This week, we turn to another reader’s question, on the topic of investing. Specifically, getting started investing as a student. (Although this information is relevant to anyone investing, especially in the Australian market, for the first time).
Even before we started our serious efforts towards financial independence, I nonetheless read everything I came across relating to money. Your typical best-sellers, and some more obscure books and blogs.
Sometimes, those sources held seemingly contradictory advice. One, for example, recommended taking out the shortest home loan possible. Another recommended taking out the longest loan term possible.
Which one is right? Why would two published books – both well-written, popular finance books published in the same country in a similar time frame – give such seemingly conflicting advice?
It turns out to be a case of different horses for different courses, and learning which course is right for you is crucial.
In the last post, we looked at the buzzword ‘negative gearing‘ (where the interest you are paying on the loan is more than the income), and why positive gearing (where your income is more than the interest) can be more attractive. But for anyone looking to retire early, or have the financial freedom to quit their job, pursue creativity, or raise a family, the concept of cash flow is perhaps even more important to know about than gearing. And it’s something we all need to know about – not just investors.
When it comes to talking about retirement, it surprises me how often I hear people say things such as ‘the government won’t let me retire until I’m 65’. Or, ‘by the time we’re ready to retire, they’ll have pushed it back to 70’.
But there’s no reason to assume that your retirement age will be the same as your superannuation preservation age or your pension eligibility age.
The typical mortgage in Australia comes with a 25 or 30 year term. But that doesn’t mean you should aim to pay off your mortgage over a three decade period.
The end date on your mortgage document is like a speed limit.
It’s not something to aspire to. It’s something you should try to stay well under.
Although the logo for Enrichmentality is a sprouting seed, symbolising the growth of new ideas and a better outlook on life, I am a terrible gardener.
I began this blog over five months ago with an anecdote about my failure to grow a money tree from planting my pocket money as a child. It should come as no surprise, then, to know that I’m also a failed gardener when it comes to growing actual plants from seed too!
I never managed to grow vegetables when we had a yard, but living in a small apartment with no balcony or external window sills posed a particular challenge.
One of the things I most looked forward to, in buying a home of our own, was having more freedom.
Owning, to me, was more than just about no longer having to pay rent, lining someone else’s pockets, but about having the ability to make the ‘house’ I lived in a ‘home’ – something a bit more personal – getting to paint the walls a different colour or put up pictures if I so chose.
And I think this is a common dream. Take the cliché ‘A man’s home is his castle‘. It encapsulates the notion that ‘One can do whatever one wants to in one’s own home’.
But is that always true? And are there other ‘castles’ you can build that give you even more freedom?
I’m coming up to my fifth month of being on the road, partly inspired by the fantastic book Cashing in on the American Dream: How to retire at 35 by Paul Terhorst. It’s a book that sat on my wishlist for a couple of years, for one simple reason – the word ‘American’ in the title. Although I (and probably most people in the world) am familiar with the concept of the the ‘American Dream’, I wasn’t sure whether the book would be too heavily focused on the American context to be of any use to me. As it turned out, it was extremely relevant, despite its distance from my location in both time (being published over 30 years ago) and space (given my Australian background).
A few days ago, I started to write a post about this book, about how we can all ‘cash in on the American dream’ in some way or another, and the relevance of Terhort’s ideas decades later, in contexts outside America (which I’ll still do in my next post). But this led me to research the very phrase ‘American Dream’, and that turned out to be a whole other (and in some ways, even more interesting!) story.
Buying a home – especially your first – can be both exciting and terrifying. How can you ensure that your search for the house of your dreams doesn’t turn into a house of horrors?
When my husband and I bought our first place, we felt in the dark – and came close to making a pretty big mistake. Fortunately, we learned a lot from the experience, and things worked out well in the end – we found a place we loved that suited our budget, paid off our mortgage in under 5 years, and that was what started our journey to financial independence.
But before we look at what you should do when getting started buying a house, let’s take a look at what to avoid: Continue reading “Where do I get started buying a house?”
Increasing house prices is one of the most frequently discussed – and worried about – topics.
One of the most fascinating items on display at the British Museum is a 13th century mortgage, carved into a stone brick.
Dated Sunday 11 June 1217, and written in Sanskrit mixed with the local dialect in Nagari script, the enormous brick records a mortgage against a loan. (I suspect that if you took out enough mortgages, you could build a house out of the mortgage bricks!)