Friday, November 11, 2022

October 2022 update ($701,515 +$41,544 or +6.3%)

↓ Emerging Markets Stock Index Fund is down by $4,622 or -4.1%
Grand total losses: $4,622 USD

↑ Eurozone Stock Index Fund is up by $8,387 or 7.9%
↑ US 500 Stock Index Fund is up by    $21,198 or 8.0%
↑ Global Small Cap Index is up by $9,734 or 8.1%
↑ Growth fund is up  767 or 1.3%
↑ EUR is up to USD by 2.1%, so for my portfolio its $4,519
↑ GBP is down to USD by 2.7%, so for my portfolio its $1,560
Grand total gains: $46,166 USD

October 2022 Financial independence nest egg update

Observations:   The markets are still highly volatile. They have recovered somewhat 6.3% from prior month but still 20.8% down from the year before.
  It is good to be a realist.  Back in August 2008 I estimated that by August 2020 my portfolio in 2008 money would be $498 K in 2008 money.  It is actually $522K.   Of course, there some expenses along the way -  we bought a house (15 years left on the mortgage) – I could easily add another $200 K to the nest egg.
  I like to hold a mirror and do bench-marking.  I did comparison of my investments using five metrics: S&P500, FTSE100, Dax40, investing in inflation protected T-bills or simply put the money in a bank at a zero interest.
  Here is how financial independence nest egg performed between 2008 to 2022:
Nest egg 2008-2022 performance financial independence

As you can see even keeping the money under the mattress would be a better strategy. I would have $800K by now.
There had been three distinct periods in my investing.

  • 2008 – 2012.  Rambling – I was investing in high commission mutual funds, precious metals and generally was keeping money in a savings account.
  • 2012-2017 Active investment in individual stocks and Vanguard and iShares ETFs.  It was a bad idea, as $100 invested in S&P500 in 2012 would become $212 in 2017 or $314 today.
  • 2017-2022 Diversified focus on emerging markets, eurozone. S&P500 and small cap stocks.   I paid quite a lot for the diversification and exposure to EUR.  $100 invested in 2017 in S&P500 would be $172 today. While $109 in Eurozone are $116 five years later.
Nest egg performance 2017-2022 Financial Independence

Thank you to my ex-bank which forced me to sell all my investments, the things improved. I am still almost $100K below S&P500 (or 14%) but above all other metrics. I also learnt the lesson and topped up S&P500 with $120K earlier this year.
What is also quite curious – there is a lot of hype about British FTSE 100, German Dax40 and so on. My simple analysis shows that Eurozone economies and the UK are significantly under perform the S&P500 power train.
What is more worrying that my current nest egg very close to T-bills alternative.  What it means that in high inflation environment my adjusted returns are close to zero.

Life is stranger than a fiction. This is all written from a lounge at an airport in Saudi Arabia.  I am eternally grateful for this opportunity to accumulate even those modest amounts of money and the lessons given. Hopefully you will find it useful on your road to financial independence.  

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