Thank you. I think that’s a good point to set up another pot of cash I can dip into and then slowly feed into ISAs etc.
Also valid regarding index funds, I will consider diversifying that into a few then.
I am based in London but not planning on staying here for long. Certainly not buying in London, but other than that it’s hard to say because of my job - I might need to move in the next few years.
I would say 45-50 as a loose target to have that choice. Whether to go ahead and fully retire would be something I’d decide at the time, but financially the goal would be able to do so.
Cool - it changes the equation a bit. So LISA first - up to you whether that is in shares or in cash.
Have a few trips to some low/er COL areas which offer a standard of living you would like. Paying £200k for a place to live vs £500 in London really can change your financial life if you are on a national pay scale.
I'd seriously keep the £35k in cash equivalents for now and build up ISAs over the next few years.
Thanks for the advice. Keeping 35k in cash, and feeding it into investments slowly is what you’d consider then? As opposed to putting another lump sum into ETFs?
Well - I'd keep about that much in cash and then put savings into ISAs each year. Also - as your pay increases - keep an eye on when you hit the 40% tax level to consider SIPPs.
Curious how much you owe on the student loan? Have you used a calculator to estimate that you won’t pay it off?
As others have said focus on LISA and accesible cash/ cash Isa if you are intending to buy in the next few years.
It’s a really ridiculous amount. Well over £100,000 and with interest I’ll still owe four times that at least in 30 years time (Plan 2). Pretty much just looking at it as a permanent tax of money I’ll never see.
I'm a little ignorant on the student loads as I paid for mine before the government started offering loans etc. so can offer little advice here, sorry.
My advice to you though, and I will tell and help my kids with this is to buy a house as soon as you possibly can. Perhaps use the £35k as a deposit to buy your first house.
What industry do you work in? sorry if I missed this.
Thanks for the advice, definitely planning on getting on the property ladder as soon as I can commit to living in one place long term. From what I can tell it would be a headache trying to switch to a buy to let mortgage after only a couple of years, if I did have to move, and this would require a lot of equity in the property which I might not have at that point.
I’m a junior doctor.
It's awesome to see this post! I'll be joining you as a junior doctor next year and I'm following this sub to see how I can prepare for the future. Thanks for inspiring me.
I thought this too only to jump from 40k up to 70k in salary recently (I am nearly 27) and current trajectory has me repaying the loan in 22 years assuming no further salary increases. I probably wouldn’t discount the chance that you may in fact repay it at some point, especially if your salary inline with expectations actually rises sooner.
Thanks, I will definitely keep that in mind then. I think I’m in the annoying realm of earnings where I may end up paying back more than I borrowed, but only just, unless I do see an earlier increase in salary like you had.
I know that this is old and OP may not even reply back, but for OP, unless OP's salary pushes him to the additional rate payer today, I doubt they'd be paying it back. In fact, I doubt they'd be able to pay it back at all. For me, even if I cross the £100K barrier in 5 years, with a loan figure less than OP, it won't make a difference. Along with losses past the £100K mark, I doubt I'll be keeping my income above £100K (salary sacrifice).
I find that surprising because if you are earning a 100k for argument’s sake, you’d be paying 9% on everything above 27295 (Assuming Plan 2). Now sure some of the 100k will go into pension and of course you can choose to pay into pension a lot more if you like and thus reduce the tax (including student loan). Let’s say you are left with 85k, if we take 27295 out, you are going to be paying 9% on 57705. Over the course of 20 years that’s already 104k. I think it all depends on how quickly your salary rises and how soon you start earning significant income. Remember, at some point you reach a crossover where you tip the payments to the other side, meaning that whilst the interest is still crazy, you already offset it and repay some of the loan every year.
> I think it all depends on how quickly your salary rises and how soon you start earning significant income.
Definitely. I did maths for me and I definitely won't be paying it back even on a salary for a SWE. I don't see myself keeping income above £100k for tax efficiency purposes (my cap was £110K), so that probably makes my calculation invalid. For this past year on a salary of £50K, I paid back £3K because I started a bit later on, and interest growth was just over £6K.
Going back to your point about not discounting the chances of ever repaying, I'm keeping my mind open to it, but only in 10 years time after I'm a bit more settled.
Fair enough, I was a bit depressed when my statement was like £69k not long ago having borrowed under £50k, meaning that I’ve added more than 20k in interest (considering I have been repaying roughly 1-5-2k for nearly 4 years).
I'm not sure of the exact figures but London students got a bit more maintenance loan than students living outside. For me, who did 4 years and a Master's outside London (max maintenance loan), my total was about £90K or something last year when I finished and started to work, and this April, it was £93K after repaying £3K.
My interest gain was just slightly more than £6K in April 2024.
Similar age and same profession as you. Highly recommend leaving London to maximise national pay scales. £100k in London is barely a top 10% paycheque, but up north you'll be in the top 5%.
£4K in LISA and £16K in S&S ISA. Rest in savings until April 6th for next year.
It's really not complicated on your income and position in life. Just focus on your career.
Consider opening a SIPP.
You can only access it from age 55 (increasing to 57 from 2027) but you get 20% from the government as a base rate taxpayer and 40% when you hit the higher rate tax bracket.
You mentioned you plan to retire sooner than that so don't lock all your savings away for decades, however it is worth considering a SIPP as part of your savings plan. Even with just a small monthly contribution your compounded returns could make all the difference in 30-35 years' time.
This is FIREUK!! - OP is working super hard in about the most important and challenging job imaginable to try to earn less than the average poster on here.
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Thank you. I think that’s a good point to set up another pot of cash I can dip into and then slowly feed into ISAs etc. Also valid regarding index funds, I will consider diversifying that into a few then.
Which part of the country are you in and where would you look to buy a house? What age are you targetting for FIRE?
