Ideal Invest/Savings/Spend Ratio + Investment Tips

Lthepriceisright on 14/01/2019 - 02:48

Hi all!

Let me know if this has previously been answered/discussed so I can take this down and have a look at that thread (I did a quick search and didn't see any though)!

I'm currently a student living at home (so no huge financial obligations yet) and looking for a full time job.

I know I'm probably getting a bit ahead of myself but what is a decent ratio to set myself up right for the future but not limit myself on enjoyment (love travel!). I think I'm going to be staying with the parents for another 2 years at least (personal circumstance reasons) so i think I should really take advantage of no rent/mortgage/bills but full time pay while I can.

Have worked casual jobs here and there to support my spending and travelling since graduating HS and was actually decent at saving despite only not really having a proper set out saving plan lol. But I have a decent interest rate on my savings so building up a rainy day fund and shoving a fair chunk into savings isn't that bad in terms of losing value on my money and staying on top of inflation. Have a few shares too. Pretty financially literate.

I'm thinking for invest/savings/spending to be around 60:20:20. Assume 50-60k/year.

spending = everyday stuff, mobile phone bill, maybe contribute a bit to the fam (though not needed - family comfortable financially)
savings = rainy day fund, future rent/deposit cushion, future travel fund
invest = shares (60-70% growth and 30% defensive), looking into indexs and maybe bonds.

With excess from spending, going into savings and invest maybe 50:50.

Not considering a financial adviser right now as I don't see the 2-3k as being worth it with the amount of money I have. Also lol Dover, FASEA update drama, and royal commission stuff so my trust is pretty low until I've sussed out a decent adviser. Maybe in a few years.

What do you reckon my ratio should be, things to consider, and any investment tips?

Financial

Comments

  • mskeggs on 14/01/2019 - 06:10
    +2

    Ratio sounds good.
    Family would be likely to value some of your time around the farm much higher than cash. “Dad, i’ve got a day free to help out with some fencing” would be worth gold.
    I would skip the defensive allocation at your age. Just keep pouring into growth.
    So what if a GFC wipes out 50% now, you have plenty of time to wait out the recovery, and every cent you contribute when prices are low buys more.

    It won’t be popular here, but if you put a little extra into super, the long period ahead of low tax growth for you will pay off when you retire. But that money is effectively gone for 40 years.

    • thepriceisright on 14/01/2019 - 09:49

      Thanks for your contribution :)

      You're definitely not wrong about the defensive not being necessary at my age. I might tweak it to be even more growth focussed. But the reason I chose to even have defensive was a. I look into some pretty speculative stuff like potstocks which could have no payout at all. And b. Just a psychological thing honestly. The time that I'll need to put into allocating 50%+ of my wage into investments needs some reward. Dividends from the largecaps will help that.

      Good point with family time and super though. In terms of salary sacrificing into super. Do all employers do that? I know salary packaging where you sacrifice to pay HECS and other loans isn't available everywhere. And when you do that the employer can take a cut of what they save you in tax.

  • pantsparty on 14/01/2019 - 07:34

    Read the Barefoot Investor for some good tips including what ratios what save.

    • thepriceisright on 14/01/2019 - 09:52

      Yeah I should really give that cult a proper chance. Didn't know it actually mentioned ratio though, my impression of it was that it just discussed choosing super and high interest savings, and labelling your cards lol.

  • TheBilly on 14/01/2019 - 08:34
    +1

    I got told it had to be 57% spend 43% save. If you get it wrong you could have a really rough time otherwise so you have to be careful. For example, if you've only spent 52% for the week you should find something to fill the 5% just in case.

    • thepriceisright on 14/01/2019 - 09:40

      That's… Very specific. Do you know if there was a reason in particular that you have to spend that much per week. Is it something to do with credit rating? Though saving has to be more appreciated when asking for a loan surely?

      • zonra on 14/01/2019 - 10:33
        +3

        Go to My Account -> Settings then turn “Sarcasm Font” on.

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