Motivation and attitude in F.I.R.E.

For today i will point only two ideas.

First, it is something that i observed more and more in the last year, an that is that the real work begin when i finish work. Even if now the main work is seen as an important tool in reaching financial independence, the main effort is in trying to live making good, consistent choices and being aware of my life. In 2015 i learn about Seneca, stoicism, frugality, shares, bonds, side hustles, i helped in invention patents case, start three new blogs, published 4 books, visited 2 new countries, finished 2 courses (Nutrition and health + Harvard Justice, with Michael Sandel as teacher), i run a 5 kilometer race, did 149 Freeletics workouts, i read 287 books and the list can continue. Most amazing fact, the year is not finished yet.In theory. I cannot imagine what will be next.

One piece of Japanese wisdom, for all the perfectionists, me included. "Give up on your perfect image of yourself, be the best imperfect person you can be, and do what you always wanted to do before you die." Very interesting, as we often propose an image of ourselves that is not real, and then we suffer because we are not there. Instead, we can accept ourselves as we are, and try to improve realistically. More than this, we must stop to do what we do not like just because it is a habit, and create new habits, experiences and skills, in order to cross some of the goals from our bucket list. One per month and is still alright. One per week and your life will be amazing. Imagine that, 52 new experiences next year. Sound good, isn't it?

Happy new year!

G.

Shares and bonds portfolio withdrawal strategy tip

I just read something interesting for you, the future early retired person. It is called Cyclically Adjusted Price to Earning - CAPE, one of the most studied and watched stock valuation indicators. And to withdraw efficiently, you need to use a CAPE median strategy. If CAPE is greater than its long median ('average' for normal people), than stocks are highly valued and you can withdraw from there, if CAPE is bellow average, withdraw entirely from bonds.
Using this strategy, you will reach a 12% more rate of success and on average 3 times more money in a 30 year period.
Want to find more, search about CAPE and Robert Schiller research, you gonna like this.

Choices

Today a friend asked me why i do not choose the most effective tactics and try a risky move in order to obtain 900%-1000%. If it will work i am set for life, if not i will start over, because i am not so old to not afford this. And, he point it out, i have like 66% chance of success. This come as my strategy is a bit over-defensive, me not being the type to like to risk too much. At the moment my portfolio is 50.93% low risk and 49.07% medium risk (maybe 1% high risk, or maybe less).  So i see his point, but somehow is not in my nature to act like this.
What to do? What to do?

Christmas Eve

Motto:  “If you must play, decide on three things at the start: the rules of the game, the stakes, and the quitting time.”
(Chinese proverb)

What this means? We all like to play, but sometimes we forget one of those three things. If we do not know the rules of the game, we have 2 options: learn them or if this will take too long, hire someone who already know them. Stakes: not less, not more than you can afford, if you put not enough, it will take much longer to reach the goal, if you put more than you can afford, and something catastrophic happen you gonna lose even more time and resources. An when too quit it is important too, i see often a lot of people who can afford to leave a job and go into retirement, but they still want to work for a while to create a buffer, just in case.

Applying Chinese knowledge to my retirement plan, isn't that funny? Or maybe is just the drinking on Christmas Eve. Who will ever know?

See you,
G.

P.S. 1 mile run last midnight, around 12 pm. Best time ever. Romanian wine rules?

End of the year

Surprisingly enough, my plan to use a piggy bank for my birthday was approved warmly by my friends, think like "we do not need to make the effort to go out to buy a gift" way. One worry out of the way.

Christmas seems to be a very interesting part of the month, i must to admit, as i am the one to do the first party of the next year, i was invited to different friends, and is good to not cook for a while. Because i am mostly guest next days, i left an empty fridge at home, not like in the past years when i use to buy a lot of food and even to throw 25-30% in the bin.

I am still to train twice for this week and is Friday, that's means one training per day for the weekend. I am doing it. Yes. In fact i will go for a run now, and i have one strength training left to be done.

Two Kindle books published, around 7000 in savings and investments,  33% income increase, a continuous fighting with my eating and drinking habits (partially success), 5k run achieved( i am thinking to aim for 10k next year, even if seems to be a big number), planning for 2 side hustle businesses, 6 books, 5 holidays and double the savings for the next year, but i will see this when i check the monthly and yearly report on 2nd on January.

Wish you all a Merry Christmas and a happy New Year!
G.

Birthday idea tip

As someone inspired me, i will be up to a little experiment. To get along with my friends, but to avoid useless gifts, to say it somehow, on my birthday party,at the beginning of January, i am thinking to put a piggy bank on the table for everyone to put there something towards my gift. Ha ha. I am preparing my message to my guests soon, to inform them about this. If only i could see their face when they read it.

Let's see how it will work out.

G.

Healthy ever after - why I want to become a Bruce Lee of financial independence

   Yes, we are aiming for financial independence, and i heard people eating only noodles or some other things like that. But in my opinion, because even me, at the beginning, i was temped to do everything in order to save x% more, we need to learn to enjoy life altogether, even if we want to be financially free. A Chinese saying tell us: Best time ever to plant a tree was 20 years ago, second best time is now. I am talking about the habit of living healthy, eating well and sleeping properly. While on short term some side hustle burst of extra-activity are welcomed, on long term we need to take care of us first, because will make no sense to have all the money and couldn't enjoy the benefit because poor health. I remember in 1979, one flight departing for New Zealand to sightseeing the Pole, and the route had 1.5 degree error, but somebody was thinking that this is irrelevant. They ended up crashing into a volcano - Mount Erebus. Small things, if not corrected, can lead to major catastrophes. 
   So, that's why, starting from now, i will add to my monthly report some health data. Today was a perfect day for this, as i had a yoga session in the morning, followed by a strength training in the afternoon, and 5 km/3.1 miles run (5k in 2015 Challenge achieved!!!). Probably will be something like:
Week 14-20.12
Weight - 81kg
Body Fat - 16%
Training session - 1
Running session - 2
Yoga session      - 1

I will see at the end of the month. Anyway, i feel good i started again, because in between 12.11-14.12.2015 i have not done too much except working and walking from and to work.

