Mailbag: incl. What about investing in the regions? July 21, 2024

32:21Now, we all agree on that one. So is there a way to implement something like Future Made in Australia for the long-term benefit of extracting more value from the natural resources we are blessed with? Well, perhaps we don't directly incentivise the manufacturing, but we create a local competitive advantage to encourage it. Yes. I personally think along the lines of Andrew's recent suggestion to turn Australia into an energy generation hub, perhaps by seeding more capital intensive energy generation projects that would lower the cost of power generation over the long term. Are there any other inputs to a more complex economy that we should be targeting?

32:55Thanks and continue the fantastic work you both do, encouraging everyone across the country that they too can be investors. Although at times the weeks may be bleak or mundane, the years and decades are truly life changing. I assume that means investing, not listening to us. But we'll see. Thanks, Nathan. I'm going to go first, mate, only because I can. Go, go. Do it. My thing on my – so Andrew will add more detail and more nuance and I'll end up agreeing with him. But let's start with a statement up front, which is if we could do it, we already would be, short of any changes to government policy which make it easier, which I'm sure Andrew will touch on.

33:35um if if we could make bauxite of aluminium we do it now twiggy or gina or uh you know harry or twiggy or something miss twiggy um someone would say actually i've got a spare i've got a lazy couple million dollars laying around i'm going to use it to to buy or create an aluminium smelter and turn it a bauxite aluminium make a fortune you say well why would you do that well because i can't make money doing it and because others overseas can do it more cheaply than i can and so I can't, there's no market for it in Australia so why would I do it? They can do it at a cheaper price, send it back to me and I'm better off because instead of making it and selling it for$2 ,600 but it cost me three grand to do it, I'm going to sell it overseas, buy it back for$2 ,600 and be better off because I get to buy the cheaper, sometimes better, sometimes not, finished product, more cheaper than I could make it here.

34:22Why do we send it overseas and bring it back? Because they can do it cheaper than we can even including the freight and we're better off because Australians get to buy $2 ,600 worth of aluminium for$2 ,600, rather than buying a ton of it for$3 ,000 or$4 ,000 because that's how much it would cost if we did it here. And so I... There is an old economist joke of two economists walk past a$20 note and leave it on the footpath as they walk past. And someone says, why didn't you pick the money up? They said, well, you know, if it was really there, someone would have picked it up already. So there is an argument around, you know, someone's got to start and someone's got to do it.

34:54I reckon the profit motive is good enough that someone's going to find the money to do those things that are attractive enough to do if it was done profitably and could be sold more cheaply than overseas could do it um generally speaking my my thoughts are three things we have a wage disadvantage which is a wonderful thing because i mean australians are paid more than they would be otherwise so don't don't decry that too quickly so we have a wage disadvantage we have a scale disadvantage we don't have that industry we can't do it as cheap as others who are already doing it and we have a proximity disadvantage which leads to economies of scale uh which is if you're closer to those international markets you are going to be a more attractive place to buy from simply because all things being equal freight is cheaper so you know can we beat chinese and aluminium i don't think it's likely anytime soon for those three reasons so you know we are we are better a little bit or not to send offshore and bite back cheaper rather than making it here more expensively because it would be a lower standard of living for australians last one really quickly we've only got four percent unemployment if you had 15 unemployment you might say let's put some of those australians to work doing this thing it'd be great for the economy if you want to create aluminium here you know drag someone away from something else they're already doing profitably and start doing this thing which is kind of my future made in australia objection in general mate they are very very broad brush objections there is more nuance i know you're going to bring it so i'm going to turn it over to you oh no you're not you're not wrong i mean the way it's the way things are that's it i mean i just want more stuff right that's the lowest price yes i just i mean think about it i mean I don't know if anyone out there has any friends that are preppers, you know, and they've got their bunker somewhere and they, they'll be their last standing when the zombies come.

36:33Yes. But it's not a great life, right? Like you've got to do everything yourself. You've got to make your own clothes. You've got to, you know, grow and farm your own food. You've got to process that. You've got to tend to your own medical needs. And it's just, no one can do anything that well by themselves. The human. That's so true. The reason humans are dominating the planet is we're not very strong. We don't have big teeth or sharp claws or we're just really good at coordinating. We've got language and we've got money. That's basically it. They're the two inventions that we came up with that allows us to cooperate and coordinate at scale.

