Investment masterclass: how to keep it simple

This is an audio transcript of the Money Clinic podcast episode: ‘Investment masterclass: how to keep it simple’

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Claer Barrett
Hi, Money Clinic listeners, it’s Claer. Now, I know you all love a bargain, so I wanted to give you the heads up about a free FT event that I’m doing at lunchtime on Friday, the 21st of April. I’ll be talking about the themes of my new book, What They Don’t Teach You About Money, with Isabel Berwick, my FT colleague and the host of our popular Working It podcast. So good naps and free careers advice as well. You can register for free online and put your burning questions to us ahead of the event. Just visit ft.com/moneyevent to reserve your virtual ticket. And if you can’t remember that link, it’s in today’s show notes.

Simran Kaur
Just by being the only female or the only young person or being someone there that didn’t see anyone look like me holding a microphone. It made me feel like maybe I shouldn’t be here. Maybe this is not the space for me. Am I in over my head trying to think that I can do this?

Claer Barrett
That Simran Kaur. A few years ago, she was a student with very little understanding of the financial world, and now she is the founder of Girls That Invest — a company set up to educate women about investing. Although there’s lots for everyone to learn with a podcast and a book by the same name. So what is her secret to success? Well, refreshingly, she seems to think that investing is not all that complex after all.

Simran Kaur
I don’t call myself a very smart investor. I think being an investor involves just taking action and I think it involves a little bit of luck as well.

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Claer Barrett
Welcome to Money Clinic, the weekly podcast from the Financial Times. I’m Claer Barrett, the FT’s consumer editor.

On today’s Investment masterclass, Simran will be sharing how she went from being an investing novice to an investing expert in just a few years, plus what tips she would give to those starting out on their investing journeys, from how to choose a fund to coming up with your own investment goals and how often to check in on your portfolio. I chatted to her in the FT studio earlier last month. She’d flown in from New Zealand for a pretty exciting gig. I know, how to top coming on Money Clinic in terms of excitement levels.

Simran Kaur
I’ve come over from New Zealand because I’ve come to speak at the House of Parliament International Women’s Day, so it was a fantastic opportunity and I thought, Well, I’m coming all the way to London. I’d love to meet and have this chat. So thank you for making this possible.

Claer Barrett
Well, we’re delighted that you’re here Simran, but let’s start by talking a little bit about your personal back-story. What was your relationship with money like when you were growing up? I mean, one question that I’d like to ask all of our guests is what’s your earliest money memory?

Simran Kaur
My earliest money memory would be when I was about, I want to say, nine years old, and it’s very vivid. I was on the playground with my friend at school and she came over and she said to me, “My dad taught me what all those numbers on the news mean. You know, the numbers of the stock market, the companies going up and down”. And I thought, “Oh, that’s interesting”. And I’ll go home and ask my dad the same thing. And I went home and I waited for the 6:00 news because back then, you know, you could only see it at a certain time. And I went and watched it and I said to my dad, like, “what do those numbers mean? What’s that table with the green and red arrows?” And he tried to explain it to me, but it didn’t make sense. And now that I’m older, I can understand he probably didn’t get it himself. But that to me was my first memory. And I remember thinking, “oh, OK, this is just not my world. I don’t understand this. It’s not for me”. And so it really took me a long time to unravel that and to go, “No, look, you can learn these things.”

Claer Barrett
Hmm. Well, I mean, you’ve made a career about it. I mean, for anyone listening who hasn’t heard of Girls To Invest. What is it? Tell us more.

Simran Kaur
Well, it started off as an idea of making financial literacy, specifically investment education as easy and bite-sized as possible. It began by sharing information like, look what even is a fund? What’s an exchange traded fund? What’s a share? What’s the stock market? How does it work? These were questions when I was growing up, and Sonia, my co-host and best friend of 20 years — when we were growing up, these were just not things that we understood. And if we tried to research about it, it still didn’t make sense. And for a long time we thought, maybe it’s us, maybe we’re not smart enough. You know, maybe this jargon is something out of our reach because it’s something to do with who we are as opposed to where we’re getting information from. And so it began that way, and it turned into the podcast. Now we have social media content, we host workshops, we’ve got our book under the same name, and we get to really work with real people in the community and share these great workshops. And it’s just a fantastic little mission that we’ve got.

Claer Barrett
Tell me about how the early desire to understand investing turned into Girls To Invest.

