Tuesday, 17 April 2018

Ten Things

Hi folks

Here are some different things to look at - hopefully it will spark some new ideas for you. It will also provide a welcome relief from my ramblings too  - ha ha!

When I surf the net (is that still a saying?), I'll usually spend some time on one of these sites.

  1. Totally loving what they are doing to old furniture at Antiquechic HERE
  2. Financial Independence FIAustralia at reddit HERE is always educational
  3. Becky's Homestead Vlog is a little corny but always a good cheery listen HERE
  4. A good compound interest calculator that I use is found HERE
  5. A bunch of great ideas on MIgardener Vlog HERE
  6. I love the old-school advice on gentlemen's clothing at Gentlemen's Gazette HERE
  7. A favourite men's blog of mine The Art Of Manliness HERE
  8. Australia's most under-utilised finance site is ASIC's MoneySmart site HERE
  9. This man and his woodwork calms my soul HERE
  10. USA readers - an astoundingly astute investing education can be found HERE by J.L. Collins

I've been super busy and will be for a while yet. It is the busy season at work as well as lots of 'matters' that need attending to on the home front too. But we're all good.

Take care folks and stay nice.


Tuesday, 3 April 2018

Beware Of Paper Profits

Hi folks

I hope you all had a pretty good Easter break.  On the last day of the long weekend Mrs HM and I went for a drive through the beautiful farmlands of Clarence Town, Dungog, Chichester Dam and state forest, then back home via Vacy, Paterson and Tocal - an utterly beautiful drive through lush green rolling pastures and cheery old hamlets. I love drives like this as they reset my over-wound brain.

So, what's this business about paper profits? Well, I have been seeing lots of articles and hearing lots of conversations about profits on investments - you know the type of thing .... "Yes, we bought a house last year and had it revalued after we painted and it is now worth X amount"  or  "Well, my shares have doubled in value in the last 5 years" or  "We are knocking down the old place and putting up three flats and we will triple our investment" or the most common one " the rent will cover the mortgage" (eeeek!).  These type of things are paper profits. Theory not reality. On paper only, not in the bank.

Paper profits need to be treated with a grain (or bag) of salt. Often the person pontificating or humble-bragging about the said profits is not factoring in taxes or costs nor are they factoring in labour costs or selling costs or the market or liquidity or, or, or. Often these claims of profitability are just big talk. Profit is never profit until everything is paid and settled and the money is in the bank clear and free.

Houses can be a great investment, but always factor in capital gains tax, renovation costs, advertising costs, stamp duty and fees, non-paying tenants, tenant damage, market fluctuations, buyer availability, seasonal impacts, total asset liquidity issues etc.  Shares can be great investments too, but always factor in capital gains tax, market volatility, fees and charges, trading costs, buyer and seller availability, liquidity, company leadership, market factors, political risk, legislative risk etc.

Being wise and canny about word-of-mouth advice/claims of the profitability of any given venture is a must.  Every investment has costs and risks. Those investments that claim to have no costs or risks are to be viewed skeptically.  Always do your own homework and research. Stay away from the big talkers.

Too many paper profits get talked about, printed in prospectuses, used as sales pitches, used in popular culture, chatted about and unquestionably believed.  You know you are onto a winner when you are getting a balanced list of pros and cons, profits and costs .... and preferably from someone who has already done it and is qualified to comment.

Take care folks and stay nice.

Mr HM.

P.S. The above photo is from the dashboard computer of my Suzuki Swift. Is the fabulous fuel economy on that screen to be believed?

Friday, 30 March 2018

Three Phases Of Retirement

Hi Folks,

There are three distinct phases of retirement.

1. Self-Funded
2. Access to Superannuation
3. Aged Pension

Essentially, many folk have to wait till they are eligible to receive an aged pension (in my case 67 years old) to be able to retire. This is the worst case scenario for someone with zero investments and zero or little super.  It used to be the norm, but with pension ages increasing and the worth of the pension amount so low, it is a bad choice if you can avoid it.

I'll use my own case scenario to explain the three phases.

1. Self-Funded -  I wish to retire from paid work at about 55 years old. I'll be 5 years too young to access superannuation and 12 years too young to get the aged pension.  This means I absolutely need to have investments outside of superannuation that I can draw on to provide me with an income to tide me across.

In my opinion, the wisest investments to have for this stage of retirement are investments that attract little CGT (Captial Gains Tax - simply, the tax you pay on the increased value of your investment when you cash it in) and that pay regular earnings and also are easy to liquidate. Dividend bearing shares with 100% franking credits fit this bill perfectly.

I need enough of these investments to cover my intended expenses for 5 years till I can access my superannuation in phase 2.

2. Access to Superannuation - 5 years on from phase 1, I will be 60 years old and can now access my superannuation. I would transfer my superannuation accumulation account across to a pension account and reap the benefits of zero tax on earnings and zero CGT too (if indeed this is still available in 5 years time). Back when I was working, I would have actively bought a combination of growth and dividend bearing shares inside superannuation which I can now access tax free. Also, during the 5 years that I was living off my self-funded investments in phase 1,  my superannuation would have been quietly reinvesting its earnings and increasing in value even though I was not adding to it.

I would need enough in my superannuation to see me through for another 7 years till I was eligible for the aged pension in phase three.

3. Aged Pension - By this time I will be 67 and would receive the aged pension in full if my remaining investments in superannuation and self funded investments were below legislated thresholds. I would also be eligible to earn a prescribed amount tax free from all my sources of investment outside of super too.

Camp drafting at the royal Easter showing this year.
I love watching these horse men and women camp drafting.

For some of us, retiring early is a necessity due to ill health and/or being too physically/mentally worn out to remain in paid work. For others it will be a luxury decision. For me, at 55, it will be a bit of both to be honest.

