Author Topic: Reaching financial freedom  (Read 16915 times)

gcr

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Reaching financial freedom
« on: July 11, 2013, 04:02:40 pm »
Quote from: Patrick
This topic has been split from http://www.shareforum.co.za/shares/long-term-investments/

I have had very good growht with Omnia and positive it will continue, also nice divi of 2.70, LDT tomorrow, solid company.
Something for Orca to consider with EOH and STXIND.
Have all three in my LT Portfolio and happy with the growht. :)
franz - growth means different things to different people - Orca is trying to get the highest growth (share price) on his investments so that he has a reasonable lump sum for a comfortable retirement, and once his has accumulated that wealth he will invest in instruments which are less risky - so that's his growth objective. I also want growth in my portfolio and look for growth of between 12 and 15% over inflation - which I am looking to keep me comfortable in my 80's and beyond. I live exceedingly well on my present pension but the reality is that once you retire the costs that eat away at your pension are medical costs, access to a bond to buy up on a house if you so wish, municipal costs just keep ramping up as does petrol, and food and eating out- there are very few costs that one incurs when working that suddenly magically go away when you retire - they stay right there. So if you are investing to augment your pension or lifestyle after retiring then I would say try and accumulate as much as R 4.0 million (in today's terms) over and above your pension so that you can afford to live like you did just prior to retiring - your house and car are not part of that net wealth
« Last Edit: July 11, 2013, 07:37:43 pm by Patrick »
Not everything that counts, can be counted, and, not everything that can be counted counts - Albert Einstein

Orca

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Re: Reaching financial freedom
« Reply #1 on: July 11, 2013, 05:37:47 pm »
You are correct gcr but only for "your" lifestyle. It differs from person to person. I personally have friends that recently retired with Provident Funds of R1.2 and R1.5M (no pensions) and with their homes paid off, they still live in comfort after 2 to 3 years. Not sure about their long term "comforts" though as they know nothing about investing.
I have been living off R12 to R15 000 pm after tax and lack for nothing. I don't even want to buy a house. I rent a fully furnished flat with good sea views and enjoy free fishing and free sightseeing and once a week an eat out. No smoking. Lots of beer though.
Now, my aim is R2.5M that I hope to achieve this year and switch to Indi. Of the 35% ave gains, I will only use 6% pa. That will give me a good leeway for a 50% correction. 
I started here with nothing and still have most of it left.

Patrick

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Re: Reaching financial freedom
« Reply #2 on: July 11, 2013, 06:29:56 pm »
You are correct gcr but only for "your" lifestyle. It differs from person to person. I personally have friends that recently retired with Provident Funds of R1.2 and R1.5M (no pensions) and with their homes paid off, they still live in comfort after 2 to 3 years. Not sure about their long term "comforts" though as they know nothing about investing.
I have been living off R12 to R15 000 pm after tax and lack for nothing. I don't even want to buy a house. I rent a fully furnished flat with good sea views and enjoy free fishing and free sightseeing and once a week an eat out. No smoking. Lots of beer though.
Now, my aim is R2.5M that I hope to achieve this year and switch to Indi. Of the 35% ave gains, I will only use 6% pa. That will give me a good leeway for a 50% correction.

Couldn't agree more (and it's not often Orca hears that  :D). The key is to focus not on wealth but on happiness, and as we've all heard, more stuff not only doesn't mean more happiness, but more maintenance, higher insurance premiums, more things to worry about, and replace when needed. We live in an environment that encourages consumerism. Want a new fuel swallowing X5 or golf gti but can't afford it. No problem, here's a car loan at eleventeen percent. Shoes already 3 months old, get new ones, just charge it, 19% interest. Ooh the new iphone 5 is out and your iphone 4 is looking stale, don't worry, just sign this contract for R469 a month for 24 months and get updated!

The strange thing is that all of the above is completely normal in our society. I'm the weird one because I drive my 2004 nissan to avoid a car loan. I'm weird because I don't spend R7500 every year on DSTV, because you know, you need it for the sport... What? You walk 1.2km to work every morning instead of driving, and bike to go see your son? Are you mad, seriously go see a shrink now!!

Aside from my sons expenses, thanks to his mom's taste in all things pricy, I could also live happily somewhere between R10k-R15k per month, and not want anything I didn't have, eating well, living well, enjoying life. If I got rid of the damn expensive maintenance and upkeep on my house I'd be in an even better situation, but I bought it when I was still under the "Ooh I got a raise, let's spend it" spell.

