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Speaker 1: Welcome to Sugar Mamma's Fireplay, the podcast where weirdnite your

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Speaker 1: financial independence, fuel your early retirement goals and dreams, and

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Speaker 1: empower you to build long term, sustainable financial freedom for

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Speaker 1: yourself and loved ones. I am your host financial planner,

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Speaker 1: Canna Campbell, and I'm a passionate advocate for true, authentic

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Speaker 1: financial freedom and independence. Whether you're just starting out on

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Speaker 1: your financial journey or you're refining your existing financial strategy,

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Speaker 1: this is the podcast that will inspire you, educate you,

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Speaker 1: and guide you towards a life of choice, security, and abundance.

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Speaker 1: So let's get started. So today's episode is a big one.

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Speaker 1: I am sharing a really important financial non negotiable rule

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Speaker 1: for retirement. I call this my sleep Well strategy, and

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Speaker 1: I will talk about this in a lot more detail

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Speaker 1: in my book Mindful Money, which of course I will

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Speaker 1: go on link in the podcast notes for you. But honestly,

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Speaker 1: if there is one piece of advice that I want

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Speaker 1: every single retire or future retiree to listen to, to understand,

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Speaker 1: and to embrace, it is this, Because yes, money does matter,

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Speaker 1: but also so does your peace of mind, your ability

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Speaker 1: to get a really good quality night's sleep and your

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Speaker 1: confidence in knowing that, no matter what the share market does,

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Speaker 1: your lifestyle, your retirement income, your independence are not under

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Speaker 1: threat ever. So today I'm going to be breaking it

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Speaker 1: all down for you exactly what the sleep well strategy is,

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Speaker 1: that is my sleep well strategy, why it is so

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Speaker 1: incredibly important to you, and how to put this into

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Speaker 1: practice in a realistic, practical way, and fact how this

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Speaker 1: really simple shift and addition to your financial strategy could

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Speaker 1: actually improve your long term retirement income, not just protect it.

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Speaker 1: All right, First up, what exactly is this sleep wealth

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Speaker 1: strategy of mine? Okay, let's go to the actual core

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Speaker 1: idea of this. So the sleep well strategy is simply this,

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Speaker 1: keep up to two years worth of your living expenses

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Speaker 1: in cash, completely separate from your emergency fund. This is

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Speaker 1: not emergency money. It is completely separate. And that essentially

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Speaker 1: is it so very very simple. But this is a

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Speaker 1: special separate buffer that exists purely to protect you from

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Speaker 1: ever having to sell your investments like your share portfolio,

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Speaker 1: your superannuation pension fund. When markets are down, they've had

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Speaker 1: their crash, they've had their correction, and people are panicking.

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Speaker 1: Now you might be thinking, all right, Okay, canna two

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Speaker 1: years in cash. That is two years worth of living

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Speaker 1: expenses in cash, And like, that's a lot of money

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Speaker 1: to me. And yes, I'm not going to deny that

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Speaker 1: it is. But it's not actually a cushion. It is

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Speaker 1: a safety net for you and your well being. Now,

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Speaker 1: there is one detailed reason as to why I recommend this.

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Speaker 1: You see, when there is a market crash or a

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Speaker 1: correction or a pullback or a panic, which inevitably there

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Speaker 1: will be, and there are obviously happening right now and

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Speaker 1: there are going to be plenty more in the future,

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Speaker 1: you're never put into a position where you need to panic.

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Speaker 1: You never have to necessarily sell or be forced to sell.

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Speaker 1: You never have to touch your long term investments and

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Speaker 1: risk having to cut off your passive income supply through

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Speaker 1: those juicy fat tax effective dividend income stream. You see,

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Speaker 1: by having this in place, you have the time, you

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Speaker 1: have the choice, you have the luxury to be able

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Speaker 1: to wait it out, sit on your hands and let

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Speaker 1: the market recover, which history shows it does. And we'll

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Speaker 1: keep talking about this. So what exactly is so wrong

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Speaker 1: with selling during a market crash, Well, it is probably

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Speaker 1: one of the worst things you could possibly do, and

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Speaker 1: nine times out of ten comes with massive regret. So

