She's On The Money - What happens to your money when you die?

Episode Date: August 25, 2020

At SOTM we spend lots of time talking about how we can attain financial freedom, but what exactly happens to our money when we’re not here anymore? Today we unpack it all, including why having a will is the way (ha!) and what exactly the consequences of not having one can be. Do you love the podcast sick and want more SOTM? We get it. 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 DEFINITELY 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 to want financial freedom. My name is Georgia King. I'm a copywriter and journalism student with lots left to learn when it comes to money. Luckily, as always, I'm joined by millennial money. We use financial advisor, Victoria Devine. Hello, Georgia King. Now, today on the show, we are going to be talking through exactly what happens to our money when we die. Now, it may sound a little morose, but the fact is that the world keeps on spinning long after we've left it.

So, where do our hard-earned coppers end up when we're no longer here to control what happens to them? Today, we'll be revealing all. But before we get there, Victoria, let's talk money wins and confessions for the week. What have you been up to? Well, I'll tell you my money win in two seconds, but I'd just like to know, do you actually call money coppers? Like, no, I don't. You just thought that was fun? I just wanted a more creative way of saying money, finance.

No, I really like it. You did well. Thank you. Would you like to know my money win or confession? Yes, please. Talk to me. I have a money win for you, which is really exciting because I feel like there was a streak there where I just had confessions, which was not so good.

This week, I have a money win related to coffee. I drink a lot of coffee. We could probably both agree, Georgia King, that I'm a bit of a coffee snob. I'm not sorry about that but I also feel like my bank account might be anyway my money win is that recently minor figures who I don't know if you guys know are my favorite oat milk this is absolutely not sponsored by the way I'm just obsessed with them minor figures have recently made their way to Coles which is very exciting not only is their oat milk available now to purchasing Coles which sounds really like they literally haven't even sent me free product for

me to say this but i'm really excited about it because it is much cheaper than my local grocer that i have been purchasing minor figures at but the exciting part is they also stock the minor figures latte which is oat milk mixed with coffee cold brew coffee and it is delicious really yes so now in my fridge i have the one liter packet for like five dollars of oat milk latte that i pour over ice in the mornings instead of walking to the cafe so george king have you got a money win or a confession for us? It's a money win and I'm really scraping the bottom of the barrel once again. I feel like more recently you have been really scraping the bottom of the barrel. Well there's like there's not a lot going on in G's life. I've been spending a lot of time

watching free-to-air television and that's my money win today guys is free-to-air television. Are you joking? I'm not joking. You weren't joking about the bottom of the barrel were you Georgia King? No I want to use the platform that we have to give a little shout out to the programs like MasterChef it's over now but that got me through a very stressful time do you know what I feel like you've got a lot of people through it MasterChef was amazing can we stop talking about your unemployed life as well like I do actually employ you but okay it turns out her other part-time job um no sorry I also wanted to give a shout out to Bondi Rescue because that show has been going since like the 90s that's not true but my god it holds up guys anyway it's all

there so forget Foxtel forget Netflix forget Stan you've got it all right there on your TV what a money win Georgia King yeah thanks so much okay so that was pretty terrible but you know who's not terrible Victoria our Facebook group you knew where it was going Victoria which post stood out to you this week if any so I have one as we all know I do love an alternative milk and so does exactly and so does Jamie Jamie has posted money win McDonald's sell milk lab almond milk for three dollars per one liter bottle and if you guys know that actually sells for six dollars and 98 cents at office works and at any other kind of like supermarket so that is significant obviously mcdonald's is making the most of wholesale pricing from them but this is

amazing and you can get it through drive-thru so jamie is now making almond milk iced lattes at home now and saving probably lots of money given i know they're not that cheap through drive-thru Exactly. Well, are we assuming that that is a part of the kind of COVID Macca's set up where they're selling like bread and milk and stuff? Yeah, I think so. I think that's what it would be from. I don't think they would have always done that. I didn't know they were selling bread and milk as well, but that's quite awesome. Yeah. The only thing I buy at Macca's drive-thru is a large fries, honestly. Hot chippies. Yeah, we're good at that, aren't we, Georgia King? What have you got from our Facebook group? Yes. So mine is from Courtney, who has a money win

