How to retire early?

[Deactivated] on 04/06/2014 - 14:56

I understand I am in desirable position but have no idea what financial direction to head in order to set myself up for the future? In summary – I don’t want to work for the rest of my life and want to retire early!

Currently on double income (155kpa + 90kpa) living in our primary residence valued at 500k. No other debt, investments or kids.

Mortgage is variable interest only, with 100% offset account.
Property value = $500k. Loan remaining = $425k. Offset Account = $200k.
Offset Account is constantly growing from our savings and at the current rate I predict the offset account will be equal to the loan remaining amount in around 2 to 3 years.

Looking for some advice on the next step financially?

The real kicker in this scenario is that my partner and I are both 26years old.

Financial

Comments

        • superm86 on 05/06/2014 - 23:06

          Cool. Been reading about it - where did you learn about it?
          there are too many bogus instructions out there - do not know learning from where would help.

        • centrelink on 06/06/2014 - 02:26

          Well there's not much to say, find a good drop shipper and research. Finding ones that are alredy saturated are bad choices or ones that can make what your after helps.

        • superm86 on 06/06/2014 - 10:27

          Thanks spn.
          Can you tell where did you learn how to do research on them, what are factors and what not? - as from your success with that I guess you made the right choice of choosing the right learning source.

        • centrelink on 06/06/2014 - 19:18
          +5

          I used to think all Chinese suppliers are crap and cheap. However what alot of people fail to realize is that there are a few gold mines out there waiting to be tapped. There will always be some Chinese companies that will offer cheap supplies and give you great quality at the same time, those are the ones you are to find.

          Now when I point this out to some of my friends they will always try to shoot me down for country of origin, but I remind them that even big luxury brand items like Apple relies in cheap manufacture labor for their phones and tablets to bring out good quality stuff for cheaper price offered else where.

          Also knowing how to use the chinese version of google (I think its called baidu or something). I am not chinese nor do I even speak chinese at all so I had my missus do it for me (and man she is terrible at using a search engine).

          Another way to find alot of drop shippers is the use of fivver. You can purchase a list of 1000 drop ship suppliers for $5 or something.

          Learning how to code (A FEW LANGUAGES) was probably the most time consuming part. All learnt online with the internet as my search resource. Had to learn a couple programming languages as well as learning how to make a website and make the whole thing automatic.

          Knowing how to present a website in a way to draw customers in and make a purchase was important. Though I learned this all in uni for my elective subjects.

          Researching how to improve search rank, keywords, adwords etc…

          As I said, theres alot to learn and its best to learn them yourself (it did take me a few years to get it automated).

          There are people who want me to spoon feed them and replicate my success for themselves, but I tell them to learn it themselves and they stop there and never do it, expecting to be spoon fed every information in a day when it took me years to do and that ends my assistance for them.

        • superm86 on 07/06/2014 - 23:58

          Thanks. That's cool. Technical thing, keywords, seo, etc. is not an issue its the research of suppliers and what in case of returns is kind of new things. Thanks for the input :). Let's hope I find courage to dig in this.

        • lemons4lime on 13/06/2014 - 08:21

          what are the chances of linking your website?

      • Baghern on 05/06/2014 - 13:50

        International gigilo

        Is that you Todd?

        http://www.news.com.au/entertainment/tv/is-todd-gisondi-from…

        • centrelink on 06/06/2014 - 02:27

          That's still working so it can't be that

    • Cluster on 08/06/2014 - 23:38

      spn, you say most of your work is automated, earns a passive income and you probably put in 2 hours or work per month.

      Do you run a spam emailing farm?

  • Kempe on 05/06/2014 - 13:01
    +2

    I retired early, albeit because I was offered a package, but best advice I can give you is not to focus too much on money.
    When the time comes you will know, and you will think you are not ready financially, but the reality is if you focus too much on money you will never have enough and will die at work

  • hahaboy on 05/06/2014 - 13:06

    What type of accountant if you don't mind me asking? or specific sector/industry? I've recently joined the industry too, but didn't think there was that decent money in it?

    • [Deactivated] on 05/06/2014 - 13:54
      +7

      Management Accounting.

      If you are in it for the money, my advice is stay away from the Big Four. You will spend years slaving away on low income&excessive hours hoping for a chance to make it big one day - and not everyone can.

