% Change since last month: 3,7 % (+ 26.000 DKK / + 3900 $)
So What The F*** Happen This Month
Savings rate is back to something that seems normal
Years worth of annual expense is up again
Rolling savings rate has gone up 4%
Two Months of Mini Retirement
I’m two months into my mini retirement.
The first month went by with having a good time in Copenhagen.
Having a good time equals:
Seeing friends and family
Drinking (too much) beers
Renovating my dad’s (and my boat)
Doing some brazilian jiu jitsu
One Month of Folk High School
The first month of being at this new school where I would like to improve my sailing skills is gone.
And boy, there is a lot of impressions by being here.
I have already improved my sailing a lot by being here. Everything I know about sailing is something my dad has taught me. My dad is an awesome teacher, but I enjoy learning stuff from other people too. (I have already learned my dad something)
I do feel a bit old though. A lot of the people on this school is between 18-21 years. Which I feared would be an issue for me. Since I’m 28. Everybody is super nice, but I do get tired of playing beer pong third weekend in a row.
Even though I would like to sail more than we do at the moment. I would encourage everyone to try a folk high school (especially for foreigners). It is an awesome opportunity to gain a new skills fast, in a super cosy way where you meet many awesome people.
I pay 6000 DKK/month (900 $) for being here. Which is cheaper than if I just had my regular life back in Copenhagen. I have become a better sailor, awesome and organic food is cooked for us three times a day. And we do not have to do the dishes. It is a huge luxury to be here.
Which is catastrophic to some of the parameters I use.
I didn’t manage to save anything because I have signed up for a sailing folk high school. Where I’m going to stay for the next 3 months.
Yes – I did manage to go from 102.600 $ to 104.300 $ without doing anything. This can still amaze me.
My rolling savings rate from February 2016 to this date went from:
58 % to 51 %.
YIKES! It dropped 7 % because I had one month without saving.
And my years worth of annual expenses dropped from:
6.42 to 4.87.
YIKES YIKES YIKES!
Last month I would be able to live almost 7 years from now. And this month I’m only able to live 5 years from this date. (Including my leverage)
BECAUSE OF ONE MONTH!
While it does bother me a. I probably won’t have expenses like this in the future. So it doesn’t make to much sense to include a month like this in my calculations. But I will. It gives me some motivation to save more.
The Reason Why I’m Deleveraging
As the avid reader might knows. I’m not going one but two mini retirements. Said in another way. In 2019 and 2020 I’m going to take 13 months off from work.
First I’m going to a folk high school to sail and have a good time.
And then I’m going to Indonesia and the Philippines to sail again.
This means that I won’t make any money for a couple of months.
Worrying about my leverage while I’m cruising on some of the most exotic oceans in the world, is one of the last things I want to do. If I had the guts, it could probably make sense in the long run (20+ years from now) to leverage more now. But I’m prioritizing peace of mind higher than my portfolio at this stage.
I’m going to keep the leverage I have now. But I will be investing normal, and this means my stock allocation will go up, while my leverage will stay at 200.000 DKK.
I need to reevaluate on how I’m going to write about it.
But I will write about it, that is for sure!
So stay tuned for some juicy blog posts the coming period.
One of the (well maybe two) things that happen to me this month made me stop leveraging. Not that I will ever do it in the nearest future. But as things are right now, I will not be doing it.
What I’m going to do is deleverage a little bit. Not that I’m going to pay off my debts. But I will keep the amount on 200.000 DKK (30.000 $) that I have now. And then invest regular in my stocks. By doing that. My stock allocation should increase a bit each month (if the market stays >0%) which means that my 200.000 DKK will be smaller compared to my stock allocation.
I will tell you why I’m doing that in later blog post.
The First 100.000 $ is a Bitch
Believe it or not.
That is a quote from the famous Charlie Munger. He said it in the book Charlie Munger: The Complete investor.
This month I managed to cross that line.
Yes – I still have some debt. But the debt that I have should be working for me, and not against. I’m still young, and that kind of debt is peanuts against to what I can earn in the nearest future.
And statistics says that if I just leave for a long enough time, it will benefit me.
The first $100,000 is a bitch, but you gotta do it. I don’t care what you have to do—if it means walking everywhere and not eating anything that wasn’t purchased with a coupon, find a way to get your hands on $100,000. After that, you can ease off the gas a little bit.
CPH FIRE MEETUP
Is going down this week.
I can feel as the date come closer, the more nervous/excited I get.
But it is a feeling I’m completely familiar with, because of my rowing.
