Thankyou to Serina Bird for this week’s wealth building strategy: A bit of everything
Serina Bird is a former diplomat, published author of the fabulous book The Joyful Frugalista, podcast host and money coach.
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:
Serina Bird aka The Joyful Frugalista
“9 to 5” profession:
Formerly worked at the Department of Foreign Affairs and Trade. Now left to write/podcast/startup full time.
AirBnB and writing
What are your investing goals?
My previous goal was to save enough to leave work! Now we are aiming to build up our net worth. Hubby retires in 2 ½ years and wants to travel around Australia. I want to be (even more) wildly wealthy so am working on startups.
What is your investing time frame? How far along are you?
I started actively investing in 2005. My investing strategy was disrupted due to separation (August 2014), but I’ve rebuilt – and remarried.
What the most powerful wealth building tool available to you?
When I think back to when I was 15 and had my first real job (i.e. not just working in my mum’s factory on holidays), I knew I wanted to invest my money and I wasn’t sure how.
A friend suggested I ‘contact a stockbroker’ to invest – but that was too daunting for me as a teenager. And I didn’t really know anyone else who was investing like that.
These days there are so many digital platforms that make it easy – and check – for anyone to invest. And there’s so much more information about how to do it as well.
Investing in the share market in particular is now for everyone: not just for the upper elite.Serina Bird
What wealth building habits are you utilising to reach your goals?
My husband and I work together as a team, set yearly goals and work together to achieve them. We track our expenses and always shop around for better deals. Saving and investing is part of our regular life.
We are conservative investors – hubby is more conservative than me. I get impatient sometimes and would like to take greater risks in some areas. But we talk through options and come to joint decisions, and then we stick with them.
What is your strategy to achieve this?
As hubby is in the remaining few years of being in the workforce, superannuation is a key part of our strategy. He automates salary sacrifice to almost the maximum allowed.
We set a joint goal in 2020 to pay off the mortgage. We achieved that briefly this month, although it’s back in the red again due to some large annual bills such as insurance.
A key strategy was tracking our progress. I created a ‘kill the mortgage’ spreadsheet and charted the progress. It went from $120,000 in February 2019 down to being $1,800 in credit earlier this week.
Looking at that graph and focusing on it was hugely motivational, and helped us focus our strategy.
How long have you been using this strategy?
Hubby and I met in 2017 and made our first investments in RAIZ not long after. We then bought investment properties together in December 2017. We’ve pretty much worked as a team since then, focusing on paying down the mortgage and building up super.
Were there other strategies before? If so, what made you pivot?
In my first marriage, we were focused almost exclusively on residential property investments. We did have some shares, and I also had Vanguard index funds, but mostly we invested in property.
We were highly geared at the time, and that was quite stressful when the marriage broke down as there wasn’t really anything by way of an emergency fund – actually, we had an overdraft so we owed money.
And also, while on paper we had high net worth, I always felt poor as it was a struggle from payday to payday to find money to pay bills. I was more frugal that my ex husband, and that was a source of tension as well.
In my husband’s first marriage, he also didn’t have a lot of spare change and finances were quite tight. He did not invest outside of super and the family home. In fact, they’d never really considered investing or talked about it.
Having learnt from these experiences, feeling abundant and ensuring there is always cash to splash if we need it is important to us.
We’ve focused more on building up super, and we also focused on paying down the mortgages (taking advantage of record low interest rates). We talk regularly – sometimes daily – about saving and investing. We now have access to equity in the mortgage that we could use if we needed it.
In addition, we each have sanity money, which we put on our Qantas debit card, and thus we each have our own money to pay for splurges (in my case, catching up with girlfriends and op shopping and buying gifts).
It feels so empowering to have our own money to do what we like with!
What makes your strategy suit your personal situation?
We are conservative investors, and this suits us as I have primary school aged kids to support. Also, I’ve now quit my stable, full-time public service job and my future startup income is as yet uncertain.
