7C Investors: C is for Charlie & Chloe

This is one of a set of fourteen pages which describe the hypothetical 7C investors – long-term UK DIY private investors on their way to financial independence and retirement.

What they want

1. Charlie and Chloe are 45 years old, and they want to
   retire at age 65, with an annual income of £25K pa (each)
2. Using the 4% rule, they need to amass a pension pot of £625K
   (in today’s money)
3. They also need to buy a house, at the UK average price of £272K
4. They will need a cash deposit of 20% for the house,
   which is £54.4K
5. They also need an emergency fund to cover 6 months of their target income, which is £12.5K
6. The total pot of money they need is 625 + 272 + 12.5 = £909.5K

Where they are now

1. They have been investing for 20 years and have saved
   (made contributions) totalling £194K (at 4% real growth pa)
   or £302K (2% real growth) so far
2. These have grown to £280K (@ 4%) or £361K (@2%)
   
3. Of this, £54.4K has been used as the deposit on a house

What they need to do from here

1. Over the next 20 years, they need to save a total of between £195K (at 4% real growth pa) and £304K (2% real growth)
2. Annual contributions will average 10K (@4%) or 15K (@2%)
3. Contributions will vary between 11.3K and 7.9K (@4%)
   or between 17.6K and 12.3K (@2%) 

The deals

1. Their deal size is either £2K (@4%) or £3K (@2%)
2. They will average 5 deals per year (@4% and @2%)
3. They need to make another 98 deals (@4%)
   or 102 deals (@2%) in their investing career

Catching up – saved half of the plan

1. If they have saved less than planned (say half), then @4% they will need to save another £394K at an average of 20K per year
2. Contributions will vary between 16.0K and 22.8K
3. They will make another 197 deals of £2K,
   averaging  10 deals per year
4. At  2% growth, they will need to save another £521K at an average of 26K per year
5. Contributions will vary between 21.1K and 30.1K
6. They will make another 173 deals of £3K, 
   averaging 9 deals per year

Catching up – saved nothing yet

1. If they have saved nothing, then @4% they will need to save another £595K at an average of 30K per year
2. Contributions will vary between 24.1K and 34.4K
3. They will make 198 deals of £3K, averaging  10 deals per year
4. At  2% growth, they will need to save another £739K at an average of 37K per year
5. Contributions will vary between 29.9K and 42.7K
6. They will make 184 deals of £4K, 
   averaging 9 deals per year

More to come later on what they need to invest in.

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