High risk, high reward: A pauper's dream of early retirement.

LL_USS

@barnstar2077 thanks for sharing your experience.

I am a risk-adversed type and I know that. So I have chosen a job that gives me a DB, and have always chosen the reasonably safe routes to work my money.

I have finally decided to use some saving (LISAs) to invest. Still full of doubts - just a couple of months ago I was still determined that the stock market had been performed so well and stocks could be over-valued, fixed rates for cash still okay so I'll fix my ISAs 3 more years (also because I may still need use the money for an investment in the children around then). Now seeing the market up and down with Trump's tariffs and U-turns it does feel a bit shaky.

Yet I still plan to go ahead with some less risky options. This LISA sum is treated as "the gravy", if the investment works well then I'll use it to travel when I can take it out at 60+. If not very well then it's still fine.

I have not planned to retire early but I like to have enough money to have a choice of when to stop or work just for fun. Good luck with your journey and plan.

barnstar2077

LL_USS said:

@barnstar2077 thanks for sharing your experience.

I am a risk-adversed type and I know that. So I have chosen a job that gives me a DB, and have always chosen the reasonably safe routes to work my money.

I have finally decided to use some saving (LISAs) to invest. Still full of doubts - just a couple of months ago I was still determined that the stock market had been performed so well and stocks could be over-valued, fixed rates for cash still okay so I'll fix my ISAs 3 more years (also because I may still need use the money for an investment in the children around then). Now seeing the market up and down with Trump's tariffs and U-turns it does feel a bit shaky.

Yet I still plan to go ahead with some less risky options. This LISA sum is treated as "the gravy", if the investment works well then I'll use it to travel when I can take it out at 60+. If not very well then it's still fine.

I have not planned to retire early but I like to have enough money to have a choice of when to stop or work just for fun. Good luck with your journey and plan.

Thank you for sharing your own plans.  A DB and LISA sounds like a solid plan.  Depending on how long you have had DBs for, you may be able to retire at 60, or at least shave a good few years off normal retirement age.  It is important to me as well to have options later in life.  You never know what health conditions you are going to have, or what your boss will be like, in your sixties. 

LL_USS

@barnstar2077, looking at my pension statement (pre-taking in the early retirement factor), my current annual DB figure is already just about livable right now with no rent/ mortage (I have very low cost living). So I suppose that means if I have enough ISA, GIA saving to last me till 60 (and a bit more to cover some basic unexpected things with LISA) then, heaven forbids, if I lose my job I can still be okay.

I just think like that so I can live without much worry :-).

For now I still like the idea of having a long and thin work life (I am in academia), so who knows even more than 15-20 years further.... but for any reason I want to pack it in at any point, then I can still consider it.

Indeed I have seen people with such high pensions and living costs here on the forum - great for them, but I am among the ordinary :-) and I can still live well (postive thinking - I know ).  

noclaf

Op I am watching/lurking on this thread with interest and hope it all works out next few years and beyond for your objectives.

I am in my early 40's, work pension is heavily US/Tech tilted and hoping in the long run continued monthly contributions do their thing...only time shall tell. SIPP is also fairly US heavy and some US +EM small caps for good measure...was a bloodbath after the recent shenanigans but again long term view +hope+a prayer.

As an aside I moved part of my S&SISA end of last year into Agg bonds, Gilts, Gold ETF and overweight FTSE 100 (All ETF's) and I certainly think that worked well to dampen some of the volatility/add diversification.

dont_use_vistaprint

barnstar2077 said:

As regulars on this forum will know, I am trying to retire early while working part time, with a current salary of about £21.5K.

Five years ago (after the loss of a loved one) I started to take my life and my finances a bit more seriously.  I was 43 at the time, with a combined pension and ISA of £73.5k.  I decided to make extra contributions and to take a few risks with my investments to see what I could achieve.  I figured if it doesn’t work out I will just work for longer, which is exactly what I would have had to have done if I did nothing anyway, so nothing to lose really.

And so it is that time of year once again, where I reassess my finances, review my results from the last twelve months, and see if my early retirement plans are still on track. 

The last year has been a real test of my resolve, with some big bills (and an overspend on a holiday) testing my ability to stick to the plan and put money away every month.  Therefore I have decided not to increase my SIPP and ISA contributions this year, so this year's pay rise should give me a bit of breathing room.

Also, I have created two new spreadsheets, one which is simply a list of any spend over £100 (listing if it was spent on house maintenance, entertainment etc.)  So I can predict with greater accuracy my needs in retirement.  With the other being a drawdown plan that takes the numbers from my combined ISA and pensions growth predictions and allows me to play around with scenarios (which has been very reassuring, so far :  )

And so, without further delay, the numbers are…

I put a combined total of £9k into my ISA and pensions this year (including the government uplift and my company’s generous 10% contribution.)  I have ended up with an ISA pot of £57.4k and pensions valuing £167.7k in total (Everything adds up to £225.2k.)  This is an increase over last year's total of 21.2k (or 10.41%.)

According to my new drawdown spreadsheet I should still be on track to retire at 55 with just a modicum of growth (even just an average of 2% a year growth, plus my usual contributions, would see me hitting my target.)  I would like at least £330k+ at 55 (in seven years time) before I would consider pulling the trigger.  The earlier I can afford to go the better though.

