woke up a millionaire

This is very conservative, even for me. What if, you were able to slum it in a home at $1MM or less, and achieve 5% returns (not very hard to do) - you have now doubled your income to $200,000 per year.

Planning super conservative is always a good approach but you should work to make your actual returns much much better.

Agree entirely in principle. However, in Sydney right now, 1mil freestanding home in not really possible in many northern nor eastern suburbs. But the focus in retirement would be as you say, to maximise returns on the investible nest egg that has to last for decades.
 
Agree entirely in principle. However, in Sydney right now, 1mil freestanding home in not really possible in many northern nor eastern suburbs. But the focus in retirement would be as you say, to maximise returns on the investible nest egg that has to last for decades.

China,

My 3BR unit in Melbourne (a notoriously low yield city) cost me $280k to buy last December and gets $300 per week.

Even at 48 weeks occupancy (so a WHOLE MONTH vacant EVERY year) less $1,500 running costs and 10% for PM costs and other incidentals still leaves me better than 4%....

The listed and unlisted CPT's are getting me between 6.5% pa to 9% pa.......



The Y-man
 
Congrats Oscar on taking the package and achieving your milestone in life,
a true inspiration.
I am so close in earning my first bag of gold, so close now, if all is well, should be there by next year sometime
 
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A fully owned house and passive income of 100k per year, indexed to inflation forever.

If you want to live in Sydney this would currently mean a minimum net worth of 5 mil. A median priced house 1.5mil to 2 mil plus 3 mil of investable, income generating assets. I assume around a 3 per cent return per year.

I agree with Oscar. Can't calculate too much. If every billionaire based their numbers on 3% pa, they'd still be counting their pennies. Think big, act bold.
 
Congrats Oscar,

Great to hear your years of hard work and smart decisions have paid off. I one day hope to be able to say the same thing although can't help but think the future growth will be very different to how it has been over the past 10-15 years..

Coming from an overly conservative family, my dad almost passed out when I told him my current dept with 2 investment properties was nearly $740k.. That figure doesn't keep me awake at night but at times I get a little nervous. Did you have similar feelings or negative thoughts at any stage throughout your journey? I'm currently 25yo and still living at home while working full time so it's not difficult making ends meet although I find it difficult to invisage $1mil equity when I'm only sitting on around $200k at present..

Thanks for the inspirational and informative read!
 
China,

My 3BR unit in Melbourne (a notoriously low yield city) cost me $280k to buy last December and gets $300 per week.

Even at 48 weeks occupancy (so a WHOLE MONTH vacant EVERY year) less $1,500 running costs and 10% for PM costs and other incidentals still leaves me better than 4%....

The listed and unlisted CPT's are getting me between 6.5% pa to 9% pa.......



The Y-man

I don't understand the point, there is a vast difference between 4% and 9%.
 
I agree with Oscar. Can't calculate too much. If every billionaire based their numbers on 3% pa, they'd still be counting their pennies. Think big, act bold.

Mate the billionaires get to that stage by counting their cash flow pennies (even if they don't scrooge on a personal level by the pennies).

Just look at Deltaberry's logic (ie yourself) on this forum, or Dazz for that matter.
 
I don't understand the point, there is a vast difference between 4% and 9%.

Hi IV, I was responding to China's post (quoted the wrong one) saying he was forecasting 3% return on his retirement property portfolio. My example to try and show perhaps he is overly pessimistic and may want to reset expectations and calculations at a "worst case" at 4% and optimistic best of 9% for relatively "safe" (non-volatile) calcs.

The Y-man
 
Thanks for the update Oscar. Some great results here, achieved with relatively low risk all while doing a job you evidently enjoyed. A simple and effective strategy that you stuck with consistently and let you sleep at night and get on with living life in the meantime. Hard to beat that...

It also shows that a path to significant wealth while being "just" an employee. Great stuff and thanks again for sharing...
 
Mate the billionaires get to that stage by counting their cash flow pennies (even if they don't scrooge on a personal level by the pennies).

Just look at Deltaberry's logic (ie yourself) on this forum, or Dazz for that matter.

Ahaha.

