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