Sleep: Aiming for an average 8 hours/night. I always try to go to sleep early but something happen. Every day.

Eating: The idea is not to eat cheapest food, but to cook wisely and efficient with top ingredients.

That's all for today. Have a perfect week.

G.

Useful habits on your way to early retirement

Yesterday i was talking about mistakes. Today i will take that discussion even further, talking about useful habits i created or i want to create in order to avoid the previously mentioned mistakes.

1. Do not lose money
A lot of people focus on making money, but as well is very important to not lose them after you make it. Warren Buffer No.1 rule is "Never lose money!".

2. Take small risk for big rewards.
As we said, a good 5-10% of your investment should be allocated for risky, highly rewarding projects. Finding ways to make a lot investing only what you can afford to lose.

3. It is what you save, not what you earn that matter.
Again, we talk about this yesterday. If you save 50% on average wages, you will be there much faster than saving 0.01% on a highly paid job. Right?

4. Diversify to reduce risks and maximize returns.
But clever diversification not random selection of shares and bonds. Low fee index fund ring a bell?

5. Stop mindless and useless spending.
Tony Robbins use to say: "spend on things that dramatically enhance your quality of life and stop spending that doesn't add any value to your life.". You get the idea. But it is only up to you to find what to cross from the list.

6. Focus on results or themes instead of to-do lists.
Relevant research find that using to-do lists is counterproductive on long term. Worth a try, i would say!

7. Knowledge is not power, execution of what you know is.
It is not enough to learn, you need to put it into practice. Just make a little bit of progress every day, every week, and before you know it, your financial independence is achieved. Somebody told me a story, about a person who choose to put some money daily in a financial freedom account. And at the end of every month to invest all the money. Imagine that, 12 years later, financially free. Just doing that. Every day, for 12 years in a row. Now that's perseverance.( I am on day 42 right now.)

8. Notice what is working and what is not.
If something work, do not change it. If something is not working, look for a different approach. But do not forget: No problem can be solved from the same level of consciousness that created it. (Einstein)

9. Do not sabotage you own success.
Sometime in order to become financially independent you need to change your core beliefs. You cannot be free with the same mindset that made you poor. It will help to see some of the video of T.H.Eker related to being rich mindset.

Retirement planning mistakes

Motto: “You must learn from the mistakes of others. You can’t possibly live long enough to make them all yourself.” (Sam Levenson)

As i firmly believe that is easier to learn from other's mistakes than to learn it the hard way, by doing them, i want to say something, based on what i just read today. I will make a list of the most common mistakes i found (and i do not want to make).

1. No plan
According to the Retirement Confidence Survey from the Employee Benefits Research Institute, 48% of workers haven’t calculated how much money they need to save for retirement. What? If you are in this category, here is a link to a one-minute plan. Use it! No, really, i mean it, use it! Similarly, Harvard Business School published a study on goal setting and found:
- 83% don’t have clearly defined goals
- 14% have goals but they aren’t written down
- Only 3% have goals committed in writing. After a 30 year follow up, the conclusion was the 3% with written goals earned an astounding 10 times the amount of the 83% group. Shall i say more?

2. Not saving enough
Here’s a shocking set of statistics for you:
- According to the Federal Reserve, the median balance of retirement savings for Americans is $60,000.
- The median retirement savings balance for those aged 35-44 is $42,700.
- The median retirement savings balance in the 55-64 age category (people near retirement) is $103,000.
In a PBS interview, Jack Vanderhei of the Employee Benefit Research Institute said you need to save 13.3% of your total income if you’re a male who works for 30 years, retires at 65, and only relies on Social Security and his retirement plan. A female needs to save 14.1% – employer and employee contribution combined – because of longer life expectancy. If you want to retire 5 years earlier at age 60, then contribution rates rise to 14.5% and 15.3% respectively. Vanderhei isn’t a lone wolf in these seemingly aggressive calculations. Brooks Hamilton calculates retirement savings contribution rates between 15% and 18% of earned income depending on assumptions. This is greatly in excess of average savings rates for most employees. And if that weren’t enough to shock you, Jack Bogle of Vanguard Mutual Funds fame points out people who don’t start saving until age 40 should contribute 25% of their income to retirement savings because they need to make up for lost time. Of course, there are some who save more than 50% of what they earn (What? And no, they are not millionaires, but average people on average wages, the word stoic say something to you? Frugal? Not spending on silly things?)

3. Not starting to save early enough
The most valuable asset you have when saving for retirement is time. Not yet, it is not the right time, you will say. The reality is there will never be a “right” or convenient time to start building toward a secure retirement. It will never be easier than today. It will only get harder because there’s less time. Do not delay it.

4. Not maximizing tax deferral
 Or as John Maynard Keynes said: “The avoidance of taxes is the only intellectual pursuit that carries any reward.” It is good, it is free, result in extra money towards your retirement plan. Why not use it?