      • hahaboy on 05/06/2014 - 22:05
        +1

        Nice. Thanks for replying. I did enjoy that at uni. Didn't realise there was good money there.

        Are you doing Management Accounting for a particular company or is it client based? Also, for your first career steps, was it through a company, going through a graduate accountant role (ie- CA/CPA, month end duties, ledgers, reporting, BAS etc) or other avenues?

        • [Deactivated] on 05/06/2014 - 22:59

          PM me if you want more info on this topic.

        • No ONE on 06/06/2014 - 11:17

          I would love to get your career plan advice on this one as well.
          I thought working for big 4, will get you earn a lot of money.

          Sorry, if it is off-topic.

      • voldemort on 07/06/2014 - 14:23

        Your thread gives me more hope about the industry (esp the pay), I'm graduating in the next few months and always thought that going for the big 4 is my ultimate goal, I know the salary is low (50~60k incl super) but I heard that the career advancement and experience/training is great. Do you have any advice for new graduates like me?

  • Cheap Steve on 05/06/2014 - 14:17
    +1

    Don't retire early find a job you love instead. I love going to work each day and have a great time. Mind you I work for myself and have complete flexibility over what I do each day.

    To answer your question - your next step is to decide between shares or property and start building up a passive income of dividends or rent. You've said you like property but I can assure you that you will get a helluva lot more income out of a share portfolio than property over the next 60 years.

    • ozeebee on 06/06/2014 - 08:53
      +1

      I can't agree with this more if I tried to.

      My biggest mistake in life is not studying or working on something I enjoyed doing when I was younger.

      Now I'm stuck in a job that pays ok but I really don't enjoy my work.

      Seriously for the young people out there, think about what you enjoy in life and focus 100% on that. Will make your life so much more rewarding.

  • OzBLover on 05/06/2014 - 15:07
    +4

    I must say with no formal qualifications, yours and partner's income are extremely impressive. Most of the accountants I know, whether working for accounting firms or in a corporate environment, are getting 75 to 80K per annum.

    BTW If I were in your position I would consider diversify my investment into share and properties. Im sure a trip to a reputable financial advisor will pay off. An initial consultation is probably free with the whole financial planning costs between 2 to 3K to start with. Then you may pay an ongoing fee or just on a fee per visit basis. I dont think you should rely on the oZbargain community to make such an important decision. With all respects, we are really good at saving a few dollars on a pack of rechargeable battery or getting free eBooks but lets leave the rest to the experts

    • [Deactivated] on 05/06/2014 - 15:16

      Thanks for the input.

      Also we both have formal qualifications in the form of Bachelor University degrees.

      • tohara on 07/06/2014 - 09:13

        Did you ever consider CA/CPA when you graduated?

        • [Deactivated] on 08/06/2014 - 21:54
          +1

          Yes definitely and my partner is still continuing to learn and study in the field.

          Its an industry standard, you always need to keep up with the game whether is CA/CPA or something else.

  • peterw1 on 05/06/2014 - 16:39
    +2

    to help you with your decision, please consider yourself in a few years with 2 children and 1 stay at home parent. Think what your partner, who is reliant on you would do if you suddenly died. Obviously life for them would be grim, but you can leave them on a reasonable financial footing. As those stupid funeral insurance ads say "well alan was a good provider but…."

    • Cheap Steve on 06/06/2014 - 06:58

      Agree that you should be looking at your personal insurances and getting them locked in on level premiums whilst you are young and healthy. Especially look for income protection cover with an agreed value.

  • edgar28 on 05/06/2014 - 16:46
    +1

    my friend used to tell me one method that is against my culture…….. but I don't think it suits you too

    His method is get a single (only single kid from her family) extreme wealthy female and retired after you had married her.

    • cheng2008 on 05/06/2014 - 20:30
      +3

      I have a feeling the OP is not interested in women :p

      • edgar28 on 05/06/2014 - 23:44

        Einstein did say "Loyal to one……… sincere to others."

  • lolmao on 05/06/2014 - 16:54
    +10

    Currently on double income (155kpa + 90kpa)

    kilopascals?

    • theophilusthistler on 06/06/2014 - 08:45
      +18

      Must be high pressure jobs

      • Windows7forever on 06/06/2014 - 11:02
        +1

        On such rich incomes I would assume the OP would be getting some high blood pressure from his boss!

        • [Deactivated] on 06/06/2014 - 11:27
          +2

          Not really - 40 hours week maximum.

