To ask if any of you feel financially secure, and if so, what does it look like...?

[Sugarbeach]

Is it even possible? Is it a realistic hope/goal?

[nextyearitsbigschool]

We are reasonably secure, our mortgage is large but the equity in the house would buy us a smaller house outright and we are not bothered about clearing it at the moment.We have insurances and savings and DH, the main earner is only likely to increase his salary as he works in an industry where salaries are very high. We do what we want when we want. I don't know his parents plans re inheritance but they are well off but my inheritance from my parents will be several hundred thousand all of which is currently in trusts and won't be needed for care should they need it and which will help us and our children in our old age.

[TheDietStartsTomorrow]

Not financially secure either.
20 year mortgage
Zero savings
No pension
No other assets besides home
We both have low paid jobs and mind is part time.
I'm 36, DH is 39.
We have children, youngest aged 5.

We don't have much debt though and we own our cars. We holiday every year though. The problem in my family is my DH doesn't know how to spend or save. It frustrates me to no end because I grew up very careful with money. My siblings and most of my friends have paid off their mortgages, have additional homes or assets and seem more secure than us.

Reading this, I realise I really need to sort our finances out. Trouble is I know it will cause arguments and that's not a solution. It's the second thing we argue most about.

[Floppityflop]

I don't think even two million in the bank makes you financially secure. You couldn't live off the interest. I am not sure what the ideal amount of wealth is. Being very wealthy has its own problems because you have to spend time attending to legal and tax matters, and you need to take care of your personal safety.

[2rebecca]

If you have 2 million in the bank and are not financially secure then you should have it taken away. Am serious here. In that case it is obviously a state of mind and spending within your means. You don't have to buy lots of crap to be happy.

[Badvoc]

We are a one income family and have been for a decade. 2 dc.
We have 23 year mortagage.
We Own my car.
Have 3 months of Dhs wages in savings.
Some cc debt on a 0% card....aiming to pay this off over the next year or so.
Dh has a pension and life cover and I have life insurance.
We have equity in the house.
We have made wills.
I don't feel remotely secure.

[RussiansOnTheSpree]

2rebecca Do you understand about interest rates? And gilts yields? A family, who already owned all their stuff, could definitely live on the yield from £2m right now but it wouldn't be a lavish lifestyle. If you put all your capital in gilts right now for 5 years, then you wouldn't even get 2%. Which would be £40k. If you tied it up for 10 years, you wouldn't quite get 3%. But tying money up for ten years is risky, so you'd probably go maybe half and half - which would mean lower returns in the 5 year period, say £20K.

There are lots of ways to make shitloads more from £2m than investing in gilts. But the question was about security. And the more remunerative ways of earning money from capital are not secure.

Like I said, very very few people are financially secure. God knows I'm not, and I earn a big salary. But it's assets that make you secure, not income. And even then there has to be a ready market for those assets.

[RedHelenB]

20k when you have no0 mortgage or loans should be enough per year to feel secure if you also had 2 million in the bank!

[Floppityflop]

2 million would only give an income of 20k in a bank account. You would have to invest in riskier products to produce a higher income which would mean your capital would not be secure. 20k fixed income is not a lot as food and fuel prices continue to rise. It is not a question of buying crap. If all benefits stopped tomorrow and you had no job 2 million would allow you to subsist more or less at current tax rates. So, millionaires are poor.

[wordfactory]

But redhelen 20k a year is nothing for a family.

You'd have to start dipping into your 2 million to pay for anyhting large. Holidays, a car, a fridge etc and soon your 2 million wouldn't be two million and you wouldn't get your 20k per year!

To live on 2 million, you would either need another source of income or you need to invest it in much riskier things.

[Bumblequeen]

Angel So sorry. I hope life turns around for you and dh.

[Bumblequeen]

We also have not gained any equity on our property.

I am determined to work towards leaving my dc with a substantial amount of money so they are able to live far more comfortably than we are.

[RedHelenB]

I would feel financially secure with £500,000 in the bank & no mortgage or other debts.

[KedenTTC1Cycle3]

2Rebeca as RussianSphere already said, you need a VERY large sum of money to be able to live off the interest.

You literally can't touch the prinicpal as that only draws down on the amount of money needed to earn a decent interest.

So no....$2million in the bank does not necessarily mean financially secure.