5. Spending too much or too little.
Again with a quote: “We have some control over when we retire. However, we have very little control over how long we live.” (Gordon Smith) Make no sense to spend more than we can possible earn, Also, make no sense to become saving hunters, even if "challenge everything" is a good habit when we talk about money, we need not to live a miserable unfulfilled life. See this post about money allocation for an example. And remember, you can play with the percentages.

6. Investing too aggressively or not aggressive enough.
Controlled risks, that's the word. Set a percentage of your money that you are comfortable to lose and experiment with it. Mine is somewhere between 5% and 10%. Use that money for investments that will have 100%-1000% profit. If is good you will have a lot of money, if not, you afford to lose it. But if only 1 out of 5 of this experiments succeeds, you get more money than all 5 sums invested traditionally. That's the idea. If you invest too much you can lose a significant amount, but if you do not risk at all, you will not have enough return on investments to do it faster.

7. Paying too much investment expenses.
Really, you need too research a bit, the internet is free. Do not believe your bank just because they said they will do it for you. Look around for better offers. Learn about compounding. See if you can teach yourself to do it. Premium rates are often not justified in a financial world.In the end, when we talk about shares, everyone is guessing. So why to pay somebody else to guess for you? Educate yourself, is much more rewarding. And doable.

Good luck and a good week!
G.

Help to buy ISA - 3000 pounds bonus.

I know the general trend is to rent instead of buy. Or maybe i am wrong. But here is something good, if you are decided to do it. The new Help to buy ISA is good to go.
What you need to know:
-You can only have one ISA on your name.
-If you chose Help to Buy you cannot have another cash ISA
-You can put 200 pounds each month, and you will get 50 from Government, but anything more than this will not increase the 50 bonus.
-You can get maximum 3000, meaning 60 months (5 years) x 200/month.
-Some companies like for example Virgin, give 3% interest, so that is 25%+3%=28% on your money. Seems good enough for me. Halifax give 4%. Probably more offers will come soon.

Book number 2 -The complete vitamins and minerals pocket guide (Nutrients Book 1)- links

As i promised, here it is.
The complete vitamins and minerals pocket guide (Nutrients Book 1)
On Amazon.
On Kindle.

Special offer until my birthday in January. He he!

Number 2

At last. I managed to finish it before my deadline, estimated by the end of the year. I will publish it in few days from now, after i will do the formatting and final check. This time it is in English - Vitamins and minerals pocket guide, and even if it is not a thick book, i needed a considerable amount of time and some sustained effort, especially to collect, analyse and gather the data. Like the previous one, took longer than expected and implied double the estimated amount of work. But, after this experience, i trust myself and aim to publish at least 6 new titles next year. We will see.

I will post the links when it is published, and like a novelty, will be available on Kindle too.

I wish you a perfect end of the year, and a merry Christmas!
G.

Is December a busy month?

What to talk about? December. What a month! Extra expenses, Planning the next year. Trying to find some hints about good and cheap shares to buy (Tesco anyone?). Trying to finish my Kindle book (despite my idea that i can finish it very quickly, seems that the time needed is at least double than allocated, and with all this work around the clock, i did not have enough time for it. But i still hope to finish it until the end of the year.). Buying gifts or just give money? (Still thinking at this idea, for my nephew definitely money, after i got him some nice 6 months clothes, only to find that he is much bigger at 4 months) Put finances and documents in order. Extra bill coming out of nowhere, almost getting my bills account in overdraft. Wondering at all the people around me buying like there is no tomorrow. (Stoic attitude anyone?) Thinking about some meditation to deal with extra stress (Real life version: i will just watch some of my favorite movies instead.). The good news today: only 806 pounds spend until now - 350 being rent.  The bad news: 4416 spent in November (i think that half of it was invested, but this is still an all time high. Aiming to be under 1500 in December. We will see.

Good habits training
After November being No Fast Food month, December will be No Bus To Work month. Hopefully. If we will not have snow.

Any good idea to deal with huge amounts of stress?

See you soon.
G.

Kindle - yes or not?

Inspired by the Jedi Master Huw Davies and his awesome blog, i decided that my side hustle for 2016 will be Kindle Publishing. I am starting from Zero, and i am hoping to go to Hero Level, with my first kindle publishing book very soon. I am working on it, is 20-30% done. I also started the second one, to continue with, at the moment is 5% done. I also set up account on CreateSpace, on Amazon, and i found some very good freelance websites, just in case i need a cover for the book or something similar. Seems to have a huge potential, the only thing is that some complicated books i use to work at will take a lot of time to publish. Meanwhile i will do some different projects which will need less time, being easier to finish.

I will keep you updated.
Have a nice week!
G.

Tips and tricks - 6% interest on savings, cashback and Apple Pay

For those who do not know yet, M&S start a current account which can give option of one savings account, limited at 250 pounds/monthly, for one year, with 6% interest. This is slightly better than TSB offer, which despite 5% interest and 250 pounds monthly, you can used only once, for one year. M&S one, you can make a new one after the older one is finished, every 12 months. It is not much, only 100 per year, but i like M&S, and i can use the debit card for cashback too.

I plan to use this on top of TSB one, having 250+250 in savings each month, one with 5%, one with 6%, as super secret emergency fund, just in case. If you need you can take the money right away. Of course, if you closed early, no interest for you and no savings account at preferential interest rate until the 12 months term is finished.

Speaking about banks, 5% cashback if i use Apple Pay for TSB and Santander, up to 100 pounds monthly. TSB use contactless card cashback 5% up to100 pounds too.

I hope it will help.

P.S. TSB and M&S current account are free, Santander is 2/month, going to 5/month in January 2016.

