Thanks to The Flawed Consumer for this week’s wealth building strategy: automated investing into diversified assets
Each week, I have asked a finance blogger or podcaster to share their investing 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:
TFC/The Flawed Consumer
“9 to 5” profession:
Conservation Project Manager (Protected Area Management)
Flipping items on Gumtree/Marketplace/Ebay
What are your investing goals?
To achieve Financial Independence (FI) through saving and investing by age 50. To be achieved by moving towards investing 40% of income into a diversified portfolio of sustainable shares, bonds, cash and property.
What is your investing time frame? How far along are you?
My FI investing timeframe is 20 years. I’m almost 4 years along the journey.
I would say I’m definitely still at the start of my investing journey at the moment, as I knew nothing about investing 4 years ago, so am still learning.
The more I learn, the more I’m able to trust in the system and part with higher sums. So, I expect our investments to sharply increase in the coming years.
What the most powerful wealth building tool available to you?
Building knowledge of personal finance – spending, saving, frugal living and investing. As they say, knowledge is power… And this is very true.
Without the understanding of how to make more money, spend less, live frugally and build wealth through investing, We would still be trying to keep up the Jones’ like a bunch of idiots!
The online personal finance community has been invaluable for building this knowledge and keeping us on track when things get hard.
What wealth building habits are you utilising to reach your goals?
Automated savings and investments… It has made a massive difference! We used to be the kind of people that would spend first and save what was left (If any).
But through automated savings payments and investments each fortnight, we now save first and only spend what is left. This ensures we always save and invest according to our goals.
Also, living more frugally is a critical habit we’ve formed and are still honing.
What is your strategy to achieve this?
We’ve set up automated payments of set amounts to each of our savings accounts that transfer each payday before we have a chance to spend the money. I’ve also done the same for my investments as well.
Additionally, we both voluntarily contribute an extra 5% each pay to our superannuation, which We set up through salary sacrificing.
How long have you been using this strategy?
Just over two years.
Were there other strategies before? If so, what made you pivot?
We had attempted to save manually, but just found ourselves getting trapped in the cycle of spending more and not saving as much as we wanted. So, we automated to remove that possibility!
What makes your strategy suit your personal situation?
My wife has a tendency to spend more than I do and falls into the trap of buying nicer groceries, etc if the money is there. If there is a small budget available to go shopping with, etc we are both better at making do with what we can. So, automation of our savings before we do our grocery shopping etc suits us perfectly.
Where do you stand on home ownership vs renting?
We “own” our own home (or, rather we will on the day we pay off the mortgage). This is a tough one. Owning your home can be great if you purchase at a good price and can sell higher later. But, houses are a money pit… It’s insane how much they cost! If we had understood just how expensive it is to own your own home, we may have thought twice about buying.
One day, when we own our home outright, it’ll be a great choice I’m sure. But, sometimes I wonder if renting is the smarter option. In saying that though, I live having a place that’s ours and that we have made a home for our family. Our home is our sanctuary, and we would hate to go back to renting despite the cost of owning. A a stable and secure home environment is very important to us.
Where do you stand on the great property vs shares debate?
I think the Australian ideals about property are outdated and don’t work in the modern world where the price of housing is ridiculous. So I sit on the diversified portfolio of non-property investments side of the debate.
Where do you stand on investing for capital growth vs income?
I support both options. Both options assist with achieving and living an FI life.
Do you have any financial regrets?
Many! To summarise though… Being stupid with money in my 20’s. The first few years of our 30’s have been spent digging ourselves out of the financial holes we dug in our 20’s, and then trying to set ourselves up for the future.
If only I knew what I know now about money 10 years ago, we’d be much further along in our FI journey.
Any final suggestions?
Be smart. Be wise. Take risks… But, not too many.
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.