with a couple of baguettes framing that text so she's written in that on a similar theme to the homemade kombucha post which I actually mentioned a few episodes ago she's made her own bread which I know most of Australia has done it at this point but she's shared the photo and it looks incredible she's written that when you consider a loaf of quality sourdough bread will set you back around ten dollars which is very true she's considering this a win she hasn't actually said what she's spending but I'm assuming you know all you need is yeast some flour water and a good attitude and you're away I don't know I don't know how to make bread but all right should we move along yes absolutely let's move along all right so to the main topic of today's show what happens

to our money when we die so in preparation for today's episode I asked around my friendship group so none of them actually have wills or know what happens to their money when they die but given that death is the one certainty in life surely this is something we need to be organizing and taking the time to actually think about. Recent stats also show us that slightly over 50% of Australian adults don't have a will, despite the fact that 100% of us will die. So, Victoria Devine, sorry to get a little bit morbid there, but to start us off, can you please give me some sense

as to why so many Australians don't yet have wills? Like, is it as simplistic as them not really caring about their money when they go because they're gone and it doesn't matter? Or is there more to it than that? Also, full disclosure, I don't have a will, so let's not be too judgmental. Oh my God, don't you? Okay, we'll get off this podcast. No. I think that's really interesting. I'm glad that you looked up the statistic that 100% of us will die. Yeah, it was good research.

I actually think this is so important to talk about estate planning, which is what organising the will is, is something that not enough of us put a priority on when we really should. Now, I can completely understand that if you are really young and don't have any assets, it doesn't make a lot of sense to have already gone and organised a will, but I think it's really good to get in the habit of organising a will when you're young so that you just update it as things go. I do think it also goes a bit back to psychology as well Georgia because no one is prepared to think about the fact that they are going to die and I'm quite blunt with this I do talk about death in my job often every single client that I have I have talked

about estate planning I've talked about wills I've talked about okay well what happens when you die let's just be really blunt here it's not rude to talk about it I think that we actually need to open the conversation up around this because it's such a taboo topic again much like money it is something that we need to talk about because we actually need to prioritize it because it is incredibly important and it actually creates a massive headache further down the track if you don't have one in place and then you have assets that need to be dispersed and children potential partners that you've separated from and a new partner like it can get incredibly messy but a good will and estate plan make that really clear and more practically Georgia not many of us actually

even know how to establish a will or talk about estate planning who do you go to where do you go what do you do what do you say we don't know and then on top of that I don't know anybody who loves paperwork and the fact that they have to then consider their own mortality I think the fact that a will is hard is because it's often dismissed. It's popped in the too hard basket instead of taking some initiative, taking some responsibility and putting it in place. So lots of my girlfriends, when I was talking to them, also mentioned that they think they don't have enough money to even worry about a will. Is that something else stopping people from going ahead and doing it? So a will is so much more than just how much money you have. It's about

the assets that you have. It's about who gets those assets. It's about, you know, what you want to happen after you pass away it can literally be anything from hey victoria i would really like in my will for it to say that all of my money goes to the lost dogs home and i've got a client like that and the lost dogs home is going to benefit significantly when this person passes away but it makes sure that you know we've put in place all of these values and you know we've been working towards living by our values we've outlined them for while we're alive why would our values change for the money that we have once we pass away so for me it's obviously about going okay well this person gets this but it's also about what do you want to happen and I think that

that is a really important conversation to have because so many people don't know the power of a will it's not hey give all my money to Georgia it's hey can you please give my money to Georgia and my other assets to my sister and make sure that Georgia is set up for life in this this way so like in a will you are actually able to stipulate the structure in which it's held as well so I might say Georgia can have my money but she can only have a hundred dollars of it every single year because that's how I want her to have it rather than she gets everything and can run a run a mark so I think it's really important to talk about it it's also just remembering that it's not just what's in our bank account it's also about superannuation it's also about you