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Speaker 1: let's talk about what actually happens during market downturns. Now,

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Speaker 1: this is when people's emotions get out of hand. They

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Speaker 1: have these knee jerk reactions and they start acting in

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Speaker 1: a irrational way. It's the herd mentality and the media obviously,

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Speaker 1: and he adds fuel to this fire with these, you know,

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Speaker 1: dramatic headlines that sometimes aren't quite accurate or even correct,

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Speaker 1: and because of that, people panic. They look at their

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Speaker 1: investment portfolio value, you know, the account balance or the

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Speaker 1: portfolio value, and this includes investments and of course your

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Speaker 1: superannuation because that is another form of an investment portfolio,

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Speaker 1: and in particular retirees, when they do this, they think,

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Speaker 1: oh no, and they start to feel anxious and nauseous,

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Speaker 1: and their head starts spinning and they don't know what

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Speaker 1: to do, and they sometimes even end up going to

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Speaker 1: the wrong people for advice and they think, oh my gosh,

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Speaker 1: I'm losing money. I better sell now immediately, and I

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Speaker 1: can just cut my losses before it gets any worse.

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Speaker 1: And you know, you think what I mean, it's one

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Speaker 1: day's up, one day it's down. One days up, it's down,

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Speaker 1: down down? What do I do? And I can't live

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Speaker 1: life that feels so unstable and filled with volatility, and

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Speaker 1: they sell. But here's the thing. You haven't actually lost

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Speaker 1: anything unless you sell. It's just a paper loss. It's

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Speaker 1: not actually happened in reality. It hasn't been crystallized yet.

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Speaker 1: And the thing you need to remember is the price

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Speaker 1: of your portfolio does not equal the value. If I

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Speaker 1: have a million dollar share portfolio and it's paying me,

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Speaker 1: say fifty thousand dollars a year, and it's you know,

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Speaker 1: there's a market pullback and it's worth say eight hundred thousand,

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Speaker 1: Does that mean it's worth eight hundred thousand if it's

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Speaker 1: still paying me fifty thousand dollars a year. Not necessarily. Remember,

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Speaker 1: the share market is just a marketplace for people to

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Speaker 1: go in exchange things for what they value at that

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Speaker 1: point in time. It is never reflective of the value.

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Speaker 1: Kind of like that analogy where I talk about a

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Speaker 1: diamond you know that you might find in the street,

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Speaker 1: and you know you take it to find out what

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Speaker 1: it's worth. It doesn't necessarily mean that someone's offering you, say,

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Speaker 1: ten thousand dollars for that diamond, even though it's probably

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Speaker 1: worth about twenty doesn't mean that it's worth necessarily ten

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Speaker 1: thousand dollars. If it's a really good quality of diamond.

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Speaker 1: It's just particular value at that point in time. It's

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Speaker 1: just reflective as to what someone values it at. So

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Speaker 1: please always remember the share price does not necessarily equal

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Speaker 1: or reflect the value whatsoever, especially when you think about

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Speaker 1: those dividends it gives you. Now, what we do know

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Speaker 1: from decades of market data is this most markets recover.

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Speaker 1: It is just a matter of time. In fact, historically

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Speaker 1: most major share market crashes usually recover within about eighteen months.

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Speaker 1: So by keeping two years worth of expenses in cash

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Speaker 1: away from your emergency money completely separate, say in an

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Speaker 1: online savings accounts, or you're owning some interest as well,

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Speaker 1: you're giving yourself that time, time to wait it out,

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Speaker 1: time to breathe, time to sleep at night, knowing you

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Speaker 1: don't need to touch a single share because you can

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Speaker 1: actually live off your sleep well cash, if you need to. Now,

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Speaker 1: if I'm saying okay, it typically takes about eighteen months

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Speaker 1: for the market or to recover, why am I recommending

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Speaker 1: that you have two years worth of living expenses set aside.

