My guest today is Brendan Malone, Managing Director and Group CEO of Raiz Invest. We talk about the world of micro-investing, the psychology behind saving, and the importance of financial education. Brendan shares his journey from Newcastle to the global finance hubs of London, Hong Kong, and Singapore, eventually leading him to Raiz Invest. Brendan aims to democratize investing for all Australians by breaking down financial jargon and making investing accessible with as little as $5.

Micro-investing is a concept that has gained significant traction in recent years, allows individuals to start investing with small amounts of money. Raiz Invest is an ASX-listed company at the forefront of this movement, empowering Australians to take control of their financial future.

One of the key takeaways from this episode is the importance of financial literacy. Brendan emphasizes that many people treat the stock market like a gambling arena, often relying on tips from friends or family. However, sensible investing requires a deeper understanding of the market and a well-thought-out strategy. Raiz Investt aims to break down the barriers to investing by providing a platform that is easy to use and accessible to everyone.

Brendan recounts an anecdote about a customer who couldn't access his invested money immediately to buy another round of drinks. This delay, inherent in the stock market's settlement process, helps curb impulsive spending and fosters a more disciplined approach to investing.

Raiz Invest offers automated savings, round-ups, partner cash-back offers and diversified portfolios, including the innovative Australian residential property portfolio.

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Chloe: Shares for beginners Phil Muscatello and Fin pods are authorized reps of Money Sherpa. The information in this podcast is general in nature and doesn't take into account your personal situation.

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Brendan: I need to buy another round. I'm trying to meet a girl. Where's my money? I need my dollar 16 or something like that. And so I rang in the next day and he goes, what are you talking about, mate? But if it was in his online saving, he would have spent it. But the fact that it's in inequity or it's in a portfolio that's listed or quoted on the ASX, and then that t two settlement, you know, he had to understand that they're cool. You can withdraw it, but I can only sell if it's in the markets open. And then there's a two day settlement. So it helps with the instant gratification request and, you know, it's massive. In particular for someone like my wife.

Phil: G'day and welcome back to shares for beginners. I'm Phil Muscatello. What are some of the silly questions that we ask ourselves that get in the way of sensible investing? And I'm glad we're actually going to be talking about sensible investing today, which is why this program's all about. Why do so many people at the pub, um, treat the share market as a tipping competition? Joining me today is former Newcastle boy, who's now Sydney boy, Brendan Malone, managing director and group CEO, uh, of raise invest. G'day, Brendan.

Brendan: G'day, Phil. Good to be here. Looking forward to the conversation today.

Phil: Wow, you've sort of clammed up suddenly. We were having this great conversation before we rolled tape, and now you seem all sensible.

Brendan: You make me a little nervous, Phil.

Phil: Oh, no, no, no. So tell us about your background in the world of finance to this point, as being the managing director of a, um, can I call it a micro investing app? Is that the best description?

Brendan: Yes. Yes. So raise invest is an ASX listed company and our whole vision, and we can talk about a bit later, but it is empowering all Australians to invest and that's how they can start with micro investing. But as you mentioned, I'm a Newcastle boy. I was, uh, born and bred in Newcastle. And one day dad said to me, well, what are you going to do after school? And it was sort of the halfway through year twelve. And I said, well, I don't know. He said, well, what about accounting. And I'm like, I hate maths, why would I want to do that? I ah, was good at numbers, much better than my spelling. But anyway, we sat down and we said well why don't we do commerce? Why don't I do commerce at Newcastle uni? And we rode away to about 15 accounting firms in Newcastle to try and get on a graduate program and I managed to get one. So I did full time work, part time uni over four years and at the end of it one of the managing partners of the company I was working for went out on his own and took me with him out of about 120 staff and we sort of did that for another two years. And then he said look, you want to grow and it's a big thing in the accounting world to have international experience. I jumped on a plane with two other guys to head to London, worked a couple of smaller jobs to start with on a contract basis for a national children's house, Churchill insurance. And then I got into Royal bank of Scotland where I spent the next close to 1314 years with them. I spent time in London in the finance team. They shipped me out to Hong Kong for six months and Singapore for six months and back to London. But I got to Hong Kong and I loved it. And it was at the same time where Royal bank of Scotland, when I first joined we'd merged with NatWest and when I was in Hong Kong we merged. We bought ABN Amro right at the height, the GFC in 2008. And it didn't go very well, but it taught me a lot about business. And the problem that we had with uh, RBS was we grew too big too quick. We didn't have the foundations and the pillars of the solid foundation to grow the business overleveraged, et cetera. And that's what's today for me, is to make sure that we grow a business with a stable foundation. Don't get too big too quick, make sure you own the markets that you're in before you look at anything else. And there is a bit of history there with the raise business, but it gave me that experience to land up at raise today.

