People always want to know if they will be able to retire wealthy or they want to know when they will be able to retire. Due to continuous changes in the economy, nobody can predict the future. However, we have statistics and experience and if we use it wisely, it can give as a good indication of what the future might be. Although it is not accurate, it will show us if there is a big shortage in our provision or it will give us a good indication of the time periods in which to achieve financial freedom.

As you know, financial planners make use of complicated computer programmes to “predict” your financial future. Since few people understand any of those analysis and graphs, we designed a simple way of determining your financial future. Our calculations are very simple and only the future will confirm their level of accuracy. Our easy to follow steps en calculations answer two questions; how much and/or how long?

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HOW MUCH IS IT GOING TO COST?

If you would like to retire within a certain time period and if you want to know how much it is going to cost you, follow these steps:

Step 1

How much passive income do you want per month?

Say for example it is R25, 000. (A)

Step 2

Multiply it by 12 (B)

It is 25,000 x 12 = 300,000 (C)

Step 3

Multiply it with the Treoc Way factor of 14. (D)

It is 300,000 x 14 = 4,200,000 (E)

Step 4

What is the equity on your Provider portfolio at the moment?

Say it is R2, 000,000 (F)

Step 5

Deduct F from E

It is R2, 200,000 (G)

This is what you are short on equity

Step 6

In how many years would you like to retire?

Say in 10 years (H)

Step 7

Divide G by H

It is R220, 000 (I). You have to increase your equity with this amount every year. .

Step 8

If you are on the Treoc Way this required increase in subsidy can be reduced with gearing by about 50%. It is R110, 000 (J) or R9, 167 per month

Step 9

Increase the subsidy with inflation every year since the target is also going to increase every year thanks to inflation.

Step 10

When you reach the equity target, consolidate your portfolio in order to have mortgage free rent producing equity equal to the target in you provider trust producing net rent at 0.6% rent/value ratio.

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HOW LONG IS IT GOING TO TAKE?

If you have a certain financial ability and if you want to know how long it is going to take before you can retire, follow these steps:

Step 1

How much passive income do you want per month?

Say for example it is R25, 000. (A)

Step 2

Multiply it by 12 (B)

It is 25,000 x 12 = 300,000 (C)

Step 3

Multiply it with the Treoc Way factor of 14. (D)

It is 300,000 x 14 = 4,200,000 (E)

Step 4

What is the equity on your Provider portfolio at the moment?

Say it is R2, 000,000 (F)

Step 5

Deduct F from E

It is R2, 200,000 (G)

This is what you are short on equity

Step 6

With how much can you increase your present shortfall subsidy per month?

Say it is R5, 000 (H)

Step 7

Multiply H with 12 (I). It is R60, 000 (J)

Step 8

Divide J into G

R2, 200,000\R60, 000 = 36 (K). It will take another 36 years before you can retire.

Step 9

If you are on the Treoc Way the time can be reduced with gearing by about 50% = 18 years. (L)

Step 10

Increase the subsidy with inflation every year since the target is also going to increase every year thanks to inflation.

Step 11

When you reach the equity target, consolidate your portfolio in order to have mortgage free rent producing equity equal to the target in you provider trust producing net rent at 0.6% rent/value ratio.