          Work smarter, not harder.

        • redpump on 07/06/2014 - 00:31

          I wish I could tell the big boss's this. They only see time still at office = hard worker, when I take 2 hours to do something the "golden child" takes 2 days to do…

        • [Deactivated] on 08/06/2014 - 21:56

          Stupid management, time to change jobs and go somewhere that you are appreciated (and paid) for your work, not time chained to the desk.

          That is old school thinking!

  • alwayscheaper on 05/06/2014 - 18:49
    +1

    Have you considered what you'd want to do if you are not working?
    I am on my maternity leave and thought it would be the best thing in the world, but after all I think I am more suited to work for money than full time educating my kid which I am not good at. Maybe take a long time off if you can, say 3 months, have a plan what you'd like to achieve pretending you have retired, then go from there!

  • robbyjones on 05/06/2014 - 20:40
    +2

    Thinking of the far off future at 26…..kudos to you!!

  • Michaelz101 on 05/06/2014 - 23:30
    +3

    I am 26 and work in the accounting field and I have two kids under 3. Wife going back to study and we still manage with my salary which is less than half of yours.

    Enjoy it, stop stressing about what to do with it all.

    One thing I'll say is the kids are the best things to happen for us, nothing money will ever do.

    • edgar28 on 05/06/2014 - 23:45
      -1

      yes…… when they smile to you…….
      No when you heard so many bad guys wondering around the school stealing kids……

      • leiiv on 07/06/2014 - 01:30

        and wait until they they become teenagers..

  • [Deactivated] on 06/06/2014 - 09:44
    +2

    Get a death grip on your personal finances, live frugally save and invest.

    You guys should be pulling down over $175k after tax and you should be able to live comfortably and happily on around $30k/year (plus mortgage) meaning you can add on $145k a year into investments. In ten years you could easily be in the $2-3m "in the black" range, assuming no complete economic collapse.

    With ~$2.5m capital you could even take out a crappy 4% term deposit investment and live on the $100k/year that'd generate (it'd only be worth ~$60-70k of today money, but still).

    • superm86 on 06/06/2014 - 10:30

      Seems like right thing to do.
      Also in this duration your expenditure will rise but also can your salary - so calculation seems okay.
      But the point is are you ready for 10 years or you need retirement sooner?

    • [Deactivated] on 06/06/2014 - 10:32

      I like this response & idea.

  • onlyletters on 06/06/2014 - 09:56
    +2

    In Australia, you can't retire. Best to rent your property and live abroad NOW!

    • Davros on 07/06/2014 - 06:59

      What he said ^^^

    • [Deactivated] on 06/06/2014 - 11:41
      +12

      We live the same now then when I was on $50k including the 1992 Holden Barina which is hardly a wealthy lifestyle.

      Smashing down the mortgage on our primary residence is not unreasonable either - just using this thread to help me explore other options.

      Perhaps you should look into career progression for yourself?

      • eyevan on 06/06/2014 - 12:13
        +4

        Well said Richard.

        I'm in a similar position as yourself, 28 years old. Married with no kids. Property worth $750k with minimal debt. Combined income of $300kpa ($250k + $50k) - Both in the financial industry.

        Best advice I could give you is to go see a decent financial planner, We did and were very happy for doing so.

      • Megeso1246 on 06/06/2014 - 13:02
        +7

        I must say that you sure have a lot of time to spare on OzBargain during office hours when your company is paying you $155,000

    • Cheap Steve on 06/06/2014 - 14:07
      +6

      You've got it arse about. The tax-paying "rich" subsidise the "poor's" wealthy lifestyle.

      • schwinn on 06/06/2014 - 17:14
        +3

        Agreed. OP and partner are in employed jobs, not business owners, and there is no mention of investment properties. There are no 'tax loop holes' that they are milking, they are full paying the taxes they are due.
        I don't think that the poor can, in anyway, compensate the 'wealthy lifestyle and asset gain' as you mention! A different topic altogether!

        • [Deactivated] on 08/06/2014 - 22:00

          Spot on schwinn.

          Tax burns but everyone pays it - we definitely pay our fair share.

    • donedeed on 06/06/2014 - 22:34
      +3

      I smell jealousy

    • baker bob on 07/06/2014 - 08:10
      +4

      OP studied hard at school and Uni, equally many left school at 16 worked hard and now own businesses or are very busy and rich tradies. The fact the OP earns what he does is a reflection of the hard work he did in early life. That goes for most people on a good wicket.

