20 y/o student in Auckland - is my financial strategy optimal?
Hey everyone! Would love a sanity check on my financial strategy, and I'd really appreciate any feedback from people who know more than me.
Background:
- 20 years old, living with parents. Majority of living costs is covered by parents.
- Currently studying at UoA
- Working part time around 20 hours per week
- ~$3.7k in Kiwisaver (I just aim to max govt contributions each year)
- ~$10k invested
Income breakdown:
- Wages: ~$470/week
- StudyLink living costs, course fees and course related costs loan: averages to $413/week
- Total: $883/week
Expenses:
- Food: $50/week
- Life/Shopping: $100/week
- Car Expenses: $100/week
- Total: $250/week
Investing strategy:
I'm very grateful to be in a position where my parents are covering my course fees. So I'm essentially using all the money I get from StudyLink and putting it towards investments.
Since my student loan is interest free, I'm essentially borrowing money for free and putting it to work in investments. Over time, inflation means the real value of what I owe actually decreases, so I'm getting paid to borrow. Repayments are also automatic, so 12% of every dollar above the threshold gets deducted from my salary automatically, and the repayment scales with my income rather than being a fixed burden.
I recently moved $10k into the Foundation Series Total World Fund as I understand that it is the best fund to invest my money in long-term due to low fees and favourable PIE tax rules. However, I am open to feedback on fund selection.
With my current income/expenses I'm able to put $2.7k every month into investments, which as of now only consists of the Total World Fund I mentioned. So at the start of every month I just take however much I have left in my account after expenses and put it into the fund.
I don't keep a savings account since if anything financially catastrophic were to happen, I have my parents as a safety net. Instead the money I would have kept as savings is instead being put to use in investments. I do however keep a 1k buffer in my checking account in the event I need to make a large purchase that the $100 per week budget doesn't allow for.
My main concern is that I have roughly 1.5 years of study left, and this current strategy is heavily reliant on the income I'm getting from StudyLink. So for me to keep this strategy up I'll need to secure a post-grad role.
Questions:
Is the Foundation Series Total World Fund the most optimal fund to make the most out of compound investing? We are talking probably a 40+ year timeline, or until I retire.
Anything else I should be investing in (i.e. individual stocks, crypto)? I kind of just want to set and forget my investments, but if there's anything specific that's worthwhile let me know.
Any assumptions I have about my current strategy that are actually wrong or more nuanced than I think?
Anything else I should be doing given my current position that I'm not doing?
Thanks so much in advance and wishing you the best on your financial journeys!