Financial independence and my plans

I realized the other day that I’m not sharing too much about my actual thoughts regarding financial independence. As you might have noticed, my articles tend to be more stock picking or investor education focused.

This is funny, because a large part of my weekly available time in brainpower is allocated to dreaming about the day I’ll finally become financially independent.

That’s why today I would like to share a bit more about my thoughts and how financial independence could look like for me.

Although, these thoughts regularly change and kind of go with the ebb- and flow of the seasons. There’s one constant though: I really want it!

What is financial independence for me?

I must have written more often about this topic, but just in case you were wondering. Financial independence to me is the moment that my passive income in the form of dividends covers my monthly expenses.

I call this the dividends-expenses-cross-over-point.

This cross over point lies for me around the 12 years mark and I’m now 6 years down the road. Initially I calculated this to be 15 years based on a 50% savings rate, but I believe that I will continue to grow my savings rate in the upcoming years.

That’s why I aim to bring my cross-over-point 3 years forward.

Let’s see! It’s a bit aggressive, but my calculations show me that it should be possible with some additional effort.

Calculate your own dividends-expenses-cross-over-point by using my dividend investment calculator.

Why do I want to be financially independent?

This sounds a bit like a no-brainer question, but it’s probably good to remind myself about it.

Well, simply said, I just want to have more freedom.

  • Freedom of choice…
  • Freedom on how I spend my time…
  • Freedom on where I spend my time…
  • Freedom with whom I spend my time…
  • Freedom of thoughts…
  • Freedom in the actions I take…
  • Freedom in how I spend my money…
  • Freedom in … (almost everything)

That’s one of the simple reasons why I named my dividend growth portfolio my freedom fund.

What’s your reason for aspiring financial independence? Let me know in the comment section below this article.

How do I envision my life once I’m financially free?

There are actually multiple options which just wonder through my mind when thinking about this topic.

1. More of the same, but with less stress

One of the first thoughts is to just continue what I’m doing now, but with more freedom of choice and way less pressure and stress.

As an example, I truly love where I’m living and how we spend our time when we’re not at work. We live in a nice environment with a lot of forest around us and being in the forest is something I always enjoyed.

At the same time I also enjoy the work I’m doing right now as well. I work with some very talented people and the culture in our company fits me very well. I actually enjoy going to the office to meet other people.

At the same time there is sometimes quite some stress involved with work. And this is probably something I might do different once I reach the expense-cross-over-point.

At that time I just might consider switching to a 4- or 3-day work week, provided that the company agrees to that. Or I might switch some roles internally which could bring me lowered stress.

Spending a bit less time at work would create more space to work on some hobbies. As an example, I really love using my two left-hands to build some nice DIY woodwork.

Another example is blogging and creating content for YouTube. I really love analyzing stocks and sharing my knowledge with you. This is something I could definitely do more of at such a moment in time.

2. Change work and be more courageous

One thing I ask myself often is: am I courageous enough?

I give you an example: I truly love analyzing stocks and talking about them. Why am I not taking the risk and retrain myself to become eligible for a job as a stock analyst?

Or why am I not doubling down on my passion for creating content? Maybe if I just push it for a year I could earn a minimum income with it.

Truth to be told, I lack the courage for that, because my current work provides me with an upper middle-class income. Investing a large sum of that income into passive income generating dividend stocks is a very conservative approach to seek financial independence.

It gives me the cash to fall back on and I know that I will be able to retire early at a certain moment in time. The only thing I have to do is to be consistent with my investment and let the compounding do the heavy-lifting.

I’m now already in a situation where an annual 5% dividend growth for the whole portfolio equates to 7 months of additional cash deployed into the stock market.

Example: 5% growth on 5000 in dividends is 250 Euro. 250 Euro at a 3% yield on cost requires 8.333 Euro to be invested. If you are able to invest 1.250 Euro per month, then this is similar to 7 months of cash contributions.

3. Focus on giving back

Another path I could clearly see my self pursuing would be to work for free and support the underserved.

I have gathered quite some transferable skills over the last 20 years which I could easily use to help educating others. Examples are financial literacy, anything regarding the basics of IT and in some areas even advanced, how to setup a business and lately also digital marketing.

There are still a lot of kids out there with limited opportunities especially those that are living in orphanages. How cool would it be to support them in their education and to support them getting into the middle-class?

Time is the main limiting factor which is stopping me from doing that today, which shouldn’t be an issue anymore once I achieve financial freedom.

