Aussie Firebug

Financial Independence Retire Early

Podcast – Early Access to Super

Podcast – Early Access to Super



Today I’m chatting to Sam.

A financial planner from around the Byron Bay area who had a really interesting path before he landed in Finance. Sam reached out to me after my Super podcast with James from earlier on in the year and explained that there was so much more to cover when it came to Super and FIRE for Aussies.

This was shocking to me too considering how big that podcast was 😅

One of the most interesting topics from a financial point of view that has come about from this global pandemic is the early access to Super which has become available for a lot of people who meet the criteria.

We’re going to be chatting about the circumstances where it would make financial sense to withdraw the money and use it in your journey towards FIRE, a deeper dive into the First home super saver scheme and a really cool convo about why everyone, FIRE or not, should aim to have $1.6M in their Super account when they hit their preservation age.

Some of the topics we cover:

  • Early access to Super and what it means
  • Eligibility to get early access
  • Circumstances where it makes financial sense to withdraw your Super early
  • First Home Super Saver Scheme (FHSSS)
  • Sam’s approach to the classic dilemma of investing inside or outside of Super even when aiming for FIRE

Show Notes


Update: Around the 34:05 mark we spoke about withdrawing from the FHSSS. Depending on your tax bracket, you may potentially have to pay more tax. Not everyone will be able to offset their tax return from the tax credit.

Update2: The ATO have released specific information regarding COVID-19 Early release of super – integrity and compliance. In a nutshell, they will come down on people who withdraw their Super and contribute. This new information was not present when the podcast was recorded so please be aware.



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


[00:00:00] Aussie Firebug: Welcome to the Aussie Firebug podcast, the financial independence podcast for Australia.

Hey guys, welcome back to another episode of the Aussie Firebug podcast. The financial independence podcast for is where I interview clever people who’ve already reached her on their way to financial independence.

Today on chatting to Sam, a financial planner from around the B Bay area, who had a really interesting path before he landed in finance. Sam reached out to me after my super podcast with James from early on in the year and explained that there was so much more to cover when it come to super and fire for Aussies, which was shocking to me because that first podcast at the start of the year about super was a massive one.

It was close to an hour and a half long. One of the most interesting topics from a financial point of view that has come about from this global pandemic we’re all in, is the early access to super this become available for a lot of people who meet the criteria. We’re going to be chatting about the circumstances where it makes financial sense to withdraw the money and use it in your journey towards fire.

We also go into a deeper dive into the first home super saver scheme. That’s a, that’s a tongue twister. That one and I really cool conversation about why everyone, whether or not you’re aiming for fire or not, should really aim to have 1.6 million in their super account when they hit their preservation age.

It’s a really cool [00:01:30] strategy. Sam talks about, I’ve never had someone explain it exactly how he explains it, so I’m sure you guys are gonna love that one.

So let’s jump into it.


Hi, Sam, welcome to the podcast. Thank you so much for coming on.

Sam Thanks, Matt. It’s good to be here.

Aussie Firebug: Now let’s start with you, mate. How did you get involved with the financial industry?

Sam: so I got into financial advice four years ago. came out of a farming background and before that, a, sort of community service, actually working for my church for about seven years in the U S.

And before that, just backpacking around the, the, European, North Africa for 18 months. So I’m sort of on my [00:03:00] fourth career now. loving this one, loves working with people and yeah, that’s, that’s where I’m at now.

Aussie Firebug: That’s an interesting story there, Sam, and, and an interesting path to get to the financial industry.

I’m curious what, what sort of farming, what background in farming is, did you

Sam: have.  well, I grew up on an American quarter horse stud. We always had about 50 horses around. We had cattle as well. And then when I came back from the U S was really interested in sustainable agriculture, did some permaculture courses, holistic management, which is sort of broad acre grazing management stuff.

and yeah, ended up setting up some properties here in the Northern rivers of new South Wales, sort of Byron Bay area. sustainable type self-sufficiency farms for people. And, anyway, there was just sort of a limited scope for growth in that always working for, for others.  got given an opportunity to move across into financial advice by a friend who had been in it for about 30 years.

And I knew a little bit about the depth of relationship that he had with his clients and sort of the trust that they had in him. And I thought that was probably a good, good industry to be in, you know, being part of people’s lives, helping them out, and yeah, going deep with people. So that really drew me to it.

And I’m, I’m enjoying it.

Aussie Firebug: I, you an American citizen as well. You sound like your accent sounds Australian to me.

Sam: Yeah. And not yet born and grew up in Australia. Left when I was 18, met and ended up marrying, Austrian American girl.

we met at the Bible college that I went to the U S [00:04:30] for. And then, Yeah. We moved back here, in the second year of being married.

Aussie Firebug: So what an interesting story. Now, I don’t know if you’ve had, this is sort of going off on a tangent already where we’re only two minutes in, but, I wonder if you’ve ever had a look at the us system, like the financial system and the tax laws there?

Because from what I’ve heard, and I’ve had actually a few. American citizens, you know, message me about if they’ve come to Australia and, you know, the whole bunch of really complicated tax questions that I have. No, absolutely no idea how to answer. But, have you ever looked at the American system and just thank your lucky stars that you’re working in the financial industry in Australia?

Sam: Well. Yeah, the pros and cons. I mean, when I was living in the U S I wasn’t making any money, so I didn’t really pay attention to the money system. I was sorta over there for, it was about seven years on a volunteer basis. So didn’t really have reason to pay much attention to it, especially as a, immigrant.

the rules were different for me, but I do have a brother living in Canada. And, so to talk to him and compare notes about what their opportunities are for, you know, fast tracking, their wealth creation. And yeah. Now I’ve got us friends that I’m sort of talking to about it. There’s pros and cons both ways.

you know, to, to both systems. Hmm.

Aussie Firebug: I’ve just shared it. It’s a bit of a nightmare of you move out of the U S you’ve gotta like keep paying taxes even though you’re leaving and stuff

Sam: like that. That side of it is a disaster if you’re a us citizen and you [00:06:00] leave. Yeah, absolutely. Yeah.

Aussie Firebug: No, it’s all good.

It’s a weird, it’s a weird cyst. I don’t know it like. I thought, I don’t really want to know it, but, yeah, it seems a bizarre way to do things. Anyway. Yeah, we’ll jump back on topic. So there is a very hot topic amongst the fire community at the moment and probably the larger just the Australian finance community, and that is the covert 19 early release of super that the government proposed the other month.

So I did a super podcast with James at the start of this year, which was an absolute monster, and I thought it would be good to discuss a few other things in regards to super and fire that maybe wasn’t covered as in depth as we would have liked to in that first podcast. So. With another super expert, coming on being yourself, I thought it’d be good to touch on the hot topic of the `early release two or the early access to super.

And also just a few other things about super that we may have missed in that first one. So let’s begin. Early access to super, what is it? How does it work.

Sam: . So, early access to super is a short term opportunity in response to the Covid 19. And the financial pressure that people are feeling is to be able to withdraw up to $10,000.

In the current financial year. So prior to June 30 and then a further $10,000, or up to $10,000 in the next financial year. So post July one of this year. and [00:07:30] the, obviously the spirit of the, The thing is to help people that are under financial hardship, unable to pay bills, unable to put food on the table.

I’m guessing that. Does not cover a lot of the people that listen to your podcasts and follow, you know, fire blogs and are on the fire journey. Because if, you know, if you’ve been on it for any period of time, you’ve got an emergency account, hopefully with a bit of cash there to get you through, at least until you get onto some of the other government.

the subsidies at the moment, whether it’s job keeper or job seeker, but we won’t go into those for now. We’ll just stick to this. so if, you’re in financial hardship, you can get that money. I think one of the best things about the early access to super is that it’s getting a lot of people to sit up and actually take a look at their super account.

because a lot of non-fire people just ignore it completely. They don’t know what insurances they’re paying there. They don’t know what it’s invested in. They don’t know what their balance is. That didn’t even have their log in set up to be able to check it. So I think that is a secondary benefit. But in my line of work, it’s a good thing.

A lot of people are starting to pay attention. unfortunately a lot of people that are under financial hardship and pull that $10,000 out. we’ll spend it and probably don’t have the intention of repaying, or topping this super [00:09:00] backer, which, , anyone that knows anything about compounding, it’s going to hurt at retirement.

Some of the figures that have been thrown around are obviously on the high side by the superfunds. Because they like to keep as much money under their management as possible because they charge a management fee and there are more realistic numbers as to how much someone’s retirement savings actually going to be affected.

But either way, you know, you’re robbing your future self if you pull that 10 or $20,000 out and don’t top it back up.

Aussie Firebug: , so first of all, I guess I want to make clear that.

This, , early release to super there, there are stipulations and rules, to get access to super. So there is , eligibility testing. I believe that it’s happening. So if you are not eligible to have to do early access to super, you shouldn’t be doing it. That is breaking the law. and you shouldn’t do it.

But for the people that are able to access this early access to super, like you said. $10,000 for this financial year, which we’re recording in, on the 2nd of May 20, 20. So the 19 to 20 financial year and the 20 to 21 financial year, so potentially up to $20,000 out of your super. So just, I don’t want to make it clear the  algebra eligibility rules, having trouble saying that.

so they, I did have it up here, so it’s

Sam: easier. I would just stick to the Australian New Zealand citizen one. Otherwise, you podcast is going to be quite long. There’s different rules for temporary visa holders, [00:10:30] et cetera, but your Australian ones are pretty simple. if you’re unemployed, and that’s whether you were unemployed before the 1st of January, 2020 or after just flat blanket rule.

If you’re unemployed, if you’re eligible to receive job seeker. Youth allowance, parenting payment, or other special benefits like farm household allowances, like drought related type things. and then if you have been made redundant after the 1st of January this year, or your working hours were reduced by 20% or more.

After the 1st of January this year, or you’re a sole trader and your business was suspended, or there was a reduction in your turnover of 20% or more since the 1st of January. So the eligibility rules are pretty, pretty straightforward, pretty simple. And the easiest way for people, I think, to pull it up and look at their own situation, see if they are eligible, is just Google early release of super fact sheet treasury.

And that’ll take you straight to the horse’s mouth and you can see the rules there.

Aussie Firebug: Yeah, I’ll, I’ll put a link in the show notes for everyone listening out `there, if they want to go to the website to see the, the rules of , who and who can not get access. Access to this early release. Now these rules, you know, reading through the last couple, if you’re made redundant, if you’re unemployed or the big one, to me, if your working hours were reduced by 20% or [00:12:00] more, like that is a lot of people, especially, it’s a lot of people and that’s, it’s almost a bit hard to.

To quantify, like there’s going to be a few gray areas. I would assume that the government are going to be auditing, but, but regardless, it’s going to be a lot of potential people that have access to to the super. So, or this early release. So a few questions that I have, it’s tax-free. Correct. So when you, if you apply for it and you can get the $10,000 yeah.

You don’t pay any tax on

Sam: that. Correct. Now, usually if you pull super out before you reach preservation age, and especially before you reach age 60 it just, it’s silly to do it. You’re shooting yourself in the foot in a major way, but because this is for, you know, financial hardship release, it’ll come out to you.

You withdraw 10,000. And 10,000 will come into your account and it will not show up as part of your taxable income for the financial year.

Aussie Firebug: Yes. Now, this is the big, I guess this is the big question amongst the community. Now let’s say, and this is, it’s personal for me as well, because mrs FIBark has lost her job, so I believe reading the rules that she would be eligible to have early release of the 10,000 offer.

Super. If she was to take out that $10,000 tax free. And put it into the ETFs that we, that we invested in, that she invests in. Although I understand that it’s now that that money has moved from a [00:13:30] low tax environment to a higher tax environment. But other than that, is there anything else I’m missing here for the downside of,  doing that?

Eve, you’re eligible to do that to top up your money outside super. That was previously inside super.

Sam: Yeah. Look, if you’re moving it from being invested inside of SU to being invested outside of super as long, you know, this is making the assumption that it’s an intelligent investment. It’s not highly speculative and likely to disappear, but sticking to the script of what, what you cover with your community.

yeah, the only downside on it, as long as it’s legal and you qualify, obviously. Is that you’re moving from a tax concessional environment that exists inside of super to a regular tax environment. That obviously depends on what your, your work situation has been prior to losing your job or having your hours reduced this financial year, and then obviously into the future.

there’s tax implications, but the other thing that I don’t know if you planning to go there, Matt, You could do both in that. and we’re going to talk about this a bit more later.  , the pros or cons of growing your, your super as part of your fire number or just trying to do that exclusively or primarily outside of super.

But if you, if you did have a double strategy where you’re trying to grow both you, you’re falling number in ordinary money [00:15:00] and you’re your fire. number for 60, age 60 and beyond. Inside of super, you could technically, and this is a loop hole that isn’t in the spirit of  the,  early access to super, I’ll be honest, but it, it’s, it’s, it’s playing by the rules of,  superannuation.

You could pull $10,000 out. You could re contribute that $10,000 and if you’re, let’s say you’re earning under $90,000 a year, you could save yourself 19 and a half cents in tax on the way in. and then just reinvest it back inside of super so you could actually end up in front by pulling it out, putting it back in, reducing your taxable income for this financial year, and then keep plodding along with your, you know, your fire strategy.

Aussie Firebug: yeah. That is very interesting.

Sam: Does that make sense?

Aussie Firebug: Yeah, it does make sense. I did hear that strategy. It’s very interesting. I wonder,

cause like you said, it isn’t

in the spirit of the law, but it is playing by the rule book, that it can be done and saving tax. And to be honest, if, if you’re playing while the rule book, this is, I guess this is my personal opinion and, a lot of people, like you got, I’m young, there’s gotta be a lot of different opinions about this, but.

If you  reducing your tax, legally, I don’t have any issues with that. obviously tax evasion [00:16:30] is illegal and you shouldn’t do that, but tax minimalization is perfectly legal. I do wonder this, this taking it out and putting it back in. I wonder if they like, that seems too obvious to me. Like a lot of people are gonna abuse that, and I wonder if they’re going to somehow, audit that or, or do something with that.

But I guess we’ll wait and see, if anything changes by the time this is recorded, and any, any laws or updated or anything, I will, I’ll make an edit. but that is super interesting. So you pull it out. Tax-free, and then you make a contribution to your super, so you reduce your taxable income and you save the difference in tax.

That’s sort of how it works.

Sam: Yeah. Now, obviously this is not personal advice, I’m sure you say, of course. and you’ve gotta be spot on with the timing of how you do that. And if it is you, generally, if you make a contribution to super, a concessional contribution to super through your employer, so salary sacrifice, then you don’t need to do any extra paperwork.

But if you make a, A personal concessional lump sum contribution. Then there’s extra hoops that you’ve got to jump through, which is shorter. And so you have to submit a notice of intent to claim form, and you don’t want to miss that. Otherwise, the whole point of doing it is, is lost. and you’ve essentially pulled 10 grand out, put it back into super and paid 15.

[00:18:00] No, sorry. If you put it back in, you won’t without doing the notice of intent. It will have just pulled money out, put it back in with no advantage to it. Right. You’ve got to submit the notice of intent to claim form to, to secure the advantage.

Aussie Firebug: Okay. And is there any cutoff date, and, and speaking of this early access to super, I guess this is a good question as well, when, what’s the latest someone can do this?

We’re recording this on the 2nd of May and hopefully I’m going to have this published relatively soon. is there any deadlines or something that people should be keeping an eye on?

Sam: Yeah. Look on the, on the fact sheet, there’s some explanation of timing, but it’s very brief. All it says is that you need to pull it.

You need, you’re able to make the request, sorry, from the 20th of April onwards. Now. Like super funds are, are taking their say about five days to get the money out to you. So I’m guessing though, the timing on this would be, as long as the request is made before the 30th of June, this financial year, then that would tick the box for your, your first part.

And then obviously at the timing for the next financial year, one is you’ve got a lot more room to breathe, cause you’ve got a full 12 months to do it. But if I was doing it, I wouldn’t be leaving it until the last week of June. I’d be doing it sort of first week of June, so that this time for the request to go in the money to come out.

[00:19:30] and then if you, that’s if you needed it for financial hardship. If you were putting it back in, yeah, I’d give yourself a bit more breathing room because you’ve, you’ve only got to get that notice of intent to claim form in before your tax return is done for this financial year or before you roll that superannuation to a different account.

So you wouldn’t want to go changing super funds in the middle of this. Re contribution strategy.

Aussie Firebug: Right? And that’s actually just reminded me of something else that’s happening, as a indirect result of this early access to super, and this isn’t, isn’t a question that, I’ll show you before the podcast.

So if you don’t know the answer to that, like don’t feel free to just pass on it. I didn’t give you any time to prepare for it, but there is a lot of news in the media  about super funds. Having issues or having trouble with people wanting access to $10,000 cash because of unlisted investments in the super funds.

And the big one that’s getting a lot of press at the moment is the, the  host plus industry super fund, which, Scott pap, the barefoot investor, he promotes heavily the heat. Now he doesn’t promote. The, the option of the unlisted investments, he’s always said that the, the index fund one, like the, the low fee option within that super fund is the one he would go for.

So it’s not like he’s, he’s promoting , the, the product that’s. I’m not going to say failing or that’s [00:21:00] causing a lot of issues at the moment. do you have any opinions or any, anything that you can tell us about why that’s happening? what you think might happen in that space and just general, I’m just generally just interested to hear what you would say in regards to that topic.

Sam: Yeah, so obviously if people have made an investment choice to be invested in an unlisted asset class. or an unlisted asset, if, you know, I’ve just looked at it here, that news news is saying that 360,000 Australians have applied for an early release of super. So we’re not talking lunch money here.

It’s a lot of money that some of the superfunds are having to, to release cough up. And yeah, a lot of the, especially industry super funds have invested in infrastructure, projects. You know, roads, tunnels, you know, big, big office buildings in the city. They sorts of things that you can’t sell one of the offices down the bottom overnight in order to free up some cash to give to members who want to pull it out for one reason or another.

So, yeah, it’s just, it’s a rush on, those assets that would certainly have a cash allocation. Yeah, but not enough cash sitting there to be able to honor. All of the redemption requests that are being made.

Aussie Firebug: Yeah. It’s low

Sam: liquidity, right? That’s like

Aussie Firebug: the crux of the issue, that they’ve invested in a lot of assets of, of low liquidity and [00:22:30] it’s not really their fault to be honest.

Like if the government makes a flips a switch, like , who knew that a pandemic would grip the world in 2020 like, no one knew this was happening. So like, it’s easy to criticize these super funds, but in reality, It’s not like they knew that this was coming and when the government just click their fingers and it’s like, Oh, we’re just going to pass this law really quickly.

Like we can’t think too hard about what’s going to happen and the repercussions like it is, they’re put in a tight situation. But it is, it’s interesting too. You know that this has come out. And I do wonder if there’s going to be some sort of, Royal commission or something, about this. And, you know, some rules are going to be put in place after this all goes down to say that they can’t invest in unlisted funds or something like

Sam: that.

Yeah. I’d be surprised if that happened because, I mean, if you went and checked their product disclosure statements, it would, it would address liquidity issues. And you know, it’s a two edged sword. Unlisted assets at the moment haven’t dropped 30%. because they’re not listed on the stock exchange.

They can’t be valued every minute of the day between 10:00 AM and 4:00 PM. They’re valued generally every quarter by certified property valuers or assesses. and that’s why they’re, they’re an investment option that has a lot lower volatility. But part of that is because they’ve got lower liquidity.

And, you know, it’s not, no one plans for a [00:24:00] mass Exodus like this. So I think there’s a lot of, lot of grace is going to be given across, you know, lots of different areas.

Aussie Firebug: , if someone is in. Host plus, I’m pretty sure it’s host. Plus someone is in host plus super and they’re looking to get out.

Like are you seeing in your experience, many people moving super funds or transitioning from one fund to another because of this reason or other media overblowing the issue here.

Sam: Are, look, I mean, bad news sells. so I’m sure they’re overblowing it. I haven’t followed it super close.

We don’t have a lot of people in industry funds. and. Yeah. I just haven’t had my finger on the pulse with that one.

Aussie Firebug: Okay. Fair enough. all right. We’ll move on to the next topic then. And that is the first home super scheme. I think it’s, that’s, the name of it. The FH S. S

Sam: yeah. We spoke. First time Supersaver scheme.

Aussie Firebug: FH SSS. It is a tongue twister. Yeah. Now, I spoke a little bit with James about that in the first podcast, but we really didn’t do a deep dive into it. So I’m keen to chat to you, Sam, about what is it, how it works in, can people chasing fire uses to their advantage on their journey?

Sam: Yeah. So obviously, depends on what people’s circumstances are.

For instance, if you’ve owned property. In your own name before then. It’s a no go zone [00:25:30] because the eligibility criteria is that you cannot have held property in your personal name before. What happens

Aussie Firebug: if your video partner has just, sorry to interrupt that. A real quick question. If you’re

Sam: no good question, they can go.

They can do it themselves. Even if they’re going to buy a property. With someone else who has held property before interest. So you are treated as an individual, not as a couple on it. So I’ll walk you through it as a hypothetical. Let’s say you have owned a property before. mrs Firebug has not, mrs Firebug can put up to $30,000 into super.

an EMR market as being related to the first home super saver scheme. That’s $30,000 is broken down into a maximum of $15,000 per financial year. And so over two years, they could add, mrs Firebug could put $30,000 total in. The advantages of doing that is that. That $15,000 each year would reduce her taxable income.

So let’s say she’s owning that below $90,000 for the $15,000 that she puts in, she’s going to save 19 and a half cents for every dollar. [00:27:00] And her tax return will be larger in both of those financial years. And if you keep track of the difference, you can put that extra texture stone aside towards your home deposit or paying off that mortgage or putting it into whatever investments you’ve got going.

When the time comes to purchase the property, that money is pulled out, and needs to be spent on your first home. You need to live in the property. For six months of the first 12 months of owning it. So if you’re someone that’s looking to rent best, buy an investment property in a good growth area, but you’re living somewhere else because of work or lifestyle, whatever it is, it’s probably not for you because you do have to satisfy the requirement of living in it.

As your first home for six of the first 12 months. but one of the other advantages to it, and I think this is a big one at the moment, when you’ve got term deposits, you know, under 2%. which is generally a sensible place for people to start stockpiling a a house deposit. You certainly don’t want to go putting it into the markets in case something like what we’re in the middle of now happens and it pushes your home purchase plans back, you know, a couple of years, depending on what happens going forward.

Instead of putting your home deposit savings into a term, deposit it to less than 2%. [00:28:30] If, if mrs Firebug puts $15,000 into super tomorrow and pulls it out in two years time, the deemed right of return that will be given to mrs Firebug when she tries to pull that $15,000 out, is around 4%. So even if the Superfund value goes down, when that money is pulled out.

It will be the amount that was put in minus the 15% tax plus a deemed right of return of about 4%. So guaranteed rate of return tax concession. It’s a pretty sensible strategy. I was helped to, you know, a good number of couples through it. But you gotta, you know, by the time you look at has anyone owned property before?

Do you have the money, to do it? All those sorts of things. It doesn’t fit everyone, but it’s certainly worth exploring if people have known property and and want to pick up a bit more tax

Aussie Firebug: short. Now there’s a bit to unpack there so that the 4% guaranteed return, w what is that based on? Is that based on the tax that you save by doing this strategy?

Sam: No. So that’s totally separate. So the tax that you save is based on your taxable income. So, you know, let’s say someone’s in the 45 cent tax bracket, there’s strategies and [00:30:00] absolute goldmine for them because, you know, they’re saving 30%. in tax by putting the money in, and then that obviously comes back to them in their tax returns.

So that’s one part of it. Yeah. The 4%, and I’m using 4% as around figure it’s roughly 4%. That, this is a same sort of equation that the government uses for, retirees, and people on. Yeah. Pensions with a look at their assets and it would be a compliance nightmare to try and keep track of. Okay. Sam’s retirement account returned 7% but Matt’s returns 6.3% and so the income from that for the income test for is.

His government benefit is 6.3 of what he’s got invested, but Sam’s rate of return was seven instead of getting into that level of complexity, they just say, if Sam has a hundred thousand in investible assets and Matt has 200,000 in investible assets, we are going to assume that the right of return on those investments is.

It’s about 4% that deeming is the process. That is the name that’s given to that process.

Aussie Firebug: Interesting.

Sam: And so the money that, [00:31:30] the money that goes into super for the first home super saver scheme, once you apply for the release through the ATO website, you go on there, you say, okay, I’m ready to buy a house.

How much am I allowed to pull out? They look backwards and see the date that the money was added to super. Then they do a calculation of, an annual rate of return of about 4% while that money was in there. They add that to the money that you put in, and then that’s what you can pull out.

Aussie Firebug: That is very interesting.

I’m not too sure many people know that that’s how that works. That’s, that’s, that’s super interesting. So even if, and I think you spoke on it a little a little bit before, but I just want to clarify. Even if the market drops, you’re guaranteed a 4% rate of return.

Sam: Yeah, and just on that point, that’s one of the risks with it is it’s a safe option for buying your first home.

It can be a bad option for growing your time and savings within super, because. Let’s say someone put in $15,000 on the 30th of June before the 30th of June last year, they put $15,000 in in the first week of July this year, they put $30,000 into the markets. They’ve got a deemed rate of return of 4% for the six months that it’s been in there, but if they want to buy a house next week, they’re [00:33:00] pulling $30,000.

Out of their super account after it’s dropped 20% so it’s stunting the growth of their retirement savings inside of super, but it’s helping them get towards their house deposit.

Aussie Firebug: Interesting. Okay.  so , when, when the money goes into, I don’t know, is it separated or that they just, they just.

Bookmark it to say

Sam: you could put it in and just earmark it in a cash account. so that.

It’s not effected that way. Yeah. and then you would just get the tax risk. You’d get the tax saving, you’d get the deemed rate of return, and then you’d pull it out. It can be done, but you’d have to get into your super fund , and nominate that that portion of your investment pool stays in cash.

Aussie Firebug: Right. Okay. Okay. Very interesting. So, so it’s a, and this is sort of super basics that I’m hoping for getting, but it’s not, sorry, it is tax when it goes in, but then it’s not tax when it comes out.

Is that right? Or is it tax both ways.

Sam: Yes, no, no, no. It’s not text when it comes out.

Aussie Firebug: Yeah. I guess what I thought. So 15% going in and then you get that you lower your taxable income and then it’s not taxed when you want to bring it out. And the, the really important bit there, which I never knew is a guaranteed rate of 4% when it’s in there.

which is very cool. It can vary. It can definitely help out. So, yeah. Awesome. That’s [00:34:30] definitely, that’s a big one. that I’ve learned and mrs Firebug actually hasn’t bought a house for herself. Now. She’s not eligible for the first home buyers grant because we’re a de facto relationship. We’re getting married soon, so that makes her ineligible for that part.

But this one, what you’re saying is she actually is eligible for this one, even though I’ve used the first home buyers grant and I’ve already bought a home. Which is very interesting.

Sam: Yeah. Yeah. And then if you wanted to double back on our first part of our conversation, if you wanted to sort of start, start to layer your strategies.

If, if you fit into the unique sort of demographic that ticked all the boxes on both the early release of super as well as the first home super saver scheme, you can potentially pull 10 out, put it in. Get the tax deduction and then pull it out in the future for your first home super saver scheme after getting a deemed rate of return of 4% but that’s for people that want to be real tricky.

Aussie Firebug: Yeah, that’s definitely something cause I believe. she will be eligible for both of those things, but yeah, I’ll have to do my research, but it’s very good to know. So, yeah, very, very interesting.

Sam: But again, on, on that one, just a real encouragement to people there. There are more, so to tick boxes that you’ve got to go through with the first time super savers games.

