Important information: The value of investments and the income from them, can go down as well as up, so you may get back less than you invest.
FROM #FreeBritney - launched by Britney Spears' fans to utilise social media and garner awareness of her conservatorship giving her father control over her finances - to the FIRE movement, many of us are increasingly awake to the freedom financial independence gives you, and what life’s like if you don’t have it.
Whether you’d love to retire at 55, give up the nine to five at 32 or be mortgage-free by 45, with a little careful planning you can achieve the financial independence you want.
Whatever financial independence means to you – these three steps will help you achieve it:
Step 1: Start small, but start now
It’s not about sacrifice or even the size of the amount, it’s about making a start. Whether you put aside 75% of your income aka FIRE movement-style, or £25 a month, the more time you give your money to grow, the better. Investing regularly in your ISA and maxing out your annual ISA allowance is a good starting point.
Step 2: Make the most of ‘free money’
When your employer contributes to your pension scheme, that’s in addition to the salary you’re paid, so it’s effectively a ‘free’ pay rise.
While you might not be able to get your hands on the money until you’re 55 at the earliest (rising to 57 soon), you’ll reap the rewards of having had a regular sum invested on your behalf, plus the years of growth that will have added to it.
Step 3: Sweat what you’ve got
If you want to work towards clearing a lump sum at a future date, there’s a handy rule of thumb that can help guide you.
Take 72, divide it by the rate of return you’re getting on your investment and you’ll see how long it will take you to double your money. Alternatively, if you needed to double your money in 25 years’ time, divide 72 by 25 and you will see the rate of return you need to meet your goal.
Whatever your dreams, start your planning now and start saving, because your journey to achieving financial freedom starts today.
Important information: Investors should note that the views expressed may no longer be current and may have already been acted upon. Tax treatment depends on individual circumstances and all tax rules may change in the future. Withdrawals from your pension savings will not be possible until you reach age 55 (the government is proposing to increase this to 57 from 6 April 2028). This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to a Fidelity adviser or an authorised financial adviser of your choice.
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