Need Recommendations to My Retirement Plan at 45 Years

yourflights on 11/12/2023 - 15:28
Last edited 14/12/2023 - 16:18

Hello Guys, me again. This is a follow up post after my last post got so many comments and suggestions. Please refer to my post here

https://www.ozbargain.com.au/node/792858

and then consider providing me recommendations for below plan. After reading all comments and doing lot of research, I have done below planning. Please let me know your thoughts regarding this.

Step 1: Next 5 Years (Accumulating Savings)
• Continue working for the next 5 years.
• After 5 years, I will have:
• Home Value: $1.5 million (assuming no change in value)
• Superannuation: $250,000
• Accumulate savings from salary: $300,000

Step 2: Retirement (Starting from Year 6)
• Sell Primary Residence: Receive approximately $1.5 million. I (me and my wife) will use 100K from our savings to make this 1.6 million. Remaining 200K will be kept as emergency fund forever.

Purchase Properties:
• $600,000 Townhouse/Unit in Sydney and live in that with my son.
• 2 Investment Properties ($500,000 each) in other states

Rental Income and Expenses:
• Total Rental Income: $50,000 from both IPs
• Annual Expenses: $2,000 (tax) + $12,000 (SIP in India) + $36,000 (living expenses) = $50,000
• Flexibility to work part-time if additional income is needed.

Investment Strategy:
• Invest additional $12,000 annually in SIP in India. This will come from my son who will be paying me $1,000/month for accommodation, invested in SIPs in his name.

So basically, We will be doing 24K SIP in India for next 5 years (6th to 10th year from today) and living off 36K per year (+ some additional income from freelancing if needed). We can live in Bali, India or Australia from this regular income.

Step 3: After 5 Years (Year 11)
• Sell Sydney Property (PPOR): Estimated value of $700,000-$750,000.
• Give $144,000 (from SIPs) + $200,000 from our property sale to son for his own home. I think 344k will be sufficient to pay for his new home deposit at that time.
• Total assets available for me at that time : $500,000 + $200,000 emergency fund + 2 IPs.

Step 4: Post-Retirement (Starting from Year 12)
• Move to the first Investment Property (in Brisbane) and make it the new PPOR. I always wanted to live in Brisbane so this will help.
• Have $500,000 invested, generating a 7% return.
• Withdraw 5% annually, adjusting for 4% inflation (withdrawing 22K in first year, 23.4k next year and so on.. 67K at 29 years).)
• Supplement income with $25,000 rental income from the second Investment Property.

Step 6: Long-Term Plan (Up to Age 74)
• Monitor and adjust spending based on FIRE (Financial Independence, Retire Early) plan.
• By the age of 74, FIRE corpus may be exhausted, but We'll have the Brisbane home, second IP, $200,000 emergency fund, and potential growth in superannuation.

This will keep us going forever and if and when we die, all will go to my son so he will he happy too.. We haven’t considered aged pension at all in our calculation as we are not sure if this will be available at that time..

We have considered all recommendations provided by OZB community in this post and used them to below advantages to ourselves:

• Living with Son during Uni:
• Assisting Son with Home Purchase:
• Location Flexibility (Australia, Bali, India):
• Lifestyle choices and exposure to diverse cultures.
• Emergency Fund available
• Option to Tap into Super if needed
• Inheritance Planning for Son
• Regular Income from FIRE and Rental Income:
• Financial independence and stability throughout retirement.
• Long-Term Sustainability:
• Adaptable plan for sustaining desired lifestyle over the years.

PLEASE PROVIDE YOUR FEEDBACK TO ABOVE PLAN AS I REALLY APPRECIATE YOUR INPUT. Please note that I am not providing any advice or showcasing any financial advice or skills here. Purpose of posting this it to get feedback from you guys for my own benefit. Please do not try to imitate or copy my plan to your situation as your situation may be different and you should do your own research and get financial advise from a qualified advisor. Thanks

Financial

Comments

            • yourflights on 14/12/2023 - 16:30

              @freefall101: I didnt see this message until now. thats a good plan. 1m$ super and house and $1m investment. Perfect amount. I am sure if I keep working until 65 and continue to save/invest wisely, I may be in similar situation. however, I do not have patience though so I am thinking different approach (may be less lavish retirement but for longer period than you as I am starting early). However as per your advice, I should be getting some professional advice to structure it properly to avoid paying lot of tax. Thanks

      • ar7ist on 13/12/2023 - 08:09
        +1

        How is the healthcare job website generating income?

