Millionaire Series: How I Achieved Financial Independence at 37, Chat With Matthias Richter

Yasi: Matthias welcome to Fast track podcast, and then again, in this millionaire series.

Matthias: Thank you Yasi for having me back. I’m very thrilled to be back on your show. Yeah. 

Yasi: Last time we talk about how you achieved financial independence and this time I want to retouch on this topic, but to go back to your early years when you first accumulate 1 million net worth.

So tell the audience at what age did you achieve 1 million networth ? 

Matthias: Maybe, maybe that’s 1 million is a magic figure. You can think of it in us, dollar Swiss, Franc, whatever. I think the Swiss Franc number I should have. Crossed it in early 2013. So I was 34 years old, little bit older than some of the people in this community that can do it before they reach 30.

But yeah, so it was 2013 and I had a system to get there. And then at the end it was just one last transaction that that’s lifted us above that number. 

Yasi: And what are the factors that help you achieve it, for example, like your income or investment or the other factors? 

Matthias: I think if you, if you look at the main factors definitely having a good income was very useful.

But income is only one side of the story. It’s also what you spend and what you keep and what you do with it. I think besides the income, I was very gifted. Having a dad, a fodder that taught me a lot about money. Since I was a kid, I was able to learn from very young age how to deal with money.

I got inspired also by my dad who kind of left the corporate world in his late forties. So I had my father at home and he spent a lot of time teaching certain things about money to us kids. The, the factor besides that probably is also real estate. It’s, it’s investing it’s real estate. High income and the not living above your means. So making something with the money, but not spending or splurging it all away, definitely starting at an early age with all these things. 

Yasi: So it’s a combination of different investment and money habits that you, 

Matthias: I believe so I believe so. Of course my story is just one part.

There’s different stories out there, but I believe if I look at my case, it was awareness first and then later knowing how to, how to deal with money and feel with wealth. 

Yasi: Have you always tracked your net worth since at a young age? Do you always have a goal? 

Matthias: Yeah. Yes, yes. Yes. Well, a goal, a goal.

I started setting goals in the late 1990s. I had a Excel sheet very, very long ago already. I started tracking my first shareholdings when I was 16 years old and was quite a amazing. Like back then. I actually I think I shared in my podcast with you last time, I did much better in the first few years than I ever could imagine.

And then I really fell down because I burned a lot of money later. I got the lucky in a, in a TV game show. I think I also mentioned that in our podcast, which helped me to supercharge. Forward to because I got burned in the first place. I think when, when the money came back again, I knew better how to stay disciplined and how to, how to keep going with that 

Yasi: How to keep the money you earned.

Matthias: Yeah. Yes. Yes. And how to, how to assign the money. I’ve earned the job that it starts working for me. 

Yasi: Since you started paying attention to your net worth at a younger age, what do you think are the other habits that help you stay on track? Like something you mentioned it earlier, but could you elaborate a little bit more on the habits?

Matthias: Well, habits living below your means. That’s probably number one. So by now I was a student. I. I started to earn quite a decent chunk of money already, even before. So I was always, I was a newspaper boy. I was a pizza maker. I, at some points I had three jobs at the same time as I, as I was actually studying at university.

So sometimes I slept maybe four or five hours a day. The habit there was just. No matter what ever comes in. I try to keep my expenses low. So spend only what you really need. And miraculously, I could hold this down until, until my early thirties pretty well. And I was also very lucky. I found my wife in Taiwan who had a very similar mindset and we married early and we both are very aligned on this topic.

So I think that’s helped living below your means means if you first, maybe you’re a student, then you get your first job avoid your lifeline lifestyle inflation. Don’t spend more money just because you earn more money, try to increase the gap because income and spending and whatever the differences there, you try to find a job for this.

That means. Put it to work for you invest that money. Also like having a system, I think in the later stage, having systems helped a lot. So I was a fund account contributor for very long. So I remember when I was 21, I signed up to contribute at least 300 Swiss francs every month at Migros bank for like equity funds.

