My Financial Independence Journey

Yasi: Mathias is a it management consultant and a member of financial independence community.

He lives with his wife and two kids in Cologne, in Germany. So since to the 2018, he’s running the financial independence, so FI Europe podcast and the cashflow game community in Cologne. And in his podcast, he interviewed a lot of people and talking about the financial independence and retire early. And in this episode, I’m going to ask him how he started getting interested in financial independence and retire early, this topic and why he started this community and what his money philosophy, what his investment philosophy and shared his personal experience with you. So you can also benefit from his learnings. So welcome to Fast Track podcast Mathias.

Mathias: Hi Yasi, glad to be here.

Yasi: You’re also a podcaster and, I think I listened to a few episodes in the past and what I like about it is like, you literally interview people from different parts in Europe and, you know, they, share their own stories. And today I’m so glad to have you come here to our show. So let me start with the first question.

We all know that, you know, financial literacy was not taught in school and where did you learn personal finance? How did you get interested in this topic?

Mathias: Yeah, first of all, it’s a cool feeling to be on the other side of the microphone. So I have a bit, a little bit of anxiety, but anyway, yeah, I started already in school, I think even before school, I had way too many Dagoberto comics.

You know, this stock from Disney, that has a lot of money, but, and then in school, I also was interested. I can remember that in the English, german lessons. People were talking about stuff and I just had economics, part of the, of the newspaper, where I just was reading about stocks and the companies.

And I was totally interested in this, what, in the nineties, it was really cool to media industry. So it was really evolving from just having two channels to search channels. You have paid TV and so on. So I was interested in that industry and also a fan of some, of the companies instead of having being fan of a football.

Yeah, my football teams, and yeah, then I also got two stocks later in when I was studied. I got two stocks from my parents because they made a loss on it, uh, because they bought it at the wrong time. They bought it at the year 2000, 2001. And uh, they said, okay, this is not worth anything. I can give it to my son.

And then I was doing my studies, I was just researching these stocks if I could sell them. And, and when, and then I also came across other stocks and yeah, I dig really deep. And I think many people, especially in their late twenties, middle of the 22nd, realizes that they start about digging into finance and then they read this whole, I would call it stock pawn.

So like a small article it’s about, this is a good stock.  If you will be a millionaire with that stock. So the whole clickbait article, so I read all of those and went to a lot of, portals, finance portals it’s called at the time. And then I also made some purchases of stocks. Often not the best decision, but maybe we can talk about that later.

And yeah, I also then went, at my first job, got also fired, uh, during the financial crisis. Um, and then I started with crowdfunding because that was a time when there was a web two O and digital startups. There were a lot of digital startups and they raise these new equity crowd funding companies, and they just jumped, uh, or invested in some of those 2012, 2013.

And, also exited some of them. And I invested in a couple of companies. And then, later on I, I found it to fine tech meetup because I found this whole fine tech companies I found really cool that they finally solve the problem and that. So, I mean, earlier you had these investment funds, you could invest in insurance policies that had a lot of fees and so on.

And I found really fascinating that these fine tech companies really solving the problem that I care about that. You, that’s a finance industry, it’s not a catering, they are the customers. And yeah, and then I also discovered this fine tech uh, topic. I also had a project or mini startup with a friend, for aggregation of, uh, multiple portfolios so that you know, what the performance is, but that failed.

But, I kept doing that fine tech meetup and also founded another meetup because I learned how to do a meetup. So that’s why I just skated this. I haven’t had any heading a cash flow meetup in Cologne and Berlin, and Diseldorf, and we now he branded it to retire, to freedom, meet up. So it’s still active meetup in Berlin.

It’s really cool people from all of us word I meet in Berlin and also in Cologne, we have a great community of people who just are looking for peers. And I think that is very important. Maybe one of my key takeaway to sort of surround you with people that have this a score. That you, you know, you think it’s just normal to aim for financial freedom and also to build your, your wealth and not hanging out so much with people who only find reason not to do so.

And that’s why I also founded this or head to our flagship events, if a Europe retreats, or it was also a surf camp at the beginning of 2017, 19. And also now in this may you have also for Europe retreat in Spain. We just meet with really ambitious people, at the pool having a nice time, some wine, some workshops and learn about finance, yeah.

From other people. So I think that’s really also key to just grab a few people who have the same interest and passion. Yeah.

Yasi: I like what you talk about. Like you liked to hang out with people who probably share the same philosophy or retire to freedom, right. And then not to be convinced by other people that think, oh, it’s achievable.

