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Can I become financially independent by 29?

Thomas: I am 19 and live at home. I attend university full time, with a HELP debt of $14,000 (and growing) and no other debt just yet.

I work at a casual job earning around $12,000 plus super.

I am also fortunate to receive regular income from some shares, plus franking credits.

I have been investing this money in shares and managed funds and have $45,000 and $50,000 in each respectively.

I am curious if this is the best use of my situation. Should I save for a deposit on an investment property and start to earn rental income or continue with the higher risk of shares and funds due to my age?

Are there alternatives to assist me in gaining financial independence in the next 10 to 20 years (very ambitious, yes)?

Paul: Hi Thomas. I love seeing people aiming high, so I have no argument with you aiming for financial independence in 10 to 20 years – the sooner the better in my opinion.

It is pleasing to see you keeping an eye on your HELP debt but not being alarmed.

HELP is the very best debt you will ever see. It is only starts becoming repayable once your salary hits close to $55,000, without interest, and if your salary does not reach the level where repayments begin, which could happen due to many reasons, the debt just sits there.

Your challenge, however, is trying to define financial independence.

At 19 my living costs, probably like yours are now, were negligible. I regarded my pushbike as the height of luxury.

A decade or so later, with three kids and a mortgage, my level of spending was an amount I could not have comprehended as a 19-year-old.

So I reckon your best plan is to keep building assets.

I am relaxed about shares or property. Over the long term, both have historically done well.

So my advice is simple: keep saving and adding to your pool of assets.

Written by Paul Clitheroe

Paul Clitheroe

Paul Clitheroe AM is a respected financial adviser and Money’s chairman and chief commentator. He is chair of the Australian Government Financial Literacy Board, and author of several personal finance books. Ask Paul your money question.

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