Meet Nathan: The investor that loves it when the market gets torched

Nathan is one of the many followers of the FIRE movement (Financial Independence, Retire Early), an ethos that turns its back on mass consumerism, and instead encourages its disciples to live simply, save as much as possible, and invest these savings for an early retirement.  

"It just speaks to you about the whole hamster wheel of working life. Instead, it's about digging down to what's really important. It's about stopping all this consumerism and instead buying your freedom," he explains. 

"Consume less now and then you don't have to work so hard. That doesn't mean you don't work. If you find something that's awesome and you can make money from it that's great. But everyone would rather be doing a passion project rather than working for money in a job that they are not passionate about." 

Perhaps unsurprisingly then, Nathan recently decided to leave his 28-year-long career in accounting to start his own recruitment business - a passion project which has already quelched his thirst for learning and experiencing new things. 

And while the first question he asks his prospective clients is, 'Where are you at in life and what's important?' Surprisingly, they often struggle to answer. But for Nathan, it's simple. The most important thing in his life is his husband, Maikol, and their health. 

"So many people are on that hamster wheel. And that's ok. I was on that wheel for an enormous amount of time - I started working when I was 18 and studied at night," he says.

"But what Maikol and I want to do is have the passive income to make sure that we are living a really cool, comfortable life. That's success to me. That's nirvana. Success is having the ability to choose how to use my own time." 

In this wire, you'll learn about some of the ETFs and stocks that are helping Nathan fund his early retirement, the lessons he has learnt from 29 years in markets, as well as his enviable plans for living his life on his own terms. 

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Livewire investor profile

• Name: Nathan Thomas
• Age: 47
• Employment status: Self-employed (very recently)
• Years investing: 29
• Investment goals: FIRE. We want to grow our investments to a point where we can live off the dividends so that work becomes optional by 50. 
• Products used: ETFs, Individual Equities, LICs. 
• Biggest portfolio holding: BetaShares Australia 200 ETF (ASX: A200)

1. How old are you and how long have you been investing?

I am 47 years old and bought my first shares when I was 18, so I’ve been investing for 29 years.  I grew up in Southwest Sydney, in Smithfield, and everyone there was a tradie. My dad was a plumber - he's a smart guy, but he was never good with money. So I always knew I wanted to be good with money and invest at a young age. 

When I was a teenager my father took me to an open day at the ASX. They still had the options trading floor operating at the time. From that day onwards I wanted to learn everything there was to know about shares and growing my wealth. I picked up so many brochures that day and just devoured the contents. I couldn’t wait to start saving and buying shares.

I purchased my first shares when I was 18 years old. It was a LIC called Greenchip Investments. They were a penny stock and had more cash than their market cap. It was a no-brainer for me but the market didn’t seem to think so and I eventually exited at the same price I entered. The classic LIC at a discount to its NTA which never closed the gap.

My next stock was Freedom Furniture (delisted) which I traded a few times. And I started to grow my portfolio over time. I used to get the Deutsche Bank weekly stock digest in the mail. I learned quickly that stockbroker stock picks were not very accurate and I was best to trust my own instincts.

I would often sell my winners once they went up 30%. Now I’m a more cautious and long-term investor. I invest more heavily in ETFs to reduce individual stock risk and get broader diversification and international exposure. As I’m still in the accumulation phase, I love a good red day on the markets. I get excited when stocks fall as I want more opportunities to buy.

2. What is your objective from investing? 

I’m very much into the FIRE movement. I want to make sure we have enough money invested so we can live off the dividend income and then work becomes optional. Reading Mr Money Mustache’s blog changed my whole outlook on life. A fantastic read. 

Cut out excess consumption, have a high savings rate and invest the rest - a simple strategy to retire early.

I’m currently working but after 28 years in accounting roles up to being the CFO of a listed business, I’ve just left to start my own business recruiting accountants. I needed a change and I could see a huge opportunity in the recruitment market. 

Almost all accounting recruiters have no understanding of accounting and the roles they are recruiting for. That blows my mind and makes no sense to me. I want to lift the bar in the accounting recruitment space and help my clients secure awesome accounting talent and with my background, I know a good accountant from a bad one. Being financially secure has given me the opportunity to make this change in my career. 

