What's A Good Alternative Investment Vehicle To Buying A House?

[ska_mna]

A lot of people complain about how hard life is, but 300k is not a lot of money yet if invested wisely you would never have to work again.

It seems to me that if you can find a partner in your 20's and save money together, it would be possible to jointly have 300k by age 35 and essentially retire from the rat race. I see some members on here mention they have saved with a partner and almost paid off the mortgage mid 30's etc.

I'm sorry, but this is cloud-cuckoo.

I suppose technically you could say it would be possible for a small number of people, yes. But it's highly unlikely for the vast majority.

To me, having even £50k in savings would feel like I was floating free as a bird!

Most of my peers (late 20's, early 30's) have either negative net savings or max £10k or so. Unless they inherited.

I fully expect to work until I drop dead. C'est la vie.

Do people actually believe that the majority of 20 year old people will have the foresight, desire and ability to save £20,000/year for 15 years? I doubt anybody I know was or is doing jobs that would allow you to pay living expenses and have some form of social life WHILST saving that amount of money.

I guarantee that nobody I know has £300,000 tucked away in some investment pot. I'd guess this is the same across great swathes of the UK as well.

At times on here the posts seem to imply that everybody is working away in £150,000/year jobs and we all have the luxury of being able to save these amounts, the reality is that for most people £25,000 is probably a decent wage, get into the higher rate tax band and you rolling in it.

^ Thank you, at least I know I'm not the only one having to live in the real world!

[FIGGY]

I'm sorry, but this is cloud-cuckoo.

I suppose technically you could say it would be possible for a small number of people, yes. But it's highly unlikely for the vast majority.

To me, having even £50k in savings would feel like I was floating free as a bird!

Most of my peers (late 20's, early 30's) have either negative net savings or max £10k or so. Unless they inherited.

I fully expect to work until I drop dead. C'est la vie.

^ Thank you, at least I know I'm not the only one having to live in the real world!

Agree, £300k over 10y even by a couple is £1,250 EACH per month so lets say that you need £1000 each per month to cover rent, food etc you need a take home of £2,250 EACH per month, gross that up and you average couple EACH earn £37,000 lol...Mr and Mrs average my ****. I've taken interest out of the equasion as this nullifies the inflation eroding the value of the £300k

Edited October 2, 2012 by FIGGY

[19 year mortgage 8itch]

Do people actually believe that the majority of 20 year old people will have the foresight, desire and ability to save £20,000/year for 15 years? I doubt anybody I know was or is doing jobs that would allow you to pay living expenses and have some form of social life WHILST saving that amount of money.

I guarantee that nobody I know has £300,000 tucked away in some investment pot. I'd guess this is the same across great swathes of the UK as well.

At times on here the posts seem to imply that everybody is working away in £150,000/year jobs and we all have the luxury of being able to save these amounts, the reality is that for most people £25,000 is probably a decent wage, get into the higher rate tax band and you rolling in it.

Easy.

Buy a £100k house aged 20 with an IO mortgage and everyone knows they double in price every 10 years.

Roll on your 35th birthday, house is now worth £400k, sell it pay off the mortgage, £300k in your pocket and retire.

How else do you expect to do it?

[Oliver Sutton]

Well, maybe 35 is cutting it a little fine - even for a single person - but I find it strange that a few people are throwing around 50 and even 60 as being a problem. I mean, how long are you expecting to live for? And at that later kind of age, you've probably enough N.I. contributions over the years to pay for a full state pension.

So, £100k on a house.

And £200k, all spent over 25 years with a post tax return of 4% gives £1k per month.

If you were 60, that would get you to 85 - and you wouldn't have touched a penny of your state pension, so that could have been re-invested over the 20 years you were receiving it, hence keeping you going until you were 95. And even then you'd then still own a house and have the state pension coming in...

And the same figures for a 50 year old don't look too bad either.

Let's face it. Once you get to your mid seventies you won't be doing much. A lot of stuff will be free as well.

