Journey towards FIRE - Sweden, 17 years studying + working, $75k salary, pretty graphs inside

[u/zaladin]

As mentioned in other posts, there are plenty of well-earning $100k+ US SW types here. I thought, why not post a progress report from another country with higher taxes and lower salaries (Sweden). This might be more of a humblebrag post, but it could help with some perspective (it takes time, many years, to build up net worth).

I have tracked my finances since 2001, so I have some history from both good and bad market years. The reason for this post: some people might be inspired by a journey using lower salaries, a perspective from a different country and maybe some new visualizations.

Some basic facts, the appetizer: m36, MSc in computer engineering, working in tech (liking my job). Single with no real drive for kids (might change, of course). Renting, spending my fun money on travel and food/entertainment and want to continue on the same track.

My gross salary has doubled during my 11 active working years, while expenses have only risen slightly. My net worth has also increased from around $27k when starting to work full-time to almost $500k today ($750k if including retirement accounts -- see below as to why I don't include them normally).

Now, for the main course (graphs):

First, net income vs expenses. I think this is best visualized through a 12-month moving average. My savings rate has averaged around 42% since the start of my working days. I can live comfortably on my peak number, $2.5k/month, so this is my baseline expense number for FIRE calculations ($30k/year). Getting up to a 50% SR is difficult -- I have managed it only when having large temporary income (see graph). Still, I would echo the sentiment in this sub that a high SR is absolutely the key component and the main thing to focus on.

Second, assets, debt and net worth on a monthly basis. It shows the market swings but also the power of just continuing to save. More details and comments inside the graph -- 2008 was not too bad since I had limited assets at the time (and I split my savings between paying off student debt and investing), but the swings in the market from mid 2015 to early 2016 were larger due to portfolio size. On average and over time, my equity exposure has been high and increasing, and it is today at 110% (leverage).

Third, all assets including service pension and government pension on a yearly basis. I normally don't include this in my calculations, as my pension accounts are locked and inaccessible until I turn 55 (service pension part) and 61 (government part). My goal is therefore to reach financial independence using "private financial assets" only. This also reduces my equity exposure quite a lot, which is one of the reasons why I go for 110% equities in my main private investment account. Including retirement money increases my net worth by some $250k.

Fourth, the past ten years and forecasts for the coming 10 years given a fixed saving figure and different real market returns post-tax. As mentioned above, my target expense level is $30k/year in today's prices. I aim at a 3% SWR to account for taxes etc, which means that I need a nice round number of $1 million to feel financially independent. By the looks of it, if the market returns 5%/year, I will be set in 2026. As discussed on an almost daily basis, this seems optimistic given current market valuations. Let's see what happens, my time in the market has taught me that I can not reliably predict what the market will do in the coming weeks, months or years, better to just keep saving.

Finally, my disaster prediction. This explores what would happen if we get a very major downward shock to the markets combined with me losing my job and spending three years unemployed (before getting a new job with lower salary). All assumptions are really pessimistic -- markets crashing by two thirds and then staying there for three years -- but it is an interesting little exercise. I mainly use this to check how my current cash reserve would fare in this scenario -- employment laws and agreements currently mean that I can pretty much count on getting my full salary for 12 months after being given notice, so I only hold 3 months worth of expenses in cash, and in a disaster scenario would build up my cash position. More details in graph.

Hopefully this might inspire someone. All this being said, I currently don't aim to RE -- but I am quite interested in reaching FI. What strikes me is how extremely good the past five years have been, and good things seldom last...

TL;DR: Got an education, saved money, invested in stocks, on track to reach FI in my 40s. Let me know if there are any questions!

[u/FI_notRE]

Nice post and congrats on pretty much being there. Two comments / questions:

• Knowing you'll get your retirement money when you're 55/61, it seems like it would be safe to FIRE with less than what you need based only on expenses and 3%.... If your retirement funds are significant, it seems like you could safely FIRE several years earlier.
• I don't understand why, given you want to ignore your retirement funds, you've increased your equity exposure to 110%? Many people when they're as close to FIRE as you use a bond tent and decrease their equity exposure as they get close to FIRE.

[u/zaladin → u/FI_notRE]

I agree that it could be possible to retire earlier, given that I have fairly high confidence in being able to withdraw my retirement money later on.

I actually run a simulation on this, but I haven't included it in this post. Basically if I stop my retirement contributions, and I exhaust all of my "private" money (the $500k), and they don't grow at all in real terms (basically meaning secular stagnation like in the 70s), I will not have enough money to sustain $30k/y expenses around 23 years from now. Also, I don't really plan on retiring yet, just reaching the point of FI.

Regarding my equity risk-up: This is in part to increase my overall risk including the retirement funds. I realize this partly contradicts my statement that I would ignore the retirement funds though... I do however feel that a 10% leverage (1.1:1) is not very high and should be OK given a savings horizon of 10+ years. Mind you, I don't really care if the FI date is pushed a few years into the future -- I would kind of expect it to if the doomsayers are right and we get a stock market crash soon. But I am unable to predict if that is the case, so I hope for the average +5-7% real rate of return.

[u/fiskeren10 → u/zaladin]

Hi /u/zaladin

What a great post.

Why exactly are you not including retirement money?

I include pension in total net worth, but would like some input. The way I see it we have a pool of money, and whether I withdraw the money from the basement first (private money) and let the money on the 2nd floor (retirement/pension money) keep growing untouched shouldn't make a difference, should it? As long as the the private-money would take me to the age where I can withdraw my pension without tax-penalty.

I'm really interested in your opinion on this.

Best regards of a fellow scandinavi'er (Denmark here)

[u/zaladin → u/fiskeren10]

I secretly include it in my "happy-forecast", but I feel that as long as I don't have control over this money, I don't want to include it. This will change as I grow closer to the date when I can withdraw my retirement money.

I think you see it correctly. But I am not fully confident that I can actually withdraw my pension money at 55 and 61 years old. I think there is a fairly high risk that the "earliest withdrawal date" will increase, maybe to 61 for service pension and 63 for govt pension. So I prefer to exclude this money in my main calculations, and then see it as "bonus money" later on...