retiring at 40, btl the best way?

[marieinlondon]

We are currently in our early 30s and want to retire in 10 years time. We have been working really hard to pay off the mortgage on our house and only have 30k left. We bought our place for 120k several years ago and is now worth over 300k. In a years time the clause from right to buy will end and we can finally sell it on and start planning our future.

We are planning on selling it next year and this will leave us with 280k ish in cash. We want to buy a slightly bigger place on a mortgage for about 450k using 150k deposit and then use the rest to buy two or three flats in good areas to rent out. I only work part time so take in just 8k, but my husband earns a heahtly 56k + bonus.

Can any one give me tips and advice? I want to remain in north London and have my investments in north London also. We plan to work hard for the next ten years to pay down the mortgages and then hopefully we will make enough to retire. Did originally post this in property but this seems to be the active forum here.

Am I crazy for thinking this is totally possible?

So you're expecting inflation to whittle away the debts in the BTL properties so you can draw an income in 10 years? But you're also assuming interest rates won't rise in that time?

I actually agree with you that interest rates are unlikely to rise in the near future but that's because we are mired in deflation right now so the consequence of that is your debt is real. It won't just evaporate because of inflation.

Sounds to me like you haven't done the maths here at all and know very little about investment although you are clearly good at saving if you can manage to do so on an income of only 65k in London.

But hey, the market is built on people diving headlong into situations they know nothing about and haven't thought through so I say, go ahead with your BTL plans. Worse case scenario you are saddled with properties that cost more than they generate but I'm sure a government bailout will be along any day to keep you and people like you afloat like it did last time anyway... /cynic/

carol

I think it was used back in the thread by a poster who gave an example of not needing to earn so much money.
If you are able to bartar you don't need as much money, iirc

Where can i easily live off grid in the uk without being told by planners and councils that I'm not being 'economically viable'? Because if there is a genuine way, I'm interested. Pretty much anywhere where the housing stock is so poor and so cheap that no-one gives a F. Alternatively, the Scottish Highlands and Islands, and the remoter parts of of Britain.

Much less risk involved in staying put and investing in stocks and shares ISAs.
Sure. Because the stock market isn't at a 40 some year high and badly in need of a correction. If I was going to place money in the stock market, I'd probably buy low (ie after a crash) and sell high (ie when the stock market is in a bubble). Right now were facing a bigger stock market bubble than 2008, with perhaps the only worse investment (bigger bubble) being the bond market. Right now is a time for playing the long game, holding hard assets, getting out of leveraged debt (mortgages) and sitting on what you have. Maybe jump back in in 2020. For now I think it is time to hunker down and baton down the hatches. All the evidence appears to show a sizeable financial shit storm on the horizon. Don't do what the financiers are telling you to do, do what they themselves are actually doing. They are getting out while the going is good.

surely having a job is bartering services in return for an IOU which you swap when bartering for goods you need?
That is EXACTLY what it is.
But we teach people to think of it as 'a job' and 'money'.
By doing so, we remove their ability to think freely, and validate our right to take their wealth. It is a very good system and they do not question it.

If you are able to bartar you don't need as much money, iirc
None of us ever stop working. We do stop working for others. Tending your garden to feed your family, feeding your duck, maintaining you car, cleaning your water system all are 'work'. The only difference between them is whether one enjoys what one is doing, or not. But we must all work in order to live a life.

To me, money is a store of how much I have worked. I work and I receive money and that allows me to buy apples and flour. It is a more efficient use of my time, because I do not grow apples or grind flour. I barter my labour for a promissory note with the Queen's head on it, and I then exchange that promissory note for the product of other people's labours.

Savings and investments are a means of transporting the value of the labour we have already done, into the future so that we may exchange that value for goods in the future.

The best vehicle for transporting value through time is one that will not be eroded by turmoil and volatility over time. We can all save 100 hours of work and get 100 hours of pay back a few months later, but we cannot all save that 100 hours of work and get 100 hours of pay back in 10 years time.

So the questions OP should be asking are...

1. How can I best pass the value of what I own today, into the future, and maintain or improve upon, its current value?
2. How may I best reduce my demand for other people's labour, and therefor reduce their need to exchange it for mine?

Sure. Because the stock market isn't at a 40 some year high and badly in need of a correction.

I gather you meant this sarcastically, and think shares are expensive at the moment.

This seems obviously odd, give the FTSE 100 is currently below where it was 15 years ago.

