Well, this is it, folks. For the first time since I started tracking my wealth towards the specific goal of Financial Independence, it appears I’ve reached my destination: I’m KoFI (Kind of Financially Independent).
My definition of KoFI is that I don’t need my 9 to 5 job anymore, but I still rely on my side gig to provide a significant share of our annual expenses. Give or take, my side business (a blog – not this one) will generate approximately 40% of our needs, in my plans. In practice, it’s been generating more than that for about 2 years now, but I have a bit of a safety margin in my goals.
Ultimately, I want to reach full Financial Independence: the point were all our expenses are covered by passive income (investment in ETFs). Once I reach that point, I’ll be able to keep working on the side gig, or drop it, or maybe keep it going for free by removing its dependency to online advertising. Who knows how I’ll think about it once I reach that step, but the point is that I’ll have the flexibility.
For now though, I’m KoFI. I don’t need no stinkin’ job*, and it feels pretty awesome. I already feel a bit more empowered to refuse tasks I would not like to work on. Feels great.
Line in blue: My target. In purple, passive money generated by investments, and in green, the money generated by my side gig. (all of these are in Japanese YEN. My wealth in USD has actually been stagnating over the past 3 months) I’m KoFI!
So, wait, last time I talked about my wealth, I was 83% there. How did I increase my wealth by more than 20% in 2 months? Am I a genius investor, who predicted how the market would react after Trump’s election? I wish. The reality is, I did nothing, and, like the rest of the world, I was actually convinced Clinton would win. If anything, this election has confirmed that people who dedicate their life predicting the market add absolutely no value to the world. Something that you, the people reading blogs like mine, already know.
My wealth, in dollars, actually did not see much of the so-called “trump rally”. I have a bias in technology stocks due to some of my earlier decisions (when I thought stock picking was the right way to do it), and those got initially hammered. Plus I do have significant international investments in some of my ETFs, so, although my US-based stock did well overall, pretty much everything else went down over the past few months. Actually, if it weren’t for my savings rate of 60%, my wealth would probably have gone down in dollars over the past few months.
But more than the Trump rally, it’s the crazy decline of the Japanese Yen that put me in a great position: since I intend to move back to Japan, my target is in Japanese yen, but most of my investments are in dollars. A strong dollar against the yen catapulted my wealth by a crazy amount last month. The yen is down more than 10% over the past 2 months.
I try to stay realistic: I was roughly in a similar position last year, close to reaching financial independence when the dollar was getting close to 130 Yen. At that time, as can seen on the graph above, I was 97% there. The difference here is that in one year I have accumulated wealth: I am now KoFi as long as the dollar stays above 114 Yen. Nice progress, and I’ve seen than the 100 Yen limit acts as a very powerful psychological support for USDJPY.
So, now I’m KoFI. Does this change any of my plans?
No. I did not expect to reach KoFI so early, but I was still expecting to reach that state sometimes in 2017. No changes in the plan for us: we are staying in the US until mid 2017 and I will keep my job here (Note: I have to, otherwise in theory we have 15 days to leave the country due to how my Visa works), to then look for a position within my company, in Tokyo. My expectation is to find something relatively easily and move to Tokyo in June. Our 3rd kid will be born in March and I should be able to take some good parental leave around that time, which should give me some time to look for teams in Tokyo. Worst case scenario, I could leave the company and maybe contact some recruiters.
From that point, I intend to keep working an additional year at least (maybe 2), in Japan. The goal here is twofold: 1) to accumulate a bit of a security buffer in terms of wealth, to compensate for potential forex risks, and 2) to have a “respectable” position in society (an actual job) while we look for a place to buy: I’ll want to secure a mortgage, and this won’t be possible without a job. I could probably buy a house cash, but this wouldn’t be the smart move given the low interest rates for housing loans in Japan.
Anyway, today’s a good time to celebrate: the stars aligned, and my first day of KoFI happens in the middle of the holiday season and right before my 35th birthday, which is pretty awesome from all points of view.
And yes, there’s of course a strong possibility that I’ll go below the target again as the market and JPY fluctuate. Hey, this will give me more reasons to celebrate again and talk about it when I cross the line again 😉
* Not totally true: my Visa is tied to my job. If I quit or get fired, my family and I have 15 days to leave the country, which would be a pain. I’d rather have my company relocate me, according to plan