P.S.2 The IMF voted ‘yes’ to adding the Chinese currency to a VIP group of reserve currencies. A nice thing to follow up, but i will not invest in Chinese finance yet.

November - end of the month report

My Overview

Total portfolio: £ 6,550 (+233)
Debt:- £ 670 (-20)
Net Worth: £ 5880 (+253)

Investments UK: £1879 (+555)
Investments overseas : £1664 (+324)
Cash: £40 (-915)
Pension: £2909 (+91)

Total Income: £1494
Passive income: £5 (0.33%)

Was a good month, where i spend a lot and i saved a lot, i maximized my Romanian First Buy ISA, just because for every 1000 euro/yearly, the government is adding 250 euro. I moved most of the cash on Bitcoin, in a bid to gain something extra for Christmas, and i plan to put at least 500 pounds on property crowdfunding until the end of the year. We will see how it will go, until now is 4% up in 2 days. I plan to take my investment back on the next surge and then play with the profit left there.

Wish you a perfect December!
G.

ImpulseSave

Did you ever notice how our American friends have all kind of apps and gadgets to help them with saving, like for example Digit. 

Good news, seems like they start to work on something similar even for UK. Now, i do not know about the cost, fees, efficiency and all the rest implied, but i will follow up. The product is called ImpulseSave, and they claim something like:

"You already use your computer, tablet or smartphone to buy music, groceries and even find your next home – impulseSave® brings that modern way of thinking to investments.

We’ve also lowered one of the key barriers to regular investment by making it possible to add as little as £1 at a time to your investments through impulseSave®.

By empowering you to set financial goals, regularly review your investments against those goals and top-up easily and quickly to close any gap, we’re helping you form the habits of a long-term investor. Reaching your goals has never been easier."

You can read all the presentation here, to check about. 

Random thoughts

What i read nowadays?

1. A mindset lesson from T. H. Eker. Click here
2. New side hustle. Did you ever dreamed to become a computer geek? Learn to code and pay what you want for it. Click here. Only until 1.12.2015. Almost free. One dollar per language, thanks to Project Hope.
3. Some quote that stuck in my mind: ,“Money is only a tool. It will take you wherever you wish, but it will not replace you as the driver.” (Ayn Rand)
4. Today dilemma: As i need to invest some money at the end of December, should i just buy some Bitcoin, as just reached the low point, or not? (The good news here is that finally Visa did something to facilitate the use of Bitcoin - click here. The bad news is that the card is available only in US.)

Some interesting podcasts for people who want to achieve financial independence

Some good ideas in all those podcast i am listening in the last 3 days. When you go to work, when you run or even before going to bed, listen and learn some new cool shortcuts on your way to FI.

Budgeting made easy - Jesse Mecham

Click here

Wealth of auto-pilot - Never work again strategy - James Clear

Click here

Financial planning simplified - 6 ideas you need to know

Click here

Why do you want to become financial independent?

It is a 'freedom from' or a 'freedom to'? Think about your motivation. And listen to this interesting podcast to find more about. That all for today.

See you soon
G.

3,2,1 go!

Talking about FIRE with old and new friends, i just remembered why i started this personal journey to financial independence. It was just a phrase somebody told me.
"Do not spend your days trying to play the role chosen for you by other people!"

It was simple like that. Somehow those words went straight to my head, reached my mind and start growing, bigger and bigger. A good friend told me that and i just believe him.

How did you start?

Victory

Seems that i had a big bunch of expenses this month, but i also saved quite well. And as a personal achievement, i just invested half of my planned holiday expenses in a short term project, thinking that i will just take the money if i needed. Seems that i am so driven to achieve my financial independence, that i managed to use only half of my holiday expenses, doing all that i wanted to do, and i still got half of the money in my accounts.
Conclusion: It is always room for improvement. Funny enough, when i went to my holiday, i was worried i could not have enough money.

P.S. 20% of unexpected expenses, also covered from my 50% of the initial sum. Clap-clap!

P.S.II  If you are quite bored and want to listen something funny (and maybe learn something new) you got one link here, working for the next 6 days.

Public opinion

Those days i meet with my missed long time friends from the little town where i was born. I just noticed something strange. Here, in this place where my adventures begin, everyone is still thinking, that it is normal to spend everything you got that month, to buy newest car, phone, build a massive house, and that saving is something you will not do. Never ever. You can max you credit cards instead, if you need money. You can pay them all your life, this is sign you are a normal person. You are probable not of this planet if:
- you can save 50% of your income
- you have no debts (God forbid, this is truly a blasphemy!)
- you want to never work again
- retirement is for people older than 65, only that you are allowed to enjoy life.

Seeing all this, i am a bit like that legendary god of luck, Janus, with had half-face laughing, and half-face crying. I was working out some little hints. One to pay all debts and never do it again, buy only with cash. If you are as rich as you think you are, pay cash for everything you buy. As a challenge. To another friend who is always surprised to have extra expenses, but every month is stuffing another 10 new clothes in his drawer, i challenge him to make an emergency fund of 3 months expenses. To one who told me that he will always have money for everything, i challenge him to save 10% of his monthly income in a long term savings account. Y know i used their big big big Ego, but i am curious know if it will work. I told them that i will give them the next advice only after all three will fulfill their challenge (help and support each other, isn't it?). "Never work again" is a very powerful concept that lure everyone in doing it. It was right to use all those tricks or not? Morally wrong? Hush-hush! And i will do it again any time.

Free credit check link

I was testing this free credit check who in fact is not checking, just doing an approximate of your credit check. I simulate different versions, and no, it is not very accurate in my opinion. Feel free to play with it. Could be an interesting exercise.