          • ar7ist on 13/12/2023 - 10:21
            +1

            @yourflights: I've worked in IT for the last 10 years and never had a business mindset to set something up like this - typical 9-5 with lots of late hours and living pay-check to pay-check.

            Learning a lot from your post. Thank-you.

            EDIT: Happy to pay you for your time to learn how to do this.

            • yourflights on 13/12/2023 - 15:52
              +1

              @ar7ist: Didnt see your edit mate. Happy to share my experience with you sometime and do not need money to share ideas. Please pm me and we can share phone numbers and decide a time to talk. I hope its allowed on OZB.

          • May4th on 13/12/2023 - 10:28

            @yourflights: all the best with this. a lot of bureaucracy/administrative hurdles and competition in the locum HCW space but if you can get it going it's a stable gravy train and that keeps going and going

  • MrHyde on 11/12/2023 - 16:14
    +7

    Don't think you'll be able to find a $600K townhouse in Sydney or $500K properties in other states (unless regional). Its hard enough to find those now, let alone think it'll be doable in 5 years time.

    • AustriaBargain on 11/12/2023 - 16:21
      +1

      Average house value in Adelaide is now 700k. Adelaide ffs.

      • Ghost47 on 11/12/2023 - 16:54
        +2

        OP's coming for you.

        • yourflights on 13/12/2023 - 15:52

          and you too.. Ha ha ha..

    • yourflights on 11/12/2023 - 16:53

      Thanks. I am thinking regional and not city. Also OK with townhouse, unit or villa as far as it can yield 5% rental return.

      • localhost on 11/12/2023 - 18:47
        +1

        For investment property? You can start now looking for possible areas and you can buy one - it will cost you $100k, the rest will be from tenant, etc.
        Also you will see how it will go in next 2-3-4 years and you can adjust your plans.

        • yourflights on 12/12/2023 - 15:25
          +1

          this is the best suggestion. I thought about this last night and thinking to start looking for couple investment properties now (rather than waiting for 5 years from now). As we have good income, we can easily borrow money now rather than after 5 years. For next 5 years, rent may continue to pay mortgage and after 5 years, I have option to pay off the mortage and activate my plan (as above) or continue to be mortgaged and use my PPOR proceeding to be invested somewhere else. that means complete change of my plan above

      • cashless on 11/12/2023 - 22:01
        +3

        You can get 5.5% in a decent savings account

      • SuperLate on 13/12/2023 - 02:40
        +1

        Consider Net Rental profit be 3.5% or less, excluding any major renovations or repair expenses every 10-20 years.
        It would be a good idea to keep on working part time.
        For a property to last another 40-50 years it would need to be a new home or recently build.
        I believe your other estimates are very generous as well. There are going to be much more expenses than you've factored in. Working part time will fill these gaps anyway.

  • AustriaBargain on 11/12/2023 - 16:20
    +3

    Have an exit plan for your properties. There's no way we can inflate the bubble for existing properties by trillions a year and not have consequences. At a certain point houses will get so expensive that renters will band together and decide it's cheaper to just found new cities along the coast. And trillions of extra value on existing properties means trillions of extra debt. So over the next 10+ years I'd make sure you have an exit strategy for your IPs or that you can afford the mortgages if rents halve.

    When the tent cities get big enough the Greens will sweep at elections and they'll just say (profanity) it and build thousands of towers for people to live in.

    • brendanm on 11/12/2023 - 18:49

      You might get want to check home ownership percentages.

    • JIMB0 on 11/12/2023 - 21:11
      +3

      They'll just keep printing money. This can go on forever. There is no limit.

    • SlickMick on 12/12/2023 - 11:21
      +2

      Greens getting elected. This is a real doomsday scenario.

  • angywoo on 11/12/2023 - 16:35
    +1

    Do you really think that you will find an investment property in 6 years time for $500k?

    • yourflights on 11/12/2023 - 16:52

      Thanks. I am thinking off a city house. Thinking of a regional town and only expecting 5% rental yield. It could be a villa or townhouse as I havent factored house value or capital gain in my planning. Just rental yield.

      • gromit on 12/12/2023 - 20:50
        +1

        Only 5%? 5% is huge.

        • yourflights on 13/12/2023 - 10:01

          I am reconsidering that percentage to 4%.. May be??

