One million invested now in an asx index fund will deliver 4.5% dividends (live off this) and 4.5% growth over time (matches inflation). There’s your problem solved. Why make it complicated? Real estate will deliver similar returns but you’ll have a lot of headaches with realestate.
@@bundyboy961 Didn’t you read my post properly? The capital maintains its real value via the annual 4.5% growth. That assumes inflation is at or below 4.5%.
I look at how much I actually spend now without my kids and it worked out to be $2000 without mortgage. Use different calculator and it cost $3800 per month in 15 year time factoring the 4%+ inflation yearly when I due to retire. Super projected to be $850k when I retire. I then use a different retirement calculator to see how long $850k last if it yield 4.5% at a cost of living at $3800 with inflation of 4.4%. It will last till I am 88. Average live expectancy for a male like me is 85. I have diabetes, high blood pressure and other health issue and likely resulting in my life even shorter. Also, at some point I will qualify for age pension so no, I am not terrify like you and will choose to live a little.
I thought the 4% rule covered inflation? Ie you take out 4% on average but the capital growth of say 7% (3% nett) is the inflation component. Only time you will lose is by being in cash….. and of course the usual market volatility.
Actually it is saying that if you are targetting having $1m in 2053, that’s the equivalent of $240k (or whatever the figure was) *today*. But sure, if you had a $1m today and invested it in a constructive way it would certainly grow - sadly I don’t have a lazy mill laying around, but I probably have a chance at saving a mill in 20yrs and that is way better than peeing it up the wall! But I do agree, I found the vid used a little too much financial sleight of hand.
If you are in a high growth option super fund and salary sacrifice to the max concessional contribution (employer SG plus your money) which is now up to $30k/yr, you can calculate what your super balance in 30+yrs would be by using a super calculator. This would be the maximum low effort super balance you could achieve over the longest time frame. The MoneySmart website has a simple calculator. But as in all thing financial, YMMV as it really depends on your own personal financial circumstances and income. One thing I wish I did when I was 29, was save a little more of my after tax pay and consistently and regularly put it into a growth oriented managed fund or LIC (these days you have the option of ETF’s) and let some of my money work for me… I’d be sitting pretty today in my 50’s and would have the choice of working rather than needing to work. Goodluck.
CPI and inflation are 2 different things. The ABS CPI under reads significantly. 50K / year in 2003 allowed an OK standard of living. 100K / year today, not so much in my view.
As long as you don't get a market crash. If you are at the near end of working life. And close to retirement...super is like russian roulette or playing black jack. It's a big gamble. That's when you need property investment.
I always leave lots of safety margin for errors so I never think that 1m is the goal. Therefore I just let it roll inside the super to something much higher whilst in accumulation phase.
it's hard to comprehend this ravi. it's like a frog siting in water as it heats up until the water is boiling. you don't even notice the changes in prices until you look back over 10-20 years.
Can anyone please advise how it is determined if a dividend is to be paid or not for an ETF? Sometimes they just don’t pay a dividend and don’t appear to give an explanation.
Pretty much all ETFs pay "dividends" (NB it's called "distributions" not "dividends" when it's an ETF) if they're invested in a company. Although some pays out once a year (annually), twice a year (biannually), or 4x a year (quarterly). If you look up the website of the ETF it'll tell you, as well as give you its distribution history. If it's something like a Gold ETF then no they don't pay distributions cuz gold doesn't make anything. A few random companies don't pay dividends but I've yet to see an ETF not pay if it's a basket of companies. Good luck!
If you own your own home outright and plan to retire at 65 and die by 85, I would say yes. But why stop at 1 million? Then again I'm 52 so it's not that far away for me personally, age wise.
I'm a real beginner when it comes to this stuff, if some financial wizards can chime in here and explain the root cause of this current transitory inflationary situation then it would be very much appreciated
I know you already received this request but I just want to remind you :) Can you do an analysis on the book barefoot investor, specifically the chapter on real state.
1. $40,000p.a is not a reasonable amount to retire on. 2. Your graph has a caption that says real estate is a hedge against inflation because the value is tied to replacement cost. This is an over simplification and I say incorrect. This is a pretty graph but it is nonsense.
I think the key word here is "reasonable". Sure you can get by on $40,000 p.a. but your going to be living week to week and have to be very careful with your expenditure. Rates, insurance, power and water - would cost minumun $4,500 p.a..
@@Anonymous-md2qp I own my own home and recieving about 35k a year income and I'm struggling hard. I'm in poverty. I think you need 50 to 60k minimum and own the principle property outright imo.
Great video one again Ravi! I suppose its not as scary if you break it down instead of thinking about how am I going to have $4m!!! Think okay in 2023 if I have $1m in assets growing then I will get there based off the same probability of inflation rising. The goal is to work towards holding growing assets worth what you could retire on today (hypothetically being 65). I can see a self managed super fund with investment properties being a pretty sure fire way.