Hubby is in the final years of his career, and while he has a great pension coming to him soon, his days in the workplace are now literally numbered. Accordingly, we are at a stage where overall we wish to take less risks.
Where do you stand on home ownership vs renting?
I purchased our first home in 2001. It was $229,000 and I remember feeling freaked out about investing nearly a quarter of a million dollars. What different times we live in now!
We moved, and I then sold that family home in 2017. It was time to move out of the family home and I also wanted to move into a smaller and more secure apartment to make it easier for me as a single parent. Originally, I planned to sell the home and then rent for a while. I was even hoping that the money would enable me to pay for rent for a long time – maybe indefinitely. This seemed a good cost saving strategy.
Within weeks of looking at properties, I discovered that the rental market where I lived wasn’t as cheap as I thought. Also, most places were quite small. I found a three bedroom place for sale and decided to look at it for comparison purposes. I ended up buying it at auction at few days later: it was two blocks from my kids’ new school, surprisingly roomy and at a good price. It meant taking on a mortgage again but it has been worth it.
When deciding to buy this apartment, I was clear it was a lifestyle choice. Apartment prices have not gone up in recent years, and although I haven’t made money I haven’t lost it, either. But the lifestyle benefits have been immense. My kids can walk to and from school (and it’s a fabulous school that they would not be able to get into if they didn’t live in the catchment area). I used to cycle to work; now I work from home and cycle, walk or take the light rail to most appointments. Hubby had a heart attack not long after we were engaged (not related to me, or at least, I hope not!), and being in a low-maintenance environment was great for him during recovery.
Where do you stand on the great property vs shares debate?
I grew up in a household of property investors, and I naturally gravitated to property. Despite the higher entry price, property is often easier for people to understand. You can touch it, you can own it, you can improve it. You can also leverage other people’s money effectively to grow wealth. Most of my wealth has grown through property.
To be honest, I love property. I get excited just at the thought of owning property and love looking at properties that are for sale.
Shares have a lower entry point, and it’s becoming easier and easier to invest due to competitive online broking products. And now there’s even micro-lending platforms as well.
I think it’s a mistake to think you either invest in property OR in shares. They are different investments and they function differently. Shares are more liquid, for example, and have a lower barrier to entry. Property is harder to get into but you can improve on it. Making additional repayments is also a way of ensuring you have funds available in case of an emergency.
Where do you stand on investing for capital growth vs income?
Earlier on in my investing journey. I was on an above average salary and was able to reap some benefits from negative gearing. Accordingly, most of my earlier property investments were aimed at capital growth. And some achieved that – one in particular achieved stand out capital growth.
At this stage of our investing journey, we are looking predominately at investments that bring in good income. That’s because I have now left full-time work and hubby is about to retire. All four of our investment properties are now positively geared and we would be hesitate to purchase property that was significantly negatively geared.
Do you have any financial regrets?
“Regrets, I’ve had a few. But then again, too few to mention.”
Heaps of regrets.
Selling shares during a time when we needed to pour them into properties. Not keeping a closer eye on my finances at one point (two properties were vacant for six months and my ex husband didn’t want me to ‘worry’ so hid it from me). Convincing my (now) husband to buy into some rare earths stocks that went no where, not investing in gold late last year/earlier this year. Selling one of my investment properties that my ex wanted to sell rather than buying it from him outright. Not taking the time to understand my super sooner (if I had, I would have contributed more – long story), and above all, not listening to my instincts.
But I had the courage to start the savings and investing journey, and bit by bit, I’ve made some huge strides and I’m really happy with how things are going.
Any final suggestions?
Thank you for the opportunity to comment. I find our ‘strategy’ changes around every year. Hubby and I about to pivot and change our strategy in the new year. Usually, we examine what we are doing and tweak it each year. The end of the year is always a great time to reflect and recalibrate.
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.