No personal capital gain consequences if you don't sell. One of the reasons we want to get our balance high enough to support our desired income without having to draw down the capital. Not being taxed on unrealised profits should be one of the least likely place the government changes the rules. Death taxes and capital gains consequences at the stage of bequest though are much more susceptable to change. We have differing taxation already in some circumstances depending on where the asset is held at time of death.
Wealth Plan
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No personal capital gain consequences if you don't sell. One of the reasons we want to get our balance high enough to support our desired income without having to draw down the capital. Not being taxed on unrealised profits should be one of the least likely place the government changes the rules. Death taxes and capital gains consequences at the stage of bequest though are much more susceptable to change. We have differing taxation already in some circumstances depending on where the asset is held at time of death.
tech/a
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Has anyone on this forum achieved Financial Freedom.
If so
What's your story?
How did you do it
How are you doing it now.
Your advice to those who are 25/35/45/55/65 etc.
If so
What's your story?
How did you do it
How are you doing it now.
Your advice to those who are 25/35/45/55/65 etc.
Yeh Me - I'm 47 made a bucket load picking equities on the ASX and holding them for as long as the business kept performing. Still doing it - though the focus now is more investing for our PAF.
Trying to put some of it down in this thread. Though I won't be recommending what I do here.
tech/a
No Ordinary Duck
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Craft
Wouldn't expect that you'd recommend but telling the story may help others
investigate similar.
With Financial Planners I know 3.
Most are just licensees from dealer principals who are someone like Zurich
who have a range of managed funds. These guys (The Planners--so called)
are in many cases aspiring financially to get to a position that their clients
now enjoy. They can only recommend a fund within the umbrella of the
dealer principal. (One is successful in his own right!).
I'm like you but 63 Could have retired at your age but think Ill be more like Rupert
Murdoch and hang around to annoy everyone.
My contribution here if anyone is interested will be from a grass roots level at
the coal face. No holes barred as it is from my view point.
I often see lots of theory and Duck all in application. Ill give you that---I've done it and
still doing it. I've already posted a book of posts over this site on the topic.
Don't need the money but accept the challenge everyday and the rest (money) is a by
product. Sure you have to plan implement and manage but once you have methods
and systems in place YOU can TAKE CARE of YOURSELF.
Those methods and systems I'm happy to disclose---
How people use the info is entirely up to them.
You wont get that from a F/P.
Im hoping others including you do similar.
Wouldn't expect that you'd recommend but telling the story may help others
investigate similar.
With Financial Planners I know 3.
Most are just licensees from dealer principals who are someone like Zurich
who have a range of managed funds. These guys (The Planners--so called)
are in many cases aspiring financially to get to a position that their clients
now enjoy. They can only recommend a fund within the umbrella of the
dealer principal. (One is successful in his own right!).
I'm like you but 63 Could have retired at your age but think Ill be more like Rupert
Murdoch and hang around to annoy everyone.
My contribution here if anyone is interested will be from a grass roots level at
the coal face. No holes barred as it is from my view point.
I often see lots of theory and Duck all in application. Ill give you that---I've done it and
still doing it. I've already posted a book of posts over this site on the topic.
Don't need the money but accept the challenge everyday and the rest (money) is a by
product. Sure you have to plan implement and manage but once you have methods
and systems in place YOU can TAKE CARE of YOURSELF.
Those methods and systems I'm happy to disclose---
How people use the info is entirely up to them.
You wont get that from a F/P.
Im hoping others including you do similar.
Wysiwyg
Everyone wants money
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Some Super Funds allow you to invest directly in ASX300 stocks & ETF's. Wider investment base without the fees and documents of a SMSF.
Interested to know if you own your PPOR because you mentioned holding a sizable amount in equities. I believe paying down (unclaimable) debt is a priority for wealth creation. One can't see the loan balance reduction as an investment but it is. Happy to see your thoughts on that.
