Aussie Firebug

Financial Independence Retire Early

Ask Firebug Fridays 26

Ask Firebug Fridays 26

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 (05:39)

Hi Mr Bug, I’ve been listening to your podcast for the last month or two and am really enjoying it so far. I’m trying to find an answer to something and can’t find it online, sorry in advance if you’ve already addressed this, I haven’t listened to them all yet.

Do you know how an ETF that tracks the top 200 or 300 companies in the market decides what percentages they invest in each company? I looked into Betashares A200 and was expecting half a per cent invested in each company, instead, the top two companies get over 7% and then each company after that gets less and less all the way down to less than .1 of a per cent

Thank you 🙂


Firebug’s Answer

Hi Jared,

There are companies that provide Index data that ETF providers use. Betashares offers the A200 ETF as a financial product the public can buy on the ASX, but behind the scenes, they pay another company to provide the index data that determines which companies are in the ETF and their appropriate weightings.

A200 for example follows an index called ‘Solactive Australia 200 Index’ from the company Solactive AG.

You can go to Betashares website and look at the indexing methodology that explains exactly how it’s constructed.

Below is an extract from the index methodology PDF document.

On Selection Days, Solactive defines the Index Universe as outlined in Section 4.

Solactive Australia 200 Index

  • All companies in the Index Universe outlined in chapter 4 are ranked according to Free Float Market Capitalization. The 200 largest companies are added to the Solactive Australia 200 Index, subject to the buffer rules below: – a company that is currently included in the Index is only excluded if the Float Market Capitalization of the company is lower than the Float Market Capitalization of the company ranked 225 at any Selection Day
  • A company that is currently not included in the Index is only included if the Float Market Capitalization of the company is higher than the Float Market Capitalization of the company ranked 175 at any Selection Day.

If the application of the buffer rule results in less than 200 companies entering the Index, additional companies will be added from the Index Universe according to the highest Free Float Market Capitalization. If more than 200 companies end up in the Index, companies with the lowest Free Float Market Capitalization will be removed until a total of 200 Index constituents is reached.

Or to put the above in plain English, companies within the index are weighted by market capitalisation (market cap)

Market cap = The value of all outstanding shares.

Here are the top 20 companies on the ASX by market cap.

As you can see, the ASX is top-heavy which results in the top 20 companies making up over 50 per cent of the ASX in terms of market cap.

The companies that land in the 150-200 range are so small by comparison that their weightings are very small as you discovered.

And in the nutshell, that’s how it works 🙂


Question (18:38)

Have you thought about when you get to your FI number if you would have any anxiety over leaving you’re paid job?

I feel it will be the hardest part for me, I will struggle with the “what if something goes wrong” “what if I haven’t done my numbers right” kind of anxiety.


Firebug’s Answer

Hi Hayden,

This is a great question.

In some regards, I sort of left normal employment back in 2018. I’ve been contracting in London and travelling the globe for the last two years and have recently started my own consulting company here in Oz (update coming up on this). So I’m in a unique position of not having to “quit” my main job per se. We haven’t reached full financial independence yet but it’s amazing what sort of freedom can be achieved towards the middle/tail end of the journey. We’re already reaping a lot of benefits from the seeds we planted all those years ago.

But I understand that not everyone is in this position. In fact, most will probably need to pull the plug at some point and leave their secure 9-5 type of job to make the leap of faith into early retirement.

Here’s the deal.

Anything you do in life is a risk!

But realistically speaking, what’s the worst thing that could happen when you quit your job and enter early retirement? Financially, a major crash in the markets is probably the number 1 most likely risk that can and might occur for most Firebugs. This will means some adjustments will need to be made but it’s really not as bad as a lot of people make it out to be. I mean… anyone who reaches FIRE usually possesses such attributes as:

  • Resiliency
  • Determination
  • Delayed gratification
  • An analytical approach
  • Obsession with optimisation

These are the qualities of someone who is more than capable of adapting to adversity and making adjustments.

And let’s bring up another point that’s almost always disregarded when FIRE is brought up by mainstream financial commentators and advisors.

FIRE does not mean you can’t make money in retirement!

In fact, I’ve yet to meet someone who has reached financial independence that hasn’t gone onto a passion project that doesn’t flip a buck.

Even our lord and saviour, Mr Money Mustache pursued a love of his in retirement which was carpentry. This made him money. Was he still retired in a FIRE context? Yes!

What about our very own early retired badass Dave from Strong Money Australia? Retired at 28 but still earns a bit of money from the blog and I believe his partner works part-time for the social aspect (please correct me if I’m wrong mate).

Most people in our community know that the word “retire” probably doesn’t describe what most of us are trying to achieve here but the FIRE acronym is here to stay.

My point is that it’s not an all or nothing approach. Once you build up a big enough portfolio to generate enough passive income using the 4% rule that covers your lifestyles, IMO, in most circumstances, you’re good to go. It’s taking that leap of faith that’s the hard part. But every single person I’ve ever spoken to that’s reached FIRE has always told me that they wished they did it earlier. So take that as you will.


Question (33:07)

Hi Aussie Firebug,

I was wondering if you could shed some light on what new investors should know about tax.

I’m recently out of uni and have always had very straightforward tax returns, however over the last few months I’ve invested a couple of thousand dollars into shares and ETFs. I’m thinking about what that might mean for my tax return next year, and would love to hear your advice on what I should look out for.

Could you please provide a bit of information on how you got your head around tax as a newbie investor, eg. did you use an accountant or go by general information available online, and if so, what do you think are some of the most important things to be aware of?

Any advice would be much appreciated!


Firebug’s Answer

G’day Beth,

Firstly, congrats on finishing Uni 👏, and it makes me smile that you’re already thinking about your financial future by investing your hard-earned dollars into the market at such a young age.

The easiest way that I know of to complete a tax return in Australia is to get some help from a company called Sharesight (affiliate link). I’ve been using them for over 5 years and their services are free if you have under 10 holdings.

You can generate an income report and there is a section below it that shows you exactly where to plug your numbers into an Australian tax return form.

Here is mine for example:

Just be sure that the numbers in Sharesight are correct, always double-check with your ETF provider.

You don’t need Sharesight to do this but they make it very easier. You can always just use your ETF providers data and calculate the numbers yourself but I haven’t done it that way before.

Another thing to note is that if you sell shares, you’ll need to generate another report called “Capital Gains Report” which does a similar thing but for capital gains and not dividends.

I personally use an accountant atm because our situation is a bit more complicated (we invest through a trust) but the older I get, the more I value simplicity which is one of the reasons that investing in shares is so appealing to me. Once you know how to do your tax returns as a passive index investor, that’s about the only admin you’ll ever need to know for the rest of your life.

The same cannot be said about most other asset classes (looking at you real estate 👀).


Ask Firebug Fridays 26

Ask Firebug Fridays 25 Feat. Captain FI

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.

Enjoy ✌


Heads up grammar Nazis, the following transcription is half human half machine and not 100% perfect (nowhere near it 😅) so expect a few typos and errors…


Aussie Firebug: Hey guys, welcome back to the very first episode of ask fire Fridays for 2021. This is the monthly fine Q and a, where you guys get to submit your questions and I try my best to answer them. It is so good to be back in Australia, back on my good mic and back to recording these episodes and creating content for you guys.

It’s been a little bit challenging creating content during the last two years, especially last year. Uh, but you know, I’m back now. I’ve got. My proper workflow environment set up. So I’m really excited to be able to produce these episodes on a consistent basis. And we are doing things a little bit differently at the start of this year.

And I’m very interested to know what you guys think. So, yeah. Usually the  Friday episodes would just be me responding to Redis questions, but that can be, I can get a little bit boring and lonely, and I thought it’d be good to get someone else in on these episodes to bounce ideas off and, you know, just have a bit of banter and get another person’s perspective on the question and how they would respond to it.

So with that being said, the first guest that I’ve invited on is none other than captain fire himself. You might know him from his own podcast, the captain of fly financial independence podcasts, which is very popular. And I’m really looking forward to getting other fire content creators onto these episodes and just other people in the community to join me in these episodes too.

Like I said, get another person’s perspective and have a bit of banter, have a bit of fun with it as well. Um, so that is where I’m heading with these episodes. Please let me know if you like them or if you don’t like them and yeah. Just tell me what you think. Now, we’ve got a great episode today. We’re going to be covering three questions that has been written in from readers.

The first question is all about financial advisors. Where should you go? If you want to find a good one, things of that nature. The second one is the Oso controversial topic of Bitcoin. And is it a good time to buy now? And then we’re wrapping things up with a dollar cost averaging versus lump sum investing.

And we mean. Captain Phil. I speak a bit about our experience when we’ve come into some money and then you’ve got to make that decision. Do you dump it all in the market at, at once or do you dollar cost average it over a few months now? Unfortunately, there were some technical difficulties with this podcast.

So you might. He a few bits of audio drop out, um, during the podcast and the middle and towards the end there a little bit. So, uh, please bear with me and I’m working to resolve that next time we record. And with that being said, let’s jump into the pod. Hey guys. Welcome to another episode of ox Firebug Fridays.

We are joined today by captain fire from captain Welcome to the podcast.

Captain FI: Hey,  thanks so much for inviting

Aussie Firebug: me on. No worries. Now I’m sure most of the audience already knows you from your podcast and written material, but for those out there that are listening, who don’t know who you are. Can you tell us a little bit about yourself and what captain fire is all about?

All right. No worries.

Captain FI: So, um, yeah, a little bit about me. Um, I’m Catherine fi uh, I’m 29 years old, uh, pilot living in Sydney and flying my way to financial independence. Um, I discovered fire, um, probably about four years ago. Um, actually thanks for yourself, mate. Um, I really hooked, um, and you know, you used all your guides to set up my cell phone account and, you know, my, uh, share side, everything like that.

Um, and yeah, just, you know, just slowly chipped away at it. Um, trying to build up a portfolio outside of my superannuation. Uh, and really just enjoyed, um, describing the process, uh, and keeping myself and keeping myself accountable, um, via the blog and yeah, just being really fortunate to connect with, um, older, awesome bloggers and content creators like yourself.

Aussie Firebug: I, I have no idea how this is going to go today. Cause this, you are the first guest that I’ve had on the ask Firebug Friday episodes. And you know, we were talking a bit before we started recording. Um, so plenty of banter there. So this is what I’m hoping that, you know, we can just bounce off each other with these questions from the readers.

So should we get into the first question?

Captain FI: Right? Yeah, look, I’m Kate and I’ve never done anything like this before.

Financial Advisors and where to find good ones (05:39)

Aussie Firebug: We don’t recall loss so I can clean up anything in the attitude. Or, um, I first question from a reader is coming in from Alex, Alex, rotten. Hi, thanks for the great podcast and website. Would you recommend seeking a financial advisor?

