Written by Scott
I want to expand a bit on goal #1 and make it a bit of a series to keep a history of my progress. Going to be a little hard without going into specific numbers but lets see how we go, I might change my mind later.
To give a bit of an understanding of my starting point for this journey I currently have the following conditions:
- Low four-figure income per fortnight, like, just into the four-figure range
- Salary sacrifice super contribution because I'm behind where I should be at my age
- Zero interest car loan (bank of mum and dad) should be paid off by 2021 at current rate, though I may move some money around
- Spaceship Voyager account chipping in a bit of income each fortnight (currently 36% up! Crazy!)
- Lastly, and kind of controversial to some, I've got just under 1,000 invested in cryptocurrency. No bitcoin, it's all in other coins like Etherium, Litecoin and Ripple (more like R.I.Pple at the moment)
The crypto has given me a bit of a taste for following movements in a speculative market (despite what some would have people believe, they are still a speculative investment) which is where I'm now at the stage of looking at the actual stock market for long term (talking 5-10 years) investment. Given these crypto investments have been in the market for a year I can cash them in at any time and move it to the stock market without incurring 100% Capital Gains Tax (CGT) on any profits as it reduces to 50% after 12 months. Though I have also toyed with the idea of writing a day trading bot as an experiment to see if a Raspberry Pi running a small python script can take a few hundred dollars and day trade it to a profit by tracking price movements and selling high and buying in the dips. Doing the tax return on that one could be fun...
Anyway Spaceship Voyager was my first "toe-in-the-water" exposure to the stock market. Spaceship is, essentially, a Listed Investment Company (LIC). An LIC is a company that other people invest in who take the invested money and make really smart investment decisions using a lot of complicated algorithms and market history. As it stands the 50 or so companies they've invested the dosh into have had all but 6 or 7 run in positive territory this year. With no fees under 5k is makes it a good foundation for putting some savings aside and getting some market growth to generate the interest for you without needing to research the companies yourself. Could be a decent set-and-forget arrangement too as their fees after 5k are currently only 0.10% or something (at the time of writing).
After this gets to 5k I'll probably aim to transfer that into an Exchange Traded Fund (ETF). An ETF is similar to an LIC in that it's an investment into a group of companies rather than a single company. The main difference I can see with the bit of research I've done is that ETF investment groupings are more focused than an LIC's. They might be broken into sectors (tech, medical, minerals, and so on) or into status groupings such as the top 200 companies on the Australian Stock Exchange (ASX) which is a relatively safe investment, or the companies most likely to return high growth which is a high risk investment as they may tank as fast as they grow. The running theory is that it's best to invest at minimum chunks of 5,000 at a time. So it makes it perfect for Spaceship to not have any fees (at the time of writing) up to that value. Take it out of there, put it in an ETF and start the Spaceship balance over again.
The last option is investing in individual companies. This is really a strategy for people who want to target specific companies, perhaps for their dividend payouts (a form of income) or long term holding a company that is more likely to continue growing its stock price and selling those stocks later for mad gains. The thing I've found here is that for dividend paying companies you may get consistent payouts or they'll fluctuate based on the performance of the company and their method of paying out. It seems ETF's that invest across multiple companies tend to have a more stable dividend payout amount. As the saying goes though, mileage may vary so do your research. I'm probably not going to be doing any individual investments for a while as I'm not looking for anything like dividend income at this time. I'd be after stock growth.
The car is easy, paying out a specific amount each fortnight back to mum and dad for helping me secure a slightly newer car than I was looking at to last me (ideally) a bit longer. I've just hit 100k on the odometer so it's probably still got plenty of legs in it considering it's mostly to get to and from work (like, 15 kilometers each way). Repayments fluctuate a bit based on my income as I'm trying to pay it down consistently but also quickly so that money can then get funneled elsewhere.
Salary sacrificing into super was a decision I debated with myself over a couple of months. I was, on the one hand, considering using the amount for other investment options (Spaceship or the ETFs) to have limited availability (a bit of work compared to parking it in a high interest savings account but not locked away like it would be in super). On the other hand though, as mentioned above, I'm quite a way behind on where I apparently should be on super for a male approaching 30 years of age. According to the general advice of my super liaison I should have close to 30k and be starting to see compound interest having a growth effect. I'm not anywhere near that. So I've put the extra in and switched the account to a high growth option to try and catch up a bit. High growth is okay in the super account for now because I've got at least 30 years of working life to bounce back from any major downturns in the next 10-15 years and use the high growth to bounce back better (provided, you know, I still have a job with a major downturn).
So that's where I'm at as of the start of 2020. I've got figures stored in a draft post that I may in future come back and add them to this post if I decide to start sharing numbers. For now though, that's pre-launch testing done, we're on the pad ready for takeoff!
See you soon,