Ladies and gentlemen,
I have been a self-employed entrepreneur for more than 15 years, have founded two companies, sold one of them (but didn't even come close to getting rich with it), and I still earn my living with the first one.
An interesting interjection: I was employed for almost 20 years before becoming self-employed. It would never have occurred to me to start my own business. Even when my business had already started, it never occurred to me to turn my hobby project into a full-time job and quit my job.
Instead, I was - quite unexpectedly - fired. I was practically "forced" into self-employment, if you like. Somehow I'm even grateful to the company at the time for kicking me out.
However, that's another story.
My small company will be crushed by AI in the medium term, and even if it were theoretically possible to adapt the business model to AI ("howling with the wolves"), I don't want to for personal reasons. One of them is, I openly admit: I don't feel like it anymore. I don't want to pull up any more platforms. I've done it twice, I've had enough. "I'm too old for this..." What's more, I wouldn't like the modified business model.
In three to five years, possibly sooner, possibly later, it's really hard to say, profits will plummet by 75% (and possibly more). The business would remain profitable even on a very low flame, but 10,000 - 20,000 euros a month in savings would then become 1,000 euros with luck, or 0 euros with bad luck.
So what is the strategy of someone in their mid-fifties who, after 40 years of work (I started earning money at the age of 14, alongside school in my youth), wants to slowly say goodbye to retirement, let's say at 60 at the very latest?
Goal: Ideally, I want around 100,000 euros in passive income (after tax) - bang!
I'm fully aware that this is a lot of money, but I haven't spent decades working so that I'll have to cut back in old age, on the contrary: I want to enjoy working only when I want to (and I will want to, I already know that. But it will probably be more of a hobby than a source of profit).
So 100,000 euros. How can I manage that?
Component 1: Dividends. I still have 5 years to adjust my portfolio in terms of dividends. If I were to switch my NVIDIA position into corresponding dividend stocks today (like $HAFNIfor example), then the target amount might even be reached. For various reasons, however, this is probably not a very intelligent strategy. I would like to invest a further 500,000 euros over the next five years (I hope the business will still allow for this) and thus create a portfolio of at least 2 million euros. My PF is currently hovering around 800-900K. Another 500K investment by 2030 - the 2 million at the end of the decade should be possible, even with a conservative approach. EDIT: This will only work if I also reinvest the dividends for the years 2025-2029 (otherwise an average return of 13% would be required - too ambitious!).
If the vast majority of the stocks in my PF are dividend stocks by then and I achieve a dividend yield of 5%, that would already be EUR 100,000, on which 25% tax will of course still be payable, leaving EUR 75,000.
Component 2: Real estate. I own just under a handful of apartments. And by "belong to me" I actually mean that most of them still "belong" to the bank, and that will remain the case for a long time to come. But they are all in very good locations, and I expect them to increase in value, even if I don't want to be dependent on them.
The apartments are largely self-supporting; with interest and other depreciation, the loss is of course blatant, but that's what we want because it reduces the tax burden. From 2030, however, when the majority of income comes from dividends, this game will no longer work, because then I may not have sufficient income from self-employment, the tax burden of which I try to reduce through depreciation. The tax savings will therefore evaporate and the apartments will have to pay for themselves completely. I am more than confident that they will do so. Rents will continue to rise in the future, property prices will at least remain stable. With falling interest rates (as we are currently seeing), property prices should even rise again. Ultimately, passive rental income should generate a surplus of 30,000 euros by 2030.
So then we would have:
Income from dividends: 75,000 euros (net)
Income from letting/leasing: approx. 25,000 euros (net)
That brings us to the desired 100,000 euros, and life is good. Oh yes: a few years later I'll get a pension - it'll probably be around 1,200 - 1,400 euros - hooray!
Where are the risks?
I think that my view of things is conservative, as described above, but there are still risks:
Bad timing: It cannot be ruled out that at the very moment my business goes completely down the drain, an economic crisis occurs at the same time, which halves my portfolio. My business and the global economy are not closely related, but let's just assume the worst.
If I had no income at all overnight, I would probably be forced to part with a property unless I wanted to restrict my lifestyle, and I already know that I definitely *don't* want to do that. I would want to protect the portfolio at all costs, so I wouldn't think about selling here. Selling an apartment would certainly put me in a position to hold out for two or three years without having to resort to PF.
And this dark vision also assumes that I won't earn a penny from other things. However, I do have a very lucrative hobby that currently brings me a profit of around 20,000 euros a year. It will stay that way for a few more years.
And finally: I'm married and my wife also earns well.
So I hope the risk is manageable (if we ignore wars and other disasters).
What would be the ideal outcome?
My wife and I stay healthy and fit into old age, live on passive income, simply let the portfolio run its course and leave it to our children at the end (or give it away beforehand, but use usufruct - for the sake of inheritance tax). And if the kids have learned even a little something from their old man by then, that should put their existence, including their own family, on a rock-solid footing.
So much for my plan for the end of the journey, when I can say goodbye with the last words:
"My job is done here. I love you all."
