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A little something different for us all today.
Recently I’ve started up a new interview series, whereby I’ll be profiling a number of high profile Aussie FIRE and personal finance bloggers.
The thing with blogging is that it can get a bit lonely sometimes, what better way to cure this than to connect with other bloggers and showcase their talents too!
Esther from The Happiness Investher
First cab off the rank is Esther from The Happiness Investher.
PLEASE check her out (not literally, the blog I mean).
With the interview, it’s basically a questionnaire of… questions, whereby we really get into the nitty gritty of her finances and attitude towards money… ready?
Hey Esther! Where can people find you on the internet?
How old are you?
Do you have kids/family?
What area of the country do you live in?
One of the pricier capital cities in Australia
What is your current net worth?
Somewhere in the low-mid to mid 6 figures.
What are the main assets that make up your net worth (stocks, ETFs, real estate, business, home, superannuation, etc.) and any debt that offsets part of these?
Shares, ETFs, bonds (via ETFs), superannuation, cash
I am not currently leveraged in any way but this may change if I buy a property.
Did you pursue tertiary education (Uni, TAFE, post-grad etc) and if yes, what are they?
Yes, I have an honours degree in biomedical science and a PhD in pharmacology. I spent 8 years at uni and my friends joked that I was a perpetual student…
What is your current job?
I currently work at a global Pharmaceutical company in the health economics division.
What is your annual income?
I currently earn approximately $146,000 (inclusive of annual bonuses and superannuation) from my main job and approximately $5000 from my investment income.
How has your income performed over time. What was the starting salary of your first job, how did you grow your income (and what you did to make it grow), and where are you now?
When I was completing my PhD in my early-mid twenties, I received an annual tax-free scholarship stipend of $35,000 plus a $5000 travel allowance (gotta love tax-free earnings!).
When I graduated, my first full-time job at a health/medical consulting firm paid $77,000 a year. By my second year of full-time work, I was earning $108,000. My recent job change to a pharmaceutical company brought about a significant pay rise to $146,000. Therefore, from my first full-time job to my current job, I have been fortunate enough to experience a 90% increase to my salary in just over three years.
Part of the reason why I was able to escalate my pay so rapidly is because I was able to leverage a job offer from a competing consultant firm during my second year of full-time work to negotiate a sizeable pay rise, and it has continued from there. I knew early on that relying on annual salary increases would not be nearly as effective as a job change at bringing about a pay increase, so I was fairly proactive in that regard.
Would you recommend people to pursue the same career path? Would you choose a different job if you could go back?
I definitely didn’t pursue a career in science for the money, and it’s through a combination of hard work, specialisation, and serendipity that I fell into a fairly well-paying career. I would encourage any readers who are in the biomedical field including researchers, and especially PhD students, to diversify their career options- the world Is your oyster!
Would I choose a different job if I could go back? Probably not as I don’t generally like to live with regret however I have a pretty diverse range of interests (sometimes too diverse!) and may have enjoyed studying law or economics or something else finance-ey. Or maybe something random, like philosophy (it’s so fascinating!), before realising I would probably need a second degree to sustain my livelihood.
What tips do you have for others who want to grow their career-related income?
As mentioned in one of my previous answers, the biggest tip I have is that annual salary increases are not nearly as effective as a job change at bringing about a pay increase. So don’t be afraid to make that jump to expedite that salary escalation process!
What’s your work-life balance look like?
I would say my work-life balance is decent, especially in comparison to many other professionals like corporate lawyers where overtime is more an expectation than an exception, and medical professionals who work long shifts. Overall, I’m grateful for the remuneration I receive for the number of hours I put in and have enough time to run several side projects and enjoy my weekends!
Do you have any sources of income besides your career? If so, can you list them, how much you earn with each, and how you developed them?
My main source of income besides my main salary is my investment income, which totals approximately $5000 per year. I am actively trying to grow this income stream as I have come to appreciate the importance of passive income. I would also love for my blog to be an additional, albeit small, source of passive income too.
What is your (your family’s) annual spending?
I spend approximately 50% of my net income.
Can you break-down the main categories this spending relates to?
- Housing- 25%
- Utilities- 4%
- Transport- 3%
- Food- 6%
- Leisure/miscellaneous/discretionary spending- 10%
Do you have a budget? If so, how do you implement it?
