Australian FI Weekly #43

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Welcome back to #AusFIWeekly for another edition of handpicked financial independence links and events from Australia and abroad. I’m Michelle, a mid-30s semi-retiree sharing my FI journey and slow travel adventures at FrugalityandFreedom.com.

I’m in my third month as a virtual assistant and online project coordinator; doing well so far! It’s been a good pivot from working in the events industry, which is near non-existent in the current reality of COVID-19. Remote freelancing has been on my career to-do list for a long time, so without current travel adventures to distract me, I’ve finally made great progress.

I’m loving the flexibility of when and how I do my work; being selective to focus on great clients and interesting projects. The experience is demonstrating the value of an alternative approach to financial independence, which Four Pillar Freedom points out: “Opening yourself up to the possibility of earning active income each year can speed up your path to freedom even sooner.”

Using the common 25x rule: for every $10,000 you have in annual expenses, you’d need to SAVE & INVEST 25x $10,000 = $250,000 to have financial independence from needing to work a traditional job. However, if you are able to EARN $10,000 every year in an enjoyable and flexible way, you can fast-track your freedom and not need to save up that $250,000. Four Pillar Freedom‘s table below shows the positive impact of earning active income to reduce your required savings portfolio size for financial freedom. Underrated FI hack!

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Australian Links

Creating an investment plan and Investment Policy Statement (IPS) – Passive Investing Australia
“The plan consists of choosing the amount you will put toward the goal each year, working out an asset allocation likely to reach the goal with the minimum risk necessary, and identifying a plan B for the goal in case the returns you’re planning on don’t materialise.”

Exchange traded funds (ETFs) versus listed investment companies (LICs) – Finder
Spoiler alert: “In basic terms, an ETF is a collection (or “basket”) of tens, hundreds or sometimes thousands of assets, such as stocks, commodities or bonds, that is designed to go up or down in value in line with the index it’s tracking… Investing in a LIC will give you access to a wide range of assets including shares, bonds and property in a single trade. However, rather than tracking an index, a LIC will have an external and internal management team who is responsible for choosing the company’s investments and managing them.” Read on for more differences and why they matter.

Calculate your personal safe withdrawal rate – Ordinary Dollar
A great calculator from Ordinary Dollar, which provides a visual complement to his extensive Safe Withdrawal Rate for Aussies blog series. Get a better understanding of how much you can safely withdraw from different portfolio configurations without running out of moolah in retirement.

5 Essential Mindsets for Simple Living – Simply + Fiercely
“Looking back now, I know that external changes like decluttering are only one piece of the puzzle. The real key to simplifying your life is learning how to think differently. When you develop the essential mindsets for simple living you experience meaningful change from the inside out.”

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Australian Events

24 June & 1 July, 8pm AEST – Investing 101 Free Webinar Series with Rachel White, Vanguard Australia (part 2 & 3) – Ladies Finance Club

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International Links

Dollar Cost Averaging vs. Lump Sum: The Definitive Guide – Of Dollars and Data (USA)
“The longer you wait, the worse off you will be, on average. The data I will present later in this post will illustrate this clearly. It’s like the saying goes: The best time to start was yesterday. The next best time is today.“

Money Isn’t Evil: It’s Freedom. Get Yours. – Tis But A Moment (USA)
“I’ve always struggled with my relationship with money. As an independent millennial woman, I vacillate between understanding that money is a necessary evil and just plain rejecting money because it’s evil. But it’s not evil, not inherently… When we start diminishing our value in one way, like accepting less money for the goods and services you offer, that has a ripple effect.”

Dear America: It’s Time to Retire the Idea of Jobs – Hayley Darden, Medium (USA)
“Traditional, unchanging jobs fail to bring out the best of the people in them. And, because better, more dynamic ways of deploying talent already exist, we may get back to work sooner if the idea of jobs retires.”

Course Notes – PopUp Business School (UK)
“It has never been more possible to start a business in a risk- and debt-free way. Let us show you a new way of thinking.” Also, check out the Rebel Entrepreneur podcast with PopUp Business School’s Alan Donegan.

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Thanks for reading and stay tuned for another guest curator next week. Missed one? Check out the archives here.

Yours in pursuit of FI,
Michelle @ Frugality and Freedom

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