Sunday, December 31, 2017

2017 Financial Independence Goals ($482,266 +$94,434 or +24%).

2017 Financial Independence Goals ($482,266 +$94,434 or +24%).
Financial goals.
- Accumulate $10 K a year, with $4k of them towards long term house maintenance – Partially complete.  We did not manage to save $4K towards the house maintenance, instead invested it during the year.
- Portfolio – go 0% cash for savings as of end 2016.  Generate $10K in dividends. Portfolio to be $430 K by end of the year – Complete.  There has been a change, as with going to Vanguard it reinvests all dividends automatically.
- Develop additional income source in full, potential reward about $2,000 a year – Not achieved, although some measurable progress made.

Blog:
- Regular monthly updates – Achieved.
- To cover 6 themes on financial independence. Two of them : mortgage, 30 year forecast scenario – Not achieved, covered only four:  “Transfer to low cost investment”, “Loft insulation and energy cost”, “Zero based approach”, “Mortgage”.
- Publish easy tracker for the long-term portfolio performance- Not achieved.
 
Educational:
- Create list of books to read - 12 books is minimum - Not achieved.
- Read the books – Partially achieved.
- Publish the books reviews Not achieved.

Family Budget:
- Stay under 110%  of 2016 budget. Increase is due to additional cost of commuting -  Not achieved. Previous year budget exceeded by 26%.  We spent too much money on the house, that we should have. 

Tuesday, December 26, 2017

December 2017 update ($482,266 +$10,073 or +2%)

Emerging Markets Stock Index Fund is up by 2.6 % or +$3,318
US 500 Stock Index Fund is up by 1.4% or $1,574
Global Small Cap Index is up by 0.8% or $873
EUR is up to USD by 2% or $4,243 for my portfolio.

Grand total additions:  $10,073
Financial Independence - December 2017 update - http://www.niterainbow.com

Thursday, December 21, 2017

Mortgage or rent

One of the point of attraction while buying a property is that you are "freezing" the cost and if it goes up in the future, you reap all the rewards.
What is missing from the evaluation that your interest rate on the principle will go up to compensate for it.  This is particularly the case for western europe, where most of the mortgages are it either variable rate, with fixed rate mortgage are 5 year maximum.

Lets look at an example buying vs. renting a house.  

House price - $475,000, down payment is $150,000  interest rate is 2,7%, mortgage is for 20 years.


Renting
Owning (Mortgage)
Monthly payment
         -1,650
-1,750
Annual payment
         -19,800
-21,000
1 year interest*
10,500
- 8,700
Principal paid
0
12,300
House up keep
0
-3,000
Insurance
-150
-1,000
Mortgage application

200**
Total
-9,450
-12,900

Tuesday, December 5, 2017

November 2017 update ($472,192 +$446 or +0%)

US 500 Stock Index Fund is up by 3% or $3,216
Global Small Cap Index is up by 2.2% or $2,372
Grand total additions:  $5,588

Emerging Markets Stock Index Fund is down by 2.1 % or -$2,757
Eurozone Stock Index Fund is down by 1.9 % or -$2,386
Grand total losses: $5,143

Thursday, November 2, 2017

October 2017 update ($471,746 +$13,306 or +3%)

Emerging Markets Stock Index Fund is up by 4.9 % or $6,368
Eurozone Stock Index Fund is up by 2.4% or $2,914
US 500 Stock Index Fund is up by 2.2% or $2,423
Global Small Cap Index is down by 1.5% or $1,600

Grand total additions:  $13,306
Financial Independence - October 2017 update  - http://www.niterainbow.com

Tuesday, October 17, 2017

Zero based approach to life

I developed number of time and money consuming habits, commitments and routines. Working from a starting point of zero I could change my life from a clean sheet of paper and a "Zero-based" approach. Zero-based approach to financial independence helps to reduce amount of time and money through rationalisation of every routine and habit that become part of new life.
This review exercise helps to make it clear (visible) and understand behind what I do, to sharpen the focus. Zero-based approach to financial independence requires courage and be ruthless to your existing habits and commitments.
How can it help:
- Does your current habits and commitments exceed amount of time and money you need?
- Do your routines litter your life with non-value added and wasteful tasks?

- Are your life commitments accurate and consistent with what you want to achieve (your goals and desires)?
Zero Based Approach to Financial Independence and Life - Copyright http://www.niterainbow.com

Sunday, October 8, 2017

Family budget 2017

This is 9th year we are keeping our family budget formally, recording every expense and trying to make sense of it all at the end of the year.
Family budgetting for 9 years. My open wallet, true and honest discussion about finacial independence.
 Overall: Almost in every category we exceeded our budget from previous year, but also from 6 year average almost in every category. Inflation (officially reported as 3% last year but with british pound collapsing 20% to US dollar feels more. Additionally, looking at energy prices – over 25% increase from 2011).