I’m a bit of a meticulous budgeter in terms of tracking my spending (love a good spreadsheet!), but I normally work within general guidelines in terms of the percentage allocated to each spending category. When I first set up my budget, I followed the Barefoot Investor “3 bucket strategy” of having one “blow bucket” for essential expenses, a “splurge bucket” for medium to longer-term expenses, and “grow bucket” for investment.
What percentage of your gross income do you save and how has that changed over time?
I generally prefer to use my net income (post-tax, post-salary sacrifice) in the calculation of my savings rate. When over 37% of your gross income goes to the ATO, it seems to make more sense to calculate it that way…
My savings rate, rather than my spending rate, has generally increased in proportion to my salary increases, as I’m painstakingly cognisant of not succumbing to “lifestyle inflation”.
What is your favourite thing to splurge on?
I love travel, spending time with loved ones over a good meal, and watching a fancy musical here and there, because I think splurging on experiences is far more valuable than accumulating possessions.
What has been your investment strategy/philosophy?
I am definitely a long-term investor and plan to buy and hold low- to medium-risk investments for a minimum of 20 years. I am currently heavily invested in equities and have slowly but steadily built up my share portfolio, but have considered diversifying my portfolio by investing in property in the future whether it be through REITs or investment properties.
What has been your best investment?
If I answer this question purely from a ROI perspective, my best investment would be a sector ETF that tracks a cybersecurity index.
If I answer this from a (semi-obnoxious, my apologies!) philosophical perspective, my best investment would be in knowledge i.e. developing an interest in financial literacy and all things investing. I wholeheartedly stand behind the belief that investing in knowledge pays the best interest.
What has been your worst investment?
Touch wood- I haven’t had an investment per se that has lost any of its capital value, but that’s probably a combination of factors including the exorbitant amount of research I did prior to making my first investment, my low-medium risk investing approach, and the current unprecedented bull market.
I would actually say my “worst investment” is not investing time to learn about how best to invest when I was younger, and consequently keeping my savings in a bank account for probably way too long.
What’s been your overall return?
It hovers around the 20% mark.
How often do you monitor/review your portfolio?
I don’t have a set routine but I do dollar-cost average regularly into the market and will review my portfolio at least once a quarter.
How did you accumulate your net worth?
I don’t think I represent a particularly extraordinary case but it’s largely a combination of having a naturally frugal and savings-orientated disposition (I was told I was money-conscious kid and saved all my pocket money!), an intense curiosity for personal finance and investing, and a decent paying job.
What has been the biggest detractor to your net wealth?
The biggest detractor by far is not being exposed early enough to the importance of investing! I wish I had been introduced to investing during my late teens/early twenties but without family or friends that had significant interest or experience in investing, I didn’t start investing until my mid-twenties. I try not to think too much about the extra years of compounding interest that I lost out on.
What are you currently doing to maintain/grow your net worth?
At the risk of sounding like the world’s most boring investor, I think dollar cost averaging into low-fee index funds/ETFs (with one or two individual stocks just to keep it interesting) is a strategy that I will adopt in the long run to grow my net worth. As Warren Buffett says “the sharemarket is a mechanism for transferring wealth from the impatient to the patient” and while this strategy may be boring, research has shown that if you hold an index fund over the long term, adding new money every month, you are all but certain to outperform the vast majority of professional and individual investors alike (The Intelligent Investor, Benjamin Graham). I also ensure that I am well diversified by holding a portfolio of ETFs that covers the Australian, the US, European and Asian markets and defensive assets like bonds.
What money mistakes did you make that we can learn from?
Apart from not investing from a younger age, the biggest “money mistake” I think I’ve made doesn’t pertain necessarily to losing a monetary amount but rather a mindset I had regarding investing, which was a hurdle I had to overcome and I think most investors need to overcome in order to kickstart their investing journey. And that is their mindset towards the risk of investing.
Prior to committing to increasing my financial literacy and commencing my investing journey, like many people I believed the sharemarket was a “risky” endeavour that a) could result in losing all my money based on a poor investment decision, and b) something I would never understand enough about to begin. But when you realise that investing is not something anyone truly can master before they begin and is as much an emotional game as it is a financial commitment, you start to gain a more holistic understanding of what it means to be an investor. This is why I’m deeply curious about the field of behavioural economics because its taps into the psychology of investing, which is key to being a successful long-term investor.
