We did it, it has been a long time coming but we finally crossed the £100,000 mark! Crack open the champagne, or reasonably priced Prosecco, we are trying to be frugal after all! In just over two years we have amassed a six-figure portfolio by making a few simple changes to our day to day life. Here is how we did it.
Our journey began two and a half years ago when we came to the realisation that we needed to start taking our finances more seriously. We were 25 with very little savings, no emergency money and we had not given retirement a second thought. Although our situation was not uncommon we knew that we wanted to do things differently.
We started researching ways to make our money work for us and learnt about the power of compound interest and investing. Shortly after, we opened our very first investment account, but lacking the knowledge we have now, we made some questionable decisions about where to put our money. We made the rookie mistake of investing what savings we had into actively managed funds recommended to us by the investment platform whilst not realising the high fees that came with them. Luckily for us, the desire to reach financial independence had hit us hard, it had become more of an obsession. More research lead us to books such as The Simple Path to Wealth and The Millionaire School Teacher and we quickly realised the errors we had made. Learning about low cost index funds changed our view of our finances completely, we realised that not only could we save enough money to have a comfortable retirement, we could save enough to retire 20 years early and that’s when the journey really began.
By this point we were heading in the right direction but were still yet to find the path. This came later when we discovered websites such as Mr Mouney Moustache and Millenial Revolution. These sites gave us the tools and the knowledge to achieve our financial goals.
We sat down and drew up a plan. We analysed all of our financial outgoings and prioritised what was important to us and what was unnecessary spending that didn’t spark joy in our lives (shout out to Marie Kondo). We devised a plan to dramatically increase our savings rate whilst not compromising on our happiness. Some of these changes were big, such as committing to investing 65% of our net income into Vanguard Index Trackers and some were much smaller changes such as taking packed lunches and not buying coffee out.
Slowly but surely we started to see results, our savings increased month on month and we started to see our total net worth grow. Jump forwards two and a half years and here we are, by consistently spending less than we earn and investing the difference, we have hit our first major milestone of £100,000! Looking back, this figure seemed unattainable, but in just under three years we have grown a six figure portfolio. There is still a long way to go, but this milestone represents the first step on our road to Financial Independence and we are more motivated than ever to get there.
Have you started your journey to Financial Independence? Let us know what first motivated you to start saving in the comments section below.