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
- Alfie and Amelia are 25 years old, and they want to
retire at age 65, with an annual income of £25K pa (each) - Using the 4% rule, they need to amass a pension pot of £625K
(in today’s money) - They also need to buy a house, at the UK average price of £272K
- They will need a cash deposit of 20% for the house,
which is £54.4K - They also need an emergency fund to cover 6 months of their target income, which is £12.5K
- The total pot of money they need is 625 + 272 + 12.5 = £909.5K
Where they are now
- They have just started investing, and have saved £0K so far
- Their investments haven’t started to grow yet
What they need to do
- Over the next 40 years, they need to save a total of between £389K (at 4% real growth pa) and £606K (2% real growth)
- That’s between 43% and 67% of the total money they need (growth in their investments will do the rest)
- Annual contributions will average 10K (@4%) or 15K (@2%)
- Contributions will vary between 6.8K and 11.3K (@4%)
or between 10.6K and 17.6K (@2%)
The deals
- Their deal size is either £2K (@4%) or £3K (@2%)
- They will average 5 deals per year (@4% and @2%)
- They need to make a minimum of 194 deals (@4%)
or 202 deals (@2%) in their investing career
More to come later on what they need to invest in.
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