Wednesday, December 21, 2011

End of 2011 - Period 2010-2011 ($ 165,000, +$45,000)

Financial goal:
- In the overall  the only changes were the additional savings and some fluctuation due to the fact that the assets are held in four different currencies.
- At the current inflation rate and the administration fees  combined around 5%,  it is very much uncertain how to get to my point B. My original goal was to have $ 2 million.
Inflation adjustments -two observations:
- Financial independence goal review. I should either to adjust for  inflation my nest egg or the financial independence goal, i.e. it should go to $ 2.1 million.
- Beyond financial independence. The invested money will earn at equal or just above the inflation rate,  the returns (annual income) will start depreciate immediately.

Wednesday, December 14, 2011

When is 10% annual income savings rate enough?

I ran several scenario - annual contributions as percentage of annual salary, inflation, interest returns on the investments, Company (employer ) contributions:

Due to inflation expectations and the risks, once retired I would keep my money in the inflation protected vehicles - precious metals, government bonds.

Wednesday, December 7, 2011

Assets investment in different currencies - USD, EUR, GBP, RUB

Why to invest in various currencies?  

World major Currencies.  There is several major currencies in the world - US dollar, Euro, Pound Sterling, Japanese yen and Swiss Frank. 

The latter is just a combination of the four currencies (Official Swiss Franc 2011 composition is 60.2% USD, 26.7% Euro, 4.2% Pound Sterling, 3.9% Japanese yen). So there is no real point to buy  Swiss Franks - they are known to change the currency composition quite dramatically.

Japanese yen - on December 29, 1989, Tokyo's Nikkei stock average reached its all-time peak of 38,915.87. Twenty years later, the Nikkei has never again reached that level — and, in 2009, reached a new low of 7,054.98.

Renminbi (CNY ), although through most of its history, the value of the  renminbi was pegged to the U.S. dollar. Recently CNY has been strengthened to US Dollar - year to year from 6.6 to 6.3 - about 5% difference.

Fear of losing value.