Anyone retired early solely from property or shares?

I was working on the assumption this is outside super. Being that the discussion started around retiring by 50, super would not come into the equation for early retirement income.

Great point. Maybe we should be referring to the mindset rather than the earning power. While both are important factors, if your spending continues to grow as you earn more then earning power is irrelevant.

 

Does someone on average income come anywhere near earning $100k? They're not used to that level of income so achieving status quo upon withdrawing from the workforce is a big achievement.

 

Exactly this. I have a friend, a machine operator who has never earned more than award wages from his job. But he’s always been a saver. Asked me to look over his retirement plan as he’s just turned 50. I should be the one going to him for advice. Turns out his projected retirement income from super alone will be double his current expenditure.

 

Ok fair point. I’m all a bit confused by this discussion so I’ll pull my head in.

 

LOL! I can't like this enough. Exactly the same here. I'd go buy something & give him the papers to sign. Then get him on board for reno's.

 

The point is, aside from luck eg Bitcoin, getting rich purely from investing savings is virtually impossible. One needs additional forms of income, LEVERAGE etc

 

It is extremely hard to do so with an “average income” if that is 70k or so. I’ve got close friends, a couple, both 44. They have worked in good corporate jobs only. No business, no leverage. Strong incomes and high savings rate. Own home ($2m), no debt. Around $2.5m-$3m (not sure exactly where it sits now) in super and family trust. Good earnings out of uni, bought home early - upgraded later. Salary sacrificed into super early. Good savings rate.

To be fair, this is the only person/s I know personally who has been smart enough to get themselves in this situation on corporate salaries (high but not crazy). Most will succumb to lifestyle creep...these guys have the balance right.

 

When we first started (investing), interest rates were a lot higher, and so were yields. I think, from memory we were paying maybe 7-8% on our first IP. Yields were running around 7%, and we could only afford the very cheapest home available on the market, so bought outside our own area. We also needed to bring in a yield of 10% so that the hold costs would be neutral to positive.

We bought in all sorts of undesirable areas in order to achieve our yield. It was the ONLY way we could hold property, and we'd renovate and fix things after trashed tenants, so we did physically DO MORE that the average investor in those terms.

So, without spending days researching on the internet to find somewhere suitable, I'll just use Elizabeth SA as an example. It would be achievable today, if said investor were to purchase a heap of properties in Elizabeth. There's spectacular yields in Elizabeth (I've still got some), and the rents have been steadily going up, so can't complain about that. You would then need for those properties to appreciate, and with what's going on in the Country at the moment, that's possible, and draw the equity out to go again. If lending is too tight for that, may need to sell some to release equity & go again.

Don't get me wrong, I'm not saying that Elizabeth is a stellar investment. It's got issues, but most of our early ones had issues.

Using an example of something closer to home, this property was sold recently.

2 Augusta Place, St Clair, NSW 2759 - Property Details (realestate.com.au)

Note the price! A plain home like that in good condition would sell for well over $700k. I saw this property. It doesn't need much work, but most people would not do what it takes. Fix the holes in the walls, paint, new carpets (cheap), new flooring in kitchen / dining etc, new cheap kitchen, there's a place here that can do a basic DIY one for around $2k, some cheap window coverings from Bunnings & you're done. We've done similar for under $10k. Of course you could add a driveway, but that's expensive. We've picked up many like this to manufacture equity over the years.

 

Yes true, but I'm specifically referring to the 100k cash flow which was the number mentioned in this thread.

 

If a person has an average income it shouldn't change anything.
They would be able to live on much less than their average income if investing so all they have to do is just invest until they reach the point at which their passive income matches their expenses and they they have reached financial independance.

 

I would agree it is somewhat difficult.

As @Sackie mentioned you have to be obsessed IMO just like being in the top field of your sport of field you have to live and breath it to get to your goal. At the start anyway.

Once your strategy is sorted and the hard work is done I think you can auto pilot it a little.

