Who is going to retire young

Discussion in 'Financial Independence, Retire Early (FIRE)' started by MTR, 30th Aug, 2019.

Join Australia's most dynamic and respected property investment community
  1. TMNT

    TMNT Well-Known Member

    Joined:
    23rd Jul, 2015
    Posts:
    5,572
    Location:
    Melbourne
    you havent seen how ugly I am!

    no amount of money will fix that
     
  2. TangibleGoodwill

    TangibleGoodwill Well-Known Member

    Joined:
    7th May, 2016
    Posts:
    81
    Location:
    VIC
    Are they longer than two week each though?

    By the time you travel, settle, start to unwind, you’re packing up again to travel home.

    Getting away, as far away from the hectic working life for a minimum of a 5 weeks stretch is the only way to heal imho.
     
  3. spludgey

    spludgey Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    3,482
    Location:
    Sydney
    I'll never understand this, but each to their own obviously.
    If the local public schools really were terrible, I'd rather move a few suburbs down to a better public school. Will be cheaper, plus you will retain the value of the additional PPOR cost.
     
    Terry_w, Codie and mtat like this.
  4. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

    Joined:
    18th Jun, 2015
    Posts:
    41,666
    Location:
    Australia wide
    If the local public schools I wonder why people are living in that area. It must mean the suburb itself is not so good.
     
  5. TangibleGoodwill

    TangibleGoodwill Well-Known Member

    Joined:
    7th May, 2016
    Posts:
    81
    Location:
    VIC
    I totally agree. I’ve done the calcs. Move to a more affluent suburb with better state schools.

    Would need to seriously sell down, significant PPOR debt, less cash flow.
     
  6. Lacrim

    Lacrim Well-Known Member

    Joined:
    25th Jul, 2015
    Posts:
    6,175
    Location:
    Australia
    Been re-reading the many 'retire young' threads on this site. By retire, I mean doing what you want when you want, but not banking on any income coming from those activities.

    In a P&I world, I'm pretty much convinced that I'll never get there from LOR with rent increases along the way only keeping up with expenses and land tax and/or serving to pay down the debt a little quicker. But on a 30 yr mortgage, we are talking an absolute minimum of 25 yrs before the debt is extinguished. Too long unless you're under 30 and already racked up some decent well positioned properties.

    The more recent views recommended reliance on dividend incomes from LICs and the like, but this may come at the expense of any material CG, and they are definitely not immune to external shocks like COVID. That said, the single best post I've ever seen on a tax effective retirement is @Terry_w's thread on receiving circa $94K dividend income per head.

    I don't really have the answers. Has anyone achieved $100K PASSIVE/DO NOTHING income from either property/shares other than the sale of a business, day trading, NRAS/'cashcows', blogs/vlog income or investing in the US?
     
    Bunbury, Codie and MTR like this.
  7. MTR

    MTR Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    27,784
    Location:
    My World

    You reminded me.... got to read @Terry_w post again and try to get my head around this
     
  8. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

    Joined:
    18th Jun, 2015
    Posts:
    41,666
    Location:
    Australia wide
    I want to retire young. The trouble is I am 52.
     
  9. Lacrim

    Lacrim Well-Known Member

    Joined:
    25th Jul, 2015
    Posts:
    6,175
    Location:
    Australia
    I was going to post the link but can't seem to find that thread. Feel free to add. I might be using the wrong keywords.
     
    MTR likes this.
  10. MTR

    MTR Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    27,784
    Location:
    My World
    I am trying to find it, but no luck
     
  11. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

    Joined:
    18th Jun, 2015
    Posts:
    41,666
    Location:
    Australia wide
    BigL, Bunbury, craigc and 2 others like this.
  12. Gen-Y

    Gen-Y Well-Known Member

    Joined:
    8th Nov, 2015
    Posts:
    3,770
    Location:
    Brisbane - Sydney
    NOT ME!
     
  13. wombat777

    wombat777 Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    3,565
    Location:
    On a Capital and Income Growth Safari
    My current strategy is focused on achieving sufficient after-tax capital from gains on shares and property to cover me through the years I have to retirement, whilst then keeping excess funds invested.

    In parallel trying to build my super to a point where the dividend income will cover my income needs from 60.
     
  14. Lacrim

    Lacrim Well-Known Member

    Joined:
    25th Jul, 2015
    Posts:
    6,175
    Location:
    Australia
    Brilliant. Unless Govt rules change, (unfortunately, that's always a possibility), I reckon this is the direction I'm working towards.
     
  15. Kjulez

    Kjulez Member

    Joined:
    23rd Aug, 2020
    Posts:
    16
    Location:
    Melbourne, Victoria
    Hello, I'm new here but I am from/ familiar with the FIRE community so thought I would join in by answering something I actually have a slight clue about as opposed to property where I don't know a lot.

    My husband and I want to retire early, but it's not early for the FIRE meaning, age 50. I think we are on track to have about 1.4M in cash & shares (mainly shares!) by that time using the 4% rule (so we may be a bit short depending on if the share market ever actually responds to covid!).

    The plan is to get whatever dividends we get by that time but also start drawing down on the capital for 10 years till he reaches preservation age, then start using his super from there. Also I don't see my husband ever stopping work completely (and i think that's really key to successful FIREs - no one actually seems to fully stop working, there is always something people do that ends up still making money), but the plan is to quit the day job at 50.

