The road to financial independence.

atush

Yes, but make sure you remain flexible in your strategy should life change.

We were on track until I unexpectedly had twins which has put our retirement back a few years.

srcandas

Student_of_£ wrote: »

Right! so here's what I plan to do:
- get my degree and continue to invest in myself - increasing my skills and employability.
- save an emergency fund of 6 months living expenses in a cash ISA.
- when this is done, split my savings between S&S ISA and pension.
- retire when I'm 60
Does this seem like a good plan?

Rock solid plan I'd say :T

ps ignore atush. She clearly didn't do a risk assessment. She may even have a miss selling claim against her hubby

racing_blue

Student_of_£ wrote: »

1) My definition of financial independence is getting to 60 and having the passive income to support me in a comfortable retirement for the next 30-40 years.
2) I am studying French and Italian at university and have just spent 3 months in France and will spend 4 months in Italy. I am also conversant in Spanish and Portuguese.
3) As for pensions, I was thinking of first of all establishing a healthy emergency fund and then trying to max out my S&S ISA every year until I reach retirement, I heard that if you do this it is possible to gain a portfolio of £1-2 million, I understand the risks involved!!

It's important to plan, and I think your plan is good- very good in fact.

But bear in mind that financial independence - which I understand to mean investment income exceeding expenditure - can easily be achieved in the future, as long as you have even modest wealth: by appropriately reducing the expenditure side of your equation. I heard somewhere 20% of the humans, globally, live on 1$ per day or less.

I'll be 40 before too long, and these are the things I thought about in my 20s:

friends
getting a degree
relationship
getting a job
marriage
getting a house
having kids
being in a sport club
building career
music
moving to the part of the country I wanted to live in
travel & exploring the world of opportunities
helping people

I can honestly say I never thought much about money. I don't think this is unusual. My nature was to work hard, enjoy the work, earn quite well, spend most of what I earned but never more. Never borrowed, didn't budget much. It was an amazing time and I have never been happier.

The events of 2007-2009 coupled with a growing family changed that and now I think about money a lot. Last year I even stumbled across the term financial independence in "your money or your life"... recommended by someone here. I have saved, plotted, planned, mapped and invested. As I leave my 30s I'll be about five times more wealthy than I was when I entered my 30s. No happier though. The reasons why are listed above!

Student_of_£

I fully realise that money doesn't equate happiness and money doesn't occupy my every waking though, for example, today i went out with a friend, had a bite to eat, had a few drinks and a few laughs, that makes me happy!
However. there have been times in my life where I haven't had a penny to my name, been overdrawn to the max, had debt collectors after me for a £79 phone bill I was unable to pay and I was stressed and upset.
This may sound funny but I'd rather be miserable and in a stable financial condition than be happy and be on the verge of bankruptcy.
Again, I realise there is a balance to be struck and that life has a funny way of changing the most well thought of plans, but at the same time I want to know that while I enjoy today, I won't wake up in 40 years with nothing to my name.

N1AK

Student_of_£ wrote: »

1) My definition of financial independence is getting to 60 and having the passive income to support me in a comfortable retirement for the next 30-40 years.

I think it's great that your considering this now and I think the intention is a good one. Personally I would suggest that the most important step isn't a specific action but instead a mindset and type of behaviour.

Managing your finances and planning for the future is something you need to continually learn about and invest time in. Not dozens of books or thousands of hours but consistently throughout your life.

Part of the reason this is so important is that there isn't one unchanging perfect strategy. Buying or renting isn't always a clear choice. Paying off the mortgage fast vs slow isn't always clear etc. Only by having learnt to understand these decisions and by knowing what you are trying to achieve will you be able to consistently make the best call.

The truth is if you're financially responsible then you'll be fine. Building up to a comfortable retirement isn't difficult if you have a plan.

atush

srcandas wrote: »

Rock solid plan I'd say :T

ps ignore atush. She clearly didn't do a risk assessment. She may even have a miss selling claim against her hubby

His risk got cut (at the doctor's) right after I can assure you.:eek: One of the most expensive things to ever happen to us.

Worse than my OH changing jobs this year a few months before Bonus time:mad:

atush

Ps, as you already speak Spanish and Portuguese (great for Latin America) I'd be thinking of learning Mandarin next.

waiax73

I also think you should set up yourself a goal a bit sooner than 2050. Also, 40/60 expenses/savings is really hard to do (impossible for me) when you're fresh out of uni. Hope you'll make it though - good luck!

Student_of_£

even so, I could still save 10 / 15 / 25 / 30% of my salary, plus I have 30 odd years for my investment(s) to grow (hopefully!)

atush

Like we said, be flexible. you can afford to save 40%, save it. you can only afford to save 25% after a change in circumstance, do that.


all in all good plan though.