Friday, October 6, 2017

September 2017 update ($458,441 +$9,449 or +2%)

Eurozone Stock Index Fund is up by 4.4% or $5,181
Global Small Cap Index is down by 4% or $4,109
US 500 Stock Index Fund is up by 2% or $2,099
Emerging Markets Stock Index Fund is up by 0.1 % or $146
Grand total additions:  $11,535

EUR is down to USD by 1% or $2,086  for my portfolio
Total loss: $2,041

Financial independence - my open wallet progress and tracker

Tuesday, September 26, 2017

How to calculate economic return on loft insulation and energy consumption in developed world

    When we bought out house loft insulation had only 25 mm loft insulation thickness, with recommended 275-300 mm of fiberglass.  I decided to do put some more, while also use it as an opportunity to clean up the dusty loft (no storage there).
With the current insulation in winter our second floor was colder than first floor due to roof loft heating losses. Additionally, I was encouraged by perceived saving due to improved insulation.
      How to calculate economic effect from insulating your loft and any potential energy savings?
Previous insulation – 25 mm, new – 275 mm.  I decided to use mineral fiberglass insulation, although if I do it again I would use more expensive natural wool. Advantages of natural wool: it absorbs condensed water and then evaporates it, traps any gases and contamination (i.e. breathes), does not loses thickness when gets wet with condensed water.  Disadvantage: more expensive, perhaps more flammable.

Materials I used for the loft insulation:
Diall Loft insulation – 23 rolls - 290 GBP -3m2 per pack, coverage - 68m2.
Gardman Bubble Greenhouse Insulation - 6 rolls - 99 GBP (as a vapour barrier).
Knauf Eko Roll Loft Insulation – 14 rolls - 280 GBP – 5.5m2 per pack – coverage - 77m2.
Loft Vent Trays (plastic) – 40 pieces – 60 GBP.
Total cost:  730 GBP or 10.2 GBP/m2

      Additionally, I used this as an opportunity to apply some teak oil to the joists and the roof beams, to preserve and protect them - 20 L at 160 GBP. No installer will do that for you, unless you specifically ask and pay.
All together it took 5 days ~ 7-8 hrs each or 40 hrs.
 How I calculated the economic effect and return on the loft insulation:

Wednesday, September 13, 2017

August 2017 update ($448,991 +$1,333 or +0.3%)

Emerging Markets Stock Index Fund is up by 2,4% or $1,724
US 500 Stock Index Fund is up by 0.2% or $234
Grand total additions:  $1,958

Eurozone Stock Index Fund is down by 0.5% or $537
Global Small Cap Index is down by 0.1% or $88

Total loss: $625

Saturday, August 5, 2017

July 2017 update ($447,658 +$17,520 or +4%)


↑ Emerging Markets Stock Index Fund is up by 2,4% or $2,915
↑ Eurozone Stock Index Fund is up by 0.3% or $325
↑ US 500 Stock Index Fund is up by 2.0% or $2,010
↑ Global Small Cap Index is up by 2.2% or $2,253
↑ EUR is up to USD by 4% or $10,018
Grand total additions:  $17,520

Financial independence - real journey - http://www.niterainbow.com

Wednesday, May 31, 2017

May 2017 update ($429,446 +$11,446 or +3%)



Emerging Markets Stock Index Fund is up  by 1.6% or $1,764
Eurozone Stock Index Fund is up by 1.7% or $1,934
US 500 Stock Index Fund is up by 1.3% or $1,342
Global Small Cap Index is up by 0.3 or $301
EUR is up to USD by 3% or $6,102
Grand total additions:  $11,446

Wednesday, May 3, 2017

Financial independence portfolio performance review



I think that benchmarking, when used in the right context is a representative reflection of affairs, especially in finance where it is numbers game. I analyzed my portfolio performance and investment choices made.

These are better presented in a table (all sum of money is in thousands):

2012
2013
2014
2015
2016
2017
Cumulative
21
140
202
215
303
303
Inflation adjusted
22
146
217
236
337
347
S&P500
23
173
265
280
412
440
Yearend value
20.7
141
169
167
316
304

Cumulative:              The invested money added up together.
Inflation adjusted:   The invested money adjusted for the inflation and added up together (as if I would have invested in Treasury Inflation Protected Securities aka TIPS).
S&P500:                     If I would invest money in S&P500 (commissions are not included).
Yearend value:          Value of my portfolio at the end of the year (including received dividends).

Here is the same information presented on a chart and “how and  why” this happened and what to do next.

Wednesday, April 26, 2017

April 2017 update ($390,514 +$10,514 or +3%)


Gazprom shares are up 5% or $5,778
            ↑ iShares core DAX is up 1% or $257
            ↑ iShares Emerging markets Sovereign debt ETF (IEMB ) is up by 1% or $200
            ↑ iShares Emerging markets Corporate debt ETF (EMCR) is up by 1% or $280
            ↑ EUR is up to USD by 2% or $4,961
            ↑ GBP is up to USD by 2% or $715
             Grand total additions:  $12,191
            
            ↓ Company shares are down by 2% or $500
            ↓ Vanguard S&P500 ETF is down by 1% or $803
            ↓ Rosneft shares are down by 4% or $449
             Grand total losses:  $1,752

