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Reasonable goal or getting ahead of myself?
Old 07-24-2013, 02:55 AM   #1
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Reasonable goal or getting ahead of myself?

Hi guys this is my first thread and I apologize if the question has been asked before (the search feature didn't return anything)

I am almost 19 years old and an accounting student in Australia. I have been thinking about the early retirement idea for a while now and have come up with a goal that i would like some feedback on.

My goal, that I have not done a lot of thinking on is to have a passive income of $100 000 by the age of 30. I'm sorry if this seems absurd but that's why i'm here, to give myself a reasonable goal. My question is basically is this a reasonable goal or am I kidding myself?

I appreciate all feedback and thanks in advance
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Old 07-24-2013, 03:01 AM   #2
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A passive income of $100,000 per year by age 30 for the rest of your life seems unrealistic to me. Sorry.
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Old 07-24-2013, 05:35 AM   #3
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I'll relay the advice that my aunt gave me on that subject - she told me that it is just as easy to love a rich girl as to love a poor girl . IOW, marry well.

The historical equity dividend yield is ~4.4% and the historical corporate bond yield is ~6.4%. If you have a 60/40 equities/bond portfolio, the yield would be ~ 4.2%, so in order to have $100k of passive income annually you would need a portfolio of ~$2.4 million based on historical passive income statistics (and taxes would further reduce that passive income). Given the "new" normal of lower passive income rates, it would probably be closer to $3 million, but things could change in the next 11 years.

To amass such wealth in 11 years would be unusual but not unheard of.

How do you plan to do it? A goal without a plan is only a dream but there is noting wrong with dreaming and shooting for the stars at 19 yo.

Good luck.
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Old 07-24-2013, 10:08 PM   #4
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I agree $2.5 to $3M fund ought to give you the income you desire. Develop the next Facebook, PayPal, etc. and you're set. That marrying rich is an excellent backup plan. Working hard saving and investing well would take more years but start early, the compounding effect is amazing.
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Old 07-25-2013, 01:21 AM   #5
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Thanks for the advice guys, much appreciated.
I will take the advice on board and as expected I will make some adjustments to my goal.
I dont have any real plan in place at the moment but after rethinking my ambitions I will put some in place and keep you updated on my progress.
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Old 07-25-2013, 10:36 AM   #6
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Quote:
Originally Posted by keevkamen View Post
I dont have any real plan in place at the moment but after rethinking my ambitions I will put some in place and keep you updated on my progress.
I recommend that the first step in your plan is do some math. Find out what kind of money you will need. I have a spreadsheet that I've kept for several years and I modify it or add more pages as necessary. From your desired endstate, crunch the numbers in reverse, and then figure out how to make things happen for real.
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Old 07-25-2013, 12:43 PM   #7
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I wouldn't be too concerned about a specific goal at age 19. Just save as much as you can with a combination of being thrifty in your spending, making a good wage, and investing wisely. I suppose a goal can help give you the motivation to control your spending, but you shouldn't consider it a failure or take extra risks if you are falling a bit short. If you are looking to get ER, as you get older and closer you'll want to set a specific target to meet before you would ER, but you've got lots of time so just try to accumulate right now.

Also, unless you are looking at income-producing specific investments like rental houses, I'd think more about your net worth rather than how much passive income it would throw. I'd rather have a growth stock that goes up 15% with no dividends than a stock that gives 5% dividends and goes up 5%, if the risks are equal.
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Old 07-25-2013, 05:22 PM   #8
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Quote:
Originally Posted by keevkamen View Post
I am almost 19 years old and an accounting student
Your goal isn't unreasonable at all. Plenty of people have used creative accounting techniques to amass large fortunes at a relatively early age.

Staying out of prison at the same time, however, could be problematical.
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Old 07-25-2013, 05:48 PM   #9
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I think it's good to have ambitious goals. What you want is very difficult, but not impossible. Saying the big number won't make it true though.

1. Research passive income businesses.
2. What are other people doing. What are they earning? How did they do it? Filter out the scams. Be skeptical.
3. Pick a first "likely" opportunity and dive in. Start small. Can you build up to $1000 in passive income per month?
4. Try. Fail. Learn. Grow. Repeat.

It's possible. Are you ready to bust your butt? If so, get started.

SIS

PS: get a good day job to pay the bills. Make the passive income gig your side job.
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Old 07-26-2013, 12:01 PM   #10
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I would suggest that you complete your education, then establish your career by working a few years. By then you will have a better grasp of your capabilities, and can set some goals then. In the meantime, w*rk hard, save as much as you can, avoid debt, spend wisely.

Probably not what you wanted to hear, but you asked.
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Old 07-26-2013, 03:06 PM   #11
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I concur that at this point it is best to only look 5-7 years ahead. Completing school with good grades and some good job experience over summer breaks (if you have such things in Australia), getting a good job that you can provide for yourself and working your way up the career ladder, and diligently saving and investing.

The reality is that unless you are unusually talented or unusually lucky, it will take decades of disciplined saving and investing to amass enough wealth to generate $100k a year in passive income.
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Old 07-27-2013, 09:09 PM   #12
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I wish I'd have been thinking like you are when I was 19! You've got a bright future! Best of luck!
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Old 07-28-2013, 05:38 AM   #13
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Really appreciate all the advice. Its great to here from people who have a similar way of thinking.
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Old 07-30-2013, 09:33 PM   #14
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That goal is very realistic if you want it enough! Look at alternative and non-conventional investments that carry 'higher' risk and higher reward. Focus on controlling those risks and acquiring more of those same investments. Here's a short list of high yield investments: real estate, forex and option trading (not necessarily stocks), and franchises. Maybe focus on one or two of these investment types and know them inside and out. Then use leverage or raise capital to execute these investments.

I've focused on real estate for 5 years now, and know the industry and local market very well. In 5 years I've built a yearly cash flow of $63,000 that's taxed at about 5%. And while most people think 10% is a respectable return on an investment I won't look at a deal under 20%.
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