I want to share little bit of math behind this blog name – Project2035. At that time I will turn 50. To think I will be half century old by then. Half a century… 🙂 Pension age at my country is 65 years. Due to improvement of medicine and average living duration I can bet that it will be at least 70 years when I will reach the pension and that is 2055… People should be living in Mars by then 🙂 Just imagine how world will look by then. Did you imagined that we will have PC and smart phones at 1970’s? But this post is not about futurism and stuff like that.
So my main goal is to become financially independent till I’ll reach half century of till Y2035. I have come up with this simple chart which explains how should I reach it. Financial independence is when you Passive income exceed your expenses. In order to reach it we have to increase our Passive income and decrease (if possible) our expenses. First one I’m planning to achieve trough my Investment portfolio which will generate me a steady stream of Dividends or Passive income. So that’s for theory, what about the actual figures. Let’s calculate were we will end up in thous 18y from now using such such math:
- 200 EUR/mo. steady investments into shares.
- Shares pay me averaged 4% (actual 4,3%) of dividends after tax.
- Dividends increase by +5% each year.
- Dividends are reinvested into shares.
- 170 EUR/mo. is invested into II and III pension funds.
- +3% pension fund growth annually.
- Pension fund money is invested into shares generating 4% dividend at Y2035.
So here is the result of my portfolio development in coming 18 years:
So our investment portfolio should increase from 22 kEUR at the moment to around 166 kEUR and should generate nearly 9 kEUR dividends / year, which equals to around 720 EUR / mo. of passive income. This looks a bit low knowing that our present income is around 1.5 kEUR and expenses 1,3 kEUR out of which around 830 EUR are fixed expenses. So in general present saving and investing is not sufficient to retire before i’m 50 🙂 Will have to think something else to boost our passive income then 200 EUR/mo. investing into dividend paying shares, but never the less even under present circumstances we should be able to live out of projected passive income on bare minimum, so financial independence is already reachable by Y2035 without changing anything today 🙂