Using the above phases and concepts, you should be able to reverse engineer your own retirement date and identify the three phases and how they will work.  Yes, I know this is based on an Australian scenario, but the similarities certainly still exist across most developed countries.

Have some fun with these figures and concepts, you might just surprise yourself with what is possible!

I have not even mentioned the option of working part time or casually/seasonally during the first two phases which would potentially augment your income in both of these stages.

It's possible folks - do your homework.

Take care and stay nice.

Mr HM.

Wednesday, 28 March 2018

A Menu Planning Argument

Do you menu plan then shop or shop then menu plan? It is not a new argument, but it is worth talking about.

I believe that if you are really trying to save every penny then shopping 'specials' then planning your menu around those specials has better fiscal merit. Mrs HM disagrees however, as she feels that shopping specials, whilst noble, does not always produce a balanced or nourishing set of weekly meals - looking at all the stupid stuff 'on special' at the shops lately, she just might have a point.

Invent your own coleslaw - break the rules.

I guess it all goes back to stockpiling and making sure that we are only buying things 'on special' that we will use and like. Just because it is 'on special' does not mean it is worth buying. Less and less staples go 'on special' compared to five years ago when we were first starting our frugal journey.

How do you menu plan - pre shopping or post shopping? Or maybe something entirely different?

Making your own sauces and dressings is cheaper than
buying it on special anyway.

Take care folks and stay nice now.


Monday, 26 March 2018

What Fruit Is This?

Hi folks

This fruit is growing on the vine-like hedge at Mrs HM's late mum's place.

When I picked it, the sap was milky white.  I brought it inside and cut it in half and it revealed a bright pink cavity inside but no seed. It reminded me of a fig ... but not.  The vine grows very fast, nearly weed-like.

Is it edible?  What is it?  Any of our gardeners out there .... a shove in the right direction would be greatly appreciated please.

Thanks in advance.


Wednesday, 21 March 2018

A Puppy and Potpourri

Hi folks

Puppy? Potpourri?  Well yes, they are connected.

When Mrs HM's biological mum passed away recently she left us her pupper - Toby.  The post picture is of Toby himself. Toby was her full time companion and never left her side. It was just him and her. You can only imagine his transition to our place bustling with many people coming and going being a vast difference to his previous life - not to mention him having to also share the house with one very 'waspish' cat (Toshi) and a 'troubled' rabbit (Pan).  Toby is doing remarkably well really.  The main thing is that we just love him and he sure seems to love us too.

Potpourri?  Well, Mrs HM was wondering what to do with the lovely wreath of flowers that we had on her mum's casket - we brought the flowers home but inevitably they begun to droop. I unhelpfully suggested we dispose of them when Mr HM promptly pulled out all the roses and begun to deftly strip all the petals. Potpourri of course!  This was a lovely was to preserve the beautiful arrangement into a product that would keep for a while longer.  The petals are currently drying on a wooden tray and will be converted to potpourri as soon as they are dry and crisp.  A gentle homely way to extend the memories.

Mrs HM stripping the petals for potpourri.
These petals hold bitter sweet memories.

Mrs HM's mum would certainly approve - frugal much.

Take care folks and stay nice.

Mr HM (Phil)

Monday, 19 March 2018

Get Your Refund Now

Hi Folks - a quick alert.

Australians, if you live in NSW then be sure to see if you are eligible for a refund.

The NSW Government has reformed the compulsory third party (CTP) insurance scheme to reduce the costs of CTP Green Slips for vehicle owners and better support people injured on our roads.
If you were the registered owner of a private vehicle in NSW Australia, as at midnight 30 November 2017, you may be able to claim a CTP Green Slip refund for insurance policies bought or renewed before 1 December 2017.
Here is the link HERE
I got a $61 refund today....straight into my savings account too.

Take care folks and stay nice
(The photo today is of the beach next to our city - Mrs HM and I do walks here often at night just before bedtime.)

Sunday, 18 March 2018

Getting Ahead At Work

Hi folks

One of the three basics of financial success is increasing our earnings. (You can read about what the other two are in this post here)

There are many ways to get ahead at work and stand out from the crowd of opinionated mediocrity - but there is only one method that I want to talk about today.

Without beating around the bush or the like, it is simply this: -

Put your hand up willingly to do the stuff nobody else wants to do

Yep, the project that is too hard, too messy, too frightening, too boring, too whatever. Consistently putting your hand up to do what others are unwilling to do will get you noticed and will give you a measurable platform to build success on.

I have a personal mantra at work and it goes like this - "eat your veggies first".  In other words, always do the ugly/hard stuff first and all the fun stuff afterwards. By habitually doing this, it will stand you in good stead to easily take on that ugly project (or whatever) that no one else wants to do.

By being disciplined to do the tough stuff first and by putting your hand up to do what others will not do, the following benefits WILL come your way:
  •   You'll learn how to tackle challenges
  •   You'll learn how to get results despite the hurdles
  •   You'll learn determination and stickability
  •   You'll achieve what others do not (because they did not want the task)
  •   You'll widen your network (solving problems always means collaborating for answers)
  •   You'll learn more about your business
  •   You'll learn things about yourself (self awareness is priceless in the workplace)
  •   You'll gain the reputation of getting things done
  •   You'll open your mind for other possibilities
  •   You'll grow your confidence exponentially
  •   You'll taste success

All the above creates professional wisdom which is a valuable commodity - it also has a currency.

I have personally tripled my income step by step by consistently using the above simple principle.  
Folks, if I can do this, you can too.

Take care folks and stay nice.

Mr HM (Phil)

Saturday, 17 March 2018

Food Pictures from Mr Home Maker's Place

A delicious cheesy chicken, cauliflower and broccoli bake.