know the assets that we have might be about our pets it might be about our children like while we are young you're right it might not be super important to you but the second you have any responsibility it's really important to make this a priority all righty so that gives us some context as to why so many people don't have wills and we will talk about what exactly they are and how we can be creating them soon but we will talk about wills we will okay we will before we get there where does our money go immediately after we die Georgia that depends on whether or not you have a will as you probably gathered from what I've already spoken about technically speaking a will is a legal instrument that directs how and to whom your estate should be divided

technically speaking and in the event that you pass away if you do pass away and you do have a will in place your wishes are articulated within that legal document and the money and assets that you actually have right now will be allocated accordingly from there and often you'll have a legal representative that helps facilitate that all of your bits cumulatively that's a big word I don't know why I wrote that down but they are called your estate so this includes real estate shares money that you have in a bank artwork investments your engagement ring jewelry vehicles even your Facebook account and your email accounts become a part of your estate if you do not have a will in place Georgia this is where it gets a little bit interesting because most of us assume

that that money just goes to our families however that's not actually the case if you die without a will though, Georgia, you're classified as having died intestate. This means assets and possessions are distributed by the government in a specific order. Generally, that order, and I've written it down, follows like this. Spouses or de facto partners, then children, then grandchildren or great-grandchildren, then parents, then siblings, then nephews and nieces, then grandparents, then uncles and aunts, then first cousins, and then after that, anyone else that the court may appoint. so that kind of seems like the hierarchy of it all so once one of the people in that list that i have just read out is living and able to inherit the assets the entire estate will go to them

assets can be divided among a wide range of extended family members up to first cousins and georgia if there isn't actually any living family members to inherit your estate then the state i.e the government may actually inherit your assets so i think it's really important to work out what this actually means and obviously that list that I read out was quite arduous but if none of those exist for you your assets might end up going to the state and I think that that's really important to point out because that's kind of the default right yeah and I feel like no one would really want that outcome it just seems a bit like anticlimactic I guess yeah and I just feel like if that is the case for you and that's what you want sure you can donate to

charities and things that are really close to your heart or things that you want to have an impact with. So I think that there's just so many things you could do with it if you don't have a family member or a person that you want to pass it on to. Yeah. So it sounds like wills are definitely the way to go. Victoria, do you have any experience in actually creating a will? How do we, how do we do that? So I'm a financial advisor, not a solicitor. So I don't actually create wills for my clients at this point. As a financial advisor though, I do ask my clients if they have a will or an estate plan and I do help them facilitate that to a point where I help them get to a solicitor and often I actually will work in collaboration with the solicitor to make sure that

the client is completely across their financial affairs and that we can properly articulate their wishes their wishes because sometimes clients like oh I don't really know what this solicitor actually means by this and you know what are my options and often I've had a really good conversation with my clients about wills and estate planning before it gets to there and then And I do actually help a lot of my clients in the estate planning space with distributing income to children and grandchildren, et cetera. So no, I don't write wills, but do I have a little bit of experience? Yes.

But would I take me as gospel? Absolutely no. One thing that is really important here though, Georgia, is that you do actually need to be over 18 to have a will. You need to be an adult. So to our younger listeners, don't stress, but do listen and have a think about it so that you know what to do when you are of that age. you can create a will in a whole heap of different ways according to your wealth bracket and the

complexity of the assets that you actually have in your name so you don't always need a lawyer to help write one I do recommend it though if you have dependent so if you've got kids honestly the best thing you can do is see a lawyer and have a chat about this and if you do have a bigger estate it definitely makes sense to start talking to people about this because it doesn't matter how young you are the worst things can happen and I know that that sounds quite dramatic but I think that we really need to make sure that everything's in line and we are very comfortable with what's going to happen. So first things first, you can totally write a will yourself. You can do it for free. It's super easy to follow an online template. All you need to do is write down your intentions

with your finances on a piece of paper and sign it in the presence of two witnesses. I wouldn't recommend this though. It's the bare minimum, like the absolute bare minimum. This is like the thing that you should do. But for the average Joe, George, I feel like that's a catchphrase you might use often and you have a really straightforward estate it's easy to buy a DIY wheel kit and I know so many people solicitors are going to be listening to this and they're going to jump down my throat and go Victoria wheel kits are the devil I'm going to go look I hear you but it is better than nothing so this template which you can pick up at Australia Post actually essentially provides you with a template to follow and instructions on how to explain your wishes properly you still need to

