Hello everyone, I’m back at it again with another blog post. Today I want to talk about the reasons why I invest and what my short-, mid- and long-term goals are. You should always know why you are investing. Different goals could come with different strategies and expectations. I strongly recommend you all to take some time and think about what all monthly contributions and sacrifices are for!
Right now I’m still living at home. This makes saving super easy and I want to take full advantage of this. Right now I’m trying to save 85%+ of what I earn. I know this could be even higher but I still want to do the occasional activity with my friends and girlfriend. I also pay for most of my food myself so this is another cost I have but I’m eating as cheap as possible!
I will probably live at home for the next 2 years. The plan right now is to start looking for a small apartment around the summer of 2022. Fingers crossed interest rates will stay at least as low as they are right now! Assuming my income stays around the same as it is right now and my investments do nothing crazy, I should be worth around €76.000. Could be more but it could also be a lot less if markets were to take a nose-dive.
Don’t give much attention to the P2P part of the forecast. That should not be in my portfolio by then. This projection does not take market fluctuations into account, only the amount I invest. As you can see I should have €33.300 in cash. Together with my girlfriend, we should easily have enough for a down-payment on an apartment worth around €250.000
When I think about mid-term goals, I’m thinking about 5-15 years into the future. I’m almost 24 years old right now and by the time I hit 30 I want to have at least €100.000 in liquid investments (not taking into account the future apartment). Some simple simulations of the mortgage show me that the loan should cost us less then €800/month. This means my part would be less then €400/month. Keeping other expenses as low as possible will make it possible to personally save and invest at least €1000/month as well.
In about 15 years, I would like my girlfriend and myself to get a bigger place to live given that by then there could be a kid as well. Renting out the first apartment could be a valuable option by then. This is something I have to look into more. I don’t know all the details that come with renting out real estate (taxes, costs, …). Maybe It is not even the best financial decision. Luckily, I still have some time to figure all this out!
Long-term goals are always a bit difficult to determine with a lot of details. My goal is to be financially free by the time I hit 50. This does not mean I want to stop working when I get there. I like working, maybe I even work a bit too much? But I just want to have to freedom to have the choice. I don’t want to think about every purchase I want to make, although this is probably just in my nature!
Investment wise I would like to have the following (keep in mind that these are rough number and a lot can change in the next 25+ years):
- €500.000 of invested capital
- 1 (or more) rented out real estate properties
- A successful side-hustle
- An even better and more successful blog than I already have (*wink*)
What are your short-, mid- and long-term goals? Do you think mine are (not) realistic? We can always start a conversation in the comments or via mail!
Me again ?
‘I’m eating as cheap as possible!’ You should eat as healthy as possible if you want to make it healthy into the long-term ?
‘we should easily have enough for a down-payment on an apartment worth around €250.000’ For that amount your options in Ghent will be limited to either very small or to in need of renovation.
‘Some simple simulations of the mortgage show me that the loan should cost us less then €800/month. This means my part would be less then €400/month.’
Don’t forget the extra costs a property brings, besides furniture and household equipment. Stuff will break, repairs/replacements will need to be made.
Consider the opportunity cost of buying a property early in life. You could rent an apartment and invest your savings.
*Me at 25*
Bought a house really cheap (€40.000) and invested the same amount in renovations spread over 3 years. I put in all my savings + lended a small amount from my mother, which I repaid over the course of 5 years. I didn’t know anything about investing. All my savings (3/4th of my income) went straight to the bank (the interest back then was 5% or more).
Got married. Wife wanted bigger house/garden. Sold everything and bought big house (that was a mistake, financially speaking). Got kids (also a financial mistake ?).
Discovered investing this year. Started putting money in VWCE. Planning a total renovation of the house in 15 years (more like a demolition, cause the house is beyond renovation), so hopefully that investment will pay off. But we have big costs now too that can’t wait 15 years (need new kitchen, new bathroom… will buy cheap, because of demolition) so amount free for investment is limited now.
Hi Vincent :D,
How are you?
While I was writing the line about eating as cheap as possible I already had a feeling you (or someone else) would comment on that! 😀 I must say that while I am not the most healthy eater, I try to always have a smoothie for breakfast with fresh fruits. For lunch, I have a salad, wrap, croque monsieur, … For diner, I have a normal warm meal like pasta, lasagna, chicken and rise, … What I want to say; It is not like I eat the same frozen food every day, I just try and buy the cheaper ingredients!
We are not looking for an apartment in the city itself, that would just be too expensive. I would like something around Ghent but affordable. Finding a house for €40.000 might not be possible anymore? I also wouldn’t mind fixing some stuff myself but I’m not the handiest guy when I’m not behind my computer.
