This post is based on an interview we conducted with Jay in June 2020.
Real Money Talk is our series where we interview Australians from all walks of life about their personal finances. The views expressed are those of the interviewees, based on their experiences with money, and as such are not necessarily representative of Spaceship's views.
We have changed the name of the interviewee for their privacy.
Overview
Name: Jay
Age: 26
Where do you live: North Melbourne, Australia.
Please tell us a bit about yourself.
I am a finance geek. Truth be told, I failed a lot in math but after reading the book “Rich Dad Poor Dad” by Robert Kiyosaki, I got hooked on personal finance, investing, and generating passive income. That and cryptocurrency happened.
I would say I’m an all-rounder guy with a passion for investment, which is why I chose Spaceship and tried it out. 😊
Previously I had created my own cryptocurrency fund management project with Indonesian clients that netted 241% profit in the blockchain space during 2016 to 2018. It was a fun and engaging exercise I had, dealing with high net worth individuals, and I was exposed to client administration and taxation legislation, along with being entrusted with client’s funds, all the while teaching others about how cryptocurrency could revolutionize banking and finance.
I am currently working as a trust officer in corporate institutional banking. I deal with the back-end work of onboarding clients, managing cash and unit settlement of bonds and other fixed income assets, and regulatory compliance, and all the while also dealing with differing stakeholders in both external and internal market operational departments.
What is your current net worth?
Currently my Australian net worth is around $94,000 AUD (depending on the market rate of my assets).
How does it break down?
Spaceship: $7,741
ETFs (miscellaneous brokers): $12,202
RAIZ: $4,414
Australian shares: $1,541
Cash savings: $60,000
Emergency fund: $3,000
Superannuation: $7,590
Cryptocurrency(s): Undisclosed
Overseas property(s): Undisclosed
Any debts? (including HELP from Uni)
$800 credit card debt. I usually use a credit card to manage my cash flow and earn rewards to buy things such as iPads, flight tickets, and other miscellaneous goodies that work offers me.
No uni debt for me. I paid that off years ago from profit proceeds of Bitcoin, back when no one cared about it.
How did you accumulate your net worth?
A majority of my wealth came from investing into cryptocurrency early back in 2012, however now I have a primary source of income that I invest into dividend growth ETFs and growth portfolios such as the one provided on Spaceship.
Earn
Do you have income sources outside of your job? If so, how much do you earn from each and how did you develop them?
Yes, I do earn income from other sources such as from dividends and from income coming off my investment portfolio.
ETFs and shares: Roughly $140 AUD per quarter.
Fixed income (bonds): Roughly $30 AUD per quarter.
Decentralised blockchain margin lending products: Roughly $300 AUD per month.
All are done via picking the best suited products that suit my risk-return profile and my investment horizon.
What advice do you have for people who want to earn more money?
I believe to keep things super simple at first but in order to earn more money, you either invest in yourself or invest in a diversified basket of stocks/ETFs that produce income.
I would also say don’t give in to lifestyle creep; once you are able to master that and allow yourself a budget to adhere to, you would be able to create an automated process in which you don’t really have to think to save! Remember, the objective is to make your money make more money, not the other way around.
Finally, always invest in yourself, be it in learning more courses or learning how to get your finances in order.
Save
What is your savings rate? And how has it changed over time?
Since I was brought up in an Asian family, I was always drilled to save my money ever since I was a kid. So my savings rate would be at a default of 30%.
However, this was not the case these days as now I have been increasing my investments and even dipping into my savings account to buy the dip!
Do you have a budget?
Yes! 30% goes to savings, 20% goes to investments, 40% goes to rent and 10% goes to anything else (bills, takeaway, groceries, insurance, etc.).
How much do you spend per year?
I spend roughly $30,000 to $40,000 a year (this is rent and all other expenses combined).
Do you make purchase decisions carefully or are you loose with your money?
I tend to make my purchases very carefully, reading articles and ensuring I get the best bang for my cash. But at times, you’ve just got to let loose and buy those new Beats headsets and new gaming chair, especially when keyboards and mouses are tax deductible when working from home!
How is your work-life balance?
50% primary work, 30% personal projects, and 20% leisure. So, I would say pretty balanced.
What is your favourite thing to spend money on?
- Shares & ETFs.
- Expensive luxury items that I budget for and that my passive income pays for.
- Time and experiences that I share with friends and family.
