Semi/Early Retirement at a young age

kidmugsy

C-dog wrote: »

I had dreamed of 3 months in the snow, 3 months in the sun

Christchurch NZ: Alps to your west, Pacific to your east. Grow lemons in your garden. In fact, buy a house with the right micro-climate and grow Bougainvillea the garden. Beware of the shakes, though.

C-dog

To me that sounds like heaven, I fear it may be a few thousand miles too far from the parents

jamesd

C-dog wrote: »

Good point. I'm not. The investments will hedge this to an extent, but I should make reference to this. Is there a compound interest calc out there that accounts for inflation?

Also is a 4.5% return too pessimistic over the long term?

The long term average return of the UK stock market over the last hundred plus years is around 5% plus inflation. In your compound growth calculations you already appear to have a suitable allowance for inflation. Dropping from 5% to 4.5% seems reasonable.

You should also monitor and allow additional safety margin. I tend to prefer not to fake the investment return by dropping it but instead to add a substantial safety margin in the target pot size. Among other things that allows for a choice to retire anyway if the target is below the ideal target but above the minimum target.

The financial independence objective is a good one with children involved since it adds extra safety to your planning. Not all cases of being hit by a bus result in death and it's nice to have options. And insurance. How well are you covered for injury or illness that stops you from doing your current or other work?

C-dog wrote: »

I do need to look at my allocation though with my next purchase. Everything to date is in Lifestrategy 100 (or 80 in my wives account). Might need to consider a less risky portfolio for the shorter term.

Why a less risky portfolio for the shorter term? Your ultimate FI objective hasn't changed and if anything you now have a need for greater early growth to have the potential to pay for school fees.

C-dog wrote: »

I'd even consider moving country in retirement if I thought I could achieve half that. ... In my head I know I need to stick to my plan of save, save, save. But I keep day dreaming of taking the plunge in a ski property in France or Austria. I won't as the goal is to reach my FI figure. But its a nice idea.

All of the EU is automatically open to you if you're a citizen of an EU country. The US has a $500,000 visa scheme, invest that much in a business in an in need area for a few years, or twice as much in a popular area instead. Apparently it's possible to borrow this money, I haven't looked. Other countries offer similar investor schemes.

C-dog

jamesd wrote:

I tend to prefer not to fake the investment return by dropping it but instead to add a substantial safety margin in the target pot size.

Me too. My figures are minimum numbers for reference more than goal. I still expect to be earning, using my investments and saving well after reaching these targets.

jamesd wrote:

How well are you covered for injury or illness that stops you from doing your current or other work?

Good point! Once we paid off our mortgage, we reduced our insurance levels right down. I need to readdress this. We will be adequately covered. Both myself and wife have full BUPA health cover. Minimal insurance.

jamesd wrote:

Why a less risky portfolio for the shorter term? Your ultimate FI objective hasn't changed and if anything you now have a need for greater early growth to have the potential to pay for school fees

I've always been of the train of thought, that I should reduce my 0-10 year risk (picked u at monevator I think). I have actually been thinking about this quite a lot recently. Since I will only be drawing down a small proportion of my investments held in ISAs and taxable accounts each year to live on, a fair whack will be held medium to long term.

I'm not versed enough in excel to work out an exact formula, but using my original figures of £425,000, I'd have 10 years x £275,000 compounding, or 1 year of £400,000.

Again these are very conservative numbers. My savings rate is much higher than I require to achieve these and ceteris paribus it shouldn't even be a consideration come ER.

School fees are something I have never considered. Both my wife & I went to state run schools. "We had a great education. But if we move, I am aware that private schooling is a must.

jamesd wrote:

All of the EU is automatically open to you if you're a citizen of an EU country. The US has a $500,000 visa scheme, invest that much in a business in an in need area for a few years, or twice as much in a popular area instead. Apparently it's possible to borrow this money, I haven't looked. Other countries offer similar investor schemes.

These are answers to questions I'll ask another day. For now the plan remains unchanged. Earn & Save. I guess come ski season (my one real passion) I always get the itch to live closer to the snow. We hold EU passports so consideration into schooling, remote working (if I chose to) and proximity to family may force the european option.

Thanks so much for everyones input to date. It's giving me real focus on my financial plan.

jamesd

You might look into permanent health insurance, which tends to be sold either through work or via IFAs. PHI pays out some percentage of your normal income, say 60%, until normal retirement age. It comes in two main varieties, own job or any job. Own job is more expensive and pays out if you can't do your usual work. Any job pays out only if you can't do any job. Both can have prices reduced by an initial period where no payments are made, perhaps a year.

I think that PHI is one of the most valuable insurances I have, since I'll have to live through whatever is causing me to claim on it for a long time. Relatively low claim rates mean that it can be a lot cheaper than say critical illness insurance. To give some idea of relative costs, I'd pay about £100 a year for £33,000 of PHI income or about £440 for £100,000 of critical illness insurance.

C-dog

I have never used an IFA. Always gone it alone, but with having to set up a company pension scheme in the near future I may entrust in their services. Any Ive met during my day to day business...I don't see our goals aligning.

They seem to be completely inept with their own finances. Either are working late into their 60s through necessity or are the flash harry 30 year old types driving 100k cars. Which will probably lead to the former.

Please excuse the broad generalisation. I'm sure they are very hard working.

C-dog

Today I hit a little milestone. Since April 13, I've invested 200k. Boom

That needs to be cemented, so that a drop in share price isn't an issue. Plan is to add 50-70k to that by April and the next 50k by Sept.

Today I stand approximately 40% of where I would like to be before calling myself Financially Independent. Is that the finish line? Hell no. But at that point I'll consider my options.

I broached the subject of moving abroad for the first time since we found out about the baby. Actually fairly well received considering. Just shows we're pretty much on the same page as each other.

Time to knuckle down, work smarter, save harder & invest the rewards.

I also took a look at the monevator compound interest calculator a few times today. Without adding to the pension pot or ISAs any further, come 57 (25 years) I should hit the 600k mark. Now frankly we know thats not guaranteed, but it calls for a little celebration. 2 tickets to the Hunger Games.

On a side note, our combined monthly expenditure (excluding Holidays) has been a little under £1000 for the last 3 months. We live very well, but with no mortgage and no car payments, our expenditure is low low low.

atush

Dont forget to A, live a little before baby comes as you wont after.

2 consider the skiing apt if you can get away enough. And rent out the rest of the year? If not, rent until you can.

Consider buying your premises thru a company Sipp executive pension. then pay your rent tax deductible thru your company into your pension. Win win.

Do save for school expenses. In a S&S isa probably. As you dont knwo where you will be living. Esp as Switzerland schools are dear lol

C-dog

We lead a decent life. Nothing too extravagant. Thankfully our ski holiday is booked for January (does this contradict the second sentence?) but I doubt I'll get a second or third in this year as the breaks were already put on by my other half when I first mentioned these.

**googles private school in switzerland**
£10-30k, excuse me....

Unfortunately my language skills are somewhat limited to English and broken conversational spanish. Any significant relocation would require german, french, Italian or Japanese language uptake.

atush

10K is pretty cheap for private school are you sure?

Anyway you seem to be getting over the shock