I can't sleep, so I'm running some numbers in my head. I have a mutual fund that I plan to invest in, and wanted to make some financial goals and projections for the next 10, 20, and 30 years. I turn 30 this year and I'm likely to start a new job that will last for at least 1 year, so long term planning is probably a good idea at this new phase in my life.
My primary goal is to retire as soon as possible by living off of the earned interest. This is how I plan to invest. I have 3 different investment plans, based on various estimates on what my discretionary income will be. The plan is that I will reinvest all interest until I retire. I marked the retirement age, along with the estimate for what the interest income will be. The conservative assumption is the baseline, where my current salary is at roughly $40k per year with $200/mo as discretionary income available to invest. I want to keep my expenses at approximately this level until I retire. The aggressive goal is what I plan to strive for assuming the next 10 years go well, and the middle is a realistic goal I believe I can achieve.
Conservative: $200/mo only
- 10 yr income: 7,250
- 20 yr income: 21,750
- Retire at 56: 43,450
- 30 yr income: 58,000
Estimated: $1500/mo for 1 yr, $500/mo after
- 10 yr income: 14,700
- 20 yr income: 45,800
- Retire at 48: 41,250
- 30 yr income: 107,300
Aggressive: $1500/mo for 3 yr, $3000/mo after
- 10 yr income: 43,300
- Retire at 40: 50,950
- 20 yr income: 123,000
- 30 yr income: 311,300
There’s all kinds of FIRE (early retirement) calculators you can find online. They’ll take into account inflation and withdrawal strategy and help you understand what is realistic.
As for your assumed interest rate of 9.6%. That’s the biggest concern I see. Maybe that’s what the plan has gotten in recent years but the stock market has seen higher growth than usual in recent years. Historical averages are closer to 7%. You’ll likely want to assume less than 7% to keep your numbers conservative.
Either way, early and frequent investments are the keys to building wealth and an early retirement. So start doing those things and as time goes on you’ll build a more accurate picture of when you can retire.