Author Topic: Newbie Question about investing  (Read 1286 times)


  • 5 O'Clock Shadow
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  • Posts: 14
Newbie Question about investing
« on: February 12, 2014, 02:30:01 AM »
So I have just recently come across this blog and the whole idea of being a mustachian.

As a result, I have started to make many changes to my families life - I have gotten a mortgage off-set account to help pay off my home loan sooner. I have called my ISP and managed to get $20 per month cut off my bill. I am still far from a full mustachian lifestyle, but I think for any lifestyle change to last beyond a couple of months, small baby steps are needed.

Anyway, #1 priority is to dump all of our money onto the mortgage and get that paid off ASAP.

We still owe $220k on that (we have a 3br, 2 bath unit) so the idea is to get that all paid.

I have zero knowledge and/or experience of investing money beyond having a couple of term deposits at various times. The forums have been a help, but a lot of the abbreviations and jargon can confuse me:)

I am trying to learn about investing and have done a little bit of reading (with lots more to come) since discovering this blog and way of life.

So my long winded question is:

In Australia, we get taxed on dividends at income tax rates (as far as I know) so obviously investing in shares that pay dividends may not be the best thing.... I understand the need to diversify your investments.

I am a little confused about the 4% withdrawal rule and the investing in index funds.... does it basically work that say if I invest $1m in index funds, I withdraw 4% of that to live on for the year ($40k), but ideally I will be making more than 4% on returns from my index fund, which get re-invested into the index fund so I am never actually touching my principle. Is this correct? Am I missing something?



  • 5 O'Clock Shadow
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  • Posts: 37
  • Age: 32
  • Location: PNW
Re: Newbie Question about investing
« Reply #1 on: February 12, 2014, 03:45:20 AM »
In short, Yeah that's correct. Check out the stock series to learn more about investing and listen to the madfientist podcast for a wide range of info.