37:13And it is such an incredible, incredible, incredible advantage. Great way to put it. Um, so, so why, why, why do we have to do everything in the same way? It makes no sense for the preppers to do, well, they can, if they want, but they're just going to have a lower quality. I don't want to do everything, right? What I wanted. Yeah, because it's, we, we make these arbitrary national distinctions and national borders matter, right? They matter for security. They matter for immigration. They matter for standard living. They are important, but it's no difference between me and my neighbor or my neighborhood in the next neighborhood or my shire in the next shire or my city in the next city or my state in the next state i live in barrel i buy things for people who live in middigon and i buy things for people who live in campbell town i buy things people live in sydney and i buy things people live in queensland i buy things for people who live overseas because there are different advantages in different places for geographic cultural environmental climate uh you know natural resource reasons i'm not i'm not mining my own iron ore in the backyard i'm buying from wa and it's not overseas and yeah again so australia matters australia is a concept as a country as a collective really really matters i'm not gonna for seconds just doesn't but that's kind of sorry just to kind of yeah no that's the idea of specialization right doesn't it's not a national border thing it's andrew and i do different we are why is there two people in this podcast because i'm boring and he's interesting but also because we have different because we have different views on things that's why there's otherwise be one person doing a podcast just ranting at you actually the sum is great the sum is greater than the whole sorry is greater than the sum of its parts right so keep going and that's society right milton friedman had this wonderful speech he gave which was that no one can make a pencil and it's almost a meme at this point no one on the planet can make a pencil because you've got to you've got to mine the graphite process the graphite get the wood get the paint get the thing you know the rubber at the end of it the metal the little ring that goes it is it is such i can go down to office works and buy a whole pack for two bucks right but if i was to make it myself actually i saw this brilliant thing on reddit i think it was the other day where this this dude said i'm gonna make a chicken sandwich from scratch to prove a point right and he made a chicken sandwich it took him seven months and i think he spent three thousand dollars and it was a really and he said i was a really ordinary sandwich like it was like a uh uh might have been a youtube series like a youtuber who did it but it was such a great point because when you really think about it i had to go here to go collect the wheat seed to grow the wheat to collect the seed to grind that it just it's it's it's a madness right so i just reject the premise of we need to make it all here it's just like no we don't we need to cooperate and coordinate that's what we really need to and by the way the things we should do here the things that actually generate most value yeah so if i if we have one worker and one dollar of capital the only question is how can we get the best term for that capital and get that work of the highest possible wage or no matter the wage living conditions more broadly right so working number of hours versus effort versus output versus money that that you know what is the best job for that worker for all those reasons and satisfaction what is the best place for that capital be employed if the answer is making aluminium great love it let's do it rory uh let's make it or if that person actually can be better employed as a nurse or a farm worker or a coal miner or a podcast host or whatever else and that's the better value of you know we get more value they get more value or We get more value and the capitals will employ more effectively.

40:35We're mad to say, let's not do that thing. Let's do something that actually has lower wages and a lower return and will cost more for the end user. And the key here is it's not a zero-sum game. Me winning doesn't make you lose and vice versa. In fact, we're all better off through this mechanism. So what we should do is – and this is – so again, we're talking about countries here. but Buffett as always, we haven't, have we done a Buffett quote yet? Maybe it's time. Let's do one. It's not even a quote. Well, I'm not, I'm going to, I'm going to paraphrase because I can't remember his exact wording, but he's basically saying each year when he looks at the businesses that Berkshire own or have investments in, he's not too concerned about what the profit did or didn't do in that last trip around the sun.

41:22What he asks of his managers is, did you improve the moat? Improve the moat. Cause that will, that will lay the foundations for future prosperity. So I would look at Australia and say, what's our mode? That's the right way to put it, actually. Yeah, yeah. What do we do that no one else can do or no one can do as well as us? And let's think about that carefully and let's strengthen that. Now, to the point I've made previously, it's like, well, I think we do have the potential for a huge comparative advantage in energy production. So we should strengthen that. And that might actually put us on a footing where it actually does allow us to compete effectively on some of this manufacturing because of that wonderful advantage that that we have but that's what we need to look at and exploit it's made to make it here just because and it makes me feel better and and nationalistic i just i get it i get it but it doesn't really make any sense not if you want to be richer and i'm not saying you know um richer for the sake of being rich i mean richer in your life and your relationships and your free time.

42:26Correct. Got to be careful there because it's not just about – plenty of rich people are miserable, right? So I'm talking about richness in life. And you can work seven full days a week, you know, 10 hours a day for a bit of extra money, but you're probably out of a week for a little bit less and actually enjoying more of your leisure time. It's not just about being rich. Yeah, exactly. Quality of life, right? Now, so that's what I mean. Like if we want a better quality of life, then we should be – hey, the Germans make really great – I'm trying to think. Hot toys. Right worse, right? There you go.

