How long are you prepared you leave your money in an investment without touching it? How much money do you ideally want to earn over this period? And are you willing to risk losing some money in pursuit of this goal?

Personal investment would be a lot easier if everything was in plain English. Instead, we are often expected to understand, and not be intimidated by, terms such as risk tolerance, return on investment (ROI) and investment horizon.

Millennial money expert and host of the She’s on the Money podcast, Victoria Devine, recently joined Australian Unity’s Executive General Manager of Life and Super, Adnan Glinac, to talk about investment trends and strategies in clear, jargon-free English.

Adnan discusses assessing how much of your money you are willing to risk, the length of time you are prepared to leave your money in an investment and how Australian Unity’s simple, tax-effective financial product—10Invest—can help Millennial investors reach their goals in a jargon-free way.

Talking Financial Wellbeing

Transcripts 

Difference between conservative and risky investors

Victoria Devine

I'm Victoria Devine, millennial money expert and the host of the She's on the Money podcast. And this is Talking Financial Wellbeing with Australian Unity. Today I am joined again by Adnan Glinac who is the Executive General Manager of Life and Super at Australian Unity. Adnan welcome. I'm so excited to have you back.

Adnan Glinac

Hi Victoria, Lovely to be back.

Victoria Devine

I'm excited today to talk to you all about investing, what it means for millennials, what it means for your community, and what it means for mine and how they all mesh together. So what's the difference between a more conservative investor and someone who's more willing to take on a lot of risk.

Adnan Glinac

In broad terms, if you look at the spectrum, cash is the least riskiest or risk-free asset all the way to something as flavoursome as crypto. And on a scale of 0 to 100, that's a good 100. It is really a personal preference and comfort on how much risk you're willing to take. That could be all in international shares—exposes you to a fair bit of risk to a certain sector. So, it's quite a personal thing for everybody and you need to face into understanding your own profile and your own willingness and ability to absorb losses and still be okay that you can ride those waves through the ups and downs of investing.

How to assess your risk tolerance

Victoria Devine

I couldn't agree more. And I feel like this conversation is something that most first-time investors or DIY investors don't have with themselves before jumping in. I feel like most people when they say I really want to start investing, they start googling, what should I invest in instead of how should I work out what's best for me? So, I want to know personally, how did you work out what risk you're willing to take on versus what you're not willing to expose yourself? And what does that mean for you in your personal life if that's not too pervy?

Adnan Glinac

It is not. Look, I ask myself a couple fairly fundamental questions. I think about the end outcome

that I'm trying to achieve and for me, it's not necessarily return. Absolutely. We all want the best return there is. There's no question about that equation. But there's a simple correlation. The more risk you take, the more volatility that you will experience—the propensity that you will lose money—but you can get higher returns. When I think about this in my personal life, I think about the time horizon and how quickly do I need my money back. I think about the purpose that I wanted and then I think about what keeps me up at night. It's such a simple question to go to. So, one way to quantify this is ask myself how comfortable would I be if tomorrow my thousand dollars became 800?

What is 10Invest?

Victoria Devine

I'm Victoria Devine, millennial money expert and the host of the She's on the Money podcast. And today we are talking financial wellbeing with Australian Unity. I'm joined by Adnan Glinac, who is the Executive General Manager of Life and Super at Australian Unity. Welcome. I'm so excited to talk to you today. What is 10Invest? I know it's an investment bond, but what is that? What does it mean and how does it work?

Adnan Glinac

An investment bond is a tax structure that is taxed at 30%, that's where it gets its tax efficiency. Think simply, superannuation is taxed at 15, comes with a bunch of restrictions. An investment bond is taxed at 30 but is far more flexible. The unique piece, Victoria, about an investment bond is if you are on the journey over the long term and we are thinking ten plus years, then investment bond delivers a tax paid outcome. That means there is no more tax to pay after you've been in the fund for ten years. It does not mean that you cannot access your money in the meantime.

Victoria Devine

And we know that that makes a lot of sense. If we say, all right, it's a tax structure that gives us the opportunity to invest, but then access only 30% at a tax rate, because I know in my community, most of my community are at a tax structure of 32 and a half or more percent.

Adnan Glinac

In any one year, you don't have to declare income. So, if you haven't withdrawn from 10Invest, then your tax affairs are really simple. So 10Invest is underpinned by six index funds that are following different markets. And generally, index funds are fairly cost effective. That's why we thought that's a marriage made in heaven.

Victoria Devine

Adnan then we're talking today about investing for different life milestones. And I know that a lot of your investors in 10Invest are actually millennial policy holders. So, talk to me about that. They’re new to investing. How did they get there and what does this mean.

Adnan Glinac

For us, so we had three principles that we took on in designing 10Invest. One was simplicity. And I talk about using normal language. No financial jargon and talking straight to people. And second, we knew that our investors needed to take a long-term view. So, we wanted to foster long term investing and foster those habits that reinforce that. And thirdly, we know cost and we are all experiencing is really critical to that equation.

How is 10Invest a cost-effective investment?

Adnan Glinac

Investment bonds used to be traditionally fairly pricey. Here with 10Invest, and I'll put it into context,

for every $10,000  there's $30 of fees per annum. So we think it's a competitive argument for anybody to be able to invest and invest safely in something that is carefully crafted and well-thought-out.

The 10Invest index funds

Victoria Devine

Under the umbrella of 10Invest, which is the tax structure. You're investing in index funds. How did you pick those index funds and why are they so attractive to you and also your investors?

Adnan Glinac

So 10Invest has got six index funds. Index funds are generally quite cost effective. And to put this into perspective on 10Invest for every $10,000 that you invest, you pay $30 in fees per annum, which we think is a quite reasonable and accessible investment solution. So, we wanted 10Invest to be simple

and accessible. Six is a good number and it forces people to think about they want to be invested in, but it doesn't make that choice debilitating where people have sixty investment options and go, you know, should I be in ABCD fund.

Victoria Devine

Adnan, I feel like investment bonds are, from my perspective, incredibly exciting, but probably something very new to the people watching this video because they were really tightly gate kept for such a long time and now they're so accessible.

Life’s unpredictability

Adnan Glinac

And again, tax is important. So, investment bond is a really nice, flexible investment vehicle that gives you the choice and the flexibility to go on the journey that of working towards a long term goal, but have the flexibility to potentially pivot and access the money earlier. Life's unpredictable.