Author Topic: How to early retire when you live in a poor country? [PORTUGAL]  (Read 3028 times)

LAdria27

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How to early retire when you live in a poor country? [PORTUGAL]
« on: October 02, 2016, 05:40:28 AM »
Hello WORLD! I´ve started to read MMM blog a few months ago, and today I Joined the forum to learn some more *YAY!*

I am 24 YO, I am earning 1500€ (gross) per month, totaling 21k€ PER/YEAR (we earn 14 months because of summer/christmas holidays), 14k€ after tax and S.S. (it´s our 401k).

GROSS / year: 21k
NET / year:14k
Rent per year: 2880€ (240€ month) all bills included
Food per year: 2400€ (200€ month)
Other expenses per year: 500€
NO DEBT

So after all, I am left with 8220€, about 60% of my net income. I don´t own a car, make all my food at home and eat mostly non processed food, only travel with my bicycle.

At the moment I have no money invested, 14k€ cash.
I am well above people usualy are at my age, since the minimum wage is 530€ and most people dont earn above 800€.

Do you have any tips so I can save more? Any investment tip? What would you do?

Thanks, and sorry for the poor spelling. Also if you need any other info I´ll be happy to share.
« Last Edit: October 02, 2016, 01:26:30 PM by LAdria27 »

marty998

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Re: How to early retire when you live in a poor country?
« Reply #1 on: October 02, 2016, 06:04:27 AM »
Presuming your potential wage is limited, I would suggest starting a business?

There is no such thing as an investment hot tip, except:

1) don't get greedy
2) slow and steady always wins the race
3) if it's too good to be true, it probably is

Poor country in Europe(?) makes me think having your savings as cash in the bank isn't the smartest of choices either... you never know which bank is going to fall over next.

I would go with either international shares (if possible) or local real estate. They are not making any more land... a good location will always have value.

alsoknownasDean

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Re: How to early retire when you live in a poor country?
« Reply #2 on: October 02, 2016, 06:32:48 AM »
Same reason as anywhere else, savings rate. At 60%, you're doing pretty well.

Theoretically with a €5780 per year expenditure, the 4% rule used around here would require you to have €144500 invested. You're a tenth of the way there :)

Of course, the nature of what investments are available and/or worthwhile heavily depends on your country. Are there any tax-advantaged retirement accounts available?

If you're an EU citizen, are you able to buy into funds listed in other EU countries? As marty998 indicated, is real estate a worthwhile investment? Is the political/economic situation in your own country stable?

Then there's the additional uncertainty around the Euro longer-term (eg: the future of Greece in the Eurozone).

With This Herring

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Re: How to early retire when you live in a poor country?
« Reply #3 on: October 02, 2016, 01:00:27 PM »
Your spelling is good.  :)

You don't give much detail on your spending, so we can't really give you specific advice on it.  I would suggest you start tracking your income and spending in greater detail.  Once you do, you may see places where expenses can be cut.  Additionally, getting a good year or so of data will let you better evaluate the potential financial effects of changes in your life situation (marriage, having children, moving to another city or country, taking a different job, et cetera).

As you are in Europe, you might find that GnuCash works well for you as a financial tracking program.  All the financial information will be stored on your computer, so it won't cause internet security issues.  Documentation (instructions and how-to PDFs) of the current version is available in English, German, Italian, and Portuguese.  Some parts of the wiki are available in German, Spanish, and Portuguese.  The program itself has been translated into many more languages.  This is not to say you would need it translated, but it might be easier to work in your native language.

For investing, you might be able to get more specific advice if you tell us what country you live in and modify the title of your original post to include "[Greece]" or "[Bulgaria]" or "[Romania]" or whatever country applies.  Other people who live in your country (or nearby) and have a good idea of the political climate will better know whether certain investments would not be safe or profitable.  For example, I would not start a business in a country that has been known to nationalize (take government control of) businesses.  If I lived in a place where banks were collapsing, I would put my money in banks that were strong and had business in many countries.

If you earn and have much more money than is normal in your country, your best bet is to be very quiet about it.  When someone wins the lottery they have long-lost relatives come out of nowhere with sob stories and attempts to swindle a portion of the winnings.  Those with known wealth can also become targets of outright theft.

Paul der Krake

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Re: How to early retire when you live in a poor country?
« Reply #4 on: October 02, 2016, 01:21:51 PM »
Portugal?

Yeah, you're going to want to diversify your investments. Small countries with modest economic engines are at the mercy of their neighbors' well being. There have been a few euro-centric threads that discuss what's available to investors, but every country is different. Saxo Bank has low fee index ETFs but they may not be available to you.

