Everything you need to know about money in 9 rules.

michaels

steampowered wrote: »

People who earn reasonable amounts and live within their means.

If someone is earning low salaries and renting, fair enough it is very difficult to save.

But for people who are earning reasonable amounts a 20% target should be very achievable.

Last 2 years we saved about 120% of gross salary, this year it will be down to 70% where it will stay until they force me off tax credits and onto universal credit.

onlyroz

GreatApe wrote: »

A mother has 2 children and 4 grand children.....

Unless granny gets dementia and the state takes it all to cover her care-home fees.


Or unless some of the estate needs to be sold to pay inheritance tax.

GreatApe

onlyroz wrote: »

Unless granny gets dementia and the state takes it all to cover her care-home fees.

It does not happen all that often, we know a lot is inherited and gifted each year some £200 billion allually

Or unless some of the estate needs to be sold to pay inheritance tax.

Few estates pay IHT and those that do leave the biggest sums

Malthusian

A person with no income other than UK unemployment benefit could save 20% of their income, but it would be daft to eat the diet of a Burmese rice paddy farmer and stare at the wall all day purely to save 20% of your income. Saving is supposed to make you financially better off, it is not a religious ascetic ritual.

@GreatApe: I've grasped your point now, very neat and tidy. I could point out all the other complications, like the fact that one of your children could get divorced and lose half their house, but you'll just say that they should just partner up with someone else who's divorced and their two halves of a house will be united to make a whole one again.

My point stands that life isn't like that. It would have been daft for my parents to send me to the local comprehensive (not that there was anything particularly wrong with the comp, but they and I valued the independent school I went to) just so that they could leave me an entire house out of my grandparents' inheritance at some point in my 20s or 30s. When the time came I was perfectly capable of buying my own house with a much more modest amount of help, so why should they have compromised on all the other potential uses of the money so I could have a free one I didn't need?

At least some of the grandchildren, knowing that they wouldn't have to lift a finger to own their own home as their parents and grandparents would take care of it, would lie about all day and when the time came they'd squander their inheritance on online poker. At which point the entire system falls apart because it relies on everyone having half of a house each. Presumably when they squandered their inheritance the house-halves would fall into the hands of one of the more reliable grandchildren, who would then join them together and rent them out to the lazier ones...

GreatApe

Malthusian wrote: »

@GreatApe: I've grasped your point now, very neat and tidy. I could point out all the other complications, like the fact that one of your children could get divorced and lose half their house, but you'll just say that they should just partner up with someone else who's divorced and their two halves of a house will be united to make a whole one again.

My point stands that life isn't like that. It would have been daft for my parents to send me to the local comprehensive (not that there was anything particularly wrong with the comp, but they and I valued the independent school I went to) just so that they could leave me an entire house out of my grandparents' inheritance at some point in my 20s or 30s. When the time came I was perfectly capable of buying my own house with a much more modest amount of help, so why should they have compromised on all the other potential uses of the money so I could have a free one I didn't need?

I dont care about any individual real or imagined scenarios of wealth and its transfer between generations.

I am simply pointing out an observation, that when women have 2 or fewer kids inheritances and gifted wealth concentrates and that each and every year the sum of inherited and gifted wealth is booming as the savings rate is still positive. And that the sums are a massive ~£200 billion annually.

At least some of the grandchildren, knowing that they wouldn't have to lift a finger to own their own home as their parents and grandparents would take care of it, would lie about all day and when the time came they'd squander their inheritance on online poker.

Sure which is why it is down to the parents to actually be selective and not give anything to the alcoholic in the family or the gambling addict just so its 'fair'. They could also perhaps set up trusts etc

At which point the entire system falls apart because it relies on everyone having half of a house each. Presumably when they squandered their inheritance the house-halves would fall into the hands of one of the more reliable grandchildren, who would then join them together and rent them out to the lazier ones...

The 'system' doesn't fall apart because there are stupid individuals

The system is the basic biological want (or even need) to provide for your own kids ofteneven at determent to your own self.

Parents and grand parents pass wealth down, that is a fact and it is a fact that absolutely huge sums change hands annually. Something like £200 billion annually just in the uk from older to younger. Ignoring that reality is silly

We in the developed world are extremely fortunate and rich and a large part of that is because we only have 2 kids per woman (as opposed to 6-8 in the past or even 6-8 now in the present in some of the 3rd world countries) and because of this inter generational transfer of wealth. Of course I accept and understand that about 1/3rd of people will leave little to nothing for their kids but we should accept and be thankful that 2/3rds can help their kids in a substantial way.

Herzlos

ilovehouses wrote: »

Almost all of them.

I'm not so sure. If many people are spending as much as 50% of their take-home on rent or mortgage, then they'd need to be spending 30% on everything else to hit the 20% savings.

That said, I probably could save more than 20% of my salary if I wasn't so reckless with money in my 20's, so you may not be that far off the mark.

zagubov

With kudos and credit to bostonerimus and bobbymotors, could this be a start
1) Spend less than you make - do a detailed budget to track spending
2) Save 6 months spending to an emergency cash account
3) Max out your workplace pension, LISA, SIPP etc
4) Try to save 20% of your gross salary. Maximize ISA then go onto regular investing accounts..
5) Buy low cost diversified investment funds like Vanguard LifeStrategy or an asset allocation with index funds and rebalance instead of individual shares and actively managed funds, they are expensive and often risky.
6) Avoid debt, pay off the credit card in full each month and never borrow for non-essentials, only for property (apart from timeshare).
7) Get transferable work skills so you’re worth more to your employer.

PasturesNew

Thrugelmir wrote: »

How many people can realistically save 20% of their income.

The sort of people that can afford pensions, savings and investments .... as pointed at in the rest of that list

Andy_L

kinger101 wrote: »

I don't think the advice is necessarily correct either. There's nothing wrong with actively managed funds.

ISTR reading (some time ago though) that in America active and passive funds have different tax treatment which skews the balance between the 2 unlike in the UK

steampowered

michaels wrote: »

Last 2 years we saved about 120% of gross salary, this year it will be down to 70% where it will stay until they force me off tax credits and onto universal credit.

I'm not sure I understand your post (unless it is tongue in cheek).

If your concern is around loss of benefits, is there any reason why you can't get a job?