Just became a millionaire

Roger175

DT2001 said:

Well done on the house build. I’m hoping to do one more conversion/build for retirement but can only dream of the increased equity you’ve made (max we’ve managed was 25%). All looks good for retirement.

looked at the % of your wealth in property and thought, having read some previous comments about inc. equity, that it was quite high at 55-60%. I then did a quick calculation and see, even if I inc a 25x multiple for our DB’s, we’d have 55% in property.
You have part of that generating income. We have a holiday home that we use for house swaps and do some Airbnb. 

So I do think property has to be included, even in part, in any calculations.

Thanks

We were very lucky to find an outstanding plot for very modest money (lots of planning and other issues to sort out), which I did all myself.
Then built it almost entirely single handed, working almost every evening and weekend for 5 years (real Grand Designs stuff!), whilst working full time during the day. It nearly killed me, but the result is outstanding. Even learnt to operate an excavator, then borrowed one from a good mate and did most of the groundworks including a complex drainage system and nearly 700m of water main trench.
We got an offset mortgage on the old house and used it to fund the build, then converted this to BTL and now earn £1,000/month out of it.
The whole thing was 'extreme' self-build and not for the faint hearted! Certainly you couldn't make these sort of gains in normal circumstances. In fact I'm a construction professional and get involved in some projects which have gone terribly wrong, often ending in disputes with builders/subcontractors etc.

We are aware that % wise, we're probably over exposed to property, but the BTL is earning us good money and we manage it ourselves and I do all the maintenance, even changed the boiler and oil tank recently! and the inherited share in a property will in due course be converted into cash and go in the ISA/pension pots.

Main house will never be sold (too much emotion invested in it). It is a large chalet bungalow, with downstairs bed/ensuite ready for old age and is almost passive, so energy costs very low (plus we've got 7 years of money coming in from the RHI on the heat pump). 

DT2001

Albermarle said:

DT2001 said:

Roger175 said:

Audaxer said:

Roger175 said:

At 39 though, it looks like you are doing fine......personally, I wouldn't worry that much about net worth on paper - it's something of an illusion in the end.

We started recording our net worth over 25 years ago, at which point our net worth was around -£60k. It's now worth just short of £2m. On a day-to-day basis we don't actually feel much better off and are still very frugal because of that, but when things get a bit stressed I do get a warm feeling being able to look at the sums and think, yes, it's gone well behind the scenes.

You have done really well, but just out of interest does that £2m include equity in your home and DC and/or DB pensions?

Audaxer
Yes, includes the following:-
£900k principal home totally unencumbered  (spent last 6 years building it myself)
£220k equity in rental property - the former family home (£180k BTL mortgage on house worth £400k)
£65k share in inherited property (protected by trust) 
£356k DC pensions (me)
£234k DB pension (wife) taken CETV. She also has another LA pension which will pay £4k/year from 60 but not incl here
£113k S/S ISAs
£81k cash/PBs

Dipped heavily into ISAs and cash to build the house, but it was a dream I had to fulfil! Nevertheless, we turned about £425k into £900k, so not a bad investment.
Both of us age 57, wife retiring next year, I am hoping to give up at 60, but have recently gone freelance, so have flexibility in just how long and how hard I want to work.

R

Well done on the house build. I’m hoping to do one more conversion/build for retirement but can only dream of the increased equity you’ve made (max we’ve managed was 25%). All looks good for retirement.

looked at the % of your wealth in property and thought, having read some previous comments about inc. equity, that it was quite high at 55-60%. I then did a quick calculation and see, even if I inc a 25x multiple for our DB’s, we’d have 55% in property.
You have part of that generating income. We have a holiday home that we use for house swaps and do some Airbnb. 

So I do think property has to be included, even in part, in any calculations.

The stats show that even for relatively prosperous families , the large majority of their wealth is in pensions and their own home . The amounts in other property and other investments/savings ,  are surprisingly low  on average ( proving once again that the inhabitants of this forum are not typical ) 
This starts to change as you start looking at the Top 3% or so, and for richer families still, business assets start to be more prominent.
Interestingly Business Assets are rarely discussed or mentioned on this forum . Probably because most posters seem to be employed, ( or were employed ) rather than owning their own business .

