Anonymous Herconomics Money Story

"Hey everyone – I’m a typical 20-something year old, attempting to get a grip on most adult things such as 8 hours of sleep every night, saving for the future and making sure I eat five servings of veg a day.

At my own pace, I have come to understand and value finance as a tool to get me to a desired place in life. This does not involve owning an extravagant fancy house or zooming around in a Range Rover even though this does sound rather nice. Instead, my financial savviness is a tool that will enable me to choose how I enjoy my time on this earth. This goal has brought me to where I am today – building on my financial wealth and passive income streams so that eventually, I will be able to live my life without the constraints of a paycheck.

The journey to understanding this long term financial goal has not been linear. Nor has it been easy or comfortable. But along the way, I have been so lucky to be supported by people who have become amazing sources of wisdom and guidance. I hope my own financial journey can in some small way help you on your own financial path.

Lessons from dad

My earliest memory about finance was from my dad, a pilot from Vanuatu who never went to university. He simply applied all the practical financial lessons that he learnt from books by Warren Buffet and others to build an amazing life for himself and our family. This is something that I now find incredibly inspiring but I often took for granted when I was younger.

He was the one who helped me set up my first savings account for my tooth fairy money and pocket money from my weekly chores. He was the first person who explained to me what a stock was and the true power of compound interest. He shared his books with me on property investing, stock investing and passive income, which I must admit I found rather dry at the time. But for all of this, I thank him, as it laid the foundations of where I am now and where I am hopefully heading.

The world of finance

At the end of year 12, I chose to study a rather sensible commerce degree because I was fascinated by the world of business and entrepreneurship, in particular I loved the stories of women who started companies and truly “made it” in life. But, the realities of first year uni kicked in; as a result of studying complex maths (or at least I thought so), and sitting through rather dull lectures, I developed into a distaste for the world of finance and investment banking.

During this time, I detoured a bit. I wasn’t a great saver – I would spend most of my savings on travel or nights at the local watering hole. I funded great experiences, especially when it came to travel, but it was only until I started my graduate role in marketing that I realised my lack of responsibility when it came to finances was going to hold me back in the long run.

It’s time to save

Ever since earning a paycheck from my full-time grad job, it was all systems go when it came to saving. I opened an excel spreadsheet and started to plan a monthly budget, in an attempt to maximise my savings as much as possible. I squeezed and pinched all aspects of my monthly plan allocated to rent, electricity, food, going out, ect. and managed to discipline myself into saving one third of my monthly income and placed it into a savings account.

So…what now?

By now I had a grip on this saving and budgeting thing. It was then time for me to take the plunge into the rather nerve wracking world of investing because the 2% interest on my savings account wasn’t going to cut it.

I began to dip my toe into a bit of stock research but I never felt confident to completely jump in, throw some cash in the ring and call it a day. After all I was certainly not qualified enough to know how not to lose money in the stock market. Stocks hold value whilst the business of choice is humming along, but unlike property which is a tangible asset, stock prices can be reduced to zero if a business fails.

With a little help from my (boy)friend

“Oh, I get by with a little help from my friends” or in my case, “boyfriend.” Not in a knight in shining armour kind of way, but in more of an eye opening sense. I knew that I wanted to invest but I had no idea where to start. My partner, a fellow commerce buddy that I met at a music festival, was lovely enough to point me in the right direction, giving me reading suggestions and ultimately the nudge to buy my first shares.

With a bit of logic and a “good gut feeling” I began to buy a small cluster of shares every month. It felt good, I was making money as opposed to losing it, and I somewhat felt like I was taking small steps towards my goal of passive income. I began to heavily lean on research tools such as the ASX Research Equities Scheme, where the majority of Australian stock broking firms publish their research and recommendations on high growth stocks. This brought me my greatest success, which led me to becoming too big for my own boots.

Crashing back down to earth

COVID-19 happened. Everything crashed. My stocks dropped in value by about 20%-30%. I panicked.

I did not panic sell. That was something that I had learned from the previous GFC – everything that goes down must come up again and vice versa.

In fact, market corrections like the COVID-19 induced one we are currently finding ourselves in offer fantastic opportunities to buy investments such as shares and property at a discounted price. In an attempt to not get too down in the dumps with my diving share portfolio, I decided to muscle up and try to get the most out of the current situation.

This led me to enlist the help of a professional portfolio manager, who I have come to trust and respect, that helps me with the research and execution of all of my trades.

As very few people can successfully time the market, I am taking a dollar average approach, whereby I constantly invest in my chosen stocks evenly over time, to reduce the impact of volatility on the overall purchase. This is just my approach, which seems to be working so far but I am also privy to what is going on in the market to make smart financial plays.

Having gone through this wild ride and developed my own approach to my finances, I now feel confident in my financial independence and ability to grow my passive income. I am in no way doing it perfect every time, but it is the little steps that count."