Plough money in, live quite frugally, am I wrong?

whatstheplan

As I've touched on in other topics, I'm 49 years old, live alone, no kids etc.  Work full-time, reasonably secure employment, been paying into a workplace pension for 16ish years.  Other than 3 x BTLs (low value properties, mortgaged, low rental income) I've never invested in my life.  I now plan to change this with the objective of retiring as soon as possible, ideally in the 58-60 age bracket as oppose to working on until I'm 65-67.

Tbh I don't do much with my life, therefore my expenditure on so-called luxuries is quite low.  I'm not interested in doing my residential property up with the latest kitchen, bathroom etc.  I don't holiday abroad.  I don't splash cash on clothes, gadgets etc.  And my car was bought new ... in 2008.  I say none of this to invoke sympathy, I'm generally quite happy with my life and my personal rationale is if I go out tomorrow and buy a £40k car, x weeks later the novelty of having it will have worn off so why bother.  If I genuinely had the cash to burn I'd no doubt have many of life's material luxuries, however I'm not in that financial position.

My thought process is, starting this year, to invest as much as I reasonably can to work towards retiring earlier.  I'm still scoping options, one of which might be making additional contributions into my workplace pension.  I'm also looking at a stocks and shares ISA.  Note, I don't intend to leave myself devoid of ready cash and will likely retain circa £8k in my standard savings account for day to day living and to cater for the odd occasion when I do decide to treat myself e.g. new telly or to cover unexpected bills.  So my high level strategy from hereon in can probably be summarised as maintaining the £8k 'float' and investing every ... other ... penny.

However, regardless of how I actually invest, I was speaking to a family member about this earlier and they weren't convinced.  I'm not saying they were wrong (we all have different objectives and approaches to life) however they intimated 'But what if you don't live to an older age, you'll have been investing all that money that could have been going towards things that give you pleasure during your working years?'  My reply was that my planned strategy is indeed a gamble, a gamble in the sense if I peg it before I retire then obviously whatever I've invested to that date hasn't garnered me any direct (material) enjoyment.

However surely that's the gamble with any medium-long term investing, no? (if we discount drawing any profits.)

I came off the call on a slight 'am I doing the right thing?' downer, however I soon regrouped!  In my personal circumstance, I'd sooner take the gamble of investing with the goal of retiring that bit earlier as oppose to spending it on 'stuff' over the next 5-10 years, meaning I'd then be resigning myself to work until 65 or thereabouts.

Steve182

however they intimated 'But what if you don't live to an older age, you'll have been investing all that money that could have been going towards things that give you pleasure during your working years?'  

I don't live frugally, but I have resisted stretching my finances by not moving to a larger house or considering private school for my son in order to invest for our future.

In reply to the above quote you could argue "But what I do live to an older age, I'll have been spending all that money that could have been invested to give me pleasure during my retirement years?' 

 

whatstheplan

Steve182 said:

however they intimated 'But what if you don't live to an older age, you'll have been investing all that money that could have been going towards things that give you pleasure during your working years?'  

I don't live frugally, but I have resisted stretching my finances by not moving to a larger house or considering private school for my son in order to invest for our future.

In reply to the above quote you could argue "But what I do live to an older age, I'll have been spending all that money that could have been invested to give me pleasure during my retirement years?' 

 

Yeah I think that's why I look on it as a calculated gamble.  Obviously I could get knocked down by a bus tomorrow, however if we always lived our life with that mindset we'd spend 100% (and more) of our income.  If we assume a finite amount of income, we ultimately opt to live our life spending it as quickly as it comes in, saving as much of it as we possibly can, or somewhere between.  Given my objective, I'll be aiming to save/invest as much as I can, however I won't be living frugally in the purest sense of the word!  I eat well enough (so not bread and dripping) and my heating is on to keep myself warm!  So I'm not scrooge!!

However yeah, I'm deciding to be more financially cautious now in the calculated hope it pays off in my late 50's and beyond.

Steve182

If it was a 50/50 decision between spending or investing you could consider Einstein's quote.

Compound interest is the eighth wonder of the world,” Einstein reportedly said. “He who understands it, earns it. He who doesn't, pays it

You may not be paying it by spending now, but you will be earning it (or compound growth)  by investing for tomorrow.

TheAble

The whole "you could die tomorrow" argument is a nonsense. Better to assume we'll be living to a ripe old age and we want to do that with financial security. 

benbay001

Luckily we have carefully calculated statistics on average age of death, somewhere in the 80s for someone who has lived to 49. 

Alexland

We do similar keeping around £10k cash, not having the latest cars, investing around 75% of our employment package in recent tax years via pensions and ISAs however with kids it feels more meaning as if we don't live to spend the money they should find it useful.
The house opposite has new owners who are spending lots of money making it really nice but it's made the lack of investment in our house more obvious so this year we are doing jobs that I had been putting off such as removing roof moss, replacing garage doors, relaying the drive, etc to make ours nice too.
Living frugally seems to work for a few years then you need to spend money on improvements to stop yourself falling behind and stop the earth reclaiming your property. Every time we complete a job that I had been delaying spending money on I feel a sense of relief although it might mean working for another month...

