The origin of the word Viking is not, as we may think, one of pale, blonde pirates with big swords who killed his/her way across the continent. Back during what we (in Scandi) refer to as the “viking age”, -c 700 A.D until 1100 A.D, the word Viking was used as a verb to describe someone who left his/her lands and explored other areas further away from home. The exploration was not necessarily accompanied by the picture we have today of such viking raids. The later imputed violence, robbery and blood-thirstiness is something that has been added to the word in later folklore. Surely, there were Viking expeditions of that precise kind, but the word was just as often used when venturing abroad to trade and sell copper, iron or other goods in a normal, peaceful manner.
To “go on viking” would have its closes resemblance with a combination of words that we today use for “explore”, “travel”, “adventure”, and “abroad”.
I like to think of my FIRE journey as a Viking journey of such.
What is your idea of Viking?
Current student debt: 42909 USD
Yes, I live in a country where university is free. Yes, considering my student debt this number is a bit frightening. Tuition is free, but you have to cover housing, food, transportation etc. meanwhile the government offers wonderful student loans to a very, very reasonable interest rate.
At this point I could have paid off my debt a while back instead of investing that money. However, the interest rate for all government funded student loans is currently at 0,34%. This means that it is actually better to keep your earned money and invest in the stock-market instead to pay the interest rate of by the dividends; while paying the minimum amount back to the government.
Every cent of our debt is currently invested in a high-yielding index fund, regenerating its value over and over. If you are interested in our approach; check out my blog postThe Leprechaun that will never die.
This is one of the reasons I love comparing financial strategies across countries. In other countries it would have been daunting to just leave this debt be while having enough funds to pay it off, whereas here, it is definitely better to keep this debt invested for as long as I can. Check out the comparison of the different student debts between US and the rest of the World; CollegeCosts. I am staying in debt and moving our money around in a few quite branch specific index funds, and I am also happily paying in the 0,34% along with the circa 100 bucks a month I am required to pay back.
What is it like where you are from?
The journey for financial independence and the naming of a pile of money
If our yearly costs and taxes (capital, property tax etc.) is defined as X then X = The sum we need yielded as dividends each year. This is really the definition of financial independence.
For whatever reason we decided to name this pile of money, and for even more unclear reasons we decided to name it The Leprechaun. This is not from some weird fantasy or fairy tale, we just named it out of the blue. This is because we need some named-entity to name the adventure. As having a certain amount of money in an bank account is an end-goal, but the journey and the challenge that comes with it. Just imagining the opportunities when becoming financially independent is scary as well as the choices we have to make their is also part of it.
So, the Leprechaun need to have an expected dividends yield totaling our combined costs and taxes.
On average, Swedish stocks will return about 4% of share value in dividends each year, so it is fairly realistic to assume the Leprechaun will need to be X/0,04 (plus some semi-horrific tax calculations on top of this). For you whom have already created this leprechaun of joy, why not start living the financial freedom and put the money in some of the companies listed as Swedish companies with best dividends.
This way, the growth of the portfolio (sorry, the Leprechaun) will be able to match/outgrow that of the expected inflation, creating a Leprechaun that will never die, as I triumphantly pointed out after having finished our excel spreadsheet with our strategy on.
This strategy in itself is fairly standard as posted Financial Independence: My investment strategy in 4 easy steps. There is absolutely nothing in it that I would assume not almost every FIRE-advocate follows. The main differentiator for us is that there are quite a few implications related to taxation in here (as well as the benefits of a welfare state and never having to pay for health instance for instance). I will dig in to our specific financials in the posts to come.
Financial Independence can mean many things, – and it is a term that is easily floated around in relation to people like Silicon Valleyers that just sold their mediocre app to Microsoft and cashed in 8-digit-something in return, or obscure venture capitalist firms that happens get it right and cash in in the big bucks, right before the ship sails for everyone else. See But why? It’s not like it is that simple?
In the later years, Financial Independence is assumed to be something you will stumble upon with sheer luck. You happened to hit the right thing,right before everyone else did. This is true wether you are investing in companies, or building them. And if you like me, live in a country with very heavy taxation, will have to hand over this independence to the state right away in form of taxation, being left with some bones of the originally earned wealth to gnaw on.
This is not true.
It is possible for anyone to save up enough wealth and live on the returns of them, even in a tax heavy country like Sweden. This blog will be a living testament to how that can be done.