It’s a dream. It’s not realistic. I think that’s the whole beauty of finding your own tribe. And then you started this Facebook group there. You know, people interested in achieving financial independence can join the Facebook group. Later we will talk more about that. And you share with us your whole journey.

Your career was how you started with us studying the two stocks your parents give to you so funny because they’re not making money from it, so, okay. Let’s just dump it to my son, but that’s an interesting story right now. Did you see the difference? How you manage money? Like your family budgets, your investment versus before.

Well, just more or less the same.

Mathias: I would say I’m more, uh, I take more risks than my family I mean, my parents, I had also grew up in a different time. So you could put money on the bank account and get interest, not on it. That is not the case. I mean, they had like times per they got 7% on savings and this is not possible.

So you have to take more risks sometimes, uh, these days. And as I’m also more curious about new trends and new stuff, I also tend to experiment with new strategies and asset classes. So I think I’m kind of different and say more, play it. Although I’m getting older and now also looking to, reallocate and more conservative, like conservative portfolios, especially these days.

Where are the conservatives stocks are cheap, basically.

Yasi: So, what is your investment strategy that let’s just say, this is not financial advice, right? We just like share your personal, uh, your decisions or how you allocate your investments just for reference. Yeah.

Mathias: Investments strategy is to, uh, at least I have also a portion where I can experiment because I like it just trying new things.

Anyway, so the most, I would say I have some, most of my money in stocks and then I have,  like another, let’s say 30% or even more than 30%, then I have some crypto, and some, more risk, risky things like derivatives and, peer to peer lending and some startup shares also.

And then I have to take into each of these, pieces of the pie to the sub-strategies. For example, in stocks, I have my own draft, uh, portfolio. That’s what I manage myself mostly. And then I have also more conservative parts where I have a value and quality focused portfolio. Um, yeah. So, and because I can not kind of do everything because I have other things to do.

I also use ready-made strategies. For example, if you buy an ETF, that is a strategy where you can have a certificate. Yeah, as it replicates a certain strategy, or you can also just buy a newsletter from any wealth manager or publisher that is also taking care of for a certain, investment strategy. And I see myself more like the portfolio manager who was managing these strategies and maybe switching them and also reallocating the money depending on the market situation.

Yasi: Yeah. And we know that like in the US, the financial independence or retire early community, the most popular one is ETF S&P 500 or total world. Why did not, why did you not choose to, you know, just opt for simple ETF rather with different asset class?

Mathias: Um, personally, I have a, I have a lot of fun to pick stocks, because, uh, they have also been there like ETFs haven’t been around all the time, so I just started to, yeah.

So it’s, I got used to it. I also have some, some ETFs, for example, the S&P 500, or also an ETF where I invest in the market, except the study industries, like oil and so on. But in general, I think I have fun, uh, screening stocks. I have fun understanding the business model. So it also helps me in my day job, to do that research.

It’s not, for me, it’s really a relaxing activity to, uh, read some investment reports and, and quarter results. And, um, yeah, and sometimes, I mean, there are people also who are uh, able to, beat the market. But I also know that it’s unlikely for me to do so, but I’m happy if I can beat the market. And if I want to make more money, I have like the smaller portions of my portfolio with derivative strategies that were at least,

based on my research. Um, I can make more percent than seven to 8% I get in ETF. So I have some smaller portions of my portfolio where I can just make more money. And, and also, one thing to the ETS, especially now,  you have some market risk. If the market is down the whole ETF, is down but if you, for example, have an ETF and combine it with really boring military or food stocks, or, uh, like Nestle then you, you, you don’t have these, uh, big drawdowns that you have.

Because usually when there’s a crisis, uh, people try to put their money into value stocks. Because that fulfill the basic needs of the people like food industry and so on. Yeah.

Yasi: Right. So, yeah. So you’ll have your ETF investment, but because you, you enjoy understand the business model and you enjoy spending your time studying different stocks and companies.

So you also combine those strategies to investment that’s interesting. Um, then coming back to the basics, how would you view, if it’s something worth you to spend money on or not? Why I asked this question, because I know there are some people in the fire community, right? They, they have like strict budget, but some people they do not.

So I just wondering how, how you view your own budget?

Mathias: My money philosophy is don’t spend on the essential, but spent on the super fuse or at least it’s a non essential. So basically I don’t spend, I have really old, uh, jeans and I have, I don’t spend so much on a new fridge.