Great video again Ravi! My take is $1,000,000 / 25yrs = $40,000 $40,000 / 52weeks = $769 AUS Minimum wage as of March/2023 = $812 per week 1. We have to think could I live off the minimum wage if I was 65 now and retire today? Maybe, maybe not. 2. I look at my budget see how much a conformable life costs now and then reverse the above to prepare for retirement in 30 years.
Good Video but he is biased with property. People who can't afford property they can invest some portion of savings in Gold by dollar cost average to protect against inflation. Gold preserves purchasing power. Cryptos are more volatile and don't know which one going to last for next 50 years. So allocate some portion of savings into GOLD.
Retirement is funded by 3 things - own personal wealth, super and pension. Relying on the pension only is not much of a life, but having all three, especially if you own your own home, can make for a comfortable retirement. My folks had a combined super balance similar to your figure when dad finally retired at 65, and it was enough. As in all things financial though YMMV.
Yeah, let's use all time historical inflation when we only introduced inflation targets in 1990. Let's not use the far less fear mongering figure from 1990 onwards.
Book In A Call - www.searchpropertyau.com.au/book-a-call
One million invested now in an asx index fund will deliver 4.5% dividends (live off this) and 4.5% growth over time (matches inflation). There’s your problem solved. Why make it complicated? Real estate will deliver similar returns but you’ll have a lot of headaches with realestate.
Have to turn a one sentance concept into an 8+ minute video to get the views.
So you live of 4.5% but the value of the over capital diminishes over time due to inflation, smart!
@@bundyboy961 Didn’t you read my post properly? The capital maintains its real value via the annual 4.5% growth. That assumes inflation is at or below 4.5%.
@@bundyboy961
No. 4.5% growth + 4.5% dividend
Growth mstches inflation
@@bundyboy961reread the OP again.
I look at how much I actually spend now without my kids and it worked out to be $2000 without mortgage. Use different calculator and it cost $3800 per month in 15 year time factoring the 4%+ inflation yearly when I due to retire. Super projected to be $850k when I retire. I then use a different retirement calculator to see how long $850k last if it yield 4.5% at a cost of living at $3800 with inflation of 4.4%. It will last till I am 88. Average live expectancy for a male like me is 85. I have diabetes, high blood pressure and other health issue and likely resulting in my life even shorter. Also, at some point I will qualify for age pension so no, I am not terrify like you and will choose to live a little.
I wish you a healthy life ahead, both physically and financially. Glad that you plan things.
@@random-gc7dc
If he lives longer than 80, he will need to depend on pension.
I thought the 4% rule covered inflation? Ie you take out 4% on average but the capital growth of say 7% (3% nett) is the inflation component. Only time you will lose is by being in cash….. and of course the usual market volatility.
You need to read up on the Trinity study on 4% withdrawal rate as you don't understand it unfortunately.
A bit of self serving fearmongering to drum up property business or am I just cynical?
Nah mate you're spot on
you nailed it...
Depends where your living. 0n gold cost or centre of Sydney, with expensive tastes, no. Every where else yes.
As per the comments below, the calculation with 1 mill and 4.88% inflation and landing at 250K is assuming the 1 mill is not invested for growth
Actually it is saying that if you are targetting having $1m in 2053, that’s the equivalent of $240k (or whatever the figure was) *today*.
But sure, if you had a $1m today and invested it in a constructive way it would certainly grow - sadly I don’t have a lazy mill laying around, but I probably have a chance at saving a mill in 20yrs and that is way better than peeing it up the wall! But I do agree, I found the vid used a little too much financial sleight of hand.
What about etf share price itself going up while keeping dividned income?
Being 29 and still investing in super until i retire, wont it go up with inflation and be at 4million ?
If you are in a high growth option super fund and salary sacrifice to the max concessional contribution (employer SG plus your money) which is now up to $30k/yr, you can calculate what your super balance in 30+yrs would be by using a super calculator. This would be the maximum low effort super balance you could achieve over the longest time frame. The MoneySmart website has a simple calculator. But as in all thing financial, YMMV as it really depends on your own personal financial circumstances and income.
One thing I wish I did when I was 29, was save a little more of my after tax pay and consistently and regularly put it into a growth oriented managed fund or LIC (these days you have the option of ETF’s) and let some of my money work for me… I’d be sitting pretty today in my 50’s and would have the choice of working rather than needing to work. Goodluck.
CPI and inflation are 2 different things. The ABS CPI under reads significantly.
50K / year in 2003 allowed an OK standard of living. 100K / year today, not so much in my view.
You're assuming that $1m stays static so if inflation is say 4% and your super is returning 5 or 6% then you're staying ahead of inflation.
Correct. He seems to have deliberately left out some details.
