November 2019 update ($549,775 +$20,465 or +%3.9)

↑ Emerging Markets Stock Index Fund is up by $1,187 or +1.0%

↑ Eurozone Stock Index Fund is up by $3,173 or +2.7%

↑ US 500 Stock Index Fund is up by $4,662 or +3.6%

↑ Global Small Cap Index is up by $3,716 or +3.2%

↑ Additional cash to invest $7,727 under my pension plan.

Grand total additions: $20,465

October 2019 update ($529,310 +$14.576 or +%2.8)

↑ Emerging Markets Stock Index Fund is up by $2,158 or +1.8%

↑ Eurozone Stock Index Fund is up by $1,407 or +1.2%

↑ US 500 Stock Index Fund is up by $2,712 or +2.1%

↑ Global Small Cap Index is up by $2,998 or +2.7%

↑ EUR is up to USD by $2,216 or +1%

↑ GBP to USD is up by $1,956 or +4.7%

↑ Additional cash to invest $1,159 under my pension plan.

Grand total additions: $14,576

Family budget 2019 – Family budget over last 11 years.

This is 11^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. 

September 2019 update ($514,734 +$12,286 or +%2.4)

↑ Emerging Markets Stock Index Fund is up by $3,362 or +2.9%

↑ Eurozone Stock Index Fund is up by $4,232 or +3.7%

↑ US 500 Stock Index Fund is up by $2,283 or +1.8%

↑ Global Small Cap Index is up by $2,297 or +2.1%

↑ Vanguard FTSE U.K. All Share Index is up by $503 or +2.1%

↑ GBP to USD is up by $633 or +1.7%

↑ Additional cash to invest $1,159 under my pension plan.

Grand total additions: $14,469

↓ EUR is down to USD by $2,183 or -1%

Grand total losses: $2,183

August 2019 update ($502,448 -$16,373 or -%3.2)

↑ Additional cash to invest $1,203 under my pension plan.

Grand total additions: $1,203

↓ Emerging Markets Stock Index Fund is down by $4,691 or -3.9%

↓ Eurozone Stock Index Fund is down by $1,436 or -1.2%

↓ US 500 Stock Index Fund is down by $2,163 or -1.7%

↓ Global Small Cap Index is down by $3,900 or -3.4%

↓ Vanguard FTSE U.K. All Share Index is down by $748 or -3.1%

↓ EUR is down to USD by $4,340 or -2%

↓ GBP to USD is down by $303 or -0.9%

Grand total losses: $17,580

June 2019 update ($518,821 +$2,188 or +%0.4)

↑ Emerging Markets Stock Index Fund is up by $1,281 or +1.0%

↑ Eurozone Stock Index Fund is up by $149 or +0.1%

↑ US 500 Stock Index Fund is up by $1,765 or +1.4%

↑ Global Small Cap Index is up by $589 or +0.5%

↑ Vanguard FTSE U.K. All Share Index is up by $550 or +2.3%

↑ Additional cash to invest $3,494 under my pension plan.

Grand total additions: $7,828

↓ GBP to USD is down by $1,326 or -4.0%

↓ EUR is down to USD by $4,314 or -2%

Grand total losses: $5,640

June 2019 update ($516,633 +$28,734 or +%5.9)

↑ EUR is slightly up to USD by $2,063 or 1%

↑ Additional cash to invest $1,262 under my pension plan

↑ Emerging Markets Stock Index Fund is up by $4,728 or +3.9%

↑ Eurozone Stock Index Fund is up by $5,884 or +5.2%

↑ US 500 Stock Index Fund is up by $8,256 or +7%

↑ Global Small Cap Index is up by $6,206 or +5.8%

↑ Vanguard FTSE U.K. All Share Index is up by $585 or +2.4%

Grand total additions: $28,984

↓ GBP to USD is down by $250 or -0.9%

Grand total losses: $250

May 2019 update ($487,899 -$25,268 or -%4.9)

↑ EUR is slightly up to USD by $2,063  or 1%

↑ Additional cash to invest  $4,032 under my pension plan scheme

Grand total additions: $6,095

↓ Emerging Markets Stock Index Fund is down by $8,565 or -6.8%

↓ Eurozone Stock Index Fund is down by $6,642 or -5.6%

↓ US 500 Stock Index Fund is down by $8,143 or -6.4%

↓ Global Small Cap Index is down by $7,563 or -6.6%

↓ Vanguard FTSE U.K. All Share Index is down by $230 or -0.9%

↓ GBP to USD is down by $220 or -0.8%

Grand total losses: $31,363

April 2019 update ($513,167 +$17,838 or +%3.6)