I also know there are a lot of extra costs but I find it quite hard to estimate them. Of course, we would try to keep water, gas, electricity, internet, … as low as possible. We also don’t want to have a lot of stuff. First of all to keep the space clean, but also just to not spend a lot of money on things we don’t really need. The less stuff the less that can break right? 😀 Renting could also be an option but like a true Belgian I have my mind automatically on buying. I should run some numbers to see if renting could be the best decision financially, but again I don’t know all the costs that come with owning a house…
Good luck with your house renovations and the start of your investing career! I always like talking to fellow investors/about money and I really appreciate you following the blog and commenting occasionally!
No, a house for €40.000 will be hard to find these days, especially in or around Ghent. But I only made €1.250/month when I bought it.
There are still houses that are relatively cheap though (https://www.immoweb.be/nl/zoekertje/huis/te-koop/gent/9000/8655097?searchId=5f0f6b8e217df), and you can keep the renovation cost low in Ghent (enough people looking for a job on the side ?). I’m the opposite of a handy man, I did almost nothing myself, except breaking out the floor and painting.
The stuff that breaks isn’t necessarily the stuff you buy. Your heating will break, your shower will break, your window could break… My house costs on average € 5.000/year on repairs alone.
I’ll keep my eyes on the immo-sites. €5.000/year is definitely more than I would expect..
Luckily, I can take my time to do some more research.
That’s for a big house, smaller tends to be cheaper. But appartments tend to have collective costs.
Hi Vincent, I am definitely not looking for a very big place. I know about the collective costs as well. Life is expensive! 😀
Since no one else is commenting or asking questions, I’ll have another go.
You mentioned before that you felt too young to concern yourself with bonds. How do you feel about John Bogle’s recommendation to invest “roughly your age in bonds”? Is your risk tolerance that high for you not to consider bonds? I haven’t invested in bonds yet. Don’t know if I should. I own a house (fully in 6 years), which is a ‘safe asset’ too I guess.
Sorry for the later response, I was enjoying some holidays! 🙂
Once I get older and closer to retirement I will most likely move part of my portfolio to bonds. This should cause the portfolio to have smaller swings, which is better when you want to live off your investments.
Right now I’m still pretty young and my risk tolerance is kind of high as well so I want to go 100% stocks in the hope of scoring bigger gains!
In your case, I would invest in bonds as well, even though your house is a safe asset you will not be (partly) living of it when you retire, which will be the case for your other investments. Depending on your risk appetite and goals I would suggest an 80-20 or maybe 60-40 allocation. Of course, this is something you will have to decide for yourself! 🙂
I came across your blog because I was googling about accumulating vs distributing for another investing decision. Good job 😉
Let’s say I am doing almost exactly the same as yourself but I am 7 yrs older (1989).
Antwerp, started in IT sector at 22, same ETF’s, bigger house bought recently, going to rent out first appartement (Yes, you should rent out your first appartment and get yourself a 25yrs loan on it), first kid on the way etc.
Built my networth 90% myself so no rich parents or anything; I can say that both your mid-term and long-term goals are going to be crushed.
But you will need to optimise your income. And this is the best pro-tip I or anyone else can EVER give you in BELGIUM:
Try to become a freelance/independent as soon as possible, now or in a couple of years. Put your mindset to it. Don’t be scared. Often your current employer will keep you on full-time because they are earning a margin on you anyway if you’re good and good IT people are scarce. Get your main income as revenue in your new company and not on a paycheck as employee.
Talk to a smart, young and innovative accountant that knows about financial independence, dollar cost averaging and compound intrest… and ideally does it himself and thus knows the best way to work with taxation and optimising income. And you are good to go to optimise your monthly income and almost double the amount coming to you in net with the same total cost for your employer. I did the quick math for your current net income 🙂
You are getting much more control on how your income is taxed, much more control on your own career and how you invest your income in “side-hustles”. I
What you are mainly losing is some level of certainty (but come on in IT?) and a lower pension because that’s where most of the tax is currently going. The rest you are losing can be bought with insurances (illness, income and stuff) that are very affordable in Belgium.
Thanks a lot for the tips. Always cool to talk to people on their way to achieving similar goals as I am. Certainly, because you are further along and thus have more knowledge! I thought about freelancing as well. There are a couple of ‘problems’ right now. My current employer got rid of most contractors recently due to COVID. I am in the progress of starting some side-hustles (alone and with partners). Heck, maybe my blog can generate me a couple of Euros in the future.
One of my projects will require a decent amount of cash. This is why I feel like maintaining my steady job right now. Who knows in the future I will depend solely on my own sources of income, but right now I am not ready yet.
Thanks a lot for your comment and tips. If you have any more don’t hesitate to let me know! I have a feeling you are doing quite well in life and I can learn a lot from people like you!