Author Topic: 22 and wondering what's next...  (Read 3399 times)

sammyjnr

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22 and wondering what's next...
« on: November 19, 2014, 04:50:06 PM »
Hi all,

#Background
Started working full time 4 months ago after graduating from college. Have always been relatively frugal, though this is now more pronounced post-MMM. I'm looking to achieve FI in 8 years. Live in Melbourne, Australia.

#CurrentStatus
Have an investment property (mortgage of $200k), with the repayments balanced by the rental income.
Earning ~$75k p.a.
Have $20k in a savings account.
Current savings rate is about 80% (living with my parents).

#Question
What can I do to accelerate my path to FI? I don't think I can hit a more aggressive savings rate, and I'm not sure how to best use my savings to compound.
Should the next phase be looking at investment options?

I've already purchased one investment property, but am reluctant to invest again in Australia given the property prices.

Would be grateful for some advice.

Sammy

Cwadda

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Re: 22 and wondering what's next...
« Reply #1 on: November 19, 2014, 06:15:36 PM »
I think you're doing great right now. Have you started thinking about the future? Like living on your own, with a SO, etc.

themagicman

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Re: 22 and wondering what's next...
« Reply #2 on: November 19, 2014, 06:20:37 PM »
Hi all,

#Background
Started working full time 4 months ago after graduating from college. Have always been relatively frugal, though this is now more pronounced post-MMM. I'm looking to achieve FI in 8 years. Live in Melbourne, Australia.

#CurrentStatus
Have an investment property (mortgage of $200k), with the repayments balanced by the rental income.
Earning ~$75k p.a.
Have $20k in a savings account.
Current savings rate is about 80% (living with my parents).

#Question
What can I do to accelerate my path to FI? I don't think I can hit a more aggressive savings rate, and I'm not sure how to best use my savings to compound.
Should the next phase be looking at investment options?

I've already purchased one investment property, but am reluctant to invest again in Australia given the property prices.

Would be grateful for some advice.

Sammy

Maybe you could post your budget and we could see if there are any suggestions on how to cut your expenses some? Do you have access to any tax advantaged accounts (I do not know anything about the Australia retirement accounts)

sammyjnr

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Re: 22 and wondering what's next...
« Reply #3 on: November 19, 2014, 10:00:32 PM »
I think you're doing great right now. Have you started thinking about the future? Like living on your own, with a SO, etc.

Current plan is to migrate to the US (hoping to end up in California) in 2-3 years. Should be achievable with my current employer.

Am currently single, and no sign of that changing in the near future unfortunately.

I guess I feel a little aimless; I didn't have a clear plan in my mind other than to cut my expenses, which I've already implemented.

Sammy


agent_clone

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Re: 22 and wondering what's next...
« Reply #4 on: November 20, 2014, 02:59:35 AM »
Do you have access to any tax advantaged accounts (I do not know anything about the Australia retirement accounts)
In Australia you have retirement accounts called Superannuation. You by law contribute a minimum of 9.5% of your salary (some employers contribute more). The issue here is that you cannot access them until the designated minimum age (at this point for a 22 year old it is 60 I think).  Which is sort of useless for someone aiming for early retirement.

I guess I feel a little aimless
I would investigate stock market investments.  There is an Australian Investing thread in the Investor Alley if you want to read that.  Do you have a monetary target that you are aiming for?  Also it may just be that your in the sit and wait phase, which you really can't do much about... (I'm essentially in a sit and wait phase too).

geek101

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Re: 22 and wondering what's next...
« Reply #5 on: November 20, 2014, 11:01:06 AM »

I guess I feel a little aimless; I didn't have a clear plan in my mind other than to cut my expenses, which I've already implemented.


Once your debt is gone and your expenses cut, it's about putting that cash flow to work.

Here's a suggestion: Examine how much cash you really need on hand. Because you have a rental property, you will want a good buffer to cover repairs, vacancy, etc. However the fact that you are living with your parents (good decision!) you probably don't need much in your 'personal' emergency fund, and I am thinking that 20k might be too much cash? Perhaps some of the real estate investors can chime in there.

I ask you to examine your cash fund because keeping less cash around can shorten your time to FI. I see a lot of us young people around here doing a good job of saving for short and medium term goals, but it's important to not have too much of your net worth tied up in cash. As agent_clone said, you should be investing in the stock market. Especially if your gut says to not invest in real estate in Aus again, put that money to work for you in the stock market.

sammyjnr

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Re: 22 and wondering what's next...
« Reply #6 on: November 20, 2014, 03:24:30 PM »
I ask you to examine your cash fund because keeping less cash around can shorten your time to FI. I see a lot of us young people around here doing a good job of saving for short and medium term goals, but it's important to not have too much of your net worth tied up in cash. As agent_clone said, you should be investing in the stock market. Especially if your gut says to not invest in real estate in Aus again, put that money to work for you in the stock market.

Appreciate the insight geek101.

I guess I should put in the time and effort to identify some investment opportunities - need to get on that compounding.

agent_clone

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Re: 22 and wondering what's next...
« Reply #7 on: November 20, 2014, 03:31:10 PM »
I'm assuming that their savings are in a high interest savings account (can be approx 4% at the moment) so cash isn't too much of a problem unlike in the US however there are better investment options.  If saving for a house it may be worth it to keep it in cash (This is what I did) but they are not so better to choose other options.

That being said, when I was looking at buying shares I was planning on purchasing new shares every 3-5k or so that I had saved to make it worth it brokerage fee wise.  Currently my aim is for having 100k in the offset then see where interest rates are after that... Given that this will take a few years many changes may occur in the mean time...