mate! So sorry, Ben, but I won’t be joining your pity party.
 
 Tread Your Own Path!

Who You Gonna Call?

Hi Scott,
 
My partner and I are looking at combining our insurance now we are moving in together. He has always used an insurance broker, I never have. He says it gives him peace of mind in case something happens, but I don’t know if I can justify paying an extra $250 a year. Are brokers worth it?

Gabe
 
Hi Gabe,
 
So this is controversial. However, like your partner, I get almost all my insurance through a single insurance broker, who charges me a commission.
 
Yes, I pay a bit more than I would going direct. Yet, as someone who’s lost a home, crashed multiple cars, had flood damage and more (you name it, I’ve claimed it), I’ve found that insurance is all about claims management.
 
And when something goes wrong my broker really earns his money. I just pick up the phone, call him, and let him sort everything out. Reading policies, understanding what I’m covered for, talking to insurance companies, sorting replacements, handling claims ‒ he does it all for me.
 
However, only you can decide whether you’re willing to pay the extra ‘insurance’ for claims management.
 
Scott

Old Dog, New Tricks

Dear Barefoot,

I am now 90 years old and have just completed reading The Barefoot Investor. I wish I had done so much, much earlier! My family house pays for all overheads and so I am able to exist on a pension and have a small nest egg. My question is: should I go with the Barefoot investment plan at my age, as who knows what the future may bring? Recently my wife passed away and now I’m lost without her. Is it all too late for me now? 
 
Sam
 
Hi Sam
 
My condolences for your wife’s passing. I can’t even begin to imagine how hard it would be to lose your best friend after so many decades together. But I think the most important thing for you to focus on is spending time with your family and friends, not on changing your finances!
 
In fact, here’s something to think about: if it is financially prudent to do so, you might consider giving some of your inheritance away to your loved ones now. That way you get to see the good your money will do, and connect with your grandchildren and great-grandchildren!

Scott.

New Vanguard Kids’ Account

Hi Scott,
 
Vanguard has recently released a new product, the Personal Investor Kids account. It starts with as little as $25 and offers a regular savings plan. However, Vanguard ETFs are not available within the account, only their managed index funds. Considering that managed funds are generally outperformed by ETFs, is it still worth creating an account for my five-year-old son?
 
Lina

Hi Lina,
 
Your question makes me feel like I’m at the breakfast table at 5am.
 
It’s like you’re my two-year-old arguing that his Wheaties taste better in his favourite Bluey bowl. (I’ve had this argument way too many times.)
 
Lina, you are buying exactly the same index, and the exact same stocks. In fact, Jack Bogle (who founded Vanguard and pioneered index funds) favours managed index funds over ETFs, as they are less prone to trading.
 
What matters is that you invest. And that you then casually reinforce the investing lesson by reminding your five-year-old of all the companies he owns shares in (“You’re a part-owner in Woolies … and Coles … and Macca’s!).
 
Go on, plant that apple tree!

Scott.

My Sister is a Leech

Hi Scott,
 
My older sister is 41 and still heavily dependent on my retired parents. She recently lost her job and has no savings, and also has mental health issues. My parents keep bailing her out when she runs out of money, but I’m concerned they are now using their retirement funds for this. She won’t take steps like reading Barefoot to help her out of her financial funk, and when she does have money she blows it on takeaway food and online shopping. How can my parents stop enabling her and help her become financially independent at such a late age?
 
Tanya
 
Hi Tanya,
 
Here’s how I’d look at it:
 
Your parents and your sister are in a beaten-up old Kingswood on a long, bumpy drive.
 
None of them are paying any attention to where they’ll end up … they’re just glad the old banger keeps on keeping on.
 
You’re not in the car with them, Tanya.
 
So what can you do?
 
Three things.
 
First, show them where they’ll end up: your parents’ money will eventually be gone (even if she gets an inheritance after they pass) and your sister will likely be stone cold broke.
 
Second, offer to help your sister help herself (again), perhaps by referring her to a financial counsellor or working through the Barefoot Steps with her.
 
Finally, let everyone know that you will not be taking your parents’ place in the driver’s seat when the old banger runs out of juice!

Scott

What’s Next for Property Prices?

The Reserve Bank (RBA) is in full arse-covering mode.
 
They had one job to do: keep inflation (that is, prices) from rising out of control … and they failed.
 
 And, now inflation is running rampant, the RBA has no other option than to keep jacking up rates each month to try and bring it down.
 
Yet it gets worse.
 
As a result of their previously terrible forecasts (“no rate rises until 2024 at least”), right now many Aussies find themselves paddling on a boogie board.
 
And this year they’ll look up and see a tidal wave approaching them: the fixed rate period is about to end for one in four home loans …  causing their repayments to go from 2% to 6% (or higher).
 
Wipe-out!
 
Again, despite all this, the RBA has to keep hiking.
 
The current thinking is that the RBA will continue pushing rates higher until something snaps in the economy and forces them to paddle in the foam for a while.
 