      You make your own luck buddy.

    • chukkii on 07/06/2014 - 09:44
      +10

      at $155k/year OP is paying roughly $47,622.00 in taxes while his partner is paying $22,597.00 in taxes. That's over $70,000 in taxes each year! (before any deductions of course)

      OP and his partner are also disqualified from pretty much all government assistance programs (as it should be) while paying for those services for lower income earners (again, nothing wrong with that).

      So OP is paying over $40k in taxes and receives nothing from the government in the way of assistance (again, this is fair) so tell me again how people on lower incomes are "unfairly compensating" his wealthy lifestyle and asset gain?

      In fact how is anyone on a lower income compensating those on a higher income?! If anything it's the other way around!

      Look I have no problems with this. Those with more should be contributing more in the way of taxes but when people like you complain that the "rich" aren't pulling their weight and supposedly leeching off others it's bullsh*t and you should be ashamed

      OP isn't one of the mega-wealthy that's hiding his money in off-shore accounts to avoid taxes! He's just a regular guy who's doing his part and paying his taxes!

      • [Deactivated] on 08/06/2014 - 22:03

        OP pays truckloads of tax. Nuff said.

  • mrluke on 06/06/2014 - 16:27
    -1

    So you want to spend the next 60 years of your life doing nothing? You have nowhere near enough to even consider retirement at 60 let alone 26. Work 15 more years and invest it well before you even think about it. Be happy your making that much money, ridiculous to think of throwing that away.

    And are you serious posting something like this on a site dedicated to saving people a few dollars? Get professional advice.

    • [Deactivated] on 08/06/2014 - 22:05
      +2

      Never said I wanted to retire at 26. I just don't want to retire at 70 either.

      If 70 is your target and you are happy with that, good luck to you sir! It's not mine.

      This forum preaches the fact that most professional advise is rubbish and loaded with sales.

      My post and question still stands open for opinion.

  • peterw1 on 06/06/2014 - 17:35

    I would suggest buying tyres when you reach 2 mm depth. Next!

  • gunnny on 06/06/2014 - 18:44

    Invest in our hedge fund. Last three years track record 30%+ each year. Good times in the market though :D

  • lolmao on 06/06/2014 - 21:30

    investment properties

  • [Deactivated] on 06/06/2014 - 22:35

    An accountant is asking for financial advice?

    • baker bob on 07/06/2014 - 08:04
      +3

      Would you let a GP give you a heart transplant, they are both doctors aren't they?

      • StewBalls on 07/06/2014 - 10:20
        +2

        Would you let most OzBargainers give you a heart transplant???

        • [Deactivated] on 08/06/2014 - 22:07

          Oh StewBalls - you crack me up.

          001525 - we are not tax or personal accountants. Do some research into what the accounting field is all about to get a better understanding.

        • StewBalls on 09/06/2014 - 10:39
          -2

          Call me old fashioned, but asking anonymous laypeople on internet forums for professional financial advice is pretty bloody stupid if you ask me…regardless of your weak excuses about your apparent complete lack of transferable skills in basic personal finance between discipline specifics. Is commonsense also not specific to either of your disciplines???

          Surely you have some personal/professional networks that would offer more credible advice? I sure as hell do, and I'm not even in the finance sector…

        • [Deactivated] on 09/06/2014 - 20:49

          Why are you here StewBalls - if everyone is a simple layperson to you? Clearly you are better then everyone - move on.

  • leiiv on 07/06/2014 - 01:45

    Sorry for being off topic, but I am curious about your loan. I assume that you lent more than 80% of the property value and must pay the mortgage insurance. Since now you have lots of money in the offset account, do you still effectively need to pay for the mortgage insurance?

    • Steptoe on 07/06/2014 - 14:47

      Can you rebate the insurance if you change LVR?

      • [Deactivated] on 08/06/2014 - 22:08

        Yes we paid lenders mortgage insurance.

        Apparently our bank (on our behalf) opted for a lower mortgage insurance premium and sacrificed the option of a refund.

        We lost a chunk of coin because of this.

        • Steptoe on 09/06/2014 - 22:50

          If you've paid the insurance, don't ever pay the loan down. Just keep working the offset.

