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?
Table of Contents
Reprogramming
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?
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ABOUT ME
Hi there! It's Tony here and I am hoping to post my journey towards one million euros.
NET WORTH GOAL
Looks good Tony!
Plans are worthless, but planning is everything!
It’s always great to have an idea of how you are going to walk the path, but being aware that the path is likely to change really helps too.
I know you touch on pensions above, but pension contributions are probably the most tax-efficient way of saving. If you are a higher earner it’s an immediate 40% gain (41% in Scotland) at point of contribution as your contributions are made from gross income. Very few savings & investments mechanisms offer 41% growth in year 0!
Obviously you can’t access the money until retirement age (55 but may raise). It’s worth an experiment – you may be able to hit 1m a little earlier with that taken into account. You just need to keep sufficient liquid assets to bridge between your ‘really early retirement age’ and 55/57 whatever it ends up being accessible.
Love that quote!
I was pondering about taking my UK pension as my core investment instead of my ISA, but it is still not clear to me and preferred to focus on my ISA for the time being.
Still got some homework to do, but if I were to leave the UK in 10 years, I’d have to keep my pension here until 55 or 57. In Spain there’s currently no recognised overseas pension scheme (ROPS), meaning that I’d have to pay 25% tax when transferring plus some hidden fees and currency fees, that sucks!
https://www.gov.uk/guidance/check-the-recognised-overseas-pension-schemes-notification-list
Currently if you transfer to a ROPS and are an UE citizen you don’t pay tax when transferring, it seems.
It’s complicated and chances are that rules will change after Brexit.
Once that has happened and everything gets clearer I’ll think about it again.
I truly appreciate your comment 🙂
This plan looks awesome Tony.
The only thing I’d challenge is the amount in your pension, you would only need enough liquid assets to bridge over to your pension pot, I believe most countries also have a pension treaty (this isn’t the case for the ISA), so the tax-free status is more safe.
If you flip everything and focus mainly on your pension, making sure you reliably have enough liquid assets to successfully bridge to it, I think you’d be almost guaranteed to make it to £1m with your savings rate. This is due to pension contributions giving you an instant 41% savings (more or less), or 51% savings if you’re higher rate EXTRA into your pot. This extra also compounds, the difference is HUGE.
Check out this cool stick figure illustration I made ? https://thesavingninja.com/wp-content/uploads/2018/09/pension-bridge.jpg
I wrote a big post on bridging and the insane generosity of the UK pension system, have you seen it?
Thanks SN,
It’s interesting that your comment and Money Mage’s came at the same second, recommending the same thing.
See my reply to his comment and my current concerns with my UK pension.
Once I clarify my doubts I think I know how the revision 2 will look like 🙂
Your illustration is clear enough, it made me laugh! I haven’t seen the post, mind to post it here please?
Ah, I assumed that no pension treaty was needed with European countries as it falls under the EU agreement? However, you’re right that Brexit leaves a big question mark above it all!
I’d like to hope that they keep the pension agreements as it’s beneficial to both parties, if not then there might be one made like the what’s listed in the gov link.
Do you know if ISA’s are recognisable tax shelters? As if they’re not, the extra pension money that you received at the beginning which will continue to compound through out your life will more than likely cover any potential costs of transferring the fund to a different country.
Sure man, here’s the link ? https://thesavingninja.com/how-to-last-until-you-can-access-your-pension/
As far as I am concerned ISAs aren’t generally recognisable tax shelters in Europe, so the tax man will come after me if I move to Spain whereas he wouldn’t with a UK pension until I receive income from it. Other option would be to move to a tax haven country of course, but it’s unlikely to happen.
I think I’ll have to spend another evening to run through the numbers again using your spreadsheets ;p and consider the possibility of increasing my monthly contributions. The only drawback I see is that you are in hands of any new future government rules. Hopefully, no major changes should happen but the risk of happening exists, and could potentially screw your previous plans.
But I think I’ve focused too much on the disadvantage and actually ignored the huge potential advantages of the UK pension system.
Appreciate your time, thanks SN 🙂
Once you did this much work for a plan, you also want to follow it! ? Have to consider doing this kind of plan for my self also!
– FN
That’s right 😉 I think that sharing it publicly in the blog is also more encouraging. If you just write it down on a paper and keep it in a drawer, chances are you’ll forget about it and throw it away whereas doing so with the blog is less likely, at least for the short-term hopefully.
Love your plan, Tony!
The tax situation seems quite complicated but hopefully, you will be able to find the information so that you can make the informed decision on whether to put more in your UK pension (for the tax relief).
Good luck with becoming a millionaire! ?
Thanks weenie 🙂
It may be worth it to have a chat with a professional tax advisor for this matter, I’m always so reluctant on spending money for advise but the complexity of my personal situation may be worth it. I spoke with a financial advisor a while ago but it wasn’t very helpful.
Thanks 😉
I love the Chart Plan, Tony! That’s really neat – I think you should keep working on that. Perhaps you can place the bubble in a sort of timeline (like TSN suggests), so it becomes clear which “bubbles” will serve as your “paycheck” before your actual pension kicks in.
Good work! I love making plans and drawings too – even if it doesn’t pan out the way you planned, you always learn something along the way ?
Thanks for your feedback on my Chart Plan, Nick.
Adding a timeline on the chart is a splendid idea, need to work out on that next.
As you say, the learning involved in planning is well worth it. I think the current plan can be improved but it works as a good starting point. Otherwise, I could go on procrastinating forever hehe 🙂
Wow Tony! This is such an inspiring post and I may well have to track my own chart to one million. It’s particularly refreshing to see a FI/RE blogger who isn’t earning 50k+ to help them on their way. It really drives home the fact that this is a possible future for anyone – as long as you try!
Definitely, you don’t need to earn 50k to become a millionaire nowadays. Discipline and patience must be kept in place though for the average earner like myself.
I got a long journey to go, but once I get there I’ll have the proof of that. Hopefully, it will help inspire the ones that actually needed the most.
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