How Long Will it take to RETIRE on SHARES

Shares every time normally. Although given the amount of property investors getting interested in shares here lately maybe I should get the dry powder ready to go back to investing in property.

 

What brilliant reading

@Simon Hampel when are we brininging interviews back?

Blacky

 

'allo.. guvness..good post......I am on the slow process of transferring a portion of wealth in property to shares/ETFs ....I figure $1.5m in shares/ETF will return about 75-80 per annum.

Very efficient to manage and much higher yield than property..only issue is timing of purchase needs to be in down market.

The 150k dumped in shares last year has gone up 35%....

Now back to shooting some of my dogs.

 

What are some good buy signals for when to get in?

 

Buy when the market drops 15-20% over a period of couple of weeks happened in early have last year....remember buying CBA for $72.....

 

I was due to commence this process starting next financial year, but I recall you advised not to cash out my Sydney portfolio.

I'm still in two minds about this as having the option of declaring myself "retired" at 32 is awfully tempting. How long should I continue to delay gratification?

 

Retired at 32....awesome......do tell.........you can teach some people here a thing or two....

 

But what will $112,850 look like in 2037?

 

Could I ask when he started investing?

 

If it's the same as the last 20 years, around $41,500

 

Not sure, but probably more than 20-25 years.
Marg

 

that is a very general/high level question MTR. all depends on how much capital one has to start with and can contribute over the years..(and what you buy, but you would assume reasonably 'safe' etf's/lics/(banks?) returning 5% or so)

i certainly wont retire on shares, but I am at the end of year 3 of a 10 year share plan, with the goal to get to 30k of dividends a year (up to about 9k at end of year 3). thats starting of with a chuck on capital and re investing all divs and adding an additional 10k capital a year (or more if i dont reach the target for that year). nothing too exciting but good to have a goal to stick to. hopefully property can give me the other income i need..

 

Hi @MTR

I found this on the old Yahoo Finance Message Board with regards to an investor leveraging into CBA

Assuming 12% Growth and 7% Dividend AND Interest on Margin Loan of 8% and re-investing dividends


- By dumb luck I was holding CBA in the late 90s, the growth then was terrific,in the 30%s.
- I used equity built up by increasing share prices to secure further purchases on margin.
- I have not always spent the excess dividend, in some cases I have used it to pay the margin interest. I have not done this in about 5 years but did earlier.

There's no guarantee the growth I got earlier would happen again, but even using current variables you could do it, would need to manage margin and price fluctuations carefully.

Assume 12% growth, 7% dividend (as I beleive available on CBA at the moment) , Interest expense of 8%. Start out buying 100K with 75K on margin (i do not recommend this, although it's about what I did)..I'm assuming here that dividends have been reinvested..See the following table. You can see how you could get to about 1M net and lowish gearing in just over 10 years.

Portfolio.. Purchase.. Loan.. Net.. Gearing
1 100,000.. 100,000.. 75,000.. 25,000.. 75%
2 119,000.. 81,000.. 38,000.. 68%
3 141,610.. 87,480..54,130.. 62%
4 168,516.. 94,478.. 74,038.. 56%
5 400,534.. 200,000.. 302,037.. 98,497.. 75%
6 476,635.. 326,200.. 150,436.. 68%
7 567,196.. 352,296.. 214,901.. 62%
8 1,154,963.. 480,000.. 860,479.. 294,484.. 75%
9 1,374,406.. 929,318.. 445,089.. 68%
10 1,635,544.. 1,003,663.. 631,881.. 61%
11 1,946,297.. 1,083,956.. 862,341.. 56%
12 2,316,093.. 1,170,672.. 1,145,421.. 51%
13 2,756,151.. 1,264,326.. 1,491,825.. 46%

On the First Year buy 100K worth, $75 on margin;
On the Fifth year, you're looking to purchase $280K more on margin;
On the Eighth year, purchase $800K more on margin!

An interesting strategy of regular gearing (every five years a Margin Loan top-up) to increase the total portfolio of CBA shares and net worth, starting with $20k in 1996 and achieving a net worth of over $1M by 2006 by selecting a quality share and regularly investing/gearing into it - Imagine how he would've gone if he purchased CBA when it first floated

He was sitting on a dividend income of around $100k p/annum at an age of 38 when I looked at it back in 2007 (good on him for sticking with his strategy).

 

A few Sydney IPs purchased 6_7 years ago

 

Yeah..but even then most people can seem to convert to sustainable income.....the issue is you can't live off CG without access to it..to access it you need to sell...that in turn some it takes CG.

Having said that there is a guys who...bought mostly units (about 18) in lower socio economic Sydney and made mostly 170-250k in profits...he is selling slowly with 50% discount he has 80-120 in profit per property...pays interest in advance on couple of loans and rolls forward an sells over time.

People who have 700k locked in 4 properties this will be an impossibility.....

 

Yep pretty much. I've been accumulating middle-ring Sydney units starting 2007, last Sydney purchase was in 2013.

 

Aah....now I remember...are you the bloke with units in Western suburbs....met at Epping?

Is that correct? You did the right thing getting units as your cash flow bleed and amount trapped in CG is manageable..also as they are units you are not under the CF pressures of people who bought houses where some are paying 40k pa in land tax...

 

Yep that's me

I recall you telling me I'd be kicking myself if I sold out of Sydney. Any thoughts on weighing that up against further delaying gratification?

 

Yes....if I remember right all are units around train stations in areas which are transforming...this why I would not sell out. They also had great cash flow even today.

Will PM you...

 

That caught my eye. I'm originally from Pakistan and my dad invests heavily in the share market there. 1 year ago he offered for me to give him my savings, about 40k and he will double it in a year and teach me the ropes of how. As you do, I didn't and bought an IP instead.

If I were to invest I will likely head for the developing countries. His bonds return an 8% "modest" and safe yield. Across the portfolio the shares return a good 25% That's why I suspect your friend won't deal with asx. He has a taste of bigger margins and the know how and experience to invest there in these countries.

I should ask my dad if that offer still stands. I didn't tell him but I lost about 10k in a stock the year prior doing it on my own