So go straight to the horse’s mouth, Google, you know, first home, super saver scheme, ATO [00:36:00] and read it all there. And that, the most frustrating thing about that is the timeframes on release. Generally when people go to buy a house, it’s like, you know, they find a dream property. They want it tomorrow. There is a bit of a lead time on getting that money released from super, it ends up being about a month if everything goes smooth.

So if you’re going to go house shopping in, say October, start the process 1st of July. Take care. Give yourself plenty of time of requesting the determination from the ATO, and then they do the calculations until your super fund to release that money to you. And there’s some lag times that sort of build up there that you want to be cautious of.

Aussie Firebug: Yeah, right. Oh, that’s very interesting. Anyway, I’ll, we’ll put a link in the show notes too. go to the FHS, link on the ATO website for people to check that out. I will definitely be checking it out. So, yeah, very good to know. let’s shift gears for a second here and chat about the pension balance cap of 1.6 million and why that should be a target for people in the fly community.

Sam: . So superannuation is, divided into two phases. The first phase that anyone under preservation age. and for most of your audience, I’m assuming, you know, we’re sort of younger, our preservation age at the moment is, is going to be 60, so let’s just talk about [00:37:30] 60. Sure. up, up to 60, you’re going to be in accumulation phase.

post 60, you have the option of moving that money. It stays inside the superannuation environment, but it moves across the half way line from accumulation phase to pension phase. The difference of those two is, A regular withdrawal amount can be set up from a pension account and account based pension inside of super, and the money that is paid out from there is tax free because you’re over 60 and the investment earnings on money’s invested inside of the pension phase are tax free.

Whereas in accumulation phase, the rate of tax on investment earnings is still 15%. So let’s imagine that you’ve got, 1.6, in super, well, let’s call it two mil. If you’ve got 400,000, Over that 1.6 cap, then it’s going to be sitting in an environment where it’s taxed at 15%. and the advantage of having it there versus outside of super is maybe questionable [00:39:00] depending on your taxable income that you’re drawing.

Keeping in mind that if you’ve got 1.6 in pension, when you pull it out, it’s tax free. So. You’re not really probably gonna have a tax problem and having it inside in an environment where it’s going to be taxed at 15% you might be worse off.

Aussie Firebug: So, so that 1.6 is really the, the gravy boat. Like everyone should be taking advantage of the tax free environment of that 1.6 it’s, it should be the target.

Regardless of where you’re at in your journey. You should be a preservation age. You want to have at least 1.6 mil in super.

Sam: No, I wouldn’t say, at least I would just say. The benefit of having more than 1.6 diminishes significantly. Sure.

Aussie Firebug: Yeah. Yeah, yeah.

Sam: I wouldn’t say it’s a minimum target. It’s a maximum target.

Aussie Firebug: Yeah. Okay. That’s a good point. Yes. Because especially in the fly crowd, if you’re going to be leaving off such a low amount of income from your investments, that you have the potential to be paying more. If you have all your investments in super, right. Then if you have it outside.

Sam: Yeah. And the reason, I think the 1.6 balance cap as it’s called, is helpful to the fire community is, you know, the debate of do we grow our fire savings outside of super or inside of super?

my personal [00:40:30] sort of approach to it is it doesn’t have to be either or. It should be both.  If you start early and make, let’s say the first year or two of your employment while you’re still living at home, or you know, you’re able to really keep your, your expenses down. If you could put.

The, the maximum concessional amount into super each year, which is $25,000 at the moment per year, which includes the nine and a half percent that your employer has to put in. If you max that out and ended up with $50,000 in super in your first two or three years of your career. You pretty much wouldn’t have to do any other contributions between then and age 60.

obviously this depends on your, your, wage and, or whether or not you’re getting a wage. Like if you’re a contractor, you’re responsible for paying your own super. Yeah. But let’s assume that someone’s just making 50 grand a year, the average Australian wage, and they’re getting nine and a half percent of that put into super.

Well, if, if, if a young fire bug gets themselves off to a great start by putting, say 50 grand into super in the first couple of years, you can sort of set and forget that. And because of the power of compounding in a tax concessional environment, you’re not going to be far off that 1.6 [00:42:00] cap. If you choose your investments correctly and make sure your fees are kept low and all of those basics, and then, then you would turn your attention to focusing on your savings outside of super,

Aussie Firebug: the power of compound interest,

Sam: right?

Yeah. But if, if I’ve got 50 grand in super and I’m 25 then. I don’t really need to be having the debate. Should I put more into super or should I save money outside of super? Well, if your projections show that you’re going to hit the 1.6 cap, by the time you reach age 60, then there’s not really, there’s not as much advantage to putting more into super versus putting it into your, You’ll ordinary money investments.

Aussie Firebug: That’s, that’s a really interesting point Sam. Cause we spoke a bit  before this podcast started recording about the fly calculator that I’ve got on my website and. I speak about that as well, and a lot of people, a lot of people ask me the same question over and over again.

You know, what is the most optimal way to reach a fire? Should I be investing in inside or outside? Super. And I don’t think I’ve ever heard that phrase like you just phrase it there, Sam. It’s, it was very, very interesting to hear, like, we all know, if you invest in super at an early age, the power of compound interest, you know, you’re almost.

Like you [00:43:30] said, that the math shows that you only have to invest so much at the very start of your career and then that will grow over time, but I actually never thought about it like that. If you get to that maximum amount, by the time you hit your preservation age of 1.6 then anything on top of that isn’t necessarily going to help you out that much and you can really focus on building the snowball outside super.

so that’s a, that’s a great, great way to look at it. Just do maybe do the hard yards at the very start and get a decent snowball rolling down that Hill, and then let the power of. Four decades of compound interest do its thing, and the snowball’s going to get to the magical 1.6. Hopefully, fingers crossed.

It doesn’t change by the time we get there. 1.6 mil, by the time you hit your preservation age and then you can focus on building your snowball outside super and you don’t have to worry, you don’t have to have that conversation with yourself. I like it.

Sam: Yeah. Interesting.

Everyone’s situation is different. So there might be different factors. You know, you’re saving, you know, maybe property is your, your gig, and you really believe in the power of leverage and you’re happy with a lot of debt. And you say, look, you know, that 50 grand that I could put into super. I can leverage that into $300,000 in an investment unit, and that’s going to have me better off, go for it.

But for those that are, that are always having that debate, or should I, shouldn’t I, and this is probably something that comes out of the financial advice sort of [00:45:00] track record so far, is when someone walks into the office and they say, Oh, what should I do? It’s up. There’s a thousand things you could do.

Tell me what you want to achieve and we’ll reverse engineer it. I think if you, if you solve that eternal debate of inside or outside of super by reverse engineering your super account balance to that 1.6 mil cap, you realize how easy it is to hit that target. If you know the markets do what the markets have always done, and you get an early start on your contributions.

And the fact that the, the snowball rolls down the Hill so much faster when you’re only paying 15% tax on those investment earnings.

Aussie Firebug: Good. Yeah, it’s a very good point. And it’s something that my calculator,

Sam: it’s on compounding on, it’s on compounding, on steroids because of the tax environment. And if you get an early enough start.

You can have your cake and eat it too. You can have enough money outside of super that you finish it. Say, you know, 33 you’ve hit your fire number that will help you coast until you hit 60 and then that, that money is going to come. And I’d probably just make a comment. I mean, everyone will have their opinion on this too, but I think especially when we’re young, it’s.

It’s a antiestablishment. It’s cool [00:46:30] to be skeptical, and sort of down on the government. But I think if we just think of what motivates governments votes, what’s the fastest way to lose votes? Tell people they can’t access their money. Like. That I think the financial situation would have to be the least of our concern.

If it gets to a point where the government isn’t going to give, , a whole generation of retiring people access to their money at 60

Aussie Firebug: I see what you’re saying. Stuff.

Sam: I’m just not as skeptical on that.

Aussie Firebug: Fair. Fair enough as well. But wouldn’t you agree that. The government hasn’t done themselves any , favors, how they’ve, how they’ve already tinkered with the rules of super in the last decade or two.

Sam: I think a lot of that tinkering falls into the category of, it affects very few people. The tinkering, I think that has been done. And look, full disclosure, I’m new to this. You know, I’ve been paying attention to this, you know, at an increase level over the last four years. Before that, I didn’t have any super because I had volunteered overseas and I just wasn’t paying attention to money.

but a lot of the tinkering that has gone [00:48:00] on has to. To reduce the lucrative nature of the superannuation environment for wealthy people who don’t need tax concessions. That’s what a lot of it has been. And the other part of it, like you think of the increasing preservation age, the people that were allowed to access their money at 55 did not have 40 years.

Of nine and a half percent of their paycheck going into super. So there, there was a strategy and there is a strategy called a transition to retirement strategy where people, once they reach preservation age, they can pull money out of super to allow them to put more money into super to save tax and therefore boost their retirement savings.

Well, someone that’s 30 years of age now does not need. That extra help to get their retirement savings on track by the time they’re 60 but someone who was 55 and had only had, you know, what would it be 1520 years in the superannuation environment. They needed that little bit of extra help to get there and the preservation age has been increased as people don’t need that extra help.

Fed sort of tinkering to cater for the, it’s [00:49:30] tinkering to cater for the, the generational changes of, you know, the different waves of people that are coming through and the opportunities that they’ve had to save for their retirement.

Aussie Firebug: Fair enough, Sam. And that’s a, it’s a good way to look at. And you know what?

I hope, I hope you are right. And maybe I have been, I guess more skeptical of the government than most, but I do hope that, it doesn’t change too much and they keep the, they keep the rules relatively consistent over the next couple of decades when. you and me can finally get access to it. So, yeah, I’m definitely hoping, but either way, you look at it, what you’ve, what you’ve discussed is super interesting.

And you know, I’ve got my calculator on my website that does the whole, how much should you need inside? Super. How much should you need outside for like, optimal, tax optimization, but it still doesn’t factor in the, Maximum you can contribute to super the 25 K a year, because that depends on your tax rate.

And it was just too confusing. And I think I’ve got a disclaimer in the calculator that says, I just can’t be bothered putting it in. Like it’s, it’s too hard to, to, To factoring everyone circumstances, like this is the blanket general rule that I’ve got, but it’s very hard to factor it in. But yeah, I really liked the way you look at it, that 1.6 as a target, as a max that you want to reach in just doing the hard yards at the start and having this snowball, as you said, on steroids rolling down that Hill to get to that point.


Sam: interesting. Either way. I think it could moderate not to hop on the [00:51:00] skepticism thing because I like to have views about the future, but, The skepticism can be moderated a little bit when you look at, okay, so I put 20 grand a year in, in my first two years of employment, and that gets me on the road to the 1.6 cap.

Well, if they move the goalposts a little bit, it’s not like I was putting 20 grand every year. Yeah, too. Like I wasn’t robbing my ordinary money investments or I wasn’t depriving myself of that second investment property because I was focusing on super, and now they’ve moved the goalposts on me. So that was two years of surplus income.

And then you forget about it and if they move the goalposts, it’s like, well, that sucks, but

Aussie Firebug: you know, we’ll live,

Sam: I’m going to hit the 1.6 cap.

Aussie Firebug: Yeah, yeah, it is. It is. You know, even I, I wrote a big article about like, when they label, we’re thinking about changing the Frank and credit refunds, and at the end of the day, it’s, you know, we will leave.

We will, we’ll get through it. there’s plenty of ways to get around it anyway, but, it just is. I guess it’s a, it is frustrating for some people that plan their retirement on certain rules and then the government want to change it and it can affect some people in certain circumstances greatly. And the majority of the population probably not as much.

Like you said, it goes back to votes, right? They, they make these changes. They try to get the best bang for their buck. Whilst also being empowered. They don’t want to lose the [00:52:30] vote. That’s like the number one focus, but they try to do everything in their power to shift, to shift the money around, to like do, more projects to get them more votes and keep them in power longer.

Anyway, we could go, that could be a whole

Sam: nother podcast where the first home super saver scheme came from. It was to get some votes. Of, you know, younger people that were struggling to get into the house market. That’s why we’ve got this opportunity with the first home super saver.



Aussie Firebug: I’m sure some people will be interested for sure.

Sam: Yeah. No worries.

Aussie Firebug: that is it. That is it. Sam, we’ve come to the end of the podcast. thank you so much for coming on and spending, spending time with us and offering us your expertise.

It’s been an absolute pleasure.

Sam: Hi, thanks for having Matt. I hope I’ve been helpful and yeah, love what you do and just keep people learning and it’s, that’s good. That’s

Aussie Firebug: good. Cheers mate. Appreciate it.

See ya.

Sam: Catch up.


Aussie Firebug: I hope you guys enjoyed that one. I love Sam’s thinking behind, maxing out your super for the first few years of your employment and then lending the power of compound interest, do its thing in a low tax environment. I’ve never really thought about it like that before, but I think it’s brilliant. Now check this out.

I did some quick mass and let’s say you’re able to max out your super contributions for just over two years. When you first start working and say you have a roundabout 50 K in super by the time you’re 22 let’s say you’re. A tradie. You might’ve been earning a little bit more money earlier on in the piece, and people that went to uni or something like that, you would have over 1.7 million in super by the [00:54:00] time you hit 60 without ever having to add anything extra yourself, assuming that your employer is contributing at least 5k year during that time.

Now, obviously there’s a few factors at play there. But let’s say that you get to that number in that situation, you could focus solely on your snowball outside of super, completely after the first initial two years that you’ve done the salary sacrificing, and you would still end up with a super balance around that really important 1.6 mil Mark.

Really cool to think about. There’s been a lot of coverage out there about the early access to super from very credible people basically saying, don’t do it. But the thing about all that general advice is it’s targeted towards every everyday normal people who won’t have the financial discipline to stick to a strategy.

Ask fire bugs are different. Accessing your super early can have financial benefits, especially if your goal is to retire early. We’re still getting confirmation on mrs firebox eligibility, but if she is eligible, she will be taking out the 10 K this financial year and the 10 K next financial year because our strategy is to build up our financial independence number outside of super.

And the only downside of doing this. Is the potential that that money will be sitting in a higher tax environment. However, there is also the possibility that we can save money on tax because retiring young puts you in a very unique position of an even [00:55:30] lower tax environment. Then super in some circumstances.

So for our situation, it actually makes financial sense. Make sure you read the show notes and fully understand the eligibility testing before considering this strategy though, and I want to make one last point about this topic because there’s been a lot of chatter on Facebook groups, online forums, and comment sections of news articles.

I’m not sure if everyone realizes, but super is actually your own money. It’s not a handout from the government, and people that qualify for the early release can spend their own money however they see fit. I’m constantly seeing comments from people judging others on how they spend their own money and somehow justifying this judgmental behavior with the fact that they’re going to have to pay for these people’s welfare checks.

Well, I hate to break it to anyone out there that thinks like this, but. That’s how welfare works. You don’t get to dictate how people spend their own money just because you don’t want to support them when they run out of money in retirement. Also, there’s nothing stopping them from taking a lump sum when they hit their preservation age anyway.

I’ve already spoken enough about how the government wastes billions of taxpayers dollars, and that’s billions with a B. But at the end of the day, I’m more than happy to pay my fair share of taxes because the overall positives far outweigh the negatives. But I’m not campaigning anytime soon to pay more tax, but [00:57:00] that’s enough ranting for me.

I hope you guys enjoy that one and I’ll catch you on the next episode. Peace. Thanks guys for listening to another episode of the Aussie Firebug podcast for links to all of the resources plus an entire transcript of this episode. Head over to  dot com make sure you never miss out on another episode by subscribing now on iTunes or SoundCloud.


Podcast – FIRE & Chill with Pat and Dave

Podcast – FIRE & Chill with Pat and Dave



What a treat I have for you guys today.

I’m joined by two of my absolute favourite bloggers who have been creating Australian FIRE content for years. We’re speaking to Pat from and Dave from

Both Pat and Dave have already been on the podcast before… in fact, this will be Pat’s third time.

How greedy I know…😜

Today we’re chatting how COVID has effected each of us, has anyone changed their investment strategies due to the recent events but most importantly, they have some exciting news that’s coming to the Aussie FIRE space next week and that’s a brand new podcast they’re starting called FI/RE and Chill.

Show Notes



Aussie FIREbug: Hey, guys, welcome back to another episode of the Aussie FIREbug podcast. Today, I am chatting to some O.G’s of the Aussie fire scene, two of my absolute favorite Australian bloggers who have both individually been on the podcast before. But this will be the first time that I’ve had them one at the same time. So first up, and making a record breaking third appearance. We have Pat, the shuffler from and joining Part is the man who starts my Saturday routine with his ever so insightful weekly posts. It’s Dave from Strong Money Welcome, lads.


Lifelongshuffle (Pat): Hey, how are you?


Aussie FIREbug: It is so good to speak to you. I can’t remember the last time I’ve had. David, last word to you ages ago for that podcast that we did. But I think did we speak previous to that or did we speak after that?And then Pat. I think Lossiemouth had you on the podcast was like, yeah, a year or so ago as well. I feel like we’ve we’ve spoken previously, though. Or am I just making things up?


I think we had a couple of email chats.


Aussie FIREbug: Yeah, it may have been. I thought like something to do with the FIRE documentary. What would you guys think of that documentary, by the way?


Lifelongshuffle (Pat): Yeah, I thought it was really good. Dave and I went to the Sydney premiere, so dave actually flew over from Perth and that’s the first time I actually met Dave.I thought was pretty good. Don’t think.


Strong Money (Dave): I think I think it laid out the I guess you laid out the basics pretty well of what’s required.But also I think maybe it went a little bit too far in in maybe leaning towards making it a bit dramatic, I guess, in terms of their level of sacrifice. It doesn’t have to be like a huge level of sacrifice. They put a good occupational spin on it because there is obviously emotions involved, but it didn’t have to be that, that level of sacrifice. But they’re making a movie, so you kind of almost have to be like that


Aussie FIREbug: I was spewing that I couldn’t be there with you guys, like I went to the London premiere of it. Yeah but I missed out on meeting Serena (aka Miss Balance). But it sounds like you had a ball.I have to, I tend to agree Dave. It was pretty good. I thought like as as a overall movie.I enjoyed it, but I definitely felt like if I’d just shown my parents or if I just showed someone, hey, on chasing this fire dream, this is what it’s about and I showed him this movie, they might watch it and be like, OK, you guys are crazy.You know, the way they portray that they live in this, what it seems to be a really great life by the beach with all their friends and then they get ripped out and they move back in with their parents. Like Mr. Money Moustache had on his blog, that “I moved out of this community to live back in my parents to save money”, I might have just stopped reading the blog right then and there.


Strong Money (Dave): Yeah, I mean, if they I mean, if you look at their lifestyle before it was pretty lavish I guess even if they just stayed in the same location and switch to like a smaller place or an apartment and then got rid of the expensive SUV’s that would have gone a huge way into building some sort of savings.


Aussie FIREbug: Yeah and then they move into like some Snowtown that the wife hates. It’s all a bit. yeah. I would have liked them focus more on the people who had already reached fire and like the benefits of reaching fire. But again, they do have to make a story. I have to make an ark and like everyone asks Travis in the questions after it’s like so is there going to be a chasing fire 2 in like 15 minutes time to see how it worked have to say so on. So I have to ask and this is made everyone’s feel and this is the moment. So how are you guys going in your respective states with all these Covid going on?


Lifelongshuffle (Pat): I’m in the construction sector and, you know, I’m considered an essential service, so it hasn’t affected my work whatsoever. I still go into work every day. I still,  travel by car there and all that sort of business. My missus is working from home. Traffic has died down a lot. I think there’s a general level of a little bit of fear.I think that might be dying down a bit now as people get sick of staying at home.But, yeah, as you know, that Australia is doing remarkably well. So maybe some complacency setting in a bit. I mean, what’s it like over there as you think people are getting complacent or if people are still sort of really knuckling down and iolating


Aussie FIREbug: We are still heavily lockdown in the UK. Nothing has really opened up. But in saying that BoJo is going to hit the TV, I think Sunday night, and I am expecting him to start opening up the country. You know, the first phase of opening up the country because, one, people are breaking the restrictions anyway, like we had we had a chat before we started recording and, you know, you’re not meant to be in the park and have picnics, to play bowl and all that good stuff. People starting to do it. Now, at the very start it was super strict and you could see a level of judgment on everyone’s eyes in the park if you have seen someone doing something wrong. I would be like, oh, your not meant to be doing that. But now I feel like so many people are getting over it and it’s getting to a point where I could not see it in the UK going on any longer than two or three weeks without them starting to open up a few things over here.


Strong Money (Dave): I think we’ve been one of the luckiest states in that we’ve had, I think, a week or a little bit more now of no new cases each day. So I think we’re gonna have some loosened restrictions coming pretty soon for us. I mean, it hasn’t really changed our lifestyle very much. My partner works from home now, but she’s doing two days a week. So it’s not not that big of a change.We still can go out and exercise take the dog for a walk and garden and go to shops. But I can definitely see that people are getting out more now than they were a few weeks ago. So there’s definitely people are becoming a bit maybe a bit less scared because it feels like we’ve gotten on top of it now.


Aussie FIREbug: I listened to a few news podcasts, and I think they’re talking about having like a little Tasman bubble or whatever they call it, ring with New Zealand, Australia and New Zealand opening up the borders between the two countries.


Strong Money (Dave): Yeah, I heard that as wel


Aussie FIREbug: I guess it give people an excuse to, to actually explore your own backyard Like if you, if you do have the urge to travel like Australia’s pretty bloody big , it’s the UK, Germany and Italy and Greece all of those countries put together. So if I was back home in Australia, I think you’d be the perfect time if they start opening things up to do a big trip around Australia if you keen for a holiday.Local tourism could boom.


Lifelongshuffle (Pat): Well, New Zealand could really benefit from this, couldn’t they? All these Australians just like, let’s get the hell out of here. The only place you can go is New Zealand.


Aussie FIREbug: So that is that that is true. Definitely. Now there are two two main reasons to have this podcast today. Firstly it’s always nice to chat to you.And we have great conversations. But secondly, you guys have some exciting news about a new podcast called Fire and Chill. I’d love to know the backstory about had that podcast was founded and then we could get into what it’s all about.


Lifelongshuffle (Pat): Yeah. So that Playing with Fire, a documentary premiere in Sydney. What was it like a year ago now or half a year ago? Dave and I were both there, we were both on a Q&A panel at the end of the show and it was the first time we met each other and I don’t know, we just sort of looked at each other and had a bit of a quick chat, maybe half an hour or something. And we just like on the spot like. Let’s start a podcast.


Aussie FIREbug: Sounds very romantic.


Lifelongshuffle (Pat): We just looked at it and gazed into each other’s eyes and we just knew


Strong Money (Dave): It was like, have you considered it? I think I asked Pat, have you considered doing any other type of content, you know, like YouTube videos or podcasts or something like that. And I think your answer was like or maybe a podcast. I thought maybe a podcast. But to do it with someone else, maybe like it with yourself or something like that and I thought, oh, maybe he’s just joking. I went to the back of my brain and then I think a couple of months later I said, oh, you know, that’s not such a crazy idea and then we started talking from there and it kind of grew. We researched it a little bit more and we thought, oh, actually, let’s do this. This is a good idea.


Aussie FIREbug: Excellent. Yes because i love yoir content. Pat, you need to start writing some more night. Like I haven’t seen any articles from you in the last 12 months. But even if theres just a podcast it is much appreciated. What should the audience expect when they download the first episode of Fire and Chill?


Lifelongshuffle (Pat): Dave, I’ll let you go.


Strong Money (Dave):  They should expect a damn good time.


Aussie FIREbug: Is there a specific genre or is it just you guys having having chats? And it’s a it’s a fortnightly podcast. Is that right?


Strong Money (Dave): Yeah, it’s going to be once, once a fortnight. We’re going to, I guess, launch the show on May 19 and it’s going to be three episodes like one intro one and then two topic related shows. And then after that, it’s gonna be one a fortnight. And it’s basically gonna be may impact diving into all sorts of fire related topics and having discussions around that, that basically we can go a bit deeper than we can in a blog post because we can talk for, you know, a good half an hour and get really into it, whereas no one wants to read a blog post that’s like ten thousand words long.


Aussie FIREbug: Yeah, Okay. Excellent. Yeah. And it is launching on the 19th of May. Is that right. Yeah. Ten days away. We are recording this on the 9th of pain now. And where is it going to be available? Where can people get these podcasts?


Strong Money (Dave): Basically everywhere.So it’ll be on iTunes, on Spotify, Stich Google, Google podcast


Aussie FIREbug: So you’re gonna be speaking about different topics. If people want to get involved or want to submit a topic question like is there any any channels that you guys are going to have set up to get people involved in the podcast?


Lifelongshuffle (Pat): Yeah, absolutely.


Strong Money (Dave): We set up an email address for topic suggestions, feedback, maybe questions, because we’re going to answer a couple of reader questions at the end of the shows. So we set up an email address and that’s [email protected] Oh, can you put that in the little chat? Because all all include that in the show notes for sure so when this is published so people can I’m sure you get bombarded with topics and questions and stuff like that. Excellent. I’m really looking forward to it’s going to be straight on my podcast list.So just to be clear, I think I know the answer to this, but you’re still going to have a weekly post that you do, Dave. You’re not going to take away any production from your blog. This is just going to be on top of the work that you already do on the blog.


Strong Money (Dave): Yeah, that’s right. So I’m going to be working a bit harder


Aussie FIREbug: And what about you, Pat? How are you? Because like I did mentioned that you’ve you’ve been a bit light on on the blogging side of things. Where is that? Is there a reason that you have me blogging so much or you want to focus more on the podcast side of things? Or can we expect more articles from you coming up in the future? Is on on. I’m hoping that you’re going to.


Lifelongshuffle (Pat): Yes.Now, you can definitely expect more articles from me.I don’t. I have no excuses, Matt. I’m just slowed down a bit. I’ve gotten a bit lazy. I suppose I should probably spend more time on it, but I’ve always got like a backlog of three or four posts that I’m sort of working on in the background and eventually I sort of get get to finishing them and posting them. But I’m definitely not nearly as consistent as Dave is there.


Aussie FIREbug: I know on that issue all too well, Pat. I know that all too well. But you are working. That is our excuse. You know, we haven’t retired yet. So I think we can use that excuse compared to Dave.


Strong Money (Dave): I was just gonna say so that’s the thing I can’t believe you guys. I mean, especially yout Pat, back in the day when you running red hot on the blower. I cant believe you guys have time and energy to do that? I mean, I don’t think I would have a blog at all if I was still working. I just couldn’t be bothered like after work hours I just don’t want to do it anyway. It sounds I’m impressed that you guys even gave out the content they did well.


Aussie FIREbug: Well, I have there’s a good reason for for mine. I’ll go first. But when I first started the blog, I was working for the government. Now I know that there’s a bit of a meme that if you work for the government, you do no work. That’s 100 percent true. And let me tell you, when I was working for the government, I had so much free time at work, like I could knock over all my life admin on the job. So I would literally be, you know, all my emails, any accointing work, investing in properties. I was doing a lot of, like, you know, work for them at work and it allowed me to just get so much stuff done. And I often I do think back and I wonder, especially now working in London where it’s such a go, go, go work style and I’ve worked hard here in the private industry than I ever did in the public sector back home, that if I’d going into the public sector straight out of uni, would I have would I have had time to start a blog and a podcast? And I’m pretty confident that the answer would be no, I wouldn’t have. It goes to show how how much free time is important to create stuff like you. If you’re just working, you gotta earn notice by your mentally and physically drained after a job. You’re probably not going to have time to sort of do your best work and do stuff that is really important because you just spending all your energy at your job and any other while being in London, because I’ve already had those processes and habits already in place, I can turning enough blog content.  I haven’t I haven’t posted like a proper blog article in ages. I’ve just been doing podcasts which as you guys have known or will get to know, it’s a lot easier to get out podcasts than it is to like research a well a well researched article and put it all together nicely and to do it all to the standard that you want. It’s easier just to get on taught him sheit with a couple guys and outsource the transcription and then post the podcast. So that that’s sort of the reason that all was able to provide as much content as I did early on and still keep it flowing over in London. But yeah, I’m not too sure. I’m not too sure about you, Pat. Did you have like some spare time back in the day?


