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Is doing nothing acceptable?
Old 08-23-2013, 10:54 AM   #1
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Is doing nothing acceptable?

The last time I posted on here I was gung ho to retire early. I have health problems that may or may not force early retirement. I am 40, have about 100k in savings, 60k in superannuation. No house, no dependents, own my car outright. No debts. I am currently working as a training doctor in Australia and specializing with 70hr+/week + massive study requirements. The program is very draining. I find I have no time to come up with intelligent strategies for retirement or investing. I have salary sacrificed the maximum 25k into superannuation this year. I put my money in an account earning 4-5%. I take advantage of a few perks like a meals and entertainment card (dining out is taken off pre tax dollars) I try to live well below my means. ................ There is an upcoming election. The Aussie dollar is loosing value against US$. Interest rates have been lowered. There is a housing bubble here but the government repeatedly does things like small grants and other stimuli to get people to buy into the market. Many people see a recession coming since this country has relied on the mining industry for too long. I feel like the investment of time and energy into my training is currently more important than spending time working out what shares to buy or how to get into the housing market. I realize that after taxes, that 5% I am earning is basically 3% so just keeping up with inflation. I have 2 more years of training and think that my current strategy isn't going to cause me to loose years of retirement but am I wrong with this thinking?
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Old 08-23-2013, 11:08 AM   #2
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G'Day Dr Popeye,

You are correct, you need to complete your training as it will assist you later. You are correct to continue to put the maximum into your superannuation (retirement plan). You are also correct that you want to go on 'autopilot' for your investments.

For the $100K, I assume this is money outside your superannuation. In that case you will want to invest in Index mutual funds. Because you believe you may be forced to stop working early due to health concerns you will want to split your investment into an index fund of stocks and an index fund of bonds (50-50). You can do this with two funds: a stock fund of the Australian market, and a bond fund of the Australian market. Any earnings on these funds should be automatically re-invested.

If you believe there a bubble about to break, the equities will lose value, while the bonds will increase in value. As the economy returns to normal, your equities will grow rapidly covering losses you incurred in prior years.

The good news is that you can do this with any of the American stock broker firms: Schwab, Fidelity, T Rowe Price. Or you can deal directly with Vangard. All operate in Oz. Do a search on "Australian Index Mutual Funds" for a list of sites you can explore and phone numbers you can call.

-- Rita
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Old 08-23-2013, 11:08 AM   #3
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A few observations:
You have a deeply country specific view of investing.
You are very conservative.
You worry a lot about the near term concerns that are probably well known to investors already.

My speculation:
You would like to be confirmed in your current investment choices.

From my USA perspective (sorry I'm going to be brief and somewhat blunt ):
You need some percentage of your money in growth for the long term.
I would suggest at least 50% in a broad international index fund as a starter.
Or find an investment advisor like you might get at Vanguard (available in Australia?) and just go with a very simple diversified portfolio.
Whatever portfolio you hold should be something you can buy-hold for the long term.
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Old 08-23-2013, 11:19 AM   #4
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I'll hold off on putting in my 2 cents as to how I think you should be investing, as I think there is plenty of information available online for you to be able to make an informed decision when you do have the time to sit down and do some reading. However, I think you've taken the first, most important step, by saving a significant amount of your income. When you do have the time to figure out an investment strategy, you'll have a good sum of money already there.

I'd say that by LBYM and putting all that money away, you're already on the right track and yes, I'd agree that concentrating on your training is job #1 right now.

Well done on what you have so far, and best of luck with the training!
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Old 08-23-2013, 11:20 AM   #5
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Let me see if I am reading your post correctly...


You are 40 now... but right now are training to become a doctor

You are already tired of the workload and want to retire


If so, then why did you start to become a doctor Seems very shortsighted to me.... I would try and think 10 to 20 years ahead when making a career decision.... about 10 years ago I thought about studying to become a lawyer, but then decided I would not be one long enough for the effort that I would need to put in...


If my reading is wrong, please correct me on what I am missing...
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Old 08-23-2013, 11:39 AM   #6
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Texas Proud, You are probably missing the part about my health problems. This is the crux of the matter. I need to plan for early retirement because it might be forced. I might get away with working for 25 years but could also not make it 10. That's the nature of my disorder. Lbscal, I don't need confirmation that I am doing the right thing since that would be a waste of time. I do like the suggestion of internationally indexed funds as a few people have suggested. My view is that the US might be recovering but Aus is about to have a recession. I could put 90k in such an investment right away and then forget about it. I realized the other day that my 5% interest is really 3% or less after taxes so essentially keeping up with inflation and earning nothing.
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Old 08-23-2013, 11:52 AM   #7
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Sorry about the "speculative" comment, most of us are just human and like confirmation. Especially me.

I think because of your unique situation and the need to put all your efforts into your training, you need help that cannot be fully found here. So an advisor of the sort Vanguard might offer, somewhat cookie cutter but diversified and in your interests (not advisors) only, is probably the way to go. You basically just need to fix an AA and then go internationally diversified since Australia is a great country but only a small specialized part of the world economy. Stick with low expense ratio, probably indexed funds for the long haul.
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Old 08-23-2013, 12:04 PM   #8
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Dr Popeye, have you checked out the Australian Medical Association's Wealth Direct tool? Sounds like it might at least provide some analytic capability. I note that you need an account with Macquarie Financial as well as an AMA membership.

https://ama.com.au/wealthdirect-0
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Old 08-23-2013, 02:40 PM   #9
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Quote:
Originally Posted by dr_popeye View Post
Texas Proud, You are probably missing the part about my health problems. This is the crux of the matter. I need to plan for early retirement because it might be forced. I might get away with working for 25 years but could also not make it 10. That's the nature of my disorder. Lbscal, I don't need confirmation that I am doing the right thing since that would be a waste of time. I do like the suggestion of internationally indexed funds as a few people have suggested. My view is that the US might be recovering but Aus is about to have a recession. I could put 90k in such an investment right away and then forget about it. I realized the other day that my 5% interest is really 3% or less after taxes so essentially keeping up with inflation and earning nothing.

Yes, I saw that.... so this means that the health problems have come about after you made the decision for this career.... (was going to say change of career, but you never said you did change)....


If you are going to be forced out because of health, do you have disability insurance A number of people in larger corps have this as an important part of their insurance package... Also, does you gvmt pay some kind of disability I know that SS does pay.... not a lot, mind you, but there is a disability component to SS...

Either way, I hope that it is not forced, but a decision that you make on your own timetable...

Can't help much on investing as I do not know what is available there.... but I would vote on doing as much international as you can... the Aussie economy is small in comparison...
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