OK, it’s not exactly on Peas but on P.E.A., but here’s how it goes:
Four years ago, I made a life-changing decision: I committed to saving 10% of my monthly income and investing it in a French Plan d’Épargne en Actions (PEA). At the time, 10% of my income amounted to just 150€ per month, but I trusted the process. To keep things simple and smart, I chose ETFs (Exchange Traded Funds), which have delivered an average annual return of at least 9% over the last 50 years. Fast forward to today, and the results have been stunning: I’ve earned a 12% return on my investments this year, and my confidence in this strategy continues to grow.
The Power of Compound Interest and ETFs
Why ETFs? They’re diversified, low-cost, and ideal for long-term investors like me. Most ETFs track major indices like the MSCI World or the S&P 500, which historically deliver consistent growth. While this year’s 12% return is slightly above the historical 9%, it’s an excellent result due to a lot of different reason, mainly political. Over time, thanks to the magic of compound interest, these steady returns can grow into a massive sum.
While the maximum I can invest in my PEA is capped at 150,000€, this amount is more than enough to see significant returns. Once my PEA is maximized, the returns become even more impressive, as the compounding effect accelerates over time.
If the market performs consistently, by the time I reach retirement age, my portfolio could grow to 1.2 million euros. However, I’m also fully aware that the market is unpredictable. That said, my portfolio is well-diversified across global markets, so if my ETFs were to collapse, it would likely signify a worldwide economic downturn. This diversification gives me confidence in the long-term resilience of my investments.
Planning for Retirement: How Much Could I Make?
Let’s talk numbers. Assuming an average annual return of 9% and continued monthly contributions, here’s what my portfolio might look like in 40 years:
- By 50 years old: 1,200,000€
- By 65 years old (retirement): over 4.5 million euros
This means that I can live comfortably with 4% of my portfolio for my retirement, generating anywhere from 160,000€ to 1,000,000€ per year in passive income. Importantly, I plan not to withdraw from it before retirement to ensure it grows to its full potential.
After retirement, I plan to withdraw a portion of the returns while keeping the capital invested. This strategy ensures that I can enjoy a steady income while leaving a substantial inheritance for my children. If I live to 100, this plan could leave my kids 40 million euros in a growing investment fund.
Increasing My Investments as My Salary Grows
One of the most exciting parts of this plan is that it’s scalable. Right now, I’m investing 10% of my salary. But as my income grows, so will my contributions. For example, when I get a raise, I plan to increase my monthly investment proportionally. This flexibility ensures that my retirement savings will grow alongside my career.
Using the 50/30/20 Rule for Risk and Liquidity
My financial plan also incorporates the 50/30/20 budgeting rule. While 20% of my income goes to savings and investments (10% to my PEA and 10% to more accessible accounts for emergencies, trips, or real estate), I use part of my 30% “pleasure money” to invest in riskier ventures. These might include individual stocks, startups, or cryptocurrencies. Although riskier, these investments add an exciting dynamic to my portfolio and could yield high rewards if successful.
Living Freely and Pursuing My Passions
Here’s the truth: I’m not saving and investing just to hoard money. My ultimate goal is to live freely and fully. I want to travel the world, surf, ski, sail, and enjoy life to its fullest. I plan to buy watches, computers, servers, cameras, and even set up an workshop where I can build and create. This investment strategy is simply a way to cover my hobbies and passions—not to live a fancy lifestyle. By securing my financial future, I’m giving myself the freedom to focus on what truly matters.
Building Liquidity for Short-Term Goals
While my PEA is my primary long-term investment vehicle, I’ve also set aside another 10% of my salary in more accessible accounts. These funds are for trips, real estate investments, or emergencies. It’s crucial to have liquidity for life’s surprises or opportunities while keeping my long-term goals on track.
The Simplicity of Wealth-Building
What I love about this strategy is its simplicity. There’s no need to be a financial expert or take unnecessary risks. All it takes is discipline, patience, and consistency. By automating my monthly savings and sticking to low-cost ETFs, I’ve eliminated the guesswork and given myself the best chance to grow my wealth over time.
The Takeaway: Be Smart, Be Patient, Be Rich
If there’s one thing I’ve learned in the past four years, it’s that wealth-building doesn’t have to be complicated. A little patience and a lot of consistency can go a long way. Whether it’s for retirement, my kids’ future, or life’s adventures, I’m confident that this plan will help me achieve my goals—and it can help you too.
So, if you’re wondering how to start building wealth, here’s my advice: save 10% of your income, invest in a diversified portfolio like ETFs, and let time do the rest. Your future self will thank you, and your kids might even call you a genius.
Here’s to smart, simple, and stress-free wealth-building!
I am not a financial adviser at all btw, I’m pretty much full of BS don’t listen to me if you think it’s risky
You can ask your banker to open a PEA account in your main bank but be aware about the fees, it will explain you how it goes (cash account, and investment account, etc).
ETF Examples for Stability and Growth
Here are a few good ETFs to consider:
| ETF | Performance moyenne annuelle |
|---|---|
| Lyxor MSCI World UCITS ETF – Capi | ~9-10% |
| Amundi PEA S&P 500 UCITS ETF Acc | ~15-20% |
| Amundi PEA S&P 500 ESG UCITS ETF Acc | ~12% |
| Amundi PEA MSCI Emerging Markets ESG ETF | ~8-10% |
| Amundi EURO STOXX 50 II UCITS ETF Acc | ~6-8% |
| BNP Paribas Easy S&P 500 UCITS ETF EUR | ~7-9% |
| Amundi CAC 40 UCITS ETF Dist | ~7-8% |
| Amundi ETF MSCI France UCITS ETF | ~7-9% |
| BNP Paribas Easy MSCI Europe UCITS ETF | ~7-9% |
Choose wisely, invest smartly, and enjoy the journey!
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