Author Topic: Blog post: How much to save each day to retire with R10 Million  (Read 1197 times)

Patrick

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Blog post: How much to save each day to retire with R10 Million
« on: November 01, 2016, 01:15:36 pm »
http://investorchallenge.co.za/how-much-to-save-each-day-to-retire-with-r10-million/

Hamster

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Re: Blog post: How much to save each day to retire with R10 Million
« Reply #1 on: November 01, 2016, 05:01:01 pm »
If the market continues to return.16% that is. What is the petiod for that being the average btw? Since JSE inception?

Also, the teacher can't carry on being in the market until the day he retires at 65. He'll have to switch to less volatile safer investments a good couple of years before he retires.

Patrick

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Re: Blog post: How much to save each day to retire with R10 Million
« Reply #2 on: November 01, 2016, 05:24:30 pm »
If the market continues to return.16% that is. What is the petiod for that being the average btw? Since JSE inception?

Also, the teacher can't carry on being in the market until the day he retires at 65. He'll have to switch to less volatile safer investments a good couple of years before he retires.
Yes of course, I'd be very happy with 16%. Interestingly according to this link http://www.standardbank.co.za/site/2013/dm2013/148004_2.html it seems that the average over a 52 year period going back to 1961 is 20%!

Switching to bonds is up for debate. I know many people do, and it's almost a rule on bogleheads to have the same % in bonds as your age, but the numbers seem to indicate that you should go for 100% stocks, or at least very close to 100%. Take a look at the research here: http://www.gocurrycracker.com/path-100-equities/

The numbers in the blog are mainly for decoration, what I really wanted to show was how easy it is to build a big portfolio if you start early.

gcr

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Re: Blog post: How much to save each day to retire with R10 Million
« Reply #3 on: November 01, 2016, 11:36:35 pm »
Patrick - good article if viewed entirely on a theoretical plane, as it advocates a discipline of saving as a prerequisite to wealth creation, an element missing is "how to bake the cake" now that you have gotten all the ingredients.
This is my opinion so testing its authenticity is open to differing interpretations
$ It presupposes that you are skilled in choosing shares to invest in
$ buying shares at a rate of R31 per day would result in extraordinary broker costs - so one would have to make a decision on frequency of purchase - may have to be monthly (my broker charges me a minimum of R 97.50 when buying shares - which escalates upwards depending on the amount of the purchase)
$ having chosen a counter one would need to diversify ones portfolio to get the benefit of swings and roundabouts in the various sectors
$ starting with a small but growing portfolio it would takes some years before you could negotiate with your broker to waive monthly charges over and above brokers fees
$ If after a few years you wanted to diversify your portfolio further you would trigger a CGT event on any sales of scrip to diversify the portfolio and applicable brokers costs to boot
$ there are life cycle events that may divert you monthly attempt at saving in other directions like, kids, kids schooling, varsity fee, possible retrenchment, medical ailments which affect income generation.

So there is nothing wrong with the dream but one has to be aware that there are many events along the path that will test your resolve to save, but provided you acknowledge these deviations and then make contingencies to get back on track you will not likely meet your goals - however another point on goals - commit them to writing and review them often and amend when required to keep them relevant so that you ultimate goal is achieved.

I had some harsh objectives which were, educated my kids through to and including varsity level, getting them out of the house and standing on their own feet before I got to age 48 so that between 48 and 65 I could set aside a lot more savings funds for investing in the JSE. Also your optimum years of earning are probably from 45 to about 52 then your company starts looking at you as a substantial cost and would look to offering early retirement.
All my work llfe I had wanted to retire at 55, but the pension fund that the company provided penalized you if you retired before age 58 and I wasn't prepared to lose 5% of my pension, so I retired at 58.

Some lessons learnt over the years - life insurance policies with profits actually proved to be inferior products, RA's only benefited the companies providing the product - if I had my youth over again I would have avoided these product like the plague. My pension can only be described as more than good, but, I still have a large portfolio of shares which I manage and will always manage unless I get senile, this portfolio is where I concentrate on growing my wealth - my expectation and focus is to achieve upwards of 20% per annum growth in its value - which  have achieved since 2005 even through the 2007/2008 shambles

So as I said you article is good but it needs to meld the practical application of realising your end goal - its not a case of throwing a dart into the dart board and hoping for a trip 20 it takes application, practice - in investing parlance setting specific milestones

As I said at outset many of my notations above are my opinions plus some personal experiences - my way of creating wealth will work for everyone but the important thing is you need to put in place a plan, and review it frequently and reset the milestones when aberrations occur               
Not everything that counts, can be counted, and, not everything that can be counted counts - Albert Einstein

Patrick

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Re: Blog post: How much to save each day to retire with R10 Million
« Reply #4 on: November 02, 2016, 08:17:19 am »
Thanks gcr, great information as always. I should do a follow up with that information. I'd probably suggest someone saving these small amounts does it in a TFSA. Then there would be no minimum cost, just 0.2% with ABSA or 0.25% with Easy Equities in transaction fees. Also no CGT which makes things easier.

I know you weren't a huge fan of them for your own personal situation, but they do make sense for a saver starting early going in for the long haul, especially someone with under R2500 a month to invest.

Managing 20% p.a. for over 10 years is outstanding. I dream of returns like that!