File attachments
Investor, Expert, and Professional Edition customers can now upload a file attachment to each trade or dividend record in Sharesight. Additionally, you can upload up to 5 file attachments against each shareholding. This allows you to store an online copy of contract notes, dividend slips or any other relevant documentation that you receive from the company. If you’re using our Broker email import function, your PDF contract note will automatically be attached to the trade record in Sharesight so that you have a permanently accessible online copy that you can download whenever you need it.

Notes about the shareholding
In addition to the existing comments field where you can record notes about each trade or dividend, we’ve now also added a comments section for the shareholding itself. Think of this as a notepad where you can jot down any information about the share. This is a great way to communicate extra information to shared users, eg your accountant or financial adviser (or client if you use Sharesight Professional Edition).

We’ve also introduced new PDF reports so that you can download and save a great looking copy of any of the reports. The PDF download option replaces the previous ‘print’ option as printing from the PDF file offers substantial improvements to the formatting. Look for the new PDF icon next to the Excel icon at the top of the reports.

Clients hate surprises in their bill – that extra hour or two (or five) spent chasing paperwork to get the tax return in order can leave a nasty taste in the mouth. And yet the clients often create those surprises themselves through lax record-keeping or disorganisation.

Sharesight users know that the service can save them time in gathering paperwork, which can then (in turn) save them money on basic bookkeeping fees with their accountant or tax agent.

And adding a complementary service like Xero, which automates your personal budgeting and cashflow management, can also do wonders for keeping your bill down at tax time.

But we’re also starting to hear from users that Sharesight is helping them not only save time and money, but actually create a more strategic relationship with their accountant.

Sharesight users whose admin and basic bookkeeping is taken care of via the cloud are able to redirect resources to the value-added services that really make an impact on their financial futures.

Services like advice on structuring their affairs, tax minimisation strategies and estate planning – which most of the users we speak to would like more of, but many feel restricted by the cost.

We’ve also heard from Sharesight users who are negotiating fixed-price agreements with their accountant for tax preparation or SMSF audits on the proviso that they will complete the administrative work themselves.

This elimination of those nasty surprises provides the client with certainty about their bill, but also allows the accountant to better manage workflow within their practice and create efficiency.

Cloud technology is enabling both clients and accountants to focus on the bigger picture and forge a more productive relationship. Why not discuss new ways of working together with your accountant?

These people are interested in taking more control of their financial affairs, but are often unsure of exactly what it involves and – most importantly – if it’s for them.

It’s a question that people can only answer themselves, but here are four areas to consider if you’re wondering if DIY investing is for you.

Personal interest
Interest in investing is by far the most important factor to consider. In my experience, the most successful DIY investors find managing their financial affairs intellectually stimulating and see investing as something of a hobby.

If you’re the sort of person who’s interested in the business world, reads the financial press, and already does some basic household budgeting, then you have the foundations for DIY investing. But if you think you would have to force yourself to make the effort to manage your affairs properly, DIY investing probably isn’t for you.

[ A note on budgeting: if you don’t budget, it’s hard to make investment plans since you don’t know how much you have available to invest in the first place. I always found budgeting a bit of a chore, but Xero and its automatic uploads from my bank statements have been a real game changer.]

Available funds
One of the big questions people have is how much they need to get started in DIY investing. ASX recommends a minimum of A$2,000 for direct share investing, however, I would say that you generally need at least A$10,000 before you can start creating a diversified portfolio of stocks you pick yourself. This is because brokerage when you buy and sell your stocks (typically anywhere from A$15 – 25 at a time) can quickly take a large chunk out of your funds if you’re trading low volumes. Brokerage should ideally be no more than 1 per cent of the value you trade.

Time to spare
I’ve also been asked how many hours per week people need to have to dedicate to DIY investing. This is a tricky question to answer as it really does depend on the individual.

However, what I would say is that you need to make sure you’re maximising whatever time you do have. Paperwork and administration can swallow up an inordinate number of hours, but using a service such as Sharesight can keep admin burden to a minimum – freeing you up to spend time on the interesting business of managing your investments and researching your next move.

And timeframe…
The magic of compounding means that the earlier you start investing, the better. I also subscribe to the theory of dollar cost averaging, which states that investing regularly (even a small figure such as $100 per month) is more effective over the long term than trying to pick the market with larger lump sum investments. This not only brings discipline to your investing, but also smooths out volatility (in theory at least) by balancing purchases made in ‘bad’ times with those made in the ‘good.’

