2015 Financial Independence Goals ($295,536 +$22,649 or +8%)

Financial:

- Accumulate at least $48,000 (This is  $40,000 in 2010 money)  or $4,000 a month for investments during 2015, beginning  2016. – Complete. This has been done, $4,000 a month like a clock work.

- Portfolio should be able to generate   $9,000 a year after taxes in the money of the day  (In 2014 it was $7,500). Stretched target – $10,000.  NO. Actual dividends were $6,000 after taxes, which less  to the previous year. Two main reasons:

#1 I am sitting on a pile of cash, not investing them, i.e. not translating them into dividends (~ $100 K).

#2 USD is stronger, so the companies with operations outside US struggling to deliver performance.

Dividends for 2015:

S&P 500 Index fund ~ 740 USD after taxes or 1.7%

Emerging markets fund ~  500 USD after taxes or 3.5%

Rosneft ~ 250 USD after taxes or 3.3%

Gazprom ~ 4,500 USD after taxes or 4%

Average dividends 3% after taxes.

December 2015 update ($295,536 -$7,218 or -2%)

↑ Accumulated $4,000 USD as part of my annual saving goal for December
↑ Received 4 additional Company shares for re-invested dividends ($0.47 USD per share before taxes or 5% annual dividends).
↑ Precious metals went up by $318 USD
↑ EUR appreciated to USD by 4% or $6,725 USD for my portfolio.
Grand total additions:  $11,044 USD

↓Emerging markets lost 6% or $763 USD
↓Vanguard S&P500 lost 2% or $1,049
↓ GazProm shares lost 12% or $12,720
↓ Company shares combined lost $1,264 USD or 8%
↓ Rosneft lost 14% or $1,224 USD
↓ iShares Core Dax lost 5% or $583
↓ GBP lost to USD 2% or $657 for my portfolio
Grand total losses:  US$  18,261

The U.S. Middle Class is Losing Ground

Pew Research Center recently published a very interesting report on what is happening to the middle class in the US.  The report itself freely available online is recommended for reading, however if you do not have time to go through all 74 pages of it, I will share my observations and reaction to it. In 2015, 20% of American adults were in the lowest-income tier, up from 16% in 1971.   

        For the three person household the middle-income range was about $42,000 to $126,000 in 2014 dollars. Lower income households have incomes less than two thirds of the median and upper  income households have incomes that are more than double the median. Under this definition, the middle class made up 50% of the U.S. adult population in 2015, down from 61% in 1971.      In early 2015 120.8 million adults were in middle-income households, compared with 121.3 million in lower and upper-income households combined. Number of adults living in the middle income households has been steadily declining from 1971 to 2015.  As one commentator put it: American dream used to be a to own a house and two cars, new American dream it is to have a job. 

November 2015 update ($302,754 -$4,084 or -1%)

↑ Accumulated $4,000 USD as part of my annual saving goal for September

↑ iShares Core DAX are up by 404 USD

Grand total additions: US$  4,404 USD

↓Emerging markets ETF lost $223 USD

↓Gazprom shares lost $1,325 USD

↓Company shares combined lost $236 USD

↓British pound is lost to USD 3% over one month, for my portfolio it is $2,521 USD

↓EUR lost to USD or $3,721 USD

↓Precious metals lost $462 USD

Grand total losses:  US$  8,488

Financial Independence Family Budget 2007 -2015. 2015 - $92,814 USD

       We have started our family budget, tracking all expenses back in 2007. Initially it was looked at as fairly cumbersome and time consuming exercise.  However, over the period of a few years we educated and trained ourselves to spend 5 minutes a day  in the evening to record all expenses.

       Now with the statistic we could more accurately predict and plan our expenses. It also  helps to clarify some fallacies and incorrect assumptions. For example, as a young parent when you look at nursery cost you think that over the period of time, as your child grows it will be cheaper. Our personal experience clearly tells that it is not happening, nurseries keep rising fees and even at “low inflation” you are lucky if you keep paying the same prize.  However, enough of that, let’s go directly to figures and who we spent $92,814  vs. previous 6 years.

