The Simple Maths of Financial Independence

[@craftypam9992]

I had been in a relationship for 10 years with someone who lived & worked some distance away. As he approached retirement, we decided we would like to sell our respective houses and buy one together, relocating to somewhere less expensive and more countrified. I made a spreadsheet to account for the house sales/purchase, monthly expenditure, inflation, capital growth, income available, possible wages, state pension in due time, all that stuff. We figured we could do it, and put the houses on the market. I quit the job I hated, and used a couple of months to get my house and garden sorted for sale. We scoured the web for places to move to. We even spent 2 weeks looking around likely small towns. Then, all prepared, we called in the estate agents. Then 2008 dropped its bombs, and everything fell apart. It took 18 months to find a buyer for my house, and 30 for his. But, it happened, we moved, there was enough cash left over to invest, and we didn't spend much till I got a part time job. And as my state pension approaches, our finances are pretty solid. We could have given up in 2008, I could have tried to get a job near my old house, and slogged out the last 12 years. If you don't work it out and follow through, you certainly won't get what you want. Make it a goal, not a wish!

[@chrisbourne-retirementplanner]

A great story Pam, and an example of how planning and focus can allow you to reach your goals. The road is very rarely smooth for the entire journey.

[@giapponerosso]

Clear , simple, super useful. Subscribed.

[@chrisbourne-retirementplanner]

Thank you that’s much appreciated 😊

[@InvestingforHumans]

I’ve watched a lot of videos on this topic but nothing I have seen has been as clear, calculated and well explained. You have my subscription Chris, good work. Looking forward to seeing more of your videos.

[@chrisbourne-retirementplanner]

That's great feedback Jon and much appreciated! 👍

[@nickjm4108]

Solid advice. Many people barely get past working out 4% and completely forget about inflation!

[@chrisbourne-retirementplanner]

Cheers Nick! Yes the process isn't as difficult or intimidating as some imagine once you know what you're targeting.

[@ajitpatel6798]

Very Informative.

[@chrisbourne-retirementplanner]

Thank you Ajit glad it’s helpful

[@maxf5868]

Hi Chris, appreciate your video and your blog. You got a new subscriber.

[@chrisbourne-retirementplanner]

Much appreciated Massimo! Glad to have you as a subscriber.

[@thedarklegend2]

You’re videos are great. They’re very informative and enjoyable, and very much appreciated. Many more subscribers will be coming your way I’m sure 😀👍🏻

[@chrisbourne-retirementplanner]

Really appreciate you saying that Ashley! I’m glad you’re finding my videos useful.

[@lanlaberinto1303]

Hi Chris, really enjoyed this video .I’m investing into SIPP and ISA hopefully reducing to working 3 days a week in a few years.. So knowing how to do it tax efficiently will be great .

[@chrisbourne-retirementplanner]

That's great Lan and I'm delighted this video is helpful for you!

[@johngray7317]

Great videos. Articulate and knowledgeable.

[@PrettyPennyClub]

Great video Chris, and great message. It doesn't matter if you don't have the details right for 20 years from now, in fact, I would be amazed if people did. When you know what you don't want, you can make a start 👍 well said.

[@chrisbourne-retirementplanner]

Thanks David. You’re absolutely right. Everything is easier if you don’t overcomplicate it.

[@IncomeBoost42]

Nice one. Pension relief is so good but also a long time to wait for those looking to retire early!

[@chrisbourne-retirementplanner]

You’re right it always feels like it’s such a long way away, but I always remind myself how often I’ve heard my retired clients say ‘where on earth has the last 30 years gone?!’ 😆 I suppose that’s where the appeal of VCTs and EISs comes in too.

[@michaelbartlett4961]

Thanks Chris. Every video l watch keep learning more. I am so glad that Vanguard is here UK now. It's makes life easier small investor. However your video's keep inspiring me save more.

[@chrisbourne-retirementplanner]

That’s great to hear Michael! Thank you for your comment.

[@CrystalField1889]

Excellent content Chris. Keep them coming pls👍

[@chrisbourne-retirementplanner]

Thanks, will do Simon!

[@iQinvesting]

So much useful information! The graphics are awesome too. Keep it up Chris!

[@chrisbourne-retirementplanner]

Thank you I’m really glad you think so 👍🏼

[@lawrencer25]

Really nice and helpful video . Thank you 👍👍👍👍

[@chrisbourne-retirementplanner]

You’re very welcome Lawrence thanks for watching.