I was meant to say, if you tried to calculate your retirement plan on how much capital is needed to generate 3% return, you'll never retire comfortably, unless your old man left you $10m+. Or you're some derivatives trader who makes $1m a year. Then again a derivatives trader wouldn't be looking at 3% passive return...

You need to be aiming - as Y-Man says - at least 10%. And if you don't know how to do that, maybe that's china's (the member here, not the country) problem.
 
You need to be aiming - as Y-Man says - at least 10%. And if you don't know how to do that, maybe that's china's (the member here, not the country) problem.

Very few people can achieve 30 plus years (the retirement period) of 10 per cent return per annum. This beats stockmarket and real estate market returns consistently for three decades. I am feeling elated at 5% but calculate retirement projections on 3%
 
If you tried to calculate your retirement plan on how much capital is needed to generate 3% return, you'll never retire comfortably, unless your old man left you $10m+.

I sort of did this - except I used 4% return.
While not perfect it gives a pretty good guide and a target to work towards.

Take your desired pre-tax retirement figure and multiply it by 25. This is the required invested capital that you need to retire when generating 4%.

Of coarse there are a million other variables which you need to take into consideration which you could spend a long time making all kinds of assumptions and still not come up with an accurate answer.

However, the way I see it is if I have 25x my desired income invested. I should be able to comfortably get 4% cash return (plus any capital growth which should maintain at least a CPI level), thus I can retire with my desired income forever safe that I can live comfortably.

If I get there early enough I can continue to build that as much I like so I have some 'play' money.

If nothing else it is a target to work towards.

Blacky
 
Very few people can achieve 30 plus years (the retirement period) of 10 per cent return per annum. This beats stockmarket and real estate market returns consistently for three decades. I am feeling elated at 5% but calculate retirement projections on 3%

not by passive investments agreed, but if one is more active and one has a firm view of value as opposed to market price then its not hard.

Even our ex-Mr Packer Senior knew when to flip a beloved asset when the price was right.

Only Mr Buffet tends to hold and keep and there are three reasons behind this
(a) The size of his company is so massive today that he cant really flip
(b) by his own admission he has said that if he was starting again, he could achieve significantly higher returns from a smaller base, than he can now. Now when he invests he moves markets (and in Buffet's younger years he used to flip more often)
(c) his continuous cash float from insurance operations give him the opportunity to use his elephant gun every now and then to 'top up furture' returns.
 
Very few people can achieve 30 plus years (the retirement period) of 10 per cent return per annum. This beats stockmarket and real estate market returns consistently for three decades. I am feeling elated at 5% but calculate retirement projections on 3%

The ASX 200 Accumulation Index was at 1,424 in 1983 and at 39,163 in 2013

A Fidelty chart shows that over the last 30 years to 2014 $10k in the ASX 200 would be worth $283,830.00 (11.8%).
 
The ASX 200 Accumulation Index was at 1,424 in 1983 and at 39,163 in 2013

A Fidelty chart shows that over the last 30 years to 2014 $10k in the ASX 200 would be worth $283,830.00 (11.8%).

How much active management and additional stress would it involve to achieve the respectable 11.8% achieved by the accumulation index?

I guess, it must be hard work investing in accumulation index (aka index fund with re-invested dividends) considering very few people agree to implement it.

Cheers,
Oracle.
 
Yep, hard work for most...most are trying to make a fortune quickly, people love tips and thinking they have a unique skill set or formula or some kind of hocus pocus that will give them outperformance. At least put 50-60% of portfolio in index/s with DRP, then play around with the remainder if you are that way inclined :cool:
 
How much active management and additional stress would it involve to achieve the respectable 11.8% achieved by the accumulation index?

I guess, it must be hard work investing in accumulation index (aka index fund with re-invested dividends) considering very few people agree to implement it.

Cheers,
Oracle.

Methinks you be taking the mickey Oracle, as you know better :D
 
Div yields are declining. Franking is declining. Interest yields are declining and the spread for risk isnt widening so must fall. As is the market.

Look at ETFs such as high yield (IHD etc)... They have fallen faster than the index.

http://www.asx.com.au/asx/research/companyInfo.do?by=asxCode&asxCode=IHD#chart

However if I were a 65 year old investor with a 20 year portfolio of blue chips such as CBA who cares. My yield is insane. My CBA shares that cost $5.40 pay almost that annually.
 
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