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Re: Will's journal

Posted: Thu Nov 19, 2020 1:57 pm
by Quadalupe
I just read your journal from start to finish, quite a ride! I was wondering if you would be willing to elaborate somewhat on your investment strategies, seeing that you write for seekingalpha and mentioned something about picking your own stocks.

Oh and congrats on achieving FI! An SWR of 5% is high, but since you have rentals, freelance work and a cycling job lined up already, I'm sure you'll do great.

Groetjes from a fellow Dutchie and keep us posted. :-)

Re: Will's journal

Posted: Fri Nov 20, 2020 3:29 am
by Flurry
Nice journal, very interesting to read!
Regarding the wealth tax: What do you think about high yield investments? Like REITs, BDCs, MLPs, CEFs, Canadian income trusts, Australian stapled securities? These investments seem to be wonderful if you don't have to pay taxes on dividends, although there is the withholding tax of course.

Re: Will's journal

Posted: Fri Nov 20, 2020 5:07 pm
by Will
@Wolf: there are very few exceptions to the wealth tax. As far as I know, when you own a business you can leave capital in the business (and you can even invest it), but as soon as you start 'paying' yourself you will need to pay income taxes on it. So this is not a way to get around it either. I know some wealthy Dutch people move to Belgium though I do not know the tax regulations there. With regard to ERE we should consider our options, since my wife is German and wouldn't mind moving there again in the future.

@Quadelupe: Wow, thanks for reading my entire journal, that's an honor! I read yours as well and you're well underway too. Now also reading the raptitude blog after your recommendation, I didn't know it yet. With regard to investment, I can try to sum up my investment philosophy briefly. (by the way, I do not want to post links to my SeekingAlpha articles here since my SA account reveals my identity)

In theory I fully agree with index fund investing. It's the most fool-proof, safe and diversified way of investing in the markets. I have only one problem with it: by default you are also investing in companies in which I do not want to invest. I do not want to invest in defense companies like Boeing or Lockheed Martin for ethical reasons, and I do not want to invest in fossil fuel companies like Exxon for both ethical and financial reasons. There are a bunch of other sectors I do not invest in: airlines (unsustainable), banks and insurers (impossible to assess sustainability), tobacco (ethical concerns). There does not really exist an etf which covers all my wishes (even some etfs focused on sustainability own Shell for example, since they are apparently best among the fossil fuel giants), and thus I more or less created my own etf. I do not aim to find companies with a pristine sustainability record, as long as I filter out the companies in which I really do not want to invest, I feel I'm already doing a decent job. I have two different 'baskets' in my portfolio:
- First basket: Companies which I never want to sell, and are decent, predictable companies which I can imagine still being around and making money in 50+ years. Preferably I want these companies to have a relatively low debt and pay a dividend. This is about 90% of my portfolio. The only reason valid for selling companies in this basket is when the original reason for owning the company has become invalid. For example, I sold my Volkswagen shares after Dieselgate (I partly bought them because of their sustainability ambitions). Some examples of stocks in this part of my portfolio are Unilever, Ørsted and Johnson&Johnson.
- Second basket: promising companies which have the potential to grow like crazy. By its very nature, the first basket will never have extreme successes. In the stock market, a big percentage of the gains come from only a small percentage of companies. With this basket I am trying to capture a part of these gains. I invest relatively little in each company in this basket, since I expect some of them to not become great successes. About 10% of my portfolio is invested here. I do not have strict rules for buying or selling stocks in this basket, though I tend to be very conservative with transactions. Some examples of stocks in this part of my portfolio are MongoDB, Simulations Plus and Slack.

The creation of your own portfolio has many disadvantages compared with a well diversified etf:
- It costs a huge amount of time
- It increases the likelihood of doing dumb things
- Asking back dividend from foreign states is a real headache (see my answer to Flurry below, this is only a disadvantage in the Netherlands as far as I know)
- You are much less diversified (I own about 50 different stocks and am not invested in some sectors at all, notably financials)

In my opinion, active investing is 5% skill/hard work and 95% psychology. Most people who become succesful active investors are VERY disciplined psychologically. Most other people, including myself, I believe are best off with an etf and doing as few transactions as possible. I only pick stocks because I want to avoid specific companies, not to beat the market. For the record, my portfolio always performed more or less in line with the markets (I had some outperformance the last few years, and this mainly was because I do not invest in financials or fossil fuels which did not do so well).

