Before becoming a renowned voice in personal finance, making regular appearances on TV show Ausbiz and working as a senior investment specialist at Morningstar Australia, Shani Jayamanne was a university student a little unsure about what to do next.
After university, Shani’s general interest in commerce saw her pick up a role with a financial advice firm.
“That was a very steep learning curve,” she said.
“It gave me an idea of the financial advice process in Australia. It was a really good starting point to understand what I did and didn’t like.”
Shani quickly gravitated towards investing and took up a role in asset management where the curtain on how people get rich really lifted.
“I worked in client services but I saw a lot of account balances, I saw a lot of transaction histories and I saw a lot of the ways people built wealth behind the scenes,” she said.
“Even my perception going into this job was that it was only for the wealthy or the ultra-wealthy but I could see that small amounts over a long time period could lead to wealth.”
At the time, Shani was living out of home on a graduate salary of little over $50,000.
“I really didn’t have that much spare cash but I could see how the small balances did translate into a very large balance when time was involved, and so that really sprung me to action,” she said.
“I was sort of thinking to myself ‘Why doesn’t everybody know this? Why doesn’t everybody do this?’”
This turning point in Shani’s career gave her a new purpose: to help more people discover the power of investing before it was too late. She shares her story in the latest episode of Women’s Agenda‘s podcast series Spotlight on Women, created thanks to our partnership with Grant Thornton Australia.
Today, Shani has worked with a broad range of people from pre-retirees and retirees to minorities and she’s even volunteered to create financial literacy programs for asylum seekers.
Her mission to do all of this started at home.
Shani’s parents were Sri Lankan migrants and her dad’s main priority was to give his family a stable place to live and to make sure his wife would be cared for when they eventually retired together.
“I don’t think my father had any interest in capital markets and equities,” she said.
After saving enough to move to Australia and buy a family home, Shani’s father’s key goal was to pay off the mortgage so it wasn’t until later in life that they started thinking about their superannuation.
“[My mother] did some casual work in childcare for maybe three or four years and so her superannuation balance is very low and not comparable to my father’s so he will be supporting both of them in retirement,” she said.
Focus on superannuation sooner rather than later
Shani says people tend to leave superannuation on the backburner until they get to their 40s or 50s and retirement starts approaching.
For women, this can lead to dire circumstances, when the compounding effects of career breaks for childbearing or caring duties, lower incomes and expensive healthcare costs later in life are factored in.
Shani was struck by an example of this when watching the ABC series Almost Australian, in which one woman who became destitute after divorce now lives in a small caravan with her kitchen bench sitting over the toilet.
“Unfortunately, that is the reality for more and more women,” she said.
“As we have an ageing population and more women move towards retirement, there’s a rising instance of divorce as well, which means that a lot of these women who haven’t had any [investing] capabilities or built up superannuation balances or have been self-employed and haven’t had any sort of way to contribute to their superannuation or haven’t thought to, they’re in this situation where they’re not living comfortable retirements and their quality of life is drastically reduced.”
Decisions today can make an “astronomical” difference
Shani says a bit of early consideration about what you want life to be like can help transform the years ahead both financially and lifestyle-wise.
“My focus is really on getting women to truly understand how important super is and how to actually harness it and practical ways to actually fix this issue with the resources that they have to maximise their returns,” she said.
“So I think while we wait for legislation to catch up, it is important that we make the best of the situation that we have and ensure that we are advocating for ourselves and our retirements and the life that we want to live.”
Everyone’s individual circumstances are different so it’s really important, she says, to work on a personalised financial plan because one size does not fit all.
She points to noise around The Barefoot Investor’s Scott Pape as a good example of this.
“I think he’s helped a lot of people in his approach but he has directed a lot of people, if we’re talking about superannuation, to Host Plus’ Indexed Balanced fund,” she said.
“He said something like ‘I think it’s beaten the pants off most stock pickers’ and so I think that’s a pretty aggressive way of defining it and a lot of people just moved into this fund.
“It was called the Scott Pape effect and it was just a lot of people moved into this fund and it has a 75% exposure to growth assets and 25% exposure to defensive assets.
“So if you’re a 30-year-old or you know even a 25-year-old that’s read this book and you’ve decided to put it into [this fund] you’re probably not making the most of the time that you have.
“You’re probably not investing your assets in the right asset allocation.
“So I ran a bit of a model where I looked at 75% growth assets to 25% defensive and then compared that to a 90% growth model, 10% defensive, and over my personal experience – so my time horizon of 30 years and my salary – the difference that you would have is astronomical so it would be about a $300,000 difference in superannuation.”
Shani says reading books like the Intelligent Investor or The Little Book of Common Sense Investing and keeping a pulse on news around business and money is really helpful in adding to knowledge about building wealth.
But she warns of getting too caught up in hot trends and market hype.
“Constantly hearing about how the market is going, it’s going up or it’s going down, it makes a lot of investors nervous and it leads to poor decisions,” she said.
“You can read as much as you like about investing, you can listen to markets, you can try and put money into what you think is going to succeed in the next year or so but ultimately the best tool [you have] is time and making sure you have the right asset allocation.”
Hear more from Shani Jayamanne on episode two of the Spotlight on Women series, where Women’s Agenda examines key industry areas to profile women building game-changing and influential careers with purpose, thanks to our partnership with Grant Thornton Australia.