Financial Independence Retire Early (FIRE)

[Bear]

I will add that, I believe the average FTB was around 30 since 2000 so, although, I mentioned making generational comparisons can sometimes be problematic, I would expand a bit and say that, generally, anyone born from roughly 1972 onwards missed out on the easier house buying times.

This would mean these people were buying in 2002> when house prices really accelerated in multiples more than income.

So yeah, the second half of GenX and onwards were affected making what @D.P. say largely correct about Boomers being the proper last generation to benefit from housing costs. (accounting for the Boomer/GenX changeover from 1965-1970-ish) i.e it's not a cliff edge.

Gen X here and I just sneaked in, buying my house in mid 2001 as a FTB taking advantage of a 100% mortgage when they still existed. After the 2 year 100% mortgage deal ended, I remortgaged using the increase in house price to get a better deal. Was very lucky to get in when we did and thankfully it was all paid off about 7 years ago now

 

[slinxy]

So yeah, this is what makes comparing generations problematic in these scenarios.

You were born in 1967 (pretty much at the start of Gen X) and bought a house in 1997 aged 30 after saving for 10 years. If you take someone at the other end of Gen X (1977) then, the equivalent timing would be buying a house in 2007, right when prices had exponentially accelerated in the previous 5-7 years and the rises were outpacing someone's ability to save more.

I'm gen X, 1978... I didn't buy a house till I was 40, I had to decide as it was now or never.
Before that I was renting, it's only in certain countries that people believe buying a house is essentials.

I was nagged to buy a house in my mid 20s, by my 30s I was looking at buying and was going to sort out the paper work but redundancy was looming.
Renting gives a level of freedom that is really required earlier in a persons career, like being able to move much for quickly for a job. It's just a matter of taking advantage of renting rather than buying, investing the additional cash.

People that are older gen x's or prevous generations, swear bind that their money in the property market, but from the looks of it buying to upscale or to rent/lease out is no longer as easy.

 

[dirtychinchilla]

It's less that buying a house is essential and more that if you own a house, it's an asset which can then be leveraged when required. If you rent, you're giving someone else leverage. Why not keep that for yourself?

 

[fez]

Before that I was renting, it's only in certain countries that people believe buying a house is essentials.

People believe it in this country because if you don't then you are likely paying more money in rent than you would be in a mortgage. You are at the whims of far too many **** landlords and housing is insanely expensive. All of these things mean that if you are having to rent instead of buy then you aren't likely stockpiling cash, you are likely treading water at best and just kicking the can of housing down the road.

Renting gives a level of freedom that is really required earlier in a persons career, like being able to move much for quickly for a job. It's just a matter of taking advantage of renting rather than buying, investing the additional cash.

It does make more sense for the young but the idea of housing freedom has largely evaporated. The upsides vs downsides in renting a massively stacked against you these days.

People that are older gen x's or prevous generations, swear bind that their money in the property market, but from the looks of it buying to upscale or to rent/lease out is no longer as easy.

Thats because it was true for decades. In theory the housing market is so overpriced now that the only way you can realistically make any money on housing is to either own the property already or be buying outright but even then the returns aren't amazing vs other investments. Fun fact though, more and more institutions are getting involved in buying housing in the UK and they will 100% be required to maximise their profits and extract every last penny from the people they rent to. Good times ahead for many eh.

It's less that buying a house is essential and more that if you own a house, it's an asset which can then be leveraged when required. If you rent, you're giving someone else leverage. Why not keep that for yourself?

Its more that renting is more expensive than buying in a lot of cases and considering how little money people have stashed away for retirement, its going to be an absolute mess when the current under 40s get to retirement age still renting with **** all pension or savings like so many will.

 

[Richie]

Gen X here and I just sneaked in, buying my house in mid 2001 as a FTB taking advantage of a 100% mortgage when they still existed. After the 2 year 100% mortgage deal ended, I remortgaged using the increase in house price to get a better deal. Was very lucky to get in when we did and thankfully it was all paid off about 7 years ago now

I'm gen X, 1978... I didn't buy a house till I was 40, I had to decide as it was now or never.
Before that I was renting, it's only in certain countries that people believe buying a house is essentials.

