Thursday, June 18, 2020

Financial independence from A to B

I have been on the road for financial independence (FI) from 2008, with some tangible steps taken since 2011.
 How long will it take me to reach it? 
 I would like to make some assumptions first:
Assumption one.  Our house is not an equity.  Counting home equity is only good if you don't plan on living there in retirement.
We are making a lot of irrational decisions by renovating the house to our liking. Significant amount will go in in the next two years’ time (approximately $100,000). 
Assumption two. I am planning to invest $2,000 a month.  This is after taxes. I assume that this amount will increase in line with the inflation.
Assumption three.  I am able to achieve 3% return after the inflation on my investment.
Assumption four.    In fifteen years’ time the kids will be out of the house and the mortgage paid.  This should lead to annual expenses of $50,000. 
 Key milestones to achieve Financial Independence:
A road to Financial Independence
 At four percent withdrawal rate I should be able to get $50K a year.  There some potential opportunities but pitfalls too. Let’s see what the journey will bring ahead.
 My father retired when he was seventy years old. He actually kept coming to work  for free for almost a month, after retirement. This was  to make sure that his successor transitioned into the role well. I maybe have a job  in my late sixties to do too by keeping my skills up to date.  However, I see a lot of people in their early fifties are given a boot at every major crisis. 

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