    Thinking of boosting our cash in the next couple of years by selling our house in what I consider to be an expensive area and buying a house in a slightly cheaper area :)
     
  16. Bunbury

    Bunbury Well-Known Member

    Joined:
    16th May, 2017
    Posts:
    427
    Location:
    Melbourne
    I'll give a run down of the general approach I've adopted. Much of this has been the product of learning from some role models as well as voraciously reading and running the numbers on the various options. Reading books, researching online and reading the discussions here on PC and Somersoft previously have been a great eye opener and fantastic resource. I definitely appreciate people posting their perspectives and experiences. This kind of resource is one advantage that beginners have compared to those who have started earlier. Pay particular attention to @Terry_w and his tips.

    The greatest advantage is the attitude you bring to the table. I remember having a dogged determination to be independent and free to do what I want in life. I know and am related to some pretty successful people. People seem to only see their success and think it's not fair or that they had it easier. These people never consider or understand the drive and years of application required to master anything worthwhile in life.

    I am currently over half way to a passive income of $100k pa after purchasing my first property in 2006. I would be there but I'm holding rather than selling a property that will well and truly get me there. I plan on doing this in ~2022 and investing the proceeds mostly into VAS as well into an allocation of VGS, and NDQ.

    The following is a loose outline of the path I have taken with some refinements for the current lending landscape:
    • Save as much as you can when you graduate. Save. Get a side hustle if your pay alone is not going to get you there.
    • Buy a good house as soon as you can. Try to select a property is going to grow in value. Move into this house and live in it. If you need to buy a place that needs some work to make this happen then do it.
    • Understand the importance of finance and structuring from the outset. Make sure you have a broker and an accountant who is not a deadbeat. Study property cycles in your market and develop a nuanced understanding of your market.
    • Buy another house that you can rent out and want to move into in the future.
    • Pay your mortgage down. Don't be an idiot and waste your money but enjoy things that are worthwhile to you. For me this has been travel. After establishing myself I have not had to compromise on this. I was able to pay my mortgage off in 8 years.
    • Recycle debt.
    • Buy a house with development potential.
    • Develop the development site.
    • Build up a cash buffer to offset your future PPOR.
    • Invest excess cash in ETFs (or LICs but I prefer ETFs) Consider using an equity top up loan to facilitate this.
    • Acquire (another) development site(s). If servicing is tight consider selling developed stock. Develop these if possible.
    • Practice patience because sometimes pausing is the best option. This can be hard if you are champing at the bit though.
    • Sell your original mortgage free PPOR capital gains tax free and move into your earmarked IP.
    • Invest these proceeds into VAS/VGS/NDQ
    N.B. Even a watered down adoption of this would get most people there.
     
    Last edited: 27th Aug, 2020
    Player, Zenith Chaos, Burgs and 13 others like this.
  17. Zimplestiltskin

    Zimplestiltskin Well-Known Member

    Joined:
    4th Oct, 2018
    Posts:
    421
    Location:
    Melbourne
    I plan to "retire" by 45 depending if we have more than 2 kids. I'm early 30s now.

    Could retire as early as 40 depending on the market and life quality I want after retirement.

    I wouldn't quit my job though, I love my job. I just want to be able to work like I don't need the money. Do what I want to do.


    My path has been very unconventional and relied on being close with and trusting family, which is not an option for everyone.
    - worked during undergrad to buy first IP
    - during 7 years of postgrad I flipped our family home twice adding in equity from my PI and effectively adding 300k in manual labour costs (Reno, sell, buy, Reno, sell, buy, Reno, hold). The home is now exactly what my family dreamed and is split into 2 separate spaces. I live in one rent/mortgage free.
    - built my career and salary higher, and travelled a lot over the past 5 years.
    - will use equity from IP and new high salary to expand to $4m in IP over next 7 years.
    - putting excess salary into shares/crypto for balance.
     
    Last edited: 27th Aug, 2020
    momentum26, Anne11 and Bunbury like this.
  18. Indifference

    Indifference Well-Known Member

    Joined:
    30th Jul, 2015
    Posts:
    977
    Location:
    Banana Republic
    I believe the traditional notion of retirement is redundant for the financially liberated.

    Being retired means not working or at least not accepting reward for working. By this definition I doubt many aspiring to retire young will actually be retired.... they may be financially independent but not retired.
     
    Anne11 and Terry_w like this.
  19. The Falcon

    The Falcon Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    3,423
    Location:
    AU
    I’m pulling the pin next January at 42. Will stick around for 6 months for handover as I run the company. I may come back as a consultant a day or two a week doing what interests me after a long break or I may not. Amazing to have that choice.

    Over the last decade I founded a company, bought out my business partner and took on his responsibilities, negotiated and facilitated the buy out of our investors with bank debt, doubled the business in the 3 years after that and sold the company to a multinational, leading negotiations on that deal as well as the day to day management of a growing enterprise.

    I’m just bloody tired now and need a rest. If I don’t want to work a day again I don’t need to. Let’s see how I feel after the batteries are recharged.
     
  20. MTR

    MTR Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    27,784
    Location:
    My World
    I retired at 47

    if I had my turn again I should have tweaked the strategy and diversified into shares, far more passive. Its really true what investors say here..... properties require more work
     
    Bunbury, Zenith Chaos, Sticky and 2 others like this.

Buy Property Interstate WITHOUT Dropping $15k On Buyers Agents Each Time! Helping People Achieve PASSIVE INCOME Using Our Unique Data-Driven System, So You Can Confidently Buy Top 5% Growth & Cashflow Property, Anywhere In Australia