Hey I come from Canberra originally!!beeroll said:Steve Navra mumbled:
The BRUMBIES
Should have known you would back Australia's "winning" team!B
Regards,
Steve
Living off equity – a Reality Check
- Thread starter keithj
- Start date
Regards,
Steve
Congratulations!
Looks like the Brumbies squeezed in - second half comeback, who'da thunk?
We get the reward, though: Part 2!
(When I tell my girlfriend, who's getting ready to come out here from Canada, that I spent my Friday evening waiting for a post on an internet forum from an investment guru, she's gonna unpack her bag and look for a nice Canadian boy...)
(All right, I actually spent it watching a bit of rugger and a DVD, but still...)
Looks like the Brumbies squeezed in - second half comeback, who'da thunk?
We get the reward, though: Part 2!
(When I tell my girlfriend, who's getting ready to come out here from Canada, that I spent my Friday evening waiting for a post on an internet forum from an investment guru, she's gonna unpack her bag and look for a nice Canadian boy...)
(All right, I actually spent it watching a bit of rugger and a DVD, but still...)
Now I know this a bit off topic, but beeroll's post on the state of the Japanese RE market was a real eye opener. Call me ignorant and I remember the bubble bursting in the early nineties over there, but why has their market not recovered?
Looking at the charts beeroll provided their market is consolidating sideways and looks like a breakout waiting to happen (be it up or down). For those of you out there who are in the know can you please explain what has been happening in the past decade for this to occur? Where are Japanese investors $s going if it's not into RE? Afterall am I correct in assuming that their population over the past 10 years must have grown immensely and their little island isn't getting any bigger....
Sorry to jump off the topic but beeroll and plumtree have really got me thinking...
ArJay
Looking at the charts beeroll provided their market is consolidating sideways and looks like a breakout waiting to happen (be it up or down). For those of you out there who are in the know can you please explain what has been happening in the past decade for this to occur? Where are Japanese investors $s going if it's not into RE? Afterall am I correct in assuming that their population over the past 10 years must have grown immensely and their little island isn't getting any bigger....
Sorry to jump off the topic but beeroll and plumtree have really got me thinking...
ArJay
Hi all,
Phew!!
You go away for a few meetings, travel for a few hours, and come back to a thread that has exploded in opinions and replies!!
Firstly, Arjay, the Japanese population has not grown immensley over the last 10 years, in fact the growth rate is less than 1% p.a. "All" the investment money has gone in several places. The major one though is pay off debt!
Back to the original question of this thread,
and yes,
Keith has every right to ask the questions of those who post to his thread.
What is the risk??
Can we put a probability on there being no growth in property over a 5 year period?? What about a 10 year period??( This can include shares in a fund, and no, I do not buy the argument that the DCT of Steve's will provide a 10% distribution p.a.)
If the risk of "disaster" is only 5%, then the odds are too high for me. This will be especially so in retirement.
Even if you retire at 45 and the find the "disaster" scenario at age 55, can you then recover?? Duncan's idea of going back to work is noble, but what if no-one wants to employ a person who has been out of the workforce for 10 years??( in a well paid job anyway).
See_change Only my wife knows how I feel
Steve, thanks for the book, interesting reading (I will go back and discuss what I don't agree with later), keep it going.
I always said I would buy your book, now I don't have to.
The conservative, negative approach does not make as much as Steve's method, given ideal continued growth conditions.
It is the Jan Somers approach, and seems to work for many people.
But if we did have a longer than expected pullback in both shares and property, and then another boom in 10-12 years time, anyone care to guess which method will set you up the best?? (opps, sorry got off the topic of LOE)
bye
Phew!!
You go away for a few meetings, travel for a few hours, and come back to a thread that has exploded in opinions and replies!!
Firstly, Arjay, the Japanese population has not grown immensley over the last 10 years, in fact the growth rate is less than 1% p.a. "All" the investment money has gone in several places. The major one though is pay off debt!
Back to the original question of this thread,
and yes,
Keith has every right to ask the questions of those who post to his thread.