Carved roast  lamb piping hot from the oven

Home made pan gravy and butter-fried white sweet potato
along with hot beans glazed with honey

Creamy curry chicken with brown rice and a garden salad.

Oven dry-baked potatoes.
Awaiting a knob of butter  or sour cream

Home made mint jelly from scratch.
We were being overrun with mint in the garden!

Did I mention that our biggest budget saving comes from cooking from scratch and eating at home? 

Literally  $1000's better off every year. True story.

Take care and stay nice folks.


Sunday, 11 March 2018

Investment Bonds - The Forgotten Retirement Fund

Hi folks

You all know my conspiracy theories on retirement Superannuation and how I am getting the best out of my Super despite it's inherent problems, however, I have not chatted to you about Investment Bonds yet.

Investment Bonds have taken a back seat as a legitimate form of investment with the rise of superannuation and folk's love of direct share and property investing. However Investment bonds are now making a comeback since Australian Superannuation laws have continued to change for the worse.

Slow baked sweet potato. 

What are Investment Bonds?

They are not the low earning cash bonds you can trade on the stock market - these are actually insurance policies that invest directly into a variety of equity (share) investments. Investment bonds combine the features of a managed fund with the benefits of a life insurance policy. Here is an excellent write-up on investment bonds by ASIC HERE.

What are the benefits of Investment Bonds?

Due to these investments being held under the structure of an insurance policy, the following benefits are available to the holder of investment bonds in Australia.

  •   Investment bonds are tax paid (30% company tax).
  •   Zero personal tax is payable once you have held the bonds for 10 years 
  •   If you do need to withdraw funds in under 10 years you still get a 30% tax rebate on the taxable portion of the amount withdrawn.
  •   Investment bonds can be pre-bequeathed outside of an estate.
  •   Highly tax effective outside of Superannuation. 
  •   Can be accessed at any age or stage of life.
  •   No need to ever declare the earnings of investment bonds for taxation purposes (unless you withdraw in the first 10 years).
  •   Can start with as low as $1000 initial investment and then Bpay/EFT/Direct Debit as little as $100 a time for no fee.
  •   Can swap investments for fee.
  •   No limits on initial investment amount or subsequent amounts in the first year of investment.
  •   Can invest 125% of the previous year's investment year on year and still have full tax benefit.
  •   Tax effective investment for children from the age of 10.
  •   Tax effective for early retirement before being able to access preserved superannuation
  •   A variety of investments and funds available including Vanguard and iShares products (depending on the bond provider).
  •   Fees comparable to Superannuation products (always scrutinise this however)

A delicious home cooked lamb roast.
Even the mint jelly is home made.

Here is a link to a couple of high-level articles HERE and HERE to get you started on researching investment bonds.

There are many providers of investment bonds in Australia the largest being Australian Unity . As part of your research, always-always-always read the PDS thoroughly, be fully aware of all fee structures and also be aware of the return and quality of the investment products being offered by each bond provider. Australian Unity's PDS is well written and highly educational  - I suggest you start your first PDS research with that one HERE. (No, Australian Unity are not paying me in any way!)

The reason I personally like investment bonds is that I can access these well before I can access my Superannuation and they have slightly better tax benefits than even fully franked dividend shares and after 10 years any of my earnings are tax free including GST (..... pokes tongue out at my Superannuation and makes an immature face). Investment bonds are also infinitely easier to deal with come tax time every year - no tracking of share parcel purchases, dividends, franking credit claims etc etc.  Once retired you can organise a regular withdrawal plan for free too - and all tax free after 10 years (..... blows a childish 'rasberry' at Superannuation pension administration fees this time)

Now I am not a financial adviser but I think Australian investment bonds are truly worthwhile your time researching as a highly flexible and tax effective alternative or supplement to Superannuation. Many articles say that investment bonds are good tax havens for the rich (very true) but they are also excellent for low income earners, early retirees, those transitioning to retirement before preservation age and many other personal circumstances too. 

Take care folks and stay nice.

Mr HM (Phil)

Here is a lovely picture of  Mrs HM's mum and Toby-the-dog
a few days before she passed.
Toby lives with us now.

Tuesday, 6 March 2018

A Sad Day

It is a sad day today.  Mrs HM's birth mother passed away this morning from aggressive cancer.  We spent the night around her bed and she slipped away quietly at 7:20 this morning.

I have mentioned her in other posts as our "aged relative" and we had recently moved house to be close to her after she broke her hip. Not long after we moved house, the diagnosis of inoperable aggressive cancer was given to her. She was a theater nurse all her life and knew exactly what the doctors were talking about. For us, the last seven weeks have just been an ever-shrinking round of hospital-work-sleep every single day .... hence not much activity here at Mr Home Maker.

This little old lady enriched all our lives in countless ways - I will always be utterly thankful that Mrs HM reached out and connected with her birth mother a few years ago.

I smile as I write this as she would often chat to me about frugality. She was the veritable queen of frugal and fully believed in saving in one corner to be able to spend on things that mattered to her.  She would often say things like "Well, I had to buy several of those because they were so cheap!" ... which would explain the lifetime stockpile of so many things in her cupboards.

Anyway, I'm off to face the unlovely tasks of arranging her funeral ("Mind you don't spend too much" I hear her say "Just keep it very simple OK!?"), organising final bills, cleaning and organising the house (huge job), attending to the countless necessary legal responsibilities ..... we won't be coming up for air just quite yet.

On a nicer note, we have now permanently taken over the care of her little dog Toby. He is a real affectionate sweetie and so very brave .... at least he is on this side of a fly-screen door.

Take care folks and stay nice


Sunday, 25 February 2018

9 Decisions

Hi folks

Here is a small list of simple decisions that will save you 'big time'.