Phil: And so you started off in the accounting side of things but then ended up more in the analyst and equity share market side of things.

Brendan: Yes, yes. So I started in the finance team and it was the finance team at the bank was all about daily p and ls, the markets boys, P and L. So my interest has always been in finance. And as I said, my numbers are much better than my spelling and that's what grew me out. And we had to grow the finance business and the reporting from the asian businesses back into head office in Edinburgh. That's why I was sent out to set it all up, because I had a good understanding of the backend systems. Then it sort of morphed into a COO role. So, uh, operations a bit between in the bank, you have the back office, middle office and front office. So it was sort of the bridge between the two. And my last role in Singapore was regional head of client network strategy. So what that really means is you've got the front office guys going out talking to relationship managers, to the other banks or corporates out there. But what's in their toolkit, you can't have someone say to a client, we can do this for you, when the back of house can't do it. So we built that bridge to say, right, you can take this. Whether it's an FX solution, whether it's a derivatives or hedging product to these guys, you've got to make sure that our backer house does. And that's something that I'm, um, massive on now, making sure that what we say we can do to our customers, especially in the raise product, is that the system can do it and can handle it.

Phil: Okay? So the company that you run, raise looks

00:05:00

Phil: after investments for many australians. But then we all have this experience and we were chatting about this and you refer to it in the tv ads for raise, is that you go to the pub or you go to a party and you, you meet people and because they know that you've got something to do with the share market, they say, oh, have you heard about, uh, blah blah blah company? And you go, okay, what do they do? Lithium? Of course they do lithium, you know.

Brendan: Yes.

Phil: Why is it that so many people, so many Aussies look at the share market as punting? It's like a tipping competition.

Brendan: Look, that's a good question. And we've got a great relationship with seven west and we do have this raise your game campaign on the Channel Seven network. And it is about who's advising you? You know, for lack of a better way, who's advising you? Your parents might say, put your money in the bank account. Your mum might say, put it under the mattress. Or grandma might say, put it under the mattress. And then your best mate goes, I've got this great uranium, lithium gold stock. It's gonna go gangbusters. Yep. Yeah. Put your money here. I think what got me interested in rays and acorns back in the day in 2015 was, I had a friend in Newcastle whose grandmother passed away, and he inherited $15,000. And he said, what stock should I buy? And my response was, what do you mean? Mate, what are you talking about? Oh, you're in finance, you're in banking. And I said, hang on a sec. And he said, no. Yeah, no. Is it BHP? Is it CBA? Is it nab? Is it? And I said, mate, no, you don't put all your stocks into one. And that's what we do at raise, is we create that diversification. And I think a lot of people out there in the australian market think that they hear the good stories on the stock market, it's a bit like punting. You don't hear about the losses. You always hear about their wins. And I think the australian chat around making money. And afterpay in the. In the last couple of years, it just springs to mind because it was a ten bag, or as they say, people go, oh, this did it, so let's have it a go. And they punt because they don't really understand. And whether it's a cross between the excitement of gambling versus the inexperience or the emotional bet, that's where I think we all, myself included, and I've got some. Some shockers over the years that I've emotionally invested when I shouldn't have. It's understanding that, and that's what we try to do at raise, is break down those barriers to financial jargon, financial access, and start small.

Phil: And last week, we were talking about, um, at sharesight. We had a, uh, festival of financial failure discussion at Sharesight, and some of the people in the audience that we were chatting to, and I just can't. People tell themselves these stories and they make up these narratives. And I'll just tell you about a couple. One was someone was talking about Donald Trump being elected and what effect that would have on Tesla. I don't know why I keep on putting Telstra when I write Tesla. I got something going on there and that maybe you should sell Tesla, because if Donald Trump gets elected, the price of those shares will go down. Or someone else who's sitting there and obviously obsessively looking at deal flow and saying, why is this company buying and selling, buying and selling and buying and selling? And you can see it right at the end of the day, and they're affecting the price. We were trying to explain to him, well, that's much more an ETF provider. There seemed to be clues in what he was saying. It was an ETF provider who have to do that on a, um, minute by minute basis. And the guardrails that are erected around the market, you just can't manipulate a share price like that, any big company, you know?

Brendan: Yeah, absolutely. I think it does entertain me when I see that the Teslas and the trumps and a few other examples out there, the longbow, that people can go, well, if this happens and this happens, and nobody knows what's going to happen. Lost a lot of money. And yes, a lot of people made a lot of money on betting like that and what's going to happen in the market. But as you say, it's very hard. It's very hard to manipulate and the ins and outs. I think, going back to the previous question, the property market's so expensive in Australia, the gig economy. And I've seen this, and I see the comments on our social media pages about it's like, well, every little bit helps these days. So, uh, if you can't get into the property market, you can't. It's a tough environment, the cost of living and the inflation. So if you can make a couple of dollars here or there on some stocks, and that's what. And as you said, it can be seen as punting. And, um, it's probably. It is very strong in Australia.