[davidg]

36yo, currently circa £300k investments as per example (£100k shares - Mostly good dividend yielders, fair chunk in ISA, £200k equity in my 2 rental gaffs in NZ, minimal mortgage).

No house in UK at present.

300K at 35 doesn't sound near enough to me. I have somewhere near to that in cash plus property in the UK and France, probably 700 to 800K in total if I could sell the property and I'm just wondering whether to retire or not at 48. I'm being made redundant at the end of the year (too old), I won't get any redundancy pay but can claim the dole at super high French rates for a couple of years.

and yet, and yet, I'm still not sure whether it is enough to retire on.... I also have a wife who believes work involves going into an office - a few years ago I was making 2K/month on google adsense from a blog I wrote. It involved an hours work a day but is became a misery listening to the missus witter on about getting a "proper job" all the time, which is why I went back to an office job.

[crashmonitor]

I guarantee that nobody I know has £300,000 tucked away in some investment pot. I'd guess this is the same across great swathes of the UK as well.

At times on here the posts seem to imply that everybody is working away in £150,000/year jobs and we all have the luxury of being able to save these amounts, the reality is that for most people £25,000 is probably a decent wage, get into the higher rate tax band and you rolling in it.

In my experience wealth is often an accumulation of years of work. No difference between someone with ten years work behind them and say 80k with a working couple who have aggregated 65 years work and have a 500K investment portfolio. And these sums do not require a bigshot salary, thrift will get you there on even the most modest wage. Fairly common for households to have >300K pots, especially retired ones.

[19 year mortgage 8itch]

It involved an hours work a day but is became a misery listening to the missus witter on

Retirement in summed up in 18 words

[Saberu]

It involved an hours work a day but is became a misery listening to the missus witter on about getting a "proper job" all the time, which is why I went back to an office job.

This is what's wrong with our society, obsession with the 'status' that comes with having an office job. I'd hate to have one, there's a lot of jobs out there which pay well that don't also involve sitting in an office all day doing mundane office type tasks.

Sadly for me the joint earning solution won't be doable until my girlfriend graduates from university, I was originally considering my backup plan for both of us to join the army in Aus as it's well paid but I realised there's probably a 5 year security background check required which precludes either of us from joining.

So the only option is to stay in China and if she has a good enough job we'd probably be able to save 2,000/ month. I think saving 2k/ month is doable if you both have reasonably good jobs but that is clearly not an option for most people. Having a decent amount by age 35 is probably wishful thinking but if you and a partner can both have good jobs by the time you reach 30 then save hard for 10 years it's possible to come out with almost 250k by age 40, or 125k by age 35.

I imagine worse case scenario by the time I reach age 30 I'll be able to earn 2,000 (net) and she will be able to earn 1,000 then save 2/3 of that.

This is clearly an important point to be made though, if you are lucky enough to have a partner with skills/ potential then you can work together and save twice as much money while living cheap. I imagine the real problem lies in considering that 10 years of time to be a waste or not, my personal opinion is that if you can be happy while living cheap then it's not a waste.

A UK equivalent would probably be two people both earning 20k or one earning 25k and the other on 15k and then managing to save 2000/ month between you. But it's much harder to do this in Britain so I can see why so many people replied with incredulity to my post, even 40k probably won't be enough. But I know for a fact it's doable in China or Australia. China because of the low cost of living and Australia because it has so much higher salaries that if you are smart with spending you could probably also save 2k.

If you and your partner both started work age 25 and saved 1k/ month for 10 years that means you can buy a 125k house by age 35 which is a very doable target for most people. Sadly because things rarely work out so perfect you always have setbacks which mean it might not be possible for both partners to start earning till you are both closer to 30. But that is a good example that even works with low earners.