          • Bren20 on 13/12/2023 - 10:40
            +2

            @yourflights: 4% rental income may be achievable ($400 rental pw on a $500,000 property), but you need to account for costs. Allowing for rates/land tax/insurance/maintenance will drop this down to maybe 3%.

            • yourflights on 13/12/2023 - 10:44

              @Bren20: wow. 3% may put me under stress in my calculation. I will definitely have to explore the best way to deal with this. I follow PK Gupta on facebook (along with thousand others) and all they talk about is positively geared properties and I could see some scenarios of people earning 4-7% rental yield (after paying all expenses) in regional areas. As my calculation is not dependent upon capital gain, I think I need to find properties in low capital growth, high rental yield markets. but thanks for your comment

              • Bren20 on 13/12/2023 - 10:53
                +1

                @yourflights: Be very careful before investing regionally, make sure you buy in a town that has long term prospects, and isn't reliant on only one industry - if the industry leaves then so does your rental market, as well as the property resale. I'd think that 7% returns are only available in towns that have a high risk investment profile.

                • yourflights on 13/12/2023 - 11:07

                  @Bren20: Agree completely. Choosing the area for IP is a challenging task and one wrong selection and I will be stuck with it forever. Thanks

                • gromit on 13/12/2023 - 15:46
                  +1

                  @Bren20: exactly, many of the high rental yields are in towns with a high risk future, e.g. mining towns. many an investor lost everything in some of regional areas where mines closed or scaled back or the mine decided to build their own housing to cut back on rental costs. If the returns are above 5% then there is likely some additional risk as to the reason why they are so high that you need to take into account.

                  • yourflights on 13/12/2023 - 15:53

                    @gromit: Interesting.. Dont know much history about investing in mining towns in Australia so would definitely consider that when buying IPs. Thanks

                    • gromit on 13/12/2023 - 15:59
                      +2

                      @yourflights: When buying in rural or outback areas do some research on the towns economy, what keeps it running. Single industry towns are high risk, e.g. a mine, an abbatoir, single manufacturer, livestock sales etc. basically be aware of the risks of your investment returning zero and the asset being unsellable if you invest somewhere like that and the business shuts down. high rental yields are an immediate red flag to do your research.

  • May4th on 11/12/2023 - 16:53
    +1

    you are bit too property heavy in your portfolio esp in the higher interest environment - need to reduce exposure. don't underestimate the stress associated with managing an investment property from overseas- there's no end to maintenance and tenant issues which is the last thing you want to worry about when you are living a carefree retiree life. I'd cut one of the investment properties and put it in high dividend stocks.

    • Ghost47 on 11/12/2023 - 16:58
      +1

      Whilst I am inclined to agree I think OP should go ahead with what they've set out, I want to see what happens.

      • yourflights on 11/12/2023 - 17:04
        +1

        I am very flexible and I have 5 years to modify my plan. Only thing I need to do in next five year is to save that 400K and tweak the plan based on the need.

        • Ghost47 on 11/12/2023 - 17:07
          +2

          Property is probably the way to go. We have a housing shortage at the moment and that won't disappear anytime soon, even with the "reduced" migration the PM announced on the weekend.

    • yourflights on 11/12/2023 - 17:03
      +1

      You are correct however I have lost money in stocks and I really dont want to go with risky investment. So far, real estate is the only one who gave me good returns. I do not have any more IP at this time. I had sold few in last few years. I just have my PPOR at this time.

      • 1st-Amendment on 12/12/2023 - 07:06
        +2

        I really dont want to go with risky investment.

        Every investment has risk, even property. I was on the bus the other day and two guys behind me were talking about their property failures. One guy bought a unit for $360k in Melbourne (didn't say when) and after 12 years sold it for $370k. After costs it was a big loss.

        The reason property is much cheaper in the bush is because there is no demand to drive growth. What happens if you can't get tenants? There is always risk.

        • yourflights on 12/12/2023 - 15:15

          it is indeed a risk if my property is vacant for long time. Looking at property market, it may not happen too frequently. I guess I need to bump up my freelancing in that situation or reduce expenses..

      • SlickMick on 12/12/2023 - 11:38
        +2

        I presumed the stock market was where you were counting on 7% investment returns??

        Over the long term, the stock market isn't risky. Expecting 7% is reasonable - just don't expect it year by year.
        Property investment is no more stable. You don't know when you'll get the tenant from hell that does $20K damage and you lose $20K income while you repair it.
        Pipes burst, electrical wiring needs to be replaced, you never know what the next hit will be.

