Summary

The website content outlines an individual's journey and strategy towards achieving financial independence by amassing one million dollars by age 50, through a combination of savings, passive income, and stock trading, without adhering to the extreme frugality of the FIRE movement.

Abstract

The author of the article introduces a personal financial plan named "1M50," which stands for accumulating one million dollars by the age of 50. This plan is distinct from the FIRE (Financial Independence, Retire Early) movement, as it does not require a minimalist lifestyle. The author, who started with a modest savings of $30,000 and a monthly contribution of$ 1,000, has set a goal to reach $1 million through a mix of dividend stocks and capital gains from trading, despite the challenges of supporting a family of six. The COVID-19 pandemic has unexpectedly accelerated the author's progress by providing opportunities to invest in depressed stock prices, resulting in significant growth of their investment portfolio. The author emphasizes the importance of understanding one's risk profile, diversifying investments, and setting realistic milestones, such as achieving$ 500,000 in three years. While the author acknowledges the risks and uncertainties of stock trading, they encourage others to take the first step towards their financial goals, suggesting that perseverance and faith can play a crucial role in success.

Opinions

The author believes that achieving a $1 million nest egg is a universal measure of financial success and is attainable through careful planning and investment.
They express confidence in their ability to reach their financial target by age 50, despite the short time frame and the responsibility of supporting a large family.
The author does not subscribe to the extreme frugality promoted by the FIRE movement, preferring a more balanced approach to financial planning.
They are comfortable with stock trading as a means to grow their wealth, having doubled their initial investment during the COVID-

My 1M50 plan, not like FIRE

This plan lifted me out of depression

What is 1M50?

It is simply short form for One Million (USD or insert your currency) by age 50.

$1 million nest egg is the measure of success for an awful lot of people on this planet. Regardless of which country you are in, it is the ‘dream’. For most people, it remains a dream. Being born into a middle-income family, I have never thought about it, not until a few years ago when I ‘woke’. I meant woke more of being aware of financial planning. It is the plan most of us are working subconsciously towards – earn enough money, quit our jobs and live off our investments. How wonderful!

Is one million is enough for me?

Yes, definitely! It has the ability to generate a comfortable income for me and allows me to follow the 4% drawdown rule until I die. I have less than 10 years to achieve it, on top of supporting a family of 6. FIRE (Financial Independent, Retire Early) movement has been trending for a while. This is a lifestyle plan for those seeking to retire early, by way of maximizing savings rate and methodically cutting expenses. I do not think I can live so minimally. Hence I took the concept of FIRE and just took out the part where we have to be ultra frugal.

Is 1 million even achievable?

From then on, I started planning. It seemed impossible at the beginning, starting with 30k in savings. I treat 401k, Roth IRA or other retirements funds separate from this 1M50 plan of mine. They will come in handy and be the ‘icing’ on the cake when I achieve 1M50.

As I mentioned earlier, the planning part took a while, it honestly did not seem possible at all. With 30k and monthly contribution of 1,000, I will only reach 269k in 10 years. That is already assuming 10% returns annually, which is outstanding returns to me.

I looked at the ways I can generate that income.

Savings – 30k
Earned Income – 1k monthly contribution
Passive income – (have to start, but not sure how)
Business (takes too long, and low probability of success)
Trade stocks (more confident, but have risk)

Everyone of us are different. Some are more comfortable and get more drive to start a business. If the business flies, one million is probably no problem at all. Some have a certain skill they can use to freelance and generate passive income.

Looking at the list, I am most comfortable with stock trading. I can still do my daily work and I had a bit of experience in it. The question is, am I willing to lose 30k to try trading for retirement.

Yes, of course!

COVID-19 is a catalyst in so many ways

And it so happened that it was COVID year, and almost all stocks prices are depressed. And so I started. In last year, I doubled my initial sum of 30k to 60k. When that happens, I got even more motivated. I closed off some old investments plans and consolidated some funds here and there to make up another 20k. I even find unused things in my house to sell on websites like Craigslist. For year one, I have somehow scrapped together 90k to continue my journey towards 1M50.

There will be wins and losses in the market. I just have to work towards minimising my losing period and maximising my winning months.

It’s not the money I am after, it’s the freedom

I split my 1M50 fund into 2 areas (pardon the weird names I call it):

1M50 delta – Accumulating dividend stocks (20%)
1M50 alpha – Trading for capital gain and growth (80%)

If my 1M50 alpha grow to a certain size, I may split it into another basket for diversification.

Understand your risk profile

Some people like to jump in fast and get their hands dirty and learn through their mistakes on the way. In this instance, I delayed my initial entry to trading and observed the market for a few months. Took my time to read and understand each stock and how which one could help me achieve faster growth at the most risk I am comfortable with.

For those who are trading, I am sure most have heard of the meteoric rise of Tesla and how many people it made millionaires out of. I bought into Tesla after a few months of it’s parabolic growth so turn into a millionaire, I did not. It did help grow my portfolio significantly. This 2021 March correction has seen it plummet though. It was good while it lasted.

I am still quite a long way from reaching 1M50. However, now I am more confident that I can achieve my plan by 50. What a difference a year makes.

My target for 2021:

Grow 1M50 delta to 50k
Grow 1M50 alpha to 150k

And I set a halfway milestone for achieving 500k in 3 years. Heck, I figured if I did not manage to achieve 1M50, at least I would have achieve 500K50.

I am not advocating stock trading. It is just a method I am comfortable with. With the rise of robinhood, the ease to trade has never been easier, the risk with any investment vehicle remains. Anybody who wants to invest, should take care and set stop loss whenever you can. And remember, it is never wrong to take profits!

I am sure there is a lot of people out there in the world who, like me, may feel that 1M50 is impossible. I would like to share with you that we do not know for sure. One thing I can say for sure, everything starts with a small little step. Place one foot after the next and let’s see where it takes us.

So take the first step – create your own fund in a separate account and work at it, perhaps pray as well. God may not grow this fund for you, but He will give the faith to persevere when you feel it is hopeless.

Photo by Glen Carstens-Peters on Unsplash

If anyone of you who may have any ideas that can help me or any others who want to make this their goal, let me know. Sharing is caring!