She's On The Money - This girl is on FIRE...

Episode Date: October 6, 2020

The FIRE movement - Financial Independence Retire Early - is making waves in Aus, but is this path to retiring in our thirties actually as sweet as it sounds? PLUS, we’re back to the regular format this week with a brilliant money diarist and a listener question from someone seeking help on where the heck to start with investing.Love the podcast sick and want more SOTM? We had a feeling that was the case. Join our Facebook page to share your money wins and money confessions, follow us on Insta for daily inspo to keep you on track and absolutely subscribe to our newsletter, the written recap of the pod’s key takeaways, including some bonus bits you won’t want to miss.Finally, if you’re in a money mess and need help untangling the muddle - we’ve got you sorted – simply record your question and send it through to us at [e-mail] and you may just end up on the podcast!Your hosts are Georgia King and Victoria Devine.The advice shared on She’s on The Money is general in nature and does not consider your individual circumstances. She’s on The Money exists purely for educational purposes and should not be relied upon to make an investment or financial decision. Victoria Devine is an Authorised Representative of Australia Pacific Funds Management Proprietary Limited ABN 34 132 463 257 - AFSL 339151.See omnystudio.com/listener for privacy information.

She's on the money. She's on the money. Hello and welcome to She's on the Money, the podcast for millennials who want financial freedom. My name is Georgia King. I'm a copywriter and journalism student, and each week I sit down to chat all things money with my favorite financial advisor, Victoria Devine. Hello, V.

And friend, Georgia King. Come on now. And best friend. Now, on the show today, we are going to be chatting through the pros and cons of FIRE, also known as Financial Independence Retire Early. Now, this is the frugal money movement many millennials swear by, but is this method of money management actually as simple as it sounds? Today, we unpack it all. Plus, later on in the show, we'll be tackling a money question about investing for the very first time, and we'll be hearing from a money diarist who had a hard start to 2020, but has finally found her feet. So a bit of a stellar show lined up today, guys,

if we do say so ourselves. But Victoria, before we get into it, money wins and confessions from the week that was. What have you got for me? I am so here for this. This is my favorite segment until I have a money confession and then I feel guilty and I wish this segment wasn't in the podcast. But in true, she's on the money style. I have a confession for you today. Give it to me. So this week I purchased some new runners, which I probably didn't need, but it made me feel really good about myself. And the fact that I have recently started running again, I felt validated the fact that I needed new runners.

Now, this wasn't the case at all. I have a perfectly good pair of runners, but these ones are super white, super shiny. And I just felt like I could justify them this week. So that's my confession. I bought a pair of shoes I probably didn't need, but for my mental health, they were absolutely money well spent so I'm not that sad about it nor am I sorry so oh for sure absolutely and I feel like you can treat yourself for you know getting back on the pavement and pounding I know um I think that's good running who am I again I used to be a runner Georgia but now I am

definitely not a runner and that has been made abundantly clear given my lack of fitness so maybe I'll give some updates on that in another pod but yeah share your journey with us yeah look let's move on. What's your money win or confession? Because it turns out I cannot run and I want to stop talking about that. So mine is a money win. Yay, George. Woohoo, Georgia has a money win. What a legend. So it's hay fever season, guys. Spring has sprung in saying that it's 13 degrees and raining in Melbourne today, but Georgia, this isn't a money win. No, no, no. It's getting there. It's getting there. So hay fever season, I'm sneezing. My eyes are itchy. My mouth, the roof of my mouth gets really itchy, which is fun as well. That's so

I've never had that oh it's feral thank you for sharing with the family and trusting us with that information yeah sorry sorry guys um so the moral of the story here is that I usually drop heaps of money on clarentine clarentine clarentine yeah yeah and you know spring goes for three months so by the time spring is done I've dropped hundreds of dollars on clarentine but when I went to grab the clarentine this week I asked the pharmacist for the generic version oh I didn't even know there was a generic version yeah yeah it's called loratine or loratid loratidine obviously this isn't medical advice please ask your pharmacist but I'm definitely going to look into that let's move on V and look at something maybe slightly more interesting exciting our

Facebook group it's been busy it's always busy did any posts stand out to you this way oh my gosh yes Emily sang to my heart Emily I want to be your friend um mainly because you make delicious looking food um but also you are a budgeting queen so emily posted this week and she said to all the preserve making souls which i didn't know was a thing but it turns out it is she said don't forget that it's coming into strawberry and tomato season she recently picked up nine punnets of strawberries for a dollar 40 each which came to a grand total of 15 i can see georgia doing a chef kiss and i think that that's really appropriate and for all her strawberry jam ingredients total of $15 amazing and she's been saving jars across the year to make preserves and she's going to get

seven or eight jars out of it and then use it for Christmas presents which I think is incredible like if someone gave me a homemade jam for Christmas I think I would love that more than a store-bought gift like that is so thoughtful and also a very nice reminder that guys it's 12 weeks to Christmas so let's get our skates on and start planning in saying that I'm going to put some Christmas budgeting tips in the Facebook group this week and probably a little downloadable Christmas budgeting tool if I can get it done in between everything else I'm doing this week. But moving on, Emily, I think you are fantastic and I think we should all give jam making a crack. Georgia King, did you have something from the group that was as good as Emily's jam? Mine's from Ali who

has written in unique money win question mark. Hey ladies, I always have a million weddings, often the same friend group and I've been able to save so much money because I sew my own outfits I always wear something new that fits perfectly that no one else is wearing and I love this one from Friday which she's got in the picture cost her $25 to make and that she said that that's one of the more expensive ones she highly recommends learning to sew because it is a great investment now this post got about 500 likes in like two minutes which is more than you get well that's I've posted a couple of times in the group, guys, and I'm ranking. I feel like my average is about 200.