Edited October 2, 2012 by Saberu

[scrappycocco]

why not just work an easy job and put money in- nsi index linkers and other products they have, gold, isa, high interest savings account etc

[crashmonitor]

This is what's wrong with our society, obsession with the 'status' that comes with having an office job. I'd hate to have one, there's a lot of jobs out there which pay well that don't also involve sitting in an office all day doing mundane office type tasks.

Sadly for me the joint earning solution won't be doable until my girlfriend graduates from university, I was originally considering my backup plan for both of us to join the army in Aus as it's well paid but I realised there's probably a 5 year security background check required which precludes either of us from joining.

So the only option is to stay in China and if she has a good enough job we'd probably be able to save 2,000/ month. I think saving 2k/ month is doable if you both have reasonably good jobs but that is clearly not an option for most people. Having a decent amount by age 35 is probably wishful thinking but if you and a partner can both have good jobs by the time you reach 30 then save hard for 10 years it's possible to come out with almost 250k by age 40, or 125k by age 35.

I imagine worse case scenario by the time I reach age 30 I'll be able to earn 2,000 (net) and she will be able to earn 1,000 then save 2/3 of that.

This is clearly an important point to be made though, if you are lucky enough to have a partner with skills/ potential then you can work together and save twice as much money while living cheap. I imagine the real problem lies in considering that 10 years of time to be a waste or not, my personal opinion is that if you can be happy while living cheap then it's not a waste.

A UK equivalent would probably be two people both earning 20k or one earning 25k and the other on 15k and then managing to save 2000/ month between you. But it's much harder to do this in Britain so I can see why so many people replied with incredulity to my post, even 40k probably won't be enough. But I know for a fact it's doable in China or Australia. China because of the low cost of living and Australia because it has so much higher salaries that if you are smart with spending you could probably also save 2k.

It is doable in this country, just that most people have forgotten how to live cheaply. If you don't have to work in London, it is possible to get rentals from around 70 pounds a week. it is possible to buy food very cheaply, enjoy the English countryside or our historic city centres they are free , eat out cheaply, go to coffee shops that aren't Costa etc. etc.. In Asia you may be disappointed by the rents, see how ugly it is, and I doubt you can get food reduced to next to nothing in their supermarkets.

edit.

(Developing countries usually equals horrendous rents and food costs off the back of a weak currency...and where are the freebies health, libraries and other means of free entertainment. You live in the cheapest country in the world you just don't know it)

Edited October 2, 2012 by crashmonitor

[catsick]

I quit work at 40, am now 44 and all my little projects and faffing around have now built up to mean my semi retirement pretty much are a full time job again, although there is no boss and I have a pretty relaxed time of things . My advice is don't even think about stopping work unless you can live off less than 4% of your capital and even that is probably tight. You also need to have stuff to do to keep yourself sane, I have the luxury of time and can work on things that interest me, for most people I don't think it would work.

[davidg]

I quit work at 40, am now 44 and all my little projects and faffing around have now built up to mean my semi retirement pretty much are a full time job again, although there is no boss and I have a pretty relaxed time of things . My advice is don't even think about stopping work unless you can live off less than 4% of your capital and even that is probably tight. You also need to have stuff to do to keep yourself sane, I have the luxury of time and can work on things that interest me, for most people I don't think it would work.

good advice

[Saberu]

good advice

Indeed, I also like the mindset of being able to earn an income from work you enjoy self-employed. Which is my goal doing something online but it's good to have a fallback plan. I would actually be more comfortable working for myself and earning a living through something that wasn't just an investment.

I hate the idea that with investing (when it's not a business) you just put the money in and there's nothing you can really do to get more than whatever percentage return the investment gives. Makes me think that anyone who doesn't have the means to eventually run their own business is simply a slave. Hence my backup plan would probably be to open a small shop, there's a lot more pride and potential with that than some fixed investment vehicle.

The conclusion of this thread from my point of view seems to be that unless you are able to earn a monthly income from your own business then you won't be in a stable position. When it comes to working full-time for a living or living off investments neither of these are as stable or have the growth potential of a business. Running your own business will put you in control and you have the potential to grow it, whereas money or a fixed asset like a house, or a fixed return investment don't really have any of these. Hell I would rather earn less money from a business that had potential to grow than more money from an investment which would always be the same.