A new hobby

I just found a new hobby, to say it somehow, or maybe an alternative way to motivate myself. Which one it is, you will ask? I am reading about people that already reached their financial independence and retired from the "work to live"cycle. I am imagining myself reaching that point. And is so amazing that i cannot believe that it is possible. Yes, i am still like 4-5 years away, but is so good to dream about. I read about someone post, and i want more and more to go there faster. I am tweaking with numbers, i am spending less. It is making me improving myself in ways i couldn't believe it is possible. You can try it. If you are not there yet. Just to see what would you feel.

New ideas - testing phase

Discipline equal freedom.
(Jocko Willink)

* Looking around i found a growth fund called Trident, and their performance is at least puzzling. For what i understand their strategy is something like US small cap value bonds , gold and US long term bonds. Still, seems too good to be true!

** Second, we will talk about the Trinity Study. In finance, investment advising, and retirement planning, the Trinity study is an informal name used to refer to an influential 1998 paper by three professors of finance at Trinity University.It is one of a category of studies that attempt to determine "safe withdrawal rates" from retirement portfolios that contain stocks and thus grow (or shrink) irregularly over time.
Its conclusions are often encapsulated in a "4% safe withdrawal rate rule-of-thumb," which had previously been published in Bengen (1994), based on the same data and similar analysis. The rule refers to one of the scenarios examined by the authors. The context is one of annual withdrawals from a retirement portfolio containing a mix of stocks and bonds. The 4% refers to the portion of the portfolio withdrawn during the first year; it is assumed that the portion withdrawn in subsequent years will increase with the consumer price index (CPI) to keep pace with the cost of living. The withdrawals may exceed the income earned by the portfolio, and the total value of the portfolio may well shrink during periods when the stock market performs poorly. It is assumed that the portfolio needs to last thirty years. The withdrawal regime is deemed to have failed if the portfolio is exhausted in less than thirty years and to have succeeded if there are unspent assets at the end of the period. The authors back-tested a number of stock/bond mixes and withdrawal rates against market data compiled by Ibbotson Associates covering the period from 1925 to 1995. They examined payout periods from 15 to 30 years, and withdrawals that stayed level or increased with inflation. For level payouts, they stated that "If history is any guide for the future, then withdrawal rates of 3% and 4% are extremely unlikely to exhaust any portfolio of stocks and bonds during any of the payout periods shown in Table 1. In those cases, portfolio success seems close to being assured." For payouts increasing to keep pace with inflation, they stated that "withdrawal rates of 3% to 4% continue to produce high portfolio success rates for stock-dominated portfolios." The authors make this qualification:

“The word planning is emphasized because of the great uncertainties in the stock and bond markets. Mid-course corrections likely will be required, with the actual dollar amounts withdrawn adjusted downward or upward relative to the plan. The investor needs to keep in mind that selection of a withdrawal rate is not a matter of contract but rather a matter of planning.”

Other authors have made similar studies using back-tested and simulated market data, and other withdrawal systems and strategies. The Trinity study and others of its kind have been sharply criticized, e.g. by Scott et al. (2008), not on their data or conclusions, but on what they see as an irrational and economically inefficient withdrawal strategy: "This rule and its variants finance a constant, non-volatile spending plan using a risky, volatile investment strategy. As a result, retirees accumulate unspent surpluses when markets outperform and face spending shortfalls when markets under-perform." Laurence Kotlikoff, advocate of the consumption smoothing theory of retirement planning, is even less kind to the 4% rule, saying that it "has no connection to economics.... economic theory says you need to adjust your spending based on the portfolio of assets you're holding. If you invest aggressively, you need to spend defensively. Notice that the 4 percent rule has no connection to the other rule—to target 85 percent of your pre-retirement income. The whole thing is made up out of the blue." Ironically, the 4% rule of thumb would, in many instances, mandate a more frugal level of retirement expenditures than a portfolio that was fully invested in government inflation-indexed bonds, such as U.S. Treasury Inflation Protected Securities (TIPS). As of mid-October 2008, Treasury Inflation Protected Securities (TIPS) boasted real yields of approximately 3%. A laddered, 100%-TIPS portfolio yielding 3% real would sustain a 5% safe withdrawal rate over a 30-year period. A 100%-TIPS portfolio yielding 3% real would not only be less volatile than a diversified, part-stock portfolio, but also safely sustain a much more generous level—25% more generous, in fact—of retirement expenditures than a diversified portfolio to which the "4% rule" was applied. While a 3% real TIPS yield is well above historical averages for TIPS yield, even a TIPS portfolio that yielded only 1.3% real would sustain a 4%, inflation-adjusted, safe withdrawal rate over a 30-year period. The original Trinity study was based on data through 1995. An update of their results using data through 2009 is provided in Pfau (2010). Shortly afterwards, the original authors of the Trinity Study published an updated study, also using data through 2009. The procedure for determining a safe withdrawal rate from a retirement portfolio in these studies considers only the uncertainty arising from the future returns to be earned on the investment. Another major uncertainty is the amount of spending that will be required each period to provide a given standard of living. For instance, there is a small chance each period of an emergency arising that will require a large extra withdrawal that may be comparable in size to the loss from a financial bear market. An example is major repairs to a home not covered by insurance caused by water incursion. The effects of such possible emergencies in addition to uncertain investment returns are considered in Pye (2010). Under conditions where a 4 percent withdrawal might otherwise be reasonably sustainable, reasonable assumptions about the chances for an emergency each year and its cost reduce the withdrawal from 4 to about 3 percent.
This latter analysis also differs by using the Retrenchment Rule to determine the value of the withdrawal each period. This rule is discussed in Pye (2010) and also Pye (2012). When using the Retrenchment Rule the default withdrawal each period is the prior withdrawal adjusted for inflation as in the earlier studies. There are conditions, however, when this default withdrawal is not applicable. In particular, the initial withdrawal is related to the prior standard of living of the retiree, not just the withdrawal that is reasonably sustainable. Also, the withdrawal for a period is reduced when a test indicates that such retrenchment is necessary. This occurs when the risk of running out of funds before the end of a plan has become too high given the size of the then current withdrawal and the funds that remain.