  • [Deactivated] on 07/06/2014 - 03:23
    +4

    How interesting. I guess most of us dont earn as much as the OP and we are the ones giving advise? lol

    • [Deactivated] on 08/06/2014 - 22:12

      So I cannot take advice from anyone who earns less then me? This comment makes no sense.

      I am paid the money I am for the work and skills I have in my particular field only.

  • baker bob on 07/06/2014 - 08:02
    +4

    It doesn't matter how much you earn compared to OP, it is what you do with it. Go to investment forums and there are people with multi million dollar portfolios that did that with kids and single income.

    The thing is to actively invest according to your risk appetite and circumstances. A 26 yr old should be very aggressive with their investments. That's why money on deposit is the worst thing you can do at this age.

    Be careful with professional advice, planners get commission on many of the products they sell and with your relatively small net worth you will get a kid 4 years out of uni trying to tell you what to do with your money. Some Accountants will push you towards tax saving investments, you should be looking for yield and growth, tax savings is cream not the strategy.

    Best course of action is for OP to self educate. There are many investment forums out there, spend 6 months reading everything and then you will have a clear picture on what is right for you. Some people like shares, some like property, you need to understand risks and rewards of both and then invest accordingly. For property, go to Somersoft forums.

    • gunnny on 07/06/2014 - 10:44

      very well said.

      • [Deactivated] on 08/06/2014 - 22:13

        Yes it was.

  • chaosmaster on 07/06/2014 - 11:58
    +2

    First work out how much money you want for the rest of your life, e.g. once you retire do you want to live on 5k a month, 10k, 20k etc. Write down
    the individual costs of your ideal lifestyle.

    Once you work out how much money you will need, work out how much money you must have in assets to earn that amount monthly. e.g. if you need
    8k a month. You could get that comfortably with 2million in assets yielding 5% a year.

    Most people retire early by having a successful business which funds their asset portfolio (few people get wealthy through the stock market, it's a way
    to diversify and maintain wealth primarily). Many people spend 30-40 years working, hoping their investments pay off (you can't control stock market
    or property market, if they tank when you want to retire your screwed).

    Lets say you know you just need the 2million above for your lifestyle, that gives you a guide as to how much you should aim to generate either through
    saving over a long period or selling a business (hard work but can be much faster).

    Earning 200k+ is great but its not enough to stop working unless you want to spend the next 15-20 years living frugally and investing (and hoping
    your investments don't tank).

  • turbo77 on 07/06/2014 - 12:00
    +2

    you say you have "no idea what financial direction to head" but i am puzzled that both of you are in the financial sector.

    I myself am a financial analyst for one of the leading FMCGs and if i had no idea about my future investments then i wonder what would happen to my company

    • StewBalls on 07/06/2014 - 12:04

      Honestly, there's a lot about this post that doesn't seem to add up…pun semi-intended!

    • [Deactivated] on 08/06/2014 - 22:17

      We both work in completely different and irrelevant fields to the basis of this post.

  • Gdsamp on 07/06/2014 - 14:37
    +1

    Ask your accountant if you can register them as dependents.
    Then hide most of your net worth offshore in a complex money laundering system designed to support the drugs trade.
    Then you can pay virtually no taxes, and complain about how awful you think the country is, knowing you're doing as little as possible to help.

  • pointblank on 07/06/2014 - 14:47
    +2

    Reading these threads online where people earn over $100k and don't know what to do with the money makes me depressed :( At least OB isn't as bad as whirlpool :P

  • peterw1 on 07/06/2014 - 14:52
    +1

    in order to retire contentedly, make sure you choose your life partner correctly. I would suggest marriage and note that time spent together before marriage is no guide to long term success, be it 1 hour or 10 years. This is the most important financial decision you will make in your life. It also comes with added benefits. Once this is sorted retirement is just another option in life. remember if you treat your partner like a thoroughbred, you won't end up with a nag. finally get some advice from an independent financial planner http://www.ifaaa.com.au/, so no hidden agendas/fees.

    • [Deactivated] on 08/06/2014 - 22:18

      Thanks peterw1. Solid advice.

  • SeVeN11 on 07/06/2014 - 19:41
    +4

    very similar to what chukkii & chaosmaster said, but a bit more calculative.

