The first £100K

[Gerry557]

My Uncle lost his Mirror/Maxwell pension. I dont know the details apart from that but I gather he stronger.......

BJ

Nice to make a positive out of a negative, not everyone can do that, even with a bit of opposite luck.

I'm not sure what got me started. I remember starting a scheme after having someone come around the house. Looking back he might have been an insurance chat or some sort of financial advisor looking to get a commission. It might have happened word of mouth. Anyway I started a £20 a month investment. I remember there was 5% commission taken on the in. It probably got me looking into things a bit more.

I remember working away with a chap and his mates said he had a plan to retire early. So when the opportunity arose I discussed it with him. He said he had bought a terrace house In Sunderland and rented it out. When the one next door came up for sale so he bought that. The plan was to keep going and he had already aquired a few rows of houses. I was a bit skeptical as he drove an old banger. He said he was putting everything into building up his base and was moving into commodities and once he had hit his target, then he would allow himself to splash out a bit more and estimated another 5 years.

It wasn't until I took a phone call at work for him and said he wasn't available could I take a message. When the voice asked if he wanted to buy some coffee. I looked in the cupboard and there was a couple of jars so I said we would probably be fine. The voice replied, you don't understand its by the ton, just get him to call back pronto.

I enjoyed talking to him about his plans but we only worked together for a month or so. My investing seemed small beans compared to him but something must have rubbed off. I didn't realise at the time that there was a thing called FIRE. even though I was doing it.

[DrFfybes]

I didn't realise at the time that there was a thing called FIRE. even though I was doing it.

He he, I think I first encountered the term on these boards, by which time I was 50 and intending to retire that year anyway. As it was I lingered part time another couple of years..

We're not in Looty's league, but the 8% drops in Global trackers in the last 4 weeks has lost about 2 years of our spend.

Paul

[the0ni0nking]

I didn't realise at the time that there was a thing called FIRE. even though I was doing it.

He he, I think I first encountered the term on these boards, by which time I was 50 and intending to retire that year anyway. As it was I lingered part time another couple of years..

We're not in Looty's league, but the 8% drops in Global trackers in the last 4 weeks has lost about 2 years of our spend.

Paul

As part of my path to retirement, I've kept a monthly spreadsheet of how my net worth has developed over time. I've just opened my spreadsheet to check and I first did this in July-18.

The overall figures for me are likely slightly misleading as they included property (rental portfolio as well as main house) which remain in the spreadsheet at purchase price as opposed to current market value. Hopefully, in a couple of years time they will all be unencumbered and generating an underlying income which can support me (c£3k/month [before tax] but after taking account of voids, repairs etc) without recourse to investments.

Excluding all property, my investments covering cash on hand, general trading account, ISA and pensions were worth c£270k in Jul-18. The same total now adds up to £670k. In 9 out of the last 12 months, the movement in that collective portfolio has been more than my monthly salary albeit my salary is reduced by 25% via salary sacrifice into my pension where I'm still contributing (and is therefore adding to the c£670k each month) and then with my net pay primarily utilised to pay down existing mortgage debt.

If I rolled property at realisable value less mortgage debt into the mix, you're probably adding another £1.1m into the "investment portfolio". (£1.2m value less £0.1m mortgage).

Final Edit - I think my first £100k had probably been achieved around 2007 - so when I was 27. At that stage, I liquidated it and bought my first home to live in and which I still own today. I then used further investment returns to purchase further property so I've had to build up that first £100k a number of times if you were to look at investments as a share portfolio howsoever held).

[swill453]

We're not in Looty's league, but the 8% drops in Global trackers in the last 4 weeks has lost about 2 years of our spend.

But then you'd only amassed that 8% in the preceding 3 months anyway

Scott.

[Lootman]

Nice position to be in but it must have taken you longer to get the first one.

I cannot remember now, and of course 100K was a lot more 30/40 years ago than it is now. I had decent equity in my primary home from my late 20s or so, due to the boom in London property prices, but that was not liquid wealth.

