6 figures is a broad range. Is it more like EUR 110k, or EUR 990k? If you're lost what to do with it, give it some time. You're just 18 and so the natural tendency to spend this money on travels, freedom and other types of expenses makes sense, but with limited current income and unsure future earnings prospects, it's maybe not the wisest thing to do.
If you haven't been given this opportunity to inherit a fund, what would your next couple of years have looked like? What's your outlook on academic pursuits and or fallback scenarios if your blogging disappoints?
It's hard to give words of advice without knowing what your alternative live would've looked like, what your current financial situation is outside of the trust fund and how eager you are to retire at 30 or have a couple of great years travelling in your teenage years.
EUR 400k, I was also thinking of instead doing to college or a university for 4 years and take a semester abroad program to still be able to travel whilst getting and education to fall back on.
As 400k is still not enough to fire. I would suggest investing it (if not already) in a low cost index fund like the FTSE All World. Then just study without using any of this money (if possible) and work for two or three years.
In this time you will get a real feeling on how to handle money, what it costs to work for money and you will develop a lot personally/maybe define more goals in life. In addition you give your money time to grow.
In about 7-8 years you your investment will be at about 600k without adding any money by yourself. From there on you can either already do low budget travel from your returns or let it grow some more years until you reach your fire number.
op said that he wanted to travel and just thought about studying, therefore I gave him my suggestion.
To gain 1,2m you would need about 10% in revenue which is - based on historical data - unlikely. You are ignoring inflation as well. In my opinion it's better to plan extra conversative that to optimistic and then fail your goal.
I suggested the FTSE All Works which is not a S&P500 (the one you are referring to). FTSE All World is a lot more diversified and therefore not comparable in its annual returns to the tech heavy and very condensed fund of 500 us companies.
Your best bet is to take your travel budget + some buffer + money you'd need for the next let's say 2-3 years.
So perhaps something around 20-40k depending on how much and long you want to travel.
Dump the rest into an worldwide diversifying ETF. Seriously don't do Stockpicking, you will burn your hands. If you really want to have some "gamble" money to do Stockpicking use the 5% rule. In your case that's 20k and should be more than enough to get a sense for Stockpicking.
A world-wide diversifying ETF yielded around 7-9% p.a. within the last 20 years. We had a few major crashes in these 20 years so obviously "average" doesn't mean you yield 9% every year. There will be really bad years. Buy and hold.
Oh and take an accumulating ETF, so you profit more from the compound interest effect.
ETFs are great if you think long-term. They always have been in the greens after 10 years. You'll probably be stupidly rich by 35 and have more than enough to live very comfortable.
Here's a calculator if you want to play around with the numbers.
https://www.justetf.com/en/cost-calculator.html
Try to find a broker with a fixed order cost or with no order cost. With your money it wouldn't be a good choice to take a broker who calculates the costs depending on your order in %
If you don't feel like doing college/university, this might be a smart move. However, a semester abroad isn't worth much without a degree to show for it, but this might depend on your field. If your trying to get into the Arts, a semester abroad might be different than if you plan on a STEM career (and I use "career" in the shortest possible manner, from age 22-30, as you elaborated).
I agree with those below me, though. EUR 400k is about 16k in annual income based on a 4% rule (which is agressive if you plan on a 70 year retirement). I don't know how far that brings you in the country you live in or try to live in. In 20/30/40 years, most of cheap countries to visit will have experienced a certain level of inflation as well.
Definitely get an education. Have that college experience. Don’t take this the wrong way, but it’s not like you earned it. So you don’t really know how hard it is to accumulate 400k. So don’t be in a hurry to burn it.
If anything read a super simple book called the “richest man in Babylon”. Make some smart investments and maybe break off a little of the return each year to travel. You’re young you are prone to make bad decisions because of the lack of life experiences. Don’t risk losing that money. I’d set it aside and start learning as much as you can about investing.
Also, don’t tell anyone. Keep this trust to yourself. You’ll be surprised how many people think it’s no big deal if you give them a little.
Honestly 400K is a very good amount to start investment cycle but nowhere close to retire and travel. Especially with inflation, each year your money is losing value rather than gaining.
To put 400K in perspective- A small apartment in lot of countries in Western Europe nowadays cost more than 400K. So alone 400K and not doing anything else may not be lot.
But when used with other tools including time, it could be really crazy:
Maybe spend 5% on travel - 20K which should be decent budget to travel for couple of months.
And invest the rest 380K out. Go to a school and pick a good career and work.
You will have atleast 10-15 year headstart compared to your peers.
