| Need advice on early Retirement Planning |
|
|
|
|
|
mcvg
Member
Cash: $ 2.60
Posts: 12
Joined: 01 Oct 2005
|
| Need advice on early Retirement Planning |
 |
|
Hi,
I am 28, married with three kids. I am self employed with about 400k in savings. The home we live in is valued at about 300k with a mortgage left of 35k and also have two investment condos woth value of 140-150k each and mortgages of 30k on each.
I recently invested in some mutual funds with TD. Not sure what kind of return to expect, but hopefully it will be decent, I wanted to invest more in real estate, but the market in canada, has sky rocketed lately and seems like a better idea to wait a bit.
Business is good, but is unstable so I can not say how many more years I will continue to go on making what I make now. I always wanted to retire by 35-40 years old, but that kind of looks unreacheable right now.
How much would I really need to retire and what can I look to invest in where I can make my money grow or possibly double in the next 7-10 years. Also what should I be looking at for long term retirement planning
Any advice would be greatly appreciated.
|
Sat Oct 01, 2005 10:01 pm |
|
|
fasttoon
New Poster
Cash: $ 0.40
Posts: 2
Joined: 16 Sep 2005
|
depends on you. What kind of retirement do you envision?
|
|
Sun Oct 02, 2005 7:05 pm |
|
|
mcvg
Member
Cash: $ 2.60
Posts: 12
Joined: 01 Oct 2005
|
I have not sat down and calculated about how much I would need monthly when I retire. I guess this is my next step. Should I be looking more at investing for now since \i am 28 and think about retirement later, once I have my money working for me?
|
|
Mon Oct 03, 2005 1:44 am |
|
|
jlee1224
Full Member
Cash: $ 12.65
Posts: 63
Joined: 26 May 2005
Location: Baltimore
|
|
|
|
It would be a good idea to see what you would need to live on if you were to retire today. Take into account college costs, health insurance, life insurance, mortgages, and such. If you need, say, $100k a year today, then you'll need more when you're 40 because of inflation. In 12 years, (at 2.5% inflation/yr) $100k will buy $131k. So if you wanted to retire in 12 years, that's what you would need from your savings a year to live. To safely retire, a 4-5% withdrawal rate is the safest (especially if you retire that young, since you will need to have more of your money in stocks than someone who retired at 60, and stocks are more risky). To withdrawal more would up the risk of outliving your savings. At 4%, you'll need $3.275 million by the time you are 40. If you had $1.5 million now, and invested in a diverse portfolio earning 8%/yr, you would have $3.5 million in 12 years, without adding a dime.
These are the situations you will need to run. I don't know your particular numbers. You said you had 400k in savings. If you saved 10k per year, and it grew in the diverse portfolio at 8%/yr, you would have $1.1 million in 12 years. That would be short of the $3.5 million you would need if you needed equivalent of $100k now then (that made sense in my head).
Play with the numbers. Or give me some numbers. I'll play with them.
|
|
Tue Oct 04, 2005 7:26 pm |
|
|
mcvg
Member
Cash: $ 2.60
Posts: 12
Joined: 01 Oct 2005
|
I don;t think I will need much more than 2500-3000/month once I retire. Obviously the more the better, but I think at that I should be comfortable to pay my property taxes, heat/electricity, food, clothes and probably a vacation or two per year.
Do you guys think that this sounds unreasonable? too low?
As for investment, what could I expect as an average return in a not so risky type of investment? I don't mind risking a few to make more, but I just don;t want to take anything with a lot of risk, until I get to my next goal of 1 million in cash (hopefully I will get there one day) 
Is there anything sligthly risky that will earn 7-8%? I just don't think I will get anywhere making 2-3% in a CD or money market?
|
|
Tue Oct 04, 2005 7:33 pm |
|
|
jlee1224
Full Member
Cash: $ 12.65
Posts: 63
Joined: 26 May 2005
Location: Baltimore
|
do you want suggestions for short term places to put money? Ultra safe places are CDs, which will get you 4-4.75%. Anything more and you're taking on more risk. REITs (Real Estate Investment Trusts) are more risky (especially now), but if you are looking to buy/hold, and will dollar-cost average in, then REITs may be a good part of your portfolio. REITs usually give 6% dividend/year, and your capital will go up (long run). Anything more and you will need to take on more risk or invest for long term.
But short term-wise, you won't get above 5% safely.
|
|
Tue Oct 04, 2005 7:42 pm |
|
|
Rolo
Yo' Daddy
Cash: $ 309.70
Posts: 1551
Joined: 13 Mar 2005
Location: Colorado/Florida
|
Pick one: Your Goal or Risk-Avoidance, you can't have both.
Embrace risk, manage risk, but do not cling to safety....you took risks by being self-employed, what gives?
Establish your goal, figure out what it takes to get there, make a plan, then do it.
How much do you want?
When do you want it?
Rule of 72.
Risk/reward ratio of various asset classes over ten years.
Leverage (your properties equity).
It's a toolbox...Put together your retirement machine...
"Expect me when you see me."
|
|
Fri Oct 07, 2005 11:41 pm |
|
|
|