sign it on the front with two witnesses. You can buy them online or again through AusPost but then you submit it and that gets documented. I genuinely think this is a bare minimum. I think it's like $35 from memory. Don't quote me on that but I think it's about $35 to do this. So to me it's really important but at the end of the day I'm talking about people who are in a situation where they are single, had no other partners and they have no complexity to their financial situation they have no dependents if you have dependents honestly talk to a solicitor get this in place properly because it is incredibly important and finally that leads me into actually talking to a solicitor if you are dealing with more complex assets hire a lawyer to help you

out this could be a specialist estate planner a solicitor family lawyer these experts have a very good idea of what's going on and know the process from a to z and they can actually act as one of the two required witnesses which is a bonus but I think it's really important to just say yep cool whilst I'm advocating for wheel kits and saying that that's a simple way honestly it's the bare minimum okay can wheels be overridden I feel like you hear about that sometimes like say your great auntie left all of her money to the dog's home bless but some people might feel they have a claim to that money is that something you've seen in your line of work are wheels always set in stone no not necessarily so according to the australian government guidelines a will is

valid so long as it is prepared by someone who is over the age of 18 is of sound mind and witnessed by two people who will not inherit from that estate and a majority of the time the allocations outlined in that will will be upheld however there are some occasions where people can contest what is written in a will and people will go to court and fight for what they believe is owed to them or is theirs. So honestly, it can get really messy and it does get really messy. And I have seen it for some of my clients get really hectic. So from clients who have had, you know, parents wills contested all the way through to clients who had a parent who had a large amount of assets that needed to be divided, but they didn't have a will in place. They actually needed to go through

the supreme court even though there was absolutely no reason to override anything it was just the supreme court making sure that those assets were being inherited by the right people and there was no argument it was you know going to this one daughter who it made a lot of sense but because there was no will in place it took more than 12 months through the court system which is crazy and obviously a lot of paperwork for that person going through that situation which is arguably an incredibly stressful situation to begin with because they've just lost a loved one it's a emotional time as it is right? 100% so yes wills can be argued with but more often than not if you've got a really solid will that's quite hard to do. Okay what happens to our debts though

Victoria like do we die with them does someone else have to pay for them? Interesting question because remember on our hex and help episode we talked about how help debt was the only debt that actually died with you so backtracking a little bit so first things first the first thing that happens once the death has been registered and the bank is notified etc is that all outstanding debts will actually be paid with whatever money or assets that you currently have. So any debts are paid off with the money in the will and then the money that is left over in the will will go to the people that is meant to be inherited by. I think this is really important because it means that there could sometimes be absolutely nothing left in the will because it's used to pay off debt

and sometimes there could be debt left over. What happens to our superannuation? So Georgia, superannuation is not actually a part of your estate. It's a separate little entity and it's treated as one. So when you pass away, your super will go to your binding death nomination in your superannuation fund and that could be different to the people who inherit your money in your will. So when someone's super is paid after their death, it's called a death benefit which consists of the deceased person's super account balance and if they had death cover any insurance benefits that were associated with this this essentially means that even if the person who has passed away didn't have much in their super their insurance payment could actually be quite

substantial as in many thousands or even sometimes hundreds of thousands of dollars so I think it's really important to think about this and also know that these two things are treated very separately 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 make a quick recording on your phone and send it through to podcast at she's on the money.com.au and you might even find yourself on the show but for now here's today's listener question hello hello bit of a heavy one but i'm hoping you can help me out i have just inherited a big amount of money from the passing of my uncle and now I have 30k out of nowhere feels like real

bonus money as I didn't really expect to be in his will at all so I am wondering what you would suggest is the best thing to do with that money I am 29 and I have 15k in savings with the long-term goal of buying a house if that helps with some contacts thanks for your help and all you guys do for the community. Alrighty, Victoria, kick us off. Where on earth does she begin with all of this inheritance? As much as this is going to feel really foreign to a lot of people, it's actually not that uncommon to receive an inheritance. And as much as it sounds really good and really nice, there's actually a lot of components to this that we need to talk about. No one ever receives an inheritance under positive circumstances. There is always a compromise. And