Phil: Have you seen that light bulb moment? Come on, for any of your users going from that punting mentality to go, oh, this is how it actually works, to be honest.

Brendan: And we had a good chat at the, uh, Australian Shareholders association conference back in May. It has, I think, you know, something like Covid and the access to financial markets that people were doing and the extra cash that they had around was in. They put it into the stock market. Young person would like to say, hey, I've, uh, put in $20 to raise. I'm sitting on the lounge, I'm watching Netflix, I'm playing on my Apple phone, and it's now $21. They will tell their mate about it. If it's $19, they won't, and they go, terrible. Pull it out. The education process that what we're trying to do with financial literacy and inclusion is to get that light bulb moment to say, well, hang on a sec, I was buying these eggs at $10. Now they're dollar five. I will continue to put in that same dollar ten that I was

00:10:00

Brendan: doing when it was higher because I'm going to get more eggs. So when the price goes up, they can see that. And I think what we've seen, and we mentioned some of the numbers at the ASA conference, 50% increase in deposits from one year, 1 March, from March 23 to March 24 in the month. That light bulb moment is starting to come. What I would like to do is to get that light bulb moment a lot younger and a lot earlier in someone's financial wealth creation journey.

Phil: Yeah, right. From when they start working. Because imagine if you getting your first job when you're 1819 years old or even younger, uh, and just being able to let that compound, that compound, because that compounding effect does really show up until like 20 or 30 years down the track, really, doesn't it?

Brendan: No. And that's the lightbulb moment. Oh, I should have done this. And one of the famous quotes, it's a, uh, buffett or a munger, is the best start to investing was yesterday. The second best time is today. And starting to understand and get that compounding, it makes a hell of a difference.

Phil: So, financial failures. We were just having a little chat before we rolled the tape again about our financial failures. And you were talking about investing in the fintechs because you like the story. Is that where you wanted to go with this?

Brendan: It's not necessarily fintechs. And I'm laughing and smiling to myself because my first ever, and people may have heard this before, uh, my first ever stock I bought was when I was about 18 or 19. And it was fosters.

Phil: Okay.

Brendan: Because I enjoyed a beer. I liked beer. I was old enough to drink. I thought I'd, uh. Fosters. Well, you know, I want to invest in something that I'm buying, and I think.

Phil: So that's that Peter lynch approach, isn't it? Invest in what you know.

Brendan: Exactly. And that's a massive lesson that I've learned.

Phil: Drinking away to wealth.

Brendan: Yeah, it's the whole exercise I lost for memory. It was $3.35 or something, and I had to sell out because I needed my thousand dollars or $800 back. It was about a dollar 37 or something like that. It was. And it was, uh, what I learned about that. And my dad let me go. He knew what was going to happen, but he let me get a lesson. Learnt, uh, well, to me back then, it was a lot of money. It is. You don't use your heart all the time. You've got to use some of your head to invest in. And as you say, you invest in what you know. I think the education journey that I've seen customers on over the last eight years is especially around. Take crypto, for example. When it first came out, everyone's like bitcoin bitcoin. Bitcoin. And they say to me, oh, you must be in it. I said no, because I don't know it. I had to force myself to understand it before I ever did anything. And that's why we bought out the sapphire portfolio in raise to give people that hands on experience of 5% of your portfolio into bitcoin, but with guardrails on, you know, no hot, cold wallet, no 16 digit password where if you lose that, you lose everything. This does it in a controlled environment to give experience. But I was ah, for lack of a better word, a late adopter into the crypto and it's still not number one in my priorities of listing because again, all the other cryptos out there apart from bitcoin is I don't know about them. So I won't invest in something that I don't know.

Phil: M we were chatting though about seeing some of these smaller fintech companies, and because we do work in the fintech space and that we do meet so many of these people, and I was talking to you about the example of a particular company that sounded a great idea. A lot of mates of mine know the guy who's the CEO, uh, of this, and they say this is a really good company and it sounds like a great story, but then nothing happens with the share price.

Brendan: And it's those sort of situations that I ah, have been in over the last eight to ten years in this market. It is amazing what great stories are.

Phil: Out there, fantastic stories, and what people are doing empowering investors.

