Introduction - the 40 year old accidental investor.

Hello All,

I’ve been reading this forum for awhile. Joined up very recently and only had the courage to post now.

I come from a migrant family background. My parents came by boat in the early 80’s they taught me hard work but the wrong mindset when it comes to investing.

I’ve followed their advice and worked my arse off and am successful in my professional job. I have finally realised however that as hard as I may try I can’t earn my way through a job to financial independence quick enough.

My parents did give me some great advice to buy a property when I was 31 (it was about security not wealth creation). Through dumb luck (buy house with lots of land son) the place I purchased went from mid 400’s to about $1.1 million today. I have a loan of $300K. Only wish I bought more than lose it all on stocks.

I haven’t been able to save anything like that through earning from my job. My goal is to retire from work and do the things I truly love from 50. I have 10 years to make it happen. $150K passive income would do it for me.

Here is some background on my situation. I would love to hear if others who have gone before me think this goal ($150K passive income timeframe in 10 years) is achievable and what strategy they might take buy and hold. Buy, renovate and hold?

I’ve been busting my arse since 16 so not keen on doing my 8-6 job late into my twilight years (as much as I appreciate the opportunity and feel blessed to earn good income).

Some background stats.

Age: 40
Income: $290k before tax
Equity: $800K
No kids.
Surplus monthly cash = $6K per month. I help out my parents and family as much as I can.

Thank you for reading. I wish you good health and happy investing.

 

Normally it would be probable with that sort of income to build 3m in assets + ppor. However, your lack of savings suggests either you spend a lot of it helping family, or you spend too much. Why would the expense of helping family decrease in the future? Whats the impact on your family relationships if you stop working and it might mean a decrease in your familys standard of living?

No judgement but fact is you were taught to be a high achieving worker and not to take risks with investing. You dont have an investment mindset or experience. This and the expectation that you will support family long term will make it harder for you to stop working.

How do you still have a 300k loan on a 400k purchase after 10 years? On 15k net a month? Anyway 1.1m is only about median in Sydney.

How did you 'lose it all on stocks'? Blue chips have done ok in the last 20 years. That suggests you invested in much riskier stuff, probably without knowing it was risky.

First thing might be to be honest with yourself and decide that you will probably work longer than you think. Or be comfortable with the cost of bucking the family system. Then learn to invest. Understand gearing, risk, etc.

You probably understand the problem, hence your username. Why would a single guy on 290k and no kids struggle in life?

 

Thanks for the insights trainee. I currently pay my parents mortgage. The loan will finish in 10 years hence why I am aiming for 10 years to stop.

I know that some will say I need to live my own life but the sacrifices my parents have made to raise me means that’s I am happy to make that sacrifice. They would have had their house paid off many years ago if it wasn’t for siblings and dumb decisions but cest la vie. A story for another day.

The stocks went pair shaped for me not once but twice once in the tech boom and more recently in the GFC took me along time to recover. Think margin lending gone wrong.

Coming from a humble background I’ve tried to get wealthy quickly and learned the hard way that leverage doesn’t always work if used in a risky manner and can be devastating.

 

Be honest with yourself. You are a gold mine for the family. Not saying that with any malice: its how traditional asian families work. They wont let you quit. Youll be at the top of your game at age 50 (law partner? Specialist doctor?) No one has incentive to make good (difficult) financial decisions with you around. In fact they might make more risky financial decisions because you are around to help them out.

They play the family card, and you have to make that choice of risking family relationships with your own goals. If that is to retire early, it will be difficult to have both.

on the investment side, how comfortable are you with debt? You dont have enough cashflow to do this without debt.

 

Very comfortable with debt. My plan is to leverage as much as I can safely as I would love to not have to work beyond 50.

My fall back plan is ofcourse to continue to work. I’m confident of earning a very good salary long term if I had too and my super should be enough. I just don’t want to wait until retirement age to enjoy life.

I’m sure there are experienced investors here that I would love to understand how quickly and how much wealth they built in 10 years and what path they took. Always easier to learn from those who have gone before.

I’m not short on hard work or motivation. I’m looking for a path to follow.

 

You have good income and serviceability. No kids works in your favour. Decent amount of equity.

My 2 cents, others will have their own take. your plan of buy/Reno / hold could work. Or buy/Reno sell/ roll on profits to actively make your money work hard to build your equity. You will need to add value with every deal you do if you plan to build wealth via residential real estate.

To come any where close to achieving that goal in 10 years you will imo need to do the following:

1. Become totally obsessed ( within reason) with doing everything in your power to achieve your goal. Develop and maintain an optimal mindset which keeps you focused and extremely motivated. You helping your family may or may not hinder your chances. That's your business.

