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Originally Posted by Bjauck
We have had a few good years of appreciating asset values so achieving a 5-6% in the future will be even more of a challenge. Share prices are even more prone to wild swings than house prices. Remember 1987, 2008, and ?
A couple retiring with a house and $2m in financial assets may still only have approximately $70,000 after tax income plus government super. It may provide a comfy but not an extravagant lifestyle. Private Medical bills, major house repairs, private hospital fees (without government subsidy as you would not qualify) for one partner may easily put a dent in the asset base and income. I think you may need those assets PLUS a fat Kiwisaver or other retirement scheme balance.
It depends how much of the $2m in financial assets is invested in NZ shares paying imputed dividends. The conventional "financial adviser" rule of thumb to increase the proportion of bond-type assets in one's portfolio with advancing age isn't paying too well in these times of low interest rates.
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Originally Posted by macduffy
It depends how much of the $2m in financial assets is invested in NZ shares paying imputed dividends. The conventional "financial adviser" rule of thumb to increase the proportion of bond-type assets in one's portfolio with advancing age isn't paying too well in these times of low interest rates.
Still after a few good years, if there is a sudden correction for whatever reason you may be pleased to have got into those low-interest term deposits!
Asset mix does play a big part...If you put a large part in NZ shares you may get get the imputation credits but then your "safe" large holdings may go all Chorus on you! You can buy overseas shares for greater diversification but then you have exchange risk etc.. No matter. you certainly need to have a healthy cash buffer and asset buffer to protect yourself from being caught out by a market swing just when you need a large amount of cash in retirement...
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No argument there. Asset mix, diversification and cash reserves are all required but a net 3.5% on $2m is setting an excessively low "goal and aspiration", IMO.
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Originally Posted by fungus pudding
An excellent post. Knowing when to stop is crucial, or put another way, knowing where you want to be at the beginning helps tremendously. There's little point in continually building assets and wealth you will never use.
Really? What if one just finds it fun? I've been building wealth I'll never use for ages. It keeps me out of bars, significant taxes are paid and the whole lot will likely go to charity. In the meantime, I have a lot of fun.
It may be a shallow existence, but I find there to be enough of a point to keep me going. It certainly beats the other alternatives, for me anyway.
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Never try to teach a pig to sing. It wastes your time and annoys the pig.
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Originally Posted by macduffy
It depends how much of the $2m in financial assets is invested in NZ shares paying imputed dividends. The conventional "financial adviser" rule of thumb to increase the proportion of bond-type assets in one's portfolio with advancing age isn't paying too well in these times of low interest rates.
relative to what we had before ,interest rates are low--relative to most ofter western countries we are doing pretty well--its easier to get some income and still stay relatively(but not completely)safe, here in NZ.
If your an oldie,logic would say to concentrate on keeping your dosh as safe as possible.
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Originally Posted by Stranger_Danger
Really? What if one just finds it fun? I've been building wealth I'll never use for ages. It keeps me out of bars, significant taxes are paid and the whole lot will likely go to charity. In the meantime, I have a lot of fun.
It may be a shallow existence, but I find there to be enough of a point to keep me going. It certainly beats the other alternatives, for me anyway.
I am reminded of the story about the embezzler who did his employer for more than three million over ten years. When he was finally caught, there was nothing left. He was asked "What did you do with it all?" and replied.
"Expensive wines, expensive drugs, expensive women - and I guess I just wasted the rest!"
Whatever floats your boat.
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Originally Posted by Stranger_Danger
Really? What if one just finds it fun? I've been building wealth I'll never use for ages. It keeps me out of bars, significant taxes are paid and the whole lot will likely go to charity. In the meantime, I have a lot of fun.
It may be a shallow existence, but I find there to be enough of a point to keep me going. It certainly beats the other alternatives, for me anyway.
If its purely for fun,then thats more like a hobby as long as you can do without it-so thats a different matter--but for most its simply a matter of never being able to satisfy that appetite for more.
The danger can be that the goal represents a future happiness that can never be achieved,because there is always more--I believe there has to be something else.
Those mega rich that get involved in charity work seem ,on the face of it ,to be happier people,than those on the power or greed tread mill
I cant say for sure that he is not-but does Donald Trump seem like a happy person ?
In many cases though being a philanthropist can be hard work--Its not easy finding those most in need and figuring out how best to help them.
I think those whose boots were on the ground,like the Garth Morgan's motorcycle trip-and Edmound Hillary who was actively involved in Nepal have a better chance of more efficient results.
It can also be done on a small scale though by setting aside some dosh when visiting a 3rd world country (thats what floats my boat) and giving to those you can see need it ,or contributing to projects like building a water tank for a village--but of course there are other ways that dont require quite so much energy.--ive always found Kiwis are pretty good at that sort of thing.
SD-you seem to have gotten your house in order(important step) It keeps you out of bars--It will probably go to charity some day--Doesnt sound so shallow to me
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Last edited by Beagle; 27-01-2015 at 10:16 AM.
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Originally Posted by KW
You realise you could sell it, move to a small NZ town, buy a very nice house for $425k, and live off the annual earnings on the $1 million capital you have left? You would never need work again. Something I realised when living in Australia, its better to be rich in a small town then poor in a big city :-) Now I just visit the "poor" on holidays LOL
You could probably start a thread on which small town was ideal--Ive been meaning to go have a good look at Keri Keri up North (did I spell that right?)
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Originally Posted by Roger
Perhaps you're right but maybe Aucklanders who are debt free are out of touch with reality now with our new found status
The council tell me my debt free home is now worth $1.425m...I'm scared for my forthcoming rates bill
As the Super City rates are still being levelled out from the old council ratings, in some parts of Auckland (Manukau and Waitakere for example) your rates bill on a house of that value may actually be reduced. If you are in "old" Auckland in a suburb that has had above average appreciation, then, yes, you may have to stump up for a big increase.
Before the Super City came about, it surprised me that, according to polls, Auckland City ratepayers seemed to be more keen on the idea of a Super City. Inevitably they would end up with hefty rates increases as land values/area were greater there compared with the peripheral council areas....an expensive house for Manukau City is now an average house in Auckland City.
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