3. What products do you use to execute your strategy?

I have used superannuation to grow my wealth in a tax-effective manner. After I paid off my first mortgage in my early 30s, I used to salary sacrifice the maximum amount each year into super. I invest through Australian Super as it has great returns and cost-effective insurance.

That said, I can’t access my super until I’m 60, so I need to grow investments outside super to cover me until then. We have two strategies for building wealth outside super:

1. Principle place of residence (PPOR): I have grown my wealth in a tax-free environment like many Aussies through home ownership. I purchased my first home when I was 25 and we have upgraded as we wanted more space. We have got the benefit of enjoying the property and the tax-free capital growth. And have completed sensible renovations to add value along the way.
2. Equities: We invest in ETFs and individual shares to grow our wealth and create a passive income stream. I watch markets daily and every Saturday morning I devour all my Livewire and other market-related content and make decisions on what I will buy in the future.

I don’t trade often. I mostly buy and hold. If there is blood on the streets I buy and occasionally I’ll sell. I just sold my Tassal (ASX: TGR) shares after they shot up on a takeover offer.

4. How would you describe your strategy?

I don’t have a written strategy, but I generally like to buy shares that I feel have a decent outlook, that pay good dividends, don’t have too much debt and that seem generally supported by the markets (consensus calls). 

 As I get older, I want to grow my passive income so I am leaning more towards the dividend payers and ETFs.

I avoid very high PE stocks and stocks that make no money except for one speculative stock which I have very high hopes for – Memphasys (ASX: MEM). Check it out. I don’t do unprofitable tech, BNPL etc. 

5. Could you please share your top five holdings in % terms and tell me a bit about why you hold each of these positions?

BetaShares Australia 200 ETF (ASX: A200) - 20%

ETF

BetaShares Australia 200 ETF

Australian Shares

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I’ve recently started putting more funds into A200 as the market has corrected. I don’t love the concentration of financials and commodities in the S&P/ASX 200, but I am happy to put funds in at this price. It has a decent dividend yield and franking credits and is the cheapest Aussie ETF on the market with an MER of 0.07%. I also invest in the VanEck Australian Equal Weight ETF (ASX: MVW) which is an S&P/ASX 200 ETF but with equal weighting of stocks, not market weighting, and I add to that position rather than A200 when BHP or the banks are looking expensive.

Vanguard Diversified High Growth Index ETF (ASX: VDHG) - 10%

This gives me overseas exposure and it’s more diversified with some non-equity holdings. It’s a nice broad-based investment.

Woodside Petroleum (ASX: WPL) - 7%

I bought this when oil futures went negative. It was just so cheap at the time I couldn’t help but buy it. The position has grown after BHP paid an in-specie dividend in Woodside shares. I won’t hold WDS forever but I still think It is undervalued and will be paying some big dividends over the next few years.

Smart Group (ASX: SIQ) - 6%

A great business with a great product, and solid cash flows. It’s easy to understand and it pays a consistent fully franked dividend with some great one-off special dividends. I have traded this stock in the past but am holding it now until the next takeover offer.

QV Equities (ASX: QVE) - 6%

This is an LIC run by Investors Mutual. It holds quality industrial stocks outside of the S&P/ASX 20 and pays a good fully franked dividend yield. I bought it as I thought it would be a good defensive play in choppy markets and it doesn’t hold the big stocks that dominate the S&P/ASX 200 (like BHP and the banks). Its NTA performance has been poor and the fees are too high, especially for its terrible performance. This has been disappointing and I’ll exit the stock if they don’t improve performance over the coming year. But it’s very defensive and should outperform if markets deteriorate. 

6. Could you tell me about your worst investment? What did you learn from this? 

Easy. Slater & Gordon (ASX: SGH). I spent a lot of time understanding that business. They had just acquired Quindell in the UK. The share price was falling. The CEO did a lot of webinars on the transaction saying, "We know the business, we understand what we are buying, and we have reviewed thousands of claims files". So I bought in, confident he knew what he was doing and that I was making an informed decision. 

As it fell, I kept buying. What a disaster. I ended up selling when the stock was close to zero so I could use the tax losses. But that loss hurt.