[@nicolagandy5934]

Fantastic video Chris. I'd definitely sign up for a Udemy course culminating in having crafted my personal FIRE strategy at the end. That way I know I've understood every aspect of the strategy, plus how I've come to end up with the plan in hand. Things are much easier to stick to when you have a full understanding of all the components. 👍🏼

[@chrisbourne-retirementplanner]

That’s great to hear Nicola thank you! Good idea for how a course should be structured too 👍🏼

[@themaskedmoneysaver]

Nice video as usual. As you know I am trying to do a combination of pension and Isa's so it gives me more flexibility and choice. Any course you developed would be well received as you explain things so well.

[@chrisbourne-retirementplanner]

Thanks Anita and yes, you're focusing on the two most valuable tax wrappers which is fantastic. Always great to get your positive comments!

[@v522v]

Hi Chris, great information again. Indeed we would benefit from a more structured video! Also, mighty I for a Tax efficient investing/retirement video for persons who are freelancers/day traders etc. (not in regular employment). Thanks

[@chrisbourne-retirementplanner]

Really good to hear Vic. I would love to create a process for people to follow in the early stages of wealth building when they may not have access to bespoke advice. Thanks also for your suggestion... I will try and figure that into a future video.

[@BeautifulNaturalDramatic]

Brilliant informative video 👍👍👏👏

[@chrisbourne-retirementplanner]

Thanks so much! I'm really pleased you enjoyed it. Always great to get positive comments from other creators.

[@jasonjudge5540]

Excellent advise as are all your videos I’ve seen these past couple of weeks. I am back to the working world after six months of being in the wilderness with no support for COVID Now I have started investing again though wish I’d paid more into my pensions in previous years. I am always playing catch up and it seems pensions is the last thing you think about making contributions into.

[@chrisbourne-retirementplanner]

Thank you Jason! I'm really pleased to hear you're back to some normality. Long may it continue! Yes I must admit, I've never had a client who has regretted building money in their pension pot, but I've heard many a person say they wish they'd started sooner!

[@mrc1500]

Great find, Chris. Sub’d. Blame Damien 🤣🙏

[@chrisbourne-retirementplanner]

Haha welcome aboard Iain! 👍🏼

[@martinindia2130]

Another great video Chris. Would be interested to get your thoughts in a FIRE follow on how you should treat asset allocation for the those looking to FIRE at say 50 and using non-SIPP funds to finance ages 50-55 before accessing their SIPP at 55. I'm 5 years out from 50 and running a different asset allocation for my 50-55 stash, but would definitely benefit from getting your reflections here.

[@chrisbourne-retirementplanner]

Thank you Martin! Yes that is definitely on the agenda, so stay tuned over the coming weeks!

[@benpowell9966]

Hello, your channel is amazing I wish I had found you sooner: my question is: assuming equity in a property , am I best to borrow this back as my interest rate is low and invest this in a Stocks and shares ISA allowance to give myself a head start?

[@chrisbourne-retirementplanner]

Difficult to say Ben because you’d have to understand the risks of this and bear in mind that interest rates can go up. A lender probably wouldn’t lend to you for these purposes though.

[@stephen6262]

Great video Chris. Would you be able to have a flexible pension say you got 100000 in a pension could you draw down 12500 tax free every year . With out the tax cheers steve

[@chrisbourne-retirementplanner]

Hi Steve. Thank you! Yes... if you had no other taxable income and were to just draw out the personal allowance from your pension, you would pay no tax. You could actually do slightly better than that initially... you are of course able to draw 25% tax free cash, so if you were to crystallise £16,760 of your pension pot you could receive £4,190 as pension commencement lump sum (tax free cash) and £12,570 (this year's personal allowance) as taxable income (zero tax). The full £16,760 would therefore effectively be tax free, and you could continue this until all of your tax free cash allowance has been exhausted.

[@stephen6262]

@@chrisbourne-retirementplanner Thanks Chris I think I understand could I do that every year no tax until my money runs out please thanks steve

[@chrisbourne-retirementplanner]

That’s correct Steve.

[@stephen6262]

@@chrisbourne-retirementplanner Thanks Chris cheers very helpfulI wonder if average people do that pay off the morgage and have about 100000 in the pension. And just draw that down for about 10 years till their state pension kicks in

[@chrisbourne-retirementplanner]

Many people do that Steve. It’s a very popular way of early or partial early retirement these days. The key thing is just managing volatility and what’s called sequence of returns risk when you are drawing a pot fully over a specific time period. I will be covering this in a future vid.