Well you know 3 more financial planners than I do.
There's no use me talking about what I do in this thread - there's plenty of other posts on that already. I think the standard plan should be based on market returns from passive investing, as that doesn't require a unique skillset. That's going to mean contributions are required, source those contributions from income from utilising an active skill set elsewhere but don't incoporate excess return requirement assumptions into the plan or its bound to fail.
tech/a
No Ordinary Duck
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Craft----OK.
Firstly unfortunately Money Makes Money.
Without it your severely limited even to the point of long term failure.
With it you can and should use it in endeavours that are scalable.
Use compounding and leverage.
With it you'll be able to seek and secure money from institutions who
only want an interest rate serviced. That is amazing!!!!
If you borrow at 5-8% and can return 10-40% PA just rinse and repeat!
I have been doing this for 30 yrs and at one time with solid 7 figures.
( Late 90s to 2010 ish.)
The return on MY money was stratospheric.
Not as high these days but still fantastic.
You wont get that from an F/P.
Firstly unfortunately Money Makes Money.
Without it your severely limited even to the point of long term failure.
With it you can and should use it in endeavours that are scalable.
Use compounding and leverage.
With it you'll be able to seek and secure money from institutions who
only want an interest rate serviced. That is amazing!!!!
If you borrow at 5-8% and can return 10-40% PA just rinse and repeat!
I have been doing this for 30 yrs and at one time with solid 7 figures.
( Late 90s to 2010 ish.)
The return on MY money was stratospheric.
Not as high these days but still fantastic.
You wont get that from an F/P.
I think a couple can get about 40K in pensions and income at deeming rates before the assets test will cut them out of the pension. (needs confirming)
This is what AFSA produce as there recommended requirements in retirement.
I purpose that we set our ‘individual’ target at 75% of average weekly earnings. That is, we want gross income of 75% of whatever the weekly wage is at any time. Its an easily accessable measure that automatically ratchets to maintain our purchasing power.
http://www.abs.gov.au/
So currently the target stands at approx. $60,000. Pretty close to the after-tax result of a wage earner on average earnings. – we would hope to get better taxation outcomes in older age then the poor wage earner.
I propose a target age of 55. Means we will have to deal with a component outside super. Gets a bit closer to the desired 40-45 mentioned above. But those aspirations might be a little beyond a realistic passive plan’s reach. Not to say they shouldn’t have an active plan and an aspiration for that running alongside – but if we discuss everybody’s active plan then we will bite off too much in one thread.
I propose a starting age of 23. Time to get Uni, apprenticeship etc out of the way but the burdens young people face with HECS and housing costs etc are going to make the job hard – so the more time the better.
This is what AFSA produce as there recommended requirements in retirement.
I purpose that we set our ‘individual’ target at 75% of average weekly earnings. That is, we want gross income of 75% of whatever the weekly wage is at any time. Its an easily accessable measure that automatically ratchets to maintain our purchasing power.
http://www.abs.gov.au/
So currently the target stands at approx. $60,000. Pretty close to the after-tax result of a wage earner on average earnings. – we would hope to get better taxation outcomes in older age then the poor wage earner.
I propose a target age of 55. Means we will have to deal with a component outside super. Gets a bit closer to the desired 40-45 mentioned above. But those aspirations might be a little beyond a realistic passive plan’s reach. Not to say they shouldn’t have an active plan and an aspiration for that running alongside – but if we discuss everybody’s active plan then we will bite off too much in one thread.
I propose a starting age of 23. Time to get Uni, apprenticeship etc out of the way but the burdens young people face with HECS and housing costs etc are going to make the job hard – so the more time the better.
So go start a thread and tell them again how good you are, Its about as useful as Ritchie Port telling me I can make $6m a year like he does from riding a bike.