So I really use the old one a long time and spend more on things that make me kind of happy. My basic values are groves. They are excellent sense being creative and curious. And that’s why I like to spend on that. Like, having, a trip with friends or like-minded people, or for example, buying a book, buying a new web tool uh, that makes my needs, to my, to my hobbies and interests. Um, yeah. And also spending in experience. So that’s, for example, we also have, even, we have, even if you won’t believe it, we rent a car for one year because we, uh, we had to, we had booked a lot of cars, uh, during Corona and now we really enjoy to stay in the nature.

So. Um, we just booked to car to go more, for camping to visit also friends and not so big cities and just, we have also this app called commode where you can, you find hiking passes, around cities that you don’t know. And that’s why we, I spent on that also. We don’t need, we actually really don’t need a car.

I can really walk everywhere. So yeah. So yeah, spend on things that aren’t frugal.

Yasi: Not spending too much on the essentials first, uh, spent on the non essentials, which brings you happiness, all fulfills make you feel like there’s quality of life or what you enjoy doing. That’s interesting because recently I was browsing through a lot of furnitures because we are going to move soon.

I felt okay, oh, this sofa I’m going to have it for 10 years. I need to find a good quality sofa or replace my current one I just have those ideas, how to put up together, uh, interior stuff. Um, but then this is interesting, like do not spend, on essentials.

Mathias: Uh, I mean, I also spent, for example, furniture, usually I don’t spend so much on it, but sometimes I also really spent.

It’s not, then it becomes my hobby. So I’m really curious in interior design and then I’m really, then I also spend on it, but usually I don’t have to design to no time to,  think about it. Then I go for the cheap one or I’ll just leave it as this. And then recently we also have been on YouTube and the TV was a movie called Venter. .

So I think two million people or more have watched it. And there I spent 10 K on my kids room because we had the ability that was a chance to stay in our flat, having an additional room for, for my home studio or home office. And also then we had idea, okay, how can we stay in here? And the flat was two kids and we just had some,  designer helping us to, uh, utilize the space we have, uh, by putting the kids.

On to each other. So in every really nice,

and then by that, I mean it cost 10 K, but in the end, uh, the business case, I think this month, or next month we are break, even visit decision because we saved so much in rent because we don’t, hadn’t had not to move into a bigger flat was like four rooms. We have just three, three room flat was four rooms now.

Yasi: And this Rente mit 40, so for those who don’t understand germane means like, uh, retire at 40, right? Yeah. So tell us about, uh, about this program. Or tell us a little bit about, you know, what’s your plan retire at 40.

Mathias: I would give me a, give myself time onto 45, I would say extending it a bit. Um, I’m I think. I have made a good progress. I think it’s, uh, especially what helped me is in the beginning of, of when I was young, I saved a lot. And also when studying than I had in the middle or end of the twenties, I spent a lot of money for concert tickets and drinks.

And then I got back to saving basically. And then I think the last year, the growth my portfolio accelerated also,  and that’s why I would consider myself on a, uh, on a good track, but I also don’t have the feelings that I have to drop out of workforce, now right now. So I could also just decide if I want not to work for a year or two, that would not be a problem, but I also, uh, what should I do?

You know? Um, so basically I also like to work. I like my, my, uh, my hobbies, and I don’t feel such a rush. ’cause I don’t, I don’t want to travel the world for the next 10 years. I don’t want to sit at the beach. So basically I don’t mind, I’m also working.

Yasi: But also have the option if you choose not to work. Yeah.

Mathias: So the next step would be then being barista. I really like, I think working part-time is one of the goals as it’s really. A goal that I can spend more time as a kids and also having a smaller, a hobby or can, can basically work for two things. That is interesting to me. Um, yeah. And maybe we also need a bigger flat, so I would not rule out if you need to be dropping out of the workforce right now.

I think it’s not a smart decision. If you want, you might want to spend more money on a great apartment in one of the major cities, because I don’t want to, I want to stay and want to stay in a smaller city or in the countryside. It’s not my cup of tea.

Yasi: Okay. It’s funny. I’m here. I’m living in the countryside. And at the beginning, I was not used to it moving from Singapore to like Switzerland, it’s already quite some a shock. And then maybe a village was like 2000 to 3000 people.

Mathias: Two to 3000 people, but I think it’s, it’s kind of different people in Switzerland see two to 3000 people .

I don’t know. I don’t know what, what type of people are living in your neighborhood?

Yasi: What type of people like normal? People from Switzerland, some foreigners.

