wolf's journal

Where are you and where are you going?
wolf
Posts: 1096
Joined: Fri Jan 06, 2017 5:09 pm
Location: Germany

September 18 Financial Status

Post by wolf »

Savings Rate = 88,3% (12 months rolling average)
Yearly Expenses = 5285€ (12 months rolling average) *
Withdrawal Rate = 7.7% (actual yearly expenses + margin of safety + health insurance)
Milestone = 86% (accumulated money compared to milestone of 210k€ by end of 2019) **
Investment Ratio = 69% (invested money in equity/bond/commodity market, rest of it in cash)
Passive Income = 61% (actual dividend&bonds passive income covering my actual yearly expenses)
Investment Rate= 4111€ (in this month)
JAFI = 1.02 (assuming I had to pay health insurance like I were RE)

* that is without health insurance
** After achieving the milestone, I'd like to reevaluate possibilities "Coasting deliberately to FI/FF"

wolf
Posts: 1096
Joined: Fri Jan 06, 2017 5:09 pm
Location: Germany

October 18 Financial Status

Post by wolf »

Savings Rate = 89% (12 months rolling average)
Yearly Expenses = 4803€ (12 months rolling average) *
Withdrawal Rate = 6,5% (actual yearly expenses + margin of safety + health insurance)
Milestone = 88% (accumulated money compared to milestone of 210k€ by end of 2019) **
Investment Ratio = 71% (invested money in equity/bond/commodity market, rest of it in cash)
Passive Income = 67% (actual dividend&bonds passive income covering my actual yearly expenses)
Investment Rate= 5007€ (in this month)
JAFI = 0.97 (assuming I had to pay health insurance like I were RE)

* that is without health insurance
** After achieving the milestone, I'd like to reevaluate possibilities "Coasting deliberately to FI/FF"

LiberateMind
Posts: 160
Joined: Fri Oct 26, 2012 8:18 pm

Re: wolf's journal

Post by LiberateMind »

Impressive Savings rate!! Any forecast on when you are going to achieve the milestone?

wolf
Posts: 1096
Joined: Fri Jan 06, 2017 5:09 pm
Location: Germany

Re: wolf's journal

Post by wolf »

@LiberateMind: thx! Maybe I'll achieve the milestone in Q3/19. (if there is no market crash)

classical_Liberal
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Joined: Sun Mar 20, 2016 6:05 am

Re: wolf's journal

Post by classical_Liberal »

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Last edited by classical_Liberal on Fri Feb 05, 2021 1:49 am, edited 1 time in total.

wolf
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Location: Germany

Re: wolf's journal

Post by wolf »

@classical_Liberal: Thanks! To be honest, I increased my assets only because of my SR. Markets were only of little help. About 80% of my invested assets are based on USD. So from an investment perspective the EURO weakness helped a bit, because my ETFs are priced in EUROs.

Yeah, Q3 of 2019 is close. That's motivating. And I still plan to coast to FI or semi-ERE in a few years. There might be also some changes at work in the next few years. So I first have to wait and figure out how those possible changes will influence me (and my income). Till I know exactly about it, I'll try to save and invest like I have been over the last 12 months. Maybe I'll postpone the start of "coasting to FI" / "semi-ERE" a bit, depending on the circumstances. Well, let's see.

First things first! Let's focus on the next milestone. After that comes the next milestone for sure.

In addition to the text form of my monthly financial progress, I am planning to upload some graphs at the end of the year. Those will show the progress from a financial point of view over the last few years, since I started with ERE back in 2016.

wolf
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Location: Germany

Re: wolf's journal

Post by wolf »

In order to become antifragil, I thought about various "backup"-systems.
Best case would be that they are not influencing each other, are independent and non-correlating.
Many of those "backup"-systems have been already mentioned in the ERE-Forum, because they are a part of ERE.

I came up with the following "backup"-systems:
- ERE skills, competencies, tools, wisdom, etc.
- real estate (where I live in)
- family, friends, neighbours, community
- health
- insurances, especially health insurance
- pension
- career "capital", work related / marketable skills and experiences
- basic security benefits
- unemployment insurance
- capital assets
- cashflow from actual passive income (dividends, yields, etc.)
- etc.

In the second step I thought about measuring them. Monetary "backup"-systems are the easiest to measure, because they are quantifiable.
I created a spreadsheet which measures the following quantifiable "backup"-systems on a yearly basis.
- expense ratio (expenses / income), in order to quantify my expenses flexibility (margin of safety)
- years of expenses based my capital assets (the traditional x FI years)
- years fo expenses based on my real estate, where I live in
- percentage of expenses which would be probably covered with my predicted pension
- my expenses compared with the statistical average of my peer group in my country (1 single person, Germany), as an indicator for my ERE skills
- percentage of expenses which would be covered with my predicted unemployment insurance for the next 12 months, if I would get unemployed
- percentage of expenses which are already covered from my passive income

I collected the data for the last five years, in order to see changes / progress.
The overview ("Big Picture" of my monetary "backup"-systems) gave me further confidence, that I am on a good way to become/be antifragil in a monetary sense.

