How Much do you Save?

Johnny_Doe

Really inspiring post by longlegged. I'm in a similar position, Basic rate taxpayer but savings and investments now mean I don't need to earn a lot (I'm "earning" £6k net from savings (a lot of p2p) which grosses to around £8333 per annum! on top of my salary. Looking to retire completely at 55 (I don't need a lot, freedom means more to me than material things)

PS saving around 50% of monthly net income..

stoozie1

edinburgher wrote: »

On a good day, it's like having 4 people working for us as opposed to just me and the wife

could you explain this a bit more, please?

chockydavid1983

I think they're talking about investments being a form of passive income.
You're getting income without doing any work for it per se, it's working for you.

Frogletina

Bravepants wrote: »

I should think that if I had a £40k emergency my investments returns would be the least of my worries!

I had what you might call an emergency of £60,000 :eek:

When my partner announced that he wanted us to split and have his share of the equity in the house, I had to withdraw around £60,000 from my savings (i.e. the bulk of it) to pay him his equity and pay off the balance of the mortgage.

It was not something I had ever considered I would need to do, but thank goodness I had been saving. I did lose some money in a bond which was not due to mature for a couple of months, but had it been another few years later that we split, I would not have had the money and the house would have had to be sold.

frogletina

Bravepants

Frogletina wrote: »

I had what you might call an emergency of £60,000 :eek:

When my partner announced that he wanted us to split and have his share of the equity in the house, I had to withdraw around £60,000 from my savings (i.e. the bulk of it) to pay him his equity and pay off the balance of the mortgage.

It was not something I had ever considered I would need to do, but thank goodness I had been saving. I did lose some money in a bond which was not due to mature for a couple of months, but had it been another few years later that we split, I would not have had the money and the house would have had to be sold.

frogletina

Yes indeed a huge loss of savings. But my point was that if I needed to spend £40k on say a medical emergency, or half my house collapsing around my ears, I wouldn't think twice of worrying about my investments. I would have even more to worry about. Money comes second to life really.

I guess you wanted to keep your mortgage low. But depdning on interest rates, if they are low enough you might have been better taking out a mortgage for your half and keeping your investments.

elephantrosie

jamesd wrote: »

Yes, compound growth at a level higher than my current spending level.

Pretend that someone has half a million pounds and is making 4% plus inflation on it, so £20,000 a year. If they spend less than that £20,000 they continue to get wealthier even after inflation.

That's a really big effect for people who are very wealthy, say one of the 134 billionaires in Britain. 4% of that is £40 million a year so it starts to not matter how much they spend on themselves, just not getting richer can become a challenge needing them to spend £40 million a year before even thinking about how they can spend the original billion before they die. First class flights, fancy houses, servants, and all the rest still might not be enough to keep up with how fast death is approaching. One solution is to give a lot of it away to whatever causes they think are worthwhile, that can get rid of it while still making no practical difference at all to how much they can spend on themselves.

65% is very good going!

i see. but do you not take into consideration of market crashes and investment loss?

yeah, i am pretty proud of my saving skills. by the way, i am also a part time student and managing to save 65% income a month.

my parents taught me well on how to save from young.

elephantrosie

to add on, i have calculated that if i continue my current expenditure and lifestyle, i could retire at 45 yo.

unfortunately not as a millionaire like jamesd..

Frogletina

Bravepants wrote: »

Yes indeed a huge loss of savings. But my point was that if I needed to spend £40k on say a medical emergency, or half my house collapsing around my ears, I wouldn't think twice of worrying about my investments. I would have even more to worry about. Money comes second to life really.

I guess you wanted to keep your mortgage low. But depending on interest rates, if they are low enough you might have been better taking out a mortgage for your half and keeping your investments.

I've had a look back at my limited records at the time (2003) - a lot of the money was in a Nationwide E savings account gaining 3.75% and I think the mortgage was over 5% so I'm sure I made the right decision. I had approx £25000 left in my cash Isas which were making me good interest in those days, though again I don't have the interest rates.

I'm amazed looking back to see that I had 13 savings accounts in 2003. I knew I needed to save, but at the time I had no idea what for.

I've kept financial records all of my life, first notebooks and I progressed to excel spreadsheets and now I use Ynab. But I still keep a record in my books of my monthly bank/BS totals and my monthly bills.

frogletina

jamesd

elephantrosie wrote: »

i see. but do you not take into consideration of market crashes and investment loss?

Yes, the 4% is allowing for those ups and downs.

elephantrosie wrote: »

to add on, i have calculated that if i continue my current expenditure and lifestyle, i could retire at 45 yo.

unfortunately not as a millionaire like jamesd..

No chance of me being a millionaire at 45 and 55 is very unlikely. But maybe in ten years.

elephantrosie wrote: »

my parents taught me well on how to save from young.

Same here, by growing up in a poor family.

elephantrosie

jamesd- I would expect more than 4% loss in market crashes really.
but thank you very much for the replies. you are obviously very experienced in investment and I should learn from you.