So, the $64 million question is: what will break, and when will it be?
 
To find out, this week I decided to talk to one of the few experts who accurately predicted both the COVID boom and the subsequent fall in the property market: Christopher Joye, the founder of Coolabah Capital, who manages $7 billion of fixed interest assets.
 
“So when do you think the housing market will break?” I asked.
 
“What do you mean ‘when’? It’s already breaking!” he told me.
 
“Across the five capital cities, index prices are down 10% right now, and they’re falling at more than 1% a month. So we are one month away from the biggest losses on record in 40 years.”
 
Back in October 2021 – before the RBA had started hiking – Joye stuck his neck out and suggested that property prices would fall between 15% and 25% because the RBA would be forced to hike.
 
Today, he has three forecasts:
 
First,  he believes the RBA will hike three more times before they pause and paddle.
 
Second, the impact these rate rises will have on the economy will be widespread and painful.
 
(I agree.)
 
Finally, property prices will continue to fall at least another 5% to 10%, which would be smack bang in his original forecast.
 
Look, it must be said that I have no crystal ball, and neither does anyone else. 
 
Still, even a grommet in floaties understands there had to be consequences for going on a borrowing binge when rates were at all-time historical lows. This year we’ll find out just what those consequences will be.

Surf’s up!
 
Tread Your Own Path!

The Christmas Miracle

Hi Scott,

I bought your new book for my nine-year-old son. It was Christmas night, and putting him to bed was proving challenging. I thought I had tucked him in for the night, but he stayed up in his room reading your book. At 9pm he got up to “get some water”, and renegotiated his weekly chores for more money. He came back out at 10.30pm to tell me he wanted to start a business making greeting cards and could we talk about supplies. I considered confiscating the book until morning, just to get a good night’s sleep. Still deciding if this was a Christmas miracle or nightmare!
 
Demmi
 
Hi Demmi
 
Oh, it was definitely a Christmas miracle.    
 
On the one day that’s totally focused on getting, your son was learning about working, investing and (if he stayed up late enough reading) giving.
 
Let your son know that I think his greeting card business is a goer. Fact is, Aussies spend a mind-boggling $500 million on cards every year … we’re the third-largest purchasers of cards in the world. Yet most are lame, and cost way too much. Your son will make cool cards.
 
Congratulations on having a Barefoot kid!

Scott

Help, My Dentist Wants My Super!

Hi Scott,
 
We have been blessed with seven kids, some of whom have unfortunately not been blessed with straight teeth. Blimey, $7,500 for braces is no walk in the park, especially when you start multiplying it by three, four or more! Apparently, in some cases you can gain early access to your super for compassionate reasons. Do straight teeth fall into this category? Otherwise, unless I sell a kidney, there is no way I can come up with the cash. I’m 40 and have about $265,000 in super. Is it worth accessing my super early?

Dennis
 
Hi Dennis,
 
Right now I’ve got my mouth open and I’m saying “aaaah”.
 
The rules for a compassionate release of super are as follows:

• To treat a life-threatening illness or injury, or

• Alleviate acute or chronic pain, or

• Alleviate an acute or chronic mental illness. 

That all seems fair enough, but I don’t know how little Benny’s braces would apply to any of these.
 
However, I spoke to the ATO (which administers the applications) and they told me that last year 9,700 individuals applied for compassionate release of super for dental treatment expenses, and 82% were approved. Out of those approved, 9% were for a dependent child’s dental treatment, which could include braces.
Uh-huh.
 
So what are my thoughts?
 
First, with seven kids you know you’re setting an expensive precedent: if one kid gets a Hollywood smile, they all do, right?
 
Second, each time you dip into your super, you’re killing off the power of compound interest (plus potentially paying tax on the lump sum). In the end, it’s not going to cost you $7,500, it’s going to be something likely $30,000, or even more.  
 
Finally, this question has given me a serious toothache.

Ultimately it’s your decision, but I’d look at every other option than raiding your super. And if you do, steer clear of these groups that have sprung up to help people access their super. Some of them charge as much as $800 to “help” you apply for the compassionate release of super. Yet it’s a basic friggin’ form that anyone can fill out in the time it takes to floss!
 
Keep smiling.

Scott

You’re a Joke, Barefoot

Barefoot,
 
You are a joke. Telling people to put their money into a savings account while the fake CPI numbers are off the charts with inflation! The real CPI would be unimaginable. Inflation is blatant central banking and governmental theft. Case closed. If you really want to help people, teach them about sound money, like the gold standard. You’re only slightly better than the fake news financial pundits on MSM (mainstream media). Our currency is completely manipulated by the RBA and government policy. FIAT is garage. Stop brainwashing the public with your Keynesian bulldust.
 
Luke
 
Hi Luke,
 
It sure is nice to be back at the crease … and the first ball is a bouncer aimed at old Barefoot’s head!
 
