Your goals with investing?

Personal finances
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22

The goal is to generate enough cash flow from dividends to be able to quit work if necessary and move to a warmer climate. The annualized total return should remain at 8%. An interesting and long-term challenge would be to achieve an even higher annualized return with a broadly diversified portfolio. On the other hand, there’s no absolute necessity.

January was a small celebration, as 12-month net dividend income had risen to exceed the household’s mandatory expenses. Then came the corona period with dividend cuts and payment delays. I’ve also slightly reduced my equity weighting, so overall, this year has seen a setback relative to the goal. Well, that’s okay, this is a marathon, and given the circumstances, I have to be content with where we are.

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23

I am currently a 21-year-old university student. Like many others, the purpose of investing and saving is some kind of freedom from the rat race, with the FIRE idea in the background, but I haven’t taken it too seriously yet, as I’m not even in working life yet. :smile:

Over the weekend, based on this thread, I thought about long-term goals that I could add to my investment plan.

As a quantitative goal for this year, I had set 10,000 € NW, which I will just barely achieve. For the next decades, an ambitious goal would be to tenfold my savings every ten years. That is, 100k at about 30 years old and a million at 40 years old, not only through returns but by investing new wealth from earned income.

It’s nice to dream and it’s fun to play with the compound interest phenomenon in Excel; it’s quite easy to turn yourself into a millionaire in a short time :joy:

I am currently heavily leveraged in the stock market, as I have mainly pushed student loans into it for over a year, so far with good success due to favorable market conditions. However, the plan is to continue the proven moderate life when moving into working life and to grow the portfolio outside the stock market with a high savings rate.

In addition to financial benefits, I have found investing to be a meaningful hobby that brings content to life, has taught me a lot, and helped satisfy my thirst for knowledge.

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In practice, I transfer about half of my salary into stocks so I don’t splurge unnecessarily, and it keeps me humble since I have to think a bit about what I can afford. Then, eventually, we’ll start taking a little extra on top of the salary.

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25

FIRE would be nice, but I don’t consider it realistic given my age, education, and professional status. I find it much more realistic to be able to work 2-3 days a week and cover the rest of my living expenses with capital income. And when I was younger, I was unemployed for a good while, and I learned from that experience that being completely idle wouldn’t even suit me. Plus, this is a nice hobby.

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My goal is to achieve financial independence by the age of 50 at the latest, which means by 2043. At that point, if I wish, I could withdraw from working life, or simply do what makes me happiest at that moment. If that means continuing in paid employment, then I’ll stick with that.

Currently, I’m 27 years old (in fact, exactly 27 today), and I have precisely 23 years to reach my goal. My portfolio is currently around €70k, invested in 12 Finnish companies. Right now, the emphasis is on growth stocks, but later, the plan is to shift the focus more towards value stocks through future purchases and simultaneously increase the annual dividend stream. Of course, it’s also possible that my current top 3 holdings, Remedy, Qt, and Harvia, will evolve into those “boring” dividend payers in the future. All my investments are currently in a share savings account (OST), where I can still deposit about €7000. When I continue making purchases on a regular brokerage account (AOT), I’ll do so by buying Sampo and Fortum, among others, partly because of their high loan-to-value ratio with Nordnet, keeping in mind the possibility of utilizing a “super loan” in the future. Additionally, my current value stock holdings are the smallest on the PST side, so after the OST is full, I’ll start adding more to the AOT.

This summer, a couple of months ago, I graduated from university, and I’m currently looking for my first permanent job in my field. This would also allow for more euros to be invested. My current job’s salary isn’t astounding yet, though my expenses aren’t either, and I’m left with about €1000/month for investing. At the moment, it’s almost an obsession for me to fill the OST as soon as possible; after reaching that goal, I plan to take a much more relaxed approach to saving in the future. Another goal is to increase my cash position, which I’ve never had. I’ve always put all my extra money into stocks, but after the OST is full, I’ll finally start building that up.