        If you want stable and risk free, you'll need to lower you expected return.

        • yourflights on 12/12/2023 - 15:15

          Thanks. I may try to add some stock (ETFs as per few people's suggestions here) in my plan however not stock as I lost some good money in last 4 years.

          Will property insurance not cover damage done by tenant? I was thinking 5% rental income after paying all expenses including insurance. Is it too much to ask for?

          • SlickMick on 12/12/2023 - 15:43

            @yourflights: Yeah if you're only in for 4 years, you may well lose money in stocks (including ETFs) and property.

            If you pay enough for insurance you can get coverage for anything, but few people win with insurance. Usually the excess will put you in two minds whether to claim, and next renewal you'll probably drop the cover, hypothetically.

            Yeah 5% net income is ambitious. Wait, are you paying cash for properties? Then maybe I guess. With interest, properties tend to lose money until they're substantially paid off.

            • yourflights on 12/12/2023 - 16:16

              @SlickMick: I am not for 4 years. My properties (2 IPs and 1 PPOR in Sydney) will not be sold for long term. Stock are not for me.

              I will definitely be paying sufficient insurance to cover risk.

              As per the plan above, it will be cash purchases (from the main PPOR I will be seling in 1. 5 mil) so no mortgage on them.

  • sumyungguy on 11/12/2023 - 17:39
    -1

    Couples living on the full age pension are barely surviving on $46K. How can you live on $36K?

    • sumyungguy on 11/12/2023 - 18:04
      +1

      OK I get it now… you're not moving permanently to Australia until year 6, when you'll buy a $600K unit in outer western Sydney and move in with your son.

      • yourflights on 13/12/2023 - 10:02

        I am in Australia since last 12 years. I will be living in Australia for half year (in Sydney towhouse) when I retire.

    • yourflights on 13/12/2023 - 15:55

      Thanks. I am getting more than 36k mate. 36K is just from rental income after paying tax and saving 12k in SIP in India. I mentioned that I will be substantiating that with 10-15K additional income from freelancing or casual work. When I FIRED completely (on 11th year), i will be getting inflation adjusted withdrawal ( First year: 5% withdrawal of 500K = 25K and also 25K from rent on last IP=50K and that will increase by 4% each year until 30th year when I will be withdrawing 150K each year) Thats when I will exhaust my FIRE bucket.

      Also, I havent considered 250K super in any of the above calculations and I am sure that will become 500K at 30 years and I may also be eligible for some aged pension which is not considered in the calculation. Also, If I am able to keep last two properties until 30 years, both may have gone to million each!!!

  • Hugh G Rection on 11/12/2023 - 17:47
    +2

    i retired at 35, it was fun for a short period, but no one my age are around. it got very boring, so i went back to work with an easy fun job that has great benefits or discounts. obviously im overqualified for the position. it was nice to be retired for a little bit, but was so boring because no one around my age was around during the day time. i was always golfing with super old people, but would like to play with people near my age.

    • 1st-Amendment on 12/12/2023 - 07:08
      +3

      but was so boring because no one around my age was around during the day time

      I've heard this same story even from old people. Retiring was fun for a few months, then the boredom sets in. We spend so much of our lives socialising with workmates that suddenly not working creates a huge vacuum.

    • LFO on 12/12/2023 - 12:47
      -1

      If you think money cannot buy happiness is because you don't know where to shop.

      Bored at 35? You don't know how to enjoy life.

      The real wealthy ones retire at birth and they are never bored.
      Always flat out doing fun stuff.
      Day after day, month after month, year after year.

      Think about it.

      • yourflights on 12/12/2023 - 15:13

        I think i will be working for few hours until at least 10 years from now. No full retirement until 10 years as per the plan above. In fact, i love freelancing and know few skills so can keep doing that for as long as I want to stay away from boredom. I am tired and bored of compulsory 9 to 5 jobs

      • 1st-Amendment on 13/12/2023 - 11:10

        The real wealthy ones retire at birth and they are never bored.

        You've clearly never met any truly wealthy people then, nor do you seem to be familiar with the problems that come with wealth. Why do you think super wealthy people still work?
        What you consider 'fun' is only fun because you don't get to do it often enough. Everything gets boring if you do it enough times.

        You don't know how to enjoy life.

        Well why don't you enlighten us. What do you think you would do everyday for years on end that would retain it's 'fun'?