Lifelongshuffle (Pat): I don’t even know how I did it. Like, I think at the very start of my blog, I was almost pumping out two a week, like for at least a couple of months and doing that with full time work. I think it was just all of that energy and invigoration I had from discovering fire and wanting to really get into it and just wanting to learn as much as I could and get get my voice out there.


Aussie FIREbug: You had that initial excitement. Like you have so much stuff you want to say. And we thought that once. Yet you do hit sort of well for me anyway. Yeah. To a point where it’s mostly like the stuff I had sort of burned inside me up.And now, like, there’s so many topics to cover because there’s new topics like everyone, you know. I guess some people like you just told me the same thing, but that hasn’t been my experience. Like there is there’s new stuff to it to cover with all the changes, with the laws and everything. And then there’s just different stages in life that you eventually get to that you don’t run out of topics to talk about, especially with such an interesting topic like fire and finance and investing in Australia.


Lifelongshuffle (Pat): And life always throws a pandemic your way and that that screws everything up again. You know, I have some more to talk about. Absolutely.


Strong Money (Dave): And even content that’s been written about like 50 times, everyone still thinks about it and approaches are a little bit diffeent. Our message will be different to how Pat will write it and how you will write it. I say I think other people will learn from the way that each of us, I guess, expresses that that thing that we’ve learnt that we’re passing on just because of the way that we’ll explain it.


Aussie FIREbug: Absolutely. Now, I did throw it and this was this is a pretty quick podcast. And, yeah, I usually have a lot of questions lined up for my guests that I email like a week before that. This these podcasts, like I say, we’re just basically was like, hey, you guys are starting a podcast. This is awesome. Do you want to jump on back? We’ll just talk to shit. I didn’t have like a whole bunch of questions, but I thought it would be good to have the community ask a few questions if they wanted to, especially having you guys on, some of the OGs of the FIRE game in Australia. I put the questions out there on the Facebook group. And a lot of people have written in. I’m just going read out some of those questions and talk about it, because a few of them are quite interesting and a few of them are repeating the same sort of stuff, which we spoke about it before we recorded. So  if you submitted a question like what is the best investment to do? And you should combine your investments to make the perfect portfolio. It’s sort of impossible to do. And we spoke about it a lot and I’d almost say if you did a quick Google, you could find you could read articles from both of these guys that explains exactly how they invest. And I might put a link in the shadows, but we won’t be speaking too much about that. But I do have a few good questions I thought were good to ask. So, first of all, do either of you use the NAB equity builder a product? And for those who don’t know, it’s like a a loan. It’s it’s leveraging into equities is the product that NAB offer. It’s quite popular in the forums. Do either of you use it?


Lifelongshuffle (Pat): No,


Strong Money (Dave): I don’t use the data.


Aussie FIREbug: Would you consider using it or as a reason that you don’t use it.


Strong Money (Dave): I say it depends.I mean, if you’re a renter and you really want to grow your portfolio as fast as physically possible, you could consider using something like Nab equity builder because I do kind of work like I guess it kind of it’s designed to be like a home line. But for shares. So you borrow money, you pay, you pay a principal and interest loan and you can, you know, ideally earn a return that’s higher than your interest rate.But given we have enough debt and too many properties I don’t think we’d be able to take out more debt. And I couldn’t be bothered with that in any way, to be honest. If I mean, later down the track, when we have very low debt or whatever, I might consider using some of our equity in our house or something like that to invest into shares, which would be like a cheaper interest rate than using the NAB product. So I don’t use it and I probably wouldn’t be using it anytime soon.


Aussie FIREbug: Yeah. Pretty much the same. Like. I’ve got investment properties debt as well. And I’ve used that in the past, like pull debt, equity to invest in shares. And I feel like that works a little bit better. But I understand people don’t want to invest in property, like just to do that. And most people are not suited to be property investors anyway. I really haven’t looked into with that much as well, like it’s really like firstly not necessary to reach fire. That’s that’s the first point. And secondly, it’s there is a bit more risk you take on if you want to do such a thing.


Strong Money (Dave): It’s not a lock.If you look at the numbers and work it out it’s not going to be a huge extra return you’re going to make anyway by getting out of there.The difference between the interest rate over the next four or five percent and a sharemarket return about seven percent, it’s not gonna be very much unless you’re going to borrow by many hundreds of thousands of dollars. And I don’t know if it’s worth the risk.


Lifelongshuffle (Pat): Yeah, well, I don’t know if I’ve ever mentioned this before on my blog or not, but a few years back, I actually had a margin loan with CommSec. And it was an interesting experience because I found that even though it all sounds great on paper, having the loan changes your behavior in terms of investing a lot. So whereas, you know, right now during Corona virus and the market downturn, I’m just continually pumping in and trying to find more money to pump into investments. Whereas when I had the margin loan, I was more concerned with maintaining my LVR So instead of being able to buy when the market’s down, I had to, like, just lower my LVR. by any means possible, miss out on the market downturn. And then when the market’s going up, all of a sudden you have more and more equity to invest. So it kind of distorts your market timing almost If I if I can call it that.


Aussie FIREbug: Yeah, that’s interesting. That’s a very good point. I usually didn’t know that. So you don’t have the margin line anymore.


Lifelongshuffle (Pat): It’s sitting in the background. I can draw on it whenever I want, but I just find these days my I don’t know, my risk tolerance isn’t high enough to take on debt, to invest in anything, really I just I don’t want debt. I don’t want how it affects my behavior. And if you think about like with sharemarket, I think once you posted it on your blog. Dave, the number of positive sharemarket years in Australia was like 70 something percent. And so if you look at that in a different way. So seventy two percent of the time, the Australian share market produced more than zero percent across that year. Then when you’ve got interest on top of that, you’ve got like four percent. You raise the bar before you make a profit. And I just I didn’t like that. So I’d like to see the statistics, like the number of the percentage of years where the share market has returned more than four percent, which is probably the NAB equity builder rate at the moment.I haven’t looked it up and I know. Could I really let’s say it’s 50 percent. Could I really tolerate 50 percent of year’s of me not making more than I’m paying in interest on those shares. I don’t know.


Strong Money (Dave): That’s funny, because some people some people live in a spreadsheet. And I say, well, according to this I make an extra, you know, X percent per year. And its like one percent or two percent. Yeah. It’s like markets don’t work like that. No, I don’t run on a spreadsheet.


Aussie FIREbug: And it’s that classic thing as well of so many people. Majority people especially and I was like that at the start. I guess as well, they concentrate on the investing side so much and they do everything that’s so much analysis and time and everything on how to get that few extra basis points or an extra percent or whatever and so much more bang for your buck is made on the saving side. And if you actually just  shopped around for a competitive home loan or did stuff on the savings side it would be so much more beneficial to your journey. And I’d even go as far to say, especially the last couple of years, like I’ve discovered, probably in order of importance to reach FIRE obviously, the savings rate is the number one thing that ought even say that once you get like the index investing,LICs some something of that nature is pretty suitable for reaching fire in Australi, in my personal opinion. But if you want to if you’ve got your savings fully optimized, I’d even say that trying to make some extra money is probably going to get you further than spending an extra few hours a week crunching the numbers in a spreadsheet, but trying to figure out is VAS better than A200 or is this margin loan going to help me out more like that. The the side hustle is something that has opened up a lot in the last couple of years of what’s possible in the side hustle space and how much that can supercharge your journey towards financial independence as opposed to, you know, Optum. Absolutely optimizing your investment is important. But I feel like it’s the last step. It should always be, save more than you earn, optimize your expenses, earn a bit more money, and then invest the rest like the very last step as long as you’re doing it like, okay, it should be should be pretty suitable.


Strong Money (Dave): And I guess like if people stopped looking into side hustlres and that sort of thing, it’s hopefully going to be in a in a space or in an industry or something like that, that dead that they’re really interested in. And I might not might not come with a huge financial rewards, but it can help them out, give them ideas and I guess motivation and inspiration for when they start reaching FIRE or towards the end of their journey.And I can transition into that new that new job as a part time gig or whatever, because it’s something that they’re gonna be really actually enjoying.


Aussie FIREbug: Yeah, it goes back to that building life at the very start of the journey, how you want to live it at the end of the journey and then sort of optimize around that. And if you do have a side hustle that you absolutely love doing. Yeah, definitely. Like more often than not, actually, it turns out to be something that most people that retire early pursue. And that’s the, you know, the career or that’s the creer that they do in their spare time once that they reach financial independence. So probably, yeah, it’s it’s very important because you don’t want to be in a situation where you reach financial independence just for the hell of it, just to say that you’ve got it. You sort of want to use that to live a better life. I have have all those options and freedoms.All right. Next question. And this is a good one, I thought, and relevant to today’s climate. So, first of all, how much do you guys keep as an emergency fund? You can either give a dollar amount or percentage and. Are you increasing it or decreasing it during the course of it?


Lifelongshuffle (Pat): I keep a basically a zero dollar emergency fun. The only money thats like liquid is just like the amount I need. So the next the next shop or the next bill that comes in doesn’t send me bankrupt. So it’s only ever a couple of thousand at a time in my bank account and everything else just gets shuffled straight into my investments.


Strong Money (Dave): Mr. Efficiency over here.


Lifelongshuffle (Pat): Do you have what do you have some sort of plan that I like if. So obviously you can sell your investments, though that’s the last thing you want to do in a downturn. Do you have can you withdraw from like a redraw account or something or is there something in the reserves?


Lifelongshuffle (Pat): Yes, I feel like the everyday sort of emergencies people think of. It’s like, oh, your water heater or your car or whatever, and you just throw that on the credit card and that’ll be paid off in the next two paychecks. So that’s not a problem. Let’s take it to the next level up. And that’s like all you’ve lost your job or you’ve lost your income. That’s sort of an emergency. And I’ve also got like my CommSec margin loan just sitting in the sitting in the wind to draw upon if I really need to, until I get my next job or bout of dividend’s anyway, which is just coming out of the portfolio automatically. So being a renter with no children and minimal lifestyle expenses it doesnt cost much to be pat the Shuffler, I just see it’s like why, why do I need twenty thousand sitting on the sidelines.How long do I really expect to be out of work and why can’t I just cover that with a margin.Mind if it ever comes along instead of having all that money not earning. You know, if I kept thirty thousand not invested since I started this journey over three four years ago, I would have lost maybe that much again. It’s already paid off for me. That gamble. Even if I do lose my job right now and have to draw on the margin.


Aussie FIREbug: What about you, Dave?


Strong Money (Dave): So our situation’s a little bit different in I don’t know if your guys might be aware of how we’re transitioning off from property to shares over time. And so what happens is we sell a property and we’ve got a big chunk of cash that sits in the offset account. Now we live on some and we invest the rest into shares each month. And so we have quite a lot of cash. But it’s not really I mean, it’s not really what we want to have long term. So I wouldn’t use my situation as like a guide. I would just I guess in normal time/ term, I would expect us to not keep very much in an emergency fund at all. I mean, we’re retired and we’re both adding some income. So, I mean, the portfolio plus that that bit of income is more than enough to cover our expenses and if something popped up, we might keep maybe a maximum of five percent in cash. But that would be it would be at a maximum.


Aussie FIREbug: Yeah, right. I don’t know if you guys have read like some of the articles. It’s funny to to read online to their credit but It’s like the US articles, but there’s a few like gotcha articles, It’s like, oh, they had this grand plan and they retired and then COVID comes along and thier screwed. Isn’t it funny to to read those and be like, well, actually, the people that have retired probably have about 100 times the wealth of anyone not fired. So they put me in that position. Well, they can pretty much guarantee they’re in a better position than 99 percent of the people out there. So I fail to see how this is a sort of give up.


Strong Money (Dave):.Oh, very. We had this exact conversation the other day when we were recording a podcast on one of our podcasts. Like when I first read something ridiculous,


Aussie FIREbug: What was your what was your summary


Lifelongshuffle (Pat): You know, crazy 35 year old retired with a million dollars and now the thirty five year olds only got half a million dollars for thirty five year old.It’s like this what you’re saying that it’s ridiculous.It’s like the thirty five year old who now ONLY has half a million dollars isn’t in a spot of trouble. It’s outrageous.


Aussie FIREbug: I don’t know how they like publishing these articles, but, you know,  they’re going to sell some clicks. The next question actually. Sort of is in a similar space to the previous one. But has the current downturn made either of you change strategies at all? And I guess with me and pat still in the accumulation phase is a bit different from your diet. But I am interested to hear from you, Dave, especially considering you are retired and like we always do hear about that the worst case scenario for someone that wants to retire and a hundred percent not earn any income, which, by the way, pretty much never happens. But the worst case scenario is that you retire and the market crashes.So I am interested to hear what you say. But we’ll start with you, Pat. Like I’m assuming nobody has has this downturn to change your strategy at all. The people want to know, though.


Lifelongshuffle (Pat): Not whatsoever. I’m still accumulating. My plan has always been to throw everything into equities for as long as possible while I’m still working. And then when I decide to retire. I’ll have another look at  my bond allocation or my safe allocation. But to be honest, I’m still doing more research around bonds. And there’s a lot of really conflicting information, I feel, from even the fire community around how useful bonds are and whether they really handy in a day accumulations phase. So I’m the jury is out for me still, but it certainly won’t be like, you know, 20 or 30 percent safe assets. If anything, it might be zero to 10 percent in safe assets once I retire. It’s not going to be anything crazy.


Aussie FIREbug: And what are you buying, if you don’t mind me asking? In terms my all my equities.


Lifelongshuffle (Pat): The latest. Yeah. Sorry. The latest purchase has been VGAD a day, which is the hedged version of VGS. If you don’t know and I know you’ve been paying attention to the Australian dollar. So I think maybe about a month ago, the Australian dollar dipped to like fifty five cents, which is below its long term average. So I’ve always sort of thought, you know, not really being a lot of firm information around the whole currency hedging space. Again, it’s sort of a bit of a grey area which needs a lot more research. But being below its long term average, I thought it made sense to go hedged instead the unhedged virgin.


Aussie FIREbug: Yeah, nice. You do look at like some of the unhedge stuff like VTS and VGS. So if you look back at like, VTS, which is the US market and like you look at the returns from like 2010 are just crazy. And half of those returns are because the Australian dollar is so bloody high. Was it was over parity at one point and all was actually in America. And also, like I was holidaying there, if I can, 2013.And I remember I’m like, hindsight’s 20/20. But man, if that ever happens again, I know I know what I’ll be shifting allocations to.


Lifelongshuffle (Pat): Yeah. I’ve always thought the same thing. Yeah. Back in 2012, it was like a dollar 12.


Aussie FIREbug: Yeah. American one Aussie dollar was born over a dollar ten U.S., which is just insanity. Think about it, I got Very lucky with that holiday. Yeah. And even like I said, I’ll be keeping an eye on the Aussie dollar to the sterling. I sent back a fair chunk of money when it was over two dollars. But now it’s like I think it took a dollar. Ninety, one sterling gets you only. So it’s men. The fluctuations in the stock market, the currency market, the oil market, like it’s just crazy, crazy times at the moment. And so what about you, Dave? Strategy changed at all. And any thoughts on, like, someone that, you know, you are retired and the market has gone down a lot. So can you just speak a little bit about that, how you guys are handling not.


Strong Money (Dave): Yes. We’ve only got about a third or so of our total wealth in our personal share portfolio. Just because we are in this kind of transition stage, I suppose. So I guess when you look at it in terms of networth, it hasn’t been such a big drop as it would obviously if we were all shares right now. So it hasn’t been hasn’t been all that scary. I’ve been excited to actually put more money into the market, to be honest. Yeah. So maybe if we were all shares that we’d feel a little bit different. But in terms of strategy change, Not really. I mean, we’re still putting putting money to work, still buying shares. Only anything that I’m thinking more about lately is like international diversification, because I know you guys will know that I started like hundred percent Aussie equities for our shares and so over the last like year or so, I’ve been thinking more about that. And we’ll probably add. Our Super is currently set up as a 100 percent international shares. I’ll probably add some international shares to our personal portfolio as well, just because, like, the more I read and experience and learn, the more I come to appreciate diversification. So we’ll probably startYeah, that’s it, that’s it. That’s about the only change. I mean, everything’s pretty much the same.


Aussie FIREbug: I’m in a similar boat to you, Dave. Like off we’ve got the two properties that we want to transition out of Eventually and be 100 percent equity. I was Literally going to list one. I was talking to a few agents. I had the one I wanted to I was like as if we had to list a boom covered. It’s like we can’t even see the property anymore. It’s just, oh my God. So that’s sort of on the backburner as well at the moment, which is super annoying.


Lifelongshuffle (Pat): And you know that it’s back open. You know, it’s back open this weekend.


Aussie FIREbug: I don’t. Is that I’ve got the two in Queensland, so it’s hot.


Lifelongshuffle (Pat): I don’t know about Queensland and New South Wales. Open homes and auctions were allowed. Today was the first day.


Aussie FIREbug: I think that’s good to hear. But I still it’s hard for me to think that it wouldn’t take a hit just with the current climate. Even in Queensland. So I guess I’m going to have to wait and see. It actually could play out in our favour a little bit because we are wanting to buy a family home back home where we’re from next year. But I am watching the property market like a hawk at the moment over all the alerts turned on and everything. And even if a property comes out that way that we like and it looks good at like a discount or a nice price, I think we’re just gonna pull the trigger and buy it because it’s so hard. I have being burnt before with property. My first one that I sold, I actually had a higher offer that I waited on and then like waited a few weeks and then the market started to go down. I ended up selling for like it was like 20 grand less than that first offer that come in. And like I say, hindsight is 20/20. What I’ve decided on with property moving forward, if it’s a price and I’m happy with and it’s a good, good house, we’re just gonna have to pull the trigger. Like, you cannot wait white and you cannot be I could go lower. It’s like not happy. Just do it. And the same goes with property, even if it’s a price you both agree upon.Just pull the trigger because you it can work out better, but you can get a lot of the time waiting for something to happen.


Strong Money (Dave): How many people do that in the share market? So, I mean, it’s gonna go lower. Just wait. Oh, just wait. Yes, exactly.


Aussie FIREbug: Right. Yes, that’s. Yep. It’s the same. It’s really it really is the same, the same mindset and psychology behind both of those. Which is why the strategy of simply buying every month is so powerful. Right. Like you don’t have to think about have to get worked up, you know, like this psychology’s taken out of. It’s just like Matt. That’s just what I do. I bought the end of the month. I buy this. I buy this. The waiting is, you know, I buy the the lowest weighted split in our strategy. And that the thinking, my dumb thinking is taken out of the equation. And it’s Semi automated in the process. Next question. So I’ve only got I’ve only got two more. Don’t like this one. This one’s interesting. So do either of you invest in Bitcoin?


Lifelongshuffle (Pat): I think that’s an invalid question. You can’t invest in Bitcoin. You can buy Bitcoin. NO


Strong Money (Dave):  No


Aussie FIREbug: Oh, now, this is an interesting one. And I’d love to know your thoughts on this, Pat, as you’ve had a pretty strong view on Super.So assuming that your eligible are either of you withdrawing from your super. Hypothetically,  would you consider withdrawing from your super and that’s obviously the new the new laws that the government come out with the new COVID laws that you could withdraw 10000 in this financial year and another 10000 next financial year.


Lifelongshuffle (Pat): Now, you’ve got me in a pickle because I don’t know honestly what I would I pull it out if I were eligible because I’m as I said before, I’m still in full time work. So I’m not at all eligible for it.So it hasn’t really come to the forefront of my mind.Yeah. I honestly, it may surprise people, but I probably wouldn’t take it out. I probably just leave well enough be. It’s money that I haven’t accounted for. It’s money that I don’t really I almost don’t believe it’s there.It’s like it’s just kind of there.


Strong Money (Dave): You have so little faith in the system and I’ve already written it off!


Lifelongshuffle (Pat): So I just I don’t even think about it too much. But it’s also. It is nice to just have something that I am not considering as part of my Main numbers as sort of a backup plan, and I just. I’ve got my main plan. And if that ever goes to health, whatever reason, then, you know, when I hit 60 or whatever it may be, I’ve got, you know, however many hundreds to thousands just waiting for me in another account that I’ve long ago written off.


Aussie FIREbug: Fair enough. Dave?


Strong Money (Dave): I’m a little bit like pat in the sense that I think of super mostly as a backup plan. And that’s really just because we didn’t think about it earlier, just because it’s so far away where we’re all roughly the same age right now. All three of us I think early 30s. So it’s just so far away. But.I actually think I mean, I don’t know the exact rules around this.I think if you have to be affected by COVID or just not working. I don’t know if I would qualify as not working. So maybe I don’t I might be eligible. I’m not really sure.


Aussie FIREbug: I think it’s a view. If you’ve been if you’ve lost your job, you’re definitely eligible. Have you had your hours reduced by 80 percent? You’re eligible. And there’s a few other criteria. But I think the bulk of people that are going to apply for it have been hit by those two things, like basically lost a job or had their hours reduced by 80 percent. But there’s a lot of gray areas in the law because it was rushed through. It’s like it’s self-assessed as well. So you can just apply for it, get the money out and if the ATO come knockin, which, you know, like how many millions of people have already done it.So the odds of you even getting audited would be pretty low anyway. Then you’ve got to sort of prove that you lost hours or you lost your job or something like that. But it’s it’s very gray, but it’s gonna be interesting.Mrs. FIREbug actually is eligible for she lost her job and because she’s eligible for it I did a bit more research than I otherwise would have. We’re at this point in time things could change, but we’re leaning towards taking it out just purely because of the whole you have to wait to your preservation age to get it so you can take it on tax free. And there’s actually is a whole bunch of little.Like, this is a trick you can do, which is sort of against the spirit of the law. But it’s perfectly legal. We can put it back into super.But I don’t know of the idea is going to plug that. I actually have a podcast specifically about this coming up. Yeah, it’s an interesting one. And I feel in that situation, I would rather have I’d rather have all our money. Like, if I could deplete super completely and put it into our personal accounts, I would purely just because we can get to it before the preservation age. But ten thousand dollars this financial year and 10000 dollars next from Mrs. Firebugs account. We’re leaning towards taking it out even though it’s going to be taxed in a higher tax environment for the time being. I still think it’s valid for our situation, but I’ll go heavy into those details in another pod.


Lifelongshuffle (Pat): I was just going to say maybe it won’t be taxed in a high tax environment for the time being because you’re not aware to get it.


Aussie FIREbug: Yeah, I know exactly what you’re getting at. Yeah. That that’s the that’s really the only the only argument against it. And like from a fire point of view, it makes sense. Like everyone that’s written these articles, like Scott Pape, the Barefoot Investor, everyone’s like, no, no, no, don’t touch it. Don’t touch it. They’re all assuming that one you’re not going to invest that money back into. You’re not going to put that money back into investments, which, to be fair, the spirit of the law is really it’s not intended for rich people to take money out of this super to reinvest it. It’s what people that are financially distressed to live off it. So I understand that like the barefoot investor is saying do everything you can to not touch your investments. Don’t take it out and buying a car or something. But for the fire crowd, it could be it can actually be beneficial depending.And as as we always talk about, it depends so much on where you are, the journey, what how old you are, how close you are to preservation age, what your goals are. Do you want to retire early? Are you happy to workto Fifty, fifty five.It all plays a part in the decision, but for our situation, yeah. It’s looking like we’re gonna do it now.


Strong Money (Dave): I mean you say star is like yeah if you take out ten thousand dollars you’re gonna miss out on one hundred and sixty thousand dollar.So you’re insane. But like to fire a crowd. Oh you’re really doing is moving money from an inaccessible account to an accessible account. It’s just that it may be taxed at a higher rate or a lower rate.


Strong Money (Dave): And obviously the benefit You get that money right now, which can help you in terms of, you know, ridging bridging financial independence. But it’s not a massive amount of money, so.


Yeah. Interesting topic. Oh, and speaking of interesting topics, this next question. So very you know, a lot of people have different opinions about these, but how are kids if you are going to have kids in the future going to affect your phone number? And is that factored into your goal? Dave, I’ll start with you. And I believe that you’re not planning to have kids in the immediate future. So this might not be valid for you. But I’ll let you answer.


Strong Money (Dave): Yes, I yeah. We’re not having kids, so it wasn’t part of the plan. I mean, if we were to I don’t see it as being insanely expensive as people think it is. I mean, I did a little bit of research because people have asked me, you know, about kind of a question like this and talking to parents and reading in forums and different places.And it’s like, wow, it depends. You know, you can spend this much, but you can also spend just this much. So it really seems to be down to personal choices on how much you spend.And so I don’t think it’s as expensive as people claim that is. I mean, it can be but Doesn’t have to be the case. So I don’t think it would blow out the number to fire All that much.


Aussie FIREbug: What about you pat?


Lifelongshuffle (Pat):  So we are planning to have kids and it is worked into our FIRE number.No, I sort of advertise on my Web site is just my number.So it doesn’t include Stephs Networth. And, you know, the goal that we both want to reach as a as a combined unit.But as a combined number, which is sort of opaque to all of our readers and my readers, even we have considered it. I think there’s a lot of hysteria around kids costing a lot of money. And it’s it’s almost like the hysteria around retirement costing a lot of money. It’s like you see all these numbers just thrown out there. It’s like all you need 10 million to retire. You need five million to retire. We know that’s nonsense. I feel like it’s a bit the same with kids. Like it will think it will cost a million dollars to raise a kid from zero to 18.And that’s that is actually nonsense. Like I’ve done looked at research done. I forget which government agency in Australia did the research, but it it shows like kids can cost anywhere from zero dollars, literally zero dollars, because the government gives you more money than you actually spend on your kids up to two hundred thousand or four hundred thousand or whatever it may be. And. It depends on the decisions you make and what you value out of life, whether it’s violin lessons or taking your kid bike riding.


I think it’s a little bit sad because I think there’s almost like a judgment that’s put on people. If you think if it’s said that while you only have to spend this much on your kids, it’s. Oh, yeah.But I want to like I want you to ask for my kid. I want to give my kids this.It’s almost like a judgement thing.Like I’m a better parent because I spend more on my child. Yeah. I don’t really believe that.


Aussie FIREbug: Yeah. My partner’s sister has gone pram shopping, it’s absolutely ludicrous. How much do they cost is what the first thing it’s like. Holy hell, is this a car or my buying a new car or buying a pram? Secondly is the the absolute like the guilt trip that some of these sales they will do. It’s like, well, you know, we got this we got the deluxe two and a half thousand version. Like, you want the best for your baby, right? Like you want the best. This is so, such a like tactic to make people spend more money. And it works.


Lifelongshuffle (Pat): My friends bought a pram maybe a year ago, and they had Pay like an extra one hundred and twenty dollars for the coffee cup holder that attached to pram. The whole pram should cost one hundred and twenty dollars. Not the coffee cup. Hold up. This is crazy.