Probably this would even be one of the most satisfying and impactful things we could do by helping others.

4. Traveling around Europe and the world

A last option and definitely something that I should do is to see more from the world.

Currently I’m having 26 days of vacation a year, which is not too bad compared to people living outside of Europe. On the other hand it doesn’t allow me to make far away and longer-term trips.

This is a pity, because one of the things I aspire is to really live for few months within a community to truly get the feeling of how they live.

How cool would it be to rent an apartment for few months in the heart of Siena, Florence? It would allow me to discover the region, visit different summer festivals and just live as an Italian person for some time.

Or what about wine-tasting in Georgia? It’s not a typical region that many people think about, but I’ve heard several times from Georgian people that this is one of the things I should definitely consider.

There are just so many places to see and experience in the world and being financially independent would at least allow me to enjoy many of those!

There’s one catch though, it would need to fit family life. By that time the kids are teenagers and their schools and education will have priority.

On the other hand, I’m sure that there will be possibilities to combine things.

Where there’s a will, there’s a way.

Which option has my preference?

If you ask me now, it would probably be something like the following:

Take a year sabbatical from work to see Europe and travel around. Live in some different places across Europe to truly explore the regions and experience their cultures.

After that year I would make up my mind on what to do.

If you’d ask me today then I would probably stay at my job first, because we’re working on some pretty cool stuff right now. I might just ask the company I work for to start working less so that I would reduce the stress.

The reduction in working hours could then be an opportunity to double down on my passion for blogging and dividend investing.

Charity would probably still have to wait a little bit. I think I would want to focus on other people once I’ve got my own kids properly educated and prepared for adulthood. I can tell you, this isn’t an easy task right now and it will for sure not be an easy task in their teenage years.

But after that I would definitely consider option 3 and use my skills to help the underserved.

One thing I know for sure though: I can’t do nothing.

Life is short and there’s just so much cool stuff to do in the world.


These are my thoughts right now and I’m sure that they will be slightly changed again if you ask me a year from now.

Now that you know this, please tell me, how do you envision spending your time once you are financially free?

Yours Truly,

European Dividend Growth Investor


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Disclaimer

I’m not a certified financial planner/advisor nor a certified financial analyst nor an economist nor a CPA nor an accountant nor a lawyer. I’m not a finance professional through formal education. I’m a person who believes and takes pride in a sense of freedom, satisfaction, fulfillment and empowerment that I get from being financially competent and being conscious managing my personal money. The contents on this blog are for informational and entertainment purposes only and does not constitute financial, accounting, or legal advice. I can’t promise that the information shared on my blog is appropriate for you or anyone else. By reading this blog, you agree to hold me harmless from any ramifications, financial or otherwise, that occur to you as a result of acting on information provided on this blog.

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European DGI

It's my desire to retire early via Dividend Growth Investing as a passive income stream. This is not easy and especially when living in Europe. That's why I started this blog and share my journey: to give you a European perspective.
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MyFinancialShape
21 days ago

Very good read mate! I can relate a lot to the points you make. And here the same, I am looking forward to have more options and flexibility. My wife and I want to achieve FI by end of 2024. Not solely through dividend growth investing, we want to add other passive income sources over time. Dividend growth investing is great but we want to diversify. We receive currently around USD 15‘000 (net after taxes) in annual dividends and have been working hard to add a rental property, hopefully in 2022. So, step by step over the years we want… Read more »

MyFinancialShape
Reply to  European DGI
20 days ago

Yes, getting from USD 15‘000 to USD 50‘000 by the end of 2024 is quite a challenge.
But I like these kind of goals, challenging and motivating.
Yes, real estate investing abroad is one bet. If things work out well, we could almost double our passive income in a matter of one year. We have relatives in France, near the Swiss border, I want to buy some properties, renovate and then rent it out.
Cheers

chris
chris
21 days ago

Seems we are on similar life trajectories – I’m also getting above average income from work which allows me to do pretty strong savings (70% of monthly income). The work was a lot of stress back a few years ago and didn’t leave much space for hobbies, etc. I assume you are probably around 40 – similar to me. I don’t have kids though. I’m investing since ~6 years, but I went into income investing (and larger volumes) only last year. Having said that, I have taken a 4-day work week last year. I transferred away from my initial role… Read more »

Chris
Chris
Reply to  European DGI
19 days ago

Thanks, I’ll take you up on the offer.

