Seeking strategy to leave corporate world .../

Hi all, not sure if this is the right place to post but here goes.

I am seeking input from other succesful investors to help bring clarity to my strategy for the next 5 - 7 years.

Goals :
Remove my reliance on Corporate world salary and become an active Investor / business owner.
Achieve $150K Net passive income per year to fund lifestyle by 2023.

Current Financial State
Assets:
PPOR fully paid & Valued at $1.95 Million.
Cash invested in Managed Funds $300K
2 x Cars fully paid and worth approx. $25K combined

Liabilities:
2 kids
Wife
No Credit Cards

Income:
Approx. $240K per year gross
Wife not working

Age:
Early 40's


Note - I don't want to see a Financial Planner as the one we had during the GFC wiped off 10 years of our life savings hence why I am sharing situation here with a view to stimulate thinking. There are a lot of folks who I know have already achieved financial independence here and I'd rather hear / learn from them.

Look forward to an interesting thread on various strategies ... thanks everyone.

 

Anyone wanting to contribute or is everyone away ???

 

When I read your post it appears you only want replies from those that have already achieved financial independence.

 

sorry for the delay am looking at health issues and concerns ,so may be even more irregular in visiting .

1. is your wife really a liability , in the investment/trading world ??

her abilities and interests might differ ,but be valuable in their own way
say she can spot a compulsive liar at 50 paces ( she might know nothing about the business but if she can spot clever spin... )

next investing can include a female insight .... say WOW is sliding badly downhill and the females do the bulk of the shopping ,so if alerted would YOU lean more toward WES and MTS??

i would also suggest she is encouraged to learn some of the essentials ( as much as she can ) ..... you might be kept away from the market and need her assistance ,

since you got bashed in the GFC , wouldn't the wife be a better option than a conflicted professional .

depending on the children's ages ,they might be useful helpers/students as well.

 

I am curious as to how they achieved this. Did they have you invested heavily in the share market and then advise you to sell after the crash? High leverage and then margin called?

 

Questions that will need answering are.

How much can you save for investments from your income each year?

Are you planning/willing to downsize your PPoR or do you wish to live there long term? Or are you comfortable borrowing against it?

You are likely going to need unencumbered investments of around 3m-4m to produce a net income of $150k p.a. might be a little lower with better returns.

From above you will can look at what you need to do to get from where you are to where you want to be.

Do you have any idea of what you might be interested in investing in?

 

Hi TS,

Hope it's nothing too serious and you're on the improve soon.

Cheers

 

Hi @Here_To_Learn , + 1 for what @Hodor said above. There are many avenues to increase cash flow outside of the coroprate world. Now it depends on what you are comfortable with.
As an example, if you are comfortable with borrowing against your PPOR, attached is a sample strategy. ( the pdf is not my own ).
What is your sleep at night factor? Invest in properties, shares (not direct but via index funds or LICs) or both?

Not advice. BTW, I've still got a way to go towards financial independence.

Good luck.

 

Yes - heavily geared with MARGIN LOAN + AGRIBUSINESS investment with Great Southern that went belly up. Loans all enforceable.

 

Safely I can save 10% of income each year.

Not planning on downsizing PPOR for next 10 years.

Interested in long term investments not get quick rich schemes.

 

Didn't think financial planners would recommend such risky investments. Terrible you were on the end of such bad advice.

Looking at raw numbers;

With $300k already and $25k contributions annually if you somehow managed to get a return of 20% (unrealistic) each and every year after taxes/fees/expenses you end up with $2.5m. With a return of around 10% then you get about $1.2m.

$1.2m @ 10% is $120k a year - Don't think anyone would call this a robust retirement solution, in the case of shares you would be living off dividends and the sale of some units. Next GFC type event you are likely to have another unpleasant experience.

So you need to use leverage or increase your savings if you wish to achieve your desired income in your timeline.

Here is an interview with someone that achieved what you are keen to using property then shares;
The keithj Interview

Two potential problems that spring to mind are;
- The lending environment the same.
- You need to buy into the property market that is about to boom or you are stuck waiting.
- Average yields on the sharemarket are not as high as in the interview.

Your income and owned outright PPoR put you in a great spot so good luck.

It might be worthwhile reading about Listed Investment Companies (big three are AFI, ARG and MLT) and Exchange Traded Funds (Vanguard, blackrock and Statestreet are the main providers) if you are interested in the share market. There are some extremely low fee examples around that are diversified and have long track records. Then you don't need to be a stock picker or pay someone to do it.

What managed fund are you investing in these days?

Keep in mind I am just a mug at all this (not retired).

