Anyone retired early solely from property or shares?

Discussion in 'Investor Stories & Showcase' started by Lacrim, 10th Feb, 2019.

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  1. Sackie

    Sackie Well-Known Member

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    There are heaps of people who've retired early and the kicker is, wasn't from property or shares. I know this one case first hand so here's the strategy. It's called the COC approach.

    1. Apply for a professional job
    2. Present yourself (visually) in a certain way at the interview
    3. Match your speech to how you visually present.
    4. Rinse and repeat.
    5. Enjoy early retirement, Compliments of Centrelink.
     
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  2. MWI

    MWI Well-Known Member

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    what.....? Stop spreading the secrets...shh!
    Only possible in Australia, I suppose?
     
  3. RichardN

    RichardN Well-Known Member

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    Can someone help me if this is the right strategy to calculate FIRE/retirement $ target? I am trying to keep it high level. Appreciate any guidance.

    My target income per annum after tax is: $ A (including rent if I need to pay rent/ mortgage)
    My net assets = $B (Asset market value – (debt of PPOR +IPs +Cash+ Shares+ overseas assets)
    My target is to achieve $ A from $B with a 4% net yield/ CG.
    Instead of chasing yield, I prefer to sell only the required assets for a living if required.
    So for example, $A = $80K
    $B = $2M

    Yield will be $80K (with 4% yield after inflation assumption) either in the form of CG/ yield.

    My strategy ss to build an asset base/buy 4 IPs as soon as possible with the power of leverage and sell 2 of those IPs in 10 years time, pay down the debt on the remaining 2 IPs.

    The assumption is that the 2 remaining IPs and shares pay my target retirement income i.e $A.
     
    Last edited: 27th Feb, 2021
  4. Indifference

    Indifference Well-Known Member

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    That can be simplified to the Rule of 25........ whatever your desired annual income is ...times 25.
    Eg. 80k x 25 = 2M......
     
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  5. RichardN

    RichardN Well-Known Member

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    I think so. Does it make sense? I am tracking my asset base once every 3 months and chasing the target asset base ($B).
     
  6. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    These rules, the 4% rule etc all assume no draw down on capital. If you are willing to sell down assets you could reach FIRE so much sooner.
     
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  7. Indifference

    Indifference Well-Known Member

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    Indeed!...... I prefer to use 5% - 5.5% as a draw down planning figure, noting that capital will likely erode. But I’m not planning to live forever so it works for me!
     
  8. Piston_Broke

    Piston_Broke Well-Known Member

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    Everyone wants to "retire" until they get there. It can be very boring.
    Did Kerry Packer, Harry T, Rupert M or frank Lowy retire early?
    Is Twiggy retired?
    Nope. None of them.

    There are various levels of financial independance or freedom and it's different for different people.
    If you really like racing cars, flying planes, big boats or sailing races on the weekends, 50k yr passive income won't get you far.
    If you want to eat out at nice restaurants every night it will only cover your food bill.
    So you still have to work or run a side biz to pay the bills and other indulgences.

    If you don't have such urges and enjoy less expensive hobbies that 50k will cover rent (if you don't own ppor) and you can indulge in low earning but enjoyable work which others may think of as hobbies. You can sell paintings, play music, work as a bar tender/resort or on cruises for the social aspects.

    I don't think 50k buys freedom, only some independence. At least 100k yr and a PPOR is needed.
    And that's if you don't have expensive hobbies.
    If you have a young family and want nice things for the kids, 150-200k is needed.
    So you have to work, though you can pick and choose what and where without the pressure of being a long hours high income earner.

    What you are describing is a very small percentage of the population. You won't find many anywhere. And I'm not sure those that do would even talk about it that much.
    Even here most are happy to cite million dollar IPs but when it comes to net income, there ain't that much. Even all those stories on the RE mags, "millions in RE" everywhere and no mention of net income. The reason is simple: not much to talk about.
    Using the outdated 4% rule a passive income of 100k net is 140k before tax which needs $3.5m in net assets earning income. Add a ppor in Sydney and it's $4.5m.
    What % of the population has $4.5m in net assets? The top 10%.
    Your "mere mortal comfortable early retirement" equates to being in the top 10% of the wealth ladder.
     
