What is your long term saving strategies?

rictus123

Starting at no debt and assume no savings this summer when i go onto my time served wage...if i keep throwing in the overtime im going to treat my payrise as if some of it doesnt exsist if that makes sense? Long term i want to be "well off". My idea of well off is not living payday to payday, having 4 or 5 years worth of living expenses in savings, mortgage free/very cheap mortgage payments and healthy equity.

Im going to do all i can to get their and il do whatever it takes. Its also a great learning experience for me.

The plan so far is to treat £1000 a month like it isnt even there. As soon as i get it on payday, get rid of it and hide it in savings accounts. I could earn £1000 a month in overtime only, between overtime at work and homers that i do at nights and on weekends. Il be 20 years old this summer. No longer a teen. So time to get going with building my assets and net worth for the future.

If i "ignore" that £1000 a month between 20 and 25...assuming 4% net intrest then il have £60,000 of my money invested and il have £66,404.11.

Also what i save now and what i save beyond that £1000 a month will be for my first house deposit..which is going to be half the cost of everything(gf paying other half) Need about £30k between us so 15k each. Im sure we can do that in 2 years at £600 a month each.

Any cash surplus will be going on overpaying the mortgage, that £1000 wont be touched but it maybe offset against the mortgage if that works in my favour?

So at 25 my goal is to have £66k personal savings, a mortgage with gf with about £50k equity in our house, and a steady income.

Then itl be time for a major review of lifestyle,home,career(for her) and make any changes we can. If all of this goes to plan and how i want it then the next block will be a 3 year until im 28...then it may be time for our family.....


Please, haters stay out. Im not wanting told to go out and get !!!!ed and live my life. This is how i want my life....This is my dream...

mark5

My advice save some but enjoy some of it aswell, i'm only 30 now but have already buried 2 friends, you never know how long your here for!

rictus123

This is what i enjoy though...once im in the habit of it il become obsessed with it. And at times forget about it. Then one day il report back to this thread and have Martin saying well done when i hit £66k savings at 25

snowqueen555

I find that a set target per month often doesnt work because certain expenses can and will crop up, thats why I save what I can at the end of the month rather than a set figure. As said, make sure you enjoy some of the money, what ratios are you figuring out for

Expenses/Savings/disposable income?

GillM

I think it's very mature of you to think ahead - so many people of your age don't save a penny. Of course, you're also lucky that you earn enough to be able to do that. However, in common with other posters, I'd also urge you to enjoy some of the money as well - financial security is hugely important but you don't want to be looking back in years to come wishing you'd done this that or the other while you were still young enough!

Good luck - I hope you achieve your goal :beer:

rictus123

Thanks for your posts and advice. I dont think i will be missing out on anything at all along the way..i will be having fun and doing everything that i would like to. This is my dream.Work hard early on in life and reap the rewards later on. I want money status and power. I want to make something of myself and get myself "well off" and financially secure.

How i plan to do this is by keeping at what im currently doing, putting the hours and the work in. The builders i work with are on 30 hours a week and take home £2,700 a month. I know this will be more than enough for my lifestyle(when im 40+)

So id be looking at taking home about £3,000 a month interest from savings. Assuming a net interest rate of 6% on £600,000(may be tax exempt as could be retired but then again might be part time/on 40 hours a week meaning id be losing £600 a month due to being basic rate tax payer) Not decided yet what i will be doing but im sure id be at least part time/working for myself taking it easy to keep me busy and supplement my income..By going down this route i could be taking in £5k a month+ part time. Thats financially independent and well off. I also plan on being mortgage free(house will only be £180k or so)..if we got that mortgage free i would rent it out and use the rent to pay the mortgage on a bigger better house(still, even with that level of savings id be happy in a £250k house...)

So to get the £600,000 by the time im 40 i need to put away £1317 a month starting this summer(when i turn 20) until the time im 40...assuming a return of 6% that will give me the money on my 40th birthday if i start on my 20th...

An extra 5 years, until im 45, of investing the same amount, £1317 a month will leave me with £895,000...which would then earn £4,475 a month if i wasnt to pay tax...basic rate tax would be £3,580 a month...which would still be more than enough to live well on.




However if i went right upto 50 with this i would see this nest egg of cash run right upto £1,289,681......The main thing thats going to work for me in my long term saving is compound interest!

I will just work my !!! off, let compound interest do the work and forget about the £1,317 a month until it turns into my salary! I think i would love to go self employed if i had earnings off my savings to cover my expenses.

This is my dream....

Accountant_Kerry

Have you taken inflation into account?? that will seriously increase the monthly income you will need to lead the same lifestyle in 20 years.

rictus123

My salary will rise with inflation though....so its irrelevant id say?

snowqueen555

Is your job secure? I find to make long term projections with the current status quo of the labour market today. Very rare it is for a person to be in the same job for 10 years.

I don't se myself in this job in a years time, I save what I can when I can.

DebtWriteOffMaster

Sorry but i think you need to snap out of this lovely little teenage fantasy world you are currently living in,
and start living in the real world matey!!