Every time you spend money on something you don't really need, you're committing yourself to work for another period of time to pay for it. Meaning less time for you to spend with the family, on a new hobby, or having some cool adventure. Basically, throwing money away shortens your life. Some people claim to love work, but if it paid no money do you think they'd still be doing that?

I'll be donating my work outfits to charity in 12 years time, and then figure out what I want to do with my time rather than work to pay for stuff I don't really need. At the moment it starts with heading off to go sailing for a couple of years with my son. Then when he goes to varsity I plan on biking the americas, for as long as I feel like it. Then I might go settle with a loved one in a small town in Thailand, or build my dream electric car. Of course all of these things could change, but the freedom to be able to make these choices remains.

Interestingly, if you can save 50% of your net salary every month, your working career only needs to be 17 years long, and you can keep living as you've been living. If you can manage to save 60% of your salary, it's only 12.5 years, and at 70% it would be just 8.5 (figures courtesy of Mr Money Mustache). Let's solve youth unemployment by retiring before 50 and giving the youngsters a chance to show us what they can do.  ;D
« Last Edit: July 11, 2013, 07:43:48 pm by Patrick »

Moonraker

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Re: Reaching financial freedom
« Reply #3 on: July 11, 2013, 06:54:46 pm »
Patrick, you think like I do. Well said.   :TU:

franz

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Re: Reaching financial freedom
« Reply #4 on: July 11, 2013, 07:12:13 pm »
thanks guys for your inputs, it's rather interesting our different outlook and ways we live and what we want.
bottomline is we all invest in the hope of making money and some of us have been very fortunate to select the right stocks and make fantastic returns which in turn is archived trough time spent analysing stocks and the market.
I for one spent many hours a week tracking the market and still get joy out of it everyday especially if one can make a quick buck.
i am a big believer in "time in the market" on selected stocks and have been holding some for years as long i can see potential for further growth and good divis.
great site and enjoy reading all your comments, thanks to Patrick of starting this challenge :TU:

Orca

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Re: Reaching financial freedom
« Reply #5 on: July 11, 2013, 07:13:29 pm »
From a high paying job with a string of credit cards and Fashion house cards I went from big bragger to nothing in a flash. Bought a butchery and lost all my Provident Funds and cash within 3 months. The butchery went bang.
I then cut up my cards and paid off my dues. That was 16 years ago. Now I have no cards and owe nobody nothing and will keep it that way.
This has rubbed off on my kids over the years and they only buy with cash.
I started here with nothing and still have most of it left.

Immobilier

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Re: Reaching financial freedom
« Reply #6 on: July 11, 2013, 10:17:57 pm »
The thread topic and actual discussion is an anomaly. Financial freedom in my mind implies abundance and not financial deprivation, i.e. being (forced to be) satisfied with essentially very little and convincing oneself that is OK. That is like high-fiving yourself for having failed. Financial freedom is not having to drive an old Nissan, not having DSTV, etc.
« Last Edit: July 11, 2013, 10:22:05 pm by Immobilier »

Orca

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Re: Reaching financial freedom
« Reply #7 on: July 12, 2013, 09:31:02 am »
I have financial freedom. My car is a 2005 model and paid for. Why buy a new one when the old one is still good? Only 71k on the clock so good for another 7 years.
Don't have to think about what to wear as I only have 2 pairs of jeans, 4 shirts and 1 pair of takkies.
Our neighbour has 2 cars, a high maintenance wife and all the bling you can think of but is he happy? No. Nothing is paid for.
I'm happy as I have no debt and even lend my neighbours a couple blue notes every month.
I started here with nothing and still have most of it left.