What is the risk??
Can we put a probability on there being no growth in property over a 5 year period?? What about a 10 year period??( This can include shares in a fund, and no, I do not buy the argument that the DCT of Steve's will provide a 10% distribution p.a.)
If the risk of "disaster" is only 5%, then the odds are too high for me. This will be especially so in retirement.
Even if you retire at 45 and the find the "disaster" scenario at age 55, can you then recover?? Duncan's idea of going back to work is noble, but what if no-one wants to employ a person who has been out of the workforce for 10 years??( in a well paid job anyway).
See_change Only my wife knows how I feel
Steve, thanks for the book, interesting reading (I will go back and discuss what I don't agree with later), keep it going.
I always said I would buy your book, now I don't have to.
The conservative, negative approach does not make as much as Steve's method, given ideal continued growth conditions.
It is the Jan Somers approach, and seems to work for many people.
But if we did have a longer than expected pullback in both shares and property, and then another boom in 10-12 years time, anyone care to guess which method will set you up the best?? (opps, sorry got off the topic of LOE)
bye
Hi Bill.LBill.L said:
I have just one very easy question for you:
How on earth can you possibly offer this opinion, when you obviously haven't got a clue what DCT is, or how it works?
See: http://www.somersoft.com/forums/showthread.php?p=141648#post141648
(My reply to your last uneducated opinion)
Regards,
Steve
PS: You don't ever have to buy my book; I will gladly give you one for free . . . though I am not sure it will fit
Sorry Bill.L,Bill.L said:
You will just have to wait . . . probability / risk is in chapter 4
I see you are spewing all your NEGATIVE stuff, even before I am finished the explanation.
I make a fair effort to present this education to Forum Members.
The courtesy of first allowing me to address issues like risk would be good . . . before you go on you NEGATIVE personal crusade.
Regards,
Steve
Last edited:
Steve,
Your efforts are very much appreciated. Please don't lose momentum now! I am keeping all my questions till the end and the list is definately growing. I have been looking at your structure since last year and I think it is sometimes easy to question or have doubts when looking at sections in isolation. This thread is attempting to tie it all together step by step and that is why it is invaluable to my learning process. Keep up the very good work.
Regards
Andrew
Your efforts are very much appreciated. Please don't lose momentum now! I am keeping all my questions till the end and the list is definately growing. I have been looking at your structure since last year and I think it is sometimes easy to question or have doubts when looking at sections in isolation. This thread is attempting to tie it all together step by step and that is why it is invaluable to my learning process. Keep up the very good work.
Regards
Andrew
Bill.L said:
Trust me Bill, if I will have been out of the workforce for TEN YEARS my Net Worth will just be huge..
Conversely, if I stayed IN the workforce for those TEN YEARS my Net Worth will still be large but I would have spent those 10 years in the Rat Race.
Given that 10 yrs is going to be roughly 10-15% of my ENTIRE LIFE I will not sacrifice 10 hours of almost every day to guard against the REMOTE chance that A) the Growth in my portfolio fails to occur and B) I end up unemployable..
The only unemployable people I've met ALL have terrible attitudes and work ethics. Given that I dont fall into either of those categories "B" is therefore not a concern.. so where's the downside Bill?
Hi All,
Please keep this forum of a professional / friendly place to visit and learn.
Please don't personaly attack people for their views, everybody has the right to have your own views, you don't have to agree with it
Just be nice towards each other, that is all i ask
SMILE AND BUY LOTS OF IP'S
GG
Please keep this forum of a professional / friendly place to visit and learn.
Please don't personaly attack people for their views, everybody has the right to have your own views, you don't have to agree with it
Just be nice towards each other, that is all i ask
SMILE AND BUY LOTS OF IP'S
GG
Sim
Administrator
I'm with Dunc here ... if I've managed 10 years out of the workforce, I'd be pretty darn ecstatic. If economic conditions got to the point where I was no longer comfortable relying on my portfolio to keep me, then I wouldn't have a problem finding other sources of income. In the meantime though, there is plenty of time for me to tweak my portfolio to take advantage of those areas of the economy that ARE producing returns, even if my share/property portfolio aren't. It's not as if I'm having to work 60 hours a week just to survive - time is plentiful !