[guiltyconscience]

For me owning our house was the huge psychological boost that made me feel secure cos if tshtf we could always sell and rent.

[guiltyconscience]

Bumble that is very commendable and we feel the same however I have creeping doubts about it as there is no guarantee they won't lose the lot in one way or another.Making me think what can we do to ensure after our days they don't fritter it away on crap obviously we try to instigate good financial habits in them but ......... any ideas anyone?

[MadeOfStarDust]

2 million would get you more than £20k - if that is the rate you are getting - 1% - I would sack the financial advisor....

For that level of capital and no-risk-at-all-put-it-in-the-bank savings you are looking at a minimum of 4% (I'm currently on 3.5% with a hell of a lot less than that...) just look through the financial papers this week....

£80k pa is not such small change....

[BraveMerida]

Been niggling me also, especially if some partner or spouse get a claim on it.....Maybe let dc have a taste of having to be financially independent, and what it means to be poor...while you are still around?!

[lifesgreatquestions]

I feel financially secure, and I agree that it's relative. I come from poverty (not enough food, sometimes homeless, the handmedown's hand me downs) as a child. I now have a great income, on a contract so it's reliably there for the foreseeable future. I am on a mortgage, I put a significant amount into savings each moths and can still afford to do nice things. We, OH and I, both live simply and manage money very well, no credit cards or purchase of useless or unnecessary gadgets. OH came from a lower middle class family who knew the value of hard work and money and while they weren't rich they were/are financially secure, own their own home, etc.

[BraveMerida]

But I wouldn't feel secure leaving 2 million cash in a bank due to inflation, and it is not risk free, you are only protected up to 85k!

[guiltyconscience]

Thanks Keden and Merida think you are right it's instigating good financial habits in them now whilst we are still here and hoping for the best. I am going to put it in trust under my sis's jurisdiction till they are 25.Decision made just gotta get it sorted thank you !

[Idespair]

I think feeling financially secure from day to day is different from feeling financially secure in the long term. I only know one couple who are properly financially secure, they have about £10m . They do not need to concern themselves with the price of anything or worry they can't afford stuff or shop around. They can just have whatever they want. Incidentally they are extremely generous. Their child came to my ds birthday party and he was given £50 worth of really nice toys from them which he was thrilled with.

[BigBoobiedBertha]

We have a largish mortgage, 2 children who haven't yet finished their education and at least one of them will need some help through university, no pensions to speak of, a bit of savings (more than £20K) and a business that is providing enough for us to live on.

I don't feel insecure tbh. We've had our ups and downs, been made redundant a few times, lived off fresh air when the business was getting off the ground, that sort of thing. Things work out in the end. Having more money wouldn't necessarily make me more secure - money is meant to be spent (within reason) so I tend to think if you have more incoming you have more outgoing and, with it, the need to have even more money.

Security is a state of mind I think. It sort of depends if you are a glass full or half empty sort of person. From a personal point of view we had very little growing up. So long as I had more than I had then, I don't feel disadvantaged. I personally don't feel the need to stash huge amounts of cash away although I understand why some people do.

Actually security to me is the ability to make money if you need it. That doesn't mean paying off the mortgage, that means being able to comfortably keep up with the repayments. We've got that so I feel OK about it.

[Beastofburden]

Exactly. If inflation is 2.5% you need to reinvest that each year, so you could only spend the surplus over inflation. Back to the 1%...

I think we are beginning to see why so many older people spend their capital on a BTL house. An income of some-one else's monthly rent (less tax, fees, etc) is inflation protected, while the capital grows in line with house prices. I tmight not make money for a comemrcial investor who is borrowing to do it, but it certainbly beats the bank account model.

[KedenTTC1Cycle3]

BraveMerida I wouldn't put $2 milllion in cash in a bank for sure!

It'd be wrapped up in stocks, bonds, mutual funds or some type of investment vehicle. You'd never earn enough interest on it, just having it sit in a bank.

And besides in the US (where my DHs and I major investments are), you are only insured up to $250k by the FDIC. So tons of cash just sitting in a bank = bad idea to me.

[wordfactory]

guilty that has been a huge issue for DH and I.

Obviously we don't want our DC to have the struggles we've expereinced, but on the other hand I dread them becoming spoilt little rich kids.