If yes. How might we find a good one? Cheers, Alex. Thank you, Alex, for such a great question. And I appreciate the kind words about the podcast and website, um, lock. Have you ever had a financial advisor in your life?

Captain FI: My, I have, I have been burned, not once. Well twice thrice like

Aussie Firebug: Roy, they were the same word or a different one

Captain FI: different different ones.

So yeah. Quite quote, unquote financial advisors. Now it’s not completely fair to tar financial advisors, um, with this brush because as actually, as I found out, I wasn’t actually talking to financial advisors, I’m talking to, um, spruikers so properties. And fund managers. Yeah. So,

Aussie Firebug: um, without illegal, like I dunno, what sort of questions you asking them?

Oh, I thought it was like, you can. Specific financial advice, like what, you know, and for the record with these episodes, of course, we are just saying what we would do in situations. Never, um, never giving personal financial advice of course, but, um, yeah, thought you needed a license to, to do that.

Captain FI: Yeah, mate, you definitely do.

I actually spoke to an awesome financial advisor, um, who I met through Instagram. So her name was Dee. She actually blogs on think it’s budget boss babies. Um, on Instagram is her handle. She actually came and I interviewed her and she was. Amazing. She kind of laid everything out. She spoke about all the regulations and actually, um, what I might do is I might actually just paraphrase a couple of the things that she’s mentioned to me.

And that way, you know, listeners can hear it from a licensed, well, I’ll be at secondhand information, but, uh, yeah, you’re right. Um, they do need to be regulated, but the actual, um, re uh, Property spruikers and, um, property investments, you don’t actually need a qualification to be a property spruiker. So if someone’s actually trying to tell you to invest in it in a property development, or, you know, a turnkey or a jewel or something, odds are, they’re actually just trying to get you to, um, to buy that because they want their 5% or their, their 10%.

And actually that’s happened to me in the past. Um, and yeah, like I said, been burned a couple of times, so. No, I don’t want to, um, tar the name, the good name of financial advisors, because there are a lot of really good independent fee for service financial advisors out there. And there are a lot of really good financial counseling services people can access.

Um, all I’d say is you need to be careful and there’s one crucial step when it comes to financial advisors and that’s actually checking their qualifications on the, um, on the, uh, ACIC

Aussie Firebug: website. Yeah, for sure. Absolutely. And I’ll, I’ll, I’ll put a link in the show notes, um, for that asset website, I think with this question, because it gets brought up a lot within the community community and a lot on the, um, the Facebook group, the Ozzy Ozzy fire discussion group.

And it’s such like it’s so circumstantial because. Yeah, I I’ll speak for our situation and it’s probably not the best situation because the wine we have structured our investments, they quite complicated. It’s through a trust. Um, all was working in London. The last two years. I had my own company in London.

Um, I was, uh, a resident of another, um, a tax resident of another country. And I had investments in Australia, so there was all this stuff going on. So I have paid for financial advice where I’ve reached my limits of what I know and what I’m comfortable with. I, I don’t think you will ever go wrong, painful financial advice from a qualified professional.

And I actually think it’s, it’s quite, um, it’s a good move to do. I guess there’s so many people though that write in and I’ve heard of a lot of stories where. That’s all they’re asking for. Like, they’re just about to pull the trigger on investing in like a really, um, simple, passive, um, Vanguard ETF or something like that.

And they go to a financial advisor and of course, you know, they, they create that, um, Uh, like the, uh, there’s a specific word that they call it, but like, uh, uh, different scenarios of, you know, you invest in this, you can give you this result, um, X, Y, Z sort of stuff, and they might pay like four or five grand, which is, you know, that is what.

That professional is worth, but what they get out of the end of it, or they feel like they didn’t discover anything new at the end of the whole process. And they feel a bit, I guess, um, let down or ripped off or something like that. And I get like, this is a hard question to answer because some people need to be, have their hand held a little bit and like, Verification that what they’re doing is correct.

And you probably shouldn’t trust, like, I would say, never trust, um, blogs or podcasts for that matter. Like always do your own research, but I never think like it’s a bad move going to a financial advisor, if that makes sense. Yeah.

Captain FI: Yeah. I’ll, I’ll, I’ll agree with you on there. My personal opinion. Um, and again, you know, Try this with a grain of salt, because I’m some random dude on the internet.

I think for most people it’s, it’s maybe not necessary, but can be quite reassuring. So ,

Aussie Firebug: yeah, this is hard like it, because I say this all the time investing is so much more psychological than it is math and numbers and everything because 20% knowledge, a hundred percent time and time again, like you always read of the stories where.

Uh, people sell in a downturn and stuff like that. And there’s always people online that have, you know, nothing invested and they say all like that, those people are dumb. And why did they do that? Everyone knows to, you know, buy more when the market’s crashing. And that is true. And I would say that like, majority of people probably know that.

Right. But I I’m telling you right now, eat is different when you’re in the hot seat. And you’ve got, you know, six figures invested in the market and then it, it loses tens of thousands of dollars. Like your mind can play tricks on you. And I actually think the most important thing when it comes to investing is understanding how your investments work.

Like never rely on just reading something, even a book, or even from your financial advisor. Like always, I’m a real advocate of, you need to understand how it’s working and to pay someone to do that work for you whilst you can do that. I could just never sleep well at night without doing the research myself and knowing what’s actually happening behind the scenes.


Captain FI: And look, even some of the most experiences those can get, um, I can get intimidated, like, Oh, I’m not gonna lie. You know, I. In the March downturn. Uh, I had my regular investment strategy and look even I it’s locked, um, you know, uh, slotted away a little bit extra into my mortgage offset rather than actually investing.

And I look back and go, ah, why did, why did I do that? Um, you know, thankfully a month or so I, you know, stuck to the plan. Um, but yeah, it, you know, it you’re right when you’re in the hot seat, it does change. And, um, look, I think. A lot of us can get away with like a good enough solution, thanks to, you know, self-education discipline and being a savvy customer.

You know, if you’re getting a good deal for the things that you’re buying, you know, and you know, often, like you speak about on your podcast, if you deal with those big four areas, what’s that like accommodation food.

Aussie Firebug: Yeah. Holidays food.

Captain FI: Yeah, and you can, you can get those under wraps. You know, you’re tracking your expenses, um, your following a fairly straightforward, simple conservative, you know, ETF, and you’ve got your splits, you know, Australian versus the international, you know, that’s a pretty, that’s pretty close to a good enough solution for most people admitted, you know, I’m coming from, you know, a single young, white male perspective.

So, um, from a, you know, Quite a financially privileged perspective. I don’t have kids that I have to worry about. You know, I have a stable job. So some people listening is probably art or I captain fire. It’s rich coming from you, mate. Um, so, you know, I think there are some places where it really is appropriate to get independent fee for service financial advice.

So I would suggest, um, for anyone who’s a young or inexperienced. In finances who doesn’t have a mentor or coach that’s someone who might benefit from a financial advice. Similarly, if you are really not coming with your finances, you have, um, poor self discipline, uh, or you’re easily spooked. Maybe that’s another great reason to go and see a financial advisor.

Certainly you are paid, you know, or physically or mentally or acting on behalf of someone who is. Um, you know, if there was a significant change in your personal circumstances, you know, marriage, birth of children, relationship, breakdowns, death in the family, um, coming into significant wealth. You know, if you’d won the lottery, you’ve got a large wound power or an inherit.

Um, if you worked in a high risk occupation, like a doctor or a lawyer, or even some might consider builders to be in a high risk occupation, you know, were an athlete. Um, or finally you are considering buying a significant investment, like a house or an investment property where here in Sydney, that can be easily.

Easily over a million dollars, you know, that is just a crazy amount of debt to come into without getting some form of professional wise.

Aussie Firebug: Yeah, mate. Um, and to the, to the second point of that question, EVs, you know, how might we find a good one? Yeah, isn’t there. I thought there was a registry registry, um, independent financial advisors, like a website or something that you can look up, um, all advisors that are, um, you know, independent and you actually have to pay them and they don’t get any commissions or anything from, um, like services and other businesses.

Captain FI: Yeah. Yeah, absolutely. Um, so when I spoke to Dee, um, she basically said that a lot of people will look to the superannuation fund first, but she explained how that might not be a great idea because of destinations in the fund. She also suggested that you can look at the services Australia or that’s basically sent the Centrelink website, um, which is where you can access, um, financial counselors and financial planners.

And they’re actually awesome. Um, Eligibility criteria. Um, my mum, when she retired, um, we were able to go and see a financial advisor through services Australia. Um, and when she had her workplace injury, um, similar, so that that’s another great place that people can look. Um, there’s actually two registered bodies for financial advisors in Australia.

Um, and that’s the FPA or the financial planning association or the a F a, which is the association of financial advisors. Um, and they’re both two, um, professional bodies that, um, financial planners or financial advisors will, you know, be a part of, I guess it’s. Kind of like lucky, I’m not sure. Um, they both have websites that you can, um, access and they do have databases and they have almost had like a bit of a name and shame.

So when some, when a financial advisor does the wrong thing, they actually get publicly spanked. So by, as you said, the best place is the ACIC financial advisor registered, um, or the money smart financial advisor at register. Uh, and you can, Chuck links to those and that’s where you can earn qualifications.

Um, you can look at their experience, um, check if there’s been any regulatory breaches or any complaints against that advisor,

Aussie Firebug: like any personal, okay. Yeah. I’ll Chuck those links in the show notes for anyone that wants to check them out. Like I said at the start, I think the most important thing is to do your own independent research and go with a professional.

If you know, I was going to say, if you think you need to, but it’s like, it there’s never gonna be any harm or I’d like to think not by going with an independent advisor. Um, so it’s probably a good thing, but does everyone need to do it? Probably not. Especially if you keep it simple and you structure your, your, your portfolio simply.

Is it a good time to buy bitcoin? (18:38)

Okay. Well, I think we’ve covered what we wanted to cover in that question. So we will move on to the next one. And this one comes in from Chad, Chad writes in. Hello. Thank you for taking time to respond to all the questions I would like to know if it is a good idea to invest in Bitcoin or any other coins regards, Chad.

Well, this is such a controversial topic, isn’t it? And I’m assuming with any other coins they’re referring to other cryptocurrencies, all we’ll start off with this one. I mean, people might not know actually, but I actually do have 2% of a Bitcoin. And the story behind that is. I bought a hundred dollars worth in 2017 because the it department in which I was a part of, we were all techies at heart.

And we like to play with new technology and, you know, um, muck around with the, the bleeding edge stuff. And someone come up to the team like one day, someone’s like, I’m buying Bitcoin who wants to buy some. And I was like, Oh, like, if you’re doing all the hard work, I don’t even know how to buy it, but yeah, sure.

I’ll throw in a hundred dollars, whatever. And, um, we all bought a hundred dollars worth in the it team. I think one person bought like a thousand bucks maybe, and we transferred some money to each other. We seen it on the blockchain. It was all very exciting and long story short at the end of that year.