1. Cancel your pay TV subscription.  Here in Australia, Foxtel was all the rage for many years but with the advent of very cheap online content through other providers or free content via the internet, paying for TV is simply a waste of your hard earned money.

2. Credit Card Debt.  OK, so you just simply can't make it disappear but taking up one of the excellent interest free offers available (I saw 20 months interest free credit card transfer offer recently) you can smash this debt.  BEWARE however, your old credit card will not be cancelled once the balance is transferred and represents a huge potential spending danger - go close that card at your bank immediately.  BEWARE again however, if you have credit card debt then you are likely to spend on a credit card again so deal with this and do not carry your new credit card on you.

3. Make a few phone calls to insurance companies (car, house, content etc).  If you are like most people and just auto-renew your insurances yearly, then you most probably are paying way too much. Make a few calls and compare all your insurance policies - you'll definitely get a better deal with 30 mins worth of phone calls.

4. Make a few phone calls to utility companies.  If you just pay your electricity and gas bills without question every year, a few phone calls to other providers will certainly get you a better deal. You may even find that a different plan with your current provider is the answer to cheaper bills.

5. Ditch your post paid phone plan. There are literally 1000's of different phone and data plans out there. Phone and data providers are continually changing phone plan offers on purpose (I used to work in the industry so I know this is true).  It is often cheaper to keep using your current phone and swap across to a prepaid plan (I pay $9.95 per month for my phone plan for instance). Even if you are not keen on doing this, at least shop around for a better plan and a cheaper price.

6. Cook from scratch. This will be the biggest saving by far. Bought lunches and regular bought meals out are a whopping waste of money. Did you know that for the price of a dinner out, you can probably feed yourself for the best part of the week. Cooking from scratch can mean that, with a little thought and planning, you can nourishingly (is that a word?) feed yourself  daily for under $1 for breakfast, under $1 for lunch, under $3 for a main meal .... that's $35 per week for food, and it gets even cheaper the more people you are feeding. I'm currently eating a delicious, wholesome homemade chicken pie while I type this post.

7. Cars and commuting costs.  I now often walk to and from work ... a leisurely 20 minute walk. Running two or more cars when you can be running one is a truly massive saving.  Think about using public transport, or biking, or even a motor bike, perhaps walking or car pooling too. 

8. Drop your gym membership. Seriously?! Yes, seriously. Walk or run  for free around your city or suburb. Cycle for free around your city or suburb. Buy some secondhand weights (gumtree/craiglist etc has oodles of them). Educate yourself on body weight training. 

9. Do small stuff consistently.  By small stuff I mean things like the following: taking slightly shorter showers, washing clothes in cold water, turn a fan on instead of the air conditioner, sun dry your clothes instead of using a clothes dryer, plan your car trips to achieve several things per trip to cut down car usage, get up earlier and go to bed earlier, bake your own bread, make your own laundry liquid, stockpile groceries when cheap, cook meals in bulk and freeze, use the slow cooker, grow your own herbs, darn your socks, eat eggs occasionally instead of meat, keep warm by wearing layers instead of switching on the heater etc etc.

Lean in to some of these changes and experience the deep sense of satisfaction of saving oodles of your hard earned money.

Take care folks and stay nice.


Monday, 19 February 2018

505 Weeks Left

Hi folks

I was messing around this evening with some calculations and one of them was how many actual weeks are left till Mrs HM and I officially and fully retire from full time paid work. 

The calculator tells me I will retire in 505 weeks (3530ish days).  Put like that, 505 weeks does not sound long at all!  I think I'll cope after all.

So, lotses to do in 505 weeks hobbitses. Yes!  (chews end of pencil)

List of things to do in 505 weeks

1. Think of ways to reduce 505 to less than that (never happy am I?)
2. Purchase that caravan (cash purchase)
3. Purchase a tow vehicle (also a cash purchase)
4. Purchase a small property to be a home base (small mortgage or pay cash??)
5. Develop two more passive income streams (2 already happening, but need 2 more)
6. Learn men's barbering (retirement job)
7. Finish my Financial Planning certification (a transition career into and during retirement)
8. Actively downsize and cull our 'stuff'
9. Increase percentage of income bearing investments
10. Start seriously studying frugal living-on-the-road skills
11. Plan and execute several extended caravan trips as a transition to life on the road

If you are wondering what our retirement plan looks like - read about it here.

What would you do if you were us in the next 505 weeks? 

Take care folks and stay nice.

Mr HM (Phil)

Sunday, 11 February 2018

More on Retirement Superannuation

Hi folks

Not too long ago I did a post on Superannuation showing the product I use, the why and the how.

Since that post, I have had several emails from readers about how my Superannuation approach compares to Dave Ramsey's investment approach. I love much of what Dave Ramsey stands for and especially what he is helping others achieve with regards to debt busting, money literacy and investing. Much of Dave's core principles he has made freely available on his website.

So, to answer all those emails asking how to emulate Daves's investing approach in the Australia market, I have come up with the following investment portfolio which takes Dave's U.S. concepts ..... but applied in an Australian context. There are significant differences to international tax treatment, dividends, franking and taxation of dividends in Australia compared to the U.S., not to mention that Australians have quite limited access to certain stocks, mutual funds and index funds compared to our U.S. readers.

Mr Home Maker's Australian Superannuation Portfolio

Very simply, we need to be able to access funds and stocks that fulfill the following four categories in an Australian context:

 1. Growth and Income
 2. Growth
 3. Aggressive Growth
 4. International

You will need a superannuation fund that allows you to trade stocks and funds inside your super. See here for details of the one I use.