So let's all give Georgia some more love. I mean, post in our group more. Bring the value to the group like Ellie has. Come on now. No pressure. All right. All right. I'll hop to it.

But also Ellie's dress looks incredible. Like it is so well styled and I don't know how to explain this, but like there's a lot of different panels on there that come together really nicely. Like if you told me that that dress was from Scamlin Theodore, I would not, I wouldn't blink an eye honestly because it's very similar to like one that i've seen that is navy that has like a similar bust i love it yeah it's gorgeous maybe ellie should start selling her creations you're a good sewer but i'm not a good sewer so i feel like if i tried to sew a dress it would just be like a smock setup oh that's pretty good that's in smocks are in you reckon maybe i'll give it a

go you know what we're not here to talk about smocks we're here to talk about fire so let's get straight into the main chat of the show georgia king so let us chat financial independence retire early. Now, the FIRE movement is centered on the premise that if you save and invest as much as you can when you're young, then you'll be able to retire in your 30s or 40s by living off the passive income of your investments. Now, the movement started in America in the 90s and now has an almost cult-like following in Australia with many FIRE chasers, as they call themselves, detailing their experiences on blogs and in Reddit forums. The FIRE movement does sound like the dream to me as you know who wouldn't want to retire early get to the golf course start

hitting those balls um you know head out on a couple of cruises yeah that's exactly aligned to your value 100 um but it's obviously it's not without controversy so can you please chat to me a little more about how it actually works and why it seems so many millennials are turning to the fire strategy of course i can georgia and i think it's really important to preface this episode as well before we jump straight in and just say look fire is such a popular strategy at the moment it is all over the internet it is in the debt free community in instagram it's all over reddit i've had a number of questions in our facebook group and i really wanted to talk about it because i think it's really important that each and every single one of us is educated about what's going

on out there financially however it doesn't mean it's attainable for every single one of us like georgia we were talking about this theory or this concept before we started the podcast and both of us kind of looked at each other over zoom socially distanced don't worry guys kind of looked at each other and said like this wouldn't be possible for either of us like my lifestyle does not mean I could achieve this and Georgia you were saying something similar and I just think it's really important to point this out like we are not talking about this because we passionately believe that everybody should be doing fire we want to talk about this because it is awesome to talk about it is awesome to know about this I want you to all be financially

educated and able to talk about these concepts and maybe if this does work for you jump right in and take it all and run with it and do more research and really understand it but I'm not here saying oh my gosh we did an episode on fire you guys need to be doing this it's not the case at all so to get off my little disclaimer high horse fire has received so much press over the years and is starting to take off in Australia because it does sound like the dream come true right like it's a bit of a short-term pain for a really long-term game and who wouldn't want to live comfortably without working as soon as possible I know I would that's actually a lie Georgia I don't think I'll ever stop working, but that's beside the point. So the logic for most people

who follow the FIRE strategy is that you spend less than you earn and invest that surplus into low risk shares. Once you've reached the point where your investment income is equal to or more than what you can comfortably live on, then you can ditch your day job and you can live off that passive income for the foreseeable future. The general idea here is actually that you'll have nailed financial independence and be able to retire early when your net worth is 25 times your yearly income and living expenses. I know everyone's asking, well, why 25? Well, the whole movement is underscored by the 4% theory, which is a rule that assumes that the money you've saved is invested smartly and safely, and it'll increase in value by about 7% each year.

Then you add standard inflation rates of about 3% to that, and you're left with a rate of return of around 4% a year. So the crux of the idea is that you'll have enough saved and invested to live off just four percent each year and then subsequently your initial investment will last forever so it sounds like a dream right yeah to help visualize this even though this is a podcast i've pulled together an example so like bear with me i'll explain it but you know what we'll also do we'll post this example in the facebook page with a pretty graphic so that it makes a lot more sense so say you've established that you need about twenty thousand dollars a year to live on now i know that that is not what everybody will live on i know my living costs are a bit more than that and

everybody else's is as well, but this is an example and I've simplified it as much as possible so that we can understand it. Then $20,000 must be around 4% of the total value of your savings before you can retire. So using this example, you need at least $500,000 invested in order to live off your passive investment income of $20,000 a year. This is because 4% of $500,000 is $20,000 and you could double that as well. So say if you wanted to live off $40,000, you'd need a million saved and invested before you could retire to have a passive income of $40,000. So like it's scalable and it makes a lot of sense in this way. These figures change according to how much of your annual income you can actually live off each year. So say you're earning maybe $80,000 a year

instead of living off 25% of it, you live off 50%. Your annual living expenses would be $40,000 instead of $20,000. And back to my example before using the 4% rule, you now need to have to save and invest at least a million dollars before you could retire and live off your investment earnings. That's like a brain explosion. Yeah, I'm sorry. I'm trying really hard to make it really simple.

