November 2018 update ($470,844 +$4,176 or +0.9%)

↑ Emerging Markets Stock Index Fund is up by $4,857 or 4.3%

↑ US 500 Stock Index Fund is up by $10,741 or +10.0%

Grand total additions: $15,598

↓ Eurozone Stock Index Fund is down by $785 or 6.5%

↓ Global Small Cap Index is down by $7,927 or 6.9%

↓ Vanguard FTSE U.K. All Share Index is down  by $269 or 1.3%

↓ EUR is down to USD by $1,954 or 1.0%

↓ GBP to USD is slightly down by $481 or 2.4%

Grand total losses: $11,422

October 2018 update ($466,668 -$30,277 or -6.1%)

↑ Vanguard FTSE U.K. All Share Index is up by $6,970 or 49.9%

↑ GBP to USD is slightly up by 0.8% or $162

Grand total additions: $7,132

↓ Emerging Markets Stock Index Fund is down by $7,344 or 6.1%

↓ Eurozone Stock Index Fund is down by $7,598 or 6.5%

↓ US 500 Stock Index Fund is down by $17,051 or 13.7%%

↓ Global Small Cap Index is down by $3,331 or 2.8%

↓ EUR is down to USD by 1.0% or $2,086

Grand total losses: $5,399

How to calculate economic return on loft insulation? Projected vs. Actual.

It has been one year, since I calculated and invested into the loft insulation.

      At the time I spent about 750 GBP and 5 days to put the insulation up in the loft (including cleaning it and teak oil application to the beams and joists to protect them). I also estimated that 20% of the heat loses were going through the roof.

     The actual natural gas consumption in 2016-2017 was 24,500 kWh (at 4.28p per kWh + 14.80p standing charge a day) or 1,104 GBP a year. 

Since I installed the loft insulation 2017-2018 consumption was 16,400 kWh (at 4,46p per kWh + 19.18p per day) or 8,100 kWh less (30% reduction) at the cost of 760 GBP.  This is a saving of 344 GBP a year.

    This means that I will get my money back in just over 2 years.  I overpaid my  utility company by 500 GBP so far. Only after I contacted them, they bothered to cancel couple of the monthly payments to reduce their debt to me.

    The natural gas prices went by 5% up in the UK last year, making them among the most expensive in western europe. No wonder that the propaganda encourages people do not heat their homes, including leaving some of the rooms unheated and keeping others at 61F (16C) in the winter.  

September 2018 update ($496,946 -$4,717 or -0.9%)

↑ US 500 Stock Index Fund is up by $626 or 0.5%%

↑ Vanguard FTSE U.K. All Share Index is up by $70 or 0.5%

Grand total additions: $696

↓ Emerging Markets Stock Index Fund is down by $1,052 or 0.9%

↓ Eurozone Stock Index Fund is down by $509 or 0.4%

↓ Global Small Cap Index is up by $1,752 or 1.5%

↓ EUR is down to USD by 1.0% or $2,086

Grand total losses: $5,399

Family budget 2018 – Family budget over last 10 years

This is 10^th 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. I am glad that we started running the budget and has kept it for 10 years. This provides a lot of wonderful insights and I wish there would be more sharing on the web, information like this.

August 2018 update ($501,663 +$25 or +0%)

↑ US 500 Stock Index Fund is up by $3,781 or 3.2%

↑ Global Small Cap Index is up by $2,639 or 2.2%

Grand total additions: $6,420

↓ Emerging Markets Stock Index Fund is down by $2,781 or 2.2%

↓ Eurozone Stock Index Fund is down by $3,314 or 2.7%

↓ GBP is down to USD by 1.7% or $215

↓ Vanguard FTSE is down by 0.6% or $83

Grand total losses: $6,393

Monthly update on financial independence - tru real life story

July 2018 update ($501,637 +$10,825 or +2.2%)

↑ Emerging Markets Stock Index Fund is up by $3,197 or 2.6%

↑ Eurozone Stock Index Fund is up by $4,302 or 3.6%

↑ US 500 Stock Index Fund is up by $4,234 or 3.7%

↑ Global Small Cap Index is up by $1,394 or 1.2%

Grand total additions: $13,127

↓ EUR is down to USD by 1% or $2,087

↓ GBP is down to USD by 1.5% or $217

Grand total losses: $2,304

June 2018 update ($490,812 -$9,090 or -1.8%)

↑ US 500 Stock Index Fund is up by $582 or 0.5%

Grand total additions: $582

↓ Emerging Markets Stock Index Fund is down by $5,547 or 4.5%

↓ Eurozone Stock Index Fund is down by $1,031 0r 0.9%

↓ Global Small Cap Index is down by $490 or 0.4%

↓ FTSE U.K. All Share Index accumulation is down by $241 or 1.7%

↓ EUR is down to USD by 1% or $2,087

↓ GBP is down to USD by 1.5% or $217

Grand total losses: $9,613

May 2018 update ($499,902 +$304 or +0.1%)

↑ US 500 Stock Index Fund is down by $2,598 or 2.3%

↑ Global Small Cap Index is up by $3,038 or 2.7%

↑ FTSE U.K. All Share Index accumulation is up by $561 or 4.5%

↑ GBP is up to USD by 0.7% or $106

Grand total additions: $6,303

↓ Emerging Markets Stock Index Fund is down by $205 or 0.2%

↓ Eurozone Stock Index Fund is down by $1,482 0r 1.2%

↓ EUR is down to USD by 2.0% or $4,286

Grand total losses: $5,973

April 2018 update ($499,598 +$4,139 or +0.8%)

↑ Emerging Markets Stock Index Fund is up by $1,122 or 0.8%

↑  Eurozone Stock Index Fund is up by $5,855 0r 4.8%

↑ Global Small Cap Index is up by $2,136 or 1.9%

↑ FTSE U.K. All Share Index accumulation is up by $573 or 4.0%

Grand total additions: $9,686

↓ US 500 Stock Index Fund is down by $596 or 0.5%%

↓ GBP is down to USD by 4.3% or  $611

↓ EUR is down to USD by 2.0% or $4,201

Grand total losses: $5,408

The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron

In line with my annual financial independence goals for this year I pressed on with the reading list. “the smartest Guys in the room” is about rise and fall of Wall street  darling an  American corporation called “Enron”, which took down auditing company “Arthur Andersen”.

