Nearing the end of our recent catch-up with our financial adviser, the general discussion turned to how we ended up where we are now. At 59 and 51 respectively, my wife Cindy and I are in a fortunate financial position. We never set out with aims of early retirement, or a target number that we wanted to reach. And despite that, we ended up in good shape.
It got me thinking about what we did right, even though we weren’t consciously working towards any particular goal.
Upon reflection, what we did right:
- We took every spare dollar and either paid down debt or invested into broad stock market funds. In early days it was into simple managed funds, in later days into index funds.
- Worked really hard and grabbed every opportunity possible.
- We had no interest in expensive material items. We bought either used cars or cheap new cars and kept them for a long time. We bought houses well below the local average price.
- We were lucky – good health, stable family.
What we didn’t worry about:
- Tax minimization – Our accountant would obviously recommend certain steps we should take to reduce our tax and we would follow that advice. But we never sat down and agonized over how to structure our finances based upon tax we might have to pay.
- Emergency funds – In Australia it seems pretty common for home mortgages to have a re-draw facility, so any extra payments on our home loan could be withdrawn if we had a significant emergency arise.
- Market timing – Dollar cost averaging all the way!
Personal finance can end up really complex. People can agonise over the detail of so many choices.
I’m no expert, just an average guy reflecting on how we got here. My feeling is that simple is better. Map out a strategy that works for you, as simple as possible, and stick to it.
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Sounds like Cindy and you have done a great job focusing on the essentials of building wealth. You’re in good company at HD. My wife and I are at a similar spot in our lives, though I plan to keep working as long as it feels right.
But I’m also thinking a lot about the shift to little new money coming into my life. So I’m considering how to best tend the wealth that we have, things like minimizing taxes, for instance. I don’t know about Australia, but the U.S. tax code demands some thinking time to make the most of it, and avoid the worst.
Thanks Edmund. Our accountant and financial advisor have advised us to do certain things to reduce our tax load, and we have followed their advice. But Cindy and I certainly never put any thought to it.
Greg,
We’re older. Early 70’s. Both retired.
We did financial things pretty much the same way. But we DID (and still do) have an emergency fund.
Thanks Winston. Whilst we didn’t have an emergency fund, there was always some money that we knew we could source as required. It just wasn’t sitting in a cash account that we could point to as an emergency fund.
Discipline, simplicity, and a little luck—a winning combination!
Taking the criteria Nick P recently highlighted
Relationships – sounds like you were aligned, of similar behaviourial finance personality and working toward common goals.
Health – Spared poor or draining outcomes.
Finance – Earnt enough and invested it sensibly.
Those 3 together are more important than any micro strategies or sub -optimalities along the way.
When we try to judge or help others we need to recognise that the trifecta is not that straightforward for many.
I am interested in what your “what now?” plans are. You’ve said that you don’t see yourself retiring although you clearly have the means. Some sort of social/community entreprise? Part time small business consulting? Bogan car racer? 😉
Thanks bbbobbins. Firstly, no bogan car racing! You clearly have some insight into Australian culture.
I suppose my main point in this post was that we didn’t get concerned about any “micro strategies or sub -optimalities along the way”, as you so succinctly put it. We just did the basics consistently.
I have a diagnosis for you. You’re displaying all the common traits of a particular malady. I’m happy to say you’ve developed late-stage humbledolloritis!