October 2015 update ($306,838 +$19987 or +7%)

↑ Accumulated $4,000 USD as part of my annual saving goal for September

↑ Vanguard Emerging markets is up by $1,545 USD.

↑ Vanguard S&P 500 is up by $4,435 USD

↑ Gazprom shares are up by $13,160 USD

↑ Company shares are up by $1,912 USD

↑ Rosneft shares are up by $1,176 USD

↑ iShares Core DAX are up by 1,209

↑ GBP is up to USD slightly $604 USD

Grand total additions: US$  28,041 USD

↓ Precious metals are down by $614 USD

↓ EUR is continue to fall to USD $7,440

 Grand total losses:  US$  7,219

September 2015 update ($286,850 -$11,560 or -4%)

↑ Accumulated $4,000 USD as part of my annual saving goal for September

↑ Vanguard Emerging markets quarterly dividends $194 USD or 6% at the current price.

↑ Vanguard S&P 500 quarterly dividends $196 USD or 1.9% at the current price.

↑ Vanguard Emerging markets shares are up by $3,025 USD

Grand total additions: US$  7,415 USD

↓ Vanguard S&P 500 slid down another $740 USD

↓ Company shares down collectively $1,340 USD

↓ iShares Core DAX down $270 USD

↓ Gazprom shares down $13,160

↓ GBP down to USD $3,465 USD

  Grand total losses:  US$  18,975

August 2015 update ($298,404 +$ 8095 or +3%)

↑ Accumulated $4,000 USD as part of my annual saving goal for July

↑ Gazprom shares are up 1,320 USD

↑ Gazprom annual dividends   4,542 USD  (USD 0.225 per share).

↑ Rosneft annual  dividends  258 USD  ( USD 0.144 per share)

↑ Precisious metals are up by 733 USD as investors are seeking safe harbor.

↑ GBP is up to USD 2,420 USD

↑ EUR is up to USD 3,284 USD

Grand total additions: US$  16,557 USD

↓ Vanguard Emerging markets are down 5,115 USD

↓ Vanguard S&P 500 collapsed 2,540 USD

↓ Company shares down collectively 807 USD

  Grand total losses:  US$  8,462

The Undercover Economist strikes back by Tim Harford

            I recently finished reading “The Undercover economist strikes back” by an English writer Tim Harford. Tim has an education in economics from Oxford University.  Although not very well known outside England is quite popular in it, mainly as a columnist for Financial Times newspaper.

          Aim of the book was to bring macroeconomics a little bit closer to a non-economist in an entertaining fashion.  The book is written like a dialogue between the writer and reader, based on real life examples.  The way topics are presented it has a lot of similarities with  “Irrational Exuberance” by Robert J. Shiller.

          Modern economy for general public is increasingly focusing on psychology, how people react and behave. As example acceptance of the wages falling in real terms, while growing in nominal ones – “money illusion”.  Tom continues on about Bank of England commenting: “ Public trust in the pound is now maintained by the operation of monetary policy”, apparently with a totally straight face.   This basically means that most of modern currencies worth something as long as people believe in it.

          The worrying fact is being a influential economist in his own country the author is advocating having inflation at about 4%, this would help to maintain nominal growth of salaries about zero.

