Ten years to £1m?

masonic

Bostonerimus1 said:

The OP looks to have a reasonable plan to me. A 40k index linked withdrawal goal from a 1M pot has a very good probability of lasting 30 years and probably longer, particularly if it isn't dogmatic. The lack of a mortgage will give the OP flexibility in spending and if they combine good budgeting with their investing I think they'll have the tools to adjust outgoings. The state pension will kick in no more than 20 years after age 50 and will probably cover 1/3 to 1/2 of the 40k annual income needs. This is one of the most common sense approaches I've seen here. There is a plan that is being tracked and analyzed and I see no reason why the OP won't succeed.

The main issue I was illustrating was that with only £120k in ISAs, and only about £1k per month projected to be added, the accessible pot for the first 10 years or so will be about 1/3 of the total, say £350k. So the starting withdrawal rate from that pot is about 11%. So a real possibility it wouldn't last the 10 years required, especially if de-risked ahead of drawdown. Easing off the pension and ramping up ISA contributions might be worth considering. There is scope for this while still remaining a basic rate taxpayer.

Bostonerimus1

masonic said:

Bostonerimus1 said:

The OP looks to have a reasonable plan to me. A 40k index linked withdrawal goal from a 1M pot has a very good probability of lasting 30 years and probably longer, particularly if it isn't dogmatic. The lack of a mortgage will give the OP flexibility in spending and if they combine good budgeting with their investing I think they'll have the tools to adjust outgoings. The state pension will kick in no more than 20 years after age 50 and will probably cover 1/3 to 1/2 of the 40k annual income needs. This is one of the most common sense approaches I've seen here. There is a plan that is being tracked and analyzed and I see no reason why the OP won't succeed.

The main issue I was illustrating was that with only £120k in ISAs, and only about £1k per month projected to be added, the accessible pot for the first 10 years or so will be about 1/3 of the total, say £350k. So the starting withdrawal rate from that pot is about 11%. So a real possibility it wouldn't last the 10 years required, especially if de-risked ahead of drawdown.

Where the money is coming from is important and I wouldn't want to run out of non-pension money before I could access a pension. So that's an area to monitor and the OP should probably have a couple of years of cash as part of their non-pension allocation when they start retirement. But I expect the OP to put that into their model and act with prudence when the time arrives.

dont_use_vistaprint

DannyCarey said:

Hello friends,

I have just turned 40 and the realisation that I am getting on has fully hit me. I have been investing every month, a little more seriously since 2016.

Between wife and I we have £312,000 invested between S&S ISAs and pension - roughly £120k in ISAs.

I have been doing some modelling of what would it take to get to a million in ten years or less. We invest primarily in Vanguard's Global All Cap index fund.

I have two kids, one in primary school and the other still in nursery for another 18 months (£1k a month). Cant wait for that to finish to be honest.

I earn £65k base and 15% annual bonus which depends on company and personal performance. I also get quite a lot of RSUs every few months which I use for nursey fees and also holiday fund. Wife earns £35k and no bonuses etc.

I invest 30% into work pension (work pays 6%, i put in the rest).

In total we invest £2600 a month.. not counting bonuses (which I invest 100% of usually), if we did this for 10 years at 5.5% growth it would be £956k, which is good enough for me to maybe ease off a bit. 

We have a "starter home" (3 bed semi), which at some point I would like to upgrade to a bigger family home. that could complicate things but I don't want to eat into investments. House worth £220,000 and we only owe £68k on it. House in my area for what we would like would be about £350 - £400k.

My work pays well but its the tech industry and so it could go south at any time. I just want to earn and put away as much as I can to have more control.

Does that seem right to you all? Anything else I should consider?

Have you ever considered a couple of years in a tax-free country , well, your skills and language are in demand, earning 2 to 4 times what you are earning in the UK? 

I know I and a lot of people were in a similar position to you in our 30s and 40s , hitting the squeezed middle,  children’s university fees looming,  needing bigger properties for growing teenagers ….seemed the only option , and it solves the problem of financial security and getting out the rat race early to enjoy your 50s

Ray_Singh-Blue

@DannyCarey

Admire what you are trying to do.

It may be of interest that we have been trying to to much the same thing over the last 10 years, and have just posted a summary here.

When considering the mortgage and ISAs together, we went from an effective balance -£370K to +£370K in 10 years, so £740K not a million.

Our basic strategy has been to fund the ISAs every year and keep 50 - 100% in VWRP, with the rest in cash.

If starting over, the main thing I might do differently would be:

• Go 100% VWRP, at least at the start
• not rush to pay off the mortgage, the leverage can be your friend or enemy but is more often your friend.

However I have modelled it, and even if we had done this and managed to put the full allowance into the ISAs every year, the balance would still not quite have reached £1 million over the last 10 years.