So every month, this 300 went there. The, after a few months I even made it like a challenge for myself. Can I do 500 this month? Can I do more? I kept track on how much I contributed by the end of my studies. That was another 50,000 to almost 

Yasi: how many years was it? Did it take 

Matthias: that was maybe four or five years.

Yasi: So four or five years you are, you were contributing to the fund consistently every single month. 

Matthias: Yes, yes. Yes. So maybe if you have to 300 per month, that’s 3006 times five, you end up probably. I mean, it’s not even 20,000 altogether, but the, with some extra charges. At the end that it ended up to be almost 50,000 and of course the performance played a role dollar cost averaging played a role.

And I think having a system played the biggest role later in my life when Rita States came into play, I believe the, the big part was once you find real estate I was very strategic about looking. On the map, looking at the city development plans, looking at other things. And we got it very lucky in, in Taiwan where we bought the, our first apartment in 2010, which was just at the end time of the great financial crisis.

So everything was very depressed and we could back then we could even take up a mortgage. And home prices are maybe around 200,000 us dollar equivalent for, for a decent department. And we, we took a mortgage up that actually we paid off within five years. We, we finished paying off the mortgage and the house price afterwards tripled.

So it was a the, the, the house location was good because there were plan to have a, like a subway station nearby. There was a high speed train coming, all these things. And in Singapore we bought another an apartment at the moment where actually there wasn’t 2013. Where they introduced a new rule for, for buyers to actually punish people who have more than one home.

So some people they panicked sold and we picked up our nice flat in Singapore at a discount back then also took up the next mortgage. Also that the mortgage was very stretched and of course the mortgage repayment, if you pay off mortgage every month for such amounts over five, six years, it’s amazing what sums up there at the end.

And that was another like driver leverage. Probably you can include in that having leverage because investing into stocks is one thing, but if you. If you have real estate and you, you are able to take a mortgage, you get the bigger lever on that, right? And then if you do that two or three times in a short period of time, the payoff can be quite tremendous as well.

You don’t have to have a Tesla share or something out or verbally something that boosts you up. It can be very ordinary things as well. 

Yasi: I liked that you live below your means, even though you had a salary increase or even bigger salary, but still managed to save more and then use the money to invest smartly.

That’s that’s a really great learning point from you. And my next question is this is what you did well, and what is the big money mistake that you made in the past? And you learned a lot from it. Do you want to share it with the audience? 

Matthias: Oh, yeah. The big money mistake is probably to get too self-confident.

And that means like, if you, if you feel this is the right way, this is how to do it with a bigger amounts too, to not be too diversified. So that means if on the stock market, my biggest loss was in 2001. When the new economy, boom. Came to an end, if you hold all the shares in the same economy, which is new economy and the whole thing comes down, well, then it’s not diversified.

You see? So it’s, it’s, everything is in one. Kind of assets, baskets you get punished for it and more diversified would have been if you have more traditional businesses in shares, or if you have real state or if you have a business yourself, or if you invest in yourself as a, as a young person as well.

So diversification doesn’t just have to be like diversify in similar shares in the same market. It could also be diversify a little bit further than that. So my biggest mistake is not being diversified enough at an early age. 

Yasi: Yeah. I think when the market is doing well, and then you never think about, maybe it’s too risky to put everything in one basket, but he just, when something bad happens, then you realize that, Oh, you didn’t diversify enough. That’s a great learning point. 

Matthias: Usually, usually some people speak against diversification. They say, if you’ll know what you’re doing, then you don’t have to diversify. But then I, I tend to say diversification to a certain amount is also some kind of insurance, because there are some things you can control, some things you can not control.

And if the things that you cannot control go against you you think you’re that all rights, then it’s still the wrong. And if you, if you have a very successful few months or a years, You, you might get very self-confident and maybe it has nothing to do with how smart you are. It’s simply the markets went up.