July 2015 update ($290,313 -$ 25,350 or -8%)

↑ Accumulated $4,000 USD as part of my annual saving goal for July

↑ Vanguard S&P500quaterly dividends 186 USD or 1,7% annual rate

↑ Vanguard Emerging market dividends 99 USD or 2,6% annual rate

 Grand total additions: US$ 4,285 USD

↓ Vanguard Emerging markets ETF lost 1,465 USD

↓ Company shares lost 1,300 USD

↓ Rosneft shares lost 1,750 USD

↓Gazprom shares lost 20,670 USD

↓ Vanguard S&P500 lost 370 USD

↓ Precious metals lost 990 USD

↓ EUR lost to USD 1,940 USD

↓ GBP lost to USD 1,150 USD

  Grand total losses:  US$ 29,635

Asset Diversification

Financial independence currency allocation:

Currency	October 2011	June 2012	February 2013	June 2015	December 2015*
EUR	26.5%	25%	13%	68%	93%
GBP	50%	41%	30%	29%	0%
RUB	21.6%	18%	14%	7%	7%
USD	1.9%	15%	43%	0%	0%

*Aspired

I wish I could have more direct exposure to USD, however Western European banks do not allow direct exposure to the USD. A lot of the EU brokerage firms excluding products trading on the US exchange rates  as these are non-AFM (Authority for the Financial Markets) registered investment funds. AFM. This is responsible for supervising business conduct, which focuses on providing:

- Orderly and transparent financial market processes;

- Transparency between market participants;

- Due care in the treatment of customers.

So they excluded Vanguard S&P 500 and Emerging markets sold in US on the USA exchanges. I think they are doing it to reduce US tax entanglements with these.

Many EU brokerage funds removed products listed on the stock exchanges in Israel, South Africa, New Zealand and Russia.

June 2015 update ($315,600 -$ 5,730 or -2%)

↑ Accumulated $4,000 USD as part of my annual saving goal for June

↑ EUR gained against USD $5,620

↑ GBP gained against USD $1,000

 Grand total additions: US$ 10,620

 ↓ Vanguard Emerging market lost 970 USD

↓ Vanguard S&P 500 lost 1,240 USD

↓ Company shares lost 390 USD

↓ Rosneft shares lost 790

↓Gazprom shares lost 12,960 USD

  Grand total losses:  US$ 16,350

May 2015 update ($321,392 +$6,072 or +2%)

↑ Accumulated $4,000 USD as part of my annual saving goal for May

↑ Precious metals went up by $363

↑ EUR gained against USD $2,098

↑ GBP gained against USD $1,050

Grand total additions: US$ 7,511

↓ Vanguard Emerging market lost 321 USD

↓ Company shares lost 888 USD

↓ Rosneft shares lost 224.7

  Grand total losses:  US$ 1,434

Energy Stocks Screening

Energy Prices forecast

* Brent Oil price

mcf - hundreds cubic feet (North America, Henry Hub).  Inflation assumed at 2% a year.

May 2015 Analysis major Oil and  Gas Companies stocks analysis:

* Gazprom has big exposure to one country only - Russia

** proposed

April 2015 update ($315,320 +$37,699 or +14%)

↑ Accumulated $4,000 USD as part of my annual saving goal for March

↑ Vanguard S&P500 is up $1,155

↑ Vanguard Emerging markets is up $1,260

↑ Gazprom shares are up $22,680

↑ Company shares are up $580

↑ Rosneft shares up $1,323

↑ EUR is slightly up to USD $3,995

↑ GBP is slightly up to USD  $2,706

Grand total additions: US$ 37,699

March 2015 update ($277,620 -$17,851 or -6%)

↑ Accumulated $4,000 USD as part of my annual saving goal for March

↑ Vanguard S&P500 is up $1,271

↑ Vanguard Emerging markets is up $ 504

↑ Received Q1 dividends Vanguard S&P500 $176 (after taxes)

↑ Received Q1 dividends Vanguard Emerging markets $33 (after taxes)

Grand total additions: US$ 5,984

↓ EUR is down to USD, lost $16,716

↓ GBP is down to USD, lost 3,300

↓ Gazprom shares lost $2,520

↓ Company shares lost $523

↓ Precious metals lost $776

Grand total losses:  US$ 23,835

February 2015 update ($295,471 +$22,583 or +8%)