↑ Emerging Markets Stock Index Fund is up by $3,693 or +3.0%

↑ Eurozone Stock Index Fund is up by $5,725 or +5.1%

↑ US 500 Stock Index Fund is up by $4,854 or +4.0%

↑ Global Small Cap Index is up by $3,447 or 3.1%

↑ Vanguard FTSE U.K. All Share Index is up by $79 or +0.3%

Cash to Invest  $2,832

Grand total additions: $20,546

↓ EUR is slightly down to USD by $2,116  or 1%

↓ GBP to USD is down by $592 or -2.6%

Grand total losses: $2,708

March 2019 update ($495,329 +$944 or +%0.2)

↑ Emerging Markets Stock Index Fund is up by $1,761 or +1.4%

↑ Eurozone Stock Index Fund is up by $1,491 or +1.3%

↑ US 500 Stock Index Fund is up by $2,247 or +1.9%

↑ Vanguard FTSE U.K. All Share Index is up by $918 or +3.7%

Grand total additions: $6,417

↓ Global Small Cap Index is down by $728 or -0.7%

↓ EUR is slightly down to USD by $4,174  or 2%

↓ GBP to USD is down by $571 or -2.3%

Grand total losses: $5,473

February 2019 update ($494,385 +$13,513 or +%2.8)

↑ Emerging Markets Stock Index Fund is up by $2,050 or +1.5%

↑ Eurozone Stock Index Fund is up by $4,790 or +4.4%

↑ US 500 Stock Index Fund is up by $3,613 or +3.1%

↑ Global Small Cap Index is up by $4,048 or +3.8%

↑ Vanguard FTSE U.K. All Share Index is up by $658 or +2.4%

↑ GBP to USD is slightly up by $380 or +2.4%

Grand total additions: $15,539

↓ EUR is slightly down to USD by $2,087  or 1.0%

Grand total losses: $2,087

Enough wealth

I was recently thinking about the comments made around my family budget, savings. While having an aspiration to get a higher salary is admirable and needs to be one of the focus areas. It is not within immediate reach, not a guaranteed outcome.

Efficiency and savings rate is largely in my current control today. Things that are in your control and have the highest likelihood of working can make the biggest difference over time. 

This reminds me of Jeff Bezos’ interview:

“…I very frequently get the question: “What’s going to change in the next 10 years?” That’s a very interesting question.

I almost never get the question: “What’s not going to change in the next 10 years?” And I submit to you that that second question is actually the more important of the two.

You can build a business strategy around the things that are stable in time. In our retail business, we know that customers want low prices, and I know that’s going to be true 10 years from now. They want fast delivery; they want vast selection. It’s impossible to imagine a future 10 years from now where a customer comes up and says, “Jeff I love Amazon, I just wish the prices were a little higher.” Or, “I love Amazon, I just wish you’d deliver a little slower.” Impossible.

So we know the energy we put into these things today will still be paying off dividends for our customers 10 years from now. When you have something that you know is true, even over the long term, you can afford to put a lot of energy into it.” 

Are additional payments on your mortgage worth it?

       A couple of years ago, we caved into the nesting instinct and bought a house.  So far economically it was not worth it, as the house upkeep is quite significant.

With a 2.7% interest rate on 20-year mortgage, every $1 K paid in the first year saves $0.7K on the interest over the period of the mortgage. However, if you are investing the same amount it at 5% into something else you

could get as much as $2.6 K.  The question is: are the additional mortgage payments worth it or?

      The challenge with British mortgages is lack of certainty. Unlike the USA in England is almost impossible to get a long term fixed rate mortgage. All the risks are with the house owners. We made an overpayment (~$7 K) last year and want to do the same this year. We asked our bank to maintain the same monthly payments. This will either reduce overall mortgage time or (should the interest rate increase) maintain the same monthly payment. There are no expectations that the salaries will follow up the inflation.

       It’s almost impossible to get a long term fixed rate mortgage. Mainly for two reasons: the banks refused to take any risk transferring it to the citizens and a juicy 0.5% commission, every time you get a new mortgage.

January 2019 update ($480,872 +$40,797 or +%9.3)

↑ Emerging Markets Stock Index Fund is up by $8,716 or +7.7%

↑ Eurozone Stock Index Fund is up by $6,415 or +6.3%

↑ US 500 Stock Index Fund is up by $8,521 or +8.0%

↑ Global Small Cap Index is up by $10,080 or +10.3%

↑ Vanguard FTSE U.K. All Share Index is up by $4,112 or +5.0%

↑ EUR is slightly up to USD by $2,027  or 1.0%

↑ GBP to USD is slightly up by $926 or +4.0%

Grand total additions: $40,797

Opportunity Cost

I had a recent opportunity to return to the USA on a business trip.  While doing some light shopping online I encountered my 2008 order.  For X-mass we agreed with the wife to order our wish list to read.