Having thought about your comment and my circle of friends I am not surprised about a high percentage of wealth being in property and pensions especially those still in London and SE. If we had not moved 20 years ago we’d have had to spend more on mortgage payments and the property would be worth lots more than our existing one skewing the figures further.

Business assets is quite an interesting point.
I’ve been employed, then self employed and at the same time a director/investor of a Ltd Co.
My business assets as self employed probably valued at £1k - minimal realisable goodwill.
The limited company which I part owned, at it’s peak probably accounted for 10% of our wealth however we wound the business down about 15 years later and inevitably struggled to realise the balance sheet values. 

As an aside I’d love to know what % of self employed have pension provision. In our case (OH is also self employed) we have been haphazard in our contributions. The reasons inc. 4 children, variable income, having the funding for different projects, no access until 55.
I think many self employed do not see it as a priority and don’t have the ‘free’ (I know it is part of the overall employment package) employers contribution.

DT2001

Roger175 said:

DT2001 said:

Well done on the house build. I’m hoping to do one more conversion/build for retirement but can only dream of the increased equity you’ve made (max we’ve managed was 25%). All looks good for retirement.

looked at the % of your wealth in property and thought, having read some previous comments about inc. equity, that it was quite high at 55-60%. I then did a quick calculation and see, even if I inc a 25x multiple for our DB’s, we’d have 55% in property.
You have part of that generating income. We have a holiday home that we use for house swaps and do some Airbnb. 

So I do think property has to be included, even in part, in any calculations.

Thanks

We were very lucky to find an outstanding plot for very modest money (lots of planning and other issues to sort out), which I did all myself.
Then built it almost entirely single handed, working almost every evening and weekend for 5 years (real Grand Designs stuff!), whilst working full time during the day. It nearly killed me, but the result is outstanding. Even learnt to operate an excavator, then borrowed one from a good mate and did most of the groundworks including a complex drainage system and nearly 700m of water main trench.
We got an offset mortgage on the old house and used it to fund the build, then converted this to BTL and now earn £1,000/month out of it.
The whole thing was 'extreme' self-build and not for the faint hearted! Certainly you couldn't make these sort of gains in normal circumstances. In fact I'm a construction professional and get involved in some projects which have gone terribly wrong, often ending in disputes with builders/subcontractors etc.

We are aware that % wise, we're probably over exposed to property, but the BTL is earning us good money and we manage it ourselves and I do all the maintenance, even changed the boiler and oil tank recently! and the inherited share in a property will in due course be converted into cash and go in the ISA/pension pots.

Main house will never be sold (too much emotion invested in it). It is a large chalet bungalow, with downstairs bed/ensuite ready for old age and is almost passive, so energy costs very low (plus we've got 7 years of money coming in from the RHI on the heat pump). 

I don’t mind being potentially over exposed to property. Our holiday home provides the ability to be away more often (in non Covid times) so meets part of our plan. In the past we’ve had 2 BTLs both in areas where we might have needed to relocate to. Their function was to protect against differing markets within the U.K. The tax regime at the time was also better and they both increased our wealth which our holiday home (although held for the longest) almost certainly will not!

My plan for retirement is to achieve X, Y and Z in terms of lifestyle (which includes lower stress). It does not require maximisation of wealth so whilst I like diversification it is not a key driver in getting the %s at whatever level someone thinks they should be.

Johnny_Doe

Life's a funny one..  I'm firmly in the "saver" camp but have had recent health issues which have made me think..

Example 1 - Millionaire (huge amount of stress in life) saves all his money into a pension - dies aged 55 from a heart attack, didn't get to spend any pension..

