Peter Thornhill

Peter got back to me:

Peter was 41 when he returned to Australia in 1988 and didn't really start saving more heavily until after that.

He also detailed their life, his career and saving but I won't post it until I confirm it's ok with Peter. But it certainly highlighted that what Peter has achieved is possible for many out there.

Ironic in that it wasn't until I was 41 (when I quit work to move overseas because of wife's employment) before I had gotten all the stupid "get rich quick" stuff out of my system and started saving seriously. We were a single employment income household from that time onward but very high income in the few years prior to early retirement.

And something else Peter added for those looking to use debt recycling with dividends to pay off the home loan quickly. Some here will probably already be familiar with the strategy:

 

Really appreciate it @austing, amazing story highlighting yes it can be done!

Anybody else having trouble downloading the link/file on dividend recycling above??!

 

@austing, what a treasure you have been to the forum! Thanks heaps.

Glad I found you and dividend income investing well before I reached my 40's.

 

I know Peter recommends to keep buying to build up the shares over time, and not wait for a market crash as you might miss out on gains sitting on the side lines waiting for it.
But is anyone else preparing for it now, not investing further and waiting to see what's gonna happen with the market theses next few months, ready to buy up big?

 

I curently have a small inv loan and at the moment just paying down the loan. Once paid i will buy regularly, in the mean time if stocks on sale again i will get the money from the offset account to buy, essentially increasing the loan inthat case.

Cheers,

Anne

 

Ok, here we go. Below is Peter Thornhill's inspirational story just to show that what he achieved is possible for many out there. But even if one fell way short of his outcome it would still likely be a very pleasing result. As Peter mentions below "Happiness is having an income that exceeds YOUR wildest expectations; no one else’s."

Investment strategy more often than not is more important than employment income. As Peter mentioned in the following video interview (posted again for completeness) his employment roles were mainly middle management. I'm guessing these would have been well paying roles especially in the later stages of his career but not excessively high. However his wife ceased working in her twenties, they raised three children and importantly Peter didn't really start seriously saving until in his forties. As mentioned in the video when they returned to Australia in 1988 (Peter was 41) their dividend income was just $941 pa.

Here's the video again:


And Peter's story, enjoy:

 

Here is another video of Peter with Sugarmama. Same setting but he has a different shirt on:

 

And she's removed her coat. What the hell's going on?

 

Thanks @austing for posting this inspirational and detailed story.
I've been doing the loan strategy mentioned in the attached PDF.
It's been going OK for me (12 months by Jan 2017). The only difference for me is that I'm not paying down the principle, just leaving the money in an offset account. I plan to extract more equity from my only PPOR next year.

However, I invest using margin loan as well at the moment (not overly expensive 5.4%).

 

Are you beating 5.4% in returns?

 

My borrowing consists of:
a) IP loan (as described in the Peter's debt recycling PDF): interest 4.3%
b) Margin loan (variable): interest 5.4%
c) Margin loan (fixed): interest 4.5%

Although the average interest rate as per above is around 4.75%, I calculated my cost (total interest/total investment) falls at around 4.85%.

In the past 12 months up to today, total dividend returns (mostly fully franked) falls at around 5.35%.

In short, my total dividend returns is slightly higher than the interest payments, only a shy 0.5%.
But after tax and the future capital & dividend growth, I'm willing to take this risk
I'm moving slow and hopefully steady. And early next year, hope I could source more "cheap" money to invest more.

FYI, all of my investments started after reading all posts in the "Other Asset class" in this forum. It's been a great great (2x speed) learning for me.

 

Are you double leveraged?

e.g Borrow $100,000 from LOC and then use this to borrow to buy $400,000 worth of shares.

 

Sounds like it @Terry_w

e.g.
1. I bought 100 of CBA shares using the LOC
2. Using the 100 CBA shares as security, I then bought more of CBA shares using margin loan

Hope it makes sense?
Yea I know it's more risky, however I don't think there are any issues with Taxation.

 

Rather risky!

But from the tax side the interest on both loans can be deductible if you are buying income producing shares.

 

Is the margin loan the risky part? Getting called In.
Seems it's leverage on leverage.

 

Thanks @Terry_w
I'm fully aware of the situation. As I said, although it has worked out for me, I'm continuously exploring cheaper and less riskier options

If I could, I may follow @austing footsteps to utilise the margin loan as the opportunistic money when market crashed.

 

Thank you so much Austing for sharing Peter's story. Inspirational!

 

don't know where you got that from. I've never used a margin loan in my life. Just lower risk, lower interest LOC against property and buying shares in gloom hence higher margin of safety. And I've never double leveraged! Note than shares themselves may also have debt so it could be a case of triple leverage.

Remember Peter's main point of never borrow more than you can afford! From memory I think Peter keeps his LVR quite low as do I. Mind you we're retired now and no doubt more conservative. But even prior to retirement our overall LVR was on the conservative side.

 

No @austing. I did not mean that you have not used margin loan.
But I think you mentioned somewhere to prepare to use margin loan when market crashed "one day". Do I understand that you're bearish on the market now?

Yes, I'm very mindful of this. Thanks for the reminder.
I'm not here to advise to use any leverage but I'm only sharing what I'm doing. Also note that I'm in my very early stage of learning.
And I'm quite pleased receiving all the feedback

 

It would be quiet interesting to see Peter's saving strategy and approach from the early $941 dividend paying days to today!