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Speaker 1: Well one might cover you in a mild downturn, but

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Speaker 1: two years gives you a nice buffer. And of course

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Speaker 1: this is based on historical recovery periods and allows for

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Speaker 1: that extra six month margin of safety for you. Think

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Speaker 1: of it like this, if most market crashes recover within

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Speaker 1: eighteen months, and your two year sleep well strategy, that is,

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Speaker 1: your cash buffer, buys you time peace of mind without

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Speaker 1: forcing you into restrictive decision. Isn't that fantastic? Isn't that wise?

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Speaker 1: Isn't that an intelligent thing to do. It's like the

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Speaker 1: I guess financial equivalent of a weighted blanket. It helps

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Speaker 1: you sleep well, think clearly, and of course stay the course.

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Speaker 1: And because of those things, you also have a lot

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Speaker 1: more energy to really enjoy living your life and making

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Speaker 1: the most of your retirement, all the fruits of your

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Speaker 1: hard work and the lead up to retirement. So what

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Speaker 1: happens if you do use that money now? Of course

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Speaker 1: you need to replace it. If you do end up

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Speaker 1: dipping into your sleep well account, even for a shorteriod

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Speaker 1: of time, you've got to replace it. And that is,

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Speaker 1: of course, once things start to stabilize again and you're

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Speaker 1: in that particular situation. The sooner you start, obviously, the better.

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Speaker 1: Your sleep well strategy is not a one time setup.

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Speaker 1: It's actually a living, breathing part of your overall financial strategy,

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Speaker 1: and it's like an insurance against forced selling. And you

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Speaker 1: don't necessarily need to rebuild it overnight. There's no panic

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Speaker 1: to restock it. Just make sure you make it a

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Speaker 1: priority when it comes to looking at your income. You know,

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Speaker 1: your portfolios stabilized and you're getting those dividends back in

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Speaker 1: your pocket again. And a great strategy is to have

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Speaker 1: a regular automatic savings plan within your budget so that

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Speaker 1: you are making inroads in rebuilding that money should you

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Speaker 1: need to. Now, this is the magic of this sleepwell

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Speaker 1: strategy and that actually can enhance your financial situation. We're

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Speaker 1: going to talk about this in more detail, so please

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Speaker 1: bear with and this is really important when you think

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Speaker 1: about dividends, fully frank dividends with those wonderful tax effective benefits,

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Speaker 1: reinvest and long term capital growth and income. So, as

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Speaker 1: I said, this is the exciting part of the strategy

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Speaker 1: and how we can improve your financial income, your timent

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Speaker 1: income over the long run. So let me explain now,

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Speaker 1: because you don't actually have to sell anything during a

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Speaker 1: market crash. Because of this sleepwell strategy, instead, you're relying

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Speaker 1: off your cash buffer. It allows you to do something

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Speaker 1: very powerful, and that is with your investments, reinvest your dividends.

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Speaker 1: So say your portfolio is still generating income even in

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Speaker 1: a downturn. And for the record, most industrial companies, the supermarkets,

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Speaker 1: the banks, the retail businesses, pretty much anything that provides

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Speaker 1: a product or service typically do maintain their dividends. Yes,

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Speaker 1: at times they may need to cut the dividends, but

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Speaker 1: most companies do maintain some form of dividends, which is

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Speaker 1: why it's so important to have a diversified share portfolio.

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Speaker 1: So instead of actually drawing down those dividends for your

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Speaker 1: living expenses, you can actually reinvest them because you're living

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Speaker 1: off the cash supply that savings account. Instead of taking

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Speaker 1: those dividends to normally spend them like you previously would,

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Speaker 1: you actually use them to buy more shares in that

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Speaker 1: company during that downturn, which means ultimately you're buying shares

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Speaker 1: that are actually temporarily on sale. They're even better value

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Speaker 1: for money. You're buying the same income stream, but you're

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Speaker 1: actually buying it now at a discount. You're using your

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Speaker 1: dividends now to actually build your wealth and build your

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Speaker 1: long term growing passive income stream, So you're actually accumulating

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Speaker 1: more units, more shares in these high quality companies or ETFs,

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Speaker 1: or my preferred option is listed investment companies at much

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Speaker 1: lower prices, which, as I've explained in turns, helps you

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Speaker 1: generate more dividends for your future. Obviously, over time that

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Speaker 1: can significantly increase your retirement income and help your money

