Cash advice: How to retire early

Ever wanted to know how you could retire at the tender age of 40 – or at least well before 65? Recently, Channel 4 aired a programme that highlighted changes people had made in order to give up work. But there was no denying some of them were extreme. Her

1 SAVE 50-75 PER CENT OF YOUR INCOME

This may seem hard at first, but if you start by saving the maximum percentage of your income that you can afford each month (even if it’s only 10 per cent), you can build from there. As you adjust to a budgeted lifestyle, you’ll free up even more. If you make your own lunch and don’t buy £4 coffees twice a day, you can save around £90 a week – that’s £23,400 in five years.

2 THE 5:2

A bit like the well-known diet, this involves only spending money two days a week and not parting with cash for the remaining five days. If you plan well, you can shop for necessities once a week and ration your consumption over seven days. See spending money as a reward, not a daily action. Work out a weekly budget, spend it over two of the seven days and move the surplus cash into your savings account.

3 SPOT INVESTMENT OPPORTUNITIES

Rob says there are seven levels of financial freedom – level one of managing money is getting out of debt, level two is saving and level three is investing. The golden rules of investing are buying when shares are low and holding on to them for the long term. All markets move in cycles, so watch for trends. What is out of favour and therefore underpriced? The best trends are often secure assets and stocks in items that are having short-term issues – underpriced but likely to recover.

4 TAKE RISKS

Take calculated risks that seem dicey but have the downside covered. You could set up a part-time business from home where you have no overheads, or create an information product packaging your knowledge and selling it as books, audio or online courses. These moves could seem like a risk but actually use very little capital.

5 DON’T BUY ANYTHING YOU DON’T NEED FOR A YEAR

Most clothes and gadgets are liabilities that go down in value over time. If you purchase a car, get the oldest year of the newest model so that most of the depreciation has already happened.