BadHorse's slow trot towards FI

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BadHorse
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BadHorse's slow trot towards FI

Post by BadHorse » Sun Jun 12, 2016 4:43 am

EDIT: Decided to remove raw numbers below, in favor of relative numbers. Also, numbers now include money from my work-based pension plan.

Step1: Get an overview of my current finances

These are just rough numbers to get started. I have no debts. 38 yo, living in Denmark.

Approximate assets, end of May:

WR rate of 12%

Assets distributed approximately as follows:
49% investment fund (actively managed by Crappinvest Inc., 30% stocks, 70% bonds)
12% in bank account at no interest.
2% private pension in bank (aldersopsparing, can be accessed at age 60 iirc)
3% apartment (andel)
35% work pension plan


Spendings and savings for May (percent of income):

29% fixed spendings (including rent, insurance, etc.)
16% extra spendings (everything from movie tickets to dentist)
32% savings
23% work pension (was excluded before the edit)
Total 55% savings rate. Not bad from a general perspective, but it won’t impress anyone in this crowd, I guess :)


Step 2: Get informed

I’m currently reading an introductory book on investing, will need to look at the Danish tax rules too.
Last edited by BadHorse on Tue Jun 14, 2016 11:58 am, edited 1 time in total.

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Eureka
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Re: BadHorse's slow trot towards FI

Post by Eureka » Sun Jun 12, 2016 6:06 pm

Nice to see you started a journal!

I suppose the work-based pension plan should count, no? This is money that will enable you to spend more of your other money than you would have been able to without it.

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BadHorse
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Re: BadHorse's slow trot towards FI

Post by BadHorse » Mon Jun 13, 2016 9:45 am

Yeah, I guess you are right.. will include it in my June calculations. As an extra benefit, it also insta-boosts my savings rate to something more presentable in this forum ;)

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Eureka
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Re: BadHorse's slow trot towards FI

Post by Eureka » Mon Jun 13, 2016 12:51 pm

I like your second argument.

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BadHorse
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Re: BadHorse's slow trot towards FI

Post by BadHorse » Sun Jul 03, 2016 4:59 am

A slow trot indeed

Net worth: ?
SR: 52% of disposable income

June has been a busy month, so progress has been slow:

Step 1) Overview of finances
I went through the gruelling exercise of categorising 12 months' expenses. Rent and utilities are the main drain on ressources, and has got me wondering if I should look for another place. 'Fun and social' is 2nd, it includes non-essential items like gifts, books, entertainment, vacations.
Brexit rocked the financial boats this month, but I don't know how it has affected my investments (managed by my bank). Until I have some idea what else to do with that money, there doesn't seem to be much point in worrying about it.
Image

Step 2) Getting informed
I read one book on investment and financial markets, will need to go through it again. I also still have to get a better grasp on taxes and on my work pension plan.
It's slow work, but the investment topics on this forum are already making a bit more sense.

Step 3) Thinking
Before committing to this, I must figure out what I actually want with (what remains of) my life and my time. Work and study has been the main focus of my life so far, and they make an easy distraction: They offer relatively simple goals and success criteria, diverting focus from more existential questions.
ERE shouldn't be just another number to chase, another arbitrary goal post that I can reach and shout "success".
In other words, I need to face the inevitable: My life no longer spreads out before me like a seemingly endless road with infinite possibilites. Doors will be closing faster than they are opening, and I must decide which ones to pry open.

Step 3) Making changes
A small saving, but a fun one: My mane was in dire need of trimming, and I undertook to do so myself. The 'after' actually looked (slightly) better than the 'before', so I call that a success :)
Maybe ERE can be the more socially acceptable excuse for really just wanting to do things myself ;)

Forskaren
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Re: BadHorse's slow trot towards FI

Post by Forskaren » Sun Jul 03, 2016 6:03 am

Is your transport costs included in some other cost? It is pretty nice if your transport costs really are quite close to zero, that can help a lot.

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Dragline
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Re: BadHorse's slow trot towards FI

Post by Dragline » Sun Jul 03, 2016 8:38 am

BadHorse wrote: A small saving, but a fun one: My mane was in dire need of trimming, and I undertook to do so myself. The 'after' actually looked (slightly) better than the 'before', so I call that a success :)
We may have to start calling you "Show Pony". :D

I have to tell you that investing with something called "Crappinvest" does not sound terribly promising for us native English-speakers. :lol: But I know its just the unfortunate name of the company. Any particular reason why you have a 30% stock/ 70% bond allocation, or is that just what they put you in by default?
Last edited by Dragline on Sun Jul 03, 2016 9:50 pm, edited 2 times in total.

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BadHorse
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Re: BadHorse's slow trot towards FI

Post by BadHorse » Sun Jul 03, 2016 12:23 pm

@Forskaren

Heh, it didn't even cross my mind to have transportation as a separate category.. a luxury of living in Copenhagen, I guess :)
Pretty much everything and everyone is in biking distance, so public transportation is only needed a couple of times a month. Longer transport like air tickets for visiting friends abroad go into the 'fun & social' category.

