Self Funded Grey Nomads Feeling The Pinch,

Hi Daza.
I invested some funds with a major bank super fund in early September & hoped to be a self funded retiree in a few years.Read in the Sydney Telegraph yesterday that the fund was one of the worst performers. Not game to check up what I have invested with them now.
At leat I still have my family, house & camper LOL.
Cheers.
Vince

Hi Daza
Well I retire in 9 and half days (Friday week) I have enough super and savings baring mishaps to live on $50,000 for the next 3 years .Hopefully by then the Stock market will rise the 57% which i am DOWN today and that should give me a comfortable living. I do feel for the other Self funded people but to sell your house furniture ect just to travel has never been an option for me you need a base especialy when you get to over the caravan / traveling age because you can never buy into the market at the level you sold. To have lost a large propostion of their funds indictes to me that they were chasing large unsecured interest rates for bigger eanings sometimes the Banks secure meager rates are best and that was my plan to convert the stock holding into Term deposits but the crash got me . But had this working I'm still off

Sorry if this sounds harsh, but it is harsh reality.

People who chase the fast quid and ever increasing large returns year after year, suffer when the financial market collapses. It is nothing new and happens cyclically.

My parents are self funded retirees and invested conservatively in commercail property. It guarantees them an income which increases modestly each year, at or just above the inflation rate. To make it failsafe, they invested in an area that should their lessees go bust, they have the expertise to step back in and run the business.

Investing is a gamble, the bigger the return, the bigger the risk.

Jim.

I am sure others will say the same, but in reality if people have spread their investments and not sold anything in the down market dividends have so far kept up. That will change but hopefully so will the equity market in the next three to four years, may be more though. It is a good time to buy.

Newspaper articles have highlighted that there are heaps of cars being sold on, all sorts of exotica which I guess shows that lots of people have lived on the edge financially. It is a severe market correction and one wonders where it will ultimately reach. Further I guess if our leadership can't come to grips with it.

I have been watching the tradingpost and ebay looking to buy a second hand very good brand camper trailer fror $35K. I have been looking for 18 months and I was thinking that recently there would be alot available due to the financial crisis, but this has not been the case so far. I rang the manufacturers to buy a new one thinking they would have some specials and the answer was that there is a 4 month wait as orders have flooded in lately! Go figure. I was told that instead of a 60K caravan or overseas holiday people still travelling Australia, and spending less on a Camper Trailer!

Cheers

D

Bit the same.

Hoping to cut back to maybe 70% and then 50% work over the next 10 years.

Luckily still have the house.
Any super or shares have dropped as we all know.

Talking to some retired friends like the ones you have bumped into and they are lucky enough to be on fixed incomes,and were complaining about it. Suggested to them that they may be well off compared to some, and they gave me a dirty look.

Talking to a few clients, they have empty order books after February next year. So I reckon I will be on half income anyway for a few months next year if I am lucky.
Just as it was in 1975, 1979, 1986, 1996, 2000. It is all a cycle.
Build up some fat in the good years for the lean years.

Well in contrast we couldnt be happier.
We have sold an expensive house on the day the market crashed for nearly what we wanted.
As my wife has her own super fund ( All in term deposit) and we are of suitable age she changed it to an allocated pension.
Then we deposited most of the house proceeds into this
We pay no tax at all now on this and can use it later to buy another smaller house and still have enough left over to survive on.

We bought a s/hand Van and Cruiser 2 years ago so we are off next month with no worries ( we hope)
Our friends who have invested all of their money in shares are as above, sort of on the bones of their a$$e The bank has even frozen some of their cash.
We tried to tell them to hold some back but they didnt and now regret it big time.
I guess it comes down to what u want to do but we have control of our money and maybe it didnt earn what some shares DID but we still have it plus the interest.

Daza

I hope Kevin 07 comes through with his pensioner bonus this week. I am sceptical though as I have missed out a couple of times when they were giving bonusses away. The missus got a $500 one this year but I was told I was not the right age...lol. Something to do on which day my birthday fell.

I have friends SFR on the road for 15 years. They took a hard hit in the '87 stockmarket crash and then again somewhere in the '90s. They were forced to do fruit picking when deep in the 60's to make ends meet. But they had their house money invested in secure deposits and when the time came to get off the road they were able to buy a house again.

We were on the road for 5 years and bought a cheap house here in SA at the end of it. I would never sell the house even though the neighbours drive me to distraction :-). The good thing is one can lock it up and drive away for months on end and then return for somewhere to rest again! It is in a small town and relatively safe from intruders.

I feel for those with their money in Super Funds as they have no choice but to ride it out. At least on a pesnion you know your limits on how far and how well you can spend.


Cheers

I've noticed quite a number of people on the forum saying that they are selling up and going on the road for good. Some would have done it anyway but some are doing it because of the economic times. Are these people the modern day swaggies?I can understand those who virtually have no choice but selling your home (that you own) and investing is a huge gamble at any time. When you are fit and healthy and full of enthusiasm after working all your life it must be tempting for some. But no one stays fit and healthy forever and I can imagine that some folk just get fed up and want to go home for a while every now and then even though they love the life on the road.We are a small, close and loving family but having to depend on my daughter and son-in-law for a roof over our heads because of our foolhardiness I would find shameful.

