Okay, I'm going to write this post backwards, starting with the conclusion I've come up with, and for those interested after that I'll describe how I got to it. Extra info, duel income, 3 kids, in early 40's, have a home loan and are refinancing to move to larger house. No credit card debt, no car/personal loan, we have 6 months of wages sitting on our home loan we can redraw if needed.
Note, I am booked in to see a financial advisor, I would just like to hear others opinions.
Currently I'm looking to invest $30k/year, $15k into salary sacrifice super, $15k into the stock market, heres why.
$15k into super to save on tax, bring us down a tier in the medicare levy.
$15k into stock market, I don't want all my money locked away until I retire, more than $15k into super would go over the super contribution cap.
I initially thought to put the $15k for the stock market on the home loan but the interest rates are too low at the moment.
The super fund:
Move my super to a fund at the bank I'll be refinancing the home loan with, they offer discounted home loan rates if you hold other accounts with them. The fund I'm looking at is an aggressive/growth index fund.
Currently I hold a few different stocks, WBC, COH, BHP and a few other blue chips, I bought these a while back and never have really had the time to follow them, they sit there and I get dividends, that's about it.
I know I haven't got the time so with the $15k I was thinking ETFs would be a good option, I looked at actively managed funds but won't be putting lots of little investments in so won't save on fees for addition contributions and after a little research, managed funds rarely out perform the index anyway. I looked at mFunds and may go down that route after a while but I think ETFs are a good start for almost set and forget. Some thing like ASX200 and S&P500 for starters.
Does this sound reasonable?
Okay so now for those that are interested, how did we all of a sudden, in our early 40's have this money to invest.
Just after midnight, January 1st 2015, "Hey kids, who wants to spend new years in Europe next year?". After way too much Grange and shots of brandy at about $600 a bottle, I asked the kids that question after watching the Sydney fireworks from a friends apartment.
Later the next day at lunch my youngest asks, "When we are in Europe can we go to the Eiffel Tower?". I look at her and ask her, "What are you talking about?". Then the eldest says "Last night you asked if we want to go to Europe, we said yes and you promised you'd take us.". What could I say? I had promised them I'd take them, my wife is sitting there laughing at me saying "I'd like to see you get out of this one!". So maybe there was still a bit of brandy in the system but I stand up and announce to the entire cafe, "Europe here we come!", I just couldn't say no to the kids puppy dog eyes.
That evening when the kids are asleep, my wife rips into me about how stupid I am for getting them all excited, we eventual come to an agreement that I take over the finances for 6 months and if I can save enough for airfares by the end of june we buy the tickets and commit to go.
My wife was the financial hub for the 20+ years we've been together. Apart from a couple of car loans when just hitting the work force, we've never had a credit card debt or any other kind of debt. We upgrade our cars every few years when warranties expire, we eat at fantastic restaurants, and drink amazing brandies.
The first week of January 2015 was a big learning curve for me as I took over our finances, we each had multiple super funds, and she had different bank accounts for different things, and with 6 months wages sitting on our mortgage to reduce interest as emergency money. My wife did a great job budgeting to make sure we lived within our means but we were both guilty of enjoying every last dollar that was left over.
The first thing I did was roll over our super into one fund each, that wasn't getting us to Europe but it was saving us on fees. I went through our bank statements and built a spread sheet that actually tracked every dollar we spent over the previous 3 years, I decided to look at alternatives to things that we'd just blow money on, even simple things like taking a 6 pack to where we were staying instead of drinking the beer in the mini bar, I shut down most of the bank accounts and just put the balance on the home loan redraw account. I stopped 'upgrade' purchases, which are just purchases that we did because a new model came out with some fancy extra features and we had the cash to buy it.
On April 30 I invited the mother in-law for dinner, instead of serving up the spag bol I had cooked, I bought out bowls with everyones plane ticket in it, including the mother in-laws. She was born and grew up in Italy so I needed a translator. It took me 4 months to reduce our wasted money, we still ate out each week, and the kids didn't go to school barefoot, but we didn't go berserk like we used to either, and I'd done it in 4 months instead of 6. The next 8 months was planning and booking everything, as well as saving. One thing I did make sure of was I didn't stop us doing what we normally would do, we just did it less extravagantly.
So we made it to Europe on the 23rd December as I'd promised, we stayed with relos the first week and then spent 3 weeks snowboarding the Dolomites, Chamonix and Zermatt, with a short stop in Venice. During our last week while sitting on the balcony overlooking the Aosta Valley my wife resides to the fact that I should take over looking after the finances and every few years we could do a trip like this. Then the money saving light bulb goes off "You know we could save heaps on a snowboarding trip if we head to Japan instead, the kids have seen their relos, invest the money we'd save and in 15 years when the kids are gone we come back here for 6 months". That sounded good enough for her.
So now it's been almost 18 months since I took over the finance reigns for a 6 month test, we still do all we did before, just not as stupidly. I did go a bit 'over frugal' ay one stage, standing at Bakers Delight I asked for a white loaf sandwich sliced. The wife pipes up, "Why do you buy that? No-one likes it, it's too thin". "Well sweetie, you get more sandwiches out of it that way". That's when I realised I might have a saving problem, but in a good way.