          • LFO on 13/12/2023 - 14:40

            @yourflights:

            I am thinking of that risk that I get bored of retirement (as few said here)

            "When in doubt, don't."

            Retirement is not for you (and all the rest, by the way).

            • yourflights on 13/12/2023 - 15:21

              @LFO: thanks. are you saying to me in particular or everyone who wants to retire early. Whats wrong in winding down earlier than most others who have to work up to the 65+ years. If you have read my full post, I am not winding down completely until 10 years from now and also keeping option open to do freelancing/website work after 10 years. Isnt it a good planning? I just dont have to work for someone by waking up at 6 am everyday. thats the whole purpose.

        • LFO on 13/12/2023 - 14:47

          Everything gets boring if you do it enough times.

          Problem is "everything" is a never ending, endless activity.
          Need several lives just to do half of it …

          Well why don't you enlighten us.

          If "I" have to tell you how to have fun then there is trouble ahead. Fun is a personal judgment.

          • yourflights on 13/12/2023 - 15:23

            @LFO: I dont remember asking here what to do for fun. I have clear understanding of what to do for my fun however my purpose of this post is to ask if my planning of funding my fun retirement is good or have any gaps.

            • LFO on 14/12/2023 - 12:29

              @yourflights: I was directly addressing 1st-Amendment post asking me for fun things to do.

              my purpose of this post is to ask if my planning of funding my fun retirement is good or have any gaps.

              Mmmmmm … "funding my fun retirement" … somehow fun related after all, somehow asking after all … Mmmmmm

          • 1st-Amendment on 13/12/2023 - 18:03
            +1

            @LFO:

            Problem is "everything" is a never ending, endless activity.

            Not really, quite a lot of things transferable, eg traveling to 30 countries is not much different to traveling to 25. And once you do hundreds of times it becomes a chore, not fun.

            If "I" have to tell you how to have fun then there is trouble ahead.

            You don't have to tell me, I've done more 'fun stuff' than most people. I was asking for examples so I could demonstrate using your own examples.

            • LFO on 14/12/2023 - 12:36

              @1st-Amendment:

              I was asking for examples so I could demonstrate using your own examples

              I'm sure you will have (negative) answers for everything anyone proposes.
              Because it is such a personal thing.

              Take cruising or even having a humble cappuccino some will love it, some will despise it.
              Take playing golf some will passionately love it, some will despise it with furor.
              It is so personal.

  • brendanm on 11/12/2023 - 18:46
    -2

    How do you figure that you would only pay tax of $2k with a rental income of $50k? Should be nearer to $8k I believe.

    Do you have no management costs for the rental properties? No rates, water supply/sewer charges, insurance etc? No repairs will have to be made to them?

    • yourflights on 11/12/2023 - 20:26

      It will be 25k for me and 25k for my wife so we both will belaying $800 tax each due to Tax free threshold. We will always be in Australia for more to an half year so will be getting tax free threshold each year

      • brendanm on 12/12/2023 - 00:12
        -2

        Ok, no wife was mentioned, I should have read your mind, sorry. Good that you will be staying for over the six months, making sure to pay as little tax as possible while sucking up the benefits of being in Australia.

        You didn't answer the second part.

        • yourflights on 12/12/2023 - 15:11

          Thank you mate. You are right. Partial stay in Australia and partial in overseas to enjoy both benefits. I was hoping to get net 5% after paying all rental management expenses. Do you think its too much to expect?

  • Ocker on 11/12/2023 - 18:49
    +3

    With al due respect, it does not matter how much you plan, the best laid plan can be totally demolished by a left field event.
    Moreover, you can be guaranteed such an event will occur.

    • yourflights on 12/12/2023 - 15:10

      Will life, health and rental property insurance help with such events?

    • Meridianz on 13/12/2023 - 11:02

      I was about to say exactly the same. Whilst good luck with this plan and on the surface it seems like it makes some sense.

      BUT - Your talking 15 year+ horizons here, predicting property markets, inflation , investments and the environments of multiple cities and countries. Overall all your outcomes you predict seem very optimistic, with very little downside.

      That is even without the random global events, (Covid anyone?) that can derail even the best laid plans, how is your plan if you can no longer return to Australia easy as we have all experienced. What if the housing market crashes, what if your son is unemployed and cant pay you, what if your ill Etc etc

      The best plans are simple and easy to execute and limited in potential outside factors and downside risk, this seems not that.