Brendan: Oh, it's huge. And I do attend a lot of the fintech startup functions, et cetera, to see what is going on out there in the world. And I'm blown away at every session I go to because there is such good things. Oh, that sounds like a really good idea. I can see that working and we invest and we put Money in, but it is a longer hold than expected. Um, even with raise, it's a longer hold than we all expected. It's challenging and there's that.

Phil: I'm not sure if you were at the conference when that slide was shown. It was someone from an ETF provider who showed this slide that over 100 years worth of research on the australian share market, only 7% of companies have outperformed the index. It's hard to pick individual stocks.

Brendan: It is, it is. And on the education journey that we've given raise customers, it has been funny because they think they can time the market. We've educated them to a certain extent. They will close their raise account or bring it back to zero and go and do it by themselves. And we typically see them come back and go. Actually, it's not as easy as that. I don't have the time to watch and stock pick. Can you reopen my raise account for us? Um, and history, I mean, it's like back in my accounting days, the number one rule when you sort of doing year end financials or audit work for guys is you pick up last year's work papers, you see the history, you understand the history before you jump in and push forward. And it's exactly what's happening in the market. When you talk about those, you know, 7% of companies, it's huge. Yeah.

Phil: And it speaks to the core satellite

00:15:00

Phil: idea, because I've realized that a lot of people that listen to this podcast, they do want to have long term investments via ETF's and investing applications, but then they still want to try and pick those winners.

Brendan: Absolutely, absolutely.

Phil: And there are ways of doing it safely.

Brendan: Yeah, yeah, relatively safely.

Phil: I don't want to.

Brendan: You've got to be prepared to learn and do a lot of work and do your time. There's no, there's no quick win. Everybody would love a quick win. And history tells us you've got to work hard, you've got to understand it, you've got to ask questions, then you can jump in. But I absolutely love the core satellite sort of structure because, and we see a lot of customers and a lot of people out there say, hey, the wealthy get wealthier because they have access to these better deals and the better opportunities. Yeah. Again, a lot of them make Money, but a lot more of them have lost Money. And you only hear about the good ones. And if we can democratize and bring that level education and access to those sort of markets for everybody, it'll be great.

Phil: You're from an accounting background, so you are very focused on p and ls and balance sheets, aren't you?

Brendan: Yes.

Phil: What are the kind of things that you look for in a good company?

Brendan: You've been speaking to my wife, haven't you? The spreadsheets that I give her every day.

Phil: You're not one of those.

Brendan: Oh, yes, yes. Yeah. Revenue's revenue, and that will come. And again, you won't get revenue overnight in a startup or. But your cost base is the important thing you do. A, uh, startup may raise some money, but you can't keep going back, cap in hand, asking for more money. It's not a good sign. It shows that you can't control it. And with my AB and Amro RBS shrinking a business to greatness because there were so many costs that we could take out of the business. I'm, um, very focused on our business to make sure that that cost is stabilised and the revenues will flow. So when I look at anything, I go straight to the p and l and straight to say what are the expenses? Can anything be taken out? Can it be tightened up? But then there's a certain point where they're running on a shoestring. There is a certain line that you have to spend money to make money. An example of that is, say something like marketing. Just because you double your marketing cost doesn't mean you'll double your customers. It does not work like that. And a lot of people have done it, a lot of people have tried it. Some industries might, but again, they're more of a thematic theme. That is, it'll run for a six month period, it won't run for a six year period of doubling your customers. So you've got to be conscious and watch that because you're never going to be. Well, we at raise believe we never. It's never a cost of acquisition at any cost because it's just not, it's not mathematically possible.

Phil: And so many companies now do rely on marketing because they're SaaS kind of companies. You know, everything's done on online and via apps and everything and the major cost is trying to acquire new customers to build up that revenue, isn't it?

Brendan: Yes.

Phil: And like you say, it's a really fine line, isn't it, that you've got to watch it.

Brendan: And then, I mean, we're spending a lot of time and effort now at rays for the re engagement exercise. You know, it's very good, very well to say for any fintech start up or any company to say I want new new new new new new. But you've got to nurture and keep the customers that you have. And over the last twelve months I'm stoked and so proud of the team to retain and cross promote our other benefits of raise being the other products that we have. It's don't lose sight of that. There's marketing dollars for one and brand awareness and acquisition, but there's also some costs and nurturing that needs to be done to retain your customers.

Phil: And this is good lessons for m listeners to learn about valuing and looking at companies that they may be considering investing in, isn't it? These are really important numbers, aren't they?

Brendan: Yes, it's key, especially in any sort of fintech, or even to a retail point of view, if you're going to invest in something that sells widgets, for example. Well, what are those widgets? Are they thematic? Are they longer term? The fidget spinners, great hype bank gone. We haven't seen them again, maybe to a certain, uh, extent, selfie sticks and things like that. Think about it. Is it going to be around tomorrow? And by tomorrow, I don't mean Saturday, Sunday, I mean in a few years time. So think about that.

