The last time I did a review on this was back in 2014 (here) so it’s been a while since then.
I started writing this blog in Dec 2011 where the objective is to document the journey towards the path to financial independence at the age of 35. I gave myself a stretch 10 years goal where I’d like to be by the time I am 35 years old. You can see them below.
|Year||Year||Starting Capital||Cumulative Annual Capital Injection||Dividends on Starting Capital||Total Yearly Dividend Payout||Monthly Passive Income|
There were a few questions from readers on some of the numbers I put above so I’d try to answer though obviously it has been a long time ago and my memory could fail me.
First of all, the starting capital I had put out there is $100,000. Obviously, I did not suddenly pop out and have that magical $100K right away in my pocket. I started working in 2007 but only started my investing in 2011 so technically that was the amount I put away and save and won from my punting of occasional soccer betting earlier in my days. Those were the good old days I trained on my adrenaline rush, patience and discipline which comes in handy these days.
The annual capital injection of $60k was a bit of a stretch there and until today, I can hardly ever achieve that sort of capital injection in one single year as you will see more later below. I work backwards and found out back then that $60k was the magical number and hence simply put it there for projection purpose. Heck, life was different when I was single back then and today I am married with 2 kids (one on the way) and the sole breadwinner on the household. The $60k capital injection was just a dream. It was never going to come close to realization.
I assume 6% dividends on my principal + capital injection every year and have this compound for the next 10 years. I did not assume for any other capital gain return from the market back then, so it is totally build on the assumption of a 6% return, mainly from the dividends and reinvested.
10 years is a stretch bitch goal that I set for myself knowing in mind that it’s almost impossible to reach there. Still, I wanted to push and stretch myself very hard knowing how my lazy mind works. If I gave myself a longer timeframe of achieving the target at the age of 65, I’d be less motivated to push myself and do well in human capital, which I did in my earlier days. The painpoint factor of working at the big 4 accounting firm motivates me to run away from the rat race and start pushing my dream comes true. I was very motivated to succeed back then. It is not a choice. It is in my hands to do it.
I’ll fast forward the timeframe to where I am today to see if I am anywhere close my original goal. I’ll go through one by one.
On the human capital front, I did better today than I expected back then where I envisioned myself to be. I knew that this was going to play a crucial role if I were going to make it for early financial independence. My fellow blogger, Chris, talked about empathy and Cinderella Story in his recent article but I don’t think I would fall under that category. The closest I can think of is having a PSLE score of 186 and going to a normal stream for my secondary but that was never close to a cinderella story. I’ve heard stories of people who came back to succeed in their career even though they were not intellectually smart but luck plays a part in their success. I think I will attribute that to my story. Luck definitely play a crucial factor in where I am today.
On the capital injection front, the closest peak I came saving in a particular year was somewhere between 2014 and 2015. Those were the times when both my income and circumstances hit a really nice spot at the peak. Since then, expenses have creeped up slowly due to increased family expenses and they have risen a lot faster than my increase in income. I am definitely on the trend down these days.
On the returns from investment, I was fortunate to earn some positive returns from the market since the time I have invested in 2011. Even in a bad year where the stock market is down, I had managed to stay positive and survived the downturn. Until today, it is really difficult to quantify if it is due to skills or luck. I really think I have to count my lucky stars for that.
|Actual / Forecast||Year||Capital||Capital Injection ($) (incl. savings and dividends)||Returns from stock market (%)|
Next Few Years Ahead
The next few years ahead is going to be tough.
Based on the review I have on my current circumstances, I can already envision that I will fail to meet my original target and have to stretch them by a further 2 years earliest. That will mean 37 years earliest based on my projection.
In terms of financials, I have previously mentioned that income has peaked but my expenses are still going up, so that will mean a lot lower savings in the coming years and lesser bullet to inject for the investment.
I could draw up different scenarios to speed up on the income front like having my wife back to the workforce but I thought it’s better to have her handle the household and slog it out myself. We are doing fine financially and I just need to ensure to reduce those silly errors in my judgment.
My motivation to reach early financial independence is also not as deep as I had intended in the earlier days. Back then, there was the painpoint factor which is not so evident right now. Energy was also much higher back then but now I couldn’t run with a speed of a Lamborghini.
I am a lot happier now because things are well in place, companions to play for and life being more meaningful with kid(s) running across the living room all the time. There was an occasional glitch of wanting to reach financial independence at some days of the year when some things get tough but it’ll mostly disappear again within the next few days.
So 6 more years to go now. I’m praying it’ll be kept that way.