Pay off Mortgage then Pivot to Shares – His Her Money

Thanks to Alex and Ellie from HisHerMoneyGuide for this week’s wealth building strategy: Pay off Mortgage then pivot to shares.

pay off mortgage

Each week, I have asked a finance blogger or podcaster to share their personal wealth building strategies. I am hoping these will be useful to compare lots of different strategies and perspectives to provide ideas and insight in your own investing journey.

Name/ Online identity:

Alex and Ellie from HisHerMoneyGuide.


“9 to 5” profession:

Ellie is a researcher and Alex is a government project officer.

Together we earn about $220,000 a year pre-tax from our salaries. We derive extra income from investments, and to a lesser extent from side hustles.

Side Hustles:

Our biggest side hustle has become online surveys. It’s not exactly lucrative, but it’s easy money that you can earn at any time.

Additionally, we collect bottles and cans for cash under Queensland’s Containers for Change deposit scheme (why not do your bit to clean up the place while earning a little on the side?).

We also blog and get a small amount of money from banner ads, and we also technically earn a small amount from loyalty reward programs (frankly they’re more of a refund than income though).

What are your investing goals?

We’re aiming for what some call “FatFIRE” or a high income level of financial independence and early retirement.

Basically we’re wanting to have enough money behind us to retire early in our early-to-mid 40s, move away to the beach, and have a passive income that will support us to live a comfortable day-to-day life as well as allowing us to travel for up to five months of the year.

We’re both in our mid-30s at the moment, so we’re still a bit away from attaining those goals. However, as of our last net worth calculation, our assets total about $2.5 million.

Aussie Doc: Net worth = Total value of assets – Total debt (inc mortgages). This is an incredible net worth to have at such a young age!

So we’re well on our way, with pretty significant passive income from share dividends.

What the most powerful wealth building tool available to you?

You are easily the most powerful wealth building tool you have available. Whether it’s up-skilling to improve your career and earnings, taking on a side-hustle however big or small to increase cash flow, or being willing to take on bigger projects like a business or house flipping.

Not everyone can land a great job, but with effort you are the best placed person improve your financial position. Individual strategies are just forms of optimisation, but you won’t get where you’re going anywhere near as far if you don’t maximise your earnings. What you do with that money is another question.

What wealth building habits are you utilising to reach your goals?

Adding to the point above, you can’t save what you don’t earn; but you can’t save what you spend.

Thankfully being frugal comes easily to both of us, so aside from having good incomes our key habit has been to save as much money as we can. This willingness to save money has given us an annual
savings rate of nearly 90%.

Aussie Doc: Check out the site! Savings rate since they started blogging 80-90%! They have paid off the mortgage on their home.

We shop around to cut costs on everyday expenses like groceries, because it all adds up over time.But we also hadn’t been afraid to get our hands dirty to save money through DIY home renovations and house flipping.

All of this means we have more money at our disposal to play with. Most
importantly, that gives us options (a kind of pre-financial independence, if you like).

There are people who have earned and saved more than us at a younger age, or had better investment returns. But by both of us having been frugal before we met, it meant that we had some money behind us from a young age. Rather than hiding that money under the mattress or in a bank
account, we’ve then used those savings to make our money work for us.

What is your strategy to achieve this?

We have a couple of investment properties, which will provide us with a level of steady, diversified income. For now though they’re simply slowly paying themselves off until we put more effort into paying off their mortgages.

However, the bulk of our investments are in shares. We primarily hold individual shares, followed by holdings in Listed Investment Companies (active entities that hold shares in multiple companies), and in passive Exchange Traded Funds (which track various indices – in our case we’re chasing dividend returns).

First and foremost we are dividend investors. Our goal is to never need to sell down shares (aka a 0% withdrawal strategy), and instead live off the passive income they produce.

We see sequence risk and declining decision making as we age as unacceptable threats to our early retirement plans. The solution is working a year or two longer to build a larger portfolio that is geared towards income over capital growth.

How long have you been using this strategy?

Living off passive income was our main goal since we met some seven years ago and started investing together.

However, the strategy has been refined and tweaked over time as we learned more about investing.

Since then we’ve disposed of some shares that didn’t fully meet those goals, but the bulk of our portfolio has remained the same, and apart from some small ‘play’ holdings that are geared towards growth we’re pretty set now.

Were there other strategies before? If so, what made you pivot?

Ellie was always a share investor, but Alex started out with property investment as the key goal for FIRE.

That changed after seeing the liquidity of shares, arguably better returns, and the fewer headaches you have compared to holding and maintaining properties.

What makes your strategy suit your personal situation?

We’re both fairly risk adverse, and a 0% withdrawal strategy seems to be the safest strategy of all.

The one risk is that our passive income fails to increase with inflation, and gradually erodes our income. But that’s where superannuation comes in as a safety net (or a big income booster if our investments do match or even beat inflation) when we’re a bit older.

Additionally, we also want to experience life at its fullest, so having enough money behind us to do that is imperative. Experiencing the world, unfortunately, requires money.

That means we need to build a sizeable portfolio to support and sustain such a lifestyle. So essentially we combined those two things to build a portfolio that will hopefully provide us with a quite large passive income, with few headaches, as well as providing us with financial security if we
encounter any complications such as health issues.

Do you have any financial regrets?

Thankfully we don’t have any huge financial regrets, but we still do have some. The biggest one is not working earlier, which would have enabled bigger savings from a younger age.

So if Alex had worked during high school or university, we would currently be benefitting from the snowball effect that compounding creates. Even a few thousand dollars extra earned back then could have made a difference by now.

So going back to an earlier question, your willingness to earn money is your the biggest asset when it comes to building your wealth towards whatever goals you have.

Thankfully that lesson was learned before it caused too much harm.

Where do you stand on home ownership vs renting? Why?

We’re firmly in the home ownership camp. The financials for renting work out fine enough, but for us we simply want the security of our own home.
There’s an intangible attraction to having our own corner of the world to call our own.

It’s an asset we can sell if we need to. And perhaps most importantly we don’t want to be at the whim of a landlord who might have demands that we don’t want to meet, or who might sell the property out
from under us and force us to move.

Thinking ahead again to when we’re much older, those aren’t worries that we want to have.

Where do you stand on the great property vs shares debate? Why?

We’re fans of both – though prefer shares.

People ultimately need somewhere to live, so there is always a need for rental properties – especially if you buy into areas that will maintain demand in the future. So property can provide a nice level of
long-term diversification for an investment portfolio.

However, as mentioned earlier property comes with some headaches when it comes to maintenance. Owning a portfolio of many properties would
likely come with many stresses. So like many things in life, we suppose it’s about moderation.

Shares, however, provide liquidity if you need to sell. They generally have better returns as well (whether it’s via income or capital growth). They also don’t go into arrears on rent or have a hot water system break on a weekend – so they’re pretty headache-free.

To see all the wealth building strategies shared with Aussie doc freedom, check out the Ultimate Step by Step guide to Wealth building, with wealth building strategies.

Aussie Doc Freedom is not a financial adviser and does need offer any advise.  Information on this website is purely a description of my experiences and learning.  Please check with your independent financial adviser or accountant before making any changes.

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