1 Million dollar, that is way too much!

[foobar]

I am living on $14k per year and according to me spreadsheets, I will need about $180k in investements to live on interest alone if I live a life of bare existence. However, I set my goal for $350k as that would allow me to accumulate savings and to travel.

$350k is way below the figures of $1M or $2M dollars I see people throw around. I can't even imagine how one could save so much money and what one would need so much money for.

Why do you need so much money? Why not live on <5k/yr like 75% of the worlds population. Why do you need 300% as much as they do:)

[firehongkong]

To the OP,
To answer the question how to save a million dollars, I bought properties (Sydney Australia). Start with saving up a deposit for one, let the home value grow, buy another when the value has gone up (pull out equity to fund the deposit on another) then rinse and repeat.

I was lucky, I had a unit (We had only just moved out of it October 2008), moved into a new PPoR home then I was made redundant less than 1 month later. I could see the reports at work, in October 2008 all the sales were going backwards thanks to the GFC.

I got paid a redundancy payout after working for the company for 6 years. The redundancy pay was equal to 7-8 months of salary when I include leave entitlements. I wisely used that as a deposit for my second investment property. (I could've blown the lot by going travelling and/or had vision correction surgery, bought a new car).... anyway, I landed a new job basically immediately (I basically had a choice of two job opportunities, one via a recruitment agency and another through an ex colleague) and this was during the GFC so I was very lucky :).

A colleague also was laid off at the same time but he took about 6 months to find a job, I know another guy who was unemployed for about 8 months and finally could only get a job paying a lot less and another guy who ended up not finding work and ended up moving interstate with this family. Another guy struggled for months to get work more recently... I guess I had skills that were still sort after and I have to say, I had enough experience but I was not old... to be honest, age discrimination is real.

I took a shortish (domestic) holiday, started the new job...

Been working ever since, left the company I soon joined in 2009 after 4 years there, did a couple of short term contracts, bought another investment property (yes, we experienced another boom).
In the meantime during those 4 years I had also sold the original IP, bought another but that new one I completely renovated (converted from 1 bedroom to 2 with a bit of planning). That conversion of that property was worth 70k in value immediately.

Anyway, my very latest IP I rent out on Airbnb and the rental returns are very strong. Its more work than a typical rental but it's worth it.

Anyway, taking into account the equity I have in Super (retirement fund), my home and my 3 IPs i'm worth over $1mill. :)
Yes, anything can happen, the values of the homes could go down but they all have strong rental returns and my PPoR has plenty of land, and plenty of spare bedrooms, it could be used for extra income generation if I wanted to, or we could knock it down and build a duplex or more.

So that's my story.... I plan to retire in 5 years but I really like my job so in 5 years possibly I could work 2 days a week. I'd also be looking to expand the property portfolio but I may buy interstate or elsewhere as I will hit land tax issues in my home state (NSW). Plus property prices here in Sydney are now so high... houses anywhere within 20km of the city centre are worth $1mill. Now is not really the time to buy in Sydney...

Hi I just came across your post. I'm looking to buy an investment property in Australia. I have Oz passport but currently live in Hong Kong. Do you think fly over and buy 2nd hand, or just go for a new project apartment?. THanks..

[BBub]

I am living on $14k per year and according to me spreadsheets, I will need about $180k in investements to live on interest alone if I live a life of bare existence. However, I set my goal for $350k as that would allow me to accumulate savings and to travel.

$350k is way below the figures of $1M or $2M dollars I see people throw around. I can't even imagine how one could save so much money and what one would need so much money for.

Why do you need so much money? Why not live on <5k/yr like 75% of the worlds population. Why do you need 300% as much as they do:)

Exactly.  Or why even use money at all?  You could move in with an indigenous tribe in a remote forest & live off the land.

Conversely, how could obtaining $1m in assets be difficult?  Global GDP is like $80 trillion per year and growing.  Seems very achievable to capture .0000000125% of that amount over the span of multiple years.

It's all about perspective.  Open up your mind & there's a whole range of possibilities.  Try not to limit yours.  I do admire you asking the original question with what seems to be genuine curiousity.

[TheAnonOne]

OP, are you married? Do you have kids?

When I was single I had spending which was pretty close to your $14k/year. Now I am married, and expenses for two of us are higher than they were for me as a single person. When we have children, they will likely increase again.

When you encounter things which seem unreasonable/unbelievable, you can either:

• Judge them
• Learn from them

But beyond feeling my favorite emotion of all — victory — I wanted to highlight those emails as the perfect reminder that instead of instantly judging someone we disagree with, why not say, “Hmm…I wonder if there’s a reason he does that. What can I learn from him?”

It seems you have unapologetically chosen the former.