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Speaker 1: last so much longer. In fact, it can actually helped

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Speaker 1: build your wealth if you're someone who's actually able to

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Speaker 1: live off less than what you earn in dividends, because

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Speaker 1: you've adding obviously an element of reinvesting on top of

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Speaker 1: draking out that income. So this is actually not about

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Speaker 1: just protecting your lifestyle but actually potentially if you're in

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Speaker 1: a situation where you can improve it. Now you might

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Speaker 1: be thinking, Okay, this sounds really smart, this sounds really wise,

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Speaker 1: But why guy, just maybe keep living off those dividends

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Speaker 1: if the companies are still paying them and use that

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Speaker 1: cash to buy more during these particular downturns. Yes, you

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Speaker 1: most certainly can. Obviously, it comes down to personal choice,

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Speaker 1: and you need to obviously get professional advice before you

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Speaker 1: start making any decisions, and you want to make sure

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Speaker 1: that your portfolio is diversified. But yes, this essentially works

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Speaker 1: in exactly the same way. If you're in a position

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Speaker 1: where you continue on living off the dividends without a problem,

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Speaker 1: and you've got this two year's sleep well strategy, you

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Speaker 1: can use that, but obviously be careful not to use

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Speaker 1: all of that money necessarily one big hit. You might

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Speaker 1: want to look at using a dollar cost averaging strategy

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Speaker 1: where you could invest sate of that money ten thousand

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Speaker 1: dollars per month to buy more shares or perhaps in

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Speaker 1: chunks of say every quarter, depending on what is going

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Speaker 1: on the market. And obviously professional advice, but it does

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Speaker 1: actually allow you to also have more control than say

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Speaker 1: an automatic dividend reinvestment plan. The point is it gives

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Speaker 1: you that security in never being forced to sell anything

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Speaker 1: within your portfolio and never be in a position where

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Speaker 1: you actually have to cut off your financial freedom, your

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Speaker 1: financial independence, your passive income supply. So let's be clear

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Speaker 1: now about what your sleep well strategy is definitely not now.

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Speaker 1: It is obviously not an emergency money fund. This sleep

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Speaker 1: well strategy is completely separate from your emergency money fund

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Speaker 1: when obviously life thows are those curveballs which no one

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Speaker 1: is immune from or and they are sometimes inevitable. It's

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Speaker 1: not about being overly conservative or trying to avoid investing.

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Speaker 1: This strategy only works if you're investing and you're planning

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Speaker 1: to stay ahead. It is most definitely not a set

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Speaker 1: and forget strategy. You need to review your sleep well

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Speaker 1: fund at least once or twice a year, making sure

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Speaker 1: that it actually still covers your true living expenses. And

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Speaker 1: of course that is two years worth of true living expenses,

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Speaker 1: so if you have a change in lifestyle, you may

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Speaker 1: need to assess or perhaps even reduce that particular money. Now,

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Speaker 1: who is this strategy directed to? Who am I really

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Speaker 1: talking to in this particular episode. Obviously everybody should know

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Speaker 1: about this so that you can prepare for it an

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Speaker 1: ideally you know, plan and advance for it. But in

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Speaker 1: particular this is the people that need to be listening

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Speaker 1: to us and thinking about this and hopefully applying this

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Speaker 1: are retirees. Retirees who are drawing an income from their

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Speaker 1: superannuational pension fund or share portfolio already, and of course

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Speaker 1: pre retirees. If you're in you know, thinking about retirement

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Speaker 1: and approaching it, and say the next five to ten years,

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Speaker 1: start building up your sleep well at night's strategy. The

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Speaker 1: sooner they're better, the easier, and of course for anyone

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Speaker 1: who wants true financial peace of mind during market volatility,

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Speaker 1: I received a DM about a month ago from a

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Speaker 1: lady saying, you know, should I be selling my share

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Speaker 1: port folio with everything that's going on right now? And

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Speaker 1: I knew this woman said. I was like, well, go

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Speaker 1: back to your goals. Your goals has always been as

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Speaker 1: far as I'm concerned about buying and building passive income

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Speaker 1: stream and you're having your independence, you've made such amazing progress.