Another thing coming up in the next few years is buying my first own home, which will also have a significant impact on my future wealth. The plan is also to possibly acquire a few investment properties, which I could focus on managing after my 50th birthday. If everything goes as I’m currently envisioning, I will have bought an owner-occupied home by the end of 2022 at the latest. So, by the year of our Lord 2043, I would have paid off about 80-100% of it, assuming I haven’t sold the apartment along the way. The apartment would likely be acquired somewhere in the Helsinki metropolitan area, so let’s guess that an apartment currently costing ~€200k would be worth around €300k then. By that time, I would have managed to acquire 3-4 investment properties on top of that, possibly half with a friend.

If I were to make some calculations for the stock portfolio:

€70k initial capital, 7% annual return, €500 investment per month, savings period 23 years = ~€674,000
€70k initial capital, 7% annual return, €1000 investment per month, savings period 23 years = ~€1,000,000
€70k initial capital, 15% annual return, €500 investment per month, savings period 23 years = ~€2,840,000
€70k initial capital, 15% annual return, €1000 investment per month, savings period 23 years = ~€4,000,000

It looks easy when drawn out like that and certainly provides extra motivation for stock investing. For me, even the top figure would be enough, which is still a relatively modest, or rather, realistic or probable scenario. With a €700,000 portfolio and a 5% annual dividend yield, the annual dividend stream would already be €35,000, or almost €3000/month gross. With my current expenses, I could live quite comfortably with that, as my costs are rather negligible. If I could put even more than €500/month into stocks with a slightly higher return, then a million-euro portfolio isn’t an impossible idea. Not to mention if I continue reinvesting dividends even after that; August 30, 2043, is not an absolute limit for me, and of course, it could be achieved earlier.

Currently, my portfolio’s return for this year is 30%. I won’t be able to achieve that in the future, especially over a longer period, but I don’t see an annual return of about 10% as impossible, which would likely narrowly beat the index. In the coming months, until the OST is full, I will put all extra money into stocks, as I have no other expenses in the near future. After the OST is full, I need to start focusing on filling the ASP account (housing savings account) and simultaneously building up that cash buffer in the brokerage account.

Money itself has never meant anything to me, and you’ll never notice outwardly even if I were to achieve, for example, that million-euro portfolio. I’m not interested in shiny watches or fast cars. Well, okay, maybe a Tesla would be fun to own someday, but users of this forum will surely understand the point :slight_smile:. Traveling and following the Finnish national football team’s matches, as well as generally collecting experiences, is my greatest passion. Money is meant to bring me freedom, which allows me to pursue the aforementioned passions when I want, not when my employer deems it suitable. It would be a dream scenario if I could, for example, leave for the other side of the world with just a couple of days’ notice if I wished. At the same time, passive income from dividends and apartments would continuously flow, and I wouldn’t be forced to spend 8 hours a day, 5 times a week, tied to location X.

Small interim goals keep the mind fresh. The next major milestone will be €100k, which would be nice to reach before my 30th birthday, for instance. Similarly, small boosts come when, for example, you notice the value of a single holding has risen above the €10k mark, or when the annual dividend stream first exceeds €1000, then €2000, €3000, etc. In this business, the value of money also somehow loses its meaning. In a stock portfolio, euros feel more like chips, not money. It’s funny to think about all the things you could buy with €70k. For example, I own about €10k worth of Remedy shares, and with that money, I could already get a decent used car, etc.

We’ll see what the future brings; at the moment, things look quite good regarding this matter. Achieving financial independence is not an obsession for me, rather I aim to enjoy the journey and will not hesitate to spend money in the coming years, for example, on traveling the world. During my studies, I’ve traveled quite a bit, and if I thought I had skipped all those trips, my portfolio would already be well over €100k. But what would be the point if all the experiences accumulated from traveling over the years had gone unexperienced? Some things simply cannot be measured in money.

E: And of course, this investing, or rather everything related to it, is a pleasant pastime along the way. Every day it’s fun to learn new things, listen to podcasts, read books, follow companies, and so on.

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27

My short-term goal is to maintain a sufficient buffer in stocks in case shit hits the fan and my cash flow from my day job stops. So far, this portfolio won’t get me very far, but it does have a small buffer that can be quickly converted to cash.

My longer-term goal is to accumulate enough wealth in the portfolio to be able to reduce working hours and offset lost earned income with capital income. However, this will take decades, and anything can happen along the way.