42:57I think a lot of the double-glazed windows and stuff come out of Germany. A lot of the high-end building products come out of Germany. Apparently, there are only two electric toothbrush factories in the world, and one of them is in Germany. Yeah, I believe that. I totally believe that. You know, the Koreans are great at making computer chips. You know, it's just like, you guys do that. You're really good at it. We're never going to. Well, we could throw billions, if not trillions, at it over the next 20 years, finally catch up, and then we could compete. Or you just do that and we'll do what we're good at.

43:28And we're all better off. You know, I have a very tiny skill set and I'm not even that good at the skill set that I have. And yet I've got these miracles around me where I'm speaking to you through this magic screen, right? There's an air conditioner blowing on me right now, keeping me warm. I'm wearing clothes that I could never make in a million years. You know, it's just like there's a car in the driveway that allows me to travel at ungodly speeds that our ancestors could have only dreamed. Like it's all specialization and coordination and cooperation. And I don't know, we've flogged this to death, but that's the answer.

44:04That's the answer. Now, if we can do it here and do it better, here's the thing. If that's the case, you don't need to legislate it. It will happen organically. Humans are very ingenuity. There's a lot of ingenuity. and someone will do it. Why? Because they feel as though they can do it and if they can do it, they'll be rewarded for it. That's the incentive. Some people think they can do it but not really can't do it and they will fail and that's disappointing. But it's great that there are people out there that are all prepared to give it a sort of shot. But it's this great big experiment mixing pot and things that work work because not because anyone decreed, I like that better and I shall therefore mandate that everyone buys Apple instead of Android.

44:48It's like, no, the free market will decide. You'll decide what's better for you. I'll decide. And it all just magically works together. And let's not mess with that because as soon as we sort of start tinkering with the best of intentions, it just usually ends up in a very bad, dark place. Just in a poorer place, you know? No, thanks. Yep. No, it makes perfect sense. Motley Fool Money. For more, subscribe to the free newsletter at fool.com.au forward slash listener.

45:20A question from David. G'day guys, love the work. First question might be a bit cheeky. I listen to your podcast through Spotify on a paid subscription and I noticed a while back that I now get ad breaks with messages from your sponsors. I note that music artists don't do this double dipping. I don't really mind but I'm wondering what the model is. Who is getting the profits from my subscription fees and who is getting the profits from my advertising attention? Yours isn't the only podcast with these ads but I figured you might be the most likely to give a reasonably frank answer um that's it that's a i won't be able to give a full answer david because some of it actually is commercial all i can say is the ferrari out the front of scott's face does not pay for itself right exactly i get i get not a cent from it by the way the motley fool gets a little bit of money um so let me i'll answer your question as frankly as i can david allowing for the commercial realities um so we started this podcast this is a very long version but it kind of makes sense we started the podcast a very long time ago uh and I will be always indebted to Mike Fitzpatrick from Triple M who called me one day and said, hey, I read something from you in the paper.

46:20Do you ever want to do a podcast? I'm like, I don't know. He said, do you want to come and try? I said, I don't know. He said, come on. I said, all right. So I said to Ram, hey, mate, come and do a podcast with me and we'll see how we go. So that's how it started. Now, why does Triple M want to do it? They want it for the ears, not the eyeballs, the ears. And what are those ears worth to them? They're worth advertising dollars. Triple M is an advertising business. Fast forward to today, a few years ago now, actually. triple m or austereo that owns triple m created a podcast subsidiary department brand whatever it is called listener and they still publish our podcasts so what's in it for listener um they want the advertising revenue uh we would do this without ads um it's it's can i say too just quite it's a bit like youtube um what are they called uh creators uh the money goes to the top one percent they don't come to people like us so so what happens is there is a split and and listen to very nicely out of it between us and them.

47:12They do all the production work and I literally talk and then I upload some files to Google Drive and magically a couple of days later, the podcast appears in your ears. White gloves, baby. Right, totally white gloves, right? It's like Krusty the clown meme where he comes in and walks out the door. So, yeah, so the answer is we split the revenue after overheads with listener. Again, I won't go into details on there, but after a listed company, it'd be inappropriate for me to disclose that sort of stuff. And I don't know if the Motley Fool would care, but I hope you don't mind, David. Yeah, it is a remarkably small amount of money that we get.

47:47I was going to say, I'm interested to know too, because if it's not insignificant, you know. Maybe I'll turn you off here. I'm happy to do that. But I want to listen as basic as I'm here. Yeah, so basically, they do it for the ad revenue. Obviously, without it, why would they bother? They actually want the ears, and so they want the ads. they do all the hard work. They get paid for the overheads of the sales. So they do the selling and the production. So they source the ads, write the scripts, liaise with the advertisers. They've got a whole sales department and a whole production department. They do all the production, put it on the pod machine, do all that sort of stuff.