Example 2 - Average man who earnt average earnings all his life in a not particularly stressful job, - managed to save well - lives happily to 99 

Example 2 is of course richer than Example 1

It's about finding the right balance in life.. no one knows what's going to happen in the future.. for me the added stress of a high paying job just isn't worth the huge sacrifice..

monaymadlol

Mistermeaner said:

Just some random musings after my net worth (dc pensions + isas + House equity) tipped the 1million Mark at age 42

- Save hard and save early ; i earn well but not mega bucks. I'm a middle manager not director. 10 years ago I was recently divorced with 1 kid and earning 35k. Now I have 4 kids and earn around 90k + bonuses but it's only in the last 5 years I've been in the 60k+ bracket

- Been 'lucky' with stock market performance in last 10years and no doubt this will drop some time but I did things right in investing cheaply and globally 100% in equities and didn't mess around changing investment s or timing drops e tc 

- Been very tax efficient maximising annual allowances and Lisa's etc .... I feel like I could ease off pension contributions but just can't bring myself to pay taxes to get at my hard earned

- I live well below my means : I have a nice house and buy good food but no fancy clothes holidays cars etc - material goods bring fleeting pleasure , family very much share same values - kids want for nothing and aren't bothered about competing for fanciest football boots in the team e tc. I'm typing this on 8year old kindle hence all the typos

- Goes without saying but no drugs, very little alcohol , plenty of exercise and sleep

- Learned so much from this forum and others like it - take time to research and learn them follow great advice

- don't rush to pay off the mortgage - that is good cheap debt. don't however get cars and other rubbish on credit

- Pick partner carefully , my first wife was a financial liability - I'm lucky we split young and only had one kid

- Hitting big financial milestones early bring s an element of peace of mind but not necessarily freedom - we still.Got bills to pay and I will keep working in fairly stressfu! Job for now - tax remains a massive anchor and remains and incentive to save into pension

- That said we are hoping that the missus can start back work part time in a couple of years and then hopefully I can do the same . A couple earning modestly is way more tax and time efficient than one big earner

- Having achieved an element of future security our plan will.now be to make sure we have good quality of life with plenty of free time - money important but only to a point and not worth sacrificing quality of life for too much .

- saMe goes for health - I've been hospitalised with stress related conditions - never again 

- StreTch - do yoga , never too late to start

- Get rid of or severely limit tv . It's all pretty rubbish and repetitive : read instead, draw , do something else

- I Don't feel rich, probably because I'm not but I am probably in the top few % of wealth for my age - but advice above  no fancy job, no inheritence, just work hard save well spend smart and invest

No fancy clothes, cars, holiday.

What a depressing way to live with so much money you earn.

Live life, you could die tomorrow and your post would mean zilch

[Deleted User]

Johnny_Doe said:

Life's a funny one..  I'm firmly in the "saver" camp but have had recent health issues which have made me think..

Example 1 - Millionaire (huge amount of stress in life) saves all his money into a pension - dies aged 55 from a heart attack, didn't get to spend any pension..

Example 2 - Average man who earnt average earnings all his life in a not particularly stressful job, - managed to save well - lives happily to 99 

Example 2 is of course richer than Example 1

It's about finding the right balance in life.. no one knows what's going to happen in the future.. for me the added stress of a high paying job just isn't worth the huge sacrifice..

Pretty sure there is a positive correlation between net worth and life expectancy 

Secret2ndAccount

This chart is for women. Works the same for men.

Mistermeaner

monaymadlol said:

Mistermeaner said:

Just some random musings after my net worth (dc pensions + isas + House equity) tipped the 1million Mark at age 42

- Save hard and save early ; i earn well but not mega bucks. I'm a middle manager not director. 10 years ago I was recently divorced with 1 kid and earning 35k. Now I have 4 kids and earn around 90k + bonuses but it's only in the last 5 years I've been in the 60k+ bracket

- Been 'lucky' with stock market performance in last 10years and no doubt this will drop some time but I did things right in investing cheaply and globally 100% in equities and didn't mess around changing investment s or timing drops e tc 

- Been very tax efficient maximising annual allowances and Lisa's etc .... I feel like I could ease off pension contributions but just can't bring myself to pay taxes to get at my hard earned