I started investing in shares at about age 30. However I was having kids back then and so excess funds were limited, especially when my wife took a few years off to look after the wee ones.

I recall I had 50K invested right before the 1987 crash, which promptly took me down to 40K. I was dismayed at the loss although now it just looks like a blip.

I had reached 100K by age 40, and things accelerated after that. The 1990s were very kind to share portfolios, and I had avoided tech prior to the dotcom bust so that worked out.

I retired and then in the 2000s I offloaded my BTLs which gave me capital for larger investments in the markets, helped by an inheritance at the time of the GFC which enabled me to buy when others were selling.

I'd certainly agree that the first 100K is the hardest, and longest to reach.

[vand]

Some people, unsurprsingly, find it hard to conceptualise what having £100,000 of invested assets working for you actually means, so a while ago I came up with an (over)-simplistic rule that you can use to help explain what it does, which is simply what I call the "divide by 100,000" rule:

That is, for every £100k you have invested, that money is earning you approximately £1/ph:

Simply by a quirk of calendar maths, with 24hrs in a day and 365 days in a week there are 8,760hrs in a year.
And over the long term markets return somewhere around 8-10% on average.

So every £100k invested will gain an additional £8k-10k per year... or roughly £1/ph.

£500k portfolio? Terrific. You're £5 richer than you were a hour ago, on average. £2m portfolio? Great, you have a money-making machine ticking away in the background that is making you £20 every hour as you work, sleep, bath, or watch TV.


Note that it is currency agnostic - It can be USD, CAD, EUR - money is money and grows at long term market rates of return regardless of what currency your groceries are priced in.

And it is also largely inflation agnostic over the long run. £100k today doesn't have the same purchasing power as £100k a decade ago, but by the same token it should be easier to acquire that £100k from your own labour in today's money, and that will always be true no matter the purchasing power of fiat.

[SalvorHardin]

My first £100K was thanks to the pension mis-selling cleanup in the late 1990s. This caused demand for anyone with Actuarial skills and a pulse to skyrocket.

Finding myself on the dole in 1997, like Dick Whittington I went to London and about 12 months later had made about £60K to get to a £100K portfolio through a mixture of high pay and not increasing my discretionary spending by much (as many do when they get a big pay rise).

By 1999 I was generating almost £4,000 a month in "spare" income", most of which went into the stockmarket (not into dotcoms, unlike most colleagues and client's staff).

Discovering Soco and the small oil sector meant that by 2003, when the pension review was ending, I had accumulated enough to try retirement. That my income would soon collapse because of falling demand for Actuaries was a big incentive, as was wanting to stop battling the Inland Revenue who kept on trying (and failing) to force me into IR35.

Small oils continued to perform well and in July 2004, having seen my portfolio increase by just over £100,000 whilst on a three week Inter-Rail holiday, retirement became permanent.

[GeoffF100]

Back in the 1990s, I paid off my mortgage and had a good job and low outgoings. I stashed away £100K+ quickly and easily, retiring with good defined benefit pension rights at the end of the decade. That would not be so easy now.

[Gerry557]

Vand

I like the way you put that into hourly rates to compare with working, the pay might be low to start with but you get a lot of overtime.

Salvor
I think a lot of people miss out on the keeping spending low initially. I know some self professed struggling high earners with fancy leased cars, £60 a month iPhone contracts and lots of auto pay services like gyms, Netflix and Spotify etc. They look down on the people living in 2 up 2 downs when you can rent an amazing apartment.

Slowly the latter start improving and overtake the former.

Geoff
Going to uni for many is a killer, 5-8 years not earning, student loans to pay back, housing deposits and higher multiples. If they get past all that pensions have changed too.

[Clitheroekid]

I have no idea how long it took me to make my first £100k, but I can tell you that one can very easily lose £100k in just over a year if you're unfortunate enough to contract dementia.

I'm acting as attorney for two former clients who are both in this grim situation. Both of them were financially successful in their lives, and 10 years ago could probably have posted very similar responses to those in this thread. But both of them lost their spouses, gradually contracted dementia, and as their children were unable to look after them they went into a nursing home.

