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Thursday, March 23, 2017

$500K - Second Milestone Target Reached

This is an important milestone for me to journal so I could look back in the few years to come to see where I am today. It's importance means so much to me that I think it deserves an article of its own.

The last time I hit my first milestone of $250k (Link Here) was back in April 2014, where coincidentally I had my first son born on the exact same day. So many things have happened since then with my first parenting experience, the graduation of my MBA, the promotion of a new career role, and the recent birth of my second son. During the period, we also traveled to various other countries as a family and visited places like Hua HinHongkong and Krabi.

That's life for the past 3 years for me. 

I've experienced happiness and accumulated experience.


Accumulating experience in progress...


How It All Started

I've actually started off quite wasteful when I was young.

After graduation, I maintained my interests in chasing the latest fashion and gadgets and did not quite know what to do with the income I earned from my job.

I signed up for an ILP product from Manulife and bought a WL policy which I have since terminated both, with the latter very recently.

One day, I decided that things would have to change and so I decided to go into investing after reading a couple of blogs from bloggers which still existed today.

I had a huge project when I started investing some 7 years ago at this point.

The goal was to eventually reached a stage of financial independence, where in my definition that means a passive income of 1.5x of the expenses incurred. There are people with their various own definition of what financial independence stage means so they differ one to another.

1st Milestone - $250k

If I were to attribute a theme for the first stage of the milestone, it would be Growth.

At the back end of my head, I knew that I had to focus on something which could propels me to a head start in having a larger base. I decided that having a successful career growth in the first few years of my life was going to be extremely important and so I worked hard towards it. I went for it a lot more aggressive than I would for my investment which was considered minuscule back then.

It also helps that I took advantage a lot during the 2011 Euro Crisis situation by putting most of my money in and it gave me a huge return when the market rebounded back.

Soon, I realized that investing wasn't easy and I continued to learn from the mistakes and apply the context in future. Thankfully, there wasn't any fatal mistakes which dragged down my capital base.

2nd Milestone - $500k

The theme for the second stage of the milestone has to be Accumulation.

It took me 3 years to get from the first to the second milestone.

Both my career and investment seeds which I have planted in the earlier years have reaped fruits and are paying a nice dividend. I played my trump card fairly decent and it has given me a huge advantage in this continuous journey I will have.

The market has not seen a huge dip since we last seen in 2008 and 2011 and I cannot say that I've done well without being mentally tested in the bear scenarios. 

I think I had somewhat positioned for luck pretty well in the past few years and I have some huge gains which I have realized in the market which helps the portfolio to continue growing.

Over the last year, I have also cautioned and prepared myself for the upcoming huge expenses I have had to incur for the family. I think the calculation went pretty accurate and it helps that I don't get surprises along the way.

$500K - Investment Breakdown

There were some readers who asked me of the breakdown in detail so I tried to see how I can do that.

Out of the $500k in the portfolio, the capital cost came up to $312k while capital gains and dividends totaled up to $188k.

It is important to me that I do not make huge losses in the market because that capital base of $312k could swing the other way if I were wrong in the market. For instance, if my returns were negative 5% over the past 7 years, it would erode my portfolio to $296k instead. That would have been hugely detrimental.

I don't track my performance closely like a hawk but I do monitor them from time to time.

For me, as long as the value of the portfolio keeps growing, it feels like I'm doing something decent and right. I understand that advantage of tracking one performance to a benchmark but at least to me investing does seem like a hobby right now, more than just a "job" to make more money. Maybe it will change someday.

TWR - 2011 to 2017

XIRR - 2011 to 2017

What's Next? - 3rd Milestone

I'm going to take baby steps at a time and not rushing in to hit my goal.

The next milestone stop for me would be to reach the goal of $750k and if history in the market could help, I am targeting to achieve them in the next 3 to 4 years hopefully. With the higher expenses, I might suspect the higher range of the 4 years but it doesn't matter too much to me at this point.

I think I've grown way more than simply hitting some financial goals that I have.

Equally important to me would be to accumulate more life experience and I am actually more excited to see my 2 boys finally going to grow up in the next 3 to 4 years, which would allow the entire family to try something really out of this world. I think that's what we are going to go out for and that's why we are going for financial independence.

I do hope in the next 4 years I could be on the way writing my 3rd milestone experience and looking back at the past 4 years of life experience where it could be another massive journey.

Thanks for reading.


30 comments:

  1. As a friend, happy for you on achieving your milestones.

    Impressive, keep it up on your oife journey

    ReplyDelete
    Replies
    1. Thanks FD for your well wishes.

      I hope you hit your goal soon which I believe will happen very shortly.

      Delete
  2. Nice! And inspiring reading your story! I want to learn how to start investing too!

    ReplyDelete
    Replies
    1. Thanks!!

