Speaker 1: I normally talk about the United States and stocks from the US, but it is important that we look at a range of different countries to invest in because we want to spread our risk not only across different sectors, but different countries as well.
The first key points I want to mention is Australia’s population growth. We want to invest in a country that is increasing in population because this brings in more money and demand for businesses over the long term. There’s obviously benefits Australia’s stock market. Compare this to a country whose population is decreasing. Business growth is likely to decline. So what does Australia’s current population growth? It says that around the one point four per cent mark as of 2017 and over the very long term, it’s expected to grow at one per cent. As you can see from this graph, the population is anticipated to double around the 2075 mark. So one per cent as an alright growth rate, which leads us to number two, what is the GDP growth or the economy growth for Australia? First of all, why would do we want the economy to grow in a country that we are investing? And I think it’s pretty obvious, but I’ll go over it anyway. Economic growth means businesses are producing more output and thus producing more profit, which is what we are looking for as shareholders, because this leads to increased share prices and increased dividends. As you can see, Australia’s GDP growth rate is pretty high and over the long term, it’s expected to grow at around that three per cent mark. Compare this to US growth estimates, which are meant to be around 2.5 per cent. The growth prospects aren’t as high as India and China, but still they are up there for a developed country. Which brings me to my third point. Australia is a stable, developed country that hasn’t had a depression in 25 years. According to a recent report by the Economist Intelligence Unit, Australia achieved one of the highest rankings of any country in the world for political stability.
They also haven’t had an economic depression in 25 years, unlike the United States and Canada, who had one in 2009. Why would you want to invest in a developed market? Well, because they’re more safe then undeveloped markets. They’re politically stable and the rule of law as well entrenched. So there’s less risk with your investment, right. So we’ve established Australia as a stable and developed country with a growing economy and growing population. Australia, I believe, is one of the best developed markets to invest their money in, which begs the question, how do we invest our money in Australia? The first option is to invest in an ASX 200 ETF. The ASX 200 consists of the 200 largest trading companies in terms of market cap and the Australian market. It’s Australia’s version of the S&P 500, which is what Warren Buffett recommends for a lot of investors. If you invest in the ASX 200, you’re going to get similar returns to the entire Australian market as a whole. It’s a safe way of investing money and a good one. If you don’t want to put that much work in choosing your investments, a passive form of investing that will grow over the long term. The second option is picking individual stocks in the Australian market. Here, I’d recommend choosing stocks similar to the way Warren Buffett invest, picking stocks that you understand that have a competitive advantage, that have management with integrity and talent and stocks that are on sale. In my next video, I’m going to talk about my favorite Australian stock, and it is likely to be one that you won’t expect. Radio. That’s for today’s video. And sorry for not posting as regular as normal. I have been working on the course that teaches how to invest like the best investors in the world, and it’s mainly focused on Warren Buffett.
Obviously, it should be out within a couple of weeks. Hopefully, if you want to learn more about investing, then consider subscribing to the channel and we can grow our wealth together.