How do I make 250,000
How Martin saved 250,000 euros and could now become a millionaire
With a starting salary of 70,000 euros a year and low living costs, Martin spends around 2000 euros a month over five years.
At 32, he had invested enough to lead a comfortable life in old age thanks to investment income. This type of financial independence is also known as the Coast Fire.
No longer working is out of the question for Martin, but he can now cover his costs with significantly fewer hours per week.
To be financially independent as early as possible through iron thrift and a high level of renunciation and to no longer pursue any activity - Martin, 34, could not imagine that. Martin is actually called differently and is very active in the financial channel on Reddit. When he earns 70,000 euros a year after graduating, his primary goal is to build up wealth. First of all, he is concerned with a safety buffer and enough money that would have allowed him to cancel at any time.
But the so-called FIRE movement, which stands for “Financial Independence, Retire Early” and which also includes frugalists, has not let go of him. He comes across the “Coast Fire” trend, in which retirement provisions are concluded early, but the own cost of living still has to be earned. Martin achieved this at the age of 32. He tells Business Insider how he did it.
The supporters of the Coast Fire investment plan let the money invested early work for them, so that they can live on the return by the time they retire at the latest. The invested sum slides there, English "to coast". This does not mean that they are financially independent early on, as the frugalists strive for, who do not want to work at all from the age of 40. With Coast Fire you only have to cover your living expenses and you can reduce your working hours or take a job in which the salary plays a secondary role.
American financial bloggers also speak of the barista fire because the comparatively light work as a barista would be enough to cover the cost of living, which can be kept very low, especially in the USA, where the trend comes from.
Martin also sees Coast Fire as an opportunity to do a job that has a deeper meaning, for example in the social field. But it would also give him the opportunity to have more time for family and hobbies, especially with a view to having children.
Despite the salary jumps, the fixed costs remain the same - the surplus is invested
When Martin was 24 years old, he completed his master's degree in physics and did his doctorate for another three years. His PhD position brings him around 1,800 euros net per month, with which he finances his living. “Although I put a few euros aside every month, it wasn't much. First of all, I wanted to fulfill a few wishes and went on vacation once in a while, ”he says. Even then, Martin and his wife had a household account into which they both pay 700 euros a month to cover joint expenses.
The couple live comparatively cheaply in a medium-sized town in Baden-Württemberg, in the condominium of Martin's parents, who, thanks to the price increases on the market in recent decades, own several properties, but are otherwise normally wealthy. For the warm rent, Martin and his wife pay around 600 euros, the rest of the monthly amount pays fixed costs such as groceries and subscriptions.
“In addition to the fixed costs, there is another 1000 euros for the car, insurance, travel expenses, food from the delivery service or other consumer goods,” explains Martin. When he thinks about it, he is almost a bit surprised by this amount, he lacks an absolutely detailed overview of his income and expenses. “It's not economical,” he says.
At the age of 27, he joined a supplier in the automotive industry as a project manager for around 70,000 euros a year. According to Martin, this is a bit above average in the MINT industry, but not unusual. After one year he already earns 80,000 euros due to a collectively agreed salary jump and his performance, but it will not be more in the following three years. This means that he has around 2000 euros more available per month than during his doctorate, but his fixed costs remain the same. He puts this amount in a share portfolio and checks the performance daily. In the meantime, he only invested in the FTSE All-World ETF and only looks at his portfolio every two weeks.
Martin rejects lifestyle inflation
Martin does not necessarily perceive this as saving, a dissolute life was never important to him, parallel to the increase in consumption, he said, “just not his thing”. The parents, who come from the lower middle class and who built a fortune primarily through frugality, are role models. As the systems drop more and more, Martin feels motivated to continue investing so much. The only thing that he spends a little more money on are two used sports cars, which he sells again after two to three years with little loss of value. "But I would never buy a car for over 20,000 euros," says Martin. At the age of 31, he changed jobs and moved up to middle management at another employer in the same industry, where he still earns around 100,000 euros per year including bonuses.
With the change of job, his view of the world of work also changes. “Long working days, stressful deadlines, a lot of travel, no deeper meaning in the tasks. So the question was: Do I have to do this all my life? ”Says Martin. At this point in time, Martin had invested 182,000 euros, in addition to his monthly savings rate, the money comes primarily from family and small savings. Around 40,000 euros come from inheritance and gifts from the family, for example for doctorates and weddings, and another 30,000 euros from investment products from childhood, such as a home loan and savings contract and conservative savings investments, which were mainly made by his parents.
“When I stumbled upon Coast Fire, I found myself right away,” says Martin. Shortly afterwards, at the age of 32 and the price gains of 70,000 euros, he had cracked the 250,000 euros that Coast Fire would make possible for him. In 30 years, with a return of five to seven percent and the dividends, this sum can become around one million euros - of which he could withdraw around 3.6 percent every year at the age of 62. Then he would have around 3,000 euros a month before taxes and would also receive the statutory pension.
He currently also has a higher four-digit amount of cash in the account and about two percent of his assets in cryptocurrencies.
Martin continues to work anyway - although a part-time job would be enough
Because his retirement provision is now complete, he only has to earn his current living costs of less than 25,000 euros a year for the next three decades; a part-time job would be enough. Quitting his job is still difficult for him at the moment.
“You can't find 75 percent jobs in management, but I'm still interested in my job. I've already thought about being a part-time everyday helper for seniors, but I would still like to earn 2000 euros a month. But that doesn't work in the social area, ”explains Martin. He is currently commuting between his hometown and Berlin, which is additional stress.
Did the money have anything to do with the fact that he was going on? Martin hesitates. He knows people with tunnel vision who can never seem to get enough. He, too, sometimes wonders whether he could earn more. “It's more than enough,” he says. When Martin talks about himself, he says things like being trapped in the “Corporate Rat Race”, which could affect his health in three to four years - the world of work is fast and exhausting today. "Some days I write 100 emails, everything has to happen immediately."
He still invests around 2200 euros a month, but he no longer has any major financial goals. Investing in his own property is currently out of the question for him. The prices would have gone up too much and he and his wife feel at home in his parents' condominium, but have no maintenance costs. The fact that he might inherit real estate one day would give him additional security.
However, there is always a certain residual risk, Martin sees it easily. “If everything goes wrong, I'll just go back to work. The nice thing about Coast Fire is that you are very flexible and you have a lot of freedom, ”says Martin.
Not everyone has these freedoms. Martin's current salary alone makes him one of the top ten percent in Germany, but he doesn't consider himself wealthy. "I know that I live in a bubble, but to be wealthy means to me that I can only live on capital gains and no longer have to sell my labor," says Martin. He feels privileged simply because he lives in Germany. In addition, Coast Fire is very fair: "At the beginning you work hard, then you can spend your time doing things you like to do and don't have to wait until you retire." Martin is looking forward to more free time and more time in the fresh air in the near future. At some point, maybe even in a new sports car.
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