the dollar journal

Where are you and where are you going?
thedollar
Posts: 107
Joined: Tue Feb 21, 2017 4:07 am

Re: the dollar journal

Post by thedollar »

July 2019 update

Financials
NW increased over USD 50,000 due to the market. Expenses have been around 1.5x normal during the last couple of months and I hope to return to my normal expense level from this month out. Feel like I'm some times bribing myself to stay in my current job. Dividend income was much higher for July than last year. At some point last year I invested in Gazprom expecting a high dividend yield on my investment - and apparently they doubled their dividend paid out in July (!).

Weight
Weight expressed in BMI increased a bit to 22.6 up from 22.5. After weeks of vacation I was actually okay with a small increase. In August I aim to continue the diet and also start exercising a bit.

Job
It's been hard to come back after the summer vacation. My motivation has been very low, especially since I already received a raise for H1. Probably I'll be more motivated during November and December when I know it's time to negotiate again.

Other
I hope to start up a few learning projects out of interest during the remaining time of 2019. There's just not a lot of time to do anything other than go to work and use free time to recharge sadly so we'll see how it goes.

thedollar
Posts: 107
Joined: Tue Feb 21, 2017 4:07 am

Re: the dollar journal

Post by thedollar »

UPDATE: trying to get a bit serious these days...

Main objectives
  • Keep job (pretty much the opposite of the forum objective, huh?) - believe there is a potential for me to increase my pay substantially this and next year
  • Steady, monthly investments in index funds
  • Locate and invest in more real estate if possible/lucrative
Asset allocation
I am increasing index fund holdings each month and have recently started investing in real estate. I need to invest some of my cash if I want to reach my target (see outlook below).
Image

NW delta
I found it interesting how my networth fluctuates. Since I put more money in the market each month fluctuations should get even larger.
Image

Looking towards 2030
An outlook on the cash flow I expect going forward attached below (not adjusted for expenses and taxes). If all goes well job income, dividends from stocks and real estate should increase massively from next year. Real estate investments yield quite a nice dividend (5%) compared to stocks these days (2%). The new investment will make for a nice concurrent cash flow base. Please do not pay attention to historic data as it may be slightly inaccurate.

Assumptions (increases start from 2021):
- All numbers adjusted for inflation
- Yearly pay increase: 3%
- Yearly dividend increase: 10%
- Yearly real estate income increase: 0%
- Yearly expense increase: 10%

Image

2030 outlook - passive and job income parity
Below graph illustrates that job income and passive income will reach parity already from next year!!
Image



Seeing above graphs makes me realize a few things...:
  • My career has picked up speed this past year
  • A major windfall has made the aggressive ramp up of passive income to come possible
  • May not reach passive income goals next year due to aggressiveness (shooting for the stars)

herp
Posts: 149
Joined: Sat Apr 08, 2017 1:11 pm

Re: the dollar journal

Post by herp »

Thanks for the detailed update! Looks like you're doing extremely well, if I may say so. FIRE is definitely within your reach.

wizards
Posts: 120
Joined: Sun Mar 31, 2013 8:24 pm
Location: Denmark

Re: the dollar journal

Post by wizards »

You're doing well for sure :)

What kind of real estate investments are you invested in? (if you don't mind sharing).

thedollar
Posts: 107
Joined: Tue Feb 21, 2017 4:07 am

Re: the dollar journal

Post by thedollar »

October Update

Cashflow:
Expenses: $1,841
Dividends: $872 (+69% YoY)
Dividends TTM: $1710 (+$30 MoM)

Total networth gain (loss): +$35.538

Investment allocation
Equities: 44.3%
Real estate: 17.9%
Cash: 37.8%

thedollar
Posts: 107
Joined: Tue Feb 21, 2017 4:07 am

Re: the dollar journal

Post by thedollar »

@Wizards

It's simply an investment fund (buying properties in the larger cities - not one of the wellknown providers though) since I don't have the time/skills to do it myself yet. Expected total return is 10% with 5% being paid out each year.

thedollar
Posts: 107
Joined: Tue Feb 21, 2017 4:07 am

Re: the dollar journal

Post by thedollar »

Some rather negative thoughts on investing and FI...

Initially when I first joined the forum I did not understand the scepticism on here regarding stock market investing and index fund investment strategies. It's a sure way to gain a safe 5-9% return if you just hold on doing bad times, right? Well... after thinking more about the dynamics of popular strategies and reading more about the stock market it's become clear to me, that 1) we cannot be sure of the future and 2) there are no optimal investment strategies unless you know the winners of the future (which we don't).

