Investing, Portfolio, Saving

Stretch goal: Invest 100K in index funds by end of year

Earlier this year, I took a comprehensive look at my portfolio for the first time and realized that I had a massive blind spot. I had virtually no exposure to the stock market. At the same time, I held three properties (and three mortgages), as well as relatively large chunks in both pension funds and cash.

Looking at this on a chart started ringing some alarm bells in my head. I’m definitely missing a trick here. After all, the stock market is a magic money making machine. So I knew right then that something had to change.

I looked at my income and my fixed expenses and initially formulated a goal to save & invest roughly 20K this year in index funds. Recently however, I’ve started questioning whether this is ambitious enough. If I meet this goal and don’t change anything else about my asset allocation, I would end up with 10% of my net worth in index funds. That is still super low!

Given my age, riskier assets such as stocks or index funds should make up a much larger part of my portfolio to maximize return potential. Ramit Sethi for example recommends 90% stocks for ages 25-35 in his book I will teach you to be rich. Not sure I want to (or can) go that extreme as I plan on keeping my real estate exposure for now, but 10% does not feel like it would set me up on a good path towards FI either. It’s time to get more aggressive.

Where I’m coming from

At the start of 2021, I held an actively managed fund, a position in a single stock, and a passively managed index fund. The actively managed fund I had held for years, but the only one who made money with this was the fund manager The single stock was from a previous employer, so it had not been an active decision to acquire this.

Conversely, the only passively managed index fund in my portfolio had only just been added, in November of 2020. Yes, I waited until after my 30th birthday to buy any passively managed index fund, or really even dabble with stock market investments at all. The Horror! Why? I have no idea.

Setting the right goal

After looking at my portfolio, I decided that I wanted to grow my exposure to the stock market, in particular through low cost index funds. But I didn’t set an explicit goal on how much to grow this by. That’s a problem, because without a specific goal, I can’t measure progress and I cannot hold myself accountable. This is important, because I know that I am quite risk averse. It’s taken me this long to even get started with investing, so unless I regularly check in on myself, there is a real chance that I won’t follow through.

Good goals are SMART, meaning they are:

  • Specific
  • Measurable
  • Achievable
  • Reasonable
  • Time Bound


Based on this, I came up with an aggressive goal for myself:

I want to have at least 100K invested in low cost index funds by the end of 2021.

There, I said it! Let’s fuel up the investment engines.

Is my goal SMART?

Let’s see if this goal meets all of the SMART criteria. It definitely is time bound, as the time horizon to achieve it is clearly defined as the end of 2021. That’s a good start!

It is also specific. Having 100K invested in index funds is a very concrete goal. Why did I choose 100K? First, I like round numbers. Second, I’ve heard many people say that the first 100K is the hardest, after that it appears to get easier. So I want to get the hard stuff out of the way as soon as possible. Third, it feels like a substantial enough amount that it would re-shape my portfolio enough for me to feel more comfortable.

Moreover, choosing this number makes it very easy and intuitive to track progress in percentage terms. The goal is therefore easily measurable. Being able to easily track my progress will be important to help keep me motivated and accountable.

Lastly, it’s ambitious. Very ambitious. Too ambitious? Let’s see if it’s achievable in a reasonable way.

How realistic is this goal?

It depends. There certainly is no way I can add 100K in “new money” this year. My net salary before any expenses is only 60K, and while I have what I would consider a healthy savings rate, it won’t be enough by a long shot.

Therefore, achieving this target will certainly involve shifting parts of my portfolio into index funds. I’ve already started this process already by reviewing one of my pension funds and deciding to withdraw some money as well as revisiting how large my cash emergency fund should be. As mentioned in the introduction, I also already had a goal of saving an additional 20K this year to invest.

Between redistribution and adding my already planned savings, I could reasonably get to 80K invested this year. That’s still 20K short of the goal (#mathgenius). So where is that 20K going to come from? Good question! The honest answer is, I don’t really know (yet). But I do have some ideas on what to try to partially close the gap.

What I plan on doing to raise more cash for this challenge:

  1. Try to negotiate a raise
    This one is obvious. Taking in a larger salary each month will enable me to save (and invest) more.
  2. Review my health insurance
    My health insurance is a high cost item that I pay every month as part of my fixed expenses. Don’t worry, of course I won’t just cancel my insurance to meet this challenge. That would not be reasonable. But I will review my coverage and see whether I can reduce my monthly rate without making too many sacrifices.
  3. Sell my stuff
    I have some unused items just lying around in my house, including some tech gadgets that could have some resale value (such as a tablet and a DSLR camera + lens). I’ll look into selling these, which should enable me to raise some money.
  4. Re-invest dividend income
    One of the perks of investing in the stock market is dividends. Since I’m a big believer in generating passive income sources, I will invest in a distributing rather than an accumulating index fund.