48:25We literally have an interest in the white gloves thing. We get a fraction of the advertising revenue. I don't actually care. I said, if we got, well, I'm not gonna give the money back to the listener, but if they did, if, yeah, this podcast isn't done for the advertising, can I say? It's just we do it because it's a recognition of our business partner's advertising model. I'll tell you what, I do it. Go on. Because I don't get any money. I'll tell you that. I mean, A, I like the sound of my own voice, which is evident to anyone who's listened. Okay, so let's just acknowledge that simple truth.

48:58But it's also marketing. And I've always thought that the – because, you know, I experimented with some Facebook ads and google ads just just money really badly spent very poor return um but with this it's kind of a platform again where i can just dial in with you scott um have a chat over zoom record it on a task cam send the file across and it just reaches an audience and my view is that it's just people who it's just a way for people to know yeah about straw man right like that's that's that's a big part of the reason do it exactly like if you like if you feel as though that like plenty of people won't but some people will go oh you had the kind of aligns with the way i like and i like the way that you go and then they might they might go visit the website and they might eventually sign up so that's that's why i do it um and it just allows allows me to save money on on a therapist as well so there's that yeah what do you mean getting some of the advertising you should be paying me for this stuff yes absolutely um so so i will say in the u.s we run ads in so the u.s guys do their own podcast they do it through listener um largely because the us is much bigger than we are and have their own podcast team and all that kind of stuff um production team and that sort of thing they ran ads for a while for the revenue and they just stopped because they didn't want the ads on the podcast and frankly i i love our people our term at listener i'm glad we do it with them i'm very happy to do the ads but honestly the the second the second they said actually we're going to add free model is that okay with you guys like yeah absolutely i don't i don't hate it i don't hate doing it just it's it's honestly it's so incidental to our business it's a it's the money is whatever you think the money is it's smaller um uh and the ads aren't even regular i don't know we don't even see the ads oh can i can i tell you a funny story yeah sorry if this needs to be cut out so oh dear time stamp boom um uh one of because i don't even listen back maybe i mentioned this at another point but i don't know one of one of the strongman members said uh um oh no go for it yeah i wonder what i wonder what nab thinks of your recent bank bashing I'm like, what do you mean?

50:59It's like, they're one of the advertisers on the podcast. Like, what? Oh, I had no idea. And frankly, because they're not listening either, they don't know. Because I'm sure NAB would not be sponsoring this podcast if they knew what I was saying about the bank. So at least you know that there's no favours given. You mentioned that to me. And as I said to you on the message, we sent a message to each other. I said, if we ever start pulling our punches, we'll give the whole thing away. Yeah. Listener would probably like it if we were nicer to some of their potential advertisers. They are, can I say, I'm not just giving them a rap, but I will.

51:32They are great. They let us decline whatever advertisers we want. They let us review the scripts and whatever. As I said, there's so few of them. I don't know how they, what I'm saying about the production, I don't know if they run old ads or new ads. We don't do them that frequently. I think the last one I voiced was, I want to say four weeks ago. I don't know before that. Must have been like three months earlier. So I don't actually know how they run them or whether they run them at all or they put house ads in. Just spoiler alert, I listen to our own podcast so we have no idea what's in them.

51:59Anyway, so this is going away too long, Dave, but you asked for a frank response. I wanted to give you one. If Listen Tomorrow said we're going ad-free, we'd be like, great, we'll do that. Not because we hate advertisers because it's not part of our model. I don't love that we put ads in the pod, but I'm happy to because Listener need to to make it work for them. They've been a great partner for us. They've given us lots of promotion. They're super helpful, super useful. I'm not saying that they won't listen to this either, so that's fine. Link Will, Link's our producer who is a gun who does all this work for us, which is awesome.