I think the following interpretation may be a fairly good Australian equivalent to the concept Dave Ramsey illustrates in his four fund method of investment :-

 1. Growth and Income
These are good quality companies that are reliable and show continued long term growth and also pay reliable dividends that are 100% franked for potential excellent tax benefits. Old-school LIC's and Conglomerates would fit this description perfectly.

The ones I use in my super are Argo, AFIC, Milton and Washing H Soul Pattinson . 

I would allocated 10% of my portfolio to each of these 4 stocks thus giving this growth and income category a total of 40% of my total Superannuation portfolio. Dave Ramsey only says to allocate 25% to this category, but this is where Australia has superior dividend payments and superior dividend tax treatments compared to the U.S. hence my higher allocation to this category compared to Dave's.

2. Growth
These stocks capture small or medium sized companies outside of Australia (because Australia is such a tiny percentage of the world stock market). In particular, we are talking U.S. small and mid-sized companies showing strong growth trends but not necessarily much dividend yield.

The ones I use in my super now are ETF's  from Blackrock's iShares : IJR and IJH

I would allocated 10% of my portfolio to each of these 2 stocks thus giving this growth category a total of 20% of my total Superannuation portfolio. Dave is not keen on ETF's and prefers mutual funds, however in an Australian context these are very strong ETF's with very reasonable underlying costs.

3. Aggressive Growth
These stocks can provide both fantastic wins and some really volatile ups and downs - but very worthwhile having in your Superannuation portfolio.  These stocks are from emerging markets all over the world. Emerging markets are where very exciting new markets and booms are discovered.

The ones I use in my super now are emerging market ETF's: Vanguard's VGE and iShare's IEM

I would allocated 10% of my portfolio to each of these 2 stocks thus giving this aggressive growth category a total of 20% of my total Superannuation portfolio. Dave Ramsey is not keen on ETF's and prefers mutual funds, however in Australian, mutual funds with reasonable fee structures and good liquidity can be tricky to source compared to the abundance of offerings in the U.S.

4. International
Australian stocks only represent a tiny percentage of the global share market so it makes sense to ensure our portfolio is taking advantage of all the solid gains and buying opportunities on offer across the rest of the world. To Dave Ramsey, "International" means everything except for U.S. company stocks - however, for Australians this is obviously very different. Seeing as the U.S. has a huge percentage of the world's big companies it is important that this category sees Australians tapping into these non-Australian stocks.

The ones I use in my super now are world ETF's both hedged and unhedged: Vanguard's VGS and VGAD.
Both these are domiciled in Australia which immensely simplifies all the tax agreements between countries and both target the top strongest companies world wide. Approximately `60% of the underlying stocks are top U.S. companies and the approx. 40% of underlying stocks are all the other top companies across the rest of the world (excluding Australia).

I would allocated 10% of my portfolio to each of these 2 stocks thus giving this international category a total of 20% of my total Superannuation portfolio. Dave Ramsey prefers mutual funds, however in Australian, mutual funds with reasonable fee structures can be hard to easily source compared to the wide choice of offerings in the U.S. (Our U.S. readers have a massive array of shares, mutual funds, retails funds, wholesale funds et al to choose from when making investment choises - I'm very envious actually)

So there it is -  that was Mr HM's attempt at creating an Australian version of Dave Ramsey's four-portfolio investment fund approach. I'm not sure Dave would approve .... but you never know - ha ha!

Please remember, I am not a qualified financial planner, so always do your own research.  I have placed links all through this post on all products mentioned  - simply click on the bolded words in the post to help with doing your own research.

With significant volatility now very evident in the stock market right across the world, there will be some very cheap stock prices and funds mentioned in this post happening - it is a wise buyers market as we speak.

Take care folks and stay nice.

Mr HM (Phil)

Tuesday, 6 February 2018


Hi folks

Well, with the stock market in Australia losing nearly $60 billion in the last few days and the US stock market losing over $1 trillion ..... it is time to panic!!

Oh no!! (covers face with hands) What have I advised you all??
Dear me! All my posts about the stock market being a wise investment now look really bad!
Gosh! How stupid was I!?
(shallow breathing and nervous shaking) Soooooo embarrassed!

Actually, nothing of the sort and none of the above is true.  It is NOT time to panic - in fact quite the opposite.

You see, market corrections (crashes) both big and small are a normal and expected cycle of the stock market. Folks who invest wisely in shares totally expect and even look forward to market corrections/crashes. (Really?  Yes, really)

When serving out dinner, also serve some for the next
day's lunch too. Frugal much! This will easily save you
over $1000 a year in lunch money.

I have not sold a single share this week, but I am gearing up ready to buy more of the quality shares I already own while they are cheap.  I am also keenly awaiting the dividends to pay on my existing shares very soon which will occur despite this market correction. I am as calm as calm can be.

How on earth can I be calm? Simply because my investments are wise, considered, boring, stable, income producing stocks which historically weather decades of market down turns and bounce back just fine. The only thing I am annoyed about is that I wished I had saved more money so I could spend more on quality stocks whilst the prices are low.

As Warren Buffet is quoted as saying - "When others are greedy be afraid and when others are afraid be greedy" - or something like that.  This is exactly what is happening now.

Take care folks and stay nice.

Mr HM  (Phil)

Saturday, 27 January 2018

When Coins Breed Babies

Hi folks

One of the most powerful personal money tips I have ever embraced is to ensure every single coin (Dollar, Pound, Euro, Yen etc) has a job and a home.  Loose coins get lost. Spare coins become untraceable. Extra coins get used accidentally-on-purpose. Homeless coins get lost into the mists of time and coins without a job are lifeless and dull.

When we allocate our coins out after we get paid, always ensure each coin has a specific job and a specific home. Coins are our personal servants and servants need to be working.

