Nearly eight years ago I started this blog and have posted an update every month. By the end of 2021 I finally reached a major milestone: lean financial independence.
What is lean financial independence?
Lean Financial independence is often defined around having USD 600,000 invested, which would allow for a passive income of USD 2,000 each month when withdrawing 4% of the portfolio each year. USD 2,000 a month is not much, but definitely survivable in many nice places in Europe, including the cheaper parts of Southern Spain etc.
Having some basic income secured for life feels very good and calming.
Portfolio development in 2021
In 2021 my portfolio increased from SGD 664,215 to SGD 821,181 (~ USD 610,500).
Fresh investments of SGD 118,332, capital gains of SGD 31,944 plus reinvested dividends of SGD 14,690 contributed.
My “side gig one man company” got its first real customer and I made some nice extra money, but I decided to separate the company cash accounts from my portfolio. That is reflected in the “company adjustment” item above. All my earnings are still kept in the company accounts.
So far, my portfolio increased strongly year after year as I stuck to the program of saving and investing.
Where did all the money go?
At the end of the year I love updating these charts and analyzing my yearly performance.
In relative terms, this is where my money went in 2021:
Income decreased for the first time ever – smaller bonus is mainly to blame. Also I got hit by the strong Singapore dollar vs. the Euro. I saved SGD 133,022, the second highest amount since I started and about 2.5 times the income I made in my first full year of work.
In relative terms my saving rate was 69%, narrowly missing my target of 70% minimum.
Spending too much money in 2021
In 2021 I spent SGD -57,734 (~USD -42,360). Travel spending made up for 30% of the total, mainly because I escaped the Winter by living in different parts of Spain for 3 months and because I traveled to Italy for 20 days or so.
All in all, my spending does not reflect normal life, as my apartment was paid for by the company and I mostly spent money on luxuries, such as traveling.
Dividends in 2021
In 2021 I received SGD 14,690 in tax free dividends.
When can I retire at current spending?
Retirement is still quite a way off at current spending, as my portfolio would only support SGD 2,737 (~USD 2,035) of spending a month. If I subtract luxury spending (cleaning services and travel) and ridiculous spending (Uber) and sell my car, then things look better.
“Lean” Financial Independence: what comes next?
Right now I am deciding whether to go back to Singapore with my cushy job, or whether I will resign to go for a high risk/high reward kind of entrepreneurial adventure. Exciting days!
I am glad that I saved quite a large chunk of my income during my Europe assignment. The flexibility and the security the savings provide are very liberating. If all goes well, I can take some risks and go for a new adventure. Fingers crossed!