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  1. #11
    El Toro~
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    Quote Originally Posted by percy View Post
    Most of us here are investors.
    To start investing you first of all need to live within your means.
    Only then can you start to invest,spare cash.
    I do not think it makes a great deal of difference whether you invest in property,shares,art or whatever,so long as your do your research and are not greedy.
    Therefore I think most of us on sharetrader will make sure we can live on our retirement income,whatever it turns out to be.
    On the other hand, there a great number of people who can not live within their means.These people reach retirement age with either no house,or a house with a large mortgage.They can not afford to give up work.Life then becomes very hard for them.
    So back to how much money do you need to retire on.Depending on where you live,your lifestyle,and health I would say someone living in the South Island with modest requirements could safely retire with a free hold house worth $350,000 and about $300,000 invested returning 5%.For a couple that would be $15,000 from investments plus super of approx. $25,000.
    Move to Christchurch your house would most probably be approx. $500,000 and your investments would need to be worth approx. $600,000.
    Move to Auckland,your house would most probably be worth $1,200,000 and you would need investments worth close to $2mil.
    I am 66 and am still working.This has a huge influence on where you are.My work is the same as having approx. an extra $800,000 invested.I still love my work.
    Agree with everything in this post, well written, Percy

  2. #12
    Permanent Newbie
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    Mar 2010
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    Income Required for Financial Freedom

    Before Tax After Tax @33%
    $70,000 $52,632


    Capital Required at different rates of return
    Yield% Capital Difference 1%


    1% $7,000,000
    2% $3,500,000 $3,500,000
    3% $2,333,333 $1,166,667
    4% $1,750,000 $583,333
    5% $1,400,000 $350,000
    6% $1,166,667 $233,333
    7% $1,000,000 $166,667
    8% $875,000 $125,000
    9% $777,778 $97,222
    10% $700,000 $77,778
    11% $636,364 $63,636
    12% $583,333 $53,030
    13% $538,462 $44,872
    14% $500,000 $38,462
    15% $466,667 $33,333
    16% $437,500 $29,167
    17% $411,765 $25,735
    18% $388,889 $22,876
    19% $368,421 $20,468
    20% $350,000 $18,421


    Cutting and pasting from Excel creates presentation problems but I divide the $70k income by the interest rate to arrive at the required capital value. The last column shows the difference 1% improvement in yield makes in capital requirements. It highlights how important getting in excessive of 7% is. Even the difference in 4% to 5% is a jump.
    In the current low interest rate environment of 3%-4% you will need over $2mill by my rough calculations. Hope I can pick up some 20% returns from somewhere. Based on past performance I will need to look after my health as I will need to be working well into retirement.
    Last edited by Aaron; 22-04-2015 at 01:27 PM. Reason: presentation

  3. #13
    Senior Member
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    rural canterbury
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    Quote Originally Posted by Aaron View Post
    Income Required for Financial Freedom

    Before Tax After Tax @33%
    $70,000 $52,632

    You also need capital appreciation to keep up with inflation. Otherwise, if you live for 30 years after retirement, your $70K won't go far at the end.

  4. #14
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    Quote Originally Posted by satan View Post
    You also need capital appreciation to keep up with inflation. Otherwise, if you live for 30 years after retirement, your $70K won't go far at the end.
    That is even more depressing then. What if we have deflation instead. I have looked at my savings, compounding returns etc and it would be a dream to be financially free for me. If opportunities arise I can amplify my returns with debt but debt has its own risks.

    Maybe debt isn't so risky in this new age of modern finance. I read that Germany was criticised for "a fixation that money should always be repaid". I guess in these days of high finance my thinking and Germanys thinking is old fashioned. If it is my money I am lending I funnily enough expect it to be repaid, with interest. How insane is the world of finance/debt/currency getting. Common sense says that if you lend money you expect to have it repaid. Unless I suppose you work for a bank and it is someone else's money then it might not be such a problem.
    But more seriously though, this website has been reported for phishing threats. Did anyone else get this message when logging in.
    Last edited by Aaron; 22-04-2015 at 02:00 PM.