You have just drawnup a ''schedule'' on paper of how over the next 30years you are going to become a millionaire! :rotfl::p
Yet this schedule of yours is just absurd! lol


You have left school/maybe gone to college and got some A-levels, haven't even got an undergraduate degree let alone a masters,
and yet you think you are going to somehow get a job working on building sites which will pay you £30.80 per hour,
even though you're just a 19year old kid with barely a few months experience of working as a builder! :rotfl::rotfl:

You also are under the impression that this contract of employment you have is a 25year contract,
when in reality its a zero-hour with 48hours notice contract which would end the day that the company runs out work (which if its paying its junior staff £30.80 per hour while others who are far more qualified will work for £5.90p/h) will be very very soon!


You also seem to think that you and your teenage girlfriend will stay together forever and ever, thus having a joint income for all those 25years.
When infact the reality is that is far far more likely you will breakup, leaving you with your sole income.


Sorry if it sounds rude or harsh but if you are actually serious about trying to buildup some savings you need to stop living in this fantasy world that you currently are,
and start living in the reality.


______________________________


:D:D

While im sure you have had a nice evening rictus telling everyone these stories about how you are going to become a millionaire by the time you turn 40 (even though your barely above min wage),
i think its time that you run along to bed now as its a school day for you tomorrow. :rotfl::D


Sorry to disappoint all the people who were sucked in to believing all the nonsense that this kid write, and posted advice to him accordingly,
however the reality is that he is struggling to pay for his bus fares to work and for his packed-lunches,
let alone planning on how to invest 100s of thousands of pounds in property!! :rotfl:;)


To quote some of their recent posts-

rictus123
09-08-2010, 7:17 PM

Iv been investing really small at £50 a month,just stopped it after a few months, need that £50 a month to pay off my cards asap. Beyond a joke now
Need to look at ways to earn money from home in the evening. Think ebay might be my best bet. Il give it another pop.

http://forums.moneysavingexpert.com/...=#post35537635



rictus123 28-06-2010, 7:25 PM

Pay has gone up as of today apparently - believe it when i see it though, counting down the days to payday a week on Friday.

I think itl come up take home about £1385 a month, more than £1500 with 1 or 2 Saturdays. Not yet turned 19 though, another few days yet

http://forums.moneysavingexpert.com/...=#post35537635



rictus123 24-05-2010, 8:56 PM

Away to turn 19, pay will go from £1,070 take home a month to £1,390.
With the overtime i do itl be over £1500 take home

http://forums.moneysavingexpert.com/...=#post33124867



So after all that nonsense about how fresh out of school hes on £30.80 per hour, and taking on Donald Trump in the property game,
it appears that in reality hes only earning £6-£7 per hour! :rotfl::cool:

KPR11

rictus123 wrote: »

An extra 5 years, until im 45, of investing the same amount, £1317 a month will leave me with £895,000...which would then earn £4,475 a month if i wasnt to pay tax...basic rate tax would be £3,580 a month...which would still be more than enough to live well on.

Not quite true.

Assuming the 6% returns with the same monthly savings of £1,317 for an extra 5 years, this will yield you an additional £90k (without any interest being compounded from £600k). If you include the compounding then you are left with £750k (still far off the £895k that you mentioned and compounding means just that, if you use any of the interest then the £750 will be closer to £700k)

Secondly, you would only pay basic rate tax on majority of the income and some (c£10k) at higher rate if your only earnings was the interest of £4,475 pm (based on todays tax rates) - with the income at higher rate and personal allowance (i.e. law of averages you exclude c£6,500 and include £10,000 giving you a net position of £3,500 to tax at an additional 20%) your math isn't far off! The figure will be closer to £3,525!

If you are deadly serious about the long term and can afford to put monies away, you might want to seriously consider looking at contributing to a pension pot right away.

Not only do you get an instant 25% return as a basic rate tax payer and an even higher return for a higher rate tax payer but also the capital growth and the income in the pension pot is absolutely tax free!

For example, as BR taxpayer if you pay in £100 to your pension pot - the pot gets £125. If you are a higher rate tax payer, your pot gets the £125 and you get to extend your basic rate band by £125 which means you save £25 in tax - net result: BR - 25% return, HR - 66.67%. Now assume that the monies are invested in a bank account earning a 6% return, the interest of £7.50 is not taxable. If it is compounded then next years return is also tax free etc so end of year 1 if you contributed just £100 and earnt a return of 6% your pot would be worth £132.50 (plus additional cash tax saved £25)

Now consider this if it wasn't in a pension pot and you were saving the same monies in a bank account for retirement, you would only have £100 in your account which would earn an interest of 6% your pot at the end of the year will only be worth either £104.80 (for BR taxpayer i.e. £100 plus 6% interest - £6 less 20% tax: Net interest £4.80) or £103.60 (and no additional cash tax saved)!

Apart from the above, the sooner you start either the bigger your pension pot or the smaller the contributions required depending on what you want!

Only downside to all this is that you can NOT under any circumstances get the cash back till you are 55 (current cap, could go up further)

Note: pensions is likely to undergo significant changes, we have already seen loads for high earners, but don't be surprised if more come in for middle earners cause as you can see from above it is very very very generous! It is my opinion and not any form of tax or financial advice, plus investments could go down so you need to seek advice from an IFA!