The Road to Wealth (part 2 — €60k): Action Plan

In the last post, I defined my goal: to have enough money so that I can live a humble life using just the passive returns on my investments. My yearly expenses are approximately €20k and I assumed a 10% yearly return. Therefore, I need to have at least €200k to cover all my expenses.

In this post, I will come up with a plan of action. What am I going to do to get myself to that €200k as fast as possible?

Recall from the last post that I already have a €60k portfolio (I saved up money while working previous jobs, and also have some unrealized capital gains from my stock portfolio).

Recall also that I have been unemployed for the past three months.

That is the first thing I need to address: my unemployment. Coming off such a low base, the highest returns I can generate are simply from working. If I can save only €1k per month, I am already generating the equivalent of a 20% annual return on my portfolio, which is fantastic.

Then, I want to set a couple of milestones so that I have something to look forward to. €100k will be one milestone, €150k will be another. But there is a problem: as my savings are (nearly) fully invested at all times, I will be at the mercy of the markets when it comes to achieving these milestones.

Let’s say there is another market crash, and I find that all my positions are down by 50%. Does that mean I am doing something wrong? Of course not. In the short term, there is no correlation between the size of my portfolio and with how successfully I am working toward my goals.

Because of that, I also want to set some savings milestones, because those are not dependent on anything but my own wages and spending behavior, which I do have some control over. Therefore, I am also considering each extra €10k that I save as a milestone reached.

Very simply put, my plan is as follows:

• Get a job.
• Start saving money and invest in stocks.
• Continue until you have €200k in assets.

With the milestones being:

• Getting a job.
• €100k assets.
• €150k assets.
• Every €10k saved.

Splendid. In the next post, I will try to calculate how long it might take for me to reach my goals.