Meet Richard: A chippie with a passion for stocks, ETFs, managed funds, and all things green
Today we start with a short but telling story that gives a real insight into our guest investor.
Richard is a construction worker with a bent for environmentalism. It's something he got from his dad, he reckons, and he's enormously proud to see it in his three kids too. It's something he feels very deeply, and lives every day, as this short anecdote shows.
Recently Richard was working on a project at Woy Woy on the Central Coast. It was an amenities block. Near to it was a 200-year-old white cedar tree that the arborist report said was damaged, was in too close proximity, and had to be cut down.
As the work began a lady turned up, videoing it all.
"She was, like, irate that they're cutting down this tree," Richard told Livewire. "And it was a beautiful tree, don't get me wrong. It was just an unfortunate thing. I just said, "Are you okay?" And she goes, "No, I'm devastated." Anyway, she literally asked me: 'How do you justify your job?' And I said: 'Well, it's pretty simple, really.
"Occasionally some trees do have to go in order for us to do it. What you see in front of you is an oval that we are hopefully going to build an amenities block for that'll get the kids off of their computer games, out into the open, meeting friends, having some fun, getting a bit of exercise."
"There was also a barbecue area with a little hut with a roof on it, and in the gutter were four gumtree seedlings. Now, as they grew, they were going to fall out and die.
"I said to her - because I'd seen them before she even arrived and I'd already made this plan - I said, "I'm going to grab those four gumtree seedlings, and I'm going to plant them and I'm going to grow them, I'm going to put them in pots. I'm going to turn them into trees. I'm going to plant them somewhere. That's a four for one deal. The council is actually going to plant two trees for the one that they've cut down. That's a two, there's six in all."
How did the lady react?
went, 'Wow, you've really opened my eyes.' She said:
'I didn't even consider all these kids coming out to here to want to do this and all that kind of stuff." Then she goes, "Are you really going to do that with those seedlings?" I said, "Absolutely." I said, "I'm already getting the pots."
When I told her about my plan of buying land, she goes, "Oh, I'd back you for sure, a hundred per cent." She was appeased, I guess, to a degree at that, and recognised that just cutting down one tree, is not necessarily the end."
In the end, Richard found 10 seedlings.
"I've taken them all. I've lost a few. I've taken four up to a friend's winery up in Broke. They're going to plant four and I've got another five still growing out the back. It's in me. It's something I'm a hundred per cent passionate about. And I believe that just economy and ecology, as I've mentioned, they have to go hand in hand. Otherwise, we fail as a race."
Richard is also passionate about investing, as we shall see.
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Name: Richard (also goes by Richo or Rich)
Employment status: Working full-time as a construction site foreman.
Years investing: 45 years
Investment goals: To fund retirement, assist his children and help save the environment for future generations.
Products used: Property, separately managed accounts, managed funds, and stocks.
Biggest portfolio holding: ETFs and direct shares in SMSF comprise 25%
How old are you and how long have you been investing?
I have 54 years of life education and my investing education started around 45 years ago. My mother was a saver, not an investor, and taught me the value of living within your means.
Being a saver in the 1980s was money for jam (interest rates exceeded 16% in 1981) until I learned that the 10% interest paid was from crippling mortgage rates. This taught me that there's always someone else on the other side of the trade.
What is your objective in investing?
As a site foreman for a commercial construction company, my appetite for risk has led to some missing digits (an occupation hazard of the building trade) and lost cash.
But as I age, I do attempt an increase in wisdom and have become more patient with my entry points (and my power tool guards!).
The ultimate goal is to have the financial backing that allows holidays, dinners, flowers (for my partner, she loves those), care for my adult children and maybe one day grandchildren.
I’d also like a boat, a vehicle to tow the boat mentioned previously, hectares of land to look after for future generations, and the ability to not stress in times of emergency.
What products do you use to execute your strategy?
The selection is growing as I learn more. Currently, I invest via managed funds and direct shares. I also own my own home and have a platform super account that allows me to select exchange-traded funds, managed funds and ASX300 stocks.
How would you describe your strategy?
My strategy is education. In an ever-changing environment, it is incredibly important to keep up to date with events. For example, I’m currently trying to stay on top of what’s happening regarding inflation, geopolitics, elections, and changing attitudes more generally, just to name a few things.
The objective is to not become overwhelmed with information and to know what you don't know, then leave those areas to the experts.
My approach is to look at the road ahead and try to figure out what types of companies will deliver answers to current situations that require solutions. That allows me to get on board early and go along for the ride.
My investments outside of superannuation are the riskier choices. Within my super, it’s increasingly becoming a source of earning dividends or distribution, while also providing some capital appreciation over time.
Tax planning, elimination of non-deductible debt, and a current will are also part of the process of arriving at the desired result.
Can you share your top five holdings in percentage terms and tell me a bit about why you hold each of these positions?
Residential house – 35%
A residential home is the largest investment, and as a tradie chippy (a carpenter) attached to a very clever girl with vision, we are able to add value through construction and smashing our mortgage payments. This is the best tax-advantaged asset, as you don't pay any when you sell your primary residence. The objective at this point is to eventually sell and to buy another that we can improve over time in retirement.
