Is Our Simple Retirement Strategy Safe or Stupid?

After being broke 7.5 years ago, my wife and i are very fortunate to be in a position where we can retire in our early 50's after we sell our 3rd Ecommerce brand after xmas.

We have already sold 2 brands we built and have 60,000 VAS shares in my wives trust/company..

After xmas when we sell our 3rd brand, we will have more than enough to purchase another 60,000 VAS shares in my trust/company.

We both have kids from 1st marriage's and to un-complicate things for when we die, we would like to seperate all of our VAS share holdings from the start...

Based on 120,000 VAS shares, each of us will receive about 200k in dividends per year.

We will also have no debt on our PPOR & a few investment properties....and yes we feel very fortunate to be in this position after what we've been through in our early forties.

I like to keep things very simple and after spending lots of hours on here reading all of the LIC/EFT threads, i feel comfortable investing so much into VAS, and think it's quite safe because of its diversification into so many companies.

So my question is, do you think it is STUPID to be so heavily invested into VAS only, or do you think it's a SAFE strategy to put us in a position to receive great dividends for the rest of our life?

thanks

 

What about Super for your post 60 years? Surely it's far more tax effective from that age.... unless you've done some very clever portfolio structuring.

Assuming 60k / 120k VAS shares is qty of shares, that's a poor ROI from such a large unencumbered asset base..... what am I missing here? Because 120k of shares in dollar terms certainly won't generate 200k annual returns unless it is in Pesos....

 

I can't comment about your investments, but are you using the small business concessions to reduce or eliminate tax?

 

@Indifference , No nothing special, re super...will both have about 500k in super.

And its currently 60,000 VAS shares, NOT 60k of shares

Not missing anything, just looking for dividend income without any effort

 

Yes accountant has this covered

 

Congratulations

you underestimate what you have achieved and your e-commerce brands....brilliant

happy days

 

120,000 VAS shares is about $10 million worth.
While dividends were very low last year, it's probably reasonable to think they will go back up to historic yields of 4-5%.

 

thanks MTR, yes its all happened pretty quickly really...7.5 years has flown

 

Yes, im certainly not worried about the current return, just wondering if people think my plan is SAFE or STUPID?

 

its fairly safe, as for stupid.... depends on what you want. If you want a good retirement with money to leave to the kids, its fine. If you want to have tens or more millions? Its not enough.

 

Congratulations on what you have achieved.

I personally wouldn't put everything in VAS. I would have most in VGS, with some in VAS.

If you haven't already, you may want to read further here and in other resources about international diversification. You may prefer VAS over VGS because of the higher distributions, in which case you may want to read about total return v dividend investing. I'm not saying that total return investing is the only way to go. Many sophisticated investors recognise the benefits of total return investing but nevertheless stick with dividend focused investing. People tend to like the idea of not consuming capital. I'm just suggesting an informed decision.

 

Turning around being broke to having multiple properties, three businesses built up to the point they could be sold, and converted to an unencumbered $11m share portfolio held in multiple trust/compmany structures in 7.5 years is a herculean effort.

Given the level of drive, determination and learning that would have been needed to acheive such a feat, it surprises me that you talk about your "VAS shares" like a Robin Hood daytrader on a reddit sub-forum. I always find it strange when people talk about their holdings in terms of the number of units they have, not their $ value.

Respectfully, if you have $11m worth if equities, you should be reaching out to a well-regarded fee for service financial planner, solicitor and accountant to develop a tailored investment plan and holding structure for your personal situation.

 

Yes i have a great accountant, and the reason why i dont talk about the $ Value of our portfolio is because for
(1) the value of the portfolio doesnt interest me, its most likely we will never need to sell any, we are just using each unit of VAS to deliver us an income stream...i THOUGHT such a value would be exciting while on the journey to financial freedom, but after getting there, whilst proud of our achievements, it's not.
(2) after many years of selling online, i know we make after all costs around $10/unit, so again i am only focussed daily on how many units we sell X $10, and then when we sell, it's yearly profit X 3-4 multiple = whatever it is

i like to keep things simple

 

well yes, i want an amazing retirement full of travel...but i cant see how doubling our money etc will make us any happier...200k PA each is more than we can spend yearly...the kids will get lots anyway and they are being set up in houses in their early twenties now

 

So are your thoughts based on investing safely by diversifying, or a portfolio making more money?

 

so, why do you suspect your plan is stupid? You could say its heavily australian shares, so some fixed income and international shares might be considered. If you have ppors, and if your children do too, thats diversification into property.

also get some decent wills done. This could keep your family wealthy for a hundred years.

 

No, it seems safe to me, but just wondered what others think...and i hadnt really thought about our property diversification...thanks

 

This thread is a breath of fresh air

Would also love to hear about your property diversification, all in QLD?? If u care to share

 

@GoldCoastBound , looks like your post might be in the wrong section. This is the property side of the forum.

I don’t think your plan is a bad one. As suggested already I would go down the path of a 50/50 split with VAS and VGS. Not necessarily to try and achieve a higher return as historically the aus market has done just as well if not possibly better. But more for diversification.

I get the appeal of all Aus for the extra income flow from our higher dividends. But as you said $200k a year each you and your partner is more than you probably need anyway. Plus at $200k you fall into the high tax bracket. With half in VGS your income will come down to around 3% so $150k each. Still more than enough. Then you have some income from the investment properties you mentioned.

Other option is to do all VAS and then use a portion of its dividends each year to start building up a position in VGS.

Either way I think you will do just fine. More importantly I would look at structure for asset protection, passing on to future generations and tax minimisation. With such a high income flow there would be some decent savings in using the optimal structure for tax efficiency.

 

thanks, we just have the 2 in VIC, and 1 in QLD now