Thanks to Miss Balance for this week’s wealth building strategy: Dividend income focus investing. Investors seem to be split between those focussed on dividends, and those more interested in total return. Aussie Doc focuses on total return, so it’s interesting to see the alternative viewpoint.
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.
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.
Name/ Online identity:
“9 to 5” profession:
Human Resources at a not for profit
Support Work – disability and aged care, dog sitting, babysitting, market research and points collecting
What are your investing goals?
My goal is to have an income stream from dividends to pay my basic expenses for me in future when I take time out of the workforce for starting a family or working on passion projects.
What is your investing time frame? How far along are you?
I have been investing since 2016, so 5 years now. I am currently investing a little over 60% of my after tax income. I will continue to invest long term, though the amount I invest will likely vary over time.
What the most powerful wealth building tool available to you?
The basic of wealth building is spending less than you earn. Some choose to lower expenses, others choose to earn more. I believe a combination of both is most powerful. Then once you have some spare cashflow, it needs to be invested to be able to compound over time.
What wealth building habits are you utilising to reach your goals?
I have optimised spending and also worked on increasing and diversifying my income.
I have continued to add value at my 9-5 job to earn promotions and pay rises, as well as having multiple side hustles that I enjoy and also bring in more income.
Every month I track and review expenses to see how I’m tracking.
Where do you stand on home ownership vs renting?
I currently rent and have done since I moved out of home. Housing is expensive in Sydney and I have never been committed enough to one location to want to buy.
I like having the flexibility at the moment to be able to move when I want, which I have done a few times. I took the opportunity to move overseas, as well as locally when I got a new job.
Now my commute is only 7 minutes and free as I can walk. I also enjoy having a smaller rent payment than what I’d be paying for a mortgage and rates, so I’m able to invest the difference.
One day if I have a family with young children, I may be looking for more stability, though for now this work best for me.
Where do you stand on the great property vs shares debate?
I believe both have their place. There is money to be made in property if you have the time and energy to invest in learning about markets, often buying and fixing up properties to sell for a profit. I personally choose to go with shares. There are a few keys reasons for this
- Property often requires a larger upfront cost, with shares I can buy smaller amounts
- I can sell a small amount of shares if needed, you can’t sell off the bathroom
- If you have tenants, you will need to keep up maintenance and property management, or pay someone else to do it. With shares, nobody calls at 3am to say the water heather needs replacing asap
- I don’t have the interest in learning more about property – this is potentially the most important point
Where do you stand on investing for capital growth vs income?
Currently I’m working towards building a stream of income from dividends to be able to cover career breaks such as starting a family or working part time on passion projects. I believe capital growth will also happen over time, though that’s not my main focus for now.
Do you have any financial regrets?
Not really regrets. I have certainly learnt a lot over the past few years and of course can look back and be mad at myself for not knowing sooner, not savings more, enjoying life too much in the early years etc. Though I don’t see any benefit in doing that.
Instead, I like to focus on how much I’ve achieved, and where I want to move forward to in the future rather than dwelling on the past. Live, learn and move on to new heights.
Any final suggestions?
Don’t overthink it. Investing can be as simple or as complicated as you would like it to be. I would suggest newbies
- Understand their risk tolerance
- Pick an investment vehicle they are comfortable with
- Get started. You can always tweak as you learn more.
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.