Uh, cause we bought like the start of 2017 for a hundred dollars. And by the time the transactional costs like the brokerage and stuff went through, I think I only had about 93 or $94 worth of Bitcoin, which I was a bit like paved off about at the start to begin with. I was like, it costs so much money to just buy it.

Anyway, it went up to like $550 December. 2017. And then there was a massive crash and it’s only just it’s come back now to be like, I think it was like six, $700 at the moment. And I don’t include it in my net worth update specifically. Cause I don’t want to like deal with all the, you know, people talking about Bitcoin and everything.

Crypto is boss. I do actually have a little bit and I’m not like I would never invest in it per se myself, because I think part of me is like, We are close to financial independence anyway, and I can see like where at the end of the road nearly. And there’s just no need. To go down that path, even though I’m not like totally against the technology or anything like that, it’s just, I don’t, to me at the moment, it’s hard to say it would be investing.

I would say it would definitely be speculating. And I actually, this is, I guess what I’m in the minority here, but I wouldn’t. Feel too uncomfortable with like having a tiny bit of the portfolio allocated towards it. Like if someone said, you know, thinking about having, um, five or 10% in crypto, I’d be like, look, you do what you want to do, but I wouldn’t be like totally against that.

Even though, even though I don’t do it at the moment, it’s an exciting space. And like, People sometimes say that it’s only an asset. If it’s generating money, what do you think cap is golden cash or I guess cash generates interest, but you know, gold, for example, do you consider that an asset?

Captain FI: All right.

Just, uh, I just want my mind on fire, but I got just grabbed a cold one out of the fridge. Well, this was a very entertaining question

Aussie Firebug: and it is a good

Captain FI: question. I need a stiff drink to calm my nerves cause, um, I just, I write a few little notes before we started talking today. And, uh, I’ll probably write far too much about Bitcoin.

Um, but look, the only kind of coins that I personally invest in are chocolate coins and that’s because I think they have something in common with the rest of the crypto coins, especially I think they’re all going to go to zero and leave a big mess. So

Aussie Firebug: why do you think that though? Do you like, have you, have you looked into the technology behind it and like the blockchain and everything?

Uh, cause I know how, like it’s very. How it all works, but I like, like, um, I’m a tech guy at heart and I’ve read the white paper on Bitcoin. I’ve watched enough YouTube videos to like generally get an understanding of the blockchain and everything. So what makes you think it’s going to go to zero

Captain FI: that’s that’s probably a bit of an unfair, unfair claim.

Um, and like, I can’t ever know something’s going to go to zero. Um, Um, my, my background was in my technical background was in engineering. And so, you know, I’ve done a little bit of coding, a little bit of software engineering. Um, but I do not understand. I understand the basic premise of blockchain technology and the ledgers, and I’ve, I’ve watched the YouTube videos.

Um, but it’s not something I understand. Um, it’s gonna,

Aussie Firebug: I don’t understand it completely either, but like, you know, I get the whole de-centralized. No one is controlling it aspect because that’s the big thing, right. Coming out of 2008, the global financial crisis. And you’ve got a whole bunch of, um, crypto cryptography nerds and math wizards and everything.

And I come up with this, you know, they combined a whole bunch of, um, technologies to bring about this decentralized currency. So like that does that.

Captain FI: So it does sound, it does sound good in theory. Um, but. You know, many, many things sound good in theory, and looking at the practical application. And I mean, let’s be honest, um, who controls the world’s wealth currently?

You know, who are the ruling elite,

Aussie Firebug: some, some, a bunch of white dudes or something old white guys.

Captain FI: Do they want to lose their wealth? Do they want Bitcoins replacing their fear currency systems? Look, I don’t know. Um, I, I think that traditionally crypto, you know, has been the currency of the dark web funding, a lot of criminal illegal terrorist activities.

And the regulatory side of it is a bit of a nightmare. And I think that’ll lead governments to be pretty slow and hesitant to adopt them as like an official currency. Um, Again, this is going to sound very qualitative. Um, one standard Bitcoin, why invest in things? I don’t understand. No, I invest in nonproductive assets like cash or gold.

I mean, let’s say best case. Um, you know, it sticks around forever, but what is it supposed to be? It’s a currency. It’s supposed to be a store of wealth, you know, and that just makes it virtual gold. Prayed on the greater full principle. You know, you need to find a fool that is happy to pay more for it than you paid for it.

Um, it wasn’t that long ago that people did the same thing with bloody flower bolts, you know, chocolates or, you know, or

Aussie Firebug: textiles. I haven’t, I think there’s like a little bit of a difference. A new technology verse, like some flowers. Right. I don’t know. And I hope I’m not sounding like too probate here cause I’m just like coming.

I’m trying to present another side of the argument, I guess. And I actually, you know, I sent, I had a question in the, um, Ozzy five discussion group, Facebook group about Bitcoin, because it is such a hot topic at the moment. You know, the price is exploding. I asked them, I asked the audience, you know, do you guys want to hear.

A podcast purely on Bitcoin. And it got a lot of, um, Yeah. A lot of people got around that and I’m trying to look, I feel I’m going to have one with the expert that’s pro Bitcoin, and I’m really, I’m trying to find someone that’s an expert that understands it. That’s against Bitcoin. And it’s really hard to find, I don’t know too many Bitcoin bears that like are very knowledgeable on the subject matter.

So if you’re listening and you know, anyone out there, Twitter, anything, um, you know, even each national, I’d love to hit them up and try to organize a pot about that. But like, you know, back to the whole. Uh, you know, tulips and the greater fool theory, I, part of me agrees with you what you’re saying, but then the other part is like, it may have some practical applications, like even gold, right?

I know gold doesn’t produce any income and just sits there as a precious metal or whatever. It, you can use it like it does have some practical use in terms of like, having that precious metal in stuff like smartphones or whatever. I feel like Bitcoin, I don’t know. I don’t know a Bitcoin as well is going to be the, the.

Uh, cryptocurrency of the future, like no one knows. I think that’s the big thing. Um, I think the, the blockchain definitely has some really cool applications and which coin like becomes the ruling sort of which one is the winner in the next 10 years is anyone’s guess that I like, I just don’t, I don’t think it’s quite.

Fair to say, like it there’s no practical use in it, even though I will say it sounds like this is why I don’t invest in it. I don’t really consider it an investment, but if they want to use it as a currency, it’s the price fluctuates so much that, yeah, I don’t see. I don’t see it anytime in the near future, you know, overtaking a major fee at currency that I’m just like, I’m not as I’m not shutting it down.

As, as men, as much as like a lot of people do. And I’m still like, um, I’m interested, I’m watching the space with a lot of interest, but I guess to answer the question, well, it’s an impossible question to answer really. Is it a good time to be calling. I’ve got no idea, but it, but it’s a controversial topic.

So we’re talking about it. Who knows? Maybe we’ll revisit this question in 10 years and it will be like part of everyday life, these cryptocurrency, I mean,

Captain FI: some of the pilots I’ve flown with, um, have got crypto and they’ve done it right so well that I don’t work with them anymore. You know, these guys have made millions of dollars

Aussie Firebug: riding they’ve rode the train,

Captain FI: they sold it and now they have ETFs and property.

Aussie Firebug: Th they’re pretty much gambling. Right. We can both agree that to become a Bitcoin millionaire is essentially gambling. Like, you know, they’ve, they’ve hit the, that, um, one concept though. I don’t know if you’ve come across this. Have you ever heard of defy before? So apparently, cause I know like it’s a big, a lot of people bring up the point like.

Bitcoin is not investing in. You can’t make money off Bitcoin. It’s the greater, it’s the greater fool theory. Like I get all that and I tend to agree with a lot of it, but I’m not, I’m like got to do, I’ve got to get someone on the planet. And maybe it’s defy, apparently there’s ways to make money consistently.

Like I’ve seen websites. I don’t know how it works. And, um, I really want to get someone to explain it to me a little bit, a bit. Apparently you can earn, like you can get a yield. On your Bitcoin through some mechanism out there, and I’m not too sure what it is, but like I’ve seen, I’ve seen, um, a few articles and a few websites that will give you like five and 6%.

If you hold your coins in some exchange or, you know, somewhere, which could be, uh, no doubt. And I don’t think it’s, I dunno, share sponsored, but like, if you’re earning five, if you’re already earning some sort of yield to hold coins, like. That makes me feel a lot better. I don’t know about you, but that, like, that would be like a, I feel like that would open up.

I’ll feel a lot more comfortable, you know, having crypto like as a small part of my portfolio at if it’s earning know 6% yield, um, every single year. W w w what were your thoughts about that? If that was like a legit thing,

Captain FI: that’s definitely a bit of a game changer. I mean, ultimately if it’s supposed to be a currency, isn’t it just supposed to be a store of wealth that grows?


Aussie Firebug: think, I think Bitcoin is. But there’s other crypto currencies that do a lot more than just hold wealth. Like I know I’m not an expert, but you know, there’s like these smart contracts out there, it’s this there’s this like whole universe that is blockchain technology has enabled to be like, if you, if you write a contract a specific way and you lay out all the rules and the conditions.

Once it’s, you know, put on the blockchain or however you do it, like, that’s it, there is no human person that can change that now. So when certain conditions are met, there are certain things will execute on the blockchain and things will go through. And like, I guess I think it’s this  movement that didn’t, it’s kind of like a lending structure.

Yeah. You can do it like a lending structure apparently. Yeah. So like, it there’s just a lot of possibilities. Like it really does feel. The more I read about it and I’m not really too obsessed, to be honest, I might sound like I’m really obsessed, but I’m actually not. There’s a lot of like parallels to the early internet.

A lot of people have said, and I tend to agree. Like we, we’re not people don’t are not too sure what the blockchain and these crypto is where. You know what role they’re going to play and how it’s going to impact the future or anything like that. But there’s a good chance that it will play a role. And that was sort of like the internet in the nineties.

Right. But the hard bit is finding on which website will come out of the internet on top. Like if you had to choose a search engine in, you know, 1999, and you were lucky enough to get Google, then you’ve just hit the lottery. But like, there’s probably like. A thousand other search engine out there, like there is a thousand other cryptocurrencies and know all this other stuff that’s going on.

So, um, who knows, but, but I also think it’s interesting that it crashes, but then it also comes back. Like, I don’t know the history with that with the tool of mania. Like I know a little bit about it, but did it ever peak again, like Bitcoin is literally died, you know, 10 times now and it keeps coming back, you know, bigger.

The next time. I don’t know if that happened with a lot of bubbles.

Captain FI: I

Aussie Firebug: don’t know the answer to that. Yeah. Wrapping this question up now. I have absolutely no idea if it’s a good time to invest in Bitcoin. And I don’t think anyone really knows if it’s a good time to invest in Bitcoin or not. Uh, what I will say is the technology is very exciting, the blockchain, and I’m not as dismissive of it as a lot of other people are in the community.

