What are you planning to live off?
- Thread starter holtk5
- Start date
... rent 
Planning on living off rents, dividends and interest.
The plan is to live off dividends, which will be generated from shares bought with equity from IPs. Franking credits improve the tax position, and funds borrowed against IPs for shares remain tax deductible. Underlying equity is not eroded, so income increases over time, typically faster than CPI.
Rents, dividends, paye & interest before 65
Rents, dividends, interest, part time paye, super and equity after 65.
The more more ways of generating income the better. Every year will be different, for example ... in 2010 income may be produced using 60%-Rent, 10%-Dividends & 30%-Interest while income in 2015 may be produced by 30%-Rent, 50%-Interest & 20%-Dividends. Some years may include some part time work to help pay for luxuries while equity will pay for luxuries in other years.
Holding cash, CF+/neutral IP's, income producing shares and capital growth shares will cover an investor in all economic environments (high/low inflation, high/low interest rate, bull/bear markets etc ...)
Rents, dividends, interest, part time paye, super and equity after 65.
The more more ways of generating income the better. Every year will be different, for example ... in 2010 income may be produced using 60%-Rent, 10%-Dividends & 30%-Interest while income in 2015 may be produced by 30%-Rent, 50%-Interest & 20%-Dividends. Some years may include some part time work to help pay for luxuries while equity will pay for luxuries in other years.
Holding cash, CF+/neutral IP's, income producing shares and capital growth shares will cover an investor in all economic environments (high/low inflation, high/low interest rate, bull/bear markets etc ...)
Share/MF Dividends/Distributions and Rent.
Probably around 2/3 from Share/MF (mainly FF dividends to improve tax position)
Around 1/3 from rents.
Once we are 60 the above will be helped out by Super (combination of PSS indexed pension and lump sum payout from wifes REST super fund)
Jase
Probably around 2/3 from Share/MF (mainly FF dividends to improve tax position)
Around 1/3 from rents.
Once we are 60 the above will be helped out by Super (combination of PSS indexed pension and lump sum payout from wifes REST super fund)
Jase
Stupidly enough I never even thought of that advantage with LOE! Really good point!
What point do you consider critical mass to be, Shadow? Or will you only really know when you get there?
At a guess it will probably be around the time when the average growth on the portfolio is about three times that of the required funds to live (for a given year), but this will depend on your attitudes towards risk.
For me, I don't see the end goal as 'doing nothing'. Most people seem to work, work, save ,work, invest, work, save, invest, work, work then reach their end goal of doing nothing.
My path is slightly different. It's similar, but in between those steps I have mini-retirements sprinkled throughout. The fact is I don't think I (or many people here) would ever be able to do nothing, we'll always be investing.
Hi Glucose,
It depends on circumstances, but for example if I decide I need $50K per annum to live off, then I might want to grow my portfolio by $100K per annum to ensure it continues to grow while I spend half the growth, in which case I would need a portfolio of $2M growing at 5% per annum to begin with.
It all depends on expected growth and how much you need to live on. It also depends what percentage of the portfolio is equity vs debt, and how much it costs to service the debt.
There are lots of other threads in the forum with spreadsheets to calculate LOE scenarios.
My aspirations are for much higher that the above figures... but I'm not planning to retire for at least 15 years, I'm still (reasonably) young!
Cheers, Shadow.
This is very true, and has caused me to think about things a bit. Perhaps I should be altering my 'retirement' plan to the more realistic perspective of 'stop turning up at my day job and manage my investments as my primary working activity'.
If managing your investments takes you as much time as a day job, hire an assistant. Or you actually have an investing business, which is different.
If we plan to kick the day job early, we definitely need 'retirement' plans. It doesn't have to be money making. It can be just things like reading, writing, travelling, learning new things, watching TV, regular lunch with friends, etc. I envision it to be a long list of smaller, maybe 30 minute / hour long tasks that fill my day, instead of big intensive projects.
Alex
