How Long Will it take to RETIRE on SHARES

Good post.

The point is we will at some stage be in an austerity / low/no growth situation. This is normal. So best expect it rather than extrapolate 14% to the moon like some folks

 

I found these booklets very helpful in better understanding history and risk. They're a bargain if buying the Kindle editions. A bit boring and challenging when statistical analysis is discussed but well worth perservering with. And they're a short read but the information in there is gold:

The Ages of the Investor: A Critical Look at Life-cycle Investing (Investing for Adults Book 1) eBook: William J Bernstein: Amazon.com.au: Kindle Store

Skating Where the Puck Was: The Correlation Game in a Flat World (Investing for Adults Book 2) eBook: William J Bernstein: Amazon.com.au: Kindle Store

Deep Risk: How History Informs Portfolio Design (Investing for Adults Book 3) eBook: William J Bernstein: Amazon.com.au: Kindle Store

Rational Expectations: Asset Allocation for Investing Adults (Investing for Adults Book 4) eBook: William Bernstein: Amazon.com.au: Kindle Store

If you only buy one then choose the last one.

 

And you think I'll be silly enough to be found here when the next huge crash comes:

 

huge risk unless it drops below 10K... that will be a sure shot buy

 

Yes, we all know about what can possibly happen with investing in stockmarket. Everyone says they are prepared and will stay the course. But trust me nothing can prepare you for the real thing.

It's the same argument when trading everyone says yes I have backtested my trading system and on paper I can consistently make 25% only to find out your emotions get the better of you and system that worked in the past doesn't work or you couldn't be disciplined enough to stick to your system during drawdowns.

My point was when there is blood on the street and everyone is saying the famous words "this time it's different" and you start believing it and because this was your retirement nest egg and you are now old enough to not be employable you are bound to get thoughts about selling and making the pain go away and saving whatever equity you have remaining. It is very natural for humans to go into fight or flight mode during adversity.

Everyone likes to quote Warren Buffett about being greedy when everyone else is fearful but how many people you know were buying stocks in the depths of March 2008?

I was not suggesting @austing to hold anyone's hand. But it would be nice for him to be around when times are tough to be able to say confidently I am not selling and would be buying as and when I have funds available this might just give enough encouragement to newbie investors thinking of bailing out to not bail out and stay the course.

To quote Warren Buffett:

The most important quality for an investor is temperament, not intellect. You need a temperament that neither derives great pleasure from being with the crowd or against the crowd.

It takes time for people to build that sort of temperament. Sometimes you just have to experience the ups and downs of the market to build that temperament. I believe @austing has build such temperament and other investors can benefit from him when they see him staying the course.

Cheers,
Oracle.

 

I get to enjoy a "father guarantee"

Kidding about the guarantee, I won't put him in any such stress although it's offered! You are right have to go in with eyes wide open

 

Which is why I suggested the books earlier. Reading some potentially scary but factual material although not a substitute for experience can help one better understand their risk tolerance.

Most of us would be better served by reading about market history and understanding human behaviour, particularly your own, rather than reading about "what" to invest in.

 

Well I am happy to admit that I would love to have @austing and @Il Falco holding my hand during the next major fall. I am so green that any experience and words of wisdom would be muchly appreciated during a major downturn.

 

You are right. don't put him in that situation and yourself as well. He wants to see you make money. You should make it yourself without his guarantees. Otherwise he will ruin your investment journey and deprive you off a lifetime experience

 

Be warned, hand holding during market crashes doesn't come cheap. @Il Falco and I would be expecting a minimum of $2k per hour for our service. However there's a 10% discount for group sessions. A free one hour hand holding session will be provided as a gift to anyone prepared to arrange for these group sessions on Eventbrite. Contact @Il Falco or myself for our special rate:

 

I agree. I lost 10K doing it on my own when i could have taken his help. Lots of learning, and i am his daughter after all, dont like being spoon fed information, like to dig for it and think for myself

 

what are your investments so far ? if you don't mind off course

 

Thanks

If buying all 4 what order would you recommend reading them?

Cheers,
Oracle.

 

Perhaps I am slow but I do not understand how this is a great investment, IMO, it is a great savings plan instead?
$1000/week x 52 weeks x 20 years = $1,040,000.00. So reinvested at 4% say will give you $1,590,000.00 so $550,000.00. So ROI on your funds is much lower (I am hopeless in calculating this but I see this return as one times more!) over 20 years. Also, where can we today have secured 5% cash return (secure and guaranteed like interest from the bank?), if invested in ASX still risky component?

Now imagine saving that $1000/ week x 2 years = $104K for IP investment. LVR borrowing of 80%, assume $400K. If bought a well located IP say for $500k then (high level example, as purchase costs need to be considered). Now assume $500K IP grows only 4% CG each year (compounding) for next 20 years that's $1,095,561, but your ROI is about 10 times more (perhaps someone here can help with calculating ROI in both examples - thanks?)!

Now that is the stuff that makes ordinary people millionaires and the interesting thing to note is that most of the time you would only outlay 20-25% of your own money, OPM representing 80%.

So I like to look at investment in total the CF + CG, so not just % growth of investment, not just the cash flow you make, hence IPs only makes more sense if you use OPM, if you look only at rents CF % than it is not attractive in comparison to any other investments. Obviously you also assume CG which can multiply your returns up on down!

I am surprised how many people just look at percentage growth or income, cash flow, but I doo understand that's what we need to consume, to live on....

 

1 PPOR and 2 IPs all in Melbourne and some shares (not worth a great deal).. I started 2 years ago. What about you?

 

I have an IP in Sydney and 2 in brisbane. Looking to move into shares now... Reading on some LICs

 

That would be the order the Author wrote them in: 1, 2, 3, 4.

If readers don't know who Bill Bernstein is then do a search. He's up there with Bogle, Ellis and other big names in the industry. Age, wisdom, exceptional knowledge, experience, extraordinary insight, talent, amazing analytical skills and important he understands the behavioural aspects better than just about anyone.

 

Thanks. Really appreciate your generosity of sharing knowledge.

Cheers
Oracle

 

I was responding to mtr with an example, those percentages figures were just examples. You can definitely earn more than 4% over 20 years with shares. You can easily buy bank shares and get 5-7% net returns in dividends alone, not including capital growth.

Agree regarding leverage, it's an awesome way to speed up your wealth using other people's money, but it can also do the complete opposite, so a balance must be found, along with cashflow to help keep the investments as they rise in capital growth.

 

From 1991 - 1999, the S&P 500 gained ground each year. That’s nine straight calendar years. It’s still an all-time record, dating back to 1928.

The S&P 500 is looking to repeat this nine year streak having done similar from 2009 to 2016 and the S&P 500 is up 10.44% YTD (2017)



The stock market is like a strapless bra.
Half the people are wondering ...
What's holding it up?
Whereas the other half are waiting ...
For it to drop so they can grab the opportunities!!!