Aussie HIFIRE

So I’ll get the obvious out of the way first; it’s been a minute since my last post.  And by a minute I mean almost two years, which yeah that’s a while between posts.  I could come up with a bunch of reasons why but the reality is that it’s mostly because I just haven’t felt like there was anything that I particularly felt like writing about. 

I’m sure that I could have written a bunch of posts about market movements or changes to legislation or some such, but for the most part that sort of stuff hasn’t been what I’ve been aiming for with this blog.

So what I have been doing in the meantime?  Pretty much just living the good life.

One of the biggest problems I have when writing about FIRE and personal finance in general is trying to look at things from a different perspective than my own.  I don’t think I’m alone in this because we all tend to look at the world through the lens of our own experiences.

Morgan Housel has a great line in his book The Psychology of Money (which I highly recommend!) about your personal experiences being 0.00000001% of what’s happened in the world, but maybe 80% of how you think the world works.  I think he’s probably deliberately exaggerating with the 80% number, but you get the idea.

Reading blogs/FB/Reddit and listening to podcasts from others in the FIRE community I’d have to say that I’m definitely not the only one struggling with this.

Most of us on the path to FIRE hopefully have at least some plans for what we want to do once we’ve reached whatever our magic number is.  I think that you want to be retiring to something you like rather than from something your hate (your job in most cases) because otherwise you’re probably going to find that retirement won’t actually make you happy.

Some people plan on spending more time with family and friends, or doing lots of volunteer work.  Bowls and golf also seem to feature pretty heavily, as does looking after grandchildren. 

On top of that day to day stuff a lot of people have a bucket list of things they would like to do, places they would like to go.  I’m a big college basketball fan so I’d love to go to the NCAA Final Four, and ideally tick off two boxes at once by seeing Duke play beat Carolina at the same time.  I’d also love to go to the Monaco Formula One Grand Prix and the US Masters Golf. 

On the travel front I’d love to go to Madagascar and see the wildlife there, head to Mont St Michel in France, Macchu Pichu in Peru as well as Petra and the Great Pyramids of Egypt.  It’d be great to do another huge road trip through the US like we did a while back but this time with the kids. 

I’ve been snorkelling in a bunch of places like Thailand and Cuba, but still haven’t actually been to the Great Barrier Reef and would love to go to Palau.  Then I’d love to be a passenger (and maybe a driver) doing a fast lap at a racetrack (ok that one I could probably do right now!).  Maybe see a rocket launch and go to the Kennedy Space Centre!  There’s a bunch of other stuff that I’d like to do on top of all that, but that’s enough for now.

The reality is however that even though we should have the money for all of this, it might not be so easy…

Something that constantly comes up in FIRE forums on Reddit/FB etc is people asking for advice on their current or proposed portfolio.  Sometimes this will be a fairly standard mix of 50% Aussie shares and 50% Intl shares or somewhere around that at least, and other times it’s 50% US stocks, 30% tech stocks, 20% cryptocurrencies. 

So why is it that there are so many of the second type of portfolios being asked about at the moment?  And what sort of asset allocation should you have?

Most of the time I write about cool things like safe withdrawal rates, or which Aussie equity index ETF is better, or diversification, emergency funds, savings rates and the like.  You know, fun and light hearted entertaining stuff!  This post isn’t going to be like that unfortunately, but it is important. 

I’m going to put in a disclaimer that none of what I say below is specific advice, it is not tailored to anyone’s personal circumstances, you should not be relying on anything written here, and you should seek advice from a professional about your estate planning.  I’ve talked to a couple of professionals in this area when researching this post, but I cannot guarantee that I’ve interpreted what they said correctly or even repeated it accurately, so please go and see a professional to get it sorted out properly. 

Also, I’ve simplified some of the discussion and left some parts out entirely so that I don’t get too bogged down in details and this post doesn’t end up being even longer than it already is. 

Basically the idea of this post is to get you thinking about estate planning and then seeing a professional to actually get it sorted out properly.  With that out of the road, let’s get cracking!

Whether or not you should buy a home is a question that gets asked a lot in the FIRE community.  Here in Australia, particularly if you are part of the 35% of the population that lives in Sydney or Melbourne, it’s a huge amount of money both as an absolute number and as a multiple of your income.  As a result of the cost whether you buy one or not can have a huge impact on how much money you can put into the investments that you’ll need to support yourself when you retire.

If you do decide that you want to buy a house though, then from a financial perspective now seems to be a great time to do so given the range of incentives from national and state governments. Given how much of a helping hand is available currently I thought it would be a good idea to talk a little about what actually is on offer and how much it can help.

Happy new financial year everyone!  Seeing as we are now halfway through the calendar year it’s time for a review of how we’ve gone with our spending so far, as well as an update on our portfolio and things in general.

The last 6 months seem to have lasted a lot longer due to working at home for much of the time because of the Coronavirus, and not going out a whole lot either for the same reason.  We’re very fortunate that I’m in a job where it’s relatively easy to work from home for most things and there hasn’t been much of a hit to my employment income.

Having said that it’s certainly had some challenges. In particular for my wife who had to deal with helping with the schooling of our eldest child while I was doing my work as well as trying to keep our youngest from running riot all without the help she would normally get from family members. We’ve gotten by though and we certainly have it a lot better than most which we’re very thankful for.

This post has been inspired by this recent podcast featuring three of the biggest names in the Aussie FIRE blogging community, and the follow on discussions in the Aussie Firebug Facebook group about how much it costs to raise kids in Australia. As all three acknowledge they don’t have kids so it’s not something they really have any experience with.

As someone who has two young kids I thought it would be useful to write about it from my perspective. Obviously my situation isn’t the same as everyone else’s, there are plenty of people who would be horrified with how much we’ve spent, and others who would wonder how we manage to spend so little. Everyone’s situation is different, so what works for my family wouldn’t necessarily work or others.

My oldest child has only just started school this year so I can’t really speak from experience beyond the 0-5yo age range, but I’ll talk through some of the typical costs, what we have and haven’t spent money on so far, and what we’re anticipating in the future.