In the Financial Freedom Roadmap section we talked about becoming less dependent on effort income by building your investment engine, which grows your leveraged and passive income over time.
We also went through the MOB Calculator (Maximise Income, Optimise Expenses, Build Investments), which showed how, as you increase income and optimise lifestyle expenses, the surplus can flow into investing in yourself and in assets. Together these make up your investment engine.
I have created some useful calculators to help you visualise the power of this method. They each work slightly differently and you will likely have a favourite.
Each calculator can be saved and shared with your own data, so you can come back to it anytime.
Liquid Asset Forecaster
This shows how your liquid assets can grow over time with the power of regular saving and compounding. Simply enter these details:
- your current liquid assets
- your monthly contribution
- your time horizon
The calculator then works out your overall growth, and the annual and monthly income this will generate using generally recognised safe withdrawal rates. Your expected income is also provided at today’s purchasing power so it has real meaning.
How Much Is Enough?
This shows the size of the investment engine you will need to fund the life you want. Simply enter these details:
- your desired monthly income based on what things cost today (the calculator adjusts for inflation)
- how many years until you want to stop earning effort income
- the leveraged income you expect to have by then
- your current liquid assets
The calculator then works out the future income you’ll need, how much is enough using generally recognised safe withdrawal rates, what you still need to save, and how much to save each month to reach your goal.
Freedom Runway
This calculator is the holy grail. It shows your freedom runway. Simply enter these details:
- your lifestyle expenses
- your leveraged income
- your liquid assets
The calculator then works out how long you can last on your leveraged income and the passive income from your investment engine. If your combined income covers your lifestyle expenses, the runway never ends and you’re free.
You can also set a minimum liquid assets level, so the calculator won’t take your pot below a figure you’re comfortable with.
Engine Fuel
This calculator shows how much of your income is left over to cover your lifestyle expenses based on how much you want to pay into investments. Simply enter these details:
- your annual salary
- whether your pension contribution is salary sacrifice or not
- how much you want to contribute to your pension, ISA and GIA
The calculator then works out your income tax, National Insurance and take home pay, before and after those contributions, including how much extra National Insurance salary sacrifice saves you, plus the total added to your investment engine.
Check out my UK Account Types page for more info on the tax treatment of these different investment wrappers.
Buy Now Pay Later
Every purchase you make today is money you’ve chosen not to invest. This calculator shows the true cost of buying something now, in terms of what your future self gives up. Simply enter these details:
- the purchase price
- your current age and the future age you’re comparing to
- your expected annual return and inflation
The calculator then works out what that money could have grown to by your future age had you invested it instead, and what that’s worth at today’s purchasing power.
I hope you found the roadmap and the calculators insightful. Keep in touch on YouTube, Instagram, TikTok or X and sign up below to get my free UK Investing Starter Sheet and newsletter.