Andrew Baxter

  In finance, there’s often a wide gap between classroom learning and real-world market dynamics. Academic theories can offer valuable insights, but they rarely capture the complexities and unpredictability of actual investing. Today, we’ll delve into the key differences between finance education and the realities of the stock market, focusing on practical strategies to help you make more informed financial decisions. The Gap Between Theory and Practice In finance courses, students are introduced to models and theories designed to explain market behavior. For example, the “efficient market hypothesis” posits that stock prices reflect all available information. However, in practice, market efficiency is a nuanced and often debated concept. While markets may generally behave efficiently, they are also influenced by factors like insider knowledge, institutional actions, and human psychology — factors that academic models don’t fully capture. A common gap arises from the simplification in

Superannuation, commonly referred to as “super,” is an integral part of financial planning in Australia. However, many people tend to overlook it, thinking it’s not urgent or too complicated. The truth is, managing your super early can significantly impact the quality of your retirement. Whether you’re just beginning your career or approaching retirement, it’s essential to take action now to ensure financial stability later in life. Why People Neglect Superannuation Many people delay dealing with their superannuation because retirement feels distant, or the topic just doesn’t seem exciting. It’s easy to think, “I’ll sort it out later,” especially when you’re focused on other  financial priorities  like mortgages, rent, or running a business. However, this mentality often pushes retirement planning down the list until it becomes a more pressing issue. The sooner you start contributing to your super, the more you benefit from compounding returns. Compounding is the process where your ear

  Money and psychology are closely linked, affecting how we handle spending, investing, and saving. Many of our financial decisions are shaped by emotions like fear, greed, and our past experiences—often referred to as “money stories.” These emotional connections can either drive us forward or hold us back. To take control of your financial future, it’s crucial to recognise these biases and learn how to manage them effectively. The Power of Money Stories Your beliefs about money, formed during childhood or through life events, play a huge role in how you manage your finances today. For many, money symbolises freedom, security, or choice—emotional concepts that can lead to both positive and negative behaviours. Consider this question: “Money is…?” Your immediate answer can reveal a lot about your mindset. Whether you associate money with freedom, security, or something else, understanding this emotional link is the first step towards financial growth. Fear and Greed: Common Emot

  Managing a portfolio effectively requires balancing diversification while ensuring your risk exposure aligns with your investment objectives. One essential strategy investors use is portfolio rebalancing. This process plays a significant role in managing both risk and emotions, helping you stick to a structured plan rather than being swayed by market movements.   What is Portfolio Rebalancing? Portfolio rebalancing involves adjusting your investments to maintain a desired allocation across various assets. For instance, if you begin with a balanced portfolio where each asset has equal weighting, some investments may outperform others over time, causing your allocation to shift. Rebalancing helps realign those weightings by selling over performing assets and reinvesting in underperforming ones. Consider a portfolio worth $100,000, with ten assets, each valued at $10,000. If one asset grows to $30,000 while others lag behind, your portfolio becomes unbalanced. This increases y

  Superannuation, commonly referred to as “super,” is an integral part of financial planning in Australia. However, many people tend to overlook it, thinking it’s not urgent or too complicated. The truth is, managing your super early can significantly impact the quality of your retirement. Whether you’re just beginning your career or approaching retirement, it’s essential to take action now to ensure financial stability later in life. Why People Neglect Superannuation Many people delay dealing with their superannuation because retirement feels distant, or the topic just doesn’t seem exciting. It’s easy to think, “I’ll sort it out later,” especially when you’re focused on other financial priorities like mortgages, rent, or running a business. However, this mentality often pushes retirement planning down the list until it becomes a more pressing issue. The sooner you start contributing to your super, the more you benefit from compounding returns. Compounding is the process where your ea

  In investing, balancing risk and reward is essential for long-term success. It’s not just about what you earn, but also what you manage to keep. Many investors underestimate the importance of   managing risk , believing they won’t face significant setbacks, but being prepared and managing risk effectively is crucial. It’s natural for investors to be more concerned about losing money than they are about making gains. This aversion to loss is deeply rooted in human psychology. However, risk is an inherent part of investing, and how you handle it determines your overall success. The key is to assess risk before considering potential rewards. Types of Risk There are three main types of risk to consider when investing: market risk, sector risk, and stock-specific risk. Market Risk:  This refers to the overall risk that affects the entire market. Events like economic downturns or global crises can lead to a broad market sell-off, where stocks across all sectors decline simultaneously. Exam