The Association of Superannuation Funds of Australia maintains a benchmark called the AFSA Retirement Standard, which outlines the expenses required to maintain a ‘comfortable’ or ‘modest’ lifestyle in retirement.
| Comfortable Lifestyle | Modest Lifestyle | Age Pension | |
|---|---|---|---|
| Couple (Annual) | $62,435 | $40,719 | $31,995 |
| Home Maintenance | Can afford renovations to home over 20 years | No budget for improvements, but can afford repairs. | No budget for home maintenance |
| Heating/Cooling | Can run air conditioning and heater with no worries. | Limited use, need to watch costs. | Cannot afford heating and cooling. |
| Dining & Eating Out | Regular dining at nice restaurants, wide range of food. | Takeout and occasional restaurant dining. | Cheap takeaway only. |
| Holidays | Regular domestic and occasional international trips. | Occasional domestic trips. | Day trips within local area. |
| Health Insurance | Premium private health insurance. | Basic private health insurance. | No private health insurance. |
| Cars & Transport | Comfortably own a mid-range vehicle. | Own a cheaper, but still decent car. | Public transport, or own a vehicle but struggle to afford repairs. |
| Lesiure activities | Regularly take part in a range of leisure activites. | Infrequent leisure activities, such as the cinema. | Only low-cost or free leisure activities. |
Investment strategies that revolve around retirement are generally known as fixed horizon strategies, because the time horizon is locked in and the investments must mature and be fully realised by that time.
If you know that you want to retire in, say, twenty years, and you know exactly how much you’ll need to fund that retirement, then you have a specific window of opportunity to get from where you are now to your retirement goal.
The types of investments that you’ll be investing in will also change as you get closer and closer to your chosen retirement age. When you’re just starting to invest for retirement, you don’t really care about any immediate benefits. And you can be more tolerant of risk, because you’ll have decades to make up for a bad investment.
But as your retirement age gets closer, that changes, and you’ll become more conservative. If your time horizon is only five years out, that may not be enough time to recover from a risky investment that goes wrong.
We have two types of payment options for our investors, and both of them can be used to assist your retirement strategy, depending on how close you are to retirement.
Our End Payment option is excellent for investors who aren’t close to retirement. It offers the highest performance, and by consistently reinvesting and taking advantage of compounding growth, can grow an initial investment of $100,000 to over $1 million in twenty years.
Read below to see how our model can generate you a 14% return on your money, every year.
Let’s use an example to better showcase how our investment models can serve to fund your retirement.
Let’s say you are thirty years out from retirement, and that you have $100,000 to invest. You decide to invest that capital into one of our property development projects which is offering a 30% return at the end of a two year investment term.
At this point, you’ve received a total return of $69,000 from an initial $100,000 investment in four years.
So your ROI looks like this:
So you have a total ROI of 69%. If we want to annualize that result, we can use this standard formula where n represents the number of years invested:
Which shows that so far your annualized investment performance is 14% per annum.
But the longer you invest, the more significant the effects of compounding will be. So let’s keep going. You invest another three times bringing the total term to ten years.
| Years Invested | Amount Invested | Return | New Total |
|---|---|---|---|
| 0 | $100,000.00 | $30,000.00 | $130,000.00 |
| 2 | $130,000.00 | $39,000.00 | $169,000.00 |
| 4 | $169,000.00 | $50,700.00 | $219,700.00 |
| 6 | $219,700.00 | $65,910.00 | $285,610.00 |
| 8 | $285,610.00 | $85,683.00 | $371,293.00 |
Which brings your ROI to a whopping 271%!
But let’s repeat the annualization equation, to see what the annual performance is:
Still 14%, which shows that this strategy doesn’t lose effectiveness over time.
So now let’s see what happens if you invest another ten years, for a total of twenty years.
| Years Invested | Amount Invested | Return | New Total |
|---|---|---|---|
| 10 | $371,293.00 | $111,387.90 | $482,680.90 |
| 12 | $482,680.90 | $144,804.27 | $627,485.17 |
| 14 | $627,485.17 | $188,245.55 | $815,730.72 |
| 16 | $815,730.72 | $244,719.22 | $1,060,449.94 |
| 18 | $1,060,449.94 | $318,134.98 | $1,378,584.92 |
After twenty years, your total ROI would be 1,278% from your initial investment of $100,000, leaving you with $1,378,584, at a consistent 14% per annum throughout the entire twenty year term.
With $1,378,584 in your retirement account, you can fund a ‘comfortable’ retirement for 22 years!
But you still have 10/30 years to go until retirement—what do you do for those last ten years?
Switch to our passive income model, which pays a distribution of 1% per month!
Let’s say you put the full $1,378,584 into a passive income investment.
You’d be getting $13,785 in income per month, which is $165,420 per year in passive income—more than enough to indefinitely fund a comfortable retirement!
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