Aussie FIREbug: I like the safety features as well. Like Ali safety features. I will that that model isn’t as safe as this one. And like that, that gets a lot of people to like. We need to be 100 percent safe. We need to be so safe. Like, would we be bad parents everywhere, the safest possible parents we could possibly be.And yeah, I don’t want to put my baby at risk. Yeah. Yeah. Three thousand dollars on a pram. It’s like, oh, my other flatmate works in marketing and like you and I are so smart. So these of the strategies I honest to God. They really tugged at all the emotional heartstrings of people. And yeah, you spend a shitload of money on something that’s like Yeah pretty sure people made do back in the day without, you know, taking out a mortgage to buy a pram.


Strong Money (Dave): That’s a big deal.You have to remember what people used today or what people do in other countries don’t have as much disposable income generated and people manage just fine.


Aussie FIREbug: Yeah. Yeah, it’s definitely yeah. That they’re very clever of how they  suck. you in. But I agree that’s it’s a status thing. Yeah. Yeah. Oh yeah. my sister’s a wedding photographer but she also does like kids’ birthdays if their parents are crazy enough to hire a professional photographer. But she does all these other like events. And yes, some of these melburne moms that, you know, drop fifteen hundred dollars on a professional photographer to be at a two year old’s party. And then she goes there and there’s like a jumping castle. It’s full on.  they spend more money than some people spend on their weddings for it.It’s crazy. It’s disposable income. And it’s just crazy. But yeah, we personally like we want to have kids. I don’t really like I’ve said ballpark, you know, a million dollars, but that’s not factoring in kids. And I don’t sort of like to plan too far into the future, like too much into the unknown. Like we are planning to have have kids, but we don’t have kids. So this is the FIRE number as of right now based on our saving rate and their estimation right now. So when we do have kids, it will obviously change. And I feel like that’s almost another like Gotcha.Some people like, ah, you know, kids like that.I am very interested as well to see how much it actually costs to have kids with someone being from the fire community. Because we all know that, you know, people in this space usually Hunt around to and get the best deals. We’re not afraid to use secondhand prams and secondhand and everything like that. So there are a few blogs out there. But are we completely honest because we haven’t had kids yet? I haven’t taken like a great deal of interest consuming all that content yet. And I guarantee that will probably change the day I became a father. How do you like absorbing all that information? But I really just haven’t gone down that rabbit hole just yet.


Strong Money (Dave): I think from memory, I think Mr. Money Mustache has a post about how much it actually or how much I spent raising their kid. And I think it was something like it was under five grand. And I think it might have been like about four grand a year or something on average, which was like, what’s that gonna cost…. An extra hundred grand to your fire number?Yeah, I mean, that’s that’s not a massive amount really. No, I think I think some people also use it as an excuse. Oh, that’s why you can retire. Yeah. Good luck trying that if you have kids, you know.


Aussie FIREbug: Yeah. That that’s that’s a bit. Yes. One hundred percent like oh this this fire thing is only for people that don’t have kids. It’s like I how true that is, it’s so new as well. Like it’s gonna be very interesting in the next couple of years. How many people actually reached the financial independence and then, you know, how many of us can sustain it. I think it’s going to change the concept or change a lot of people’s views. Yes. Only you only need to be in a certain demographic. You can’t have kids. You need to be earning, you know, a million dollars a year for for it to be plausible. But we know that’s not sure. And I think that’s gonna be proved in the next five or so years when we’re we’re all still kicking around, you know, hopefully. if COBID has wiped out the planet.


Strong Money (Dave): I guess as time goes on, there’ll be more and more examples of people from different backgrounds, different life circumstances back, and will now have achieved their own version of financial independence.On different incomes and everything, so it’ll give the people who are new to the, I guess, new to the scene and each beach person will have an example to look up to like, oh, that person’s like many of these persons like me.


Aussie FIREbug: For sure. All right. Well, I’ve exhausted all the Facebook questions, so I think it’s nearly an hour that we’ve been recording. So, guys, it’s been an absolute pleasure having you both on fire and show podcast.I’m going to have a link in the show notes. Put it in your calendar. It’s gonna be fantastic. I can’t wait for the first episode. And thank you so much for coming on, both of you.


Lifelongshuffle (Pat): No worries. Thanks. Thanks. Thanks for having us. Matt.



Podcast – Starting an Online Business – Games Like Finder

Podcast – Starting an Online Business – Games Like Finder



Today I have the pleasure of speaking to Sam from Games Like which is a curated video game recommendation database where you can discover new games based on what you’re currently into.

What I absolutely love about Sam’s story is he took a passion and turned it into an online business that helps out over 10 million gamers and generates up to an astonishing $4K a month in profit.

Some of the topics we cover:

  • How Sam came up with the idea for
  • What were the steps from inception into a product
  • How does Games Finder make its money
  • How much does Games Finder make
  • How much time do you put in each month to keep it running
  • Tax benefits of having an online business
  • Sam’s advice for anyone thinking about turning their passion into a side hustle

Show Notes



Aussie FireBug: Hey, Sam, welcome to the podcast. Thank you so much for coming on.


Sam: Pleasure to be here. Thanks for having me.


Aussie FireBug: Now we’re going to be chatting about how you turned a passion into an online side hustle that is helping you on your journey towards financial independence for those out there who don’t know who you are. Can you just give a brief overview of who you are and where you’re from?


Sam: Sure. So I’m based down in South Australia. I’m 28 years old, obviously on the path to financial independence. Always been a passionate gamer. Little stint in a competitive gaming as well. When I was younger, which I quite enjoyed forcing, was born a little too early to turn that into a career. But I’ve turned it into sort of a side, hustle through the games, find a website that I that I run know us.


Aussie FireBug: Now I have to ask because I wasn’t a I wasn’t a competitive game. But, you know, I’ve played my fair share of guys back in the day. What games were you a competitive gamer in, Sam?


Sam: Yep, definitely. So started call of duty, you know, offensive, which was the very first call of duty and the expansion pack for that. So I played for a few clans there on it was actually a competitive ladder run by Telstra. Believe it or not, it was called Game Arena. Not around anymore, but that was probably my main competitive stint. Also, I had brief stints in League of Legends and Fortnight, but definitely was not as successful there, given I was in full time work by that point, so I didn’t quite have the time to keep up with the young kids that are around these days.


Aussie FireBug: Yeah, definitely. Yeah, I get I keep keep flashing back to my 16 year old self. I think that a lot of people at their listening that has played Call of Duty because it’s such a big franchise. So I’m sure that a lot of people have it has played. I’m sure everyone’s got that guy or girl in their group. That’s pretty good at call of duty. How does one actually go? I’m just genuinely, genuinely curious. How did how do you get into competitive gaming or similar competitive gaming back in the day? And how does it all work? You get paid for it. You go to an arena. Had you go to get a certain score to get into the clan, it just. Can you give us a bit of an insight into that world?


Sam: Yeah, sure. God takes me back is nearly 10 years ago now. I guess at that time there was very few competitions around it. Like I mentioned, though, Telstra was running a a game ladder. I think it had about 20 teams. So it was the top Australian league, if you will, for college, Judy, at the time. And it was simply a matter of, you know, I was playing regularly every day, constantly coming the top of service team. Team Deathmatch was the popular mode. And, you know, you just start connecting with a few of the better players. You know, you get invited to try out for a few clans. Some of them were local as well. So I’d made up with them, maybe do a few LAN events and stuff. But as far as payment, there was not really much was very much a you can call yourself a competitive gamer and hey, maybe you know, if if we win, will shout some pizza or something. But it was definitely by no means a career at that point. I was just born too early.


Aussie FireBug: Yeah. ‘Cause we’re talking ten years ago. So yeah. I used to play on a bit of a nerd myself, although I haven’t played as much as I’d like to just in the recent years, but I used to play Starcraft.Starcraft was my jam and when Starcraft 2 come out I’d always I play that ridiculous amount whilst uni. I got up and went all the way up to the masters level, which is for anyone out there and I don’t know how many people will know because this is such a nerd tool, but it was the top 2 percent of the server. I believe there was only one other league above that which was Grandmaster, which was the top two people people of the server. And I my biggest achievement in my games life is I beat a grandmaster once upon a time and I beat him by doing a zerg rush, believe it or not. And it was a bit more sophisticated than a 6 pool, but it was like still a rush. The competitive game scene back then 10 or so years ago, it was nothing like it is today.Sometimes it comes across my YouTube of the Starcraft tournaments and these, you know, the WOW tournament and stuff. And they just it’s like 40000 people or something in an arena. And the prize money is like millions of dollars. It’s just insanity.


Sam: Yeah, it just did not exist back then, you know? Yeah, I said million dollar prize pools in tournament’s huge stadium, huge fans. You can be a twitch streamer on the side making thousands of dollars a day. Just people watching your skills. And that just didn’t exist back then. It was solely just doing it for the fun of it. And if you made some money on the side through, you know, some small tournaments, that was that was great. But there was no path for. Take that as a career as there is now, definitely a little jealous here.


Aussie FireBug: But now this is a nice Segway into my next question, because what I love about the Internet is it opens doors that previously didn’t exist. Now, what I love about your story, the reason that you’re on this podcast is because you took a passion and you turn that into a side hustle. So you started an impressive online company that has helped over 10 million gamers and now has grown to include its own staff. Can you give a brief overview of to what Games Finder is?


Sam: Definitely can. So at its heart, I guess games find as a video game recommendation website where basically I take a popular game. So maybe fortnight because that’s probably one the most people listening might have heard of before. And I’ll go out and I’ll curate a list of similar games to 8:56. I’ll say, hey, you know what? If you want something a bit more realistic, try this one. If you want something for mobile. Try this one if you want something with swords or magic or something. Try this one. But it’s similar to fortnight. I’ll pull them together. List what platforms it’s available on. Is it phrase not free where you can buy it? Some general information, some screenshots, some videos. Put it all in that one place and basically serve that to visitors, primarily through Google traffic. People are searching for these things and I’m simply delivering what they’re after.


Aussie FireBug: Awesome. Awesome. So it’s a Web site. So it’s a curated list. Games on it on its own website. So how did you what was the idea behind Games Finder and how how is it born? Was this something that you personally wanted that didn’t exist? The marketplace didn’t have a product like this. And you said, I really want it. A lot of my friends wanted it. So you just when it created it, can you just walk us through the steps or outcome?


Sam: you’ve hit the nail on the head. It was exactly 10 years ago. Like 8 or 7 when I started, it was looking around for similar games. I can’t remember the game, but I just I just couldn’t find the information I wanted. It was frustrating to me. And I just decided, you know what? There’s got to be that famous line. There’s gotta to be a better way, you know? And so I created that better way. Industries moved a lot in those years. There’s now things like, you know, I even read it has blown up. So it’s easy to find these things. Steam, which is a PC game store now makes it very easy to do this stuff as well. But it just didn’t exist when I started. And I just love the concept of because how often you know, when I’m talking to friends who play games like are I really love X game? What else will I like? And that’s just why the concept started.


Aussie FireBug: How many times and people are out there listening. I’m sure this happens all the time with a group of friends. And you come up with an idea and you say this is like, why doesn’t this exist? And it could be absolutely anything. It can be, you know, in the gaming industry. A Web site, if you’re into snowboarding, could be, you know, one of the best places to drink beer at The Snowy Mountains, specifically in Australia. It could be about fishing. It could be whatever you want it to be. But what I’ve found is a lot of people talk about it, but they don’t actually take the steps to make it the product. So can you talk a little bit about your friends talking about this product that they wanted and yourself? You know, Salik didn’t exist and you wanted it to exist. How did you go from inception into actually something online? Can you walk us through the steps there and how you actually grew the business to where it’s at today?


Sam: So probably go. It’s probably a bit of a long story, but important to take people on this journey.


Aussie FireBug: We’ve got to on that wave. Excellent.


Sam: So even though I started Games Finder in 2013, I actually had the seeds of making money online. Back when I was in high school, probably 16, 17, 2007, 2008, I was in high school, part time job, playing video games, playing soccer on the weekend, pretty regular kid. And I started searching for ways to make money online. I came across a Web site where you could write articles and get paid. I no longer exist anymore. It was cold squid, squid to squid and then two O’s. It’s a strange name.


Aussie FireBug: I would put in the show notes. But you said it’s non existent


Sam: No, it’s not. Does not exist anymore. Unfortunately, risk you take when you use someone else’s platform, I guess. But basically was the user generated content website. So they gave you all the tools where you could publish a web page and they would share revenue that that page generated from ads. I think it was it was fifty fifty your or close to that. You know me being a 16, 17 year old thinking yeah, I’m as good a writer as anyone else, I can give this a crack and put up three or four gaming articles. And I remember making my first eight cents in. I was probably the first six months, I think I made eight cents. So I didn’t didn’t really pan out. But what an eight cents. Oh well it was eight US cents. So by the time I voted, it was like fifteen cents.


Aussie FireBug: So that’s a decent amount at the tuck shop as a six. Yeah. Yeah. Yeah.


Sam: Oh absolutely. I don’t actually I don’t actually think you can even buy a lolly.This is in a back in my day story unfortunately.But you know I basically left it. I did nothing with it. But then six months later I got a ten dollar amount because one of my articles that got popular and Google got a few visits, whatever. And that’s sort of when that light bulb moment hit that, you know, I wrote four articles, didn’t really know what I was doing. Imagine if I wrote 40 articles and I knew what I was doing and how that sort of snowball can start.So I actually did that for about five years, doing random gaming articles, a few other bits and pieces hit and miss. I was I was learning, but I was I would make that a thousand dollars a month at the peak of that, which I was in. You need at that point. So obviously a nice little uni go out, have a drink or something like a fund.


Aussie FireBug: That’s big, big being on $8000 a month. Yes. Is pretty epic. You.


Sam: It was. It was. Yeah. Yeah. I even I even quit my part time job in my last year of uni. Cause I was I figured I could grow this. But then just after I finished uni I had the idea for games funding which we just talked about before. So I decided I want to go ahead and create that. Obviously, I had a bit of a background to work from which helped. So I created a WordPress site. I’m not sure what you host your blog on.


Aussie FireBug: Yeah, WordPress as well.


Sam: Yep. Had you had you find that pretty pretty simple to set up?


Aussie FireBug: It’s it’s very simple. I tell people all the time. You know, if you want to get something online, you can literally set it up without any technical knowledge whatsoever. You can watch if you eat your videos, follow me, go out and you can be online in about an hour. I think fully domain name registered hosting everything. It’s the Internet’s crazy. Yeah. The doors that it opens is just more people need to know about stuff like this, which is, you know, your story is a great example of it.


Sam Yeah, absolutely. They say, yeah, I set up a WordPress site seven years ago. It was a bit more technical, but it’s extremely easy these days. There’s hundreds like had hundreds of videos, hundreds of articles. So I reckon for about one hundred dollars, I had a year’s worth of Web site hosting a domain. I even got a premium WordPress theme, which is just those changes, how things look. And I just started doing some basic modifications. I don’t have a coding background by any means, but I learned to be in school about h._t._m._l C SS, so I was able to change some basics. Even if I didn’t have that knowledge, I would have been fine to go. It was more, you know, I’m a bit pedantic about things, so I want them to look a certain way. And then I just started writing. I was writing so much I just finished uni so I didn’t have a wasn’t working full time or anything yet. So I was just writing and writing and writing probably took three or six months before I had enough content up there to where I was getting some trafficking. And then, you know, I was just getting one visit a day and five visits a day, then ten, hundreds, thousands. I started reinvesting in people to write content for me. I hired a developer to create some features that I thought would be good that well beyond my expertise. And I just that snowball just kept on going.


Aussie FireBug: Love. Love that story. So, you know, there’s a famous saying, I can’t remember which movie it’s from, but build it and they will come. Is it Field of Dreams or something? I can’t remember. I have found and I’ve got my own blog, but I’ve also there’s a few other Web sites that I’ve done in the past and build it and they will come is actually a terrible analogy I’ve found. For if you want your website to get traffic, that is not how it works. If you’re trying to build an online business, I don’t know if you if you’ve had the same experience that I’ve had that you really need to get your content is king. I’m curious to get your opinion on this, but you said, you know, a lot of your traffic was driven by Google. What strategies did you implement to ensure that this this new product that you created was going to get that traffic and people were going to actually read the content that you’d spent hours and hours writing?


Sam: Yep, it’s a definitely a good question. So when I was writing for the scritti website, I picked up a lot of tips and tricks. I’d recommend people search up. That’s basically called keyword research. So there’s a number of tools. Google even has their own where you can type in a key word or phrase and it’ll say, hey, this this phrase gets searched 40 times a month or 50 times a month or 100 times a month or, you know, hundreds of thousands of times a month. The most popular. So what I started doing was I’d go in there and I’d say, all right, well, I’m writing about games like let’s games like fortnight. All right. That get searched 500 times a month. I’m going to write an article on that. I might check out the Google search results and go, you know, 500 people a month of searching for this, but all these results are actually terrible. So if I’m building something good, Google is actually pretty good at figuring out what’s good and what’s not good these days. So as long as you’re writing for something that has demand, you usually can get rewarded for that.


Aussie FireBug: Absolutely. And is it was it any other. Was Google your main traffic generator or is there any other sources that you pull from that bringing significant traffic?


Sam: I definitely get a bit from being as well. Bing presently brings in a bit.


Aussie FireBug: Really?


I don’t get a lot of social traffic. And part of the reason for that is choice. I didn’t want the building a social following building.You know all this work that comes with social. I decided that’s not for me. That’s not something I’m good at or interested in. So I completely honestly ignored that side completely. I want to start off the website. I did get some traffic from YouTube. I actually had a semi-successful YouTube channel at the time I started this as well. So I was using that to funnel a bit of traffic like I was doing a lot of legal legends, game, common commentary and stuff. So I made a few league legends, guides and stuff, put them on the website, built-up bit of traffic like that But otherwise, yeah, it’s completely Google.


Aussie FireBug: So you build this product, built this website to serve a need that you and your friends wanted. But the power of the internet, you can now host this web site and unlimited or the whole world can benefit from what you’ve built.Now, obviously, you mentioned that, you know, it was only $100 to have the hosting and the domain name and everything like that. Yeah, that is only suited for, you know, low traffic in a smallish website. Imagine that Games Finder has now grown to be a lot, cost a lot more than the initial hundred dollars. So obviously and this is another. This is the power of an online company. Is it you can you can start small and if your product isn’t good and it fails, that’s fine because you’ve only lost the time that you’ve put into it. You haven’t actually lost, you know, tens of thousands of dollars like you would with a traditional business if you had to buy a shop or buy inventory and store that in a warehouse and so on and so on.


Sam: So, yeah, absolutely.


Aussie FireBug: So obviously, you’ve scaled up to a point now where you’ve you know, we’ve mentioned you’ve helped 10 million gamers. How does games find to actually make its money to keep that show running?


Sam: Yep, definitely. I might just touch on. Yeah. As you said, the expenses have grown as well. So it’s darn common for me to spend thousands of dollars a year now on games, find out between hosting and premium WordPress benefits and develop a time and you know it. I was able to stop essentially risk free for 100 dollars. If I hadn’t worked out, I could have just walked away. So I definitely agree with your point there. As far as how games find to makes money. Pretty standard. So like most websites, anyone that goes on without an adblock activated will say some typical banner advertising there probably makes up about a quarter of total revenue. Just because gaming doesn’t pay a lot for advertisers don’t pay a lot for gaming. Gaming websites and I find that a lot of my users run adblock software probably because their game is there on the computer a lot or they’re a bit more tech savvy. So they run an ad blocking and that’s fine. I also run one, so I’m not going to be a hypocrite here.That’s that’s fine. I try to implement them tastefully, but if you don’t want to see them, that’s fine. So the other 75 percent is actually made up of affiliate revenue. So it’s from a few sources, but from, I guess, largest to smallest. I work with directly with a few game publishers, mostly for free to play games where I receive a revenue share, usually between 20 and 50 percent of any in-game purchase plays. Mike. So if you have a saying the in-app purchases on these free to play games, spend $10 and get a nice looking hat or something, I’ll get a cut from that.


Aussie FireBug: That that that’s very interesting to me. So because Aussie fly about also makes money from affiliate relationships and I actually have ads, but it’s ads on this podcast because I don’t know how many people out there know about the podcast is actually more popular than the blog. Believe it or not, and I actually don’t run ads on my website. Aussie firebug because like you, I thought I just didn’t know how much. I didn’t think it it’s gonna be worth it. Like how many people run or ran adblock compared to the absolutely minuscule amount of money that you get for putting ads onto your site. And I think I’ve read a few statistics to say it actually it hinders more than it helps depending on obviously how many page views you get. But that’s interesting for me to hear that still 25 percent of revenue, that’s still a lot of money. So yeah, there must be a decent amount of game is not running adblock, which is good for you. But my question was, so someone comes to games finder a dot com and they click on a game so they know like there’s a special link, is it, and then the gaming company know that it’s been that traffic has been sent by you. And then if that person, which they somehow still know is playing that game makes an in-game purchase, you get a cut of that revenue that roughly if I got it right there.


Sam: Yep. Exactly. That’s so unique. Your URL that I send them to somehow and the background I’m I’m not that tech savvy, but yeah. They attach that person to my account for the for the rest of their life. Some of them, some of them for the rest of like some of them it’s only purchases in 12 months or something. The ones I work with were rest of their life is actually obviously very attractive. But I also like the model because in my mind you’re not paying for a game unless you’re actually enjoying it. So it actually means I’m actually making more money by recommending good games, which which is what I really like about that revenue model and that’s no cost to them. It’s probably my preferred revenue model and the one that’s the most successful for me.


Aussie FireBug: Yeah, for sure. I agree with you as well. If you’re recommending a company that you’ve used or that you’re currently using is a lot easier to get someone to discard through an affiliate link or something and everyone wins in that situation, I feel.But also advertising a lot of. So let’s make money that way as well. Can we talk now about how much? So when you first started and Games Fund has been running now for, what, seven years? So how much was how much did games find to make at the start? And how has that growth. What’s that growth been like over the seven years that has been running? And how much are you guys making today?


Aussie FireBug: Yep. Sure.


Sam: So I’ll probably tackle how much I’m making today. First, we might as well put that out there first. Sure. So at the moment I’m making about three thousand to four thousand dollars a month in Australian dollars.I get paid in both US euro and Australian. So I have a lot of fun watching the currencies, but it’s about that on average. The first year I was probably making after about a year, probably making three hundred, four hundred, maybe five hundred a month and sort of every year since then I’ve been adding $500 a month. That’s sort of the growth. So every twelve months at $500 a month and that gets me to basically where I am now. So it’s been pretty steady and consistent throughout.


Aussie FireBug: Awesome. And is the say you currently work a full time job and this is your side hustle at the moment. Is that right?


Sam: Yes. Yep, that’s correct.


Aussie FireBug: Is the dream to eventually have gains? Want to grow into enough income that you’ll be able to quit your job?


Sam: I’m honestly not sure about that. It’s got the potential I think it has the potential would ever want to do that. Maybe as a later on, I you know, I’ve reached my FBI number or something and I decide to step away and do the website but I’m not sure I would want to make it my full time job. I just think it’s I mean, I enjoy the career I’m in now. I don’t hate it. The fire community, I’m definitely more FI than RE. I really enjoy my career. I just like to do this as a side hustle. And then sometimes I wonder if I did at full time what I enjoyed as much. So I’m honestly on the fence. I’m not sure which direction I’ll go.


Aussie FireBug: I really like that answer because I think that. It’s different having a side hustle and site that you passionate about. It’s different to if you turn that into a full time job. And I guess this is why I like fire so important that you can do. You can pursue your hobbies and dreams and your passions without being forced to rely on them for a living. And it’s so much more enjoyable when you don’t have to earn money from whatever you’re doing. As a passion or a hobby. So, yeah, I think that if you’re doing it as a side hustle and it’s you know, it’s earning pretty unbelievable amounts of money and you’re enjoying it. You know why would you change anything? We discussed a little bit before this podcast. We’re just chatting about the potential tax benefits of owning a company. Can you tell the audience how being the founder of Games Finder has been tax efficient in your circumstances?


Sam: Sure. So, yeah, one of the best parts about having the side hustle for me because it’s also my hobby is the way I’ve been out to maximize some benefits around Taxes.I’ll slip in the general advice disclaimer here, not tax advice. Seek your own advice.I myself use a qualified accountant would recommend it.


Aussie FireBug: Well, my tax returns are a bit complicated because of the trust. Once I once I clean up, once I get sell the properties and everything’s through the ETF and just shares the plan, eventually long term for us, I’ll do it myself. But at the moment, just because it’s a bit more complicated and I just couldn’t. On the other side of the world traveling around it was it’s easier to hire a professional, but eventually I’d like to think I’d get down to control myself.


Sam: Yeah. I’m sure you like get the hang of it once you simplify things a bit.So for me, though, because of, say, my hobby is gaming, so new video games come out. I would love to buy them. And the benefit of having a website that reviews games is if I did buy that video game and decide to review it. That’s tax deductible. That was that’s a business expense. So I have that benefit of things I may have bought anyway can become a tax deduction. There’s also little things such as electricity, internet, computer upgrades. There’s some portioning between private and business use for those, but there’s still some benefit to be realized. And at the end of the day, it’s just I’ve turned a hobby into profit and then just getting even a little bit extra out of it by shifting some expenses to a tax deductible state. So I’m saving, you know, 30 percent or thirty seven, whatever the tax rate is, I’m saving that from.


Aussie FireBug: How many does any 16 year olds listening to this that are just online right now starting up their own company so they can get tax guidance? So do you have an ABN or is it the actual company?


Sam: I do have a ABN. So it’s a it gets a bit complex.I used to run it as a sole trader and these days I run it. I run I actually run it through a trust. So my taxes are getting complex. That’s what the accounting is for. So, yeah, it’s evolved over time.


Aussie FireBug: Say, I wonder, the reason I ask is because an ABN doesn’t really cost much to stop. I think it’s what, like 100 bucks or something. You can register a business name for like 100 bucks or close to that.


Sam: Yeah. So I think the ABN actually might even be free. So I don’t think it’s any cost for the ABN. I think the business name part has a cost, though. But don’t quote me on that.


Aussie FireBug: Yeah, maybe I’ll look that up by putting the show to it. But the reason I bring it up is because like I wonder how the ATO look.Imagine if 10000 kids just created an ABN and just created a website for like 90 bucks and said that they were doing this gaming website and they just put an absolute shit load of games and laptops and everything and just started claiming everything on tax like is that. I’m sure there’s an account and yet they’re listening like shaking his head or her head and say, no, that’s not how it works. Not imagine that’s not how it works. But I wondered if, you know, there’s some something that I could do there. But yeah, I’m sure there’s there’s checks and balances that the ATO do to stop that from happening.


Sam: Yeah, I’m sure there is. I think probably when it comes down to is I mean, I’m not an expert in the tax side of things, but you would need revenue to offset that. I don’t think you can start a business by ten twenty thousand dollars in losses, made no money and bought all this stuff and tax deduct that. I’m pretty sure that that’s why you’d probably get caught up.


Aussie FireBug: Yeah, that’s interesting. I’ve been not speaking about this anymore. This is definitely going into specific tax, but it’s interesting. But your circumstances it’s 100 percent legit and I really think that such a thing it’s such a cool little benefit of this business that you’ve created. Like it’s in a niche that you absolutely love and you have the passion. You know, you with a semi, say, my professional gamer, everything like that. And you’ve you’ve taken that passion and you’ve turned it into a profit. I think it’s a really cool story. Now, switching gears a little bit. You’re into the FIRE movement. When did you discover fire? And why is it so important to you?


