Personal & Financial Inputs 🧑💻
*This is the total amount you plan to save and invest each year towards your FIRE goal. Your portfolio grows through two main mechanisms:
1. **Compounding Investment Returns:** Your existing savings (including previous/removal of previous contributions and their gains) grow each year by the "Effective Annual Compounding Rate." This rate is derived from your "Expected Annual Investment Return," adjusted for "Annual Inflation Rate" (to calculate the real return), and then reduced by your "Effective Capital Gains Tax Rate" (applied to the gains). This means your money earns returns on both your initial capital and the accumulated interest/gains from previous years, creating an accelerating growth effect.
2. **New Savings Contributions:** The "Annual Fixed Savings" amount you contribute is added to your portfolio each year. Once added, these new savings also immediately start benefiting from compounding returns. This combined growth helps you reach your FIRE capital target faster.
*Your estimated **net** annual living costs in **Cyprus** during retirement (after any taxes on withdrawals from your portfolio). This should include all expenses like rent, utilities, food, transportation, entertainment, and healthcare. A single person might target €18,000-€25,000, a couple €30,000-€40,000, and a family €40,000-€60,000+ depending on lifestyle and rent.
Investment Assumptions 📈
*A common planning figure for long-term real returns (after inflation) from a diversified investment portfolio, often cited around 6-7% based on historical stock market performance (e.g., S&P 500).
*The long-term average inflation rate in many developed economies is around 2-3%. Using 3% helps account for potential future price increases.
*The "4% Rule" suggests you can safely withdraw 4% of your initial portfolio value (adjusted for inflation each year) and have your money last for 30+ years in retirement, based on historical market data (e.g., Trinity Study).
*This rate applies to the gains from selling your investments. In Cyprus, for non-domiciled tax residents, gains from the sale of shares and other securities are generally tax exempt for individuals. CGT of 20% applies to gains from immovable property located in Cyprus.
Expat & Retirement in Cyprus 🏝️
*This is the average tax rate on the **gross** amount you withdraw from your investment portfolio in retirement. This tax will reduce your **net** available funds. For non-domiciled tax residents in Cyprus, dividends from qualifying foreign sources and interest income are generally exempt from income tax and Special Defence Contribution (SDC) for 17 years. However, a **2.65% General Healthcare System (GESY)** contribution applies to worldwide income (with a cap). Capital Gains Tax (CGT) on the sale of shares and other securities is generally exempt for individuals. Your actual tax rate will depend on your specific income sources, non-dom status, and other factors. It Mono is highly recommended to consult a tax professional for personalized advice.
*This simulates thousands of possible market scenarios using historical data to provide a "probability of success" for your portfolio lasting through retirement, accounting for market volatility. A higher number of simulations gives a more robust result. It helps assess the reliability of your FIRE plan under various future market conditions.
*This is the duration over which the Monte Carlo simulation tests your portfolio's longevity. It should reflect your expected retirement length; 30+ years is common for early retirees to ensure long-term sustainability.