RE: Vlog 220: My version of financial freedom.
Definitely an important topic to talk about @exyle! Would you say financial freedom is the same thing as financial independence?
I've calculated that to be financially free and have a netto month income of €2.000 per month, you basically only need €625.000 invested in World Index Trackers with the assumption of 7% return per year. This way, you wouldn't have to touch your principal amount, which is key to financial independence!
For the last 90 years, this has been the average return on the stock market (dividends + price increase) and should be doable (although I would wait out the upcoming crash/correction on the stock market before putting money in). I am not even talking about investing in crypto, which currently seems to have much higher returns ;-)
Personally I am aiming for a combination of investments in crypto, index trackers and real estate.
Of course that €2.000 netto is only enough for 1 person. When you are with 2 people, you need approximately a little bit less than €1.000.000 (and not talking about potential costs of having kids of course).
I believe this is actually quite doable and achievable if you don't spend too much money on consumer goods. And here I am talking about 'retirement' in The Netherlands. If you retire in South-East Asia, you need a lot less and can be financially free much earlier.
Btw, great move of cancelling that contract with the big client. Must give you a lot more freedom and a good feeling of not having to be on call 24/7. I am curious how you feel when you cancelled the last one of those 24/7 contracts, must be amazing!
Keep up the good work!
Yes, you can live with less in a developing country. But in places like the Netherlands you have your medical expenses pretty much covered by being a citizen or a permanent or semi-permanent resident. Getting cancer or a stroke can be a total financial disaster in a third world country or a country that doesn't have universal coverage if you don't have an insurance policy with extensive coverage. Such insurance policies tend to be quite expensive. You should factor that into your cost of living in a third world country.
That is a very good point! Never thought about it like that. Thanks for commenting :-)
When you're young you are better able to risk living in a third world country from a cost of healthcare point of view. But if you're middle aged or old the prospect of becoming seriously ill should give you a pause. Also, if you become incapacitated by serious illness, you could end up in a horrible place unless you have become part of a community of trustworthy people. In welfare states, you will be taken care of by the system.
Check out Mr Money Moustache, he explains the (rather simple) math behind "retiring early"
https://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/
http://www.mrmoneymustache.com/2011/09/15/a-brief-history-of-the-stash-how-we-saved-from-zero-to-retirement-in-ten-years/
Thanks! I know Mr. Money Moustache and I actually did some of my calculations based on his ideas ;-) Great guy!
I'm generating the same kind of income, though my investment costs were waaaaayyy less. I know everyone is not a fan, and some people are very sceptical, but Bitcoin mining has given me total freedom from the corporate office job I used to have.
My initial investment was around $30 000, and I now generate anything between $1500 - $3000 per month. Just letting you know, there are alternatives :)
That was a good move @andriesvw! Awesome that you have been able to do that :-)
If a global cryptocurrency become dominant, then the arbitrage benefits of living in a poorer country with lower USD forex rates will be less.