A tough week on the ASX! Will you rally in week 8?

5 weeks to go!
# Individual Portfolio
1 Dotti Buffet - QLD $56,608.52
2 biancab - INT $56,578.16
3 Emsiri - QLD $55,874.09
4 Lionel J - QLD $55,637.78
5 SuperMac - QLD $55,220.08
# League Portfolio
1 Robina traders $52,078.70
2 Queen St Hyper $51,967.32
3 Boiler Room $51,889.22
4 AKL AM Dream Team $51,763.76
5 Stage Market Movers $51,516.11
Most Improved Player • AUS - W/E 5 May
Congratulations Adrian Liu!
You have won a $200 Grocery Voucher!
Most Improved Player • NZ - W/E 5 May
Congratulations Bianca Barton!
You have won a $200 Grocery Voucher!
Most Improved Player • AUS - W/E 12 May
Congratulations Ryan Jones!
You have won a $200 Grocery Voucher!
Most Improved Player • NZ - W/E 12 May
Congratulations Hanna Enoka!
You have won a $200 Grocery Voucher!

Be fearful when others are greedy, and be greedy when others are fearful.” Warren Buffett


One of the greatest challenges when investing can actually be YOURSELF and learning to control your emotions. And as soon as you have your own money in the market these emotions will increase greatly.Two of the biggest emotions you will need to learn to control are fear and greed. This can be either the fear of missing out or the fear of losing. Greed steps in when you have made money and you think, “If I just hold a little longer I will make even more,” and you end up holding too long and lose a lot more.


Often players will find they experience a range of emotions – greed, fear, hope, disappointment, joy and sometimes a mix of everything. You need to learn to control your emotions, do your research and keep to a plan.


Fear and greed can also influence the sharemarket, so in learning to deal with your own fear and greed, it is important that you understand how it works in the market and use this knowledge to help you rather than hinder you.

Here are some articles you may find interesting:


  1. The Financial Markets: When Fear And Greed Take Over by Investopedia
  2. A Lesson From Warren Buffett on Buying Fear by Chris Wang
  3. Fear and greed: It’s real and it moves the markets by Wall St Wise


So there’s your challenge, to be aware of how fear and greed works both in yourself and in the sharemarket, and be sure you have the right mindset and discipline to keep your emotions in check.


If you want to educate yourself further in this area here are two books you might like to look at:


Think Like the Great Investors by Colin Nicholson – Achieve a new level of investing and trading success by defeating your worst enemy – yourself.


Trading in the Zone by Mark Douglas – You may think the only challenge is that of increasing the value of your share portfolio; however, you may also be facing a challenge within your mind.

Watch: Warren Buffet's Best Advice on Investing

Investing in shares with dividends?


What are dividends? 


A dividend is a payment (usually out of profits) that a company may pay to its shareholders.


Companies pay as a way to reward shareholders. By paying dividends the company makes itself more attractive to investors.


Companies typically like to keep a consistent pattern to their dividend payments as they know a lot of investors, especially retirees, rely on dividends for income. A lot of investors look at what a company has done in the past to try to get a feel for likely future dividend payments. They can also get more of an idea of what is likely to happen by paying attention to announcements the company makes to the market as well as what company analysts might say.


The big banks and Telstra for example, have a history of paying good dividends so a lot of investors like these stocks. It is important to remember however, that a dividend is not guaranteed, as a company may pay a dividend one time but not the next. Or they may change the amount of the dividend. If a company experiences a significant drop in profits you might expect the next dividend to be lower or in some circumstances no dividends paid at all.


You can watch this video to help you understand more about dividends.

What is franking all about?


Franking is to do with tax. When a company pays a dividend, it has often already paid tax on that money. If this is the case then the shareholder is given a concession called a franking credit which shows that some tax has already been paid on the dividend and the shareholder will pay less tax as a result. We don’t take tax into account in the Challenge so we ignore franking but for investors franking credits can make dividends even more attractive.


So how do you receive a dividend?


Companies need to keep track of who owns their shares so they can pay dividends out to shareholders – therefore they need a cut-off date (ex-dividend date). To be entitled to a dividend a shareholder must have purchased the shares before the ex-dividend date. If you purchase shares on or after that date, the previous owner of the shares (and not you) is entitled to the dividend.


In the real world a dividend will be paid into a shareholder’s nominated bank account on the payment date, sometime after the ex-date. In the Challenge, the dividend gets paid on the ex-date into your Challenge account as cash.


So is a dividend worth chasing?


Because dividends give you more money in your portfolio…you may have chosen to invest in those companies that have dividends coming up. Now there is nothing wrong with this, however, you need to take into account that a lot of shares fall in price by the dividend amount the day they go ex-dividend. This means you would need to wait until the share price recovered from this fall in order to take full advantage of the dividend.


You can select a share simply based on its dividend. However, you really need to consider more than just the dividend, as companies can only continue to pay good dividends if they are doing well financially so it is also wise to also look into how the company is performing.

It’s time to educate yourself


What’s your understanding of financial planning? If you’re like most people it’s probably not something that formed part of your formal education or that you were exposed to growing up. If it wasn’t something you were taught or picked up from your family, then it’s an area you’re going to have to take responsibility for yourself…and it’s a personal investment in learning that could help you live the life you want to live!


When you take the time to invest in your financial education you open yourself up to so many more possibilities for creating wealth. By applying the knowledge you gain and adopting sound financial principals, you’re giving yourself every opportunity to succeed.


So why should you invest in your financial education? Here are a few good reasons for starters.


  1. Financial understanding pays life-long dividends
  2. Increases your capacity to earn more
  3. Multiplies your return on investments
  4. Helps you lead a better quality of life
  5. Provides peace of mind in retirement
  6. Reduces the risk of losing your wealth

Provides a general peace of mind around money

Financial intelligence is the key to true independence


It doesn’t matter how big your bank balance is or how many assets you have – If you rely on others to make financial decisions for you – you’re dependent. As long as you’re relying on somebody else’s financial knowledge to help you manage your money you’ll never be truly financially independent.


Building your financial intelligence allows you to make decisions for yourself!


Once you’ve learnt the true value of financial independence you’ll always be able to view your finances from a position of control, understanding and self-belief.


Start investing in your financial independence


So where to from here? Make a commitment! Make a promise to yourself that you will start to improve your financial literacy and build your knowledge base. Every book, every article, every finance video – it all adds to your financial intelligence and empowers you on the road to independence.


The key is to maintain your commitment and enjoy the journey.


Get started today and visit moneywiseglobal.com to begin your financial education.

You’ll find hundreds of articles, savings tips, finance videos and more.


For an appointment to help you Start Living Your Best Life, call one of our expert financial advisers on 1300 728 249.