Triples your assets in 5 years – a wealth of common sense

A reader named Andy asks:

I am 25 and live in Belgium. I make € 2,000/month net in a factory job and save € 500- € 1,000/month (living at home). My assets are ~ € 67,000. I am debt -free.

My goal is to grow this to € 200k- € 400k within 4-5 years. That would enable me to move to Southeast Asia (ideally the Philippines) and start a company.

If you were 25, debts free with ~ € 67k net value, what investment or allocation strategies would you give priority to reach € 200k- € 400k in 4-5 years?

I absolutely love this question.

It has figures. It has a goal. And it has meaning behind that end goal.

I wrote about trying to build a nestei in a relatively short time in my book Everything you need to know about saving for retirement From the perspective of people who get a late jump on pension savings.

I told the story of Carl and Carla Carlson, both 50 years old who had nothing in the way of retirement savings. The Carlsons wanted to know if they would be better off to shoot the moon with their investments or save more money to make up for lost time.

These are the figures I came up with for a simple scenario analysis:

This was my conclusion from the book:

Even if Carl went out of the park in his Robinhood account and doubled the return of 6% of Carla, a higher savings po figure would still have led to better results. A doubling of the Carlson savings from 10% to 20% led to a better result than a doubling of their investment return from 6% to 12%, even for a two -decade period. And there is a good chance that Carl is not the second arrival of Warren Buffett, so increasing their savings is much easier than increasing their investment return.

Andy from Belgium has an even shorter time horizon, but he is looking for a significant increase in his assets in the order of 3-6x. That is a big leap in such a short period, which means that compiling your investments is even less.

I have done a similar exercise with the help of the information provided and some different monthly savings and investment returns (and yes, I found the euro sign on Excel):

This is the growth of his assets over a period of 5 years with the help of these different assumptions.¹

Just like the example from my book, increasing your savings speed has a greater impact on your final balance than increasing your investment return in this time frame.

The good news is that if Andy can reach the higher end of his current monthly savings range, he can come close to the lower reach of his net purpose of his assets.

The bad news is that if he wants to hit € 400k, he must either get a huge increase or become the next Jim Simons at night.

At its current savings level you would need something 30% annual returns for about 5 years. With a more reasonable return you would need more such as € 3,500 to € 4,000 per month to reach € 400k.

In 5 years I could give you all kinds of all kinds of assignments and investment ideas to 5x your wealth, but you probably don’t get the high-end of your goal, unless you start earning much more money or a lottery ticket investment starts.

My advice would be to try to get the top of your savings range for € 1,000/month or find out how you can earn a bijwares.

There is another consideration:

What does you keep from moving to the Philippines? Why wait?

You are 25 and live at home. You have already shown that you have money to save money. Why don’t you try to do it from your dream destination?

Consider setting your goal at € 100k, so that you can get there earlier.

Life can be very different at 30 than at the age of 25. You have the option of being adventurous at the age of 25. If you want to move to the Philippines, a spreadsheet calculation will not stop you. You could always go back home if it doesn’t work.

There are some life events that you are never completely ready when it comes to your finances and you just have to take a leap into faith and find out while you go.

This can be one of those times.

I discussed this question about the last episode of Ask The Compound:



Callie Cox added me again to the show to chop it about questions about an AI that prevent a recession, invest in intertwined markets, covering your biggest winners and paying off a car loan of a brokerage account.

Continue reading:
Everything you need to know about saving for retirement

¹I know this question was in euros, but it’s just easier to find the dollar sign on Excel.