52:26He's the best part of the deal. So he'll hear it. And Link, thank you. But other than that, yeah, that's what it is. Link's not listening. He's going to the beginning and the end, he's top and tailing it. Well, can I tell you, behind the scenes, we accidentally published a mailbag, but you don't know this yet, out of sequence. He grabbed the files before I'd renamed them and so he grabbed the wrong ones. And that was the one where we had a 25-minute break in the middle where you had to go and do something. And I went out. I made it, I published the pod. I was like, okay, fine. But two days later, I went, oh mate tell me you no i cut that out like so he's paying attention so you'd be happy to know exactly so he is he's probably listening unfortunately for link he's got uh for his sins he got to listen to us um i'm sure i'm sure he's like guys i thought it was meant to be like an hour that's right sorry really unusually long what's going on now yeah can i say i say another just because it's interesting from a business angle so what's so wonderful about podcasts is it's it's um i forget the name of the protocol now it's one of these open protocols so anyone can do it right like there's no rss yeah yeah i think you're right rss right maybe the feed but yeah anyway so so anyone can publish it's not a permissioned kind of thing yeah so there are corporations that do it spotify famously uh brought joe rogan into their ecosystem but you can listen to it through any third party app which is kind of cool i don't know if you've heard the debate about the open internet yes um which is a fight well worth having because otherwise corporations and people like elon musk will control the internet and we don't want to go there but it's but but so so spotify is a streaming service for music and they've got that whole model and they just decided that well we need to get into podcasts as well so they do it and any any any rss feed they will suck in because why wouldn't you it's free it's open source anyone can can kind of do it uh i'll just give a very quick shout out to the team at fountain they're app that i use oh cool and it's uh you won't say cool when you know the model um but it's it's a bitcoin yeah so it's oh god you don't pay at all so far down the rabbit hole it's so it's really cool so it actually it it it directly connects the content creators with the listeners and and and and people so rather than spending money on sponsoring and promoting your podcast you might actually stream in real time, you know, micro transactions to people's wallets.

54:47So I will get paid. I mean, I've probably made 80 cents this month or whatever to listen to various podcasts. People are happy to pay me because they're trying to stand out from the noise. Oh, cool. Okay. Yeah. And then I can tip. And so it's like, there's ones that I like and I can clip it and I can tip it and I can sort of say, that was a really good episode, guys. Here's 10 sets. You know, like fractions of a cent kind of stuff. Yeah, yeah, yeah. But when you're a podcast at scale, it's sort of like that. I think what's cool about it is it removes some of those commercial sensitivities and it allows people to speak a bit more frankly and connect with their things.

55:21So it just happens that Bitcoin is the mechanism that does it, but it's kind of cool. Anyway, I use Cunt. It's a good point actually, mate, because if we – you're doing it for PR, Motley Fool's doing it for brand recognition, Motley Fool's doing it for the same. If you and I both lived only on the podcast revenue, frankly it would have to be a different model. We'd have to be probably nicer to the banks, and we'd probably find a way to try and be international. Because the other thing is, to your point about scale, they're getting a couple of 10 sats, whatever that is. I'm kidding. They're getting 10 sats from everyone around the world on a globally relevant topic, right?

55:54We wouldn't be talking about Peter Dutton or Nuclear in Australia or whatever, whatever. We'd be doing some big NVIDIA conversation or something else and make sure that people around the world could hear it. Because the audience around the world is dozens of times the Australian audience. So if this was about raising cash, and again, let's say if it was. So anyway, that's what we do. Just quickly on Dave's second question. I don't know about the Spotify paid subscription, mate. I don't suspect a listener gets an email from Spotify. And if they do, we get absolutely zero of that for what it's worth.

56:22A listener may or may not. No, Spotify. Look, I'm not 100%. Spotify just do it because, again, it's an RSS feed that they can just. Yeah. They want. But they're paid to get rid of their own ads, aren't they? I assume. For the music side. So the music business is different. They've got to pay licensing and all of that kind of stuff. For a podcast, I could, if I had the programming now, I could launch a – that's why when you go to the app store, whatever app store you use, there's 4 ,000 different podcast players because anyone can do it. Because there's a pull together and skin, yeah. That's why there can be any number of browsers, any number of email clients, anything that is an open protocol.

56:57That's kind of the point is that anyone can do it. So from Spotify's perspective, they're just going, well we just want to have as much content as we possibly can through this one-stop show we want we don't want people to google motley fool podcast and then listen to it through the first you can actually listen to it through the website on listener right yeah no come to us you might listen to them you might listen to something else while you're here so that's why they're they're doing it because why wouldn't you do it right but they have no they they just whatever they pull through that feed is whatever they pull through that feed there's there's no control or ability frankly for them to edit it out.

57:34So any money that David's paying for a paid Spotify subscription is going to Spotify and not to the podcast creators. No, it doesn't. No, it wouldn't go anything to Listener. I don't, I could be wrong on that, but I'm pretty sure. Yeah, I can't imagine. Anyway, David, there you go. That's a frank answer, mate, a full answer. Yeah, as I said, we do it because it makes Listener happy. I have absolute autonomy to say no to ads at any point we want to if we didn't want to do them individually or as a group. We just do them because it makes Listener happy and keeps us sweet with them. And I'd rather not have to do the production work to get a podcast up and running.