I notice a lot of old people tend to spend huge amounts of money after retirement, I put it down to the fact that without something to do like a kind of work which they can get pride out of then they try to make up for it by taking holidays and spending money as a way of escapism.

I don't want to be one of those people who works 30-40 years in a full time job only to retire and not feel any satisfaction. A lot of people are looking for satisfaction in their lives but looking in the wrong places. In my opinion if you are able to live frugally it means you are more satisfied/ happier with your life than spendaholics who seem to be filling a gap in their fulfillment which should be replaced with something more suitable.

[blackgoose]

If you are in your early 20s, there is still time to change careers. Rather than putting all of your efforts into saving and never experiencing anything other than sitting inside, it is best to move into the area that pays the most. Though it is best attempted if you are smart and have outgoing personality. That is the only way of accumulating serious wealth whilst working for someone else. Business ownership is the way most others achieve it. Scrimping and saving can only get you so far.

[Bradbury Robinson]

300K at 35 doesn't sound near enough to me. I have somewhere near to that in cash plus property in the UK and France, probably 700 to 800K in total if I could sell the property and I'm just wondering whether to retire or not at 48. I'm being made redundant at the end of the year (too old), I won't get any redundancy pay but can claim the dole at super high French rates for a couple of years.

Is that £800,000 hard-earned, inherited, property purchases over the last twenty years, investment? It makes a difference to this thread. I appreciate if you rather would not say.

and yet, and yet, I'm still not sure whether it is enough to retire on.... I also have a wife who believes work involves going into an office - a few years ago I was making 2K/month on google adsense from a blog I wrote. It involved an hours work a day but is became a misery listening to the missus witter on about getting a "proper job" all the time, which is why I went back to an office job.

Interesting and a healthy figure you were earning from Adsense. You're not Grant Shapps are you?! I've toyed around with this kind of idea for a while now but never gotten very far I'm afraid. I did get one small site up and running and managed to make an income from it, unfortunately that income was £1.12 from one visitor in about six months!! I've recently been made redundant and again it's something I look at but struggle with the initial idea and starting the things!

In my experience wealth is often an accumulation of years of work. No difference between someone with ten years work behind them and say 80k with a working couple who have aggregated 65 years work and have a 500K investment portfolio. And these sums do not require a bigshot salary, thrift will get you there on even the most modest wage. Fairly common for households to have >300K pots, especially retired ones.

Fair points but unfortunately the figures being thrown around initially were 35 and £300,000.

It is doable in this country, just that most people have forgotten how to live cheaply. If you don't have to work in London, it is possible to get rentals from around 70 pounds a week. it is possible to buy food very cheaply, enjoy the English countryside or our historic city centres they are free , eat out cheaply, go to coffee shops that aren't Costa etc. etc.. In Asia you may be disappointed by the rents, see how ugly it is, and I doubt you can get food reduced to next to nothing in their supermarkets.

It probably is possible to get rentals for £70/week if you want to live in certain parts of certain towns, most probably in a HMO or possibly a very, very small flat. It's also possible to live in a tent moving from field to field and save that £70 as well.

If you are in your early 20s, there is still time to change careers. Rather than putting all of your efforts into saving and never experiencing anything other than sitting inside, it is best to move into the area that pays the most. Though it is best attempted if you are smart and have outgoing personality. That is the only way of accumulating serious wealth whilst working for someone else. Business ownership is the way most others achieve it. Scrimping and saving can only get you so far.

The problem with that is that you can't just put your finger on a job title and say that's what you want to do. The areas that pay the most will more than likely be ones that need years of training, training which has to be paid for and takes time, all whilst we are supposed to be saving £20,000/year remember.