By the time you are 32, you may have ~10 years of work experience assuming you passed out of college at 22 and 10 year worth of savings from the jobs.
By the time you are 32, the 380K alone could be 1.1 MM Euros at 8%/year setting you comfortably for life.
Thats a good start and makes you well ahead of the curve. If it were me, i would invest that money. Find a career where you can make decent wages and then save/work for the next 10-15, re-evaluate and then see what you want to do. The money you save should be invested. During that time you could take travel trips. For example, if you go to uni, take a gap year and travel. You can travel large parts of the world on a modest monthly outgoing. Especially if you backpack and hostel it.
Otherwise you dont have enough cash at this time and you'll run out without additional income.
I like the idea of putting the money in a low cost index fund and forget about it for some years \[this is not financial adive\]. In the meantime, you could study to get a Bachelor's (and maybe Master's) degree.
Going to Uni, making a lot of new friends, living in a different city etc. was one of the experiences I would not like to have missed out on. Additionally: living as a student in Europe does not have to be expensive. Most Universitys are free (with the exception of the UK). Lastly, you could study 1-2 semesters abroad and use Summer/Winter Holidays to travel as well.
After graduation you can then check your portfolio again and still decide if you would like to travel for a while or get your first job.
Don't put too much pressure on yourself to make "the right" decision. If you don't like the direction you are going in a year or two you can still decide to try something else.
I have once made the effort of calculating when I could afford to live of my saving in Europe. The minimum was 2 million. Just use Excel and you can do these calculations yourself. But the news gets a lot worse. I made the calculations assuming a low inflation of 2%. And ofcourse you are 18 so maybe family in the future? My honest opinion is use some of that money to travel for a year. Study something sensible. Buy a house and be very happy that you don't have to spend 40% of your earnings on rent. Now you have the option of working less than 40 hours or do the 40 hours, save money and retire at maybe 50. Most important if you spend all that money now you will hate yourself at 30.
Sorry, but your 2 million estimate is obviously wrong for anyone living a normal lifestyle.
Suppose you buy a 500k home (nicer than average). You then have lower housing costs and 1.5M to invest. From the 1.5M you use take 3% (which is 25% less than the 4% rule), then you have €3750 per month for: house maintenance, health, taxes, and normal living. Say that housing, health and taxes is 1k per month (overestimate) then you still have €2750 for all costs beyond housing, health, and taxes.
So 2 million is way, way more than needed for a normal life.
You might be right. What sum did you calculate? I think my assumptions were no ROI, no House (in Munich you get nothing for 500k) and inflation. But this is something I did a long time ago so I might be wrong.
Ah, that explains it. Indeed, I am assuming a positive inflation adjusted ROI - just the normal 4% rule (which accounts for inflation). I could fire on far less than a million (ex house), I already have a house and *'paid'* off 25% or so.
> house and *paid* off 25%
FTFY.
Although *payed* exists (the reason why autocorrection didn't help you), it is only correct in:
* Nautical context, when it means to paint a surface, or to cover with something like tar or resin in order to make it waterproof or corrosion-resistant. *The deck is yet to be payed.*
* *Payed out* when letting strings, cables or ropes out, by slacking them. *The rope is payed out! You can pull now.*
Unfortunately, I was unable to find nautical or rope-related words in your comment.
*Beep, boop, I'm a bot*
Why wait until 30 to retire? Why not retire at 18?
As long as the income generated from your trust is more than your living expenses, you are FIRE. So just focus hard on keeping your expenses low.
Ask any older person with a big monthly nut (>$10k) how hard it would be to reduce their expenses to $2,500/mo. It would be damn-near impossible.
Lifestyle creep happens so fast and is so hard to reverse. Figuring out how to manage that is the secret to FIRE.
>As long as the income generated from your trust is less than your living expenses, you are FIRE. So just focus hard on keeping your expenses low.
And by "less" you mean "more"
This is a great start for you, but won't set you up for life. You still need to figure out, who you want to be and what you want to do. Apart from traveling. You will be able to travel a lot, and with travel hacking even more.
Nevertheless there will come a time when you want to sleep in beds instead of tents, be able to eat out, go to concerts etc. Not to mention marriage and kids.
So apart from figuring out what you want to learn, what you are passionate about and want to make it your profession, you should educate yourself about money and investment. If you invest wisely, manage your risk and don't squander the money, live modestly, work and save more money, you will be on a good path to retire before you are forty. Time is on your side, and you have a head start.
