7C investors: 3 Journeys and 28 Names
In order to make the content of this site more directly relevant to its readers, I would like to introduce a number of hypothetical investors representing regular stages on the journey to financial independence. ((Or rather along three journeys.)) We will refer to this group as the 7C investors.
To set some boundaries for the range of people who will find this content useful, I have used some simplifying assumptions:
- the typical investor will want to retire between the ages of 55 (when the cash in SIPPs becomes available) and 65 (the closest round number to the state pension age)
- few people will invest before the age of 25; this gives an investment career of between 30 years (to age 55) and 40 years (to age 65)
- the base target income at retirement is the average UK wage (which I have rounded down to £25K)
- the maximum target income at retirement is the top of the basic tax rate band (currently £42K)
Together, these produce three journeys to retirement:
- from 25 to 65, with target income of £25K pa
- from 25 to 65, with target income of £42K pa
- from 25 to 55, with target income of £42K pa
There will obviously be investors whose ambitions lie outside these bounds, but this is the target audience that I will be writing for.
This a practical blog, and many of the day-to-day issues of DIY investing are to do with portfolio size (an investor with a large portfolio is unlikely to implement an idea or strategy in the same fashion as one with half the wealth).
If we further divide these three journeys into 10-year stages, we derive a total of 14 snapshots, points along the way that we can analyse to see where we should be (what the portfolio size should be) and what we should be doing to stay on track:
A: 25 years old, aiming to retire at 65 with an income of £25K pa
B: 35 years old, aiming to retire at 65 with an income of £25K pa
C: 45 years old, aiming to retire at 65 with an income of £25K pa
D: 55 years old, aiming to retire at 65 with an income of £25K pa
E: 65 years old, aiming to retire at 65 with an income of £25K pa
F: 25 years old, aiming to retire at 65 with an income of £42K pa
G: 35 years old, aiming to retire at 65 with an income of £42K pa
H: 45 years old, aiming to retire at 65 with an income of £42K pa
I: 55 years old, aiming to retire at 65 with an income of £42K pa
J: 65 years old, aiming to retire at ]with an income of £42K pa
K: 25 years old, aiming to retire at 55 with an income of £42K pa
L: 35 years old, aiming to retire at 55 with an income of £42K pa
M: 45 years old, aiming to retire at 55 with an income of £42K pa
N: 55 years old, aiming to retire at 55 with an income of £42K pa
To humanise these snapshots, we will give them names, one for each gender: ((the names are taken from the list of the most popular children’s names for the UK in 2013))
| Letter | Male | Female |
| A | Alfie | Amelia |
| B | Benjamin | Bella |
| C | Charlie | Chloe |
| D | Daniel | Daisy |
| E | Ethan | Emily |
| F | Finley | Freya |
| G | George | Grace |
| H | Harry | Holly |
| I | Isaac | Isla |
| J | Jack | Jasmine |
| K | Kai | Katie |
| L | Leo | Lily |
| M | Muhammad | Mia |
| N | Noah | Niamh |
I will refer to these pair of names when examining the effect of any idea or strategy on these 14 representative portfolios. For example:
- Alfie/Amelia is 25 years old, and hopes to retire at age 65 with an income of 25K pa.
– To do this, he/she needs to accumulate net wealth of £910K.
– He/she currently has net wealth of £0K.
– He/she will need to invest between 10K and 18K pa for the next 40 years.
More on how these numbers were calculated – and the corresponding numbers for the other 26 Names – in a later post.
Mike Rawson
Mike is the owner of 7 Circles, and a private investor living in London. He has been managing his own money for 40 years, with some success.