      • yourflights on 13/12/2023 - 11:14
        +1

        I agree. I do have lot of variables. I have spent first 20 years of my life in India and would love to go back. Bali is my new love and becuase I am not now planning to buy villa in Bali, I will have flexibility to leave Bali overnight if I dont like.

        Global event like Covid will derailed many millions across the world and I am prepared to be part of that group and come back to workforce. My skills will help me to find job easily whenever i want (not overconfident here but knows my skills and market very very well). Being Australian citizen will always allow me to come back to Australia. Is that not right? For covid like events, border may be closed for some time but I know that if I am stuck overseas, I will be spending less anyway than being in Australia.

        If my son can not pay me, it will be less deposit for him when he wants to buy property and it may not impact me much. I am not relying on his 12K a year for my retirement. Whole point of asking him to pay money is to teach him importance of education and money. For my life threatening illness, I am not worried as I wont need any retirement in such unfortunate situation. If the illness is not life threatening but chronic, I may have to rely on Medicare and private insurance (if I continue to pay during retirement) or may be an insurance from overseas (India or Bali which are very cheaper). There is a slight risk though.

        will try to reduce variables as much as possible and thank you for that suggestion

  • boomramada on 11/12/2023 - 21:52
    -1

    PLEASE PROVIDE YOUR FEEDBACK TO ABOVE PLAN AS I REALLY APPRECIATE YOUR INPUT.

    Go find a paid financial advisor or yet a another flex post.

    • yourflights on 12/12/2023 - 15:10
      +1

      If you look my original post and this post, you will realise that how much of people's feedback I have implemented in modifying my plan. This is definitely not a flex post mate. I know that some OZBs are far more practical than this so called financial advisors. I called few and when I told them that I want to retire at 45, they were not interested. For most FAs, retirement doesnt start until 65 or more unfortunately so they dont have many arsenals to help people to retire early

      • boomramada on 13/12/2023 - 17:17

        retirement doesnt start until 65 or more unfortunately so they dont have many arsenals to help people to retire early

        What kind of bs is that? Plus you are dreaming.. If you want to retire, you need at least (min) $48k after-tax cash flow based on the current condition and also have a loan-free house and car. $48K been just above the aged pension. Since you don't have pension benefits, you need to aim for around $100k per year lol
        And you don't even have money to pay for a financial advisor.

  • BigBirdy on 12/12/2023 - 07:50
    +3

    You're way too optimistic.
    You're basing your plans on returns that may well not be achieved, without a sufficient buffer to cover shortfalls. You're also expecting your ongoing living costs to be far lower than I'd expect, with little chance to grow your nest egg without living on a very low budget. You should also expect a significant increase in health costs with age.
    Will you be able/willing to restart a career should you need, and be prepared to compete for employment with others half your age? And if a recession comes with a downturn in asset values, high unemployment and a general switch from spending to saving?

    • yourflights on 12/12/2023 - 15:08

      I have 36K from rent and remaining shortfall from part time work( freelancing which I love) and I am sure I will be earning enough to keep myself busy for some years and also help with my living expense. I am not going to fully retire until 10 year from today as per the plan above. Thanks

      • BigBirdy on 12/12/2023 - 16:58

        You said you'd retire in 5 years, with $550k and a $1.5m house. You're then going to downsize to a $600k Sydney home … sounds like a sh*tty retirement home, but your choice. Then 2-3 of you live off investing the remaining ~$1.4m to last the next ~30 years. Good luck, that's not the retirement I'd choose

        • yourflights on 12/12/2023 - 18:06

          My Sydney townhouse will only for my son. We will only be staying for few months only and remaining time in Bali/India as per original plan. I am well aware that I can not stay in 1.5 million home and retire so downsizing is the only option I have. BTW, I am tired vaccuming this home already so smaller home will be better so I can focus on other important things

  • Jaduqimon on 12/12/2023 - 09:04
    +5

    Investment properties with no leverage is a waste of time. Better put the money in etf.

    • Ghost47 on 12/12/2023 - 17:04
      +1

      OP could leverage into four properties instead of buying two outright.

      • Jaduqimon on 12/12/2023 - 17:17
        +2

        Not sure if he can get the loans if he wants to retire

        • Ghost47 on 12/12/2023 - 17:19
          +1

          Good point. He'll probably have to rejig his plan and get the loans before retiring.