What did I learn? Don't trust management, don’t put too much confidence and $$$ in one stock and sell before a stock falls to zero. Oh, and I cancelled my Morningstar subscription who were cheerleaders for the stock. 

While I did lose quite a bit on this stock, my heart went out to all the solicitors who sold their businesses to Slaters in return for stock. They would have lost everything. 

7. How does Livewire help with your investing process and what tips can you share with other investors about using Livewire?

I’m an equities market junkie so I love reading all the content. I love Buy Hold Sell and love hearing all the differing views on stocks and why. Livewire brings me new ideas to investigate further. I love hearing compelling reasons to buy a stock from a fundie and then do my own research. I’ve picked up a few gems from Livewire, like Fiducian Group (ASX: FID), Equity Trustees (ASX: EQT) and many other smaller stocks that I was not aware of.

It’s my go-to for market content and I have it saved on the front screen of my iPad. 

Buy Hold Sell

Livewire Markets

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8. Do you have a favourite contributor you recommend other investors follow?

I just love Rudi Filapek-Vandyck. He's always the voice of reason and plays the long game with a focus on quality long-term compounders. I also love Emma Fisher from Airlie and Catherine Allfrey at WaveStone. And Charlie Viola and Marcus Padley just to name a few. I have watchlists on their selections or holdings in their funds and I watch their performance. 

I’d love to have lunch with them and talk stocks. There was an awesome video of Catherine Allfrey and her career on Livewire. I share her pure passion for stocks. It’s too late but I really should have gone into portfolio management or equity research.

Rudi Filapek-Vandyck

FNArena

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Emma Fisher

Portfolio Manager

Airlie Funds

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Catherine Allfrey

Principal and Portfolio Manager

Wavestone Capital

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Marcus Padley

Director

Marcus Today

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9. What can Livewire do better or what do you dislike about Livewire?

I love Livewire and devour the content. It is brilliant. 

I would like to see more in-depth information on specific companies. Pick a stock, discuss what the stock does, why the fundie like the stock so much and then have five-year balance sheets, income statements, dividends and discuss debt levels etc. 

I think that would be awesome and then I can get across a few more new ideas to research. There is so much noise, and so much surface-level info, and I do love the detail.

10. Is there a lesson you’ve learned as an investor that could potentially help others?

I’ve learned so many lessons and will keep learning lessons. Here are just a few of them: 

• Nobody can predict short-term fluctuations in the markets. This is just noise. Think long-term.
• Don’t keep waiting for a dip to buy. Just buy regularly along the way otherwise you will miss the boat. 
• Cheap stocks are often cheap for a reason. Turnarounds are generally poor investments.
• Individual stock picking can be a mug's game. ETFs are a great way to invest for the long term. 
• Company management will always show their results in the best light. If you want to find out the issues in a business then line up the investor packs for this year and last year. Management always take out graphs and other info that isn’t showing a positive message. Drill down into these missing pieces of information to identify the challenges the business is facing. 

11. Can you share a personal passion or ambition you have for your future?

I’m really passionate about my new recruitment business and getting that humming. As an accountant, business development isn’t a task that comes naturally so it’s a challenge for me personally which I’m genuinely looking forward to mastering.

I was heavily involved in campaigning for marriage equality. My dad and I were on the front page of the Sydney Morning Herald, and he used to go to Canberra all the time as a parent to campaign as well. After the marriage equality bill passed, I wasn't very well and COVID kept stuffing up our plans, but my husband and I finally married last October after nine years together. 

We love living sustainably. We love to reuse, repurpose and recycle these days and try not to buy stuff we don’t need. We even have a worm farm and our own compost. We recently renovated our house in Cremorne and lived in the house during the renovations. It was such a great learning experience and something that I thought I could never do. And now I've got all these extra skills. 

As you get older, you start to realise what is really important. The dream now is to buy a few acres of land, build a super energy efficient and sustainable house as owner builders, have a nice veggie patch, some chickens and live a meaningful, but slower and lower impact life. The design and build of this home will be our ultimate passion project and I can’t wait to get started.

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We are looking forward to hearing from more of our readers in 2022. If you are interested in being profiled in our Meet the Investor series, contact us using the email address below:

content@livewiremarkets.com