But at the end of the day, money can be a really foreign concept for most of us. And I think that's really important to mention here as well. Like in our brains, our brains work logically, which is why it is so hard for us to understand compound interest because we go one plus one equals two, right?

But when compound interest comes into play, one plus one doesn't necessarily equal two. If you've got an interest rate being applied to a one plus one could equal 2.25. And that just doesn't make sense to our brains. It is not because we are not smart. It is not because we don't understand it. It's because literally our brains are not wired to understand compound interest easily, which is why we have to work, Georgia, extra hard to understand it and wrap our hands around it. And why when people start talking about investment, so many of us feel like these things just go straight over our head because genuinely they are hard to grasp. It's not a simple concept. I really think that millennials

are drawn to fire though, back onto this topic, Georgia. It's because it fits with our reputation of being leisure loving people who have a zest for life and travel and consumerism and all of that other stuff. We know millennials are an incredibly hardworking generation and we're also really entrepreneurial. And a lot of us are seeking an alternative route to the traditional path to success of working a nine to five Monday to Friday job in a big company and staying loyal there until retirement. Like we know that it has changed. Historically, people would get one job and stay there and retire there and they'd have their 30 year tenures. Whereas the average tenure of millennials now is like 18 months. It is so much different. But nowadays, many of us are drawn

to creating side hustles or small businesses. And we're really rejecting the premise that there is only one way an old-fashioned way to becoming financially free we are taking our future into our own hands and i think that the fire strategy really appeals to that entrepreneurial spirit that many of us innately have or many of us are now being surrounded by with social media so i think it is really cool to see and such an interesting concept to kind of study and understand and go hey what does this actually mean like what are these people doing and how does this work which leads me perfectly to my next question v like it obviously has a lot going for it and it does sound really appealing but I think it would be helpful for our listeners

if we could kind of rattle off the pros and the cons of FIRE so that they know if this is the right option for them. 100% and I think that this is really important to do as well because we also need to touch on and I know I'm going a little bit left field because this is more into like understanding investments but why we invest and so many people in our community keep saying to me like, oh, Victoria, I really want to start investing. And I say, great, fantastic. I'm so glad you are here. Why do you want to invest? And they go, because it's good. And everyone's been telling me it's good. It's like, okay, but like, what do you want to get out of it? And even last week I had this meeting with such a beautiful new client of mine, and I'm so excited that she's

joining my little family, but I was speaking to her and she's like, you know, I really want to invest. And she has a fair bit to invest and, you know, save. And I was like, okay, let's get to the crux of it. Why do you want to invest? And she was like, oh, so, you know, maybe when I retire, I can sell down my investment portfolio and I can use that money to live my life. I'm like, no, no, no, no, that's not what we want. Investment creates passive income and I think that we need to understand what passive income is so that we can understand why we are investing. Passive income is something that I talk about all the time and it is a very smart way of

making your money work for you. If you do the work now, then that compounding interest is going to look after you in the long run forever. it's not just until you retire and you sell your investment portfolio it's not why we're putting money into superannuation so we can sell it down and then have you know 500 grand sitting in our account it's so that 500 000 makes dividends and returns that we get in cash each and every single year and compounding interest works by every single year maybe if you've got a dollar invested and let's just say cleanly you're making a 10 return you would then the year after you'd then

have a dollar and 10 cents to invest. So the money that your money is making, so that 10 cents is then invested the year after, and you might get 10% on that. So it makes money while you're not working for it. And over time, that makes a very, very significant difference. And I know that this is, you know, a little bit off track, but it's so important for you to understand that when you get to retirement, your investment is still making money for you. And that is the money you live off. So the money you've been saving and investing all these years, you don't actually sell down. You don't spend that. That in theory is meant to last forever. Like that'll go to your children or that'll go to, you know, a cause that you really believe in. And that's why wills and

estate planning and, you know, planning your future is so important because we are going to create assets for ourselves that pay us forever. And that goes back to that example I gave you guys before, which essentially says that if you save and invest and you want to get $500,000 in your savings account and it returns at 7% and then you have inflation, et cetera, you will get a passive income each and every single year on average from your investment portfolio of $20,000. And then if you've got a million dollars invested, you'll get $40,000 a year, so on and so forth. So say if you are in a situation where currently, Georgia, maybe you earn $80,000 a year and you go, hey, if I still had $80,000 a year coming in each and every single year, I could

retire. Like I'd be happy. I could pay off my house or I could pay rent or I could, you know, go on holidays. Maybe that's a really comfortable income for you and you want to achieve it. Fantastic. If you can create a $2 million portfolio, you will have an $80,000 amount of money coming in each and every single year for the entire time that you have $2 million invested. Does that make sense? Yeah, I think so. I think that's a pretty good description of how it all works. Yes, but