I was nagged to buy a house in my mid 20s, by my 30s I was looking at buying and was going to sort out the paper work but redundancy was looming.
Renting gives a level of freedom that is really required earlier in a persons career, like being able to move much for quickly for a job. It's just a matter of taking advantage of renting rather than buying, investing the additional cash.

People that are older gen x's or prevous generations, swear bind that their money in the property market, but from the looks of it buying to upscale or to rent/lease out is no longer as easy.

@Bear - I am not sure how old you are but I am assuming you are early Gen X (1970-ish). If so, and then looking at @slinxy above (late GenX), it seems to support what I said (and what you both quoted)

Deciding to buy over renting was nothing to do with what some people say is a British obsession to own a home - my pensioner parents rent and I see their rent increase each year. Buying a house should mean you at least have a roof over your head when you are elderly. Renting cannot guarantee that at all and, if I get to 70+, the last thing I want to worry about is not having a home to be in.

 

[Bear]

@Bear - I am not sure how old you are but I am assuming you are early Gen X (1970-ish). If so, and then looking at @slinxy above (late GenX), it seems to support what I said (and what you both quoted)

1971. I was agreeing with you, I only quoted you as I was borderline on your dates and it does make a difference. A few years later I wouldnt have been able to afford the house that I was in, which was ludicrous.

A bonus of buying your own home is once its paid off you dont have to pay anything anymore. My mortage payments now go straight into savings, whereas rent always has to be paid.

As you say I dont think its an obsession to own your own home, more that it makes financial sense as quite often rents match or exceed mortgage payments

 

[Richie]

1971. I was agreeing with you, I only quoted you as I was borderline on your dates and it does make a difference.

Oh, I know you were agreeing, I suppose I just quoted you and @slinxy to restate what I only had an opinion/theory on. What you both then went on to say helped support the theory a bit

A bonus of buying your own home is once its paid off you dont have to pay anything anymore. My mortage payments now go straight into savings, whereas rent always has to be paid.

As you say I dont think its an obsession to own your own home, more that it makes financial sense as quite often rents match or exceed mortgage payments

Agreed. Hoping to make overpayments to shorten the term, else it will be state pension age that it will be finished

 

[throwaway4372]

Finally found time to make a Sankey diagram. Not as fiddly as I thought it would be (took about 20 mins). When I have more time I want to automate the generation of the Sankey notation so I don't have to manually update it.

Pretty interesting to view things this way. Tax makes me sick. It looks like I have a big chunk of income unaccounted for, but in reality there's pc/car/boiler purchases looming so I want to accumulate some cash for that.

Spoiler: Sankey Diagram

 

[Minstadave]

Finally found time to make a Sankey diagram. Not as fiddly as I thought it would be (took about 20 mins). When I have more time I want to automate the generation of the Sankey notation so I don't have to manually update it.

Pretty interesting to view things this way. Tax makes me sick. It looks like I have a big chunk of income unaccounted for, but in reality there's pc/car/boiler purchases looming so I want to accumulate some cash for that.

Spoiler: Sankey Diagram

No mortgage/rent?

 

[throwaway4372]

No mortgage/rent?

Paid the mortgage off a couple of years ago. (25 years done in 10 years)

 

[Calpol]

Finally found time to make a Sankey diagram. Not as fiddly as I thought it would be (took about 20 mins). When I have more time I want to automate the generation of the Sankey notation so I don't have to manually update it.

Pretty interesting to view things this way. Tax makes me sick. It looks like I have a big chunk of income unaccounted for, but in reality there's pc/car/boiler purchases looming so I want to accumulate some cash for that.

Spoiler: Sankey Diagram

No kids?

 

[throwaway4372]

No kids?