    1) figure out your expenses necessary expenses (annually) (food/mortgage/rates/utility/petrol/insurance etc) - this is your minimum expense to tick you over the line day in day out
    2) figure out what your lifestyle expenses (annually) are - e.g. holiday, toys, branded stuff etc.
    3) sum these 2 figures together and this represents you total yearly expenses that you need

    Now you just need to figure out how much asset you need to generate that income.

    from lowest risk to highest risk (annual returns)
    * term deposit returns 3-4% gross (not index to inflation)
    * residential property returns 4-5% gross (indexed to inflation)
    * commercial property returns 6-10% gross (index to inflation)
    * simple cashflow strategy (covered calls/naked puts) on share market generates 10-30% gross (index to inflation)
    * advanced option strategy (spread trading etc) on share market generates 100-300% gross (index to inflation)

    You can do the maths here and figure out how much capital you need to deploy in each situation to generate the necessary cashflow.

    I'll share an example of mine so that you can get a feeling of what a person can achieve in 10 years

    I bought my first property when i was 22 in the low 200k,i subdivided it recently, built another dwelling on the back for ~300k and both the property combined is worth about ~1m today. More importantly, the rent i get from the combined property today is around 40-50k gross a year. (gross yield is 4-5%). I could have paid down the debt on this property over the last 10 years easily, but I bought a couple extra property instead because my goal was not 40-50k gross rent. [Important thing for me here was the fact that rent is index inflation, meaning 10 years from now my spending power from the rent collected should not decrease as my rental income would have increased accordingly. The bonus is that the price of the property would also be increasing if I needed to sell it]

    Technically speaking, you (and ANYBODY reading this) can do something similar right now and over the next 10 years all you need to do is pay all the debts down and plan for a subdivision. Its not rocket science… You do need to read property books, learn about property zoning laws from WAPC, learn the local council rules, make a few phone calls, and the lookout for these type of property. If you are not prepared to do this, nobody can help you.

    Personally, I would NOT recommend you save and put your hard earn cash in a term deposit given you're only 26. It's a lot harder to save 100k than it is to create 100k! remember creating 10k annual cashflow is like have 100k in the bank earning 10% interest.

    You need to figure out what you want. I've went down one path many years ago, i'm sure you can do something equivalent with commercial property, start a business in your current profession, be a stock/option guru, be a small time property developer, buy a franchise (nandoes/subway/sumo salad etc.), or start an internet business. I'm sure there's plenty of other investment options.

    Just find ONE that you're interested in, and stick to it, invest your time learning everything you can on that ONE subject, then invest your money into it… don't just sit on the bench.

    The biggest mistake I made was diverting my brain power, time, money, energy, space etc. on more than ONE subject. If I stayed with residential property from the very beginning I would be a lot better off today.

    Note: You will have to make sacrifice along the way, it might mean you choose go to a property seminar instead of a mate's party or pay your debt down instead of holiday with your mates. Just make sure you plan some fun along the way, else it will be a pretty boring and lonely way to retirement.

    Hope this helps.

  • tbb on 07/06/2014 - 20:06
    +1

    I started thinking about retiring early when I was back in uni. I would like to retire between 50 and 55 if possible. However that would require 3 million to support my comfortable retirement life, roughly 60K a year to spend assuming not taking super or pension at all. Here is my scenario: I am now 30 yo and married without any kids.

    Combined income: 200k a year before tax
    Online business income: 10k a year
    Investment on share: 10k a year profit
    Super contribution: I have put in 25k a year for the past 4 years
    Property value (2 properties and one vacant land): 1.6 million
    Loan remaining: 1.1 million
    offset account: 50k

    Plans in the future:
    1. book writing contracts in negotiation (i have my phd degree)
    2. develop an iOS app (i have plenty of ideas and I think I am a good coder)
    3. help my partner to set up a childcare business (my partner works in this are)
    4. buy two more properties
    5. …

    The purpose of these planes is to diversify my income source so I don't have to rely on my full time job. If these plans are well implemented, It should generate enough income for our living expense. I know there is a big IF, but I will try my best. And I know I can do it.

    If you can't have time for any other plans, you should focus on property and share market. But be advised that any investment is risky so you need to get educated. Reading investment magazines and books are very helpful for me.

    • superm86 on 13/06/2014 - 11:53

      Cool..
      What sort of online biz - ecomm or affiliate or advertising?

