Author Topic: My retirement blog. (Read 420259 times)

Bread · « **Reply #195 on:** May 31, 2016, 08:48:47 pm »

Hello all.

I spent all in all 11 days in hospital in February/March. Was treated for a stomach bug and a 20 min op. Came to just under R80k fully covered by Discovery. Monthly premium for my wife and I is about R2600.

Orca · « **Reply #196 on:** May 31, 2016, 09:21:28 pm »

Welcome back Bread. I'm sure jaDEB will be happy and I will stop shouting at you about your tax complications.

Bread · « **Reply #197 on:** May 31, 2016, 09:34:21 pm »

hahaha..........finally got my tax sorted out, although I'm still waiting to hear if I must pay in or not. Brian Smith of Dee International did it for me. Think he's in Fish Hoek.

jaDEB · « **Reply #198 on:** June 01, 2016, 07:32:10 am »

Hey Bread

, nice to see you here. How is the investing going...

Bread · « **Reply #199 on:** June 01, 2016, 09:13:47 am »

Hey jaDEB

I've entered this here Investor Challenge so I should be top of the log soon

I want to buy SAB this morning, especially seeing how it spiked when the news hit the wires. But then it dropped more going into the close so I'll have to watch it closely. Fundamentally I should buy it today but not technically.

I see you're much more active on here.

Orca · « **Reply #200 on:** June 06, 2016, 09:45:32 pm »

As I was saying. The Portuguese coastal area is divided into 3. The Green coast in the north where we live and is named this due to the greenery.

Much rain here but the 2 go together.

The Gold coast is the middle and the center is Lisbon. Not as green but it has acres of olive groves as far as you can see.
Interestingly, the people here go olive oil tasting as we did with wines in the Cape.

Then the Silver coast at the bottom. Silver due to the whiteness of the soil and silvery, waxy plant leaves perhaps. Hot and dry due to the proximity of northern Africa that blows it's weather over it.

The scenery inland differs vastly from the coastal areas and becomes more green and hilly with picturesque lakes and forests.
Now that the geography lesson is over, I will continue with our trip to the Algarve next.

Orca · « **Reply #201 on:** June 06, 2016, 10:28:42 pm »

So off we went. Made no bookings or plans on where to stop over and did what we did when we were young. No... not that!
Shoved my toothbrush in my back pocket and grabbed my wife's 2 suitcases and and headed to the train station.
The inter city trains travel at 200 km per hour so in no time we were in Lisbon. Got off and went to the nearest hotel but it was too expensive. Then the next and the next. All too expensive and I huffed and puffed down the cobble streets with the 2 suitcases in the heat while my wife was shouting obscenities about exchange rates behind me.

We eventually settled for a 3 star in the old city center at a good price. Clean and all the staff spoke perfect English. What a change from the north where hardly anyone can even say "Hello" in English.
Had a good time in the outside street pub. Beer is cheaper than Coke here.

Halfway to our destination.

Orca · « **Reply #202 on:** June 07, 2016, 11:48:24 pm »

So off we went the next morning. Back to the station. Faro in the Algarve.
As we traveled the landscape got flatter and drier with nothing really to post about.
Once in Faro we were disappointed as it is the heart of the Algarve. Much like the city of Benidorm in the south of Spain that is a Brit enclave where Spanish go to look at the Brits with their fat sunburned red bodies and their t-shirts over their bare shoulders.

In Faro, you actually have to catch a boat to get to the sea. The very wide lagoon runs parallel with the coast and right across the city. Not impressed.

The next day we decided to take a bus along the coast to Lagos rather than the inland train.
What a good choice. Most of the coast has very high cliffs but the small beaches are exquisite and the most beautiful I have seen.

We had to stop over on occasion and stay overnight. The beaches are stunning and so were the golden tanned girls. Some even topless and teeny bikini bottoms. I was so angry at this. Not at the girls but because of my age and I had a wife in tow.

This is the place to be if you are young and do not care about back problems when you are older.

Bread · « **Reply #203 on:** June 08, 2016, 11:15:19 am »

bwaaaaahahahahaha..........I can just imagine you huffing and puffing with your wife's suitcases in each hand. You're lucky she didn't have more! And I reckon now would be a good time to check out those bikinis while I'm still 50 years young.....before the back problems start

Orca · « **Reply #204 on:** June 08, 2016, 03:27:06 pm »

Quote from: Bread on June 08, 2016, 11:15:19 am

bwaaaaahahahahaha..........I can just imagine you huffing and puffing with your wife's suitcases in each hand. You're lucky she didn't have more! And I reckon now would be a good time to check out those bikinis while I'm still 50 years young.....before the back problems start

If you were younger, I'm sure you will develop back problems here.