let's get back on track. I'm sorry that I'm just jumping around. No, no, no. I think that's very, very valuable. But we were talking about the pros. So that was the passive income point, I guess. But what else can our listeners be getting excited about with this method? Obviously all that, because I've just spent the entire episode just talking about why we invest. but also investing in low risk generally pays off and there's not a lot of risk here if you invest really well so if you're trying to achieve an early retirement by taking a punt it is definitely not advisable but if you really know what you are doing with those investments then the risk is really reduced so from my reading it seems like a lot of fire chasers are choosing to

invest in ETFs or LICs which we know are very reliable choices when it comes to the stock market I won't get into those you can absolutely google them or go back and listen to our investing podcast from season one just to get a bit of a recap but in general the fire method has really been designed as I pointed out before to let you live your life the way you want to live it and it provides an alternative option to the nine-to-five grind and honestly that's probably the biggest benefit that you get to have more say in what your life looks like and that is probably why so many people are drawn to it but in saying that with all positives there are often a number of negatives and I think it's really important to point out those as well look one of the biggest issues for

me, Georgia, is that FIRE is impossible for a lot of people who already have been in harder financial situations or don't earn big six figure salaries that might have multiple debts, et cetera, so forth. So it's almost like to make FIRE happen, you kind of need to be in a privileged position from the outset to make that occur. And, you know, if we really break it down to make FIRE work, you have to really, really aggressively save. Like we're talking 50 to 75% of your income.

And for most of us, Georgia, that's literally not plausible. like it sounds good in theory when you're like oh my gosh this strategy could work like it's all about being frugal I can be frugal but like can you save 75% of your income to create this like it might not be something that is actually able to be achieved and I would hate to think that people look at it and then get really disheartened because it doesn't fit them a lot of people who actually follow fire have had success forget to mention their position of privilege and insist that it's the way to get rich and live your best life when in reality for a lot of us it's just not that easy like for lots of families and individuals putting that surplus money aside

is impossible because there isn't actually a surplus in their income life at the end of the day georgia is expensive and i think that this outlook can be a little bit limited and exclusive yeah yeah i feel that obviously a massive part of getting this right is living very frugally and restricting yourself to maybe not treating yourself to lavish dinners or going out or holidays here and there which honestly georgia for a lot of us is a really important part of our 20s right like that's something that I really value and I'm not willing to give up and of course it's very privileged to say things like this but I think a lot of millennial Australians have grown up and grown used to the idea that you can go on an overseas trip every few years and you can go

out for dinners and drinks pretty regularly each month and I think that for so many of us weighing up whether you're willing to sacrifice these luxuries in life and the things that you really love doing in your 20s and 30s so that you can live comfortably without salaries in your 40s might not be something that you're doing and being honest like I don't think this is something that I would be comfortable doing and Georgia I've said before to you that I think that old age is a privilege denied to many people and I really want to live my life you know responsibly I do want to save I do want to invest I do want to really provide for future me but future me is just as important as current me and I need to look after both of those versions so I think it's important

to talk about that not saying that people in their 40s are old by any stretch of the imagination but I just think that you know you see so many things happen in life like we should be enjoying it and making the most of it always while still setting ourselves up for success and to me if that means that I'm working for 20 more years I'm I'm pretty okay with that it's worth it it's worth it I feel like this year has also really crystallized how important the color in our worlds is like we can't go on holidays we can't go out for dinner yes it sounds privileged but a lot of that stuff really makes life worth living. And this method means that you do have to forgo all of that. And, you know, have beans on toast for dinner most nights a week. You can't

go out with your friends and spend money. Like you really do have to make a pretty big sacrifice to make this work. 100%. I think it's really inspirational. There are people who are doing it and I absolutely love it. And I would love to talk to more people who are doing it. And I've met lots of them. Like I have clients who are doing this, so I'm not actually that distanced from this concept but for me I also think it's one of those things that if you're passionate about it and you really commit to this this isn't like oh I'm saving for my house and you know you kind of do it for 12 months or two years or however long that happens for you're actually doing it for life and I think that that's a massive you know strain on relationships and strain on your personal

relationships like I know it would make it really hard if I had a girlfriend who was doing that because the way I socialize is often you know going out and going for walks and grabbing coffees and doing things that maybe she might not want to do and I just think that it's worthy of taking that into consideration too but it could also be easier if you and all your friends want to achieve that maybe you're all on the same page and you're just like yep sick this is awesome this is our plan we're all going to retire early and we're going to do it together like awesome but I think that there is a lot of social pressure that might come along with this theory or this way of living and then moving on a bit more I think that it's also another negative sorry guys fire doesn't

really consider that life occurrences pop up like ill health or death or divorce or you know your car breaking down on the side of the road and you needing two grand to fix it and I think that these things can swoop in unexpectedly and muck up our plan so it's not always as straightforward as it would have been in an ideal world and while it's great on paper there are always unforeseen things that pop up. And if you've been unemployed for like 13 years, retired, and then you need to get back into one of your income streams because it's been unexpectedly compromised, then I think you might find it harder to get back into the workforce and get back on track. So I think that something that goes along with this would be making sure that you're really well insured and you're really

