Certainly agree with the "old man money". I've been making full use (25k) of salary sacrifice to super for the last few years (since the start of 2009), and being in a low tax environment (both contributions and earnings) certainly helps things along. However, I'm 30 now, and under the current rules, won't be able to use this money until I turn 60. Given how frequently the rules around super get changed, I have no idea what the rules are likely to look like once I can access it (at whatever age that gets increased to). I guess long story short, I'm keen to use super for its tax breaks, but not prepared to have it as my only savings vehicle, due to the policy risk surrounding it. I'l just let it keep contributing at 25k/year for the foreseeable.
Like you, I struggle with the idea of residential real estate here. Its boomed so hard, for so long, that at best I can see it flat lining in real returns for a decade, will likely flat line in nominal terms (real term depreciation), and at worst, crash. All while being cash flow negative (in this country). Not an appetizing investment vehicle for me at the moment.
With regard to stocks, at least some real return is better than nothing! Over the time I've been investing in shares, I've put in a net total of $220k and have about $45k in returns ($726k of shares - $460k in margin loan). I figure even with this, I'm still generating $550/month in real returns, and that's been over a fairly rocky investment period. A few times that is enough for me to live off, so FI isn't that far off.
I'm trying to drive the "young man money" a bit harder by investing through a company, rather than my own name. The company tax rate is a bit of an advantage compared to my personal tax rate, so it gets a slight advantage on tax on contributions and gains, but not as good as super. To offset that, I have full autonomy on when and how it is used, and the franking credits of the income tax paid get kept, so I can defer income to later years when my marginal rate may not be as high.
That said, my best investment has far and away been a holding in a private company (which is also my employer). That's averaged about 33% annual (pre-tax) return. However, that's been a very active asset, with the return being as much sweat equity as conventional return on equity.
I'm reasonably comfortable that even with low rates of return, FI/RE by 35 is viable for me, but sure would be much easier if real returns were a bit more buoyant. I guess it all comes down to:
- Spend less
- Save more
- Minimize investment costs, including taxes
- Be patient