Savings rate

I am naturally a saver, it might be that the the eight years as a poor student have a part to play. As a medical student we had about 32 contact hours in lectures/tutorials. Outside of that there was plenty of study to do. Whatever work I did I could only manage up to 20hours a week. As a result I had to learn to make the little income I had go a long way. When I became a junior doctor I was mindful that I should not live the life of a poor student but was well aware that being a migrant in Australia I had to save and build my own wealth. Whilst I had never sat down to calculate my savings rate prior to February 2021, I on average saved 40-50% of my take home income. Tax returns, fringe benefits payments were directed to savings, part of my pay was paid directly into online saving account. Whilst my savings rate was excellent my investment rate was very low. I initially channelled my savings to buy a car for cash in 2013, then buy a house with a 30% deposit in 2018.

When I sat down in February of 2021 to calculate my networth I was very “house rich” but asset poor. I had $30 000 in shares, $98 000 in superannuation, $17 000 in cash (9K emerg fund, 5K holiday,3K home reno) and about $240 000 in the home loan redraw.

Going forward whatever I was savings had to be directly invested into Index Funds/Exchange traded Funds.

*Savings rate = investment rate

*Save 50% = invest 50% into income producing assets

*Do not count house into net worth (it does not bring me an income)