Define your personal financial goal

After defining a potential way forward in terms of how to invest your money, the most important point to address is - what is your personal financial goal?


Here it is important to distinguish two different components of your goal: motive and timeframe.


Motive addresses the foundamental question - what are you trying to achieve?

For example, do you want to join the Financial Indipendence Retire Early (FIRE) crowd? Maybe around 40 years old? Or around a more laid back 50 years old? 

Is your goal "just" to keep working and integrate your pension with an additional source of income? 

Also, do you want to leave most of your capital to your heirs or are you willing to deplete it along the way? 

Do you want to buy a house for yourself and your family?


Timeframe addresses the other question - when do you want to achieve it?

It is strictly linked to your Motive and can drive a lot of the choices you will need to make - e.g. how much to save today, the exact investing strategy. Time also works as a reality check - it can be that your Motive and Timeframe just do not fit together - if you are 24 and want to be FIRE at 30, you would need to save a lot of money now to support your lifestyle for approximately 55 (?) years. 


It is important to think about all these questions upfront and discuss with other people who will be involved and affected by them.


Personally, what am I aiming at and by when? I would like to have the option to stop working before the pension age - maybe around 50 years (so 15 years more). The pension would kick in around 68 / 70 years of age, so for 20 years I would be fully dependent on passive income and then I would have both sources to sustain myself. 


In the following posts, I will share the simple mathematical model we will use, an overview of what I am doing now to try and fulfill my goal and what other scenarios might look like.

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