Savings Target

eskbanker

benbay001 wrote: »

What are you actually saving for though? I am basically your age, earning a whole lot less than you and have basically the same out goings.

Savings are great, but saving more than half of your income 30 years before retirement is certainly odd.

What makes you say that? What would you do if you had OP's income, that you'd consider less 'odd'?

londoninvestor

A good question for OP actually is whether they have a target retirement age in mind.

benbay001

eskbanker wrote: »

What makes you say that? What would you do if you had OP's income, that you'd consider less 'odd'?

Anything. Have a holiday, move home, buy a better car.
Not much point having £2 mil in the bank if you only need £1k a month to live.

eskbanker

benbay001 wrote: »

eskbanker wrote: »

What makes you say that? What would you do if you had OP's income, that you'd consider less 'odd'?

Anything. Have a holiday, move home, buy a better car.
Not much point having £2 mil in the bank if you only need £1k a month to live.

OP is seemingly looking to buy a property, which, being London-based, obviously requires some serious saving.

There's nothing inherently wrong with spending a higher proportion of salary for those electing to do so but to characterise doing otherwise as 'odd' seems narrow-minded, and many on a money saving forum will naturally have accumulation in mind, given a generous salary and relatively low outgoings.

Building a buffer is prudent for a variety of reasons, not just for retirement but also to be in a position of strength when earning potential decreases (e.g. job loss, serious illness) and/or living costs increase (e.g. family)....

Tubemap

cloud_dog wrote: »

Yes. some other stuff to make it long

Thank you for confirming

benbay001 wrote: »

What are you actually saving for though? I am basically your age, earning a whole lot less than you and have basically the same out goings.

Savings are great, but saving more than half of your income 30 years before retirement is certainly odd.

Thanks for your message. My goal is quite simple. I would like to reach £100,000 of savings/wealth before thinking about any potential real estate project (i.e. buying a house).

I agree with you, my out goings seem low compared to my salary. I do not have a lot of needs but I try to find out the best deals on anything that I am doing (e.g. broadband, electricity or gas etc...). In terms of clothing, I could buy fancy suits, expensive brands, have a cool watch (and I really like watches) and so on but I genuinely do not care about those things anymore (I used to though).
I also have the chance to travel across Europe for a very cheap price, part of my family works for a famous English airline company and I tend to get tickets at a discount. I am aware that this a privilege and a chance.

eskbanker wrote: »

OP is seemingly looking to buy a property, which, being London-based, obviously requires some serious saving.

There's nothing inherently wrong with spending a higher proportion of salary for those electing to do so but to characterise doing otherwise as 'odd' seems narrow-minded, and many on a money saving forum will naturally have accumulation in mind, given a generous salary and relatively low outgoings.

Building a buffer is prudent for a variety of reasons, not just for retirement but also to be in a position of strength when earning potential decreases (e.g. job loss, serious illness) and/or living costs increase (e.g. family)....

My ultimate goal is to retire early, probably the target of most of the people being interested in savings and increasing their wealth. I really do not want to work until I am 65 and I believe that if I keep saving at that pace over 20 years, I am hoping to get close to a million pound. Once this goal is reached, I would probably get to live in a cheap country and live with the dividends and interests.

Any thoughts ?

eskbanker

Tubemap wrote: »

My ultimate goal is to retire early, probably the target of most of the people being interested in savings and increasing their wealth. I really do not want to work until I am 65 and I believe that if I keep saving at that pace over 20 years, I am hoping to get close to a million pound. Once this goal is reached, I would probably get to live in a cheap country and live with the dividends and interests.

Any thoughts ?

Seems to me you're heading in the right direction - personally I agree with your short-term plan to save enough to buy a property in London, which, as well as avoiding rental costs, should ultimately be a decent long-term investment.

As recommended by another poster, it would be worth maximising pension contributions as this is a tax-efficient way of long-term accumulation.

Aiming for £1m by 48 may not be the answer it seems right now - inflation at 2.5% would reduce the buying power of £1m in today's money to £625K, and you'd probably be looking at 40 years of life expectancy beyond that, so that would be a long time to eke out a living from a pot of that size, even in a cheap country!

However, plans can and do change, so continue doing what you're doing but be prepared to revisit and finesse your plans later on....

Tubemap

eskbanker wrote: »

Seems to me you're heading in the right direction - personally I agree with your short-term plan to save enough to buy a property in London, which, as well as avoiding rental costs, should ultimately be a decent long-term investment.

As recommended by another poster, it would be worth maximising pension contributions as this is a tax-efficient way of long-term accumulation.

Aiming for £1m by 48 may not be the answer it seems right now - inflation at 2.5% would reduce the buying power of £1m in today's money to £625K, and you'd probably be looking at 40 years of life expectancy beyond that, so that would be a long time to eke out a living from a pot of that size, even in a cheap country!

However, plans can and do change, so continue doing what you're doing but be prepared to revisit and finesse your plans later on....

Thanks for your contribution Eskbanker.
I do have a clearer picture of my target now:

1. December 2019 target: £75,000
2. Increase my Pension Contribution (if there a particular age before being able to unlock it?)
3. £100,000 target as soon as possible
4. Brain storming on whether I want to buy a property here in London. I am a bit tired of real estate agency, customer service is close to zero but they are very good in taking your money.
5. Keep accumulating and investing throughout my career with a potential switch at some point between Capital Growth to Income products (HY, Stocks with dividends etc ...).
6. Ultimate goal ==> retirement :j :cool:

I will certainly increase the pension contributions in the near future

eskbanker

Tubemap wrote: »

Increase my Pension Contribution (if there a particular age before being able to unlock it?)

Currently the minimum age to access pensions is 55, but it's planned to increase in line with the increase to state pension age, so 57 by 2028, and maybe more beyond that, so difficult to project what it'll be by the time 2048 comes round!

This gets discussed in threads such as https://forums.moneysavingexpert.com/discussion/5902379/private-pension-increase-from-55-in-2028

Tubemap

Thanks a lot for your help eskbanker.

Any other thing that I should consider to further optimise?