Invest
How do you invest?
Through various investment products such as Spaceship, Raiz, Commsec, NABTrade, cryptocurrency exchanges, FX and option brokerages. I’ve been trying out this new platform, BrickX, which allows individuals to buy shares of a property via a unit trust structure. Neat!
What has been your best investment?
Hands down my best investment was Bitcoin circa 2012.
Second was getting through and spending money in getting a Masters of Applied Finance at Monash University and getting a good grade of High Distinction.
Third, I must say my Spaceship portfolio currently.
What has been your worst investment?
One of my bad investments was a $65,000 investment into an Ethereum blockchain project named DX.Exchange that was an ICO during the 2017 cryptocurrency bubble.
Lost all that money and the project and its founders ran away with investor funds.
The one thing that I take from that is Caveat emptor i.e. buyers, beware. Know what you are investing in!
And the worst investment was an out-of-the-money Bitcoin option trade I took with a margined $2.5 Million USD notional that was margin-called 5% off strike price.
I lost $1.25 Million USD on that personal trade alone.
You gotta learn from somewhere right?
What's been your overall return?
Depends on how you would look at it, as I began my investing journey with $80 AUD in 2012.
Now I have upwards of $100k and have redeemed profits along the way to pay for miscellaneous expenses such as taxes, rent, uni fees, and my life.
How are you building wealth?
By having a primary source of income to top up my investment funds and have my investment fund grow from both income generation and capital appreciation.
I also rebalance my portfolio as need be, especially when there are a lot of cheap assets (mid-March 2020).
What are your main roadblocks? And how are you addressing them?
Main roadblocks are the inability to invest more into the market and not breaking my investment mandate! Been trying to rebalance my cash position so that there are more shares and ETFs to produce more future cash flow for me.
Do you have a target net worth you want?
It is not more of a target net worth but more of a target cash flow.
I am aiming to have an investment portfolio that generates an income of $10,000/month. I am still at around $500/month, so I am still far away from my goal.
When did you make your first significant behavioural shift towards wealth building?
I guess the significant change began with my exposure to investment via Bitcoin. Knowing that your money can make money from you and then learning from books on how to apply that. I guess that would be around 2012 to 2013 during my undergraduate years.
If you could start again, what would you do differently?
Start investing early. The one thing I find that you will never be able to claw back is the time you have lost and the time you need to make up by increasing the risk you need to take in your investment to get the returns you want for retirement and paying kids tuitions.
- Invest early and invest in a broad range of basket assets (ETFs tracking ASX200, SP500 and the like).
- Invest more in cryptocurrency earlier, and tell others more of its supply-and-demand properties.
- Invest in Tesla and do not hear what your friends say about it back in 2014!
What mistakes have you made along the way that others can learn from?
Caveat emptor: Make sure you understand what you are buying into and what you are getting yourself in. The worst mistake is to not understand the products that you invest in, who manages them, and where your money goes.
Do not chase for returns. The higher return there is, the chances are you are onboarding more risk to your portfolio that you are not accounting for e.g. liquidity risk, premium risk, exchange risk.
Diversify your investment portfolio. Do not just sit on one basket of investment; this is to ensure you will not FOMO (fear of missing out) on hot stocks.
Time in the market is a stronger indicator of financial success, more than timing the market. So invest for the long term, and you will not lose.
Invest your time in learning more about personal finance. It’s free! Look it up!
Do you have any worries about retirement? If so, how are you planning to address them?
As they are, I am not worried about retirement. I believe I have built a great moat based on my investment portfolio and the net inflows of cash coming in.
Hopefully, ceterus paribus, my contributions and hard work will pay off in the future.
However, I am a bit worried about the superannuation environment and the future outlook on how my super is managed. I wish I could have taken my super out to manage myself without tax considerations, but that is another story.
How are you learning about building wealth?
I learn through books, exposure of products that are offered at my line of work, my own research into differing asset investments and term sheets, and also the occasional read on Reddit, newspaper and several finance videos on Youtube such as from Andrei Jikh, Joseph Carlson, and Graham Stephen.
Do you give to charity? If you do, what percent of time/money do you give?
As a requirement from my religion, I donate 2.5% of my yearly primary income to my nominated charities and donate another 1.5% from any profits I earn from my investments.
Had thought of donating my time but I’ve never really found the time to schedule that in.
