As I said in my first blog post this will be an introduction about me and where I am financially at the moment (budget will be present in the upcoming week).
Defining the goal,
Since the age of fifteen my goal have always been to become financial independent, at first the dream were more to become wealthy but during the university something changed my mind and I actually realized that it is not wealth that are my holy grail, it is financial independence and freedom.
The goal is to exit everything that today are a must at the age of 40 and still have a decent life. This comes with some questions, which follows.
What is actually a decent life?
A decent life for me includes a couple of things, health, family (3-4 people), friends and material things. The only thing I actually can control is the material things, but I will still consider that we are two adults which split the costs equally when doing the estimation of a decent life budget, below the budget can be seen. Important note is that the budget is a hypothetical "decent life budget" for me in today's money, everything could be changed over the years. What do you think about it? To tight?
2491.5 euros per month does my money machine needs to generate, annually 29 898 euros. This implies that I need to have a cash flow from my investments which generates 29 898 euros on an annual basis.
What is a moderate cash flow to count with on my investments?
Since my investments only will consist of global dividends champs (when the goal is reached) will I calculate on a 3.3% dividend yield. Yes, I know it's above the average yield on S&P 500, which is around 2%. But since the focus will be on high dividend yield stocks, I still consider 3.3% to be achievable and moderate dividend yield.
In other words my goal will be reached when I have a total amount on 906 000 euros (29 898 EUR / 0.033), sounds like a big pile of cash, possible to achieve?
How should I now achieve this big pile of cash?
The tactic are pretty simple, save as much as possible and invest it wisely, my target is to put away 1000 euros per month and have a return on assets on 14 percent per year, as I said budget will come in the upcoming week. At the age of 41 and after 17 years I will reach my goal with, if I stick to 12 000 euros saved per year and with an annually return on assets by 14%.
As I said this calculation are very conservative, I will probably be able to save more and I know my salary growth will be very high the upcoming years, expect my salary to double within three years. Simulation graph could be seen below.
216 000 euros are invested and 689 473 euros comes from return on assets, which really shows the value of compounded interest and what Warren Buffett would have called "The Snowball effect".
About me
As my journey and goal should be the important thing on this blog, will this section be short and effecient. I am 24 years old, five years at the university, degree´s within accounting and finance, having at the moment an international graduate position at a Fortune 500's Top 10 company and aiming for financial independence as soon as possible.
I decided to be anonymous and write under the pseudonym Eighth Wonder Investing (EWI), because I don't want the blog to affect my personal and social life.
Why haven't I reached my goals yet, I am still 24 years old? Biggest obstacle have been to be on a small budget as a student, still think I done a great job, which has 22 000 euros already.
Probably will you find out more about me as long as I proceed to write on the blog.
Over and out,
Eighth Wonder Investing
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