Two of them on the financial subject have not been read.

This re-enforced my thinking about Zero Based approach to life. Past years have been big for me. My kids were born. We moved to a new city. I had two exciting and well-paid jobs between 2010 and 2016.

I think in new millennia era one separates between “experiencing self” and “remembering self”. Remembering is about kids, new jobs, new city. Experiencing self for was a lot about the internet and my phone.

I start spending a significant amount of time interacting on the internet and my phone than with the family.  Initially, the phone was no more than a player which I can use to make phone calls.  I start picking my phone, tablets much more often that you pick up a knife and fork, pending far longer reading emails, reports, emerging in data than reading books.

The applications on my phone and tablet are enormously powerful and allow me to do a lot on a move, but I am not happy with the role internet plays in my life. I have no problem with disconnecting from the network during vacation or otherwise. It is not about addiction but substitution.  I need to re-think how my time is spent and how to spend it otherwise.

2019 Financial Independence Goals

Financial goals.

- Save 20% on the income. I would like to follow financial advice on an index card and save 20% of your money (Currently this is around 12%.  I will try to save any extra bonuses I receive and trim some of our expenses.

How am I going to save 20%:

- Accumulate $10 K a year (tax deferred contribution) in the private pension fund – equivalent of 401(k) , $10K to the tax efficient account.

- Accumulate $4 K of them towards long term house maintenance and make two additional monthly payments on the mortgage.

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 mortgage one.

 

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.

What are your goals for this year?  

2018 Financial Independence Goals - Review

Financial goals.

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

- Portfolio – no changes. Keep investing in the pension/retirement fund – Complete. Invested $19K (this is 2018 and 2018 cash).

- Develop additional income source in full, potential reward about $2,000 a year. Target sites to be developed in full this year. – This is not achieved.

Blog:

- Regular monthly updates.- Complete. Although sometimes I was loosing will to do it.

- To cover 6 themes on financial independence, including  30 year forecast scenario. – Partially complete. I covered four themes – Financial Advice on a Card, Return on Loft Insulation, Family Budget for the past 10 years, 10 years Networth Change.

 

Educational:

- Read 12 books from the list. – This is not achieved.

- Publish the books reviews. – Complete, although not a lot of reading happened.

- Corporate finances to study in detail. - This is not achieved

Family Budget:

-          As long as the savings goal is made I do not mind the rest. Aim to stay under previous year budget. – Complete. The savings goal is complete but I was unable to send 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. – This is not achieved. Only ran 400 miles. As the result BMI is not achieved.

Overall the year was a good one but I wish I would do more progress on educating myself and developing more skills in Financial Independence, looking after my health.

I spent too much time at work and although this resulted in extra $3K as a bonus I am not sure that it worth it.

How was your year? What do you think was the most impactful for you?

Financial Independence change in the Net Worth over the past 6 years analysis

This is how my financial performance looked like over the course of the last 6 years and benchmarking my investment decisions against global stock markets:

Year	2013	2014	2015	2016	2017	2018
End of the Year, $ K USD	298,429	288,608	295,536	387,831	482,266	432,089
Money invested (Do nothing)	298,429	318,105	332,356	413,899	508,617	528,940
Inflation adjusted U.S.*	299,282	322,877	337,740	418,038	519,298	540,048
S&P 500 benchmark**	394,553	470,275	491,211	640,340	895,521	869,044
DAX (Germany)**	374,528	404,848	459,332	578,196	724,056	608,157
FTSE (the UK)**	354,235	376,529	385,699	556,486	729,349	689,698

* If I invested in inflation protected US treasury bills

** Total return (market change and dividends reinvestment)

This is how my networth change last 9 years:

December 2018 update ($432,089 -$38,755 or -8.2%)

↑ EUR is slightly up to USD by $1,885 or 1.0%

Grand total additions: $1,885

↓ Emerging Markets Stock Index Fund is down by $5,270 or -4.5%

↓ Eurozone Stock Index Fund is down by $6,648 or -6.1%

↓ US 500 Stock Index Fund is down by $14,594 or -12.4%

↓ Global Small Cap Index is down by $13,006 or -12.1%

↓ Vanguard FTSE U.K. All Share Index is down  by $961 or -4.8%

↓ GBP to USD is slightly down by $153 or -1%

Grand total losses: $40,737