- I live well below my means : I have a nice house and buy good food but no fancy clothes holidays cars etc - material goods bring fleeting pleasure , family very much share same values - kids want for nothing and aren't bothered about competing for fanciest football boots in the team e tc. I'm typing this on 8year old kindle hence all the typos

- Goes without saying but no drugs, very little alcohol , plenty of exercise and sleep

- Learned so much from this forum and others like it - take time to research and learn them follow great advice

- don't rush to pay off the mortgage - that is good cheap debt. don't however get cars and other rubbish on credit

- Pick partner carefully , my first wife was a financial liability - I'm lucky we split young and only had one kid

- Hitting big financial milestones early bring s an element of peace of mind but not necessarily freedom - we still.Got bills to pay and I will keep working in fairly stressfu! Job for now - tax remains a massive anchor and remains and incentive to save into pension

- That said we are hoping that the missus can start back work part time in a couple of years and then hopefully I can do the same . A couple earning modestly is way more tax and time efficient than one big earner

- Having achieved an element of future security our plan will.now be to make sure we have good quality of life with plenty of free time - money important but only to a point and not worth sacrificing quality of life for too much .

- saMe goes for health - I've been hospitalised with stress related conditions - never again 

- StreTch - do yoga , never too late to s

No fancy clothes, cars, holiday.

What a depressing way to live with so much money you earn.

Live life, you could die tomorrow and your post would mean zilch

I feel sorry for people that need material things to make them happy

And you're incorrect about it meaning zilch - if I d is tomorrow my savings pension and life insurance will see my partner and kids financially covered for the rest of their lives with no detriment to lifestyle - someone living closed to the wife with credit and little savings would be much more vulnerable 

marlot

Albermarle said:

I do agree with you I was just curious how you would assess a DB element.

Well for LTA purposes it is X20 but everybody thinks that is too low.

Most CETV offers are in the region of X 30 to 35 but current market conditions means that is higher than they have been historically .

Mordko's approx estimate of X25 is as good as any for this type of theoretical exercise . A bit more if the T's and C's about inflation linking and spousal pension are  good .

I've done it slightly differently.  The ONS death date figure suggests I'll live to 84.  I retired at 55, and took some DB pensions then.

For DB pensions taken at 55, I multiply the current payment rate x 30.
My wife's main DB pays out at 60, so x25
State pensions at 67, so multiplied by just 18.

Add in our savings and SIPPs and this comes out at a fairly decent number.  But I then deduct tax and living expenses over the course of my retirement and I come out about even.  So hopefully I've juggled saving for retirement about right.

https://www.ons.gov.uk/peoplepopulationandcommunity/healthandsocialcare/healthandlifeexpectancies/articles/lifeexpectancycalculator/2019-06-07

DT2001

marlot said:

Albermarle said:

I do agree with you I was just curious how you would assess a DB element.

Well for LTA purposes it is X20 but everybody thinks that is too low.

Most CETV offers are in the region of X 30 to 35 but current market conditions means that is higher than they have been historically .

Mordko's approx estimate of X25 is as good as any for this type of theoretical exercise . A bit more if the T's and C's about inflation linking and spousal pension are  good .

I've done it slightly differently.  The ONS death date figure suggests I'll live to 84.  I retired at 55, and took some DB pensions then.

For DB pensions taken at 55, I multiply the current payment rate x 30.
My wife's main DB pays out at 60, so x25
State pensions at 67, so multiplied by just 18.

Add in our savings and SIPPs and this comes out at a fairly decent number.  But I then deduct tax and living expenses over the course of my retirement and I come out about even.  So hopefully I've juggled saving for retirement about right.

https://www.ons.gov.uk/peoplepopulationandcommunity/healthandsocialcare/healthandlifeexpectancies/articles/lifeexpectancycalculator/2019-06-07

I like the idea of including SP as it has value.
Statistics are a wonderful thing. If as Mordko suggests there is a positive correlation between net worth and life expectancy you have, by inc SP, added a few years on 🤷🏼‍♂️