Saturday, February 23, 2019

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.” 

Monday, February 18, 2019

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.

Thursday, February 7, 2019

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
Financial Independence - -