Author Topic: Noobie Lurker  (Read 2129 times)

RayRay

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Noobie Lurker
« on: January 06, 2017, 12:40:49 pm »
Hi there,

I've been lurking on this site for some time, after being introduced to the wonderful world of investing through Patrick's blogs.

Started out with ETF's in my TFSA mid 2016, and looking to grow from there.

I'm 27 YO, and my goal is to retire within the next 15-20 years.

As the title reads, I'm quite a noob; so please excuse my lack of knowledge from time to time.

Cheers,
Rayner

gcr

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Re: Noobie Lurker
« Reply #1 on: January 06, 2017, 03:19:26 pm »
Welcome to the site.
I read on one of the web sites this a.m. that you can double your wealth in 8 years if you achieve a 10% return on your investments; and, if you get a 15% return on your investments it would double in 5 years. 2016 has been a volatile year so achieving these types of return may prove somewhat difficult to achieve, but, never stop trying.
Given the time frame within which you wish to retire you would probably need quite a large sum of money to invest to achieve a reasonable nest egg - i.e. wealth which is there to supplement your pension, as CPI and other charges start eroding your pension.
Maybe you need to look at is a pension that will give you a minimum of 70 - 75% of your last earned salary, and that you are in a position where you don't need to commute any portion of that pension on retirement. Also if working for a boss check out the rules of the pension fund - will you incur any penalties to your pension fund if you retire ahead of a given age - some companies impose a retirement age of anything between 55 and 63 - so be aware of the requirements so that you don't suffer penalties. Also by commuting part of your pension at retirement date all future increases awarded by your pension will  (my Dad worked for the government of old and his pension increase annually was basically 1.0% below CPI - not a healthy position to be in) be based on the residual pension and by the time you get to your late 60's you suddenly realize that you don't have enough funds to sustain yourselves as you are still part and parcel of escalating costs for medical, medical aid contributions, tax, municipal rates and taxes (only get some relieve after age 70) and basic cost of living.
Also be aware that banks are loathe to lend pensioners money because their longevity in indeterminable and you may well have to take very short term loans to meet household needs and maybe the replacement of a car.

I retired early without penalties and live very comfortable on my pension, my investment portfolio has been strengthened through reasonably astute investments (plus some disasters) so I don't want to pop your bubble of dreams.
Do yourself a favour put yourself in a retired position at say 70 - then envisage how you want to live (forecasted salary at that stage of your life) and then work backwards, and then challenge your pension fund (presuming you do belong to a pension fund) to tell you how much you would need to set aside annually/monthly to meet that particular target. If you see that there is gong to be a gap, then that is where your investment strategy comes in to play to fill that gap

Hope this help in not only looking forwards but also backwards so that you can run your journey with your eyes wide open. I haven't mentioned it but I am extremely prejudiced against RA's so do your homework especially around fees and fees for extending the time horizon of the RA
Good luck       
Not everything that counts, can be counted, and, not everything that can be counted counts - Albert Einstein

Patrick

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Re: Noobie Lurker
« Reply #2 on: January 06, 2017, 05:16:26 pm »
I read on one of the web sites this a.m. that you can double your wealth in 8 years if you achieve a 10% return on your investments; and, if you get a 15% return on your investments it would double in 5 years.     
There's a simple rule of thumb that's actually remarkably accurate for working these out in your head, it's called the rule of 72. All you need to do is divide 72 by the percentage and you get the time it would take to double, so for 10% it's 7.2 years, and for 15% it's 4.8 years. 72 has a lot of numbers which divide perfectly (2, 3, 4, 6, 8, 9 and 12) making it really easy to use.

RayRay

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Re: Noobie Lurker
« Reply #3 on: January 10, 2017, 11:58:51 am »
Thx for the info gcr and Patrick!