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  9. The Falcon

    The Falcon Well-Known Member

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    4% rule assumes 4% withdrawal rate over minimum 30 years with this rate increasing with inflation. Note “withdrawal rate”. This was designed around a 50/50 stock/ bond allocation. Modeling this shows close to 100% reliability - based on historical returns. “Reliability” in this case is not running out of money before 30 years, in many case significant capital will be consumed depending on returns and sequence risk
     
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  10. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    I think many Australian share investors are thinking about the 4% rule differently than the american version, the divdends here are often 4% yield roughtly with franking on top. So the idea is that your capital is remaining the same or actually increasing as values increase and then you are just drawing on the income.

    Thats how I have thought of it anyway.

    Its like retiring on the rents, If you have 5% yield with 1% for costs you will have a net yield of 4% which means no need to sell property if you have enough (except that with property the values increase faster than the rents)..
     
  11. Big A

    Big A Well-Known Member

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    I think there are a few on here that would have $100k passive income stream.

    Doing it purely with equities is not easy. Between aus and international equities a portfolio would be bringing in under 3% income right now. Disregarding franking.

    Add in some higher yield assets as I have ( property trusts and mortgage syndicates ) and it’s much easier achieved.

    Also much easier to work on gross figures rather than net. Not easy to work out net, especially outside of super. Different levels of franking / international tax offsets, property trusts pay tax deferred income. Approximately 50% of the income I receive from property trusts I pay no tax on today.

    Though I am in the retiring early is overrated camp. I get bored very easily and like to keep busy.
     
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  12. Lacrim

    Lacrim Well-Known Member

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    True. And to get $100K passive, that's still $2.5 mill of encumbered shares. Big number.
     
  13. Piston_Broke

    Piston_Broke Well-Known Member

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    Yep, history tell me 4% and 1mil these fire people are preaching is nowhere near enough for a long retirement of any kind.


    [​IMG]
    [​IMG]
     
  14. Sackie

    Sackie Well-Known Member

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    Most of the people i know who have 'retired' on fantastic income (though in reality still doing business ventures for fun), is mostly though business and and having made massive gains in RE then reinvesting in other businesses.
     
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  15. Big A

    Big A Well-Known Member

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    This.
    Not sure most people earning an average wage are going to be retiring early or late with $100k income from passive asset ownership.

    I certainly didn’t and can’t imagine others here who achieved this, did that working a 9 to 5 on an average salary. I am sure someone with better math skills than me can work out how much you would need to save and invest out of an average salary each year to achieve $100k passive assuming 4% income from that investment. I’m guessing a large part of your earnings over a long time is required.
     
  16. Momentum

    Momentum Well-Known Member

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    I stopped working when I was 32 and reached 40K net rental income. I could've worked longer and retired on more but life is too short. I'm not interested in working. Moved to Thailand and lived a very comfortable life for 11 years. Rental income has more than doubled since then but I'm pretty frugal and don't spend it all. Don't plan to leave all my assets as an inheritance so I'm also happy to sell down capital as I get older.
     
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  17. Sackie

    Sackie Well-Known Member

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    Are you still living in Thailand?
     
  18. Travelbug

    Travelbug Well-Known Member

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    YES! This is me too.
    Our CF was pretty low but I was ready to retire. I started investing late and retired at 57. We sold a couple more properties then had a half decent cashflow, without touching Super.

    I don't want to work and am not bored (once travel starts again I'll be off). I would like do some volunteer work this year.

    Life's good!
     
  19. Beano

    Beano Well-Known Member

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    Change the assumptions and you will find you can achieve the the magic $100k (even $100k pw)
    1: start young like as a teenager.
    2: consistent buying
    3: the properties brought as a teenager are now earning 200+pc on cost in the twenties 100+pc on cost
    4: in the last decade 8 to 10+%
    5: all profit is used to reduce debt
     
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  20. skater

    skater Well-Known Member

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    Time to change your thinking, maybe. :p
     
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