Financial planning for future / retirement / end game

I think more important is to know even without her father's money, she will be doing just fine and set for life. Children's own independence and capability to face life's challenges and survive well is better than my inheritance to them.

 

It's not about 'fathers money '.


You raise them to be strong, independent, non entitled, hard working charitable and conscientious.

The money is there to help ease many of life's burdens. Not as a resource to let them become an entitled bum in society. We have plenty of them already.

That's what I've been teaching her and will continue to as she grows up. At 3 years old she's likely already more responsible than many 40 years olds.

 

To enable a relatively carefree retirement I began planning some 20+ years prior to calling it a day.

1. Super
2. 3 unencumbered residential IP's
3. A combination of LIC's and ETF's (information that I gained from this forum)
4. Cash reserves
The key has been to limit meddling (which initially was difficult).
Currently receiving between 78-82k net, depending on distributions and dividends.

Happy Days!!

 

Any more kids on the agenda

 

What’s meddling

 

Unwarranted interference.

 

NFW.

1 is moooooore than enough for us.

 

This calculator seems to be pretty good and it incorporates govt pension payments too
arrow-down

 

Planning and time is the key - and reviewing the plan on a regular basis.
Retired at 52 and utilised a number of strategies.
1. Was assisted with deposit on house in early 20's -> then proceeded to pay for this house by renting out the rooms -> this is a good way to help children but also to educate. By the time you are in late 20's share houses are not the preferred way of living so harder to generate income.
2. Borrowed against the equity in houses whenever available -> not necessarily using it but having it available. Invested some of the borrowed money into invest in managed funds using regular monthly contributions -> set and forget and tax deductible interest.
3. Purchased investment property with equity in PPOR -> typically mid range, good quality properties and have had good tenants and not too bad from a maintenance perspective but still negative geared. Used buyers advocates to help buy property. Held property at least 10 years. Deposits from equity in property, and borrowed remainder. Had high incomes and loans were easier to come by.
4. Upgraded PPOR and borrowed what we could and invested a reasonable amount in direct shares. Engaged financial planner at aged 48 to put together a strategy to retirement and beyond. Shares buying and selling now managed by FP. Setup a SMSF to give us flexibilty.
5. Utilised strategies to minimize tax where possible. Have utilised the 6 year CGT exemption on PPOR which is now worth approx 2.5M in VIC and moved into a 550K home near the beach in QLD. We do tax planning every March/April to consider any requirements prior to the 30th of June
6. We sold the managed funds and some shares after retirement to generate a cash buffer. We timed the sales to minimize tax plus used concessional contributions into super.
7. Effectively living off rent now and some remaining investment loans to cover rental expenses, We will likely sell investment properties and VIC PPOR and divert as much into super as we approach 60-65. Will utilise the bring forward NCC contributions and Downsizing contribution to ensure super balance is at least 1.7M each. Will then start a pension from super at 60. Will likely be a 60%growth portfolio at that point.

Some might see this as a high risk strategy during to the borrowings and we have been lucky with the low interest rates and also the ease of getting money 10 years ago. We have also kept a good cash buffer.
Most would say have no loans when retiring but that typically means when retiring at 60-65.

Key tip - investing as early as possible into property for growth and then using it for other investments once you have equity. Diversify into shares when you can as that gives you other options if cash needed. Work out your exit plan for property -> review it and change it as necessary.
Also work out what assistance you need and engage it -> took us a few goes to find the right FP and Accountant.
Mistakes we made
- not borrowing all we could before we stopped working and the loan rules changed.
- Managed funds not ideal as you cant manage the tax aspect but they did work well from a dollar cost averaging and set and forget strategy.
- bought one dud investment property in a cheaper area
- land tax is now becoming an issue as all property in VIC.

 

Not this bunny!!!

We have been retired for 11+ years now and still a 7-figure investment loan portfolio. We will be 88 when our current loans expire.

We love investment debt as it gives us tax flexibility, we can generate returns greater than the interest rates, especially after-tax, …

It will be interesting to see whether our banks will refinance our loans when we hit 88 .

 

You might be able to get a 2 year loan with at least one lender.

 

TBH, I will be happy if I am still above ground

 

This is quite right @spoon .
Pretty well everything is different .
Every day different traps and opportunities appear.
Each decision can lead you to somewhere different.

 

Reading through all the above posts which are all very good, I do not see much mention of going into business and the merit of having a good cashflow stream in order to invest in real estate etc?? Especially during your working years and even onward!! Cash Flow is a wonderous thing to have a lot of IMO and even more so when it becomes Gross Profit!

Building up a good business to sell is not really as hard as many people seem to think. Alternatively, you can spend your life helping someone else build their business and making them rich so you can one day be a boring old man/woman that's just played it safe!

 

A business is a great strategy for retirement - potentially sellable CGT free too

 

Thanks Terry, and this is another reason why I like farming so much because you can build a great business around a real asset. I am just in the process of leasing another portion of farm land that I purchased almost 10 years ago and have run myself up until now. There are quite a few tax advantages available to farmers that are not well known by the majority of city people I would think. The very negative slant that the media like to find in the industry gives the majority their perceptions. Personally I am happy if it stays that way.

 

Hi RENI99,
What type of tax planning do you do?
How would you describe a good FP? Keen to establish a relationship with one after initial IP purchase this year but not sure what to look for. Partner and I are in our early 30's so feel like this is a good time to finally start thinking about this long term retirement strategy.
Thanks!

 

From a tax perspective we project tax as at end of financial year at the. End of April and then decide whether we need/can reduce it - through concessional super , forward paying expenses like tax fees, spend on rental maintenance, selling some dud shares or paying interest in advance.
A good FP is one that you feel comfortable with working with on an ongoing basis - one that charges a fixed fee and not a % of the portfolio and one that considers property a good long term investment alongside equities. They can be hard to find as the good ones are likely to expect you to have a reasonable amount to invest. We were in this position by our mid 40’s. We were ok with accumulating investments but did not really know best options for exit strategies and super setup nor what age we felt comfortable in retiring.

 

Thank you for the reply. Makes total sense.