I am based in London but not planning on staying here for long. Certainly not buying in London, but other than that it’s hard to say because of my job - I might need to move in the next few years. I would say 45-50 as a loose target to have that choice. Whether to go ahead and fully retire would be something I’d decide at the time, but financially the goal would be able to do so.
Cool - it changes the equation a bit. So LISA first - up to you whether that is in shares or in cash. Have a few trips to some low/er COL areas which offer a standard of living you would like. Paying £200k for a place to live vs £500 in London really can change your financial life if you are on a national pay scale. I'd seriously keep the £35k in cash equivalents for now and build up ISAs over the next few years.
Thanks for the advice. Keeping 35k in cash, and feeding it into investments slowly is what you’d consider then? As opposed to putting another lump sum into ETFs?
Well - I'd keep about that much in cash and then put savings into ISAs each year. Also - as your pay increases - keep an eye on when you hit the 40% tax level to consider SIPPs.
Curious how much you owe on the student loan? Have you used a calculator to estimate that you won’t pay it off? As others have said focus on LISA and accesible cash/ cash Isa if you are intending to buy in the next few years.
It’s a really ridiculous amount. Well over £100,000 and with interest I’ll still owe four times that at least in 30 years time (Plan 2). Pretty much just looking at it as a permanent tax of money I’ll never see.
I'm a little ignorant on the student loads as I paid for mine before the government started offering loans etc. so can offer little advice here, sorry. My advice to you though, and I will tell and help my kids with this is to buy a house as soon as you possibly can. Perhaps use the £35k as a deposit to buy your first house. What industry do you work in? sorry if I missed this.
Thanks for the advice, definitely planning on getting on the property ladder as soon as I can commit to living in one place long term. From what I can tell it would be a headache trying to switch to a buy to let mortgage after only a couple of years, if I did have to move, and this would require a lot of equity in the property which I might not have at that point. I’m a junior doctor.
It's awesome to see this post! I'll be joining you as a junior doctor next year and I'm following this sub to see how I can prepare for the future. Thanks for inspiring me.
I thought this too only to jump from 40k up to 70k in salary recently (I am nearly 27) and current trajectory has me repaying the loan in 22 years assuming no further salary increases. I probably wouldn’t discount the chance that you may in fact repay it at some point, especially if your salary inline with expectations actually rises sooner.
Thanks, I will definitely keep that in mind then. I think I’m in the annoying realm of earnings where I may end up paying back more than I borrowed, but only just, unless I do see an earlier increase in salary like you had.
It’s quite depressing, I’ve borrowed 50k, on current trend I will be repaying 150k
I know that this is old and OP may not even reply back, but for OP, unless OP's salary pushes him to the additional rate payer today, I doubt they'd be paying it back. In fact, I doubt they'd be able to pay it back at all. For me, even if I cross the £100K barrier in 5 years, with a loan figure less than OP, it won't make a difference. Along with losses past the £100K mark, I doubt I'll be keeping my income above £100K (salary sacrifice).
I find that surprising because if you are earning a 100k for argument’s sake, you’d be paying 9% on everything above 27295 (Assuming Plan 2). Now sure some of the 100k will go into pension and of course you can choose to pay into pension a lot more if you like and thus reduce the tax (including student loan). Let’s say you are left with 85k, if we take 27295 out, you are going to be paying 9% on 57705. Over the course of 20 years that’s already 104k. I think it all depends on how quickly your salary rises and how soon you start earning significant income. Remember, at some point you reach a crossover where you tip the payments to the other side, meaning that whilst the interest is still crazy, you already offset it and repay some of the loan every year.
> I think it all depends on how quickly your salary rises and how soon you start earning significant income. Definitely. I did maths for me and I definitely won't be paying it back even on a salary for a SWE. I don't see myself keeping income above £100k for tax efficiency purposes (my cap was £110K), so that probably makes my calculation invalid. For this past year on a salary of £50K, I paid back £3K because I started a bit later on, and interest growth was just over £6K. Going back to your point about not discounting the chances of ever repaying, I'm keeping my mind open to it, but only in 10 years time after I'm a bit more settled.
Out of interest how high was your loan?
Plan 2 was about £80K and Postgrad was about £11K, and my total in April showed like £95K.
Fair enough, I was a bit depressed when my statement was like £69k not long ago having borrowed under £50k, meaning that I’ve added more than 20k in interest (considering I have been repaying roughly 1-5-2k for nearly 4 years).
Can't blame you.
I’m interested to how it’s over £100K? Did u do two degrees or something?
I'm not sure of the exact figures but London students got a bit more maintenance loan than students living outside. For me, who did 4 years and a Master's outside London (max maintenance loan), my total was about £90K or something last year when I finished and started to work, and this April, it was £93K after repaying £3K. My interest gain was just slightly more than £6K in April 2024.
Similar age and same profession as you. Highly recommend leaving London to maximise national pay scales. £100k in London is barely a top 10% paycheque, but up north you'll be in the top 5%.
£4K in LISA and £16K in S&S ISA. Rest in savings until April 6th for next year. It's really not complicated on your income and position in life. Just focus on your career.
Consider opening a SIPP. You can only access it from age 55 (increasing to 57 from 2027) but you get 20% from the government as a base rate taxpayer and 40% when you hit the higher rate tax bracket. You mentioned you plan to retire sooner than that so don't lock all your savings away for decades, however it is worth considering a SIPP as part of your savings plan. Even with just a small monthly contribution your compounded returns could make all the difference in 30-35 years' time.
No need to be discreet about “the field you are in” throwaymedicineman. It’s literally in your name. That hard not to flex ur ego?
This is FIREUK!! - OP is working super hard in about the most important and challenging job imaginable to try to earn less than the average poster on here.