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 (3:40)

Hi Aussie Firebug,

Thanks for all the content you have published over the years. It has certainly given me the motivation for me to achieve FIRE. My first exposure to the stock market was through the robo adviser StockSpot. It was good as it was simple to set up a regular transfer from my salary.

However, just like you I was becoming aware of the management fees and thought I’d save by performing the trades myself on SelfWealth. I’m now looking to deviate from the target portfolio StockSpot offered and find replacements for both IEM (0.67% management fee, and IOO (0.40% management fee) with lower management fees but investing in the same sector.

Which stocks would you recommend to replace these two?

Thanks and keep up the awesome work (I’m loving ask Firebug Fridays)! 🙂

– Alexander

Firebug’s Answer

Hi Alexander,

Good call. Those additional management fees really add up over time and eat into your returns. With the products available these days, I don’t really see the need to go through a middleman man anymore. The only advantage I see with those companies is their ability to make investing as easy as possible. Good for a beginner to dip their feet in, but once you can to a serious size portfolio (>$10K) I would be going straight to the source.

I don’t know too much about IEM or IOO if I’m being honest. But those management fees are HIGH 😩.

What I like to do if I’m looking for similar products is to go to and enter in the ticker. They have really good info about the ETF but also have a section ‘Funds Like’ which looks like the below


Check that out and see if you can find an alternative with a lower MER.



Question (8:22)

Hi Firebug,

I’m in my early thirties, married with a 6-month-old baby. We own a house (valued ~700k) with a 450k loan. We have built up 430k in the offset account. The Mrs & I are both engineers (hence the poor grammar!) with relatively high incomes.

As we move towards paying off the house I was forced to think – “shit what’s next?”. We have about 70k invested in a privately-owned company that’s pumping out 12-15% returns. No other investments.

In the last few months, I’ve discovered the FIRE community and been consuming everything I can find. Halfway through rich dad poor dad now.

I’ve built my own FIRE spreadsheet & played around with yours. We could be FIRE in 6-7 years. Conservatively I’ve planned to work for the next 10 years. Retire at 42 – hell yer!

At the start of next year, I plan on putting 7-10k into the stock market each month – mostly ETFs/LIC. I’d say, we have a high-risk tolerance. The house is paid off/stable jobs and will be investing surplus money. What’s your opinion on geared EFTs – example BetaShares GEAR.

The assumption with most FIRE plans is “ever-increasing asset/market value”. With this assumption why wouldn’t you have geared investments like BetaShares GEAR?


Firebug’s Answer

Hi Mark,

Firstly, congrats with the new baby. I’m sure having a child brings a new perspective to your life and further strengthens just how important it is to be financially healthy now that you and your wife have a child to look after. I hope you’re starting to get some sleep now 🤣😴

Geared ETFs are very interesting. On the surface, it would appear that in an ever-increasing market, why wouldn’t you invest in a geared ETF to amplify your gains? We understand that traditional gearing cuts both ways, but if you don’t sell in a downturn you should get back everything you lost and make a lot more in the boom years right?


This is one of the most misunderstood products on the market. Traditional gearing is completing different to an internally geared ETF like BetaShares GEAR ETF.

Internally geared ETFs suffer from something called ‘volatility drag‘ when the leverage is reset each day.


Here’s a simple example.

Let’s say we invest in two ETFs. One is geared by a factor of 2 and the other one has no gearing. We invest $100 in each ETF.

On the day we buy:

  • Normal ETF
    • Underlying = $100
  • Geared ETF
    • Underlying = $100
    • Fund managers loaned underlying = $100
    • Leverage reset = none on the day we buy
    • Total exposure within the fund $200

Day1: Market goes up by 10%

  • Normal ETF
    • Underlying = $110
  • Geared ETF
    • Underlying = $120
    • Fund managers loaned underlying = $100
    • Leverage reset = fund has to buy $20 more of the ETF to match the geared ratio of 2:1
    • Total exposure within the fund $240

Day2: Market goes down by 10%

  • Normal ETF
    • Underlying = $99
  • Geared ETF
    • Underlying = $96 (leverage cuts both ways so underlying down by 20%)
    • Fund managers loaned underlying = $120
    • Leverage reset = fund has to sell $24 to match the geared ratio of 2:1
    • Total exposure within the fund $192

Day3: Market goes up by 2%

  • Normal ETF
    • Underlying = $100.98
  • Geared ETF
    • Underlying = $99.84
    • Fund managers loaned underlying = $96
    • Leverage reset = fund has to buy $3.84 to match the geared ratio of 2:1
    • Total exposure within the fund $199.68

Day4: You sell

The normal ETF has made a tiny profit and returns you $100.98. But the geared ETF only returns $99.84 and actually made a loss even though there was an overall gain.

Internally geared ETFs are usually only good for day trading and is not suitable for long-term investing. If you want to gear, look into debt recycling because you’re in a good position with so much cash in your offset.



Question (22:24)

Hi Mate,

Just want an opinion on what to do from here on in and wondering if I’m making the right decisions.

I’m turning 23 in November, Currently have 65k in the bank, 35k in shares which is half ETFs (VDHG). I own a block of land which is worth 35k in a small town. Currently, live at home and pay $50 a week rent/food, (very cheap). Earning around 60k after tax annually and don’t have any expenses other than my vehicle.

I really want to make the most of my situation and add to and build my ETF portfolio up.

Should i just re-invest dividends on all shares and how much is too much to have in the bank. I plan to add A200 to my list very soon and contribute to both ETFs each year. Should i contribute to one more than the other or just one?

I plan to live at home until I’m 30. Any Advice would be much appreciated.



Firebug’s Answer

Hi Mitch,

You’re absolutely killing it mate.

When I was 23, I had a negative net worth due to my HECS debt! Took a year and a bit for me to get into the positives so congrats on your awesome start.

You have an absolutely golden opportunity in front of you whereby you could really leapfrog your way to FIRE because of your circumstances. Stay at home as long as you or your parents can tolerate it. I stayed at home until I was 26 and attribute those 3-4 years at home as one of the single biggest factors to save and invest as much as I did in those early years.

Do you have a Mrs. though? Sorta hard to pick up chicks in your late 20s and bring them back to mum and dad lol. But financially it’s the best move… just don’t forget money life balance 👊

I would reinvest all your dividends if I were you. Impossible to know which one you should invest in moving forward because everyone has different risk profiles, goals and circumstances.

What I can say is keep your expenses to an absolute minimum, save up at least 3 months worth of expenses in case of an emergency and invest a healthy chunk consistently over the next few years,

And that my friend, is a recipe for financial independence if I’ve ever heard one. With your age, low expenses and already insanely high net worth (for your age)… I think it’s entirely possible that you could be one of those freaks in the FIRE community that hit the goal before 30.

Good luck and make sure you enjoy the journey there! Don’t kill yourself just to reach a number a few months/years earlier. Enjoy your youth just don’t spend your precious money on too much bullshit.


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