Sunday, April 2, 2017

March 2017 update ($384,408 -$5,531 or +1%)

Vanguard Emerging markets ETF is up by 1% or $161
  Company shares are up by 1% or $201
Rosneft shares are up by 2% or $225
iShares core DAX wen up 4% or $920
GBP is up to USD by 1%, for my portfolio it is $358
Precious metals are up by 1% or  $531
Grand total additions:  $2,396

Vanguard S&P500 ETF is dow by 1% or $642
Gazprom shares are down 6% or $7,223
iShares Emerging markets sovereign debt ETF (IEMB ) down by $60

Grand total losses:  $7,925

Monday, February 27, 2017

February 2017 update ($389,939 +$3,228 or +1%)

Vanguard Emerging markets ETF is up by 4% or $567
Vanguard S&P500 ETF is up by 4% or $2,993
iShares core DAX wen up 1% or $273
iShares Emerging markets sovereign debt ETF (IEMB )  is up by 2% or $399
iShares Emerging markets  Corporate bonds ETF (EMCR) is up by 1% or $546
Precious metals are up by 3% or $296
Dividends Vanguard Emerging markets  (VFEM) for Q4 2016 - $35
Dividends  Vanguard S&P 500 (VUSA) Q4 2016 - $270
Dividends  iShares EM MRK SOUV BD  - $209
Dividends  iShares EM MRK CORP BD  second quarter benefits - $924
EUR is up to USD by 2%, for my portfolio it is $5,081
GBP is up to USD by 1%, for my portfolio it is $358
Grand total additions:  $11,887

Rosneft shares are down by 19% or $2,205 for my portfolio.
Gazprom shares are down 5% or $5,670
Company shares are down by 3% or $784

Grand total losses:  $8,659

Tuesday, January 31, 2017

January 2017 update ($386,711 -$1,120 or -0.3%)

Vanguard Emerging markets ETF is up by 6% or $882
Rosneft shares went up by 2% or $221 for my portfolio.
iShares core DAX wen up 2% or $378
iShares Emerging markets sovereign debt ETF (IEMB )  is up by 1% or $300
iShares Emerging markets  Corporate bonds ETF (EMCR) is up by 2% or $880
Precious metals are up by 7% or $686
Grand total additions:  $3,347
 
Vanguard S&P500 ETF is down 1% or $945
Gazprom shares are down 2% or $2,835
Company shares are down by 3% or $687
Grand total losses:  $ 4,467

Sunday, January 22, 2017

2017 Financial Independence Goals

This year it took me a little bit longer to come up with financial independence goals. The journey continues but at a slower pace. I am with the same company but on a half of the salary, doing more hours than ever before.
Focus in the coming year will be on sharpening and developing new skills and knowledge to move on.

Than you think about it  - over 25% of our income goes towards mortgage, house bills and property tax, I need to adjust now.

Financial goals.
- Accumulate $10 K a year, with $4k of them towards long term house maintenance.
- Portfolio – go 0% cash for savings as of end 2016.  Generate $10K in dividends. Portfolio to be $430 K by end of the year.
- Develop additional income source in full, potential reward about $2,000 a year.

Blog:
- Regular monthly updates.
- To cover 6 themes on financial independence. Two of them : mortgage, 30 year forecast scenario.
- Publish easy tracker for the long-term portfolio performance.
 
Educational:
- Create list of books to read - 12 books is minimum.
- Read the books.
- Publish the books reviews.

Family Budget:
- Stay under 110%  of 2016 budget. Increase is due to additional cost of commuting.


Be happy.  Run 1,000 miles during the year. Keep BMI below, target 26.5 (current 27.7).

Wednesday, January 4, 2017

2016 Financial Independence Goals ($387,831 +$92,295 or +31%)



Financial goals.
- Accumulate at least $24K a year. Stretched target - $50K.  Partially complete. Accumulated approximately $ 38K.
- Portfolio should be able to generate $8,000 a year after taxes in the money of the day.  – Complete.  Without seeing end of the year result from some of the companies received $8 K after taxes.
- Develop additional income source in full, potential reward about $2,000 a year – Not achieved, although some measurable progress made.
- Less than 5% of portfolio in cash by end of the year and $350 K overall net worth in the money of the day – Partially achieved, portfolio $387 K but approximately 11% in cash.

 Blog:
- Regular monthly updates – Not achieved. (Missed September update).
- To cover 6 themes on financial independence -  Portfolio performance, Assets Allocation,  Energy stocks screening and Family budget. Missing one more theme.
- Publish easy tracker for the long-term portfolio performance – Not achieved.
 
Educational:
- Create list of books to read - 12 books are minimum. Not achieved. Read only two, not achieved.
- Read the books.
- Publish the books reviews – Not achieved.
 
Family Budget:
- Stay under $100,000 with the family expenses – Achieved. Spent $84K.
- Accumulate $7,000 towards durable goods replacement over 10 years – Achieved.

Be happy.  Run 1,000 miles during the year. Keep BMI below, target 26.6 (current 27.5)- Partially complete. Ran 1,022 miles but BMI is 27.4.