One other realization I had some time ago is this: Is financial independence a goal for you or a tool? If you treat it as a goal, then once you reach it, you are left with nothing – and that can be pretty depressing realization. I’ve seen some people on the Web being so focus on financial independence…

For me, I realized this is just a tool I need to be able to purse things which I really value in life and which I see a much longer term journey.

Chris
Chris
Reply to  European DGI
19 days ago

To extend my previous comment:

That is why I also try not to benchmark myself again indexes or other people’s portfolios. This can easily lead to anxiety, anger and a host of negative emotions as I know I’m simply not as good as more experienced people are. This can also lead to pursuit of increase in yield where income becomes a goal itself (“to be better than others”) not a tool.

What I do for myself is simply asking a question: Do I get enough income to maintain my style of living today and over the next 40 years.

Daniel
Daniel
21 days ago

Good read as always, thank you for the blog post.

Not really topic related but I am curious how does your portfolio compares to the benchmark, S&P500 index. Are you able to outperform the index buy at least one percent and if not, do you not think following the index would be a better solution, taking significantly less time/risk ?

Daniel
Daniel
Reply to  European DGI
20 days ago

Even though I started investing in 2019, I still consider myself a newbie in all this so please excuse me for insisting on the matter. You say you’re more interested in stocks that pay a dividend yield of over 2.75% and ideally companies that are growing the dividend year by year. So hopefully you will grow your portfolio big enough and your dividend income will cover the expenses which sounds great. But, what if your portfolio (with dividend income included) doesn’t outperform the S&P500 in the long run. You then invest in the S&P500, and when it’s time for FIRE… Read more »

European DGI
Admin
Reply to  Daniel
20 days ago

Hi Daniel, I understand your line of thinking. I also had that in the past, but there are few downsides for me to that: 1, I should consider a 19% capital gains tax which would be huge by that time. Hence, 19% more money would be needed which could be the equivalent of 2 years of investing longer in the SPY ETF. Off course, you could argue that the dividends received over that time are also subject to dividend withholding tax when looking at my strategy, so the difference might be a bit less. 2. I probably wouldn’t have build… Read more »

Karbofos
Karbofos
20 days ago

Great article, thanks. As Daniel wrote above, it would be very interesting to compare your portfolio with the S&P 500. I have been investing since 2006 (Stock Pick) and have been losing to the broad S&P 500.

Life With Dividends
20 days ago

Great post as always, eDGI. This has been a timely read for me as my significant other and I were just chatting about this subject a few days back. We both absolutely love traveling and seeing the world and my hope is that we can do a lot of that once we are financially independent. Like you, I simply cannot fathom doing nothing. I would probably be bored out of mind and start to feel sick of myself if I were that idle. One thing I am sure about is that I might never actually give up an aspect of… Read more »

art
art
20 days ago

very good read, I think it even has more relevance now, where the last 18 months really was to deprive people of capital and stop any plans to become independent, I am checking your blog, I am giving myself 5 years to also become financially independent, one life!,

European DGI
Admin
Reply to  art
20 days ago

5 years is quite quick Art! Let us know from time to time how it’s going 👍

Juan
19 days ago

Wow! Eyes opening words here edgi, very nicely written. It’s interesting to read things like these, it gives all your hard work and knowledge sharing a very human context. Despite financial freedom being a very personal state of life/mind, it’s interesting to see how much overlap there is among people (in the investing community at least). Pretty much everyone’s financial freedom definition I’ve come across in blogs, vlogs, etc includes reducing working hours to have more time for hobbies and family and/or work on giving back to the community. Being more courageous, although sometimes phrased differently, is also a common… Read more »

Chris
Chris
Reply to  Juan
19 days ago

Very good comment about being misguided by system. We start as a blank slate and most of the time what is being written there in our forming years is: work 5 days for someone else and get paid. Some of us realize this is not an only model early in their 20s, some of the take until 40s (like me) and some realize that only once they move to retirement in their 60s. For me, I’m happy I realized at exactly this point and not at 60s. To further comment on why are those things not part of our life,… Read more »

David
David
19 days ago

Nice article
I like the closeness and the fact that you share your ideas more in a personal level
thanks

steveark
19 days ago

I am financially independent and no longer work a 9 to 5. I divide my time between volunteer work chairing a college board of trustees, a charitable foundation board and mentoring engineering students at my former university. I also teach at our church at times and consult as an expert witness from time to time. But I spend most of my time playing tennis and pickleball, running, fishing, hiking, bushwhacking, off roading and traveling. We have a few other hobbies but those are the main ones. The kids are grown and scattered nowhere near so some of our travel involves… Read more »