Monday, December 30, 2013

December 2013 update ($298,420 -$9,390 or - 3%)



The portfolio changes:
Accumulated additional 3,500 USD as part of recreating my Emergency fund.
Vanguard 500 Index up by 300 USD
Company shares up by 330 USD.
EUR and GBP are up towards USD, overall gain is 4,970 USD (EUR) and 270 USD (GBP)
Grand total additions:  9,370 USD

Precious metals lost 910 USD
GazProm shares are down 17,710 USD
Rosneft shares are down by 140 USD
Grand total losses are 18,760 USD

Wednesday, November 27, 2013

November 2013 update ($307,800 +$12,300 or + 4%)



The portfolio changes:
↑ Accumulated additional 7,000 USD as part of recreating my Emergency fund, this is for October and November.
↑ Vanguard Energy ETF up by 1,800 USD
↑ Vanguard 500 Index up by 1,100 USD
↑Company shares dividend reinvestment programme added additional 4 shares and some growth. Overall 580 USD up.
↑ GazProm shares are up by 5,580 USD
↑ Vanguard SPX 500 ETF dividends - quarterly dividends – 66 USD after taxes.
↑ Grand total additions:  16,126 USD

↓ Precious metals lost 370 USD (chiefly due to fact that RUB is weaker towards USD).
↓ Rosneft shares are up by 1,330 USD
↓ EUR is lost towards USD, while GBP gained, some. Overall change is 2,100 loss on month to month basis.
Grand total losses are 3,800 USD

Tuesday, October 8, 2013

Family budget comparison 2008 – 2013



Non-inflation adjusted table:
Observations:
-         Education expenditure is up. Expect to raise further next year.
-         Car insurance cost dropped by 3.5%. No claim period and shopping around allowed us to select cheaper car insurance. Another reason - we happened to pay twice for our car insurance last year for 2011 & 2012.
-         We spent less on vacation this year.  Last year family trip cost us almost 2,200 more and there was a short break as well.
-         What is missing from the budget are annual savings towards durable goods.  At the moment this is 7,000 a year.

For the next year, I expect to:
-         Educational cost to raise further by $8,000.
-         Spend more on clothes. We have been intentionally curtailing our demands but there will naturally need to buy some.

Friday, September 27, 2013

September 2013 update ($295,500 +$35,480 or + 14%)



The portfolio changes:
Accumulated additional 3,500 USD as part of recreating my Emergency fund.
Vanguard Energy ETF up by 1,100 USD
Vanguard 500 Index up by 200 USD
GazProm shares are up by 19,800 USD
Gazprom annual dividends  USD 6,070, after paying dividends at 10% rate. It is 3.5% dividends.
Rosneft shares are up by 2,200 USD
Rosneft annual dividends  USD 410, after paying dividends at 10% rate. It is 2.7% dividends.
EUR is up towards USD. For my portfolio it means additional 2,300 USD
GBP is up towards USD. Additional 100 USD.
Grand total additions:  35,680 USD

Precious metals lost 200 USD
Grand total losses are 200 USD

Tuesday, August 20, 2013

August 2013 update ($260,290 +$1,500 or + 0.6%)


 The portfolio changes:
↑ Accumulated additional 3,500 USD as part of recreating my Emergency fund.
↑ Precious metals grew by 70 USD
↑ GBP vs. USD exchange rate went up, brought additional 200 USD
Grand total additions:  3,770 USD

↓ Vanguard Energy ETF down by  810 USD
↓ Vanguard 500 Index down by 200 USD
↓ Company shares are down by 460 USD
↓ Rosneft shares are down by 800 USD
Grand total losses are 2,270 USD

Thursday, August 8, 2013

Portfolio performance – 3.6% a year



For financial independence, growth of the portfolio (raise in value because of the stock /shares fluctuations) is of very little to no importance. Unless it goes through the roof, like it happened to Apple, IBM, Microsoft, etc.. shares from the beginning.