Mathias: So it’s a good community that you have chosen basically.

Yasi: Yeah, I think it’s nice here. Yeah. Are you, are you referring to like a different generation demographic?

Mathias: Uh, yeah. I think you can have different demography. I think in, in the biggest cities. Much easier to just go. If, for example, you, you stop working at six o’clock or seven o’clock and then maybe you want to talk about metaverse for somebody having a beer, talk about metaverse and it’s much easier to do that in a city.

Uh, because you find people that actually aren’t interested in it and you are back home, like in 50 minutes, you only, yeah.

Yasi: That I agree that I agree, but you know, I think I wouldn’t be able to adjust to this lifestyle if not, because of COVID. So there’s a lockdown, then we have to, if we go out, then we go back.

There’s a hiking routes. Basically all the bars and restaurants are closed and they’re coming back on you know how you, manage your money, how you invest. And if I were to ask you right now, you are in your thirties or early forties.

Mathias: I would say in the late, late thirties, unfortunately. So I’m just waiting for getting bored and so on.

Yasi: Coming back, like if you were in your twenties now, what would you tell the younger Mathias? What would you tell him? Not to do all the mistakes to avoid?

I would say also being a bit more straight forward in, in, in career. So, figuring out faster where, what you’re good at, basically. So, and then progressing there in that career paths and really try to

uh, if you, if you know that you’re in a, in a job where there is no progress, any more than you should adjust there faster.

So why it’s important to?

Mathias: Yes, because you can increase your salary and by increasing your salary, you can increase your options and your investing. And also you get more, responsibility and higher, I would say.

Yeah, higher value tasks, but that’s, I mean, What people think that is high value, you know, but you get more responsibility. I mean, I have, I haven’t had a couple of years, I had not met, made such a fast progress, but I think that was okay because we got, our first child. So it was okay.

Having a job, not to travel so much and being at home at six o’clock.  Yeah, so that it had. Yeah. That’s one idea. Another idea of cost is, of course, is to choose. I think you have to choose in the beginning. I mean, many people study also social science and things that are not well paid or I’m entering companies that, are not, yeah, in, in a good.

A good industry to start. I think choosing a industry where there’s the money and where there is a progress and that shapes the world, like currently it would be meta verse logist, maybe also logistics, and industries or biotech biotech. So the industries that aren’t focused for the next 10 to 15 years say I would.

Put my focus on and not starting in some way we as a can’t win anything because everybody is in cost cutting mode.

Yasi: Yeah. So to increase your human capital and then to increase your earning power. So that speed up the actually financial independence time to finish achieving financial independence. And then now.

Uh, you are you late thirties, you aim like mid forties to have the option to retire or half retire. Uh, can you share with us or help our audience to understand this concept? Like how can someone to retire early? Because in their mind, in a lot of people mind, they need to have a lot, a lot, a lot of money. Then they use them, you know, little by little, little by little until the die, but that’s not the case.

So can you explain us a little bit how you designed it?

Mathias: Our spending, spending. Okay, understood. I think I w want to go to a certain threshold of money, uh, with. Croft strategies. And then I would slowly, slowly progress to, um, uh, low-risk strategies, but also to income strategies. So right now I would maybe if you’re young, you can invest in growth stocks.

Um, you can hold them. And later on you, you want to, you want to have a certain income stream, so you would potentially invest in real estate. Uh, you would invest in. Uh, low-risk peer to peer lending or in reads, um, or on dividend stocks and so on. So I think when you pass a certain, um, your, your FII number or your barista, if I number where you can just need to work part-time.

So then you would, as what switched to income, um, Investing strategies. So that’s the idea I don’t. Um, yeah, so I don’t personally, I don’t count my pension from the state government. I don’t know why. I think Germany’s a, they have done a poor job, uh, in the, pension schemes. I think as the UK, the US is much better that you can save  without paying taxes.

Or you can just put things into a tax advanced wrapper. Yeah, you don’t have to protect basically. That’s I think that’s coming you’re in Germany soon.

Yasi: So in Germany are you referring to like a IRA, similar pension fund?

Mathias: Yes, IRA and I think there’s one in the UK too in the Germany, there’s only Reits.

It’s called Reits as a, you have to pay a lot of fees. To insurance companies and there’s real hope for the freelancers and there, you also have to pay a lot of fees and, and if you go to a broker and ask for some advice, they just tell you, okay, I know it makes some sense, but I don’t have anything else to sell to you.

So that’s, I think the new government, they will, they know that they need to fix it and they want as providing you scheme.