well looked after. But it's also really important to note that income protection isn't paid out in most cases if you don't have a job because it's protecting your income not your investments so for me i think it's just about working out what is actually going to work in the real world and you know if this is something you really want to do see a financial advisor because it will pay off for you like get set up start investing really aggressively like you need someone on your team and then one more negative before i i finish sorry georgia i know that i said that low risk investing can be very safe but there are still no guarantees on return here so the four percent theory as i mentioned before and it means this whole thing is based on past performance of local

and global stock markets covid19 has absolutely sent our share market plummeting and i know that this has happened heaps of times but we also have to be in financial positions where we can ride out the bad years as well as the good because you know if we talk about it since 1900 i think it is the average return of the share market or the Australian share market specifically has been 13.21%. And that sounds quite high, especially when they're working off 4% because obviously they'll be in a situation where more often than not, they'll be in positive. But what if really bad things happen? What if a global pandemic hits and their share portfolio isn't performing in the way that it is? Could they survive for those couple of years where their share portfolio

isn't returning as much as they had anticipated? So yes, it's lower than average. Yes, I think it's really conservative number but what happens when you don't have that income for a couple of years yeah really good point there be on a slightly different note i think it's probably worth mentioning the impact that fire could potentially have on your mental health like i joked before about retiring early and like how good that would be for golf and you know cruises and stuff um all of the retiring stereotypes because you just got you go on so many golf cruises is that a thing a golf cruise I'm actually pretty good at golf guys um anyway I digress golf chats um but the mental the mental health aspect of this is that you you retire at 40 and then it's like great I've got

you know maybe 40 to 60 years of doing sweet nothing like that sounds maybe good in theory but you still have to live frugally and it's like what are you gonna do for that whole time I know like you have very much an A type personality. Do I? I do to an extent. Oh, I think so. But can you imagine if you were to no longer work or have anything to fill your days? Like what would your purpose be? What would your drive be? I mean, I know exactly what mine is and mine is so closely tied to work. Like my mental health, honestly, during COVID has been hit for six because I thrive on working. I thrive on human interaction and being able to go to work and create things and feeling like I'm not able to do that

and feeling a little bit health plus sucks. And I know that, you know, the whole purpose of this isn't to go through a global pandemic, but not having something that helps me with my drive and gives me a channel and a creative outlet, I'd really struggle with personally. But in saying that,

I would love to be in a position where by the age of 40, I'm financially free so that I can actually choose what to do. So I think it's important to go, okay, like, are we striving for financial freedom or are we striving for retirement? because for me, financial freedom is the thing that I would ideally love to achieve sooner rather than later. And for me, that means knowing that I have a passive income if I need it, but I also

will probably work. But for a lot of people, it's like, okay, well, maybe retiring isn't what you want. Maybe you just want the freedom to work part-time and take six months off and travel Australia and do whatever you want to do. But I think it's really worth thinking about what happens after like what happens once you achieve this what is your lifestyle what are you doing how does that work for you I think it's important to talk about the mental health impacts of that like 100% will your friendships change will your social interactions change like so many of us have really great relationships with the people that we work with like does that change are we meant to change that I'm not sure yeah I think your world kind of becomes smaller and I think

this theory also kind of assumes that everyone hates their job and hates working and hates the nine to five grind when that's simply not true for a lot of people I love working I would not enjoy retiring at 40 even if I could go hit golf every day you know I just I just don't think it is necessarily as fabulous an idea as a lot of the fire chasers make it out to be yeah and I think that that's where you know it's actually a really nice topic for us to talk about because this isn't in line with my values but that's okay and that's like that's perfectly fine for something to not be in line with my values but I can say that it's in line with other people's values and I'm really grateful that I really understand what that means and I've had the opportunity to think about whether

it's an option for me and I think that that's a really beautiful position to be in where you can say wow that works for me but it might not work for someone else yeah and it's just like me choosing not to eat meat like I know why I choose not to eat meat does it mean it works for everybody else no does it mean that I judge people who do eat meat no like I don't mind what you do with your time and energy and choices it's not my place to have a opinion on that but does it mean that I should consider whether I should do what you're doing yeah I'd love to know what you're up to and why you're doing it so I can see if it fits with my values and my beliefs.

Like how awesome is that, that we live in a world where we have that opportunity? 100%, well said there, Vy. Before we do wrap this main part of the show and head to today's listener question, as a bit of an overarching response, Vy, do you think FIRE is something our Shoes on the Money listeners

should actually consider pursuing? Look, I think saving money is amazing and investing is amazing and investing smartly are definitely things that we all should be doing and celebrating and implementing in our own lives but I'd probably advise a more sustainable approach to money so that we can enjoy our lives right now instead of just later on but if you are following fire or you've listened to this and you're like wow fire is incredible because at

