Absolutely, definitely possible. You can achieve anything you put your mind to, if you want it enough. You are only limited by your beliefs. If you think $1million is not possible for you, you will never get it. But if you think $20mill is possible, you have a target and you will reach it if you keep at it.
is 1 million in 10 years really feasible ?
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When I retire, I won't be leaving my total net worth tied up in property. I know people in Hong Kong who can't afford to sell (they owe more on their properties than they can sell them for); I understand Lend Lease lost $1 billion on property in the US. Nor will I leave it in a share portfolio; there are many retirees "in that boat" who are really hurting at the moment.
No, I will be moving my funds to far more safer and conservative investments.
So, if I started off with nothing today and develop $1million in net worth (not counting my PPOR) when I retire in 10 years time (in 2013), my wife and I would be planning on a 5% (or $50K) income stream. Even after income splitting and tax, this would only leave us around $41,500 to live on. Assuming low inflation of 3% pa, this equates to less than $31,000 in today's dollars. This ain't a lot of money.
Even if my safer and conservative investment keep pace with inflation (say 3% growth), I don't feel comfortable retiring on $31,000 in today's dollars. I have worked too hard and I am aiming for a far better lifestyle than that. I am expecting to be retired for 30 to 40 years - that is a long time not to have fun.
As I stated in a previous post, retiring in 10 years time with something closer to $33 million will allow me to really enjoy the following 30 to 40 years with confidence. I have seen too many retirees driving taxis, etc because they thought that they had retired with a lot of money but it wasn't. Not this ducky!!
Why go that slowly?
Aceyducey,
I agree with you on that.
Me, I am biased towards property. Plan is to stop work within 10 years and concentrate on the important things in my life. Still working out what they are - it is currently my major challenge.
Property investment though will always be ongoing. Never selling. Just buying. Watch that equity grow like magic. And then borrow "tax free" funds against the growing equity; at a comfortable sustainable rate. I can't wait. And the equity will still be growing fast enough to allow more and more property purchases.
Being a spreadsheet person, I've prepared a quick sheet to show how even on modest figures one million dollars of equity can be achieved within 10 years. Change some values in the yellow cells to see other scenarios. The spreadsheet can give unreal results so check that the numbers are credible. For example, you do have to be able to service loans!
One million dollars will take me about five years.
One million dollars in 10 years is achievable - but why go that slowly?
Aceyducey,
I agree with you on that.
Me, I am biased towards property. Plan is to stop work within 10 years and concentrate on the important things in my life. Still working out what they are - it is currently my major challenge.
Property investment though will always be ongoing. Never selling. Just buying. Watch that equity grow like magic. And then borrow "tax free" funds against the growing equity; at a comfortable sustainable rate. I can't wait. And the equity will still be growing fast enough to allow more and more property purchases.
Being a spreadsheet person, I've prepared a quick sheet to show how even on modest figures one million dollars of equity can be achieved within 10 years. Change some values in the yellow cells to see other scenarios. The spreadsheet can give unreal results so check that the numbers are credible. For example, you do have to be able to service loans!
One million dollars will take me about five years.
One million dollars in 10 years is achievable - but why go that slowly?
Hi kierank
Never say never! It's perfectly possible to achieve 6% return after tax today, it all depends on your risk profile and where you look.
As a personal example, I pay my investors a return of around 11% - even on the top tax rate they're coming out with close to 6% return. That's secured by property, so is hardly a high risk investment. that's just one example - I'm sure there are plenty of other opportunities out there.
Never say never! It's perfectly possible to achieve 6% return after tax today, it all depends on your risk profile and where you look.
As a personal example, I pay my investors a return of around 11% - even on the top tax rate they're coming out with close to 6% return. That's secured by property, so is hardly a high risk investment. that's just one example - I'm sure there are plenty of other opportunities out there.
B
brains
Guest
"As I stated in a previous post, retiring in 10 years time with something closer to $33 million will allow me to really enjoy the following 30 to 40 years with confidence. I have seen too many retirees driving taxis, etc because they thought that they had retired with a lot of money but it wasn't. Not this ducky!!"
KieranK,
Retiring on close to $33 million will give you more than confidence to retire on
But the reality is, its a lot easier to say than do.
Good luck.
KieranK,
Retiring on close to $33 million will give you more than confidence to retire on
But the reality is, its a lot easier to say than do. Good luck.
