Zaxon, with regard the ETF Vs the LIC, looking at VAS they seem to be selling at 2.13 times book value, yet MLT which is a LIC appear to sell at very near NTA backing.That's very true. And you can do exactly that, and live happily ever after.
I like your approach, and for exactly the reason you've stated!I am certainly thinking along the line of % drawdown per annum. That way, in the leaner years when the market returns are poor the amount withdrawn will also be lower based on %'s. If it's a fixed amount, it can end up depleting too much of the fund during a downturn.
4% of AUM, or 4% of retirement balance + CPI?Both my wife and I draw the minimum amount of 4%.
Wow to the cost. And I totally agree with the justifiable fear of ending up crammed into some aged facility, looking forward to the weekly kerosene bath.An aged care facility will cost each person around $1,200 week out of your own savings ATM if you are not entitled to a pension. You need cash flow for such events. You don't want to end up in some government funded facility sharing a room with 4 other people, not a nice way to check out of this world.
I expect many people to be using the 4% SWR. But not everyone. And not myselfHi Zaxon, there people out there have done work based on history for us.
There is a chart on page 4 showing the probability (based on history) of your money lasting the distance. 4% looks pretty good.
4% of AUM, or 4% of retirement balance + CPI?
Wow to the cost. And I totally agree with the justifiable fear of ending up crammed into some aged facility, looking forward to the weekly kerosene bath.
I have this theory that, for the price you'd pay to go into some retirement home, you could hire a nurse yourself. I'm sure there's a person with nursing training, who only wants a part time job. (Perhaps they're raising kids or something). Pay them to come to your house for an hour, 7 days a week. Have an emergency button you could push if necessary, etc.
You'd end up with far cheaper care, be given as much attention or more than you'd get in a retirement home, and as you can choose who you hire, you can have someone who actually is prepared to care.
It's just a theory. I've never worked out the numbers. But it seems right to me.
An excellent point! Which begs the question, when people on ASF say they only draw dawn 3.5% (etc), that couldn't be based only on super.The draw down from super is legislated, starting at 4% and increments with age to 14%.
https://www.ato.gov.au/rates/key-superannuation-rates-and-thresholds/?page=10
Very good. So the drawdown minimum only applies to super, since that determines whether you get to keep the "zero tax" status of your super. Your whole AUM (super + taxable investments) are assessed when it comes to eligibility for the pension. In this case, it's a deemed % return you're assessed on, not your actual returned.Outside of super, it is treated as income so normal tax rates apply, therefore the draw down + cpi, has to include tax.
So the choice of super, or holding outside of super, or a combination of both would probably have an effect on the way people draw down the money.
There's a difference. So book value in ETFs, is the underlying book value of the companies that it holds.Zaxon, with regard the ETF Vs the LIC, looking at VAS they seem to be selling at 2.13 times book value, yet MLT which is a LIC appear to sell at very near NTA backing.
Is there a difference between the ways they are valued, or is it just the fact the ETF is more popular, therefore commands a higher relative price?
I'm glad this is working in practice. Excellent info!The nurse idea is what we have planned for the mother in law, she is happy with it, we will see how it works out.
As a second question for everyone: what is your withdraw rate when you retire? Are you doing a fixed rate based on your balance on retirement + CPI? Are you doing a variable rate as a percentage of your assets under management each year? And what percentage are you using?
These are excellent questions. The method that makes sense to me, is to take your mandated drawdown of 7% when you're 80, for instance, pay yourself the 4% (insert figure here), and put the remaining 3% into taxable investments. You can achieve whatever "effective drawdown" you want.how do you keep your draw down at 4%?
Super has increasing draw downs.
Outside super has tax implications.
Which leads to another discussion, this thread seems to be good at that.
Certainly Tricky, cheers for clarifying that.There's a difference. So book value in ETFs, is the underlying book value of the companies that it holds.
View attachment 98491
For instance, CBA has a P/B of 1.96. So if an ETF held 100% CBA shares, it would report its price-to-book ratio as 1.96.
The LIC uses "book value" to mean AUM - how much their holdings are worth on the market, not the book value of the underlying companies it holds.
Trixie!