Sam: Sure. So I discovered fire. Probably. Probably just after I launched games finder. So I didn’t stop getting signed up because I wanted it to contribute to my fire journey. I would say worked out quite well that that is doing that. But that’s not why I started it. I think like most well, maybe not most people, but at least a subset of people listening to this. I was a saver my entire life. Never really understood what I was saving for or why I was saving. I was just really good at it. Discovered Mr. Money Mustache. It was either through a friend or through read. It just absolutely devoured that that blog in a short span of time realized that savings could give me just greater freedom in life and choice, which is something I’ve always valued because I have always viewed money as this limiting thing in life where it definitely doesn’t buy happiness, but it removes so much stress from your life having finances sorted.And I think and I think that just comes from, you know, you grow up. What do you see adults worrying about? They’re always worrying about money. Maybe they’re fighting about money. You hear on the news people struggling. And to just remove that stress from life is so empowering. I think that’s what attracted me to fire.


Aussie FireBug: Absolutely, man. I think. I think there’s a statistic out there. It’s like the second highest reason for divorce. I think in America, the study was full. It was money issues or financial problems. So it’s definitely like you said, it’s not.It’s real funny one, because when you explain it to people, especially being a notorious, tight ass my whole life, it’s like explaining to people that it’s not actually. I don’t actually love money. I just I like what it can do for my life. Like, it’s not like I want to be the richest man in the graveyard. But what I want to be able to do is do what I want when I want and not have to rock up to a job that I originally locked in.Now that I don’t like or I work for a boss, it’s it’s a bit of a prick. Something like that, sir. Money doesn’t buy happiness. It’s technically true. I think this is 50 Shades of Grey in between that statement anyway.


Sam: Yeah, I absolutely agree. I was actually in a job that I didn’t like very much and that was definitely a motivator as well. My first job at a unit was, you know, it was stressful and I always thought, well, what’s a better way? And that that definitely encouraged me to really buckle down into it for sure.


Aussie FireBug: Very similar. Like a lot of stuff that you’ve mentioned, especially just being a good say that and not knowing why. Like, I definitely went through that and I can relate 100 percent to that. I said, yes, save up all this money and then sort of blow it.Not when I say all this money, you know, it’s laughable how much it was now, But back then it’s like. Yes, I saved all this money and I was like, well, what’s the point of having all this money? I don’t like I better spend it on something and I’ll just buy new clothes or something. And then I thought, well, I’m not even, you know, that was good. But now I got no money. It was just such a odd thing.So, yeah, it’s such a classic light bulb going off when you discover financial independence and there’s people like Mr. Money Mustache. He’s just such a such a oracle, you know, in the fly space that he’s actually living proof that it works. And you can actually pull back from a full time job and go in to pursue your passions, your hobbies and stuff that you like doing at such a young age. So I really think that’s a cool. A cool door to open in your brain. And it really. Yeah. Light bulb definitely went off for me. Which it sounds like it went off for you as well.


Sam: Yes, it absolutely did. And I mean five, six years ago when I discovered it, he was probably only one of the few that were out there. And it’s been really enjoyable to see the Australian community build up. You know, we’ve got subreddits. The community. Yeah. Exactly. You know, I see it in the news every now and then. So you’ve you’ve got the podcast. I see. You’ve got your Facebook group, which I which I joined today. It’s you know, it’s. Yeah. It’s just been really nice to to see that growth and hopefully it continues.


Aussie FireBug:  Yes. Shout to Aussie fire bug facebook. It’s think we’re at like three, three, three and a half like three thousand seven hundred members. It’s got more members than people like on my own Facebook page. It hasn’t like guys in my Facebook group like the page at least. Come on.


Sam:  I’m guilty


Aussie FireBug: I’d be expecting a like within the next hour. So does how does having a side house a lot games, fun games find a play into your FIRE planes or does it not really play into it at all?


Sam: I mean, like I said, I didn’t start it with that intention, which is which is probably a big bonus. I didn’t start it for the monetary reasons. But now that I’m into fire and it’s come along, it’s obviously become a huge part of my plan. There’s probably this probably three ways that it’s helped. The first one is reducing expenses. So we talked about the tax benefits already. That’s obviously a nice little boost. But another part of that is I’ve I’ve probably received thousands maybe maybe even tens of thousands of dollars worth of free video games either sent directly to me or just asking the publishers, hey, I really like this game, can I play it? And that alone has saved me that much, because if I didn’t have games finder, I’d definitely been paying for those games and playing them. I have not had to do that. That is a huge cost reduction.


Aussie FireBug: Yeah, that’s that’s such a such a bonus, isn’t it?  I don’t know. You know, the YouTuber marquis brown or something on YouTube that the guy aren’t tech, the tech reviews. I’m probably saying his name wrong.Oh, my God. Like when he first started, he was buying everything himself. I’m pretty sure because his channels and sponsored. And I used to think, how much money is this kid dropping on all these new gadgets? But now, like, yeah, he gets laptops, cameras, smart phones just thrown at him because he’s videos get 10 million views, you know so like all the manufacturers want their product to be reviewed by him just to get it get that exposure out there, which is such a cool thing. I don’t get too many free things, like there’s a couple of services that I have partnerships with, but it’s not as lucrative. Definitely in that regard is something like Games Finder. Jealous!


Sam: You’ll get that. I’m not sure what financial product you’d get for free, but I’m sure we can find one for you.


Aussie FireBug: I need I need some. Any financial companies are listening. Feel free to throw some products my way.


Sam: Hey, all you have to do is ask. That’s that’s what I do. I just ask and I say, hey, I’ve got this Web site. If you’re interested, send me some keys. I usually ask for a few for my friends as well. You know, you got to test it out properly. Yeah, it’s it’s definitely saved a lot of money.


Aussie FireBug: Yeah, definitely. And that is such a important thing to just ask the question. Because what’s the worst they can say is no. And then you’re back to the same situation you were at before. So could not agree any more. Definitely need to ask.


Sam: And then the second part, I think I said three ways. So we’ll go to number two is obviously the income side we can’t ignore. You know, I said three to four grand per month that the website is making. That can make a tremendous difference over the long term. You know, am seven years in. So I wasn’t always making this much, but that’s where I am now. Might be higher in the future, even if it stays at this level. That’s all going straight to investments. I just treat it as money that it’s it’s not my money. I just I just invest it. All the money the website makes. I’ll say there’s expenses, but anything left over is just a striaght into Vanguard.


Aussie FireBug: Such a bonus. The fact that you can do it for whatever reason that you can do it, if something happened at your job job or something like that, you’ve got another source of income coming in and like you’ve already got investment. So that’s another. You’ve got just off the top. I had three sources of income coming in and you might have more. Which is such a powerful concept of, you know, growing this snowball from from attacking it from multiple places. Obviously, most people listening will have the primary source of income, which is the job each or you trade your time for money. That’s obviously gonna be a big one. But building these little streams of income, I think is a such a a way to supercharge your way to fire that doesn’t get as much attention as the other things, like arguing between what’s better, A200 or VAS, which is such a miniscule as such a miniscule difference between those products anyway that this side hustle and making money online. That’s definitely my preference. A can really, really speed things up. And yet I keep harping on about a bit if more people knew the possibilities. I think you could shave years off your retirement date for sure


Sam: It easily and I mean, I would say I’ve been quite successful now at the level I’m at. But even when I was at the $500 a month phase, you. That’s amazing. That’s an extra. Sure. And I’m investing a year one grand , 12 grand a year and that’s just straight to investments. You you you lived without it. So there’s no reason to spend it. Just get it into investments, you know? And that adds up.


Aussie FireBug:  And it’s it’s something that you can grow as well as like a little baby. You can nurture, you know, and it’s there. It’s, you know, making money online once as soon as you start. It seems like you get your first $10 or $100. Like you said, the light bulb go goes off and this is just a whole another world where you can potentially make money and this I feel, can play into the retirement part of a lot of people’s flight plans that if they have something, a little side hustle to fall back on each drastically, drastically reduces their reliance on the portfolio come post retirement, even if you have enough in your portfolio. Let’s say that the market crashes and burns like it is at the moment It’s going down at an alarming rate. If you’ve got that that side hustle and that income that’s been made online, you are going to sleep a lot easier than if you’re you’re relying solely on the portfolio.


Sam: And you’ve you’ve stolen my third point because my third point is absolutely the flexibility that the side also brings in your fire plans. You know, I’ve got a Web site. It can be easily packaged up and sold. So if I decide to retire and I want to sell it, there’s a boost to my assets for investment income. Maybe I could quit my job and just run the Web site that we talked about. Or maybe I quit my job and keep the website for the income stream. Maybe I retire with less assets because of the website or maybe I use it to protect against bad returns in the first few years. You’ve just got so many options with that extra income that it’s absolutely the flexibility is is incredible.


Aussie FireBug: Could not agree any more, Sam. Now, before I let you go, I have to ask any advice or what would be the number one piece of advice that you would give to someone that’s out there may be listening. That is thinking about turning their passion into a side hustle.


Sam: I would definitely start out like I did, I would find a no risk way to get into it, so be it. Maybe you want to create a YouTube channel that’s that’s free to start up. There is a few Web sites out there where you can with riots and sort of test the waters. So one of them is called HUBB pages. I just don’t show it. I have a little experience with it. I don’t do it much anymore because I have my my own website. But you could go on that. You could write a few articles, see if you like the idea of it. It might make you $10 a month. Learn more about the process. Risk free. All you’ve got to lose some of your time. And that being said, I would say start with an area of interest. Pick something that you’re interested in that you think might be under undeserved, that you can that you want to research and you might be OK. Q Right. An ultimate resource on it or something. So for me that I also did a few gaming guides because I was really deep into some games where I had some value to give. Think about what sort of value? Where’s your value? Basically.


Aussie FireBug: Awesome. I think that’s that’s a common theme. You know, I’ve had Brandon and your self on now in the sort of theme of side hustles. I would recommend you need to start in something that you’re passionate about. Like don’t go into something. Just because you’re Googling is that it’s the latest trend or what’s gonna blow up or something like that. It’s always better. Some people might have success in that. But I personally think it’s always better to do something that you’re you’re obsessed in and you have so much passion for. And I know a lot of people out there listening will be like, I don’t have any passions. Well, I think that’s rubbish. Everyone has passions.You just gotta think hard enough and really, really put the time and effort into what putting a list together on what the things that you’re good at, the things that you’re interested in and the things that you when you go down to the pub on a Friday night, you just know a lot more about than majority people there. And even if it’s super niche the Internet opens up the door for the whole world to look at your product or your content. So it odds are if you interested in something, there’s gonna be people out there that are also interested in it as well.


Sam: Absolutely. You don’t need to be some award winning writer. You don’t need to have insane website skills. It’s it’s very easy to do. I mean, I started this fifteen, sixteen and I’ve done all right. Games Finder’s is not an amazing website, but it’s it’s filling a niche that I’m passionate about and that’s that’s enough If you pick the right the right niche.


Aussie FireBug: Yeah, great. Now I couldn’t let you go before asking you a few questions that 16 year old me was dying to ask, especially about the competitive gaming career. And maybe there’s some people out there that might find this interesting as well. Smart console or computer gamer?


Sam: It’s absolutely computer gaming for me.Sorry. Console players out there. What’s that?


Aussie FireBug: Read it mean like master race. You’re part of the master race, are you?


Sam: Yes. I guess I am. I wouldn’t use that term because I think 0 0 gamers are equal.And whatever you want to play on, it’s fine. Yeah, I’m definitely on.


Aussie FireBug: Politically correct answer.Love it. What version of cod? Call of duty for those out there that didn’t know what that is. Did you play the most?


Sam: Definitely the first one, definitely United offensive. I remember tracking my time played in an old program that you actually mentioned before the podcast xfire that isn’t around anymore. I had one thousand five hundred something hours in that game, which is almost embarrassing to say, but a young kid in high school with nothing better to do with his time. So that’s where it goes.


Aussie FireBug: Yeah, I guess we we did speak and I was on xfire as well, but I can’t remember if.Yeah, I think maybe you did have. I wonder if that information is still out there somewhere on a database or something.  I’d love to know how many hours I spent on call of duty as well.Weapon of choice.


Sam: There was a rifle that I was actually quite good with. And there was a survey that tracked weapons stats. And I was actually the best player on the server with this weapon. It was the Mosen as a bolt action rifle that the thing was a Russian a Russian rifle even then. Yeah. Many fun times without that weapon. It was is good. Good times.


Aussie FireBug: Hardcore or normal.


Sam: I like a bit of both. Actually, I’m actually playing quite a hardcore game at the moment. But then that being said, I think there’s a place for non hardcore games because sometimes you just want to relax and you don’t want that pressure and say both something I’m going to have to say.


Aussie FireBug: You know, I encourage you to specifically, you know, how there was the hardcore mode in like the I think was hardcore. I always played the hardcore mode because it was more realistic to me. Like if you shot someone once in a major area, they died instantly, whereas like some COD games. I don’t know what the latest ones like, but you could sort of power your way through like you could, you know, shoot someone a few times and I could just keep running and you’re like, Oh, I just miss them that hardcore with so much better, I felt, because you just nick them and they would die and you get the kill. And I always thought that was a lot better, although it did suck when you come across a really good play because you just you had no hope.


Aussie FireBug:  Did you have a favorite perk in the latest COD.


Sam: No, actually, I didn’t. I didn’t play the latest COD, I haven’t played in a few releases. I have to say I’ve looked elsewhere for gaming in recent years.


Aussie FireBug: You’ve moved on. Oh, I have. Some of the other questions are not going to make sense then, but they want I’ll still ask them. So when you when you played a lot of match, what was your normal score for you in, say, like Team Deathmatch? How many kills? How many deaths? Roughly.


Sam: Offensive worked on a point system. So those points for kill, but there’s also points for objectives and Multikils I would regularly get over 100 score on these servers. I’m not sure how that translates to current games, but yeah, usually very high score very low debts.


Aussie FireBug:  Your KD was good. It would have been like it would have been like 4 to 1, 5 to 1.


Sam: Yeah, it was pretty solid.


Aussie FireBug: Now, you might not have played this one, but I’m really hoping you did because this was my favorite.Highest level you ever got to call of duty World War zombies.


Sam: I’m sorry to say I never played the zombie


Aussie FireBug: Like what? That was like a religion in amongst our group of friends. Like seriously that the world of the world. zombies was our jam back in the day like we used to. Seriously gather round, my friend and have beers before the pub. The zombies mode has a special place in my heart for gaming. I feel like you need to get back on that!


Sam: I should. There was a few zombie mods COD 4, COD I played however that was probably the lat i played. I think I was playing league legends by by that stage.


Aussie FireBug: Yeah. COD was such a leap in engine or something. I was like buttery smooth. It looked really nice. But you haven’t played a few in the last couple of releases but yeah. Very special place in my heart in the call of Duty series. If there’s anyone out there listening, Sam, that wants to get in contact with you, what’s the best place to reach out to you?


Sam: So once this podcast goes live, I’ll definitely be watching the comments for a week or two after. So if anyone has a question, I’m happy to answer it there. And you know, it’s always good to be public with these sort of things because if you’ve got a question, someone else probably does. Otherwise, like I said, I joined your Facebook group So if anything pops up there, I’ll try to answer it. But if you have something more private that you don’t want to share with other people, there’s a contact page on Games Finder that I’ll respond to.


Aussie FireBug: Great.I’ll put a link to the website games find in the show notes for those listening that want to check it out. Mate, we’ve reached the end of the podcast. It was an absolute pleasure having you on. Thank you so much for sharing your story with us.


Sam: No worries. Absolute pleasure.



Podcast – Coronavirus market crash with Peter Thornhill

Podcast – Coronavirus market crash with Peter Thornhill



Recorded and released on the 19/03/2020 (London time).

There’s a whole bunch of fear and uncertainty going around within the FIRE community right now. A lot of younger investors, myself included, have never invested through a bear market before. 

I thought it would be helpful to hear from someone who has seen a thing or two in the investing world and be the voice of reason during these turbulent times. 

I chat with Peter Thornhill about the current market crash and if this is any different to previous bear markets.

Some of the topics we cover today include:

  • Peter’s experiences with previous bear markets
  • Similarities to the GFC
  • What Peter’s buying in this downturn
  • DCA or lump sum?
  • Is this just fear and confusion or maybe a financial reset?
  • Plus a whole bunch of community questions from the Facebook Group

Show Notes



Aussie Firebug: Hello, Peter. Welcome back to the podcast. Thank you so much for coming on.


Peter Thornhill: My pleasure, Matt. Good to be back.


Aussie Firebug: There’s a whole bunch of fear and uncertainty going around the FIRE community right now. A lot of younger investors, myself included, have never invested through a bear market before. I only started investing in shares back in 2016 and have only ever really known the market to turn up until the last month. I’m currently down a whopping one hundred and twenty eight thousand dollars. Can we start with your experiences with previous bear markets when you’ve had skin in the game?


Peter Thornhill: Well, welcome to the real world. History is, of course, my guide. And as long as you appreciate and understand history, you can foretell the future. I can therefore say with great confidence to most people that at some stage there will be a disaster and everything will go pear shaped. I have no idea when. I have no idea what, but once the herd stampedes, then off we go.


Aussie Firebug: Does this bear market feel any different to the others that you’ve personally invested through and that you’ve lived through?


Peter Thornhill: Well, I guess in one respect, yes, it is, because I’ve actually had a look at all the pandemics that have occurred over the last two thousand years. There’s been a lot of them, but not not many have had the same impact on the share market as they have SARS ebola They’ve all had an impact, but not to the extent that this one has because this is knocking on everybody’s door, whereas a lot of the other epidemics were isolated to largely individual countries, whereas this one this is a global job. And as we’re now all globally connected, news travels like wildfire. So you can have everybody panicking all at once.


Aussie Firebug: Feel like the media plays a big part as well with the fear and the scary headlines sell a lot more than just mild headlines. And that’s not to downplay the seriousness of this virus, because it is is very serious. And there are thousands and tens of thousands of people that are dying. But just this day and age, I think you’re right that it does, especially with international travel and everything. Things are spreading quicker and there’s more there’s more communication and maybe a bit more preparation this time around than previous before.


Peter Thornhill: I wouldn’t say that there’s been more preparation. If you want to see the real story there was a TED talk by Bill Gates in 2015 and I encourage everyone to go and look at it. I’ll put that in the show notes. He suggested in that TED talk that the next pandemic was the world was as ill prepared as it always has been. And whether it’s a war that kills 40 million people or whatever he forecast in 2015 that the next world crisis would not be a war, it would be a pandemic. And listening to his TED talk is just an absolute revelation. This is a guy telling it as it is and governments around the world are totally ill prepared. I mean, if there’s a war, they’ve got armies, they’ve got tanks, they’ve got planes, they got ships, they’ve got missiles, they got everything and they got reserves that they call up. But if there’s a pandemic, there’s absolutely no fallback position whatsoever. And that was the thing that struck me most about Bill Gates talk.


Aussie Firebug: Interesting. I’ll definitely link that talk into the show notes so everyone can have a listen. So so you’ve lived through a few bear markets in the past. Can you speak about some of the ones that stick out in your mind?


Peter Thornhill: Well, rightly or wrongly, they all stick out. 1973/74 was the first that I was really aware of. We were only in England for sort of three when the first oil crisis, share markets tanked. The UK market fell about 30 percent in 1973. Everyone said, Oh, thank God, that’s over. In1974 It halved again and the impact of that, because I was working in the financial services industry in London at the time and it was absolutely devastating the way it affected people. The next one, I guess, was probably 1987 the year before we got back to Australia. 1973/74  I was young, foolish. I didn’t have much money anyway, so it really had little, little or no impact on me, but I was aware of what it did to other people and 87 fledgling investor at that stage. And again, not much money to be able to take any advantage of it. So the big one for for us was the global financial crisis, which just was an absolute crackup.


Aussie Firebug: That’s a good segue way into our next question. So obviously, a lot of my audience and people that listen to this podcast fall into the younger demographic. So they’re just starting their investing journey of Perth. Are they? Or have only been investing for a few years like myself. So the GFC is obviously the big one that we all sort of remember. So I remember I was just out of high school when it happened. And like you said, I didn’t have any money to really take advantage of the situation. It was big news and a lot of headlines, a lot of newspaper selling about the financial markets crashing around the world.Do you do you see any similarities with the the fear and everything that’s going around with this pandemic to the GFC back in 2008?


Peter Thornhill: Well, the key with all of them is fundamentally that fear is based on ignorance. We’re frightened of things we do not understand. Knowledge is power. And the sad part is that too many people have really very little knowledge and easily frightened by what what the hell is going on around them. And my advice to young people today is self-quarantine and put your bloody phone down. Turn off the computer. Stop reading the newspapers. Turn off the television and you can follow me floating through this current disaster.


Aussie Firebug: So obviously, it sounds to me like you believe this is just another crash. Another thing that’s gone wrong in the world, which will continue to go wrong every every couple of years, something like this happens. So you obviously believe this will pass and there will be another time of prosperous business increasing their profits going into the future and it’s only a matter of time before this pandemic passes and the stock market recovers. Would that be fair to say?


Peter Thornhill: I think so because the stock market ultimately is a barometer on a daily basis of the fear, the greed, the stupidity, the day trading, the short selling. Every man and his dog has access to this thing called the share market is reflected in the performance of the stock market. But people for some reason read this as a reflection of all the businesses. When in actual fact, all it is, is the infection. It’s it’s a little bit like when you do get older, you get a favor. Okay. The sharemarket’s got a fever. It’s flashing red and everybody goes bananas.


Aussie Firebug: Indeed. Do you think, though, that there’s going to be some fundamental losses in a lot a lot of businesses around the world that potentially you’re going to have no business for three to six months, like that’s going to affect their bottom line? 


Peter Thornhill: Absolutely. And this is where it’s different to the GFC. For example, the global financial crisis was a disease incubated in the United States with corrupt investment banks, creating some absolutely toxic derivatives and then creating their own derivatives to better get it against them and then they export that disease to the rest of the world. So that was confined to basically incredibly toxic derivatives based on residential property and mortgages. This one is different. And you’re quite right. The impact on business generally is going to be devastating. But fundamentally, I cannot accept that as a result of this pandemic that all of a sudden things have changed and that all human endeavor is going to grind to a halt. I would suggest that out of this, like every awful event, the creative nature of humanity will come through. But in the meantime, it’s gonna be a very painful journey, just like every one of these incidents. Always are.


Aussie Firebug: Now, there’s a famous clip of you on YouTube. I’m gonna put that in the show notes because everyone should watch it. You said you look forward to events such as the GSC. In fact, I think you even said that you love them. Can you explain the reasoning behind this and how you are containing your excitement of the thought of another GFC this time around?


Peter Thornhill: The excitement is tempered by my concern about the health of everybody. My family included that the GFC was an absolute godsend. And just to show you how silly I am, CBA went from sixty four dollars to fifty and I bought so they went to forty. I bought some more. They then went to twenty six with all my sphincters tightened. I bought some more. And funnily enough, I’ve had people say to me, Well, why didn’t you wait and buy them all at twenty six? I said, Well, I didn’t have you there to tell me that that was the bottom. The subsequent events were CBA went back up. So the fifty, forty and twenty six didn’t look so silly after all. But the best part is that was the GFC in 2008. We have had one hundred and thirty five percent of what we invested during that period return in dividends alone. Unbelievable. There was no perfectly believable because I can I could give you the same story for Wesfarmers. We’ve had one hundred and forty six per cent and yes, there was that famous quote. You know, I look forward to the global financial crisis. And the thing is that when the herd is spooked, it goes berserk. And it enables us. I was asked why I lied, why I wanted another GFC, and my comment was quite simply where I’d like to buy some more Commonwealth Bank of twenty six. Some more Wesfarmers at $13. Because I didn’t go hard enough the first time round. I mean, it sounds ludicrous, but to me, when the herd panics, you never, ever stand in front of the herd. When it stampedes, you step to one side. You let the herd go hurtling past in a cloud of dust. And then you turn around and you pick them all off one at a time from the rear.


Aussie Firebug: So that that’s a really great analogy. So what you’re saying there basically is as everyone is liquidating and selling, this is the smart thing to do in a situation like this is to stand to the side.


Peter Thornhill: Hold your shares. And as as the price comes plummeting down, you go shopping.Because we get to buy the future income stream from those businesses at a huge discount.


Aussie Firebug: I probably should clarify it, and I’m sure people understand, but I’m sure yourself as well as my partner. We don’t look forward to to a pandemic, of course, because of pandemic powerful, but this is purely on these podcasts obviously is about finance. So we just trying to navigate the waters in regards to investing. So I just want to make that clear to everyone listening now. There was another golden quote in the same video which I’ve actually referred to on the blog before. And it goes something like you said, watching the share prices drop is a totally different thing to the cash flow that’s coming out of the portfolio. That is what we are living on. We are not leaving on the capital as a source of income. It’s generating the income for us. Now, that quote really resonates with me personally, but I’d love for you to talk about that and how dividends can help during a bear market.


Peter Thornhill: Well, the dividends tend to be far more stable because they are a function of the management of the company defining what is a suitable higher ratio and paying out the dividends accordingly. So companies with higher capital requirements will probably retain slightly more profit. Others with less capital requirements have no point in the company retaining those sitting on their balance sheets so they can lift their dividends. So you sit there and the cash flow pours out of these businesses and that is what sustains our future life. The share price is to a large extent, irrelevant dividends.


Aussie Firebug: Now, we spoke in a little bit about that. These pandemic, unlike 2008, is going to affect a lot of businesses. Bottom line is actually the fundamentals of the business is gonna take a hit. Dividends will most likely or almost certainly will drop in the future, but not as much as the share price. Can you explain why that is?


Peter Thornhill: Well, it’s going to be a mixed bag depending on the industry you’re in. The manufacturers of toilet rolls are going to honor an absolute pardon me, pardon the pun, an absolute roll. So the profit performance will vary according to the pharmaceutical company that creates an virus or a medicine to deal with it Are going to go up. So you’re going to have all different organizations producing different results, which is why I love a broad spread across a whole lot of companies. So there’s going to be good and bad as there are in every stock market. So it’s that diversification that protects us. But yes, dividends are probably going to take a hit, which is one of the reasons that I’m delighted that some share prices are down 30, 40, 50, 60, 70 percent, because I don’t think the companies are going to go broke. But I can buy their future dividend stream at a discount of 30, 40, 50, 60, 70 percent. And I think that is outstanding. So although across the board, there may be a reduction in dividends because I own more of these shares. We are largely insulated from the worst of the disaster.


Aussie Firebug: Now, this is almost gone into my next question here. Speaking of buying shares at a discounted price, what are you buying during this downturn?


Peter Thornhill: Well, it’s interesting, Matt, because at the stage we’re at now. You know, I used to keep myself when I worked in the financial services industry and for a number of fund managers here and abroad that I, you know, knew what I was doing. The realization came that I didn’t know what I was doing. However, I am unwinding how direct individual shareholdings and I am feeding more and more and more of that into the listed investment companies. The old fashioned ones and increasing the holdings there. Because to be honest, Matt, I have far better things to do than mess about my wife than money.


Aussie Firebug: Fantastic. So specifically, which LICs? Because I know there’s gonna be a lot of listeners out there that want exactly which ones that you have on the limit.


Peter Thornhill: Okay. Well there’s there’s a few of them for a variety of reasons, but the original ones and some of them by accident because I ended up with some of them simply because a smaller listed investment company was taken over via larger one. Cambria was taken over by Milton, which is why I ended up with Milton. Anyway, cut a long story short of the good old fashioned ones. AFIC, Argo,  Milton Whitefield. I like whitefield because it’s one hundred percent industrials. It looks like a load of rubbish when there’s a resources boom and it looks absolutely heroic when the resources boom dissolves. Soul patts, brickworks. There’s loads of them. I mean, I’m not going mad, but the diversification is there because the last thing I want is to leave my wife with a portfolio of 40 or 50 shares, individual shares. I mean, she knows why they are there. But she doesn’t want to get involved. She loves the income stream, I’ve got to say. And that’s important. So I’m actually, with a little bit of work over time, I think we’ll probably end up with maybe six or seven listed investment companies speaking untold hundreds of thousands of dollars of income a year. And on average, we are probably gonna chug along at about 10 percent per annum compound. Now, I know there’s a lot of people out there that want the alchemist stone to turn lead into gold, but I’m quite happy with a boring 10 percent.


