My FIRE spreadsheet assumption

Hey guys,

A couple of years ago I have developed this spreadsheet which estimates my future net worth in 10 yrs. It's become very addictive as I often look at it

The net worth projections are based on a number of assumptions and tweaking them up or down can make a significant difference. They are all 10yr averages. I would be very interest to hear from more savvy than me, economically minded investors whether these assumptions are reasonable:

- Average 10yr house price growth of 5% across two of my properties (one in Kings Park, Melbourne, older build and one in Nudgee, Brisbane, built in 2008),
- Total accumulation growth of 8% across my shares portfolio (15% BHP, 15% CBA, 3% WES, 3% WBC, 64% big LICS - WHF, MLT, MIR, ARG, AFI, QVE in the order of portfolio share),
- Average 10yr7 inflation rate 2.5%,
- Average wage growth 2.5%,
- Average currency exchange rate AUD/EU = 0.6. This is because I'll live in Europe and all dividends will have to be converted from AUD to Euro.

Cheers

 

The assumptions seem fair. But you are invested in a single market and currency. If I were you I would go all in on VGS from now on.

 

Hi Realist

Where in Europe?

Another Italian town is selling dozens of $1.60 homes

I have a friend that is looking to retire in the family villa in Croatia

Any reason you didn't look at VTS/ VEU (and other ex-AUS) in the past, or VGS more recently?

 

Hey mate, Montenegro. This is how beautiful it is And according to Numbeo, and my own experience, it's 50% cheaper.

The reason I'm not investing in VTS and VGS is because of high dividend yield of Australian shares. This way I never need to sell my capital. I'm planning on having a 2yr buffer in case of market crashes and unfavorable currency exchanges.

 

If you're already going to have a 2 year buffer in cash, why not diversify outside of Australia? You're exposed to all kinds of risks by investing in a single market to chase a perceived advantage that doesn't help you much in any way.

Volatility and drops in yield can be managed, but if Australia falls into a +10 year downturn then nothing will save you.

I'd advise researching "Sequence of return risk" and "Safe withdrawal rate".

 

You'll probably find this useful:

Non-residents or not planning on retiring to Australia - Passive Investing Australia