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Monday, October 12, 2020

My Retirement Plan as of October 2020

It has been five years since I manage my own stock investment portfolio. When my older brother and I decided to split, our portfolio was in October 2015. I started with 
$400,000 capital when I started managing my own portfolio. Moreover, I have been contributing money ($2000/month) in the portfolio every month. Now, my portfolio is valued at $810,000 (As of October 12, 2020). That's a CAGR of 10% every year since October 2015. If I compare my portfolio performance to the S&P 500 performance, I actually underperform the market. I made many bad investment decisions during my journey; however, I learned from it. I hope for the future; I can make better decisions in investing.

New Year's, it's about to come soon. It's going to be in 2021 soon. I'm going to grow older, but I am still committed to my financial plan toward financial independence. Even though my portfolio has grown in value over the years, I think it is still far from the goal I want to achieve. I still want to keep working on my portfolios for another 15 years ahead before I start enjoying the passive income the portfolio will generate for me.

I am still going to continue contributing to my portfolio for another 15 years. At that time, it will be the year of 2035, making me 45 years old. I have calculated the future value of my personal wealth 15 years ahead if I keep contributing the same amount of money to my portfolio every month. The total personal wealth I have right now (October 12, 2020) is approximately close to one million dollar. This consists of both the USA stock portfolio as well as my Indonesia stock portfolio. Yes, I reached millionaire status by the age of thirty. However, million-dollar is not much money in today's world. This is why I am still working on building more wealth before I plan to retire and enjoy life.

So, what's the plan?

I plan to continue contributing $2,000/month to my USA portfolio and about $1,000/month to my Indonesian portfolio. That's a total of $3,000/month I contribute every month, making it close to $36,000 every year that I contribute total to both portfolios. I calculated my future net worth using the compound interest calculator, and the result is pretty impressive.


By contributing $3,000 a month to both of my portfolios from now to the year 2035, and let's say I generate 12% CAGR annually to my investment portfolios. I am expecting to have a future value of $6,127,732.56! I believe this future value I calculated is perfect for me to retire on. If I generate 5% of the total value of portfolios, that will make approximately $306,350 pre-tax of passive income every year. I hope by that time, I could retire with a comfortable lifestyle. 


I have been pretty conservative with the annual return I can generate to my portfolios. Of course, the future value of my wealth is still an assumption. However, I am optimistic about reaching this goal.

I am still currently working in my dad's home appliance manufacturing company. It has been almost seven years since I started working for him. My wage is about Rp 25,000,000 (USD: $1,700) every month. It's quite low if you compare to American wages; however, I can't complain since I'm only working part-time in my dad's company. And this amount is considered a lot of money in Indonesia.


Furthermore, I also try to avoid owning liabilities in my life. I don't want to own materialism things that take away money from me. For example, I declined my dad's offer to buying me a new car. I believe that having a new car would come with upkeep expenses that can eat up my monthly budget. I am content with the beater car I am currently driving. It's more than ten years old; however, it still runs very well. I have also decided to have a full-body paint job on the car to make it look fresh and new.


My retirement plan requires me to save the majority of my income coming into me every month. And it can be quite a pain in the ass to keep up with a strict monthly budget. After all, I also want to enjoy the experience and things in life. I hope by delaying my gratification, I could later become wealthy in the future.


What I also need to do!

My retirement plan seems achievable, and I am optimistic and confident about reaching that end goal. However, besides working towards financial freedom, I am also figuring ways to increase my primary income. If I can have alternative incomes coming into me, I can have a higher monthly budget and more contribution to my investments. I am still working on side hustles that can eventually become a source of income for me.


Some of the side hustle I am working on is this blog you are reading right now and FinzWatch, a financial media website. Furthermore, I am going to figure ways how I can be a content contributor on YouTube. I still have many things I need to work and learn. For example, I need to know how to edit videos to post video content on YouTube.


Moreover, I am also figuring out other ways I can make money online. I have planned to build a work station in my bedroom after the COVID Pandemic is over. My dad doesn't let me build one at the moment because he is worried about the risk of getting sick. By having a work station in my bedroom, I hope I can be more productive during the night time. This will result in me working on something when I am hanging out in my bedroom. 


Working on side hustles is very challenging and requires a lot of dedication and time. I felt that if I failed in creating a new source of income from my side hustles, I am still optimistic that I can retire wealthy at the age of 45. The reason is that I have placed a very conservative expected return towards my portfolio, and I am also a strong saver. I believe by continuing sticking to my monthly budget; I can continue contributing money towards my investment. And this will be the key to me becoming wealthy. However, it would be nice if some of my side hustles turn out profitable. 

In Summary

Up to this point, I am content about the entire thing I had done over the years. Despite not being able to beat the S&P 500 index, my portfolio is doing pretty decent. I believe that continuing to doing what I have been doing will put me in a great financial spot 15 years ahead. I think by the year 2035, I can start enjoying the investment I worked on.


Besides working on my retirement plan, I am still finding ways to have my side hustles to succeed. Having my side hustles project to succeed can help me have a larger monthly budget and more money contribution to my investment. However, even if my side hustles didn't turn out well, I am still confident about my retirement plan at 45 (the year 2035). I believe the strong financial foundation that I have created, savvy monthly savings, and consistent monthly investments will make me reach the financial goal I always dreamed of.

The journey to my financial independence is still a long path. I will keep posting content and information on this blog. So always check this blog out to stay updated. I hope this article on my retirement plant can somehow inspire you, people, out there to do the same.

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