Of course that is only one part of the equation in order to get a antifragile score. The other parts (see list above) are also very important and crucial, e.g. health and relationships.

classical_Liberal
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Re: wolf's journal

Post by classical_Liberal »

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Last edited by classical_Liberal on Fri Feb 05, 2021 1:48 am, edited 1 time in total.

wolf
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Location: Germany

Re: wolf's journal

Post by wolf »

classical_Liberal wrote:
Fri Nov 02, 2018 3:53 am
That's why I think the other, less tangible, assets are truly the most important forms of diversification. IOW, situations in which my pension (social security) fails will probably highly correlate with situations in which invested capital fails to produce 3% real returns. In these cases one would need ridiculous (say 100X spending) amounts of monetary capital to avoid disaster. It's much "cheaper", from a YMOYL life-energy standpoint, to work on genratating other forms of capital (80/20 rule) than it is to accumulate that much money. It's the best insurance at the best price.
Interesting point of view. I do think too that other, less tangible, assets are important for diversification.

For example, first I think of health. I find it easy to get in shape, do exercises, weight training, go for a walk/run, go bicyling, eat healty etc. And if I use the Pareto Principle it would be even easier.

My second example is friends, family, relationships, social connections, and community. From a YMOYL life energy standpoint I find it more difficult than just work, earn money, save and invest. Maybe one reason lies in my personality type (INTJ). Because I assume, I compare (unconsciously) my RHW (real hourly wage) with the expenses/investments involved in building social connections. Therefore I find connecting with people and building an "asset" on it much more difficult than building capital assets. Of course, I try to do it, but building longterm relationships (as a type of "asset" for diversification) is challenging for me. Well, I have a really good connection to my family. But beside family, I have only one friend, who I see regurarly. I In addition to that I have good connections to my colleagues, but I don't count them as an "asset". Well, I value independence and time by myself.

Do you mean that with "cheaper" and less tangible assets? I am interested to understand you, how you mean it. Can you give me examples. And how do you apply the 80/20-Principle? What are your other "backup"-systems, besides an "old age monetary bucket"?

classical_Liberal
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Re: wolf's journal

Post by classical_Liberal »

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Last edited by classical_Liberal on Fri Feb 05, 2021 1:48 am, edited 1 time in total.

wolf
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Re: wolf's journal

Post by wolf »

@classical_liberal

Together with your journal your thoughts make perfect sense to me, especially with this post here: viewtopic.php?f=9&t=8943&start=80.

I've started to read the posts in your journal (again). It's a great inspiration to me regarding a semiERE-mindset, contentment in life and building social connections, and of course all types of "assets".

When I read, that you identify yourself as an ENTJ, I was even more motivated to read your journal from the beginning. I would like to have a little bit more E in my life. Well, working on it. ;)

For example I have been meeting with a friend on a weekly basis, in order to go out for walks in the woods with dogs. And she is an ISFJ. So our conversation topics are very interesting. They are totally different from what I used to think about myself. Sometimes I'm even speechless :o and don't know what to answer, because I don't talk and think about such topics very often (senses, feelings, people-based/-centered stories, mundane tasks, empathy, etc.) So I understand what you mean with the following:
the importance of having some relationships with others of a different personality type adds significant value

noahrudite
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Re: wolf's journal

Post by noahrudite »

You mention that you want to become more antifragile. Looking at the list I can only see things that would make you more robust or resilient. Those are not bad things, but is there anything that can be done to become truly antifragile? As per Wikipedia: "Antifragility is beyond resilience or robustness. The resilient resists shocks and stays the same; the antifragile gets better".

wolf
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Re: wolf's journal

Post by wolf »

Interesting...I am gonna think about that.

wolf
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Re: wolf's journal

Post by wolf »

Bankai wrote:
Sat Nov 10, 2018 3:59 am
@wolf - are you saying <1.5% then? What are you factoring in? Supporting more humans or just spending way more? Good job reaching 4%!
from SWR milestones

Thank you Bakai! I answer your question in my journal, because I don't want to start a off-topic discussion over there.

Well, first of all, I have a defensive asset allocation. I think the total real return will be more like 3% than 4% p.a.
Secondly, I'll plan to spend more, e.g. for traveling, leisure activities, vacacions, experiences in life, maybe also tools and stuff. (of course all in a ERE style)
Last but not least, I want a margin of safety in order to be flexible with my budged/expenses, e.g. if health related costs will increase significantly more than expected, or ...

But really, it is just a "number", which I consider as a "north star", that leads the direction I wanna be in the very longterm.