the end of the day it is like how great is this concept that we can create financial freedom for ourselves earlier like you might want to create financial freedom and then go work in a charity for the next 30 years so you can have an epic impact on the world like I am so here for all of that it just isn't something that i am going to personally adopt but if you're doing fire can you please post in the facebook group this week about how you're achieving that because i want to hear it i want to be here for it and i just i'm so interested because it is such a cool concept that you know i just can't work out how i'd adopt into my life yeah me either hi there you've reached the she's on the money mailbox do you have a money problem you want

help solving? Do you have a money dilemma you just want to chat about? Victoria is here to help. Each week, we'll be playing your questions to help make sense of a money mess you may have found yourself in. Make a quick recording on your phone and send it through to podcast at sheisonthemoney.com.au and you might even find yourself on the show. But for now, here's today's listener question. Hey, gals. I've bulk listened to She's On The Money over the past couple of weeks and I love the show. So, thank you. My question is that because of you guys, I'm actually thinking about investing in shares instead of property, which I always thought I'd do. But I was wondering

if you could maybe expand a bit more on where we should start as first-time investors. Victoria, obviously, I am not the person to be answering this question. Why not? Well, I mean, you could take my advice, but I'm not sure it would be that useful. Before we do get into it, I know that you've recently been talking about property and you're kind of known as the shares guru like that's your way of creating wealth can you talk to me a little bit about what you're doing at the moment I feel attacked here Georgia King but I am currently looking at purchasing my first property which you know I'd love to share more

information about when I have more information with it but obviously I am wildly passionate about shares and will continue to be so but purchasing a property is in line with my partner's values. And now is something that I'm like, yep, cool. I would absolutely love to do that, but it doesn't mean we aren't investing in shares as well. I do think, you know, looking at it from a more holistic point of view, like one or the other is often something that we are choosing at the very start of our journey because we can't afford to do it all. And we can't like our listener, she's like, yep, cool. I'm thinking about investing in shares instead of property because, you know, maybe she can't afford to do both at the end of the day. Home

deposits are incredibly expensive like it takes ages to save up for them but I think it's also really important to note that whilst property is really expensive to get in the door with it's also an ongoing financial commitment so you are committing to usually 30 years worth of home loan repayments and that's something that you can't just skip one month because you want to go on a holiday or skip one month because your car broke down and you need that money to you know go towards new tires or whatever it is. So I think it's really important to actually point out that yes, investing in shares is something I'm passionate about, but I'm passionate about it because it's in line with my values. And that is having flexibility around creating my future

wealth. I know that if one month I can't afford to invest in the share market, I just don't. And there's no bank coming for me because I didn't pay my mortgage repayment. And there's no ongoing commitment for me. So yes, property is something that I'm looking into, but it is definitely something that I don't want a majority of my wealth going into because I just feel like I don't want such a big commitment. But if you are a first timer, right, if you're someone who's getting into the market for the first time and you're not even sure where to start, one, listen to our podcasts in season one about investing, get a good understanding of why you want to invest. Like earlier in this episode, Georgia, I explained that I have a client and she's a brand new client

and we really had to deep dive into why she wants to invest and like what are we trying to create and understand that like are you investing so that you can retire are you investing because you want your money to work for you while you aren't buying property maybe your ultimate dream is to buy property but you want to do that in 10 or 15 years because it's not something aligned to your values right now maybe you're waiting for that but you want your money to be working hard while you're getting to that point in your life. All of these things are really good options and all of these things are really valid reasons for investing, but it's important that we understand why we are investing in the first place so that we can then pick assets that are in line with those goals.

Obviously, we're going to be taking low levels of risk because I would never recommend that someone just take a punt on a share, even though we hear really great stories. Georgia, a couple of months ago, we saw a really great post in our Facebook group of someone being like, oh my gosh, I bought Afterpay at like $4.50 and I've made this massive return. And that's great. But that doesn't mean that that is something that is sustainable nor a good idea because it's so volatile. Like that has gone down again. And you know, is that something that we can sustain? Like we can't time the market. So obviously we can't tell you what to invest in because we don't actually understand you, your financial goals, what you're actually looking to achieve. And

that's something that's so hard about this podcast, right? I would adore it if I could get on here and be like, all right, guys, so this is how you set up a share portfolio. This is exactly what shares you're going to buy. This is how it is. Like I would love that. But there's so many different components of investing. Like how long are you going to invest? How old are you? How much do you have to invest? What types of assets do you want in your portfolio? Are you an ethical investor? Are you not an ethical investor? What type of risk are you able to take on? How long for? What does risk look like to you what other assets do you have what does your future look like like how much do you earn all of these things come into consideration and I think that you know it's far

more complex but working out your own financial situation then picking an asset class that works for you is really important so if you're picking shares and you've realized that that is aligned to you first things first I would either look into different investing platforms get a love for our Facebook group, understand what is going on and, you know, what are other people doing, learning from their journeys and then potentially seeing a financial advisor. Because if you are choosing shares instead of property, I'm assuming we're not talking about, you know, I've got a thousand dollars to invest. I'm assuming that you have potentially enough cash flow to create an asset that would potentially be worth a property. And if you're talking to me about that, get

