7C Investors: A is for Alfie & Amelia

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 - A

  1. Alfie and Amelia are 25 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 just started investing, and have saved £0K so far
  2. Their investments haven’t started to grow yet
What they need to do

Approach - A

  1. Over the next 40 years, they need to save a total of between £389K (at 4% real growth pa) and £606K (2% real growth)
  2. That’s between 43% and 67% of the total money they need (growth in their investments will do the rest)
  3. Annual contributions will average 10K (@4%) or 15K (@2%)
  4. Contributions will vary between 6.8K and 11.3K (@4%)
    or between 10.6K and 17.6K (@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 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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