Aussie Firebug: That sounds good to me. I’d definitely be happy with 10 percent at the moment after my portfolio, the hit that it’s taken.


Peter Thornhill: Think about it on an accumulation basis. You’re going to double it every seven years. Thousand is two hundred. Two hundred is four hundred four hundred to eight hundred eight hundred one point six million 1.6 million 3.2 million. For God sake, in 40 years. What are you going to do? Absolutely heroic.


Aussie Firebug: Yeah,That’s the plan. So I question so I just had a thought popped into my head the last time we spoke. You weren’t the biggest fan of ETFs And I think that type of you just had some questions about them. Has anything changed in that regards with ETFS. or are you more on the at least the investment company


Peter Thornhill: I’m still not uncomfortable.I prefer the company structure rather than the ETF structure. Right. Because if a there is a company takeover and it’s cash, not scrip, the listed investment company can reinvest all that money on behalf of their shareholders. The ETF has got to do something with it. It can’t retain it.


Aussie Firebug: Interesting. When you’re buying these Elyse’s at such a discounted price at the moment, how are you deciding what to buy? Is there a price that you’re looking for? Or do you just invest regularly? You just have a plan that you stick to and it just is like clockwork.


Peter Thornhill: I have no plan. There is nothing clockwork. It is totally emotional. And it is on the day. How do I feel? And let’s go.


Aussie Firebug: It is interesting to hear. So you don’t. Dollar cost averaging into the market. It is not like a time that you buy every month or know those.


Peter Thornhill: Those days are gone mad. But effectively there is dollar cost averaging. Because with a lot of the old fashioned  dollar cost averaging they have capital raisings. It takes one of two forms. One is a share purchase plan or the other is a rights issue on a pro rata basis, a one for ten or something like that. The rights issues require a full prospectus, so it’s like any company raising fresh capital. The share purchase plans do not require a prospectus. It simply requires a BPay on those on the form and it’s done. Now, these have proven to be a real boon for my three sons because investing in these LICS they don’t ring me up and say, Dad, you know what? What about argo? What about Afic? What about movement? Blah, blah. They just take them up because that’s how I’ve trained them. Now people are going to say, oh, yeah, but what happens if they’re in a think? Asset value is lower than the price. So there’s a premium. Yep. Okay. So if you look at the chart of the stock market, it goes up, down, up, down, up, down. But it’s all headed in one direction. So OK. I bought a premium. I bought a discount. I bought a premium discount premium discount premium. Discount premium. The end result is you draw the line through the middle. And what directions is it heading in…UP! But every one everyone has to finesse everything to the ends degree. I have better things to do.


Aussie Firebug: It seems to me every single time I wake up, with the exception of a few days last week, the prices are plummeting and they’re plummeting down. So what is your approach in a situation like this? I know that there’s a common saying, you know, don’t try to catch a falling knife. Are you waiting for a specific price to hit? Or are you just you wake up one day, like you said, emotionally and you like the look of the price, you’re gonna to invest in it. And then if it’s cheaper in a month’s time, you’re gonna go again.


Peter Thornhill: Matt, as I indicated earlier, I was trying to catch a falling knife. I bought CBA 50. I bought them at 40. I bought my twenty six. I have no idea where the bottom is. No one does. And sometimes I’m going to look like an absolute donkey. But in the overall scheme of things, it doesn’t make a blind bit of difference. But just to give you some sort of sense of where the hell we’re at. Frieda and I have watched four million dollars evaporate from our portfolio.


Aussie Firebug: Well, I was actually I was gonna not so much that I didn’t, you know, it was appropriate that, yes, they formally. That’s a lot of money.


Peter Thornhill: Now, am I having sleepless nights? I have the perfect antidote to the current Corona virus, which is half a bottle of champagne each before we go to bed.


Aussie Firebug: It’s a gritty and strong cash flow, no doubt. Still Strong cash flow. Yep. Yep. Fantastic. Okay, so another question. Do you have much international exposure in your portfolio? Why? Why not?


Peter Thornhill: The answer is yes, I do. I have CSL. And a a number of other high quality, outstanding Australian companies that are global. So you don’t want to buy American share? No. Too much bloody trouble. We have some absolutely fabulous world class companies. I mean, Cochlear and CSL are two perfect examples of this. Both of them being absolutely slaughtered at the moment. And I’m rubbing my hands with glee.


Aussie Firebug: Interesting. Okay, so it’s predominantly everything that you own is on the ASX. It’s just that some of those companies are really a global company.


Peter Thornhill: Well, yes, but in fairness, Matt, I sort of own up to the fact that this may or may not be an issue for you when you come back to Australia. But I wasn’t sure that I wanted to leave what we considered at that stage to be our home. So I left my pension fund in England so that accumulated from nineteen eighty eight onwards. And I converted to a self-invested personal pension when I retired. So I have holdings in the United Kingdom and basically my super fund in England has four holdings. It is four old fashioned listed investment companies.Each of them pays quarterly dividends. That is sixteen dividends a year.So I draw a monthly income.Twelve income payments come out and it’s that is that in pounds. And then you transfer sterling. And because of the double taxation agreement, I pay no tax in the UK, it’s all treated as taxable income in Australia.


Aussie Firebug: Interesting. Oh, you must be liking the exchange rate at the moment.


Peter Thornhill: I’m definitely I’m I’m loving it.


Aussie Firebug: I’m definitely keeping my eye on that because I can sterlings myself the pound and we send money back home to Australia each month to continue our investing. Sorry. Yeah, it’s it’s I’m looking at that with a cane or I think it’s over one pound. Over two. Yes, over $2 now.Okay. So we have some questions now. So I basically know these podcasts to everyone listening. It was really spur of the moment. I actually listened to the mad scientist had a podcast and he brought in someone that was a seasoned investor jail, J.L. Collins. And it was really just a to come over on. Diana was such a turbulent, turbulent time in the market. And I really took inspiration from that podcast and thought, who can I get on really, really quick just to have a chat? And of course, Peter Thornhill being the man, the myth, the legend. I thought, let’s get him on the podcast. So I literally just sent you an email, Peter, last night, I think, and you responded very quickly. And I thought, let’s do it. Let’s jump on and do this podcast and get it out there as soon as possible. So I literally posted something in the Aussie fire discussion Facebook group that I have, and I posted it probably about an hour before this show happened because it was just spur of the moment. And I think there was about a hundred questions within the first 40 minutes, which just goes to show how popular popular you are, Peter. I’ve got a whole bunch of questions from the community that were the most liked and I’d love to hear your response to some of them. So the first one is would you purchase LICs now while they’re trading above the NTA (net tangible assets)?


Peter Thornhill: Yes, the answer is yes. I would.


Aussie Firebug: Yeah. It doesn’t really matter does it. You just purchase. It’s not something that you concern yourself with. You’ve got other things to worry about.


Peter Thornhill: Yeah, well, I have nothing to worry about. I have lots of other things to think about. its A good way to be.


Aussie Firebug: Second question, does the heavy drop in VAS, which is the Vanguard Australian Index, top 300 fund and low Aussie dollar change your mind on buying HFS.


Peter Thornhill: Not one jot


Aussie Firebug: what financial steps did you take during similar events in the past? And did they work?


Peter Thornhill: Well, the answer is that the probably the most significant was the global financial crisis. And the answer is I stepped up to the plate and I took advantage of it. And it had a profound impact.


Aussie Firebug: Expand on what stepping up to the plate means.


Peter Thornhill: Yeah. You may remember my two golden rules spend than you earn, earn borrow less than you can afford. So during the global financial crisis, I was able to go across a whole raft of shares and the impact of that post the global financial crisis because share prices tanked. We bought in at the well, let’s take CBA. We bought CBA at twenty six. For example, the dividends we’ve had since have paid us more than 100 percent of what we put in. In the meantime, the share price came back from twenty six to over 80. It’s currently back around the 60s or something. But where the market recovered from the low point because of buying that cash flow our result and particularly at that point, as far as the index is concerned, our portfolio recovered far greater than the index did and our cash flow exploded also as a result of that. So it was you know, there was no rocket science associated with this. It was just taking advantage of everything being on sale and stepping up. And I’m doing exactly the same thing now. We still don’t spend all we earn. I still haven’t drawn down all the liquidity that I have available. So I’m sitting there with all the armaments you need to be able to sit this war out and take full advantage of it.


Aussie Firebug: That’s a very interesting point. I just want to touch on that. You have obviously some dry powder. How how how much cash reserves do you have or have? Have you had the same amount of emergency filed your whole life? Like you keep a set amount, six months worth of living expenses, a year’s worth of living expenses that gets it. 


Peter Thornhill: No, It relates to, you know, inflation, basically. So what we had originally was nothing like we have now. Because to me, unfortunately, I own an apartment and, you know, it grieves me but unfortunately, whether you’re aware of this in the UK, but security of tenure is not an issue for people who are renting because long term lease holds a part of the furniture in the U.K. They are not here. So there is no security of tenure. And you are left in the hands of bastard property speculators on 12 months and 60 days notice to quit anyway. So we own an apartment. That’s fine. So I’ve got all this money sitting rotting in this damn place. Now I can utilize that because the bank’s been managed by Australians they love property. So they are currently lending me money at 3.3 percent and I am able to invest that in shares producing around for four and a half percent. I get franking credits on top of that. I get a tax deduction for the three point three percent. You’d have to be nuts not to take it. The banks are paying me to borrow money from them to invest. So I have loads of dry powder. There’s probably about 2 million undrawn.


Aussie Firebug: That is that’s incredible, so obviously the dry powder. The point I was trying to make is that is crucial to be able to take advantage in a situation like this. Like if you don’t have the fundamentals, you’re not going to be able to sleep at night, you’re not going to be able to take advantage. So obviously, like you said, the two golden rules spend less than you earn and borrow less can afford.It works really well in a situation where you’re comfortable and you have that dry powder. A lot of people out there maybe don’t have a whole bunch of cash and, you know, a little bit worried about the future in what way it where it’s going to head maybe about their job security. So we’ll be your advice to someone that potentially doesn’t have that emergency fund built up, like would investing be the last thing you would be thinking about if you didn’t have that dry powder?


Peter Thornhill: This is the tough one that it’s really easy for me to sit here at Seventy three telling you these stories and we’re talking to an audience that’s probably not even half my age. And all I can do is cast my mind back to when we began. And I was very fortunate because I married a saver. And I’ve got to say, over the years presenting, I’ve become acutely aware of the issues associated with that. To savers, nirvana, to spenders, not the best, but they’re aligned. The worst is one spender, one saver, because one of them can spend their life white anting all the efforts of the other total bloody disaster.So, you know, two savers, you know, nothing heroic on our part. Free to stop work when the foot when our first child was born back in 1975. And she has her career has been raising three absolutely magnificent young men and supporting me in my donkey job of going out and earning money. And basically, that’s it. So when when there were no reserves anyway, all we could do was with what little we had. And I’m afraid today and I say this knowing I’m probably gonna offend people. So many young people today expect to have today what it took forever and I lifetime to achieve. They want it now. Well, that’s okay. But there’s a thing called opportunity cost and the price you’re gonna pay for having everything now. How can I best express it? Today’s pleasures beckon more strongly than tomorrow’s pay.


Aussie Firebug: Another famous quote, I’m sure that also an Peter. Yeah. I couldn’t agree with you anymore. I think that what I was thinking of when you were speaking was if you haven’t done the fundamentals before, this situation happens like we’re in now, probably not the best situation to take advantage of it. But if you are, I guess the message is things like this happen. These events happen. And that will continue to happen. But it always recovers. And that’s something that I believe in. And I’m sure that you believe in as well. Eventually, in the long run, it will recover and the stock market will reach new heights.


Peter Thornhill: Matt, if I could just interrupt there for a second. The full day presentations that I do and the next ones coming up on Saturday, I have the history of all the sharemarket crashes going back, back, back, back, back. I’ve added an extra slide for this coming Saturday’s presentation and it covers all the pandemics of the last two thousand years.


Aussie Firebug: Always if you’ve got that slide or I can include it in the show notes if you’re willing to share


Peter Thornhill: All of this has been going on. Whether it’s you know, I think about my my parents, my grandparents. You can imagine living through two world wars and a depression. And we’re sitting here, you know, weeping and gnashing of teeth as a result of what’s going on at the moment. I mean, you never know you whether a bomb was going to drop and destroy your entire bloody family. Actually, technology’s an interesting thing. I was just having a look at the First World War. Total casualties, both armed forces and civilians were forty million, but the burst of technological advancements that occurred as a result of the First World War tanks, aircraft, blah, blah, blah.They managed to kill 80 million in the Second World War.Technology is a wonderful thing. Or worse, it’s.


Aussie Firebug: Yes, exactly right. Onto the next question, Peter. Now, you touched on it a little bit before, but I’m going to ask it anyway. Do you recommend continued continuing to dollar cost average and buy and hold index funds or LICs?


Peter Thornhill: Yeah, I’m not particularly interested in index funds because taking the Australian market as an example. I think we may have had this conversation before. I ignore resources, no interest. I don’t want them dragging my performance back because if you look at the comparison between the industrials indices and the resources, the gap is huge. My second cut is I don’t want any property. So the listed property trust sector is very it’s part of the industrials index. If I take that out, the industrials index rises even further. So for my simple mind, the easiest way to beat the All Ords and the industrials index is to get resources and properties totally out of it. And that’s the real simple cup. And it has paid magnificent dividends for us over the years.


Aussie Firebug: Fair enough. Banks are a bit on the nose at the moment. Are you buying more CBA, like you said in the past? Or is the value and growth elsewhere in the markets? Obviously this isn’t financial advice


Peter Thornhill: Absolutely not, because I am moving away from individual shareholdings. I’m moving more towards the LICS. So it’s a fairly dumb option. But to me, if I can have six or seven LICs in a portfolio producing five or six hundred thousand dollars a year in income, what the hell do I need to spend my time trying to finesse it? I don’t want to be a slave to the money doing what you’ve just said, which is try, you know, trying to choose where to tip in. I want money to be my slave. So I’m using the dumb option.


Aussie Firebug: Yep. Now, someone has recently read your book and they say it stands up well. Would they be any new chapters you would add if you were writing it today?


Peter Thornhill: The answer is no. I mean, the principles are fundamentally the same. You know, we’ve had five editions or five iterations of the book. Nothing fundamentally has changed over that period apart from when the GFC hit. But to add another chapter on chapter on pandemics, I don’t think it’s going to add any value to the book itself.


Aussie Firebug: For a younger investor, would you recommend leveraging more into the markets to make the most of a time like this? Because we know that in the past you’ve been a fan of using your home’s equity to reinvest into shares. So what would you what would you say to a question like that?


Peter Thornhill: Let’s not try and be heroic. This is where people try to get ahead of themselves. This is the snap opportunity. Forget it. The most valuable asset that everybody has is their time. As I mentioned to you earlier, you know, 10 percent, you double every 7 years. So 7, 7, 7, 7, double, double, double.The time is going to do all hard work for you. You don’t have to spend time agonizing over. Is it right to go now? Should I go harder? Do what you can afford. Because source law says if you’re really trying to be heroic, what do you do at a particular point in time? Comes back to bite you.Just relax. OK. Self isolate and carry on


Aussie Firebug: Is there any signals that you are looking for in the market or water economy to mark the bottom?


Peter Thornhill: What’s the bottom? What the hell am I looking for? I mean, for God’s sake, does anybody know where a bottom is? Does anybody know where a top is? This is the problem. For some strange reason, we are led to believe that there is something magical about selling at the top. Buying at the bottom. Blah, blah, blah. I’m sorry. I don’t think anyone has a crystal ball to enable you to pick either tops or bottoms. And all you have to do is watch. And this is this is the other issue. It’s boring being a dividend investor. Because you only get excited twice a year. Whereas with share prices, you can get excited or disappointment disappointed every single day.


Aussie Firebug: Yeah, I couldn’t agree with you any more, Peter. I know it’s I sort of had an idea of what your answer would be to that question, but I had to ask it anyway because I had a lot of likes in the Facebook group at the moment and I’m getting a whole bunch of emails myself. You know what? When do you think the bottom is? How do I know this is the right time to invest? And I couldn’t agree with you anymore. No one knows. And if they say they know they’re lying or they’re delusional. No one knows when the Next week, we could start rebuilding. It’s probably unlikely, but it could rebound and it could go into new highs like you just don’t know. And my view on the matter is just to invest like we usually do every single month we we put in and out into the market, dollar cost average and we just go about our business. But it’s it’s good to hear from you paid. It’s so similar. Thinking, too. It’s basically impossible to know.


Peter Thornhill: In the GFC,Why the hell did I buy CBA? Fifty one to buy them at 40. If I’m an investment guru, shouldn’t I know when the bottom is? I’ve got no damned idea where the bottom is, and I can say to you categorically. Taken to its logical conclusion. I bought shares in a company. This is going back some decades now and the price dropped. I bought some more. Price dropped again, just like CBA. I bought some more and then it went broke.Yeah, that was clever. Was.


Aussie Firebug: Well, like you said, you didn’t have the crystal ball.


Peter Thornhill: And the other difficulty is people are deathly afraid of a company going bust and losing their money. The biggest mistakes that I have been I have made have been sell decisions. If I can illustrate, I was a shareholder in Pacific Dunlop in 1995, Pacific Dunlop incubated and then floated a startup called Cochlear. As a shareholder in Pacific Dunlop, I got my shares at $2 50. They been floating around two hundred dollars, and just to show you how clever I am. My shares went from $2.50 to $20. How heroic was that? I sold some at 50. I sold some at 100. I sold some at 150. I sold some. That has cost me over a million dollars.


Aussie Firebug: It’s a good story, Peter.


Peter Thornhill: Well, I’ve got more. I did a site with CSL in it $7. I’ve been over 300 for a while and being a shrewd investor. You know, you don’t make a profit to yourself. I offloaded them. And I can tell you if I have parcels of, say, fifty thousand dollars in each acquisition, if a company goes broke, I lose fifty thousand dollars.I have lost millions of dollars by selling.


Aussie Firebug: It’s good. That’s a interesting way to look at it, Peter. Definitely.


Peter Thornhill: Yeah. Which is why now I take two aspirin, lay down and wait for feeling to pass.


Aussie Firebug: Very good.Yeah. This one this next question got a lot of likes and I guess it’s a hard one to answer, but to put it to you anyway. Do you believe that the market is declining based on fear and confusion, or is it due to a fundamental issue that won’t just evaporate?


Peter Thornhill: The market will generally react in a rational way to events. So the global financial crisis was a perfectly rational reaction to a period of extraordinary greed, stupidity and connivance by Investment banks in the US, etc.. This one’s slightly different in that it’s a pandemic, but ultimately the market overreacts because you have people who have no knowledge, Are fearful and at the first sign of trouble. Panic and index funds as share prices fall. So we’ve got shares down 40, 50, 60, 70 percent. Index funds have to reweight. So the whole selling process becomes so fulfilling. And this is the bit I love all those people out there mechanically doing what they have to do, simply feed the beast. And I just sit there. I mean, the analogy I have is when, you know, when the herd stampedes get out of the way, wait till the herd has stampeded past you and then turn around and just start picking them all off from the rear.


Aussie Firebug: Yeah, so really there’s no. We’ve touched on this subject so many times, it’s just but it isn’t it isn’t different. It’s different in the sense that it’s it’s a new pandemic. Like we’ve never seen this before, but it’s it’s similar to other events that have happened in the past. And it’s not like society as we know it is going to crumble. There’s going to be a financial reset of the world’s markets.


Peter Thornhill: The financial reset that everyone fears is that all these companies go bust. Okay. Now, that tells me they’re all human endeavor is gonna grind to a halt. There’s gonna be no food companies. There’s gonna be no banks. There’s gonna be no companies making bricks, glass, roof tiles, cement. So your lovely properties won’t exist any longer. I don’t believe that for one minute. I mean, even if there was a monumental disaster and we all went back to living caves. At some stage, I believe my wife and I’ll be sitting there on a rabbit skin rug trying to keep warm and follow the fire and there’ll be a thump, thump, thump on the front of our cave. And when I answer, there’ll be a likely lad at the front. And you say here, looking at. I’ve been grinding up some Alesia rocks and I’ve got some very pretty colors. I can paint your cave and it will only cost you three chickens. And human endeavor starts the whole silly process. One more time.


Aussie Firebug: I really like that story. That’s fantastic.


Peter Thornhill: Well, Matt, basically the stock market reflects the endeavors of the human race. So if you were telling me that it’s all gonna go pear shaped and human endeavor is gonna grind to a halt. I’m sorry, I disagree.


Aussie Firebug: I’m with you, mate. I think it’s gonna be outback as well, and I’m putting my money where my mouth is, obviously. Keep investing every month. It is scary, though. This it’s such a drop. Definitely. And I think you even said it about the GFC like you. You’d have to be someone without a without a heart to not notice or not to have some sort of emotional reaction to such a drop as the GFC. And it’s no different to this one. But I guess it’s just it goes to test everyone’s limits and what how they react in a situation like this, their risk to tolerance. So if you’re not doing too well now, maybe it’s a chance to look at your portfolio and maybe have a more defensive assets if you’re not coping with such a big drop. But it just goes to test everyone’s mettle at the moment.


Peter Thornhill: And Matt, I can say honestly, after 40 years of presenting that some people are just not wired the right way. I’m the lunatic fringe and everything between me and people who emotionally should never, ever own shares.


Aussie Firebug: Yeah, that’s a big one as well. The emotional factor of investing. I actually think it’s more important than, you know, the fundamentals of math behind investing means nothing if you’re not at an emotional state to cope with the ups and downs.


Peter Thornhill: Yeah, the emotional aspect of investing, you know, financial literacy is the key. And the barrier for most people to varying degrees is the amount of rubbish they carry in their head.


Aussie Firebug: Under what particular circumstances, if any, would you advise someone to sell some of their portfolio to take a loss And increase in increase their cash holdings?


Peter Thornhill: The answer is I will do it when my financial advisor tells me to go and I don’t.


Aussie Firebug: I would imagine that you will see him telling or her telling you anytime in the future.


Peter Thornhill: Oh, no. Fair. You know, with with due respect to him, he is extraordinarily valuable to me because he takes all of that away. And it was very important, particularly to Frieda and I, when we decided to retire, because I transferred a lot of shares in Frida’s name into the super fund, etc, etc. So there’s a lot of rearranging to be done. And I know I don’t know the rules. I don’t want to know the rules. The government changes the rules all the time. But again, I have better things to do with my time, so I rely on my financial adviser. And there have been some instances where it has been appropriate to offload a share. I am also guilty of it in the vernacular in England, doing some bed and breakfasting where I sell a share, crystalize a loss to bank it, and then by the share back again.


Aussie Firebug: I can’t do that. I don’t think you could do that in Australia, can you? Yes, you can.


Peter Thornhill: But you’ve got to make sure that there’s a gap between the transactions. So I have crystallise losses are still on the same shares, but I’ve crystallised losses, put them to one side so that if, for example, there had been a company takeover in my portfolio and there was a huge capital gain because it was 100 percent cash, no scrip. I’ve had these losses that I went without interfering with the overall long term holdings. I’ve got the losses that are back sitting there to help offset the capital gain. To me, it makes sense, doesn’t it?


Aussie Firebug: Yeah. Absolutely. Next question. This is obviously your favorite asset class. Do you have any thoughts on the housing market and how it will respond to this crisis. Is now a good time to buy? Or should we wait?


Peter Thornhill: Forget it.Rent don’t buy because the property bubble that has arisen as a result of the ridiculous policy of central banks and governments around the world of cutting interest rates has created massive bubbles in other assets.And I am ever so hopeful that this current corcona virus is going to be the catalyst that tips the whole thing over.And we have the banks up to their eyeballs, mortgagee in possession, owners of property and my sons tied on will be able to walk into the bank with a wad of cash and buy properties for half their current price much closer to their real value.


Aussie Firebug: How do you calculate a property’s real value?


Peter Thornhill: I have absolutely no idea.


Aussie Firebug: So just all that we know, all that you know at the moment is they’re grossly overpriced.


Peter Thornhill: Yeah. And it’s interesting because I often ask audiences if I gave them the balance sheet for Wesfarmers, how many of them would feel comfortable and coming back to me in a week’s time.Having analysed the balance sheet of the company in the annual report and telling me what the company was worth, I’d never had anyone put their hand up to say that they would be comfortable doing that. So my question then is what the most people use in their minds as the proxy for the value of the company?The share price.


Aussie Firebug: Yeah. Yeah, that’s that’s all. Yeah.


Peter Thornhill: On the basis that everybody knows the price of everything and the value of nothing. Where do you think property sits?


Aussie Firebug: Well, I would I would like otherwise look at it on the surrounding properties or similar types of properties. What they’re going for, because we may increase we’re looking to buy a house next year in Australia when we move back and settle down at family at rent. Well, the only thing about renting and like you’ve touched on is the stability. There’s no security and stability with rent either was because mostly I’m living in London now and travelling around Europe. Yes, you do see that stark difference in culture when renting and there’s families as generations that have rented the same place for, you know, 50, 60 years. That just doesn’t exist in Australia. So. I would be totally down for a long term rent. Back in the town that we’re from, but I don’t think we got going to get one. So in the event that we don’t, which is highly likely, we’re going to have to buy. Well, let me not have to buy it. I think we’re looking to buy at this point, which is just the reality of it.


Peter Thornhill: Can I just suggest comeback test the water initially rent? Because if the pandemic does its job then and really wrecks the system, then you’re gonna be able to buy a hell of a lot cheaper because there’s gonna be an awful lot of mortgagee in possession, sales going.


Aussie Firebug: I’m keeping an eye on the market. I’m watching it very closely.


Peter Thornhill: But never confuse property prices with the value of the value of these properties hasn’t changed much in the last 40, 50 years. The only thing that’s happened is the prices have changed. I can remember from some of the comments I think on our previous session together. You know, we left Australia, went to London when we realised we weren’t coming back. We bought a little terrrace house in clatan. I then got headhunted to move to the Midlands of England. We bought a house in Kitterman, soon Worcestershire. We then got headhunted to come back to London. I bought a house in Delage in London, then got headhunted to come back to Melbourne, bought a house in Melbourne, got hit. Harder to come in all that time. All I’ve seen house prices going up, but the values haven’t changed.We’ve just had this huge inflation which your generation is not going to enjoy. So the headwind and the tailwind we had was the tailwind in particular. Inflation devalued our debt and inflated the price of the property. So that terraced housing Clairton that we paid seventeen thousand pounds for, we sold for sixty two thousand pounds. Well that had that property in Strogoff and Road is now worth about 1.6 million pounds. Still the same frigging house.


Aussie Firebug: I was gonna ask you because I’m actually we’re in Clapham North. Funny enough. And I think we were platen common. There you go. It’s it must be. It’s typical Australian Australians to move to Klapper because I’m not sure if this was if Clapham was like that. Back when you hear it.


Peter Thornhill: It wasn’t met. It was Earls Court that was called Kangaroo Valley. We broke the mold and Clapton was close to Brixton, which was I won’t use the term that they described it. But it was largely West Indian and there were lots of Rusty Cortinas in the gutter. But, you know, we we paid 17,000. We sold it for sixty two because my salary had gone up. I could borrow more. So the house we bought in Kidderminster. We paid ninety thousand for. We sold it for a hell of a lot more than that. We came back to London. My salary had gone up. I could borrow even more. So this whole stupid chasing your tail has produced absolutely no value for us. At the end is where we are now.


