From $0 to $500k invested in 5 years | Strong Money Stories #1

Welcome to the first in a new series called Strong Money Stories.

These interviews will highlight real members of the community.

We’ll look at how they’re taking what they’ve learned and are building their own path to freedom.

As you see what others are doing, and how they’re going about things, I hope it inspires and motivates you.

To my delight, many of you have put your hand up for these interviews, which is fantastic.  We’ll be showcasing people at all levels of progress with different situations – the more examples the better.

If you’re open to sharing your journey with the community in a similar way (anonymously if you wish), feel free to reach out via my contact page.

I’m excited to bring you this series, so without further ado, let’s get straight into the first one!

Can you share a bit about yourself?

Hello!  I’m Ashi, 41 years old, living in the western suburbs of Melbourne.

I’m married, with two daughters in primary school.  My wife and I are both working full time.  I work in IT, and my wife works in finance.

When did you discover the idea of financial independence?

In 2013, we migrated to Australia from India and started from scratch.  In our initial years, my wife looked after our young kids while I worked.

With only one of us earning, we were mostly living paycheck to paycheck, with just a small amount of savings as a buffer.

Then in 2018, we needed to travel to India for family reasons and the trip cost us more than $10k, putting us in the red with no savings.  That made us realise our finance strategy (or lack of it) was not up to the mark.

That’s when I started reading to figure out how to grow whatever meagre savings we could manage.  I learned about investing and the concept of FIRE.  We gradually started ramping up our monthly savings and purchasing ETFs from 2019.

I must mention here that Dave’s blogs have been immensely helpful in learning all about FIRE.  Those have been such eye-openers with the posts so relatable to the Aussie way of living.  Just like how MMM’s blog are written with US readers in mind, I feel Dave’s is the corresponding “true Aussie” version of it.

Did you latch on to the idea of FI straight away, or did it take a while for you to believe it was possible?

To be honest, FIRE looked too good to be true!  It was hard to believe it was possible to live on passive income and not have to worry about a 9-5 job.

I loved the idea, though I seriously doubted whether achieving FIRE was possible.  I thought it must require a family inheritance or a high paying job to build enough income producing assets.

Only upon reading through the FIRE community’s individual success stories from people who have managed to semi-retire or fully retire right here in Australia, I started believing that it is indeed possible with some perseverance and dedication.

What is your goal (FI, semi-retire, etc) and how far along are you?

I have two main goals.  First is towards semi-retirement and second towards a full retirement.

For semi-retirement, I want to achieve $1m in ETFs and term deposits.  Right now, I am halfway through this mark with approx. $500k invested, and another $175k is in Super.

For a full retirement, I want to achieve $1.5m invested and pay off my mortgage.  I’m only 25% towards this goal, so still a lot to be done!

What does your ideal lifestyle looks like, and what does freedom mean to you?

I want to be able to spend more time with my kids, assist them in their education and spend some quality time with them.

Right now, jobs take up most of our day and even when we aren’t working, the nature of our jobs always has us thinking about the next day’s work.

There’s always an email to reply to, a meeting/presentation to prepare for, or that spreadsheet to fill-up in the back of your mind!  It is an art to completely switch-off at 5pm every day.  Somehow, I’m not good at that!

Freedom to me means the ability to be able to do what we genuinely like to do without having to worry about jobs and wages and the need to be present for a 9-5.

What excites you most about the path you’re on?

Building wealth and become financially independent are great motivations.  But there is something more that excites me.  It needs a bit of context.

Our parents are in their 70s, living in India.  While they are hale and hearty, we want to be able to do lots of trips so that our kids can spend time with their grandparents.

A couple of things that stop us from doing that is the limited leave we can take, and the approvals needed for a long trip (say 4 weeks).

In years to come, if our parents need our presence and support due to age or health reasons, we may need to quit our jobs and move to India temporarily or permanently.  We don’t know for sure, but that could happen.

If the FIRE journey can eventually enable us enough to be able to look after our ageing parents without having to worry about our jobs, that would be the best possible use of the freedom we can imagine!

Can you share some of your income/expense numbers?

In 2013, my after-tax income was about $7k per month, and our expenses were $6k.

So, we were saving $1k per month initially, which was like going nowhere.  If we do the numbers back then, our savings rate was 14%.

Since then our situation significantly improved.

Through regular small salary increases at work, my after-tax income has grown to $8k per month.

When our kids grew up and started pre-school, my wife joined full-time work and is earning about $5k per month.

I also started a side-hustle on evenings and weekends.  I picked up Excel Spreadsheets Automation using VBA programming for small  businesses.  It worked like a charm.  That increased our income a further $2k per month.

