How to Save A £100,000
In a recent video published to my YouTube channel (highly recommend to watch), I discussed what it takes to reach that magic number of £100,000. Now that seems like a lot of money, well it is a lot of money, but you may be surprised that it doesn’t take as much money as you may think.
The key with reaching such big financial milestones is having a clear plan/goal, knowing exactly what you have to do to achieve that goal (i.e. how much do you need to save per month/year), and most importantly, be persistent to save/invest what you set out to.
You can save your way to £100K or you can invest your way to £100K, but the real difference is the likely return you will get with your money. Savings accounts interest rates are laughable nowadays (we are talking 1.5% at best), so investing is becoming more and more attractive, particularly in these times of such high inflation.
So what exactly does it take to reach £100,000?
For these scenarios, we are going to assume you are saving your money within a savings account with 1.5% annual interest. We are also going to assume that you are going to increase your savings by 2% each year in line with inflation.
For these scenarios, we are going to assume you are investing your money with an average annual return of 8%. We are also going to assume that you are going to increase your investment savings by 2% each year in line with inflation.
So there you have it - it’s not as crazy as you would think, is it? Clearly, investing your way to wealth is much easier than saving your way, but of course it does come with risk that you have to be willing to take to reap the rewards. Either way, it is possible to reach that glorious six-figure number, you just have to choose the way in which you want to reach there.
Happy saving and investing!
30-year old living in the UK who is actively working towards achieving Financial Independence (FI). Sharing all the tips and tricks I am learning along the way!