↑ Eurozone Stock Index Fund
is up by $3,173 or +2.7%
↑ US 500 Stock Index Fund
is up by $4,662 or +3.6%
↑ Global Small Cap Index is
up by $3,716 or +3.2%
↑ Additional cash to invest
$7,727 under my pension plan.
Observations:
It took two weeks to sell my funds with previous pension provider and transfer money to the new one. Incredibly slow.
With the new provider I also took
decision to put some additional money as I expect to move jobs. In the new job
I will not be able to contribute any more to the fund.
As the result I expect to have
one more small contribution and some tax return on my pension contribution
between now and end of January. They
combined will not exceed $2,000.
With new pension money holder,
the money is invested in Growth fund. The fund is wild combination of the USA,
UK and BRICS stocks.
I manage to meet my annual savings goal ($17K vs $10K planned).
I expect that the market will sink
slightly in December, but hope that overall value of the nest egg will remain
about $525 K (This is does not really matter, as I will not be able to achieve
financial independence for the next 25 years at the current contribution rate.
This is what 10% and humble market performance savings rate will
do to you).
How many years does it take to
achieve financial independence vs. percent of income saved?
% of annual income saved
|
Years
to replace 100% of income at inflation adjusted return
|
|||
3%
|
4%
|
5%
|
6%
|
|
10
|
81
|
61
|
50
|
41
|
20
|
61
|
46
|
37
|
30
|
30
|
49
|
37
|
30
|
25
|
40
|
42
|
32
|
26
|
21
|
50
|
37*
|
25*
|
23
|
19
|
* The trick there if you lived
for a long time at 50% income, perhaps you do no need 100% of it, after
all. To replace 50% will take 22 years (18
years at 4% inflation adjusted return). You can observe that the time here is more important
than percentage. The message is: do not try so hard towards your financial
independence. Enjoy the life but keep saving.
Many prospects stating that
historical stock market performance was 7%. This is absolute (not inflation
adjusted) return. Inflation adjusted is between 2-4%.
My personal base line is to save
$15K a year, at 3% return I will have $1,600K in 25 years, which will generate
$50K before taxes. It should be enough to
cover the expenses. Assumptions: the house is mortgage free and the kids are
out of the house. Two hypothetical scenario:
- Increase savings to $25K (which
will deprive family from many fun things) I will achieve the same in 20 years;
- No additional contributions. Will
have $33K a year in 25 years.
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