Do you have a target net worth you are trying to attain for FIRE, will you quit working when you reach this?
I don’t necessarily subscribe to the FIRE movement perhaps as closely as many others in the FIRE community, but I do think it would be nice to reach a point where I work because I would like to not because I have to.
My end goal is to grow an investment portfolio that will generate enough passive income to cover the majority of my expenses but I haven’t necessarily stipulated an age at which I aspire for that to occur. Preferably before I’m old and frail though…
What are your retirement plans?
Nothing overly specific (it is over 20-30 years away after all!) but hopefully through a combination of salary sacrificing into superannuation and steady buiding up of my investment portfolio, I will have amassed a tidy nest egg to give me the freedom to live out my retirement without the fear of outliving my nest egg. Keeping it broad!
But for me, financial freedom is the ultimate goal.
How was your childhood? Was your family wealthy, middle class or low-income?
I grew up in a middle class household who was very averse to debt and equally risk-averse to investing money.
How did you learn about finances and at what age did you “get it”?
The importance of not living a debt-fuelled lifestyle was instilled in me from a young age (“If you live fake rich now, you’ll live real poor later”) but apart from that, I didn’t truly learn about the importance of budgeting, investing, and all those personal finance goodies until I moved out of home and across the country at the age of 25.
Who inspired you to excel in life? Who are your heroes?
I am very fortunate enough to be surrounded by many people who inspire me across many different facets of my life. My family and friends are my prevailing inspirations, but there are also other inspirational figures (authors, podcasters, business leaders etc) who I look to for guidance.
Because my blog The Happiness Investher covers investments beyond just financial investments, many of the blog posts pertain to investing in yourself and in others and are inspired by books I’ve read from some of my favourite authors on personal development.
How do you think differently than the average person when it comes to money?
Great question! I’m not sure that I necessarily “think differently” than the average person but I would say I probably have more of a vested interest and curiosity in personal finance and investing.
I truly believe that anyone (and everyone!) should start their investing journey and as young as possible, and feel quite passionately about raising awareness of the importance of investing to the younger generation (just ask all my gen Z friends, they’re probably sick to death of my investing rants!) because I wish it was something I was made aware of at their age.
Do you have any favourite money tools and resources you recommend (books, podcasts, apps etc)?
I’m an avid reader and self-professed bookworm. I try to read at least 2 books a month, not necessarily on financial investing but investing in the broader sense (personal development etc). Podcasts are also a fantastic way of consuming information on the go (e.g. while running at the gym. Hot tip: don’t read and run- tried that and crashed spectacularly off the treadmill…) and some of my favourite investing/finance podcasts include Equity Mates Investing Podcast and the She’s On The Money Podcast.
Not to shameless self-plug my blog again (apologies!), but I’ve written a post on the 3 must-read books to kickstart your financial future and another post on ways every tech-savvy millennial can get started in investing, which delves into some of the most handy finance apps. Some other great books apart from the 3 must-reads books include the seminal classic The Intelligent Investor by Benjamin Graham and Motivated Money by Peter Thornhill.
Do you give to charity? Why or why not? If you do, what percent of time/money do you give?
I don’t give regularly to a specific charity however I tithe regularly (10%) to the church I attend.
What does money mean to you? Should everyone pursue it?
There is a wonderful quote that goes “Rich is measured in money and wealth is measured in time” and to me, it absolutely epitomizes what money means to me.
It’s very easy, especially for those deeply immersed in the personal finance world, to equate their self-worth to their net worth. But for me, money represents freedom, not a nominal value. It endows you with the freedom to do what you want with your time and to live life on your own terms.
Finally, is there any advice you have for The Frugal Samurai readers regarding wealth accumulation?
Apologies if it’s not terribly practical advice but because I can’t resist getting a little philosophical, I would say don’t equate your self-worth to your net worth. Yes, it is important to increase your financial literacy and grow your investment portfolio, but as investor and author Peter Thornhill says “those who are not driven by the desire to be rich for the sake of it, but by the desire to use wealth to make a difference, are likely to lead more fulfilling lives”. So define your financial goals but define your WHY first.
Thanks for completing the questionnaire Esther! If you want to check out her blog, you can do so at The Happiness Investher.
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