Yasi: Yeah, I kind of understand because if the money is in your own portfolio, you can deploy it the way you want, right. Whenever you want. But if it’s in pension funds, sometimes it’s difficult for you to have influence on how to use the money, how to invest the money or how to take them out.

Mathias: So how to take them out.. There are some new products that you can even invest in ETFs, but you have still too high fees too high. Yeah. I’d say Mazda. Then you would pay if you just opening the robo-advisor account or a by etf. Basically you have these management fees. Yeah.

Yasi: That’s just a good point because I think many people might not pay attention to their pension funds because the money was deducted from salary every month. They don’t see it, they don’t know about it. Uh, but it’s still important to know, you know, where your money goes and how much you have in your pension funds so that you can plan your retirement or like you write, if you don’t count your pension, you just put up your own.

Nest retirement money from retirement over time. Uh, that’s even safer than the pension comes on top. Right. So my last, and then my last few questions would be, you know, you have this, uh, F I Europe, Facebook group also podcasts. What have you. Uh, you know, the biggest takeaways from all interviews or interactions with people.

How do you see those who successfully achieved financial independence at an early stage or a, what did they do? Right.

Mathias: So regarding the successful people. I think there are some patterns and the ones that managed to have a really fast career early in the life, in the middle of the twenties, that got promoted and promoted and promoted and they could save a lot.

And then. Basically financial free ends. And they’re also the ones that are able to build a business, that they find team members that they can rely on the affluent, maybe in the beginning of the career, and then really focus on building the business and not finding excuses and really hustling.

So I think many people who made it in their earliest thirties or in the middle of the service, they are actually. We work a lot. So really, uh, all the time and hustling and networking and trying something new and then trying again and so on. So many people also have I interviewed somebody yesterday who has.

Worked and trading. And then they had, he had also some websites side hustles, and then finally he also just, uh, founded the own business full-time versus a 1 million investment. And he was just. Always trying new things. So that’s one thing then I have also observed in my Facebook groups that test as strong.

Sometimes they have different values. Kind of fighting each other. Um, so I think they should make peace with each other and just,  know that they have different values or they are in the different life situations. Or some people would really lean fire.

They don’t, they currently don’t have the ability to increase their income. So. Perfect sense. But when you have the ability to, um, increase your income, then you should not spend too much time on, on saving a buck or a dollar on, on a coffee. Um, so that’s, that’s just a different, I shouldn’t think you have to understand why as a person is doing it and just accept it because they have different situation.

Um, Then also, I think from the Facebook group, um, many people also using the gear arbitrage. So for example, using it from people from south of Europe often go to central Europe to earn money. And then they also looking for, for having our Facebook group, um, orientations or where can they get a job, what broker to use, uh, how they can save money, what credits cards and what else not.

Um, so that’s. But also, uh, people coming from, from outside Europe. That’s a, there, I have a lot of questions, to orientate yourself and they can also see, I know also many people are a couple of examples that have moved back to south of Europe’s and once they made, made enough money.

Um, because in south of Europe, they can just retire earlier because the expense, the money they need is not at high ends. And they retired in the south of Europe and seconds. They’ve built their own business, maybe opening a fire block or becoming real estate agents or whatever. So having a more simple and not so time consuming activities in the south of Europe.

Yasi: Yeah. Okay. Thank you so much. I think those are very insightful. Um, for those who are very interested in learning more about financial independence or if they are located in Europe, where they can join your community or where they can contact you. You know learn the more about this topic.

Mathias: Um, yeah, for example, you can listen to our podcast, financial-independence.eu.

Um, there’s also the event for the FI Europe retreat in may, uh, where you are invited to join. And in Spain, uh, it’s 20 to 24th of May, I would say, then you can Google a retire to freedom berlin or retire to freedom Cologne. If you, if you enter that region and want to connect with people, if you’re interested in FinTech, you can Google FinTech, meetup, Europe, I think or FineTech meetup Cologne.

Um, there’s a YouTube channel and you can also join. So, I think it’s really good. Um, really good sessions with a lot of, well known people in industry right now. So that’s some. Okay.

Yasi: Okay. We will put those links in the show notes and thank you so much for being here with us Mathias and really appreciate your time.

Uh, hopefully, you know, some of the audience, you know, check out the Facebook group, join the Facebook group, join the conversation, listen to the podcast and welcome to the, fire community here, Europe.

Mathias: Yeah. Thank you very much for having me Yasi.