The issue will only get worse as the official cash rate is cut the deposit rate being offered will also fall putting more pressure on those SFR's depending on the cash rate to live off.

With Kevin spending the surplus as quick as he can to create a short term market lift there will be precious little left in the bank to give bonus handouts to pensioners next year.

It's not just people who have chased big returns who are hit hard. The only people who have not had big (paper) losses are those with everything in cash. Even some of those have had fund redemptions frozen. Even traditionally conservative investments have been hit hard.

I've been a 'self funded retiree' for six years now, though I'm still 12 months away from being able to tap into the super fund. I manage my own super fund and about 18 months ago, I converted enough of the super fund to live on for 3 years to cash. I was a bit nervous about the market and particularly the US economy. I figured if there was a downturn, it would be handy to be able to live for three years off the super fund without having to sell any shares.

Turns out to have been a good move. But perhaps not good enough. I wouldn't be surprised if it is at least 6 and possibly 10 years before the world stock markets return to where they were 12 months ago.

It will be interesting to see how the northern tourist season goes next winter. Some areas were a bit down last year due to fuel prices. At least that won't be such an issue in the short term.

Some self funded retirees aren't feeling the pinch.
They're too numb to feel much at all !

Then I suppose theres the likes of us.

Small mortgage on a modest house,
Average income, sometimes below,
No savings to speak of,
Super...most people would carry more in their wallet,
10 yrs away from the 'final' knock-off,

Apart from costs of everything rising, the national and global financial crisis has not really affected us in any major way.
Having said this, I do find myself worring more and more about retirement and the thought of living on the pension.

Cheers....Lionel.

Hi all , i have being talking to my father in law about this all over the last few weeks! I asked him about selling up and living in a mobile home for the rest of your retirement years till you need to go into a home, he suggested to me that

1: you keep your home and rent it out

2: if you can buy a couple more homes and rent them out( 3 is good but 4 would be better, i.e. $250 a week* 4 = $1000

3:live off half and bank the other half in a high intrest account

4: live well within your means ie lots of fresh fruit and vegies, cheap meat which you can get lots of good stuff from people that grown there own and sell it on the side of road.

5: do most of the maintence on your vehicles yourself, if you don't know how then buy a service manual and tools or get someone to show you how its done, i.e. changing oil, filters the basic's, grease gun. $300 for a service these days if not more for a $50 bottle of oil and good filter some time to spare and run a spanner over a vehicle.

shop smart with parts & appliances etc etc.

6: go agreed value with insurance pay yearly on everything( you should have the money available).

7: emergency fund $10000 would be a good starting figure! In a high intrest account as well!

Disclaimer: my father in law was an old bank manager, me i'm nothing but a first year accountacy student (was) but have asked a lot of questions and advice and read alot from this site aswell.

I only am offering the views i see and the worries i hear. This plan will be my plan when i come to retyirement age which is another 31 years away and i am looking forward to it, bigtime.( body falling apart).

i am hoping to get into a council job soon and will have a decent wage thats fixed which will allow me to save up the purchase price of a house and pay cash for it ( i have persoal loans which sux and i have learnt my lesson " you don't have cash don't buy it")then hopefully every 6-8 years after that i will be able to buy a second house and a third maybe a fourth hoperfully then it will be close to retirement and won't have to work unless the dreaded cancer gets me!

the thing being with the houses you can get somebody to rent and get a decent income from that which you can pour into your next property savings account to buy your third and same for the fourth. so if you are on a wage of 50000 take home and your wife earns the equivilent then if you can live off the one wage for 6- 8 years then you would have $300 000 - $400 000 for another house, now if you sacrifice that same wage and the rental income combined will give $372 000 - $496 000 plus interest less capital gains, so if youkeep your rental income low, less tax you pay, more dollars to have!

so after 12 years of scrimping and saving you have your $50 000 income plus rental income less tax, so per year would be $50 000 + $24 000 + intrest accrued - tax =$ 74 000 + intreest acrrued - tax!
which after 12 years assuming that you bought brand new cars when you bought your 1st house, should be due replacement, which will lessen the tax hopefully ( if you have a smart accountant).

after 24 years you should have a rental income with four houses based on $250 / week= $1000 or $ 52000/ year plus your $50 000 yearly income which quals $102 000/ year less your partners money less tax plus intrest accrued. now if you can start early like 21, you can retire by the age of 50 and still enjoy life on a partime basis. if you are like me then you have 7 years to pack away as much spare dollars as you can, after 24 years i have 7 left till retirement, do i buy another house or refurb all of the houses. thats the next big decision! opt for refurb as it reduces your tax loss and after you can inrease your rent to $300 / week.

so your finacial position as at the day of your retirement should be

7* $50 000= $350 000 plus intrest + rental income of three properties@ $750 / month for( $750* 3 * 84 months =$ 189 000 = $539 000 plus intrest accrued plus previous cash capital less tax less brakages and repairs = to a substancial finacial nest egg which if used correctly will keep you in modest comfort for a number of years!

these are ball park figures. provided you don't go too far overboard with the rent i.e. charge a zillion bucks for a dump and if you can get good tennants and keep the tennants happy and content you won't be without any rental income.

i hope this is correct as i am not a finacial planner or accountant!

can anyone spot and holes in it!