Ji Kierank
Re your comment
"So, if I started off with nothing today and develop $1million in net worth (not counting my PPOR) when I retire in 10 years time (in 2013), my wife and I would be planning on a 5% (or $50K) income stream. Even after income splitting and tax, this would only leave us around $41,500 to live on. Assuming low inflation of 3% pa, this equates to less than $31,000 in today's dollars. This ain't a lot of money."
With your example, you could be able to achieve a better tax outcome than that in retirement.
You mentioned that you intended to sell your properties and diversify your investments.
By using Allocated Pensions (money from a superannuation fund) couples today can achieve around $50,000 tax free income with some smart planning. AP's pay no tax on earnings and the income drawn can be very tax effective - usually nil tax.
You could commence your own Self Managed Super Fund with the money from sale of properties and roll over to AP. Need to be aware of Reasonable Benefit Limits, which put a cap on the total amount an individual can have in an AP to receive the concessional tax treatment.
Geekay
Re your comment
"So, if I started off with nothing today and develop $1million in net worth (not counting my PPOR) when I retire in 10 years time (in 2013), my wife and I would be planning on a 5% (or $50K) income stream. Even after income splitting and tax, this would only leave us around $41,500 to live on. Assuming low inflation of 3% pa, this equates to less than $31,000 in today's dollars. This ain't a lot of money."
With your example, you could be able to achieve a better tax outcome than that in retirement.
You mentioned that you intended to sell your properties and diversify your investments.
By using Allocated Pensions (money from a superannuation fund) couples today can achieve around $50,000 tax free income with some smart planning. AP's pay no tax on earnings and the income drawn can be very tax effective - usually nil tax.
You could commence your own Self Managed Super Fund with the money from sale of properties and roll over to AP. Need to be aware of Reasonable Benefit Limits, which put a cap on the total amount an individual can have in an AP to receive the concessional tax treatment.
Geekay
Hi Kierank,
I don't know if I can wait 30 years for your answer!
(Grief . . . I could well be long gone by then
)Rather, lets plan it for 5 to 10 years from now
Regards,
Steve
Aceyducey,
Obviously, I am more risk adverse than you. May be it is my project management background.
I just wonder what would happen to "good property portfolio" if there was a major earthquake off the coast of Sydney which created a huge tidal wave or if a large meteor landed in Melbourne's Port Philip Bay. When you are younger and/or working, it is easier to recover from events such as these but when you are older and/or not working, it is a lot harder. These events may be unlikely - so were planes flying into buildings. I believe today's world is a lot faster and risker than that of my grandparents and the world in 30 years time will be faster and riskier than today.
Hence, I will be erring on the side of conservatism when I retire, both on the amount of net equity and investment assets.
We should also not forget the rapid advances that are continually being in medical science. May be in 30 years time, living past the age of 100, will be common place and the quality of life of such persons may be very good.
Geez, I might be retired for more than 50 years!!! looking forward th that!!!!
Originally posted by brains
Retiring on close to $33 million will give you more than confidence to retire on
Brains,
I hope you are not saying that we should only set ourselves easy to achieve goals!!
I like to stretch myself (when it comes to setting goals that is)
Originally posted by Steve Navra
I don't know if I can wait 30 years for your answer!
(Grief . . . I could well be long gone by then
Rather, lets plan it for 5 to 10 years from now
Steve,
I am planning to build equity for the next 5 to 10 years from now and hopefully it will be enough for 30, 40, 50, ... years of retirement. As I can't predict the future, "the proof will be in the pudding". I will only know the answer in 30, 40, ... years time.
Kieran
Steve
Kieran,
If this event happened I would anticipate that the effect would reach far beyond the property market. Share market would crash, unemployment would skyrocket (except if the death toll outweighed the number of bankrupt businesses) and the AU dollar would plummet.
There would be NO safe investments in or affected by the area destroyed....if your money was not overseas you'd probably lose most of it regardless of your investment vehicle.
of course, those of us with a diversified property investment would be reaping the benefits of non-eastern seaboard property price skyrocketing in value & rental returns.....
The way I see it, some catastrophic event major enough to overturn the property market nationally would also devalue EVERY other investment vehicle in the country...when the dust settles what will be left? A hunk of land and people who want to start rebuilding.....who owns the land?
Cheers,
Aceyducey
Aceyducey,
I wasn't thinking of a catastrophic event that destroyed the world as we know it. In that case, I agree with you - who cares what or how you have; it would be worth nothing.
