Double the $1m and retire early
By investing his sale proceeds wisely, Bernard can ...
QI recently sold my unit to a developer as part of a collective sale and received a net $1,070,000. What advice or strategies would you give to further invest this money?
Would buying a few investment properties (say three over the next 12 to 18 months) and putting the remaining amount into a term deposit be a good option? Or would you look at investing in stocks or bonds? I’m still young at 34 and would like to eventually double that $1 million and set myself up for early retirement. Your recommendations would be greatly appreciated.
Bernard, you are indeed still young and with $1 million from your sale you can really set yourself up for the future.
To double that by your retirement age is a very modest goal, even with an early retirement target. Let’s call that age 55, meaning you have to double it in 21 years. You also have to allow for inflation, so let’s go with 4% as a historically realistic return above inflation. If this is achieved – and, of course, there are no guarantees here – your money would double in 18 years, so by age 52.
First, you may have employer contributions going into super, which really helps to bring forward retirement. With your $1 million, I am pretty sure that centuries of historical investment returns will prove to be true and show a term deposit to be your lowest-risk but worst investment.
So we turn to property, bonds or shares. My view is that with this great opportunity to secure your future, why not spread your risk?
Concentrating risk will give you the potentially biggest returns with the greatest risk. Spreading your risk across growth assets makes more sense to me. So what about one or even two properties and then a share portfolio? You could use low-cost ETFs to own a diversified share portfolio or a very low-cost manager such as Vanguard.