It worries me a bit. It is kind of to good to be true.
I made more money with my investments, than I did at my job.
And a 10,5 % change since last month is just insane.
Because the market has taken such a huge jump. I have not invested that much this month. In order to stick to my 10 % cash allocation. The other months I have been leveraging 100 % no matter what the market did. This means if had saved 10.000 DKK I would borrow another 10.000 DKK. But that does not mean that I will invest all of 20.000 DKK. If the market had gone no where, I would invest 18.000 DKK and keep 2000 DKK in my cash cushion in order to be in 90 % equities, and 10 % cash.
This month I had to throw more than 10 % of what I have saved in order to keep my 10 % cash allocation. I managed to save about 13.000 DKK, and I needed to keep about half of that it in order to hit my cash allocation. I just think it would be absurd to keep 6.500 DKK in cash, but still be investing 19.500 DKK with the majority of the invested money being leverage.
I have only leveraged 100 % with the money that I did transfer to my investment account. Which was about 7.500 DKK. And that’s why my leverage is less than 100 % this month.
If I can keep my leverage at about 40 % or less, my rate of the loan will then only be about 1 %. If I’m between 40-60 % leveraged, I will pay 2 % in annual fees. And if I move above 60 % I will pay 7 %.
OUCH! I have no intention to do that.
My January Challenge
I tried to start 2019 with a little challenge.
A challenge where I tried to spend less than 1000 $ dollars for a month. And I failed. But what ended up as an average month (with about 60 % savings rate). Could have been quiet catastrophic I hadn’t had a laser focus on how I spent my money.
CPH FIRE MEETUP
I have finally got everything in order for the FIRE Meetup in Copenhagen.
It will take place in my rowing club (Roforeningen KVIK) the 8/3/2019 at 6 PM. Everybody is welcome so feel free to join.
The concept is that there will be a pizza waiting for you at 6 PM for the price of 100 DKK. I know, a pizza doesn’t cost 100 DKK, but the remaining money will be donated to The Ocean Cleanup. It was a demand from my rowing club that I needed to raise some money for charity, if I should borrow the club for free.
So MobilePay me 100 DKK to 25400183 if you would like to attend the meetup.
There will be some keynote people at the event.
Jacob Lund Fisker from earlyretirementextreme.com is going to be there. He is quite famous in this community. He is visiting some family in Denmark, and I convinced him to swing by our little meetup.
Then we have Pernille Wahlgren. She is not a typical FIRE lady. But she has made herself financial independent in relative young age, by investing in stocks. She is also getting quiet famous at the moment. With her “live & think freely” concept. Which I like. She runs the page PernilleWahlgren.Dk
And we will also have Sanne Fehmerling Kristiansen. Who runs the site passivindkomst.nu. Her concept is trying to make her whole family financial independent through passive investments.
I know all of these people from documentary made about FIRE from Danmarks Radio. It was called “Stå Af Hamsterhjulet” (Quit the Rat Race). And is definitely worth to watch.
The stock market has not been friendly this december month (if you are selling). I’m still trying to fund 20 times my annual expenses, and this mean that a market drop is quiet lucrative for me. When the market is down, I’m able to buy more shares with the same amount of money.
Since last month I have gone absolutely nowhere. Except for having more leverage. As the avid reader might see, this is the first time ever I have leveraged more than 100 %. I have done that because I would like to end up the same place as last month. And not have a decline in my portfolio. This is a strategy slightly inspired by Dollar-Value-Average. I could write an entire blog post about that strategy, so you will get a brief one now.
Dollar Value Average
Dollar-Value-Average is where we decide what amount our portfolio is going to rise + interest, and then we need to hit that target every month. For simplicity, let’s just say that we would like to raise our portfolio with 100 $/month. Then the following months would look like this:
= 100 $
= 200 $
= 300 $
.. And so on
If the market goes up, and we have 120 $ at the start of the second month, we will only invest 80 $, because we would like to hit that target of 200 $. If the market is down at the start of the 3rd month, and we only have 180 $, we will then invest 120 $ to reach our 300 $ target.
That strategy is called Dollar-Value-Average. It is a simple method, of buying more when the market is down, and buying less when the market goes up.
And that is what I have done this month. I have leveraged more, in order to stay at the same level as last month.
2018 and my savings rate
This is how my year looked like according to my savings rate:
January = 30 %
February = 65 %
March = 48 %
April = 55 %
May = 53 %
June = 75 %
July = 73 %
September = 19%
October = 51 %
November = 67 %
December = 55 %
Average = 59 %
I had a higher savings rate in 2017 where I managed to save 62 %. So I’m not completely satisfied with “only” saving 59 % this year. In 2016 I didn’t have student loan payments, that could be the answer to a slightly lower savings rate.