LAdria27

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Re: How to early retire when you live in a poor country?
« Reply #5 on: October 02, 2016, 01:52:05 PM »
Your spelling is good.  :)


Thank you :)

I will start doing this with food. I think I can save 25% off what I am spending today.
The truth is other than the house, food and annual expenses (that cover clothes, occasional dinners at restaurant, etc) I dont have any other expense.

I already updated the title, and thanks for pointing gnucash. I´ll make sure to take a good look into it.

For investing, I have various possibilities, but not as much as i´d like to have. Banks give 1% return (28% of that 1% is taxed), then you have to pay the trading fees. So for the amount I do have to invest, I´d be loosing money.

Thanks for everyone that took time to answer.


ddharriman

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Re: How to early retire when you live in a poor country? [PORTUGAL]
« Reply #6 on: October 02, 2016, 04:54:18 PM »
Hi neighbor

Based in the actual situation of our economy - almost 0% interests paid by the banks, but also almost 0% (or less) inflation - my advice for you is to do 4 things:

1 - create a one year emergency fund = to one year (at least) expenses.
Using your numbers, at least 6.000€ in your normal bank, earning one year interests, per example 1.000€ every 2 months (so if you have an emergency you will use just some of the money and still earn interest in the rest);

2 - after that, and from the (around) 8.000€ per year that you save, buy “Certificados do Tesouro Poupança Mais” (http://www.igcp.pt/gca/?id=1303).
These are State secured “bonds” running for 5 year periods.
They pay interesting progressive interest rates (for Portugal) - 1,25% year 1,1,75% year 2, 2,25% year 3, 2,75$ year 4 and 3,25% (http://www.igcp.pt/fotos/editor2/2016/CTPM_Taxas_de_Juro/10_TAXA_JURO_CTPM.pdf).
Buy these up to 12.000€, 2.000€ per 2 months so you will have in every 2 months of the next 5 years interests entering your bank account (and thus contributing to your savings);

3 – after that create a least one Plano de Poupança Reforma (https://pt.wikipedia.org/wiki/Plano_Poupan%C3%A7a_Reforma).
This is a personal retirement plan where you put a fixed amount of money every month and can outdraw it when you become 60 (or sooner in special situations), and where you pay less taxes for it.
As the time goes by create other(s) up to the maximum amount of money you pay less taxes for  - in 2016 (related to 2015 IRS) the amount was (per year) 400€ (up to 35 years old), 350€ (35 to 50 years old) and 300€ (more than 50 years old).

4 – after exhausting 3, return to the State bonds of point 2 (or other that give more % of earnings at the time you get to this point) and invest more in there.

Automate this and enjoy your life.

But(!): if the economical situation changes, you will have to take that into account and change some or all the things described above.

Best regards,

Radagast

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Re: How to early retire when you live in a poor country? [PORTUGAL]
« Reply #7 on: October 02, 2016, 05:58:34 PM »
https://www.bogleheads.org/wiki/EU_investing

The Bogleheads site has a wiki for European investors. It doesn't look very useful, except for the list of European domiciled ETF's. Better would be using the forum search function for "Portugal". It looks like there was a similar question a few weeks ago, I'm sure lots more too...

https://www.bogleheads.org/forum/search.php?keywords=Portugal&terms=all&author=&fid%5B%5D=1&fid%5B%5D=10&sc=1&sf=all&sr=posts&sk=t&sd=d&st=0&ch=300&t=0&submit=Search

Cathy

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Re: How to early retire when you live in a poor country? [PORTUGAL]
« Reply #8 on: October 02, 2016, 08:18:19 PM »
I'm surprised no one has explicitly pointed out the obvious (although in fairness, reply #3 above alluded to it), namely: if the circumstances of your current country aren't conducive to amassing wealth and achieving early retirement, your best bet is to move to a more favourable country for that purpose.

The United States is likely the best choice for the accumulation phase because of the unlimited income upside in that country. In contrast, for example, Canada is also a pretty good country (so long as you stay on the Queen's good side), but it's very difficult to earn a high level of income in that country because of a constellation of structural socioeconomic and legal factors. In the USA, if you're willing to put in the work (and not everybody is), you can reach early retirement pretty much as fast as you want, whether that is in five years or in twenty years or somewhere in between. Once you've saved up your stash, you can then move wherever you want for your retirement (although the USA isn't a bad retirement locale either).

European citizens have a fairly straightforward path to the USA (again, if they are willing to put in the work), because there are many companies with offices in both Europe and in the USA and those companies are very happy to do everything in their power to bring high-performing employees to the USA, including providing any necessary training, legal services and sponsorship, and relocation support, subject of course to US law.

arebelspy

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Re: How to early retire when you live in a poor country? [PORTUGAL]
« Reply #9 on: October 03, 2016, 06:19:56 AM »
I'm surprised no one has explicitly pointed out the obvious (although in fairness, reply #3 above alluded to it), namely: if the circumstances of your current country aren't conducive to amassing wealth and achieving early retirement, your best bet is to move to a more favourable country for that purpose.

