7C Investors: B is for Ben & Bella

Ben & Bella

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

Targets - B

  1. Ben and Bella are 35 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

Savings by Age - A

  1. They have been investing for 10 years and have saved
    (made contributions) totalling £85K (at 4% real growth pa)
    or £133K (2% real growth) so far
  2. These have grown to £101K (@ 4%) or £145K (@2%)
  3. Of this, £54.4K has been used as the deposit on a house
What they need to do from here

Approach - B

  1. Over the next 30 years, they need to save a total of between £304K (at 4% real growth pa) and £473K (2% real growth)
  2. Annual contributions will average 10K (@4%) or 16K (@2%)
  3. Contributions will vary between 11.3K and 7.9K (@4%)
    or between 17.6K and 12.3K (@2%) 

Use of Savings by Age - A

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 152 deals (@4%)
    or 158 deals (@2%) in their investing career
Catching up – saved half of the plan

Catch-up B

  1. If they have saved less than planned (say half), then @4% they will need to save another £387K at an average of 13K per year
  2. Contributions will vary between 10.1K and 14.4K
  3. They will make another 193 deals of £2K,
    averaging  6 deals per year
  4. At  2% growth, they will need to save another £567K at an average of 19K per year
  5. Contributions will vary between 14.8K and 21.1K
  6. They will make another 189 deals of £3K
    averaging  6 deals per year
Catching up – saved nothing yet

Catch-up Savings B

  1. If they have saved nothing, then @4% they will need to save another £474K at an average of 16K per year
  2. Contributions will vary between 12.3K and 17.6K
  3. They will make 157 deals of £3K, averaging  5 deals per year
  4. At  2% growth, they will need to save another £662K at an average of 22K per year
  5. Contributions will vary between 17.2K and 24.6K
  6. They will make 165 deals of £4K
    averaging  6 deals per year

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

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