I like to use my brother as an example as he’s 21 and on a $58k per year salary, we sat down and figured he wouldn’t be able to start with a decent property so needs to start with high growth shares. His time is best spent trying to increase his capital in an aggressive way.

This means a lot of time spent understanding small cap companies that are undervalued, roughly he’s up 150% in the last 3 months.

Everyone has the opportunity and the internet is an amazing educational tool. I guess it’s just not 1 size fits all.

 

You are correct. It is not easy.
It's one of the reasons I am always calling BS on this forum since many years back in the somersoft days. Everybody has millions, but no one has any money.
Then there's the class i call the "poor millionaires", cause they are.

The top wealthy people I know none of them are 9-5. All business owners working long and hard their lives.
The ones I know that are employees are way above everage income and I doubt would be earning 100k net from rentals. But they are definetily top 10% in assets.
Myself always self employed as well, never high income earner though. Just not a big spender.
Spending costs 42% more if you're paying 30% tax. That's almost double!

At 20yo I wanted to retire at 40. You're right there too, it's not all that common. "OMG all those bank payments" etc etc. They thought I was nuts, and some thought I had tickets on myself for thinking I can be better than anyone else. It is a thing.
Super was not compulsory and in those days, and when it came in it was useless to my cause.
I want to manage my own money (you couldn't at first) instead of giving to the high flyers. And I wanted it in my pocket anytime.

It takes 15-20 years to achieve a decent amount of growth and wealth. And because it's leveraged the ROI is much more than the asset growth rate.
So with a 20% deposit a growth rate of 5% is an initial ROI of around 20% that diminuishes over time.
So if the rent pays expenses and the loan, you can set n forget and start saving for the next one. In the early 90s that was around 30k deposit for a house 120-150k out in MalacaVille.

So if you had saved and bought 2 very average IPs with nothing other than hold'n'pray, 30yrs later you would have a little over 1.2 mil in assets paid off earning about 38k net income.

You would have also blitzed the average super holder, and why I will keep on saying Super is only for people who can't invest.


Can it still be done today? I can't see why not.

 

LOL! I really don't think I did anything special. I'm just one stubborn girl who can't be told 'You can't do it".

 

On the other hand if there was a high income earner that spent like a person on a low salary it would be much quicker and easier to reach financial independence

 

No one is saying it's easy and of course most wouldn't do it. Not that they couldn't, they just don't even try.

We were never on big wages. At 30 I went to Uni so survived on one average wage. At 32 my hubby lost his job and we went to garage sales on Saturday and sold stuff at the markets on Sunday to survive. When I finished uni my wage wasn't even high enough to start paying my HECS fees.

By 50 we had some equity in our home so started buying cheap houses. We did renos to increase equity and make them CF+.

Hubby retired 8 years ago, me 5 years ago.
When people used to say on this forum, you need $100k I thought that was crazy and I would never be able retire if I had to wait until we got to $100k cashflow. We had a lot less than that when I retired.

We live on rents, some shares and other investments.
If I took 4% from Super we'd be on close to $100k but I just don't need it so it's just accumulating.
There a quite a few people I know of on this forum that would be on $100k. Not everyone puts their hand up. And I know they have not been given money or had huge wages.

I'd definitely doable. You don't need to start at 18, you just need to start. you'd your don't make $100k, so what.

Reach for the stars!
You may not get one but you won't get a handful of mud either.

 

This is well worth reading from somersoft. I guess many here may remember this member



woke up a millionaire

 

Woah Geoff was there.... and that's 18 years ago.....how long this forum gig been going on for....

 

Blast from the past

wonder where MichaelW is today? Loved his post on his development in Mona Vale.... anyone remember this one?

 

That’s a bit harsh.... Super is actually an investment vehicle.... & it can be a rather tax effective part of any portfolio....

Just consider how much equity you really need tied up in Property to generate the same Net income of an equivalent value inside Super. Ie 1.5M in Property versus the same in Super.

You can’t just compare the average Super balance in the same breath as having 1.5M equity in investment property.... because that’s hardly normal or average.