Writing (non)sense, Finance for Dummies & Super All Blacks

Supposedly, supposedly, these missives don’t make any sense. A very good friend of mine, admittedly she doesn’t work in financial services (yes, I do have actual friends with actual jobs in the actual world), mentioned that she has read some of these LinkedIn posts and supposedly, in her words: “I don’t understand a word of them”. I, of course, nearly choked on my Eton Mess. Thankfully, there was a glass of Blue Nun 1974 to hand and I composed myself.

In the ensuing debate, because she’s a very nice, smart lady, I promised to do better for the hoi polloi. So here we go:

1. Damien Talks Money (really clearly, really directly and does his research)

Take a peek at this – The Optimal Order For Investing Your Money In 2024. He has a prioritised list of 10 (maybe 11) points, starting with Pension Matching, that purists can quibble with but for 95+% of people this will either work immediately or set you thinking about your own personal circumstances in the right way. I’ve just downloaded his Pension Cheat Sheet with very helpful links, rates, research on many leading providers and none of it is Advice. Brilliantly done.

2. Dummies & Professors talk Wealth

Thank goodness there’s a Personal Finance for Dummies edition. On their cheat sheet, they list “live within your means and don’t try to keep up with your co-workers, neighbours and peers”. Sounds like a useful modern-day mantra! And then trust a Professor (Galloway, in this case. Great podcasts btw) to come up with an equation in his book ‘The Algebra of Wealth’:

Wealth = Focus + (Stoicism x Time x Diversification)

Having looked up stoicism, think of that wise but dying emperor in Gladiator, that all makes sense to me. It’s all about patience, concentration on what your financial goal is and, ironically, lack of concentration on where you put your money…!

3. Super-duper sovereign wealth by the All Blacks

So, it’s back to pensions. And with all the gossip about Rachel Reeves’ pension review to “boost investment, increase pension pots and tackle waste in the pensions system”, this one will likely affect us all.

And, I’m afraid that I couldn’t keep it simple for this whole article (sorry, Zeta – that’s my friend btw) so reference this excellent FT analysis of the NZ Super Fund.

Since 2003, their compound return has been ~10% pa, resulting in a tripling of their money. It’s the best performing sovereign wealth fund over the last 10 years. How, you may ask?

Active management. Very high external fees for supernormal performance. Particularly around a Strategic Tilting approach, an internal derivatives sleeve, which is officially described as “to add value, we aim to buy low and sell high.” Er, that sounds pretty obvious and sensible. But at the scale of a wealth fund, effectively taking FX bets at one stage reaching 40% of the total fund value, is an approach that only professionals could or should take.

Lessons for me? Keep it Simple. Invest in What You Understand. Be Patient, like an All Black.

Have fun out there!

Audere est facere.