This is what the economist are saying. But, on the other way, they are also advising us to retire at 65, so i would take their advice with a pinch of salt. I would like to see a similar study done on Dividend-Growth Strategy, but i didn't find anything yet. Also, those studies were done during the dot-com bubble, so i would consider them a bit biased towards those results.

Today thought - November first tips and tricks

* As T.H.Eker teach at his seminar, one very easy method to check how much you need to become financial independent, now i expect everyone to say what do you think about his strategy.
Example: How much you need for
Month ===> Year ===> +50%
1500             18000         24000

If you are good enough to invest and have 10% return (average return in real estate in Canada)
then you need 24000 x 10 = 240000.
Pretty close to my way of doing it, I had 242.000 with my method. But i do not know the real estate market in Canada, in UK, in my town, is more like 7-8%. With 11 months rented per year. Without other expenses.

** Speaking about attitude, i found the original article about Hell, yeah! strategy. Click here to read it. I started to used successfully, and is making a difference in my life.

*** Motivational phrase: Sacrifice instant gratification for long term success.

October 2015 end of month report

My Overview

Total portfolio: £ 6,317 (+621)
Debt:- £ 690 (+50)
Net Worth: £ 5627 (+671)

Investments UK: £1324 (-446)
Investments overseas : £1310 (+90)
Cash: £955 (+791)
Pension: £2818 (+276)

Total Income: £1726
Passive income:£29 (1.68%)

Debt: I managed to put all my debt on a Zero interest card until 1st of April. Now i have 2 options, to pay it quickly just to finish my year without any debt, or just to pay it right before the interest start. I am paying small amounts every month, I didn't decided what to do. But in terms of personal motivation, will be something big to finish the year with no debt, so probably i will do this.
This month was not bad, with £671 added to my net worth. Investments in UK, I got some savings reaching maturity, and i start to build some cash emergency fund. Overseas, surprisingly pound vs RON quote went down so my savings there gain some value, As for pension, is going up automatically. I started to calculate the percent of passive income from my monthly amount. Not a big number, i must to admit. But here I am, starting my 11th month on my way to financial independence. A difficult month, with some big expenses. All I want is to finish it with a positive balance. Cannot wait for my end of the 1st year report.

As you can see i am on my way to use a different report now. I am also thinking to use a 6 sub-accounts system for my income, that will probably look like this:
1. FIRE  -at least 10%
2. Long term saving 10%
3. Education 10%
4. Necessities - no more than 55%
5. Me!Me!Me! -10% to be used by ME  by the end of every month
6. Charity -5%

I will test it for November to see how is it going.

Tips and tricks

Motto of the day: Lack of money is not a problem, it is a result of your actions. Change them. (T.H.E.)

* Exploring the hidden corners of internet, i found some interesting things. One is a very complicated and complete early retirement calculator. I test it, seems to work well. Want to play with? Link here.
** Also, from the same guy who did the before mentioned calculator, an interesting article about predisposition to fraud. Most of us know this, but i will put the link here especially for one of my friends, you know who you are. Huh!
*** Best strategy to achieve financial independence in 10 words.
1. Working income => 2. Savings => 3. Investments => 4. Passive income
(Faster: Simplify your life!)

Millionaire mind intensive day 3

And i finished. What was a very interesting feeling, was working close with 800 like minded people, all of them on their way or already financially independent. It was amazing, and i will cherish every one of those 3 days. You know about how did you felt when you meet this month at the FIRE Meetings? At least how i see it in my mind, but i am sure that in reality was much, much better! Now imagine hundreds of people like us. And you know most of them after 3 days. A lot of friends made, a lot of ideas, theories, techniques, improvements, tips and so on. Coming from people who already have the habit to over-deliver. A very good event, who in the end gave me some clarity, structure in my thoughts and direction. I will quantify the effects as i am a statistics fan, and i will tell you.

Tomorrow, in fact later today, i will do my monthly check and i will post it here.

See you. Good night.
G.

Millionaire mind intensive day 2

Huh, my second of 3 day training is starting now. Funny enough, they got a programme called ' Never work again' that it is available for only £4945. Yes they got quality informations, but i could read some blogs that got at least same if not better quality. For free.
I will come back with a later post about what i agree and do not agree in their financial freedom training.
What i want to say, we often have access to some invaluable advice through our blogs-network. Value it!

See you soon.
G.

Trick or treat?

In the spirit of Halloween, i would tell you about my experiment. The trick is that if you always pay with real money, not with 'virtual' ones using the card, you are much less likely to waste it. The treat is like 600 pounds extra in my account this month, after i did this for the last 30 days.

You can try it!

Hints and bits and random data

* Side hustle for children (and not only): this one is very easy, that even one 11 year old can do it. Ideal if you have clever kids? Check the link here. Selling cryptografically secure passwords.