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It was nice to read this post, especially because I could have almost copied it as my own text in this thread. I would have only changed my age to 25 and the size of my stock portfolio to 50k euros. The same 7,000 euros is also stashed in a Norwegian savings account, and there’s a bit “too much” money in my bank account as well. One difference, though, is that I already bought my own apartment this spring :slight_smile:

And congratulations on your milestone!

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When I started investing over 20 years ago with a small monthly savings plan, the idea was mainly to save a little money and put it into profitable investments. Then the markets went downhill for three years, but despite everything, I managed to keep my motivation up and persistently continued my monthly savings. Capital slowly began to accumulate, and the compound interest effect started working after a few years of decline, as prices turned around.

For me, the turning point was the financial crisis. At that time, a) I already had a nice “nest egg,” and b) I became genuinely interested in investing, and at the same time, I set a goal of true financial independence, to be genuinely independent. That goal is still there, although some less productive things (like my own apartment, forest, etc.) have been acquired along the way. The portfolio is already a comfortable size, and I also have a suitable buffer in deposits. Now I have a feeling of basic affluence.

Along the way, I’ve noticed a few things that I could share as my own subjective experiences:

Firstly, it’s really difficult to predict market developments; even if you knew things for sure, the world can still surprise you. And there are always, absolutely always, numerous reasons why it’s a bad time to start investing. There’s always something negative going on in the world; the “right” time to start investing will never come if you wait for so-called good times.

Secondly, compound interest calculators are misleading in that they give too smooth a picture of this whole business. I’ve had long periods where portfolio returns have stagnated, or even gone downhill for extended periods (even years), and large returns have accumulated in relatively short timeframes. From the financial crisis to today, my portfolio’s return is about +500%, but even within this period, there have been long stretches where returns have flatlined or slowly drifted downwards. So, patience is indeed needed.

Thirdly, regarding return percentages, when estimating future returns, it’s worth considering the significance of negative returns. To recover from a -50% drop, a +100% return is needed just to break even. Negative periods severely erode the average annual return. For an international portfolio, something like a 10% annual return over the long term is realistic / slightly optimistic. For example, the OMXH25 index fund has generated +9.2% per year over 15 years (dividends reinvested). And Finland has been one of the best-performing markets during this period. You can use a compound interest calculator to see how much difference even a seemingly small difference, like 9.2% vs. 10% annual returns, makes over 15 years; when compounded, it creates a clear difference in the final outcome.

So, patience, good nerves, and above all, motivation are needed to sustain investing in the long run.

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For me, investing has two functions:

  1. Long-term wealth growth. I haven’t set a specific return % target for myself; instead, I aim to make the best possible decisions by learning from both wrong and successful investments. In other words, the goal is to make more right decisions and fewer wrong ones—the return % will follow.

  2. A place for extra cash to generate more income than it would sitting in a bank account.

Return % is mentioned a lot. In my opinion, it also needs to be tied to time. This spring, it has been easy to set a double-digit target for oneself, but history has shown that in an average year, even a single-digit return has been good.

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Indeed, in the long run, there’s a difference whether the annual return is 8% or 9.2%.

On the other hand, since the expected return of the stock market is positive in the long run, I’ve thought that a small amount of debt leverage is always worthwhile: specifically, a small leverage, and the slightly higher stock allocation it allows compared to what would be possible without leverage.

This way, in my opinion, one can accept a slightly lower return (8%) on the invested capital, but still achieve, for example, 9.2% when calculated on one’s own capital. Over a long investment horizon, this matters. Just like small expenses, which I aim to keep below 0.2%.

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Great thoughts and insights into people’s minds and investment philosophies.

My investment history in a nutshell:

  • First purchases at 16 in '97 when I got a small nest egg of about 16,000 FIM (just under €3k) from my parents. I invested in Nordea Optima mixed fund and some random stocks.
  • Gradually moved to tech stocks in '98-99 and managed to almost 10x my capital around that time. Insane stuff. Lots of partying…
  • Studies abroad began in '99 and my portfolio kind of “got forgotten.” During my studies, I used it to fund a “slightly better student life.”
  • In '01, the tech bubble burst, and I practically lost everything I hadn’t squandered on a joyous student life. I had the misconception that a) in working life (business/finance), you immediately earn handsomely, b) investing is as easy as pie.