One of the easiest coins to lose are coins for the future. Providing for our future selves is serious business and this must be first priority in our allocation of coins each time we get paid. Coins for the future have a clear purpose and they need a home were they can breed happily and have lots of new baby coins without being disturbed. Coins for the future need a home where they can breed multiple generations of new coins without every being robbed or pilfered.

Did you know that ......

  • Just like the washing, coins when left alone will breed and multiply
  • Coins can have grand baby coins and great grand baby coins and great, great grand baby coins
  • Coins breed and multiply best when totally undisturbed
  • Some coins are clever enough to have babies twice a year no matter what their state of health
  • If coins are not allowed to breed and multiply then they shrink a bit every year
  • Coins are immortal, they never die.
  • Coins can breed from the instant they are born and they never are too old to breed.
  • A coin that has been prevented from breeding (even for decades) will start breeding again instantly if allowed.
  • Coins are breeders not readers
  • Disturbing breeding coins is just like disturbing egg-producing hens - it puts them off the lay.

Just like baby kittens and puppies are cute, so brand new baby coins are cute too. The problem is that not many people have ever seen or experienced the birth of a baby coin.  I have several coins that are about to have babies and it is so exciting. I feel very proud every time my coins have baby coins. I get notified of the birth of my baby coins via SMS, then I proudly peek through the coin nursery internet window but I never disturb them.

Sometimes you just have to make money fun ..... fun enough to make you smile.  My baby coin story is just one such way.

Take care folks - stay nice.

Mr HM (Phil)

Sunday, 21 January 2018

I Answer Kim's Investment Question

Hi folks

In our last post, Kim from Sydney left me a question:

..... could you please elaborate on where the personal post tax investments were placed to earn such a large amount? The best I can find in term investments is not much more than 2.5% - less than inflation. thanks.. Kim from Sydney :)

I thought this question was worth doing a post on -  so here goes.

There are several parts to this astute question from Kim that I need to quickly dissect then answer.  Kim has rightly identified that:

1. Banks rarely currently pay much more than 2.5% interest
2. Kim is referring to investments OUTSIDE of super - implied in this is the negative affect of tax on investment earnings and capital gains tax
3. Where investment should be placed to get such large earnings
4. That there ARE large earnings 

If you look at the last post and reverse engineer the maths you will see that the rate of return that I have used is 7%.  You may say that this is impossible seeing as banks rarely pay more than 2.5% interest on savings and that this also seems to be dropping - this is certainly correct. Money in the bank is not a true investment for this very reason.  Once banks start paying 5% interest or above will be when cash in the bank will be once again considered a low level investment. So, where does the 7% come from?

The 7 % comes from investing in the share market - both Australian shares and international shares. This may make you stop reading straight away, but please hang in there.  Every Australian's superannuations are invested in shares in various ways, thus most Australians are invested in the share market without even knowing it, the difference is that their Super fund is managing it and often for a sneakily delicious fee.

However, shares certainly scare people. Everyone can quote the big share market crashes with people loosing fortunes etc, etc and this (along with zero knowledge of even the simplest workings of shares) is why people give shares a miss. Some people dabble in shares and due to lack of basic good advice end up just gambling and losing money.  Thus many folks favour property.  Property investing can certainly return good results, but for the average investor, once stamp duty is paid, inflation factored out, landlord insurance is paid, maintenance on the property is paid, interest on the investment mortgage is paid, land tax paid, real estate management fees paid, accountant's fees paid, repairs and damage paid for and vacancy is absorbed there is little real profit to speak of and many people end up selling their investment property because it simply is not real money in the bank. Besides that, it is so hard to save up the huge deposit required to enter into property, the growth in the house value cannot be accessed easily without selling the whole property (you can't knock a brick out and go and swap it for a loaf of bread!) and the obvious fact that there is zero diversification when all our money is in property makes it a problematic investment - often you'll go backwards for many years unless you are very canny.

So back to shares - here are some facts:

  • The share market as a whole (not individual shares) conservatively over long periods returns 7% on average. (Some years it returns 20% and some years it is in the negative)
  • Shares can be bought into with as little as $500
  • Shares can be purchased regularly
  • Shares can be bundled together to create excellent diversification via purchasing ETF's (Exchange Traded Funds)
  • Shares can pay income - this income is know as dividends (yield)
  • Shares can increase in value - this is call growth or capital gains
  • Shares can both grow and yield
  • Shares are very easy to buy and hold
  • Tax time is NOT difficult when you hold shares
  • Many Australian share dividends have 30% tax paid on them already (100% franked dividends)
  • Fully franked shares (30% tax paid) is a wonderful tax saving strategy
  • International shares often have much higher growth than Australian shares - (Australian shares are less than 4% of the world's entire share market)
  • Share growth (Capital Gains) is only taxed if the share is sold and the CGT (Capital Gains Tax) is halved if the share is held personally for 12 months or more.
  • A buy-and-hold-forever share strategy will rarely if ever attract CGT
  • Shares dividends can often be automatically reinvested if you enter into a DRP (dividend reinvestment plan) with the company or share provider - this is automatic compounding
  • When the share market 'crashes', wise investors will buy up big on quality shares. Shares are at their cheapest in a 'crash' (or correction)
  • The share market 'crashes' (corrects) often. It is normal and expected and nothing to be feared. It is when you buy up shares because they are on special! Uneducated people panic and sell.
  • Quality dividend yielding shares will continue to pay dividends right through down turns and corrections - quality dividend paying shares are truly 'all weather' stocks
  • Shares can easily be divided up for estate planning purposes
  • LIC's (Licensed Investment Companies) are worth considering as they buy up big bundles of quality shares  over many decades -  thus owning one of their shares gives you part ownership of many businesses. Quality LIC's pay fully franked dividends and also realise share growth too ..... the best of both worlds
  • ETF's simply mimic the market. ETF also are bundles of many different shares (bundled according to the ETF sector, theme or purpose) and by buying one ETF you are part owner in many businesses. Quality ETF's also pay dividends and realise growth (yield and growth)
  • Conglomerates are similar to LIC's in that they own shares in many business. Often conglomerates will own very large percentages of quality businesses and pay excellent fully franked dividends

With shares it is important to look at a minimum 7-10 year investment period or longer. Conservatively, I choose to use 7% return (a combination of growth and yield) even though in many years the return is much greater than this. Erring on the side of conservative is far more prudent, especially when making long term calculations like in my previous post.