Now that I'm settled in both my location and portfolio, I can re assess my financial position.
The experts say that if you can live off 3% of your investments pa, your money will last forever.
This is not always the case as it is not with me. I live on 6% of my investments pa and my capital has been growing.
About 60% of my living costs are covered by dividends. I do not pay withholding tax on foreign dividends within DIVTRX nor do I pay any income tax or CGT anywhere.
This means that my investments must grow by 2,6% pa for the capital to remain flat. Not un achievable and I can weather a few flat years or a major correction.
What is a bit of a concern is the EUR/ZAR as every time the ZAR moves by a certain percentage, I have to factor it into gains/losses of my portfolio.

Patrick · « **Reply #205 on:** June 08, 2016, 03:50:01 pm »

According to the biggest study ever taken (Trinity study):
3% is so close to a sure thing you can't tell the difference.
4% works in 96% of cases for a 30 years retirement

Not only does it work, in half of those cases, someone who retired and drew 4% for 30 years ends up three times as wealthy as they were when they began. And guess what, those numbers are on a 50% stock, 50% bond ratio, you'll be even wealthier if you go 100% stock, in most cases...

You can basically spend growth minus inflation forever, so if SA grows at 12% with inflation at 6% then a 6% drawdown is fine.

The big variable I see as you correctly mentioned is the Eur/Zar exchange.

If you feel like a really detailed look, here's the best piece of writing I've found on the 4% rule: http://www.gocurrycracker.com/what-is-your-retirement-number-the-4-rule/

And here's a good read if you want confirmation that 100% stock is the way to go: http://www.gocurrycracker.com/path-100-equities/

Sounds like you're having a fantastic time Orca, I'm rather jealous of all your adventures, but mine are coming!

stealthywealth.co.za · « **Reply #206 on:** June 08, 2016, 05:18:46 pm »

I am a big fan of the 4% rule - did an investigation in a South African context here- http://www.stealthywealth.co.za/2016/06/what-is-4-rule-for-retirement.html

In most cases not only can you drawdown forever, but your capital actually grows in retirement.

gcr · « **Reply #207 on:** June 08, 2016, 10:37:35 pm »

I don't know that I concur with the writing around the 4% rule, as it assumes that you have your retirement funds in a single pot and is really skewed towards retirement annuities. When you retire the earliest age that you can access your RA is 55 but if you don't retire at this age you can extend your RA to age 70 (currently). However if you have a reasonable pension, an RA and investments (bank investments, mutual funds and shares) then the 4% rule is not valid.
The reality is you need to look at your worldly wealth and then structure you draw downs accordingly, but, this situation doesn't just occur just before retirement it happens decades before you even reach retirement. When I retired at 58 a year before I retired my employer called me in and started discussing retirement options with me, I terminated the discussion because I had already planned my retirement some 5 years before actually taking up the offer of early retirement.
So each case is unique and it has to be strategised on an individual basis - to me there are 3/4 pillars that need to be addressed over your working life:- 1) have a pension fund 2) have an RA (new order not the crappy old order RA's) 3) have short term investments 32 days/FD's etc 4) build an investment portfolio
With this range of differing investments the 4% rule does not apply - your pension is your base monthly income and the others augment your pension giving you the flexibility to buy capital items from time to time.
I am a firm believer in ensuring that you have a good pension in place the others are what I would call top up investments which will look after you financially in the future 20/30 years down the line.
To my mind if you don't have a pension then the question arises what were you thinking in your twenties by ignoring putting in place a pension.
Those persons who don't have pensions and only have a lump sum on which they hope to sustain themselves then maybe 4% could work but it would be preferably to draw down less in the good times and then revert to 4% in the difficult times so that I the good times it boost the capital, thus allowing you to increase you monthly Rand drawing by CPI.
Personally I have all 4 pillars in place and the one investment I have a problem with is my Living Annuity as I am compelled by law to make a 2.5% annual draw down (which I would prefer not to make any draw down), as these funds I have assigned for use later in my life i.e. once I get to 80. Also I look at the other 3 pillars outside of my pension as a compensation in the event that I die that these 3 pillars more than compensate my wife for her reduced pension.
So in the final analysis its pretty much everybody for themselves but based on their unique circumstances

This is my opinion and views and it works for me - a message I have impressed on my kids

dividendtycoon · « **Reply #208 on:** June 09, 2016, 08:40:59 am »

I really enjoy reading Orca's blog, please keep posting about life in Portugal.

