Which means that Scott, in particular, recounted to me the story of his boss who owned a few practices (and the property that they ran from) eventually selling them to the doctors working there, yet he didn’t achieve the stratospheric financial heights that one would intuitively expect.

Thanks for your comments; you have inspired me to do a f/u post …

“I didn’t mention adding $150k a year AFTER TAX into the mix (I think that was you?) … but doesn’t it sound like an awful lot to you?”

Of course you didn’t…that was my point. Your analysis failed to consider Scott’s ability to incrementally contribute money from his income over the 10 year period. I just thought it was odd that you left it out, since the mantra of this blog (at least in the beginning–money 101 and early 201 stages) is to save as much of your income and invest it. Why wouldn’t Scott be able to follow this advice? …and more importantly, how would incremental contributions affect Scott’s ability to reach his goals?

Also, I bet the doctor making $700k per year in your example isn’t having a hard time investing $150k/year after tax. Why couldn’t a professional making $350k+/per invest $150k/year after tax (assuming they were following your money 101 steps)?

Also, I can’t figure out how you got 67%…I’ve run the numbers and come up with ~58.5%. Can you please explain how you came to that number?

The high-income-channeled-into-RE strategy is a good second level choice (which is why you really need to think your Life’s Purpose in the absence of money, then turn that into real NEEDS – not wants – then convert those NEEDS into cash requirement, then convert that cash into a strategy … THAT will tell you which path to take) only limited by your time/expertise and how much you can actually commit to socking away each year.

Building up a nice retirement fund from through investing a high professional income into real estate can be done although it does take both aggression and the right market conditions. Even, to produce the sorts of returns mentioned in the post and comments is likely to be a challenge.

I would say that starting a business is not generally compatible with the working hours which most professionals are required to put into their careers. Speaking from personal experience, it’s pretty hard to find the time or the energy to run a business at the end of a 12-14 hour day (even assuming that family commitments will allow it). Also, many professions are difficult spaces in which to consider setting up yoru own business in a manner which will match the income or give you an asset that can be sold for multiples of income at the end of the day.

Real estate is much easier and unless you want to give up the professional income, accepting the lower rates of return involved is more realistic. It worked for us (at least in part due to starting the process close to the low point of a down cycle in property prices and Hong Kong’s low tax rates).

Cheers
traineeinvestor

Of course, anything that you can add each year will lower the compound growth rate required, especially if you can maintain highest and best use of each subsequent chunk of cash (not as easy as it sounds).