Jellyman Investing - Personal Finance for Australians

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If you haven't researched Index Funds, I suggest you start there before investing in individual companies. Should you be brave enough and willing to do the work, you can invest in individual companies. Long term they can potentially provide significantly higher rewards. But remember. With higher reward, comes greater risk.

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When you get your financial affairs in order, when you educate yourself to the point where regardless of what's happening in the economy you still make money or protect yourself and your family, you've won the game of life. It's not that hard, just takes time.
Before I get on with this episode, a reminder that I have a Patreon page where you can read articles, download spreadsheets, get internet resources, watch tutorial videos and even chat with me. It's free to join so sign up today. The link is:
Patreon.com/Jellyman_Investing
Also, a disclaimer, that I am not a financial advisor, please consult with a professional before making any financial decisions. On with the episode.
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Right now you make be broke, in debt, no savings, no house, whatever. Things could be bad for you? I mean is it worth trying to get all my financial affairs in order? What's at the end of the rainbow here?
So to get you motivated and excited about the future let's talk about what your life could be like once you achieved many of your large financial goals. Here's some of the advantages.
You're not worried about not getting your paycheck that week.
You're not worried about unpaid leave.
You're not worried about slightly higher bills.
You're not worried about unexpected expenses.
You're not fearful that you can't provide for your children.
You don't care about change home interest rates.
You don't check the price of food on menus.
You can buy what you want, when you want and however much you want.
You can flight first class.
You spend and enjoy life, and yet your assets still grow in value.
You don't care which party is in Government.
You can capitalize on market downturns.
You can sleep at night knowing your investments are conservative
You've managed your investment risk such that downturns don't scare you.
You can pay your house off soon.
The list goes on. The point is, these are all extremely exciting things. You may not get all of them, but what's important to understand is how these things unfold.
You don't wake up one day and 10 of these are suddenly true. What tends to happen, is that you achieve one which frees up capacity to achieve the next.

https://www.patreon.com/Jellyman_Investing
There was once a king who was to pay a farmer for his work. He asked how much he'd like to get paid. The farmer replied saying, place two coins on the first square of the chess board. Then double the number of coins when you go from one square to the next.

First there was 2, then 4, then 8 and so on. Can you guess how many coins there are by the time he reaches the end of the chess board?

Before I get on with this episode, a reminder that I have a Patreon page where you can read articles, download spreadsheets, get internet resources, watch tutorial videos and even chat with me. It's free to join so sign up today. The link is:

Patreon.com/Jellyman_Investing

Also, a disclaimer, that I am not a financial advisor, please consult with a professional before making any financial decisions. On with the episode.

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The article explains compound growth, a key concept in investing where money earns more money, eventually outpacing expenses and leading to financial freedom. This can be achieved through various investment avenues like stocks, index funds, real estate, or business ownership.

The concept is similar to how credit card interest works. If only minimal payments are made, the interest accumulates, leading to an ever-increasing debt. This compounding effect can turn a small debt into a large one over time, illustrating how banks make money and the dangers of credit card debt.

The article then applies this concept to investing. For instance, investing in a company like Apple allows the investor to benefit from the company's growth, which in turn increases the investment's value. The goal for long-term investors is to have investments that grow more than their annual expenses.

An example is provided to illustrate this: investing $1M in stocks that grow by 10% annually. By withdrawing $100k each year, the investor maintains the principal amount while benefiting from the growth.

The article emphasizes the power of compound growth and how even a small change in the growth rate can significantly impact the investment's final value. It also highlights the importance of choosing the right investment vehicles, like superannuation funds with minimal fees, as small differences can lead to substantial gains or losses over time.

Finally, the article promises to explore further topics like investment choices, risk assessment, and the role of age in investment strategies in future discussions.

https://www.patreon.com/Jellyman_Investing
Once your accounts are set up and put into autopilot, its time to get efficient. You'll come to understand that when it comes to investing, it's not necessarily the amount you earn or the amount you invest, it's the time you stay invested.

Before I get on with this episode, a reminder that I have a Patreon page where you can read articles, download spreadsheets, get internet resources, watch tutorial videos and even chat with me. It's free to join so sign up today. The link is:

Patreon.com/Jellyman_Investing

Also, a disclaimer, that I am not a financial advisor, please consult with a professional before making any financial decisions. On with the episode.

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To illustrate the impact of extra repayments on a home loan, consider a $500k house purchased with a 100% bank loan, a 30-year term, and a 5% interest rate. Monthly repayments are about $2,700, totaling $466k in interest over 30 years, nearly doubling the house's cost.
Adding an extra $200 per month reduces the loan term by nearly 5 years and saves about $80k in interest. Increasing the extra payment to $500 monthly saves $150k in interest and cuts almost 10 years off the loan.
Building wealth isn't about sudden windfalls or high salaries; it involves small, consistent habits over time. Making minor lifestyle adjustments can significantly affect loan repayments. For example:
1. Reducing utility bills and switching to energy-saving bulbs.
2. Being more efficient with food consumption.
3. Using an electric scooter for short trips.
4. Making coffee at home.
5. Choosing a bank with no account fees.
6. Reducing streaming services and Uber Eats usage.
These savings, potentially totaling $300 monthly, can accelerate mortgage repayment, increase savings, or build an emergency fund. Additional income sources, like tax returns, bonuses, or side jobs, further contribute to this strategy.
Managing small amounts effectively prepares for handling larger sums. The same principles apply whether dealing with $50 or $50,000. It's about developing a mindset from the ground up. Wealth often accumulates subtly, and how one manages small savings can influence their overall financial growth and ability to build wealth sustainably.

https://www.patreon.com/Jellyman_Investing
Welcome to another episode here at Jellyman Investing where we'll be talking about building your foundation. That means, learning how to structure and automate your accounts so that you don't over spend, you have a better understanding of where the money is flowing and most importantly, slowly and steadily build your savings to the coveted 6-12 month target.

Before I get on with this episode, a reminder that I have a Patreon page where you can read articles, download spreadsheets, get internet resources, watch tutorial videos and even chat with me. It's free to join so sign up today. The link is:

Patreon.com/Jellyman_Investing

Also, a disclaimer, that I am not a financial advisor, please consult with a professional before making any financial decisions. On with the episode.

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In the past, many people, including myself, managed finances through a single bank account, making it hard to track spending, bills, and savings. This approach often leads to overspending and unclear savings growth.
The game-changer for me was learning about account structuring and automation from "Barefoot Investor." Automating finances reduces reliance on willpower and provides clear visibility on each account's growth.
Most banks offer multiple accounts through their apps. A basic structure includes four accounts, but customization is encouraged for individual needs.
1. Everyday Spending: For daily expenses like lunch and transport.
2. Enjoyment: Allocating funds for leisure without overspending.
3. Short to Mid-term Goals: Saving for things like weekend trips or special purchases.
4. Emergencies: The most crucial account for unexpected, large expenses. It's important to prioritize this fund to avoid setbacks.
For instance, if unexpected expenses average around $1,000, aim to save $2,000-$3,000 in the emergency fund. Once this target is met, allocate more to other accounts.
Many people spend their paycheck without saving effectively. Scheduled payments in banking apps can help allocate specific amounts to each account based on income and expense understanding.
This system resembles the Japanese practice of using labeled envelopes for budgeting. Expanding beyond four accounts for specific expenses like bills, insurance, or pets ensures funds are always available for each category. Surplus funds in these accounts act like mini savings accounts, gradually growing.
This practice is crucial regardless of income level, from $2,000 to $50,000 a month. Efficiently moving money to where it's needed prepares you for more complex financial ventures like investing and real estate.