Author Topic: (Take 2) Australian needs advice - with case study  (Read 924 times)

Graduate1079

  • 5 O'Clock Shadow
  • *
  • Posts: 5
(Take 2) Australian needs advice - with case study
« on: January 14, 2019, 02:00:24 AM »

Posts: 1
View Profile  Personal Message (Online)

Australian needs advice (never invested)
ę on: January 06, 2019, 04:41:34 AM Ľ
QuoteModifyRemove
Hi everyone,

I've just turned 48 and unfortunately have not made any steps to invest until now.  I have been looking at Vanguard products as well as going through St George.  I just need advice as to the how to go about how to actually figure out what product is right for me? 

Case study.
1 working, 1 on pension (at less than $50 per week as I earn too much!?)
Own our home $450,000 est
No Debts
Approx $20k in savings

Monthly net income     $4337.56

Monthly Expenses:
House Insurance      $102.00
Rates                      $246.77
Private Health(2pax) $305.00
Phones, internet        $113.30
Electricity                 $105.83
Car Reg/insur            $94.86
Pub. Transport           $142.56
Food/wine/fuel          $1400.00

Expenses per month est $2527.26
Leftover                         $1809.99

My super fund fees are quite low.  I am planning on contributing an extra $1k per year into my fund.  I have approx $150,000 only in my super fund.

I've been wondering if I should open a Vanguard account on behalf of my retired partner and contribute as much as I can ? 

We do live very frugally.  We don't eat out ever and cook from scratch, that is just what we enjoy. We don't have expensive hobbies are a mainly homebodies.  A death in the family has made me really think about my life and where I am going financially.  I do appreciate everyone's help and guidance.

Thank you everyone for all your help and advice.

marty998

  • Walrus Stache
  • *******
  • Posts: 6524
  • Location: Sydney, Oz
Re: (Take 2) Australian needs advice - with case study
« Reply #1 on: January 14, 2019, 02:41:12 AM »
This is tricky to answer fully because you have only provided half the picture. Does your partner have any savings or investments, or any super? You are 48. Your partner is retired? How old is your partner? Are they on a part age pension? And yes, if you earn $50,000 a year after tax, I reckon you both have enough to not need welfare.

I ask how old and if retired, because if they are not currently earning an income, then it is desirable to put all of your investments in the non-working spouses name. This will minimise the tax on earnings. If under 65, they may also still be able to contribute to super and pay no tax on the pension earnings.

$1400 a month is a huge amount to be spending on food, wine and petrol. You've got to break this up into smaller categories and figure out ways to optimise here. Home brands, Aldi substitutes etc.


Graduate1079

  • 5 O'Clock Shadow
  • *
  • Posts: 5
Re: (Take 2) Australian needs advice - with case study
« Reply #2 on: January 14, 2019, 04:45:09 PM »
Thank Marty998,

Thank you for your response.

My SO is over 69, not working has $20k in savings only

I guess when I calculate the food per month it does seem like a huge amount, I guess I have never really thought that we could go lower than $300 a week on groceries, liquor, fuel etc.  (in addition our beloved pet is costly).

Do you have any further optimisation tips?  I like what you suggested.



middo

  • Pencil Stache
  • ****
  • Posts: 800
  • Location: Country Western Australia
  • Learning.
Re: (Take 2) Australian needs advice - with case study
« Reply #3 on: January 14, 2019, 05:25:53 PM »
Hi Graduate,

I was spending over $1000 per month on food when I first started tracking my expenses about 18 months ago. We now find we consistently spend under $500 per month. Just seeing where your money goes helps you to think about how important it is to buy that expensive sauce or choose that cut of meat.  I tracked every single item for 3 months and nearly drove my wife crazy, but it really showed up our biggest wasters of money.

I'm not all over the investment stuff like others here, but I would have thought that $1000 per year extra in super was not going far enough.  Tax benefits work up to $25K per year so you should be looking at salary sacrificing as much as possible.

deborah

  • Walrus Stache
  • *******
  • Posts: 8922
  • Location: Australia or another awesome area
Re: (Take 2) Australian needs advice - with case study
« Reply #4 on: January 14, 2019, 06:24:39 PM »
As far as I know, you canít contribute super to your SO because (letís assume the older partner is male, I have trouble calling someone ďitĒ) he is over 65 and doesnít pass the work test (works for over 20 hours in one month of the financial year).

I think that your best financial decision would be for him to be able to pass the work test. If he could do this, you could put extra superannuation into his account (you can set up a new one with low fees, good growth...), and it would be available for you both to use from the day you retire, even if you retired tomorrow. This isnít hard - just helping at the forthcoming election would probably almost give him the required hours. If he canít work, I suspect that youíve got a difficult decision - investments outside your super will mean he ends up losing the pension, but may allow you to retire early, and investments inside your super wonít be available for you to retire early, but will be more tax effective. Investments in his super will also reduce his pension. Check when you can access your super.

Your expenditure is not sustainable. You would currently expect to both end up on the aged pension, because of the low level of savings you have. You should try to get your expenditure down to what youíll both get from the pension. This is quite doable. My base expenses are about one third of yours (Iím retired, and travel with extra money) even though I spend every second week driving 7.5 hours to visit my parents and then spending money on stuff for them. They also live on a lot less than they would if they got the pension (which they donít), although they have a lot of expenses due to the carers they need every day.

Gremlin

  • Stubble
  • **
  • Posts: 158
Re: (Take 2) Australian needs advice - with case study
« Reply #5 on: January 14, 2019, 06:59:31 PM »
I'd second being more granular around that "$1,400" food/wine/fuel spend.  That's a lot for 2 people trying to live within their means.