unfortunately that compromise is the loss of life of somebody else and I know that I know that whenever I talk to someone who has received an inheritance they would give all of the money back to have that person back in their lives so I would love to talk about inheritance in more of a sentimental and legacy way as well as a constructive way because it's obviously a great opportunity but it doesn't come without some level of sacrifice and to me that really needs to be recognized at the beginning because this is important and I think that too many times people say oh wow they're so lucky they got a massive inheritance but they don't see the loss behind that inheritance and I've got a number of clients who have received inheritances but I guarantee you

they would give it all back in a heartbeat to have their mum or their dad or their grandparents back so for me that's really important to just kind of like outline at the start because I think that it's really important. But also, Georgia, in the next 20 years, we are going to experience the largest intergenerational wealth transfer in history, which sounds massive because it is, because there is an estimated $3.5 trillion of wealth that will be transferred in Australia, not internationally, in Australia from the baby boomer generation to the generations below it. that is massive. And I feel like that's also worthy of recognition. And according to the HSBC's Global Future of Retirement Report, Australians will pass on an average inheritance of $561,636

Australian dollars, which is to me, massive. And it's something that obviously, you know, on the receiving end of that, that's an opportunity to create wealth. But then it's also something that I don't think a lot of us will ever comprehend because, you know, that doesn't mean that every single individual will receive that amount. It's usually divided up among a number of different people and uncles and aunts and cousins and sisters and brothers and all of that. But that's the amount that is actually going to be transferred within the next 20 years. And I think that we really need to start talking more openly about how to have these conversations. Something that we really don't talk about and I think there's probably a perception out there that inheritance

is just like bonus money like you don't really need to be thinking about what you're doing with it but I know you're going to say that that's absolutely incorrect right yeah put that put that opinion in the bin it's not bonus money I mean it's something that it's an absolute bonus it's an absolute blessing to have but again it doesn't come without some level of loss and we really need to recognize that but the first thing you need to do whether you're inheriting $30,000 like our listener question or you're inheriting $300,000 is think clearly go slowly if you've had someone in your life pass away you're not thinking clearly enough to make big decisions and the best thing in most cases is you don't actually have to make a big decision to

begin with. I think it's really important to sit it to the side, get some advice from the right people, understand what you can actually achieve, understand what your options are and run like hell Georgia from anybody who says that you need to make a decision really quickly. There is always going to be another opportunity. If a financial advisor, a friend, a family member says, oh you've got an inheritance you need to invest it in this as soon as possible no no you absolutely do not for me good investment means that we invest for the long term not for the short term and we make a lot of decisions but with a lot of education so we don't have to take it quickly so if you've received a lump sum of money and you just want it to sit in a savings account with absolutely

no interest rate that's fine I would obviously recommend a high interest savings account for the short term, but there is absolutely nothing wrong with letting your inheritance sit to the side for a little while while you make a good decision about it. For me, it's also really important to have a think about what you want to do with your inheritance received. I haven't got stats in front of me, but I know for sure that too often people blow their inheritances and they essentially just don't make use of them in the way that they should. So I think it's important to remember where it came from. Someone worked really hard to achieve this wealth and to be able to share that with you and essentially change your life. And it is honoring a massive legacy

to essentially put that to work as hard as possible. So keep in mind that you have another level of responsibility. Don't just blow it on something that is not going to essentially provide wealth into the future. I mean, your money, your decision, these are all just my personal opinions, but I think it's really important to not go out and just buy a new car or go out and you know spend it on a massive holiday like I want you to create wealth and I want you to put it towards something that helps you in the future as opposed to just going all right well I got a new car and that's a depreciating asset so based on the listener question today V should she be putting that money towards a house deposit absolutely she could I think what's important to note here

and this is probably more personal opinion but it is really constructive to understand is that if you put an inheritance towards a home deposit yes it's absolutely going to help you get into a home faster but essentially that is going to lock you into a mortgage for the next 30 years so I often see people getting lump sums $100,000 maybe $200,000 and they put that towards their home deposit or that becomes their entire home deposit but then they have a mortgage repayment that they can't really afford or they're put in a position where they're like, oh, like now I have to, you know, put all of this money into a mortgage that essentially they didn't have or that they didn't want to be paying for yet. So I'm not saying it's a bad idea, but had they invested