Glass half full.
I know people who have changed careers late in life and have done very well at it - like Dunc said, with the right attitude and ethics, you can do pretty much anything.
Glass half full.
I know people who have changed careers late in life and have done very well at it - like Dunc said, with the right attitude and ethics, you can do pretty much anything.
Steve Navra said:
I remodelled my Spreadsheet to allow someone to continually re-employ Lazy Equity to purchase new Assets...
- Enter the LVR you're comfortable with
- Enter a few other figures like how much to allow for purchase costs, new rental income when buying, new ongoing costs when buying etc..
- Enter your PAYG Income down the worksheet.. cease entering it when you want to retire. (Col R)
- Enter your starting Portfolio Value, Debt, Rental Income and Costs
- Enter a "Y" in Col F when you want your portfolio to re-gear to your max and buy more assets the next year.. When assets are purchased, your ongoing costs and rental income are increased to reflect this.
- Enter your predictions for Interest Rates in Col N.
- Enter your predictions for Growth in your assets in Col O
- Enter your predictions for Inflation in Col P (this causes your rent and property costs to grow).
The values in the spreadsheet are not mine, nor are the predictions for rates etc mine.
Observe Column U, it tells you what you have to live on.. you can adjust this by choosing to earn some PAYG income or drawing down some Equity.. Equity is drawn down in Col Q, as a percentage of your total portfolio. Equity could be used to live on, or service debt associated with your new portfolio purchases. When its negative, you need to go earn some more money, or draw down more equity..
Dont draw down equity you haven't earned unless you're a freaking moron
To see how much equity you've cumlatively "earnt" watch Col V, to see how much equity you've cumlatively "spent", keep an eye on Column W.Could be full of bugs, I am a Software Developer after all..
Blue Cells - YOU cant touch these.blue
Green Cells - YOUR data expected.
Pink Cells - Watch these closely!
Steve, am I right in assuming that when you say "dont spend what you havent earnt" that its cumulative.. ie if you earnt 10% 3 yrs in a row, but only spent 5% each year, that you still have around 15% that you could draw down on in future years without feeling guilty?
You'll need to unprotect the worksheet if you want to tweak it.
Living off equity – a Reality Check
Dear All,
1. I think it simply boils down to this issue: "what is our own life passions and are we presently doing what we really want to do in our own life?" As the proverb says, "One man's meat is another man's poison" and there are definitely different ways towards our own retirement planning, given our individual unique life circumstances and life goals.
2. The strategy advocated by Steve does provide a good guideline which we can consider to tailor it to our own unique life circumstances and life goals but it is definitely NOT the ONLY way.
3. I have taken the path as a full time property investor though I am presently not yet freely free. However, pursuing my own life passions now in property investing is like having "heaven on earth" now and the most exciting part of my own life. It is not just the money, it is financial freedom to do what I have always wanted to do in my own life and having all the time to read up and attend the various self-development and financial literacy seminars and conferences, visiting new places, looking for new properties to invest etc and having quality time to "quietly" think through my own cashflow issues and property portfolio and managing them effectively to create more/new wealth to further invest in myself and in my property portfolio.
4. In this way, I grow my property portfolio faster towards realising my financial goals earlier in life, and then proceeding on to 'stretch" my financial goals further to include new life challenges of creating new wealth and cashflow through developing a business out of own life passions to help create new life-time residual passive income streams for my family and myself. As a property investor, I "buy" time to reach my financial goals;- as a property developer, I "create" my additional time for my future for my family and I enjoy in the near future through my present intensive "time investment" in property investing and self development, by learning how to effectively leverage onto the oother people's time, capital and resources, to help create these various new life-time residual passive income for family and myself to retire off and to give back to society in future.