Simran Kaur
I really wanted to understand personal finance for myself, and so when I was studying university, I wasn’t in finance to begin with. I began in healthcare, so I became an optometrist to begin with. And during our studies, our university encouraged us to take papers outside of our course. And then I studied a course through Yale, which was online, and it was called Financial Markets. And I found that to be really, really interesting. And it ended up being a lot more simple than I’d ever imagined, you know, trying to understand what, how insurance worked, what was the stock market, how did these things all work? And I remember just feeling quite angry and going, is that it? Like, is that what the stock market is? Is that what a fund is? Is this how people make money through capital gains and dividends? Like, it’s really not that difficult.

Claer Barrett
Hmm. So tell listeners about the content that you’re making with Girls To Invest. What are the kind of things that people want to learn from you the most and how do you go about teaching them?

Simran Kaur
I think the most common thing that comes up is how do I begin? And it’s almost like the, you know, the first step is the hardest. But in a sea of knowledge, if someone Googles, how do I invest or how do I get started, there’s so much information out there that they almost get analysis paralysis. And God forbid you ask them, like, which broker to begin with? That’s a whole nother story. Again, the analysis paralysis comes in. And so what we try to do is offer a way of going, “look, start from the beginning of the podcast, we’ll start from the beginning of the book, and if you make your way through these steps, you will understand everything you need to know to feel like you’ve got a decent amount of knowledge”.

Claer Barrett
Hmm. What would be the three top tips you would give to people who are listening to the podcast and thinking, Well, I would like to get started, whether they’re male or female. What would you say the three key questions people should be asking themselves?

Simran Kaur
I think rather than jumping into what stock should I buy or what fund should I jump into, it’s understanding what is my goal. Because if you reverse engineer and know what your goal is and know how long you’re investing for, what kind of, you know, number you’re after and what timeline you have, you can then work backwards and go, “Look, I’m investing to retire early in 20 years”. That’s a different type of investing style versus someone that’s investing for five years that’s trying to, you know, save up for a home deposit. The person who’s investing for five years might not be able to take as much risk because they have a shorter timeframe. And so by going backwards, you’re then gonna be able to come to that answer in a more natural way as opposed to going, “Look, I just want to make as much money as possible. Where do I put that?” Number two, the thing I would recommend is understanding your risk profile. People don’t invest often because they’re scared they’ll lose it all. And so what I like to remind people is risk is like a spectrum. And so you can sit anywhere on that scale. You don’t have to jump straight into the NFT space and think that’s what you need to do to invest in 2023. I think the third thing that I’d recommend is just be careful of FOMO or fear of missing out investing. It’s something that’s, it kind of plagues our generation, I think, or realistically plagues the entire population because whether it’s online or, you know, that colleague at work or your uncle at the barbecue, there’s always someone that’s got a hot tip and you’ve got to be very careful as to what you let in and what you use to sort of, you know, direct your decisions.

Claer Barrett
Well, I heard JOMO talks about in the FT office the other day, it’s the joy (laughter) of missing out.

Simran Kaur
I love that.

Claer Barrett
So we can maybe replace FOMO with that. So people can probably pick up from the biographical details that you’ve given us that you’re quite young. Tell us a little bit about how you have been managing money in your life for somebody who graduated not that long ago.

Simran Kaur
So I graduated in 2020. It’s only been three years of, of being out in the big world. I would say that our generation and the Gen Z’s that come after us, they have almost had to learn about money earlier, almost have had to care about personal finance earlier than maybe people that had graduated ten years ago because we’re just in a world where realistically, it is harder to buy your first home. You can’t live off a single income and in a lot of large cities at least. Even retirement ages are being questioned as to, you know, will it stick to 65? And so I don’t know if it’s because of a general interest or because we’ve kind of had to think earlier about these things. But I’m kind of seeing a general shift where young people are going, “OK, I’m going to graduate soon or I’m going to start working soon. What can I do now to set myself up for ten, 20, 40 years down the track?”

Claer Barrett
Hmm. That’s really interesting. And you are 26 now . . . 

Simran Kaur
Yes.

Claer Barrett
27? 26 years old. Now I was I think 27 years old when I managed to buy my own flat. But that was back in the days before the financial crisis where you could just kind of smile winningly and a banker would give you a ginormous mortgage without asking too many questions. How are you getting on with the problem of the property market you just spoke about?