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Speaker 1: Perhaps if you're feeling uncomfortable, start building up a cash

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Speaker 1: reserve that you can use to potentially add more to

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Speaker 1: this portfolio. Of course, this was under the premise of

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Speaker 1: general advice, and it was a sort of offline conversation

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Speaker 1: between two friends as such. And I will even say myself,

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Speaker 1: as I look at our financial strategy and our fire

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Speaker 1: goal to build up two hundred thousand dollars you're in

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Speaker 1: passive income. When I can see that we're getting there,

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Speaker 1: I will most definitely start building up our cash flow supply.

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Speaker 1: For this particular strategy, but I know that the sooner

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Speaker 1: that I start, it's going to be easier. If it's

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Speaker 1: only with a thousand dollars to kick stuff, that account

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Speaker 1: is really valuable. Now for anyone that is early on

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Speaker 1: your fire journey and you like the sound of this strategy,

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Speaker 1: you may want to find that sweet spot of balance

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Speaker 1: between building your passive income and of course making sure

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Speaker 1: that you have this separate savings built up in the side,

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Speaker 1: which is why it's important to get advice. But only

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Speaker 1: you will know when you're ready to start building up

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Speaker 1: this fund. But as a minimum, I would say five

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Speaker 1: to ten years. At least start something, even if it's only,

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Speaker 1: as I said, one thousand dollars or five thousand dollars.

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Speaker 1: Always know what you're going to need so that you

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Speaker 1: can mindfully plan and prepare in advance. It's one of

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Speaker 1: those rare financial ideas that offers emotional and mathematical value

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Speaker 1: in your life, and it reduces obviously the stress and

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Speaker 1: also boost your future income and wealth as well. Now,

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Speaker 1: as I said, peace of mind is priceless. It really is,

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Speaker 1: and that's why I call it a sleep well strategy

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Speaker 1: because it's exactly what it gives you. It's not flashy,

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Speaker 1: it's not complicated, it's not sophisticated, it's really very simple

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Speaker 1: and elementary, and at the end of the day, it's

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Speaker 1: one of the smartest things you can do to protect

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Speaker 1: your income, your investments, and of course your sense of

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Speaker 1: security both now and well into retirement. So if you

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Speaker 1: haven't already, take some time this week to think about

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Speaker 1: and calculate what actually are your annual living expenses right

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Speaker 1: now and what they might be in retirement or what

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Speaker 1: they are in retirement. Obviously multiply it by two really easy,

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Speaker 1: and consider how much you can actually put towards building

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Speaker 1: up this fund to kickstart the process, what you can

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Speaker 1: afford in your budget to slowly and start building up

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Speaker 1: this as quickly as possible. And of course where you're sitting,

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Speaker 1: what income you've got coming in from your income stream

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Speaker 1: for retirement, from shares, from investment properties and so forth,

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Speaker 1: and make sure that you put that money into a

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Speaker 1: separate savings account away from emergency money, and nickname it

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Speaker 1: my sleep Well Strategy savings account. So, whether you're ten

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Speaker 1: years away from retirement or already enjoying your financial freedom,

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Speaker 1: this sleep Well strategy is a gift to give yourself

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Speaker 1: and your future self. Now, that is pretty much it

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Speaker 1: for today's episode on Sugar Mama's Fireplay. I really hope

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Speaker 1: that you're feeling inspired, empowered, and you are ready to

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Speaker 1: take action on your financial journey to independence. If you've

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Speaker 1: enjoyed this episode, please share it with someone who could

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Speaker 1: benefit from listening to this advice from me. A reminder,

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Speaker 1: I'm a financial planner, not a influencer. And of course,

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Speaker 1: don't forget to subscribe so that you never miss a show.

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Speaker 1: I publish an episode every Monday morning at five am.

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Speaker 1: I am here for you, holding your hand every single day,

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Speaker 1: and I believe in you and what you're working on

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Speaker 1: achieving now. In the meantime, please keep learning, keep growing,

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Speaker 1: and most importantly, keep that financial fire burning right. I'll

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Speaker 1: see you next time. Chow for now,