150k Passive Income ....what it takes..

Ta.

To generate 80-100k based on the 4% rules (google please) you need to have assets in the region of $2m to $2.5m returning about 5% per annum to keep up with inflation). The issue with property is that net of costs it gives an income of 3.5% per annum net. So you will need to have assets more like $2.3 to $2.8m.

This is possible to achieve in 15 years by buying well price quality properties in the major capital cities when they are down. I did this in that sort if timeframe. ...even today..it will be possible...thought it might not look like it...eventually they will ease the lending restrictions but it could take 5 years.

 

@sash I agree & this why I don’t like how most people approach retirement income planning.

IMO, it shouldn’t be a target figure per se. It should be a band. Ie. I need a base income of 50k /yr to meet my modest yet enjoyable lifestyle requirements & everything above that allows increasing luxuries up to let’s say 100k for planning purposes. Now you can plan on how much risk appetite you can afford within the portfolio, the types of income streams needed & incorporate emergency capital drawdown planning that attempts to preserve the long term base.

This slight shift in thinking can be quite liberating in both long term planning terms & during your working life once your determined base is achieved. I therefore don’t ever look at my financial affairs in terms of capital value... to me, it is for the most part, unnecessary.

 

Yep...most people don't have the skills and are entirely reliant on Financial Planners..

I for one like to have buckets of income....lets say Mr XXX (triple X).....has $5m in assets outside of his home. Of that 500k is in Super...and the rest in cash, properties, and shares. Assume Mr XXX is now 54 and wants to retire at 55.

I would envisage the following structure to be the optimum at 55:

1. 500k Cash offset against properties
2. $1m in Index Funds/Shares/LICs returning on average say 5% but a drawdown is only 4% so he takes out 40k per annum. Aobut 10k in franking credits.
3. $3.5m in full paid off property in Sydney, Melbourne, Brisbane, Perth (includes offset in item ). returning 3.0% net...very conservative. Depreciation is expect to offer aobut 25k in tax relieft pa . That would give him about 105k.

So in total Mr XXX has 145k in income per annum. With his franking credits and depreciation benefits. Mr X would pay tax on about 110k...leaving him about 115k in the hand. With some income splitting he would get down that even further to something like 25k tax.

 

While I appreciate the concern with my well being & financial future, with all due respect, @sash you don't know what you are talking about. You don't know the make up of my portfolio, ie: the yield it's generating, the amount of lazy $$ sitting in offsets, how much is currently P&I verses IO, how much, if any of the debt is being reduced, etc. Without knowing this, how can you possibly make any assumptions?

Me too!

OK....so now you are suggesting that the quality of my portfolio is inferior? Would that be inferior to the same level as all those, Western Sydney properties that you so often pulled me up on? The same ones that had substantial CG? Don't you worry yourself about that, I've still got some left, with very, very small mortgages attached to them.

.

Ah....I see where this is going. Diversification! You've been diversifying, & now you feel that others should as well. Don't worry about that either. I've got it all under control. Granted, you've probably got much more than I have, especially as you've got a large Super account & I have none, but I've got a smallish portfolio happening which grows every month. I also still have a small Business in the Family Trust....granted it doesn't make a heap of income, but we don't spend ANY of the income from this, so as of this year all the debt attached to the trust will be used up, so this income will be directed to paying down debt.

While I can't vouch for @sash, yes I fully understand this.

No, you are correct.

 

I’ve run some numbers on this high end hair caper, it seems like $452 is a quarterly event !
I haven’t got a handle on hair styling inflation, any data? If it’s anything like private school yoy we are in trouble.

 

I figure we can assume that salon and over the counter tints are pretty much inline with each other so no need to adjust if we use today's prices on a home tint. The most expensive treatment is $18.99 at Priceline (when she was doing it at home) so on your now $452 a quarter. Now I don't know how long you have been married, so I'll just use numbers that suit my purposes (as any good financial speculator would) - 15 years a smidgen over 23.5%p.a. So in another 21years your lovely wife will be spending your entire $150k passive income (today's dollars) on hair treatments if this trend continues assuming income and hair treatments track the same rate of inflation.

 

I am challenged hair wise....but it seems that the cost of tints is dropping ...was popping into the RAMS offices the other day...and there was women's hair tints going for $99.

 

Another possibility....

A balanaced fund averages around 7-8% per annum long term. Invested via an account based pension in Super = no tax. Thus spending $50k per year, it is possible her capital may not ever deplete if her investments return 7-8% per year.

Although the return depends on when one starts, sequencing risk and all that jazz but as her capital drops the old age pension kicks in to top up her income.

 

Yes definitely..but the balanced funds I see which are consistent are the Industry Funds - i.e. Host Plus, Australian Super and others. Do you think the Financial Planner recommended that?

As for the aged pension.....yes it will kick-in...but the rules keep changin'

 

Barefoot Investor has a chapter on it.

Swapped everything to Host Plus, managed to re-discover another $20k in super in the process. FREE! Everytime I tried to do this through a finance advisor, they wanted to charge me about $2.5-3k.

 

Yep...since I did this ..I am up 30k since Feb 2018.

Scott Pape recommends the balanced product.

But I did extensive research and found the best to mimick a SMSF (non-property)...it allows oyu to invest in ETFs and LICS...thought selection is limited. The major players are there.

NHG...it is great you are thinking about Super so early not many people under 40 even think about...and it could cost them tens of thousands. Well done....

 

My uninformed view on all this is the usual one. It all depends. People can crunch numbers all they like and still prove nothing. It comes down to how people manage their income I reckon. One can be on $100k and consider themselves poor with nothing in the bank because they spend the lot. Another can be on the same, spend $60k, invest $40 and so increase their income over time.

The returns help remarkedly as you infer @willair but it still comes down to how much you spend in relation to your income and what you do with the excess.

My income for some holdings has increased even though the dividend has remained static or reduced. Simple reason for that.

I bought more of the relevant shares.

 

For @willair read @willy1111 and all shall become clear!

 

We are all different Satay King like menus at fast food outlets,and why would I want to escape the enslavement of such conditioning ..

 

The real gem in that movie is the final FU by Marky Mark to Dan Connor
Took me three times watching it to get it through the thick noggin; owe nobody nuthin

Great flick, more to it than what you “see”

 

And this excellent version on investing and index funds:

 

Whatever one spends each year in retirement is different for everyone. As you point out the main thing is to make sure that there’s something left over to reinvest. If one can do this then Inflation is of minimal concern. Despite our higher level of spending plenty always has and always will get reinvested each year.

 

Aren't you double paying fees? You're paying hostplus admin fees, choice plus facility fee, on top of that you're paying the ETF's admin fees.

 

Yes. As I mentioned way back in this thread, the figures provided by some involved in the superannuation industry on what income is necessary in retirement is, um, suspect, I tend to adopt the same view when others weigh in suggesting similar.

Anyway, I don't care what the numbers are for other people. I only have to know about numbers as far as they relate to my situation and my situation is quite good.8