The fees are respectively around £73k and £87k a year, and neither of them knows what day it is. They no longer have any meaningful relationships with their children, let alone anyone else, and I've not the slightest doubt that in both cases their children, seeing their parent in this dismal condition (and also seeing their inheritance disappearing far more quickly than it was ever accumulated) wish they had simply died of a heart attack.

I don't like saying it, but their only purpose now is to provide profits for the care homes (or `granny farms' as they're rather grimly known).

It's really awful to have seen what's happened, as I've known both of them for decades, and I can remember all too clearly the great times that we've spent together. It's also been very upsetting to see the effect it's had on their families and friends, and of course I can't help thinking that I might be in that situation myself in a few years' time.

If only we knew what lay ahead it would be a great deal easier to decide what to do with our hard-earned.

[dealtn]

I have no idea how long it took me to make my first £100k, but I can tell you that one can very easily lose £100k in just over a year if you're unfortunate enough to contract dementia.

I'm acting as attorney for two former clients who are both in this grim situation. Both of them were financially successful in their lives, and 10 years ago could probably have posted very similar responses to those in this thread. But both of them lost their spouses, gradually contracted dementia, and as their children were unable to look after them they went into a nursing home.

The fees are respectively around £73k and £87k a year, and neither of them knows what day it is. They no longer have any meaningful relationships with their children, let alone anyone else, and I've not the slightest doubt that in both cases their children, seeing their parent in this dismal condition (and also seeing their inheritance disappearing far more quickly than it was ever accumulated) wish they had simply died of a heart attack.

I don't like saying it, but their only purpose now is to provide profits for the care homes (or `granny farms' as they're rather grimly known).

It's really awful to have seen what's happened, as I've known both of them for decades, and I can remember all too clearly the great times that we've spent together. It's also been very upsetting to see the effect it's had on their families and friends, and of course I can't help thinking that I might be in that situation myself in a few years' time.

If only we knew what lay ahead it would be a great deal easier to decide what to do with our hard-earned.

With respect, they aren't losing £100k, they are consuming a service for which they are paying (nearly) £100k annually. Similarly their only purpose isn't to provide profits for those providing that service. That is a very unfair description for those providing that necessary service The profit is a small percentage of that fee, and rewards those willing to invest their own capital in a service that might otherwise not be provided. Nor does such an accusation reflect well on the workforce, often low paid and dedicated, that tender care to those at that stage in their lives. Dementia care (and other age related care) is costly and requires dedicated and loving employees.

[servodude]

I have no idea how long it took me to make my first £100k, but I can tell you that one can very easily lose £100k in just over a year if you're unfortunate enough to contract dementia.

I'm acting as attorney for two former clients who are both in this grim situation. Both of them were financially successful in their lives, and 10 years ago could probably have posted very similar responses to those in this thread. But both of them lost their spouses, gradually contracted dementia, and as their children were unable to look after them they went into a nursing home.

The fees are respectively around £73k and £87k a year, and neither of them knows what day it is. They no longer have any meaningful relationships with their children, let alone anyone else, and I've not the slightest doubt that in both cases their children, seeing their parent in this dismal condition (and also seeing their inheritance disappearing far more quickly than it was ever accumulated) wish they had simply died of a heart attack.

I don't like saying it, but their only purpose now is to provide profits for the care homes (or `granny farms' as they're rather grimly known).

It's really awful to have seen what's happened, as I've known both of them for decades, and I can remember all too clearly the great times that we've spent together. It's also been very upsetting to see the effect it's had on their families and friends, and of course I can't help thinking that I might be in that situation myself in a few years' time.

If only we knew what lay ahead it would be a great deal easier to decide what to do with our hard-earned.

With respect, they aren't losing £100k, they are consuming a service for which they are paying (nearly) £100k annually. Similarly their only purpose isn't to provide profits for those providing that service. That is a very unfair description for those providing that necessary service The profit is a small percentage of that fee, and rewards those willing to invest their own capital in a service that might otherwise not be provided. Nor does such an accusation reflect well on the workforce, often low paid and dedicated, that tender care to those at that stage in their lives. Dementia care (and other age related care) is costly and requires dedicated and loving employees.

