A 60 year strategy

In 1998, aged 30, I made a what turned out to be a major decision, to start investing so that I could retire early. I had saved some money, learned some financial modelling from a few years as an actuary and had been paying into a company pension scheme.

Other than that, I had no real strategy for how to achieve financial independence. So I formulated a 60 year strategy to guide me which went like this:

  • From age 30-60, save an additional amount each year which would double in real terms over 30 years.
  • At age 60, withdraw the amount I put in at 30 to whatever it had grown to. At age 61, withdraw the amount I put in at 31. And so on.

The insight for me in this strategy is that I’m always a long term investor – at age 59, I’m still putting in an amount that won’t be touched until age 89. So there’s no need to change investment strategy just because I’m close to retirement.

Also, the aim of “doubling in real terms” was somewhat plucked out the air. The ISA allowance at the time was £7,000, and I figured that £14,000 in 1998 money would go a long way to supporting me (especially if supplemented by a pension).

But, it turned out to have two important consequences which are still with me today.

Firstly, doubling over 30 years is a get rich slow scheme. So I could discard all notions of chasing return and looking for hot tips. I simply didn’t need to. I had enough runway of time to let compounding do all the heavy lifting. All I had to do was stick to the plan and the market would do the rest.

That was when I selected index funds with dividend accumulation as the core investing approach. I only bought FTSE100 tracker funds, but through various companies to not over rely on one fund manager who might hit trouble. I’ll do another blog post to dive into the rationale behind FTSE100, and how that differs today.

The second consequence of the strategy was that doubling in real terms over 30 years actually equates to an average real return of +2.3%pa over inflation. This was a mathematical calculation that I didn’t actually do until very recently. However, in my modelling spreadsheets that I’ve been using for many years, I’ve been using +2%pa as a conservative number from my actuarial training days.

So my “gut feel” target investment return would have supported my cashflow needs. As it happens, 25 years in, my average real return has been around +3.2%pa, so a good headroom.

Needless to say, my 60 year plan has evolved somewhat (the most striking difference being that I stopped work age 51, not 60). But the important thing is to have a plan, stick to it, and evolve it as you have more information.

Read more on this topic . . .


I am not your financial adviser.

The information in this post relates to my financial journey. It may or may not be relevant to your own. You need to make your own decisions on your own financial strategy.

Do not buy or sell anything based solely on what you read.