Marcusian

This is a debate I have been having myself - I am 37, fit and healthy, a competing bodybuilder, feel in my physical prime. I just find it hard to be in anyway motivated to go OTT with later in life 'benefits'. I am not saying I am not, I invest, I have SIPP, a work pension etc. But I want to go after things now, I want to save and buy a gym, a buy to let etc. I live very frugally, I can account for every last 'surplus' money I have made since doubling my income last year, business continues to grow etc. 
I want to do things that give me a buzz now, not when I am 70. I am more than happy to chill and live a spartan life when I am older. 
I guess it's a balance, but I just don't get much pleasure from thinking I can be better off when I am 70 at the expense of being better off at 40 when I am looking to obtain assets that need my energy. I am not talking about wasting my money - more focus on getting the £50k needed to buy a gym I can work in, run and smash out the park now. Not invest it all because at 75 I can spend more on things old people do. 

Nebulous2

Moderation in all things, and all things in moderation. 

Spend some now, get your pleasures from what you enjoy,  but the more you save the quicker you can hit that stop button. You need to find a balance between the two that is right for you.

People say you get more enjoyment from spending on experiences than things. I find it hard to see where the line is drawn as my expenditure on things brings me experiences. My main hobby is cycling. When I started, late on in life, around 10 years ago, I was extremely reluctant to spend on it. Gradually that has changed, with better kit, clothes and bikes. However - the bike is simply a tool. The value to me is in the experiences it has brought me, testing myself on long-distance endurance events. 

There will always be someone saving more than you and living more frugally. Equally there will always be those who manage to outspend you. If you go between the pension forum  on MSE and the debt free wannabe section you will find extreme examples of both. The trick is not to measure yourself against these extremes but to plot your own route.  

 

ratechaser

Alexland said:

We do similar keeping around £10k cash, not having the latest cars, investing around 75% of our employment package in recent tax years via pensions and ISAs however with kids it feels more meaning as if we don't live to spend the money they should find it useful.
The house opposite has new owners who are spending lots of money making it really nice but it's made the lack of investment in our house more obvious so this year we are doing jobs that I had been putting off such as removing roof moss, replacing garage doors, relaying the drive, etc to make ours nice too.
Living frugally seems to work for a few years then you need to spend money on improvements to stop yourself falling behind and stop the earth reclaiming your property. Every time we complete a job that I had been delaying spending money on I feel a sense of relief although it might mean working for another month...

That last part really resonates with
me. When houses go on the market in our area, there's the usual estate agent code, ranging from 'immaculately presented', through 'opportunity to improve', all the way to ' requiring complete modernisation'. The correlation here is unsurprisingly length of ownership and age of vendors - there's a certain grim reality that ambulances often precede For Sale signs - we have a pretty old demographic around here...

Taking a critical look at our own place, which we have lived in for over 15 years, we are probably sitting in the middle ground of estate agent speak - after an initial splurge when we moved in, we have been pretty frugal with house 'stuff' and there's definitely a need for more investment. Luckily it coincides with the fact that our cash is earning peanuts so might as well put it to some good use. 

The shame of selling a house that needs 'modernisation' while we are still alive - what would the neighbours say 

Back to the core point of the OP - live at a level that you are comfortable with, it sounds like you are easily able to do so while putting money away for the future. But please don't end up being the richest corpse in the graveyard...

Albermarle

ratechaser said:

Alexland said:

We do similar keeping around £10k cash, not having the latest cars, investing around 75% of our employment package in recent tax years via pensions and ISAs however with kids it feels more meaning as if we don't live to spend the money they should find it useful.
The house opposite has new owners who are spending lots of money making it really nice but it's made the lack of investment in our house more obvious so this year we are doing jobs that I had been putting off such as removing roof moss, replacing garage doors, relaying the drive, etc to make ours nice too.
Living frugally seems to work for a few years then you need to spend money on improvements to stop yourself falling behind and stop the earth reclaiming your property. Every time we complete a job that I had been delaying spending money on I feel a sense of relief although it might mean working for another month...

That last part really resonates with
me. When houses go on the market in our area, there's the usual estate agent code, ranging from 'immaculately presented', through 'opportunity to improve', all the way to ' requiring complete modernisation'. The correlation here is unsurprisingly length of ownership and age of vendors - there's a certain grim reality that ambulances often precede For Sale signs - we have a pretty old demographic around here...

Taking a critical look at our own place, which we have lived in for over 15 years, we are probably sitting in the middle ground of estate agent speak - after an initial splurge when we moved in, we have been pretty frugal with house 'stuff' and there's definitely a need for more investment. Luckily it coincides with the fact that our cash is earning peanuts so might as well put it to some good use. 

The shame of selling a house that needs 'modernisation' while we are still alive - what would the neighbours say 

Back to the core point of the OP - live at a level that you are comfortable with, it sounds like you are easily able to do so while putting money away for the future. But please don't end up being the richest corpse in the graveyard...

I am also in a similar place ( like Alexland as well) 
House is quite nice but 'lived in ' and the OH has been pushing to spruce it up as 'we can afford it ' Also being in our early sixties makes sense to do some things now , rather than later , as maybe in ten years time we might look to move.
Our new bathroom fitters arrived one hour ago !
And my car was bought new ... in 2008. 
It might feel good to be saving money on not buying a new car but there are some downsides  . The pollution from modern cars ( and not just electric/hybrids) is a fraction of what it was even 10 years. and fuel economy is better . Also cars have a lot more safety features nowadays - automatic braking - blind spot monitoring - lane departure warnings - more airbags etc