I see a lot of similarities in myself back then to “hoodies” today!

  • I started saving and investing again around '06 when I got my first well-paying job. The '08 crash went well because I used my '01 experience and was able to time it well. My portfolio grew to around €100k by '10, and I was 30 years old.
  • In '12, purely by chance, I got an extremely good opportunity to buy a large, run-down, value apartment in the city center at a bargain price, which I went “all-in” on. This meant selling my car, going on a tuna diet, etc., because the loan payments and maintenance fees ate up over 3/4 of my net income.

Only at that point did I start thinking about an investment plan and setting goals! For the first time since '97, I made a long-term Excel spreadsheet.

My goal, set at 32, was that it would be nice if my net worth was 7-figures before my 40th birthday.

I reached that goal at 40.5 years old.

Between '12 and '20, a lot happened, and I also made mistakes in the stock market. But from '06 to '20, there was only 1 losing investment year (damn Nordea and Lehto).

I can shed light on the fact that the biggest value creation has come from apartments. Especially that large, run-down apartment. Massive leverage, low purchase price due to condition and luck (no realtor, directly from an estate), the megatrend of urbanization, low interest costs…

Investing has become a hobby, and perhaps even a job at some point. I do it because investing offers endless intellectual challenges and new learning. You are accountable to yourself for the results and you get the full benefit (minus taxes). There are also smart people in investment circles. It’s been funny to notice how the smartest people seem to be found in these circles nowadays — is that a good thing for society? :smiley:

My motivation stems from a certain desire for freedom. I want to be responsible for my own financial success. I want to have security and the option to choose what I do. I want to reach a situation where work can be treated as a hobby that brings in money. And I also want to be able to take a job I like, even if the salary is just “coffee money.”

Additionally, I have many important things in life that I’d rather focus on than a 9-5 (or more) typical job.

I do have milestones for the development of my net worth projected in Excel until I’m 60. But once the first big milestone was reached, the significance of those numbers slightly decreased. Now I focus on doing and enjoying it!

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Pääelantona sijoittaminen
33

It’s really nice to follow this thread!

But on the other hand, Uncle Masse is a little worried about the Maiden of Finland led by Sanna: if almost all of Finland’s intelligentsia think the same way as the youth in this thread, i.e., “get rich quick and financial independence; at 40 I’ll work if I feel like it; I’ll travel; I’ll move abroad if Sannas start to piss me off more; I don’t imagine getting any pension after 2040, etc.”, then in what state will egalitarian Finland be in 20 years? The smart ones have all fled both physically and financially, and the Sannas are distributing zero to each other???

But the fault is not with the smart individual, but with the stupid system…

Uncle Masse, FA, smart youth grasp things much better than Sannas :nerd_face:

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I started investing in 2011 with summer job money after the army, thinking that I’d rather have money when I’m old. My colleagues warned me not to, saying I’d lose everything. I didn’t dare tell my parents for years because at home, only lottery playing was approved.

Along the way, I discovered the idea of financial independence, which was rumored on Kauppalehti forums and in rare blogs. I devoured investment literature and various forums/blogs. For a long time, I had the idea that I wouldn’t touch technology stocks and would stick to domestic ones. Fortunately, these ideas have changed along the way, and now 90% of my stock portfolio consists of foreign companies.

My original goal back in 2013 was to achieve financial independence before the age of 55, with a debt-free home and approximately €1,500 net spending money per month. Along the way, the target age has come down because central banks have taken care of stock price increases, and now the target age is closer to 35, meaning I have 4 years to reach the next situation, which would be Phase 1 financial independence:

  • Dividend portfolio: €350,000 - €400,000, plus, depending on the situation, 5-20% super credit at 0.99% interest, and acquire companies paying good dividends, aiming for an average dividend yield of 6.5% (this is a high percentage and often involves risk as to whether the dividend is at a sustainable level), which would generate approximately €27-32k in gross dividends annually and €1,650 - €1,950 net.