I was thinking of an event that resulted in major damage (not total destruction) but caused the demand for property in the affected areas to drop, property values to drop and return income to drop. Another example of such an event would be property in a Northern Queensland city after a major cyclone.
These events would not be deemed catastrophic to the world at large but if your properties were in the affected areas (whether it be Sydney, Melbourne, Cairns, etc), it could be catastrophic to your retirement.
KieranK
I wasn't thinking of a catastrophic event that destroyed the world as we know it. In that case, I agree with you - who cares what or how you have; it would be worth nothing.
I was thinking of an event that resulted in major damage (not total destruction) but caused the demand for property in the affected areas to drop, property values to drop and return income to drop. Another example of such an event would be property in a Northern Queensland city after a major cyclone.
These events would not be deemed catastrophic to the world at large but if your properties were in the affected areas (whether it be Sydney, Melbourne, Cairns, etc), it could be catastrophic to your retirement.
KieranK
KieranK
"I was thinking of an event that resulted in major damage (not total destruction) but caused the demand for property in the affected areas to drop, property values to drop and return income to drop"
Do you mean like if One Nation won the state election and Pauline Hanson was elected as Premier?
Only joking of course!!!!!! Don't wish to start a political debate - better things to talk about - like making money.
Geekay
"I was thinking of an event that resulted in major damage (not total destruction) but caused the demand for property in the affected areas to drop, property values to drop and return income to drop"
Do you mean like if One Nation won the state election and Pauline Hanson was elected as Premier?
Only joking of course!!!!!! Don't wish to start a political debate - better things to talk about - like making money.
Geekay
KieranK,
So disverify your locations. That way you'll have balance when one city gets devistated.
By all means, invest in hong kong if you mroe comfortable about it. I would hesitate because of currency fluactions, but if that' ssomething you are comfortable with, go for it.
I heard a report on the radio which said SMSF do much better becuase people invest in what they know. can't quote precisely, but they said something like "there's a lot of money tied up in woolworth shares within SMSF. That's becuase they go thre every week, and they'll be the first to know if something's going wrong with woolworths and be the first to pull their money out."
Jas
It never ceases to amaze me on what basis people choose investments.
Those same people as referred to on the radio probably flew Ansett, insured their home with HIH, had a one tel phone contract and buy Big Kev products.
From my experience, the customer is usually amongst the last to know the business is about to go belly up.
Hence, one of the advantages of property, it doesn't rely on an army of people with degrees, but no hands on experience, to manage it. The worst result you could probably have is to not insured it and it burn to the ground - it doesn't take much to cover that risk.
Geekay
Took 15 years to get to a certain level by saving / PPOR ( pre property investing days ). Pain in the ......
We've probably quadrupled our wealth in last four years.
Have doubled it over last 18 months.
Compared to msot active investors on the forum , we've been very conservative, and if we'd been more agressive 18 months ago , we'd could have easily quadrupled our money in the last 18 months , but part of that is due to the phase of the market at the moment .
see change
We've probably quadrupled our wealth in last four years.
Have doubled it over last 18 months.
Compared to msot active investors on the forum , we've been very conservative, and if we'd been more agressive 18 months ago , we'd could have easily quadrupled our money in the last 18 months , but part of that is due to the phase of the market at the moment .
see change
I see - a residential property specific catastrophe that wipes out residential property up and down the eastern seaboard but leaves commercial and industrial property untouched...has no impact on currency movements & barely causes a ripple on the share market.
Kieran, in all seriousness, it's very difficult to have a residential property crisis across major metros that doesn't affect other asset classes.
Sure they may be impacted to a lesser extent, but they will still be impacted.
Remember also that property is not a single asset class in a single market.
You can buy in many different markets & purchase different asset classes....sort of an all-in-one option.
And by diversifying your portfolio simply within property you can protect yourself against events in a single market.
BTW: I don't think you should only hold property, but you can choose to and still feel very secure
Cheers,
Aceyducey
Hmmm
What if we were attacked by aliens like in Independence Day (ID4)
will Will Smith be around to save us ? What if that big alien space ship does crash in the Eastern suburbs like it did at the end of the movie !!!!
Alot of rich people would be very upset I guess, including Murdoch and Packer, it would wipe out billions in houses. Insurance companies would not cover an alien invasion.
Regards
Investor
PS. Therefore stay away from the eastern suburbs of Sydney.
