Bare Minimum

With regards to Passive income/converting equity to an income stream what are youre opinions on the Bare minimum in equity you would have to have before retiring?

I suppose you would want to be conservative in case a very flat 5 years or so of growth happened.

At 5% an income of 50k would be handy without getting carried away and spending too much capital,what do you think?

Darren
 
Originally posted by beech
With regards to Passive income/converting equity to an income stream what are youre opinions on the Bare minimum in equity you would have to have before retiring?

I suppose you would want to be conservative in case a very flat 5 years or so of growth happened.

At 5% an income of 50k would be handy without getting carried away and spending too much capital,what do you think?

Darren

G'Day Beech,

50K would be handy, 75K would be handier, 100K would be dandy, 200K would be dandier.........
really, I think it's all a matter of what one's lifestyle costs.
I have a good mate that told me the other week that just to maintain his and his familys current lifestyle he needs $85K a year, to me that seems extravagant.
And as for retiring, I will retire when I'm dead, no sooner, no later.
But I love what I am doing..... what I think you meant is "retiring from something that you don't like doing" in that case work out what it costs to maintain your current lifestyle, add in car replacement, daughter(s) future wedding costs and substantial wedding presents to children, childrens future educational expenses, costs of extended future holidays and replacement of all major furniture items including fridge, big screen plasma TV, stereo and computer equipment etc etc.
Once having calculated these costs, double them to make sure, and you will arrive at a figure that should be the bare minimum.
On achieving that figure in passive income, go in and see your boss with a big grin on your face, and I'm pretty sure you'll know exactly where to tell him to place his job.
Until then, be nice to him.......or her.

regards
 
hi Jakk good point re ones lifestyle and doubling the figure you think you would be happy with.All thgose doodads you mention cost money.

Also would have to agree with you on retiring from which you dont enjoy(hard yakka)in comparison to investing in property which is very addictive.

Would probably be rare where someone has invested for a good part of their life in property only to stop cold turkey on retirement and invest no further.


BTW howd you know i had a daughter,been reading birth notices or something Jakk?:D
 
Originally posted by beech


BTW howd you know i had a daughter,been reading birth notices or something Jakk?:D

Beech, when you have 3 sons, you are always on the lookout to see where your future daughter in law may come from......
and ascertain whether her family has sufficient funds to cover the lavish wedding reception and substantial wedding gift... :)

regards
 
Jakk,

What was your surname again ?????
Need to see if its programmed into my daughters phones and have it removed !!
You with 3 sons and me with 3 very attractive daughters and knowing you only live 20 minutes away makes my comfortable latter life look a little shaky.
:(

Forget the golf, where is that real estate paper again?.:confused:
 
As the father of 2 girls I'm not touching the wedding discussion.

My rule of thumb:-

quit your day job once your passive income is twice your salary.

An alternative measure is "quit your day job once it costs you more in lost deals than you make in salary".

regards

Paulzag
Dreamspinner
 
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hi Paul when you say quit your job when your passive income is twice your salary,are you talking using your equity to provide an income stream (annuity) or strictly positive cashflow after expences?

Darren
 
Hi

My idea would be to quit when passive income covers your living expencess and a SANF allowance built in.

I would consider the what if interest rates went up 2%, inflation rises 2% as well, vacancy rates rise and rents fall, if you can live with that then wave your boss goodbye.

I would also like to invest in several othe income streams other than property to spread the risk.....my happy balance at the moment would be property 60%, shares 30% and other 10%.

bundy
 
Originally posted by beech
hi Paul when you say quit your job when your passive income is twice your salary,are you talking using your equity to provide an income stream (annuity) or strictly positive cashflow after expences?

Darren

My understanding of annuities is they are finite.

Sure, quit with an annuity as soon as you know you wont outlive it. Wouldn't you hate to look for a job after 20 years of retirement?

So for my rule of thumb, passive income is on-going non-personal exertion income that is reasonably sustainable. The reason for quiting once it is twice your salary is that something major has to happen to it for it to reduce by 50%.

Many people quit working as soon as their investment income is enough to cover a frugal lifestyle. That is counter-productive as they miss out on compounding returns and are under pressure to sustain a subsistance income.

Regards

Paulzag
Dreamspinner
 
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