Enjoy Life

Just things in which I have my passion ranging from retiring early, enjoying life and nice things.

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Retire at 40s

I retired when in my 40s and enjoy it every day. Not having the stress of being a slave to my work, waking up early, sleeping late, travelling and be out of the house almost every week.. I do not miss anything!

Obviously, this did not come just out of the blue. I planned it for a long time already, and want to share some of my experience how to plan it.

Tips how to retire early

First of all, I worked hard for it, and made some good money, while saving for later. But I also had some luck in choosing where to put my money over time. It started already when I was 28 when I bought my first apartment. It was a 2 bedroom apartment in south of France that was typically more a holiday location than for permanent living. I bought that with a mortgage but ensured that I could it off whenever I wanted without penalty.

As soon as I made more money, I paid off my mortgage as soon as possible which was in my case in 6 years. I realized that living debt-free and without rent you are saving a lot of money that you can use to re-invest or buy more houses. So my first 2 tips are:

1) Buy a place instead of rent as soon as you can (with a mortgage)
2)  Lower debt and try to live debt-free (pay off mortgage)

So, where do you put that money? Buy another house or apartment or put it in the stock market?
Let me explain how to decide.

Investment Main Alternatives

Stock Market 

The easiest investment is obviously in the stock market. These are public stock that has transparent financial and operational performance. The income is through the share price increase as well as in some cases dividends. 

Typical return varies between 5% and 15%.

Private Companies / Startups

Investing in private companies is more difficult as the shares are privately owned. The owner(s) need to agree to give you shares, but even more difficult is when you want to sell, you can only sell it back to the owner(s). Typically the share price is agreed with on a formula based on revenues and profit, but the owner(s) need to agree to sell your shares. 

Startups are like private companies but in size much smaller. Still, a value formula needs to be put in place to determine the overall company value. 

Typical return varies between 10% and 30%, but in some cases they could be triple digit returns, especially with startups, but risk is also high as you could loose all your money.

Houses / Apartments / Garages

Another investment vehicle are buying houses, apartments or garages. The asset is in brick and means that if something goes awfully wrong, you still can sell you asset. But the value may go down significantly, so you may still loose money. 

Typical return is between 3% and 6%, but with low risk and additional value in case house prices rise. 

Bonds / Obligations

Bonds are putting your money in typically government or company bonds or obligations. You get an interest, but there is a risk that the company or country cannot pay anymore and you may loose your investment and yield. Risk is low medium, but still not as safe as just putting your money in the bank.


Put your money in currency is basically saving your money. Saving accounts do not provide a lot of interest, but you keep your money as is.

How to decide 

From first sight the public stock may be the most attractive investment. But thinking of houses, as house price may go up, that may also be an interesting alternative. But that may take time, so what is best investment?

Most people would look at ROI of investments. But in my experience, the best measure to help with investment decisions is to use Net Annual Return . That is calculated all income versus cost price and averaged per year:

Formula Net Annual Return: (Total Selling Price / Total Cost) ^ (1 / years of tenure) - 100%

So, for instance, you buy for 1,000 units of USD S&P 500 on 1st of July 2002 at a price of 815 USD each. Now that would sell for 2.945 USD on the 3rd of May 2018. There is no dividend, so overall ROI would be:

Overall ROI S&P 500 = (2.945.000 USD - 815.000 USD) / 815.000 USD = 216%

In 2008 I bought an appartment in France for 80.000 USD and used it for rental. I obtained around 3.200 USD rent per year, so for 10 years that calculates to:

ROI Apartment rental 2010-2018: (3.200 USD*10 years)/80.000 USD =  40%

Compared with the S&P500 ROI of 216%, it is far below. But now it sells for 190.000 USD in 2018 and I need to factor that in as well. So overall ROI is:

Overall ROI House Total= ((190.000+10*3.200 )- 80.000 USD) / 80.000 USD = 178%

Still, overall ROI of 178% is lower than the S&P 500 ROI of 216%. So, was the house purchase a bad investment?

Let´s compare with the net annual return formula how it calculates:

Net Annual Return S&P 500 = (2.945.000 USD / 815.000 USD) ^ (1 / 16 years) - 100% = 8% per year.

Net Annual Return House total= (220.000 USD / 80.000 USD) ^ (1 / 10 years) - 100% = 11% per year.

So my money worked 38% ( (11%-8%) / 8%) better with the house purchase than with the S&P 500 investment. So, the house was a better investment. 

My investment portfolio

So, my investment portfolio is decided with looking at Net Annual Return rather than other factors. I take risks and my portofolio is spread in equal amounts over stock market, private companies and startups, and real estate. And then I keep for at least 3 years living expenses in cash, just to ensure to have cash at hand.  

So my tips are:
1) Buy a place instead of rent as soon as you can (with a mortgage)

2)  Lower debt and try to live debt-free (pay off mortgage)

3) Use Net Annual Return rate as guide to decide where to best invest

4) Spread your investment in equal parts over public stock, private and real estate

5) Keep part in cash for at least 3 years living expenses for more difficult times  

That is how I evaluate my investment portfolio and with an average Net Annual Return of 15+% of total available money, I am not complaining.

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