Simran Kaur
I was very lucky. I was able to purchase a home last year and that was on the basis of being quite, I would say, somewhat lucky. I don’t call myself a very smart investor. I think being an investor involves just taking action and I think it involves a little bit of luck as well. So by investing quite young, I was able to use some of that money to put down a deposit for a home in New Zealand. And I often cite that because I don’t think I could have saved my way to that money. I don’t think I  — you know, I didn’t have family help. I didn’t have a partner. I don’t think I could have just worked a job and put down cash and bought a home by myself at that age. And so I think investing is a very powerful tool, you know, over the long term.

Claer Barrett
I think your message and my message too is that ... Just being in the market, investing slowly but surely, getting into that regular habit of putting some money aside every month and having faith that over time it will build into something bigger is a habit that we should all be trying to pursue. But unfortunately, when it comes to getting rich quick, there are no quick fixes.

Simran Kaur
No, I often try to tell myself and people that listen in to our show, “look if it, if it seems too good to be true, it probably isn’t”. But I hope that’s also encouraging to those listening to this episode that maybe don’t make that much. Because if I always like to say, look, if you only make £25 a year and you invest a little bit of it, you are going to be financially better off than that person that makes £200,000 a year, but spends £200,000 a year because one of you is going to have compound interest work for you. And at the end, when it comes to retirement, you know you’re gonna be a lot more better off because it’s better to make habits than to unlearn habits.

Claer Barrett
Now, I was speaking to a colleague earlier. He was really surprised that Money Clinic has listeners all over the world. But it strikes me that when we talk about investing, sure, in the countries that we’re based in, there’ll be different systems and tax wrappers and vehicles for holding our money. And whether it’s pensions or ISAs or 401ks, all of that kind of stuff. But underlying all of that, in terms of the investments that we’re choosing and the different kind of things that we can invest in, it’s pretty similar wherever you are in the world.

Simran Kaur
I think it’s almost like a universal language money, like personal finance and trying to understand, “well, what, what are the strategies involved or what are the rules I use to choose a fund or to choose a share”. Those are the same no matter if you live, you know, in the UK or in New Zealand or the US and we get that question a lot.

Claer Barrett
Are there any rules of thumb that you’d like to share when it comes to how investors can approach choosing a fund that’s right for them?

Simran Kaur
I think if you’re beginning and you don’t know where to start and you’re just overwhelmed — I really, really, really like the Boglehead method or the three fund method. And for those that don’t know what that is, it’s the idea of putting your money in possibly just three different funds. Fund one is a broad market fund. It can be based in the US, that’s where it came from. But you can also base it in your home country with, you know, that’s like the Footsie 100 if you’re in the UK or the ASX 200 if you’re from Australia. Then the second fund that you incorporate is a global index fund. And so that includes, you know, emerging markets. You have a bit more exposure to, to different places. And then the third is a bond fund. And that again can be based off the home country that you’re in. It could be a US bond fund. And having these three funds, you can sort of change what percentage you have of all of them. If you go, “I don’t want to take on too much risk”, then maybe the bond portion is much larger. If you go, “I’m 20, I’m investing for the next 40 years until I’m 60” then maybe your share portion is a little bit larger, whatever that may look like for you. But I think that’s a really good way to start.

Claer Barrett
Interesting that you mentioned tracker funds there. So we made a podcast with Robin Powell and Jonathan Hollow a couple of months ago about the cheapest way to invest using tracker funds. But nevertheless, as investors get more experienced, they often want to maybe pursue a particular theme or a particular geography or even invest in the shares of a particular company. What are the kind of things that people need to weigh up from a risk point of view, but also from, from a choice point of view? How would you go about that?

Simran Kaur
Oh, I think I have a bit of a controversial opinion on this, I believe. (laughter) Good. I believe that, you know, when you get started investing and you’ve set up your portfolio, we see this interesting pattern. People give it a year and then they go, “Surely there’s more to this. Maybe I could make things more intricate.” I personally believe you don’t have to make it harder or more complex to get the gains that you’re after. I think that there’s a balance and you can get too deep into it where you’re spending a lot of time, a lot of money and making a lot of complex decisions. But are you going to get the results that you want from it? Are you actually gonna perform better than investing in just an index fund? And I think asking yourself that hard-hitting question is important to do. And if the answer’s yes, and you know, that makes sense. But I see a lot of times people spend way too much time, possibly way too much in fees for results that aren’t actually much better.