As I mentioned earlier, for us personally, Uh, where we’re well on track to reach financial, financial independence. So I don’t feel the need to take on additional risk or to sort of go off on another path or anything like that. But what I will say is I’m not totally against dabbling in crypto and, and exploring this and potentially buying some coins in the future.

DCA vs Lump Sum Investing (33:07)

That’s not, I’m not shutting it down completely. And it may be something that we do. Moving on to the very last question for today, we have a reader called DC who writes in Haley  Firebug. I know your dollar cost averaging the proceeds of the investment property. Number one sale into your equities portfolio over the last 12 months or so wondering if you’ve run the numbers on what the difference would have been.

If you put it all in, when you first received it. I know you wrote about needing guts and courage to invest at all. Now that you can put a dollar figure on your foregone investment returns versus the actual investment returns you made, how do you feel about this? Knowing what you know now would you have acted differently?

Thanks mate. W uh, these questions referring to, and this one was actually, it’s a bit old, so I know I have done bug Ozzy Firebug stuff, you know, for. A long time now I’ve just been overseas in the last two years. So this one I think was put in like nearly a year ago, but it’s a, it’s a good question, I think.

And what is referring to is we sold our investment property, um, in 2018 and we got quite a large cash payout with it. Everything, when everything went through on the banks, you know, the mortgage was paid off and everything thing, it was like, Close to $200,000 or something of cash was just sitting in your bank.

I basic, I wrote about it in a few updates, but instead of putting it all into our portfolio in one hit, which is what the literature says to do, and it works out. That’s a more often than a dozen I dollar cost average. So I went from like, we try to do about $5,000 a month, anywhere portfolio. And we bumped that up to 15 to $20,000 and we just, we dollar cost average debt, um, over the next 12 months, because always, and this goes against everything I stand for, but I was like really worried that there was going to be a huge crash.

And if people can remember at the end of 2018 in December, so we sold in like, September, I think to 2018 in December, there was a big crash and it actually pulled back a lot in December. And I thought, you beauty, here we go rash. And I’ve got, ’em all cashed up and it actually recovered real quickly. And in hindsight now, um, I would have totally been better off putting it all in at once.

I haven’t run the numbers to figure out how much better off we would have been. Uh, but again, it’s such a psychological thing. I just was like, So are scared to be crashed, what’s going to happen. And it’s just what I felt comfortable with $2 cost average. Um, but that’s just me. So what about you cap? Have you ever had like a logic.

The money that you need to put into the markets. And how did you approach that?

Captain FI: Yeah, the con the convent, they shouldn’t be out at dollar-cost averaging versus some investing is, um, it’s a really good conversation to have. Um, personally I fancy myself as a, want some style investor, like most things in investing, you know, sometimes you can romanticize, uh, Um, but, but in general, I always try to invest as much as I can, as soon as I can.

And that’s just kind of been my personality. I won’t lie. Sometimes I just jump in with two, my two left feet and sometimes I get fit well

Aussie Firebug: that that’s what the, um, analytics say that that’s the best way to do it. And that was definitely true for my delight in the question. It says, you know, not knowing what you know now would you have acted.

Of course I would, because hindsight is 2020. So if I knew what the market was doing, I’d invest exactly at the right time, but that’s, you know, you read a lot of, um, analysis on this end, the lump sum. Historically has been the better way, more fun than not. Um, so it’s actually a good way to be. It’s interesting

Captain FI: though, when you look at, um, the concept of DCA and, and LSI for me, you know, I’m an employee.

Um, I receive a regular income and as soon as I get it, I invest it. So ironically, that’s kind of both dollar cost averaging and mom’s time investing. But I think more specifically, I guess the question is what happens when you fall and yeah, look, I’ve been in that situation. I, um, I received a, a small payout.

Do you do like a work, um, work dispute? Um, basically, you know, a back pay, um, for more of a better term. Uh, and you know, my response was to invest it. Um, I get, like I said earlier in the episode, I did get a little bit scared of the much Downton and not the sort of convenient, like shove over a bit of cash, emailed for investing into my mortgage.

It rather than investing it. And it, that was a bit of an excuse and I was a bit scared. Thankfully, I came to my senses and resumed that sort of regular

Aussie Firebug: investing. I don’t think anyone. Yeah. Like if you’ve got, I always tell people this and you know that right in, like once you have a significant amount of your wealth taught up in the markets, when it does draw, you know, five, 10, 15%, whatever it, unless you have some sort of robot, unless you’re a, some sort of spreadsheet Excel robot that just does the perfect thing at all times.

Like, The stuff is going to happen and your mind is going to play these tricks. There’s nothing worse. I know you’ve been in this situation, a cat that if you second guessing yourself and you’re like struggling to sleep at night, daddy’s the worst spot you want to be in. And that’s where knowledge is power.

And like, you will only sleep soundly at night. If you know, How it works and what you’re investing in and why you’re in that. And this is like tying back to that first question with, you know, do you need a financial advisor? Like that is so important. And I think that’s the most important thing. Something

Captain FI: that I’d bring up as well is, you know, the concept of, um, debt payoff.

Isn’t something that we really talk a lot about in the fire community, but the fire community and the debt, you know, the debt-free community, um, uh, you know, are overlapping. And, you know, you’ve got the concept of debt snowball versus the debt avalanche. And if you read the barefoot investor or, you know, Dave, Dave Ramsey, um, you know, you’ll see that they would, um, be proponents of the debt snowball, and that means paying off your smallest step first, knocking them over building momentum and using that to pay off, um, the, the highest debts

Aussie Firebug: last.

It’s like, it’s like a psychology. It’s like a psychological. Yeah, absolutely.

Captain FI: Whereas the debt avalanche would take a more analytical little analytical perspective to pay off the highest interest rate first. So people with maybe brains like ours, um, you know, typically referred to us, I guess, an analytical or an engineering brain.

You know, we, we’re probably a bit more comfortable with the debt avalanche and we’re probably a little bit more comfortable with lump sum investing, but the power, the psychological benefit of the debt snowball is similar to the psychological power of the dollar cost averaging. Yes. I mean, I think to, to weigh into my situation a little bit more, uh, personally, you know, um, having an investment property, um, building at the moment and I don’t ever envisage selling it.

So I don’t imagine that I’ll ever be in a situation like you were, and you had a bit of cash to invest. Um, my plan is to just sort of have it sitting in the background, hopefully it appreciates and capital value and, um, you know, I’m able to refinance on an interest only loan, you know, that’s the plan at the moment to say, you know, again, re romanticizing myself as an investor.

If I did sell it for whatever reason, yes. I would like to have that money reinvested into ETF’s websites or another property development or purchase as soon as possible. It’s very, very easy to sit here and say that now, but very difficult to actually do it. When it’s your,


Aussie Firebug: you were in the hot seat, I absolutely do.

You know, there’s so many parallels. To invest in personal finance and, you know, the whole realm of fun and maintaining a living the lifestyle and like going to the gym and everything. There’s so many parallels between the two, because, and I even wrote, like I had an article, um, about increasing your income and I drew upon, you know, health and fitness, a lot in that area on how it can relate to good financial habits.

And I feel like in this situation, so like to answer the question. If we are ever in the situation where we have a lot of money and we need. The markets. I like to think that I would do it in one lump sum. Like that’s what I’m thinking now. That’s what I want to do. Um, but it might change, you know, when I’m putting the hot seat, but like with health and fitness and especially like going to the gym and eating right.

And stuff like that. It, most people are like to think no, what they should be doing. Like it’s not easy to, to have the, you know, uh, an APAC and those washboard ads, ads, and everything, and like to it’s it’s it takes a level of discipline to stay fit and healthy for most of your life. But it’s not the lack of knowledge.

It’s not like there’s like a secret sauce or anything to it. Most people, I would like to think so anyway, know what they should be eating and that they should be doing some sort of, sort of exercise, you know, everyday breaking into a sweat, you know, not sitting on the couch for 10 hours a day, whatever.

It’s just like doing it and knowing what to do. Uh, two very different things and there’s that level of discipline and like, you know, enthusiasm can only take you so far. You’ve got to rely on the, um, the discipline and the routine that you’ve built to like sort of maintain that lifestyle feel as though a lot of that has to do with investing as well.

Like you can read and read and read all the things that you have to do and, you know, what’s best to do and stuff, but to start actually doing it. And developing that self-discipline, it’s going to be a lot different than just listening to what’s best and reading what’s best. If that makes sense.

Captain FI: Yeah, absolutely.

Mate, you know, Tom it’s people say, well, how do I get good investing? How do I do this? The most important thing is to just stop and find out what works for you.

Aussie Firebug: Um, I got to get it perfect. The first time I know that I had analysis very well because. All was like, okay, I can’t possibly invest without investing in the best product ever.

Like, you know, how could I possibly invest $5,000 in less? I do 12 months of research and it has to be the best investment that’s possibly available, but like the best investment doesn’t actually exist because everyone has slightly different circumstances and goals. So it’s like, Just start. It is definitely one of the most, um, it’s one of the hardest things to do.

Even for me, I was researching this stuff for a good 12 months before I went into the share market, but just starting making those mistakes and then like building on them and like figuring out what works for you is, um, It’s like, it’s all part of the journey. Isn’t it

Captain FI: getting, getting some skin in the game?

Yeah, mate, I just wanted to say, look, I, um, I’ll put it out there right lately. I kind of been struggling a little bit, you know, I’m back to work and my job, you know, confidence and, um, you know, your mindset is really, really important in aviation, uh, because it’s, you know, it’s a time critical environment and you’re constantly making decisions.

You’re constantly evaluating what you should be doing. And some of the stuff that I’ve been chatting with my therapist about, and, you know, there’s absolutely no shame in talking to a therapist. Mental health is super important. There’s a bit of stigma about that in my field, but let’s say, yeah, we can move on from that.

But. One of the things we talk about is, you know, comparison is thief of joy. And what I’ve learned in my journey to financial independence is that, you know, yes, we need to keep track of our finances and yep. We should not be afraid to make changes if you know, things clearly aren’t working. But for me personally, the level of scrutiny, scrutiny, and comparison that I’ve applied to myself and comparing myself to other people, you know, that’s been a huge source of anxiety and tension for me.

So one of the things that we’ve been working on is basically the kiss principle, keep it simple. Don’t overthink it. You know, the 80, 20 principle in a focus on the 20% of work that gives you the 80% of your results, you know? And so for me, agonizing over what could have been. If I had a, it slightly different investing choice or what someone else achieved or, you know, or what the  did.

And damn, I wish I had done what he did or, you know, should I have listened to Mr. Money mustache? You know, should I invest differently? That’s not, for me, I’m stepping away from that mindset. And I just want to focus on a simple proven strategy and not overthink it. Um, and that is what helps me sleep at night.

