At what age do I reach Financial Independence?
Since the beginning of my blog, once a year, I write a post in which I calculated when I would reach FI.
In order to track my progress, I will do the same calculations with recent numbers. In this blog post I did the original calculations back in February 2015 and for the posts in the following years, just click on the corresponding year 2016 and 2017.
So this is a yearly returning blog post, and for my calculations I used the numbers of January 1th of each year.
I crunched these numbers and calculated the future value of my Vrijheid Fonds for the year I will turn 50 and for the year I will turn 65.
Future Value of my Vrijheid Fonds
When I know these values I can calculate my future dividend in these years. Last December, I have looked at my expenses, as I do every year, and came to the conclusion that my annual expense could be lowered while maintaining the same life style.
I’ll need about € 36,000 per year to keep up the same life style. If I use my current weighted average dividend yield (for more information on my weighted averaged Yield and DGR, please read my 2018 post Some metrics of myVrijheid Fonds), I calculated that my Vrijheid Fonds needs to be approx. € 1 M in value before I can live of my passive income.
A couple of days ago I calculated my weighted dividend Yield of my Vrijheid Fonds for 2018. It was around 3.58%. This is higher than last year, because of lower share prices in comparison to last year (and almost all dividend increases last year).
The weighted average dividend growth rate of around 3.66% and this is lower than last year. This is mainly due to the oil stocks that haven’t raised their dividend (significant). To compare the data with the past years I use the same overall yearly growth of 12%.
|Weighted average Yield||3.66%||3.57%||3.20%||3.58%|
|Yearly fresh capital||€5,000||€5,000||€ 7,000||€7,500|
|Future value 2023||€185,000||€192,000||€ 213,046||€203,305|
|Future value 2038||€1,200,000||€1,236,500||€1,427,081||€1,390,868|
|Possible retirement year||65||64||63||63|
When do I reach FI?
Just as the last three years, I have to report that after 1 year of hard work for my Vrijheid Fonds, I still cannot retire when I turn 50 (booh, booh). And this reality check also learns me that for me, it will not be possible to raise the value of my Vrijheid Fonds in the coming 5 years to the point that I can retire ;-(
If we look at the data, I conclude that one year of hard work resulted in approx. €10,000 of less projected future value 🙁 (In 2023). My projected future value declined, but because my weighted average dividend yield is higher than last year, I will receive more projected dividend than with the metrics of last year.
What I did after last year’s calculations is that I raised my goal for donating fresh capital this year. This higher yearly fresh capital is used to fuel my beast. And after my review of Q1-2018, I can say that I’m on track to reach this goal.
These are some very simple calculations with lot assumptions. And I know that live happens when you make other plans. But I use these calculations solely for my own pleasure and insights. So these are not hard data. It just gives me a direction and shows me that I’m on the right track.
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?