My goal for 2019 will be to save above 66 %. It will be tough, but manageable.
Blog Post This Month
Here are the following post I managed to write this month:
The finance is doing great, my portfolio went up 5 %, and I didn’t have to many expenses this month. That is why the portfolio is up almost 8% since last month. With I think is a significant amount.
I have also changed bank. Now I have an account where I make 5 % interest on the first 50.000 DKK (7.500 $). Which is better than the 0 % I made at my other bank.
I got told by the national team coach in rowing, that they didn’t want me on the 2019 season team. Rowing has been the main focus of my life since 2009. It is tough to do something that much, and then get a message that they will not spent more time on you.
My goal for a long time has been to qualify a boat for the 2020 Olympics. And the situation I’m in now is not very good to accomplish that dream.
It is a very weird feeling something I have been doing for almost 10 years, is maybe coming to an end. And it is not even my own decision. This is not my first time experiencing some resistance in rowing. The other times I have had a similar experience, it has been like gasoline on a campfire. My motivation just went through the roof.
This is first time where I’m questioning the whole thing. I have promised myself not to make any immediate decision. I will stay fit, and show up a bit more in my own rowing club, which is also nice to see all of my old friends. But I’m starting to see for the first time in my life, that there is other things in this life besides rowing.
For the first time in 10 years I’m able to go where ever I want, whenever I want. Which is a very ambivalent feeling. I’m used to having a coach telling me when and where to show up, and suddenly I’m able to do whatever I like. I can imagine this might be the feeling whenever a person has been to jail for long time. What would seem awful to the main public (training 12 times a week or being to prison) ends up being comfortable.
And I still love to work my ass off. But the big question is do I still want to do it 12 times a week, if I can’t be a part of the national team?
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.
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.
This month has been the third worst month according to my savings rate since I started this journey back in February 2016.
I have been away with the national rowing team for six weeks. First we were on a four-week training camp in Austria, and then we left for the world championships in Bulgaria for about two weeks.
Even though we did terrible at the world championships, I’m still grateful for the experience.
Because of the six weeks away from my day job, I ended up with almost no money this month. That is not moving me closer to my FI goal. But I do love rowing. So getting the opportunity to eat, train and rest for six weeks where I don’t have to pay for it, is even more awesome!
After my last update, I ended up buying more stocks and leveraged more than I wrote. So the comparison to last month is a bit off. In the future I will do all of my savings, borrowing and investing before I make this post. So I don’t end up doing other stuff than I what I have written here.
Due to the bad savings rate I’m not going to invest, or leverage anything this month.
I would like to have about 10 % in cash. As a buying opportunity if the market will crash (Which if think it will soon). I do not believe in market timing, and the only reason I’m not investing this month is because of the lack of my saving. It doesn’t make any sense to buy a low amount of shares, because of the fees it will cost me on the transaction.
I have invested this month though. I maxed out a tax-advantaged retirement account with 5100 DKK (800 $) with funds from my account where I borrow my money.
The money of that retirement account is not included in my networth. Because I won’t be ale to use those money until I hit the “cultural retirement age” of +65 years.
Hopefully I will have a better savings rate next month.
I thought it would be fun to share how far I have come with my financial independence project. I have always enjoyed watching other people’s numbers. And here I am. About to do one myself.
I have never understood why personal finance should be a tabu. But I can feel there is a slight resistance in me. Telling me that I shouldn’t tell everyone about my finances.
But here it goes:
This is how my allocation looks like September 2018.
I have about 465.000 DKK (72.500 USD) invested in stock index funds. Where 125.000 DKK (19.500 USD) is money I have borrowed to a rate of 1%.
And 58.000 DKK (9.000 USD) in cash.
My first goal is to have a SWR on 7% on my 110.000 DKK/year budget. Which is about 1.600.000 DKK (250.000 USD).
523.000 DKK / 1.600.000 DKK = 32,6 %
If I continue the way that I save, invest and borrow. I will hit my 1.600.000 DKK in about 36 months from now.
This month savings rate was at about 78 %. Which is quiet high for me. I have a 3 year rolling savings rate of 58 %.
This month I have chosen “only” to invest 5.000 DKK and leverage it with another 5.000 DKK so in total 10.000 DKK (1.500 USD). Because I would like to have som surplus cash when the market is going to tumble.
Never hesitate to contact me if you have any questions.