  • philart on 07/06/2014 - 20:34
    +8

    We retired at 55 but never earned more than today's equivalent of $80k combined and raised 4 kids at the same time. The secret is to economise on everything and buy your own house. Pay it off as quick as possible and then salary sacrifice the mortgage equiv into your superannuation to save on income tax. I think it's now harder to grow a good super than it was for us baby boomers who saw their investments grow fabulously in what was at times a double digit interest environment. On reaching 55 we sold a house on the Gold Coast for 475k and bought a smaller but still comfortable home in the Clarence valley for a little over 300k, which gave us a pot of 200k with investments included. Since then we've lived on a budget based on $500 p/wk and when you have no debt, one economical newish car, life can be surprisingly cheap. We got lucky with the stock market crash, so knowing that stocks go up and down, when they're down and everyone's selling it's the time to pick up quality shares like the main banks cheap, but only half our savings went this way, the rest we parked in term deposits because shares are not something you can always sell at or above the price you paid. As we don't hit the threshold to pay income tax we benefit from dividend franking credits, so the Westpac shares we bought at $16 a piece have been paying a return of 11%pa. So here we are 5 years on, our combined super of 300k is untouched and growing. In a few months when we're 60 we can access it without having to declare any of it on our tax returns. We still have around 50 grand from our initial savings and obviously we've had to sell shares along the way, but those shares all made a profit and the few Westpac we still hold are currently trading at $34.Control your Super, when shares are high like they are now, switch to fixed interest then when the market takes a drop switch back to shares for a while assuming there's not a GFC brewing, take a 10% run up and then move back to a conservative fund. Most Super companies allow you to do this online. the problem with shares is they go up fast and go down even quicker. Over the long term they're a good investment, but if you can enter and leave the market and take some profit, and then sit out some of the market falls then you're on a win-win, most people just leave their super in a balanced fund and go on a roller-coaster ride - we used to until we got pro-active, otherwise your super might gain some years @25% and others it falls back say 20% - that sort of thing.

    Our budget has now gone to $600 pw and our $350k will grow, so that by the time we get to retirement age (for us it's 66) we should still have around 125k in our super, even allowing for the purchase of a new car. Don't go for 4WD's,V8's or other gas guzzlers, or designer label clothing unless you're earning a couple of hundred grand a year, it's by trying to live a champagne lifestyle on a beer income which keeps people asset poor.

    So we don't have a life of expensive wining and dining, but we do have everything we need, if not everything we want. Whatever, neither of us has missed having to get up to go to work and the acre of land we have here keeps us busy. The rest of the time its fishing, walking the dog and chilling. When we hear Investment experts talk that you need millions in your Super to have a quality life we smile to ourselves. But not everyone is able to display fiscal discipline or walk away when they see tomatoes at five bucks a kilo in Aldi and instead settle for the cherry toms self seeded in the yard. It all depends on what you want from life. Of course smoking, drinking in bars or gambling doesn't enter into our lives, apart from the odd $10 on keno when we have our $12 steak dinner down at the RSL :o) BTW we only do our accounts once a month, we always know what our financial position is to within a few grand anyway, all shopping, petrol etc is paid by credit card which we pay on time every month so not to incur charges, it itemises all our purchases for us - Good luck.

    • tbb on 07/06/2014 - 23:43
      +1

      really glad to hear someone indeed retired at 55. I am planning it that way but ppl think I am talking non-sense. Good luck.

  • worldwidehappiness on 07/06/2014 - 21:46
    +1

    When you buy shares, a good idea is to average down. Say you want to put $12,000 in CBA. You put $4,000 in now, then if the price goes up, you've made a profit. If price goes down, you can lower your total entry by buying another $4,000. Same again if it goes down some more. Then you can use $4,000 worth as a trading parcel, but beware of capital gains, of course.

    Beware that share prices are high at the moment because interest rates are low. If interest rates rise, then shares you buy today could go down in value.

    Another risky idea is to daytrade indices using CFDs. Takes a bit of practice and discipline, but the leveraged returns are amazing. The main key is to avoid losses by closing losing positions instantly, and don't hold overnight.

  • deviant on 08/06/2014 - 08:45

    I like reading all the varied comments above as everyone has different thoughts on lifestyle, retirement and risk appetite. You could live very comfortable with just one house saving up and living off what you earn - a conservative but safe path (if job security is ok).

    People say get a planner to determine your risk appetite which is true to determine what you are comfortable with. So hearing out these options I guess you can determine who has done what and what has worked for them. And really if you are ccomfortable with.