So I’m guessing you made a typo when you said “FIAT (as in government-backed currency) is garage”. I’m sure you meant to write “garbage” but I’m going to run with “garage”, because the savings strategy in the Barefoot Steps is all about having a getaway car ready for when life happens. It’s not about a financial return, but a psychological boost. And it works.
 
Now, let me take a swing at a few of your deliveries:
 
First, gold-bugs like you (and their children, Bitcoin bros) believe it’s only a matter of time before the world goes to hell and we end up with hyperinflation, like in the Weimar Republic in 1920s Germany.
 
And that could end up happening.
 
However, for me, the world is far too complicated to bet on any one binary outcome, much less waste what could be decades of your life waiting around for it.
 
Second, you can live your life believing that the powers that be are manipulating and lying to you.

Yet that’s not a worldview that equates to happiness, sunshine and cupcakes.
 
Finally, since the dawn of time capitalism has worked, and that is the driver of the Barefoot Steps: you systematically save and invest in profitable businesses and hold them for the long term.
 
Is that all too idealistic for you?
 
Maybe.
 
Yet which outlook leads to a more peaceful life?

Scott

The Princess and the Plague

My seven-year-old son was having a bad day.
 
Not only was it the last weekend of the school holidays, but his little sister was hosting her fifth birthday party — a princess-themed party with dress-ups, sparkly shoes, and lots of fairy bread.
 
“The party is all girls, Dad!” he cried.
 
“Well, we’re having a princess-themed piñata, and with your cricket skills you’ll absolutely dominate that, champ”, I said, trying to cheer him up.
 
Yet it was no use. He huffed and puffed, and buried his head under his pillow.
 
“Trust me, mate, in ten years’ time, you’re going to love hanging out with all those girls”, I assured him.
 
At that point he looked up from his pillow and scowled at me like I was Cinderella’s Wicked Stepmother:  
 
“No way, Dad. Girls are BORING!”
 
Okay, so my son was doing what we all do: extrapolating the recent past well into the future.
 
And, financially at least, last year kind of sucked:

The Reserve Bank yanked interest rates by 3% (and they’re still yanking), and both the share market and property prices dropped by over 5%, with homes falling at their fastest pace since the GFC (and they’re still falling). Bitcoin was absolutely mauled, falling over 60%.
 
So the sixty-four-million-dollar question is: will things continue to suck in 2023?
 
You probably have a hunch.
 
And that hunch about the future will likely guide the decisions you make today.
 
Here’s the thing though, very few people ever put their predictions under the microscope … and those that do are shocked at how bad they are at it – even highly paid investment managers.
 
So right now I want you to make — and track — your financial predictions for the year ahead. Specifically, spend a moment now thinking about where you think housing, shares and Bitcoin will be at the end of the year.
 
Then take out your phone and repeat after me:

“Hey Siri/Hey Google/Hey FBI,
 
“On the first of January 2024, at 9am, remind me of the following predictions I made today:
 
“Aussie shares will go up/down XX%.

“The Aussie housing market will go up/down YY%.

“And Bitcoin will be trading at $ZZ.”
 
It’s easy to be a hero in hindsight (“I knew 2023 was going to turn out like that!”), but much tougher to do it in real time. So go on, do it now!
 
Oh, and to his surprise, my son ended up having a great time at the party. However, 24 hours later we received some grim news — it turned out that one of the princesses had the dreaded plague. The day before their very first day of school! Who would have predicted that?
 
Tread Your Own Path!

You Can’t Write, Barefoot!

Hi Scott,
 
You really need to employ an editor for your writing! Your articles read like you dictate them, without any thought to sentence structure or punctuation. I don’t mean to be rude, it’s just that I’ve been an editor for 30 years and I’m a stickler for good writing!
 
Wendy
 
Hi Wendy,
 
Throughout my career I’ve had many professionals give me similar advice.
 
In fact, legend has it that a publisher turned down the original Barefoot Investor book because, and I quote:
 
“He writes in one-sentence paragraphs!?”
 
How infuriating. And they were right, of course.
 
Being a wordsmith, you’d know that whenever someone starts a sentence with “I don’t mean to be rude” … they’re about to be rude!
 
So, Wendy, I don’t mean to be rude, but The Barefoot Investor went on to become the bestselling book in Australian publishing history, one infuriating sentence at a time.  

Scott.

Merry Christmas

Scott,

Your advice has literally saved my life. After 11 years of losing everything in a violent relationship that led to multiple hospitalisations, I am now on an upward trajectory and have a safe place to live. I had no reason to stay alive except your advice and the personal stories of others who had been marginalised. Your book gave me strength. Although I have severe PTSD, I know that I can overcome this too. Your books are always my go-to gift. Merry Christmas!

Helen
 
Hi Helen
 
Your message of strength and resilience is what we all need to hear at this time of the year.
 
Here’s to you finding your safe space.
 
Merry Christmas to you, Helen, and to all the Barefooters out there.
 
I’m taking school holidays off (as always!) and will be back in February 2023.

Scott.