Retiring with $1 million in the bank is now no longer enough if you plan to live off the interest. Perhaps you need a new approach

That is called a reverse equity mortgage.

Things won't last for kiwisaver funds with high share holdings. When these elevated prices work their way through the system, the returns will steadily drop. It takes a while admittedly, because until now, the kiwisaver funds will have bought most of their shares at lower prices. But when they buy more at elevated prices, the maths doesn't look so good.

http://www.workandincome.govt.nz/individuals/brochures/benefit-rates-april-2016.html

$41/barrel is bang on the post WW2 average so fairly normal.

My personal view is that our real economy is now so weak that I'd wonder on even getting to $80 sustained let alone $100+ is possible without triggering GFC mk2, though i prefer / expect a Great Depression mk2 myself. I just need to this mess to hold together for 2 more months, at most 3.

This is the new oil price. Fracking is online and pumping hard and plentiful. As long as the proxy war with Russia continues oil is going nowhere for a long time.

Landlords cannot claim tax rebates against mortgages (they can in the UK).

Landlords, like every other hireage business, can claim the interest paid on business activities as a full business expense. Just like all other businesses.
so it's not a rebate, and as the loan is gradually paid back, the expense shrinks and the landlord pays more tax because they have better net profit due to the shrinking interest expense.

Also only the interest expense is claimable, not the whole loan repayment, and it is only for business expenses, not personal stuff unless you want IRD giving you a full forensic colonoscopy.

No, IMHO its the lack of return not the quasi value of capital. QE may have bubbled their assets (I dont think so myself) in value but without the return on that to live on its moot, a bubble. Worse when it pops they'll lose capital value hand over fist and the income will collapse further. Now it maybe that the wiser ppl will sell their assets to give them cash as cash isnt going to deflate in value as fast, but not everyone can do it, there has to be a greater fool buying.

So blaming QE for this mess when it is a reply to dis-inflation is simply wrong for me.

Do the maths, you are right 1% is 1% but that is only in respect to mainentance of your capital value, as far as day to day living goes a 4% return on your capital even losing 3% buying power a year to inflation is a lot more palatable.

But don't be too hard on yourself, even our ex Merchant Banker PM couldn't work this out. or doesn't want to admit it more likely

In 2007 you could get 8% for 5 years, easily, enough said really.

give me the 3% inflation any day.
with my new 0% student loan, and fixed in buy price at todays rate for the house mortage, I'll let compounding do the heavy lifting.

0% gives no heavy lifting, and is for people who know that you can't inflate forever.

Your rental return of $375/week is very high. $320-340 more the norm for a 4 bed in that type of purchase price range, e.g.,

http://www.realestate.co.nz/rental/search/bedrooms_min/4/districts/255/…

PN is similiar to Hamilton in that it has abundant land all around it - unlike Auckland (and even Tauranga to an extent). So factor in land availablity only being regulatory and factor in market disruption from an eminent revolution in building techniques - techniques tha mean new builds will be much cheaper than doing up a run down rental dog box - and your model looks risky. Auck is different.

Why are you ALWAYS spruiking Palmerston North? Palmy is what it is, and is never going to be Auckland or Wellington no matter how hard you try. It's getting a little tiresome.

250k houses in PN typically return 300-330/wk gross revenue.

"Their money is tied up in a Trust so they don't care about rest home costs"
With all this talk of offshore tax havens all we hear is a deafening silence with regard to this little rort happening right under our noses.
I had discussed this with my old dad. He said he had no need for such a thing as he had enough saved up to cover his and mum's care if they ended up this way plus he felt that, if you could pay you should pay rather than relying on hand-outs from the taxpayer. Unfortunately he was heavily invested with finance companies - lost the lot pretty much. A heavy personal blow to this proud old WW2 veteran and contributed to his death we believe.
Mum has alzheimers and needs constant care at considerable expense which we are having to pay from what remains of her estate. How come folk can get round this so easily. I recall that Jim Bolger had his mum on one of these dodgy trust things with the intend to bludge of the taxpayer when they are well capable of providing for her. Sucks!

The Authorities have woken up to trusts , and can trustbust the local ones.
In fact there are few reasons to pay for all these trusts/lawyers now.

Mike you should do some homework about Trusts and Rest Home costs. I was involved in giving advice over this topic for 30 years. It is always evolving and basically is tightening up all the time.
1. you need to be very very sick to get into a rest home and have the costs paid by the government who have you assessed . You must be frail and normally the time spent in care before one dies is around a year or so.
2. they are definitely tightening up on trust monies. You must disclose trust monies and they are making it harder all the time to avoid using them.
3. My mother went into care for 18 months and only had $500k in the bank and paid for her care. At the end of her life she had $490k. It is all about how you invest it. She only had national super on top and the cost was $52k per annum.
4. There is a lot of nonsense spoken about this topic. The reality is the government are continually making it harder to avoid trust funds being used for care costs.

I could have formed a trust for my mum. It would have been for rest home care costs only and I thought that was immoral.

Benefit 3x from inflation in property. Capital appreciation, rent appreciation, and mortgage reduction in real terms.

Echos of neo-feudalism

There's one option you've missed which Western governments are engaging in like mad to halt this malaise - immigration. We simply import loads of people to continue this mad cycle and this (on paper) solves the problem, for a while at least. Of course this completely screws over and impoverishes the existing population (especially younger generations), overloads infrastructure and completely changes the fabric of a society, but governments and leaders seem hell bent on this approach.

"It's curious how reticent governments and central banks are about the social implications of low and negative interest rates. Every effort is going into destroying a culture of saving, getting people to spend whatever they have, or borrow and spend that. Spending is all that matters, spending everything available to restore growth. The choices are pauperism or debt servitude."

You're assuming they have the required grey matter to be aware of the issue. Of course those that are aware are most likely in a position where it doesn't affect them so why would it matter.

I am more curious as to why the masses do not see the issue. Why this has been instilled into the way of life, the path to being "wealthy".

All in the name of economic growth and having ever increasing "living standards".

Yet we tinker with everything but the real causes. Shame on us.

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