05-06-2019, 03:56 PM
(This post was last modified: 05-06-2019, 04:19 PM by dreamybear.)
Thanks mobo for your very comprehensive posts - didn't expect my post to spark this level of discussion. I enjoy reading the narrative but struggle at the technicalities of your calculation due to my lack of finance knowledge. Nevertheless, do allow me to share my simpler thoughts on what I guess the strategy is.
Hypothetical Example / Assumptions :
1. Fresh graduate worked for a few years, and managed to save $200k.
2. With the $200k, borrow another $400k with borrowing costs at 3%.
Total : Own capital $200k + Borrowed capital $400k = $600k
3. With total of $600k, invest primarily in counters(e.g. REITs) which yield abt 7%.
Net Yield : 7% - 3% = 4% or 0.04
4. $600k * 0.04 = $24k which is ard $2k a mth for passive retirement income.
Of course, if own capital is higher, the borrowed capital can be higher too => more mthly income.
Reference that I found (do note that I hv not used KE before & my understanding of its product may not be correct) : https://www.maybank-ke.com.sg/products-s...-facility/
If my hypothesis is somewhat close, I think to be able to come out with an idea like that is very impressive & refreshing - it is more credible than those who teach you to analyse stocks and tell you that you can be financially independent thru' investing. There wld of course be risks since it's using leverage, unexpected events like govt policy changes, etc but I think young working adults may afford to take higher risks esp if they want to F.I.R.E.. Also, I think the trainer had backtested his strategies to factor in recessions, etc.
Hypothetical Example / Assumptions :
1. Fresh graduate worked for a few years, and managed to save $200k.
2. With the $200k, borrow another $400k with borrowing costs at 3%.
Total : Own capital $200k + Borrowed capital $400k = $600k
3. With total of $600k, invest primarily in counters(e.g. REITs) which yield abt 7%.
Net Yield : 7% - 3% = 4% or 0.04
4. $600k * 0.04 = $24k which is ard $2k a mth for passive retirement income.
Of course, if own capital is higher, the borrowed capital can be higher too => more mthly income.
Reference that I found (do note that I hv not used KE before & my understanding of its product may not be correct) : https://www.maybank-ke.com.sg/products-s...-facility/
If my hypothesis is somewhat close, I think to be able to come out with an idea like that is very impressive & refreshing - it is more credible than those who teach you to analyse stocks and tell you that you can be financially independent thru' investing. There wld of course be risks since it's using leverage, unexpected events like govt policy changes, etc but I think young working adults may afford to take higher risks esp if they want to F.I.R.E.. Also, I think the trainer had backtested his strategies to factor in recessions, etc.
"Let all that you do be done in love." 1 Corinthians 16:14