Like I mentioned in my last update, I crossed another 100k€ mark this month, yay! 🎉 Will I make it to 1,000,000 € by the time I am 40? Can you become a millionaire by 40? Stick around to find out.
Life doesn't always go as you planned and so won't your investments. When I started my career what feels like a lifetime ago, I calculated that in a good market, I could make enough by saving and investing to be a millionaire by the time I'm 40, but to do that I had to
- Save very significant amounts every month, and
- Be much better than average at investing
Oh and 3. be lucky. Forgot about that. Turns out that has played the biggest role in my journey to be totally honest.
The first 100k is the hardest and I'm on my 7th
I'm sure you've seen this kind of analysis before, but here it is with real life data. How long does it take to accumulate 100k? It depends on how much you already have.
There are a few forces behind this, one of the biggest one being compound interest, which is no stranger to anyone. But there's another significant mechanism at play: your income and lifestyle creep. You might not be able to influence your compound interest much (e.g. if you're following a simple global ETF strategy), but you can definitely influence your income and your expenses.
Some of the most interesting data points to track are months between the subsequent 100k's, which I have plotted on the graph below. As you can see, while the first took me 68 months, already the next took only a third and the previous two have taken just 7 and 5 months.
I have another graph for that, which shows the past wealth development, and makes a projection based on monthly contributions and an annual interest rate. The monthly contribution is assumed to be 2,000€ and annual interest 13%. You'll say unrealistic. Perhaps. But it fits fairly well to the historical performance.
13% is probably too much to ask, also taking into consideration that a large portion of my wealth is tied in the house, but on the other hand I do hope my track record holds. Wish me luck! 🤞
Peer lending returns
| Platform | Return | stake | |
|---|---|---|---|
| Mintos ⭐ | 12% | review | ✔ |
| Estateguru ⭐ | 12% | review | ✔ |
| Lainaaja | 10% | ✔ | |
| Swaper | 12% | review | ✔ |
| PeerBerry | 12% | review | |
| NEO Finance | 12% | review | |
| RoboCash ⭐ | 11% | review | ✔ |
| Crowdestor ⭐ | 10% | review | ✔ |
| Bondora | 8% | review | ✔ |
| October | 4% | review | ✔ |
| Trine | 7% | review | |
| Sun Exchange ⭐ | 5% | review | ✔ |
| Reinvest24 | 10% | ✔ |
Returns have not changed since last month. I continue to have over 100,000 € in the staked platforms marked above.
I want to yet again point out one platform I have a lot of love for: Sun Exchange. This platform lets you own solar cells in South Africa that produce CO2-free electricity you get paid for. Not only does your investment replace coal-powered electricity to save the planet, you actually get a return on it. Not the greatest return on the planet in monetary terms, but invaluable otherwise. Want a free solar cell? Just sign up and make any purchase using my affiliate link and I'll gift you an extra cell 🌞😎.
Another platform I believe deserves seriously more love is Estateguru. For the long history I have with them, they've delivered completely solid performance. I have currently no doubts about them myself and am considering doubling down on my stake. I consider them the best in Europe in their category.
Could I have spent only 1,500€ in September?
Because it looks like I just did. 1,483€ to be exact.
I am baffled to how little I'm spending. My food expenditures have shot through the roof during COVID, and my restaurant bills are just ridiculous. I've budgeted just 350€ on food, but I spent almost that on restaurants alone.
It is surprising to me how little living costs at the moment. This includes mortgage interest rates and maintenance, but there were no large unexpected costs.
But there is some deceit in this. For example, in order for my living to be this cheap, I need to own about 100k€ worth of house. And my car is fully paid. It deprecates, and I need to renew it every few years.
So I've made a little extra this year, which is why my savings after taxes and expenses is already 60k€. It also means my savings rate so far this year is above 70%. I am quite satisfied 😏
Am I financially independent?
Well... it depends. Let's see.
How do you define financial independence? Do I still need to work?
- No, I don't: For me to live a life where I have a nice house, food on the table and some money to spend on restaurants even - I have that now.
- Yes, I do: I wouldn't be satisfied with the kind of life I would have, so I do need to accumulate a bit more.
If I have a net worth of 700k€, but only 600k€ is invested, then I can use the 4% rule to that 600k€. Based on that, I can withdraw 24,000€ per year or 2,000€ per month. As I need to pay 30% taxes, that amounts 1,400€/mo net. If I didn't have a job, I would save quite a bit on things such as car and lunch costs, so I can safely assume I could do it. But I don't want to.
You too can check your time to financial independence with my financial independence calculator.
So yes, I am financially independent to the degree that I will survive the rest of my life without ever working again. Anything I do work, contributes to a higher standard of living. If I want to have proper vacations, I better stay working for a bit longer.
Stocks are doing great, too
Last month I mentioned how I am investing on growth stocks such as ;$CELH, $DNMR, $DMTK, $SOFI and $ROKU. I'm still quite heavily invested in these and just added $DLO recently. So far this year my stock picks have returned 89,000 € growth (50,000 € realized).
Long-term (since 2010), my stocks have yielded 14% CAGR, which is just a little more than what the S&P500 returned in the period (13%). I'm glad I haven't lost against the index and I'm quite sure I've learned a ton. Tracking these things can be tricky, but not with my free investment calculator. Want it? Take it 👇
Get the free investment calculator
After all, you do need to understand your performance first, before you can improve it, right?
What's next for the wealthy Finn?
My eyes are on the double-comma. I have an awesome job that pays well and I hope to continue to perform well with my investments. It's still going tough to accomplish in the next three years, but it's possible.
What advice would you give me? What should I do? What should I avoid?
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