And recently I learned to focus more on the journey and not the destination. So I don't concentrate too much on that special longterm goal. Rather I set my next milestone in midterm (either financially, or work related, or a special travel, etc). And then I try to reach that, e.g. my milestone of 210k€ till the end of 2019.

thegreatvoid

Re: wolf's journal

Post by thegreatvoid »

@wolf do you take welfare benefits into account , when calculating your numbers ? I don´t know about Germany , but in Austria when you get fired or quit your job, you get unemployment insurance for a very long time ( 60 % of your gross pay in your last job ) .

after that you can receive something combarable to Hartz IV in Germany , for a year , which is 95 % of unemplyment insurance .

after that you can receive benifits indefinitley ,but they force you to sell your assets first.

I know it´s very anti-social to maybe game the systems , but most of us pay into these programs and never receive any benifits.

just wondering what your thoughts are ? PS Glückwunsch reaching 4 % SWR

wolf
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Re: wolf's journal

Post by wolf »

Thank you for the "Glückwunsch" :)

No, I don't take welfare benefits into account and I don't plan to do so. I want to be selfsufficient by myself and I don't want others to pay.

Of course I pay unemployment insurance every months. On the other side I would get some money (60% for 12 months) from it, when/if I would become unemployed.

But I consider unemployment insurance as a kind of backup system (one of many), as I described a few posts earlier (viewtopic.php?f=9&t=9636&p=177207#p176624)

I guess when it comes to welfare benefits these are the positive/negative aspects of a social country (e.g. Germany, Austria, ...), depending on your view (poor/rich, liberal/conservative/, paying/receiving, ...)

@thegreatvoid: Do you take welfare benefits into account, when you calculate your numbers?

wolf
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Re: wolf's journal

Post by wolf »

2Birds1Stone wrote:
Sat Nov 10, 2018 11:40 am
Congrats Wolf! Do you find it get's easier for the WR% to drop once you got to 4%?
from SWR milestones

Thank you 2Birds1Stone! I answer your question in my journal, because I don't want to start a off-topic discussion over there.

Good question! And I guess that there are many possible answers to it, depending on many aspects, etc.
I do think that it gets easier, but not because of the number, but because of others things around that number.
When I found out about ERE, back in 2015/2016, my WR was much higher. It was around 20%, because I had already saved some money till then and I have been living quite frugally since I started working. So in the beginning of my ERE journey my expenses were 2-3 times greater than these days. With practicing ERE and reducing my expenses a S-curve developed. In the beginning the improvements were little. But after some months the improvements (mostly dut to reducing my expenses) became greater and greater. Now, my expenses had flattened out. There is not too much room for improvement anymore (when comparing with a few years ago). Of course I could increase my income, but I find that not as easy to do as reducing my expenses. So yes, in a some way I find it got easier to drop my WR%. Time will tell, if that is also the case for the future months and years.

How have you experienced the change from a much higher WR% to around ~4% (where you are right now)?

thegreatvoid

Re: wolf's journal

Post by thegreatvoid »

It´s indeed a very strange system we have. Just as an example. My younger sister´s SO quit his job in may and has been receiving unemployment benefits ever since, even though he earns 7 k a month from renting out his house.

I don´t take it into account when calculating my numbers, but I´m thinking about going to university towards the end of my accumulatio phase and coasting to FI .
For the reason I have been working full time for 4 years, I am eligble to a program here in Austria, from which I would receive 800 Euros per month for studying, which is pretty great considering it´s more than my monthly expenses and I live 3 kilometers from the univesity.

As a danish citizen I would also get SU ( money for stuying ) , but I don´t think I will ever move back to Denmark, due to the high taxes.

I´m in a similar position like you. Comprable SWR , but I´m also aiming for a very low SwR due to my young age and
presumably higher spending in retirement.

2Birds1Stone
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Re: wolf's journal

Post by 2Birds1Stone »

wolf wrote:
Sun Nov 11, 2018 2:39 am
from SWR milestones

Thank you 2Birds1Stone! I answer your question in my journal, because I don't want to start a off-topic discussion over there.

How have you experienced the change from a much higher WR% to around ~4% (where you are right now)?
Thank you for the explanation.

I have detailed monthly WR% data going back to December of 2014, where it was 22.92%!

In the beginning, the addition of investments made the biggest difference in WR% change, but as the portfolio grew, new funds represented a smaller and smaller portion of the entire nut. While my portfolio grew in the first 2 years, so did my income, and spending! The last 18 months, I'm finding that reducing spending has a much more profound impact on WR%. For example, in October 2017, my TTM spending was $24,630 and WR% was 7.3%, 12 months later I hit WR% of 4.46%, largely in part to TTM spending dropping to $18,547. To get the same effect from new investments/returns, my portfolio would have to grow by $200,000.....I guess the point I'm trying to make is, there is still a lot of room for improvement on spending for me/us.

I do feel like once you get close to or below 4%, and still earn an income, you end up in runaway mode......unless you drastically increase your expenses moving forward.

classical_Liberal
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Joined: Sun Mar 20, 2016 6:05 am

Re: wolf's journal

Post by classical_Liberal »

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Last edited by classical_Liberal on Fri Feb 05, 2021 1:54 am, edited 1 time in total.

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