The Plan

Assumptions

These assumptions should yield:

Theoretical Performance

Using an expected monthly return of ~0.035%, the total wealth $W$ at month $n$ is given by: $$ W(n+1) = W(n) \times 1.00035

Implementation

  1. Until the Emergency Fund is enough for a year of expenses, all investment goes into risk-free assets
  2. After that, investment are made to balance the conservative portfolio allocation
  3. Financial Independence is reached when a year of today’s expenses equals 5% of the emergency fund, meaning the total wealth should cover about 30 years of today’s standard of living.