How Long Will it take to RETIRE on SHARES

@kierank

Just had a quick look at sharesight, last 12 months for me (taking into account recent falls) is 10.23%, comprised of 6.41% Gains and 3.82% dividends

 

You blokes really have to stop looking at that stuff.

Better metric is dividend income to date two FY years ago and now. Is it less or more? In $$ terms not %% ones. I can't buy my groceries with %% only $$ Afterpay notwithstanding cause it wants $$ from me if I used it which I don't.

Skip last FY due to aberation unless you can strip out the specials.

Report back by tomorrow. I'm trying to give youse something constructive and practivle to do. Be grateful.

 

Apologies for being rather terse. Stuff gets in the way occasionally.

What I am attempting to say in my usual clumsy way is % does not really do much for me in a practical sense.

One person can have a10% yield and another 5%. Who is better off? The person with 5% of course because s/he has $1m in income whereas the other has $200k.

 

Oii....stop makin' sense...I want people to panic...seriously..I am about to dump serious coin...and youse are running interference.

It is no fun when you do a big dump and there is not toilet paper ya know....

 

This is a how long is a piece of string question. It will be determined by how much you are willing to put into the market, comfortably.
Leverage plays a huge part in acquiring property; whilst it can also be used to acquire shares, for many it comes with additional risk. Something most are averse to.
If I had my time over again (investment wise) it would be LIC"s & ETF's all the way. Very little hassle compared to the never ending issues that surface from owning residential IP's.
So the answer is yes, you can definitely retire on shares if the investments made are prudent.
Most on here would attest to the fact that owning residential IP's can be a pain in the backside quite often. Ahhh.......hindsight!

 

Especially when toilet paper is n short supply.

 

Por no dos?

Why not both...I have used property as the vehicle for huge gains....now with CV drop in the market I will move a signficant chunk into LICs/ETF....

 

Ah now I see what the problem is.

 

Its a ******* of drug mate..... you can see the dollar tracks on my arms.

I need a hit everyday..but these days only seem to score 1-2 times a year.

 

More

Still in accumulation mode though so regular buying



No 'special' dividends with the ETF's

 

Shame about that although they are there but you don't "see" them whereas with LICs they are clearly stated.

 

Looking at the market today, we're going to look back at this moment as the best buying opportunity since the GFC.

 

True, when BHP, FMG, Wesfarmers, Jumbo etc all pay a special dividend it flows through

 

False economy....only mad men and english men go now...oil prices have crashed....ASX down 4%....

One to watch is the US....they have no idea and sticking their head in the sand on CV...about to get very interesting....

 

That’s only if you’ve never bought anything over the years since the GFC.

 

Still buying in small parcels

 

@kierank is that 12% combining capital growth and dividends?

@Snowball I was reading your blog last night and found it interesting but am struggling to see how we can reach FI in 5-10 years as you say most can. We live fairly humbly, just need a 60k passive income for a family of 3, which we can still add to as needed with some part time work etc for luxuries like travel... and more investing . Your calculator says 11-12 years with us both working fulltime, 90k salaries x2 -30% tax = 120k and we are starting with a 200k savings from previous investments.

I would agree with @Gockie that I think leveraging with property in the beginning makes a lot more sense mathematically to get the 'snowball' started. We have a small neutrally geared investment property worth 350k with 150k equity in it and I'm doing the sums to figure out if we are better off selling it now to put into shares or letting it keep growing for 5-10 years and then converting it and it seems to me the capital growth is going to outperform the shares.

You have said you wouldn't do property again and learned from your mistakes but could please explain how you see unleveraged savings into shares outperforming leveraged property growth over a short term ie 5 years?

I am trying to do some equations to work out the best way towards FI and how long it might take us but am getting pretty confused about which numbers to use as realistic estimate for shares in terms of growth and dividends. I used to think it was 10% growth and 4% dividends but I have seen a lot of numbers calculated on different threads, dunno said at one point something like 6-7% and perhaps that was including dividends?! The hypothetical portfolio might be 60/40 VAS/VGS, or 50/50 if that made the maths easier. I have used 8% growth and 4% dividends, does that seem reasonable?

I am working on an assumption of 5% growth on property in Melbourne as a comparison, our properties have actually been performing at 7% growth average so that seems fair to me but happy to be told otherwise by oh mighty wise ones, any help much appreciated.

 

Yes

 

Have you done the deed and have you cleaned up?

 

Well at the end of the day it comes down to spending levels. You’re on good incomes so you’re half way there.

Spending say $50k pa would bring it to more like 9 years, but if that’s not for you then it’ll take a bit longer. We live comfortably on about $40k as you might’ve seen on the blog. Don’t even have to reuse toilet paper (not that you can get any atm)

The reason I said I wouldn’t do property again is because under 10 years the frictional costs are just too big. Stamp duty maybe buyers agent, then selling agent and CGT, plus the ongoing cashflow losses (not as bad these days) and the unpredictability of capital growth makes it less appealing to me.

Since you already own property half those costs have been paid so it’s a bit different.

And with a short timeframe like 10 years or less, I’ve decided that paying out large up front costs and having no ongoing cashflow for no certain benefit for many years at a time is not a very enjoyable way to invest.

Whereas having some diversified share funds like you’ve described, paying a decent regular income stream with basically no costs, no headaches and making progress every month with regular savings is a VERY enjoyable way to invest.

It doesn’t matter too much which numbers you use as they’re bound to be wrong - both property and share returns are unpredictable. But ballpark I would go on 7-8% long term total return for shares and 3% capital growth for prop.

I have close to zero expectation of property growth being anything like it’s past growth over the next 10-20 years.

But you have to decide what numbers makes sense to you and what you’re comfortable with. Little use turning this into a future return debate lol.

So the reasons I share are mostly just from my experience and reflections, rather than saying one is strictly and always better than the other.

Whatever you choose, sounds like you’re in a great position due to your high savings rate which is by far the biggest factor in achieving FI in a short space of time. Well done for that!