Hi everyone, in this blog post I'm going to be talking about my ambitions in life, especially from a financial point of view and how I expect to achieve this. Ambitions are there, just like dreams, to be fulfilled.
If you've read the title, my ambition is probably pretty clear. I want to become a millionaire someday. Rather sooner than later, but I'm okay if it takes some time, because I mean, a million is a lot. I'm from Belgium so I'm going to be talking in Euros today, instead of Dollars. Usually I make my examples in USD because this is the reserve currency and just about everyone knows less or more how much a dollar is worth. As of today, 1 Euro is worth 1.13 Dollars. So my goal of a million Euros is actually worth around 1.13 million US dollars.
People that are familiar with my blogs, will know that I'm a big fan of ETF's and Index Funds, so they are probably going to be my main investment that will make me a millionaire. By investing the right amount every month into the S&P 500, it probably won't even take me a 100K per year salary to reach my goal. It's crazy to think that most people, if they would spend their money wisely, could be millionaires. You just have to start investing early.
Let me give you an example: If you start with €0 in your account and just deposit €200 every month into a S&P 500 ETF or Index fund, it would take you 'just' 41 years to become a millionaire, if the market slightly underperforms and you only have an average return of 9% per year. If you count in yearly inflation (about 2%) in your deposits, it would take you only 39 years. I know 40 years sounds like a lot, but just think of it, if you start investing at the age of 18, you'll have a million Euros/Dollars/whatever currency you like in your account by the time you're 58. You won't even be retired yet and still have a lot of money. If you keep investing at this rate, by the time you'll retire (in Belgium this is around the age of 65), you'll have €2,206,484.39 in your account. Crazy isn't it, how you can go from 1 million to over 2 million in just 7 years. On average your investment doubles every 10 years when you let the interest compound. At a certain point, your investment will increase faster than you can even spend the money.
Let this be a lesson. EVERYONE can be a millionaire if they handle their money with their head. €200 per month is not an impossible amount of money to set aside. Consistency is key.
Even if you end up living check to check as an adult, you can use your teens and twenties to put aside enough money to be able to comfortably retire. When you're young, the cost of living is normally still pretty low, I mean, most people live with their parents and don't have to pay (or at least don't have to pay much) for housing, food, electricity, gas, water etc. No one expects you to be rich, no one expects you to spend a lot of money, but in your younger years, you can also make a lot of money.
Let me put this in an example again. Let's say you can work enough and put aside €300 per month from the ages 18-25. By the time you're 25 your account will be worth €34,928.08 at an interest rate of 9% per year without inflation. If you then stop investing, after 38 more years, you'll still end up with one million Euros in your account. I know that some people have it more difficult than others, but for the majority of the middle class in Western Europe and North America, it really isn't that hard to become a millionaire if you think about it.
But, then why doesn't everyone become a millionaire? There are two answers to that question in my opinion. The first one is fear, fear to invest and to lose all your money, but if you think rationally about it, this fear doesn't have a leg to stand on. The S&P 500 has never (NEVER) made a loss over a period of 10 years. So if your investment horizon is larger than 10 years, which it probably is, it doesn't make sense to fear losing all your money. The second reason why people don't become millionaires is materialism and spending your money without thinking deep enough about it. People see a certain amount of money in their bank account and they just go 'Aha, I have money, let's spend it!', but this is wrong. Okay, money is still there to be spent, but if you're smart about it, you don't spend everything immediately on those new shoes, clothes or gadgets you probably won't even use.
Personally, I'm planning to save as much money as possible so that I can become financially independent as soon as possible. I will also keep investing in and playing around with singular stocks and crypto's because that's also really fun to do, but it's damn hard to beat the market on your own, so I'm going to be smart with it and just invest in the whole market. That way, by the time I retire, I'll have enough money to spend the rest of my life carefree and in the way I want to spend it.
DISCLAIMER: THIS IS NOT FINANCIAL ADVICE. ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING.
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