My FTSE 100 valuation spreadsheet hasn't been updated since just under a year ago, but luckily the FTSE is at about the same level now as then, so my calculations then should still be broadly valid.

At that time the FTSE 100 was at 6689, and I calculated that the inflation-adjusted peak was 9654, i.e in inflation-adjusted terms the FTSE was down nearly a third from a peak reached about 14 years earlier.

As a multiple of ten-year average earnings, it was cheaper than on 90% of dates in the previous 20 years.

Also, as a multiple of ten-year earnings, I reckon a UK index tracker is cheaper than trackers for the rest of Europe, North America, Japan, Asia-ex-Japan and Emerging Markets.

So I wonder why you think shares are expensive now.

I agree with you DisconcertedAndRetired. I would also add that most people seem to forget about the cumulative epositive effect of reinvesting dividends on stock market holdings.

At that time the FTSE 100 was at 6689, and I calculated that the inflation-adjusted peak was 9654, i.e in inflation-adjusted terms the FTSE was down nearly a third from a peak reached about 14 years earlier.

Is that based on the BoE's declared inflation rate (currently 1%)?
Do you believe the current inflation rate is 1%?
Could you think of any conceivable reason why the BoE might be motivated to declare an inflation rate that has been, let's say 'adjusted' downwards?

In fact, can anyone think of anything they buy today that is only 1% more expensive that it was last year?

Just like GDP, where the government have 'adjusted' the country's growth by including profits from hookers and drug dealing, there is a lot of evidence that inflation is running north of 7%.

Incidentally, the only other country to have artificially 'adjusted' their GDP upwards, buy adding in guessed revenue from prostitution and drug smuggling is . . .

Greece.

Re bartering: VAT is due on all goods and services, even if bartered ie no actual money changing hands. Not many people know that.

The GPd was adjusted to reflect the EU calculation methodology, the other countries already included prostitution, so no need to adjust.

Petrol has reduced from about 130 last year to about 117 now, so 10% fall. Electronics always fall in price. Your personal inflation maybe 7%, especially if you buy a lot of labour intensive products, but an average is not.

Vat is less likely to be an issue due to turnover thresholds, much more likely is income tax evasion.

Carol

1. How many countries in the EU include prostiution and drug dealing in their GDP figure calculation?
2. Electronics are not going down in price when compared current model against current model. Comparing last years model to how much it cost when new is erroneous.
3. When all other energy cost are rising faster than the declared inflation rate, in a market where energy prices are falling, siting the impact of a 50% drop in oil prices on the single instance of 'at the pump' is hardly representative when the same cast is adding to your electricity bill faster than the declared rate of inflations. The same cost is adding to the price of your food when oil is the largest component in its production and delivery to market.

You can believe Government data if you wish, and you can advise people to invest in your faith on them, but you can't really expect not to be pulled up for the inconsistencies in your analysis.

Are you telling us your cost of living has not increased more than 1% over the last year? Are you telling us your grocery bill has not increased by more than 1% over the last year?

Shame we can't do polls on MN. I'd bet most people have seen a greater than 1% increase, and I'd be willing to bet most are close to 7%.

If you are looking to save money, you are looking to do it for one reason only. You wish to be able to use it in the future, and the one thing you don't want is to lose purchasing power.

What is the point of investing in a vehicle that does not keep pace with the real underlying inflation in people's lives, even if the published figure we are told to believe by the BofE is 1%?

I'd like to see how well you think the stock market is performing if you use a realistic inflation figure rather than the one you have been told to use by Government.

The FTSE doubled from 1985 to 1995. It stood at about 3600 then and has not doubled again yet. Over the period 1995 to 2015 the average UK houseprice has more than quadrupled.

Ellie

here is an econoomist article about the GDP changes - is Europewide and Germany already had prostitution as was legal.

In electronics, current model to current model is only valid if no extra performance. You don't compare the old cost of a loaf of bread to the current cost of 1.5 loaves of bread, so why compare the cost of an old model with an improved model. You pay the same price today for better performance than a year ago, that is a cost reduction.

All energy costs are falling, I cited petrol as most visible to most people, but energy costs are not higher today than last year.

this article says that average grocery bills are 2% lower this year than last.

3 heavily mortgaged buy-to lets will not provide enough extra cash for 2 adults to live on for 40-odd years.

Surely you can see that??

mollie apart from maintenance, all those things you still have to pay if you're renting though? Having to fork out anywhere from £500-2000 pcm on mortgage repayments though would surely help keep the cost of living down?