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Talking Cents

By Frank Conway, Feb 2 2017 02:58PM

Passive investing can generate greater investment returns
Passive investing can generate greater investment returns

There is a growing debate as to whether Warren Buffet and mega money managers like Vanguard are right when they discuss investing strategies.

And in case you might have missed that debate, the central issue is fees.

Passive investing supporters like Buffet and Vanguard founder, Jack Bogle argue that there is no benefit to the investing public when it comes to paying too much money over to ‘active’ investors. Those are the guys that spend a lot of their time buying and selling stocks and bonds in order to ‘beat’ the market and generate a higher rate of return to their customers.

Bogle and Buffet believe it is more profitable to take a less active approach, a passive approach. They argue that it is impossible to beat the market long-term and those that do only do so for a very short period of time, their luck runs out and over time, their rapid fire buy-sell approach actually costs investors huge sums of money unnecessarily.

For Buffet and Bogle, the math is overwhelmingly in their favour.

When I talk to investors and students, explaining the concept of active and passive investing can be a little daunting. At first, I tried to simply present the maths and while this worked in offering the science, it didn’t fully explain the real difference between the different approaches.

Until yesterday!

While out on a run, I experienced the difference.

It was about 7pm and traffic was heavy.

What I noticed was that I was getting to the next set of lights at the same time as two particular cars. This lasted for just two sets of lights. And this reminded me of another driving experience through Manhattan a few years ago. Provided you drive at a particular rate of speed, it is possible to hit a majority of green lights all the way from lower Manhattan to the top end of the island. This is passive investing.

When I did that drive across Manhattan, I noticed another car that sped from light to light. It got caught at every red light. And at the end of the cross-island drive, I was still next to it. The other driver was active investing; speed, spurts and stops and along the way, getting no further, using more fuel and probably risking a speeding ticket.

For some investors, there can be a certain romance in the concept of the Wall Street type financial adviser.

When it comes to growing your money there are many investment options to consider. But when it comes to investing approaches, there are only two; active or passive.

The maths support a passive approach all day for the sheer size of the investment return potential over time.

At the end of the day, this is broadly the better option to securing more long term wealth growth…and putting money in your investment account (including pensions).

Frank Conway is a Qualified Financial Adviser and Founder of the MoneyWhizz, the financial literacy initiative

By Frank Conway, Feb 1 2017 06:23PM

With the passing of the dark days of January, February brings a touch of Spring in the Irish air. And what better time to sit down and give some thought to your finances.

Learning about money should be a life-long process. And this is especially true today as more and more of us can expect to live longer yet have more financial responsibility when we stop working and earning a regular income. With both the State and employers scaling back from offering the traditional supports in retirement than in past years, how financially fit we are throughout life will set the stage for how well off we can expect to be. And it is financial literacy that will underpin this.

You are never too young, or old to learn about money, money management and how to improve your financial literacy.

In fact, financial literacy should be more than a passing fad. It should be treated just like physical fitness; a regular process of learning and refinement that will help those that are actively involved.

Following are some simple and practical steps that can support you in the continuous financial literacy journey:

1 Create visibility and keep an eye on your spending (and bank balance).

There is no doubt that modern technology has made it really easy to check in on your bank account regularly. It can be done from your home PC or your phone. So why not use the access to regularly check into your bank account balance and keep an eye on your spending as this can serve as a powerful way of keeping your spending in check. Use the information to track expenses, set goals and remain in track to achieving those goals.

2 Browse the finance section of a paper

Many journalists do a great job researching the market for all sorts of financial news, money-saving tips and best practice. This can range from tips on investing for retirement, cutting health insurance costs, buying a home and saving for a rainy day. So use their expertise as it can be a great starting point to getting great impartial money tips that could pay off handsomely in the long term.

3 Be humble and ask questions

People can be very hesitant to ask money questions. This happens where they can have legitimate questions but fear sounding ‘dumb’. There is NEVER a dumb question when it comes to money. Never! Remember, the worst thing you can do when it comes to your money is remaining silent. Talk, ask questions and speak up. If you don’t understand what compound interest is, ask! If you don’t understand what TER or OCF is, ask! Bye the way, they mean Total Expense Ration and Ongoing Charges Figure and refer to the costs that are applied to investments. The worst thing you can do when it comes to your money is remaining silent.

Frank Conway is a Qualified Financial Adviser and Founder of, the financial literacy initiative.