 

This is why I don't trust hairdressers. I have a bad haircut over 10 years ago and don't trust any of them now.

 

Why do you need such a large passive income? This now you would be earning about $150k after tax and you are saving 10% of your income - which would mean you are living on about $130k. even this is a huge amount. What do you spend this on?

If you are paying off a home loan perhaps by the time you retire the home loan would be gone. you might have kids, but they will leave home at some point. So your expenses will drop.

Also think of tax effective ways to structure. $75k for each of you and the wife will mean less tax so your gross income goal would be less.

If you can reduce your desired income, it will speed it up exponentially. .eg. if your passive income goal was $75k you would get there in less than half the time it would take to get to double that of $150k.

 

nope!!

damage done and probably too stuffed in other places for a transplant

however the doctor changed strategy and retired instead , and the new one doesn't get to play until Feb.1 (if things don't change again)

HOWEVER the investment damage could be worse

my retirement plan from ease onto a aged pension on Jan.1st 2020 changed to started on the DSP Jan.1st 2017

so the' instant retirement income fund' set up period 2011 to 2020

has had a nasty cut in preparation time ( and no crash to test the robustness and to exploit )

so will be limited to tweaking only from now on .
playing defensive in uncertain time-frames will not appeal to me .

do i bring the post-2020 look forward 3 years or completely re-assess ( most likely at the top of a bubble )

a more interesting challenge than expected

 

Bugger, sorry to hear that. A challenge it is. But having read your posts here I reckon you will make the best of what you can. Bloody life is so damn unpredictable.

Cheers mate.

 

a bit more unpredictable now (here ).

but now i am locked to the retirement plan all the next set of parameters come in to play .

living costs ( leaving a big unknown for medical costs ,both body-parts checked missed expectations ...still some more to check )

expected inflation ???

other unexpected costs ..do i need to shift residence.

and will i still be able to manage the fund in say 12 months( directly )

but it could be worse, some flexibility was factored in ,and some of the plan (the 'free-carries and bonus issues ) can still make a risk-free contribution

(could have been particularly hard if i chosen to leverage for extra cash instead of cash rescues out of profitable assets )

 

That sucks twisted, good to see you have some flexibility to look after yourself financially, hopefully you get some better news soon.

 

will have to make my own good news,

but am a firm believer of the 'silver lining ' quote . ( maybe i can do it again )

after the sudden hit (pre-healthcare card ) of medications in excess of $700 amonth a healthcare card should bring that down to about $50 a month (short term) but am looking at one hospital proceedure ,next month and potentially more later.( so call meds $100 a month allowing a small buffer )

HOWEVER switching from the accumulation stage to income reliant stage ( and over the Xmas break ) 3 years early ,has left me with extra decisions that demand attention ( and sadly before the next financial crisis).



better is not an option ,

doctor decided to check my heart ( OH DEAR!) a big panic but by the time the procedure was booked for hospital treatment ,the diagnosis had changed ,cardiologist stops the procedure and consults others . ( result the cardiologist retired at Xmas ,but my new expert is a research professor ..... should i be worried ???)

HOWEVER sitting around the hospital all day inspired bronchitis ( my case of that )...... and the GP to check my lung function (my GP's second unpleasant surprise last year ) but i knew about that and adapted around it most of my life .( including competive endurance sports .... the GP expected enlarged heart , the tests said worn out/toasted )

now 2 years ago i would have bet on a right leg (above the knee ) amputation (that is not healing either ) as my first major hospital trip for this millenium (they haven't checked that very carefully either )

but have taken the live fast (crash hard ) path and 62 years is pretty good run of luck.

however i won't be unique among members in confronting major changes in financial planning (hopefully itwill be less suddenly for others ) .

so maybe i can think up a useful tweak (for many)

first up deeming rules (since even the DSP was fast-tracked ...over the Xmas break !!!)

some 3 year 'growth' stocks ( small cap speccies ) are looking more a liability (many of those will need to be re-assessed)

next will be re-appraisal of DRP choices ( went mostly 100% DRP up to now )

and being before the next crash (was expecting to have one by theend of 2019 )

does ( div. )cash become king or does 50/50 cash/shares still make the most sense ??

oh well could be worse ...at least i have plenty to think about . (and somehow side stepped half the government super changes .)

 

Caveat: I have not yet achieved financial independence (i.e. I am still working for some man, somewhere).

One mistake I see people make is that they want further, easy income, so they leave full-time PAYG work and "invest in a business" without thinking through, or perhaps appreciating, the time/management that goes into actually *running* a (successful) business.

Most of the time, they are actually just buying themselves a (more than) full-time job.

Just something to be very aware of.