Author Topic: How do you plan for FI?  (Read 3971 times)

skip207

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How do you plan for FI?
« on: January 04, 2017, 06:05:41 AM »
This is something I have been thinking about for a while now.

Disclaimer:  I am in the UK.

I get the principal, create a pot large enough to generate a return which will cover your day to day living costs plus some R&R and then maintain (or even grow) the pot.

However, how do you all actually plan to do that?

I guess primary source for most people in the UK is pension.  This I have and come ER it will probably make up 35% ish of my NW.  However due to rules in the UK I wont be able to access it for at least 10 years after ER - maybe more.

That's what gets me thinking about the ways to generate the income in the mean time.

I have a property that I let out, so I understand that will be an income.  But after that I am at a bit of a loss, esp if interest rates stay so low.  Do you guys risk it in funds?  If so how do you go about reducing the risk?

Any advice welcome!

soccerluvof4

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Re: How do you plan for FI?
« Reply #1 on: January 04, 2017, 01:10:18 PM »
I would start by reading through this-

http://jlcollinsnh.com/stock-series/   

boarder42

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Re: How do you plan for FI?
« Reply #2 on: January 04, 2017, 01:13:47 PM »
stocks over time are inherently not risky ... common misconception.  read the above from beginning to end and you should feel better if not then maybe you should go the Real estate way to FIRE. Real Estate will help you reach FIRE much faster than equities if dont correctly but does require more work than setting up a 80-90% equity to bond allocation and putting it on auto pilot.

skip207

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Re: How do you plan for FI?
« Reply #3 on: January 04, 2017, 02:12:33 PM »
Sorry should have said my ER date is T-13 years, so market fluctuations could hurt me.  My pension is heavily exposed (90%) to markets so that's probably as much risk as I would like to take.

Property is something I am interested in but also already exposed, perhaps would consider another cheapish property?

What I am more getting at is once you get closer to FI how do you reduce those risks?

I guess there is limited investment channels these days with rates being so low.  Hopefully by 2030 they will be creeping up?
I am looking at other vehicles too - I purchased a classic car last year - not going to make me a fortune but its another avenue.

I guess from the replies so far you guys just use the stock market pretty much all the way?


frugledoc

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Re: How do you plan for FI?
« Reply #4 on: January 04, 2017, 03:57:29 PM »
I also like p2p hard money lending - uk based.  I'm getting 12-14% and no defaults in over 1 year

Check out saving stream, money thing and ablrate and DYOR on p2p independent forum

bownyboy

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Re: How do you plan for FI?
« Reply #5 on: January 04, 2017, 04:00:06 PM »
I am in UK and my current plan is as follows:

Throw as much into personal pensions as I can to fill up on 40% tax rebate
Save into Stocks and shares ISA to cover period from ER (49) to 55 when can access pensions
Get state pension forecast to work out how much due and when
Have 1 year of living expenses in cash account to be used if the markets are down
We will not be looking to 'reduce risk' when ER. The investments will stay where they are, with us gradually drawing down from them

skip207

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Re: How do you plan for FI?
« Reply #6 on: January 05, 2017, 02:33:55 AM »
I am in UK and my current plan is as follows:

Throw as much into personal pensions as I can to fill up on 40% tax rebate
Save into Stocks and shares ISA to cover period from ER (49) to 55 when can access pensions
Get state pension forecast to work out how much due and when
Have 1 year of living expenses in cash account to be used if the markets are down
We will not be looking to 'reduce risk' when ER. The investments will stay where they are, with us gradually drawing down from them

That's basically the same plan that I have now.

So maybe I am not going all that far wrong?

Pension is covered as much as our LTD can afford.
We have 2 houses (1 Pri Res 1 let).  Currently at LTV c.50% over both - both on good rates.
We have FU fund of c.2 years living costs.

The main thing is our savings, we currently have "spare" around £2k per month. 
Our main savings pot was in PBs but we moved house and spent most of that (£80k) in the process.
Now building back up and looking for somewhere to put that £2k a month.  PBs are not what they used to be and 123 is maxed out at 1.5%.
I don't like ISAs in the current market, yes its a guaranteed return tax free but for 1-1.5% I cant see the point in locking money away for 3-5 years.  I think the banks are getting a way better deal than the customer.

P2P sounds pretty good, I will look into that today.

UKMustache

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Re: How do you plan for FI?
« Reply #7 on: January 05, 2017, 04:07:26 AM »
I am in UK and my current plan is as follows:

Throw as much into personal pensions as I can to fill up on 40% tax rebate
Save into Stocks and shares ISA to cover period from ER (49) to 55 when can access pensions
Get state pension forecast to work out how much due and when
Have 1 year of living expenses in cash account to be used if the markets are down
We will not be looking to 'reduce risk' when ER. The investments will stay where they are, with us gradually drawing down from them

That's basically the same plan that I have now.

So maybe I am not going all that far wrong?

Pension is covered as much as our LTD can afford.
We have 2 houses (1 Pri Res 1 let).  Currently at LTV c.50% over both - both on good rates.
We have FU fund of c.2 years living costs.

The main thing is our savings, we currently have "spare" around £2k per month. 
Our main savings pot was in PBs but we moved house and spent most of that (£80k) in the process.
Now building back up and looking for somewhere to put that £2k a month.  PBs are not what they used to be and 123 is maxed out at 1.5%.
I don't like ISAs in the current market, yes its a guaranteed return tax free but for 1-1.5% I cant see the point in locking money away for 3-5 years.  I think the banks are getting a way better deal than the customer.

P2P sounds pretty good, I will look into that today.

Stocks and shares ISA (one each) in a vanguard lifestrategy fund is another option.  Set it up as a regular investment (X amount per month) and forget about it.
http://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/v/vanguard-lifestrategy-60-equity-accumulation

dreams_and_discoveries

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Re: How do you plan for FI?
« Reply #8 on: January 05, 2017, 05:45:55 AM »
Stock and shares ISA up to the limit, then taxable accounts.

I'm a big fan of buying low cost trackers, in a buy and forget approach.

If you are very risk adverse, you can buy more bonds as opposed to stocks.

As we're now entering a new, post brexit era, inflation looks certain to rise - so any cash savings will soon be depreciating due to inflation. The stock/bond markets are a good way to protect against inflation.

UKMustache

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Re: How do you plan for FI?
« Reply #9 on: January 05, 2017, 05:58:22 AM »
Stock and shares ISA up to the limit, then taxable accounts.

I'm a big fan of buying low cost trackers, in a buy and forget approach.

If you are very risk adverse, you can buy more bonds as opposed to stocks.

As we're now entering a new, post brexit era, inflation looks certain to rise - so any cash savings will soon be depreciating due to inflation. The stock/bond markets are a good way to protect against inflation.

Which trackers do you use?

I've got the HSBC FTSE 100 / 200 and then that vanguard fund I linked to earlier is just a collection of other index funds globally with set bond allocation.  It's always good to see what others have chosen to invest in though.