My One Million Journey Plan Statement – Millionaire In 10 Years?
Some time ago I read the Route2Fi blog post plan on how he will become financially independent in 5 years and left me totally open-mouthed. His post is a complete detailed yearly basis plan defining every single step on his journey.
Ever since that moment (and after getting my mouth back to its normal closed position) I’d try to work out my own millionaire plan, but I just couldn’t figure it out…
A mathematician would have told me that my situation had too many unknowns and the result of the equation was … well, guess what? Unknown… Very helpful!
But I am not a mathematician after all (Oh yes!), I am an engineer, and you know what engineers do? They engineer things! (or at least try to, somehow!).
The thing is that the real problem began when I realised that I wasn’t actually trained to engineer a one million net worth, or to engineer my way to be financially free, or neither to engineer a prosperous life for myself and my loved ones. I was trained to do absolutely none of it!
So then, how do I find the solution of my equation if I haven’t been trained to find the unknowns?
My mind was initially trained to spend, to show off, to be proud of, to borrow money (though I haven’t yet), to compete, to get into the hamster wheel and don’t stop running until I completely get out of breath, making me fall onto the ground as a result.
I wasn’t trained to become a millionaire, to be financially free, to shape my life the way I actually want to, and sadly, odds are that neither you were.
Then is when I accidentally began my own reprogramming schedule by getting into the habit of reading books destined to reshape my thoughts. How fortunate! Some haven’t been taught how to even read…
My first reprogramming phase started by reading the Poor Dad Rich Dad book as I mentioned in my about page.
Reading one book isn’t enough to get a millionaire mindset or shape anything at all, it requires constant work, so I continued reading more Kiyosaki books like the Cashflow Quadrant and so on.
The second and third stages of my reprogramming took place while reading two other great books, Think and Grow Rich by Napoleon Hill and the Secrets of the Millionaire Mind by T.Harv Eker.
I still have a lot of homework to do but these books are changing the way I think and are helping me to shape my mind towards a new millionaire mindset, which is just what I need in order to find a solution to my equation. See? Things seems to puzzle out now.
My blog comes handy as I plan to write more about what wealth principles rich people follow than the poor don’t in the future and other related topics. This should be useful to help me build a reprograming habit and to develop a millionaire mind.
Why all of this you may think? First, because I love personal development and second because I admire successful people and their thinking. Hopefully, I can become one of them one day too. I wrote a bit at the beginning of my blogging journey about my whys for wanting one million and my 10 reasons to pursue Financially Independence if curious.
What you’ve just read is the most important part of my plan. There basically wouldn’t be a second part of the plan if the first wouldn’t exist.
We are where we are, and what we are, because of our own conduct.
— Tony @ OneMillionJourney.com (@JourneyMillion) October 11, 2019
My Think and Grow Rich Written Statement
As I stated on the latest point on my millionaire pledge list I had to write a clear and concise statement of the amount of money I intend to acquire, naming the time frame I need to get it, stating what I plan to give in exchange and describe clearly the plan through which I intend to accumulate it.
Writing down my statement here on the blog may be a bit odd but I’d like to follow the rules as they are.
“By the 15th of September of 2029 I will have in my possession a net worth of 1.000.000 €, which 550.000 € will come to me during the interim.
“In return of this money I will give the most efficient service of which I am capable, rendering the fullest possible quantity, and the best possible quality of service in the capacity of a design engineer.
“I believe that I will have this money in my possession. My faith is so strong that I can now see this money before my eyes, I can touch it with my hands. It is now awaiting transfer to me at the time, and in the proportion that I deliver the service I intent to render in return for it. I have a plan which intent to follow until I accumulate this money.”
The Plan (Revision 1)
And here comes the man with a plan! Yup, that’s me folks!
Let’s be realistic. Chances are that the plan won’t develop the way I have written it down, there are countless things that can happen, affecting the general outcome. BUT it is helpful as guidance, and most importantly as a leaning tool. That’s why I’ve called it Revision 1 as I know it isn’t perfect and will have to be reviewed and updated occasionally.
It will be interesting to watch and compare my progression with this plan over time and make hopefully better future decisions while I keep learning from my mistakes like this one for instance.