** They just developed something interesting at Oxford, a language understanding intelligent service that can even use SIRI or Cortana. I think this can result in a (r)evolution in phone AI in the future. Language Understanding Intelligent Service (LUIS) offers a fast and effective way of adding language understanding to applications. With LUIS, you can use pre-existing, world-class, pre-built models whenever they suit your purposes -and when you need specialized models, LUIS guides you through the process of quickly building them.

What this language can do, you will probably ask?Here is the list:

-Create language understanding models

-Create models for your application to better understand intents like "turn on the lights", or entities such as "start a new jog/walk/hike/bikeride". Tune your model with in-depth performance visualizations.

-Use pre-built, world-class models from Bing and Cortana

-Use the pre-built, world-class models to recognize entities like places, times, numbers, temperatures, and to also handle common requests like "set an alarm for 8 AM". Immediately enable personal assistant functionalities by using a selection of Cortana understanding models.

-Deploy your models to an HTTP endpoint

-Deploy models to an HTTP endpoint with one click. LUIS returns easy-to-use JSON.

-Activate models on any device

-Activate your language understanding models from your application on your phone, tablet, or any other device that has access to the Internet.

-Maintain models with ease

-Review commands spoken to your application to spot and correct errors. LUIS automatically suggests the most important commands to label.

If you buy shares, not only mutual funds, the future seems to be bright in the phone app sector. But i will let you to look for the companies that will use this technologies soon (hint: Apple is one of them)

*** Meanwhile i will tell you what i noticed in the world economic news and market most recent changes. Eli Lilly ex chief Sidney Taurel will become Pearson's new chairman. That is a good news, as S.Taurel can provide strong ties with U.S market, being one of the most knowledgeable experts at the moment. Aberdeen Asset Management is having the third consecutive year of negative new flow on both income and equities, What a shame coming from what was once Europe largest listed fund (in 2013). Philips is on his way to get rid of his lighting business, trying to sell his major stake in  the company Lumileds. I think Hitachi should take lessons from them, having now 9 business divisions, with the possibility of providing major profit returns if the will just close the two divisions with the biggest loss. But who am i to tell them what to do. Apple is to announce his profit soon, with the experts predicting a low performance next spring, first time in years. What to do? Maybe an aggressive campaign is not the answer, but this is a far away future at the moment. 

**** London financial independence real estate tip. I've seen some very good prices for studio and 1 bedroom flat in Hounslow, around 199.000. Given that i found on internet that the average rent for one of this is 1818/month, meaning 21816/year, that's a whooping 10.96% ROI, sound good to me. You should easily get that rent with some money invested to give a luxury make-up appearance to your flat.

That's it for today, enjoy the rest of the week, see you soon.

G.

The 30% rule, the rule of 25, the rule of 20/80, the 4% rule and many others.

Today we gonna play with numbers. There are a lot of arbitrarily set rules, but right know i will talk only about the ones that are essential for financial independence.
The 4% withdrawal rule:  It's a rule of thumb used to determine the amount of funds to withdraw from a retirement account each year.
The rule of multiply by 25:  This rule estimates how much money you'll need in retirement by multiplying your desired annual income by 25.
The rule of 30% : State that you should pay no more than 30% of your monthly income for your rent.
The rules of house end price: This area is a bit murky, but the experts agree that mortgage should be no more than 28-36% of your monthly income, i think we can safely apply the rule of 30% here too, and, here it comes, the house price should be no more than 2.5 x annual income. Where i can find a 45 thousands pounds flat, God only know!

Oh, and i leave it for last, the rule of 20/80. This rule state that we get 80% of our happiness and satisfaction from a mere 20% of our daily activities. Do them first, i'd say!

My two cents about financial advice

Sometimes you ask yourself if you can do it or you really need professional help? I was lucky enough to study economy for many years, but not all are so fortunate. Of course, every skill can be learned. The problem is that a lot of the people i know lack basic financial education. And they need some advice. Here is the trick. Everybody got an opinion. My uncle Paul try to give me advice all the time, yet he is barely end his meets every month. My postman told me he know a lot about investing. Everyone know. But not every one apply. As Cicero said "Advice is judged by results, not by intentions. If we listen to some others much more clever than us, here are the financial advisers not to be trusted on the long term.
1. People who lack necessary qualification and proven results.
2. Someone who build his wealth in another business or real estate, because stock investment is something different.
3. Authors and writers, because they are better at writing, not investing.
4. Academics, because they have some interesting theories, but their experience lack the practice , and real life is reacting in a surprising way sometimes.
5. Someone who is selling investment products, because the inherent conflict of interest that biases the advice you receive (true for most stock brokers and financial planners).
6. A person who made his wealth through marketing investment advice instead of actually investing

The best recommendation is given to you by proven actual results, and often you can see the FIRE in their eyes. I hope this helped you now, as it would helped me 10-20 years ago, when i did so many mistakes. The trick is to always check who are the best in the field, and to learn from them. Aim for the stars. If your adviser will tell you how can you lose your money first, before you find how you gain more, then he/she is a good one. If is telling you about the risk management and preserving capital, personalized to your needs, you already feel like winning the lottery.

 Questions to ask first, before you ask someone to help:

1: Is the adviser already successfully doing exactly what he is advising you to do?

2: Is the adviser still “walking the talk”, or is he just “marketing the talk?”

3: Will the adviser provide documented proof that his advice works?

4: What is the adviser background, education, training, skills, and experience?

5: Has the advice been tested and proven successful through multiple market cycles?

6: Does the advice provide a balanced viewpoint with both positive and negative attributes or is it a one-sided sales job?

7: Does the advice over-simplify the inherently complex nature of investing in an effort to make the sale?

8:Is the advice personalized to your needs or is it generic?