Yes, I am single... A little bit surprised about your increase in spendning after your married, the household common expenses can then be shared between two persons so I would have expected it to decrease significantly.

Spending in a marriage would go up but spending PER PERSON (could) drop

[Gockie]

To the OP,
To answer the question how to save a million dollars, I bought properties (Sydney Australia). Start with saving up a deposit for one, let the home value grow, buy another when the value has gone up (pull out equity to fund the deposit on another) then rinse and repeat.

I was lucky, I had a unit (We had only just moved out of it October 2008), moved into a new PPoR home then I was made redundant less than 1 month later. I could see the reports at work, in October 2008 all the sales were going backwards thanks to the GFC.

I got paid a redundancy payout after working for the company for 6 years. The redundancy pay was equal to 7-8 months of salary when I include leave entitlements. I wisely used that as a deposit for my second investment property. (I could've blown the lot by going travelling and/or had vision correction surgery, bought a new car).... anyway, I landed a new job basically immediately (I basically had a choice of two job opportunities, one via a recruitment agency and another through an ex colleague) and this was during the GFC so I was very lucky :).

A colleague also was laid off at the same time but he took about 6 months to find a job, I know another guy who was unemployed for about 8 months and finally could only get a job paying a lot less and another guy who ended up not finding work and ended up moving interstate with this family. Another guy struggled for months to get work more recently... I guess I had skills that were still sort after and I have to say, I had enough experience but I was not old... to be honest, age discrimination is real.

I took a shortish (domestic) holiday, started the new job...

Been working ever since, left the company I soon joined in 2009 after 4 years there, did a couple of short term contracts, bought another investment property (yes, we experienced another boom).
In the meantime during those 4 years I had also sold the original IP, bought another but that new one I completely renovated (converted from 1 bedroom to 2 with a bit of planning). That conversion of that property was worth 70k in value immediately.

Anyway, my very latest IP I rent out on Airbnb and the rental returns are very strong. Its more work than a typical rental but it's worth it.

Anyway, taking into account the equity I have in Super (retirement fund), my home and my 3 IPs i'm worth over $1mill. :)
Yes, anything can happen, the values of the homes could go down but they all have strong rental returns and my PPoR has plenty of land, and plenty of spare bedrooms, it could be used for extra income generation if I wanted to, or we could knock it down and build a duplex or more.

So that's my story.... I plan to retire in 5 years but I really like my job so in 5 years possibly I could work 2 days a week. I'd also be looking to expand the property portfolio but I may buy interstate or elsewhere as I will hit land tax issues in my home state (NSW). Plus property prices here in Sydney are now so high... houses anywhere within 20km of the city centre are worth $1mill. Now is not really the time to buy in Sydney...

Hi I just came across your post. I'm looking to buy an investment property in Australia. I have Oz passport but currently live in Hong Kong. Do you think fly over and buy 2nd hand, or just go for a new project apartment?. THanks..

Hi FireHongKong,
Sorry for not replying sooner. I suggest you buy a second hand property, better value when you buy and you'll do better when trying to sell. With older properties you'll generally find smaller strata schemes (also, worth buying a freestanding house with land - you'll have more potential in the future). If there's renovation improvements to be made you'll also be able to increase the value of the property. You can either fly over or work with a buyers agent. I'm on the Somersoft forum (google it) and that's where you will find a lot of knowledgeable Australian property investors. :)
I'm happy to tell you my thoughts on where I think are the places to buy, but of course its better to hear from a variety of people, not just me! But if you have places in mind, i'm happy to hear them.

[AlexK]

[/quote]Yes, I am single... A little bit surprised about your increase in spendning after your married, the household common expenses can then be shared between two persons so I would have expected it to decrease significantly.
[/quote]

Mine went up when I got married too. Wife expects date nights, organic everything, much higher level vacation accommodations, me to wear in-style clothes, etc. It's all worth it but yeah it was a surprise to me too.

[Aussiegirl]

Hi I just came across your post. I'm looking to buy an investment property in Australia. I have Oz passport but currently live in Hong Kong. Do you think fly over and buy 2nd hand, or just go for a new project apartment?. THanks..

I agree with Gockie - buy established.   Especially if you aren't paying tax in Australia and can't utilize the depreciation expense.   Big new building generally have very high strata (think elevators, pools, concierge etc), which increases the time it takes for the property to become cash flow positive. 

When I was working overseas I bought a property using a buyers agent, sight unseen.   Still own it, never been vacant and has no quite doubled in value).   The other way to do it is to do all your research online, work out what you want, narrow down the available properties and then spend some time in the location doing the on the ground research and buying.  We recently did it this way for another property, which worked out well (so far!!).    This is probably a bit hard to do in the Sydney market given the high level of auctions and the general craziness of that market at the moment. 

Good luck!