That would be my second choice.

My first would be online income.

The Internet doesn't care where you're located.  They pay you for content/service/value/etc. that you can provide.  They often pay you in USD.  Obviously Euros are stronger, but the point is the higher salary--getting 50k usd and having it be 44k euros is better than now.

An affiliate program paying you in US dollars (Amazon, for example) doesn't care if you're in the US or Portugal or Timbuktu.   An ad company (Google Ads, for example), ditto.

21k euros per year currently?  It may take a year or two to build up to more than that, so I'd be throwing all my extra time at it while keeping a main job, for a bit, but then start to scale it up and shift to that full time.

But the Internet doesn't care where you're located.  Get paid a good salary by providing value when your location doesn't matter.

That's 100% the first thing I'd do if I were in a country where FIRE was tougher because of low wages.  Second thing I'd try to do would be move, as Cathy suggests.
I am a former teacher who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and am now settled with three kids.
If you want to know more about me, this Business Insider profile tells the story pretty well.
I (rarely) blog at AdventuringAlong.com. Check out the Now page to see what I'm up to currently.

LAdria27

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Re: How to early retire when you live in a poor country? [PORTUGAL]
« Reply #10 on: October 09, 2016, 01:27:57 PM »
I'm surprised no one has explicitly pointed out the obvious (although in fairness, reply #3 above alluded to it), namely: if the circumstances of your current country aren't conducive to amassing wealth and achieving early retirement, your best bet is to move to a more favourable country for that purpose.

That would be my second choice.

My first would be online income.

The Internet doesn't care where you're located.  They pay you for content/service/value/etc. that you can provide.  They often pay you in USD.  Obviously Euros are stronger, but the point is the higher salary--getting 50k usd and having it be 44k euros is better than now.

An affiliate program paying you in US dollars (Amazon, for example) doesn't care if you're in the US or Portugal or Timbuktu.   An ad company (Google Ads, for example), ditto.

21k euros per year currently?  It may take a year or two to build up to more than that, so I'd be throwing all my extra time at it while keeping a main job, for a bit, but then start to scale it up and shift to that full time.

But the Internet doesn't care where you're located.  Get paid a good salary by providing value when your location doesn't matter.

That's 100% the first thing I'd do if I were in a country where FIRE was tougher because of low wages.  Second thing I'd try to do would be move, as Cathy suggests.

Thanks to everyone who tried to help!

I´ve tried the internet (freelance translation) but the field is so hard to get in, that people will always go with people they do know. And some freelancers work at reakly low rates.

"An affiliate program paying you in US dollars (Amazon, for example) doesn't care if you're in the US or Portugal or Timbuktu.   An ad company (Google Ads, for example), ditto."

I´ve tought about it. Could you point me a book or something that could help me getting started? Do you need to start a blog/forum, find a "niche" and then go from there? Thank you.

arebelspy

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Re: How to early retire when you live in a poor country? [PORTUGAL]
« Reply #11 on: October 09, 2016, 06:26:11 PM »
I´ve tried the internet (freelance translation) but the field is so hard to get in

Choose something with a higher barrier to entry then.  Or differentiate yourself in some way--offer it in ways others don't, or can't.

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that people will always go with people they do know.

Initially no one knows anyone on the Internet.  So if they've used someone before, yes, they'll choose them (assuming the work was sufficient).  But if they're a new customer to it, they won't have someone they know.  So that's why you build up a portfolio, reviews, etc.--so they will choose you in that spot.

Getting initial clients is much harder than having existing ones, yes.  But that's where everyone on the Internet starts.

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And some freelancers work at reakly low rates.

This is true.  You need to offer value so you can charge good rates.  Offer things those who can work for super low rates can't offer.  Differentiate yourself and your offerings.

Quote
Quote
"An affiliate program paying you in US dollars (Amazon, for example) doesn't care if you're in the US or Portugal or Timbuktu.   An ad company (Google Ads, for example), ditto."

I´ve tought about it. Could you point me a book or something that could help me getting started? Do you need to start a blog/forum, find a "niche" and then go from there? Thank you.

A blog is one option.  An okay, probably not great, one.

There are many, many ways to make money online.  It depends on what type of scale you're looking for.  1-1?  Mass audience?  What sort of income are you looking for?  What sort of time commitment?  What are your strengths?  What do you know a lot about, or are willing to learn about?

Right now you're thinking somewhat narrowly--I'd start by trying to broaden your vision of what is possible.  :)
I am a former teacher who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and am now settled with three kids.
If you want to know more about me, this Business Insider profile tells the story pretty well.
I (rarely) blog at AdventuringAlong.com. Check out the Now page to see what I'm up to currently.