Calculation example: Vincent and Isabelle

Vincent (35) is a programmer and lives with Isabelle (32) and their two children. He received €3,300,000 privately for his shares in the IT company where he worked, after it was sold. He received these shares as part of his remuneration when he joined the company a few years ago as a senior programmer. At that time, the company was still a start-up.

Vincent does not see himself as a true entrepreneur and therefore accepted a position as a programmer at a large company. His salary is €80,000 gross per year, all-in. Isabelle works part-time and earns €30,000 gross per year. Last year, Vincent bought an apartment for €500,000, which he financed entirely with an annuity mortgage at an interest rate of 2%.

Vincent wants to grow his wealth so that he and Isabelle can stop working earlier. They want to work for no more than another 20 years. Each year, they want to be able to spend €80,000 net, with their spending power keeping pace with inflation of 2% per year. This means that annual spending power should, for example, be just over €97,000 after 10 years and almost €119,000 after 20 years. Vincent also wants to leave at least €250,000 to each child.

Vincent wants to grow his wealth. With an investment return of 0%, however, the impact of inflation and taxes becomes clearly visible. In this case, Vincent and Isabelle can maintain their desired lifestyle until they are 65 and 62 respectively. They can leave €250,000 to each child and will then only own their home, which will have been fully repaid.

With a conservative investment return of 3% per year, the wealth grows noticeably, as Vincent had hoped. In this scenario, Vincent and Isabelle’s money only runs out when they are 73 and 70 years old. They can leave €250,000 to each child and will then only own their fully repaid home.

With an investment return of 5% per year, Vincent’s wealth grows sufficiently for them to stop working after 20 years. The wealth only runs out when Vincent is 103 and Isabelle is 100. They can each leave their children at least €250,000 and will then only own their fully repaid home.

The example above shows how different return scenarios can affect your financial future. As a committed Private Bank, we understand that your wishes and goals are unique and that your situation calls for a tailored approach. Together, we explore various financial scenarios. Read more about Wealth Planning or make an appointment.