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By Neil Vorster   

Retire early and easily, can this be too good to be true?


Retire early

Early retirement is a dream we all want to come true.

And yes, your dream can come true, and I'll show you how.

Studies show that more than 50% of  the people interviewed between the ages of 30 and 50 express a desire to retire before they turn 60. Incidentally, if you have read this far you fall within that 50%, good thinking!

A quick Google search will return an endless supply of advisers who produce very complicated algorithms and calculators designed to boggle your mind and convince you to buy their products. All this in an effort  to stave off the inevitable 40 odd years of hard salaried work followed by the penny pinching twilight years.

In almost every case, these financial calculators are marketing tools designed to sell you a retirement annuity or convince you to build up a share portfolio. Their algorithms generally follow an approach that is dependent on a whole array of assumptions and predictions, such as;

  • the average inflation rate over the next  20-50  years
  • the interest rate for the same period
  • your projected salary increases
  • your planned annual savings
  • stock market performance
  • and of course if the calculator is American, a  reference to 401(k) pension fund

If you search really hard you will come across a philosophy called Early Retirement Extreme (ERE). ERE  is a lifestyle philosophy that combines an integration of many ideals, which sounds like a life sentence of effort in planning, ascetic living under the disguise of “simple living, self sufficiency, and not to be forgotten, prudence.  It speaks of aiming to save between 50 and 80% of your monthly income!

I am sorry to say, if my cross section of friends and acquaintances are anything to go by, ERE will have to remain a book title, an unreachable goal for most of us.

When I was in my twenties, a wise friend, Paul Fairhurst,  gave me a pearl of wisdom that I have never forgotten. It took me 15 years to act on his wisdom, and my only regret was to have waited so long.

So what is this great pearl of wisdom?

He said, the average person in South Africa spends 25% of the family’s combined income on rental or their bond repayment.  A simple extrapolation brings you to a formula for retirement.  If you therefore own 4 paid up properties in Fourways, Sandton, you can retire on the average Fourways household salary. Robert Kiyosaki calls this financial freedom: the point at which, by the application of financial wisdom, your job becomes optional.

The beauty of this simple formula is that it is so easily attainable, and is such a safe bet. It makes no requirement of  you to guess future interest rates, stock market performance or inflation rates. It relies on the simple rule that people spend a quarter of their income on rent or bond repayments. If you feel insecure with the formula (like I did), why not aim to own 6 or 8 buy to let investment properties. That way if the 25% rule remains, you will end up well-off. If the South African lifestyle becomes more conservative and people only spend as little as 15% on rental, you remain safe.

The only discipline that will be required of you is that you educate yourself in an effort to maximise your investment decisions. Once your portfolio has reached your target 6 or 8 buy to let properties, plough all your surplus rental income into repaying the bonds. By using the escalating rentals to reduce your bonds quickly, financial freedom becomes a very real option within 10 to 15  years.

By subscribing to Organic Growth, we will equip you through a series of blogs, videos and webinars how to build and manage your own portfolio of buy to let investment properties.

If you want to know how to invest, have a look at our Property Investment 101

Have you ever heard this simple retirement plan before?

Does it make sense, or simply raise additional questions?

Please feel free to leave your comments or questions below. 


About the Author Neil Vorster

Neil Vorster is a property investment coach, investment author and co-founder of Organic Growth. Aerobatics pilot and cycling nut.

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Please leave your comments and questions below
  • Great blog Neil. It is such a pity they don’t teach this at school. This is a basic mindset that our children need to have in order to plan better with their future.

    I believe that we should be financially free to pursue our purpose. Personally I am not planning to retire, but do plan on fulfilling my purpose; having an annuity income makes this possible.

    Thanks again for sharing

  • Yes and it has fortunately worked very well for me. I retired 7 years ago based on a healthy (and lucky) selection of properties and am now “free to work” when I want to. The model also extends beyond SA borders where I built a portfolio of properties which yield considerably less than in SA but where inflation plays a lesser role in the “mix”. This philosophy does not make anyone rich just fully funded which should be the whole point about retirement. With Neil’s huge expertise finding the right properties should ot be too difficult.

    • Thanks Paul…for those of you who haven’t pieced the puzzle together, I owe my career in property to Paul.

      Once again, thank you so much for inspiring me to change my career back in the eighties and also for showing me some of the essential values of property investment.

  • This is what school and adult education should be about. This is what the lame stream media should be teaching people on TV instead of all the nonsense we see. I too am fortunate to have produced income from property but with a different slant. Our interior design firm (you can like us on FBook Horak Venter Design if you want more info) focuses on taking ordinary properties and upgrading them- within the parameters of a strict budget- by decorating with minimal built work and installing new landscaping. We do this for our selves and clients. Yes we have made mistakes, but these days fewer, but when I look at the bottom line the figures look good.

    • Thanks Grant. Yes, there is a great big void in our education system. Hence the existence of Organic Growth. We exist to teach others how to create wealth while holding down a job.

  • … but you still have to be able to secure and afford 4 – 6 bonds and based on current market conditions of almost zero propertry growth that’s NOT easy!

    • Not easy, but possible. There may be almost no growth nationally, but by investing in the right properties in the right areas and at the right price, it is easy to beat the national averages.

  • Thanks for the article Neil. Much appreciated and definitely financially empowering. Thank you!

  • Hi Niel,

    The article makes complete sense, the problem is that pulling something off like this is easier said than done. I’m 30 and I’d like to think I’m fairly successful. I own a 2 bedroom house in a sought after neighbourhood, which I have a tenant occupying. The rent from the tenant is just short of the bond repayments of roughly R8,000. I own a second property to the value of R2,6mil, which I currently reside in. Half of the bond of the second property is paid off and I’ve kept the rental at full bond to show a negative balance at year end, for obvious reasons.

    The problem is have with this, and why I say it’s easier to say, is because there is such a lack of knowledge around WHY this “property thing” is such a good idea. I understand the theory of 4 x 25%, but I find it difficult to gauge and calculate how good the return on investment is, because like the article says, interest rates, area appreciation, household upkeep and an assortment of other things are so variables that constantly change. I’ve read about property having roughly 5% appreciation per year, but that’s a lot less than some of the JSE blue chip stocks, not so?

    I’d love for you to write further on this subject, breaking down the costs and opening my (and I’m sure others) eyes to why this is potentially so valuable.

    ~ A New OG subscriber.

    • Hi Chris, at 30 you are way ahead of the game. Well done.

      The reason I am so passionate about what we do here on OG is that there is so little information out there…

      Your question about property growth is valid…if you were buying these properties with your own cash.

      Do the simple maths, if you get 90% finance and a tenant pays off your bond. You are primarily investing other people’s money.

      If you get, say 10% growth of your property, you are getting 10% growth on the purchase price, not 10% growth on your own cash invested!

      This is the primary key to the success of residential property investment

  • Hi Duncan
    The way we do this is by sourcing good deals and making them available to our Organic Growth Investors Club members.

    Join the club and send in an application for our current hot deals
    To join, click on Membership on the menu button at the top of this page.

  • This is such a great read! I am only 23 years old but I am very interested in property investments and cannot wait to get started. One question Niel, as a 23 year old who will only START earning a salary next year, what is your advise on how to get into the property investment business?

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