FIRE Starters (Financial Independence, Retire Early)

Discussion in 'Financial Independence, Retire Early (FIRE)' started by Redwing, 21st Feb, 2020.

Join Australia's most dynamic and respected property investment community
  1. Zenith Chaos

    Zenith Chaos Well-Known Member

    Joined:
    10th Jul, 2015
    Posts:
    1,673
    Location:
    Sydney
    Piston_Broke and Spiderman like this.
  2. Zenith Chaos

    Zenith Chaos Well-Known Member

    Joined:
    10th Jul, 2015
    Posts:
    1,673
    Location:
    Sydney
    Maximising Total Return should be the general objective taking risk into consideration. Both shares and property provide income, but property does not offer liquidity when you need more money than the yield offers; one can always sell shares and parts thereof.

    Leveraged property may be a good way to build wealth, but in retirement I can see how 100% in equities is preferable.
     
    Nanjie, DJC, Jack Chen and 1 other person like this.
  3. Bunbury

    Bunbury Well-Known Member

    Joined:
    16th May, 2017
    Posts:
    427
    Location:
    Melbourne
    This is good general life advice as well.
     
    Jingo and Terry_w like this.
  4. Bunbury

    Bunbury Well-Known Member

    Joined:
    16th May, 2017
    Posts:
    427
    Location:
    Melbourne
    I agree in a general sense but I'd add the disclaimer that the when passive income is much higher than is needed then tax deferred (capital) growth becomes critical for investors not interested in making unwanted donations to Canberra.
     
    Last edited: 12th Aug, 2021
    Anne11 likes this.
  5. hvdw87

    hvdw87 Well-Known Member

    Joined:
    27th Feb, 2019
    Posts:
    197
    Location:
    Royal Melbourne Golf Club
    But if circumstances are constantly changing, surely you don't want to be constantly changing your structures?
     
  6. Terry_w

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

    Joined:
    18th Jun, 2015
    Posts:
    41,670
    Location:
    Australia wide
    That would be too costly. But you have to adapt to changing circumstances.
     
    Jingo likes this.
  7. Piston_Broke

    Piston_Broke Well-Known Member

    Joined:
    30th Jul, 2015
    Posts:
    4,081
    Location:
    Margaritaville
    This depends on individual circumstance including age.
    With a gross income of 60k tax is about 10k or 16%. Not a big deal.
    There's ways of minimising tax on other income including side hustles specially when doing things you like be it golf, painting, music or just about any other activity, except for traveling the next year or so.
     
    Jingo likes this.
  8. Bunbury

    Bunbury Well-Known Member

    Joined:
    16th May, 2017
    Posts:
    427
    Location:
    Melbourne
    I agree but I'm talking about fat or obese FIRE. Like if your income is $500k pa but you only need or desire $200k pa then it is prudent to bias towards a growth investment focus, in addition to other strategies to reduce tax.
     
    Jingo likes this.
  9. dunno

    dunno Well-Known Member

    Joined:
    31st Aug, 2017
    Posts:
    1,675
    Location:
    Mt Stupid
    Problematic - give it away before it becomes a bigger problem.
     
    Bunbury, Jingo and jimmy like this.
  10. Bunbury

    Bunbury Well-Known Member

    Joined:
    16th May, 2017
    Posts:
    427
    Location:
    Melbourne
    How so?
     
  11. Piston_Broke

    Piston_Broke Well-Known Member

    Joined:
    30th Jul, 2015
    Posts:
    4,081
    Location:
    Margaritaville
    Well you could start a charity foundation.
    You can run it, covering your expenses or get a family member to preside over it, for a small fee.
    In the US the suggested max admin fees is 35%.
    And donations are tax deductible.

    I'm not advocating a fake charity, the opposite. If you have the means it's good to do good.
    And doing good can come with extra benefits.
     
    Jingo and Bunbury like this.
  12. hvdw87

    hvdw87 Well-Known Member

    Joined:
    27th Feb, 2019
    Posts:
    197
    Location:
    Royal Melbourne Golf Club
    I have firmly landed on consistent acquisition of 2-4 ETF's with the view of long term hold and reliance on dividend income in retirement as what makes the most sense to me. Coupled with efficient use of the CGT exceptions on principal places of residence (likely my only ongoing foray into property).

    I love the simplicity that ETF investment provides me and now its down to hopefully aligning an equally simple ownership structure.
     
  13. Anne11

    Anne11 Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    571
    Location:
    Brisbane

    Justin from Rootsofgood.com
     
  14. Piston_Broke

    Piston_Broke Well-Known Member

    Joined:
    30th Jul, 2015
    Posts:
    4,081
    Location:
    Margaritaville
    What he call starting from zero and making a million was actually starting from 1 ppor + 1 RIP + 64k in shares.

