1,5y ago when I started this blog I posted Why Y2035 and calculation behind it explaining what is the meaning of sites name and the calculation of how things will look like when I will turn 50 years old. Lets have a look at the chart once again.
Our portfolio was 22 kEUR value and I have calculated that if I were to continue investing 200 EUR/mo into shares that pay 4% dividend yield and increase their dividends by +5% each year with dividend reinvestment, also 170 EUR/mo contribution to pension funds with 3% annual growth and at the end all money going to dividend shares with 4% years our portfolio should reach 166 kEUR and should generate 9 kEUR dividends annually. Lets see were we are today and recalculate the numbers.
- Portfolio value has increased from 22 kEUR in Y2016 to 30 kEUR in end of Y2018
- YOC stands at 3,9% with US companies paying only 3,1% (Whithout T with high yield and biggest exposure would be even less)
- Y2018 Dividend increases for US companies stands at only +4%, Baltic are not calculated as totally unstable.
Let’s see how the number change when dividend yield is set to 3% and growth to +4%.
As you can see portfolio value declined to 154 kEUR and projected income to 7.2 kEUR or only 600 EUR/mo. That is less then 1/3 of our expenses today or our expenses 😦 Now that sucks. 2y has passed and situation regarding financial independence has not moved that much. I could even argue that is has deteriorated a bit. As the old saying says – its back to the drawing board 🙂
Possible options to reach Financial independence in Y2035.
- Decrease expenses by -29% – with flat 25 kEUR income we need to decrease our expenses from 21 kEUR to 15 kEUR and invest remaining 10 kEUR or 833EUR/mo to get 15 kEUR of dividend income in Y2035.
- Increase income by +40% – keeping 21 kEUR expenses flat and investing whole difference we need to increase our income from 25 kEUR to 35 kEUR saving and investing remaining 14 kEUR or 1.166 EUR/mo.
- Combination. Increase income by +20% and decrease expenses by -14% – We need to increase income from 25 kEUR to 30 kEUR and decrease expense from 21 kEUR to 18 kEUR investing remaining 12 kEUR or round sum of 1kEUR/mo.
- Look for investment with more returns, ex. rental property, shares with higher dividend growth ect.
Let’s see how thing will go. Either way staying with same 200 EUR/mo investments is to low, but either way more them most of people are doings. Even with 600 EUR/mo passive income when I will turn 50 that will be a real achievement 🙂