58:01It's not that hard, but Link does a much better job than me. All that being said, can I say that the new business transaction account from NAB is well worth checking out. And I have found it has really streamlined my business activities. Just saying. Just saying. That's right. For no reason. I can't even think of another episode. It's terrible. I'll hate it. I can't even think of another episode we had recently. Who do we have? I can't even do better than that. There you go. Go with that. Here's a counter thing. I'm not a NAB customer. I have used I used NAB last I had a university student tertiary student package when I joined when I went to uni and they gave me a savings account and a credit card with three that's not a credit limit how's that for preying on so but I also do like I appear on Gemma Dale's podcast she does the NAB my wealth or something NAB wealth I think it's called anyway yeah they're an advertiser we owe them no allegiance nothing else I've knocked back products I've knocked back scripts because they put words in my mouth that I'm not happy to say.

59:01If they say, you know, NAB is the leading this, I won't say that unless it's actually proven. I will say NAB is a leading one. Dude, you don't have to lay it on there. I mean, anyone who's listened to us for any period of time, though, that we're not holding punches. I'm not anyway when it comes to the banks. Let's move on then. David, second question. I've got a long-term goal of buying a four-wheel drive in a caravan to do a tour around Australia. Mate, I'm jealous. Hoping this will happen in the 10 to 15-year timeframe and I won't necessarily be fully retired. What is the best way to save for this kind of spend?

59:29Options I can think of include home loan offset account, term deposit, ETFs, or share portfolio. Any other suggestions? Cheers, David. No, I mean, everything except the term deposit is a good idea there, I think. Offset is a guaranteed return because it's the interest saved. So that's nice to have. and I only say like you know whether it's an ETF or direct investing that's all good too because you are talking about a 10 to 15 year time frame because it's probably going to be a bear market or two in all of that so if you were saying I want to do it next year I would say do not invest in shares absolutely do not invest in shares you know in fact put it all into a term deposit or an offset because that's that's the that's the more sensible kind of play but for that kind of timeframe, they're all good options.

1:00:22Well, even then, you've got to be careful with the direct investing because that's a good option if you do it right. There's plenty of people, we've made this point in a recent pod as well. It's like, while it's good in theory, there's actually numerically, probably more often than not, plenty of people, it's a terrible outcome because they just ape into a meme stock, which again, heads up on another upcoming episode on meme stocks and just do that. That's already been Ed, I think. Oh, it's already been Ed. Okay, right. Trying to keep track. So, I will tell, can I tell the listeners, we've been, we pre-record for about three weeks before the four-week break and we record the mailbag sequentially so they get a rollout over the seven-week period.

1:01:08So, we recorded this mailbag episode about six weeks ago but we recorded the Friday episodes out of sequence to try and keep it real in real time before I go away. So we've got Malbecs recording sequentially and then our Friday episodes are recording out of sequence. That's why I ram. So my apologies. I just rock up and rant. So it gets all a bit mixed up for me. Again, I think you should be behind me for this, but that's okay. Can I just elaborate to a little bit more on the term deposit? Why is that? I mean, I just think, look, who knows what's going to happen with interest rates. But when I look around, the last time I looked wasn't that long ago.

1:01:44you're just getting such poor returns. And on an inflation-adjusted basis, you're barely above water. So it's kind of like maintaining your money, but it's certainly not growing it. So if your goal is just to preserve, there's an argument to be made there. That's the argument for me. Go on. Well, over 10 or 15 years, I would like to preserve and grow, frankly. Maybe I'm being a little bit greedy. And again, there's always a cost. There's always a compromise. And the compromise with that is like, well, I mean, who isn't going to take the growth and the preservation? Well, the person who doesn't like watching the value of their money drop 30 % in one year.

1:02:21Like that is the – Well, that's where preservation is. It's a funny word, right? We think about preservation in nominal terms. Anyone who's listening to you rant about inflation will know that's not the right way to do it. But I have$100 now. I'd like$100 in the future. Perfectly reasonable as long as you realize that in 10 years' time,$100 is worth 80 bucks. And so you've got to say, okay, well, maybe less than that. You say, well, okay, well, then I don't really have$100 for the purchasing power. I need to at least keep up with inflation to preserve my money in any real sense. Unless you can get someone to guarantee you 2024 prices, I wouldn't want to be buying something in 2034 prices unless I'm getting something to keep up with inflation at least.