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Phil: Tell us about the history of rays and why it was established, when it was established. And it used to be acorns and it was George Lucas's company, was it?

Brendan: Yeah, yeah. So George and I, uh, came out, it was 2015, a joint venture with acorns out of Newport Beach, California. A 50 50 joint venture that came out here in March 2015. Worked hard on the back end, uh, you know, changing the nickels and dimes to dollars and centers and getting it to the australian market in February 16, which was great. We started off with five core portfolios, all made up of, all constructed with seven ETF's quoted here on the ASX. And it went well, went very well to go start with. And then in January of 18, we sort of parted with the US, brought their shareholding from just under 50% down to about 10%. And we changed the name in April

00:20:00

Brendan: 18 to raise, and we listed on the ASX in June 2018. And at the same time we were expanding into southeast asian businesses. So we had operations in Indonesia and Malaysia. And unfortunately, over the last 1218 months, we've reviewed the strategy and the cost burn and go back to the previous conversations around cost base. We decided to divest from those businesses. So we're solely focused now on the australian business. But if I look back from, uh, a couple of years ago, we had five or six portfolios. We now offer nine portfolios. We have a superannuation product that my super guarantee gets paid into, or I can make voluntary contributions. So it's a superannuation fund. Then we have our raise rewards program, which is the cash back. So again, in this sort of environment of cost of living and every cent in dollar counts, it's working quite well from an engagement and re engagement exercise. And then we have something like raise kids. And we've got over 40,000 accounts now set up for the little ones. It goes back to the whole premise of why did I get involved? And, you know, I said at the same time, I had the mate in Newcastle saying, where should I invest in what raise does is breaks down the barriers to investing, and you're fully invested for as little as $5. We started the business with two mindsets. The first one was that small amounts. And, uh, we've seen that so consistently. A dollar here, a dollar there, it all add up. Small amounts add up. And we have over $1.4 billion of funds under management now. So that's proof that it does add up. And the second one was that customers need an exercise, a way to automate. And we see a lot, and we spoke about it at the conference, was that we all do, no matter what it is, whether it's investing, whether it's news feeds, or using technology to make our lives easier. And we've seen that a lot of customers, the idea was around customers will lean on technology to automate their savings, whether it's a dollar a day, dollar a week, dollar a month. If I ask you for dollar 50, Phil, you'll say, hey, hell no, if I ask you for a dollar 50 pineapple. But if I ask you for a dollar 50 times, I have a better chance of getting that out of you than a dollar 50 pineapple. So it's breaking down those barriers and making it easy and accessible for everybody. And the overarching benefit of raise is the financial education that they get people. Oh, uh, what do you mean? What tools do you have? It's in the palm of your hands and you're trying it. How do you learn to kick a soccer ball? You don't learn by reading a book. You get out there and you kick it. You practise it. It's in the palm of your hand. Yeah, there's guardrails and a safe environment to do it and learn. And if you don't like it, you withdraw and you close the app. But you got to give it a go. You've got to use it and have hands on experience. And that's what's been really powerful over the last eight years.

Phil: And you haven't mentioned the roundups either.

Brendan: No. Well, I mean. So, uh, with raise, there's, it's a save and invest app. So on the save side, we have six ways to save. And that's, as I said, reoccurring. So, automated. Daily, weekly, monthly, we have the raise. Rewards cashback program. So that comes in.

Phil: So there's partners that you can purchase products through, and they'll give you some deals.

Brendan: There's over 1300 merch now on the app, and I like my swimming. So I can go into, say, speedo in the app, go and buy a pair of speedos, and they'll give me cash back on that. So it's credits, the loyalty. We released an announcement last week to say that we've gone live now with automated rewards. So, going back to your question about roundups. So, roundups, we pioneered the concept of roundups because small amounts over time add up. So what that means is you link your debit card or your credit card to raise. We see the transactions like buy coffee across the road at the, uh, coffee shop for $4.50. We see that. We round that to $5. We take that fifty cents and put it into the market for you because we've got those transactional details for that functionality. We've now got the capability, and we're live with about 15 merchants at the moment testing it. Why not give them a loyalty reward? And that's so challenging out there for the bigger, uh, customer, big players out there, or any sort of retailers like, what makes Brendan go to that chemist instead of that chemist? Well, if they're going to give me a little bit of cash back, it might be one or 2%. It doesn't sound a lot. But again, if I'm getting two or $3 a week, times that by 52, I can do something with that hundred dollars or $150, whereas, yeah, cool. I didn't worry about the dollar, but look after the pennies and the pounds and look after themselves sort of thing. So that roundup functionality is key because it starts small, but people can understand, and it just continually adds to and back to the eggs case, if the market does drop, you were buying at $10. Now you're buying it eight, you're getting more eggs. So when it does turn or flip the values there or the gains there, and there's lump sum deposits as well, you can put, you might get some money for your birthday. This time of year in particular, we see tax checks come back or ato refunds come back, and they might put a lump sum of two or $300 into to really boost their savings and go ahead. And the other one, which, um, I'm, um, so amazed with, is if you're in our portfolios, whether it's ETF's or our stocks or even our property fund, there's a distribution or a dividend paid. So. So that brings money back into the farm. And over the, um, eight years that we've been operating, over $130 million has been paid or