Aussie Firebug: Wouldn’t you say, though, just on that, that even if the property is fetching more rent as it continues along through the decades in cash flow is rising and know. Property doesn’t have great cash flow. That’s not selling. I’m trying to argue. But if it’s getthis, it’s fetching more rent. Wouldn’t you say that the value of the property by large would rise? Maybe not as much as they are rising at the moment, but definitely in Australia. But if it is increasing rentals, wouldn’t that logically conclude that it is going to be worth more? No.


Peter Thornhill: If that’s the function in the UK and in Germany and Holland and Belgium and France and Switzerland, why are lots of people speculating and property like Australians?


Aussie Firebug: Well, that’s a very good question. I know that there’s a housing market in London icrazy. It’s it’s hard to stay with Sydney and Melbourne. I actually think it’s more expensive. So that’s definitely I know a lot of Europe and Germany. Like you said, it doesn’t have that ridiculous. Income to cost ratio that Sydney and Melbourne do at the moment. But yeah, I have no idea. The answer to that. Just to be frank and honest with you.


Peter Thornhill: Your rent is never gonna grow like the dividends from high quality companies. Number one. Number two, you don’t get franking credits with rent. Number three, you’re holding costs associated with the share – Zero. You’re holding costs associated with a property -Pretty awful. I cannot see we rent the lifestyle. And as I’ve hinted already, the only reason we own this damn property is because, like you, that we can’t get a long term leasehold in this country. I’m trying to get my wife into emigrating so we can enjoy it and we can come on holiday in this country and rent all the apartments that, you know, we were all properties we’d never bother buying.


Aussie Firebug: Yeah, we’ve rented a whole life as well. with Mrs. Firebug, so I’m definitely, definitely agreeing with you there. I just think some got to be some value summaries of the properties fundamentally rise in values. I don’t think it’s just cause I think a lot of it’s to do with the low interest rates, of course, but there’s got to be some sort of value placed on these properties. I would imagine and the price obviously doesn’t reflect that completely


Peter Thornhill: And there’s a whole lot of properties in Sydney and I’m sure in other capital cities in Australia that aren’t even occupied, they are bought by overseas. If I can use the word investors who are simply trying to hide their money somewhere else. You’re probably reading all the stories of the first time homebuyers who can’t compete with the investors in Australia. Investors like inverted commas there as well, who are betting against first time homebuyers. Have they still got the mortgage tax deduction?


Aussie Firebug: I dont know. 


Peter Thornhill: Because when we were there and bought the house in Clapton, you got a tax deduction on the mortgage interest. Oh, yeah. It’s the other way round. First time homebuyers get crapped on, but everybody who wants to speculate in property gets a tax break. That is absolutely obscene. So, you know, a kid behind the eight ball as a potential property owner in Australia.


Aussie Firebug: Yeah, It’s interesting one. We could talk, we could have a whole podcast on it, I’m sure, about if we could. The struggles of the first time buyers and everything. But we’ve paid up. We’re just about time to wrap up this podcast. Before I let you go, what’s the one piece of advice you would give to someone young that’s just starting investing? And also to someone who is already retired or is close to retirement in this environment?


Peter Thornhill: Self isolate, number one. And number two, just get on with investing whatever you possibly can. In good quality, diversified, and I prefer the LICS, simply for the diversification. Because I don’t want young people wasting their time. I don’t want potential retirees wasting their time. The more important things in life are your family, your career, your future… is your slave. Don’t become the slave of your money and just get on with the process of investing. Unfortunately, it’s very boring and it takes time. But just be confident that if you can simply compound money at 10 percent a year, you will have a reasonably secure financial future.


Aussie Firebug: Right. And what about the people that are already retired or close to retirement? Is the same advice? Or do they need to look at this a little bit differently?


Peter Thornhill: Well, the tough part is they don’t have much choice because how much are you getting on your term deposit today? You should see the audience when I remind them of the interest rates that were available in the early 90s. 13, 14, 15 percent credit. Anyone who buys an annuity today needs their head examined. But, you know. So you have this these issues. There’s all this money swilling around. But ultimately, you don’t have any choice. That’s the hard part is getting over the one big problem with the stock market. It’s publicly available. It’s in your face every day. And they’re going to do every damn thing they can to get up your nose. The news this evening at about five o’clock, they were talking about this, this massive interest rate cut today of point to two five percent. We’ve watched interest rates go from 14, 15 percent all the way down, death by a thousand cuts.This is just complete and utter waste of time. Difficult times. But this tests the mettle of the individual. Are you ready for tough times? My parents. My grandparents. Damn it. I remember there was no money. You tighten your belt if dividends Okay. Let’s say our income drops from whatever it is now by 10 or 20 percent. Okay. What will we do? Okay. We’ll only travel abroad three times a year instead of four. Sorry, that’s being facetious, but you cut the cloth accordingly.


Aussie Firebug: Yeah, that’s that’s timeless advice. I feel as well in tough times you you tighten the belt, you find ways to spend less. You do the things necessary or you do the things that you need to do to get by. Because really, I look at you out lifestyle and our situation. Obviously, everyone’s different, but there is so many things that we can cut. It’s absolutely crazy to hear some of these people, especially from a first world country, that maybe is the first time they got to go through a tough time and they’re acting like it’s the end of the world. But unless and I want to downplay the pandemic and the seriousness of this virus. But to to say that you can’t cut costs we’re talking about in this day and age, I think is very few people that truly living week to week who probably couldn’t carry out a whole bunch of crap out of their spending.


Peter Thornhill: Matt, it’s all bollocks. Try cooking your own food. Try doing your own bloody laundry. And yet here a thousand and one things you could do. You don’t need a new car just because you got pissed off at the last bill for fifteen hundred dollars for a car service does not qualify you to go out and spend thirty thousand to buy another car. Just suck it up and. 


Aussie Firebug: On that note, we will wrap it up, Peter. Thank you so much for coming on and being the voice of reason during this scary time in the markets and for a lot of us Like I said, a lot of millennial investors, this is the first bear market we’ve really gone through. So thanks a lot for sharing your wisdom, sharing your experience and coming on the podcast.


Peter Thornhill: Matt, my pleasure. And for heaven’s sake, have courage, everybody. It’s all going to come to an end and we will look back and it will be part of history. And you and a lot of other young people, when you are 60 and 70, you’ll be able to talk to younger people and say, I remember when just like me.


Aussie Firebug: That’s that’s excellent. Thanks a lot


Podcast – Superannuation and FIRE

Podcast – Superannuation and FIRE



We’re kicking off 2020 with probably my most requested podcast topic of all time… and that’s Super and its role in the FIRE journey for Australians.

This is an absolute monster of a podcast (nearly 1.5 hours long 🤯) where I’m speaking to Super Guru James Coyle. We cover so many things in this pod and the topics range from “I know nothing about how Super works” all the way into the nitty-gritty technical details that hopefully will shed some light for us FIRE folk and maybe will help some people out there that are weighing up the pros and cons of Super when it comes to FIRE.

Shoutout to everyone who contributed to the questions on the Aussie FIRE discussion Facebook group. I did my best to tried to ask James the most ‘liked’ questions from the community but couldn’t get them all in.

Also massive shoutout to Josh for the transcript below and Victoria who helped with some of the technical questions we had 🙏

Some of the topics we cover today include:

  • The basics of how Super and the pension work in Australia
  • Tax benefits of Super
  • The tax-free environment within Super and how it works in practice.
  • The major differences between funds and what to look for
  • Children inheriting Super
  • How it works from the accumulation phase to your pension fund
  • Smart things to do if you’re 50-60 and nearing your preservation age
  • SMSF, are they worth it for FIRE chasers?
  • Women-specific considerations to maximize the outcome of Super (great tip below)
  • How do minimum withdrawal rates work in retirement
  • First Home Super Saver Scheme

And that’s not even all of it I swear 😅

Show Notes



Aussie FIREbug: Hey James, welcome to the podcast. Thanks so much for coming on.

JAMES: Thanks. Great to be here.

Aussie FIREbug: Now you’re someone who has spent over 20 years in the super industry and I can’t tell you how good it is to finally have someone of your expertise on the podcast, this podcast talking about super talking about FIRE and the role that super plays in someone’s FIRE journey has probably been the most requested podcast and in my whole time podcasting. I’ve been trying to get an expert in super on the show for a while and it kept on falling through, so it was like the one podcast I could just neverland and finally it’s booked and here. I’m really excited to get into it. So let’s just jump straight in. James, let’s start with the basics because I’m sure there’s going to be people listening who have a general idea about how super and the pension works, but probably not precisely. I myself fall into this category. So when can someone access the age pension and super and how does it generally work for the majority of people in Australia? We will get into the FIRE specifics in a bit, but generally, how does it work in Australia?

JAMES: Right? So both, both the age pension and super have age-based access rules and they’re actually different. So right now someone can access the age pension when they’re 66 years of age. But that the government is like many governments around the world increasing the age at which people can get, get social security, pensions, et cetera. So by 2023, you won’t be able to access the age pension until eight 67. Super is slightly different and there is whole bunch of other rules around how much income, and we can talk about that a bit later. The, super, you can access earlier. Right now people are able to access super at about age 58. If you’re 58, now you can access your super, but that’s increasing again over the next four or five years to the point where people can’t access it until age 60. So I think for most of your FIRE listeners who are going to be possibly in their forties or younger, it is going to be that they can’t get the age pension until 67 you can’t get your super until age 60. So that’s a couple of things to think about with regard to them. I’m happy to talk about sort of assets and income test and different things around, around, te pension if you’d like a bit later

Aussie FIREbug: So I’m just, I’m just curious, and this is, I guess it’s not related to the audience listening to this podcast because we’re on the road to FIRE. As someone who is on the road to FIRE we are not planning on relying on the pension at all. I am curious how much is the pension, how much does someone get?

JAMES: So if you, if you are eligible for a full age pension and you are a couple, you’d get about 36 and a half thousand dollars per annum. You’d get about 20 or 24,300 as a single per annum for the age pension. You also get also get a card that gives you access to a range of different health benefits, but it’s really a subsistence level of support

Aussie FIREbug: We don’t, we definitely don’t want to be relying on it. There is an asset based test anyway, so we, the FIRE crowd definitely wouldn’t be eligible for it. Correct me if I’m wrong, but wasn’t the original idea of super to slowly phase out the need for an age pension. Do you think that will ever happen or, maybe I’ve missed, read that somewhere?

JAMES: Well, yes sort of. That’s a, that’s a, that’s a terrible answer to say sort of. But the original hype around super was that it was going to reduce or eliminate the need for for an age pension. But really that was only ever just hype. Now the way people talk about it is the fact that it will, it will reduce the reliance on age pension. But people talk about super in the context of supplementing the age pension. So when we talked about, when we talked about those limits that, you know, if you’d say a couple on 36,000 or a single on 24,000, if you’ve got super, you can supplement that so you can have a reasonable amount of assets and you can have a reasonable amount of income and still get access to to all or part of the age pension. So super can reduce the reliance on the age pension, which is, which is a good thing you’ll find, I think they think about 70% of Australians are going to rely on all or part on the age pension. For those people on a part age pension, they’re supporting their income through, through super. So that’s really where it’s coming in. But you know, nine and a half percent of your salary going into Super is just not going to eliminate the need for any age pension for the majority of Australians.

Aussie FIREbug: Right. But, but that’s a rising, right? That 9.5% goes up over time, isn’t that right?

JAMES: That’s the theory. It is meant to go to 12% and at one point it was meant to go to 15%, but the respected governments have delayed those increases over the, over the years. But yes, it will be increasing to, it will be increasing to 12%.

Aussie FIREbug: I know they keep changing the rules, which, you know, there’s always the raging debate amongst the FI community about is super a valid strategy or is it part, should it form part of your strategy to reach FIRE? Or are you too scared that the government’s going to change the rules. We’re going to get into specifics later on, but you know, I just couldn’t help but mention something when you, when you said there that they’ve changed it because they’re tinkering with it all the time. It’s hard to know and plan for the future when they’re changing the rules

JAMES: Well I firstly, I agree 100%. From a personal perspective, I’ve spent much of my career in superannuation running a few different roles, but one of the roles that I’ve run has been providing education and communication around super and to try and get people engaged, contributing and planning better for their for their retirement. The common complaint that people make is that they’re just going to change the rules on me. So I’m just as frustrated as some of your listeners might be. I think too much rule changing actually undermines confidence in what I think is actually a terrific system. I’m a really big advocate of the system, but I really get annoyed at the way rule changes can undermine confidence. Overall I don’t think there’s any need to be so worried however every time you tinker with something, it reinforces this perception and lots of that tinkering is just unnecessary.

Aussie FIREbug: Yeah. It’s, it’s bizarre. I completely agree with you as well that the whole idea of super. The original idea is such a fantastic idea about investing in assets, starting young, gaining all these tax benefits and slowly over time this would reduce the reliance on the pension and the strain on the taxation system so much that you could theoretically people could be self sufficient, which is what we’re trying to do in the FIRE community to be financially free and retire on our own terms and not have to rely on the system to fund our retirement. But I could not agree with you any more. Every single time these politicians get together and they start tinkering with the rules, it just discourages people to seriously look at their super and to seriously invest in it and take all the advantages like we will discuss later. With all the constant changes, you just dont know. I’m not on the the doom and gloom side myself. I think if you’re planning to retire on super, then there’s a pretty good chance that it’s going to work out in the long run. But it is very frustrating when politicians are constantly making change.

Aussie FIREbug: Yeah no doubt it’s frustrating. But also even with all of the tinkering, you look at some of the opportunities for FIRE and where it fits in. Super should be a core part of people’s retirement planning as it isa terrific vehicle with some terrific advantages.That’s a good segue to talk about super in regards to FIRE now. So can you explain the tax benefits of super and why it is one of the most tax efficient vehicles an investor can have in Australia?

JAMES: Yeah. So the first thing is if you’re, if you’re a typical a typical Australian and you’re in a paid or salary job, your employer will be required to pay nine and a half percent of your salary into super. And we mentioned a little bit earlier that’ll increase the to 12% with some employers paying more. The tax effectiveness of it is that super contributions are taxed within the fund at 15% and that’s a lot less than the vast majority of people’s marginal tax rate. For the FIRE community thats thinking of retiring in their forties, et cetera while they may have some terrific tax accountants and all sorts of things, at the end of the day, most of them are going to have a marginal tax rate. For someone earning 37,000 they wiill pay a tax rate of 32.5%. So the money in super is taxed a lot lower than your marginal tax rate. That’s the first advantage. And that’s, there’s a few reasons for that. this has a benefit for savings. We talked a little bit earlier, you don’t get access to the money for 60. So part of the benefit of being forced to save and forced the lock your money away is this lower tax rate. Again, the earnings in your in the super fund, are taxed that 15%. Most of the funds are able to get the effective taxation rate well below that. So you’re finding that the earnings on those investments are also taxed at a very low, low level. So if you’re able to have the money in super up until when you can access it in your sixties or you, you, you want to retire on an income stream, that’s a terrific place to have some of your money.

Aussie FIREbug: Can I just jump in there? I just want to drill down on a few points you made. So there is a maximum that you can contribute at that 15% rate every year which is 25,000 is that right?

JAMES: That’s correct.

Aussie FIREbug: I’m just going to use an example. Let’s say you make $100,000 before taxes, you can actually reduce your taxable income by $25,000 and that 25,000 can go into your super and it’s taxed 15% going in. Is that right I’m doing well so far. And then when it’s in super it’s taxed 15% on the earnings within super so that if you’re investing in stocks that pay a dividend, those dividends are taxed at 15% within the super fund. Is that right?

JAMES: It is, so that’s the maximum taxation rate on the super funds on the super fund earnings. But what what the super funds able to do, because once again, it’ll get, it’ll get advantages around for instance, Australian stocks, franking credits capital gains, et cetera. The funds will be able to get the effective tax rate lower than that. Many of the funds work pretty hard to get the taxation rate of the fund’s earnings lower than 15%.

Aussie FIREbug: That’s very interesting. I actually did not know that. So they can the super funds can do some accounting wizardry and use franking credits and use all these advantages to lower the income of the fund as a whole. And that, that benefits all members. Is that essentially what they’re doing

JAMES: That, that’s basically what they’re doing. You’ll probably, you’ll probably start to, to get beyond my “off the top of my head” knowledge fairly, fairly soon. But they do the, I think probably all the funds work pretty, pretty hard to make sure that through the nature of their investments, whether it’s infrastructure investments, or the way they’re treating capital gains, et cetera, they work pretty hard to maximize the earnings of their, of their fund members. And obviously part of that is part of that is going to be through the way they’re investing in allocating assets. Another way that they’re doing it is, is to get the best tax outcomes across the fund as a whole. You can find that, some of the big funds will have various tax statements to drill down into some details on that.

Aussie FIREbug: I just thought of something that is very interesting. I’m thinking that in the context of FIRE let’s say because a 15% tax rate is very low. The majority of people on the road to FIRE, they’re not going to get anywhere near 15%, unless I’m forgetting something. But, that is probably the best tax rate you could hope for, for any investment on the way to FIRE. However, once someone has retired, let’s say someone does retire in their forties or mid thirties, if, if they’re on the road to FIRE then they’re pretty hardcore. Is it possible that you could have investment shares in super being taxed at or the dividends in super being taxed at 15% or close to 15% when actually your tax rate outside super is lower, because let’s say you’re retired and you’re leaving the FIRE lifestyle and your, you and your partner, you’ve got a 50/50 split of assets as a couple and let’s say that as a couple have combined income under the tax free threshold, Is it theoretically possible that you’re paying more because you’re holding those assets within super paying that 15%

JAMES: Yes that’s possible. It’s certainly possible to have a higher tax rate within super than your tax rate outside of super. So if you’ve got people that have retired and their assets generating a very low income,they could be below the tax free thresh hold of $18,500 .

Aussie FIREbug: But the FIRE crowd, I guess is unique in this regard because a lot of us don’t spend a lot of money and if you have a couple, it’s, it’s not uncommon to see a couples expenses to be under a combined total of 45,000. So if you split that between two people, you know, you’re almost getting to the, the under the tax free threshold or maybe just a little bit above. So I thought I was just interesting that potentially pay more tax.

JAMES: It’s a good look and that’s, that’s correct. That’s a good point, some people that are at thats sort of level, and living on a pretty pretty low income could be taxed at a higher rate. One of the things I didn’t mention with regard to the $25,000 contribution limit was that that’s a concessional contribution limit. You can put what they call non-concessional or after tax contributions into super as well If people want to load up their super and some people might choose to load up on their super closer to retirement because in retirement the tax on your super is essentially tax free once you put it in an income stream.

Aussie FIREbug: That is that’s a perfect segue because that’s actually my next question. I’m learning things in this pod, which is great. You just mentioned if you go past the 25 K you get taxed at just your normal tax rate. So then I’ve heard, and maybe people in the audience have heard about it as well, this magical tax free threshold that super can provide. So how can you explain how it works? How does your super work when you get to the retirement phase and you actually start living off your super and where does the tax free threshold come into play with all this?

JAMES: So when you retire we talk about the preservation age – if you’ve retired, you’re no longer working and you breach that preservation age, you can have your money and transfer your super balance out of that. That in what’s called an accumulation account which can then transfer into an account based pension. This account based pension will pay you an income stream. The money in that account based pension and the earnings within that account based pension, a tax free. That’s one that’s one of the advantages. Now we’ve already talked a little bit more about that. For most the target retiement age is 60 however if you’re a target age is 40, that’s, that’s still a long way away. There’s a limit on how much money you can put into this tax free environment and that $1.6 million. So that’s actually a terrific environment to have a lot of your retirement savings in.

Aussie FIREbug: Let me see if I can if I’ve got this right. Let’s just say for example, someone’s done really well for themselves and they’ve got $2 million in their super fund. When they hit their preservation age and they want to start with withdrawing money from this fund, can they choose to only pull the 1.6 out of that 2 million into this into this retirement account that you spoke of in the tax free threshold and keep the other 400,000 in, in the super fund that’s taxed at the 15%?

JAMES: Yeah, they could. They could take the whole $2 million out of super if they want, and place it in a bank account. The other thing they could would be transfer $400,000 out, shove it in a bank account, put $1.6 million into the the account based pension. The third is what you’d suggested leave the $400,000 and just transfer 1.6 million out of the account based pension.

Aussie FIREbug: When you say you’re transferring it into the account based pension, is that all done within the one super fund and are you selling off the assets to bring it into cash to put it into that pension to withdraw from it? Or does it, is there just a, a definition within the super fund that says this portion of the portfolio is now in the asset based pension and they can start living off the dividends from the share portfolio or how does that work?

JAMES: So what’s happening, but most funds will have an account based pension but it’s a separate product. Right. So this is actually one of the, one of the things that many funds are trying to try to deal with how they, how they can ensure there’s not a sort of a capital gains gains event. In terms of moving from an accumulation phase into an indirect drawdown phase there are some trickier things that thefunds are dealing with. One of the big funds I worked with was Australian super, but I could pick a hundred a hundred funds that would have similar arrangements. You, you’ll be able to essentially essentially just start a new product, transfer your money within from the accumulation phase within Australian super into their account based pension withdrawls from that point.

Aussie FIREbug: So if you had shares in the accumulation, let’s say that your if you’re with a super fund that you can pick your portfolio quite well. Like I know i am with vision super…. And I hope they’re good by the way!

JAMES: Yeah, I know, I know, I know vision there are there, I haven’t worked for them, but I know, I know vision super and they are a pretty good fund.

Aussie FIREbug: They are an Industry, super fund. I’m pretty sure. But yeah, so let’s get on with them. And my split, like my portfolio allocation with them is I think it’s 55% international, 45% Australian. And that was, I think the most, the riskiest. I could go, I just went full. Like I went in there and said, I want the most riskiest option on what all shares, I don’t want any bonds. And they had an offering for that and I went for it. So in that example, if I’m moving from the accumulation to the pension fund, even though it’s a new product, are they just going to say, you’ve got this example, you’ve got $1 million in your accumulation fund, we’re just going to deplete that and then spin that same million dollars in the exact same units of shares in your pension fund that you now have to sell off. You know, I know there’s a compulsory withdrawal each year or something. Do they, do they literally do that or do they act, do they have to cash out and, and put it there as cash?

JAMES: Yeah, so this is, this is actually one of the things if everything’s in a poor fund, so you’re not treated as an individual within the fund. And this is one of the challenges that the funds have. If you’re an individual and all of the assets were in your name and that the individual shares are your name then that’s treated differently to the way it is a pooled fund within the super account. This is not my particular area of area of expertise, but generally all of the capital gains are going to be taxed within the fund. I don’t think that you within that situation inccur a capital gains tax but the money that’s moving from accumulation to pension is treated at the fund level. I am probably given a bit of a waffley answer here because I’m not that good on the detail on that particular event.

Aussie FIREbug: All right. I’m interested to know it’s, it’s sorta sounds like they’re just giving you it in cash and then you withdraw it down from cash. But I’d be interested to know that you’ve you could have it actually as a portfolio because, you know, a big part of FIRE is that alot of people don’t want to sell down their portfolio. And it, to me it doesn’t make sense if you’ve got a big enough portfolio, why wouldn’t you just keep living on the dividends? So if you can’t withdraw those shares into the the pension mode then That’s, that’s interesting. But anyway, we’ll move on to the next question. Next question. So let’s talk about the differences in super funds and what they offer. It’s so hard to compare funds these days because they’re all offering something beyond just the management of your assets. They have different types of insurance they might offer co-contribution depending on where you work, financial help different management fees, et cetera, et cetera. Is there anything someone should look for when choosing a super fund If they’re planning on retiring early? Other than the obvious management fees, which is what the majority of people in the FIRE community just look at, they just look at the management fees. How well are the assets going to perform? Is there anything, any key things that we should be looking out for?

JAMES: I think there’s some, you talked about the obvious, you talked about the obvious things. I, I’d say I’d say you look for a fund that’s got a reasonably diverse investment before portfolio so you do have the opportunity to get access to a range of different investment options, management fees are important and really important as are administration fees and advisory fees. The fees for that advice can be quite low. That’s the sort of advice that’ll help you with things like transitioning to retirement within the fund. So I think that’s worth looking at. Insurances are certainly worth looking at cause there’s some, there’s some tax advantages to having life insurance within super. So that, that can also, that can also help you. Do you mind if I take a very quick tangent on that?

Aussie FIREbug: Yeah, go for it. Yeah.

JAMES: So so that’s actually one of the advantages for people that people within the FIRE community that want to see, what are the benefits of, of super before they retire? Well one of the things that you can benefit from super before you retire is by actually having your life insurance sort of death cover, total and permanent disablement or income protection, that’s often going to be cheaper as instead of your after tax dollars going to buy death cover or TPD cover you’re actually paying for that out of the super fund.

Aussie FIREbug: Yeah, it was, it was a sort of an open ended question really because there so many people look for different things like one size doesn’t fit all. But in, in regards specifically to the FIRE community, it seems to be the general consensus that the lowest fees are the best options, which is one point that you made to like for the investment options is usually on the top of the list for anyone trying to reach FIRE. And, and just on your tangent as well, it was was gotta be a question a bit later on, but I’ll jump in now. So you mentioned the insurances. Is there any reason someone would have those types of insurances, the income protection TDP and so on? Is there any reason that you would have them outside of super verse inside a super? Are there any pros to that?

JAMES: Yeah, so there are, there are some reasons why you might have it outside of super, but firstly, there’s a couple of the couple of advantages, but inside of super are that tax advantage that I talked about. The second reason for insider Inside of super is many super funds have what’s known as a group insurance policy. That means you, you automatically get insurance cover as part of this big group policy. And that means everyone within the fund is insured. And so if for instance, a funds such as Australian super you’ve got 2 million members so the buying power they have got for a pretty good insurance policy is just terrific. So you get this automatic cover at pretty lo cost and there’s tax advantages for those premiums being paid for within your super account. So yes, there’s really good reasons to have it inside super. One of the disadvantages is that there are some limits to how much cover you can get within super. So you can find that you can find that if you’re particularly high income earning, you might find that insurance within super doesn’t exactly meet your need. But you might want more than you’ve got significant debts, you significantly exposed, You’ve got lots of kids, I don’t know, but you want a lot of cover, you just can’t get enough super, so that the first reason you might have to go outside the group policy and get some additional cover outside super. There’s also limits in the product design within these group policies so you might find I want a different type of total and permanent disablement cover or I want a different I want a different type of income protection than is available to me because of my particular circumstances. So there are reasons, but those reasons generally would apply to the minority of people. I think the most people most of the time would do pretty well to have had insurance within super.

Aussie FIREbug: That’s great answer James. I definitely didn’t know that. And you make great points about a lot of, a lot of these, the answers to these questions like there isn’t a right answer to a lot of these questions because it is very circumstantial, you know, it good to, to learn the pros and cons for each side. Onto the next one. Children and inheriting super. How does that work?

JAMES: Yeah, another, another area where it’s getting a little bit, it’s a little bit tricky. so the first thing is that there’ll be different things that occurring when you’re retired versus when you’re still working, working, et cetera for example: trusts, binding nominations, testamentary trust or there’s a bunch of different things that are going to be involved in children inheriting super. Different taxes are going to actually apply kids getting super. If as an example, you’re 50 and you die and you don’t have binding nominations and different trusts in place, your fund will basically make a judgment about who are your dependents.

Aussie FIREbug: Interesting.