No arguments from me. I don't think either of those ages or the target income figure is unreasonable. In fact, if anything the more realistic / conservative the end goal is, the more chance there is of undershooting it and being disappointed.
tech/a
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So that's all well and good but if your going to live for another 30 yrs
and your chewing into whatever nest egg you have ---
30 yrs ago the average wage was about $18000
So over 30 yrs about a 300% rise in what you need.
Your $60K now will need to increase dramatically overtime and
You need to be able to do this without a job and preserving what you DO have.
My Father---still alive at 92 actually retired at 54. When he retired the Average wage was $11,800
His retirement after the first 10 yrs has been nothing more that a chore!!!
He retired on $400,000. He now lives as a struggling pensioner with all the dramas every pensioner
has to cope with.
Don't under estimate what you'll need.
I think your very conservative.
and your chewing into whatever nest egg you have ---
30 yrs ago the average wage was about $18000
So over 30 yrs about a 300% rise in what you need.
Your $60K now will need to increase dramatically overtime and
You need to be able to do this without a job and preserving what you DO have.
My Father---still alive at 92 actually retired at 54. When he retired the Average wage was $11,800
His retirement after the first 10 yrs has been nothing more that a chore!!!
He retired on $400,000. He now lives as a struggling pensioner with all the dramas every pensioner
has to cope with.
Don't under estimate what you'll need.
I think your very conservative.
tech/a
No Ordinary Duck
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Ok if you think so.
I'm well aware the 60K is going to have to grow (potentially a lot) over retirement to maintain purchasing power and its all about not chewing into the capital asset that creates the income flow. Do I not write what I'm thinking or do you not read it?
Your example is exactly why I'm doing this thread.
Plenty of people who have made good active income soon find themselves in poverty in retirement because they have no idea of how to passively invest their capital appropriately. The best way to learn is to get experience accumulating some of it passively.
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Only time enough to post for encouragement - love the idea you've started in this thread, craft.
I've said before (usually when answering a question inthe beginner's forum) that a stock market forum tends to get replies like, 'oh, you should learn short-term trading' etc. and misses the point.
I read a book years ago (wish I'd paid more attention!) where the author emphasised several times that, 'you only have to do average to get a wonderful result' - that's a misquote, but essentially, the basics of saving lots, not going into debt, playing it safe (not stupidly safe, but you know what I mean) and being consistent and persistent...you really don't need a fancy trading system etc if you're in it for the long haul.
On the scenario you've painted originally (it's changed now, but I only just started reading this thread a few minutes ago):
If the 25yo after uni or whatever starts out on $50k with no savings (being that conservative because I believe we're wanting to be inclusive of as many as possible) starts salary sacrificing 30% per year...and goes through to 65 (I know, not 60...it's old for some but not for those that are approaching it!)...and their wage (and salary sacrifice) increases with inflation (which is actually pessimistic. It's often forgotten in simulations that people usually go up the ladder at least somewhat - or it's not difficult to do at least a little - which changes things - for the better - again). Anyway.
If they can hit 10% returns (which some might take issue with projecting this for the next few decades, but I note that some of the super funds are using around 8.5% for the 'shares' option, however I wouldn't have a problem with someone arguing that this is where my scenario breaks down for average Joe) then I think they can hit the $100k a year.
But yeah, it's good to see the latest posts in the thread are already changing this around a little - as it's hopefully going to be an encouraging exercise.
Just for the discussion point (and because I often can't help but see the other side of things) I'd like to suggest the opposite of those suggesting an earlier age. Especially as a standard (which I think this thread is kind of angling at). When I was younger, I thought exactly like that. But now I see that people work or run businesses and stay productive until way past 45,55 or even 65. I'd rather see scenarios that don't assume a pension, as opposed to hitting the goal much younger.
A more sure / guaranteed path in that light is to make sure you are in (or transition to) a career or business that you enjoy. That's doable for Average Joe.
Anyway - just thoughts. Back to work (not retired yet!)