Wonderful points well made!

[BigB]

With respect, they aren't losing £100k, they are consuming a service for which they are paying (nearly) £100k annually. Similarly their only purpose isn't to provide profits for those providing that service. That is a very unfair description for those providing that necessary service The profit is a small percentage of that fee, and rewards those willing to invest their own capital in a service that might otherwise not be provided. Nor does such an accusation reflect well on the workforce, often low paid and dedicated, that tender care to those at that stage in their lives. Dementia care (and other age related care) is costly and requires dedicated and loving employees.

Wonderful points well made!

Both CK and dealtn are not wrong.

After 5 years of supported independent living, my 89 year old mum (dementia) has just spent 2 weeks respite in a care home and tomorrow will become a full time resident. There are 2 residents who are 100 - mum says shes hopes to god she doesn't live that long. On bad days she wishes she was dead. There are also good days.

[Gerry557]

I remember the struggles with the outlaws with one acting as carer for the other. That was until she had a fall and broke her arm and could no longer provide the care. Fortunately he did recognise the family, all except his wife, which must have been difficult for her. Apparently his wife was much younger.

I felt he was pushed to go into a home and not given extra home help. Initially he went into the home whilst she recovered from her injury but as time went on the home help idea was being under sold. I don't know if it was more to do with council finances. It would cost them to provide home help but they could put in in a home paid from his pension and topped up from the family.

The first home gave him assessments and physio and was good but then when he had to move all that disappeared. It was a granny farm as you call it. He went downhill in there. Generally people only stay a couple of years in those places and it's probably cheaper to go on a cruise.

Still if you have got nowt saved up you get it all free anyway so give it to the kids.

[dubre]

It is worth a reminder that the huge care home cost for those that pay is largely because they are subsidizing those that do not pay.

[GeoffF100]

It is worth a reminder that the huge care home cost for those that pay is largely because they are subsidizing those that do not pay.

Is that always true, or are their care homes that take only self-funders?

[dubre]

I know that the most expensive care home in our area £1950+/week will take people partly funded by social services. Any BUPA home appears to accept clients from social services at less than half that which self funders pay. No knowledge of what happens when self funders run out of money?
DYOR

[Lootman]

I know that the most expensive care home in our area £1950+/week will take people partly funded by social services. Any BUPA home appears to accept clients from social services at less than half that which self funders pay. No knowledge of what happens when self funders run out of money?
DYOR

My mother-in-law went to a residential care home for Jewish people. They had an interesting approach to fees. You basically hand over your entire net worth, minus a small amount. And they care for you for as long as you live. So a bit like an annuity, I suppose.

Obviously you'd want to know that they are well-financed and stable.

[GeoffF100]

I know that the most expensive care home in our area £1950+/week will take people partly funded by social services. Any BUPA home appears to accept clients from social services at less than half that which self funders pay. No knowledge of what happens when self funders run out of money?
DYOR

IIRC a friend said that there were care homes that only accepted self-funders in his area, but they had problems when people ran out of money and they were not cheaper as a result. I have not been able to verify that. It probably does not matter. You (or whoever is looking for you) visit the local homes and ask for quotes.

[Clitheroekid]

My mother-in-law went to a residential care home for Jewish people. They had an interesting approach to fees. You basically hand over your entire net worth, minus a small amount. And they care for you for as long as you live. So a bit like an annuity, I suppose.

A rather less random mechanism is an "immediate needs annuity", whereby in return for a lump of cash the annuity provider will pay the fees (or part of them) for the rest of the resident's life.

They are fairly tax-efficient, as, unlike with a conventional annuity, the income is tax-free provided it's paid directly to the care home.

It's also a deductible expense from the resident's estate for inheritance tax - i.e. the amount paid can be deducted from their estate immediately it's paid over. Consequently, if it's a taxable estate the actual cost could be seen as costing only 60% of that sum.