Decided DIY isn’t for you?

If going it alone isn’t for you, you may wish to think about engaging a financial planner. But you will need to do your homework to find one to suit you: shop around, get some recommendations from friends, and source at least three quotes.

But I’m a strong believer that nobody cares more about your finances than you do – and a little bit of ‘hands on’ goes a long way for anyone. Even if you delegate the management of your financial affairs to a planner or accountant, you need to take ownership of what you’re delegating.

Do you think there are any other points potential DIY investors should consider?

Below are key factors to consider when turning your mind to investing overseas.

Research

It may seem obvious but research is crucial to offshore investments. Try sites like Morningstar, which not only provides investment research for international equities but also gives DIY investors a local perspective on the global situation.

How to go about it – and the pros and cons

Should you decide to invest, there are the mechanics to consider. Here’s a summary of the most popular options.

Direct via local broker or online service: Most major Australian-based brokers offer this service. It is relatively straightforward – especially if you are already trading with that provider – with the added advantage that the foreign exchange issues are taken care of for you, so you can trade in Aussie dollars. However, brokerage fees can be high, which can eat into returns if you make a lot of trades.

Direct offshore investing: After the requisite initial paperwork, it is simple to open and run an offshore trading account. By trading direct, you can significantly reduce brokerage fees. This option may suit an investor who has already tried an Australian-based broker and has already begun trading heavily overseas.

Pooled investment: Choosing to a pooled investment vehicle such as an international Exchange Traded Fund (ETF) or a managed fund offers smaller investors the benefit of exposure to a wider range of shares that they might be able to access directly. The ETF option can be cost effective and, because it is listed on the local exchange, has the added advantage of being tradeable through your local broker or online trading service. Both ETFs and managed funds are available in hedged or unhedged options, so you can decide how to address the potential positive or negative effects of currency fluctuations on the value of your investment.

Once you decide where and how to invest, it’s a matter of using a portfolio management system that will enable you to address factors such as currency shifts and the offshore taxation requirements.

The good news is that Sharesight offers a range of tools that take care of these important details for users who invest overseas:

• International data feeds, including NASDAQ, NYSE, London Stock Exchange and New Zealand Stock exchange, keep investors up to speed the latest dividend and corporate information
• Currency conversion, which is automated for the user, so you can see your true Australian dollar position
• Taxation issues – Sharesight captures information relating to, for example, withholding tax from offshore markets so you can record and claim relevant tax credits with ease. Do make sure you register with the appropriate authority when you purchase international shares because, if you don’t, in markets such as the US an additional penalty tax may be applied to your earnings.

Our international investment tools have been extremely popular with our New Zealand users, who often include overseas shares in their portfolios due to the relatively small size of the local market. So we’ve designed and built the tools to offer real value and benefit to real investors. In other words, we know what overseas investors need and we know that it works! So if taking the international plunge is right for you, remember that Sharesight makes it easier than it’s ever been.

What we’d like to focus on here is an uncomfortable issue that many of us like to skirt around – often until it’s too late. And that is, what happens to a share portfolio when its owner passes away. The simple fact is that older people are more likely to own shares, and in most cases will pass them, along with their other assets, on to family members after their death.

However, unlike other more tangible assets, such as property, unless the portfolio is in order and records meticulously kept, even the most generous and well-meaning bequest can result in beneficiaries and executors spending an enormous amount of time, effort and yes, money, trying to unravel the portfolio.

That includes determining exactly what the holdings are in the first place, assessing the taxation status relating to dividends and, in Australia, capital gains. And that’s even before any decisions about what to do with the portfolio itself – whether to break it up, sell part or all of it and so forth, are made.

We’ve all heard stories about beneficiaries and executors spending months or even longer digging through piles of paperwork kept in shoe boxes and following elusive paper trails in the hope of getting a clear picture of a parent or relative’s true financial situation.

Of course, that’s not the case for all investors. Many take a different path, because they want to avoid passing on that kind of impost on to their families. Concerned about how their hard earned and often closely studied portfolios will be understood and managed after their death, in their later years one popular option for these investors is to simply cash out of their portfolios.

The fact that they are often forced to do so at a time that’s not of their choosing and may as a consequence erode the potential future value of their shares is a trade-off that many will make in the interests of clarity for their estate.

