I’m a 26 guy born and raised in Stockholm, Sweden. Moved to Norway at around 9 years old and consider myself Norwegian. At the moment, I live in Bergen in Norway. Studied electrical engineering, philosophy, finance and entrepreneuring in Australia (ICMS, Sydney), Norway (NTNU and NHH), Japan (KEIO, Tokyo) and USA (Berkeley). Mostly worked with fintech startups. Traveled the world alone for a year and worked as an English teacher in Vietnam. Invested in the stock market and managed my own portfolio for about 8 years. I’m very fond of backpacking, hiking, reading and doing sports. For a more detailed overview, read my interview here:
My View On Financial Independence
Many bloggers write about financial independence and they often define it as the end state were they don’t need to work anymore and yet live a comfortable life.
They will do this by being very frugal (not spending much money) and live below their means (spend less than what the average person with the same income class does).
By combing this frugal mentality by saving a lot, sometimes as much as 50%, they aim to retire before the average retirement age and thus, be free and able to own their own time. What this means is that they want to quit working at an early age and decide themselves what they want to, how it should be done and when it should be done.
At first, I as many others found this idea of freedom to be very liberating.
Total Freedom – Is It Really That Amazing?
Not having to work and just enjoy life sounded truly amazing. You could be your own boss and thus, life would be relaxing, enjoyable and more meaningful. All of those long hours at the office would be gone and what waited was a long life with total freedom to do whatever the mind could think of. True freedom and no obligations what so ever. But as time went by and I started thinking more about how life actually would look like in this state, I got more and more pessimistic. You see, I have experienced this kind of freedom before and I did not like it at all. Back in 2012 I had a serious accident and had to stay at home for about 6 months before I could go back to daily life. At first, I liked it. Waking up, drinking coffee, watching a movie and then drink another cup of coffee while thinking about what to eat for dinner. It was relaxing indeed, but the boredom quickly got to me. It didn’t take long before I got restless and felt that I was wasting my time. No feeling of accomplishment, progress, and future looked the same.
Change Gives Life Meaning
The famous child author Astrid Lingren, who has written a ton of enjoyable books about happiness, was throughout her life sometimes heavily depressed. But said that sometimes you need to feel sorrow or pain in order to truly feel joy, happiness, and meaning.
I believe that too. We humans need to experience a chance. If not, we get tired, restless and we cant appreciate what lies before us.
What this means is that a state was one has no obligations and no tasks is not a healthy task for most people.
The idea that no work will maximize happiness is false and does not create a life full of joy and meaning.
What is the goal then and how does money help achieving this goal?
My idea of financial independence is that one can work less than normal, but still work. By this, I mean that one has enough income from other sources that it is possible to work maybe 4 hours each day. Or only work Monday to Thursday, having Friday free to enjoy the weekend and maybe go travel quite often. I think this would be very relaxing, yet still meaningful.
Another way to look at it is that financial independence gives you the option of being bolder in your choices. So, if you choose to work a lot, you work for you and no one else. It could also mean that you seek jobs that truly meets your goals and desires, more than jobs that solely match your desire for income.
How will I reach this state?
There are two ways in my option to reach this state. Both strategies involve discipline but differ in that not everyone can use both strategies.
The first strategy is to invest money in the stock market. If one talks about an index such as the S&P500 (a list of the 500 largest companies trading in the American stock exchange), it should in the long run annually increase by about 8%. This means that each year, your saving account will gain 8% and thus, you will make more and more money and this will help you reach that state. I use a somewhat different strategy called the Dividend Income Strategy, but it uses the same principle.
Why I Use Dividend Growth Investment Strategy And Not Just Indexing
The difference is that when you add money to the index, your money stays there. In the long run, which means in average, it should grow at a rate of around 8%, but during some periods, it might take years before the money grows. This does not really suit my needs for having extra income in my daily life at any time to meet the required life state. I don’t want to wait 8 years before withdrawing cash from the account so that I can more frequently go traveling or work less. That deviates from my goal and thus, pure index investing is not for me. It will probably generate the highest amount of return (meaning it will most likely be the best strategy for making you rich). However, personally, I don’t feel comfortable waiting that long before getting cash from my investments. As such, I use the Dividend Investment strategy. This strategy also involves buying stocks, but the stock directly pays money to my account (which is called a dividend payment). An index takes that dividend and directly invest in the index itself (meaning, I also get the same amount of money, but I never see it. It is reinvested in the index directly and does not go to my account as cash).