I've said before (usually when answering a question inthe beginner's forum) that a stock market forum tends to get replies like, 'oh, you should learn short-term trading' etc. and misses the point.
I read a book years ago (wish I'd paid more attention!) where the author emphasised several times that, 'you only have to do average to get a wonderful result' - that's a misquote, but essentially, the basics of saving lots, not going into debt, playing it safe (not stupidly safe, but you know what I mean) and being consistent and persistent...you really don't need a fancy trading system etc if you're in it for the long haul.
On the scenario you've painted originally (it's changed now, but I only just started reading this thread a few minutes ago):
If the 25yo after uni or whatever starts out on $50k with no savings (being that conservative because I believe we're wanting to be inclusive of as many as possible) starts salary sacrificing 30% per year...and goes through to 65 (I know, not 60...it's old for some but not for those that are approaching it!)...and their wage (and salary sacrifice) increases with inflation (which is actually pessimistic. It's often forgotten in simulations that people usually go up the ladder at least somewhat - or it's not difficult to do at least a little - which changes things - for the better - again). Anyway.
If they can hit 10% returns (which some might take issue with projecting this for the next few decades, but I note that some of the super funds are using around 8.5% for the 'shares' option, however I wouldn't have a problem with someone arguing that this is where my scenario breaks down for average Joe) then I think they can hit the $100k a year.
But yeah, it's good to see the latest posts in the thread are already changing this around a little - as it's hopefully going to be an encouraging exercise.
Just for the discussion point (and because I often can't help but see the other side of things) I'd like to suggest the opposite of those suggesting an earlier age. Especially as a standard (which I think this thread is kind of angling at). When I was younger, I thought exactly like that. But now I see that people work or run businesses and stay productive until way past 45,55 or even 65. I'd rather see scenarios that don't assume a pension, as opposed to hitting the goal much younger.
A more sure / guaranteed path in that light is to make sure you are in (or transition to) a career or business that you enjoy. That's doable for Average Joe.
Anyway - just thoughts. Back to work (not retired yet!)
skc
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No you don't count for the purpose of this thread because of what you said below.
Neither does Liam Neeson.
I look forward to seeing your post on this exercise.
The key here is really the notion of "average Joe". I would say that, for most people who are on (or capable to be on) $100k passive income today they most likely gained the asset base through "unique skillset". Or in simpler words - having enjoyed high income through the working age, and have the ability to grow that income throughout the working life.
If the Average Joe only earns a wage that grows with inflation, it would be a very difficult proposition to achieve $100k/year passive income without some luck.
I find Systematics case for upping the age very compelling.
Allows us to utilise super to its full efficiency.
Tech/a and brty can talk about active plans outside super– they really should be part of the overall picture with the payoff goal being the possability of earlier financial freedom if thats what you want.
But I think I’m more passionate about exploring the backup plan doable by nearly everyone and exploring the passive skillset so that you can still have in place an income no matter how you physically and mentally progress in retirement.
Now thinking target age of 60 or 65. It doesn't really matter what we come up with for this exercise but the objective in your personal plans need a lot of thought. Gad it is getting some discussion
I'll think about it for a while and see if we get any other comments/suggestions
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I feel like this thread has already become skewed.
Craft is trying to outline a steady, passive plan to build wealth over the long term.
Tech is saying:
- you need more than you think
- explore better ways of earning income faster (short term trading/small business/whatever)
The two aren't mutually exclusive and everyone should be doing both, investing for the long term and exploring ways for quick(er) wealth.
If one builds a business or a trading programs earning 40% a year, of course put everything you have into that but it 'aint that easy and in the mean time, average Joe should be listening to Craft.
Edit: the recent posts cover the above, well said Craft & systematic
Craft is trying to outline a steady, passive plan to build wealth over the long term.
Tech is saying:
- you need more than you think
- explore better ways of earning income faster (short term trading/small business/whatever)
The two aren't mutually exclusive and everyone should be doing both, investing for the long term and exploring ways for quick(er) wealth.
