Anyone retired early solely from property or shares?

You can start the journey from average wage position.

But the key is to save a bit and develop the mindset of "money works for me".

You get the money works for me snowball rolling and working for money soon enough becomes unnecessary.

Otherwise build a business and get people earning money for you. Just doing it from you own labour is a hard gig unless you have some fantastic skill set.

 

So what did Oscar retire on in the end - rents, dividends, selling, borrowing against his props ie LOE?

 

Me too - here here

Joined Somersoft - 12 April 2007

See I was sold on index fund investing back then as well - here

Cheers,
Oracle.

 

Just interested to know what they invested in family trust please? Is it just index funds that they keep accumulating to get to that amount?

 

That was me I was really obsessed when I started out young, really, and took around 10 years! Even at a seminar before internet days my mentor called me out and said that too!
Even 95% can be saved if one is obsessed!
I know of a young girl who just bought her 3rd unit, first two are investments, one in Adelaide, one in Melbourne, now this third will be PPOR in Sydney to live in, and earns less than the average wage in Sydney.
Yes, many if not most will not do it, but it is possible.

 

Largely index funds. A few direct large cap stocks.

 

If I just look at IPs for investment, then depends what property Investing strategy you follow.
But at very high level generalization assume you receive 4% gross rent/yield, hence many need 1% for expenses, so 3% net rent/yield from your IPs. So $2,670,00 in property with no loans will generate around $80K then. Remember you would then need to pay tax out of that.
Yes it's extremely hard to do that by earning then paying income tax and then investing cash into RE, hence why we use leverage into RE. So the idea is to grow your asset base in $ value ASAP, so assume growing it to say $4M instead, where you would accumulate as much as you can, time, economy and your finances would dictate that (assuming 80% LVR starting out).
I had acquired 8 IPs in 8 years, 3 in first year as I became serious about growing my asset base, so I sold our land for our dream PPOR then and put 50% deposits from these purchases. I did it the hard way as each time I saved another 25% (20% for deposit 5% for cost), I would duplicate regardless of economy of what was happening around, rather if my circumstances permitted I continued to grow my asset base, so I kept buying more IPs. I was a low risk taker and needed to sleep well at night, hence I never used equity drawdown to duplicate.
So the number of IPs is irrelevant, it depends on your asset base and rent/yield they generate, but the idea is to grow to maximum asset base, that may mean as an example 4 IPs instead? So if you are young I would suggest the first 10 years are to grow your asset base, the next 10 years if you stop duplicating you should have some compound growth and then another 10 years should enable you to retire or even pull out some titles (paid off IPs just because of CG).
This is from just passive investment approach.
I am into my 21st year with IPs and the CG has surpassed even my expectations, pulled out 2 titles, pulled out equity for reinvestments now, as buffers too.
Remember once you stop accumulating and properties increase in value then your LVRs over time become less and less, also the indexation of money will actually decrease your loans, maybe not so much your amounts but the purchasing power over time. So the longer you hold and stopped accumulating then over long time you may find that you may need to sell only one or none at all as your LVR becomes very low.
21 years ago the idea for us was to replace our salaries so we wanted to generate $25K each so $50K total. So we needed to generate net asset base of $2M, at 4% gross yield/rent. Once we surpassed that we continued to accumulate. Now our CG is so much larger than the set asset base and our IO loans are larger than that (just realized that - but have offsets accounts and could repay many of them).
The wonderful thing is having all those choices instead and truly understanding now the meaning of how people make money while they sleep.
Hopefully that helps?

 

Yes it was a bit harsh.
Most wealthy people I know have lots in super. They pay 46% tax and put all excess income in super. And they are terrified of the stock market. They lost heaps buying on hot tips stocks at 50-60 cents that quickly went to 10 cents.

The original purpose of compulsory super was to force people to save.
It's a forced saving vehicle of money you cannot touch until the gov gives you permission.
Being a civil libertarian type, I am against any gov having control of my money and telling what to do with it.
I am a sole trader, i have a company and a trust. I have never gone past the 30% tax bracket except for CGT this year.
I am self employed, i decide when I work and how much I make and my average tax over the years is around 20%.

