FI in Sweden

Where are you and where are you going?
Forskaren
Posts: 189
Joined: Sat Nov 07, 2015 4:04 pm

Re: FI in Sweden

Post by Forskaren »

Well, I might start a family if I find the right person. Many women in my area that are not already taken, got something serious wrong with them. Mental problems, economic problems, unemployed, children with multiple men, nonexistent education etc. Being single is better than many options that I see out there.

I have some problems with joints, so I have some pain and limitations to movement. I need to work om my health to slow the worsening of the problem. It is very likely that I at some point will need surgery, which is always a risk. The surgery can solve most of the problem but it not good to do until you really need it.

Forskaren
Posts: 189
Joined: Sat Nov 07, 2015 4:04 pm

Re: FI in Sweden

Post by Forskaren »

I feel for a more defensive strategy, as I no longer need to chase the highest yield.

In the beginning of this year I changed my non-retirement investments from 100% stocks, to a more classical 60% stocks and 40% bonds. The plan is to do an annual rebalancing to get back to 60/40 in the beginning of each year. In extreme years I might do an extra rebalance. If I need to withdraw money, I sell the assets that get me back closer to 60/40. Automatic investments will be made at a 50/50 ratio, since most years stocks outperform bonds.

All stock investments will be in low cost index funds. All bond funds will be in Swedish currency.

20 % in a bond fund with short term corporate bonds with low to moderate risk (fee 0.1%, total cost about 0.3%)

20 % in a bond fund with moderate duration bonds, residential, governmental, municipal bonds with low risk (fee 0.10%, total cost about 0.15%)


30 % in global index stock fund (0.11% total cost)

15 % in Swedish index stock fund (0.00 % total cost)

15 % in Emerging markets index stock fund ( fee 0.15%, total cost 0.29%)

wolf
Posts: 1090
Joined: Fri Jan 06, 2017 5:09 pm
Location: Germany

Re: FI in Sweden

Post by wolf »

Why do you feel for a more defensive strategy?

If I remember correctly you are in your 30s. It's a long time to draw down from your investments.
In the short time you may feel more secure by adding bonds, but there are long term risks involved regarding inflation.

You may find that article by ERN interesting:
Early Retirement Now: The Ultimate Guide to Safe Withdrawal Rates – Part 19: Equity Glidepaths in Retirement

Forskaren
Posts: 189
Joined: Sat Nov 07, 2015 4:04 pm

Re: FI in Sweden

Post by Forskaren »

wolf wrote:
Tue Jan 28, 2020 11:59 pm
Why do you feel for a more defensive strategy?

If I remember correctly you are in your 30s. It's a long time to draw down from your investments.
In the short time you may feel more secure by adding bonds, but there are long term risks involved regarding inflation.

You may find that article by ERN interesting:
Early Retirement Now: The Ultimate Guide to Safe Withdrawal Rates – Part 19: Equity Glidepaths in Retirement
I turned 40 and I have investments that corresponds to over 40 years of expenses in non-retirement savings. I also now want to have the option to retire at any time or/and buy a reasonable priced home. With zero returns after taxes and inflation my money would probably last until I am 100 if I stopped working today, considering that I will get pension and can draw from retirement investments. I don’t need to get the highest returns by taking more risk. A 1929-style crash with 90% drop in stocks would suck if I want to have to option to retire within reasonable time. Didn’t it take around 20 years for the stock market to recover back to the 1929-peak level if you made no withdraws?
With a 60/40 ratio my investments are more diversified than 100% stocks. The rebalancing tends to make me buy low and sell high, so the investments get a little extra boost from that even if the expected average return will be lower than 100% stocks.

wolf
Posts: 1090
Joined: Fri Jan 06, 2017 5:09 pm
Location: Germany

Re: FI in Sweden

Post by wolf »

I see, thanks for the explanation. Still, I am not arguing for an 100% now. Rather I argue what is described in the link. It's called Equity Glidepath. You start at 60/40 now and move slowly over the course of the next ten / fifteen years to 100%. I don't have higher returns in my mind, rather I think of risks involved. In the short term you have the sequence of return risks and potential crash. And in the long term there is the risk of inflation. Both could be mitigated to a certain degree with Equity Glidepath.

Forskaren
Posts: 189
Joined: Sat Nov 07, 2015 4:04 pm

Re: FI in Sweden

Post by Forskaren »

My savings rate for January was very high:

Report US$
Earned income 3279

Expenses
Rent 497
Transport 26
Food 261
Entertainment 79
Other 143
Total 1006

Savings 2273
Savings rate (%) 69

Forskaren
Posts: 189
Joined: Sat Nov 07, 2015 4:04 pm

Re: FI in Sweden

Post by Forskaren »

February was another good month financially.

Report US$

Earned income 3544

Expenses
Rent 493
Transport 23
Food 185
Entertainment 70
Other 417
Total 1188
Savings 2356

Savings rate (%) 66

Forskaren
Posts: 189
Joined: Sat Nov 07, 2015 4:04 pm

Re: FI in Sweden

Post by Forskaren »

I started to invest by 60% stocks, 40% bonds in the beginning of the year. Now I have put the rules in writing.

Investment rules for non-retirement accounts:
The investment rules can only be changed every 3 years:
Jan 2023
Jan 2026
Jan 2029

Every year in January, I rebalance back to 60% stocks and 40% bonds. No extra rebalancing allowed.

Monthly savings or deposits have to either be 50/50 or 100% stocks. At least 50% of my annual income should be saved, unless big events in life.

If I do withdraws during the year, I sell to get closer to 60/40.

The stocks should only be index funds with low fees. At least half in global index funds, while the rest in Swedish and emerging market index funds.