00:25:00

Brendan: reinvested into customers accounts on dividends and distributions. And, uh, it would be a high percentage of our customers. It would be the first time they've ever received that and have access to that.

Phil: Wow, that's an amazing thing, just to suddenly understand what goes on. And do most of them reinvest or do they take the cash out?

Brendan: No, most of them do invest. And this is what I like about raise. It's. Everybody knows they've got to save. Everybody knows that they should. And everybody. I think the numbers were 70% of our customers say they've got a budget. 49% of them stick to it because it's very difficult for a leopard to change its spots. You tell someone that they can't do something, that they'll ignore it or. No, no, no. But what raise does is you might set a budget, and it's from here to here. It's very difficult to show on a podcast. And they say, this is my budget. Whatever I've got left over, I'll save and invest. No, no, let's bring that this side of the budget so that you're doing it as you go. And a couple of bucks here or there going into your. That adds up. But by telling someone that they can't do it, or, you know, I apologize to my wife. If she knows that we've got this money on the side to invest in, and she might see something on sale, she'll go, oh, I bought it. I saved her money because it was on sale. No, it's part of the. So it automates that. And we definitely see people leaning on technology for that reason.

Phil: So, uh, when you're deciding what education to provide users of raise, how do you make that decision? Is that driven by what you see from your experience dealing with investors? Or is it people ask for certain information, or you realise from what you see, what kind of information they actually need?

Brendan: It's definitely a bit of both, but a lot of it comes from our customers. You know, what do they want to do? I mean, we had a, uh, post years ago. What does the ASX stand for? ASX customers out there might see it in the Daily Mail or whatever. ASX hits record high or record low. What's the ASX? It was one of our most liked posts in. What is compound interest? So we break it down into. And it's a bit of a entertaining. If Brendan can read it. He's an overcastrian. Anyone can read it. And does it pass Brendan's test in the office? But it's just breaking it down. Simple. You can pick up textbooks, it's very complicated. And you go, okay, but what does that mean? You know, what is compound interest? And then you put some word in the definition and they may not understand that and that might be diversification. Well, then they've got to go and research diversity, make it easy and accessible for that information. Customers ask for it. You know, the team's great because they'll ask, you know, what happens if a customer says this? And maybe I'm a bit more on the commercial side of the banking side of things. So I'm looking at it from this level, but we really want to get down and really understand it. And the team are great because it's like I say to them, I'll say something to them on product or education or whatever, and it might not be right, but it will spur other conversations, other ideas and other aspects and even down to accessibility. You know what I love about raise is, and we've all done it, I bank with Nab. So I have a nab account and then I have an online savings account with Nab. I will go, the debit card's running short of cash. I just log onto my app whilst, say, I'm at the pub or at shopping centre. I can transfer Money and I spend it with raise. It's in the stock market, you know. And even to the point where we had a guy leave a voicemail at ten, uh, 40 05:00 p.m. on our customer support line saying, I need to buy another round. I'm trying to meet a girl, where's my money? I need my $16 or something like that. And so I rang him the next day, and this is right back at the start, I rang him the next day and he goes, what are you talking about, man? But if it was in his online saving, he would have spent it. But the fact that it's in equities or it's in a portfolio that's listed or quoted on the ASX, and then that t two settlement, he had to understand that they're cool. You can withdraw it, but I can only sell if it's in the markets open. And then there's a two day settlement. So it helps with the instant gratification request. And that's massive, in particular for someone like my wife.

Phil: But you're not only invested in the share market because you've got a property portfolio as well. Tell m us m about the property portfolio and why that's been incorporated.

Brendan: Yeah, I'll, um, um, just quickly go on. What I said that we are save and invest, so save. I've spoken about the ways to get deposits and money into it, and then what do you actually invest in? And that's a game. Back to the original conversations of asset classes. You've got a, you've got to know, uh, what, you've got to understand what you're investing in.