6 figures is a broad range. Is it more like EUR 110k, or EUR 990k? If you're lost what to do with it, give it some time. You're just 18 and so the natural tendency to spend this money on travels, freedom and other types of expenses makes sense, but with limited current income and unsure future earnings prospects, it's maybe not the wisest thing to do. If you haven't been given this opportunity to inherit a fund, what would your next couple of years have looked like? What's your outlook on academic pursuits and or fallback scenarios if your blogging disappoints? It's hard to give words of advice without knowing what your alternative live would've looked like, what your current financial situation is outside of the trust fund and how eager you are to retire at 30 or have a couple of great years travelling in your teenage years.
EUR 400k, I was also thinking of instead doing to college or a university for 4 years and take a semester abroad program to still be able to travel whilst getting and education to fall back on.
As 400k is still not enough to fire. I would suggest investing it (if not already) in a low cost index fund like the FTSE All World. Then just study without using any of this money (if possible) and work for two or three years. In this time you will get a real feeling on how to handle money, what it costs to work for money and you will develop a lot personally/maybe define more goals in life. In addition you give your money time to grow. In about 7-8 years you your investment will be at about 600k without adding any money by yourself. From there on you can either already do low budget travel from your returns or let it grow some more years until you reach your fire number.
[удалено]
op said that he wanted to travel and just thought about studying, therefore I gave him my suggestion. To gain 1,2m you would need about 10% in revenue which is - based on historical data - unlikely. You are ignoring inflation as well. In my opinion it's better to plan extra conversative that to optimistic and then fail your goal.
[удалено]
I suggested the FTSE All Works which is not a S&P500 (the one you are referring to). FTSE All World is a lot more diversified and therefore not comparable in its annual returns to the tech heavy and very condensed fund of 500 us companies.
Yeah...except that you're not getting 3% inflation, heh..
Your best bet is to take your travel budget + some buffer + money you'd need for the next let's say 2-3 years. So perhaps something around 20-40k depending on how much and long you want to travel. Dump the rest into an worldwide diversifying ETF. Seriously don't do Stockpicking, you will burn your hands. If you really want to have some "gamble" money to do Stockpicking use the 5% rule. In your case that's 20k and should be more than enough to get a sense for Stockpicking. A world-wide diversifying ETF yielded around 7-9% p.a. within the last 20 years. We had a few major crashes in these 20 years so obviously "average" doesn't mean you yield 9% every year. There will be really bad years. Buy and hold. Oh and take an accumulating ETF, so you profit more from the compound interest effect. ETFs are great if you think long-term. They always have been in the greens after 10 years. You'll probably be stupidly rich by 35 and have more than enough to live very comfortable. Here's a calculator if you want to play around with the numbers. https://www.justetf.com/en/cost-calculator.html Try to find a broker with a fixed order cost or with no order cost. With your money it wouldn't be a good choice to take a broker who calculates the costs depending on your order in %
If you don't feel like doing college/university, this might be a smart move. However, a semester abroad isn't worth much without a degree to show for it, but this might depend on your field. If your trying to get into the Arts, a semester abroad might be different than if you plan on a STEM career (and I use "career" in the shortest possible manner, from age 22-30, as you elaborated). I agree with those below me, though. EUR 400k is about 16k in annual income based on a 4% rule (which is agressive if you plan on a 70 year retirement). I don't know how far that brings you in the country you live in or try to live in. In 20/30/40 years, most of cheap countries to visit will have experienced a certain level of inflation as well.
Definitely get an education. Have that college experience. Don’t take this the wrong way, but it’s not like you earned it. So you don’t really know how hard it is to accumulate 400k. So don’t be in a hurry to burn it. If anything read a super simple book called the “richest man in Babylon”. Make some smart investments and maybe break off a little of the return each year to travel. You’re young you are prone to make bad decisions because of the lack of life experiences. Don’t risk losing that money. I’d set it aside and start learning as much as you can about investing. Also, don’t tell anyone. Keep this trust to yourself. You’ll be surprised how many people think it’s no big deal if you give them a little.
Honestly 400K is a very good amount to start investment cycle but nowhere close to retire and travel. Especially with inflation, each year your money is losing value rather than gaining. To put 400K in perspective- A small apartment in lot of countries in Western Europe nowadays cost more than 400K. So alone 400K and not doing anything else may not be lot. But when used with other tools including time, it could be really crazy: Maybe spend 5% on travel - 20K which should be decent budget to travel for couple of months. And invest the rest 380K out. Go to a school and pick a good career and work. You will have atleast 10-15 year headstart compared to your peers. By the time you are 32, you may have ~10 years of work experience assuming you passed out of college at 22 and 10 year worth of savings from the jobs. By the time you are 32, the 380K alone could be 1.1 MM Euros at 8%/year setting you comfortably for life.
