By Amanda Morrall (email)
One of the great things about my job is connecting with people; sources, other journalists and readers. I have been privileged to meet some incredibly smart, interesting, funny, and successful individuals many of whom I have drawn inspiration.
I wrote recently about one of of our readers who staged a remarkable financial turnaround. He went from a free-spending, carefree, live-for-the-moment spendaholic to a goal setting, credit card spurning, whip-smart CFO of his own right with a six figure portfolio at the age of 29. You can read about his story here.
Yesterday I had my personal finance socks blown off once again by another reader who confessed to regularly setting aside 20% of her gross income, and self managing her own retirement portfolio outside of KiwiSaver. It was worth six figures. Being a snoopy journalist, I just had to get the story.
What was most impressive was that this reader was a single mum of two children. As one of those myself, I can appreciate that such a self-discipline savings programme (in the face of never ending expenses such as school fees, uniforms, birthday gifts, sports programmes etc. etc.) is no easy task.
On her own steam, she'd managed to wipe the debt decks clear, stock her emergency fund, save for a house deposit, buy a home (finance the renos as she'd bought a fix-it-upper) and channel her discretionary savings in a portfolio of her own design. She has been growing her savings at a rate of about 10%.
Here's the post if you missed it:
I'm saving 20% of my income (I'm not with Kiwisaver) and intend to do this until I retire from full time employment at 55, I invest the money myself, inflation adjust the savings each year and so far, so good with the capital increasing around 10%+ each year including interest and additional $'s saved. At 55 I intend to use 25% of the total capital to start up a self-sufficient lifestyle business - giving me a guaranteed income (as l will be mortgage free at this stage) and then I'll be able to live out my life doing pretty much - just as I please. Kiwisaver is not for me (even with the incentives) as it is far too restrictive for my plan and I like the control I have over my investments (they are fairly conservative) and playing around with the financials to get the outcomes I desire for that magic date. When I started 5 years ago I knew nothing about money, but I've read everything I could get my hands on and I'm feeling a lot more confident now about the future. Sure you can put your money into KiwiSaver, do what I'm doing or hedge your bets both ways - but think of retirement as another phase to life and hopefully all going well you will have an income, be able to protect your hard-earned capital and provide for the next generation along the way. Now I just have to live long enough to make it all happen :-)
I managed to glean some other details from her, which I'll save for my book, because they were so sensible and effective.
This gal didn't think much of her accomplishments, said her strategy wasn't "earth shattering.'' Maybe not however there's arguably very few who have done what she did (without the benefit of a partner). And while her saving strategy may be common sense, (saving more than you spend) there's precious few who have the discipline to enforce that. You wouldn't know it from reading our comments but we do have a fair female following at interest.co.nz and the ones I've heard from have it going on financially. It's inspirational.
What also impressed me about this reader's situation is that she went about business without shelling out for a financial advisor. My personal view is that if a financial advisor can get you on a path toward financial freedom (or at the very least security) that you might not otherwise have found, then they are in all likelihood worth the money. At the same time, I think those who are eager to learn, who invest the time in growing their knowledge and who have the discipline for follow through, can do without.
Said reader shared my view.
You don't need a financial planner, but I went to a couple of unbiased seminars to find out what they were saying - more or less what I already knew because I had devoured every article known to man-kind and approached successful people who were already doing very well. People are always happy to share their tips, I ignored the guy who had a 5 bedroom house in an affluent area with a 95% mortgage and felt he had made it - as that was his "wealth status-symbol"... He'll learn.
I don't want to beat up on financial advisors. They've been beaten up sufficiently post finance company collapse. But I am interested in hearing your stories about how, if any, they have helped or harmed your situation. I welcome the good, the bad or the ugly.
Either drop your comments in the thread below or email me directly. Your anonymity is assured.