Thoughts on what I consider to be the two most used and primary investment strategies:
  • Stock-picking:
    It's become pretty clear to me that the game of stock picking relies solely on luck. If you want a significant return by picking stocks, you need only few stocks and the risk will then become sky high. You'd almost be better of buying lottery tickets. Sure you can buy a lot of different stocks to diversify but you're still not sure that you've picked the few winners and the upside disappears. Stock picking is NOT a reliable option in my view.
  • Index investing:
    The only other reasonable alternative to stock picking as far as I can think of is index investing. Various other strategies exists (looking at you Dogs of the Dow) but in my view that's just a standardized way of picking stocks. Index funds, however... A way of 'riding' the winners tail waves while diversifying... You sort out the losers as their market cap drops and they leave the index while you pick up potential winners as they enter the index. The method has worked historically but there is no way to know that companies and stock prices will behave in this way in the future. Since the method works it's become popular and prices of 'winners' currently included in index funds have skyrocketed. In other words, the fact that it has worked historically has created a huge risk that it won't work going forward.
Having already reached a 'healthy' SWR, I'm still going to keep my investments and my index funds. There are simply no other reasonable ways to become FI or to invest. No alternatives that would be better. The only thing we can actually control regarding the robustness of FI and RE is efficiency and low costs... Maybe I'm late to come to this conclusion which has already put forward many times by Jacob and others on this forum but I'm also both glad and somewhat sad that I've realized these things about of investing and robustness of FI.

bigato
Posts: 2343
Joined: Sat Mar 05, 2011 12:43 pm

Re: the dollar journal

Post by bigato »

While there's no guarantees, the best way to predict future behavior still is past behavior. And the way to move beyond robustness is embracing resiliency. One of the ways to do that with respect to investing is to allocate in non-correlated or negatively correlated asset classes. You exchange possible higher returns for less risk. If you restrict yourself to a single asset class like stocks, diversifying can only go so far.

Further resiliency can be achieved by moving beyond the paradigm of FI towards ERE, which adds complexity and decreases your coupling to any single source of income/inputs. That means, for example, that investment returns and robustness need not be higher because you can grow some of your food, trade skills in your community, ride and fix your bike instead of needing a car. You have multiple strategies to fullfiling any single single need, thus decreasing the importance of any of them.

thedollar
Posts: 107
Joined: Tue Feb 21, 2017 4:07 am

Re: the dollar journal

Post by thedollar »

bigato wrote:
Wed Nov 20, 2019 10:45 pm
Further resiliency can be achieved by moving beyond the paradigm of FI towards ERE, which adds complexity and decreases your coupling to any single source of income/inputs. That means, for example, that investment returns and robustness need not be higher because you can grow some of your food, trade skills in your community, ride and fix your bike instead of needing a car. You have multiple strategies to fullfiling any single single need, thus decreasing the importance of any of them.
Exactly what I'm getting at. You can only go so far in terms of ramping up investments and diversifying. Once you have reached a healthy SWR more money/investments cannot mitigate risks from unpredictable future and/or investment environments. Higher level of resilience is achieved by other factors/skills as you correctly point out.

Do you have any strategies in terms of diversifying to assets not correlated with the market? Gold?

bigato
Posts: 2343
Joined: Sat Mar 05, 2011 12:43 pm

Re: the dollar journal

Post by bigato »

I mostly follow the golden butterfly portfolio items, although I don't adhere strictly to the proportions of 20% in each asset class. This is about 95% of my investments now, and the other 5% is in riskier and/or experimental strategies.
Other than my investments, I have a rural property of about 2 and a quarter acres with plenty of access to water, and I have experience growing some of my food.

thedollar
Posts: 107
Joined: Tue Feb 21, 2017 4:07 am

Re: the dollar journal

Post by thedollar »

November Update

Cashflow:
Expenses: $2,000
Dividends: $1,283 (+162% YoY)
Dividends TTM: $1777 (+$67 MoM)

Total networth gain (loss): +$65,460

Investment allocation
Equities: 44.5%
Real estate: 17.6%
Cash: 38.0%

thedollar
Posts: 107
Joined: Tue Feb 21, 2017 4:07 am

Re: the dollar journal

Post by thedollar »

December Update

Cashflow:
Expenses: $2,712 (woops!)
Dividends: $1,885 (+112% YoY)
Dividends TTM: $1,847 (+$70 MoM)

Total networth gain (loss): +$36,301

Investment allocation
Equities: 45.6%
Real estate: 17.4%
Cash: 37.0%

thedollar
Posts: 107
Joined: Tue Feb 21, 2017 4:07 am

Re: the dollar journal

Post by thedollar »

For 2019 spending was much higher than 2018 primarily due to vacations but also general lack of focus. I will try to improve this for 2020. Other goals for 2020 are primarily investment and allocation related. Investment/net worth gains were huge during 2019 but I realise that the returns could disappear within a month so I wont put too much emphasis on those.

2019:
Expenses: $24,677
Dividends: $22,620
Total networth gain (loss): +$347,171

2020 goals:
  • Achieve $18,200 spending goal
  • Achieve $30,000 dividend goal
  • Invest additional $270,000 in stocks
  • Invest additional $300,000 in real estate
  • Achieve 50%+ stock allocation
  • Slowly move allocation towards index funds to reach 80% of all stock investments

herp
Posts: 149
Joined: Sat Apr 08, 2017 1:11 pm

Re: the dollar journal

Post by herp »

Even with the increased spending, it looks like you're in excellent shape.

thedollar
Posts: 107
Joined: Tue Feb 21, 2017 4:07 am

Re: the dollar journal

Post by thedollar »

Thanks Herp!

January Update

Cashflow:
Expenses: $X (to be updated)
Dividends: $877 (+96.7% YoY)
Dividends TTM: $1,900 (+$53 MoM)

Total networth gain (loss): +$95,421

Investment allocation
Equities: 47.1%
Real estate: 17.0%
Cash: 35.7%

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