    So ill tell you my situation. I started working 4 yrs ago at the age of 25. Our combined pa at the start was probably 200k pa. I bought a house lived in it for 2 yrs. I setup a side business and eventually it became my full time job. My accountant kept telling me to dump money into super or property to decrease my tax owing. So i began dumping 25k into super every yr per person. Really forced me to save. I began earning 400k pa after 2 yrs and so I bought a nice big house, investment only as I knew I could never afford it 10 yrs down the track. I moved out of my house after 2 and a bit yrs and rented. I claimed a deduction on both houses and I claimed deduction on rent for home office (40 percent) worked out to be more tax effective. Why would I do this? To live in a nicer placer with better deductions for the same money. Recently I have setup a smsf with 200k super balance in cash (market is a bit high) plus not really buying for into shares but property of my business soon. Both houses has had capital gain of 200k and 500k respectively. I ain't living in them. My wife is pregnant but I planned for it. And we will live comfortably with her working PT 2 days a week. But she will setup her own business at home so she has more time at home (increase our home office tax deduction also). And because it's a rental no risk on CGT. I have about 400k in offset and I will start land developing soon. My ultimate goal is passive income.

    I can only work for so long and so hard it's got to end sometime. I want stability and there is never is a thing as a stable job.

    Good luck!!

  • nuno on 08/06/2014 - 14:17

    Any good wealth strategy will have diversification and hedge component attached. Look also investing in business start ups- venture capital - currency - and yes.. the dreaded real estate. Maintain your liquidity base and strike at the right time.

    • robbyjones on 08/06/2014 - 16:46

      You make it sound so easy!

      • nuno on 08/06/2014 - 16:59

        it aint. trust me.

        • robbyjones on 08/06/2014 - 19:09

          Yes, I know, if it was we'd all be rich.

  • fchis on 08/06/2014 - 20:57

    An option is to find a job at an investment management company overseas, I.e. Singapore or HK. In these places, you only pay minimal taxes in comparison to Australia. I have a friend who works as a trader in Singapore and he's making $290k USD per annum atm (previously, he worked as a VP at JP morgan in HK). With the amount of money he's making with minimal tax, he can retire before 40 by eating off the interest income from the banks.

  • AmericanDad on 09/06/2014 - 14:37
    +1

    Reading OP's post makes me sad. Good for you! Currently 24 and on less than 60k. Did a law degree in a reputable university. Where's the pile of money I was promised when I picked law??! Yet I'm already thinking the exact same thing- how to retire early. No way I'm going to work 9-5 for the rest of my life.

    • [Deactivated] on 09/06/2014 - 21:43

      Doing article clerking? Stick around another few years. It gets ever so slightly better than 60k/year.

  • lplau on 09/06/2014 - 22:39
    +1

    Property is a good one if you want to keep earning even though you have retired.

    2 ways to play property but basic principle is risk = return.

    1. Buy in a better area, which means more expensive but the prices won't drop much if another GFC or bubble bursts.

    2. Buy in a developing area, which means cheaper, but the prices may drop considerably.

    I remember a couple of years when the GFC hit, and the time the housing market burst. All my friends who bought out in the sticks were telling me "My damn house is worth less than my mortgage". Where as I bought in a better area, although it was more expensive, however the prices only dropped like 10k, not 100k or 200k like my friends.

    Make sure you choose the right property, for my area it was all about location:
    Situated on the best train line
    Close to the train station
    Close to schools
    Close to shopping centers.

    Choose right and you got a good investment going.
    Property can also be used to offset your taxes too depending on how you play it.

    Property isn't always the correct way for everyone, so best to read up on what ways you can invest and choose the one you think is best.

    There is always risks, however its how you manage the risk which determines your success.

  • Baysew on 16/06/2014 - 12:39

    Lots of things have been covered here, mostly advice on other investments.
    However, consider keep doing what has been a success for you already. Consider doubling up on your existing home. $500k is not a lot compared to Melbourne/Sydney prices. So maybe upgrading to $1m+ property.

    Pros - All capital gain is tax free
    - Life style benefit of better house, suburb, closer to work or leisure
    - Simple - sets a new goal to pay down as you have proven already.

    Cons - Eggs are all in residential property basket
    - Other more tax effective investments, outside of family home around
    - Real Estate can be very inflexable

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