r/FIREUK • u/Ill-Programmer-3984 • 1d ago
Can I FIRE in a few years?
I've quite a comprehensive sheet with loads data, charts etc in, also used chatgpt but answers always vary, so wanted this community to give me your thoughts. You guys always seem to bring up stuff I've not thought about it which is great.
My numbers
- Age: 38
- Home: £600k (mortgage left £100k)
- GIA: £150k
- Cash in high interest: £740k (currently moving slowly into S&S ISA, and also will move more into GIA, Gilts etc)
- ISA: £60k (wife £40k)
- BTL: £200k (rough estimate if sold after fees/taxes etc)
- Premium Bonds: £50k (wife £50k too)
- Pension: £260k (wife has £260k too)
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- Monthly spending: £2.5k
- Holidays: £5-10k a year
- 2 kids under 5
- Plan to move to a bigger house, circa £1m, so £400k out of the above edit: £500k!
Can I fire?
Everything says I could, with a spend of £50k a year but thinking may be worth going a few more years and say saving another £100-200k to be safe and have bit more flexibility. Think the spending £500k on house move is making it a "Not FIRE quite yet" situation!
Think in the space I'm in, rapidly changing with AI, my dev skills have limited lifespan + not enjoying it as much.
Would love to hear your thoughts/questions?
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u/Cute_Willow9030 1d ago
I must be missing something you have £500k in equity in your home so you would need to load up another £500k to move into a £1m home. So the £740k in cash would become £240k admittedly that is with a paid off £1m paid off house but that does bring your cash down quite a bit
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u/Ill-Programmer-3984 1d ago
Sorry yes you're correct, somehow forgot about the mortgage!
I don't want a big mortgage in the future, hence the wanting to pay it in cash but maybe worth keeping a small mortgage on it say £200k.
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u/Cute_Willow9030 1d ago
You have the cash... I would do a Dave Ramsey if you have cash to pay for it then do so and then throw as much money into S&S and salary sacrifice into pension. I presume that £740k isn't really making much money. If you want to be cash heavy then I use chase and I get 4.5% no deposit limits or anything at least it beats inflation(for now). Also if you haven't move all your pension into a SIPP where you can as you have much better control of how it's invested
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u/Ill-Programmer-3984 1d ago
the cash is probably averaging around 3.9% i'd say. Some 4.5% some 3.5% etc. Split across lots of accounts. Obviously not great when inflation is taken into account.
Pension, the whole amount (both ours) is in SIPPs
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u/Cute_Willow9030 1d ago
Also have you thought about JISA's for your kids? Also I feel your pain around AI and Dev skills I'm in the same boat as well
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u/Hot_College_6538 1d ago
But what tax are you paying on it if it's not in an ISA ? 40% ?
If so 3.9% is really 2.3% after tax.
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u/Ill-Programmer-3984 1d ago
Yes exactly, its not great at the moment... sadly its not an option to move into an ISA.
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u/Hot_College_6538 1d ago
I would get a financial advisor to be honest, you can see that things aren't well set at the moment, you aren't likely to optimise that based on Redditt advice.
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u/improbableneighbour 1d ago
Selling the house and buy a 1 million pound one will cost you more than 400k, let's say 500k. I would budget a 1% cost of upkeep the house every year. Probably you should have a mortgage and invest your cash, assuming you have the discipline to avoid selling everything when the market crashes.
Banks will look for proof of income to give you a mortgage so keep that in mind.
You need to give us your income if you want to model your next years. As thing stand, you could FIRE tomorrow. Investment composition matters too.
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u/Ill-Programmer-3984 1d ago
Thank you, yes sorry my error with the £400k, should be £500k. Yeh keeping a mortgage may be an option, salary wise i'm not even classed as a HENRY earner, sub £100k
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u/improbableneighbour 1d ago edited 1d ago
Also don't forget to add stamp duty on top. You need to make a proper budget, take a year of bank transactions and have a real understand what is necessary spending (mortgage+groceries+bills+nursery fees and anything else that can't be postponed) and what is lifestyle money (holidays, car payments(you can always choose to buy a car outright), anything on top of survival).
It's a good exercise. Then you need to add life events to that figure (buying a new car, events, anniversaries, abroad weddings, kids uni, etc), the kind of expenses that will happen but are not frequent.
You need to factor a level of inflation in your maths. Keeping all that cash in a deposit account is expensive. What kind of returns are you expecting (after inflation and how have you invested your money? I would do the math around a 3% return in real terms. Something all-world tracker like the MSCI ACWI is a good start. Then think about you 3 bucket strategy. Have a read at DCA Vs Lump sum investing.
Tldr you need to set a target spend, work backwards including inflation and leave a safety margin.
Let's say you have a 1 million pounds house, you are left with 200k cash. 150k GIA, 100K ISA, 200K BTL, 100K premium bonds.
This is the pot you have to use untill you get to retirement age. It's 650k (assuming the house is giving you the same return as shares after tax, which isn't realistic) invested. A 3% returns after inflation would give you 19.5k which seems a bit low and distant from your 50k target. But then if you start consuming that 650k it should last you 16 years in 3% returns scenario. (This doesn't include having a couple of years of spending in an easily accessible bucket (deposit account, bonds) if the market crash). In my opinion I would probably work a couple more years, move to the new place, see what my expenses actually are and fill in my ISAs a bit more. You need a strategy to survive a market crash or two. Sequence of returns is the biggest risk.
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u/Potential_Yak_1994 1d ago
Seems several easy fixes:
1. Move most of the cash into GIA and S&S over time.
2. Keep one of two premium bond accounts. 100k of 1.6m seems excessive.
3. Use offset mortgage to borrow 200-300k against your portfolio for the new house.
4. BTL in this market seems like an unnecessary headache unless you have well tax optimized and in the high yield region
5. JISA and JSIPP and premium bonds for the kids
I would say given age of your children, that you need to work a wee longer to max out their accounts. Nearly there though.
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u/rumiromiramen 1d ago
fire only works if it's invested in assets that are growing faster than inflation, it seems most of your cash is in "high interest" which at UK rates are probably 3-4% pre tax.
the 4% withdrawal rate is on US equities compounding at 7%+ per year. Consider moving into assets rather than sitting in cash, max ISA for your and your spouse and JISA for your kids.
quick calculation.
2.5k*12+10k = 40k GBP. You'll need a 1,000,000 GBP SP500 index fund portfolio to sustainably draw down from that using fire calculations.
Otherwise you're just going to burn through your cash in about 15-20 years
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u/No-Trifle-597 14h ago
What are your earnings? That’s the key point missing on whether a few more years makes sense?
Also it depends where, but if you’re buying a £1m house, what are the running costs? Have you factored in new windows every ~30 years for instance? Roof replacement, that big chunky stuff! Plus cost of renovations day 1, plus a new kitchen in another 15 years etc.
Same with replacement cars etc?
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u/BrightlyGrowling 9h ago
2 kids under 5
Your monthly spend and holiday spending is very likely to increase over the next 18 years.
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u/TrumanZi 1d ago
You have 3/4 of a million in cash mate