I tried to calculate what my $ 258 K portfolio generates for me in real terms:

Saturday, July 27, 2013

July 2013 update ($258,550 +$11,500 or + 5%)



The portfolio changes:
Accumulated additional 7,000 USD as part of recreating my Emergency fund.
↑ Vanguard VDE is up by 1,500USD
↑Vanguard VOO is up by 600 USD
↑Rosneft is up by 1064 USD
Dividend Vanguard SPF 500 ETF 66.5 USD (10% tax subtracted).
↑ EUR part of the portfolio grew by 2,660 USD
Grand total additions:  12,890 USD

↓ Company shares are down by 104 USD
↓ Precious metals down by 841 USD
↓ RUB part of the portfolio lost 130
Grand total losses are 1075 USD

Monday, June 10, 2013

Financial Independence Portfolio performance


Recently I stopped getting excited about size of my portfolio, but rather aim to focus on what is can generate for me in terms of dividends.  Now it is 3% annually. The funny thing is, even if the net worth goes up, the yield  is going down.

My understanding that with the bull market and funds are chasing performance, more and more companies are pulling out from TIPS (Treasury Inflation-Protected Securities) and putting money in the stock market.

The average yield on lowly rated corporate debt, or junk bonds, recently dipped below 5 per cent to a record low that is less than US Treasury bonds yielded in 2007.

I came to realize that for the financial independence size of the nest egg is of little importance.  Difference from a retirement portfolio is that I am not going to sell it to buy annuity.  For financial independence, the nest egg should be able to generate enough money to cover expenses and compensate for the inflation.  Inflation affects not only expenses but the principal (nest egg) as well.

Sunday, June 2, 2013

May 2013 update ($246,730 +$8,400 or + 3.5%)



The portfolio changes:
Accumulated additional 3,500 USD as part of my annual savings goal.
Gazprom (GAZ:FRA) is up by 600 USD
Vanguard VDE is up by 1,900 USD
Vanguard VOO is up by 500 USD
Company shares are up by 470 USD
Grand total additions:  6,970 USD

Rosneft lost 520 USD
Grand total losses are:  520 USD

Tuesday, April 30, 2013

April 2013 update ($238,300 +$4,470 or +1.8%)



The portfolio changes:
Accumulate additional $3,500 as part of my annual savings plan ($42,000 a year or $3,500 a month)
↑ Annual bonus added towards financial independence investment - $10,000
↑ EUR is up towards USD – 1,581 USD
Grand total additions: $15,081 USD

Vanguard Energy ETF stocks are down $1,300
↓ Gazprom and Company  shares are down $4,490 combined
↓ Emerging market mutual funds are down $1,980
↓ Precious metals down $970
↓ RUB and GBP   are down to USD, causing loss combined 1,871 USD
Grand total losses are $10,611 USD

Friday, April 12, 2013

Energy Stocks Screening


 Energy Prices forecast

2013
2014
2015
2016
2017
2018
Oil $/bbl*
107
100
100
100
102
107
Oil in 2012 prices $/bbl*
105
94
92
90
90
93
Gas $/mcf
3.06
4.25
4.5
5
5.4
6
* Brent Oil price
mcf - hundreds cubic feet (North America, Henry Hub).

April 2013 Analysis major Oil and  Gas Companies stocks analysis: 
* Gazprom has big exposure to one country only - Russia

Thursday, April 4, 2013

March 2013 update (234,000 +4,000 or +2%)



The portfolio changes:
Accumulate additional $3,500 as part of my annual savings plan ($42,000 a year or $3,500 a month)
Vanguard Energy ETF stocks are up $ 300
Gazprom and Company shares are up $790 combined
Precious metals up $400

Emerging market mutual funds are down $990

Tuesday, March 12, 2013

Currency wars, Risk taking and Satisfaction



Risk taking

            With interest rates still low – some government bonds offer negative interest rates – the Eurozone crisis stabilizing and the US economy healthier, investors are emboldened.
              A huge amount of liquidity has been sitting in cash or negative yield bonds out of fear. As that recedes, a wall of money is flowing into financial assets. Debt markets are very accommodating and there is a lot of capital sloshing around.
             Some of the governments are more desperate than others – in the UK there has been serious discussions on imposing negative interest rates as a stimulus measure.  This will further undermine the savers efforts to earn meaningful money to preserve the capital against inflation.
              Spread between yields for highly-rated and lower-rated companies bond is far narrower than it is used to be. Investors are chasing returns, sometimes at all cost. It is not unheard off that emerging markets institutes rated at BBB- successfully selling bonds at 3.6 per cent in USD. This makes bonds rather risky and pricy investment.
              Investors are putting money in the assets they would not do otherwise for the premium they are getting – stock market at the current returns. Markets are almost at all-time high, while the returns are very low.   There is a risk of not only erasing value of the money, but erode the returns as well.