However, we would like to alert share investors to a clearer, easier and potentially more profitable path. Whether you’re the D-I-Y investor considering estate planning or the relative and beneficiary of the investor, using Sharesight to manage the portfolio in question offers a clear, simple solution.

Sharesight provides a comprehensive list of all holdings in the portfolio and detailed, up-to-the-minute records relating to all the activity within it for taxation purposes. Further, it also gives the performance information needed to help both the investor and beneficiaries make informed decisions about whether, when and what elements of the portfolio should be sold.

Another key benefit Sharesight offers for investors in this situation is its sharing feature. This enables the investor to allow others log-in privileges, so they can either view the portfolio, via ‘read-only’ access or, actually participate in its management, via ‘full access’ functionality.

Imagine both of you being able to chat on the phone about the portfolio with the screens open in front of you. It’s an ideal way to help a relative or executor become familiar with the portfolio and its performance before it becomes an estate matter, and an easy way to open up what can be a difficult or uncomfortable dialogue.

It’s also a feature that can help DIY investors retain control and visibility of their portfolios if they become ill or infirm. A trusted relative or associate, such as an adviser, can continue to manage the portfolio in the manner that’s been agreed, leaving the investor with peace of mind about his or her share investments and the ability to access them at will.

So if you’re a D-I-Y investor thinking about your family’s future, or someone who’s concerned about managing the affairs of your parents or other relatives after they pass away, now’s the time to start talking – and to look to Sharesight for the help you need.

Because the fact is, that while investors can’t directly control the returns they are going to receive from the market, they can control how much they are going to spend on managing their share market investing. In other words, it clearly makes sense for investors to focus on factors they can control, with the aim of minimising cost and freeing up funds available for reinvestment.

There are three main areas where controllable costs are incurred. The first is seeking advice on which shares to buy and sell. Then there is the cost (brokerage) of actually doing the buying and selling. And finally there is the cost of portfolio administration. This includes the tedious – but essential – reporting associated with effectively managing a share portfolio.

To reduce these costs, an increasing number of D-I-Y investors are turning to online services. They use online advisory services for investment advice, trade online to reduce brokerage costs, and make use of smart technology platforms that automate much of the administration and generate all the data needed for taxation and accounting purposes. Utilising online services in this way provides all the functionality of a proprietary ‘wrap’ platform for a far lower price. The right kind of online investment portfolio management system can also help provide a full understanding of the true returns of a portfolio, in turn enabling investors to make more informed and cost-effective decisions. Features to look out for in an online platform include:

1. Comprehensive record keeping. Look for an online portfolio management system that provides all the information you require, leaving you free to utilise the services of any broker or investment advisor you like. This is in contrast with most wrap platforms, which bundle fees for advice and administration with brokerage, giving investors limited ability to see whether they are getting value from each component. The right online portfolio management system allows investors to disaggregate these services and select those which offer the best value for money.

2. Investment performance monitoring. Investors should look for an online portfolio management system that provides a transparent view about how each individual investment is performing. This compares with a traditional wrap platform, from which it is often difficult to determine which individual stocks are better performing.

3. Automated administration. Many D-I-Y investors become distracted by the administrative tasks associated with managing their portfolio. Many direct share owners cannot afford, or choose not to, use an accountant or financial planner to carry out this administration. This can include calculating dividends and franking credits, and capital gains. Look for an online system that can automate the recording of transactions and other relevant share investment activity, producing all the information required to complete a tax return in a few clicks.

4. Compliance. If you’re an investor managing your own super fund, aim for an online share management system that can automate the flow of data to your accountant. This will not only save considerable time, but also reduce bookkeeping and accounting fees.

Of course, the total cost efficiencies generated by using an online share portfolio management system will depend on the nature and size of the portfolio, and how actively it is traded. However, choosing an option that provides control, transparency, automated reporting and has the facility to link to other relevant software is certainly a great place to start.

Users of Sharesight would agree that investing in the share market can be both financially rewarding and personally satisfying, and I know that many of us are keen to get our children involved in some way.

So, what do we need to teach young people about share market investing once we’ve helped them get a basic understanding of financial concepts?

Here are my top share market basics that any investor needs to understand before they get started.