    The difference is that a distributing fund pays out the dividends, while an accumulating fund automatically re-invests them. I prefer having them paid out, as it may form part of my income in retirement and of course I still have the option to reinvest them too. Best of both worlds in my book!

    Since I’ll be investing the money continuously throughout the challenge, I should be getting some dividends along the way. In fact, in March I got my first dividends already – only 30 EUR but still. The ball is rolling! I’ll put the beauty of compounding interest to work.
  5. Consider re-allocating funds from other saving priorities
    Separately to my investment savings target, I have another savings goal that is related to paying off my mortgage principals faster. I might challenge this goal and re-allocate some or all of those savings to index fund investments instead.

How much can I raise with these initiatives?

For each initiative, I’ve tried to assess the likelihood of success (LH) and the potential impact (PI) to come up with that initiative’s expected value (EV = LH * PI). While both the likelihood as well as the impact estimate could be debated, this approach gives me a rough guide for whether achieving this challenge is in the realm of possibility.

NB: If you try something similar, be honest with yourself. Don’t feel confident about asking for and receiving a raise? Score it as a low likelihood. There’s nothing wrong with that. I think it’s better than making your chances look too good on paper and then failing anyway. However, scoring something as a low likelihood doesn’t mean you shouldn’t try. Even for a low likelihood option, pursue it with full force, especially if the expected impact is high!

Having said that how do my planned initiatives stack up?

Table by LadyFIRE

Well… The expected value is certainly short of 20K. Does this mean my goal is not achievable? Not necessarily. However, it does mean that I either have find more ways to raise cash, or I need to push very hard to realize all of the potential impact from the above set of initiatives. I expect it will end up being a mixture of both, or I may end up falling short of the goal.

In summary, I have a relatively solid plan for achieving 80% and at least some idea of how to reach 90% of the target. I think it’s fair to say that this makes the goal potentially achievable. But is it also reasonable? I think all the steps and initiatives I’ve outlined are reasonable. But there are definitely some things I won’t do to get to 100%.

What I don’t plan on doing:

  1. Second Job / Serious Side Hustle
    I will not be adding a second job or a serious side hustle with the aim of making more money. My main job keeps me plenty occupied and contractually it would be difficult for me to accept a second job too. If there happens to be an informal opportunity to make some “beer money” I probably won’t say no though. But that likely won’t move the needle much.
  2. Invest my “fun money”
    At the end of each month, after meeting my savings goals and having paid all my expenses, I transfer any remaining money to a separate “fun money” savings account. This money is a buffer for any big “wants” (such as vacations or a new laptop) that I might have in the future. I won’t be investing this money instead. It feels psychologically good to have some buffer for some fun too, and that’s money I’ve “earned to spend” by being more frugal in prior months.
  3. Go to extreme lengths
    This challenge is nice and well, and while I’d love to achieve the goal, I won’t go to extremes to meet it. I won’t sell a kidney. I won’t sell my house. I won’t start panhandling or eat oatmeal for breakfast, lunch and dinner. No worries! This will be a straight up challenge focused on finding ways to smartly, sustainably and healthily reach 100K invested. If I meet this goal, it will be in a reasonable way. And if I don’t make it, that’s ok too.
  4. Consider capital appreciation or depreciation
    Whether my investment goes up or down in value throughout this challenge is not in my control. Therefore, I will focus on the money I have invested, not the portfolio value to measure progress. I won’t meet the objective just based on getting lucky with appreciation, and I won’t fail by being unlucky with a market downturn.


What is the current status?

As of today, I have roughly 29K EUR invested in index funds. That’s 24K more than at the start of the year, and to me, that’s already a great achievement. It also means that I’m 29% of the way towards the goal. At the same time, we are currently through 26% of the calendar year (there’s a neat page to check this). So I’m even slightly ahead of schedule. YAY!

Chart by LadyFIRE, made with MS Excel

However, as outlined above, I expect the first 80% (or 80K) to be the easiest, because I have a somewhat solid plan on how to get there. The bigger challenge will be the last 20K. I’ll be sure to update on the status of the challenge regularly and keep you all informed of how i’m doing.

Will I achieve this goal?

This is definitely a stretch target and will not be easy to achieve. There is a very good chance that I will not reach 100K invested, even if everything goes perfectly (no emergencies or large unforeseen expenses). But you know what? Even if I end up with 80K invested, that’s still a lot more than the 20K I would have if I didn’t change my objective.

So bring it on! This challenge is officially underway!

Have you ever challenged yourself to invest a certain amount over a specific time period? What has your experience been like? Do you have any top tips for me on how to close the expected gap from 80K → 100K? Any obvious wins that I missed? Or do you want to join me and set an investment goal for this year for yourself? Let me know in the comments!

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