Sunday, 13 August 2017

Investing - Teach Yourself

I am a sucker for 1940's gentlemen's fashion

Hi folks

Investing can be scary, confusing, frustrating and time consuming. However the most important thing with investing is educating ourselves before we invest a single cent.

I have constructed a very basic reading/research list for those of us who have never invested - hopefully it will begin a lifelong self-education and interest into wise investing:

Cooking and freezing meals in bulk

These links below are mainly relevant to Australia (because that is where I am!) but the basic principles are the same world over - just click on the item in the lists below to take you to the article or site.

Investing Research:
Bogleheads - Investing in Australia
ASIC - Moneysmart - Investing
How To Start Investing - Scott Pape
ETF's How to buy - BlackRock

Investment Products Research:
Vanguard Australia
iShares Australia

Obviously and importantly, I am not a financial adviser nor am I affiliated with any of these companies or products that I have linked above, nor have I or will I get paid for this post by anyone. I am simply sharing these links that I found useful in the beginning of my self-education into investing.

You will note there is little in these links about day trading, individual share trading or speculative trading as this type of trading is not of interest to me. My investment plan is long term, buy and hold, reinvest and diversification across the next 20 years or more.

Never clown around with investing - commit to life-long learning

Hopefully this tiny handful of links will start your wider journey of self-education into wise investing. All those hard-saved pennies from being frugal need to be put to work - you've done your bit in saving them, now they have to do their bit and multiple faster than inflation.

Enjoy, take care and stay nice.

Mr HM (Phil)

Saturday, 12 August 2017

Where I Keep My Money and Why.

Bank accounts, Superannuation and investments .... phew, there are so many ways to tackle this topic so I just thought I would share what banks and financial institutions I currently use. Of course, if much better deals arise or the conditions on my current choices alter then I will change this list without any sense of loyalty. With financial institutions, it is all about the math and the quality of the product for me.

So here goes:

ING Bank :

Online Savings Account #1 (high interest + bonus interest + occasional conditional bonus interest ):
This holds our self-insurance fund (aim for enough to cover 3-6 months of all living expenses).
This account has no fees.

Online Savings Account #2 (high interest):
This houses our $2000 emergency fund and I just let interest accrue.  This is specifically for immediate emergencies that are not a known part of the budget (e.g.  fridge or washer die ).
This account has zero fees.

Transaction Account:
This holds 1 month's worth of bill money (in advance) and each payday an exact amount gets deposited directly by my pay office into it to cover all our known bills.  All direct debits for bills etc come out of here too and other bills are paid out of here via Bpay, transfer or by debit card. I automate as many bills as possible.
I deposit exactly 60% of my net fortnightly income into this account.
This account has zero fees.

ME Bank

Online Savings Account (high interest + bonus interest)
This is our savings account for big ticket planned purchases (e.g. holidays, lounge suite, Thermomix). I deposit exactly 10% of my net fortnightly income into this account.
This account has zero fees.

Transaction Account:
This is my spending account - no questions asked. This has only been a very recent luxury as every cent has been focused on debt reduction, building an emergency fund and a self-insurance fund . Do not open one of these type of accounts until debt, emergency fund and self-insurance fund are sorted.
I deposit exactly 10% of my net fortnightly income into this account.
This account has zero fees.


I use Acorns to deposit small amounts directly into a aggressive share market investment fund (very similar to a managed fund but you can start with as little as $5).  The fee structure is comparable to a managed fund as are the predicted and historical returns.
I invest a fortnightly amount into this fund and withdraw it all every 5 years to purchase a new (or new-to me) car.
The total fee structure for this investment works out at approx 0.5%

HostPlus and ChoicePlus Superannuation:

In Australia, employers are mostly required to contribute 9.5% of our annual salary by law into a superannuation fund. I am astounded at how many Australians show very little interest in their superannuation funds or are even aware at the choices they have or the huge pitfalls of accepting the default options.

50% of my Superannuation sits in HostPlus Indexed Balanced fund and the other 50% sits in the self-investment arm of HostPlus called ChoicePlus (they are linked). I have my own self managed portfolio of stocks, ETF's and LIC's happening within Choiceplus. Both have very different fees structures which are critical to fully understand.