The bonds should equally divided in the two funds I already chosen.

herp
Posts: 152
Joined: Sat Apr 08, 2017 1:11 pm

Re: FI in Sweden

Post by herp »

Hi Forskaren,

I think you have a solid plan and I think the rationale for dialing down risk is sound. Why keep playing the game if you have already won? A 60/40 allocation still gives good room for growing your nest egg as long as you continue to work.

Can I ask why monthly savings are not simply set to be contributed at your target allocation of 60/40?

Forskaren
Posts: 189
Joined: Sat Nov 07, 2015 4:04 pm

Re: FI in Sweden

Post by Forskaren »

herp wrote:
Thu Mar 26, 2020 4:46 am
Hi Forskaren,

Can I ask why monthly savings are not simply set to be contributed at your target allocation of 60/40?
It allows me to have a weak rebalancing between the big rebalancing. Just now I am saving in 100% stocks each month. A normal year I would save 50/50, since stocks would grow to temporary be over 60% until big rebalance.

Also, it feels good to at least have bought some stocks if the bottom of a crash would be in the middle of a year.

Forskaren
Posts: 189
Joined: Sat Nov 07, 2015 4:04 pm

Re: FI in Sweden

Post by Forskaren »

March was an expensive month including car repairs. Still my income covered all costs.

Report US$

Earned income 3286

Expenses
Rent 479
Transport 1277
Food 465
Entertainment 49
Other 302
Total 2571
Savings 715

Savings rate (%) 22

benrickert
Posts: 24
Joined: Sat Apr 25, 2020 11:34 am
Location: Oslo

Re: FI in Sweden

Post by benrickert »

Good timing on the change to a more conservative asset allocation given coronavirus, @Forskaren ! #hindsightbias 😊
Have you considered increasing gold/precious metal exposure instead of bonds given zero interest rates and high degree of money printing?

Forskaren
Posts: 189
Joined: Sat Nov 07, 2015 4:04 pm

Re: FI in Sweden

Post by Forskaren »

Yes, but my investment rules forbid change until Jan 2023. I am considering stocks in silver mining companies (5%) or physical gold (10-30%). Silver is more aggressive than gold, and mining more aggressive than metal. Silver mining company stocks may give a gigantic payoff or total crash. Supposedly, they are not very correlated to normal stocks.

I don’t want to buy paper gold and silver not backed by real metal. Buying real silver is very stupid in Sweden since you pay 25% sales tax, so spread will be over 30%. Gold bars you can buy without sales tax. Both silver and gold are a bit unpractical to own the real metal at home. Gold got some ETFs backed with real metal, fees acceptable but could be lower. Some silver ETF looked expensive and 100% fake silver.

benrickert
Posts: 24
Joined: Sat Apr 25, 2020 11:34 am
Location: Oslo

Re: FI in Sweden

Post by benrickert »

Aha. Interesting. So the allocation you’ve set you are not going to change until at least 2023? I see the benefits to that. It’s easy to jump around to what sounds good.

Have you considered gold royalty companies? They own mining rights, getting paid for price*volume by the miners. So you get the price upside but without the costs (very high margins). Find them interesting but as with the miners they’ve run up in price since the March bottom.

Forskaren
Posts: 189
Joined: Sat Nov 07, 2015 4:04 pm

Re: FI in Sweden

Post by Forskaren »

Yes, it is good to have rules that forces you to not react on impulses. I have been thinking.

I am concerned about that if many think that a certain type of gold investment is better than other ways, that it will be overvalued. The problem with gold itself is that the value of all gold in the world is small compared to the currency, bond, real estate and stock markets. Why would you choose to have disproportionate much gold?

benrickert
Posts: 24
Joined: Sat Apr 25, 2020 11:34 am
Location: Oslo

Re: FI in Sweden

Post by benrickert »

@Forskaren Agree on gold. It has had a strong run and difficult to value what the right price is. The fed-is-printing-money-argument seems a little simplistic but could eventually prove correct. But maybe deflation first due to rapidly declining demand/ recession. The problem as I see it is there is close to zero expected return on government bonds. But I guess the could still hold their value if stocks went way down.

Forskaren
Posts: 189
Joined: Sat Nov 07, 2015 4:04 pm

Re: FI in Sweden

Post by Forskaren »

My savings rate for April:
Report US$
Earned income 3242

Expenses
Rent 483
Transport 140
Food 467
Entertainment 58
Other 169
Total 1317
Savings 1924
Savings rate (%) 59

April was an economically good month. Food became a bit high due to restaurant visits and the purchase of some finer beers and Whisky.

Forskaren
Posts: 189
Joined: Sat Nov 07, 2015 4:04 pm

Re: FI in Sweden

Post by Forskaren »

My savings rate for May was very good, considering that I paid the annual car insurance.

Report US$ for May

Earned income 3653

Expenses
Rent 522
Transport 346
Food 367
Entertainment 81
Other 189
Total 1504
Savings 2149

Savings rate (%) 59

Forskaren
Posts: 189
Joined: Sat Nov 07, 2015 4:04 pm

Re: FI in Sweden

Post by Forskaren »

june

Report US$

Earned income 3359

Expenses
Rent 514
Transport 0
Food 380
Entertainment 252
Other 112
Total 1258
Savings 2101

Savings rate (%) 63

Forskaren
Posts: 189
Joined: Sat Nov 07, 2015 4:04 pm

Re: FI in Sweden

Post by Forskaren »

I don’t spend much money in this crisis. No significant purchases and basically no travel.
For July:
Report US$

Earned income 3582

Expenses
Rent 548
Transport 8
Food 308
Entertainment 23
Other 155
Total 1042
Savings 2539

Savings rate (%) 71

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