Tuesday, March 5, 2013

Rate of Return (ROI) on Real Life Investments



In 2012 I have acquired some investments and would like to review their effectiveness. The way I calculate rate of return is quite simple:
-         For the shares /equities with dividends paid:  (price at the end of the year – price at the beginning of the year + dividends paid)/ price at the beginning of the year.
-         For the mutual funds or shares with the dividends reinvested: (price at the end of the year – price at the beginning of the year)/ price at the beginning of the year.

I used my current investments as real life example of rate of return on the investments:

Vanguard Energy ETF - VDE
Gazprom OAO (GAZ:FRA)
Company shares
Number of holdings
300
3000
248 to 260
30th December 2011
30,243 (@100.81)
32,130 (@10.71)
9005 (@36.31)
28th  December 2012
30,057 (@100.19)
27,690(@9.23)
8736 (@33.6)
Dividends
537* (1.99 per share)
1219** (@ 0.45)
12 shares or 388**
Dividends %
1.78
4.4
4.4
Overall return $
351
-3,221
-269
Overall return %
1.1%
-10%
-3%
*10% taxes paid.
** projected dividends, 10% taxes paid.

Thursday, February 28, 2013

February 2013 update ($229,800 +$3,060 or +1%)



It has to be highlighted that the change is for the last 2 months, rather than one.

The portfolio changes:
Accumulate additional $7,000 as part of my annual savings plan ($42,000 a year or $3,500 a month)
Vanguard Energy ETF stocks are up $2,100
Vanguard Energy ETF 2012 dividends were $ 537 or $1.99 per share.  By default bank charged 10% income tax on the dividends, otherwise I would get $597.
↑ Emerging market mutual funds are up combined $450

Precisions metals lost $1,210
Company & Gazprom shares down combined $930 in spite of Q4 dividends reinvestment. Gazprom yet to pay dividends for 2012. Projected $0.23 per share - $4.34 or almost 5%.
GBP (£) lost to USD ($) almost 6% of its value. For me it presented a $4,700 loss.

Wednesday, February 20, 2013

Diversification



One of the key strategies for successful financial independence is to keep right portfolio allocation and diversification.
What I have decided is my annual investment targets to be invested in mutual funds. This will provide less growth but less risk as well. Should I manage to accumulate any additional money for the investment, I can put them in individual equities, if I want to.
This is last two years and three scenario for this year (Do nothing and stay in cash, do partial investment or invest everything):

Wednesday, February 13, 2013

Key Performance Indicators (KPIs) for Financial Independence



From A to B and  how.
A - Knowing where you are (current net worth)
B - Where you want to be  (amount of money you need to achieve financial independence).
How – Family budgeting vs. Income –Savings and where to invest.

These are the financial independence basics. One would still need to have key performance indicators. For my plan and portfolio I want to choose following:
-         Absolute total return on invested cash. Expressed in dollars and percentage.
In 2012  the result was $5,4 K and 3%.
-         Relative total return (measured against S&P 500)
3% vs. 14% (S&P 500).
-         Inflation adjusted return.
       2012 inflation was 3%, hence adjusted return was 0%.
-         Cash accumulated to be invested (annual figure expressed in 2010 money).
$ 51 K vs. $ 40K planned.
-         Assets & currency allocation.
To be developed. Moving in the right direction.
-         Personal expectation.
After getting acquainted with inflation, I lowered my expectation of early retirement /financial independence.  However this is still a very important indicator.
Suppose market performed well, but you did not manage to accumulate as much money as planned – you still on target. Sometimes market was bearish or certain assets underperformed, but accumulated cash compensated for it.  You need to have your own understanding and aspirations.

Sunday, January 20, 2013

Rate of Return (ROI) on Investment - Real Estate Apartments



 
I have  been recently contacted by a reader asking for a help to analyze results of investing into 2 condominiums (apartments).

Here is the input data (story):
Apartment #1  (Apt. #1) - initial investment $ 56 K back in 2005 and additional amount of money in 2010 - $170 K.
Apartment #2 (Apt. #2) - investment $ 170 K in 2010.

The questions are:
 - Whether the investment in the real estate worth it and what is rate of return (ROI)? 
 - What to do next - sell them or keep as rental properties?