I am still 100% equities, and plan on staying that way for the foreseeable future (and well into retirement.)  In keeping with my high risk high reward philosophy I have also recently moved everything into US stocks only (As they were down over 10% and didn’t seem to be springing back up straight away.)  Without getting into politics, I believe this dip will be temporary.  Worse case scenario it will sort itself out in just under four years time :  )

I’m not saying that my strategy is right for everyone, but feel like I have very little to lose by trying, and if nothing else it will be interesting to see what happens if you take a few risks while also maintaining paying in every month (even if I just end up as a warning to others! :  )

Good luck with your plans. I retired at 53 and I’m almost 2 years in and I can tell you from my experience it’s really good to plan and do all those spreadsheets but the reality often pans out very differently. 

as well as the numbers have a good hard think about risks and opportunities and be ready with Plan B, C, D etc. when you are retired you have a lot more time and you can do a lot more  without spending money. I also believe being invested in equities is the best idea, But it depends on your mindset. Some people like to have everything planned out with a fixed amount of money and know what they’re doing every year, others like myself preferred to just go with the flow knowing we have options and alternatives if things go really bad for awhile, like now :-) 

barnstar2077

dont_use_vistaprint said:

barnstar2077 said:

As regulars on this forum will know, I am trying to retire early while working part time, with a current salary of about £21.5K.

Five years ago (after the loss of a loved one) I started to take my life and my finances a bit more seriously.  I was 43 at the time, with a combined pension and ISA of £73.5k.  I decided to make extra contributions and to take a few risks with my investments to see what I could achieve.  I figured if it doesn’t work out I will just work for longer, which is exactly what I would have had to have done if I did nothing anyway, so nothing to lose really.

And so it is that time of year once again, where I reassess my finances, review my results from the last twelve months, and see if my early retirement plans are still on track. 

The last year has been a real test of my resolve, with some big bills (and an overspend on a holiday) testing my ability to stick to the plan and put money away every month.  Therefore I have decided not to increase my SIPP and ISA contributions this year, so this year's pay rise should give me a bit of breathing room.

Also, I have created two new spreadsheets, one which is simply a list of any spend over £100 (listing if it was spent on house maintenance, entertainment etc.)  So I can predict with greater accuracy my needs in retirement.  With the other being a drawdown plan that takes the numbers from my combined ISA and pensions growth predictions and allows me to play around with scenarios (which has been very reassuring, so far :  )

And so, without further delay, the numbers are…

I put a combined total of £9k into my ISA and pensions this year (including the government uplift and my company’s generous 10% contribution.)  I have ended up with an ISA pot of £57.4k and pensions valuing £167.7k in total (Everything adds up to £225.2k.)  This is an increase over last year's total of 21.2k (or 10.41%.)

According to my new drawdown spreadsheet I should still be on track to retire at 55 with just a modicum of growth (even just an average of 2% a year growth, plus my usual contributions, would see me hitting my target.)  I would like at least £330k+ at 55 (in seven years time) before I would consider pulling the trigger.  The earlier I can afford to go the better though.

I am still 100% equities, and plan on staying that way for the foreseeable future (and well into retirement.)  In keeping with my high risk high reward philosophy I have also recently moved everything into US stocks only (As they were down over 10% and didn’t seem to be springing back up straight away.)  Without getting into politics, I believe this dip will be temporary.  Worse case scenario it will sort itself out in just under four years time :  )

I’m not saying that my strategy is right for everyone, but feel like I have very little to lose by trying, and if nothing else it will be interesting to see what happens if you take a few risks while also maintaining paying in every month (even if I just end up as a warning to others! :  )

Good luck with your plans. I retired at 53 and I’m almost 2 years in and I can tell you from my experience it’s really good to plan and do all those spreadsheets but the reality often pans out very differently. 

as well as the numbers have a good hard think about risks and opportunities and be ready with Plan B, C, D etc. when you are retired you have a lot more time and you can do a lot more  without spending money. I also believe being invested in equities is the best idea, But it depends on your mindset. Some people like to have everything planned out with a fixed amount of money and know what they’re doing every year, others like myself preferred to just go with the flow knowing we have options and alternatives if things go really bad for awhile, like now :-) 

It sounds like we are on the same wave length!  I'm impressed you managed to go at 53, but I think it will be a bit too soon for me to hope for!  Once I have given up work, I (like you) will be pretty flexible with how much I spend and look forward to the challenge. 

barnstar2077

noclaf said:

Op I am watching/lurking on this thread with interest and hope it all works out next few years and beyond for your objectives.

I am in my early 40's, work pension is heavily US/Tech tilted and hoping in the long run continued monthly contributions do their thing...only time shall tell. SIPP is also fairly US heavy and some US +EM small caps for good measure...was a bloodbath after the recent shenanigans but again long term view +hope+a prayer.

As an aside I moved part of my S&SISA end of last year into Agg bonds, Gilts, Gold ETF and overweight FTSE 100 (All ETF's) and I certainly think that worked well to dampen some of the volatility/add diversification.

I was previously in globally diversified funds, I have just gone all in on the US to try and take advantage of the current volatility.  Once sanity prevails in the US I will go back to the previous funds and remain that way into retirement unless another potential opportunity* pops up.

*Full disclosure, opportunities can also backfire :  )

Juno_Moneta

barnstar2077 said: 

I have just gone all in on the US to try and take advantage of the current volatility. 

Now it’s my turn to say I’m both surprised and concerned by your decision! But wishing you the best with your investments - as you know I fully understand the factors and thought processes that lead to an all-in approach

barnstar2077

Juno_Moneta said:

barnstar2077 said: 

I have just gone all in on the US to try and take advantage of the current volatility. 

Now it’s my turn to say I’m both surprised and concerned by your decision! But wishing you the best with your investments - as you know I fully understand the factors and thought processes that lead to an all-in approach

Touché indeed! :  )

Tassie_Devil

ali_bear said:

Your strategy is a sound one. When you make regular (monthly) investments you average out the ups and downs of markets at the time of purchase. 

Untrue. When you make regular monthly investments you buy at the ruling market price. 

How does buying monthly average out the price?