The other vitally important factor when investing is time. The 8th wonder of the world most certainly is compound interest across time and when using the conservative 7% approach this means that every ten years you can pretty much double your money.

Time in the share market means a long term commitment to buy and hold - not to sell. By buying and holding the following can occur:
  • Share dividends can be reinvested and snowball over time
  • Share growth can accumulate over time
  • DRP means more shares are bought automatically without any emotional decision-making required
  • Dollar Cost Averaging (DCA) will occur if you are regularly investing meaning that some share parcels you will buy when the price is high and some you will buy when the price is low, thus over time a pure average cost is paid for your shares.
  • Time allows a few stock market 'crashes' to occur which give wonderful opportunity to buy up quality shares very cheaply
  • Time in the market means that you will always see the share market bounce back - and it always does bounce back
  • People who panic when share prices drop never benefit from share bounce-back nor the opportunity to buy quality shares cheaply - in fact, they stupidly make a loss by selling up instead of simply allowing time to pass and sticking with it. (You would not sell a house when the housing market crashed -  then why do it with shares for goodness sake??!!)
  • Ensuring you buy good quality dividend paying shares will mean that earnings from dividends occur even in market downturns and when these dividends are reinvested they are buying extra shares at their cheapest.  When the share market bounces back, these reinvested dividends bought during a downturn increase their intrinsic value dramatically.

Wise investing

Investing wisely is even more important outside of superannuation than it is inside superannuation. So the following is important to ensure your investments outside of super and bought with post-tax dollars are the best they can be.  The following will ensure the best bang for your buck outside of super.

  • Investments outside of superannuation allows you to retire or semi-retire well before preservation age.  This is because you can access these investments at any time as there are no access restriction like with Superannuation. The younger you are the truer this is.
  • As these investments will be taxed ON TOP of your current earnings it is important that the shares purchased are the wisest for taxation considerations. Shares that hold or increase their growth but also pay good dividends are the best. Not only that, dividends that are fully franked (already have 30% tax paid on them) will potentially save you significant amounts of tax. Depending on your top tax bracket you may either get a tax refund or only have to pay the difference between the 30% already paid by the share company and your tax bracket.  Once you are eventually living off these investments the 30% tax may even cover most of your tax responsibilities depending on your circumstances.


So very simply, investing wisely in shares that pay good regular fully franked dividends is essential. Also, making sure that your investment strategy is buy-and-hold is essential to create long term wealth, avoiding unnecessary CGT, taking advantage of buying up when the stock market 'corrects'  and committing to reinvesting every penny earned until you are ready to retire or semi-retire is key. Understanding that the stock market as a whole, will, on average, over the long term return 7% as a combination of growth and yield. Never being tempted to use higher rates when doing your calculations otherwise disappointment will be certain.

At their current interest rates, banks are nowhere near being adequate investments compared to the stock market, nor are bank interest rates fully franked or have any such tax benefits. When bank interest rates settle at 5% I will begin to be a little interested and if they increase to 10% then I will certainly apportion some money to them ..... but usually if banks are paying 10% interest (or above) then the economy is usually running at wild inflation rates which is another set of worries entirely!

In my personal unqualified opinion only (and despite the scaremongering) shares are potentially the wisest long term investment with the best tax advantages for normal folk who have no special market skills elsewhere. For the record, I hold shares in AFIC, Argo, Milton, Washington H Soul Pattinson, Vanguard VGS and Vanguard VGAD - click on each for links to info on each. As you can see I go for 'wise old owl' companies that share the same thoughts and goals as this post. I will not get rich quick, but I will get rich quietly and certainly. I now need to ensure my future monetary wealth is matched with equal amounts of wisdom, personal integrity, humility and generousity.

Kim, I hope this post gave you and indeed all our readers here at Mr Home Maker the detail needed ..... or at least a kindly 'shove' in the right direction. I'm not a qualified financial adviser so please do your own research.

Take care folks and stay nice.

Mr HM (Phil)

Friday, 19 January 2018

Little Miss Piggy Bank

Hi folks

Well, I have been systematically taking opportunities to chat to my daughters about investing.  The eldest and the youngest are VERY keen learners and the middle three daughters are surreptitiously  hovering around and quietly listening in (I notice out of the corner of my eye).

I have been showing them practical examples (and using online calculators etc) to show them the astounding power of investing 20% of their net incomes as well as prudently managing their employer-funded retirement funds.

Seeing as three of our daughters are finishing their nursing and teaching degrees soon, I have been using an average wage for a nurse in NSW Australia to demonstrate the numbers to them.

I'll share it with you all now too.

Little Miss Piggy Bank

  • 20 years old
  • Registered shift nurse in Emergency Department
  • Gross annual wage = $63,500
  • After tax annual wage = $50,000
  • Live and save off 80%  = $40,000
  • Invest 20% = $10,000 ($833.33 monthly)
  • Employer Retirement Guarantee 9.5% of gross wage = $6032.50 ($502.71 monthly)
So .....