I'd add to that, you're already spending $140-something on public transport a month with one of you retired and a further $95 a month on car EXCLUDING petrol.  Your transport costs are huge for 2 people, one of whom is retired.  What's causing that?  And is there a better way to manage?

nnls

  • Handlebar Stache
  • *****
  • Posts: 1168
  • Location: Perth, AU
Re: (Take 2) Australian needs advice - with case study
« Reply #6 on: January 14, 2019, 07:30:41 PM »
As far as I know, you canít contribute super to your SO because (letís assume the older partner is male, I have trouble calling someone ďitĒ) .


They works a lot better than "it" as in "they are over 65..."

In regards to the OP- as everyone else has said track spending and then look at areas where you can cut it down, can you bring your food/wine/fuel down lower?

alsoknownasDean

  • Handlebar Stache
  • *****
  • Posts: 2014
  • Age: 35
  • Location: Melbourne, Australia
Re: (Take 2) Australian needs advice - with case study
« Reply #7 on: January 15, 2019, 12:44:28 AM »
At $2500 per month and a 4% SWR, youíd need $750,000 invested to support that level of expenditure (excluding pensions etc, and in 2019 dollars). Not overly difficult to get to that by 60 with enough of a savings rate, but if you want to retire earlier or downshift later youíd need to save more.

Does your partner have any super? Have you any scope for increasing income?

How much longer do you plan to work full-time?

marty998

  • Walrus Stache
  • *******
  • Posts: 6524
  • Location: Sydney, Oz
Re: (Take 2) Australian needs advice - with case study
« Reply #8 on: January 15, 2019, 01:36:40 PM »

Your expenditure is not sustainable. You would currently expect to both end up on the aged pension, because of the low level of savings you have. You should try to get your expenditure down to what youíll both get from the pension.

Not to be too morbid about it, but this also matters for advanced life planning - by the time the OP qualifies for the age pension, their spouse will have exceeded their life expectancy. It's not too early for the OP to start to consider what Aged Care options might be appropriate and how that might be funded.

Graduate1079

  • 5 O'Clock Shadow
  • *
  • Posts: 5
Re: (Take 2) Australian needs advice - with case study
« Reply #9 on: January 15, 2019, 04:54:59 PM »
Thanks all.  Yes my SO can't work for health reasons and I am happy to support him as best I can.

I have a lot to be thankful for and there are worse off.  I do feel that we can improve on the food bill, I hate shopping and avoid it as much I can, so this is a wake up call like Middo said.  We need to drill down. 

But Middo are your meals bland or tasty, and do you meal plan?  SO is a bit of a culinary genius, maybe that is our excuse for buying way too much.

deborah

  • Walrus Stache
  • *******
  • Posts: 8922
  • Location: Australia or another awesome area
Re: (Take 2) Australian needs advice - with case study
« Reply #10 on: January 15, 2019, 05:15:31 PM »
Expensive ingredients donít mean nicer meals. For instance, Dahl, cheese on toast with a salad or vegetable soup are some of my favourite meals, and all of these are really cheap.

middo

  • Pencil Stache
  • ****
  • Posts: 800
  • Location: Country Western Australia
  • Learning.
Re: (Take 2) Australian needs advice - with case study
« Reply #11 on: January 15, 2019, 05:40:27 PM »
Our meals are, in my opinion, tastier than most other peoples. We do like chillis and spices, so that helps.  No, we don't meal plan
We.do have a few basics at all times in the fridge. Capsicum, carrots, onions, garlic are regularly used.

Here is one of our recipes.

teriyaki chicken stir fry.  Make the teriyaki from scratch with ginger, chilli, soy, garlic, lime juice and brown sugar to taste.  Add a thinly sliced onion, about 150 grams of thinly sliced (across the grain) strips of blade roast, then when just browned, add brocolli, julienned carrots, capsicum, and if they are cheap this week, snow or sugar snap peas.  Thicken sauce with cornflour if desired.  Eat with white rice, my preference is basmati.

Some ideas here.  The majority of this meal is vegetables.  Meat is expensive, so buy a cheaper cut like blade roast. You can normally get it from coles for about $11 per kg.  Buy a kilo of meat and slice it into stir fry slips.  Pack bags of about 150 grams flat for easy defrosting into ziplok bags and freeze for later use.

This meakes enough for 4 so we have it for dinner, and then freeze it fir later when feeling lazy.  Rice cooker for 15 minutes, 5 mins in microwave and another great meal.

Sauces in jars cost a lot more than making them from scratch. They contain excess.salt and sugar and cannot be changed easily to meet your tastes.  We use 5 birds eye chillis in this recipe, which makes it hot, hot enough that some won't like it.

Buy rice in bulk, a minimum of 5 kgs at a time.  It doesn't go off.  Look for it on sale when you arr half way through the last bag.  I normally get a 5kg bag of basmati for under $10.  Normal retail would be about  $18. Planning ahead helps here.

Some big hints:

Reduce your meat intake.  It is normally the most expensive single component of a meal.

Make.your own sauces.

Buy in bulk and cut up and freeze.

Choose cheaper.cuts and learn to cut them well.

Enjoy the flavours, they are usually cheap if making from scratch

Graduate1079

  • 5 O'Clock Shadow
  • *
  • Posts: 5
Re: (Take 2) Australian needs advice - with case study
« Reply #12 on: January 15, 2019, 06:29:24 PM »
Middo I find it inspirational that you have halved your food budget and don't feel deprived.  Thank you for the recipe ideas am genuinely keen on changing our habits.

Thanks Deborah ~  you know we used to do this a lot back in the day when we were both working.  We called it 'do it yourself night' which usually meant sandwiches.  We need to reinstate this.