Financial Independence change in the Net Worth over the past 7 years analysis

This is how my financial performance looked like over the course of the last 6 years and benchmarking my investment decisions against global stock markets:

Year	2013	2014	2015	2016	2017	2018	2019
End of the Year, $ K USD	298,429	288,608	295,536	387,831	482,266	432,089	575,086
Money invested (Do nothing)	298,429	318,105	332,356	413,899	508,617	528,940	549,690
Inflation adjusted U.S.*	394,553	361,145	336,942	462,739	619,649	501,911	722,293
S&P 500 benchmark**	394,553	467,612	488,316	627,481	859,178	835,597	1,118,724
DAX (Germany)**	374,528	404,317	457,382	570,485	708,560	599,216	772,167
FTSE (the UK)**	354,235	376,391	385,749	540,970	700,605	664,879	804,044

* If I invested in inflation protected US treasury bills

** Total return (market change and dividends reinvestment)

 Various indexes fund performance comparison - S&P500, German index, British FTSE and Treasury bills

As it could be seen from the graph if I would keep all money in cash, I would have $550 K by now or $1,119 K if all invested in S&P500 (including dividends reinvestment) for the past 7 years.

There are three main reasons for it:

-          As we understood earlier, that my previous focus was on high return low growth stocks with aim of achieving earlier financial independence. This has changed in 2017.

-          My portfolio is balanced among emerging markets, European stock markets and S&P500.  British and German stock markets are shadowing S&P500 but significantly lagging in performance.

-          I have significant exposure to EUR and used to have some to British pound, over the last 7 years, EUR lost 19% to USD and British pound 25%.

Going forward:

My current net worth is $575 K USD, if I assume that the historical stock market growth is 7% and inflation is about 3%, expenses are 1% this will leave net growth of 3%, a year.

This is an optimistic assumption, as the past decade market has been more volatile mainly due to the power shift and share to the emerging markets. EU specifically allows its luxury of politicking, instead of forging strong unions and focus on economy.

If I leave the money without any additional investment, I should have $1,168 K in 25 years.   This is approximately $46K a year during retirement.

Currently I am able to save additional $10K a year this will result in additional $375 K, bringing total to $1,574 K in today’s money, or $63K a year.

Our current expenses are about $110 K a year, without mortgage and kids we need around $60K a year or approximately $ 2 million as nest egg (including contingencies).  To have $2 million in retirement I need to save $23 K a year for the next 25 years.  To retire early by 5 years, I need to save $35K a year over the next 20 years. There is a huge incentive to save the additional money towards the retirement.

Every little helps, but as you can see saving $100 a month over 25 years is going to give you $43 K in the next egg, doing the same for 40 years, will result in $90K.