Don't forget about the 15% tax
@@darrenthorne1finally someone with a common sense question that no one talks about….
I don't agree at all, take the same money and put it in super versus a home will deliver more than the rise in the home value
As long as you don't get a market crash. If you are at the near end of working life. And close to retirement...super is like russian roulette or playing black jack. It's a big gamble. That's when you need property investment.
I always leave lots of safety margin for errors so I never think that 1m is the goal. Therefore I just let it roll inside the super to something much higher whilst in accumulation phase.
it's hard to comprehend this ravi. it's like a frog siting in water as it heats up until the water is boiling. you don't even notice the changes in prices until you look back over 10-20 years.
Thanks Ravi. Where did you click to change to the manual rate? It's ineditable on the original link.
Using the average pre early 90s is inaccurate as monetary policy changed since then. 2-3% is a better long term average to assume.
Can anyone please advise how it is determined if a dividend is to be paid or not for an ETF? Sometimes they just don’t pay a dividend and don’t appear to give an explanation.
Pretty much all ETFs pay "dividends" (NB it's called "distributions" not "dividends" when it's an ETF) if they're invested in a company. Although some pays out once a year (annually), twice a year (biannually), or 4x a year (quarterly). If you look up the website of the ETF it'll tell you, as well as give you its distribution history. If it's something like a Gold ETF then no they don't pay distributions cuz gold doesn't make anything. A few random companies don't pay dividends but I've yet to see an ETF not pay if it's a basket of companies. Good luck!
Cool Video, Thanks Ravi
Very insightful and great motivation 👍 cash 💸 is trash!!
If you own your own home outright and plan to retire at 65 and die by 85, I would say yes. But why stop at 1 million? Then again I'm 52 so it's not that far away for me personally, age wise.
Most of the super calculators adjust for inflation
I'm a real beginner when it comes to this stuff, if some financial wizards can chime in here and explain the root cause of this current transitory inflationary situation then it would be very much appreciated
What’s the turnaround time to reply to emails ?
I know you already received this request but I just want to remind you :) Can you do an analysis on the book barefoot investor, specifically the chapter on real state.
1. $40,000p.a is not a reasonable amount to retire on.
2. Your graph has a caption that says real estate is a hedge against inflation because the value is tied to replacement cost.
This is an over simplification and I say incorrect. This is a pretty graph but it is nonsense.
If you own your own home, $40,000 is more than enough to cover council rates, food, utilities etc.
I think the key word here is "reasonable". Sure you can get by on $40,000 p.a. but your going to be living week to week and have to be very careful with your expenditure. Rates, insurance, power and water - would cost minumun $4,500 p.a..
@@Anonymous-md2qp you can't afford nice looking escort girls
@@waynev5097 Plus Health cover- $3500 a year plus increases every year
@@Anonymous-md2qp I own my own home and recieving about 35k a year income and I'm struggling hard. I'm in poverty. I think you need 50 to 60k minimum and own the principle property outright imo.
Great video one again Ravi! I suppose its not as scary if you break it down instead of thinking about how am I going to have $4m!!! Think okay in 2023 if I have $1m in assets growing then I will get there based off the same probability of inflation rising. The goal is to work towards holding growing assets worth what you could retire on today (hypothetically being 65). I can see a self managed super fund with investment properties being a pretty sure fire way.
Enjoy your posts. Keep going 👍
Definatley need to look at future value
Great video again Ravi! My take is
$1,000,000 / 25yrs = $40,000
$40,000 / 52weeks = $769
AUS Minimum wage as of March/2023 = $812 per week
1. We have to think could I live off the minimum wage if I was 65 now and retire today? Maybe, maybe not.
2. I look at my budget see how much a conformable life costs now and then reverse the above to prepare for retirement in 30 years.
Good Video but he is biased with property. People who can't afford property they can invest some portion of savings in Gold by dollar cost average to protect against inflation. Gold preserves purchasing power. Cryptos are more volatile and don't know which one going to last for next 50 years. So allocate some portion of savings into GOLD.
1000000 is still way out of reach for a majority of Australians. 500-600k is even a big number for most to reach at retirement.
Retirement is funded by 3 things - own personal wealth, super and pension. Relying on the pension only is not much of a life, but having all three, especially if you own your own home, can make for a comfortable retirement. My folks had a combined super balance similar to your figure when dad finally retired at 65, and it was enough. As in all things financial though YMMV.
So your investments don’t accumulate any income 😳
A million? Pffft u need 5 million in assets or savings to even consider retiring in aus do you know how much my council rates are annually!!!
That's right which is why I made this video. $1M won't be enough.
Yeah, let's use all time historical inflation when we only introduced inflation targets in 1990. Let's not use the far less fear mongering figure from 1990 onwards.
Not true
1m is not much this days. Today in 2024 minimum you need 10m.
If you don't have to pay tax, it is enough