that $100,000 or $200,000 or $30,000 in the case of our listener this week, I think that that puts them in a position where they're creating wealth, but they aren't necessarily having to contribute to that wealth. It's not impacting their future life. It's not impacting their ability to save and achieve goals that they already had. If a home deposit is your goal and it's just essentially turbocharging that, then okay, no problems. But I recommend in every situation of inheritance that you go and get some solid advice from a financial advisor. Honestly, it'll be worth its weight in gold because often we don't have the nows and we just don't have the financial literacy to know what the best option for us is when it comes to lump sums of cash as you said

before v as well people who do receive large amounts of money uh in a lump sum can receive a lot of advice from a lot of different people who aren't necessarily the people who should be distributing that advice so yeah i would stick to the professionals 100 and i think that everybody's got an opinion when it comes to money and I think that it's really nice that Uncle Jim wants to give you some advice on what to do with your newfound inheritance but take his advice absolutely be grateful for it listen don't don't cut someone off and be like oh I'm just going to get advice from professionals take on the opinions but know that they're not the only ones that count know that you need to put yourself first and you need to consider whether each option is actually

going to suit your personal situation or not. For sure. Are inheritances something that you deal with a lot in your line of work? Yes, it's actually something I deal with quite often. I have clients come to me often for the first time because they have inherited an amount of money that they need some advice on. And for me, I feel really special that I get to be a part of that process of honouring the legacy of someone who has passed away, but also setting you up for future success so that none of it gets wasted I think around inheritance there's actually a really large amount of guilt and I know that if you haven't gotten an inheritance you might be thinking like oh why be guilty like it's a nice thing but it's actually a really big burden for a lot of people

and I think that you need to also speak to someone who understands that and wants to talk that through with you because one of the best ways to get rid of the guilt that's associated with your inheritance is to understand that that's the thing that the person who's passed on wanted that's what they wanted to do they wanted to set you up and the best way that you can show respect to them and not feel guilty about that is honoring that legacy and live it out and make sure that you're putting it to work and making it work as hard as they worked for it so for me it's a really special space to work in I feel like it's something that I really enjoy doing because I feel like it's really impactful to the people that I end up working with. And it's so diverse as well. Like

inheritance isn't always money. It could be an asset like a house and you then have to make the decision around whether you move into it, whether you rent it out, whether you sell it. It could be shares. It could be other assets like bonds. It could be a collection of cars. It could be anything. So I think that understanding what inheritance actually means and getting some good advice on is really important. Hi, I'm a 29 year old six figure saver and this is my money diary. Now for the fun stuff. What good would a money podcast be without the pervy bits? It's time for money diaries. So I guess my attitude to money is healthy and strategically thinking. What does our six figure saver do? How much does she earn and how much is in her bank account right now?

I am a librarian how much I make it's 65,000 per annum but I work part-time so I actually only get paid about 50 grand a year um which equates to about I think 1400 into my bank account in a fortnight and then how much do I have in my bank account I have ten thousand dollars in like an emergency fund. I've got a managed fund, like a Vanguard managed shares fund, which is pre-COVID was a hundred grand, but post-COVID it's probably sitting at about $80,000, I imagine. And there's a few thousand dollars floating around with transaction accounts and other things. So when did our 29-year-old six-figure saver start becoming interested in money? So the reason I first got into money was a book on my dad's bookshelf.

It was Noel Whitaker's Making Money Made Easy, I believe the title was. And I just sat down and started reading it one day. And I learned about the magic of compounding interest in that book, which was really cool. And from there, I've just continued reading and listening to things and developing my knowledge, as well as talking to my dad, who is quite well informed when it comes to finances. And what happens to her income when she gets paid? I get $1,400 a fortnight into my bank account. Before that goes in, I put some money into super, so a salary sacrifice. I think that's about $280 a fortnight. I live off about 50% of my income.