↑ Accumulated $4,000 USD as part of my annual saving goal for February

↑ Received Q4 dividends for company shares $103

↑ GBP is up against USD, gained $1,337

↑ Vanguard Emerging markets is up $1,060

↑ Vanguard S&P500 is up $2,382

↑Gazprom shares are up $13,600

↑ Company shares are up $1,197

↑ Rosneft shares are up $2,394

↑ Precious metals are up $3,209

Grand total additions: US$ 29,282

↓ EUR is down to USD, lost $6,699

Grand total losses:  US$6,699

January 2015 update ($ 272,888 -$15,702 or - 5%)

↑ Accumulated $4,000 USD as part of my annual saving goal for January

↑ Invested additional 7,080 in the Company share plan and got the at 25% discount worth of $8,665

↑ Received  $48 for Vanguard Emerging markets ETF and $179 for S&P500, which is roughly 1.5% each after taxes.

↑ Vanguard S&P500 ETF gained $1,690

↑ Vanguard emerging markets ETF gained $354

Grand total additions: US$ 14,936

↓EUR lost $10,050 towards USD. Year to year EUR lost 17%

↓GBP lost $2,293 towards USD. Year to year EUR lost 11%

↓ Gazprom shares lost $11,330

↓ Company shares lost $265

↓Rosneft shares lost $3,720

↓ Gold lost $2,980

Grand total losses: US$ 30,638

2015 Financial Independence Goals

Financial:

- Accumulate at least $48,000 (This is  $40,000 in 2010 money)  or $4,000 a month for investments during 2015, beginning  2016.

- Portfolio should be able to generate   $9,000 a year after taxes in the money of the day  (In 2014 it was $7,500). Stretched target – $10,000.

- Think about additional source of income.  My blog start bringing some measurable income but want to beef up with some streams.

Blog:

- Regular monthly updates

- To cover 6 themes on financial independence.

- Publish easy tracker for the long term portfolio performance.

I have no intentions to move towards an entertaining blog with 2-3 weekly posts.   I will endeavor my best efforts to stay on personal subject of financial independence and family budget.  

Educational:

-  Create list of books to read  & read them- 12 books is minimum.

-  Publish the books reviews.

Family Budget:

- Stay under $100,000 with the family expenses

- Accumulate $7,000 towards durable goods replacement over 10 years.

Be happy.  Run 1,000 miles during the year.

Financial Independence Annual Goals Achievements – 2014 ($288,608 - $9,792 or -3.7%)

2014 Financial Independence Goals vs. Achievements

Financial:

- Accumulate at least $47,000 (This is $40,000 in 2010 money)  or $4,000 a month for investments during 2014, beginning  2015  - Achieved.  Accumulated $48,000.

- Portfolio to be at $370,000 by end of the year – Not Achieved.  Actually end of the year results a lower than at the beginning of the year, in spite of investing $55,000.

Year	2008	2010	2011	2012	2013	2014
Money of the day	153,400	119,800	165,600	226,800	298,400	288,608
Inflation %		2	3.5	3	4	4
Cumulative inflation		1.02	1.06	1.09	1.13	1.175
2010 money	153,400	117,451	156,967	209,032	265,244	245,623

- Think about additional source of income.  My blog start bringing some measurable income but want to beef up with some streams - This is not achieved yet.

Blog:

- Regular monthly updates – Achieved.

- To cover 6 themes on financial independence – Achieved.

- Create easy tracker for the long term portfolio performance – Almost there. Need to make presentable.

I have no intentions to move towards an entertaining blog with 2-3 weekly posts.   I will endeavor my best efforts to stay on personal subject of financial independence and family budget. 

Educational:

-  Create list of books to read & read them- 12 books is minimum – Partially achieved. Lust created and first 6 books bought.

-  Publish the books reviews – Started.  To be continued.

Family Budget:

- Stay under $84,000 with the family expenses – Was way out of balance. Overspent by $27,000

- Accumulate $7,000 towards durable goods replacement over 10 years – Achieved.

Be happy.  Run 1,000 miles during the year – Ran only half of it.