My CashFlow Quadrants
The current plan is based on the first and fourth CashFlow Quadrants from Robert Kiyosaki.
My main source of income comes from my employer, that puts me in the E (Employee) quadrant. Saving and investing puts me point the I (Investor) quadrant. My cash flows between these two main quadrants.
According to Robert, the fastest way to become financially independent is by making cash in the B (Business) quadrant and invest its net income (I). I haven’t figured out how to do that yet so I will have to rely on my employer.
One of my reasons to become FI is to have the financial security to try and experiment, but I really need that security after my father’s experience with his business.
A lot can happen in ten years, perhaps I’ll get the chance to work as a self-employed (S, second quadrant) design engineer, but so far is not the case.
My One Million Journey Chart Plan
The main goal is reaching a 1.000.000 € Net Worth. This will be more than enough to provide me with financial freedom and stability.
Stocks & Shares ISA will be my core portfolio. The returns out of this portfolio are tax-free as far as I reside in the UK. I will focus my attention on maximising it up every year (£20K currently) using my income savings (50% at least) and rental income. My only investments here will be Index Funds or ETFs of both, stocks and bonds. Balanced 50/50 allocation until after a market crash or after a successful home purchase. Balanced monthly contributions 50/50. Rebalancing twice per year, in June and December. My expected annual growth rate for the next 10 years is 5%. This is a fast liquidity account.
Pension will play another important “walk-on part”. I am enrolled in my employer’s pension scheme. Every month I contribute the minimum 5% out of my payslip and my employer contributes the 3%. I also get a tax relief from the government. That approximately sums up £175 a month at the time of writing. All info of how that works is here. I set my investment strategy as adventurous, and what it basically does is to invest in a world index tracker for a 0.5% annual fee. This is more expensive than other world trackers, but it is still worth it if considering my employer contributions. My expected annual growth rate for the next 10 years is 7%. I won’t have access to this account until I am 55 or 57 or 60 or whatever the government decides during the next 20 something years. That’s primarily why my Stocks & Shares ISA is my core portfolio instead of my pension.
Alternative Investments will be an important source of passive income. There’s some controversy on this type of investments as some argue that it isn’t recession-proof, or there’s at least no evidence that it will perform well. I share some of these concerns and that’s why I will only contribute my savings on tobacco to my €45K Project Fund (£50) or in other words, ethical investments. I personally have big expectations in the future of Fintech and this type of investment, that takes me to the decision to keep my current allocation percentage (10%) and leave it compounding. If the 10% increases substantially then I will consider rebalancing.
Cash provides me with safety and options. Safety in terms of an emergency fund to be utilised in case of unexpected events such as losing my job, health issues or any sudden expense. Options in terms of making a down payment for my future home. I expect to purchase a house at some point during the next three years. This cash will be kept in checking or savings bank accounts at a value close to 30K.
10 Years Net Worth Projection
I finally come to the point where I need to see what I can expect to accomplish in ten years.
And guess what?
Becoming a millionaire in 10 years is difficult but possible.
Let’s have a look at it on the following table:
The first row, Sep-19 corresponds to my current Net Worth. The value of my assets changes every year, hopefully increasing its value and compounding its interest.
In the box located at the bottom, you will find what my considerations have been for every asset, my monthly contributions, the calculated growth and inflation.
My biggest challenge will be to contribute £1617 to my ISA every single month in order to max it out. My net salary is £2050 and I expect to save £1000 out of it (50%). The rest will come from my real estate rental income, which is slightly over 1000 EUR gross and I will be enjoying during the next tax year 2020-2021. I am on target to max out this tax year 2019-2020.
There are many risks involved. Currency ratios, rise on mortgage rates, ISA rules amendment, lose my job or capability to earn money (health), market crash, void periods of my rental warehouse (current contract finishes in 2026) and not to mention the major one which is leaving the UK.
However, I think I have been pretty conservative with my calculations. My core portfolio will be the largest liquid asset at a 330K.
As I said at the beginning, the chances of my net worth growing as per the above table are scarce, but it’s a start and it gives me faith than I can do it because it is possible. I will have to work hard for it, but it’s OK because I am buying my own freedom which is priceless to me.
Over to you
What do you think about my millionaire statement? Is it reasonable? Would you do something differently? Am I just wasting my time?