You are right that if I ever move to a less central place (relative to work/friends/family etc) I will have to budget for it. Never owned a car, but it seems they are crazy expensive :shock:

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BadHorse
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Re: BadHorse's slow trot towards FI

Post by BadHorse » Sun Jul 03, 2016 12:30 pm

Dragline wrote: We may have to start calling you "Show Pony". :D
:lol: :lol: I'll need one of those fancy ostrich-feather head dresses then! My next DIY project perhaps? ;)

Just maaaybe Crappinvest isn't their real, official name. It's one of those products that the bank peddles, and everyone and their cousin need a share of the profits. A professional investor I met actually called it the most expensive investment product on the market :(

It has to change, but I figure I should wait until I have a plan.. and therein lies the problem. Is this is a long-term investment, or will I want the money e.g. for buying RE? Decisions, decisions..

The high amount of bonds is because it was originally invested with only a two-year horizon. I don't even remember how long ago that was, but two years seemed like a near-eternal commitment at the time :roll:

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BadHorse
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Re: BadHorse's slow trot towards FI

Post by BadHorse » Tue Oct 18, 2016 12:02 pm

Hmmm.. been a while since I updated this.

Net worth: (I keep forgetting)
SWR: uhh, dunno..
Saving rate: A mystery wrapped in an enigma.

Nope, I haven't been updating my budgets over the summer. This was at first due to the combination of off-set vacation expenses and the inevitable money back-and-forth with friends. Then my workplace got some payments messed up, so the actual income & outcome each month became a bit of a tangle to unravel. Lastly, since time is limited, I've decided that a detailed budget isn't my top ERE-priority right now.

Instead, I've been trying to make progress on Ze Grand Finanzial Mazterplan!! That is, an actual plan for investing. To this end, I have:
- Read the Jim Collins stock series + some other web ressources
- Read a couple of books on stocks
- Sold off my CrappInvest portfolio, placed the money in a cash account (with just a tiny, widdle bit of interest) to await further orders.
- Opened an account w/ an online stockbroker and bought my first stock! Weeee! Let's see how that goes.

So no great progress, but small steps are also steps. Next up is a meeting w. a pension advisor, and more reading :)

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Eureka
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Re: BadHorse's slow trot towards FI

Post by Eureka » Tue Oct 18, 2016 5:15 pm

Congratulations with your first purchase!

As for your cash, are you aware that banknorwegian has a savings account where you can withdraw your money anytime with no penalty and the interest (up to 1.5m dkk) is 0.85%? I just discovered it and signed up right away.

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BadHorse
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Re: BadHorse's slow trot towards FI

Post by BadHorse » Wed Oct 19, 2016 9:38 am

Thanks :)
Yes, I'm also using Bank Norwegian (makes me feel like a really dodgy sort of speculator to place money in a foreign country!).
Can't believe we're getting excited about a 0.85% interest rate though... it's rather underwhelming in a historical perspective.

Noedig
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Re: BadHorse's slow trot towards FI

Post by Noedig » Wed Oct 26, 2016 7:26 am

Badhorse, well done with getting underway so early in life.

Copenhagen is all round great place, I say as a Brit living in wonderful/awful London.

I started seriously saving maybe 8 years ago and from a zero start am nearly FI: it helps to have the ERE rationale when making all the many decisions that will take you there. Good luck to you.

Great moniker you have: 'The Evil League of Evil/Is watching so beware/The next mistake you make/Will be the last we swear"......

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BadHorse
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Re: BadHorse's slow trot towards FI

Post by BadHorse » Fri Jan 12, 2018 5:36 am

Digging up and dusting off this good ole journal for an update.

Money: Meh and Sigh

So in my usual unintentionally unconventional way, I've managed to be one of the few people who actually lost money going the ERE route.
I've always been naturally frugal, with no particular overarching plan but a few loose ideas along the lines of "Why not just keep expenses at the student-level after graduating", and "if I save half my money, I'll only have to work half the time".
Of course this meant reasonably-sized savings, which the bank would then occasionally badger me to move into one of their investment fonds. I knew this was an expensive solution for investing, but, what the meh, it's just money, and it's really boring.
Reading this forum finally gave me the motivation to reclaim my money from the clammy claws of the bank, and invest them on my own.... except I sorta stalled after step one, and am now keeping almost all* my funds in plain cash.. so yes, I've missed the gains from this crazy stock bull market. :roll:

Still, it's been interesting and rewarding to read about financial markets, investing etc. If I just ignore my private finances and focus on the system itself my interest increases dramatically.

Previously, I might look at e.g. the granite curb stones while walking somewhere, and marvel at how more than a billion years ago, this rock was formed from magma deep in the earth, then slowly pushed to the surface. Then sometime in very recent history some odd-looking primates started to break and carve pieces of this rock, sweating and toiling. Others would move them out, in still wider areas, to construct homes, roads, bridges, and still more complex buildings. Then it's machines breaking the rock and distributing it across the globe, while near-instant electronic communication determines its destination and purpose.
Every little thing around us carries a whole history of the world that brought it into existence.

Now I'm adding the financial perspective on top of this network of history and interactions. It just fascinates me how our entire human culture is enmeshed in an increasingly convoluted system moving around different abstractions of "You owe me a favour".


OK, this update has turned into completely off-tangent rambling**, so I'd better just stop here. :lol:

tl;dr: I'm OK at saving, but suck at investing. The world is a strange place.


* "All" here meaning the money I control myself. A good portion of my pay automagically gets sent to my pension fund each month. That's the commie Danish nanny state ensuring dumbniks like meself will have something to live off in old age.

** Don't blame me, every self-respecting supervillain has a propensity for soliloquies

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