How much capital do I need to retire comfortably on ?

[ynot]

Having recently been reviewing my retirement investment strategy and found this thread. I have a debt free house and $500k.

Im considering a rental property purchase with the $500k but would be interested to hear what others think about REIT's as an alternative investment. Have not been following them lately so not sure about how they will perform looking forward.

[fungus pudding]

Having recently been reviewing my retirement investment strategy and found this thread. I have a debt free house and $500k.

Im considering a rental property purchase with the $500k but would be interested to hear what others think about REIT's as an alternative investment. Have not been following them lately so not sure about how they will perform looking forward.

I imagine with 500k you will need to eat into the capital, as well as using the return. If that is the case -go for the LPTs. You can always flog off a few if you need 10 or 20k, or add to if you have a year with low expenses.
Besides that it's a damn sight easier dealing with a share of a trust, than a tenant. Especially with the ones which are PIES e.g. ARG, PFI. GMT, PCT. Not even any paper work, with no tax to worry about. Augusta is not a PIE, and Stride. comes with stapled shares in a management company Stride is a PIE, but the stapled shares in SIML are not.

[ynot]

I imagine with 500k you will need to eat into the capital, as well as using the return. If that is the case -go for the LPTs. You can always flog off a few if you need 10 or 20k, or add to if you have a year with low expenses.
Besides that it's a damn sight easier dealing with a share of a trust, than a tenant. Especially with the ones which are PIES e.g. ARG, PFI. GMT, PCT. Not even any paper work, with no tax to worry about. Augusta is not a PIE, and Stride. comes with stapled shares in a management company Stride is a PIE, but the stapled shares in SIML are not.

The million dollar question, or .5m in my case, is how do I choose this portfolio and secondly how do I manage it. I am not averse to researching the subject but I am afraid of getting it wrong.

[Aaron]

The million dollar question, or .5m in my case, is how do I choose this portfolio and secondly how do I manage it. I am not averse to researching the subject but I am afraid of getting it wrong.

Sorry can't help you as I know nothing but nice to know there are others like me who are unsure where to invest. Would be interested to hear back what you decide.
I think 2018 was a good year for cash compared to other investments.
https://www.cnbc.com/2018/12/20/the-...d-in-2018.html
No yield but if asset prices are falling then it works out OK. You are however taking a chance that central banks will eventually make your money worthless with low interest rates and money printing. Have read a lot about "time in the markets, not timing the markets" blah blah but think I am smarter than the experts who dedicate their lives to investing so continue to unsuccessfully try and time the markets.

Not a recommendation but I am waiting another year (or two) to see if I can time the next major downturn and buy investments at half price. Janet Yellen has stated that we shouldn't expect another downturn in our lifetimes which may be right. I am not a phd and she is way smarter than me, yet I will wait a bit longer as December 2018 maybe gave us a glimpse into the future, at least up until Jay Powell confirmed investors can rely on the Fed Put.

[Bjauck]

...
I think 2018 was a good year for cash compared to other investments.
https://www.cnbc.com/2018/12/20/the-...d-in-2018.html
No yield but if asset prices are falling then it works out OK. You are however taking a chance that central banks will eventually make your money worthless with low interest rates and money printing. Have read a lot about "time in the markets, not timing the markets" blah blah but think I am smarter than the experts who dedicate their lives to investing so continue to unsuccessfully try and time the markets...

In 2018 these were the following approximate after 33% tax returns (included both taxed income and untaxed unrealised capital gains during the year) for various asset classes:

NZ Cash (in a big bank): <1%
NZ 12-month Term Deposit +2.3%
NZ bonds mixed portfolio +2.5%
NZ shares +5.2%

With inflation running at about 1.9% only NZ shares would have provided a reasonable amount of return plus capital CPI purchasing power preservation. Bonds and 12 month td would have given you an after inflation and after tax return of approx 0.50%.