@Flurry: the dividend tax here in the Netherlands works as follows: The official dividend tax rate is 15%. When you fill in your tax return, you can subtract dividends you paid in ther Netherlands from your wealth tax. This indeed means that you can pay zero dividend tax. The problem is, you can only subtract this amount without any strings attached on dividends from Dutch companies (As a result, the Dutch 15% dividend tax technically only applies to foreign people investing in Dutch companies, a cause for much disagreement in Europe). The Netherlands have dividend tax treaties with most other countries, which most of the time mean that you can get back 15% of dividend from the Dutch goverment with your tax return, but need to ask back the rest of the tax from the foreign countries, since most countries have a higher dividend tax than 15%. The only more or less automated system for getting your dividend tax back from abroad is from the USA, which works REALLY well and causes no hassle at all. The other countries you need to do yourself, most of the time manually, and rules differ dramatically. Switzerland for instance has a dividend witholding tax of 35% which makes it really worth it to ask back the remaining 35-15=20%. You need to fill in a form which you can request at the Swiss government, certify at the Dutch tax authority and then add proof that you own particular stocks from which you received dividend. Stock brokers usually 'sell' such a proof for about €100 per stock, which makes it absolutely not worth it for me. In the end I just printed some information from my broker without a certification stamp from them and still succeeded in receiving my tax back from Switzerland, but this same strategy failed in France. I need to start my endeavor to get back dividend tax from Germany and Denmark, but I heard these countries were more doable than France. I know that very wealthy investors let their advisors and brokers take care of this.
I'm sorry if I went into way too much detail in my story, but to answer your question directly: yes, for Dutch or US companies I would receive all of the dividend without paying tax, I have no idea about the dividend tax agreements between the Netherlands and Australia or Canada. Whether the types of companies you mention are good investments is difficult to answer in general. I do own a couple of REITs in my portfolio, but not only for their yield. Most high yielding stocks have a reason why they are yielding so much, and that reason is usually risk.

Re: Will's journal

Posted: Tue Nov 24, 2020 3:05 am
by Flurry
Oh, it's the same for Austrian citizens. It also depends on the bank/broker you use to buy your stocks. US is very easy, GB has no withholding tax at all, many Australian companies also pay dividends without withholding taxes (due to the stapled security structure). But for Australia that might depend on the bank, for example with Interactive Brokers you only pay 15% withholding tax on Canadian dividends instead of 25% and you don't have to file for a Canadian tax return. Many European banks get that wrong and it becomes a huge hassle.

Re: Will's journal

Posted: Wed Dec 23, 2020 7:58 am
by Will
Since my employer kindly asked all the employees to use all their holidays this year, I'm free the last three weeks of 2020. It feels a bit like silence before the storm. Because we're locked down in the Netherlands, and because it is winter, my life slowed down considerably. I'm leisurely arranging our belongings in order to prepare to move out of our apartment. My wife is putting the last hand to her PhD, and I'm sometimes helping her out with spelling and grammar. My daughter is still partially being taken care of by the neighbors. I did run a marathon a week ago (new personal record of 3:43!) and am knocking out many chores, but still I'm having a relatively lazy existence at the moment.

In 2021 I will work the first two months, during which my wife will give birth and we will suddenly have two children to take care of. Not long after that, we will buy a large campervan and start our adventure, if covid doesn't block all of our travel plans (but I guess traveling by campervan will the most resilient way of traveling in a post-covid world). 2020 was a relatively boring year of consolidation for us, 2021 will be an exciting year during which everything could change. I'm greatly looking forward to it.

Re: Will's journal

Posted: Sun Jan 03, 2021 2:51 pm
by Will
Happy New Year everyone!

I just reread my 2019 review which I wrote about a year ago, and my, what a different year 2020 was!
A brief summary to start: We finished the rental (which was a lot of fun) and found some reliable renters just before the covid situation hit the fan. We went on skiing holiday but drove back after two days because the resorts closed. My wife got pregnant again (our son is due literally any time now), and a-l-m-o-s-t finished her phd. I did a lot of sports and loved it. We planned our sabbatical and will be free from work from March 2021 until November 2021. My wife is already on pregnancy leave now. We will not officially quit our jobs but are taking parental leave, so our backup plan is to return to our current jobs in November 2021.