So 20% goes to a shares portfolio, which I've just set up, which is separate from my managed fund. 20% goes to a house savings deposit. And the other 10% is for like fun splurges, like buying a mountain bike or anything like that, going traveling. What are her thoughts on investing? I have quite a risk positive profile as an investor. being younger I'm obviously in it for the long term when I was about it would have been my late teens to early 20s I set up a Vanguard managed fund account and I did that because my parents invited me to come along to their financial advisors meeting with them and the financial

advisor let me ask him a few questions at the end and it was one of the products he recommended so I did a bit of research after that and got into it. Does she have any debts? No I've actually never had any debts in my life. I made a deal with my parents that if I paid all my uni fees up front I could stay at home with like rent free and I did that. What is her big money goal? My big money goal is to do with just having the freedom to live life well. Money for me is all about enabling opportunities a good example of this for me was um so I've always been a really good saver so when I was 16 I there was a little pamphlet I saw in the school news bulletin about a summer exchange to Belgium and Germany and um I was able to go do that I paid for it myself my parents

didn't give me any money for it cost me about 10 grand I was just able to do it because I can and I had the money um so yeah it's really about providing opportunities for me obviously one day I'd like to own my own house but I want to move around a little bit more before I settle down and um my dad also retired early he retired when he was 50 so I'd like to be able to do something like that as well and what's her best money habit I'm definitely a really good saver and I'm really good at self-awareness and that comes with reflection of how I'm going with my finances so I regularly reflect and plan and work out if I need to change direction or change what I'm doing in order to reach my goals whatever they may be. And what is her worst money habit? So my bad money

habit is kind of also my good money habit. So growing up, I was a bit of a tight ass, but I've certainly worked on that in the last eight to 10 years. And I really feel that I've got the right balance of being a saver, but also enjoying life and spending money and having a good time and not worrying about if someone owes me 10 bucks or not. What would our six figure saver grade her money habits? Look, I'd have to give myself an A+. The only area in which I could probably really improve is my income. So I'm on quite a low wage at the moment, particularly compared with my experience and my skills. So that's one thing I could work on improving. And I also need to do my will. Victoria Devine, is that not the most perfect

money diarist we've ever had in our time here at She's On The Money. I think that's a true A+. I'm not sure how we would describe that in any other way except for the fact that I'm sure that there are a fair few listeners that after listening to that money diary were slightly annoyed at her for being I guess too perfect which not a problem but I can't relate to that if I'm being brutally honest. Well that's the thing we don't want people to listen to this and feel like oh my god I'll never get there but I think in what she said there were so many tips and tricks that we can all pick up on to apply to our own lives so that we can hopefully strive to be where she is currently which is in a very good spot at a very young age right

absolutely and I think she's achieved a lot and congratulations to her and I think it's definitely worthy of recognition but I also wanted to point out that this is not the average this is not what usually happens but I thought it was something that we really should be having on the podcast because it's totally doable like she just started early she's in it for the long term she was talking about the type of investments she was making and saying that you know she wants to ride it out potentially retire at 50 like her dad did for me that is so awesome because honestly it proves that anything is achievable on any salary if you put your mind to it like she said she gets paid what was it $1,400 a fortnight and for her to be living off half of that and then allocating

the other half towards savings and investments and achieving her goals that honestly it's awesome to see and she's absolutely on the right path. 100% and it is it is so encouraging to see someone that's not earning you know six figures and still has that amount in her savings or in her Vanguard account. Can you talk to me a little bit about what that means? Because when she mentioned that, I was like, I don't know what you're talking about. So Georgia, Vanguard is a company and it's not a particular investment. It's actually a company and they have a number of different investment options. They have index funds, they have ETFs, they have bond index funds, they have lots of different options. What I really liked when she was talking about her

investments though is that she was saying look there was about 100 grand in there and then over COVID it's about 80 now and she didn't seem too phased about that and I thought that that was really important to note because that's just how their share market is performing at the moment we're going through a crisis it makes sense that her shares would decrease in value but what that means is that they've decreased in value if she was to sell it does not mean that she has any less shares than she has before. And as she said, she's still contributing to her shares. She's still putting 20% of her income each and every single fortnight into her shares. And I think that that's important because that's how she is creating wealth. That's how she is compounding

