Saving and investing exhibit interesting behavior.
If I accumulate savings year-over year, they tend to accumulate linearly. If I invest my savings and get a small return on my savings year-over-year, they accumulate exponentially.
Exponential accumulation or growth is much, much faster than linear growth. It is this exponential growth that will allow me to become financially independent sooner rather than later.
Assuming a rounded down average total income of a census non-elderly family in Canada of $90,000 and a rounded down average household expenditure(consumption) for a census couple family in Canada of $50,000, the table and chart below show what that exponential growth looks like. The two curves start off close, but then the accumulated investments really takes off. It's a snowball effect, where the accumulating return on your savings eventually grows large enough so that it becomes a significant part of the amount being invested each year.
Assuming that someone was diligent enough to save $40,000 each year and invested to get a consistent 7% overall return year-over-year, the difference between the exponential and linear accumulation ($1,754,607.07 - $800,000) would be $954,607.07 in just 20 short years.
You very quickly realize that your annual savings rate is the only thing that matters, especially if you're goal is to accumulate 25 times your annual spending.
I assume in the table above that the rate of return on my portfolio stays at a consistent 7% year in, year out. That is of course not the case, as it will go up and down. That can make a big difference. I highlight my reasoning for assuming this average rate of return in my Investment Thesis.
I have also assumed so far that I start with $0 to my name, and myself and my partner's combined ability to save $40,000 a year.
Along the same lines, I assume that my partner and I will keep earning a combined net income of $90,000. It will mostly likely go up and down as we advance through our careers, whether it be through wage increases, employment changes, periods of unemployment, etc.
I have presented only a simplified representation of exponential savings/investments/portfolio growth and have only highlighted the factors that have gone into my decision making process, as I feel it captures the essence of my goal of and path to financial freedom.