When you are thinking of retirement there are two main questions that come to mind.
- How much do I need in retirement (income and principal amount)
- How much do I need to save today to reach that goal by retirement
Below calculators allows you to answer the questions above based on some basic assumptions. It is important to use realistic assumptions and never too late or early to start investing. Compounding interest is one of the most powerful advantage that only works over time.
While dividends makes up an important component long term return, the rate of return below assume a total return including capital gains as well.
Step 1: Use Superannuation Calculator to find the size of investment portfolio required to meet your annual income with touching the capital.
The super calculator assumes that you will not touch the capital.
Step 2: Once you know how much capital you need at the start of retirement. Find how much you need to invest today based on a investment return assumption and how many years you have until retirement.
We set a baseline of 7% as it is a reasonable market rate of return (like the ASX 200 Index which you can track with ASX Index Fund ETF) over the long run. The higher rate of return is used in the super calculator means greater level of risk is taken in the investments in the portfolio.
The goal of picking the best Australian shares in model portfolio is to make higher risk adjusted return. So we are aiming for a higher return than the market at the same time ensure the risk taken is worthwhile and do not put our capital at risk.
Related: The dollar looked to have bottomed and looked to appreciate against other major currencies. EUR to AUS look interesting from here.