NAB Trader (National Australia Bank):

Online Trading Account:
A slave account used to hold money that I am using to make a stock market trade. Dividends (if not auto reinvested) also get paid into this account. Trading fees are also deducted from this account too. This account is linked to the NAB Trader online saving account.
The banking component of this account if free.

Online Savings Account:
This account is linked to the trading account and pays reasonable interest on monies waiting to be traded on the stock market. It is wise to have your money earning interest awaiting a down turn in the market which is often the best time to buy quality stocks. It is also a good place to build up investment savings ready for a monthly, quarterly or half yearly purchase of stocks if you are using the average cost method.  I use a mix of both methods as each has merit and I simply do not have the time to be staring at the stock market day and night. Once I am ready to make a trade I simply transfer funds to the Trading Account and make my stock purchase.
20% of my net fortnightly income needs to go into this account.
The banking component of this account if free.

My investment plan is VERY boring - LIC's, ETF's, Indexed Funds and a small (but steadily growing) portfolio of high dividend yielding stocks. I am a lover of DRP's (dividend reinvestment plans) too. I never day trade. Buy wisely and hold forever is my ideal investment strategy.

Tax wise, it would be a little better to put all my investments inside Superannuation however the downsides to Superannuation are that the money is locked away and not accessible, the stock trading investment options are often limited and fees are payable on top of normal stock trading activity. Beneficiary payments out of Superannuation can also be tricky too and once into retirement phase the fees Superannuation charges are horrendous. The other risk factor of using Superannuation is that the rules are always changing and I am not comfortable having all my eggs in one basket. Anyway, that is my opinion only so don't count it as qualified advice - do your own research.

Biscuit Tin Buried In Back Yard

Nope.  No talents wrapped up and buried for me thanks very much!

Anyway - so there it is.

No point being frugal unless there is a purpose for the savings.

Frugality needs a purpose and a plan. What to do with all those saved pennies from being frugal? Well now you know how I do it.

Take care folks and stay nice

Mr HM (Phil)

Please note the following carefully:
1. I am not a financial adviser
2. I am not affiliated with any of these products (no $$ have or will come my way!)
3. Information shared here is for encouragement and opinion sharing purposes only and is not financial advice.
4. I live in Australia so this post is from an Australian perspective.  Things may be very different in your country.

Monday, 7 August 2017

The Ignored Commandment

Beautiful fresh chemical-free
home made soap.

Hi folks

So this post might create some strong opinion - but hey, here goes.

As we probably know, the 10 commandments of the Christian Bible are actually originally the Jewish commandments given to the Jewish leader and prophet Moses direct by G-d on Mount Sinai.  For all intents and purposes these 10 commandments have played an enormous role in the shaping of western society.

Actually, from a Jewish perspective, there are 13 separate statements that make up these 10 commands. The 10 commandments are the basis of Jewish law, declaring G-d's universal and timeless measure of morality unlike the other 613 commandments in the Jewish Torah, which include detailed duties and ceremonies such as the dietary and sanitary laws etc etc.

Nourishing home made bread for 80 cents a loaf.

Here is the very common paraphrased Christian version of the Jewish 10 commandments

  1. You shall have no other gods before Me.
  2. You shall make no idols.
  3. You shall not take the name of the Lord your God in vain.
  4. Keep the Sabbath day holy.
  5. Honor your father and your mother.
  6. You shall not murder.
  7. You shall not commit adultery.
  8. You shall not steal.
  9. You shall not bear false witness against your neighbor.
  10. You shall not covet.

But here is the problem - this Christian paraphrased version leaves out an important Jewish context, especially on commandment number 4.

The easiest way to educate ourselves on the full context and content of these 10 commands is to read them as they are found in the Jewish Scripture.  Most of us however do not own an authentic copy of Jewish Scriptures but many of us would have a Christian Bible hanging around somewhere - the record of the Ten Commandments can be found in the Old Testament of the Christian Bible, both in Exodus 20:2-17 and Deuteronomy 5:6-21.

The joy of freshly laid eggs

Contextually, commandment number 4 actually reads like this (even in a Christian Bible version):

Remember the Sabbath day, to keep it holy. Six days you shall labour and do all your work, but the seventh day is a Sabbath of the LORD your God; in it you shall not do any work, you or your son or your daughter, your male or your female servant or your cattle or your sojourner who stays with you. For in six days the LORD made the heavens and the earth, the sea and all that is in them, and rested on the seventh day; therefore the LORD blessed the Sabbath day and made it holy.