gcr

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Re: Reaching financial freedom
« Reply #8 on: July 12, 2013, 10:13:10 am »
I have financial freedom. My car is a 2005 model and paid for. Why buy a new one when the old one is still good? Only 71k on the clock so good for another 7 years.
Don't have to think about what to wear as I only have 2 pairs of jeans, 4 shirts and 1 pair of takkies.
Our neighbour has 2 cars, a high maintenance wife and all the bling you can think of but is he happy? No. Nothing is paid for.
I'm happy as I have no debt and even lend my neighbours a couple blue notes every month.
Orca - not to burst your bubble - but I don't think you have achieved financial freedom - it may be very real right now, but, when you need to replace your car it will be capital that you spend (you don't use credit) and once capital is spent it is very difficult to replace it from the remaining capital. Also medical costs only get worse the older you get and you will find that a medical aid only is supportive to within limits. I can talk form experiences as I manage my folks finances and they spend their days popping pills and visiting doctors due to their very advanced ages.
I can safely say that I think I have financial freedom in todays money but I don't know what the situation will be in say 15 to 20 years time so my focus is to continuously improve my net wealth but with a focus of financial freedom when I am 80 or so
Not everything that counts, can be counted, and, not everything that can be counted counts - Albert Einstein

Patrick

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Re: Reaching financial freedom
« Reply #9 on: July 12, 2013, 11:14:05 am »
Orca is moving to Portugal. He won't need a car, just a fishing rod  :))

Welcome aboard Immobilier, good to see you posting  :TU:

I'm quite a bit more conservative in my retirement plan. My goal is to get to R9m in today's money in 12 years time (average market returns, massive savings). If I then move that to something like the satrix divi, I'll be getting dividends of R360k per year or R30k monthly. If I only spend 20k, I'll be able re-invest 10k a month meaning my wealth should grow. Of course you would also expect the divi to grow every year too, protecting my capital.

On top of that, my company pension (not huge but it would comfortably cover my current lifestyle) will kick in at 62, plus my web business has been picking up over the last few years, and while it only brings in 15% of my current income, it'll keep doing that with very little effort in future, plus I may just decide to expand it in "retirement". So in my case I feel that retiring at 46 is overkill!

As for driving an older car, well it's all a matter of preference. I love my car, it may be older, but it handles like a rental car, it's never broken down on me, I'm not scared to drive it on dirt roads, it packs the family, my (non electric) bike, dirty hiking gear, the odd pair of muddy dogs and many other things I wouldn't do in a new 3 series or C class like my friends are driving.

DSTV I also couldn't justify. I'd much rather use that R625 a month to go out to watch the very few big games with my friends. And when you compound the costs it really adds up. I moved into my own place 12 years ago. Back then DSTV was R349 a month, today it's R625 a month, that's an average inflation of 5.5%.

If I'd invested on the JSE back then like I am now, I could have easily gotten 15% growth p/a. Today that would have been worth R164k! What would you have, a few hours of repeats every week or R164k? It's a no brainer. If I do the same for the next 12 years, keeping the 15% growth but upping inlfation to the current 6%, in 12 years when I decide to hang up the ties I'll have another R300k (R150k in inflation adjusted money) to play with.

I could always work a few more years and seriously increase my wealth, but as the saying goes, nobody on their deathbed has ever said "I wish I had spent more time at the office.".

Orca

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Re: Reaching financial freedom
« Reply #10 on: July 12, 2013, 08:06:09 pm »
Correct. No car in Portugal as I can't drive on the wrong side. All I need is my Fishing Rod as I will be living in the Old Town Center where the markets are. If there are no fish caught , no prob. On the way back home I will just buy fish from the market and some Port Wine and I'm good. 
« Last Edit: July 12, 2013, 08:10:45 pm by Orca »
I started here with nothing and still have most of it left.

Nios

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Re: Reaching financial freedom
« Reply #11 on: August 13, 2013, 05:33:29 pm »
I really enjoyed reading this thread.

I found this on another forum https://soundcloud.com/primediabroad...g/julia-saving thought it'd be interesting here.

Truly inspiring, and true show of somebody who has their head screwed on right.

I like the section Patrick mentions about percentage savings required for x number of years working time. Really makes one wonder.

CallmeDana

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Re: Reaching financial freedom
« Reply #12 on: August 16, 2013, 07:36:58 am »

I found this on another forum https://soundcloud.com/primediabroad...g/julia-saving thought it'd be interesting here.


I listened to 702 that day when they had Julia on. That show was a wake up call for me.

Patrick

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Re: Reaching financial freedom
« Reply #13 on: August 16, 2013, 07:43:40 am »
Just fixing the link for everyone, this one works: https://soundcloud.com/primediabroadcasting/julia-saving

Nios

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Re: Reaching financial freedom
« Reply #14 on: August 16, 2013, 10:26:27 am »