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I'm 24, live in Australia, married (no kids) and renting. My wife studies and works a well paying, flexible job.

I work in an unskilled government job that pulls in $50k-$60k per year.

Currently we have about $13k saved and is increasing steadily. I want to make the most of this situation as (God willing) kids will come and my wife will have to stop working at some point. (HER CHOICE)

Due to these foreseeable changes our financial situation will be far less advantageous than they currently are.

I know nothing of investment and never invested before.

Any advice would be great!

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Your question is very broad. Whole books can and have been written on this topic.

The right place to start is for you and your wife to sit down together and figure out your goals. Where do you want to be in 5 years, 25 years, 50 years? To quote Yogi Berra "If you don't know where you are going, you'll end up someplace else."

Let's go backwards.

50 Years
I'm guessing the answer is "retired, living comfortably and not having to worry about money". You say you work an unskilled government job. Does that job have a pension program? How about other retirement savings options? Will the pension be enough or do you need to start putting money into the other retirement savings options?

Career wise, do you want to be working as in unskilled government jobs until you retire, or do you want to retire from something else? If so, how do you get there? Your goals here will affect both your 25 year plan and your 5 year plan.

Finally, as you plan for death, which will happen eventually. What do you want to leave for your children? Likely the pension will not be transferred to your children, so if you want to leave them something, you need to start planning ahead.

25 Years
At this stage in your life, you are likely talking, college for the children and possibly your wife back at work (could happen much earlier than this, e.g., when the kids are all in school). What do you want for your children in college? Do you want them to have the opportunity to go without having to take on debt? What savings options are there for your children's college?

Also, likely with all your children out of the house at college, what do you and your wife want to do? Travel? Give to charity? Own your own home?

5 Years
You mention having children and your wife staying at home with them. Can your family live on just your income? Can you do that and still achieve your 50 and 25 year goals? If not, further education or training on your part may be needed. Are you in debt? Would you like to be out of debt in the next 5-10 years?

I know I've raised more questions than answers. This is due mostly to the nature of the question you've asked. It is very personal, and I don't know you. What I find most useful is to look at where I want to be in the near, mid and long term and then start to build a plan for how I get there. If you have older friends or family who are where you want to be when you reach their age, talk to them. Ask them how they got there. Also, there are tons of resources out there to help you. I won't suggest any specific books, but look around at the local library or look online. Read reviews of personal finance books. Read many and see how they can give you the advice you need to reach your specific goals.

Good luck!

  • Thanks for the help. I know its such a general question but at this stage of my life there are so many variables. In terms if debt I have to say that we are entirely debt free except for about possibly $20k (absolute max) for my wife's studies. But an aspect of Aus gov education incentives is never having to pay back debt until a certain wage earnings threshold is reached. Currently she is under. I imagine we will pay it off though and that is our only debt. – Jad Sep 25 '15 at 12:19
  • My job offers pretty good Super. In fact its actually pretty amazing because if there is a financial crash again (2008) I won't lose savings because the government pledges to back the savings with min $200 million. Being an organisation with about 35k employees, I'd assume that $200mil would cover any losses. I guess my overall problem here is that my father worked as a 'trucky' and my mother as in a bookstore. Both had little to no idea about finances and struggled their whole lives. I only know how to float a bank balance, nothing else. It's a personal discussion but hey, we're all persons! – Jad Sep 25 '15 at 12:25
  • @JadLetcher, I said I wasn't going to recommend a book, but I'm going to break that :) Get a copy of "Total Money Makeover" by Dave Ramsey. It will teach you a lot and is a very approachable book. I don't follow everything he says to a T, but it has helped me get understand a lot of things. – mikeazo Sep 25 '15 at 12:55
  • If I had 15 rep I'd up the answer.. – Jad Sep 25 '15 at 13:54
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The advice I have is short and sweet. Be an investor, not a speculator. Adopt the philosophy of Warren Buffet which is the 'buy and hold' philosophy. Avoid individual stocks and buy mutual funds or ETFs. Pick something that pays dividends and reinvest those dividends. Don't become a speculator, meaning avoid the 'buy low, sell high' philosophy.

EDIT:For some reason I cannot add a comment, so I am putting my response here.

@jad The 'buy low, sell high' approach makes money for the stock broker, not necessarily you. As we learn in the movie Trading Places, each buy or sell creates a commission for the broker. It is those commission expenses that eat away at your nestegg. Just don't sell. If a security is trading at $10 a share and pays $0.25 a share each quarter then you are getting 10% ROI if you buy that security (and if it continues to pay $0.25 a share each quarter). If the price goes up then the ROI for new buyers will go down, but your ROI will still be the same. You will continue to get 10% for as long as you hold that security. A mutual fund buys the individual stocks for you. The value of the fund is only calculated at the end of the day. An ETF is like a mutual fund but the value of the ETF is calculated moment by moment.

  • Is the buy low, sell high approach unfeasible for an inexperienced person like me or is it just a bad approach in general? I'll have to look into ETF's and mutual funds as I don't know what they are yet. Thanks mate! – Jad Sep 25 '15 at 13:14
  • Actively trying to buy low and sell high is difficult. It's a lot easier and more reliable to simply avoid buying high and selling low, when possible, and let dividends and "market rate of return" work for you, depositing on a regular schedule and rebalancing once a year or so to maintain your intended diversification mix, using index funds rather than individual stocks or bonds. It isn't exciting, but I don't want my money to be exciting; that sword cuts both ways. – keshlam Sep 25 '15 at 14:37
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I am a huge fan of jim Cramer and while you may not get CNBC in Australia you can prolly catch jim cramers podcasts If you have an iPod or iPhone which really will help your financial literacy a bit.

Here's my advice .

  1. Pay off all your debt or high interest debt
  2. Think about investing in your career. Are there steps you can take where you may be in a better earning position in the future? If you were laid off or fired tomorrow how much would your earnings be changed ? Investing in your career doesn't just need to be a degree or money, it can be investing time ie learning new stuff making side projects and a portfolio. But investing in your career can help your long term wealth.
  3. Invest your capital to make your money work for you.

Set up a IRA or tax advantaged accounts if they exist in Australia (sorry I only know usa markets really well).

Then you can pick investments to go in there or in a different investment account. I am a huge fan of index funds in particular Etf index funds because they are still very liquid. I prefer the free or no commission funds by Charles scwabb but vanguard is also very good or maybe even better. A few great funds are the vanguard total stock market fund (it invests in every company in the world) and any fund that mirrors the s&p 500 or the Russell 2000 midcap.

Another good idea just to make room to save money is make a budget with your wife. I like the other post about planning in reverse . Setting up a budget to see your expenses and then make automatic pay dedications that go into savings or different accounts for savings.

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