3# My Monthly Financial Independence Update

The Quick Takeaways

This month savings rate: 51 %

This month leverage: 100 %

Rolling savings rate since February 2016: 55 %

Total value of portfolio: 550.000 DKK (84.000 $)

Years till I hit a 7 % SWR: 2.6 Years

% Change since last month: 1.8 %

So What The F*** Happen This Month

I think we all know this month has been a rowdy one. Stock wise. Excluding this day (where everything seems to go up) my portfolio is down 25.000 DKK (3.800 $).

I have been quiet excited about the market drop. I have taken this quote from Warren Buffett quiet serious.

Be fearful when others are greedy, and be greedy when others are fearful – Warren Buffett

All stocks has pretty much only gone up for a long time.

The Shiller PE 10 were at the second highest ever recorded.*

So I can have a hard time justifying buying stocks. And because of that I have decided to have some of portfolio in cash. Around 10 %. There is several reasons for that:

  • By having some cash I can rebalance if the market should take a big dive.
  • And I think it is a responsible thing to do when I leverage my investments by 50-100%. It means that I can afford the leverage. If everything tanks, I still got some cash reserves to make sure that everything is good.
  • Plus I would like to have a 1-2 years of cash when/if I quit my fulltime job. And this resonates very well by having 10 % cash. So if I end up with a portfolio of 2.500.000 DKK (380.000 $) I would have around 250.000 DKK in cash. Which is equivalent to two years of my spending.

BUT!

When the market did drop this month, I could finally justify buying some stocks. And Morningstar begins to call that the general market is undervalued**

I don’t practice market timing. So I will buy whatever the market does. But I would lie to you, if I said that I didn’t feel an inner resistance when everything just goes up and up and up.  And that’s where my 10 % cash allocation feels good.

Just Bring Another 2008

I think this month would be similar to something that happen back then. We just need to experience them for 9-10 consecutive months.

But this month has just proved that my portfolio can decline 4-6 %, and still be able to make the portfolio rise. 

*http://www.multpl.com/shiller-pe/

**https://www.morningstar.com/tools/market-fair-value-graph.html

Skriv et svar

Din e-mailadresse vil ikke blive publiceret. Krævede felter er markeret med *