financial advice it will be worth its weight in gold love that um micro investing platforms get a lot of love in our group they do are they a good option for this listener or is that a different game completely so you're right georgia micro investing platforms are a bit of a different game because they aren't meant to hold your entire wealth like they are micro investing platforms for a reason and the whole point is to invest either your small change or you know additional amounts of money but at the same time I love micro investing platforms I use them myself obviously I can't recommend specific ones because I am a financial advisor but I just think that they are a fantastic place for first-time investors to start having a bit of a play around and seeing

what is the investment market like like what assets do these investing platforms invest in what does this mean and like you guys know that I use personally Raisin Spaceship and I don't use them for my actual share portfolio. I use Spaceship as like a small amount just so I can have a bit of a play with it because I am a bit of an investing nerd. And I also use Raise as my roundups on my purchases. And then as you guys know already, I usually take that amount of money when it has reached a certain sum and I invest it in my bigger portfolio. But I find them really great at getting your head around first time investing. Like what does a share portfolio look like? On Raise, you're able to choose your investment platform you're able to choose which portfolio is in line with

your values and you're able to actually go in and learn a bit more about it and I think that you know that's probably why they're so loved in our group because they're accessible because you can start investing with as little as five dollars but then also you're able to kind of follow the market and see how your portfolio goes up and down so when you do start investing larger amounts of money you're not feeling overwhelmed by the concepts because you're already quite familiar with them. Really well said there, V. So yeah, I guess have a go with the micro-investing platforms and it's exciting, I guess, that she's going to start looking at shares. I think it's exciting, but that's me and I'm obsessed. So let's move on, Georgia King.

Now let's take a sneak peek into the financial lives of perfect strangers. It's time for Money Diaries. Hi I'm the 24 year old comeback kid and this is my money diary. So six months ago sort of as this COVID situation was beginning to pop off I was in an abusive relationship and crashing at that person's house and so sort of as we were all dealing with this worldwide pandemic I also became unemployed and yeah in the space of sort of between the two the two lockdowns in Melbourne I moved into my first rental with two of my wonderful friends and I also got my driver's license I met a new wonderful partner and I got a job pretty much my dream job as well after what was almost yes seven months of unemployment I landed a job that's all I could have ever wanted

So now I'm feeling financially secure and I guess quite positive about the outlook of the rest of the year and how life is looking compared to what it was many months ago. Yeah, it's really great. So to get started, we asked what she does for work now and how much she is earning. So I work in human resources, but only got this job within the last month. Prior to that, I've been unemployed for the last seven months and I'm earning $55,000 a year plus super and I have about $24,000 in various savings accounts plus some money in shares. And what happens to that money once it hits her account? I transfer money to my house account for rent and bills and all the house bills they get direct

debited from the house account and then at the moment actually I transfer um each week my partner and I have been transferring like 20 to 30 dollars or whatever we've sort of got left over um to a separate like fun account that we're going to use to spend when we can eventually like go out for dinner and do nice normal things so put a little bit of money in there and then my tactic at the moment is kind of just whatever's left at the end of the month I transfer to savings. How does she feel about investing? Does she invest and if so how? I have some money in shares so I put money in a Comsec share portfolio about three years ago I think and before COVID times it was up to about 11 and a half grand but now it's gone down a significant amount as everyone's so that's

awesome but I think I probably put my money into those shares when I wasn't 100% informed about the ins and outs of the process and also I guess what the individual companies were within that share portfolio I kind of just was like yep this is a steady conservative growth kind of portfolio sounds good put my money in rather than sort of investigating the individual companies and how much they align to my particular roles and things like that so I think I do want to invest more when I'm a bit more settled financially but when I do be a lot more informed and I guess particular about which specific companies I want to be putting my money towards I guess. Does the comeback kid have any debts? I only have a hex debt from my psychology bachelor which was I think it's about

35 grand or so but no other debts and I don't plan on having any other debts until I get a mortgage or something what is her worst money habit my worst money habit would be that I definitely get caught up not this year let's say in normal normal social existences getting caught up in social sort of situations and I find it hard saying no to things I definitely get the the FOMO feelings and I don't like saying no to events or dinners out or things like that and I like everyone around me to be having a good time so I'm willing to spend the money to make sure that people are having a good time and also I would say I have pretty expensive tastes in food that would be my my guilty pleasure and I'm not quite willing to negotiate on.

And what is her best money habit? I would say I've always been a very thoughtful saver and spender I'm never spontaneous with my spending and um I do you know I apply the rule of wait wait a day or two days if you're thinking about buying particularly like clothes and items and things like that that I wouldn't have a um inherent need for perhaps I like to really ponder and think about things like that and yeah I just have always I hate the feeling of regret more than any other feeling in the world and that translates to money regret so I don't ever like spending money and then the next day going oh my god why did I do that so that translated to me just being really careful before I

before I spend anything big. What is the Comeback Kids big money goal? I guess after the year that it's been and has been such a financially stressful year my goal at the moment is just sort of to save so that I have some money to enjoy if that makes sense like I just want to sort of build up a savings account that I can then yeah spend on the things that bring me joy and eventually when we can you know do these nice things again and go out and do all the normal bits and pieces to be able to just spend that money and not feel stressed or guilty about it so it's not particularly saving for one you know one big purchase or anything like that but just sort of like saving to be able to enjoy it again because I would say this whole year I haven't enjoyed