[@BeautifulNaturalDramatic]

Great stuff 👏

[@chrisbourne-retirementplanner]

Thank you! Appreciate you supporting my channel.

[@TheSubtleInvestor]

Hi Chris - big like for this great video. You explained some really crucial element on retirement. What's your thought on the lifetime pension allowance increasing over next 20 years - that can be a massive tax bite.

[@chrisbourne-retirementplanner]

Thank you so much! I can’t see it increasing very quickly in the short term - it’s certainly an easy ‘stealth tax’ target when the government needs to pay back some of the massive borrowing of the last 12 months. I remember a time before A-Day when the lifetime allowance didn’t exist. Seems like a lifetime ago now! I think it will just be necessary to keep enough flexibility in people’s strategies to utilise a combination of tax wrappers.

[@richardwhite1120]

Hi Chris thanks for the great content you put out. Although I realise that you are not able to give specific advice, I am wondering whether you have a view on high octane mining and precious metals stocks via a fund for perhaps a very small part of a portfolio. These offer the chance to turbo-charge returns although the opposite is also true of course! Investment v speculation. Best wishes, RW.

[@chrisbourne-retirementplanner]

Thanks for your comment! Everything can play a role, but like you say, it would only ever be advisable for a small part of a portfolio because those types of assets don’t possess the stability and liquidity characteristics to be core holdings.

[@andrewnunn9757]

Hi Chris. I’m investing in US stocks through my SIPP and ISA and I do this through HL and I’ve doubled my money this year. I am being quite bullish in my approach as I’m 51 and am trying to catch up on my pension pot. However it’s costing me a fortune jumping in and out of trades with Exchange charges. Do you know how I can reduce those costs as on sone months it’s costing me thousands.

[@chrisbourne-retirementplanner]

Hi Andrew. To be honest it sounds like you’re with the wrong provider for this type of plan management. Not only will HL keep charging you for placing trades, the FX fees (if you’re having to pay those on any deals) are eye watering. A platform like Freetrade would be more cost effective as there are no dealing charges at all and FX fees are lower. Feel free to use my link in the description of this video if you’re interested in checking them out, and we’ll both receive a free share.

[@andrewnunn9757]

@@chrisbourne-retirementplanner can I transfer out my SIPP and ISA

[@jasonjudge5540]

If it’s US stocks you’re after I think etorro is probably the best choice. Though I’m sure Chris would be more qualified to help than me.

[@chrisbourne-retirementplanner]

They do offer a SIPP. It is a flat £9.99 a month. EToro is an option as Jason has said, but they do not offer tax wrappers like ISAs and SIPPs at all.

[@chrisbourne-retirementplanner]

Also forgot to mention Andrew that the ISA wrapper has a fixed £3 monthly fee too. You'd need to work out whether the £156 annual fee for both wrappers would equate to a saving based on the amount of dealing you are doing.

[@kryptokarl2405]

Hi Chris great content and sound advice would paying extra into my work pension be a good idea or putting it into my personal pension instead.Thanks

[@chrisbourne-retirementplanner]

Hi Karl. Are you employed or is it your own company? Paying into the workplace pension may give a slight advantage if contributions are deducted from your gross earnings, as you’ll avoid paying National Insurance. With personal contributions, you’ll have paid NI on the income you’ve received before paying it back into a pension.

[@janewhitzend688]

Hi Chris great content as ever. We would like a spreadsheet and course for our situation too if you managed to find time to develop one in future. Our particular headache is that our money is tied up in home equity. I cannot work due to disability and have spent the last 15 years caring for our SEN twins. Our income has come from my husband and some state benefits. We will lose some benefits in a few years and plan to downsize. We need to plan for retirement in 5 years and the gap period between that and state pension kicking in. So a model for these scenarios would be ace. I have run my own but I doubt my figures and am clueless on the tax implications.

[@chrisbourne-retirementplanner]

Hi Jane. Sorry for the delay I’ve taken a few days off for the festive period. I am working on a course to launch this year, which I’m sure will be helpful to you.

[@janewhitzend688]

@@chrisbourne-retirementplanner relieved you took some time off! I will keep watching out for the launch.

[@johnporcella2375]

On a calculator app on a mobile or tablet: 29,000 × 1.02^20 = 43,092 (0 decimal places).

[@mahmoodyousuf1893]

I find your videos very informative, to the point and useful. I have been working abroad for several years, but plan to be back in UK soon. Have contributed to the NI for state pension, and should be able to get nearly the max when I reach 66. Also have some NHS pension, which I get. Will be coming to UK next summer, before finally moving back. How can I meet you/ be a client? Any possibility of discussing details on phone/email or WhatsApp before we meet? Thanks.