2. Learn everything you can about the strategy you want to employ, then network with those already doing it, learn from them/share ideas/possible jvs etc. I for a fact know that there are very good Reno opportunities in Brisbane and Sydney at the very least. You need to research, and seek out people, read posts on PC, troll internet for snippets of gold. It's all out there.

3. Network, network, network. Most of my deals came from networking , then collaborating with others on deals in different ways.

4. Make sure you understand all about Reno feasibilities, Market due diligence, risk mitigation, target demographic . Read every Reno and add value thread on PC.
5. Seek out a bloody top gun broker who will work with you creatively for finance and help you get your projects over the line as much as possible.

6. I said it before, I'll say it again. Imho if you get the mindset wrong, you will greatly diminish your chance to achieve your goals. Do not let past challenges ( stocks) affect your mindset moving forward. .

Best of luck on your journey. And remember, risk is very real as you've experienced. Don't let an arbitrary timeframe influence you to take on more risk than you are comfortable with.

 

You can start by doing alot of reading on this forum, ask questions, read real estate investment books and play with the numbers in Excel etc to see the cash flow, projected growth and returns on each deal. Find which strategy you would enjoy doing and which suit your skills, lifestyle and also your current work commitment.

Attend forum meetup to network and meet other experienced members who are quite generous with sharing their knowledge and learn from them.

Understand how real estate cycles exist. It's worthwhile pouring alot of time into doing independant research to undertand how real estate investment works. Know that everyone's circumstance, goals, skills, risk tolerance and resource is different so you need to do what works best for your situation.

Set a goal, map out a plan then execute the steps etc. Something like what's written in the posts other members have shared in the below link:

Retirement Incomes....will you be in the top 3%!

Best wishes.

 

Thanks for taking the time to read my post and respond Sackie. Your thoughts and opinions are valued and I will be sure to keep them in mind as I go through my journey. I’ve read a number of your posts of this forum and I find I tend to agree alot of your opinions.

I will post progress on this forum and make a note to check in at 1 year intervals to share with people how I’m progressing.

 

Thanks Vanilla Slice. That’s one of my favourite desserts BTW.

Good suggestions. I’m going to start an excel spreadsheet as you suggested and see if I can reverse engineer what my goal might look like.

I use to think 10 years was a lifetime and now at my age, the years seem to fly by.

Happy Monday.

 

I absolutely second all of this. First priority, you need to lose the name 'lifestruggles.'. If you expect everything to be a struggle then it will. A self defeating attitude will suck your energy. You're going to have to have a positive mindset to reach your goal because a simple buy and hold strategy might not get you there, you're gambling on future growth that may or may not occur. Active property investing increases your chances substantially but you need to be highly motivated, and you won't be if your mindset is negative.

 

Ha! I was thinking just that last night.

 

Thanks ellejay.

Appreciate your thoughts. Most of the time I am a very optimistic and a positive individual. To be honest I didn’t want to come across as a nob with my first choice of username “winning”.

I like your suggestion of active property investing and will aim to become more active as my experience grows.

 

Off topic for a moment. I believe in giving twice as much as I receive so if there are others on here who would like some career advice on getting ahead feel free to reach out. The irony is not lost on me given many people’s goals here.

I’ve learnt a lot over my career and managed very large teams, so happy to share my experiences.

Just don’t ask me about property investing guidance......YET.

Maybe one day I will be able to help others in this space.

 

Which industry, btw?

 

Read @Travelbug's story. Travel bug started at 50 and retired. Very inspiring. Got to start somewhere. As trainee said - acknowledge where you are.

 

During the depths of the GFC as many would have done they listened to the unflattering stories and the media scions who's barometer is always wrong i say this because if you want to retire in ten years time on property alone with a 150k after tax income then you will have to change your traditional perceptions on how you reach that level..
Plus i do understand the culture you live within and the way everyone within the family circle from babies too the very old that will never end up in a high care nursing home all are loved and looked after ...

Myself if i was you i would read the post on LIC'S by a several highly experienced no-working un-employable investors living the life on sit-down money...

Then read the post on what looking cheap on the ASX ..

Then just keep reading ask question's till you see this may work for me because once you break a ten year plan into years months weeks and days your ten year plan may go into 20 depending of your understanding of risk and you go from contributing money to taking it off the table..

The only other way as most within some culture's marry young but a lot don't once they see the freedom Australia offers ,try and find some-one in the same boat as you 40 is very young and the way iv'e always seen life there is always someone waiting..
The Black Swan: The Impact of the Highly Improbable - Wikipedia

 

Started in financial services, transitioned to government.

 

Amazing journey, very similar to what I would like to achieve and inspiring results. Thank you for directing me to the post.

 

Thanks Geoff I will look into it. There I was at 7:00am trying to figure out how to do it myself on the settings page for 10 minutes!