spending money whatsoever it's just been a stress it hasn't been anything that's brought me sort of you know any freedom or joy or anything and finally what grade would the comeback kid give her money habits I would rate my money habits I think as a B plus because my saving sort of plans are just very ad hoc and just save as much as you can I definitely could be budgeting things more and being a bit more aware of what's coming in and where I can put it I don't think I would recognize the situation that I'm in now it's like I transformed my world from being dependent on other people and dependent on other things and just not free or safe in any sense of the word to complete I'm completely independent my life is run for me by me the way I want it to be

and I also just feel like I'm capable of of looking after myself and making this making the rest of my life the way that I want it to look I don't think if you had have told me in March of this year that I would be in the position that I am now I don't think I would have believed you I thought for a very long time that I was stuck in that situation that I was in and that one of the reasons that I found it quite hard to leave that relationship was because I didn't have an income and I didn't know where I was going to live so that was something that kept me there and if you had told me yeah if you had told me that it would have been possible and worked so wonderfully and so well and the way that it has I would have felt so secure in leaving

earlier because yeah god I've just made the life of myself that I never really would have imagined so it's amazing it's awesome. Victoria what a money diarist um where do we begin what did you think? Oh my gosh I loved her what a journey though I loved hearing all of that I I honestly am so in awe of people who change their situations and you know actually go through stuff like that to have been in an abusive relationship to now six months later being in a completely different situation like it's inspiring like and I think that it's inspiring for someone like me who's not in that position but then also hopefully if people are listening and they are in similar positions like hearing other people who have gone through situations like that and are now in bigger

better positions like she has her dream job she's got savings she said she was investing like you know she said I've got 35 grand of Hex debt like I never want to be in this position again like what a queen I can't I can't love her more like and you know how confident she was like her voice like you could just hear that she was a happy person like I want and that she'd come a long way yeah she'd come so far and I think that you know it's so easy to judge people because you look at her situation and you break it down you're like wow like she's got a lot of savings why didn't she just leave her relationship you don't know their relationship you don't know their situation you don't know what's going on and I think something that really grinds my gears is when

people say well why didn't you leave earlier like that's a really privileged position to be in regardless of finance regardless of anything just saying oh well why didn't you leave is ridiculous but the fact that she found a time that she could leave that she you know had a place to fall and she had some ducks in a row and she moved in with her sister and you know then was looking for a place like none of that is easy all of that is really hard and to have gone through that and be coming out on the other side and be this happy and I'm sure there are still things that she's sorting through but you know to come out in that position like I'm so proud of her that honestly would have required so so much work like mentally physically like everything like that is so hard

to go through 100 and even to share it on the podcast with our listeners I think is a beautiful thing to do so oh my gosh I cannot tell you how grateful I am for our money diarists and that's why they're anonymous right like I don't need to know what your name is or you know where you come from or where you live obviously she's not uh living in Melbourne though drinking given uh she's going out and we are not allowed to do that so give you a clue guys but um yeah I just I'm always in awe of the money diarists and their willingness to share information with us to learn from like we are so lucky these stories are so beautiful and like hearing them in their own voices yeah ah i love it yeah warm and fuzzies um from the financial perspective v so she does

have 24 000 in savings as a 24 year old she started investing at 21 so she's doing a lot of things right there as well guys 24 grand in savings at the age of 24 is incredible she should be so proud of herself that is something that so many people listening are not going to be able to resonate with and i definitely didn't have that so yeah and also no debts just a hex debt like she's she's killing it so yeah a big well done um on so many levels for this money diarist uh unfortunately v i think it's time to wrap the show though it is but just before we head off we'd like to acknowledge and pay respects to Australia's Aboriginal and Torres Strait Islander peoples the traditional custodians of the lands waterways and skies across Australia we thank you

for sharing and for caring for the land on which we are able to learn we pay our respects to elders past and present and share our friendship and kindness now it's time for the boring but important stuff the advice shared on she is on the money is general in nature and does not consider your individual circumstances she is on the money exists purely for educational purposes and should not be relied upon to make an investment or a financial decision and stress less we promise victoria divine is an authorized representative of australia pacific funds management priority limited abn 34132463257 afsl 339151 bit of a sing song there and as i love that i want you to start rocking it next week i think you can do an entire wrap of our watch this space oh what

a thrill as always a big old thank you to ryan john for putting together today's podcast we would absolutely love it as well if you joined our facebook group where our community shares money tips and tricks every single day free of judgment so she's on the money on facebook and join us if facebook's not your thing find us on instagram we're at she's on the money aus and don't forget guys a couple of weeks ago we launched our online master class which georgia king has been getting surprisingly glowing review it's true and i made it i am actually shocked that people are loving it as much as they are so head to our website and hit masterclass to check that one out yeah some other things here at the end guys if you want some fun on your friday we've got a newsletter

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We do because we find more friends, and that's more fun. More friends, more fun, more money diaries. But that is all we have time for today. We will see you next week, friends. Bye, guys.