When will you stop?
- Thread starter Ace in the Hole
- Start date
I know a couple who recently hit about $2.5M in the stockmarket (60% stocks, 40% bonds)and decided in their mid 40's to semi-retire (still blogging) and travel the world , spending at least three months in each destination: renting homes, house-sitting, learning languages and customs and enjoying life
They might spend the next 3 years doing this....or the next 30
I want to do this. SO. MUCH.
Thats is why people say buying shares is like dating and buying property is like marriage. The entry and exit is messier, more work, less liquidity etc. Its exactly that reason I LOVE real estate.
I agree totally, we all do best when we play to our own strengths and develop our skills to be well above average at those skills. Its becoming highly skilled at what you do (at the same time as understanding the law of supply and demand) in whatever that arena is that leads to safely generating profits, regardless of the marketplace, the cycle, the shifts in sentiment and trends.
Totally agree, and whilst this is a property forum I actually really like hearing from people who are doing well in other markets/business areas. I think long term we should all at least consider our options across markets. Even if we decide to stay heavily weighted because of our skill set we should learn enough to consider diversification.
here is an exercise plot say nvt.ax or dmp.ax on finance.google.com click on 10 years charts and see anything happen to them during, before and after GFC
Full article here
Good opportunity to buy if you think it's a quality stock and today was just a temporary setback.
Would be interesting to hear your views.
Cheers,
Oracle.
Attachments
I am up to a bit over $20k passive income atm.
Will be up to $30-40k passive by end of this financial year coming.
When I hit $60k, i'll go hard on developments.
Fingers crossed, I'm sure something will come up that will make the game more interesting.
Will be knocking on a few of your doors for advice on what to do next I'm sure.
Will be up to $30-40k passive by end of this financial year coming.
When I hit $60k, i'll go hard on developments.
Fingers crossed, I'm sure something will come up that will make the game more interesting.
Will be knocking on a few of your doors for advice on what to do next I'm sure.
You can see I load up yesterday on Aussiestockforum and post why
quick 10% return for a day work If I want to exit
You can see I load up yesterday on Aussiestockforum and post why
quick 10% return for a day work If I want to exit
Roe,
Following on from your post about company types which you favour (FCMG) and posts about how the market is a long term weighing machine, could a lazy investor looking to hold for long term and for dividends then purchase stocks in these companies, knowing that they may temporarily be a bit overvalued but over the long term they will continue to improve?
Sort of the "time in the market instead of timing the market" strategy?
Yes. Read Roger Montgomery's book which talks about exactly this. He gives a formula to determine which companies are both a) Good quality enough to be around for a long time and b) currently trading at under their intrinsic value.
yes but it comes down to personal circumstances, you can do both
you not timing the market per say but timing to get into a certain business.
you dont just go and buy any good business at any price, with enough understanding you can enter the business when it hits a folk on the road...
in my experience the market tend to over-react tarting everything with the same brush ...
A mining companies hit funding issues and face commodity price decline is very very different to companies like Brambles or Coke or Retail Food Group or Navitas getting a hit, yet the market tend to brush them with the same brush.
you need to know enough to determine that the brush they used for Mining companies are brush you dont want to touch and the brush they used for Brambles or similar business you can stand in their way and let them tar it for you.
FMCG stocks yes you can be a lazy investors and buy and hold for dividend provided you look for these keys matrix
Business model
how much capital require to run and grow and expand business, the lighter the better...something like NVT it cost them virtually no money to grow, NVT and FLT I think are the best of the best model. You wont find any better model..they are gold standard..
if you want to know how NVT grow I talked about it a while ago on Aussiestock forum compared it to say Harvey Norman.
These business customers pre-fund all their expansion and cash flow.
when you buy shares by understand the business, I can tell you it change the way you view the stock market and that the key point Benjamin Graham
and Warren Buffett emphasis, it is not a ticker on the board, it is not a piece of paper you scare has no hard asset backing but a part owner of a business
where you have genuine interest in its operation like it is your own business.
Return on Equity and Capital
this is usually a given when you have a good model, your return on equity and capital should be fairly high, teens and higher and so each dollar they retain
they can generate in 10s or 20s % for you..the longer it goes the richer you get...Hence Warren Buffet quote "Time is the friend of the wonderful company, the enemy of the mediocre"
Interest Covered
how many times their earning can covered debt, I prefer low debt business but I don't mind they having debt as long as it not a burden.
FMCG companies 4 or higher is ok, I prefer 5 and above. I stayed away from highly leverage business doesn't matter who the hell they are with the exception where it get a massive hit and price decline to a bankruptcy level
and I think they can recover then I take a risk and buy in knowing I either make 10-20 times return or may lose my money...
Free cash flow
This is the blood of a business, when you have a lot of free cash flow, you can pay higher dividend, expand the business and have many options open up to you as a business, you can stand up to your competitor, sustain price war and take them out etc.
end of the day do some learning and acquire knowledge before you venture out, there are a lot to learn with the stock market....I am still learning each day and I will never stop but the beauty of the stock market is the more you know, the better you get as an investor and the ability to generate higher return than the market is not that hard.
Last year to 30/06 I out perform the index by 10% ..the market return 13% my return 23%
by the process of eliminating all the bad stocks your chance of out perform the market already improve by a few factors.
Have fun and good luck and enjoy life
Perhaps the number of IPs is not that relevant rather what asset base is required, right? Anyway, as long as your assets (whatever they are) provide income greater than your expenses (meaning there's always cash left over) than that's enough, wouldn't you agree?
For each individual it will differ, as we all have different expenses but as long as there is more income than it is enough for me... I hope it would be enough for you too.
It just seems like there would be a point where resi investing is just really not worthwhile anymore.
Sure there would be exceptions, but say you hit 500k - 1 mil in passive income from resi property, or less if you are satisfied, would you really want to keep accumulating more resi for long term hold, unless you were in the development biz?
If you were still hungry for more cashflow at this point, surely you could get much better returns investing in other assets without having to deal with the ongoing requirements of residential property?
Depends if that was net or gross.
Agree with the above - thanks for the terrific insight ROE -much appreciated!
I think 100k net passive income is plenty. Why waste time effort and energy to generate more? To generate 100k of net passive income consistently year on year, I think that you need close to unencumbered 3mil of resi IPs having gross rental yield of at least 6.6% - allowing for vacancies, unexpected repairs and other costs
Last year to 30/06 I out perform the index by 10% ..the market return 13% my return 23%
by the process of eliminating all the bad stocks your chance of out perform the market already improve by a few factors.
Have fun and good luck and enjoy life
Hi Roe,
Some great posts above, is the market return on 30-6-14 at 13% the S&P/ASX All Ordinaries Accumulation Index?
MIW's point on your asset base and China's re: % return on a larger base is also significant
Though I'm not sure that I'd follow China's system other than buying in on a Really Bad Day on the Market, as I'm regularly purchasing anyway
At work I've often seen people jump onto a hot stock or rumour and throw a few k onto it. Not many of these stocks go up 100% and even a 50% return on $2-3k is a large risk to me on such a small asset base, if you look at your chances of repeating it every few months you may as well play lotto or roulette