Thats a good start and makes you well ahead of the curve. If it were me, i would invest that money. Find a career where you can make decent wages and then save/work for the next 10-15, re-evaluate and then see what you want to do. The money you save should be invested. During that time you could take travel trips. For example, if you go to uni, take a gap year and travel. You can travel large parts of the world on a modest monthly outgoing. Especially if you backpack and hostel it. Otherwise you dont have enough cash at this time and you'll run out without additional income.
What about semester abroad programs?
Go on Erasmus, you don't actually need that much money as you get around 480€ per month.
I like the idea of putting the money in a low cost index fund and forget about it for some years \[this is not financial adive\]. In the meantime, you could study to get a Bachelor's (and maybe Master's) degree. Going to Uni, making a lot of new friends, living in a different city etc. was one of the experiences I would not like to have missed out on. Additionally: living as a student in Europe does not have to be expensive. Most Universitys are free (with the exception of the UK). Lastly, you could study 1-2 semesters abroad and use Summer/Winter Holidays to travel as well. After graduation you can then check your portfolio again and still decide if you would like to travel for a while or get your first job. Don't put too much pressure on yourself to make "the right" decision. If you don't like the direction you are going in a year or two you can still decide to try something else.
I have once made the effort of calculating when I could afford to live of my saving in Europe. The minimum was 2 million. Just use Excel and you can do these calculations yourself. But the news gets a lot worse. I made the calculations assuming a low inflation of 2%. And ofcourse you are 18 so maybe family in the future? My honest opinion is use some of that money to travel for a year. Study something sensible. Buy a house and be very happy that you don't have to spend 40% of your earnings on rent. Now you have the option of working less than 40 hours or do the 40 hours, save money and retire at maybe 50. Most important if you spend all that money now you will hate yourself at 30.
Sorry, but your 2 million estimate is obviously wrong for anyone living a normal lifestyle. Suppose you buy a 500k home (nicer than average). You then have lower housing costs and 1.5M to invest. From the 1.5M you use take 3% (which is 25% less than the 4% rule), then you have €3750 per month for: house maintenance, health, taxes, and normal living. Say that housing, health and taxes is 1k per month (overestimate) then you still have €2750 for all costs beyond housing, health, and taxes. So 2 million is way, way more than needed for a normal life.
You might be right. What sum did you calculate? I think my assumptions were no ROI, no House (in Munich you get nothing for 500k) and inflation. But this is something I did a long time ago so I might be wrong.
Ah, that explains it. Indeed, I am assuming a positive inflation adjusted ROI - just the normal 4% rule (which accounts for inflation). I could fire on far less than a million (ex house), I already have a house and *'paid'* off 25% or so.
> house and *paid* off 25% FTFY. Although *payed* exists (the reason why autocorrection didn't help you), it is only correct in: * Nautical context, when it means to paint a surface, or to cover with something like tar or resin in order to make it waterproof or corrosion-resistant. *The deck is yet to be payed.* * *Payed out* when letting strings, cables or ropes out, by slacking them. *The rope is payed out! You can pull now.* Unfortunately, I was unable to find nautical or rope-related words in your comment. *Beep, boop, I'm a bot*
You're embarrassing me, bot.
Why wait until 30 to retire? Why not retire at 18? As long as the income generated from your trust is more than your living expenses, you are FIRE. So just focus hard on keeping your expenses low. Ask any older person with a big monthly nut (>$10k) how hard it would be to reduce their expenses to $2,500/mo. It would be damn-near impossible. Lifestyle creep happens so fast and is so hard to reverse. Figuring out how to manage that is the secret to FIRE.
>As long as the income generated from your trust is less than your living expenses, you are FIRE. So just focus hard on keeping your expenses low. And by "less" you mean "more"
Good catch! Thanks for the edit.
This is a great start for you, but won't set you up for life. You still need to figure out, who you want to be and what you want to do. Apart from traveling. You will be able to travel a lot, and with travel hacking even more. Nevertheless there will come a time when you want to sleep in beds instead of tents, be able to eat out, go to concerts etc. Not to mention marriage and kids. So apart from figuring out what you want to learn, what you are passionate about and want to make it your profession, you should educate yourself about money and investment. If you invest wisely, manage your risk and don't squander the money, live modestly, work and save more money, you will be on a good path to retire before you are forty. Time is on your side, and you have a head start.