      At its peak Enron shares were worth $90.75 and on December 2, 2001 (when it filled for bankruptcy) were trading at $0.26 . The company was chasing dream of deregulation through the vast network of political donations (former Secretary of State Heinz Alfred Kissinger (naturalized USA citizen as of 1943, son to German Jews) served as advisor, along with  James Baker  and many others).

       Here is some interesting quotations from the book: “…When people describe Skilling they don’t just use the word “smart”; they use phrases like “incandescently brilliant” or “the smartest person I ever met”…He could instantly simplify highly complex issues into a sparkling, compelling image.

…Skilling also had tendency to oversimplify, and he largely disregarded – indeed, he had an active distaste for – messy details involved in executing a plan. What thrilled Skilling, always, was the intellectually purity of an idea, not the translation of that idea into reality.

March 2018 update ($495,459 -$9,025 or -1.8%)

↑ GBP is up to USD by 2.9% or  $408

Grand total additions: $408

↓ Emerging Markets Stock Index Fund is down by $3,909 or 2.8%

↓ Eurozone Stock Index Fund is down by $2,440 0r 2.0%

↓ US 500 Stock Index Fund is down by $2,023 or 1.8%

↓ Global Small Cap Index is down by $1,052 or 0.9%

↓ FTSE U.K. All Share Index accumulation is up  by $9 or 0.1%

Grand total losses $ 9,433

Financial Advice on an Index Card

    Being an avid reader of Financial Independence books and blogs, somehow I missed a remarkable advice given back in 2013.
    A professor at the University of Chicago said that: "The best financial advice for most people would fit on an index card". One of the readers commented on his post : "What *is* this simple free best personal finance advice that fits on a card? It's kind of a tease to say its so easy and then not go ahead and spell it out in twenty seconds.
    Here what the professor responded, by hand writing it on an index card:

• “Max your 401(K) or equivalent employee contribution
• Buy inexpensive, well-diversified mutual funds such as Vanguard Target 20XX funds (Note: I tried that but expense ratio is higher for them. Target fund is 0.14% vs. 0.04 S&P500).
• Never buy or sell an individual security. The person on the other side of the table knows more than you do about the stuff.
• Safe 20% of your money.
• Pay your credit card balance in full every month (Note: I say do not use them at all. Its a gamble).
• Maximise tax-advantaged savings vehicles like Roth, SEP and 529 accounts.
• Pay attention to fees. Avoid actively managed funds.
• Make financial advisor commit to a fiduciary standard. 
• Promote social insurance programs to help people when things go wrong (Note: Its capitalism we are living in, not communism)”.

February 2018 update ($504,484 -$16,535 or -3.3%)

↑ FTSE U.K. All Share Index accumulation is up  by $262 or 1.9%

↑ GBP is up to USD by 1.5% or  $200

Grand total additions: $462

↓ Emerging Markets Stock Index Fund is down by $2,879 or 2%

↓ Eurozone Stock Index Fund is down by $5,083 0r 4.1%

↓ US 500 Stock Index Fund is down by $4,419 or 3.8%

↓ Global Small Cap Index is down by $4,620 or 4.1%

Grand total losses $ 17,001

January 2018 update ($512,019 +$38,753 or +8%)

↑ Emerging Markets Stock Index Fund is up by 4 % or +$5,313

↑ Eurozone Stock Index Fund is up  2.2 % or +$2,732

↑US 500 Stock Index Fund is up by 5.2% or $5,954

↑ Global Small Cap Index is up by 4.2% or $4,699

↑EUR is up to USD by 3% or $6,450 for my portfolio.

Grand total additions:  $25,149

Additionally, I invested accumulated cash into one of the pension fund schemes (roughly $13,604).

Principles of Corporate Finance by Brealey Myers and Allen

As part of my continuous commitment to develop in-depth knowledge I started going through “Principles of Corporate Finance” by Brealey Myers and Allen 11^th edition (ISBN-13 978-0-0771-5156-0).

This will take a while as the book is over 800 pages long and has plenty of problems sets, at the end of every chapter, which I am committed to solve. The interesting questions, worth discussion or an additional attention will be posted here.

To check myself I also bought  Solutions Manual for Principles of Corporate Finance (Eleventh edition) prepared by Peter Crabb (ISBN 978-0-07-750247-8).

All solutions described here are by no means complete or correct. So any use will be at your own risk, although I would appreciate alternative solutions or discussion on the subject.

2018 Financial Independence Goals

Financial goals.

- Accumulate $10 K a year, with $4k of them towards long term house maintenance.

- Portfolio – no changes. Keep investing in the pension/retirement fund.

- Develop additional income source in full, potential reward about $2,000 a year. Target sites to be developed in full this year.

Blog:

- Regular monthly updates.

- To cover 6 themes on financial independence, including  30 year forecast scenario.

 

Educational:

- Read 12 books from the list.

- Publish the books reviews.

- Corporate finances to study in detail.

Family Budget:

- As long as the savings goal is made I do not mind the rest. Aim to stay under previous year budget.

- Be happy.  Run 1,000 miles during the year. BMI at 26.3 by December. Loose 2.5 pounds a month.