By Frank Conway, Jan 17 2017 07:41PM

Every year, more and more adults make common mistakes when it comes to money. Especially difficult for many are concepts such as investing sufficiently, planning for life needs and preparing for money surprises.

But as we move faster and faster towards a cashless society, along this money superhighway, it becomes critical that kids are taught the essential elements of money and how the money system works. This can provide them with essential life skills that will pay massive dividends in the future.

For parents and teachers alike, there are a number of core skills that every 6-year old child should know about money including:

1. Planning helps people make choices about how to use their money.

2. There are 2 kinds of sharing – some goods can be shared that do not have to be returned, such as a gift. But there is another form of sharing, like something that is borrowed. And in the case of a borrowed item, this must be returned.

3. People that live in a local community share with one another everyday where they share the cost of services, like the cost of running the local school or paying for nurses in a hospital.

4. Money is limited for most people so it is important to protect it.

5. Money can only be spent once – after it is used, that’s it, it’s gone!

The new financial literacy framework developed by MoneyWhizz is a comprehensive set of guidelines developed specifically to facilitate parents; teachers and communities extend core financial principles.

The purpose of developing the principles and supports is to ensure that kids are better prepared to shoulder the burden of financial responsibility now and in the future. But equally important is that adults are empowered to facilitate the dissemination of the financial knowledge.

MoneyWhizz is proud to support kids learn about money as financial awareness is a core life skill.

By Frank Conway, Jan 16 2017 09:37PM

Talking Cents with Ollie is a new and innovative financial education programme developed here in Ireland. Its main goal is to teach kids aged 7 - 11 about money and how money works. And it is developed to be fun!

Bye the way, Ollie is the wise Owl that offers all of the money wisdom.

Talking Cents with Ollie focuses on the core money issues that kids will be required to master, including money management, budgeting, planning, avoiding financial mistakes and much more. So, for the first few editions of Talking Cents with Ollie, we focus on some core areas of discussion.

But the really important feature of Talking Cents with Ollie is that kids will not be learning on their own. While each edition of Ollie comes with child specific content, there is also an adult support section (parents, teachers and grandparents can use this) that empowers adults to have really meaningful money conversations with their kids.

Each edition of Ollie will have a specific focus. For example, in the first edition, the topic of the history of money is discussed. So within the Ollie Magazine, kids learn about barter and the gradual modernisation of money to the form we are all familiar with today.

In edition 2, Ollie discusses Needs and Wants. Important topics, especially since we can all experience a little out-of-control spending if fail to control spending on expensive 'wants' in life.

In addition to the broad content of each Ollie edition, there are some really great features, such as critical thinking incorporated into each edition of Ollie. The purpose of course is to force kids to think and reflect on the lessons contained within each Ollie edition.

Talking Cents with Ollie teacheskids aged 7 - 11 about money
Talking Cents with Ollie teacheskids aged 7 - 11 about money

By Frank Conway, Apr 11 2016 02:33PM

Employers that offer financial education as part of their employee benefits also benefit. This is according to a number of international studies that examine the long-term impact of financial stress on the well-being of their employees. The studies conclude that financial stress results in lower employee productivity, higher rates of absenteeism and poorer levels of employee retention.

In separate analysis conducted by MoneyWhizz, 90% of employees react positively to receiving financial education. Many say that receiving financial education helps them manage their finances more effectively and become better money managers.

Impact of financial stress on health

Analysis conducted by MetLife, the US health care provider reveals:

44% suffer from migraines compared to just four percent of those reporting low financial stress

27% suffer from ulcers or digestive tract problems compared with 8% reporting few money worries

23% are depressed compared with just 4% where there are low levels of financial stress

Leading employers recognise the importance of financial well-being among their staff.

Many now actively seek out programmes that can assist staff improve their personal financial knowledge that are designed to reduce financial stress.

Top 5 preferences for receiving financial literacy

1. During work hours is the top preference of staff to receive financial literacy

2. During lunch time break is second

3. At home or on own time is their in the list

4. Immediately after work comes in fourth

5. On weekends comes in fifth in the order of preference

See full list of times and benefits HERE

Improved workforce planning

Increasing the financial security of employees and helping them plan for retirement also helps employers improve workforce planning and attrition rates. Financially secure employees are more likely to be able to retire when they choose rather than have to delay retirement.