My taxable wage has rarely been above average, so why can't I compare my assets to that of an average wage earner?
The question was can this be achieved with an average wage, and the answer is yes.
I do admit a bit of luck and darn good group of people around me helped. As did this forum.

Geez you must have had a lot of people tell you that.
Or did they just tell you "you can't buy up half of St Marys and Mt Druitt"

 

When I see a property sold, I like to look up the sales history, many not making a profit after holding it for years. Spruikers make it seems like property investing is all milk & honey easy street, house price double every 7 years blah blah blah, to many the reality is very different.

 

Me too, just not posting in that particular thread.

 

Well, not many know/knew I even had property, outside of this forum. Those that did told me I was 'lucky'.

 

Just curious whether they have any kids?

 

2 kids, primary. for more colour ; they started out of uni 25 years ago on 50k or so. Smart, hard workers who learned how to play the corporate game. end up on 250/350k by early 40s (her/him). Good salaries but nothing crazy. Achievable with application.

 

Thank you! That's a very good achievement for them with about 3m in Super and family trust.
Yes, trying to decide whether we should use the equity loan from PPOR for shares investments but then no point opening the family trust since we want it to be tax deductible.

 

I don't see why if set up right you couldn't draw money from the PPOR on lend it to the trustee / trust for investment purpose and claim a tax deduction. I would check this with a qualified professional but I believe if its put together correctly it can be tax deductible.

 

You need to search/read all his posts..... its all there

He had more than enough income from shares and rent and worth much more today

 

I have now been on this journey for over a decade and being salaried employees, can attest, it is definitely harder to achieve FIRE on salaried incomes. The problem is unless you have very specific skills that the job market highly values, you will consigned to average/just above average wages. My skills are reasonably niche and hard to be replicated by machines or outsourcing (yet). But not terribly rare unfortunately. My wife’s skills combined with professional qualifications make her skills more valuable but does not fetch the mega $$$$. Both of us value our time away from work so there is a definite ceiling on how hard we are prepared to work (we already do long hours and work pretty hard). Unlike business owners, we can’t as easily scale up and leverage the hard work of others so therefore, the compounding earned income year after year is limited.

So (not so) quickly, I realised that if I need to retire early, I will need to ramp up my savings rate. Not just do a feeble 30 – 50% but increase it way more than that. Just like working out at the gym, I found that bumping my savings rate to 70% or thereabouts requires you to work your way up to that point. I chastise myself often for not having achieved those percentages early in my investing career. But deep down I realise that is futile. I also learned that I needed to look mostly towards US oriented FIRE blogs to normalise for myself that saving 70% was possible and in many ways can even be enjoyable.

The problem I sometimes see on this forum (mostly because I have been that way myself until not so recently) is that people wanting the lifestyle of an overseas holiday every other year, catholic school for kids, eating out once or twice a week and then thinking these are the ‘bare necessities’ to have a reasonably good life. It probably is and all well and good - but only if your current salary levels lets you afford it. You can’t have slightly above average salaries and spend average amounts (even though you think you are practically slumming it) and then expect to save copious amounts to reach FIRE at an young(ish) age. Something has to give. You will either have to delay FIRE, reduce your target retirement income or earn more (see above comment on the ability or lack thereof to do so as salaried employees). Barring this, there is no option but to cut expenses drastically to reach the portfolio totals mentioned here recently that is supposedly unattainable. Of course if you bought a property or two at the right stage of the cycle and you rode the boom by leveraging it into more properties and those leveraged properties grow exponentially, you might make it by capital gains alone. But if you can’t time it that well or if the credit fountain dries up, you have to save hard and lots to earn your freedom.

It is hardly glamourous. No wonder very few embark on it and even fewer see it through to the end.

 

perfect timing now, just throw a dart

 

I have already thrown the darts a while ago. I am sticking around to hopefully see it pay off

 

Thank you! Just to clarify do you mean we become the trustees of the family trust and lend the money to the trust and then tax deduct the interests from our PAYG incomes?