johngalt's journal (France)

[johngalt]

Hey everyone,
i'm johngalt, a 26yo young man from Paris, France.
---CURRENT SITUATION---

Current asset : 102k€

- Monetary (bank accounts) : 63%

- Bonds (through mutual funds) : 13%

- Stocks (owned and through mutual funds) : 23%

- Other (gold) : 1%
Current salary after tax : 2k€ per month

Current spending : 650€ / 1,5k€ per month (see below)

Rent : 850€ (currently paid for by my parents - even though i've asked them many times to stop, they want to pay for my rent -they're quite rich. So i'm currently not spending this money, but i like counting it as being spent in my budget)

Transport : 50€

Electricity : 50€

Food/shopping : 300€

Fun : 50€

Holidays (1/12 of yearly spendings) : 150€

Other (gifts, etc.) : 50€
--- 2013 GOALS ---
Asset : Reach 150k€ (quite ambitious)

Asset allocation :

- Get monetary part to 35-40%

- Gets stocks to 25-30%

- Get bonds to 15-20%

- Get gold to 5-10%

- Get some real estate (through mutual funds) to about 5-10%
Spending :

- I must try reducing my food and shopping spending... damn Paris is an expensive city !

- I cannot act on the transport spending. I live in Paris, i already have the cheapest subway pass and no car.

- I won't be able to act on holidays and gifts (4 weddings this year, all out of town and 1 abroad).

- I don't know what will happen with my rent... i hope moving in with my gf by the end of the year, so i would finally get a rent to pay, but could be cheaper than 850€.
--- Other ---

I'll be changing job in the next two months, but i don't know yet if the salary will be much higher (fyi, 2k€ after all taxes is already quite a high salary... in france the median net salary is 1,5k€ and the net is 1,8k€ - after income tax)
--- FOR NON-FRENCH READERS ---
Some infos to help non-french readers (i.e. the vast majority) understand some details of my current asset allocation :

- Monetary refers to (1) "regulated" bank accounts which serve "regulated" (on a national level) interest rate at least at the level of inflation, entirely tax free. About 35k€ can be placed there. It's safe, very liquid, and saves your purchasing power. And (2), it also refers to other "regulated" bank accounts with low yield on the saving but that give rights to "preferred" very low interest rates for loans to buy an apartment. All in all, it's quite a good deal to have money there if you a plan a future investment for an apartment.

- My bonds and stocks are located in special "fiscal envelopes" that allow me to get my returns almost tax free (well, at least at a tax level much lower than the income tax).

[johngalt]

Little typo in the previous post : "in france the median net salary is 1,5k€ and the net is 1,8k€ - after income tax" = "in france the median net salary is 1,5k€ and the average net salary is 1,8k€ - after income tax"

-----------------------------------
I'll be quitting my job tomorrow, getting a nice 5k€ of bonus.
I'll probably invest it mostly in real estate mutual funds, to diversy my current assets and get my asset allocation closer to what i'd like it to be.
I'm really convinced that asset allocation has a major impact on the overall yield of one's assets (often more than "stockpicking", especially on long periods).
What do you guys think of the importance of asset allocation vs tactical "stock/fund picking" ?
Cheers

[Dragline]

Unless you are a stock wizard (and maybe even if you are), you are much better off long term focusing on asset allocation.
Just make sure that the things you pick are actually uncorrelated or negatively correlated -- i.e., when one group has a serious drop, the others ought to stay relatively neutral or go up. Some bonds are correlated positively with stocks and you would not want to hold those, given what else you have.

[George the original one]

From an income perspective, I do not have great faith in asset allocation.
For instance, someone who has a geographically diverse real estate empire is not going to suffer unless suddenly no one can afford to rent homes/offices. Sure, parts of their empire may decline and they might suffer some decline in income, but the overall income will be reliable.

