How much income do you need to live the dream?

A very good post.
Make the most of each day and live in the moment, I know cliche.. But very true

 

OK here goes....

Step by step....

1. Determine the income you need...
2. Work out how many properties and amount of shares to get to this figure.
3. And then model this based on what you have to invest and how long it will take to get there. Use savings, growth rates of IPs, and rental growth. You should then be able to get a view on how long this will take. Modelling on worst, mid, and best case scenarios will also you assess and revise you modelling every year.

 

I've done any approximation on these things in terms of what asset base would be required at say a 4% yield (eg fully franked dividends). Other than looking at historical (10 year) capital growth for any area is there any other method to predict future CG?

 

No...remember past growth is not a good predictor.

However, looking at major infrastructure such as rail corridors, major shopping centres, business parks, and hospitals are a better predictor of growth. Growth may not happen immediately...but over 5-10 years it will if they (infrastructure) have been approved.

The other thing is to look at suburbs which have boomed and look at the suburbs around it...are they 20-30% less..if so why...if there is no good reason snap it up.

I love the way you have used 4%....that is the 4% rule...excellent benchmark for a endless income over the coming years. I will post on this shortly.

 

How do you predict what growth you can expect from infrastructure though?

 

No one knows...but to give you an example:

Wellard WA....put a deposit on a house land package for 310k in 2014....for a 3x2x2...train station was in but town centre was being built. Once Woolies was the anchor tenant other shops followed. This was the PEET estate. ...completed in 2013...completed in 2014 Oct. End value was $425k..currently rented for $420pw.

 

My goal is to be getting about 80-100k (in 2015 $) a year through a combination of income generating assets & a non full time job, ideally a remote one.

Has anybody here heard of the 4% rule? Essentially, assuming your net assets grow by 6% or more p.a., then you may pull out 4% to fund your lifestyle whilst ensuring your assets are inflation proof (net assets still go up at inflation rate or higher).

edit: I realise now, after writing my post, that the 4% rule has already been brought up....

To add a little for discussion, assuming I want 90k pa., then taking that as 4% of assets, I need 2.25mill in net assets. When you consider there are funds like vanguard that are prepared to guarantee a 7% return on investment, you don't even need to rely on property!

 

Yes the 4% rule is where it has been proven over time that 4% of an asset base will return endless returns...so long as you draw down 4%.

So if you have $1m in the bank drawing 4% will give you 4% + indexation for the rest of your life. So if we assume inflation is a flat 2%. The the drawdown would look something like this:

Year 1 - $40k
Year 2 - $40.8k
Year 3 - $41,616
etc.....

Will post in a new thread now...

Here ya go:

https://propertychat.com.au/community/threads/4-rule-what-is-it-and-how-does-it-work.1682/

 

This is incredibly true, investing in yourself is the best way to improve your life. A lot of people focus on improving their financial situation, forgetting other important things. How cliche is the notion of the CEO pulling in 500k+ p.a. but who rarely sees his wife and kids at home.

Other people focus on other things, and quickly forget that life is holistic, there is no one important thing that deserves your full devotion and attention. How often do you see people that are obsessed with improving one of: financials, fitness, lifestyle, socio-cultural status, etc. Its better to focus on everything holistically, starting with your mind!

 

One gazillion dollars

 

My income stream when I retire will come from a mix of investments: residential housing, cash, dividends from shares and super. I don't have my equity concentrated in any asset class. My residential rent income stream is not where I want it to be yet. I have 2 development sites and fully developed, I could just sit on them until I retire and just those would give me enough income to "live the dream". But that's boring, and I don't want to be boring!

 

OK...so how do you balance boring and risk?

 

The journey is very important for me too. "Getting there" is life and I want to enjoy my life. No point getting to your destination (goal) only to think back about how miserable your journey has been. I also take your point about your loved ones. Out of the blue one of mine found out he has terminal cancer. Look after your loved ones and don't take them for granted.

 

Make some safe investments and some "interesting" ones.

 

i have to disagree with this. with $25m in net quality investments it would be a pretty woeful return to just get $1m a year. why do so many people assume that low yielding resi property is the only place for money? you'd surely be putting money into a mix of high and low risk investments with that kind of capital


with regards to the topic at hand, personally i think a really good lifestyle would be$150-200k as a single person, great/dream would be higher.

im single and only 33 so once im married and have kids the figure would be higher for the dream lifestyle

 

Yep....that is the return on quality stuff ...about 5% ...I used 4% to be conservative....that is only the yield...once is now considering the potential growth as with shares. With just say 4% growth on $25m is $1m...something to ponder...

 

$

3-5 years for $250k passive-ish, 7-10 for a fair bit higher.

ill always keep doing active things though as i love what i do in the various businesses and industries. we're living in an age of immense opportunity, there's always more opportunity than time or capital to act on them imo

ultimately as mentioned above money is just one part of life, there's no point placing it above everything else that is important as theres no point being the most miserable rich ******* around

 

we're discussing income here so capital growth is irrelevant.

ill be honest, if at the end of it all im only making 5% return on my total invested $$ ill be thoroughly disappointed

 

I like being disappointed...I am like a retailer...small margins...but great net income on a large asset base which drives the value of the business.

Risks vs Return scenario...I like playing small ponds but like to be the big fish.

 

Well it's better than being the most miserable poor *******.