Unedited Transcript of Sunday Mail interview by Kate Patterson

Interview with Paul Clitheroe and Jeremy Britton; "Who's Taking Your Money?"

Paul, you are a famous Financial Planner and you have read Jeremy's book, do you support what he says?

`To be perfectly blunt with you obviously I'm encouraging of any book that I think the public can actually understand. I thought it had some pretty practical advice and common sense ideas which I always like.
 

What did you like best about the book?
``It is fair to say, in a very cluttered space (of financial books) you need a good headline, and good on Jeremy for coming up with a headline that caused me to open up the book. `I think the book actually has some good common sense advice in it and so for my money, it's a stand out on the shelf.''

Any other feedback on the book's content?
``The stuff in there is the rules of gravity, there's no rubbish in there and I just believe that I would happily to say to someone who said to me `what's a good honest book which will give me the basics that I should be doing to save money and invest money', I'd happily put that book on the list....it's sensible.

How do you feel about the idea of investing where you spend?
I think this is lovely, the reason I say that is that if it's stuff we're doing every day, it's not likely to be some two-bob scam company. I deal with National Australia Bank, I deal with Coles and Woolworths and Coca-Cola, and so we actually do deal with blue chip companies all day long...

I have even passed this advice on to my teenage son. I said to my son when he was about 13 (he's now 19), rather than leaving money in the Commonwealth Bank earning 5% why don't you buy some Commonwealth Bank shares? He also bought some Coca-Cola shares and he bought some Coles Myer shares. My son to this day is still interested in shares because he bought shares in stuff he deals with on a daily basis.'


Jeremy, what made you write the book "Who's Taking Your Money (and how to get some of it back)"?
For many years I have been teaching people how to invest, realising that the complex jargon hides simple principles that could be taught to high-school kids. Investing is simple and can be done successfully by anyone with a Grade Four education. For several years I have volunteered in local high schools teaching students that buying a Billabong share is as easy as buying a Billabong backpack!


Queensland consumers outlay a lot of money -- In your opinion is it worth the hassle of trying to "get some of it back" please explain?
Absolutely, "getting your own back" may be a small hassle, far smaller than filling in a tax return form. You may receive $500 back from the tax office; you could receive several thousand back from your investments...

What would be your top tips on how to go about doing this?
Simply investing where you spend could see you replacing your "work" income with a thousand dollars a week, with no tax to pay. Is THAT worth the hassle? :-)

You talk a lot about investing in companies that you shop at, why is this a good idea?
I believe that the average consumer is an intelligent person. They know enough to buy good quality brands and they try to get the best value for their dollar. They will change brands if needed, and they will not continue to shop where they receive bad service.

Take the example of Telstra. When the shares first issued, the service was good, plans were cost-effective and T1 was a darling. Profits rose because millions were using Telstra. Shares went from $4 up to $9. A couple of years passed and services were not as good, coverage in the bush became worse, plans became contracts and Telstra employed overseas contractors to save money... The service became worse and consumers could have taken the opportunity to sell Telstra shares when the service was bad and profits were about to fall. The shares were around $8. Simply knowing enough to follow good service and leave bad service, would have made you 100% profit and then prevented a 50% loss.

You say "If you know how to shop, spend and pay bills, then you have all the skills required to become a terrific investor" what's your advice for getting started?
Take inventory of where your money is going to, as I say in the book "know the destination of your dollar". When you buy a DVD player at Harvey Norman, some money stays with HVN, some goes back to the maker in China, but then the Chinese manufacturer has to send money back to BHP for the steel. I cover hundreds of brands in the book so that people can see where their money is really going. Know the destination of your dollar and then talk to an expert about your habits and work on a plan together.

Could you summarise a few ways people can minimize tax?
I believe that taxes should be optional and I prefer to give to charities whom I support, rather than give to general revenue. Those who wish to minimise tax could donate funds to charity (tax-effective and good karma) and follow some of the advice in Chapter 12. Borrowing to invest (for an investment property or for shares), pre-paying business expenses or investment expenses is often a good idea. Many investors will also receive investment income "tax-paid".

Do you think people get sick of outlaying all this money and is "trying to get some of it back" something everyone can do? Please explain?
I think outlaying money is something which we have to do: you can control your cashflow and reduce your outgoing budget but you must still pay for life's essentials. If you are going to have to shell money out anyway, why not learn how to get some of it back?

You say invest in worthwhile goods and services whenever you can and that will come back to you...could you explain this? Wouldn't that just make you more broke?
Buying a $40 shirt can be cheaper than buying 3 shirts at $13 each -- if the more expensive one is better quality, it should last longer than three cheap ones. The trick is to buy LESS items but items of better quality . Shopping where everything is $9 and under can make you go broke as the items may constantly wear out. Buy better quality, not to be confused with higher price. Most consumers know when something will last a long time and give them little trouble. These things also may have a better warranty, which makes ownership more cost-effective and reassuring.

