Secrets to an Early and Wealthy Retirement - Part 4.

Your equity to debt growth ration. Your equity rate of increase, so what your portfolio is growing, is greater than the debt rate of increase, so what you're drawing out. You don't want to be drawing out more than what your portfolio's growing. They're the 3 rules.

We'll show you a FIDO how that all comes in to play. When you put your FIDO together with your property mentor, you put in your portfolio, you name all your properties, year of purchase, purchase price. We probably need to do a bit more training with property mentors but I always separate the line of credit out and in the FIDO we have to put a 1 in to calculate the debt and you have to put 50 years double, so it never doubles. You can factor it in if you've got it applied to each property but I put it in separate.

Then you've got your purchase price, years to double gets a bit distorted but I've gone 10 years on all the properties, your debt and your value. In the retirement year, if there's a shortfall we need to factor in what that short fall might be. If you're going to live on money and you've still got a shortfall in your portfolio, you need to factor that in as well.

In this example we're going financially independent in 15 years, 3% inflation rate. I always go a little bit higher on interest rates in case we got a interest rate rise. Troy did show CBA 15 years, they don't actually put that on their website anymore. They only put up the five years, so I was talking to Kevin Young before, we think CBA economists aren't really sure what's happening with interest rates long term. If you go to the CBA website, have a look at that.

The LVR 60%, you can see here, that's always been there. Always since we had FIDO, so members who start drawing on their portfolio above 60% aren't really following Kevin Young's retirement plan. If they want to live on $90,000 in 15 years, at 3% inflation, 140,000 would be required to draw down. Can I do it in 2026, drawing down 140,000 portfolio value? It's at your LVR so that as a percentage of your portfolio 39%, I can borrow 2.5 million and 2.5 million in equity and my equity is growing at 622,000.

Check -> Secrets to an Early and Wealthy Retirement - Part 5.