As a DGI I’m working to Financial Independence (FI). Most of my readers are working to the same goal. As you can see on my Twitter account (@polliesdividend), my goal is to reach FI when I’m 50 years old. This year I’ll be 42 years old. So is my goal realistic? In this blog post I’ll look into it. I’ll try to calculate how much I need when I’m retired.
So it is time to crunch some numbers.
At this moment my Vrijheid Fonds has a value of € 55,000. Every year I donate all dividend that I get from my Portfolio and will add approx. € 4,000 of fresh capital. At this moment my weighted dividend yield is 3.66% (see here)
With these three numbers I can calculate my future value of my Vrijheid Fonds. The future value of my Vrijheid Fonds depends on the dividend Yield, Dividend Growth rate and the stock prices.
I can’t look into the future and can’t say what the stock market will do. Therefore I have to work in this blog post with an estimate. A yearly gain of 8% will give me approx. € 145,000. And a yearly gain of 15% will give me approx. € 235,000
With a weighted dividend Yield of 3.66 % and a weighted average dividend growth rate of 6.92% a yearly growth of 12% must be do able. With these numbers my Vrijheid Fonds will be approx. € 191,000 when I turn 50 years of age.
With an average dividend yield of 3.66% this will give me €7,200 in dividend every year. This by far not enough to retire! (booh, booh) I’ll need about € 40,000 per year to keep up the same life style. So my Vrijheid Fonds needs to be € 1,2M before I can live of my passive income. With the same financial numbers as above I will reach this value when I’ll turn 65!
What can I do to speed this up? Keep pumping in fresh capital as much as possible and as early as possible. So this is what I’m going to do.
At what age do you reach FI?
What is your advice for me, to reach FI sooner?