[Bruce Banner]

I notice a lot of old people tend to spend huge amounts of money after retirement, I put it down to the fact that without something to do like a kind of work which they can get pride out of then they try to make up for it by taking holidays and spending money as a way of escapism.

Or perhaps, having planned for their retirement, they are spending their money on the things they have always wanted to do but previously didn't have the time?

[Democorruptcy]

Well, maybe 35 is cutting it a little fine - even for a single person - but I find it strange that a few people are throwing around 50 and even 60 as being a problem. I mean, how long are you expecting to live for? And at that later kind of age, you've probably enough N.I. contributions over the years to pay for a full state pension.

So, £100k on a house.

And £200k, all spent over 25 years with a post tax return of 4% gives £1k per month.

If you were 60, that would get you to 85 - and you wouldn't have touched a penny of your state pension, so that could have been re-invested over the 20 years you were receiving it, hence keeping you going until you were 95. And even then you'd then still own a house and have the state pension coming in...

And the same figures for a 50 year old don't look too bad either.

A return of a fixed percent is largely useless over such a long period of time. It's need to be inflation + X%. Plus it needs to be your real inflation not their mickey mouse figures.

[Realist71]

Indeed, I also like the mindset of being able to earn an income from work you enjoy self-employed. Which is my goal doing something online but it's good to have a fallback plan. I would actually be more comfortable working for myself and earning a living through something that wasn't just an investment.

I hate the idea that with investing (when it's not a business) you just put the money in and there's nothing you can really do to get more than whatever percentage return the investment gives. Makes me think that anyone who doesn't have the means to eventually run their own business is simply a slave. Hence my backup plan would probably be to open a small shop, there's a lot more pride and potential with that than some fixed investment vehicle.

The conclusion of this thread from my point of view seems to be that unless you are able to earn a monthly income from your own business then you won't be in a stable position. When it comes to working full-time for a living or living off investments neither of these are as stable or have the growth potential of a business. Running your own business will put you in control and you have the potential to grow it, whereas money or a fixed asset like a house, or a fixed return investment don't really have any of these. Hell I would rather earn less money from a business that had potential to grow than more money from an investment which would always be the same.

I notice a lot of old people tend to spend huge amounts of money after retirement, I put it down to the fact that without something to do like a kind of work which they can get pride out of then they try to make up for it by taking holidays and spending money as a way of escapism.

I don't want to be one of those people who works 30-40 years in a full time job only to retire and not feel any satisfaction. A lot of people are looking for satisfaction in their lives but looking in the wrong places. In my opinion if you are able to live frugally it means you are more satisfied/ happier with your life than spendaholics who seem to be filling a gap in their fulfillment which should be replaced with something more suitable.

I think you should spend less time guessing what makes other people happy & why other people do things, and spend more time actually doing whatever you feel will make you happy / successful.

Your conclusion that running a shop will give you more stability than a full time job & more freedom than living off passive investments is bizzare.

[davidg]

Is that £800,000 hard-earned, inherited, property purchases over the last twenty years, investment? It makes a difference to this thread. I appreciate if you rather would not say.

At a guess property inflation since 1995 accounts for a 20% maybe, rents received another 20%, perhaps a bit less, and the rest is earnings. I have moved to where I could earn most money at any time. Very little investment income (shares etc). Tax due paid on all of it. I've got scraps of pension here and there which I've not included but doubt they are worth much.

No inheritance, my parents have spent most of it!

> You're not Grant Shapps are you?

No, wasn't he earning a lot more but basically conning people? Google adsense was great when it first started. I used to get $10/1000 impressions, I'm lucky to break a dollar these days. With 250-400K page views per month that was very nice. My missus was right though about it not being serious and I don't think I could or had the passion to develop things further.

> It's also possible to live in a tent moving from field to field and save that £70 as well.

Or a van. I know people who do this - insulated van with windows is ok. With a cheap mobile plan you can even have the joys of internet access on the road!