5. To me, by living off the equity from my property portfoilo, I am paying myself first, let alone enjoying my life now.
6. However I also often tease and joke with my wife that she is in fact, even in an more enviable position than me:- as she fully enjoy her teaching career and the govt/others "pays" her to enjoy her life passions and to do what she is really enjoying herself.
7. I guess this is the case for Sim as well.
8. Thus, the real issue only arises when we do not truly enjoy what we are presently doing in our lives, be it in a job or in a business and this may actually suggest it is about time we take stock of ourselves, our own lives and life goals and to have the courage to change our present life-paths where neccessary.
9. A related thought which I will also want to further share: let us all NOT be too busy planning for our retirement and acquiring wealth for ourselves per se until we fail to enjoy our present life NOW with our loved ones! Who's knows what holds tommorrow for each of us and our loved ones? Man can plan all he wants and can but unless God will it, all these human planning are all in vain and can be easily made nought by external world events and natural disasters like the recent earthquake and tsunami disasters.
10. For your kind update and considerations,please.
11. Thank you.
regards,
Kenneth KOH
*******************************************************Sim said:
Dear All,
1. I think it simply boils down to this issue: "what is our own life passions and are we presently doing what we really want to do in our own life?" As the proverb says, "One man's meat is another man's poison" and there are definitely different ways towards our own retirement planning, given our individual unique life circumstances and life goals.
2. The strategy advocated by Steve does provide a good guideline which we can consider to tailor it to our own unique life circumstances and life goals but it is definitely NOT the ONLY way.
3. I have taken the path as a full time property investor though I am presently not yet freely free. However, pursuing my own life passions now in property investing is like having "heaven on earth" now and the most exciting part of my own life. It is not just the money, it is financial freedom to do what I have always wanted to do in my own life and having all the time to read up and attend the various self-development and financial literacy seminars and conferences, visiting new places, looking for new properties to invest etc and having quality time to "quietly" think through my own cashflow issues and property portfolio and managing them effectively to create more/new wealth to further invest in myself and in my property portfolio.
4. In this way, I grow my property portfolio faster towards realising my financial goals earlier in life, and then proceeding on to 'stretch" my financial goals further to include new life challenges of creating new wealth and cashflow through developing a business out of own life passions to help create new life-time residual passive income streams for my family and myself. As a property investor, I "buy" time to reach my financial goals;- as a property developer, I "create" my additional time for my future for my family and I enjoy in the near future through my present intensive "time investment" in property investing and self development, by learning how to effectively leverage onto the oother people's time, capital and resources, to help create these various new life-time residual passive income for family and myself to retire off and to give back to society in future.
5. To me, by living off the equity from my property portfoilo, I am paying myself first, let alone enjoying my life now.
6. However I also often tease and joke with my wife that she is in fact, even in an more enviable position than me:- as she fully enjoy her teaching career and the govt/others "pays" her to enjoy her life passions and to do what she is really enjoying herself.
7. I guess this is the case for Sim as well.
8. Thus, the real issue only arises when we do not truly enjoy what we are presently doing in our lives, be it in a job or in a business and this may actually suggest it is about time we take stock of ourselves, our own lives and life goals and to have the courage to change our present life-paths where neccessary.
9. A related thought which I will also want to further share: let us all NOT be too busy planning for our retirement and acquiring wealth for ourselves per se until we fail to enjoy our present life NOW with our loved ones! Who's knows what holds tommorrow for each of us and our loved ones? Man can plan all he wants and can but unless God will it, all these human planning are all in vain and can be easily made nought by external world events and natural disasters like the recent earthquake and tsunami disasters.
10. For your kind update and considerations,please.
11. Thank you.
regards,
Kenneth KOH
duncan_m said:Could be full of bugs, I am a Software Developer after all..
So, I'll just e-mail you with loads of bug reports...
duncan_m said:
Ugh, what ghastly colours you choose!
The bond market
A lot of focus is made on shares and property. There is one other commodity that has been overlooked...the Bond market.
At the right time you can invest in this market for excellent capital growth and income. It has been a few years since I studied this market or its strategies but when I last looked you could use margin lending here.
