My FIRE spreadsheet assumption

Discussion in 'Financial Independence, Retire Early (FIRE)' started by Realist35, 23rd Jan, 2020.

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  1. Realist35

    Realist35 Well-Known Member

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    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 :)
     
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  2. mtat

    mtat Well-Known Member

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    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.
     
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  3. Redwing

    Redwing Well-Known Member

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    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?
     
  4. Realist35

    Realist35 Well-Known Member

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    Screenshot_20200123-171344.jpg Screenshot_20200123-171315.jpg
    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.
     
    Last edited: 23rd Jan, 2020
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  5. mtat

    mtat Well-Known Member

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    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".
     
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  6. mtat

    mtat Well-Known Member

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