  • Equity Savings Account: +€150,000. Here, more speculation is practiced, which is the cornerstone of my current strategy: looking for undervalued sectors/stocks or promising growth companies.

  • Investment properties: I have 2 investment properties. The goal in the first phase is to pay off one to generate cash flow, while the other property can continue to operate on its own, with the tenant paying down debt for the future. Acquiring new properties is not currently planned.

  • Investment Company: Establishing an investment company. This is a somewhat fluid goal and a hobby after achieving financial independence. If I’m not employed, I can pay myself a small salary tax-efficiently. Capital should be at least €200,000 before I consider this sensible, and this is not a mandatory goal in the first phase.

So, roughly €600,000 in net investment assets should be accumulated before I would dare to say I am financially independent, with some leverage added for properties and the stock portfolio to bring future growth. We are now about 70% of the way to the Phase 1 goal. I have started allocating more funds to the dividend portfolio, and I believe I have a chance to achieve the goals before the age of 35, but predicting the future has always been challenging.

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Thanks. It’s hard to find positive sides to aging, but let’s hope the growth of the stock portfolio is one of them. By the way, this morning I noticed that I share a birthday with a certain Warren Buffett; I wonder if that’s a sign of something..

Good to hear we’re on the same path :slight_smile: Hopefully the journey continues as favorably as the first steps..

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My goal is to retire/leave the workforce when I turn 60. I started investing at the beginning of this year (funds and stock picking). I’m turning 30 this year.

With my current starting capital and monthly savings, this is still a somewhat distant dream, but I trust that my career will progress and I’ll be able to increase my monthly savings in the future.

In addition, I see this as a pleasant hobby. It’s interesting to follow and learn about different companies. And here, too, I trust that development/learning will occur, and I’ll be able to make better picks in the future. And thereby grow my wealth so that my retirement dream comes true.

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The goal is to play a fun game, to add excitement to life. I get great pleasure when the numbers go up. I don’t need any more reason than that to obsessively grow my portfolio.

If it leads to financial independence at the same time, I won’t complain.

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It’s worth remembering that in the early 2000s, we saw a continuous three-year decline when calculating compound returns at short intervals or thinking about a million-euro portfolio at 40. The continuous rise in recent years has made investing even a little too easy and rosy. It’s good to remember the risks if you’re aiming for over 10% annual returns.

On the other hand, if you weathered the COVID-19 downturn with a large portfolio without getting nervous and still sleeping well, you can say you passed the test. You probably didn’t feel much like lowering your targets when that €100k portfolio melted down to €60k in three weeks, did you? It would have been interesting if this thread had started in March.

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I didn’t sell anything during the corona crash, nor before or after it. Mostly, I was just annoyed that I didn’t have cash to buy more, although I most likely would have bought far too early. The crash only made me less inclined to check my portfolio much, and certainly not to lower my targets. On up days, it’s much more fun to glance at the portfolio and watch it grow, hitting new ATHs daily and breaking new round-number milestones.

At the time, I thought I’d start accumulating cash and maybe take out an investment loan sometime in the fall, but I certainly wouldn’t have believed that we’d be hitting new ATHs daily at this point :smiley:. Learning from this, I’ll start accumulating cash for this very purpose in my portfolio in the future, once I’ve filled up my OST (Owner’s Savings Account), as every extra cent is currently going there. But indeed, at least I passed the test, and my stomach acids apparently can handle anything.

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For me, this corona dip was surprisingly easy mentally, as I didn’t have time to experience that total frustration before the quick recovery. For me, the toughest time was the three-year continuous decline at the turn of the millennium; as a beginner investor, I really started to lose faith when, despite monthly savings, the portfolio value just kept going down year after year and everything was at a loss. Being at a loss for several years was a tough spot for a beginner :smiley: (Then, when the courses finally turned into a clear upward trend, it was nice to have plenty of units bought at low prices in the portfolio.)

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My goal with investing is to get my finances in a state where I could retire from working life before the official retirement age, around 58-60. We’ll see in 18-20 years if I manage to achieve this goal :slight_smile:

I started investing quite slowly at the beginning of last year. Currently, I have 6 funds and 8 stocks from different sectors in my investments.

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