I've not done the van thing but have slept in some very cheap accommodation (like zero :-) while working for blue chips.

Edited October 2, 2012 by davidg

[cybernoid]

The conclusion of this thread from my point of view seems to be that unless you are able to earn a monthly income from your own business then you won't be in a stable position. When it comes to working full-time for a living or living off investments neither of these are as stable or have the growth potential of a business. Running your own business will put you in control and you have the potential to grow it, whereas money or a fixed asset like a house, or a fixed return investment don't really have any of these. Hell I would rather earn less money from a business that had potential to grow than more money from an investment which would always be the same.

Fine. Go on then.

Saying and doing are different things

[dangermaus]

A return of a fixed percent is largely useless over such a long period of time. It's need to be inflation + X%. Plus it needs to be your real inflation not their mickey mouse figures.

This is why I'm pleased to be getting my GIP from the army (war pension equivalent) 30% of (salary x 1.2) for life, linked to inflation. Only about £600 a month right now but will forever be somewhat near the equivalent of 600 a month

[Terminator]

Indeed, I also like the mindset of being able to earn an income from work you enjoy self-employed. Which is my goal doing something online but it's good to have a fallback plan. I would actually be more comfortable working for myself and earning a living through something that wasn't just an investment.

I hate the idea that with investing (when it's not a business) you just put the money in and there's nothing you can really do to get more than whatever percentage return the investment gives. Makes me think that anyone who doesn't have the means to eventually run their own business is simply a slave. Hence my backup plan would probably be to open a small shop, there's a lot more pride and potential with that than some fixed investment vehicle.

The conclusion of this thread from my point of view seems to be that unless you are able to earn a monthly income from your own business then you won't be in a stable position. When it comes to working full-time for a living or living off investments neither of these are as stable or have the growth potential of a business. Running your own business will put you in control and you have the potential to grow it, whereas money or a fixed asset like a house, or a fixed return investment don't really have any of these. Hell I would rather earn less money from a business that had potential to grow than more money from an investment which would always be the same.

I notice a lot of old people tend to spend huge amounts of money after retirement, I put it down to the fact that without something to do like a kind of work which they can get pride out of then they try to make up for it by taking holidays and spending money as a way of escapism.

I don't want to be one of those people who works 30-40 years in a full time job only to retire and not feel any satisfaction. A lot of people are looking for satisfaction in their lives but looking in the wrong places. In my opinion if you are able to live frugally it means you are more satisfied/ happier with your life than spendaholics who seem to be filling a gap in their fulfillment which should be replaced with something more suitable.

I'm not trying to put you down but have you ever run a business?.. I'm guessing you haven't as you seem to think its a one way bet any you will easily make more than 10% return pa.. Its really not that easy, if it was everyone would do it!. Do you really think running a shop would be rewarding?

I would be grateful if you could point me in the right direction of the 'many' safe investments that return 10%+ pa?

I am now mid 30's and am in a very fortunate position to have saved seven figures but I still don't see how I could retire any time soon (not that I want to) and maintain a good enough income to enjoy life. Considering there is only a 85k guarantee per institution it is near on impossible to find a sensible return that is safe..

The biggest problem with your plan is inflation, it will erode your capital like a b1tch… 300k will buy very little in 20yrs time..

Just because you gain your fulfilment from living as frugal as possible doesn't mean everyone who doesn’t share your outlook is an out of control consumerist.. I gain my pleasure from being able to travel with my friends to see and experience new places, eat out and socialise as I please, drive a car that will start every morning and at some point be able to buy a house that has sensible sized rooms, somewhere to park and where my neighbours are not right on top of me, like it or not in the southeast that’s never going to be cheap.. I guess that make me a mindless 'spendaholc' in your book.

Apologies if you think I’m trying to wind you up as its not the case, just think you need to be a little more realistic..

T

[Democorruptcy]

This is why I'm pleased to be getting my GIP from the army (war pension equivalent) 30% of (salary x 1.2) for life, linked to inflation. Only about £600 a month right now but will forever be somewhat near the equivalent of 600 a month

If that means you were injured, sorry to hear that.

