Making money is about discipline, most people do not have the courage to stick to their convictions and achieve the result they want.
Rather than talk theory I have decided to use my family as a real life scenario.
My wife and I would like to have an income of $100,000 pa in retirement. To do this I will need $1.2 million when I retire. If I want to leave something to my kids I will need $5,000,000.
I have 20 years to save $1.2 million.
Here is the plan.
1. I will split my return between income and capital growth. This will make sure I am moving ahead in time of low capital growth. (Like now)
2. I will have most of this in Super, as at present this is the most tax effective environment.
3. I am comfortable taking some risk and understand that from time to time my capital will go backwards.
4. I am time poor so I do not want any investments, which will require effort from me. So property is out.
5. I want professional advice so I will factor in there fees into the overall return.
6. I will take a long term view.
To achieve this result in 20 years we will need to salary sacrifice $26,000 into super each year and achieve a return of 8% pa.
Over the past 20 years the All Ords Accumulation index achieved a return of 21.5% pa as such this is where I will invest.
By taking on this challenge, our take home pay will decrease by $1,500 per month. This is a small price to pay to have a rich retirement, the alternative is to do nothing and live on a pension of $23,750 for us both.
When investing, time is on your side. If you are young, these figures play in your favour.
For a 20 year old you will need to invest $4600 pa or $390 per month.
For a 30 year old you will need to invest $10,500 pa or $890 per month.
Would like a rich and rewarding retirement?
Give us a call on 07 4771 4577 and let us help you put a plan into action.