Author Topic: Case Study - Proper Investment for 7 Year Retirement  (Read 1332 times)

coryjj000

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Case Study - Proper Investment for 7 Year Retirement
« on: March 08, 2017, 10:23:34 AM »
Originally sent to MMM...

Yo yo yo MMM!

I know you're busy and you probably get a ton of emails like this,but I was wondering if you could provide me with some advice. I found your blog a few months back and have been voraciously consuming each post starting at the beginning.

Without throwing a fucking book's worth of additional info at you, I have a question... Being that I plan to "retire" in 7 years, how should I allocate my investment funds? I want to take advantage of the tax shelter of an IRA but don't want to have too much money wrapped up in it that will be more than enough to get me from 59 1/2 to my death. I want the ability to sell off/close my brokerage in 7 years and live off of my investments from there on out should I choose to do so. I don't intend to close shop, but you never know what will happen to the real estate industry as we know it in the years to come.

 I'm considering using Betterment for the traditional investment side of things where I want to get $650,000 invested that will grow at 3% or more per year after inflation and acquire *7 more rental properties (I currently own 4 but have 1 on the market for sale) for a total of 10 that gross $400+/month in income each.

Some stats that may help (don't punch me in the face for having so little in savings, not seeing the light sooner and having been a total Consumer Sucka previously):

Married w/ 2 stepdaughters (12 & 16 y/o)

I'm 32 and own/operate a real estate brokerage where I gross $250,000-$300,000 per year pre-tax (after all business expenses are paid)

I plan to save $10,600 per month from here on out. (We used to spend too much on bullshit, but I know better now)

Minimum monthly expenses/returns I want after 7 years of investing: $5500/month - $66,000/year (Less needed/wanted after mortgage is paid off)

$39,000 in an IRA - Vanguard Target Date Fund

$40,000 in reserves for personal and rental property expenses

Have no debt other than mortgage of $2710 and credit cards (one business, one personal - used for points and protection) are paid in full each month.

Monthly expenses average $7900/month (mortgage, bills, short-term savings for vacations, birthdays, Christmas, etc.)

*My approach is to gain a minimum of $20,000 in equity with each property I acquire. Minimum cash on cash return of 15% and minimum total ROI of 25%, roughly.


Thanks in advance for any insight you can provide. I really admire what you have done. You've made me look at everything differently.

zolotiyeruki

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Re: Case Study - Proper Investment for 7 Year Retirement
« Reply #1 on: March 10, 2017, 10:48:38 PM »
I'm not sure exactly what you're looking for--do you have any specific questions about your current plan?

2Birds1Stone

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Re: Case Study - Proper Investment for 7 Year Retirement
« Reply #2 on: March 11, 2017, 04:37:24 AM »
OP, keep reading.

There are many ways to tap IRA's before age 59 (Roth Ladders)

If you plan to FIRE in 7 years, I would suggest a simple 3 fund portfolio.

Max out tax deferred/advantaged space first.

Look into what your options are as a self employed individual.

Toss the rest into a taxable brokerage account.

Read up on tax efficient investment placement (ie bonds in tax deferred, stocks w/ qualified dividends in taxable, etc)

"A small house can hold as much happiness as a big one." - Fortune Cookie

29 Months till FI - Stop by, or stay a while.....
https://forum.mrmoneymustache.com/journals/fire-by-thirty-five-chronicles-36-months-till-sabbatical!/

human

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Re: Case Study - Proper Investment for 7 Year Retirement
« Reply #3 on: March 11, 2017, 05:01:45 AM »
If you are saving over 100k a year for the next 7 years you will be able to retire. Is this a joke or what? That would most likely be close to a mil unless markets tank. Keep expenses below 40k and voila you are FI.

waltworks

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Re: Case Study - Proper Investment for 7 Year Retirement
« Reply #4 on: March 11, 2017, 09:06:42 PM »
Go post a case study. Your spending is completely out of control, but luckily you have income to match. If your luck changes...

Get that spending down (a LOT), and you're good. Don't get it down, no go. Pretty simple. If you want to spend $66k in retirement, you need about $1.6 million invested. Since you have $40k right now and are planning to put away ~$100k/year going forward, your 7 years is quite a stretch, and that's assuming you can hit your savings goal.

Again, post a case study. Track your expenses down to the penny. That will give you the knowledge you need to make it work.

-W