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Peri’s 10 Year Financial Plan

3 March 2010 No Comment

Today, I present an entry in the Financial Plan Writing Contest. Just a reminder that you can win $250 by participating.  Here are the brief guidelines, to read the full description of the contest, click the link above.

  • Answer the question: What is your financial plan for the next 10 years?
  • Be sure to to hit on things such as income, job security, budgeting, expense management, real estate, investing, retirement planning, etc. – the more detailed within specific areas the better!
  • Be sure to discuss how the economy might affect your plan – what if we fall into a double dip recession?  Or worse, a depression?  Or inflation?  What if you lose your job? What are you doing to prepare for any economic scenario?
  • Be specific about certain financial goals you might have
  • Include your age and your age-specific concerns & goals
  • A minimum of 500 words is required – again, more detail improves your chances of winning the contest!
  • Send your contest submission to kevin (at) 20smoney (dot) com with “Writing Contest” in the subject line

You still have time to submit your entry to the contest!  Be sure to enter soon!

I want to be financially stable by 2020.

That, though, is probably the aim of everyone who is taking the time out to write in to this competition or for those reading 20smoney on a regular basis. The questions I have been asking myself for almost a year now is how I want to go about achieving this goal. The journey for me is just as important as the destination. If it wasn’t, I would have gone straight into trading at a large investment bank as soon as I graduated (and I graduated with a Maths degree so this was an entirely plausible choice).

I am a Londoner born and bred although my parents are Turkish. They moved to England in the 70s to study and never returned. Being based in London sometimes makes Kevins articles in 20smoney irrelevant for me but I try where I can to transfer the message of what he is writing about to make it relevant to my situation. I am 23 years old and as I mentioned before, I graduated from university with a mathematics degree in 2007. I have been working full time for about 2 ½ years now in what I can only describe as an ‘ok’ job. In fact, I think this is one of the first things I would like to change- having a career that I enjoy and get a decent salary out of is a priority of mine. At the moment, I have a ‘job’ not a ‘career’ and in order to increase my salary, I need to work in a company that will allow me to grow. I am currently on £31k but hope to have at least doubled this within the next 5-7 years.

I feel a little young to be even talking about pensions but seeing as my company put in 5% of my salary towards my pension, I match that sum. I also have a student loan which I pay about £100 a month towards. In terms of savings, I currently hold an ISA account (holding £10k) and a savings account (holding £15k) (neither of which are earning much interest, for obvious reasons). I have been able to save so much money in the last couple of years solely because I moved back home after I graduated and so don’t have any outgoings except for my student loan, pension and ‘fun’ money. I try on average to save about £1500 a month.

So now you know where I am financially today, let me explain how I plan to be financially stable by 2020. With most of the money that I have saved, I plan to buy my first property (I just put an offer on a small 2-bed flat, wish me luck!) which will hopefully make me a small profit of about £300 every month once I rent it out. The flat is in a good location so it should always be rentable but in case for some reason, it is empty for a couple of months I will be able to use my salary to pay off the mortgage. I will still have some savings for the (hopefully) unlikely event that I am without a job and the flat isn’t rented out.

I then plan on putting the money I will be making from this flat and from my normal work salary into shares in a construction company in Turkey. My parents have very good ties with Turkey still and so it would be very easy for me to invest my money in Turkeys growing economy. This will be a mid-term savings plan (3-5 years) in which time I hope to have saved enough money to be able to put down a deposit for another flat (with a buy-to-let mortgage) once I’ve sold the shares. If I see that the shares are making more money that I could make from rent from a flat, then I’ll leave them where they are.

I have honestly only looked forward to the next five years- but I know that my money-making initiatives are mostly going to be from property, shares invested in Turkey and my salary. I know that some people will think I have missed the boat when it comes to property, which I don’t disagree with, but if I go into it with the mindset that I want to buy property to make a secondary income by renting them out rather than by selling them at a profit then I believe I will be ok. I plan to hold on to the property I buy for at least 20 years, and by then property prices will definitely have increased anyway (I live in London, remember!). And now is an ideal time to buy if you can as prices are slightly lower than they were a couple of years ago and mortgage rates are favourable.

Submitted by Peri

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