[@chrisbourne-retirementplanner]

Hi Mahmood. Thanks very much it’s great to hear that you’ve enjoyed my videos! Do feel free to get my contact details from the About page of my channel if you’d like to get in touch 👍🏼

[@torus186]

Let's forget that 2% inflation rate and ramp it up a little. How much has changed over just a year. We have just had a 11.1% CPI print, I think I'll stay at work a little longer.

[@MultiOutdoorman]

Cannot believe the ratio of likes ( or whatever) against the number of views.... come on, people, click a thumb for these content makers !

[@chrisbourne-retirementplanner]

I’ll give that comment a thumbs up 👍🏼😆

[@blah4306]

I'm 51 and earn 25k per annum but I'm not on the property ladder, is there hope for me? Brilliant content by the way!!!

[@chrisbourne-retirementplanner]

Yes, definitely! If you were to target the state pension age as your retirement age you’ve got a good 16 years to plan and a lot can be done in 16 years! Ray Kroc didn’t open his first McDonalds restaurant until he was a year older than you 😉 There’s no time to waste though… time to assess whether you can obtain more income, start looking at how costs can be saved, invest any excess.

[@blah4306]

@@chrisbourne-retirementplanner thank you I'm flattered you replied, great channel by the way!!!

[@sash41]

Hi Chris, how can I become a client of yours? Can we connect? I am UK based

[@chrisbourne-retirementplanner]

Hi there. I have received your email and will reply.

[@boombustinvest]

Is there a calculation mistake in the video? You say that the £29K target at 10 years compound interest at 2% gives £43K target, but that is wrong... it should be £35,350?

[@chrisbourne-retirementplanner]

Hi there. Let me know the time stamp in the video and I'll check.

[@boombustinvest]

@@chrisbourne-retirementplanner you start describing the calculation at 3:50 and then arrive at the £43K target at 4:20. (I just would like to know that I haven't misunderstood something so that I get my own calculation right)

[@Jeffybonbon]

is it me or has utube gone quite about the FIRE movement

[@chrisbourne-retirementplanner]

The fire’s died down a bit 😆

[@Jeffybonbon]

@@chrisbourne-retirementplanner They are to young to have experienced the currant market conditions which have happened before 1988 /90

[@andyonions7864]

A decent phone calculator has a power key (x with a little y to the top right). You might get it if you turn your phone sideways. 1.02 Xy 10 = * 29000 = You can play with growth rate 1.02, years 10 and amount 29000 easy enough. Right now 5% inflation might be a better assumption.

[@chrisbourne-retirementplanner]

Great stuff Andy it’s good to know that function. I don’t think 5% inflation is likely though. Maybe on a year on year basis, but that will wash out quickly. No major economy central bank is pricing in that level of inflation... we can see that from forward interest rate guidance. Current employment uncertainty wouldn’t support rampant inflation.

[@andyonions7864]

@@chrisbourne-retirementplanner it all depends on Covid bounce back. Strong recovery will lead to inflation with all the dosh that's been spent. Wak recovery, agreed, unemployment will hold inflation in check.

[@chrisbourne-retirementplanner]

There will undoubtedly be inflation on a one year comparative basis, but that will just be an unwinding of pent up demand. It will essentially just be a return to norm and central banks will look through that. The view of most economists is that it’s unlikely to lead to a monetary policy response as there are no signals that it will persist.

[@simonrlewis]

Yes, or change Chris’ calculation by simply putting the starting figure in as the first argument! (Works on iPhone)

[@911ben8]

Jump onboard 🚌. Chris is taking us on a journey, and there’s a big pot at the end. 💷💰💷. I Call Shotgun! 💺

[@chrisbourne-retirementplanner]

Haha love it Ben! Glad to have you along for the ride 👍

[@stupossibleify]

Can't imagine the £20k allowance on ISAs remaining much longer given current government debt. A reason to invest quickly?

[@chrisbourne-retirementplanner]

I think there are many measures the government would take before reducing the ISA allowance. A number of those measures were mooted before the budget, but ISAs weren’t considered a target.

[@hughgallagher]

For me, the platform route is the best way to get this out to the general public. I have messaged you on LinkedIn as I am working on the spec for a similar tool already and have the skills to build it. Maybe we could collaborate?

[@chrisbourne-retirementplanner]

Will check that out Hugh.