If you get the timing right then you stand to make some massive capital gains as well.
The bond market is larger than the stock market in terms of turnover.
ps. I have not personally traded this market but I have seen strategies based on the last cycle and the results were amazing. The reason I thought of throwing this in the discussions as this market will become very relevant in the near future and those looking for future income would benefit from learning more.
Regards
Sailesh
A lot of focus is made on shares and property. There is one other commodity that has been overlooked...the Bond market.
At the right time you can invest in this market for excellent capital growth and income. It has been a few years since I studied this market or its strategies but when I last looked you could use margin lending here.
If you get the timing right then you stand to make some massive capital gains as well.
The bond market is larger than the stock market in terms of turnover.
ps. I have not personally traded this market but I have seen strategies based on the last cycle and the results were amazing. The reason I thought of throwing this in the discussions as this market will become very relevant in the near future and those looking for future income would benefit from learning more.
Regards
Sailesh
Sim
Administrator
Kennethkohsg said:
Kenneth makes some very good points !
Summary cliches: it's only money; you only live life once; take time to stop and smell the roses; you don't appreciate what you've got until it's gone; 'tis better to have loved and lost than to never have loved at all, etc.
I was just away from the forum for only 2 days and I had to wade back about 5 pages to find where I last left off!
Pete's quote:
"Does one ever really retire? I can't imagine I'll ever be seriously retired. Always learning, growing, changing in all aspects of life - including investing."
Jumping into the thread at this juncture after the preceding contributions from Kenneth Koh and Sim is appropriate.
Agreed. Much as I love property investing and all things financial, there is a whole lot of living out there! Note those stars dancing on TV. I can never be fully retired (nor want to) but the intense and hands-on type of investments have to be reduced to make room for the other things in life.
When financial independence is achieved, I envisage more time for on-line DIY super investments, occasional fixer-upper and mentoring junior. This must be supported by certain cashflows, which I am developing now. Hence, within the future scenario that I have painted, the risk to avoid is going back into full-time employment.
Pete's quote:
"Does one ever really retire? I can't imagine I'll ever be seriously retired. Always learning, growing, changing in all aspects of life - including investing."
Jumping into the thread at this juncture after the preceding contributions from Kenneth Koh and Sim is appropriate.
Agreed. Much as I love property investing and all things financial, there is a whole lot of living out there! Note those stars dancing on TV.
I can never be fully retired (nor want to) but the intense and hands-on type of investments have to be reduced to make room for the other things in life. When financial independence is achieved, I envisage more time for on-line DIY super investments, occasional fixer-upper and mentoring junior. This must be supported by certain cashflows, which I am developing now. Hence, within the future scenario that I have painted, the risk to avoid is going back into full-time employment.
Each person will live life according to thier own philosophies on life itself. Some cant wait to get out of the rat race and then do nothing.
Those that retire on the pension or a super that gives them less than thier working incomes will be limited in enhancing thier lifestyles in retirement. Most people plan the shortterm around Australia trip then they find they are running out of money therefore future holidays are few and far between.
On the other hand you will have people who are canny investors and are always looking at ways of growing thier portfolios and enhancing ther lifestyles. They are actively contributing to society with thier positive outlook in life.
Those that retire on the pension or a super that gives them less than thier working incomes will be limited in enhancing thier lifestyles in retirement. Most people plan the shortterm around Australia trip then they find they are running out of money therefore future holidays are few and far between.
On the other hand you will have people who are canny investors and are always looking at ways of growing thier portfolios and enhancing ther lifestyles. They are actively contributing to society with thier positive outlook in life.
Sim said:Summary cliches: it's only money; you only live life once; take time to stop and smell the roses; you don't appreciate what you've got until it's gone; 'tis better to have loved and lost than to never have loved at all, etc.
Couldnt we just add these cliches to the bottom of every post so that everyones knows that its a GIVEN and so that we don't all have to go thru the same polite nodding, smiling group hugs when someone suggests taking time to smell the roses or whatever other tired cliche gets dragged out?