Don't let the inflation link think you can take the safety off though, it's only CPI not RPI so they are still stealing from you each year.

[ronaldo]

Whilst I'm under no illusion that I'll be able to retire at 35, I do believe that it should be possible to retire at 55 - and I'm on slightly less than the national average wage.

I'm 29 now and my state pension age will be at least 68 - and probably more by the time 39 years pass. There's no way I intend to work until that age.

My plan however, does involve buying a house. I'm in the process of signing contracts on a 4 bedroom house in a reasonably nice area at a LTV of 67%. I intend to pay down the mortgage until it's 60% LTV and then move to the cheapest available Lifetime Tracker Mortgage available at that time - on an Interest Only basis.

To rent a similar house would cost £600 per month but an interest only mortgage would cost £320 per month if base rates rose to 3% (I know they'll eventually rise above this but so will rents and so will inflation). This cheap accommodation will allow me to maximize my pension contributions.

I'll be putting 24% of my salary to the pension and my employer will contribute 6%. I'm a lower rate tax payer but am in a salary sacrifice scheme where the employer donates their national insurance savings to the plan so giving up £100 salary results in a gross pension contribution of £167.

Using this calculator, I'll have to use 40% of my 25% Tax Free Cash lump sum to pay off the mortgage. I'll then be left with the remaining 60% in my bank and an annuity of 38% of my final salary (in todays terms).

The remaining 60% in tax free cash can be used to live 'comfortably' until my state pension kicks in - at which point, I should have a total income (state + private) of about 65% ot my final salary.

Just writing this post makes me realise how little people are saving for retirement - most in my company have a total contribution, including employers, of 6%.

If I were to work to state pension age, currently 68 for me, I'd end up with a final annuity of 96% of my final salary (in todays terms) and would only need 15% of my lump sum to pay off the mortgage.

[markyh]

Whilst I'm under no illusion that I'll be able to retire at 35, I do believe that it should be possible to retire at 55 - and I'm on slightly less than the national average wage.

I'm 29 now and my state pension age will be at least 68 - and probably more by the time 39 years pass. There's no way I intend to work until that age.

My plan however, does involve buying a house. I'm in the process of signing contracts on a 4 bedroom house in a reasonably nice area at a LTV of 67%. I intend to pay down the mortgage until it's 60% LTV and then move to the cheapest available Lifetime Tracker Mortgage available at that time - on an Interest Only basis.

To rent a similar house would cost £600 per month but an interest only mortgage would cost £320 per month if base rates rose to 3% (I know they'll eventually rise above this but so will rents and so will inflation). This cheap accommodation will allow me to maximize my pension contributions.

I'll be putting 24% of my salary to the pension and my employer will contribute 6%. I'm a lower rate tax payer but am in a salary sacrifice scheme where the employer donates their national insurance savings to the plan so giving up £100 salary results in a gross pension contribution of £167.

Using this calculator, I'll have to use 40% of my 25% Tax Free Cash lump sum to pay off the mortgage. I'll then be left with the remaining 60% in my bank and an annuity of 38% of my final salary (in todays terms).

The remaining 60% in tax free cash can be used to live 'comfortably' until my state pension kicks in - at which point, I should have a total income (state + private) of about 65% ot my final salary.

Just writing this post makes me realise how little people are saving for retirement - most in my company have a total contribution, including employers, of 6%.

If I were to work to state pension age, currently 68 for me, I'd end up with a final annuity of 96% of my final salary (in todays terms) and would only need 15% of my lump sum to pay off the mortgage.

No chance unless you are Gay? a woman will get her claws into you, you will be loved up, marry her, pop a few sprogs then at least 20 years you will have fook all money as your "family" will suck you dry. It starts with mamas amd pappas cots and prams and never ends.

Pipe dream of a single bloke.

M