      You may want to hop onto the facebook link page below as we discussed a lot of financial stuff on a day to day basis.

      https://www.facebook.com/groups/286299831788022/

      Delete
  3. That's quite an impressive achievement!

    ReplyDelete
  4. Congrats! A true inspiration indeed.

    ReplyDelete
  5. B,

    Cool!

    Your ratio of 60:40 for capital injection and investment returns is similar with that millionaire New York girl who retired at age 28. That's about right ;)

    The trick is to buy low isn't it?

    Ah, you benefitted from the US fiscal cliff and the Greek crisis!

    Imagine if you had started in 2009? But then, if you had started in 2006... Don't believe anyone who says anytime is a good time to start investing ;)


    As for your XIRR, I'll not talk about it as readers can calculate their own primary school simple average over these 5 year ;)


    "I think I've grown way more than simply hitting some financial goals that I have."

    I suspect you are beginning to see the light... Once you have several millions, it would be crass to continue to set more goals to accumulate more...

    You would probably join the ranks of those with no financial goals but just want family to be safe, happy, and most of all, have fun together!

    Cheers!



    ReplyDelete
    Replies
    1. Hi SMOL

      I'm always in the camp that timing matters in investment only to those who are able to exploit it. However, when my friends come up to me who has zero experience, I generally tell them to sort out their finances first before starting how to grow their money. Something like walk before you run :D

      Delete
  6. $5 million of investible net assets is probably the magical mark I suspect.

    ReplyDelete
    Replies
    1. Hi Anonymous

      I don't set that high but I don't mind having that for sure ;)

      Delete
    2. Hi B

      Easier for my generation (late 40s) to reach that using property as an alternative with securities. With $5m net investible assets, can generate at least $250k of passive income conservatively at medium risk. Enough for a comfortable life with family. But harder to build a base with property now with higher property prices and the cooling measures. But you're on the right track so keep it up.

      Staying as A

      Delete
  7. nice! keep up the inspirational stuff!

    ReplyDelete
    Replies
    1. Thanks FC for your kind words.

      Delete
  8. Nice and inspiring...I have similar plan and started working on my first goal 10 months ago...target to achieve each goal at...your story gave me the believe it's do able :)

    ReplyDelete
    Replies
    1. Hi Anonymous

      Thanks for your kind words.

      It'll be great if you could share your story someday, even to the extent of how you manage to go through your journey right now. I hope you'll succeed :)

      Delete
  9. Congrats B.

    I started to invest about 7 years ago too. Invested about $150k. Now growing to $320k. Still along way to go!

    ReplyDelete
    Replies
    1. Hi Anonymous

      That's a more than 100% profits than your capital. You are making a great progress and I'm sure you'll surpass your goal (and me) very very soon.

      Delete
  10. congrats!
    Have the first baby, get $250K, 2nd baby, get another $250K to equal $500K. So the conclusion is to get $500K, just get 2 kids. LOL :)... to reach your $750K, I think I know what you're going to have to do next... hahaha!

    Your portfolio is super consistent, you make all the right analysis to divest and to invest. Your blog is awesome to follow. keep it up, bro!

    Cheers!

    ReplyDelete
    Replies
    1. Hi Vivianne

      Ahaha, nice theory there. I'm pretty sure a third baby won't get to the $750k goal. If it is, I'm going to eat my words and fly to the US to find you :)

      I like how you are transitting from a dividend to rental income portfolio too. It shows that income is flexible and can come in many forms.

      Delete
  11. Hi B, thanks for sharing your investment journey! I hope to reach a milestone like you too. Unfortunately I am still far away from that.

    ReplyDelete
    Replies
    1. Hi SR

      I think your milestone will come pretty soon, I saw your portfolio and the passive income is coming in solid and consistent every month too. It won't be long before we hear your success story :D

      Delete
  12. Hi

    I have been reading your blog for the past year.
    Just want to let you know that your stories are really inspiring.

    I am working hard to get the first 200k in my investments too.

    Congrats to you.

    ReplyDelete
    Replies
    1. Hi Mingsong

      Thank you for your support and I hope you are able to hit your achievement very soon too :)

      Delete
  13. Hi how long did you take to reach your first milestone and what's the initial capital you started out with 7 years ago?

    ReplyDelete
  14. Hi B,

    Congrats! It took me 11 years to get to 500k.
    I was wondering why you sold off UMS? It is a strong cash generative business with above average dividend yield, even after the run up.

    Vingaard

    ReplyDelete
  15. Congratulations on your 2nd milestone. Your warchest is the size of my entire portfolio. I have just started building up my portfolio last year and still have a long way to go. Slowly working my way up to my first milestone of 100k.

    ReplyDelete
  16. Your XIRR is mind blowing. Warren Buffett will kowtow to you. :-)

    ReplyDelete
  17. Congrats on your $500k milestone and 2nd baby! You have been an inspiration too!

    ReplyDelete

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