So, whilst maintaining capital purchasing power, to currently provide an independent after tax retirement income of $30,000 from rolling over term deposits with varying lengths would require $5,000,000 of capital. (3.7% is the current rate for a BNZ 5-year TD)

If you are prepared to have your capital value eroded by inflation, $30,000 after tax income from term deposits would require $1,300,000 in capital. But that income would be static (and dependant on changes in interest rates) so inflation could erode what it could buy each year.

Disc: Assuming un-changed tax system. All figures are Very approximate. DYOR.

[Aaron]

Finally it has been worked out $785,000 plus a mortgage free house for a comfortable retirement.
https://www.stuff.co.nz/business/mon...ces-retirement

Or has that been pointed out earlier in this thread. It is possible for me but will involve some significant sacrifice or some lucky investment decisions between now and retirement. Not sure if scrimping and saving my whole life for a comfortable retirement is the best option. Options are decreasing fast as time seems to speed up as I get older.

[blackcap]

Finally it has been worked out $785,000 plus a mortgage free house for a comfortable retirement.
https://www.stuff.co.nz/business/mon...ces-retirement

Or has that been pointed out earlier in this thread. It is possible for me but will involve some significant sacrifice or some lucky investment decisions between now and retirement. Not sure if scrimping and saving my whole life for a comfortable retirement is the best option. Options are decreasing fast as time seems to speed up as I get older.

If you start with $52k at 25 years of age, then a 7% annual return compounding will get you to $785,000. (with no further additions)
So in theory that target should not be too hard to achieve. Most people would contribute say $2,000 per annum to their kiwisaver. If you start at age 30, you should be there by the time you reach retirement. (Big emphasis on starting early goes without saying).
For us in our 40's or later that target may be harder to achieve via traditional mean. A good friend of mine has about $52k now in his kiwisaver. Unfortunately for him he has about 20 years to retirement. That means at 7% compounding will only get him to $201,200.
So the moral of the story is.. start as early as you can.

[JBmurc]

Having recently been reviewing my retirement investment strategy and found this thread. I have a debt free house and $500k.

Im considering a rental property purchase with the $500k but would be interested to hear what others think about REIT's as an alternative investment. Have not been following them lately so not sure about how they will perform looking forward.

I personal would avoid Residential property at this stage ..year to two ago I would have said look to the likes of invercargill-dunedin etc but now both have gone up pushing av. yeilds(for properties with Cap growth potential in good areas) to much lower levels and with all the costs one has renting properties and damage one always gets..

Personal if I had a spare 500k I'd be buying another Commercial property ... much less hassle if you buy the right property
a couple I would be looking closer at ..down my neck of the woods

https://www.realestate.co.nz/3461424
10% yield .long term fixed term lease.. does need some earthquake strengthening but I understand Oamaru has very low earthquake risk so local council would give you a longer term to bring upto min standards which going from the picture look like the front facade has already been upgraded ?? ...

https://www.realestate.co.nz/3407006
Well built good location 8% yeild

[fungus pudding]

I personal would avoid Residential property at this stage ..year to two ago I would have said look to the likes of invercargill-dunedin etc but now both have gone up pushing av. yeilds(for properties with Cap growth potential in good areas) to much lower levels and with all the costs one has renting properties and damage one always gets..

Personal if I had a spare 500k I'd be buying another Commercial property ... much less hassle if you buy the right property
a couple I would be looking closer at ..down my neck of the woods

https://www.realestate.co.nz/3461424
10% yield .long term fixed term lease.. does need some earthquake strengthening but I understand Oamaru has very low earthquake risk so local council would give you a longer term to bring upto min standards which going from the picture look like the front facade has already been upgraded ?? ...

https://www.realestate.co.nz/3407006
Well built good location 8% yeild

I couldn't agree more about commercial/industrial as opposed to residential. Some of the syndicates available are well worth considering. e.g. this Wellington one is being syndicated in $200,000 lots with projected return of over 10%. (Disc - I have gone into this one, but possibly some titles still available) Main tenants look good.

(Spark, BNZ and AMP.)

https://www.stuff.co.nz/business/pro...ding-ever-sold