February 2020 update ($523,663 -$42,905 or -%7.6)

↑ Financial independence savings for two months $4,000

Grand total additions: $4,000 USD

↓ Emerging Markets Stock Index Fund is down by $5,600 or -4.5%

↓ Eurozone Stock Index Fund is down by $9,654 or -7.8%

↓ US 500 Stock Index Fund is down by $11,585 or -8.3%

↓ Global Small Cap Index is down by $10,996 or -9.2%

↓ EUR is down USD by 2% or $4,266 for my portfolio

↓ GBP is down USD by 1.4% or $789 for my portfolio

Grand total losses: $46,905 USD 

 Observations:

  Stocks sell off led to the financial independence portfolio correction of 7.6%. West european portfolio is double hit, as the euro is down to USD as well, which made it the worst performing index.

 I start asking myself is it worth keeping it? Looking at past three years it only gained 3%, which less than inflation rate.

The only reason I am keeping it is that competition between China and the USA will intensify in the coming years, while China slowly chips away a bigger market share from the US.

Owning a house for financial independence

My salary is increased quite a bit and I know that it is not forever.  In principle, over the next 5 years we could have almost paid off the remaining 50% the house which is mortgaged.  We are not going to do it.

Owning a house is driven by emotions, rather than economic considerations.  We bought a house which was not maintained for the 10 years before the sale.  We put about $15 K before moving in to make it.

As we expecting some money to spend, we put a list of projects we would like to do.  Except $2K a month as savings, all surplus will go into the projects for the next 2 years.

The projects are basics which a typical house requires every 15-20 years anyway: fence replacement, re-plastering the walls, built in wardrobes replacement, etc.

This is very important consideration for financial independence when owning a house. Apart from long lasting goods such as car, fridge, washing machine, etc.. you need to upkeep the house, if you own one.  The maintenance is roughly 1% of the house cost per year. If you bought $500K house, save $5K a year towards long term maintenance.  The percentage is higher for the cheaper houses and lower for the more expensive once.

At the age of 65 it is reasonable to done major redecoration and replacement of heating/ventilation, fireplace and it should last for the remainder of your life. Only small service and upkeep will be required.

Why is owning house is emotional?  Assume you bought a house for $500K and redecoration will cost $70K. The house value will not increase by $70K regardless of what TV programmes will tell you.  If average home on the street costs $500K, no person will pay $600K for yours. You do it for yourself only.