If one builds a business or a trading programs earning 40% a year, of course put everything you have into that but it 'aint that easy and in the mean time, average Joe should be listening to Craft.
Edit: the recent posts cover the above, well said Craft & systematic
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Please note that my example was someone starting out with a commitment to save about 30% of income. Something similar to a couple who decide to live on one income (people have done that).
I'll admit, this takes a unique behavioural approach...but it's not luck, good fortune or a high salary.
When you've got time on your side (40 years is a lot better than the 20 years many typically have)...it all adds up: your starting amount (in my example zero, but not always the case) and your early contributions being as large as possible outweigh starting later with an extra couple percent returns and/or larger contributions. The 25yo really does have the thing that the richest man in the world can't buy. Best thing the 21-25yo graduate can do (in my opinion) from a financial point of view is to keep living like a uni student for the most part. Travel, but travel cheap. Get married, but don't let that change your lifestyle for now. Save (and invest) like crazy before the kids come! Focus on a getting into a job / career / business that you enjoy and plays to your strengths. Go up the ladder a little or a lot.
Typically, whilst the young have time on their side, most just don't realise it (in the right way). Instead their mind goes to, 'I'll get to that later...'
Getting that behaviour to change would be a miracle, but I think parents can instill a lot that puts the odds in favour.
Side note: The 100k was only from the initial example, anyway. If someone was earning (today's dollars) $80k at retirement after starting out at $50k (today's dollars) - because they've been diligent and gone up the ladder a little - and they are used to saving 30% anyway...will they really feel a need for $100k? They only nett about 45k now after that kind of savings rate (which they won't need to do). Which makes the example, what? Even more achievable?
Of course - some might want even more dollars in retirement than during working years - that's another often overlooked consideration in scenarios. A fin planner would probably say it's unusual - but it's a possibility.
tech/a
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The average Joe will have a house and a few kids in that 25 yr plus bracket
With a wife at best working over a 10 year period of having 2 - 3 kids part time.
So for average Joe to sacrifice 30% on going to 65 is un realistic in my view.
People are having trouble surviving with 100% of income if we are talking Joe Average.
How does a 25 yr old average guy start with an amount that's enough to start.
$20-100k
They have some decisions to make.
What if they want to get into business.
Buy an investment property or their own property ---- good bye long term nest egg for passive long long term investment in stock.
Long term investment stock/property/business all are the keys to financial freedom.
And one can be enough.
But I'd suggest that with only 3-5 % being self sufficient in retirement
There are very few Joe Averages.
It's not as clear cut as compounding 30% of a wage over 40 yrs at 10%.
In reality that is about .5% of the superhuman race Joe Average never gets there.
With a wife at best working over a 10 year period of having 2 - 3 kids part time.
So for average Joe to sacrifice 30% on going to 65 is un realistic in my view.
People are having trouble surviving with 100% of income if we are talking Joe Average.
How does a 25 yr old average guy start with an amount that's enough to start.
$20-100k
They have some decisions to make.
What if they want to get into business.
Buy an investment property or their own property ---- good bye long term nest egg for passive long long term investment in stock.
Long term investment stock/property/business all are the keys to financial freedom.
And one can be enough.
But I'd suggest that with only 3-5 % being self sufficient in retirement
There are very few Joe Averages.
It's not as clear cut as compounding 30% of a wage over 40 yrs at 10%.
In reality that is about .5% of the superhuman race Joe Average never gets there.
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Exactly especially in this low interest rate live now pay later world we now live in . If you relying on average super returns you will be living a pretty dull retirement imo . Your wealth plan needs to be dynamic with the bar set high . Now saving 10% on a 30% return is a start . Id be investing in skillset if i was young . Amazing how people put so much time into social media and such little time into retirement planning .
10k start point .. save 20% on 10% return vs save 10% on 20% return using 60k av net wage
