Seeing former colleagues blow hefty pay packets made Jamie Allen swing the other direction, writes Sylvia Pennington.
Discovering Scott Pape, the personal finance guru better known as the Barefoot Investor, while on deployment overseas, inspired 29-year-old Jamie Allen to embark on a strategy of wealth building via property, shares and superannuation.
An aircraft engineer who joined the Australian Defence Force as a 21-year-old apprentice in 2009, Allen’s CV includes six years in the services and two summers at the South Pole, where he managed an airfield for the Australian Antarctic division, a branch of the Department of the Environment and Energy. Now Brisbane-based, he works as an operations controller for a commercial airline.
The past three years have seen him amass a deposit for his first property, an apartment in the inner-city suburb of New Farm purchased in early 2016, and start investing directly in shares via his superannuation account.
“I really got into the Barefoot Investor’s columns and Facebook posts when I was overseas with the military,” Allen says. “I saw lots of people around me doing the opposite of what he would advise – young guys who would go on a tour and make $20,000 or $30,000 and then they’d go home and spend it all on a car.”
Rather than follow them down the ‘splash-the-cash’ route, Allen formed his own ‘club’ – an informal group of money-conscious Millennials who wanted to learn how to make their hard-earned cash work harder for them.
“It started out with just me and then some of my friends got involved and now there are quite a few of us who discuss things and work on them together and give each other different ideas about managing our money,” he says.
“I’d say there’d be 20 or 30 people around the place I’ve gotten interested in investing in shares and getting their super sorted. Once you break the ice, people get excited and they want to talk about it. It’s always been a taboo, talking about money with friends and family, but usually it’s the root of everyone’s problems.”
The average Australian aged 25 to 29 had a mean superannuation balance of $16,441 in 2013-14, according to The Association of Superannuation Funds of Australia. For those aged 30 to 34, the figure was $30,937.
Australian servicemen and women have access to a defined-benefits super scheme but may roll only their own contributions over into an alternative fund upon leaving the military. The balance rises with the consumer price index and cannot be accessed until retirement age is reached.
After his discharge, Allen rolled his contributions into a fund which offers competitive fees and a facility whereby members are able to invest in shares of their own choosing, in minimum parcels of $2000.
Educating himself about share trading and the market has been part of the journey and a worthwhile exercise, given its potential to offer double-figure returns in the long term, Allen says.
“Whether you’re doing it with your super or with other savings, you need to know what you’re investing in,” he says. “You can’t go off what someone told you at the pub. You should feel confident what you’re buying is worth it, if you’re putting your money in.”
Get sorted, make progress
ANZ adviser and fellow Millennial Daniel Thompson says Allen’s hands-on, growth-oriented approach is a good one for under-35s who want to make sure they retire with the maximum, three decades hence.
“Even if there’s a crash or market downturn, you have plenty of time to rebuild your balance at that age,” Thompson says.
“It’s not until a bit later in life that people should be thinking about easing into a more defensive strategy, with a greater focus on cash and conservative investments.”
Getting your super sorted makes sound sense, particularly for today’s youngsters, for whom owning their own home is no longer the given it once was, Allen adds.
“A lot of people don’t really know where their super’s at and hold multiple accounts but if you can’t afford to buy a property then you’re not getting that capital gain so it’s essential your retirement money is in order,” he says.
“There’s a lot of young people who say, ‘I don’t have to worry about that at the moment’ or they’ve got four different super accounts that are getting whittled away by fees or the money’s not invested as well as it could be but they don’t seem too fussed about it. Small decisions you make today can be worth $100,000 or more in retirement.”
Based on a personal story. Name has been changed to protect his identity.