JAMES: And so, and this is actually a source of, it’s sort of a terrific, it’s sort of in some respects a, a terrific principle, but it also can be quite a complicated principle because the fund is not the oblidged to give the money to your estate. They are obliged to give the money to your dependents and they make a judgment as to who your dependents are. And so different people can say, I’m dependent on, you know, Matt, you know, I don’t know if you’ve got kids or anything, but let’s just say your kids.

Aussie FIREbug: No, not yet, not for a few years.

JAMES: So hypothetically you may have no dependence or you, might have a partner, et cetera. If you’ve got a partner it’s likely, it’s likely the fund will decide that your partner is your dependent. So the money in your, the money in your super account plus any insurance you’ve got, your death benefit would go to your dependent in your case, that’s probably just your partner and then share your would get all of that. So they will essentially make that call. If you’ve got no dependence and there’s no one that’s got any claim on being dependent on you. Sometimes it can be your parents might be dependent on you, it could be your partner, it could be your kids, it could be some cousin, it could be all sorts of things, it could be a flatmate. There’s all sorts of people might be determined dependence, but if there’s no dependence, it would then go to your that that money would then go to your estate. As you can see by this idea of the dependence it’s different. It is actually different to your estate and you do find that if for instance, you, you have been married, you have had kids that’s broken down, you’ve started up another, you’ve started up another relationship, you’ve now got a partner, but you’ve got an ex with, with kids, it starts getting quite complicated. You dislike your ex and your disowned and your kids but you are sort of legally obliged to keep paying them money and now youve got a partner who’s living with you and sharing the rent or sharing the mortgage… Who gets that money and who’s determined dependent? It starts getting a bit tricky and complicated and I’ve sat on a couple of those committees from time to time sort of working out who the dependents are. Believe me, it’s, it’s, it’s hard and people complain and people challenge because there’s, there’s not a perfect right answer. You’re trying to make a judgment as to, okay, there’s $1 million here, we’ll give, you know, 200,000 of the partner will give 400,000 to the X. We’ll give 100,000 each to the kids.

Aussie FIREbug: The cat, the cat gets 50,000

JAMES: So it’s sort of good because the principal is the people that need that money and it was originally insured to ensure that those people that depend on you, that their livelihood are protected and you don’t suddenly just find through a whim a whole bunch of people that should be protected are unprotected. So its really, it’s a really important responsibility of the trustees, but it can also be quite difficult and messy. And as I said, there’s then other arrangements that people that are on top of the game, they can nominate beneficiaries, binding nominations, have trusts in place, et cetera. But you can, you can do a fair bit to protect your kids and ensure your kids get, get that money.

Aussie FIREbug: That was going to be my question, Like if you have something in your, will that specifically says where the super is if something happened to you, is that considered enough estate planning to sort that?

JAMES: No. The example I gave where the monies within the super fund and you, you’re dying at 50, 55 the trustees will definitely take into consideration your will and, and the estate, but they are not bound by that.

Aussie FIREbug: That’s, that’s very interesting. I don’t know if that’s a good or bad thing, I’ll have to think about that. We think about super as our money. Like if I write a will and I want my super to go somewhere, I would think that it would go where I want it to go. Do you know what I mean? But that’s an interesting system. I didn’t know that.

JAMES: Well, it is, and that’s important also because there’s an insured benefit and part of that insured benefit is for your feel dependence there’s who’s dependent, who’s dependent on you. And as I said it’s, there’s, there’s lots of, there are lots of views on that and in most cases it does by the way, it’s got to reflect, it’s gonna reflect that. But you could change, you could just suddenly change your will and all of a sudden people that were insured and part of your insurance benefit was because you had kids and you had debts and just just decided to, you know, you’ve met someone new and you change your will thenThat doesn’t, that doesn’t bind the the fund to, to honor that. They definitely take it into consideration. As I said, there are other arrangements, If you can do binding nominations and if youve got trusts in place or testamentary trusts and If you’re in the, the drawdown phase, there are, there are ways to deal with this. But for most people, they don’t have that in place. And as a result the fund will act in their best intent

Aussie FIREbug: I sort of said it like, you know the funds sit around and rubbing their hands together and like, yes, we get, we get to make a big decision now. But yeah, that, that’s a terrible situation for everyone involved. Y

JAMES: As you leanr about the situation you start to think Oh my God, as it starts to unravel, you find scenarios where somebody might have a second family or they might have some, you go, Oh Jesus, how are we going to deal with this? It’s not, it’s not terrific fun.

Aussie FIREbug: Sounds complicated. Alright, so next question. In the age leading up to the preservation age in your 50s and 60s, are there certain smart things to do and set up before Turning the fund into a draw down pension or before you hit that preservation age where you might be still working, is there any key tips and tricks that you can talk a bit about?

JAMES: Yeah, so I think there’s probably, there’s a few things that you can do. Obviously as you’re starting to get into your, 50’s is you’re getting pretty close to the time when you can access your super. So some of the decisions become a little bit more immediate. For a a 20 year old and great reasons to have money in super for 40 years by the way. But, but a 20 year old, it’s so damn far away for someone that’s in their 50s. They’re thinking, actually I can get this money back out pretty soon if I need it. So obviously if you’re going to be well below that $1.6 million cap that we talked about earlier, it makes sense to get more money into super to be able to access that to get the full advantage of that cap If you’re gonna have your money in an account based pension tax free, get, get as close to their cap as you possibly can.

Aussie FIREbug: As a just quick sidebar. I know it’s been spoken about you know, going after that 1.6 cap. I wrote quite a controversial piece/ on the franking credit refunds. I don’t know how familiar you are with that whole debate, the franking credit refunds, but it was going to affect the FIRE community quite significantly. And it was pretty obvious to me that the government was going after to that tax free threshold within super, within that 1.6. The way they were going about it was through the refund because to my understanding, if you’re in that 1.6 tax-free free threshold and you receive an Australian dividend that has a franking credit attached to it because you don’t pay any tax, you actually get that franking credit refunded. So there was a whole sort of wrought with that tax free threshold. But I thought that that, that was the issue in the debate, but there was a bit of politics being played within that campaign promise and they were going after they were going after the refund, they said they were going off of the refund, but really they wanted to get at the 1.6 million tax free threshold. Do you think it’s going to be around in 10/ 20 years time or like I know it’s sort of political suicide to, to go after it because there’s so many retirees who vote, but I’m, I’m interested. Like it just seems too good to be true.

JAMES: Well, they’ve already made, they had made some changes already in the sense that a few years ago they didn’t have the $1.6 million limit. You had a much higher tax free limit. So they’ve already restricted it to a degree, three years ago, you could have had $3 million in an account based pension and enjoyed all of those benefits. So it was, it was terrific. The point is they’ve already made some changes to that. The last thing I could do is hand over heart and say there’ll be no further further changes to that. I think they will continue. I think there’s actually, right now there’s a retirement income review that’s taking place that’s going to be helping the government make it, make decisions on how we have a better retirement income system. I don’t know what’s going to come out of it. I’d be, I’d be surprised if they got rid of it entirely because I think, I think you want to create incentives to keep their money in the system and not take everything out as a out as a lump sum and spend it. Right now a 60 year old could get access to all of their super, they could get all of that money out if they chose spend all of it and then totally rely on the age pension. I think the government was going to want to continue to create incentives for people to have their, keep their money in super or in the super system and that this tax free threshold is one of those incentives. I actually think that’s a good thing. They’ve also, they’ve also made some changes to the way they treated annuities In terms of the, the age pension, again, to help people have some of these products to keep, to keep money in super or other retirement products longterm. If they don’t do don’t do that and they do completely eliminate that incentive that it’s no longer tax free, there is likely some obligation and force people to transfer super into these products and then it, and I think that’s an even more onerous obligation. Imagine, You have to have it in, in one of these products they made. They made, they made by the way do that. But I think if they force people to do that, the payoff will be, they’ll still have that tech spray amount. I think, you know, if it’s, if it’s a discretionary sort of a voluntary approach, you have to create the incentive and the incentive is the tax benefit. If they, if they force people to do it, I think they’re still going to have to have some form of preferential tax treatment. But, gee, it’s, you know, I’m trying to predict what the government’s going to do and whatever. I’d really be surprised if they got rid of it entirely. But that wouldn’t be the first time I’ve been surprised in super.

Aussie FIREbug: Well, that’s the thing, It goes back to what we spoke about in the beginning of this pod. It’s, it, it puts people off if there is uncertainty and tinkering/changingthe laws. You know, like I said, there, there’s a fair percent of the FIRE crowd that just can’t be bothered with all that even they see the tax advantages, they see how beneficial it can be. But they’d rather just invest in their own. And I, I sort of fall into that myself, just because the preservation age is so far away from me. But if I was definitely a bit older and I was closer to it, then I would take advantage. But at the moment, you know the employer contributes their 9% and I haven’t put in any anything else. But Hey, that could change, you know as, as I get older, definitely. If it’s still around and the tax free threshold still around, I would assume if I’m earning any money leading up to the preservation age, it would be all dumped in.

JAMES: I actually get where you’re coming, you know, super industry in my early thirties, and despite working in the industry retirement saying that bloody long way away, I’m now, I’m now mid fifties. All of sudden that becomes a bit, a little bit more real. It’s sort of amazing how, how in your 20s and 30s it feels a long way away but in your 50’s and all the sudden it’s, it’s not as far away. But the other thing you asked about a couple of other things that people, can do. So for instance, you’ve got non-super investments and those, those sort of non-super investments, you, let’s just say you’ve got 100,000-$300,000 in your bank account that are white, leave it in your bank account…Certainly not for the interest rates, right? Let’s just say you’ve got that amount of money and you’re, you’re in your 50s. You, you can transfer $100,000 a year into your super account in addition to that $25,000. That’s, that’s treated effectively from a tax purpose. In fact, you can bring forward up to three years of that. So you could transfer in any one year, $300,000. So that’s one of the things they get more money into super, particularly if you’re getting to that point where you’re still working. You can see that there’s going to be some tax advantages having a whole bunch of money and super your below that $1.6 million cap and you’re saying, actually it makes a bit of sense for me to get some more money into the system now. And one of the ways that I can do that is by bringing forward these, this would be called non-concessional contributions and putting in one year I could actually get $300,000 into super. So that’s one of the things that you could do and there’s other things that you can do in your sixties if you’re downsizing your home that might be getting too late for your audience. There’s certainly other things that you can do later in later in retirement to, to keep some money and get and continue to get more money into the super system.

Aussie FIREbug: Okay. Well that, that was very interesting. I had no idea you could do that. So that’s you know, for someone listening, if you’re in your 50s, yeah, $300,000, I’m not too sure, like you said, how many people would have that in cash, especially in today’s interest rate environments. But Hey, if you have it, it absolutely makes sense to chuck it in there, especially if you can see the light at the end of the tunnel and your preservation age is there. Absolutely should take advantage of that tax free threshold. Now next question, I think these are extremely complicated, but if you’ve got any insight, it’d be appreciated. Self managed super funds, are they worth it for someone trying to reach FIRE? What are the general pros and cons of setting one up?

JAMES: This is a can of worms. But, it depends. Great answer. So some of the things, some of the things for most people, they’re probably not worth it. Self managed super funds require a reasonable amount of work and effort because a lot of the compliance costs, et cetera. If you don’t have reasonably substantial assets, then those costs are just too big a percentage of the via total total portfolio and your earnings. Once you enter the retirement phase, people said, actually, I don’t want to keep having to manage this. I’d just rather something that was simpler. So for most people I’d be saying it’s probably not worth it. There are some people that it is worth it though for instance if you’re running a business, you can, you can often have the business being run and owned by the, by the super farm. So they could be, could be some reasons for doing that. If you’ve got very, very substantial, very, very substantial assets, the compliance costs that I talked to talked about and the effort, well it’s not much more effort for $4 million a self managed super fund than it is for $100,000 self may super funded. So if you’ve got, you’ve got substantial substantial assets and you’ve got a business and you’re running aspects of the business through the super fund, then it can actually terrific because there can definitely be some real real advantages.rSo yes, and they, there can also be, and I’m really not an expert from there, so hopefully don’t probe, probe too much on the question. But again, you know, some of the, you know, some of the, some of the treatment of people going into, you know, into the pension pays, they can be in a drawdown phase. Again, there can be someadvantages the people within the self managed self managed super fund. So there are, there are, I think there’s definitely some advantage. Personally It doesn’t suit me and I wouldn’t do it. Get, gets get. That’s a classic one that gets them advice. There’s no, yeah, there’s hundreds of thousands of Australians have get they’ve got them and lots of those people It’s terrific for them.

Aussie FIREbug: Yup. I I did some research years ago into self-managed supervise just because I was interested and I’m like, like you said, so much of this is, it depends. It’s very circumstantial for the individual and from the research that I did, it was sort of similar to setting up a trust and putting your assets in a trust outside of super. We invest through a trust, but it is very complicated and it complicates things almost to an unnecessary degree. Yes, there is tax advantages Potentially for an, again, it depends on your circumstances. But if I could do my time again, I probably wouldn’t have set up a trust. Like, I’ve set up one now and we invest through a trust outside super and it’s working well and it actually has, has worked quite well for us because, cause we’re overseas at the moment and we’re not residents for tax purposes in Australia anymore and there’s some, some cool stuff I can do with investments back home. But it’s very, it’s like most of these, the answers here, it’s, there’s a lot, there’s pros and there’s cons and it, it really depends. I found for the self managed super fund as well, if you’re a high roller and you your have have got a lot of assets, it’s, it’s potentially worth it, but if you’re someone, and this is more relating to the FIRE crowd, usually people in the FI crowd, we don’t need a whole bunch of assets to retire on it. Like if someone has got more than well it depends where you live of course. But if you’ve got, you know, over 2 million, 3 million, 4 million like you mentioned, unless you’re doing fat FIRE, which is sort of the exuberant FIRE path, , you’re not going to have that, those type of assets. If you do have those types of assets, I agree, you probably should pay to get some advice and see if it actually is worth it for you. Moving on, I had some fantastic questions from the Aussie FIRE discussion Facebook group. It’s only a month old and We’ve nearly got 2000 members. So please anyone listening, feel free to join us and join in on the discussion. I posted, because this podcast was so requested, I posted a question to the audience, Do you guys have any questions? There were just so many responses, really, really good ones. I’ve got a few here that I’d like to read out, some of the ones that were, had the most likes on them. If you could just give your your general thoughts and an answer that would be great. So I’ve got the first one here. Is there any women or woman’s specific considerations to maximize the outcome of super it as an example, super whilst on maternity leave when your employer may not be contributing?

JAMES: Yeah, so really quickly they should be far more women’s specific considerations because women generally have less super in retirement for a whole bunch of reasons: salary parodies and time out of the workforce for kids, et cetera is another there should be far more. Some employers pay super on maternity leave. I think that’s going to become far more the far more than norm to be paying super on maternity leave. I think there’s some terrific groups. There’s a group called women in super that are doing, doing a lot of work to try and get more advantages for super and some other, some other groups such as AIST that are trying to do more work in this area. But to be honest a lot of it’s left up to the individuals to compensate for the fact that they’ve got time out of work you know, contribute early. If you can get your partner to contribute get spouse contribution that may be of benefit. I think there should be more done to compensate women. One of the legislative things is to actually pay women higher to compensate for the time out of the workforce. Yep. So different things like that.

Aussie FIREbug: Yeah. You touched on one I actually had no idea about. So can you, you can contribute to your partners super. Is that, was I hearing that correctly? Yeah. Well, there you go. Do you get a $50,000 cap in that regard? So if you do 25% to yourself, your own super, could you then contribute 25,000 to your partners super?

JAMES: No, you still get that same $25,000 tax free limit. But you can get a little bit of a rebate which i am hazy on the detail, but there’s actually a rebate for the spouse contribution I might say. I think there’s some sort of, there’s some thought that there’s a, an offset on your super contributions, I think up to something like $3,000 for spouse contributions. So there are still some tax advantages, but they don’t apply to your $25,000.

Aussie FIREbug: We can put it in the show notes. We can do some research and get the facts in the show notes after, after this pod. But that’s a really good one. I’m glad you brought that up. Thanks for that. Second one. And we haven’t really touched on withdrawal rates. So maybe if you just start with what’s a withdrawal rate, that’d be good. But it is, how do minimum withdrawal rates work in retirement? Why is there a minimum withdrawal rate to begin with, surely it’s in everyone’s best interest not to force people to take more than they need to.

JAMES: There are withdrawal minimum withdrawal rights if you’re in one of those account based pensions that I talked about earlier, there’ll be minimum withdrawal rights at different ages.

Aussie FIREbug: So just to clarify, We’re talking about, so you’ve got the contribution phase and then you’ve got the pension phase. So we’re talking about once you convert it to the pension phase, the, the legislative requirements state that you must withdraw a certain amount every single year is that correct?

JAMES: That’s correct. Yep. That is correct. For instance, if you’re a 60 year old, it it’s 4%. So it starts at around 4% and it increases right up to it. I think if you’re about 95, it can be something like 18% must come out. So there’s a whole age, age based tier. Basically as you get older, you’re having to take more and more out of your super each year. As I said,

Aussie FIREbug: Is the goal with that, that they want every single person to essentially, as morbid as it sounds, as they’re approaching death to have their super balanced run out. Is that sort of what they’re, they’re, they’re trying to do with those withdrawal rates?

JAMES: Yeah. Supers meant to provide an income in retirement that that’s sort of a key or, or supplement your income in retirement. It’s not meant to be a vehicle to have tax free lumps of money going to your kids. If you had $2 million in super and I was one of those pension cafes, pension, it’s incurring absolutely no tax. You take no money out, you die, your kids get all of that. So it’s not meant to be set up for that. It’s meant to be providing people an income. So, so they wanting to, they’re wanting to basically force people to take an income and withdraw money over there over their lifetime from their super. And if we all, you know, had an expiry date on our birth certificate, exactly are going to die they’d have those withdrawal rates exactly right. But that’s what I, that’s, that’s what they want. And in a way that, that actually makes sense. Whether the amount, it does say the amount is correct is a different matter because you sometimes find people are being forced to withdrawal more than they need. At a particular age and they have to take it out put it into that to put in their bank account or somewhere else where it’s taxed.

Aussie FIREbug: You’ve explained that incredibly well. Like it shouldn’t be, especially again, it comes back to these tax free threshold area that I could see the government saying it’s meant to serve the purpose of a person retiring, but it’s not meant to be a big inheritance for the kids in a tax free environment. All right, so this was quite a popular question that we had and I have a feeling, again, it’s gonna be ” it depends” , but if you could do your best, that’d be great. Does the investment approach within super change for people who are in their twenties to someone say in their 50s. Could you briefly explain the key differences between the decades starting from your 20s to your 50s in terms of an investing strategy within super?

JAMES: Are you thinking that you’re thinking this about this from the perspective of whether the fund has got a default approach to their investments or whether the individual should be investing differently in their twenties and fifties. Some funds have a different investment strategy. The people in their twenties than people in their sixties, they have life cycle style investments. Other funds might just have a default from everyone that’s in the accumulation phase and then a different default for everyone that’s in the retirement phase.

Aussie FIREbug: It was asked, it was asked by someone from the Facebook group, but I believe what they were getting at was in terms ofthe product that you’re investing in within the super fund. Financially speaking I’m sure your answer would be, you know, contribute as much as possible every single year, all the way up until retirement. But in terms of the the mix of the portfolio within the super fund, you know, more aggressive when you’re younger probably makes more sense and sort of what would you, what would you typically see someone shift towards as they move on later in life?

JAMES: Most people the longer your time horizon, the more aggressive you are in your asset allocation. So you’re more likely to in the 20s to be very heavily exposed to grow the assets. Matt, you talked about sort of your split up international and Australian equities now thats a long time horizon. If you’re going to live to 85 or 90 or et cetera, you’ve got 50 or 60 years then looking for the growth assets makes a lot of sense. And for the most, most people, they start to get more conservative later, later in life. Part of the reason for that is, is for a lot of people, they want more stability of income later in life. When you’re investing you want to maximize your returns as much as possible as the assets are growing. When you actually living off it, you want to have a little bit more stability of and there’s different ways to achieve that. But some people will have a more conservative investment option and some funds will will also have lifecycle style options, which, start to move people into more conservative asset allocation as they get closer to an inter an into retirement. But the other, the other side of that is if you think about all of the different layers of your income in retirement, if you’ve got money inside and outside of super, if you’ve got annuity type products as well, you can know, you’re going to have an annuity which gives you a fair bit of income, stability and certainty and then you can have a lot of other money in very aggressive asset allocations, so you can actually get that certainty and stability in other ways than just having him all of your money in very conservative allocations. The default settings for funds will generally be more conservative for people in retirement than they are in their 20s. Did I answer that answer?

Aussie FIREbug: I thought that was good. I’ve often wondered as well, and maybe you can answer this bit, the default allocation of the portfolio for majority of people is, as you said, it’s, it’s usually in the middle, if not to the conservative side, which I think is missing out on a huge opportunity for people in their twenties and thirties when you can’t even access this until another 30 years or 40 years potentially. Wouldn’t it make more sense for more super funds to have that slider as you by default? Don’t rely on the people to go into their super fund and change this because 90% of people never do it. If people do, do it it’s already too late in their 50s. I was given the conservative allocation through vision super and I to actually manually go in and change it, but I just feel like that’s missing out on a lot of opportunity. Are there is super funds out there doing this and sliding it up as you go through the decades. But yeah, it makes more sense to be super aggressive in your 20s and 30s. And then like you said, as you get to your 50s, you go in and change the portfolio to be a bit more conservative. And just quickly for those who may not have heard of them before, can you explain and you and your annuities a little bit in how they work?

JAMES: So there’s a few different, there’s a few different types of annuities Basically. Things such as term annuities and lifetime annuities provide a guaranteed guaranteed income stream to you. So you can, for instance, could buy an annuity was super money. You can actually buy it out outside of super money, but you could buy with some of your superannuation money and annuity that if for instance, it’s a lifetime annuity, it would pay you a guaranteed income for the rest of your life no matter how long you live. So if you bought, if you bought that lifetime annuity at age 60, depending how big an annuity you, you bought, it will provide you a guaranteed income for the rest of your life.

Aussie FIREbug: who’s guaranteeing that?

JAMES: They are basically backed by a life insurance company. So there, is that what might be called counterparty risk?The restrictions on how and the capital that you have to have to back these annuities, there’s some very tight controls on that. So nothing’s I guess perfectly yeah. The capital requirements that sit behind these, these annuities are pretty, pretty stringent. So the advantage of one of them might be if you, if you buy one at 60 and you live to a hundred, geez, you’ve got a terrific deal. You buy one at 60 and you lived at 61 you, you don’t care cause you died..but there’s no money going to your estate. They haven’t take up in Australia because of, because of that, that idea. But from a personal perspective I’d sort of like the idea of of having that degree of certainty. You know, I’m probably one of those sorts that would continue to have this is absolutely personal and not advice, but I’m the sort of person, very aggressive asset allocations. But I’m supplemented by an annuity. There’s also a term annuity that will provide a guaranteed income for a period of time. Some people might have a whole series of term annuity and they were a little bit different. I’m not an annuities expert. They’ll also be the annuities that that you can actually have some provisions where if if you die, you know, the residual value of those can, can go to, can go to partners, et cetera

Aussie FIREbug: Right. Okay. now I promise I’ve only got two more questions left. It’s, it’s been quite, quite a big podcast, so thanks for sticking with it. How does the first home super saver scheme work – at a bit of a tongue twister there? Can you just talk a little bit about that? Because I feel as though it’s a bit under utilized and the reason is because not too, not too many people understand actually how it works and what are the benefits of that game.

JAMES: The first time savers game basically allows people to save thier money in super for the deposit to purchase their first home. So you can volunteer contribute about 30,000 into super and withdraw that and withdraw that amount plus any plus any earnings on that amount to buy your first time. And if you’re a couple, you could both do it soyou could get 60,000 in. One of the advantages is that money is sitting there and earning at the super tax rate of 15%, not at your marginal tax rate.

Aussie FIREbug: So then you’re able to withdraw it without incurring any tax – I would assume? And then you’re able to put that down as a deposit for a home?

JAMES: This is, this is where I think it’s actually not the 15%, so I think it’s actually what’s called a voluntary contribution. So it’s money above that. I’m a tiny bit vague It’s a voluntary contributions above your above the nine and a half percent. So you have to make additional voluntary contributions. I’m not entirely sure whether they’re taxed at the 15%.

Aussie FIREbug: I’ll put them in the show notes so don’t worry about it. Yeah. So if you wanted to take part in this game, what are the, what are the processes? Do you, do you contact your super fund? How does that work?

JAMES: Yeah, you do it with the, you do it with the fund. I’ve never done this particular, I’ve never done this particular one. I don’t think that you have to tell the fund before you do it, that you can just do it. I am a bit vaugue on this so would need to check.

Aussie FIREbug: Ah, well we’ll put some links in any way to the show notes that you specifics about that. But the general idea, I’m, I’m pretty sure people listening got the general idea. And then the last one from the community do you get slugged with any capital gains tax, if youswitch super funds?

JAMES: Oh yeah. You could do, you could, you could just transfer your balance from, if you’re in vision super or I’m an Australian super we can transfer our balance from one to the other and we’re not going to get slugged with capital gains tax that’s going to be handled at the attend or that the, the fund funding. So, so whatever you’ve got. So say it’s $100,000, you can transfer that to another fund.

Aussie FIREbug: Right. Okay great. So no, it doesn’t trigger any, any capital gains is fantastic.

JAMES: It’s cause the assets, the assets aren’t in your name. There could be some different treatment with regard to, self managed funds where the assets are in your name, but that’s one of those more complicated scenarios. Unwinding self manage super funds can be a bit complex. That’s another thing to think about with your money and vision or my money and you know, whatever we could, we could transfer into another fund and that’s not a capital gain.

Aussie FIREbug: Yep. Great. Fantastic. Well, James, we have reached the end of the pod is an absolute monster. You did a fantastic job. If anyone wants to find you or contact you, what’s the best way they can reach out to you?

JAMES: That’s right. They can reach out to me. So I work for a company called super ed. They could reach me like a Richard by LinkedIn: James Coyle. I’m not sure the protocol, giving emails out but I’m probably happy to talk to people. They can email if they like it: [email protected] I’m so happy for people to happy with people, but I’m also not a financial personal financial advisor. So if people are wanting very specific advice on things, i am not the person to go to.

Aussie FIREbug: Ill put a link to superED in Tin the show notes. And your email address too, just don’t blame me if you get, you’re getting tons of emails, James and your inbox blows up! Look, it was an absolute pleasure having you on. Thank you so much for coming on and sharing your experience and your expertise.

JAMES: It was lots of fun. Thank you, hopefully it’s useful to people. It was monster, you might need to do a bit of editing.

Aussie FIREbug: I’m sure it’s going to be a big hit. Thanks a lot James!

Podcast – Making Money On Youtube – Brandon

Podcast – Making Money On Youtube – Brandon



Have you ever heard stories about some people being able to make a living by uploading videos to YouTube?

You know what I’m talking about, those urban legends of a cat video going viral and the owner receiving thousands of dollar each month in passive income.

Today I’m speaking to Brandon, a 24-year-old Physio from Canberra who also runs the Aussie Wealth Creation YouTube Channel that currently has over 45,000 subscribers and generates over $3,500 thousand dollars a month through YouTube Ad revenue. 

Some of the topics we cover today include:

  • Why Brandon started his YouTube channel
  • How to monetise a Youtube channel
  • What’s important when creating content
  • How much money you can expect to make per views
  • Other passive income techniques Brandon has tried
  • The Young Investors Podcast

And much more!

Show Notes

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