Aussie Firebug

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Nothing written below is financial advice. The below questions and answers are for general information only and should not be taken as constituting professional advice. You should always do your own research when making any financial decisions.



Question (2:48)

What are your thoughts on being over-exposed to the Australian economy?

It’s something I’m grappling with in my portfolio allocation at the moment. So much of the ASX top companies are tied to the Australian housing market and economy – in fact, so much of our economy is tied to the housing market – any kind of pullback will not only affect house prices they will have wide-ranging implications on ASX200 / ASX300 companies, jobs, Government taxation receipts, everything! So this is what worries me.

If we really do believe in diversification, then we should be diversifying across asset classes internationally, not within one very small economy. Diversification across direct property investment and buying an LIC or ETF that focus on Australian shares is not real diversification, given these assets are inextricably linked.

Interested to hear your thoughts.


Firebug’s Answer

Hi Detrimental,

Australia makes up about 2.5% of the world’s economy (measured by market cap). This sounds and is a very small percentage of the world.

We ain’t one of the big boys, unfortunately.

And to make things worst, the ASX is top heavy with almost everything up the top linked to housing 😤. If housing goes under it’s going to drag most of Australia down with it.

I’m a big fan of diversification, but I’m a bigger fan of franked dividends. Do I get worried about placing so much of my wealth in a small country?

A little.

But I have a fair chunk of wealth in VTS, VEU and Super. This helps.

So many companies that are listed on the ASX are global now anyway. So while they trade in a small economy. Many are linked to other global companies that operate in other regions. So much of the world is linked these days that it’s hard to really pin the bigger companies down to one country. Just look at the states. They make up around 40% of the world but in reality, it’s a lot more than this.

If labour were to remove the franking credit refund next year, it would take away a major reason I invest in Aussie shares and I would have to reassess the strategy.



Question (13:00)


When does purchasing your own house PPOR come into your future plans? Are you planning to move into one of your rentals? How would purchasing a house and potentially having kids affect your FIRE plans?


Firebug’s Answer

Hi Tanya,

Did you know that Mrs FB and I were extremely close to purchasing a house back in 2012? I had been working full time for a little bit and wanted to use the FHOG to either build or buy for us. We even put in a few low ball offers on houses we liked in our country town.

The biggest issue was that neither of us could agree on a house to buy. Mrs FB wanted a house that had all the work done to it already whereas I was looking for a doer upper.

We couldn’t agree on anything so we ended up staying at our parents for a few more years and I ended up building IP1 closer to the city because I thought the capital grow would be better.

The decision not to buy in our hometown and to instead invest elsewhere ended up saving us at least $150K if you factor it how much IP1 made us and all the money we saved whilst living at home. Houses around our hometown have pretty much stayed stagnant for the last few years, and if you factor in inflation, they have actually lost money.

CRAZY how one decision can make such a big difference.

Now back to your question…

Renting suits out lifestyle extremely well. But when kids come onto the scene, that will change.

I have written about the pros and cons of buying vs renting before. And I still believe that the biggest reason you would want to buy is for the security. We do plan to buy a PPOR one day to have that security for kids. There’s plenty of fat in our budget already that we could trim if needed. But the truth is that we will just have to have a bigger portfolio to adjust for kids which might mean working a few more years.

No biggie.



Question (23:07)

Hey Mate,

I have been reading your blog. I see you mentioned to be wary of mining towns. I was considering investing in Gladstone since the property prices are rock bottom. However, I get mixed views from everyone I ask.

What are your thoughts?


Firebug’s Answer

Hi Luke,

Dude, as soon as I hear property investing in mining towns, I’m like…


I’m no expert in Gladstone, pretty much all I know about it is from a few mates that did FIFO work up there years ago.

One of the absolute pillars of property investing is who is going to rent your property? That person has to have money. That money usually has to come from a job.

My biggest issue with mining towns and a reason I never went near them is that the entire economy of the town is usually dependent on one industry. And if that industry packs up and leaves… You could be cactus.

Cash flow is the absolute lifeblood of any property investment. I still have two IP’s and I’m not particularly worried if there is a major downturn in Queensland over the next few years. I would be way more concerned if rent dropped by 50-60% vs property prices. If you have good cash flow you can ride out the bear markets.

Investing in mining towns is way too risky for my liking and you sorta have to time the market perfectly. I’ve never heard of a buy and hold strategy for a mining town. Usually, people get rich by owning property before the mine opened or risky investors buying in the boom, fixing the house up and then selling within a few years.

The most important thing you can do is your own research!


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