And so, yeah, so I try not to, I try not to overthink and get the analysis paralysis.

Aussie Firebug: Absolutely. Some wise wise words, inmate to, to end the pod actually we’ve reached the last question, dude. It was an absolute pleasure having you on. Thank you so much for making it’s been

Captain FI: wonderful. And, uh, I even got to have a beer, so how good.

Aussie Firebug: Yeah, we’ll have to grab on in real life. Eh, one, one day I’ll, uh, you know, when all this COVID stuff blows over, will I know some that they should be a fine meet up at some point might even, you know, try to organize one, but yeah, we’ll have to have it be in real life, man.

Captain FI: Uh, and, uh, the good, the good thing about my job is, you know, you can generally see sneak over the border at 30,000 feet and yeah.

Aussie Firebug: Yeah. Private plane. All right. Really appreciate it.

Shout out to the cap, making the time to come on, highly recommend his pod as well. If you just search for captain fire, you’ll find him. And that’s a wrap because that’s the first episode in the books for 2021. Uh, like I said at the start very excited for this year. And I’m looking forward to creating that consistent content and really getting back into the swing of things.

And with that, enjoy your Friday guys. And I’ll see you on the next episode. Thanks guys for listening to another episode of the Ozzy Firebag podcast, for links to all of the resources, plus an entire transcript of this episode, head over to Ozzy Make sure you never miss out on another episode by subscribing now on iTunes or SoundCloud.


Ask Firebug Fridays 26

Ask Firebug Fridays 24

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.

A bit of a different AFF today guys,

It’s been ages since I last uploaded any audio content and I wanted to give you all an update as to what has been going on.

I also touch on a topic that I’ve already covered but my thoughts have changed over the last few years and I think a few people would like to hear what I would have done differently if I had to start my FIRE journey all over again from scratch.

Enjoy ✌


Heads up grammar Nazis, the following transcription is half human half machine and not 100% perfect (nowhere near it 😅) so expect a few typos and errors…

Intro + Podcast update (0:57)

Hey guys. Welcome back to another episode of Ask Firebug Fridays. It has been a very long time since I last recorded one of these episodes, uh, or any of my podcasts for that matter. It’s been nearly six months. Since I last produced any audio content, and I felt like I needed to just give you guys an update as to what’s been going on during the last half of this year with Aussie Firebug.

And I also wanted to touch on a topic that I’ve actually already covered before, but my perspectives have, has changed on that topic over time. And I think it will continue to evolve, but I wanted to just get, give you another update on that subject matter, because I think it might help out a few people, but first let’s talk about the podcast and generally.

Aussie Firebug content of light. Let’s get into it. Okie dokie. So unless you’ve been living under a rock this year, you’re probably aware of the global pandemic that has gripped the world. So COVID hit in March this year, 2020. And my company that I’m working for basically went into overdrive. So I’m working for a startup and for anyone out there that hasn’t worked for a startup before, it’s not uncommon for the first couple of years.

Uh, w at working for a startup or when you’re working for a startup that it’s pretty full on. You’ve got the founders, they’re the early adopters. People are all trying really, really hard to make this new idea, make this new company work, and it can be quite stressful. And there’s a lot of work and people are putting in, you know, ridiculous hours.

So I’m working for a startup and then when COVID hit and everyone started working from home, I felt like that workload and the stress and everything was compounded a lot by people working from home and maybe, you know, managers, not sure if people are working as hard as, as they could be, or as efficient as they could be if we were in the office.

And I’m sure that, you know, people out there that are listening to this pod, uh, that are, that have been working from home this year. You can probably back me up when I say that the lines between what is work and what is not work is really, really blurred at the moment. And I guess, um, you know, we’re all trying to adapt to this, this new world that we’re currently living in, but I found myself on the computer.

You know, past five 30, just finishing off a few little bits and bobs, uh, for the job. And next thing you know, it’s like seven 38, and you know, I’ve got to have dinner, I’ve got to go to bed soon and it’s a really unhealthy thing to get into the habit of doing, but it just sort of. I know, it just sort of happened to me and a lot of my colleagues and essentially you do that long enough.

You’re going to get burnt out. And that’s exactly what happened to me this year. I was sick of staring at a bloody computer screen for potentially, you know, 12 to 14 hours a day. Well, I don’t know about you guys out there, but I do a lot of my leisure stuff. Um, in my leisure time playing video games or watching YouTube videos, it’s on the computer or it’s looking at some sort of screen.

And even I was thinking about this the other day, like even when you’re at work, yes, I’m still working on a screen predominantly, but I get breaks all the time. Like if I’m going to. You know, the coffee maker or the water fountain, or, um, just going into a meet meeting with people and like looking at them face to face.

It’s like it gives your eyes a break from the screen. And it’s crazy to think about how long, all a whole bunch of people working from home all around the globe have been staring at a screen for this long, for this amount of time, without any breaks. Like I literally wake up, I’m staring at the screen all day.

I’ve got all my meetings there. And, you know, this is, this is nothing new. A lot of people are going through this. Um, and actually funny side story, not, not really funny, but, um, I actually had to get glasses during lockdown, which was, you know, I’ve never needed or never felt like I’d needed glasses before, but they, the, the glasses that I did end up getting reduced the stress on my eyes or something like that.

Um, so it wasn’t so much that I need them to see per se it’s just to help me, like, not. Concentrate too hard on the screen or something. Uh, it helped with the headaches anyway, so they must be working. But, um, it was funny to listen to the optometry, say that the amount of people that have booked in to get new glasses during lockdown has just been through the roof, which I can totally understand with everything that’s been going on.

So anyway, I was working too much and the last thing I wanted to do. Is jump on the computer to do, even though it Aussie bug. And this podcast is a passion project when I didn’t have to be in front of a computer. And especially after like the hardcore lockdown finished in London and we were able to go out and weekends and things of that nature, I was getting out, I was getting out on my bike and if we weren’t like exploring London on the weekends, we did do a few trips overseas during the weekends and stuff like that.

Um, so I really just haven’t. I, I haven’t wanted to jump on the computer during my spare time. And that’s where a lot of the Aussie Firebug content that I do make happens. It’s either after work or on the weekends, maybe in the morning or something like that. But I just felt like I had to get away from the screen as much as humanly possible when I wasn’t at work.

So as a result, uh, you can imagine Aussie Firebug content fell off a cliff, but I really just wanted to give this update to you guys because I’ve had a few people actually messaged me saying, you know, a steward on the podcast is the podcast. When’s the new episodes coming out. And I thought I better release something just to let you guys know that it’s still, I’m still recording episodes.

And I actually still have. Um, I currently have a lot of episodes in the editing room and I’m sure, um, maybe there’s people listening that have been on those episodes and sort of, uh, wondering when they’re going to be released. And for, for those of you out there, I definitely am going to release them and edit them and stuff like that.

I just, I found it really hard to, as I said, have the willpower to be in front of a computer when I, when I don’t really need to be. And I guess that’s, that’s the beauty of running, you know, a passion project and a side hustle is like, I only have to do it when I want to do it. I’m really just crawling to the finish line with this contract.

It’s sort of killing me a little bit, this contract. So I just want to get it done. Finished the year, have a really good rest and I’ll be back better than ever in 2021. And I’m really excited about, I’ve got some really good podcasts guys in the editing room that I can’t wait to get out. Uh, but it’s nothing is going to be released until next year.

On the blog side of things, I’ve always done my monthly net worth updates and they will continue. But in terms of the podcast or any audio content, uh, that nothing, nothing new will be released this year. It’s going to happen in 2021. And that’s really the update and that’s really all I wanted to say with this.

So I am taking a little break and see you guys next year.


What I would have done differently if I had to start all over again (7:58)

Okay. So to finish the last ask, Firebug Friday episode of 2020, what a year it’s been, uh, we’re going to revisit a question that I’ve already covered, but I’ve had some, as I mentioned in the intro, my thoughts on this has changed quite a bit.

Especially in the last two years, it’s really been a, a learning experience for me. And I think I’ve really grown as a person and I’ve really broadened my horizons in the last two years. And I, um, I’m excited to speak to you, you guys about that, especially in regards to fire as well, like it, cause it goes beyond fire for me in the last two years, but I think there are some, some great lessons that I’ve learned that I can apply for.

Uh, the, the journey that is financial independence retire early and, um, yeah, so let’s get into it. So the question is what would you do differently if you were starting again from scratch today? And it’s a great question. Um, and I think a lot of people ask that when they knew to find they’ll come into the forum boards or the Facebook page, the Aussie fire discussion group, and they will ask this and that they’re hoping for people that have done the journey to, you know, speak on their experience.

So I want to break this down. I really want to focus on the financial independence side of thing for, for this question, because the retire early part, I think is a lot more philosophical. And I could probably do a whole episode on the retire early and why it’s important and you know, what, what, what should be the driving factors of why you even want to go on this journey to begin with?

But I think it’s going to be too long. If I, if I go, if I delve into that, Um, that sidebar. So I’m going to stick with, what would I do differently if I’m starting again from scratch today in regards to financial independence and reaching financial independence and not necessarily the quickest way possible, but doing it the best way?

I think so that’s not depriving yourself of everything, but I just, there was, there’s a few things that I would tweak. So first of all, I’m going to break. Financial independence for me is there are three major components. And then there’s sub components within those major components are of reaching financial independence.

So the first major component and the most important one, and I’m going to list these in order of importance as well, which I think is important. So the first one is the savings rate, which I think is universally regarded as the most important thing. And for good reason, amongst the fire community. It, it has that double whammy effect of not having to produce as much passive income to live a great lifestyle and also having more money to deploy, to invest.

So as you, you know, as you get a higher savings rate, both of those things happen at once, which is why it is so important. And it definitely is, uh, the main thing people should focus on. Yeah, the second major like segment or part of reaching financial independence, in my opinion. And the second most important.

And Mike, this is where my views are starting to change and has been updated in the last two years. Is income potential. So that means your earning capacity. And I’m going to go into detail in a minute, but that is in my opinion. Now I’ve changed my mind. I had a, I actually didn’t even think about this one, um, till I moved overseas, but income potential is a major one that does not get.

Enough limelight in the fire community. And the last major piece for this is obviously investing because you need that passive income. But I think that way too many people focus on investing and even they, they skip a lot of people when they first discover financial independence, they will skip the savings rate.

And they definitely a lot of people, even that have been around the financial independency in a long time, or skip the. Income potential, uh, and they’ll go straight for it. They will go straight to investing. Right. So you’ll always see questions about investing, you know, VAs 8,200. The Vanguards diversified high growth index versus, you know, make your own portfolio.

There’s a whole bunch of questions that always gets asked on the Aussie fire discussion group on Facebook, which I’m a moderator of. And it’s fine to ask those questions. Don’t get me wrong, please. You know, it’s not like you should stop asking them, but really the bread and butter over reaching financial independence is really your savings rate.

