While working I had spent years studying how to invest in property and shares. I had also had mixed results trading with small amounts of money. When I retired I spent a further 6 months intensively studying trading psychology, great traders, and different trading strategies. This gave me the confidence to fund my trading accounts, with seed money, to try out some ideas.
In the newly funded trading accounts I tried my own strategies, and those I found while studying. I gave the strategies plenty of time to show signs of success or failure. The income generating strategy showed some promise. It may generated enough income to retire comfortably if I had $250,000 – $500,000 in trading funds. There was a downside, the stress from a “market correction” probably would have killed me. My threshold for stress was pretty high, if I could affect the outcome. Trading was a very stressful way to make money, with the potential for huge losses. The illusion of affecting the outcome had ended many trading accounts, bankrupting the owner or landing then in jail. The risk was just to high.
I had always liked property as an investment, but when I retired my focus was on stable income. Our rental property was pretty stable, there were yearly maintenance costs and occasional tenant turnover, but prices of similar properties had increased. At this rate I expected to sell the property in my 60s to top up our retirement savings. Using rental properties to fund our daily spending would be less stressful than trading, but would require most of the $1,000,000 to purchase something that generated enough rental income.
My property investment experience involved buying properties with savings and borrowing the rest. The idea was to let the rent pay down the borrowed amount, then collect the rent as income. That was a great strategy if I had 10-20 years, but I’d retired early and needed cash in my pocket every month. Rents were stable, or dropping, because renters had more choice in the current market. Mortgage rates were at historic lows and a fizzling construction boom meant new properties were being completed, or would be soon. The recent property boom had inflated property prices, so the returns were lower than interest earned through bank savings accounts. There were development opportunities that could have worked, but I was becoming very conservative with our investments.
In retirement we were relying on your savings to work for us. Our cash was either earning money, or its being cannibalized to fund our lifestyle. Given enough time and effort we probably would have found a good investment. Instead we were spending our time looking for the highest earning bank accounts, and jumping through hoops to keep earning bonus interest.
The bank interest strategy wasn’t going to work forever, but it didn’t need to. It was a money machine that could be used when interest rates were rising. When rates started to fall our money needed to find another job. This was our present situation, and we didn’t know where our money would go next. We had roughly 6 months to figure it out before the interest rates fell again.
Joe retired in his mid-thirties to spend more time with his young family. He started this blog to share his story, help others plan their path to retirement, and enjoy retired life.
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