This post is based on an interview we conducted with Mark in September 2018.
Real Money Talk is our series where we interview Australians from all walks of life about their personal finances. The views expressed are those of the interviewees, based on their experiences with money, and as such are not necessarily representative of Spaceship's views.
Mark is a Managing Director of State Street Global Advisors and Head of the Investment Solutions Group, Asia Pacific.
He's spent most of his career managing money. He keeps an eye on geopolitics and has a healthy optimism for the future of the human race.
That said, on a micro level, he has some solid tips for anybody hoping to organise their life so they may not have to worry about money so much.
Over to Mark:
There are a series of basic things people have to know, the most important is: distinguish between what is important and what is noise.
Get a job even before you leave school.
Employment is voluntary. You are not “working for the man” as you can quit anytime. The second you are over-worked by your boss, escalate the issue massively. Don’t sit and sulk.
Understand how warranties work. Ask the question and make sure you read the policy and get it in writing from the supplier explaining what you have to do if something breaks.
Understand how insurance works. Ask the question and Make sure you read the insurance policy, and if you don't understand it or what you need to do to make a claim - ask your insurer to explain it in writing.
You are the best person to look after yourself. My daughter did her RSA and started working at the Crows Nest Hotel. She hated it, so she left and started working at another hotel, much better experience.
If you manage yourself better, you will definitely be happier.
If you have a life partner - or at least partners - you tend to be happier and financially better off.
Save some of every pay packet.
Save up for things.
Pay your credit card off every month.
Buy second-hand things. Understand what things are utterly worthless second-hand (e.g. furniture) and buy them.
Travel is an investment in yourself.
Wealthy people buy new cars.
Pay good money to a specialist repairer to assess a second-hand car you are considering.
If you buy a property with your partner - live on the lowest salary and deduct repayments from that salary. Pay the other salary into the mortgage in its entirety. (see point 7.)
Do without things, save up.
Learn to be a great cook.
Understand what superannuation is for. It is to look after you when you get old. Ask yourself a question, do you want someone else to look after you and rely on them to do the right thing when you retire? Or would you rather know that you have it under control?
Point 18b. Superannuation is not investing, it is saving. Retirement is really simple. You retire on a given date, then you have two questions to answer; how long will you live and what do you need to live on a week? That is all you need to focus on. You have a pot of cash that is deployed into a set of investment stuff. Forget about that. All you want to know is how the stuff will pay you the weekly income you need in real dollars.
Understand why excessive inflation is bad.
Learn the four rules of spending. Who makes the best spending decisions?
a. You spend your money really carefully e.g. you buy yourself a coffee.
b. You spend your money on someone you know less well e.g. you buy me a coffee and are not sure what I like.
c. You spend your money on someone you don’t know at all e.g. you buy a coffee for a hobo.
d. You spend someone else’s money on someone you don’t know e.g. you are on the board of a charity or work for the government.
Your earliest jobs are so valuable. Why does one place do well and another doesn’t? If you provide good service does it usually result in them responding positively or negatively?
When you are going for a serious job, i.e. post-graduation, your part-time jobs and extra-curricular activities tell an important story. Why do so some companies like employing rowers? What motivates you?
Muscular labour is a noble way to earn money. Never forget that. Can you disassemble a hydraulic ram, fix it, and then reassemble it?
Tell the truth. Explain that working for company X isn’t your dream job but you understand how valuable working for them can be. Working as an auditor is a classic example, most hate the experience but also say the same experience is invaluable. The point is that at that particular stage of your career, you can’t use the experience but eventually you will.
You are a brand. Think about how a great company values its brand and mimic what they do.
Commercial interactions are based on human contact. Embrace it. The “old boys club” evolved for good reasons. People like to deal and work with people they like.
Learn about compounding.
Sit down and do a calculation (get help to do this if you need it) and work out the impact of your life if you start work a year earlier and earn say, $40,000, and save $10,000 of it towards your retirement. See what a difference that makes towards your retirement.
When you don’t have lots of commitments, it is much easier to take risks. So take risks when you are young.
Work out how many hours a week you spend on social media. Could you get a second job with that time? Give it a try.
When you are young, work really hard. You are physically able to recover faster when tired.
I remember when I was 20, I wanted to be 40. When I got to 40, I was correct.
Mark’s story:
My first job was at DJ’s as a Christmas casual. Then full-time (I stuffed up my uni application, still can’t work out what went wrong). Earned $98 one week and $102 the next.
Got into uni part-time then went to Arthur Young, now Ernst & Young as an auditor. I studied two degrees part-time. I moved into investments when I was working at an insurance company.
Work/life balance is alright - however when you a) work in a global team and b) support clients, then your time is never your own. Best thing about my job: no two days are ever the same. Worst thing: no two days are ever the same.
Being effective at work means you have better balance. It really helps if your partner and family know what you do and also why you do things. Some kids when asked where their Mother or Father works, don’t know. I think that is dreadful. You know where they go to school, they should know where you work and why.
To budget means to reduce debt as quickly as possible. The second focus is building a super balance that will be adequate across time, income and risk factors like inflation and downside risk (sequencing).
When you get older you often have major events e.g. 21st’s, weddings etc. Important, but generally impossible to wrap a spending framework around them. So if you go on an overseas holiday, knowing you are only going to spend a set amount is crucial.
My best decision was paying off a mortgage a decade early.
My super is 100% indexed equity – don’t overthink the accumulation phase, it’s pretty simple, whoever has the most wins. Vulgar but true.
My worst investments were during 1987 punting on penny dreadful gold mining stocks. They made betting at the races look like a well-considered investment process.
Good luck to you!