You talk about spreading your money around (investing in numerous things)....why is this a good idea?
The average consumer spends money on food, shelter, clothing, consumer goods, entertainment and many other areas. Aim to get money back on ALL of these areas, not just your favourite one... It's like the old rule of having your eggs in different baskets, or betting on ten horses not just one...

Jeremy, you've done a lot of research on who's who" behind many household names, why is this sort of knowledge important?
Knowing the destination of your dollar is important, as it empowers you to get the money back! Over the last three to four years, DVD players have become cheaper, while steel has become more expensive. If you had invested into the DVD manufacturer, your shares would have gone down, but by investing into where the money ends up (the steel miner) your investment would have tripled! [BHP shares went from $10 to $30 over the last four years-on the back of rising profits]

Simply knowing that there is only ONE company behind AAMI, Shannons, Aus Pensioners Insurance, Vero, Tyndall, Guardian and Mariner may make you realise it is worth investing where you spend. Many people will be absolutely amazed when they see "who owns who" and how a few companies seem to be everywhere at once.

There is some spending that you can't avoid (i.e. we have to eat, be housed and clothed etc) is there much left over for the ideas in your book?
There SHOULD be! Spending all of your income is not the way to get rich... Have a third party look over your budget, as they may see areas where you can be more effective --often we can't see this ourselves as we are too involved in our own world, that's why you need a wealth coach.

You could reduce expenses 10% by better cashflow prioritising, or by finding a better deal on things. Imagine if you could save 10% on your insurance by changing companies, and then use this saved money to buy shares in the insurance company! Some banks will reduce your bank fees if you own shares in the company. The list goes on.

You are obviously a big fan of shares and Australian shares at that...
My belief is that Australia is quite uniquely positioned to become incredibly prosperous, in the same way that Japan and Singapore went from poor nations to incredibly powerful within a few decades. Australia has an abundance of steel, coal, oil, gas, gold, wheat, uranium, wool, timber and many other resources that are required by the rest of the world. The emerging economies of China, India, Brazil and Russia are going to need everything that Australia can produce just to feed their growing demand. We are an English-speaking country, chock-full of resources, in the heart of Asia. What greater opportunity exists?

You say "know that you cannot accumulate real wealth in your chosen area without first adding value to others" can you give an example?
A doctor generally makes more of an hourly rate than a hairdresser, because he adds more perceived value to the client. It should be easier for the doctor to charge more, make more, save more and invest more. The hairdresser could compete in the circle by improving their skills or giving better service. Oprah's hairdresser probably makes more than my doctor, because she adds more value to Oprah's image than my doctor adds to my health! Time to invest into shampoo or drug companies?

What are the most important things readers should take away from this book?
Know that "you can invest", no, scratch that, "saving is hard, investing is easy"...or perhaps "get rich everyday by investing into everyday items".... hmmm, there are a dozen good takeaways from the book.... some of my favourites are " know the destination of your dollar", "invest where you spend", and "follow your wallet, not your heart". Yahoo looked like a good investment, but when was the last time that you actually PAID Yahoo? I send more money to the grocery store and the bank, so I buy shares in those and not into the internet advertisers. It's also more stable, as shown by the 2000 "tech-wreck", when Yahoo shares plummeted and "old economy stocks" such as food, banks and insurance companies stayed fairly stable.

What is your correct title?
Officially I am called a Financial Planner or a Financial Adviser, but i reckon that that title makes me sound old, stuffy and boring... I prefer to call myself a Wealth Coach, which is more like a life coach for your wallet or a personal coach for your investments...I bought the website "24hourwealthcoach.com" and I am intending to sell millions of books to the US market; --the Americans should be investing into Australian companies -- Aussie companies have exceeded American companies over the last few years and I believe that they are well positioned to do it for the next few years as well! (sorry, am I preaching and not answering the question? oh, that's right, my NEW correct title is "Wealth Coach")

By the way -- I found the parts of the book I read very enjoyable. You have a good sense of humour!
Why, thank you, Miss Kate... Some people may feel talked down to or that I trivialise some concepts: I am making the book accessible to 14 year olds as well as 41 year olds and seniors. My daughter had shares in a "trendy" shoe company when she was in Grade 7... So what if I call a serious bathroom manufacturer "Great Western Toilets" or make jokes about companies that sell sex and toilet paper? If it helps to illustrate a point or helps you to remember, then it's all good. Investing is easy and it can be fun as well!

The book will be out in bookstores in December and will be featured in Money Magazine "book of the month". If you can't wait until Launch Date December, readers can order a copy now through www.24hourwealthcoach.com and it will be autographed and sent out to them at home.