In all, we are currently earning approx. $15k per month take-home.  Our expenses did not grow that much, currently around $7.5k per month.  So our savings rate is now 50%.

What’s your investment strategy look like and why?

Mine is quite different to the standard.  A lot of the FIRE community would consider my strategy overly risky and I completely acknowledge that.

I’m mainly investing in IVV (S&P 500), also with some NDQ (Nasdaq 100).

I know the Aussie FIRE community is more into VAS and diversified funds like VDHG.

One reasons why I’m going with IVV is that it’s higher capital growth, lower dividend.  That suits our current situation to avoid paying taxes on our dividends.

Later, say in 10-15 years, when we semi-retire or retire, we plan to switch to a higher dividend focused portfolio.  That will be in our later years when we need the dividends to live on and we won’t be in a high tax bracket.

Right now, I’m ok taking the risk of banking on the US, with a little extra focus on technology through NDQ.

Do you plan to pay off your home by the time you hit FI?

Yes, we would like to pay it off in next 10-12 years before we fully retire.

We consider having no mortgage as additional peace of mind, with one less expense to worry about.

How will you live off your portfolio?  And do you have a passive income target?

We mainly plan to live off dividends.

My target for full retirement is $60k post-tax income.  I believe that will be sufficient for us provided our mortgage is fully paid off.

So, considering the 4% rule, my FI goal is $1.5m invested and the PPOR paid off.

After you reach your chosen goal, what will you do after that?  Any plans?

When we hit the semi-retirement, we want to move to part-time work.

We will reduce to 3 days a week.  That way, we will have much more quality time for family, and have a 4-day long weekend every week.

With income through part-time work, we then want to keep growing the investments to reach the $1.5m goal and pay off our mortgage.  That will enable us to retire fully.

Post retirement, I would like to continue growing my side-hustle (with more time at hand) as that is something I absolutely love doing without feeling constrained.  It is like someone pursuing their passion while being able to earn a bit from it.

Is there anything about your situation which is different from others in the FI community?

I grew up in a very modest family in India, where we had no major wealth.  My grandfather and father were the sole earners, while my grandmother and mother were the homemakers.

Saving was in our family blood like a religious thing.  Throughout my childhood, I have seen my grandparents and parents living frugally and believing in saving.

They utilised income wisely, like spending only only what is really needed and on our education, never indulging in luxuries.  My parents, now in their 70s, are still exactly the same or may be even more frugal with age!

Let me give you examples.  When I visit my ancestral home, I see the same kitchen utensils that I used when I was a kid.  The furniture is still the same.  The refrigerator must be 25 years old – somehow still running!

One of the beds was purchased in 1979 and is still there serving the master bed for my parents.  They upgrade only when something is broken beyond repair!

Throughout my childhood, I never got pocket-money for lollies or savouries.  Anytime I wanted some spare change, my parents used to tell me: “Just let us know what you want and either we’ll make it at home, or we’ll buy it for you after a careful thought of whether that is needed!”

So, I developed this perception that money – even spare change – is sacred and needs to be preserved.

Also, apart from my sister, I don’t have any relatives here in Australia, though we do have a lot of friends.

Because of this, we sometimes consider the possibility of returning to India for our retirement.  India is quite cheap compared to Australia.  That means, we will need much less to retire if we do that in India.  We also have our ancestral home back in India where we could live rent/mortgage-free.

Having said that, it’s not easy to make that decision, because we also want to remain close to our kids.

Has anything about the journey been easier or harder than you expected so far? Any surprises?

I believe the regular blogs/posts and hearing from the FIRE community has been the most helpful factor that has made our journey easier.

Even though we hardly know each other in the FIRE community (except the meetups), just having that assurance that we are not alone in this journey, and that there are hundreds who share the same vision, is simply great!

No surprises as such.  We are just trying to stay the course and work our way through this “portfolio accumulation” phase, so that eventually we can hit the FIRE number in the next 8-10 years.

What actions that have made the biggest difference so far in your financial life?

Once we discovered FIRE, our entire thought process changed.

Instead of just living comfortably, we accepted this mission of maximising our income while continuing to live frugally, and then putting all the surplus savings into investments.

As mentioned, we increased our savings rate from 14% to 50%.  We started tracking our monthly expenses and savings rate religiously and became much more mindful spenders.