[johngalt]

Thanks for those first comments.
Here is a little graph i've made to track my progress towards financial independence :

[palmera]

hey there. je vais a Paris (pour un moi)en mai si tu veux faire un meet up!
welcome!

[bulgaria]

Hi Johngalt,
How are you trying to get from 102k->150k with a <2000 net income job? Even if you are able to save it all, it will only get you half way. So if you have some magic tricks, perhaps you can share them?

[johngalt]

Hey !
@Bulgaria

No magic tricks, i did write that my goal was ambitious

I am going to be at 110k€ by the end of the month thanks to the bonus and other exceptional revenues.
Basically, that's what i got in mind :

- 15k€ coming from income savings

- 5 to 10k€ coming from interests
That would get me to 130/135k€.
I also plan on doing some private teaching too to get some complementary income.
We'll see how it goes !
@Palmera

I'm not sure yet if i'm ready yet for public meetup... there are many "sensitive" infos regarding my assets on this journal and it's nice to have the anonymity of internet... at least for now.

[johngalt]

To give some update :

Assets
Noncurrent fixed assets
Real estate : 0 k€
Other : 0 k€
Noncurrent financial assets
Equity securities : 50 k€
Debt securities : 20 k€
Precious metals : 1 k€
Current financial assets
Cash equivalent : 9 k€
Cash : 50 k€

----

Equity
Savings from work income : 120 k€
Capital gains from investments : 8 k€
Liabilities
Short term debt : 0 k€
Long therm debt : 0 k€
Deferred taxes : 2 k€

Total gross worth : 130 k€
Total net worth : 128 k€
Spending rate : 1,25 k€ / month

[johngalt]

Update for year end 2014

Assets
Noncurrent fixed assets
Real estate : 0 k€
Other : 0 k€
Noncurrent financial assets
Equity securities : 81 k€
Debt securities : 18 k€
Precious metals : 1 k€
Current financial assets
Cash equivalent : 9 k€
Cash : 45 k€

-----------------------------------------

Equity
Savings from work income : 133 k€
Capital gains from investments : 18 k€
Liabilities
Short term debt : 0 k€
Long therm debt : 0 k€
Deferred taxes : 3 k€

Total gross worth : 154 k€
Total net worth : 151 k€
Spending rate : 1,25 k€ / month
SWR : 10%

[johngalt]

Update end of 2019 :

Noncurrent fixed assets
Real estate : 0 k€
Other : 0 k€
Noncurrent financial assets
Real estate securities : 55k
Equity securities : 275k
Debt securities : 10k
Precious metals : 1 k€
Current financial assets
Cash equivalent : 15 k€
Cash : 20 k€

Equity
Equity : 320 k€
Liabilities
Short term debt : 0 k€
Long therm debt : 42 k€
Deferred taxes : 14 k€

Gross worth : 376k
Net worth : 320k

Long term debt is a 50k bank loan at 0.9% fixed rate over 4yrs.

I also have a stock option plan at my current company, est. current net value is 80k but the company being private it has no real market value.
At the end of the vesting period mid 2022, the stock options would be worth > 300k (at current stock price, but it will depend on the stock price then) but again value can be unlocked only in case of a liquidity event (IPO, secondary rounds, etc.).

[wolf]

Welcome back! Great development on the financial front. What have you done all those years (in regards of ERE)?

[johngalt]

Well I got married and a kid, so that will postpone a bit the ERE goalpost.
But on the financial front things have been going well, with strong returns on my stocks together with a significant increase in my salary.

Looking back at my (now very old) SWR projection (which was valid when single) :

2011 : 36% SWR
2012 : 26% SWR
2013 : 18% SWR
Projected :
2014 : 13% SWR
2015 : 9% SWR
2016 : 7% SWR
2017 : 5,5% SWR
2018 : 4% SWR
viewtopic.php?p=47494#p47494

If i put myself into that situation, as of 2019, I am a bit under 5%, so a bit late on the intial projection.

Based on my actual spending I am at 10% SWR so still far from the goal.