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Someone Tell Me What To Do!!!!!!
Old 04-12-2005, 05:49 AM   #1
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Someone Tell Me What To Do!!!!!!


I am about to stop work......

I am 31 yrs old....

I have 280K to invest...

I need about 17K a year to live on (I have paid my mortgage off already)

I realise that this is about 6% per annum, more than the 4% SWR I have read about.

So come on, how do I get to 6%, I am prepared to sacrifice some of the capital growth in return for the income.

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Re: Someone Tell Me What To Do!!!!!!
Old 04-12-2005, 06:36 AM   #2
 
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Re: Someone Tell Me What To Do!!!!!!

I'd continue to work, until you get to 4%. And I'm thinking you need more than $17K to live on. Remember you'll have more time to spend money when you're not working.

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Re: Someone Tell Me What To Do!!!!!!
Old 04-12-2005, 06:41 AM   #3
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Re: Someone Tell Me What To Do!!!!!!

I agree with Cut-Throat...keep working or at least take a job that may pay less but give more satisfaction or free time. 280K is very good at 31 but it would be very difficult to live off 17K a year.
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Re: Someone Tell Me What To Do!!!!!!
Old 04-12-2005, 06:41 AM   #4
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Re: Someone Tell Me What To Do!!!!!!

Not really the advice I was after!!

I won't be working as I have just sold my business - the money I have available to invest is from the sale.

My partner or I may well get a part time job in 6 to 12 months time to bring in some extra cash.

So can anyone give me some investment strategies to maximise income from the 280K?
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Re: Someone Tell Me What To Do!!!!!!
Old 04-12-2005, 07:33 AM   #5
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Re: Someone Tell Me What To Do!!!!!!

Bonds and maybe some CDs (soon) will give you the 6%
safely, but you still have to worry about inflation.
The regulars here know that I think a single person can do just fine on 17K a year, at least for now. Starting from your age, it might get dicey later, but of course
you are willing to work PT. I see no problems here.
You seem sufficiently motivated. I would do it
(hell, I did it........quite a bit later in life though).

JG
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Re: Someone Tell Me What To Do!!!!!!
Old 04-12-2005, 06:12 PM   #6
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Re: Someone Tell Me What To Do!!!!!!

Quote:
Not really the advice I was after!!
Talk to the Bush administration, they will twist the facts to support whatever you want to hear.
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Re: Someone Tell Me What To Do!!!!!!
Old 04-12-2005, 07:42 PM   #7
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Re: Someone Tell Me What To Do!!!!!!

Quote:
I have 280K to invest...
You didn't say how much your house was worth or what your net worth was. Recommend based on the amount and your age to look into real estate, combine your home+280k and leverage both perhaps even into a complex where you can live also.
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Re: Someone Tell Me What To Do!!!!!!
Old 04-12-2005, 07:44 PM   #8
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Re: Someone Tell Me What To Do!!!!!!

Quote:
I have 280K to invest...
Forgot to mention, other threads have covered FISN.com CD's @ 6%.
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Re: Someone Tell Me What To Do!!!!!!
Old 04-12-2005, 07:49 PM   #9
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Re: Someone Tell Me What To Do!!!!!!

Zipper where are you?
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Re: Someone Tell Me What To Do!!!!!!
Old 04-13-2005, 12:21 AM   #10
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Re: Someone Tell Me What To Do!!!!!!

Thanks for the comments -

My house is worth 400K and all paid up.

After that I have 280K in cash.

I am in the UK and the Gross bank interest rate I have is 5.1% - but the problem is that I need to get to 6% after the taxman has taken his slice!!

I also have 4 buy-to-let properties, they all have mortgages, I could afford to clear all of these which will generate about 1350 a month, but leave me with no cash and all my capital tied up.

I am just confused, I know I can make the money work harder, but don't know how to do it.
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Re: Someone Tell Me What To Do!!!!!!
Old 04-13-2005, 04:11 AM   #11
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Re: Someone Tell Me What To Do!!!!!!

It's posts like this that make me feel I haven't been doing all that well financially all my life.

31 y/o 400k in house; 280k in cash + investment properties
50 y/o 1.5m net worth

In about 10yrs the 31 y/o has more than half of what I have after working 30yrs.
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Re: Someone Tell Me What To Do!!!!!!
Old 04-13-2005, 05:32 AM   #12
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Re: Someone Tell Me What To Do!!!!!!

How things change

In 1966 my salary was 8k/yr fresh out of college - big bucks for the time. No IRA, 401k, let alone Roth.

Investing thru the modest 'flat market' from 1966-1982 via DCA and taking ER in Jan 1993 with 200k in the market plus a paid up duplex, the market history of the 90's did the heavy work AFTER stopping work.

You work with what you have. The fundamentals don't change - LBYM, DCA, start early as you can, use low cost funds, diversify, etc.