Claer Barrett
I mean, how do you suggest that people take account for this? How could people approach having a portfolio review?

Simran Kaur
I love portfolio reviews. They’re kind of like a date with yourself and your money. And so Sonia, my co-host, and I, we make a real, is like, spectacle out of it. You know, you sit down, you have a nice dinner, you’ve got your laptop out, you light a candle, and once you sort of set the mood and actually get into the important stuff, what I like to focus on is kind of reviewing my goals and understanding has that changed? Because maybe at the start of the year I wanted to buy a house, but maybe at the end of the year, you know, mortgage rates have gone up and cost of living is higher and maybe my salary has changed and I might go, “well, maybe this is not actually the goal that I’m after right now. I don’t need this money in five years. I need it in ten years”. And suddenly what I’m after might change. So reviewing your goals is always step one for me. Second thing is making sure I base my portfolio on a percentage allocation. So X amount should be invested here, let’s say 90 per cent in funds and only 10 per cent should go to individual shares. And so reallocation is really important to me. I think it makes sure that my risk profile stays the same. I’m not falling into a place where my investments don’t match up my values. And honestly, just starting off with those two things is a good way to begin.

Claer Barrett
Simran you’ve spoken before about being a young woman of colour growing up, not seeing people like you reflected in the investing sphere. I mean, tell me a little bit more about that, but also what you would like to see the financial industry itself do more of.

Simran Kaur
I truly believe that with representation comes action. When you see representation, you truly think, “Oh, she looks like me or he looks like me. I can do that.” And I mean, even in the last five years, I think it’s changed so much and I can only see it getting better. I think from the side of the consumers and from the side of the financial services — I think both sides believe that more representation, more diversity is a good thing. It benefits us all. And I can’t, I don’t think I’ve ever met anyone that said “we shouldn’t have this change. We shouldn’t have more women investing”. You know, if all you cared about was the, you know, the dollar, it’s still really great to have more women invest. If all you cared about was female empowerment, it’s still great to have women invest. But either way, I just, I guess I have a very positive look on it.

Claer Barrett
Are there any tips that you’d like to pass on to Money Clinic listeners about managing any aspect of their personal finances that have really helped you on your investing journey?

Simran Kaur
I think an unlearning really helped me. And it was the unlearning that was stopping me from taking that next to it where I kind of believe that money was a bit evil. I kind of believe that now I probably shouldn’t aim to have enough. As you know, money is something that makes you a bad person or you get quite caught up in it and you become very money minded. I don’t want to be like that. And I had to kind of think back and go, Why do I believe that? Because the truth is, it’s not just this one pie that if you take, you leave least for other people. Age 2021 study found that when women, when our salaries increase, we’re still charitable and our “charitableness”, if that’s the right term, increases to companies than our male counterparts. So the more we earn, the more we put back into the communities that we come from. I don’t think money makes you a good or a bad person. I think what you do with it has that impact. And so by kind of pushing down that limiting idea that, “no, no, I shouldn’t ask assimilationist, i shouldn’t ask that raise, I shouldn’t invest” was very, very, almost damaging. And I’m glad I was able to unlearn that. And I think for a lot of people that haven’t started, that’s the subconscious that sometimes holds you back as well.

Claer Barrett
Hmm. Brilliant. Well, thank you for coming in and having a talk to Money Clinic. It’s been a pleasure having you on. So . ..

Simran Kaur
Thanks for having me, it’s been awesome.

Claer Barrett
Thanks again to Simran Kaur. Check out her podcast and her book, both called Girls That Invest and take a look at the Girls That Invest website if you want to learn more.

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That’s it for Money Clinic with me Claer Barrett this week and we hope you like what you’ve heard. If you did, spread the word, leave us a review. We’re always looking to chat with people about their money issues for the show. So if you’re interested in being part of a future episode and looking for some expert money advice, then email us. Our address is money@ft.com. You can also take a peek at our website ft.com/money. Grab a copy of the FT weekend newspaper or follow me on Instagram, I’m @claerb. Money Clinic was produced in London by Persis Love. Our sound engineer is Jake Fielding and our editor is Manuela Saragosa. You heard original tunes this week by Metaphor Music. And finally, our usual disclaimer: the Money Clinic podcast is a general discussion around financial topics and does not constitute an investment recommendation or individual financial advice. For that, you’ll need to find an independent financial adviser. That’s all the small print for now. See you back here next week. Goodbye.