In the final washup, "our" investments are a reflection of our lives, and will likely end up a prelude to our immediate families' future "investments" (over which we will have no control)
I often think, if I get lucky and pick a multi-multi bagger …. and get to retire early, I'll most likely be bored
Therefore, picking the wrong Stocks most of the time is probably in my best interest
With that in mind … Some of us are doing extremely well
Well done! You'll be able to "fat" FI/RE. Very good position to be in.my target is 2.5%. i'm currently in the low 3s, so i probably could retire now, but as much as i've grown to hate the corporate treadmill these days, i can still summon up the willpower to stay with the plan and stick it out another 2-3 years.
You make an excellent argument for going ultra concervative. And curse those excellent genes of yoursi'm not too keen on the widely touted 4%, for a number of reasons.
it has a small but noticeable chance of failure, AND it's based on a 30 year retirement timeframe. all four of my grandparents lived into their 90s (one is still alive), since i'm looking at retiring in my early 40s, that could be 60 years of retirement to fund. i don't want to be continually worrying about that small chance of failure for decades on end.
Totally agree. Well, that's the ideal retirement. Sadly, one most people will never see.i'm not looking to merely maintain my current lifestyle in retirement, i want to be able to improve my quality of life during it. new medical treatments, the fancy new gadgets/toys/forms of entertainment that people can come up with in the future, those things probably aren't going to come cheap.
OK my turn. My plan is to take a fixed % of AUM (Assets Under Management) each year. In my case, that will be 5%. But haven't I breached the 4% rule? I have. It's time to report to the headmaster and explain why!As a second question for everyone: what is your withdraw rate when you retire? Are you doing a fixed rate based on your balance on retirement + CPI? Are you doing a variable rate as a percentage of your assets under management each year? And what percentage are you using?
I was saying to my partner just the other day, if we leave money to the relatives, I'd like to set up a testamentary trust, give them no direct access to it, and have them paid 4% (insert figure here) from it each year. I see it as good money mangement teaching opportunity from beyond the grave, and they'd have a reliable monthly income for the rest of their life
4% of AUM, or 4% of retirement balance + CPI?
Wow to the cost. And I totally agree with the justifiable fear of ending up crammed into some aged facility, looking forward to the weekly kerosene bath.
I have this theory that, for the price you'd pay to go into some retirement home, you could hire a nurse yourself. I'm sure there's a person with nursing training, who only wants a part time job. (Perhaps they're raising kids or something). Pay them to come to your house for an hour, 7 days a week. Have an emergency button you could push if necessary, etc.
You'd end up with far cheaper care, be given as much attention or more than you'd get in a retirement home, and as you can choose who you hire, you can have someone who actually is prepared to care.
It's just a theory. I've never worked out the numbers. But it seems right to me.
Good advice … and certainly not wishing to appear unduly negative, but
In the final washup, "our" investments are a reflection of our lives, and will likely end up a prelude to our immediate families' future "investments" (over which we will have no control)
I often think, if I get lucky and pick a multi-multi bagger …. and get to retire early, I'll most likely be bored as crap lol …..
Therefore, picking the wrong Stocks most of the time is probably in my best interest
With that in mind … Some of us are doing extremely well
I want to do what I want NOW. NOW is today tomorrow and the next day---
owning or part owning businesses which can supply a passive or not so passive income
OK. This is very interesting. So we know that rich people set up trusts for their kids who go off to college. Let's run with that cliche. They're not a Testamentary Trust. Possibly they are discretionary. There are companies that specialize in managing rich people's trusts. I'm assuming that they're prepared to carry out Daddy's instructions verbatim. Daddy is the Appointor, Professional Trustees Pty Ltd is the Trustee, and Geoffrey is the Beneficiary who receives the funds, but has no say in anything.I suspect the Will maker would be unable to specify a percentage. You cannot fetter the discretion of the Trustee and, if it is a Discretionary Testamentary Trust, the Trustee determines the amount of income, if any, allocated to each beneficiary. Possible Corporate Trustee in which case a beneficiary can be a Director and then guess what can happen?
Interesting. Certainly a potentially beneficiary doesn't have to accept the proceeds of a will. But if they do, can they just dissolve the trust? That sounds odd to me. I agree with the limited lifespan of a trust. Still, 80 years is a good runIt is also possible for a beneficiary to opt out of the Trust in which case they are able to access the capital and do with it what they want. Also a DTT has a limited span of 80 years from when it first comes into effect.
Costs are a big thing. Yes, unless you're leaving a signficant fortune, it may not be worth doing.A vast subject and it will cost to get it right initially plus future costs as it will need to be reviewed as circumstances change, eg definition of children (IVF, surrogate, etc), blood line and so forth.
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?