Quote from: gcr on June 08, 2016, 10:37:35 pm

I don't know that I concur with the writing around the 4% rule, as it assumes that you have your retirement funds in a single pot and is really skewed towards retirement annuities. When you retire the earliest age that you can access your RA is 55 but if you don't retire at this age you can extend your RA to age 70 (currently). However if you have a reasonable pension, an RA and investments (bank investments, mutual funds and shares) then the 4% rule is not valid.
The reality is you need to look at your worldly wealth and then structure you draw downs accordingly, but, this situation doesn't just occur just before retirement it happens decades before you even reach retirement. When I retired at 58 a year before I retired my employer called me in and started discussing retirement options with me, I terminated the discussion because I had already planned my retirement some 5 years before actually taking up the offer of early retirement.
So each case is unique and it has to be strategised on an individual basis - to me there are 3/4 pillars that need to be addressed over your working life:- 1) have a pension fund 2) have an RA (new order not the crappy old order RA's) 3) have short term investments 32 days/FD's etc 4) build an investment portfolio
With this range of differing investments the 4% rule does not apply - your pension is your base monthly income and the others augment your pension giving you the flexibility to buy capital items from time to time.
I am a firm believer in ensuring that you have a good pension in place the others are what I would call top up investments which will look after you financially in the future 20/30 years down the line.
To my mind if you don't have a pension then the question arises what were you thinking in your twenties by ignoring putting in place a pension.
Those persons who don't have pensions and only have a lump sum on which they hope to sustain themselves then maybe 4% could work but it would be preferably to draw down less in the good times and then revert to 4% in the difficult times so that I the good times it boost the capital, thus allowing you to increase you monthly Rand drawing by CPI.
Personally I have all 4 pillars in place and the one investment I have a problem with is my Living Annuity as I am compelled by law to make a 2.5% annual draw down (which I would prefer not to make any draw down), as these funds I have assigned for use later in my life i.e. once I get to 80. Also I look at the other 3 pillars outside of my pension as a compensation in the event that I die that these 3 pillars more than compensate my wife for her reduced pension.
So in the final analysis its pretty much everybody for themselves but based on their unique circumstances

This is my opinion and views and it works for me - a message I have impressed on my kids

I think all the above is very good advice. It has obviously worked well for gcr and most people would probably be best advised to follow it. Personally I have taken a different path, where 99% of my wealth is in listed equities. I have shunned pension funds, RA's (except a small one I stopped contributing to 10 years ago as there was no penalty) and unit trusts, because I hate paying the fees that all these funds cost. With my equity portfolio my 'management fees' are almost zero. I am close to being able to live off the dividend income now so by retirement it should be more than enough. I do think that I have reached this stage a lot quicker due to the fact that my fund has not been eroded by 'management fees' and has as a consequence compounded more quickly.

My strategy is higher risk, probably reckless, and I do have a more risky portfolio than average, but I just wanted to present an alternative scenario, even if I believe most people would be much better off following gcr's advice.

stealthywealth.co.za · « **Reply #209 on:** June 09, 2016, 09:41:51 am »

An excellent holistic view by gcr, you seem to be on top of things!

Like dividendtycoon I also avoid RA's due to costs and not being in control of where your money goes.

My other problem is that I am still ~15 years away from my early retirement and a lot can change with regards to tax/lump sum payouts/converting to annuities etc. treatment of pension funds. So I am not paying too much attention to it at the moment. But will need to start looking into how this is going to affect things closer to the time.

It is very interesting to see how everyone has differing strategies from Orca using a 6% drawdown and iimigrate to Portugal approach, to gcr's 4 pillars, to dividendtycoon's dividend income approach - and all have had success! I think the important thing is to have a plan/strategy and then stick to it. Well done gentlemen (or possibly ladies - can never be sure with the internet

.... )

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Author Topic: My retirement blog. (Read 420259 times)

Bread

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Orca

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Bread

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jaDEB

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Bread

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Orca

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Orca

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Orca

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Bread

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Orca

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Patrick

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stealthywealth.co.za

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gcr

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dividendtycoon

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stealthywealth.co.za

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