This post is based on an interview we conducted with Jim in December 2022.
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: Jim
Age: 46
Where do you live? Queensland.
Please tell us a bit about yourself.
I am a Senior Software Engineer, former Mining Engineer and live on a commercial Coffee farm that our family owns and runs.
I have two teenage boys, both boarding at a private school as we live in a regional area.
We have a lot of outgoing expenses with the kids, farm and life in general.
What's your current net worth?
This is a bit tricky to answer as our farm and business is worth approximately $3 million but held by a family trust. Excluding that my net worth is about $1.2 million.
How does it break down?
- Directly held Australian shares: $250,000
- International shares managed fund: $220,000
- Spaceship Voyager: $50,000 (increasing with regular investment)
- Farm and coffee business: ~$3 million but held in family trust. Our home is part of the farm.
- Superannuation: $650,000
Do you have any debts?
No.
How did you build your net worth?
The farm belongs to our family, but for shares I have always had a keen interest in investing and building wealth over the long term. I prefer to chip away at it by investing monthly. That's what attracted me to Spaceship Voyager - the ability to set up a regular investment plan with low fees that is basically on autopilot.
I have also avoided debt as much as possible (especially car loans and personal loans). I have not been a big real estate investor as I don't like tying up huge amounts of money in a single, fairly illiquid asset. That said, before moving to the coffee farm we owned a house in Perth which we sold for a profit, some of which was invested in farm infrastructure.
Earn
Tell us a bit about your career.
I have had a fairly windy path, working as a Mining Engineer in Western Australian Iron Ore mines for nearly 20 years, which helped on my wealth journey as mining tends to pay well.
However my real love is software development so in recent years I have moved into that industry after dabbling in it for many years. I enjoy learning and have worked in technical roles for most of my career. I probably could have earned more in management roles but just didn't enjoy those roles.
Do you have any income sources outside your job? How much do you earn from each and how did you develop them?
We own and run a coffee farm in Far North Qld. Last year it earned about $30,000, but the farm is still ramping up production and that is expected to increase significantly in years to come. The farm was developed with funds from the sale of our house when we left Perth.
What’s been important for you to learn about money?
Besides improving your skills and taking on more senior roles, I think it's really important to have other (passive) sources of income.
For most people, a regular investment in shares is a great way to do that. That's what attracted me to Spaceship Voyager - the ability to automate investments into the funds means you don't need to think about it.
It's amazing how much wealth you can build if you just keep chipping away!
The other big one is to avoid debt unless it can generate a return (eg. real estate). I avoid payday lenders, personal loans, car loans like the plague.
Save
What's your savings rate? How has it changed over time?
I try to save and invest approximately 40% of my income each month. That goes into Spaceship Voyager, direct shares and an online high interest e-saver account for emergencies. It has increased in recent years as we got rid of all of our debt. I try to make sure I save at least as much as I was putting into our mortgage back in the day, plus some extra.
Do you have a budget?
Not a strict one, but I do plan out big items of spending, and my investments are automated for a set amount each month.
How much do you spend per year?
Including school fees, weekly groceries, hobbies, travel, etc (but excluding farm business operating expenses) we spend around $80,000.
Do you make purchase decisions carefully, or are you loose with your money?
For big things such as cars, farm equipment etc. I usually do the research and try to make good decisions. I can sometimes be a little loose with meals out and hobbies.
How is your work-life balance?
Pretty good. Since moving to our coffee farm I work remotely full-time for a software company. They have excellent work-life policies and are great to work for. My wife runs the farm with some part-time employees.
During the coffee harvest in September and October things can get a little full on with very long days, but the rest of the year is typically good.
What's your favourite thing to spend money on?
I love fishing and boating. I probably spend a little too much on fly fishing gear, my boat and lures!
Invest
How do you invest?
I primarily invest in shares as I like the liquidity and there is no maintenance, tenants etc to worry about (vs houses). I do own some direct shares, but I like ETFs and index funds as they have low fees and tend to beat stock pickers in the long run. Our coffee business could also be considered an investment, but it's a lot more work!
What's been your best investment?
The software company I work for was recently acquired. I had some employee shares. After the acquisition those shares were paid out in cash and I made a 400% return.
What’s been your worst investment?
We bought a beach house north of Perth when we lived there. We thought about it too much as a bit of fun and not as investment. It was owned by a real estate agent (big mistake!) and we paid far too much and then sold it later for a big loss.
What’s been your overall return?
Our long run return has matched the ASX long run of around 8% over the last 10 years.
How are you building wealth?
Through regular monthly investments in Spaceship Voyager, direct shares and by growing our coffee farm.
What are your main roadblocks to building wealth? How are you addressing them?
One roadblock was not investing regularly, Spaceship helped me address that. Other than that, keeping my non-essential spending low helps me put more in.
Do you have a target net worth you want?
I have an overall goal of achieving financial freedom, which for me means I only work when I want to, I don't have to work to fund my lifestyle. I am not there yet, but I would like to have a net worth in liquid assets of around $2 million to consider that goal met.
Behaviour
When did you make your first significant behavioural shift towards wealth building?
Probably later than I should have. In my mid 20s I started investing in some managed funds, but then built a house and had kids which was a very expensive time and those investments were spent. I stopped investing for a while. I started again seriously investing in my mid 30s.
If you could start again, what would you do differently?
Start investing as soon as possible and don't waste money on silly things like expensive cars. The most important thing is to achieve financial freedom so I'm not dependent on having a job to survive.
What are some mistakes you’ve made along the way?
Don't buy a beach house, especially one owned by a real estate agent!
Do you have any worries about retirement? If so, how are you planning to address them?
There is always uncertainty, but I think having a large financial buffer and diversified investments will help weather them. I don't want to be unable to rely on my own means to fund the retirement I want.
How are you learning about building wealth?
Reading as much as I can from the greats such as Warren Buffet, Ray Dalio etc. Listening to financial podcasts.
Do you give to charity? If so, what percentage of your time/money do you give?
I volunteer my time with some local community groups, I have written some phone apps for them and help on some weekends. Probably one day per month.
We want to hear your Real Money Talk
At Spaceship we’re big believers in sharing our money stories. We want to hear yours, too. In our ongoing Real Money Talk series, members of our community share what they’ve learned about managing money. We’d love you to take part. Here’s a link to our Real Money Talk survey where you can share your story.