Now let’s take a look at how my targets for 2020 panned out:

Targets for 2020

- Achieve a savings rate of at least 55%
Partly because of the covid situation, our spending has been the lowest since I started my book keeping, I had a savings rate of 65.66%*. So technically, a big fat success, but at the cost of more social isolation.
* I do not count my investment income, which is mostly dividend, as part of my savings rate

- Have a non-paycheck income of at least 50% of expenses
This came in at 43.03% this year, very much the same percentage as last year even though our spending was lower now. This was mostly due to us wanting to build up a buffer for possible renovation of our rental house, so we left all the rental income on the shared bank account with my parents in law. Since we own this rental together with them, I believe it’s prudent to have a buffer on it to make sure that we will always be able to pay for big renovations out of pocket. I just see this as an additional ‘cost’ of owning a rental house together with my parents in law.
Additionally, my income from side hustles was low this year.

- Do sports at least three times per week on average
This was a big success, I did sports 219 times in 2020. Some achievements among others: I ran two marathons and did a tortuous cycling training schedule in summer to get in shape in 1.5 months, which was ambitious but worked.

- Start as a contractor as main job OR plan and start pre-retirement (buy/build camper?)
This was the most important goal of last year. We now nailed down the period during which we are free from work. So I will count this as a success, although I will still be working in January and February and we did not buy a campervan yet.
- Finish rental house and make sure it is rented

- Have a revenue of at least 1,200 from writing articles
Big fail, and after I read the book ‘Atomic Habits’ by James Clear, I realized that this goal is entirely wrong. Though I aim to make writing an important side hustle, by focusing on the income I will not become a better writer. In 2021 I will not care about the income from writing, I just want to practice it and become better at it. I will define a better goal at the end of this entry.

- Eat more healthily/sustainably
I was struggling with this one. I did not drink coffee for two weeks but did not notice anything different, so I just continued drinking coffee this year since I like it. I did however try drinking as little alcohol as possible starting in July. This was a much better idea. This year every morning after I drank as little as one glass of alcohol, I felt bad: tired, lazy, and worst of all unmotivated. Since July I drank almost no alcohol. This felt good. I do not want to force myself to quit entirely though.

Net worth
Stocks 191,934
Crowdfunding 476
Equity in rental house 70,000
Loan -44,529
Cash 32,824
Total net worth 250,705

Over a quarter million euro, up from 204K. Last year I said that I did not expect my net worth to increase by another 50k anytime soon, but this almost happened again, during a pandemic, which is very surprising.
I am phasing out my crowdfunding holdings, since it was a very small part of my assets and it’s just not worth the hassle. We upped our cash holdings because of our sabbatical plans. We need to buy a campervan and be able to last 2021 with very little income in the worst case.

2020 income and spending


Note: This is only my part of the spending. Since I share almost all of these with my wife, our family spending is about twice as high.
The biggest difference in our spending is that we spent very little on travel this year. Our groceries spending on the other hand went way up. This was influenced by multiple factors: we did not visit our families so much, and usually we eat at their place when we visit them. Also, our daughter started eating much more than she did previously. And we did not try to keep our grocery spending in check, I’m usually the one who does the shopping and I spent quite lavishly on luxury food items this year.
I have no clue what our spending will be in 2021. On the one hand we will move out of our rental apartment, on the other we will buy a campervan and I will need to factor in a monthly depreciation on it. Travelling in a campervan CAN be quite cheap, but I have no idea whether we want to stay on paid campsites, somewhere in nature or maybe do some house sitting once in a while. Fuel costs can be quite large as well if we drive a lot, but food costs will probably be comparable to this year, or maybe a bit higher since it is more difficult to build up a pattern of good value-for-money food consumption when you’re travelling.

Targets for 2021

- Achieve a positive savings rate
This one might be ambitious, and I have no idea whether it is realistic while travelling 2/3 of the year, but we will see.

- Do sports at least once every two days on average
Not sure how this combines with travelling, but of course my racing bike and running shoes are joining us on our trip!

- Empty house and allocate all our stuff
To campervan, to parents (storage, but as little as possible), and sell almost all of our furniture. This is a prerequisite to moving out of our apartment so it’s almost certain that we will succeed, but still it will be a lot of work.

- Start sabbatical
If the new baby is healthy enough also start travelling. We will see how this goes with the covid situation, but travelling by campervan will probably be the most resilient way of travel in the near future. Maybe travelling will be very difficult with new covid restrictions, in that case we need to come up with an alternative plan.

- Write at least one paragraph of text every two days on average
No revenue targets anymore, writing should be fun! I’m closely keeping track of this, and yes my entries in this journal count as well! (even though they are much more like braindumps than articles and are usually of a relatively low quality compared to my other work)

- Create a plan for 2022
Will we start new jobs? Where are we going to live? Somewhere with a low cost of living or close to friends and family, or both if this is even possible? Will I start as a contractor, search for a ‘regular’ job or start a business? Buying more rentals and renovating them? Should we quit our current jobs and extent our sabbatical? All these questions need to be answered during this year.