And your income potential in my mind, if you can nail those two things, the investing side, why whilst important, I don’t want to downplay, like there’s not important, but it’s really like, it’s, it’s largely out of your control and you should really focus on those other two things, which is why I want to, I want to dig deeper into those two things for this question.

And we’ll start with obviously the first one, the, uh, savings rate. So let’s start again. Let’s start from the top. The savings rate. Is obviously how much of your paycheck you can save. And it’s got that double whammy effect. Like I said, the higher your savings rate, you have the more money you have to invest, but also the other side is the less you, the less passive income you need to be able to live your lifestyle.

So that awesome double effect is happening now. My views on the savings rate has definitely changed over the years. And really what I would say I would, if I was starting again from scratch, I would focus on the four big areas that 98% of people, 99% of people will most likely spend majority of their, or the majority of their expenses will fall into these areas.

And they are housing. Food transport and holidays Eve, you can nip these four big areas in the bud and establish good financial habits early on in the piece. Most of the other things take care of themselves. Now I that’s an, that’s a, a viewpoint that I didn’t have my whole life. Actually the majority of my life, I really sweated the small stuff way more than I really should have to be honest.

Like I think back now, And I cringe a little bit about how, how much of a tight ass I was back in the day. And I definitely like, I hate using the word regret because I, you know, you can’t change it and it is what it is, but there are definitely things that I could have done differently. And I, I would have done differently if I was starting again from scratch.

And I’ll give you an example because when I was younger, actually, between. Like the ages of maybe like 14 to about 26 or 27. I was probably, you know, one of the biggest Tituss you’ll ever meet in your life. And. I was, I grew up a little bit crazy with how much money I was trying to save around about the time that I discovered fire.

And I used to set these hardcore budgets, like $2,000 a month. That was all I was allowed to spend. And it didn’t matter what emergency popped up because there was always some sort of thing that popped up during the month, but I just have to, I had to figure out and deal with it. Right. So if I had to get new new tires on my car and I had to spend my four or $500.

Well, that’s $500. That’s like 25% of my budget was gone for that month. And I always worked around that. Like, you know, that the famous saying, pay yourself first. I definitely did that. I was like living that mantra heavily. So when I got paid, it was like all of it was saved. And at that point I wasn’t invested in the share market.

I was saving for a deposit for investment properties. And I would stash that money away and then whatever money I had left over, I would just have to deal with it. I had to make it work. Right. So it was like, I looked back and it was definitely, I saved a lot of money that’s for sure. But now that I’m older, I do sometimes wonder, did I sacrifice?

And I give something up in terms of friendship groups. Uh, in order to squeeze out that little, few percent of a savings rate and was it worth it and looking back now, I’m not too sure it was. And like, if you, I’m not saying I lost any friends, you know, cause I was too much of a tight ass, but I really like, you have to, if you’re getting invited to social gatherings and events, And you’re constantly not going because you’re worried about money and like saving as much as possible, which I definitely went through a few years of that back in the day you’re going to get, or your friends are going to stop inviting you to those events and those gatherings.

And I’m still, I still have mates and I’m still friends with the people I grew up with and everything like that. But yeah, I like since moving to London and. Going out and not worrying so much because I’ve definitely treated my time overseas as like an adventure and a holiday. Um, and so I do go out for beers with my work colleagues all the time.

I’m not too, you know, I, I hardly even worry about, uh, you know, if we go out for dinner and everything like that. And what I found is I still track how much we spend religiously. And I don’t think that’s just like a habit I’ve always got. And we actually aren’t even spending that much more. We really aren’t.

And I feel like because we have good financial habits built in already. We can like live a little bit and the small stuff really doesn’t matter as much as I thought it did at the start. So as long as in my mind, as long as someone’s got housing, food, transport, and holidays, Within reason and optimized as much as possible.

I think that. Yeah. You know, going out and having beers with your mates and spending money on that coffee. I don’t think it matters as much as I thought it did at the very start. Now I know that there’s going to be people out there that have done the math on it. And I understand all that. Trust me, I, I get all that.

I was living in a spreadsheet myself, uh, at the start of the journey. So they can say like, it adds up over the course of the year. Then you compound that you invest at this. This is how much money you gave up. I get all that, but I think sometimes it’s okay to just not sweat the small stuff and to live a little bit within reason.

If you’ve got those four things under control, I think you’ll be more than okay. And if I could go back, I’d probably change a few things at the start of my journey and. Last point on this, the housing part of the equation is, is probably no, I think it’s definitely the biggest part because the other three, like you can just follow common sense.

You know, food, try to make as many meals at home. It’s going to be healthier. It’s going to be cheaper, better for you, et cetera, et cetera. Um, transport, you know, don’t buy a brand new $50,000. You’d have Europe, an apprentice tradie. It’s going to set you back financially a lot. And holidays, you know, do you really need to go to, uh, the, you know, the latest Island that the Kardashians went to or something, or the latest girl on Instagram has been not learning videos too.

Pick your holidays and, you know, be as efficient as possible with it. So I feel like those three areas are pretty self-explanatory, but the interesting one, and just from my experience, uh, in the last couple of years, like just growing up with, with people and seeing what people do, my people, I went to high school and stuff with housing is such an interesting one because, and I’ve thought about this a lot.

A lot of my mates, uh, boys and girls, they started working and pretty much everyone’s every like the group of friends that I grew up with and like, uh, that generation, like I was born in 89 and, um, I’m a millennial also. So our parents had a, really, a strong sense of home ownership was making it in their eyes.

And so like, if. It was constantly repeated at the dinner table. Like this person has bought a house like this, this young, you know, it might one of my oldest sister’s friends. It was like 22. She’s got a house. Well, she must be doing so well for herself. She’s setting herself up like. I think a lot of people out there listening, even my, uh, Google analytics has anything to go by, fall into the same age range that I’m in.

So I’m hoping that a lot of you guys out there can relate to this, that our parents, like if you’ve got boomer parents getting a house and getting a home, owning a home really young, it was like the ultimate sign that you’re doing well in life, which is really funny because. I just, I don’t think that our generation, the millennials value, and I don’t want us to be speaking on behalf of a whole generation, but our generation is a lot different to our parents’ generation and a hell of a lot different to our grandparents generation as well, because that’s, that’s the other thing I was thinking of, like my grandparents on my dad’s side is Italian and they migrated to Australia.

So. I could understand that having a bit of land to call you on your own and like starting this new life and by getting a house that you can raise your family. And that was like a big deal. That was like the dream you go to another country, set yourself up, right. Get start a new life. And then they had kids which were our parents, the boomers, and they’ve sort of grown up with the same, you know, similar mentality, like get a house.

Start a family. Like that’s, that’s sort of what the goal is in life. And I really feel. Like that is not the case for millennials. We do like, and I think the statistics back it up as well. We do a hell of a lot more traveling and we’re exploring the world and we aren’t working the one job for our whole career.

Like those days are really, um, they’re gone that, you know, you go to a, you started a corporation, you work hard, you work your way up the ladder. I really don’t think like there’s going to be people. I’m sure that do that still, but, um, they’re far and few in between. Most people will have a lot of jobs throughout their career.

And most people as well, most millennials, uh, have traveled way more than their parents. And that’s like due to a whole bunch of factors, um, a higher standard of living, you know, travel costs coming down and stuff like that. But the point I’m trying to make here, and I’m going to tie this back to the housing point is a lot of these people that I grew up with and I’ve seen, you know, in my home town and everything.

They ended up getting, they end up buying these like four bedroom houses when they were 22, 23. And I’m not saying that that’s like a bad thing because it’s not it’s, you know, you can sit yourself up and you can pay it off. If you’re lucky, you know, by the time you hit 30 and everything, and that’s good, that’s better than most people.

Right. But if we’re talking purely on finances, and this is a point that is often, often overlooked, there is an opportunity cost that comes with buying such a big house, or to put it a another way, taking out such a big loan at such an early age. And half the time, like, hopefully, you know, you guys can relate a little bit and you, you might know someone that has done this, but half the time these people, they buy, they buy the humongous house and they only live in like 20% of the house.

They might use the kitchen, their bathroom, their room, and then there’s like three empty rooms. They got this big space of land, this big block, and they’re not using hardly anything. But what they don’t realize is they’re paying for all that. So, like, that’s not, you know, they’ve got this big house and everything, but they’re still paying for it.

And they have so much of their capital tied up into an asset that isn’t produced. Are you seeing any income? Now? You can argue, you can say, yeah, but you can sell it later on for a profit and pay no tax, which is the nice thing about, um, the primary place of residency. And yes, that is true. But. You are locking away so much capital that it isn’t able to compound when it’s not producing any, any income.

So that’s a lot different, a lot different than investing or buying an investment property and, and living in a much smaller area and really trying to save a whole bunch of money and, and put that into an income producing asset. It’s a lot different. And I’m not saying either way is right or wrong, because as many people know there’s intangibles that come with buying a house and a lot of people buy a house for different reasons.

But if we look purely from a, from a financial point of view, All I’ll say, is that be sensible when it comes to housing and either you’re going to buy a big house early on and like, that’s what, that’s what you’re going to do. Just know that you are going to be paying for it. And that opportunity costs is there.

So you really need to ask yourself, do you really need a house that costs that much money? And do you even know what you want to do for the next seven years? Because if you don’t really know what you want to do, So, what we did is rented this tiny two bedroom flat in the country that cost bugger rolls like.

At one stage, it was like $190 a week, which is just really, really cheap. And we just poured money into income producing assets. And I really feel like that sped up our journey a hell of a lot, and it almost would have been, it almost in some sense would have been crippling if we had taken out a decent size loan early on in the piece.

And what’s funny is that we were really close to doing that back in like 2013, where. You know, are we going to rent? Are we going to buy? And I can tell you that I’m so glad that we went down the renting path because not only has it opened up doors and it’s allowed us to travel and everything, because sometimes I think if you’ve got a house, are you really going to take that risk and maybe move to another place to get a new job or go overseas or anything like that?

If you’ve got this mortgage tied, To your name and everything. And I think that I really truly think that that might put a lot of people off. So I think you just got to ask yourself, do you really need to own a home? And I think for people, with families and stuff like that, yes, that’s a good reason.

That’s what we will eventually own a home for that reason. But I think that too many people, uh, pushed in the direction of homeownership, especially by their parents when they don’t even really know what they wanted to do with their life. And, uh, yeah, it’s just something to be aware of. But either way you go and I guess I’ll wrap it up now in this, with this point is just be sensible and try to optimize the housing as much as possible.

So whether you rent. Do you know, do it appropriately and sort of live within your means and get that nip that in the bud. And as I said, good financial habits early on in the piece. And if you buy a house, try to buy appropriately because bigger is not always better. And you’re going to have that opportunity cost.