1:02:56Yep, yep. And do what is best aligned with your temperament and abilities and time and interest. That's why the ETFs are so popular. and you know I get it right because I kind of I all of these other options are just crappy options and stock picking is really hard and scary so I'm just gonna do this and get the average it makes perfect sense right I totally get it so it's just like such a default position there's we often talk about risk-free rates and hurdle rates and investing it's kind of the hurdle rate for anything I think long-term investments like probably if history is any guide I'm probably going to get let's call it between seven and 11 on average compound over the over the long term so anytime i'm looking at saving money it's like can i do better than that if the answer is no then don't do it i think that's yeah i mean that that that is the right bogey right i think um i mean yeah i love i love your point of temperament because it literally is you know it depends how you're going to feel over that 15 years i'm going to because i just kind of myself because i think it's important i'm going to take half a step back and say the thing that most matters and which point about temperament is spot on and i want you to think about temperament not only what you would like but you're likely to do over that 15 year period the market's probably going to have two or three really significant pullbacks maybe the shares dropped 10 20 30 percent from top to bottom during that period right now they dropped 38 a month during covid we know that a month and four days it was down 38 um if you can't if you can't yeah and this is your this is your pride and joy money this is your lap around australia money right this is the money you're hoping to use to semi-retire and and go for a drive for 12 months now maybe it's 12 months maybe it's not um if you can't watch that money fall by 30 at some point during the journey don't invest in shares because when i say can't watch it do it what i really mean is it falls you go oh my god this job you take it out you crystallize the loss as the boffin so you basically lock in the loss you had 100 bucks it went 120 then fell to 90 and you said buggy that i'm taking the money out That is the very worst thing you can do.

1:04:59So not just what do I want, what do I like, but what can I literally see through? How can I, you know, can I, you know, live through that period and not take the money out and do anything silly with it? So that's the temperament. That's the real rubber hits the road temperament question. And that's, I think, what's worth focusing on. In terms of where you then put it, again, I should be able to answer that temperament question. Over any extended period of time, more than five years, the best probability is shares every day of the week. Now, I don't say guarantee. I don't say definitely. I say the best probability, very deliberately.

1:05:32The market could crash 20 % and stay lower for 10 years. Of course it could. Your 100 bucks could be 80 bucks in 15 years' time because you buy the wrong shares, you buy the wrong ETF. The market itself just crashes, doesn't come back. A million things could happen. Well, probably not a million, 10 things could happen that could cause that portfolio to fall that far permanently. And that's possible, right? Really, really, really stupidly unlikely. Probably more likely to be hit by lightning. Maybe not. Maybe you'd be in a car crash. But the odds are really small of that happening. But it's possible, so just bear that in mind.

1:06:01If you can't countenance that possibility, don't invest in shares or in ETFs or in any other asset. Property prices could fall 50 % and stay low, right? So just be really careful about the way you think about that choice of options, that range of options you've got. When it comes to the – to that being said, probabilistically, and because you want to keep up, A, with the value of money, to Ram's point about inflation, and B, you want to actually gain something from it, If it was me, and I can't tell you what you should do, obviously, if it was me, I would have it in shares. I'd have it in a broadly diversified ETF or portfolio of carefully chosen shares.

1:06:3715 years, you'll like it to double your money maybe twice if you're really, really fortunate. The market tends to go up about 9 % a year, double your money every eight years if that happens. Now, maybe it's not that good, maybe it's better, but somewhere between double and four times your money. Over that period of time, you'd be very, very, very unlucky not to double your money in nominal terms, not accounting for inflation. you'd be very unlucky to get more than four times your money. But somewhere in that range is pretty lucky. I think around most 15-year periods, I think you'd get pretty close to the average market return over that time.

1:07:08So you're getting close to two to four times your money, which is a pretty compelling idea, what four-wheel driving caravan you want to buy. The last thing I'll say quickly is when you get towards the end of that period, then you want to think about when you take the money out and leave it in cash. And that comes down to, we've said this before, but how definitely you need the dollar value or the date to be real. So, you know, if you'd have invested, I would have said 15 years before COVID. So let's go back to 19, no, 2005. I would have said, yep, 15 years, I think you should invest in shares.

1:07:41I would have also said, hopefully, at least I will now, but I would have said hopefully would have said then. You're getting a great return over time, but be mindful that things could fall the day, month, year before you want to take the money out and you may have to ride that out. So if you decide, I'm going to sell in April 2020, then the market falls 38%. Your 100 grand is now worth 62 grand. You're like, oh, that hurts. Now, if your date is locked in or the amount you need is locked in somewhere near that date, somewhere before that 15-year period, take some money out or take it all out and put it in cash.

1:08:13You'll forego some gains in all likelihood, but you'll know that you know that you know how much money you've got. If your date isn't fixed, I would say, well, actually, I was going to sell in April 2020, the market had a small or very large conniption, I'm going to wait a year and then sell, or two years or whatever the period is. And then you sell at an opportune time at an opportune price. So the more definite your date, the earlier I think you should take out the money and go to, not you personally, obviously, David, but you should take the money out and go to cash, because then you know that you know how much money you've got.