Self-managed super fund – 25%
My superannuation is held in a platform account that, so far, is invested across the following:
· Australian Real Estate Investment Trust (AREIT) fund,
· Alternative Bond fund,
· Managed Wholesale Australian share fund, and
· Some direct dividend-paying shares.
Direct shares and exchange-traded funds – 25%
Currently, I think the entry points for international share ETFs and also direct shares are starting to look attractive.
I make additional contributions via salary sacrifice. This provides the most tax-effective outcome to preserve my savings. And if I’m fortunate enough to see an upward pay adjustment at any stage, I will look to increase these contributions.
Managed funds – 9%
In terms of the specific funds in which I’m invested, these include:
The InvestSMART PMA Ethical Growth Fund. A professionally managed account, I chose this because of its ESG performance, low fees and the pedigree of people who are involved in the company. (I also should note that, in addition to Livewire Markets, I also subscribe to Eureka report and Intelligent Investor.) Savings go into this fund monthly. The people behind this fund are the investment professionals, and know what I don't know.
This comprises around 5% of assets so far.
Australian Ethical Emerging Companies fund, again run by quality professionals (I also added this fund to the portfolios of each of my three adult kids, which they now add to themselves, along with birthday and Christmas cash from me, as they will generate capital growth and distribution income from something they may not need. This is around 2% of assets currently.
Third-place is a tie (at current prices) between the Intelligent Investor Australian Equity Growth Fund (IIGF) and my shares in Antisense Therapeutics Limited (ASX: ANP). The first is an ASX-listed managed fund that holds Australian shares and the other a biotech company that is working on an orphan drug for a disease called DMD, that may also have possible benefits for other ailments. This also comprises around 2% of my total portfolio.
What has been your worst investment?
The worst investment so far would be during the Dot.com period in early 2000. I bought shares in a mining company, that became a call centre company, and then also became the owner of a plastic hypodermic technology.
When management of that company exited the building as it became insolvent, around $11,000 of the money I had borrowed to invest went with them. That was painful.
This turned out to be one of the best investing lessons I could possibly have experienced.
How does Livewire help with your investing process and what tips can you share with other investors about using the tools we provide?
Livewire Markets has been a revolution. A key tip from me is that not only should you diversify your investments, but you should also diversify your information sources. And that’s provided by your platform, where investing information is provided in a neat package, from the journalists and analyst professionals interviewing and questioning investing professionals, podcasts, statistics, charts and an abundance of other information.
The best tip I can give is to read the articles that relate to the economic environment and your specific investments.
When I receive the daily Trending on Livewire email, my first step is to open the three lead articles, scan them, and quickly to determine which information I can comfortably consume. I also pay specific attention to any tips, insights or strategies I might be able to absorb.
I also give the articles that relate to my investing universe, as outlined above, a close read. And I generally catch up on the musings of some of the professional investors who manage money in some the fields I don’t understand particularly well, including Alternatives, bonds and international shares.
I then scan Editor’s Picks in the daily email for any particularly relevant articles that I may have missed.
At the same time, I strongly believe it’s important to understand your own limitations in terms of knowledge. It’s also important not to overstimulate your thought process, as it can lead to rash or no actions.
Do you have a favourite contributor you recommend other investors follow?
As with my children, there are no favourites. Why limit yourself to just one option that can look after you in retirement? There are so many excellent contributors that it pays to be open to all.
What can Livewire Markets do better or what do you dislike about the content and information platform?
The format is terrific. The themed articles are informative and the investigations into thematic evolutions are eye opening.
One area that may be of further interest could be the latest technology innovations, such as
· glass that generates electricity,
· maybe more biotech, and
· perhaps a deeper look at artificial intelligence.
· I'm sure these are on your lists of topics and I look forward to many more engaging articles.
Is there a lesson you’ve learned as an investor that could potentially help others?
First of all, you need to pay attention to the lessons! As we’re all individuals, the information we need is different.
You need to get the basics right, choose good sources of information, and diversify between personal management and professional management.
You also need to diversify again by not limiting yourself to industries, companies, or ideas.
Be open minded and patient. Enjoy the little things – like watching the sunrise and feeling rain on your skin. And share your smile often, because life is not that serious, it is a blessing – so live it.
But most of all, one of the best things I’ve learned is the importance of being patient. Be patient because the times will come. Anyway. I'm just sitting back at the moment, just being patient.
Can you share a personal passion or ambition you have for your future?
My personal ambition is to save the planet, or at least a portion of it, for future generations, some of which I helped to create.
Making money at someone else's expense needs to stop. Economy and ecology must go hand in hand, or we will not have a home.
Fortunately, my partner Julie and I have similar desires to plant trees. We will be buying hectares somewhere and replanting the native bushland, hopefully earning carbon credits along the way to help the transition to renewable energy sources.
My father was a reuse, recycle, repair, pioneer in his time and through me and now his grandchildren, that continues. A deep-felt passion for life, planet, the universe, and conscious learning has created a truly wonderful existence so far. I am blessed to be where I need to be, and fortunate that I’m present enough to enjoy it.
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We are looking forward to hearing from more of our readers in 2022. If you are interested in being profiled in our Meet the Investor series, contact us using firstname.lastname@example.org
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Glenn Freeman is a content editor at Livewire Markets. He has around 10 years’ experience in financial services writing and editing, most recently with Morningstar Australia. Glenn’s journalistic experience also spans broader areas of business...