Phil: Even if you look at your super statement and understanding it. Sorry, you go on. But I always try and make this point on the podcast. Look at your superannuation statement to see where Money gets invested.

Brendan: Look, I've done some great forums or workshops at the universities and there was one of about 300 people in it. And I said, you know, put your hand up if you've had any experience or you've ever invested in the ASX or equities, and 20 people put their hands, hand up and I said, okay, now put your hand up if you've got a superannuation account, everyone put their hand up. And I can guarantee you every one of those have some sort of exposure to the australian equity market. And that was the education, because people didn't and they don't learn. And so the underlying portfolios that we have, you've got conservative to aggressive, which is seven ETF's all quoted here on the ASX. And it's just

00:30:00

Brendan: a different weighting between the conservative aggressors that creates that sort.

Phil: Of risk curve, uh, the same that superannuation funds do with their conservative growth.

Brendan: And all that sort of stuff. Then we have an emerald portfolio, which it was an amazing development because our customers asked us, said, I want to invest in what I believe in. Can you provide us socially responsible? So we created this emerald that's got four ETF's quoted on the ASX and it's a socially responsibly themed portfolio. And again, the Sapphire portfolio we took the moderately aggressive portfolio, skimmed everything back a bit so that we can have a 5% allocation to bitcoin so people could understand in a controlled environment, have exposure to bitcoin. And then about three years ago, we acquired a business called Superstate, which was Australia's only residential property fund that people could invest their super into. And, you know, the property market's a big thing in Australia. Everybody's got the australian dream is to own a home. So what that does is break down the barriers to getting into the market and give people experience in it. So this week actually, we settled our 12th residential property in that down in Melbourne and they're scattered out, there's no concentration risk. There's a couple of them.

Phil: So you're actually buying properties?

Brendan: We buy physical properties and we rent them out and they're just like managed by the local property agent from a valuation point of view. They get revalued independently every six months so that we can work out what the adjustment, what the price adjustments are, the unit pricing, uh, and the rent accrues and the things. Crews like that pays a distribution on an annual basis. But it's going really well. Really well. It's grown a lot over the last.

Phil: Twelve months because I thought you'd be, I don't know, doing mortgage backed securities or something, reits or something like that. But it's actual australian residential property.

Brendan: Yep. You can get it. Look at the property and there's not, there's photos of the properties where they are. It's brilliant. And the excitement that people go and they'll take a screenshot and say, I own this much, be the front door handle of the business, but it's giving them that understanding and access to the property market. So I think it's an absolutely cracker. So that's our number eight portfolio. So 30% of your assets go into the property portfolio. And then the 1 August last year we created what we call raise plus. What that means is you can use one of our base portfolios as a base and then you can allocate 99 ASX stocks, 48 ETF's, the bitcoin up to a maximum 5%, or our property fund up to 30%. So a customer can sort of create their own portfolio. And this, uh, last week, last Friday, we released that into our superannuation business as well, so that a customer can take their super balance and sort of get a bit more hands on, but still in a controlled environment. Over the top. ASX 99 was 100, but one of them came out. So we'll take that back to the investment community to see who we add in for that to bring it back to the as. ASX one, um, hundred. It's not the ASX 100, but it's ASX the top. They're probably the largest 100 companies. So yeah, that what you invest in and I think that's very important to people to understand and the behaviour that we've seen. Customers will come in on the conservative, they get a bit, you know, month or two later they go up to the aggressive or unfortunately the portfolios have done very well. We were announced last week by super ratings that our moderately aggressive was number two in the balanced portfolios and it was a 12.1% return net of fees. So the construction of the portfolio is going well and we can see that as soon as that gets announced, people do rebalance over to the moderately aggressive portfolio.

Phil: A customer that's putting their money into raised portfolios for the first time they've got their l plates on. How are they guided in terms of which portfolio to go into? How is that done?

Brendan: Yeah, we don't really guide or advise or recommend. It is purely the customer's choice. So once you go through the registration process, you download the app from the App Store or the Google Play Store, or jump online and hop on the web app, go through the registration process, your KYC link, your bank accounts, one bank account for where the money comes from, where your deposits come from, one for roundup. So we can do the automated rewards or roundup functionality. And then it says what would you like to invest in? And we have some very great your how to's on what is in each portfolio. So it's purely the customer choice. And just generally customers will come in and go, just join the conservative portfolio and start off then, and then sort of get educated. A lot of them, the typical behaviour is that they won't have their automated reoccurrings on, or even the automatic roundups are not on until they understand it, sort of two weeks later. You can see that, okay, it was on average $8.88 for that week of roundup, Jeff. So I can afford that. So I'll turn it on automatically instead of manually going through. Then they realise and there's an education process and a journey flow that we put in front of customers either on email or in app to say this is what's happening in the market. And then they understand I can afford another $5 and they might start reoccurring up. So it's taking them on that journey for them to understand. And uh, what I'm pleased to see that they do move up the risk curve on the portfolios because they are uh, having a better understanding. And it's not all about the returns, it's about what's in the underlying assets.