1:08:45If your date isn't fixed and you can afford to be flexible with it, when the returns are best, then I would leave it in equities until such time as you want to take the money out and the pricing was favorable. Now, favorable is a hard word. Who knows what the actual dollar value is? No one. But if the market's just crashed 20%, probably not the best time to take the money out. If the market's riding an all-time high, I think you pretty safely take the cash out. Not because it can't go higher, just because you're not selling at a discounted price in all likelihood. Anyone to add to that, Ram? Sorry, that was a bit of a kind of cook's tour.

1:09:15Anything extra you'd throw on top of that one? You know, what I actually was thinking was, it's kind of not related, but it's one thing that I came across very early on and it's always stuck with me. It was something that Peanut Thornhill saw, I said at one of the events, and he's, I'm not a car guy. He's a car guy. Oh, is he? Yeah. That's funny. I didn't think he was a car guy. There you go. Well, he drives a Corolla or he did at the time. Right. And the reason is, is that when you buy very fancy sports cars, they cost a fortune, they depreciate rapidly. Just maintenance is insane. insane you know the insurance is ridiculous and you probably only take it out occasionally on the odd weekend so his his view was rent it i mean okay yeah it's it seems stupidly expensive for the time you've got it that's right but amortized out over your life it's actually you get to drive a different sports car every other weekend and it's actually much cheaper than if you would buy a car and then i only have the one car and i had i've had people say the same to me with boats you You know, buying a boat is like tearing up$100 bills while having a cold shower is how I've heard it described.

1:10:24Or the other one. Go on, get it going. What were you going to say? The other one is like there's two happiest days of your life is when you buy a boat and then when you sell a boat. That's what I was going to say. Yeah, well done. Because they just, I mean, the birthing, like everything is just, I mean, boating, great. I mean, who doesn't want a boat and, you know, stuff about on the water, great fun, right? But it's stupidly expensive. and I just, just this, I don't know if this applies with caravans and four wheel drives and stuff, but if it is, I want to spend three months doing that and that's it.

1:10:54And then I don't really need the caravan. I don't really need that. This might be something to be said when you actually do some sums on that, that you might be able to do it far earlier and far cheaper just by renting it. Now for that six months, you go, gosh, that was a lot of money for six months, but it's probably going to be more economically rational when you think that, well, after you've done your holiday now you've got this thing that you never use that you're paying you know again insurance on and rego on and all of this kind of stuff so it depends i always think and it's the same with boats right like if you are the person who is literally every weekend all saturday all sunday you're on the water probably makes a huge amount of stuff don't rent the boat right if you if you every day you drive you love to drive sports okay buy the nice sports car but if you're the kind of person who's like most people just like you don't really do it as much as you think you don't need to own these things right you can just i've done it with my mates before we got a house boat and that kind of stuff it's like hey you rock up you get the keys and then you chuck the keys back and you go it's like not my problem anymore yeah not that we're trashing the thing but it's it's just sort of like it's so affordable when you when you look at it rather than one of us having this boat that we maintain and look after and i know it's kind of not even related to the question but that's what i was thinking if you saw my face that's what i was thinking No, I like it.

1:12:11I like it. Hopefully we've done that justice. By the way, I looked into renting a four-wheel drive to do the trip that I'm either or not coming back from, and it's stupidly expensive, so we chose to drive. But we're going to fly up there to save the time of driving and the petrol and the wear and tear. Hire a car we've got there to fly home. You can't make a work. We did it with – Last year, we took the kids up to Dubbo Zoo. We hired a van. We used Camplify, actually. Oh, cool. So this is a company. I'll go again. No sponsorship arrangements. Although, guys, give us a call. and I don't know if the shares are worth investing in.

1:12:44I've never looked too closely, but it was a great experience, right? And I was just like, picked up a van that someone owned that they weren't using. It's that kind of Airbnb, like some guy did own a van, wasn't using it all the time. They rented it out through the platform. They got a bit of money. We had a bit of a van and everyone kind of won. And it was just, and like, otherwise I was buying. Yeah. It's kind of cool, like when it works. So anyway. There you go. Enjoy the trip. David, hopefully you'll be around for a bit longer. We can still be around in 15 years time when you do do the trip.

1:13:13Let us know how you went. But that's for a future Scott and future Ram to deal with. For now, we have to finish off. We will be back next Friday. Enjoy the rest of your weekend. And until then, Fool on. Cheers. The Motley Fool and people appearing in this program may have positions in the companies mentioned. General advice only. Please speak to your financial professional to understand how it may pertain to your situation. Subscribe to the free newsletter at fool.com.au forward slash listener. The Motley Fool operates under Financial Services Licence 400691.