Retirement Stocks 2019

[Value Collector]

Value Collector, either your approach is ultra conservative or you have a huge capital base. The fact that you only spend half of your income in retirement. In terms of real estate as we know rents tend to rise over the long-term and in terms of shares if you pick growing companies as you seem to do they increase their earnings and dividends over time. Why do you then feel the need to reinvest half of your income also? Does your portfolio generate so much income that you have no possible need to or want to spend it? Or is it just a leftover habit from when you were younger and poorer?

Interesting questions, with some complex answers.

Yes, my portfolio does generate more income than I need or want to spend, this is for a number of reasons

1, I have always been frugal in an effort to build the capital base, and although I have loosened the purse strings quite a bit and now enjoy some luxury things like travel (currently writing this from a hotel room in London), eating out, new car etc. I still hate waste, and am pretty minimalistic.

2, I enjoy the process of building wealth, “getting richer” is kinda of game for me, my favorite game since I was 14 and finding and making new investments is more fun for me than wasting the income on things I don’t really need or want.

3, I am only 37, and hopefully will live a good many more years, So I didn’t want to come close to having to draw down capital, if I became accustomed to spending 100% of my income, eventually some years will come where that income drops, and then I have to either reduce our lifestyle dramatically which can be embarrassing to explain to the wife, or spend capital. I thought sticking to a cheaper lifestyle that grows steadily over time and is maintained in bad years is better, eg in a bad year my income could halve, but all I have to do to maintain life style is spend 100% that year, and the wife doesn’t need to feel any pain.

4, I want to build a big capital base to donate to charities upon my death, spending 50% and reinvesting 50% should help grow a huge capital base by the time I pass away, so reducing my consumption to 50% will eventually mean more of my earnings go back to parts of society that need help.

 

[SirRumpole]

4, I want to build a big capital base to donate to charities upon my death, spending 50% and reinvesting 50% should help grow a huge capital base by the time I pass away, so reducing my consumption to 50% will eventually mean more of my earnings go back to parts of society that need help.

I'm impressed.

I was starting to think you were a materialistic, capitalistic bastard.

There is a heart of gold beating away while you count your capital.

 

[Value Collector]

I was starting to think you were a materialistic, capitalistic bastard.

I do like to give that impression, hahaha.

But capitalistic I plead guilty, Materialistic not at all.

 

[barney]

1, I have always been frugal in an effort to build the capital base.

VC ….. without divulging all the secrets of your holy grail ... Myself and likely many others would be keen to hear how you "got started"

ie What was the secret to building that capital base at a very young age? eg. High paying job; Bank robber perhaps

 

[qldfrog]

I would ask the same,

VC ….. without divulging all the secrets of your holy grail ... Myself and likely many others would be keen to hear how you "got started"

ie What was the secret to building that capital base at a very young age? eg. High paying job; Bank robber perhaps

I did not make too bad decisions investment wise, had a quite good income,very frugal and could only retire this year at 52
A far cry from 37, not even sure if my portfolio income will cover my expense this year
You need either an initial win aka inheritance or lotto
Otherwise it will take longer to reach that stage
Money makes money
What was you windfall VC..8f you can say only of course

 

[SirRumpole]

I would ask the same,

I did not make too bad decisions investment wise, had a quite good income,very frugal and could only retire this year at 52
A far cry from 37, not even sure if my portfolio income will cover my expense this year
You need either an initial win aka inheritance or lotto
Otherwise it will take longer to reach that stage
Money makes money
What was you windfall VC..8f you can say only of course

One idea might be to join the Armed Services at a young age get a good salary, have all your housing food, transport and living expenses paid for , save all you can then leave after 8 years and then invest all you have saved.

 

[Value Collector]

VC ….. without divulging all the secrets of your holy grail ... Myself and likely many others would be keen to hear how you "got started"

ie What was the secret to building that capital base at a very young age? eg. High paying job; Bank robber perhaps

I have mentioned it on a few threads,

But basically there is no secret, I just started my saving and investment journey young (14), I always earned a decent wage, but saved half of it, and managed to make some really good investments along the way (the gfc was a big help).

It also helped that my girlfriend/wife of 16 years has also been onboard with the frugal living and saving life since we met (she was 18 I was 21).

In the early years we lived super cheap, still had heaps of fun (the best things in life are free) but we saved heavily, no over seas holidays till I was 32 (except for and reunion and funeral in NZ), No new cars till I recently got the Tesla, No big houses etc etc.

