Putting Every Dollar to Work

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it seems pretty common for home mortgages to have a re-draw facility, so any extra payments on our home loan could be withdrawn if we had a significant emergency arise.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.