All in ETFs
My inbox is cluttered with hundreds of different threads of conversations, which in turn means I struggled to find a true focus for a blog post this week. But I often think I’m receiving and sending out some real wisdom, and it's a shame it never reaches a broader audience. So, today, I’ve scrolled back through my inbox from the last week or two and pulled out a few threads from some emails I’ve received.
In a recent blog post, I rebalanced our investment portfolio; this time, I’m rebalancing my life. I resigned from my PAYE job. I’m another step closer to early retirement, and I’m VERY excited about it! I always looked forward to working on Wednesday and Thursday each week, and deciding to leave a job I enjoy, plus giving up $20,000 a year, has been challenging.
I’ve got a super short blog post for you this week where I am answering a question that is often asked: What is an imputation credit? If you are a share investor (including ETFs), you will pay tax at your personal tax rate on any dividend income that you receive. You must also be aware of any tax credits available to you due to your dividend income. These are called Imputation Credits, and you can use them to reduce the overall income tax you pay.
In August, I made a significant change to our investment mix. I sold all $103,000 of our Smartshares NZ Top 50 ETF (FNZ). This change ties in with all the other tweaks I’ve made over the years, where I have been progressively refining how we invest and setting ourselves up for future growth. Year after year, our mix changed as I learned and understood more, so this recent change is part of this evolution. If I were to use investment speak, I’d say I have ‘rebalanced my portfolio’.
My latest bright idea was for our whānau of three to spend the month of July earning more money while spending less of it. Call it a Financial Reset. Why? When the general societal vibe is that we are all in a rough state economically, it is easy for an individual to feel powerless. Although optimistic by nature, I’m not immune to this feeling of gloom. But instead of accepting that we are in a financial crisis, I’d prefer to take the bull by the horns and own our situation.
It’s standard for me to get at least one blunt email saying I’m wrong about a financial decision or purchase I’ve made on behalf of my whānau. Generally, the reasoning given will be based on one aspect, often a technical math issue, ignoring all the other points I mentioned. I used to panic that they might be right and that I might have this money stuff entirely and utterly wrong. But I no longer do. Instead, I take their comments with a grain of salt and consider that it’s probably them who are wrong. Although it takes time, often I’ll research their argument and find that they are.
A year ago, I published a blog post titled “We Sold Some Investments: Putting our version of the 4% Rule to the test!” To cut to the chase, we’ve done it again. Having read about The 4% Rule for years and met many people who had retired early and were using it, back in 2023, we decided that we were not yet ready to retire, but pulling some income off our investments would improve our lives at that time. Finding more available cash without working more hours would allow us to do more of the things we wanted to do.
Congratulations, you have made it to the final blog post in this series of six: INVESTING. Investing can be incredibly complex, but I found a way to simplify it. I used to feel overwhelmed by the options available, but now I don't. I’m hoping to help you feel the same way. But still, this is one of the most challenging blog posts I have EVER written. Condensing “investing” into a single document is no easy feat. The Happy Saver was born out of my search for information about what I could invest our money in. It took me years to arrive at our current strategy, which combines KiwiSaver and ETF investments. Ultimately, I finally found THE perfect information, which I want to share today.
A super quick blog post this week because I thought you might find it interesting. My last blog post, Share Market Shocker, shared that our investments had dropped $25,000 between August and October 2023. I said I’d give you an update in a year. Well, just to show how fast and volatile the share markets are, it's only been three weeks, but I have an update for you. The point of this post is to share how comfortable Jonny and I feel with these fluctuations.
