How Long Will it take to RETIRE on SHARES

Discussion in 'Financial Independence, Retire Early (FIRE)' started by MTR, 5th May, 2017.

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  1. devank

    devank Well-Known Member

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    Not disagreeing.. but on the other hand, I had A40. 100% loss.
     
  2. Snowball

    Snowball Well-Known Member

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    Annual savings is how much you're saving each year. Your savings rate % is a huge driver of your ability to become FI in a short space of time.

    Current portfolio value is just your current net worth in investments.
     
  3. Labuku

    Labuku Member

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    VTS (an ETF - fund size of 1.91B) for the Total US market is a little different to a single share holding in a single sector in Aus.

    Products

    "Vanguard U.S. Total Market Shares Index ETF seeks to track the performance of the CRSP US Total Market Index, providing investors with exposure to a broadly diversified collection of securities that, in the aggregate, approximates the full index in terms of key characteristics."
    From sharesight:

    Sharesight_-_Your_online_portfolio_manager.jpg

    * past performance is not future performance etc etc

    But for VTS from my limited understanding to have 100% loss would require a bit more of a situation to occur.
    Pure speculation but something that could do it might be...
    tenor.gif
     
  4. standtall

    standtall Well-Known Member

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    Lucky you didn't listen to your dad else you would have lost more than half of your savings by now after accounting for a 25% market crash (2017-2021) and 50% drop in currency value.
     
  5. twisted strategies

    twisted strategies Well-Known Member

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    i would argue average income on those shares was a very important factor

    however i do see a school of thought that promotes a retiree should sell everything and then use the money ( sort of like a Lotto win ) ( my former super fund expressed an ethos like that so took the opportunity to liquidate early ( and invest my way )

    also a well judged participation in DRP schemes ( some offer a discount ) can help as well
     
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  6. d3outguncom

    d3outguncom Well-Known Member

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    Feedback on retirement plan appreciated. We started our current investment journey 3 years ago. 54y.o. These forums have been invaluable in directing, informing, educating and warning us.

    Situation:
    • 2 IPs - Sunshine Coast - $370k mortgage on each, current value approx $575k (total equity $410k) about to refinance to 2.29% fixed for 2 years
    • no PPOR
    • $850k in SMSF split 40% VAS; 40% VGS; 15% other ETFS (ACDC; NDQ); 5% speculative (e.g. RAC; DUB; CXO)
    • $300k ETFs and direct (e.g. FMG, WES) in personal name
    • Over $300k in franked dividends to claim from business
    Strategy:
    • Adding $50k allowable max. to SMSF p.a. + $300k over next 3 years in allowable "bring forward rule"
    • Continue to allocate to as per above
    • Continue to DCA into personal
    • Access additional equity as allowed to add to ETF direct balance
    Goal:
    • Would be great to retire by 60 (6 years). Current household income (business and personal) over $300k p.a.
    • How much do we want in retirement? $100k p.a. in today's $, allowed for inflation at 5% in 6 years, maybe $130?
    Concern:
    • At current 4.5% dividend yield from ETFs, $1.2m will provide $54k p.a.
    • Is any balance we want meant to come from drawing down equity?
    • I hear 4% p.a. draw down means equity will last 25 years, but doesn't that then reduce dividend and therefore total indexed living allowance keeps decreasing every year as you get older because there's less equity for dividends to come from or am I missing something?
    • Is it better to draw on less equity in early retirement year (e.g. 3%), and increase as you get older?
    • Is there something I'm missing in the strategy that is limiting our net equity and cashflow (no crypto suggestions please :))
    Thanks
     
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  7. codeninja

    codeninja Well-Known Member

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    I am wondering the below

    I am doing a simple calculation. VTS approximate performs 15%. With that CAGR of 15% if one invests 100k would get around 1.5 mil in 20 years. And after 15 years move that to VAS or VGS or high yield ETF to get around 60k per annum.

    Any additional monthly savings additionally can fast track this further. Of course past performance is not.
     
  8. Baker

    Baker Well-Known Member

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    I've not checked your maths, so did you deduct CGT from your realised VTS profit before buying VAS/VGS?
     
  9. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Growth and markets are not linear. How often have you allowed for market correction and then time for the lower value to then flatten and then grow later. If we use the GFC that period was 11 years. ASX index only returned to pre-GFC levels from 2007 in 2018. ASIC have concerns for the number of people who have entered the market in recent times who have a assumption of linear continuation who are disregarding market correction risks.

    When a market looses 40% like in the GFC the recovery needed to break even is 66.66% to merely break even. Few see the 40% crash coming and even fewer predict 66% market growth

    Choose your investments - Moneysmart.gov.au - All markets can experience loss.
     
  10. Colonel Flagg

    Colonel Flagg Member

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    The "Trinity Study" (Trinity study - Wikipedia) showed that a 4% draw down of a diversified Share / bond portfolio was extremely unlikely to exhaust the portfolio.

    In the vast majority of cases , you ended up with way more equity than when you started sticking to the 4%.
     
  11. Redwing

    Redwing Well-Known Member

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    upload_2021-12-5_17-1-40.png

    On your other point, this is always a good reminder :D

    [​IMG]
     
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  12. Intrigued_again

    Intrigued_again Well-Known Member

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  13. SatayKing

    SatayKing Well-Known Member

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    Countdown to the next discussion of the Yes and the No. The answers to both are always the same.

    Clock circle.jpg
     
  14. codeninja

    codeninja Well-Known Member

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    Happy to pay the taxes if my calculations ever become a reality. My thoughts are it is not even a core principle or strategy. Just a supporting stream.
     
  15. RobS1993

    RobS1993 Well-Known Member

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    On our current trajectory and if I decide not to switch to a different area of my career we should hit “FIRE” around age 38-40 with shares. We are quite aggressive with savings and have a high household income (and no kids). Target passive income of 15k per month. I put it in quotation marks as I would likely work 1-2 days a week to supplement the income goal and even 2 days a week covers more than half of that target.

    But I’ve been thinking a lot recently about getting more exposure to property. Only issue is I am extremely time poor at present.

    If anyone has any books that detail a decent strategy I’d like to spend more time educating myself. I see many people in their 30’s in the news with 20M+ portfolios and I would love to dissect their strategy and see which pearls I could use I my own property journey.
     
    Redwing likes this.

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