Fail to plan, you plan to fail!
GFF has a plan for the future and it’s all about managing cashflow now to build up a future FIRE income. Money comes and money goes – but you need to keep an eye to where it’s building up and what that means for the future.
As part of Ready, Aim, Fire I thought I would share what we are doing to build up a reliable income stream to provide a (more or less) passive income. This passive income is primarily to cover us until we can access pension funds which are squirreled away and out of reach (but not out of mind!)
Here’s how our FIRE income is made up in annual and monthly average terms (as of March 2019):
- Peer to Peer Lending: £4,750 / £400
- ISAs: £2,500 / £200
- Non-ISA: £1,500 / £125
- EIS: £2,000 / £180
- VCTs: £12,000 / £1000
- Cash savings: £250 / £20
- AirBnB: £1,000 / £100 (maybe not so passive – but easy money?)
- Total: £24,000 / £2,000
In terms of portfolio management; we are reducing investment in P2P lending, selling and reinvesting in VCTs and increasing ISA and Non-ISA investment. We hold a large number of shares in a beer company that I would like to sell – hopefully next year.
What I am aware of is that the relatively high income comes at the risk of poor growth. In the case of VCTs, the dividends can often be paid out of capital and P2P lending is not without risk and I’m backing out of it to reduce my exposure. This £24,000 should not be seen as fully guaranteed!
If we both keep working and saving, the money can go into income producing assets. There’s lots of way for a family to manage taxes and my plan is to keep growing this income amount without paying too much extra tax – so using ISA allowances and other techniques.