A few months ago, I decided to get back into investing. We had sold our apartment years ago and the proceeds had just been sitting in an online savings account. The fact that interest rates were getting lower and lower in Australia prompted me to look for alternative places for our savings and I had been reading up and listening on podcasts about exchange traded funds (ETF).
ETFs are investment funds that are traded on a share market, such as the ASX. In this post, the words “ETF” and “share” can be used interchangeably. When I refer to buying an ETF, I’m referring to buying a share of an ETF on the ASX.
While I had invested in a managed fund in the past, I had never bought shares directly before. This post sets out the steps I followed to set up my ETF portfolio. (more…)
Numbers don’t come to me as naturally as words do and this partly explains why I jumped on the personal finance bandwagon a bit later into my twenties. Luckily, many of the basic and sound personal finance concepts can be powerfully communicated using various online calculators.
For the last four to five years, I have been proudly credit card free. Similarly, my partner has been credit card free for at least three years now. I had terrible experiences with credit cards as a young adult, starting from being approved for multiple credit cards at age 18, not really understanding how exorbitant the interest rates were and proceeding to live from pay-check to pay-check with a large credit card debt. When I began to become more financially aware, I paid off all of my credit cards at the first opportunity and avoided them like the plague. I understood that there were benefits in having a credit card, if you used them as a financial tool, and with restraint. For example: (more…)
Although I don’t believe in ‘keeping up with the Jones”, now and then I do like to compare how I am tracking financially to the average Australian, whether it is salary wise, savings or spending. It helps to give me perspective and motivation and is an interesting benchmarking exercise. So here are some average balances I have compiled, to help Gen Y Australians see how they’re tracking. I’ve compiled the balances from several sources, since they all differ due to the underlying assumptions, inclusions or exclusions in the data. The numbers I have included cover averages Australia wide, in addition to breakdowns by age. (more…)
As the regular readers of my blog will know, I’m about to turn 27 soon which means that I have been mentally preparing to turn 30 for the last 6 months. Part of this mental preparation involves ensuring that I get my financial house in order. My early twenties were about getting rid of consumer debt, developing basic financial habits such as budgeting and salary sacrificing into my superannuation to make the most of compound interest. My partner and I also bought an apartment last year and since then I have been trying to build up 3 months worth of savings again. I haven’t quite yet gotten on the investing bandwagon outside of superannuation, but I can’t get trauma insurance out of my mind. I know, it’s a weird thing for someone in their twenties to say. I also would like to start this blog by stating that I do not work for an insurer and this is not a sponsored post, I’m just a twenty-something who happens to be passionate about trauma insurance (this is concerning even to me). (more…)
I seem to have a lot of readers from the United States, so I thought it would be useful to provide a brief and generalised overview of Superannuation arrangements in Australia before I launch into my musings.
Superannuation in Australia
In Australia, it is compulsory in most circumstances for employers to pay a proportion of an employee’s salary into their superannuation fund, which is effectively their retirement savings. The minimum proportion is 9.25% as at July 2013 however this is set to increase incrementally and very gradually, to 12% by 2021). Employees are encouraged to make additional payments into their superannuation funds, which can be done either before or after tax, each approach having their own pros and cons. The employee’s date of birth dictates when they are able to access their funds. As I was born after 1964, I won’t be able to access my retirement savings until I’m 60, 35 years from now.
Why should a 20-something bother thinking about their retirement?
This was my mentality up to the age of 23. I wanted to live in the ‘now’ and being 60 was simply unfathomable. Anyway, what if I get hit by a bus next year? Then I would have been squirreling away extra money for nothing. My employer already makes contributions to my retirement, so that will be fine. (more…)