Phil: Yeah. Because everyone, so many people go, oh, uh, I'm conservative, I don't want to lose any money. Not

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Phil: actually understanding what those means, those terms mean in the financial space.

Brendan: Exactly.

Phil: Yeah.

Brendan: So everybody says to me, oh, what a great idea. But it's not for me.

Phil: Mhm.

Brendan: And I'm like, well, why isn't it for you? I don't know anything about investing. That's the point. So I told you, my brother's up in the goldie. So up, I drive up with the dog and then my wife and the kids fly out the next day and Belinda's at the airport at 630 goes, oh, I forgot nappies. Can you get some? So I got a tail of rally. Go Stockland west burley at seven in the morning and then go down to the coulee, the golden Coolongadda airport, pick them up. And I had a raised t shirt on, and it was seven in the morning, it was grey and cloudy and no one in the car parked. So I parked the car. I go walk into priceline and two big maori guys, two big guys, singlets on tattoos, the thing around their neck and the dreads. And I'm like, oh. And they're, oi, cuz. Oi, cuz. And I ignored them. I'm like, just. I just want. I've walked out with two big pink nappy boxes. So embarrassing. Oi, cuz. Oi, cuz. And he goes, is that Ray's? And the media gone, oh, no, he's lost money on his razor. He's gonna beat me up here. And so I go over to them and he goes, hey, k, cuz. Hey, cuz. Is that Ray? Is that Ray's on your t shirt? And I said, yeah, yeah, it is, mate. Yeah, it is. Step back. And he goes, oh, cars, come here, come here. He put his arm around me, he opened up his rays account and he said to his mate Brendan, and I'll never forget it, his name's. I said, oh, I'm Brendan as well. And he goes, Brendan, look at this. Open it up. And he had $1,011.48 in his account. He goes, I have never saved a $1,000. Thanks, mate. And he gave me a cutting. I went, uh, wow, guys like him. And to get him to give it a go, it's like everybody says, oh, that's a great idea, but it's not for me. Why not? Because I don't know anything about investing. That's the point, guys. And that's what we're trying to do now with this re engagement campaign. The rage or game campaign is just give it a go, put $5 in. If it doesn't work, take it out.

Phil: That's such a great story.

Brendan: Even one of them, with their plus portfolios is, uh, one of the guys out, uh, in country New South Wales, put on social media, he says, and I won't use the language, but he's like, haha. Uh, CBA. I, uh, finally got something with the plus portfolio. He'd put a portion of the allocation into the Commonwealth bank stocks and had a dividend. And he wrote, after 44 years of banking with you, I finally got something back. Ha ha ha. And he circled the dollar 27 or whatever it was dividend he received. That's what I love. That's what I love to see because people are getting something out of it. Not only financial education, but an understanding.

Phil: So how can listeners find out more about raise? Where can they go?

Brendan: Yeah, so as I said, you download it from the app store, raise r a I z or jump on the website to raiseinvest.com dot au and go for it. It's very easy. There's a lot of information on the YouTube channels. There's a great channel on, I still call it Facebook, but meta called Ray's central, which is independently run. And the feedback and the conversations on that's brilliant. And by empowering all Aussies to actually have an understanding of. And if you jump onto that and have a look, some of the conversation's great, some of the extra education and learning that does inspire us to go right. Well, what are they talking about in this group? How can we help that and benefit that? So, uh, it's on social media. If you're watching the footy AFL on a Friday or a Saturday night, make sure it's on channel Seven and you'll see, um, Abby Holmes and our raise your game campaign. It's quite exciting.

Phil: Brendan Malone, thank you very much for joining me today.

Brendan: Great. Thanks for having me.

Chloe: Thanks for listening to shares for beginners. You can find more@sharesforbeginners.com if you enjoy listening, please take a moment to rate a review in your podcast player or tell a friend who might want to learn more about investing for their future.

00:38:34

Place transcript here

Any advice in this blog post is general financial advice only and does not take into account your objectives, financial situation or needs. Because of that, you should consider if the advice is appropriate to you and your needs before acting on the information. If you do choose to buy a financial product read the PDS and TMD and obtain appropriate financial advice tailored to your needs. Finpods Pty Ltd & Philip Muscatello are authorised representatives of MoneySherpa Pty Ltd which holds financial services licence 451289. Here's a link to our Financial Services Guide.