1. Only invest what you won’t need to liquidate
I’ve said it before, but I’ll say it again. Unless you’re a professional trader, share investing is a long-term business. Over a period of many years, the share market will generally outperform other investments. But if you need to withdraw your money at short notice, you run the risk of having to sell when markets are low, which could cause you some serious losses.

2. Be prepared to ride the ups and downs
Short-term market turbulence can be disconcerting and many investors at the moment are nervous about their on-paper losses. However, numerous studies have shown that share markets do better over the long term, so sticking with it will usually be a better option. Nonetheless, if you’re not prepared to ride out the lows for the sake of longer term gains, then stock market investing probably isn’t right for you.

3. Diversify
Diversification is important for two reasons: it can potentially protect you against undue losses if investments in a particular company, sector or asset class fail, and it can actually improve the overall return of your portfolio.

To get your kids thinking about diversification, help them buy a small portfolio of 3-5 shares in different industries. The share market makes diversification easy because almost every industry is well represented. Don’t overdo the diversification though. It does not guarantee success and if it’s overdone it adds complexity and it can dilute returns if it results in investment in lower yielding assets. For more on diversification see Andrew Bird’s article here.

4. Do some easy homework
Start off buying into well-known companies that have been around for a long time. Look for companies that do things you understand and operate in areas that are likely to grow in future. Thinking about some basic questions will quickly highlight industries with good potential. What is the future of the Australian mining industry? What are the implications of our aging population? Will tourism remain a growth industry?

5. Keep an eye on performance
Share investing may be a long-term business, but that doesn’t mean you can take your eye off the ball. There may be times where you want to sell down some of your holdings, or reallocate some of your exposure to maintain diversity. Staying abreast of the performance of your shares is important, and you can do this by reading the financial press and specialist websites, and subscribing to a service that will give you an overall picture of your portfolio’s performance, such as Sharesight. But remember that you are in there for the long haul so resist the temptation to panic and sell if prices take a short term tumble. Make your decisions on what you believe are long term trends, not short term volatility.

6. Don’t fall prey to “shoebox syndrome”
As all share market investors know, the benefits of being in the market come with responsibilities to the tax office. If you’re not prepared to keep your paperwork in good order throughout the year, or use an online share portfolio management service such as Sharesight to do it for you, you most likely will end up in a last-minute scramble to get your affairs in order.

What other tips do you have for teaching your kids (or grandkids) about the share market?

CMC clients will be spared the task of having to manually enter all their historic trades when setting up their Sharesight portfolio and any future share trades will be automatically synchronised to Sharesight. Best of all, customers with small portfolios will be able to take advantage of Sharesight’s new free plan to manage their portfolio in Sharesight at no cost. Our standard Investor and Expert plans will also be available to customers who require the additional functionality.

The CMC partnership is another significant step towards our ultimate goal which is to make life easier for investors by fully automating the administration and management of investment portfolios.

We are working hard to ensure similar functionality is available to all share market investors. We are in discussions with a number of other brokers about providing similar functionality and our ultimate goal is to provide seamless connections to all brokers in Australia and NZ. Feel free to let your favourite broker know that you would like them to implement this service as well!

How do I connect my account to CMC?

If you are a CMC client this functionality will be rolled out over the next month. CMC will host a dedicated page on their site which will provide customers with the opportunity to create a new Sharesight account or link an existing account. Transactions will then be automatically recorded in Sharesight as soon as a trade is completed in the CMC system.

Our press release and related press coverage can be found here.

Over the years I’ve helped many families with their household finances, and continue to be surprised by just how many people put finance in the “too hard” basket.

The thing is, basic financial concepts are just that – basic – and anyone can understand them. But the important thing is to start learning early so it all doesn’t seem too daunting later on.

An idea that helps kids learn about money is to extend the idea of giving them pocket-money. The idea is to increase the amount of pocket money but make your child responsible for paying for various small things that you would have otherwise purchased for them. As they get older and demonstrate that they can spend responsibly, the budget can be increased to cover larger items like clothing.

One of the most important concepts I think we need to teach young people is the difference between short-term, medium-term and long-term financial goals – and how your priority actions for each timeframe will probably differ.

Below are some tips I’ve shared with young people in the past that might help you get started talking to your kids (or grandkids) about their own financial priorities and timeframes.

Short term: set yourself up for success

Understand where your money is going. Keep track of all your incomings and outgoings over 2-3 months. Are you spending more than you’re earning? What proportion of your income goes on essentials (rent, travel, bills and groceries) and what proportion is on discretionary spending (going out, shopping, etc).