 

[Value Collector]

One idea might be to join the Armed Services at a young age get a good salary, have all your housing food, transport and living expenses paid for , save all you can then leave after 8 years and then invest all you have saved.

Hahaha, you know me to well.

 

[sptrawler]

I have mentioned it on a few threads,

But basically there is no secret, I just started my saving and investment journey young (14), I always earned a decent wage, but saved half of it, and managed to make some really good investments along the way (the gfc was a big help).

It also helped that my girlfriend/wife of 15 years has also been onboard with the frugal living and saving life since we met (she was 18 I was 21).

In the early years we lived super cheap, still had heaps of fun (the best things in life are free) but we saved heavily, no over seas holidays till I was 32 (except for and reunion and funeral in NZ), No new cars till I recently got the Tesla, No big houses etc etc.

Sounds a bit like my story, always saved, wife was onboard with frugal living married at 21 she was 19.
The only big difference I can see is I had four kids by the time I was 30, that didn't change the saving ethos, just the amount.
Still I retired at 55 and am enjoying the babysitting.

 

[Value Collector]

What was you windfall VC..8f you can say only of course

As I said I have had quite a few investments work out very well for me over time, some of which we have spoken about here recently.

The early ones before and during the GFC were fantastic, but I was working with a smaller capital base, so they didn’t “set me up” to retire, but they set me up to be ready to make larger investments that later turned out well.

The two biggest investments I have made that did very well and where I had been able to allocate a large amount of capital were the following two.

Capilano (czz) - between 2013 and 2018 it went from $2.25 per share to $21.00 when I exited, and paid some decent dividends, my initial investment grew to a bit over $1 Million not including dividends.

FMG - from 2013 to present I allocated about $100k of capital to get a put option operation started where I was selling a lot of deep out of the money and a few at the money puts and using the premiums and dividends to buy more and more Fmg as option got exercised periodically, so far with dividends reinvested, options premiums and capital gains my Fmg holding is worth about $1.3 Million today.

Lots of other smaller investments and option operations worked out well too probably to many to name.

 

[SirRumpole]

Lots of other smaller investments and option operations worked out well too probably to many to name.

Any duds ?

 

[Value Collector]

I did not make too bad decisions investment wise,

One of your bad decisions might have been caught in the Capilano thread.

https://www.aussiestockforums.com/threads/czz-capilano-honey.25082/

Back in 2014 you were trying to talk me out of my Capilano investment, which as I said ended up being a big win for me.

Sometimes the worst investment decisions are not the things you did that show up in your investment record, but it’s the things you avoided.

If you followed me into the investment maybe our capital bases would look more similar now

 

[Value Collector]

Any duds ?

Yeah, a couple of early ones which in the grand scheme of things were insignificant, although at the time they hurt.

But you just have to learn from your mistakes and get back on the horse.

 

[qldfrog]

Sounds a bit like my story, always saved, wife was onboard with frugal living married at 21 she was 19.
The only big difference I can see is I had four kids by the time I was 30, that didn't change the saving ethos, just the amount.
Still I retired at 55 and am enjoying the babysitting.

one kid only but arrived with a backpack and a degree aged 27 knowing no one so initial pay was low and going up the ladder not that easy
was thinking about the army idea: how much can you save max a year after tax 30k to 40k max ?
And your income is kind of fix, can not get second job or do extra on week end?
so 300k saving after 8 years when you are 30, if compounded maybe 500k? still short to retire 7 years later
VC must have had a 10 fold share luck or another big win.
Good on him anyway to retire by37;
I wanted to retire at 40, I was nearly there at 45 and took it easy working a few days a week till this year.No kid would help if you are so minded
And we all agree retire has different meaning for everyone, but basically I summaries as:
the freedom to not work for money if so you wish
After reading a few of these threads I just decided to put 15k on ratesetters.
That will be all, no need to risk more but an interesting variation in term of investment

 

[barney]

As I said I have had quite a few investments work out very well for me over time, some of which we have spoken about here recently.

Thanks VC …… Using Options to create value was probably the main thing that got me interested in the Stock market before I joined ASF …

Unfortunately Commsec assessed I did not qualify for an "Options account" back then, so I started trading speculative stocks instead …..

That cost me a couple of shirts back then (it could have easily cost me my marriage given the extent of the losses) but I stuck at it and now days have recovered to the point of "going ok" … go me! lol.

