The financialportfol.io calculator is a guide that helps you to evaluate your progress towards becoming financially independent.
Financial independence means the ability to live off the return generated from your asset base.
The net assets needed to become financially independent vary from person to person. The calculator helps you to forecast that number based on your current status quo and your assumptions about the future:
The current net assets are your starting point. Add up all your income-producing assets as of today and deduct any outstanding loans. The current net assets start producing income from day one and therefore give you a head start in compounding interest.
The net income yearly represents your regular income net of tax and other cost related to that income. Take an educatd guess about your average future income up to the forecasted retirement date including possible pay raises or other volatilites that might arise in your profession.
The spending yearly serves as a proxy for your general lifestyle. Estimate a realistic average of your current expenses, your spending level up to retirement and beyond. This amount of expenses will be assumed to be at your disposal every year once you have reached financial independence.
The rate of return is the net return you can generate in terms of your preferences, your knowledge, skills and risk tolerance. Estimate your average return based on your asset allocation. Learn about passive and active investing to increase your rewards and decrease your risk.
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