All in all, this year will be a very open year with regard to experiences, jobs, travel and life in general. It is possible or even likely that our lives will take a twist this year. I'm working on it so that this twist will be a positive one. As I said, the first big change is already imminent: our son will be born in January. At the moment we are mostly preparing for this and hope he will be healthy.

Re: Will's journal

Posted: Mon Feb 22, 2021 5:00 pm
by Will
About a month ago, our son was born. The birth went well, there were no complications and he is very healthy and happy. He does have a bit more trouble sleeping compared with his sister, who slept straight through the night from the first day after she was born. So the last month was a period of little sleep, the last weeks of work (for me) and much taking care of our children.

I still need to work for two days until I'm free until November. Or as I like to say to my wife, at least until November, depending on what we decide to do after that. But we have the possibility to return to our current jobs. It does not feel special yet, but I guess it will when I'm not required to login on my working laptop anymore for 4 days a week.

We also almost casually spent the equivalence of a whole year of our regular expenses on a campervan. It is second hand and not a young vehicle, but possesses most of the modern safety systems, which is one of the aspects we find important. We are importing it from Germany to the Netherlands, because prices are much lower in Germany. Probably we could make a profit by selling it straight away in the Netherlands, but we might sell it again in a year or so, or start renting it out. We will pick up the vehicle at the end of March, if all the covid restrictions allow it.

We will keep our current home until the end of April. so we still have a bit of time to get our stuff in order before we will finally move into our new home the campervan. The only thing which is sad is that the neighbors who take care of our daughter many times a week will stop seeing her. They are like grandparents to her and they will miss her badly. Of course we will stay in touch and try to meet as often as we can, but it will never be like it is for them now. I am happy that we kept them informed about our plans in a very early stage (already since 1,5 years ago), so they have had enough time to psychologically adapt.

Re: Will's journal

Posted: Sun May 02, 2021 3:52 pm
by Will
Last 2 months have been a complete makeover of our lives.
- We suddenly had to cope with 2 children instead of one, and our son is not as easy as our daughter was
- My unpaid leave started, which will last until the 1st of November (at least)
- We imported a campervan and started moving our possessions into it
- We permanently moved out of our apartment 2 days ago

The Dunning-Kruger effect and our experience with minimalism
With regard to moving into a campervan and getting rid of our possessions, we went through almost the whole spectrum of the Dunning-Kruger effect. About a month ago we thought we had it all figured out, but alas. We were way up Mt. Stupid, which we realized when we started moving our stuff out of our house. Since then, we went through the valley of desperation and got rid of ALL of our furniture, boxed all of our possessions which we did not want to get rid of (still WAY too much in my opinion) and stored it at the places of my parents, my wife's parents and my sister. We finally moved out two days ago. It is frightening how much stuff we collected during the six years we lived in our house, even while spending only a modest amount of money compared with many of our peers. The last weeks were very hectic and stressful.

We now possess a campervan chock-full of stuff. Currently we are spending our first night in it. As an example of how full it is: when I need a particular item from a closet, I need to take almost all of the stuff out of this closet which my wife filled with surgical precision, take the item and lay everything back EXACTLY how it was lying there originally. Otherwise stuff will just not fit. We still need to radically reduce the amount of stuff, starting with our car which we still need to sell.

At the moment it is relatively cold here in the Netherlands for this time of the year. This means that campervan living is not ideal. Originally we were planning to drive to a location with warm weather, but this is currently not really possible with the strict covid restrictions which some countries have (notably France). It is likely that we will stay in the Netherlands (campsites are open here), and at the place of my wife's parents in Germany (campsites are closed in Germany but they have a large garden where we can camp).

My wife is (still) finishing her PhD, I do not have a real target at the moment. My single most important goal the coming weeks is that I want to pick up daily sports again, which I seriously neglected during the last couple of weeks.

Re: Will's journal

Posted: Mon May 03, 2021 6:06 am
by J_
Uggh, it sounds as an almost too strong confrontation with the reality of camper-van living and at the same time coping with a new baby!
The best way, may be, to see it as a new period with a lot of fun and freedom and getting new skills of parenting, simple life, living in/near nature and a lot of (new) social skills.
I wish you all the best. You choose it freely and you can always change your mind if it does not work.