interest. For me, that makes a whole heap of sense and is something that a smart investor does. And just a little refresher for maybe new listeners or people like me who have just forgotten. Compounding interest. What is that? So for me, Georgia, compound interest is where the interest is paid at regular intervals that build on top of earlier interest paid. So it essentially means that the money that your money makes then starts making you money and those things increase. And we've all heard this example from me before, because I feel like a broken record when I say it, but I want to drill it into all of your heads because it makes sense. And to me, this is one of the simplest ways to understand it, is if you started investing at the age of 21

and from the sounds of it, our money diarist this week was actually investing way before that, you would have, by the time you reach retirement age, saved about $240,000, which sounds really exciting. That's a very big number to begin with. But had you invested it in the share market with an average return of about 7.5% including compound interest that means that the interest earned each year gets added to your sum that is invested each year you would actually have an investment portfolio worth about 1.2 million dollars and I know you've heard this before but to me that is incredibly important to understand because that is the power of compounding interest whereas if you saved every single year, instead of investing and getting a compounding return, you would

actually only have $240,000. So there is a massive difference between just saving or investing for the long term. Does that make sense? Yeah, no, it does. And I think that this story is pretty much the perfect example of just being sensible with your investing. And that's why she does have that massive amount in her investments is because of the compound, right? Absolutely. And I'm sure she's contributed a lot like she's 29 and if she's been investing for the last 10-ish years like if she started at 19 then it makes sense that her savings or her investment would be at that level and she said that she was investing about 20% of her income each and every single fortnight that means that every fortnight she's putting that $280 into her share portfolio she's already

got a hundred grand if her annual interest rate is sitting at about seven and a half percent which as we know, is the Australian average, and she's investing until retirement, so 30 years away. Georgia, that means that in the future, she will have a total investment portfolio worth $1.75 million. That's pretty attractive, I think. And I think that to me, that's where the power of compounding interest is. Because if we look at it in even more depth, over this period of time, she's obviously put in well she's obviously already got a hundred thousand dollars her regular deposits from here on in will be about two hundred and eighteen thousand dollars which means her investment is going to make her 1.4 million dollars that is 1.4 million dollars that

her money is making her she's not earning that she's not saving that it's just because she's exposed to the market for the next 30 years she is essentially making free money like I shouldn't be referring to it as free money because it is earned and you are investing for the long term etc etc but that is 1.4 million dollars that she didn't have to go to work and earn and i think that that is incredible but it's also why i'm so passionate about investing early and investing for the long term i think we can probably wrap it there v because we have been talking about this wonderful human for quite some time now but i think probably the last little note to leave it on would be that she should definitely get around to doing her will. It is our What Happens to Your

Money When You Die episode. So I think that ties in quite perfectly. But apart from that, I think she's good to go. 100%. And I think it's also important to again, reiterate, this is not the norm. She's incredible. I want to celebrate her. She absolutely deserves to be on the podcast, but I would hate for anyone who is also 29 to be listening to this and going, oh my gosh, she's achieved so much more well yes but we're all in different situations we're all on different journeys there's no way that I who is also a 29 year old has achieved the same thing or had the same type of restraint I cannot say and you know what I wish I could say that I'd been investing since I turned 16 and had my first job but that's just not the truth and it is just not what I have

done and I think that you know everyone's a little bit different but how awesome is it that we are able to learn from her great points there victoria as always but it is time to wrap up the show just before we head off we'd like to acknowledge and pay respect 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 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 let's quickly wrap the boring but important stuff 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 a financial decision and relax we promise victoria divine is an authorized representative of australia pacific funds management propriety limited abn 34132463257 afsl 339151 and as always a big thank you to ryan john for putting together today's podcast we would love it if you joined our facebook group where our community shares money tips and tricks every single day free of judgment search she's on the money on facebook and join us if facebook's not your thing or you also want to find us on the gram we're at she's on the money aus also if you do love the show please rate review and subscribe because because that really helps us out in the charts doesn't it

me it does the more you rate review and subscribe the more we trend and that is what we want to do guys and sometimes it's just nice to read the nice little reviews isn't it it is so nice to read nice reviews all righty guys we'll leave it there uh we'll see you next wednesday see you next week guys