        • yourflights on 12/12/2023 - 18:04
          +1

          If I want to leverage and want to get loan, I will do it before I retire and I am sure I can get good loan as there is only small mortgage now so borrowing is available

          • Ghost47 on 12/12/2023 - 18:11
            +1

            @yourflights: You should be fine with a 50% deposit. Banks will gladly give you a mortgage.

            • yourflights on 13/12/2023 - 10:04

              @Ghost47: Thanks. Do you think getting 50% loan would be better rather than paying 100% out of pocket? But then I will still be under mortgage stress during my retirement. Also, I will then have to invest that money somewhere else.

  • skillet on 12/12/2023 - 09:28
    +1

    I don't have any financial planning skills so I can't help you with that.

    +100 to you for including your son in your retirement plans. TBH it sounds like majority of the plan revolve around him. I think you should keep this plan far from his memory so he could also carve out a fine FIRE plan for himself in the future rather than waiting on your wake and doing nothing for himself. Remember that your money cannot last when passed down but knowledge of wealth can last for generations.

    Tax rates here can be quite high, so perhaps consider moving to another country. Thailand has very good and advanced medical facilities which is good for pensioners who need them.

    • yourflights on 12/12/2023 - 15:06
      +1

      Thank you so much. Great suggestion. That is exactly why I am asking him to pay $1000 per month from his part time job in Uni so he learn the importance of money.

      Moving another country was in original plan but due to residency status (183 days), I decided to stay in Australia for half year and overseas for remaining half.

  • SydneySwan on 12/12/2023 - 12:03
    +3

    Plan is too focussed on property market so no diversification. You are one bad tenant who trashes the property away from disaster.

    • yourflights on 12/12/2023 - 15:05

      Thanks. Does the insurance not cover the damage done by tenant?

      • chaddles on 13/12/2023 - 00:14
        +1

        Any number of things can go wrong with a property that might affect its value and your ability to rent it out, and the amount of income and expenses you might expect from it - including regulatory or tax changes, a sector-wide contraction, construction issues, natural disasters, compulsory acquisition, bad tenants, bad neighbours, changing surroundings, etc. Some of these things may be covered by insurance, but not all. Having so much invested in a single asset (or asset class) exposes you to risk, and diversification is one way to reduce your risk exposure.
        My advice would be to see a financial adviser. For transparency, I work in the finance sector, my views are my own and not intended as personal advice. I do believe it can be worth spending some money for professional, personal advice - it might help you reach your goals and avoid some pitfalls.

        • yourflights on 13/12/2023 - 10:04

          Thank you. Based on lots of comments here, I am thinking to do 2 properties + 1 investment bucket (ETF/Bond) rather than 3 properties. I hope that may help to minimise property only investment risks as you mentioned.

  • LFO on 12/12/2023 - 12:40
    +1

    Now, the dread What If?:

    Dying at 44 and three quarters?

    • yourflights on 12/12/2023 - 15:04

      Then my son will be sad for few months and then be happy!!

      • LFO on 13/12/2023 - 14:25
        +1

        If your son loved you then he will prefer to have you there, not your money

        • yourflights on 13/12/2023 - 14:27

          Yes, he does love me but hey time is the best medicine and he will be out of sadness in few months and eventually be happy as he will be in better financial situation..

          • LFO on 13/12/2023 - 14:43

            @yourflights: Your words, your feelings.

            Remember he is an individual with individual feelings, not yours.

  • jaqoozi on 12/12/2023 - 18:12
    +1

    I'm having been thinking similar thoughts. I found these resources useful: https://www.prospera.com.au, https://www.otivo.com, https://ficalc.app. Good luck!

    • yourflights on 12/12/2023 - 20:01

      Finally, someone I found who is thinking in line with my planning. Thanks. Will see those sites now

  • mrvaluepack on 12/12/2023 - 19:20
    +1

    You have not taken into account IP maintenance expenses. You'll be surprised how much it eats into your rental income. If you are after yield, just buy 10 to 20 year aus gov or usa gov bonds now. The price will increase when reserve banks start lowering rates.

    • yourflights on 12/12/2023 - 20:01

      Can you tel me more about AU bonds. Is there a site to see some more details about them

      • mrvaluepack on 12/12/2023 - 21:24
        +1

        Just buy fixed income ETFs or if you think you are smart enough to pick and choose individual bonds then have a look at this website:
        https://www.fiig.com.au/

        • yourflights on 13/12/2023 - 10:08

          Thanks mate. I will explore this option. Are these safe and govt protected? or risky?

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