Nope (and don't want any).

 

[Richie]

Tax makes me sick.

Spoiler: Sankey Diagram

Tax is a necessary evil. Given it looks like you can invest/save about double what you pay in tax (and paid a 25 year mortgage off in 10 years) , I would say you're doing very well indeed.

Why not fire more into your pension to offset the tax, or are you at a max level already?

 

[throwaway4372]

Why not fire more into your pension to offset the tax, or are you at a max level already?

Quite a few factors go into that decision. The context is the pot is already quite healthy and it doesn't really make a meaningful difference to the forecast if I contribute a few percent more. This is a lower % than I've done for a while, the main reason is I've recently had job instability and a long period of unemployment, and I have some large looming expenses, so right now I want more cash buffer more than I want more pension pot. I'm also acutely aware that I can't access the pot until 57, whilst that isn't old by normal standards, it's seeming quite likely I'll retire long before then whether by choice or the job market kicking me out, so I need more pre-57 funds than I currently have. I'll probably increase it if I get more confident that my job is stable. I also look at the tax savings by increasing the contribution and it's really not that much in absolute terms, not wanting to get into politics but using my vote is looking like my best bet for meaningful tax reduction.

 

[cheesyboy]

Before that I was renting, it's only in certain countries that people believe buying a house is essentials

This is a common misconception. In Europe, I believe only Germany, Switzerland, Denmark, has a lower home ownership rate than the UK.

 

[D.P.]

This is a common misconception. In Europe, I believe only Germany, Switzerland, Denmark, has a lower home ownership rate than the UK.

And Sweden, France and Austria.

Home ownership rate is largely proportional to socioeconomic factors, GDP per capita, renter protections etc

 

[cheesyboy]

And Sweden, France and Austria.

Home ownership rate is largely proportional to socioeconomic factors, GDP per capita, renter protections etc

Sweden, France are basically the same as the UK. Certainly not indicative of a different attitude to ownership (the original point). The Germanic countries are the outlier really.

 

[slinxy]

just got my P60 for last year and updated my spreadsheet... only to notice something very shocking.

in 2023 i got paid 6.93% more than I did this year, as I took my bonus as pay rather than put it into my pension. this put me well into the higher tax rate.

This year, like last year.. I worked out my pension contributions so that all my taxable income remain below the higher tax threshold.

Along with the 12% rather than the current 10% rate, the difference in my actual take home pay was only 1.63% lower. Crazy huh!

 

[throwaway4372]

Spoiler: Sankey Diagram

Thinking a bit more about this, what I took value from wasn't all the detail of living expenses, but rather the broad brush view of how resources are allocated.

Here's the Sankey version of what I mean:

This has the added benefit of being much simpler to make.

But what I really wanted was something to include in my spreadsheet, and whilst I could automate the Sankey there's really no need because a pie chart tells me all I need to know:

A couple of observations from that:
- It includes the employer contribution, which so far I haven't bothered to count, but it's a decent chunk of resources so should be counted.
- It makes it easy to see total pension contribution as a percentage of total resources (which isn't the same as adding the two contribution percentages together).

 

[adamg64]

Good day people.

I hope you don’t mind me asking here but this thread seems to maybe be the best place to ask regards investment opportunities.

I’ve been thinking about this for some time and dunno where to start and do it safely, mainly looking to invest a small amount and if it takes off look to increase it.

I have a small amount in an isa with RBS but I feel I want to invest in some stocks and commodities maybe solid things like gold, google , Nividia etc.

I feel I’ve missed the boat on crypto but I just want to be safe (I know there is risk in everything) but where to start mainly what app should I use?

I’m currently on holiday in Orlando and been using Revolut app and was checking out there investment section but they seem new to that side and want something proven?

Need an app or website I can safely invest and also a place that if it’s not for me I can sell and pull my money back out quickly.

Hope somebody could offer a little advice please.

Or anybody should follow or checkout advice.

Thank you have a great day.

Adam.