The new year means it’s time to plan for the next stage in the campaign. Here’s the outline of my 2022 financial independence campaign plan.
Why I revise my campaign plan every year
The world changes all the time. Life changes. Investment outlooks change.
A plan that has no room for flexibility is doomed to fail. If I had one overarching plan, I’d be afraid to miss opportunities to achieve my end goal.
Annual reviews give me enough balance between giving enough time and resources to make them happen and giving me flexibility to work towards my goals.
Reminder: my goal is to achieve CoastFI in 9 years.
As I said in the 2021 campaign plan: my aim was to achieve CoastFI within 10 years. One year on makes it a 9-year planning horizon.
My overall strategy hasn’t changed
The strategy remains:
- Invest in myself. By doing this, I hope to gain knowledge and skills to achieve financial independence and grant myself freedom.
- Spend intentionally. By spending intentionally, I hope to make my money go further, freeing up resources for investing.
- Invest my money. This is how I intend to defeat inflation and earn my freedom to choose what I do with my time.
Assumptions and life events for 2022
This plan is a bit different than the previous year, and will be different to other years. The decisions that I have taken to prepare the 2022 campaign plan are based on a few factors and the plan should be interpreted in the context of these.
1. I should qualify as a solicitor in September
I began my career change back in 2019. This year, I should be qualifying as a solicitor in England and Wales.
I’m expecting my pay to double on qualification. This means that if I can keep my living standards at roughly the same level, I ought to be able to double my savings rate from the end of 2022 onwards: a massive boost to my campaign plans.
For anyone who is interested, I believed in investing in myself before I learned about financial independence. I gained a law degree through the Open University and the rest, as they say, is history.
2. On qualification, there is a significant chance that I relocate offshore
I recently reviewed The Sovereign Individual. One of the lessons in that was to relocate to places where the laws benefit me the most.
My partner is from the Channel Islands. Partly due to family reasons and partly due to the favourable opportunities for lawyers, we’re seriously considering relocation when I qualify. This would mean a few things:
- We would end up having to buy a much more expensive house (which I’m not looking forward to). No, it won’t be any better than the one we currently have.
- I may need to cash out my ISA and re-invest into a regular investment account. I’m not sure on the rules of this, but as a result I will be investing less in the ISA than you might expect.
- I would probably need to transfer my pensions. My SIPP is with Vanguard, and Vanguard don’t accept Channel Islands customers. Fortunately, there is an agreement to allow me to transfer my pensions to local equivalents.
This is still a possible move – not a guaranteed one. However, the benefit would be that I would have a flat rate of tax of 20% and I wouldn’t need to worry about Capital Gains Tax.
As a result, I would be encouraged to spend more time on side hustles, as there would be no wasted effort in paying higher rate taxes if one took off. I would also gain more benefit from investing in capital rather than income-producing assets.
Investing in myself
It looks like I have some chunky life events coming up this year!
Even so, I have two main objectives for investing in myself under the 2022 campaign plan.
Courses and training
I have a learning credit to use from my previous career. This is something I used to part-fund the diploma for financial advisors. In 2022, I plan to use this to attend a course in mediation. This should give me other career options, make me more invaluable to potential employers or allow me to set up a side business on my own terms in the future.
I also intend to complete the RYA Competent Crew course. We are still looking at disappearing on a boat when we hit CoastFI, but I don’t have much sailing experience (my partner has a lot). I figure that it might be good to make a start!
Reading list
I’m always on the lookout for good reads. I have three books on my list already:
- The Fiat Standard by Saifedean Ammous.
- The Millionaire Fastlane by MJ DeMarco
- The Psychology of Money by Morgan Housel
I should also put up more reviews of the books I’ve already read. That might be a good time to revisit the lessons from them!
Spending intentionally
I may need to buy a house this year, so I guess that will be my most intentional purchase!
Other than that, I intend to keep my spending light. We’re actually looking to reduce the number of possessions we move with. Our accidental minimalism lifestyle we’ve hit upon makes this quite easy.
One area I intend to be quite generous in is in spending time with friends and families this year. I might be relocating and might not see them as frequently afterwards, so I plan to make the most of their company this year.
Investing my money
The dilemma I have is that I may be forced to cash out of my ISA on relocation, while I don’t yet know of all of the tax rules in the potential jurisdiction I plan to relocate to.
My investment plan for the 2022 campaign will be in two phases:
Phase 1: From January 2022 until September 2022, I will split my investments between my pension overpayments and various crypto, primarily Anchor but also through yield farming side hustles.
Phase 2: From October 2022 until the end of the year, I will switch primarily to liquid equity assets, probably index funds in some configuration, to replace my ISA. As I don’t know what the most tax-efficient investing strategy will be on arrival, I will invest in getting professional advice when I arrive.
If I don’t relocate, I Phase 2 will mean maximising my ISA until the end of 2022.
The logic of Phase 1
The tax savings from investing in my salary-sacrifice workplace pension should outweigh any inefficiencies created by needing to move the pot to another broker, if that becomes necessary. As I understand it, there is the option to transfer UK pensions to local equivalents without repaying the tax reliefs on pension savings.
The overpayments in an asset that cannot be accessed for 25 years seems relatively low risk, when the tax efficiencies are considered. This will be the counterbalance to the high-risk, semi-speculative crypto investments I will be making concurrently.
I’m sure that the crypto investments will probably upset a lot of more conventional financial independence campaigners.
No, I haven’t given up on index investing. It’s simply that the amounts I’ll be investing while still a trainee will be dwarfed by the amounts I will invest overall in 2022, if all goes to plan. In the big scheme, the high upside risk is desirable while the downside risk is just that I’ll need to work 4.5 months longer if it all fails.
This is also planned with the anticipated growth in pay in mind. If I were to relocate on the same savings rate, I’d be thinking about things differently.
The logic of Phase 2
Phase 2 is effectively a rebalance of the 2022 campaign plan investment phase.
I’m expecting to invest twice as much during this time, between pensions and whatever the closest ISA equivalent is.
I won’t know all of the options available to me when I get there. In mainland UK, I have years of knowledge about financial products available, won through a lot of reading and available literature. Because I have quite a tight time frame for my plan, I’m going to invest in an advice-only report from a local specialist, so that I can get up to speed as fast as possible.
I’m 99% certain that it will just mean using a low-cost broker and investing in the same funds as I do already, but there might be other advantages to living on a tax haven for a bit. Makes sense to try and maximise the opportunity.
If the 2022 campaign plan involves relocation, is this still a UK FI blog?
Well, yes.
I will still be paid and investing in £GBP, still subject to the same ravages of inflation. The only differences will be in the tax treatment and account options.
In all other respects I will be in the UK, using a British passport, in an area where the laws mainly mimic those of mainland UK. There’s no special treatment for the Channel Islands after Brexit or anything else, and I don’t change nationality or anything else.
Plus, there’s the chance that I return to the UK after a few years.
Let’s see how it goes!