If you tie up all your capital in a non-income producing asset. You know, it, it could, you could miss out on many years of, uh, compounding. That’s all I’ll say, all right, the second major part. And I think this does not get covered enough and my eyes are really opened and I’ve really broadened my horizons really.

In regards to this part is the income potential on the road to financial independence, right? I wasn’t even thinking about this and I didn’t really, even, this is like a brand new area for me. Um, but I did actually recently contribute to Pearl is ebook called Aussie FIRE,  where I spoke about how important it was to increase your income and how it’s often overlooked.

And it has taken me years to realize this, moving to another country where my skills are in demand has really broadened my horizons. Your earning capacity is the biggest asset of all during the accumulation phase. Now I want to, I want to repeat that because it’s SU I, I feel like it’s super important and it doesn’t get spoken about enough in the fire community.

Your biggest asset is not your share portfolio at all. It isn’t your biggest, your biggest asset is your earning capacity. Now, once you’re finished with the accumulation phase, Yes, your share portfolio will, you know, it will be so large that it’s going to be doing the heavy lifting, but it, that doesn’t kick in until the very end and on the journey towards financial independence, you really have two major leavers at your disposal, how much you’re willing to save and how much money you can earn.

And those two, those two are the drivers to financial independence. Trust me on this. Like I’m. W we, uh, to also use away from the angle and we are, we’re almost on like cruise control now because it’s just going to happen regardless if I add to the snowball or not, we’re going to get there. But, um, the, the savings rate is super important.

It’s number one. So have that optimize key, like dial that in, but then try to increase your income. Trust me on this, investing in yourself by upscaling. And getting that education and maybe moving jobs every few years will annihilate any passive income investment returns during the accumulation phase, which is what I’m assuming the bulk of people out there listening are in.

If all we’re starting again from scratch today. What I would do differently is I would jump onto Google and find out how much, like look at the people that are in a similar age bracket, experience, demographics, you know, our location, everything like that, and find out how what’s the average, what’s the medium, uh, wage for someone in my job description or someone in my role.

Right. And if I was earning. More than the average, then that’s awesome. There isn’t really many low fruit to pick if I’m earning more than the average, because I’m already doing really well. If I’m in, if I’m average or, you know, in the medium, um, I can look at like, what is the next jump in my career that I can take that can get me that pay rise and.

This is a really important point for people that are earning below average incomes, especially in your field. This is like one of the, this is one of the, I’m not going to say easiest, but it has to be one of the lowest hanging fruits that you can go after. If you are earning below average salary, if you’re putting as much effort into optimizing your savings rate.

And especially if you’re putting a whole bunch of effort, Into trying to calculate and work out the, the most efficient and most optimized investing portfolio. Maybe put some of that effort into actually trying to jump the ladder at work and getting a raise or even better. And what I found through experience is to job hop into a new position because that in my experience, that is the best way to get serious gains in your salary, your yearly, your yearly salary.

Can increase astronomically. If you are willing to move somewhere where your skills are in demand. Now, of course this isn’t going to work for everyone and I’m not factoring in, you know, people’s situations and everything like that. But I’m talking about purely from a financial independence point of view.

If you are looking to increase your income. Job hopping is the best way to do it. In my opinion, yes. You’ve got to have the right skills and experience helps and all that stuff and having the right certifications. But if you are willing to move, I feel like that is the easiest way to increase your income substantially a lot easier then to do it through investing.

Like if you think about it, let’s just say that. By you going to another place or moving jobs, you can potentially get like a $20,000 raise in your salary, which I don’t think, you know, obviously there’s, there’s a variety of people listening in from various backgrounds and everything, but it’s not unheard of for someone to go from, you know, 70,000 to $90,000.

Right. It’s it’s not that crazy. How long would it take for you or for anyone out there to invest your way to $20,000 worth of passive income? It’s going to take a hell of a lot longer to do that than it is to put in the effort and to grind away at increasing your income, whether it be in your job or maybe doing a side hustle or something, or doing something after work, if you’re like maxed out in your earning potential in your current job, then I would seriously consider starting a side hustle.

Even if it only generates a, you know, a thousand bucks a month. That’s still $12,000 a year. And again, how long would it take you to generate $12,000 from passive investing income? It’s going to be a hell of a lot longer. Like this is a real game changer. It can be a massive game changer, uh, to anyone on the road to financial independence.

And I really feel it’s not spoken about. Nowhere near as much as it should be because the savings rate is always the best. And I definitely agree with that because a dollar saved is a dollar earned and you’re not going to pay tax on it and all that good stuff. But I’m just speaking from experience.

When I moved from Australia to London, where my skills were more in demand and there was more of a, you know, more lucrative jobs over here and stuff like that. I more than doubled my earnings when I moved over here and my sort of my brain sort of exploded to be like, I never knew opportunities existed like this for people with, you know, within my skillset.

I always knew that there was higher paying jobs in the city, but I didn’t know it was like this. And you don’t know until you try. All I’m saying is once you have optimized your savings rate, In my opinion, try to increase your income. That should be the next biggest thing on anyone’s list. Investing is definitely important and like, you should understand investing, but once you’ve got the basics down, you really want to set and forget and automate that as much as possible.

And I think as well, that a lot of people in the fire community they’re hustlers at heart. I, I truly believe that like a lot of people that come to this community. And stick around and are actually, you know, trying to reach financial independence. They’re not just, they’re not just cruising the forums, not, not trying to actually implement this lifestyle, that the proper ones that are doing this.

I really think that there’s ambition and there’s like entrepreneurial spirit in a lot of people that pursue fire that enthusiasm and that heart, that willingness to work hard and like do the grind and everything. It is much, much better suited. To try to increase your income. Then it is to try to get the most efficient and perfect portfolio mix in the world.

And I don’t think enough is spoken or written about that part of financial independence where savings rates. Awesome. But so is increasing your income. And like I said, your earning capacity is your biggest asset. And that’s taken me many years to realize that. And lastly, the last major part or, or major component of reaching financial independence is the investing.

I’m going to keep it short and sweet with this. If I were starting again from scratch, I would just keep it really, really simple, even though I had success with property early on. And a lot of that was to do, was to do with luck, or it’s hard for me to say that I wouldn’t do it again because if I knew hindsight is 2020.

So if I knew. I knew I was going to make as much money. I probably would have done it again. I definitely would have done it again, but if, I didn’t know, like if it was going to be a random timeline, I probably would just go straight to a. Passive income share portfolio. And the only reason I say that is because just my mind.

Yeah. So at the moment, I don’t want to be renovating houses anymore or anything like that. And I’m sort of just over that and I’ve just got other ambitions. There’s other things that I want to do. So I would just be, I’d go the lazy route. Um, passive style index investing. I probably would go either VAs or a 200, either one is fine for my Australian component.

And then I’d, I’d even, probably go, um, VGs. Over my current one that I got the VT VTS and VU and own that. I’m only saying that because of the, uh, annoying w eight Benny form, even though I really like the VTS and VU, and I like to tweak, I like to be able to dial in the, how much is the in the U S how much is in the world and everything like that.

That super duper simple I’d either go various a 200 VGs. Or I would just go the Vanguard, highly diversified index, high growth option. I think it’s called the, the VD HG option and just, and that’s where I’d keep it. And I would just I’d invest in a 50 50 split between me and ms. Firebug and that’s it.

That’s what I would do if I was standing in from scratch today. Super duper simple. So to recap that, and to conclude that. I would focus on three main areas, the most important being savings rate. I would optimize that again, get that really efficient. I would lock in nip in the bud housing, food, transport, and holidays.

And I wouldn’t sweat the small stuff as much old. I would live a little bit more if I could do it again, then I would concentrate on my income potential. Where am I skills going to earn me the most amount of money? And I would take more risks in this regard. Moving overseas to where my skills are in demand has been.

The best thing that I’ve ever done in my life is the last two years has been awesome. And I wish I did this when I was younger. I’m glad we did it, but I really wish if I’ve always five years younger still, we we’d go to another city or another country and we do it all again. But we’re just at the stage in life now where we want to settle down and start a family next year.

So it’s, you know, it’s a little different now, but. It really, I cannot say this. I can’t speak highly enough of getting off the Island, getting away from Australia and seeing the world exploring and using your talents in other countries. It’s just, it’s one of the best things I’ve done, highly, highly recommend.

And lastly, with investing, I would just take that really, really simple approach and do a. Ridiculously simple portfolio, something like VD HG or VAs plus VGs and I would just throw money. I would just throw money in it. So every I would automate it. I would automate it as much as possible. So when I save a set amount every single month and we try to do about $5,000 these days, that would just get thrown in there.

So whatever splits I’m running, I just automatically invest. And eventually over time that snowball grows to a ridiculous amount. And that’s really about it. Once I got those three components locked down, everything else works itself out.

Okay. That is it for 2020, the very last episode. I hope you guys enjoyed it.

Ask Firebug Fridays 26

Ask Firebug Fridays 23

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 (2:30)

Hi Aussie Firebug,

I currently have some cash funds that is used as my emergency fund. Given the poor cash rates on bank savings accounts, what would you recommend I invest in, in order to generate some return whilst still having access to the funds? I know Mutual Funds do have some fixed income funds.

I assume this would be a similar position for most investors when they save up for a deposit on a property.



Firebug’s Answer

Hi Franco,

This is always a tricky one to answer and it depends on a few factors.

Firstly, your emergency fund should always be in cash and I wouldn’t be using it as a down payment for a home. It’s possible that I’ve misinterpreted your email but it sorta sounds like your saving up your emergency fund to one day use as a deposit for a house? Sorry If that’s wrong.

When are you planning on buying? What’s the timeframe? Your investing horizon will dictate a lot. If you’re realistically going to be buying a house within the next year or two, I’d personally just leave it in a HISA.
You could potentially make more by investing in other assets but you run the big risk of a market going downhill when you want to pull your money out to use!

Unfortunately, the current economic climate is punishing savers 🙁


Question (6:40)

Hi Aussie Firebug,

My partner has been following you for some time now and he has recently introduced me to your blog! My partner and I are 23 and 21 and are keen investors and avid followers of your blog. I feel as though we are in the very position you would have been in at our age with similar goals in mind. We were considering buying a house over the next few years but having read your blog, we’ve opted to rent until kids are in the picture and we’ve even decided to delay our euro trip as well lol.

I am just messaging you to see if in hindsight you wish you had done anything differently roughly 8ish years ago or any advice you would give to your younger self! (Other than the value of investing in ETFs :P). Specifically speaking in terms of investments.

Thanks so much and look forward to hearing back from you.

Firebug’s Answer

Hi Jess,

I would have never set up a trust if I’m being honest. Too complicated and you don’t need it to reach FIRE. A 50-50 split or 100 to the lower income earning wll work just fine. It also makes accounting difficult. Having it in your own name is a lot more simple and sometimes it’s worth paying more for simplicity.