  5. #15
    Senior Member
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    Quote Originally Posted by Aaron View Post
    That is even more depressing then. I have looked at my savings compounding returns and it would be a dream to be financially free for me. If opportunities arise you can amplify your returns with debt but debt has its own risks.
    But more seriously though this website has been reported for phishing threats. Did anyone else get this message when logging in.
    No, I did not get a phishing message. My personal goal was a mortgage-free lifestyle property plus a million invested. I've always lived on the smell of an oily rag, all my tenants have flasher cars than me and I've never owned an i-phone etc, am a slow adopter of expensive technology and if I ever retire, I'll be the old guy in rags at the back of the company meetings eating all the sandwiches.

  6. #16
    Senior Member
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  7. #17
    Share Collector
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    Porirua
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    Rethink your retirement. For me, "retiring early" was getting to stay home and bring up my kids and take all the holidays we wanted and then choose a new career. And never stressing about the possibility of us both being out of work. And being able to choose to retrain and take up a new career that suited me. This took a small, debt-free house and a starting sum of $30k (and currently needs about $300k with one modest part-time income and 3-4 teenagers).

    After that, I am seriously keen to work out the rest of my life and never retire again

  8. #18
    Guru
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    Cool

    Quote Originally Posted by huxley View Post
    Funny quote
    I love it

  9. #19
    Senior Member
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    We cannot be really certain for sure, I guess. And it will be at the end of our lives when we get to know whether what we have saved or our capital was enough
    or not. So just aspire to get as much above that very low threshold of $1M as per what KW shared on the link above and having passed all the conditions that are given (no debt, an unencumbered house, etc). If you're really an investor and have not started rather late $1M is easily attainable.
    Last edited by RGR367; 23-04-2015 at 02:52 PM.

  10. #20
    ShareTrader Legend Beagle's Avatar
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    Quote Originally Posted by RGR367 View Post
    We cannot be really certain for sure, I guess. And it will be at the end of our lives when we get to know whether what we have saved or our capital was enough
    or not. So just aspire to get as much above that very low threshold of $1M as per what KW shared on the link above and having passed all the conditions that are given (no debt, an encumbered house, etc). If you're really an investor and have not started rather late $1M is easily attainable.
    I agree and see that as a minimum target BUT here's another perspective from some retiree's I know well.

    Mary has retired and lost her second husband to cancer many years ago. She lives in Turangi and is actively involved in the community and has very little in the way of retirement savings BUT she makes jams and pickles and knits colourful baby booties with pictures of cute farm animals on top which she sells at the fortnightly markets down there, often to tourists passing through. She makes about $300-400 per fortnight and she lives reasonably comfortably on that and her national super in her unencumbered home there which is basic and not worth much more than $100K but she seems happy enough.

    Sylvia lost her husband a few years ago and lives on the National super plus a modest super policy her husband took out many years ago which pays for the monthly management fees, (about $550 a month) in the village she enjoys with a supportive and caring community. Her son manages a very small portfolio which pays her another $60 a week and she seems happy and well able to meet all her bills and travels down to see her extended family in Southland quite often.

    Neil and Chris didn't have any money when they retired, in fact due to non existent retirement planning, excessive spending and some unfortunate events they still had a $200K mortgage on their modest Auckland family home. They love animals, (former manager of Animal welfare centre in Auckland), and didn't have enough room for their many different animal's and strays they took in at their home. They traded down to an nice unencumbered 8 acre property in Te Kuiti which cost around $250K from memory and run a full suite of chooks, pigs, sheep, goats e.t.c. as well as domestic animals they love including cats and dogs and seem very content. The bonus is they're close enough to Auckland and have room for their kids to come visit on the weekends and the kids seem to like having a break from Auckland.

    Proof that you don't need an absolute fortune to retire on ?

    Others I know have converted part of their house into a separate flat and rented it out and seem to be doing fine on one lot of rent plus the Supernanuation.

    I wouldn't advocate aiming too low but I think we can all agree that human beings provided they're adaptable are capable of more than one way of skinning this retirement cat.

    There's also the point that there's absolutely no guarantee whatsoever that you'll make it to say the age of 70 and even if you do its odds on favourite that you'll enjoy spending that XYZ amount of discretionary spend a lot more in your thirties, forties or fifties than you will in your nineties. Food for thought ? I think a balanced approach is best.

    I've probably erred on the side of enjoying it as you go a little too much but you've got to call this thing as you see it.
    Last edited by Beagle; 23-04-2015 at 01:00 PM.

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