A few things that have helped are we:

—  Cook at home with once-a-week lunch/dinner outing for a break.
—  Have just one streaming service, not multiple.
—  Have one fully paid off car.  No credit card debt or personal loans.
—  Check all Woolies/Coles specials and utilise those.  I also use Woolies Everyday Annual Scheme to save on our groceries through 10% once a month discount, plus we do all our purchases through BUPA LifeRewards discounted Gift Cards enabling another 4% saving on every purchase.
—  Use as much Rewards Points as possible towards direct cash redemptions.
—  Have home internet and mobile sponsored by my employer.
—  Work-from-home which saves on petrol and Myki costs (public transport).

Which financial or life lessons have proven the most valuable to you?

Three key lessons I’ve learnt:

1- Frugality is awesome!

There is no need to keep purchasing random stuff thinking that will uplift our lifestyle or for showing off to friends and family.  It is amazing to realise we could live fine with so little once we embraced frugality.

2- Start the investment journey as early as possible.

I will teach my daughters to start investing as soon as they finish school.  If they start earning part-time in Uni, I would advise them to start investing half of their earnings right away.

3- High savings rate, either through increased income or reduced expenses, is the single most crucial factor that can help attain FIRE.

Much more important than how much returns the ETF holdings are earning.

If you could go back, would you do anything differently?

In hindsight, I started investing quite late in life when I was 36 years of age.

I should have started when I had my first full-time job at the age of 23.  Essentially wasted 13 years with minimal investing in those years. ☹

Where do you think people go wrong with their finances? And how can they begin moving in the right direction?

I see people around me spending mindlessly with no discipline or focus on saving.

The concept of FIRE remains a myth to many.  There is a lot more awareness needed about FIRE, the immense potential for freedom and what it could mean to our lives!

The first step in the right direction is a retrospection of all expenses and developing a mindset focused on savings and investment.

Any other thoughts, lessons, experiences you want to share? Anything else you think may be valuable for readers?

Work out your FIRE numbers and follow your individual strategy slowly but consistently!

Stay connected in the FIRE community and try learning from others.

And don’t forget to read all of Dave’s posts regularly!! 😊

Dave’s takeaways

Amazing story, and a big thanks to Ashi for being willing to share it with us.

Here’s a few thoughts from me…

—  I love the frugality examples from the family.  Certainly puts us westerners to shame.  There’s such a large cultural (even generational) difference in how money is treated.  We act as if our money isn’t scarce, but in doing so, we ensure that it is.

—  Most people are best served getting their spending under control FIRST, then boosting their income.  That’s exactly how this family made the most of the extra income.  Without good spending habits, more money just leads to lifestyle inflation and a suboptimal result.

—  I like that Ashi will encourage his daughters to only spend half their income from the beginning.  I’ve had other readers tell me the same, and that it’s working.  Reason is, you are creating a new normal that they get used, so they won’t think anything of it!

— The side hustle is also impressive.  It’s well worth exploring if you have any ideas in mind.  Depending on what it is, you can turn it into a real business, and you may even enjoy more than your regular job (as is the case here!).   Either that or a cushy transition into semi-retirement.

—  I like that there are clear intentions about what’s important to them.  Although the plans are not concrete since they might move back to India, all their efforts building wealth right now will be immensely helpful wherever they end up.

Final thoughts

Sometimes life can give you a nudge and wake you up.

Ashi certainly had an “oh shit” moment early on and realised they needed to do better.

That one moment led to him discovering life-changing financial concepts that are now putting this family on the road to wealth and freedom.

There’s no substitute for a thoughtful mind that is open to new ideas.

It’s amazing what can be achieved with hard work, dedication, and thoughtful planning.  I have no doubt they’ll be able to semi-retire within 5 years at this rate, and fully retire within 7-10.

I’ll be eagerly watching to see if Ashi actually does slow down and pull the plug. From what I’ve seen of other hard-working people, it may be harder than he thinks 😉

Do you have any questions for Ashi?  Share them in the comments and with any luck, he might pop by and reply 🙂

Thanks for reading! 

Here are some resources you may find useful on your wealth building journey:

My book: After 5 years and hundreds of articles and podcasts, I’ve distilled everything down into an easy to follow book. A complete roadmap to achieving financial independence and retiring early in Australia. Audiobook available on Spotify and Audible.

Mortgage broker: My personal broker for more than ten years is More Than Mortgages. If you’d like help refinancing or getting the right loan for your needs, get in touch with MTM. They have fantastic reviews for a reason.

Sharesight: A great portfolio tracking tool for share investors, and free for up to 10 holdings.  It tracks all dividends, franking credits and capital gains, which is incredibly helpful at tax time.  Saves me a lot of time and headache!

Just so you know, if you choose to use these resources, this blog may receive a financial benefit at no extra cost to you.  Thanks in advance if you do.  And to be clear, I only ever recommend things I use myself and genuinely believe in.