7C Investors: C is for Charlie & Chloe

Charlie and 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

Targets C

  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

Savings by Age - A

  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

Approach C

  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%) 

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 98 deals (@4%)
    or 102 deals (@2%) in their investing career
Catching up – saved half of the plan

Catch-up C

  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

Catch-up Savings C

  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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