    "In 2004, we owned a rental condo...We had just purchased our new primary residence"
    Never let the facts get in the way of a good scammy fire story
     
    Jingo, Big A, Anne11 and 1 other person like this.
  15. Anne11

    Anne11 Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    571
    Location:
    Brisbane
    Focus on the theme, not the details perhaps. For me it shows that it can be done.
     
  16. The Falcon

    The Falcon Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    3,423
    Location:
    AU
    Solid plan imho. I’m in the same boat with only residential property exposure via PPOR that we will continue to upgrade over time and enjoy the “fruit” with net wealth progression keeping PPOR value as 20-30% of total assets. All unleveraged.

    I’m fortunate to have not needed to rely on residential property investment…I could never get any interest in it, so wouldn’t have worked for me.
     
    Jingo and Big A like this.
  17. Piston_Broke

    Piston_Broke Well-Known Member

    Joined:
    30th Jul, 2015
    Posts:
    4,081
    Location:
    Margaritaville
    LoL I'd really love to know how to start from zero with a PPOR + Apartment + 64k.

    And he does it for blog income and so he can charge $160hr consulting fee.
    Imagine an early retirement consultant who's answer is "Start form zero with a ppor, unit and 64k".
    He has no idea on how much work and effort it really takes to retire at 30 without a silver spoon.
    If it was golf it would be "How par any course after 3 mths! Start at minus 50
     
    codeninja, Jingo, Big A and 1 other person like this.
  18. PKFFW

    PKFFW Well-Known Member

    Joined:
    15th Mar, 2018
    Posts:
    424
    Location:
    NSW
    Haven't watched the video or read his blog so apologies if this is answered somewhere in there.

    Was he given the PPOR, apartment and 64k in shares?

    If not, wouldn't that mean he started with zero and saved enough of his income from whatever sources to pay for those things? (or as much as anyone in life starts with zero, since it's actually not possible to literally start with zero)
    I certainly agree that at this time this is likely a significant driving force for many in the FIRE blogging/podcasting/etc realm.
    Again, haven't read the blog etc but did he actually start with a "silver spoon"?

    Sure he mentions in 2004 he had a PPOR, apartment and $64k in shares and (from the comment you made in your previous post anyway) seemingly starts his story from there. But unless he was given those things, I think it can reasonably be assumed he acquired them through his own means.

    To me that is like someone telling a story about running a marathon. They may begin the story when they were at the 30km point but that doesn't mean they started the marathon on the 30k point and only ran the last 12.2km of the race.
     
    monk and Anne11 like this.
  19. Piston_Broke

    Piston_Broke Well-Known Member

    Joined:
    30th Jul, 2015
    Posts:
    4,081
    Location:
    Margaritaville
    C'mon maaan :)
    And that is literally the million dollar question that fire bloggers don't like answering.

    2013 dividends 22k. FIRE on 22k per year.

    2015
    "Around 75% of our investments are tied up in tax advantaged accounts. Accessing these funds requires some fancy financial footwork (namely, the Roth IRA Conversion Ladder), so we’re only spending the dividends in our taxable brokerage accounts for now. o_Oo_O


    This year we received $7,767 of dividends in our taxable accounts. That’s down roughly $1,300 from 2014’s $9,077 in dividends in our taxable accounts."


    Dividends 2020....$36,623usd not peanuts but not all that great with 3 mouths to feed. And that's why he keeps working.

    With 3 kids truth is he never reitred and "finacially free". He has to work to put food on the table, or his wife does.
    He just changed his employement status.
    Nothing wrong with that, I reckon it a good thing and not enough people do it.

    Maybe in the USA self employed = retirement, though i have my doubts.

    Maybe covid ate my brain and I got it all wrong but imo if anyone here with 3 kids wants to retire on 47k per year and still work many hours, call him up for a consultation.
    If you want to know how to make 700k in one year or turn 100k into 2.5mil call me...
    2222222 I got an answering amchine that'll talk to you.:cool:
     
    Last edited: 10th Sep, 2021
    Jingo and Big A like this.
  20. San2018

    San2018 Well-Known Member

    Joined:
    22nd Nov, 2018
    Posts:
    195
    Location:
    Sydney
    Just a random thought.

    If someone have $2.5M ( assume 80% LVR) invested in property and they are yielding 4% rent and 4 % annual growth long term, and to cover mortgage payments and expenses, we take out 6%, the properties are giving 2% returns per annum. So that's $50K per annum. Isn't is great $50K per annum by leveraging someone else money?

    When ready to retire,just keep selling one at a time worth of $500K, survive for lets say 6 years and remaining portfolio still growing.

    I assumed worst case numbers and can get money from banks. If you can't get $2.5M, try $1.5M still good outcome. Am I missing anything obvious here?