And then there's people who well in RE - I never did - although the duplex was ok - not spectacular - but ok.
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Re: Someone Tell Me What To Do!!!!!!
Old 04-13-2005, 07:42 AM   #13
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Re: Someone Tell Me What To Do!!!!!!

Quote:
It's posts like this that make me feel I haven't been doing all that well financially all my life.

31 y/o 400k in house; 280k in cash + investment properties
50 y/o 1.5m net worth

In about 10yrs the 31 y/o has more than half of what I have after working 30yrs.

I think his numbers are in UK Pounds! So thar is almost double in USD

SWR
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Re: Someone Tell Me What To Do!!!!!!
Old 04-13-2005, 07:43 AM   #14
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Re: Someone Tell Me What To Do!!!!!!

Quote:
50 y/o 1.5m net worth
Not so bad, I am 51 and a NW of 1.6m, I think
Most of us here ER'ers are in the same boat.

SWR
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Re: Someone Tell Me What To Do!!!!!!
Old 04-13-2005, 07:46 AM   #15
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Re: Someone Tell Me What To Do!!!!!!

60 with n/w WAY under 500K.

JG
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Re: Someone Tell Me What To Do!!!!!!
Old 04-13-2005, 08:43 AM   #16
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Re: Someone Tell Me What To Do!!!!!!

HC1811,

You asked the same question back on March 17th
on this same forum. It would be better for continuity
of discussion if you had not started a new thread
on the same subject. My comments have not changed.

Cheers,

Charlie
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Re: Someone Tell Me What To Do!!!!!!
Old 04-13-2005, 07:54 PM   #17
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Re: Someone Tell Me What To Do!!!!!!

Quote:
60 with n/w WAY under 500K.

JG *
And a gainfully employed spouse...conveniently omitted.
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Re: Someone Tell Me What To Do!!!!!!
Old 04-13-2005, 08:09 PM   #18
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Re: Someone Tell Me What To Do!!!!!!

HC1811

What you want is to be early semi-retired, as opposed to early retired.

Figure out how to make 5k a year doing something pleasant, or something simple you can do in a few hours a week or a day a week.

Then withdraw from your financial savings at 4% or 4.5% just like the rulebook says.

If you do that, you'll find your numbers work out.

btw, are you talking pounds or dollars? If dollars I am suspicious of the 17k figure.

When I calculate an annual budget, I try to be sure to include some sort of accrual, or amortization for the wear and tear on a car (to fund an account to replace it one of these days), and the predictable maintenance (in my case, exterior painting every 7 years) on your house. If you do that, you might find your 17k is closer to 20k. Good thing you have national health insurance covering your medical, too!

So you might actually need to earn 8k a year to be completely sound. But a bright 31 year old should be able to do that. Your real estate expertise sounds like you're on the ball -- maybe you can rehab another property, or manage somebody's property to earn a bit each year.

Making your money 'work harder' sounds like a short term solution. You'll inevitably start ignoring inflation, or taking on more risk than is prudent or something like that. The SWR studies all converge on 4% long term for a reason. Bigger numbers just don't work out, at least not initially. Years from now, after the Boom of the 2010s, you'll be able to look back and think, ahh... yes... but for now you've got to assume the 2010s will be just like every other decade and stick with normal long term projections.

To take out your 4% safely over time, you should have the funds in a broadly diversified, low fee, low volatility investments. ER in early 30s means you have to pay particular attention to the things that can mess you up over the long run. That, or plan to start a second career at some point.

Good luck with it!



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Re: Someone Tell Me What To Do!!!!!!
Old 04-14-2005, 12:11 AM   #19
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Re: Someone Tell Me What To Do!!!!!!

My figures are in pounds sterling - sorry if this has caused any confusion.

I have been running my own company for a few years and have had a good offer and decided to sell.

This has enabled me to clear the mortgage and left me with the 280K to invest.

I got the investment properties 3 years ago with small deposits and have let the rental income cover the mortgages - if I leave the mortgages to run they will be paid off when I reach 50.

I don't really have the desire to do much work and want to do all the useual things - play golf, spend time with my son and family etc'.

I just do not know what to do for the best.

One minute I think I will go and invest it all in the stock-market and then I think it will be simpler to just pay the mortgages off on the 4 buy-to-let properties (but then I can't get at the money if I need it).

What is the solution?



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Re: Someone Tell Me What To Do!!!!!!
Old 04-14-2005, 04:58 AM   #20
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Re: Someone Tell Me What To Do!!!!!!

HC1811:

In my experience, people need a place to live, whether the market is up or down. Also, in the years we've let properties (about 10), haven't noted a drop in rents in the metropolitan areas we know. Have also noted that it seems easier to find a good long term renter in a down market than up.
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