Once you understand where your money’s going, establish a savings account that allows you to make withdrawals without penalty. Set up automatic payments that directs a portion of your discretionary spending into to this account each payday so you can’t forget to contribute. Adjust your discretionary spending so that your remaining funds last you until next payday.

Your savings account is not for your retirement, it is your fund for unexpected expenses such as car repairs, and also your pot for those “must haves” such as an iPad or a holiday.

Don’t borrow. If there is not enough money in your savings account for what you want, wait until there is! That will stop you from committing a cardinal financial sin – borrowing money. A little patience will pay handsome dividends over your lifetime. For example if you have on average $1000 on your credit card over the next 20 years at a 15% interest rate you will pay over $3000 in interest. How much better off you would have been if you had waited until you had that $1000 in your savings account!

The only exceptions to the ‘don’t borrow’ rule are if it is for something that will create lasting value that exceeds the interest you will pay. For example a loan to buy a house that will appreciate in value (and save you the cost of renting), or a student loan that will enable you to learn new skills.

Medium term: think bigger picture

Consider saving for those big commitments. What are your financial goals for the next few years? Would you like to buy a property or set up a business, perhaps? If so, you’ll most likely need to start saving for the longer term. Set up a separate account with high interest rates and don’t be tempted to dip into this pot of money early.

Longer term: the road ahead

Consider other investment options. The share market, investment property, bonds… The list of investment options for the longer term (which generally means retirement) seems endless and you will need to think carefully about what’s right for you.

Nevertheless, the most important thing when considering these types of investment options is to only invest money that you are prepared to put away for the long term. While money invested in the share market, for example, will usually outperform most other investments over a period of many years, there will be times when the investment underperforms. That means that if, for example, you need to withdraw money during a period of underperformance, you will crystallise a loss that otherwise would have been recouped when the market picked up.

In my next post I’ll be discussing how to get kids started in the stock market, if and when they’re ready.

And that is that Sharesight operates completely independently from your broker, planner or any other investment service that you may use – while still enabling one or all of them to have the level of access you would prefer. This means you can have more than one broker viewing and advising on your portfolio, either with ‘read only’ or ‘full access’.

For you as their client that’s a huge benefit, because most brokers or planners use proprietary portfolio management systems that are limited by the fact that they can’t link with, or view, any others. (And can I just point out that while these systems may offer some of the functionality that Sharesight provides, none are, in my view, as sophisticated or user-friendly).

So how can enabling multiple access can be an advantage?

Of course it all depends on your investing style, but many people find that using multiple brokers offers a range of benefits.

These can include comparing research and recommendations, the ability to access different specialist functionality provided by different brokers and the general benefit of not putting your eggs in one basket, so to speak. Not to mention that, as we all know, playing two suitors off each other can increase their level of interest!

A recent conversation with Sharesight subscriber Jonathan illustrated this perfectly.

He found that the service from his broker was dropping off, and when he gave his broker read-only access to Sharesight, the broker didn’t use it.

However, he added a second broker and hey presto! Now both of them use it. This way, both brokers can see what the other is recommending (nothing like a bit of healthy competition!). Jonathan has found this has improved service and responsiveness from both brokers considerably.

At the same time, he’s also discovering additional ‘soft information’ that he would have been unlikely to find otherwise.

For example, one broker will say “oh, that stock was recommended because his firm did the capital raising for that company”.

This sort of intelligence can add an extra dimension and real value to the decision-making process.

If you want to give multiple brokers a try, here are a few tips:

• Use the new ‘contract note importer’ — It makes it really easy to keep track of your trades and the system will make a note of which broker made each trade. (click here to find out more).




• If you do decide to give two (or more) brokers a try through Sharesight, be sure to use the custom tagging feature (this can be set up in the Performance Report to track one broker’s recommendations against another. This makes it easy to compare the performance of each broker’s picks and decide which suitor you like best!




• Lastly, if you want good service from a broker you need to be prepared to reward them for good research or advice. If you try and get good research from a full service broker and then put all your trades through an online discount broker, don’t expect the flow of information to last very long.




But don’t take our word for it. If you think you’d benefit from the insights of more than one broker, get onto it today and throw Sharesight into the mix to make sure you get the best that both can offer.

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