Little Miss Piggy Bank @ 20 years old
  • Retirement Employee Investment = Nothing. Zilch. Zip, hand-outs from Dad
  • Personal post tax investment = Nowt. Penniless, Zero, hand outs from Mother Dearest

Little Miss Piggy Bank @ 30 years old
  • Retirement Employer Investment = $87,042 producing $5,601 annual return (reinvested)
  • Personal post tax investment = $144,270 producing $9,283 annual return (reinvested)

Little Miss Piggy Bank @ 40 years old
  • Retirement Employer Investment = $260,238 producing $17,168 annual return (reinvested)
  • Personal post tax investment = $431,339 producing $28,370 annual return (reinvested)

Little Miss Piggy Bank @ 50 years old

  • Retirement Employer Investment = $604, 862 producing $40,030 annual return (reinvested)
  • Personal post tax investment = $1,002,545 producing $66,350 annual return (reinvested)

Little Miss Piggy Bank @ 60 years old
  • Retirement Employer Investment = $1,290,590 producing $85,624 annual return 
  • Personal post tax investment = $2,139,125 producing $141,920 annual return 

In reality,  just shy of her 40th birthday, Little Miss Piggy Bank's investments will be earning her enough to fully cover her $40,000 yearly living and saving expenses. At this point, she will be therefore be FINANCIALLY INDEPENDENT.  Astounding ..... but true.

Show your children, nieces, nephews and their friends.  Wealth on a normal wage is utterly achievable. 

Be encouraged, stay nice and take care.

Mr HM (Phil)

Friday, 12 January 2018

Tortoise & Hare Finances

Hi folks

So, I am pretty sure we all know the fable about the tortoise and the hare and how that slow and steady tortoise won that fabled race ..... yep.

You know, some days it feels like our incomes are like the tortoise and our expenses are like the hare.  On other days, it is our savings and investments that feel like the tortoise and our incomes are the hare.  For some of us, our partners are the hare and we are the tortoise (or vice versa) when it comes to household money. Some of  us have a hare income and a matching hare spending habits, others of us however have a tortoise income and tortoise spending. At any rate, there is lots of tortoise and hare habits going on when it comes to personal finances.

To be truthful, the hare was just an idiot. He could have easily won that race. He could also have saved the whole community of forest folk from death the very next week when the forest council elected the tortoise to go and warn all the forest folks of the approaching forest fire - all because the tortoise was the winner (!). Needless to say that forest burned as did many of the forest folk because the tortoise was the wrong choice.

Lessons for Hares:

  • Stay focussed.
  • Don't get distracted.
  • Leverage your natural abilities.
  • Reach the finish line quickly, then rest.
  • Slow reliable plodders have lots of fans.

Lessons for Tortoises:
  •   You got lucky competing against an unfocused hare.
  •   Stick to water - tortoises move much faster in water.
  •   Hares can't hold their breath under water nor can they swim efficiently.
  •   You should have declined the job of warning the others of the forest fire - ego.
OK, enough musings....

Tortoise & Hare Finances
  1. I've been a tortoise earner and I've also been a hare earner - having a hare income wins hands down.
  2. I've been a hare spender  - fun at the time but devastating at the finish line.
  3. I've been a tortoise spender - very powerful, very boring but definitely a winner.
  4. Save and invest like a hare.
  5. Increase your income like a hare.
  6. Minimise your spending rate like a tortoise.
  7. Invest like both the hare and the tortoise  - 50% yield & 50% growth
The moral of the story is, that the tortoise and the hare should be friends, partners even. The tortoise could keep the hare focused and the hare could carry the tortoise when necessary. Competition is rarely useful.

Take care and stay nice folks.


Sunday, 7 January 2018

How To Have No Bill Stress in December 2018

Hi folks

Just think about how nice it would be to have zero bills leading up to and over Christmas - amazing.

No pre-Christmas money stress, no post Christmas bill stress - bliss.

(How's your credit card balance going right about now?!)

How To Have No Bill Stress in December 2018 

To have no bill stress in December we will have to start immediately  - today actually.

Sweet baked potatoes.
Lower glycemic index than normal potatoes too.

Step 1:
Working out how much each of your bills cost you each 12 months.

To do this you will have to look back over your last 12 months worth of bills or bank statements and add up each bill payment so you have a yearly figure.  For example, electricity may have cost you $500 in March, $600 in June, $700 in September and $800 in December which equals $2600 over 12 months. Another example  - Car insurance which might be a direct debit of $100 per month, so the 12 monthly figure would be $1200.....and so on and so forth for all your bills in turn.

Step 2:
Working out your total yearly bill cost.

Simply add up all the 12 monthly figures that you have calculated in Step 1.

Step 3:
Divide the total yearly bill figure from step 2 by 48, then, multiply this figure by 1.1.  Write down this number - it will be your magic number.

For example:  yearly bills equal $30500.00. So, 30500.00 divided by 48 equals 677.08333 then multiply this by 1.1 equals 744.72 (rounded up to two decimal places).  744.72 is therefore my magic number.

Step 4: 
Set up a dedicated bank account for these bills.

This bank account must ONLY be used for all bills figured out in Step 1.  No cheating or dipping into it for other things or this whole system will fail.

Step 5:
Deposit your magic number (worked out in Step 3) every week into your dedicated bill account.

Step 6:
Pay your bills as they arise out of the bank account set up in step 4.

Step 7: 
Come December, you will have a full month's worth of bill money sitting waiting in your account. Any bills that come in during December can be blissfully paid from this money.

Fried chicken. Some Southern fried and
some fried with a dukkah coating.



As today is the last day of the first week in January we need to put our magic number into our bills bank account TODAY  ..... at latest, first thing Monday morning.

Glasses up (ching!) to having zero bill stress come December 2018.  We'll all be sitting back relaxed whilst the world around is heating up their credit cards.

Take care folks and stay nice.

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