It’s a bull market. So no matter what you touch us, it turns into gold

Yasi: I like that expression. 

Matthias: But don’t be fooled by that. Don’t think sorry to take that example now, but don’t think because of Bitcoin go up or don’t think because of Tesla go up or anything go up it’s because you are smart that you make a little bit of money and just be aware of these things. Right. I think at the moment we have seen tremendous run-up in the markets.

Think about what diversifies something, not everything of course. Right. So one way to do it is instead of having 80 or a hundred percent of your portfolio into something, if you can still do the more risky things, but maybe you keep it to a smaller extent. You’ve put maybe 20% of your total wealth into stocks or things that could be very high, volatile volatility and not, not a bigger part of that.

And like this, if, if the situation turns you will not get burned so bad, but if the thing go up, you might still profit, but not to the full extent. So it’s give and take it’s a trade off. 

Yeah, there’s an upside. There’s a downside, but at least you’re protected. Yeah. So just a warning to the audience.

Anything we talk about in this podcast is just an opinion, personal experiences by no means it is a financial advice. 

Okay? 

Past performance is no guarantee for future performance. Yeah. 

Yasi: And that brings to the last question of this episode is what is your next financial goal? 

Matthias: I really love the, the ikigai concept, which means like to live your life around your passions of course can still mean to contribute value to society, to earn some money.

So financial goal is to. To actually earn some passion income to say it like that from projects where I think I can have a positive impact to help others to uplift the orders. So one thing is for, for you, if you don’t know it yet, Yasi, me, we are working on the money course. Yasi will definitely we’ll include that in the, in the show links.

The things like that, working on projects that I believe I can impact people in a, in a positive way to make more of their lives. Also extending my existing wealth. To an extent where you can call it generational wealth. I think that’s a generational wealth is something that lasts more than one generation.

So not that I want to spoil my kids with that in a way, but to build something up that kind of lasts a little bit longer, that could be the business that can survive, or it could be that the wealth is arranged. And of course, financial literacy teaching my kids to, to know how to handle things. That’s. I loved of wealthy people forget about that part.

They worked so hard on their business, on their money and the one day they pass away, their kids will be very wealthy because they inherited, but they don’t know what to do with the leftovers. And then in Chinese to have a saying that wealth doesn’t last, or it doesn’t survive for more than three generations.

 I want to avoid that. Of course, a lot of people have tried before, but that’s, that’s maybe my financial coach goal there. The, the, the third point. Less financial, but also like life design a way I want to live my life in a way. That people like my kids, when they see me living my life, that they are inspired to live a passionate and productive life of my own design that the financially can be sufficient for the family to do well, like an inspiration for them.

Yasi: It reminds me of the story you mentioned earlier, and also in your blog posts that how your dad taught you financial literacy. And then you, you can also pass this to your children. Even beyond that. It’s, it’s a, such a. I would say such a privilege as a young kid to learn that directly from the parents, but as a grownups, if people do not have the opportunity, I think we can always learn from, you know, online courses from listening to podcasts and reading books.

So. Yeah, great. I like the educational part. 

Matthias: For kids. I just feel kids. They look at how you live your life and then they, they don’t, they may listen to what you say, but if you live your best example, they, they will, they will have it. Yeah. They see it seeing is believing, walking the talk.

Right. And if you’re a parent and you keep talking about do this or do that, but you yourself do the opposite. Let’s say you, you always look at your phone or you do this teach your kids not to look at the phone. Then it will not get the job done. So you have to, you have to be an example, a role model for them to look up to with that. That’s that’s the goal.

Yasi: It’s great. I like it. And thank you very much for being part of this series and nice to have you again, and I will leave. Yeah, I, I will leave some of the links in the show notes that if people, if it is the first time they, they hear about you and then they can visit you, your blog, your website, and also for the audience out there who want to understand how to improve your personal financial situation and learning from your past 20 years experiences.

And then they can also sign up for the fast track money course. 

Matthias: Thank you so much Yasi.