What to do with money

[richiespqr]

Aoa. I don’t know what to do based on my current situation. I have around 1,000 in savings. I’m 22 years old, south Asian and don’t plan to move out anytime soon. I am also studying in uni. I have 2 years left. I’m making minimum wage in Canada working 8 hours per day for 3 days only. In our culture we live with our parents. Anyways, I would decide to move out after I’m married. Which would be by 23 or 24. What to do for my current situation. Let’s say I’m applying FIRE. I want to retire by 30. Just so I have a backup, if I decide to stop working. How to structure this?. Based on my future expenses or no expenses living with my parents.is it wise to do purchases based on short term goals or only long term goals like retirement?. How does that work?. Let’s say I need the money for a short term purchase, there is always a risk it doesn’t work out. Plus I can’t find any options for a halal money market fund on Wealthsimple. Any formula I should apply for fire in my situation?. Or can be applied to any situation?.

Update : I meant like how much should I have saved up by 30?. Assume I’m living with my parents for 10+ years or even longer. I know retiring by 30 would be impossible. But based on my situation, should I have done it based on future expenses?. How?. Can someone give an example?. This is assuming I had enough money to live off my investments.

 

[reirei]

@richiespqr Retire by 30? Unless you’re making an inordinate amount of money it’s not likely mate, even if ur making into the 100,000s. It will take you many many years and decades to be able to retire comfortably.

 

[resjudicata]

@richiespqr Retire at 30 is very unrealistic. There’s a chance that you can be making a sufficient income source from home but still this requires some sort of work unless you’re EXTREMELY lucky. 1000 in savings will not do you justice. I say improve your income, improve your savings account and study into stock options. For a job I recommend sales. If you know how to speak to people and can deal with a stretch of lots of learning you can end up making 100,000 a year easy. It’s all commission though, skill based.

 

[resjudicata]

Also brother forgot to mention, you can save your money into more and invest in a business.

 

[rhs]

@richiespqr I'm not directly answering your question but I would suggest in your position right now to focus on:
1) Accumulating an emergency fund (3-6 months worth of expenses)
2) Investing the rest

Arguably the best investment for a young person is themselves. Invest in your self development that raises your earning potential (via an employed job or through earning money yourself via entreprenuership).

The quicker you develop your earning potential, the more you can save and potentially invest bringing you closer to FIRE iA.

As for FIRE, I wrote an article on FIRE from a Muslim perspective here that hopefully is of benefit: https://blog.zoya.finance/a-muslims...ancially-independent-and-retiring-early-fire/

 

[richiespqr]

@rhs But for my case, an emergency fund is not really an emergency. How much do I really need to accumulate?. Do it based on future earnings potential?.

 

[richiespqr]

But that is unknown

 

[rhs]

@richiespqr In the article, I give a framework for calculating how big your investment pot should be:

"The goal is to eventually amass a large enough investment pot where the returns can cover your living expenses. A rule of thumb is to accumulate total investments of approximately 25 times your expected expenses.

This threshold works by assuming a 4% safe withdrawal rate. The safe withdrawal rate is the maximum amount you can withdraw from your savings so that you don't run out in your lifetime"

The assumptions that underpin this 25 times your expected expenses are explained in the article. I would add that retirement planning is naturally very fluid as the future is unknown so I wouldn't worry about specifics but just set a target for now and start working towards it.

You can of course revise your targets as time goes on and you acquire new information.

 

[richiespqr]

@rhs That doesn’t take into account zakat right ?

 

[rhs]

@richiespqr Nope but I addressed this in the comments of the article:
"Practically, most Muslims will have to have a larger withdrawal rate to cover their zakat obligations. To compensate, Muslims would need to accrue a larger pot or achieve a higher rate of return on their investments.

We also need to factor in the differing zakat rates on different types of investments to get a better idea of what our zakat contribution is likely to be.
For example, in the UK where I’m based, the National Zakat foundation holds that for investors that buy shares to achieve a dividend, zakat would only be liable on the underlying zakaatable assets of that company. Their research has found that a suitable proxy for the FTSE 100 was a zakaatable rate of 25% of the market value. So in practice, you would pay 2.5% on that 25%, which amounts to 0.625% of your overall investment."

 

[jonesedwardk]

@richiespqr There are funds on WS, but they may not give the best returns.

 

[malik]

@richiespqr I think you're being naive - hardly anyone retires at 30 and that is such a young age for you to retire and not work for the remainder of your life. Also, how do you know you'll get married at such an age?

 

[resjudicata]

@richiespqr I think you may find this flowchart helpful. Although it is UK specific, the general principals should still be applicable. If you do an internet search, you may find something which fits your situation.

Edit: Also search this sub as there has been discussions on FIRE which you may also find helpful.

Edit: Forgot to include link!

https://flowchart.ukpersonal.finance/

 

[jiokee]

@richiespqr Buy memberships of halal marriage websites. Marry an older rich lady and retire by 30. Thats your bet with 1000.