Aussie Firebug

Financial Independence Retire Early

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 (1:50)

Thanks for the great content!

I was just wondering what your thoughts are on gold? Is owning some gold a part of your financial plan?

Thanks a lot for your time,


Firebug’s Answer

Hi Julia,

Gold to me is a hedge against inflation and something I’d consider if I wanted to reduce volatility within the portfolio.

I don’t really consider it an investment per se because it doesn’t generate any cash flow. You have to rely 100% on capital gains for it to work which I don’t like and was one of the biggest reasons I moved away from real estate. To me, it’s more of a store of wealth which historically has had an inverse relationship with the stock and property markets (good for volatility).

Historically, shares have absolutely smashed gold over the long term.

Take a look at the total return stock index (S&P 500) vs Gold and Silver over the last 50 years


And if you go back 100 years the gap is even wider.

Take a look for yourself here at long term trends.

You can basically ignore the first graph on that page because it doesn’t include reinvesting dividends which is ridiculous. We want to compare the total return from an index, not just the share price.

I only want to invest in assets that pay me. This may change in the future when maybe I’m not as concerned about the cash flow and perhaps caution on the side of diversifying and maintaining my wealth. Precious metals could come into play at that stage.

But right now, golds not on my radar.


Question (7:28)


Congratulations to you for what you have achieved & continue to achieve on your FIRE journey.

Thank you for your incredible generosity in sharing your knowledge, passion & enthusiasm. Inspirational!

Up until about 6 months ago, I exclusively purchased ASX listed shares directly but in the last 6 months decided to start purchasing ETFs.

Now that I have the ability to compare apples with apples, I have to say that my annualised returns for direct share purchases are at least twice that for the ETF benchmark of VAS (over the entire 6 years).

I am not writing to boast – in fact, my purchases have been largely recommended by 2 share sites I subscribe to (intelligent investor & barefoot investor) so I can hardly take any credit.

I know that the FIRE community is so bullish on indexes but I am not sure that you are not missing out on some reasonable returns.

I know the theory that most people don’t beat the index & probs that is true in context. Little of what Buffet says in regards to share investing is wrong. but I think with a little bit of ‘expert’ advice & by that, I don’t mean full-service brokers who only work for themselves.

I reckon that solely investing in indexes might be limiting your returns.

Anyway, I guess I just write to you to raise the issue with you & share my thoughts.

Once again – congratulations. I wish I had had your insight at your age.

Thank you, take care


Firebug’s Answer

Hi Tanya,

Thanks so much for the kind words 🙂

I love receiving emails like this, it’s a real motivator that I must be doing something right and it helps me make more content, much appreciated!

I’ve often grappled with this question myself. There were times during the GFC where some of the big 4 banks were trading so low that you could have had a ridiculous yield of 13% plus franking credits! We know now that they recovered but at the time there was a real concern that some of the banks could have gone under which is why the prices fell so much but still. It would have been extremely tempting to swoop in on some of those cheap shares and clean up.


As you’ve mentioned, the FIRE community loves indexing because we don’t need to pick the winners and losers, we just buy (nearly) everything.

Could we be missing out on better returns?


Do I care?


I’m more than happy with the idea of a 7-9% return over the long term using ETFs and LICs. I personally don’t think the extra risk is worth trying to beat the market but everyone is different. It’s also a bit of fun trying to pick winners here and there and I wouldn’t completely rule out the idea of allocating a small percentage of the portfolio (5-10%) to individual stocks. I personally don’t feel the need to do that at this stage but when the next crash comes it could be tempting to jump on some companies as everyone is panicking and heading for the exit.

I will say this though. As indexing becomes more mainstream, the likelihood of active investors outperforming the index increases.

Think about it. Back in the day, everyone was trying to outperform everyone and charging big fees along the way. But that game is always going to have winners and losers by its very nature. And if you factor in the management fee, there was a very high chance you’d underperform the market.

Index investing solved this issue IMO.

But let’s say that the majority of the market is made up of passive index investors. In theory, the market would become inefficient and there should be a lot more opportunities for active investors to snag a bargain especially within the small-cap and emerging market sector. If the market reaches a point where the majority of investors are not doing research or looking at anything other than the top 200 companies by market cap (for example), active management (professional or amateur) could feast on the inefficiencies of the market and you’d see and swing back in favour for active management. This is until the opportunities start to decline as more and more active investor gobble them up and the extra in fees once more becomes not worth it.

This see-saw between passive and active would continue forever in my opinion but no one (especially me) really knows what would happen. That’s my take anyway.

The other thing I want to mention is that while you have done well over the last 6 years, it’s not a long enough time frame to conclude that your individual stocks have outperformed the index. Come back in 15-20 years and once a recession has come and gone 😜.


Question (15:38)

Hi mate,

I’m so happy to find our Australian fire blog. I’ve been reading and listening to people like Mustache, fientist etc for quite some time.

One thing that has always annoyed me is seeing how little they live off and not understanding how they can possibly make that work. I would love to see a breakdown of your yearly spending habits. I’ve had a look through your blog and can’t find anything that matches this. I noticed you seem to live off only 50k a year with you and your partner, which also seems too bloody good to me haha.

I look forward to seeing what sort of expenses you count.

Thanks, Cameron.

Closet F.I addict

Firebug’s Answer

Hi Cameron,

Take a squizz at our last saving review article which detailed exactly how much we spent during from July 2017 to June 2018.

I need to publish our current review from the last financial year (18/19) but it’s gonna be a hard one because we moved counties and have another set of banks over here in the UK. I’ll get around to eventually.

From my experience, you need to nip the big four in the bud.

90% of people will spend their hard-earned dollars in these areas in order of the most expensive (usually).

  1. Housing
  2. Food
  3. Transport
  4. Holidays

Look at these areas first, the other smaller things do add up over time but they can wait for now.

I’m not gonna sugarcoat it, if you want to buy a house in either Melbourne or Sydney, you’re going to pay a big price for that privilege and delay your FIRE date. Renting in the city can actually speed it up if you can take advantage of the job market and snag a high paying job (depends on the industry you’re in). But there’s plenty of jobs that are available in the country where housing affordability is a lot better.

I’m not the best person to ask about food advice because there’s still heaps we could shave off our grocery bill but we enjoy our snacks and buy high-quality produce. It’s something I’ve never been too frugal about, and that’s the quality of food you put in your body. But buying this stuff can be expensive. There are the obvious wins like always packing you lunch and not going out too much. But I’m calling the kettle black a little with that one because we have been social butterflies since being in London and I’d hate to look at our food and drinks category for the last 6 months. Buuuuuut this trips a bit of an exception because part of experiencing the world for me is to enjoy the different cuisines and restaurants.

Cutting down on meat can also halve your food bill.

Being sensible with your car (if you even need one!) and holidays is such a personal choice that it’s hard to comment on. You need to strike a balance between saving for your freedom and enjoying your life. We delayed our FIRE date to live out a dream and I wouldn’t change anything about that decision.

The first step in all this is to track your expenses.

Do you know exactly where your dollars go? Feel free to flick me your breakdown and I can provide a more detailed comment if you’d like.



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