The obvious next question is .... What was your criteria for choosing Capillano and Fortescue at the time you did? (ie. how did you assess the future value of those companies to give you the confidence to go in hard? … ie Fundamental analysis/buy when a Stock is undervalued?)

If I may also ask …. How much do you now consider (in hindsight) was "luck" a factor in your "wins?"

That is certainly not meant to be a derogatory question in any way … rather a personal observation over the years, that getting outlier results on the S/market can sometimes be a bit random.

Bottom line, you have been very successful …… and any "hints" for the rest of us will be graciously absorbed

Cheers.

 

[qldfrog]

One of your bad decisions might have been caught in the Capilano thread.

https://www.aussiestockforums.com/threads/czz-capilano-honey.25082/

Back in 2014 you were trying to talk me out of my Capilano investment, which as I said ended up being a big win for me.

Sometimes the worst investment decisions are not the things you did that show up in your investment record, but it’s the things you avoided.

If you followed me into the investment maybe our capital bases would look more similar now

VC, about Capilano, the reason was ethical, I have no regret:
as you know and this was the cause of tense debate at the time, I consider them as crooks, and would prefer investing in tobacco than in them, no one is forced to smoke crap whereas fake honey.
I actually went out after my initial entry and only in the last year has their wrongdoing been made more or less public/exposed but no one cares
You had a great investment good, but we each have our own limits .
I liked the honey business, searched it, and as a bee keeper was aware of too many wrong doings to stay in.
FMG:
yes I was wrong and never believed they could handle the debts, now with negative interests, it shows how wrong I was...

If I may ask did you purchase a PPOR or rented..pure personal interest, and may not be a valuable question for younger persons as past may not be replicated

 

[qldfrog]

Bottom line, you have been very successful …… and any "hints" for the rest of us will be graciously absorbed

Same here, we know about CZZ, options, any other contributor in hindsight?

 

[Zaxon]

Hi
Thought I'd see if there is any interest among retirees exchanging thoughts on stocks to hold for dividends and (usually) franking credits for income purposes.
This could be a very boring topic for many investors, and I am more interested in the views of those who have retired.

As I'm not retired, I didn't think you were seeking the opinion of non retired people, but having read through the thread, that stopped nobody else

Firstly, at 74, I'd hope you would have decent (perhaps the majority) of your investments in bonds. If you're after a "regular income stream", that's where I'd go, particularly corporate bonds, as treasuries aren't paying much.

My concern about picking stocks primarily based on dividends, as per your question, is that it limits your choice of stocks to a rather small universe. It's like looking for a wife, but she must have blonde hair. You can always sell down a small portion of a growth stock, and generate your own "dividend".

To me, the perfect "retirement" stock is one that has a low beta (so stable relative to the market), and has a great Total Return. That might come from dividends, it might not.

 

[barney]

I wanted to retire at 40, I was nearly there at 45 and took it easy working a few days a week till this year.

Retiring at 50 was one of my plans ..... Over a decade later, I now dream of retiring ..... at all

Much respect and admiration for you chaps who have done well, so well done

I still battle, but never go hungry … plus I have a great family, so am probably better off than many …

In the end it's all about the journey

ps I still intend to be filthy rich one day …. I'm just not sure that I'll be able to enjoy it lol

 

[Value Collector]

one kid only but arrived with a backpack and a degree aged 27 knowing no one so initial pay was low and going up the ladder not that easy
was thinking about the army idea: how much can you save max a year after tax 30k to 40k max ?
And your income is kind of fix, can not get second job or do extra on week end?
so 300k saving after 8 years when you are 30, if compounded maybe 500k? still short to retire 7 years later
VC must have had a 10 fold share luck or another big win.
Good on him anyway to retire by37;
I wanted to retire at 40, I was nearly there at 45 and took it easy working a few days a week till this year.No kid would help if you are so minded
And we all agree retire has different meaning for everyone, but basically I summaries as:
the freedom to not work for money if so you wish
After reading a few of these threads I just decided to put 15k on ratesetters.
That will be all, no need to risk more but an interesting variation in term of investment

I wasn’t just saving cash while in the army, I was investing bought two properties while in the army before the boom, and built a decent share portfolio over time too.

I have averaged a 20%+ return for 20 years over my entire portfolio, I have lots of great investors particularly during and since the GFC, boosted by my options positions.