Now you can instantly see that the oversimplified paraphrase of commandment number 4 is just plainly misleading. An integral and clearly-stated part of this commandment is that we work six days per week. God worked six days a week and likewise should we. We clearly get all happy and excited about the 'sabbathy' do-nothing bit where we just rest up and kick back, yet we conveniently ignore that part of the commandment that clearly states that we must be working six days a week. Gulp. Change the subject? Awkward. (A tidal wave of excuses and protests breaks over me!)

There is so much to be discussed and debated about this subject and this post is getting rather long....however it is there as plain as day - work six days a week.

The total satisfaction of
home grown produce

Mathematically speaking, working six days a week earns Jewish people 20% more income than the rest of us who work five days a week. The implications are endless. The realisations are deep. That 20% is the difference between poverty and wealth. I have SO much more to elaborate on this topic, but it needs to wait for another time to be truly powerful.

We will reference this post again many times over in future posts as we further explore the Jewish phenomena. 

Something to think through. Try not to immediately judge this Jewish fact - just let it sink in.

Take care folks and stay nice.

Mr HM  (Phil)

Sunday, 6 August 2017

Frugality Is Not THE Answer

My new wallet - it has many zippered compartments for cash enveloping
and oodles of card space too. It also holds my iphone too and is not bulky.

Hi folks

So, as you all know I have been studying up copiously on the Jewish 'take' on life due to the fact that Mrs HM is of Jewish extraction - the learnings thus far have been astounding and as yet I am only scratching the surface. The fabulous thing about all-things-Jewish is that there is more opinions and perspectives than there are Jewish voices! Ha ha - it keeps it interesting to say the least.

Frugality and Simple Living have been a big paradigm shift for Mrs HM and I over the last few years and have made a vast positive change in our financial lives. This change has also manifested so many knock-on positives in other parts of our life too. However, I have recently learnt that it is not enough, nor is frugality the single 'answer' to a financially meaningful life - far from it in fact.

Home made dessert

As it turns out, frugality practiced by itself can be rather damaging and regressive. Frugality practiced in isolation can actually create long-term financial stress.  Frugality can be all-consuming .... and therein lies the problem. Nevertheless, frugality IS a vital ingredient of a larger triangle of disciplines required for a good life - a bountiful life - a meaningful life - a memorable life.....but again, not in isolation.

Frugality needs to exist in equal proportion to two other vital financial disciplines. The three disciplines that create a strong basis for a financially meaningful, bountiful, memorable and good life are:

Frugality - Earnings - Investments

Each of these three disciplines must be given EQUAL time and attention.

Spending all our effort on single-mindedly earning more money is a well known ugly life pathway. Allotting all our life efforts to sniffing out the needle-in-the-haystack of lucrative investments is also pretty dodgy. In the same way, being obsessed with frugality just turns us into an unlovely Scrooge.

A special night out and a special dessert.  Frugality
makes the occasional treat 100% affordable.

However, a wise balance of all three will create a firm financial foundation on which to build  and grow our lives, meaningfully contribute to our neighbourhoods and society and be free of the clutches of consumerism.

I have had this balance VERY wrong over the last few years and it is now being addressed.  This triangle of financial strength gives us three anchor points on which to move forward and grow.

Do you have a coin jar too? Ours is a recycled coffee jar.

I am going to elaborate much more on these three disciplines in future posts and how they are so powerful as a symbiotic union and yet how destructive they are by themselves.  Basically, doing frugality all by itself will not improve our long-term financial situations. Likewise, just focusing on earning more money will not curb wastefulness or addictive consumerism. Similarly, being obsessed with investing is pointless if there is nothing to invest!

A vital key to long-term financial empowerment is a balanced and wise attention and commitment to prudent frugality, continued increase of personal income and dedicated life-long investment habits.  There is no grey area here. Remove a single one of these three disciplines from the equation and our finances will stall pretty fast - conversely, ensuring all three disciplines are attended to will see exponential and continuing financial improvement that will live on generationally.

So much more on this and heaps of other topics in the future folks.

Take care and stay nice!

Mr HM  (Phil)

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