I would have bought IVV instead of VTS because IVV is almost the same (same low MER) but is domiciled in Australia which means no W-8BEN-E forms. Small change but again, less complicated.

I don’t regret investing in property even though it’s way more work. It has taught me many life lessons.

I wasted a whole heap of money before discovering FIRE around 23-24 so you’re already way ahead. You guys are so young that getting the snowball started now is so beneficial.

The other thing I’d say is that you need to make sure you’re living a great life too. A great life doesn’t cost much but don’t deprive yourself too much. I was way too hardcore at the start and in the long run it doesn’t actually make that much of a difference.

I bought a car worth $21k that I slightly regret. Could have had a similar car which would have got me from A to B for around $6k but oh well…

Other than that… Not much really. I’ve always been pretty frugal in general so no major stuff ups.

Hope that helps


Question (16:25)

Hi Aussie Firebug,

Firstly, thank you for everything you’re doing. The information and content that you put out is truly life-changing. You’re inspiring me to save, invest and get excited about what’s possible in my financial life, for that, thank you.

I’m also looking for your advice on this topic, here’s my current situation.

My partner and I began our investing journey about six months ago. We currently own Betashares A200, VAS and VEU since following your strategy which makes sense to us.

We also follow Scott Papes work and he recently released his ‘Idiot Grandson Portfolio which listed reasons why he prefers VAS over A200. We’re now considering switching to VAS and I’m trying to understand the implications of buying different ETF’s (although they are both index-tracking ETF’s). And the primary question I want to get clarity on is; will the dividends pay more if we hold more of one ETF versus holding two ETF’s? For example, will I receive more dividends if I have say, 200 units of A200 shares versus having 100 VAS and 100 A200?

I guess overarchingly, I want to understand how having a bunch of different shares that are the same in many ways affects the overall dividends and compound interest. I know you recently switched from VEU to an iShares product and I keep asking myself, ‘doesn’t that affect his compound interest longterm?’.

Any advice you can shed on this topic would be greatly appreciated


Firebug’s Answer

Hi Nu,

I’m pumped to hear that you’re enjoying the content so much mate 🙂

I’ve read Scott’s ‘Idiot Grandson’ Portfolio too, it’s a fantastic read with great reasoning behind the decisions on investment products.

The price of any unit of a company is largely irrelevant as in it’s an arbitrary number. That’s because when they first go public, usually another company comes in to give a valuation for the IPO but after that, the market sorts out it’s worth through supply and demand based upon how much of the company a single unit is worth.

Theoretically, if a company is worth $100 and they have 10 units outstanding, that would mean each unit is worth $10. But what happens if they dominate the market and are worth $100M in five years? Each unit is now worth $10M which means it’s very hard for people to sell their units to other buyers. What a company can do is a share split where the board of directors increase the number of outstanding shares to current stockholders. The primary motive is to make shares seem more affordable to small investors even though the underlying value of the company has not changed.

So each company/index fund may have a different value for their unit price, but as long as the underlying assets are the same it should not impact return at all.

A200 and VAS are a bit different in terms of dividends because of how new A200 is as a fund. I believe I’ve answered why that would be the case in another AFF as it’s a bit lengthy to go into. But over time they should be extremely similar.

I hope that answers your question mate.



Ask Firebug Fridays 26

Ask Firebug Fridays 22

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.

So I’ve got a bone to pick before I get started today.

I’m well aware of my struggles with the word ask (thank you for constantly reminding me 😂). I pronounce it like A-K-S (arks) instead of ask.

Well! I opened an email from a reader the other day who shed some historical light of my pronunciation of the word.

In a stunning turn of events, it turns out the pronunciation of the word ask, now considered standard, descends from a northern England version of the verb that in most midland and southern texts through the 1500s was spelled with x or cs (arks).

The reason that it’s now pronounced ask is because of a process called metathesis which is the transposition of sounds or syllables in a word or of words in a sentence.

I don’t claim to know what that exactly means but from what I could gather from the Wikipedia page, it’s basically when two very similar sounds switch inside of a word. Other common ones are
comfortable > comfterble
nuclear > nucular
prescription > perscription

The word ‘ask’ was most likely pronounced incorrectly but over time people wrote it the way they said it and it became the standard we have today.

They’re also a lot of evidence to suggest that the way you pronounce the word will be heavily influenced by where your ancestors were from as it was spoken differently in different places in England.

So wrapping up. The word is definitely pronounced ‘ask’ but now I have a better understanding of why I and many others say it the way we do!

And with that, let’s jump into today’s episode.


Other readings: 
Metathesis (linguistics)
People Have Been Saying “Ax” Instead of “Ask” for 1,200 Years
Why do some people say “aks” or “ax” instead of “ask”?


Question (4:15)

G’day AFB,

I am 29 with $70k saved and I don’t own any property. I am completely sold on parking my 70k savings into a LIC, re-investing my dividends plus contributing an extra 5k/year at minimum and not touching it for 30 years. But here’s the plot twist – through my work, I am entitled to a one-off 20-25k (after-tax) payment that can only be used to purchase a first home (which I must live in for 12 months). This is not including the Queensland first home owners grant of 15k, which I am also eligible for.

I have never been interested in real estate, and I am just about to pull the trigger on shares… but now that I consider the 20k+ extra that I can access, it is really making me think about buying a cheap two-bedroom apartment, living in it and renting out 1 room… instead of investing in shares.

So my question is – am I crazy not to take the extra 20k available and buy property instead?

Thanks for the great blog, and thanks in advance!



Firebug’s Answer

Hi Tom,

That’s an amazing work perk!

I’ve been out of the property game for a while now and wasn’t aware Queensland has a $15K FHOG. If you combined that with your entitlement from work, that’s creeping up to be potentially ~$45K! This is not a small amount of money and something you’ll need to put serious consideration into.

Personally, I would never make such a big decision like buying a property just because of a grant… but a grant that’s going to give me $45K… hmmm I can probably make that work tbh!

My question to you.

Are you ever going to buy a home to live in? I understand first hand the appeals of renting and investing the surplus of money into the stock market but an opportunity like this seems too good to miss if you’re ever considering buying a home in the future. Unless there’s you’ve got something specifically against it that I don’t know, if I were you, I would take advantage of the free money from your employer and government.
You have to remember, even the governments FHOG can be axed and is never a guarantee.

I experienced this first hand back in 2012. A few years beforehand, one of my mates received something like ~$40K from the Victorian FHOG to build a new home in country Victoria. 40 bloody thousand bucks from the government! And he was going to buy anyway so this was just money for jam! The grant decreased the next few years and I ended up getting a tad over $20K back in 2012. After that, I believe it disappeared for a while.

My point is opportunities like may not come back around…

Have a long hard think as your two options are both good IMO.


Question (11:31)

Hi Aussie Firebug,

I have been listening to JL Colin’s a bit and he talks about leaving a legacy for his kids. He believes his investments will, following the 4% rule, be greater when he dies thus leaving it to his kids. His kids will then live on his investment following the 4% rule who in turn can leave it to their kids.

In the Australian contexts using your strategy 3, one would have a large amount to pass onto the kids. Have you thought about how you would do this? Would some sort of trust be the most appropriate way to set up this continuing legacy? I have two girls and would like to protect the investments from any failed relationships etc they may have.

Interested to hear your thoughts


Firebug’s Answer

Hi Andy,

This is such an interesting question and I bet you could ask 10 people chasing FIRE and get 10 completely different answers. I’ve thought about this a little, not a lot, but at this stage right now (and it could change). I want to give my children as much as they need to fulfil their full potential and not a cent more.

But how much will that be you ask?

That Andy… is the million-dollar question!

I think it’s going to be hard enough not to outcast them socially by being the only kid in school without the latest phone or povo brand sneaker. I had experiences from my childhood where I was teased because of the brand of shoes I wore… but this helped thicken my skin and I had the personality type to deal with it. Will my kid be like that? Or will they suffer psychologically from something I could have easily prevented? Maybe I’m overthinking this?

Raising them through to adulthood while simultaneously teaching them the value of money is a struggle every parent goes through I’m sure.

But having a multimillion-dollar portfolio to pass on to the next generation may be a little bit more specific to us FIREbugs.

This may sound selfish to some but please hear me out. As of right now… I don’t plan to leave my kids anything!

I plan to do my absolute best raising them. This will include free housing, unlimited food, paid for education, etc. But what I don’t want, is for them to know that their future financial security is taken care of because their parents are financially independent and they will eventually inherit the colossal snowball!

I truly believe that if I choose to do that I would be robbing them of an opportunity to participate in what I consider to be one of the most fulfilling accomplishments anyone can do in their life. And that is to reach financial independence through hard work and dedication.

We’re all dealt a different hand in life and everyone receives help along the way, some more than others. But passing on the entire fortune to your kids is like giving them the Super Mario Warp Whistle so they can skip straight to the end. They won’t know how much fun the game is if they don’t play it!

I hope my kids are financially independent before I kick the bucket. I’m unsure where I want the snowball to go. Most likely a charity I’m passionate about.

If are set on leaving a legacy behind for your kids, I don’t think you can beat the estate planning of trusts. There are so many ways you could do it too. Maybe they don’t receive everything at once? Maybe they only ever receive the dividends from the portfolio each year? I’d go see a trust expert and explain what you want to achieve and I’m sure they could implement it.


Question (22:15)

Hi Matt,

Like yourself, I’m also looking at moving overseas to work for a while in the next couple of years. I’m assuming that your existing property investments may be negatively geared to take advantage of Australian income tax law. Now that you are earning income (and paying tax!) overseas, what impact is this going to have on deductions and cashflow for your Australian property investments?


Firebug’s Answer

Hi Bryce,

Nice to hear that mate. Moving and working overseas has been one of the best decisions I’ve ever made in my life!

Our two remaining properties are positively geared before depreciation is factored in. With the depreciation schedule, they are negatively geared.

However, we bought both the properties in the trust which was a mistake in hindsight. So we have never been able to reduce our income through negative gearing on those properties. What we have been able to do though is reduce the taxable income of the trust using those deductions. Even though the trust earns money in the form of dividends from the shares. It has never had to make a distribution because the deductions have always been more than the income.

When we sell the properties, the trust will start to distribute income like normal since there won’t be anything left in there that will cost the trust money.

The flexibility of the trust has actually been really handy whilst we’ve been overseas and has meant that we are able to distribute income (when it comes) to other people and not be taxed 32.5% because we are not residents of Australia for tax purposes. It also enables us to continue to purchase shares as they’re not in own personal names but rather the trusts.

The money I make through will be taxed at 32.5% from the get-go which is not ideal. I did seek advice from my accountant and was willing to bet that I would have greater tax savings on my consulting checks while being a resident of the UK for tax purposes rather than staying an Australian one.

It’s all a bit complicated and I’m going to publish my Australia to UK article when I finish it that will explain this in detail.


Ask Firebug Fridays 26

Ask Firebug Fridays 21

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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