9: Is the advice a complete investment process or a half-truth?

10: Does the advice focus primarily on risk management and capital preservation?

11: How is the adviser compensated? What are his conflicts of interest?

12:  Is the advice based strictly on facts or does it include meaningless opinions?

FIRE-getting physical

It is normal for everyone to want to enjoy his hard earned newly achieved financial independence for as long as possible. In order to do that, we need to do more than have the money. As many of us will start to live the life after the age of 30, or even 40, we will need to take care of our health, physically, emotionally, mentally, and to exercise minimally to stay in shape.
My resolution:
1. I will try to go to sleep at 22:00 and wake up around 6:00.
2. I will try to cook and eat healthy, avoiding to much salt and sugar.
3. Running sessions 2-3 every week, at least, and freeletics exercises, at least twice a week.
That is  is for the moment.
See you around!
G.

Quote of the day

“The stock market should not be viewed as a way of making money. Working is how money is made—saving and investing is how it’s kept.” —E.J. Smith

Is that true? Or is just a reminder of another time, and another world? Who will agree with what is said here? Personally i think that the previous quote is not one of actuality , and this wise man used to have the pattern of thinking that we need to work for 30-40 years and then retire, when we are old and we cannot work anymore. So much changed, so much dissipated to make place for the newcomers. I like all this trend of FIRE (financial independence/retire early) and i hope that our number will grow, and more and more will start their search of a happy independent life.
Me, for this year i will just try to pay my last credit card, and reach 6k new wealth. And run 5k. If we are to speak in thousands. Only 3 months left, such eventful months for me. And my side hustle at the moment: work overtime. Not too clever, but effective.
Felling hopeful, isn't it?

See you soon.
G.

Mind games

I feel like taking a kind of break next week, after i just finished and 80 hours/workweek, a far cry from Tim Ferris 4 hour workweek. Compared with my last one, my next 37 hours work week look like a walk in the park. But i hope i reach my goals with this, as i will go in a well deserved, and seemingly expensive, holiday. I need to, it is my little brother wedding, so a bit of mayhem is welcome. Anyway, this is scheduled for mid november, i still have time for a side hustle until then.
Meanwhile i try to work on my second book, and despite my slow progress, i will estimate i am at 50% completion. I also try to invest a bit of my time in my development, as i booked a 3 day training with T. Harv Eker, something that sound interesting enough, fancy named Millionaire Mind Intensive.

On top of this, i would like, hmm, poor choice of words, let's try again, I MUST finish this month and the other 2 months left from this year on a positive monthly balance. I am doing my best at the moment, working hard and relaxing even harder. We will all see what the future brings.

P.S. I miss a little market value jump of Bitcoin, as i sold everything on the last month high and i forget to buy it back when was low enough. Eh, no need to worry, i will do it next time. I said to me, but something is still there inside of me, almost crying for the lost opportunity.

Shave like your Grandpa(and save doing this)

I am willing to try this as a new ( old) method of save money and have a great shaving experience. Seems that all i need for a top experience is one badger hair type brush, one safety razor, one soap and stainless soap bowl and 100 razors. Estimate cost - £50-60. At the moment i use Gillette Proglide with razor cartridge - annual estimate cost - £120. I know that i save (only) 60 pounds, but friends of mine that already used this method told me that it is all about the shaving experience. Beware: it will take 1-2 weeks to learn this new skill.

Bonus: Times is money! What is this saying make you thinking? Because most of the readers of this blog probably are interested in early retirement and financial independence. Working hard now in order to save time later. But what about the other point of view? How do you treat your time? What is your average ROI for let's say one week of your life? Make a journal and track this. You will be surprised. Hint: there are some things money can't buy, and one of them is health (probably). Looking from this point of view, sleep is the most awesome time investment. Confusing? I just started. Do you want to do to much, but you do not have enough time? You know how to deal with money debt, i presume, so why to not do the same with your time debt? Because in the end all you need to remember is that Time is money, and the most amazing thing money can buy is Time. My most important goal (and yours i'd like to believe) is for me to be happy, and to do what is the most fulfilling, pleasure giving experience in life. And in order to do this i need Time. So, why not to give it the same importance as we give to Money, and realize that what we want to achieve doing this is Freedom and a happy life, because why not to admit it, sometimes we forget Bruce Le advice to watch the Moon, not the finger that point to it.

See you soon. Have a good night.

G.

Active vs passive

At the moment most of my monthly money are coming from active sources, something like 95% of it, with only 5% coming from passive income. I do not know what others think, but even after my early retirement, i still see myself as having at least 20-25% of my income coming from active sources. I know, in theory the best option is to have 100% passive, but this will be very boring, isn't it? Now, related to other ideas i had this week, as i was thinking that i am going at a very slow pace, and i wanted to work more in order to reach my goals. Somebody reminded me that in the end not money and early retirement, but our happiness is the goal, money are only the instrument we use for achieving more. And if this journey is a marathon, not a sprint, so be it. Make no sense to exhaust myself or to worry too much about missing some deadline, as they are not set in stone. I was assured that once i will start enjoying life, my productivity will increase and my goals will be achieved faster, using Mr. Bruce Lee own strategy. In order to become faster we need to slow down. I will keep you posted about this.

Added later: As a big joke from Universe, after this post i checked my accounts, I've seen that the markets are recovering the percentages lost in the last months. So i am growing after all. Hip-hip-hooray!

Choices, choices and choices

This week i faced a hard choice, but in the end the rational part of my mind took a break, and i decided to work some extra 40 hours in order to achieve what i was planning for the current month. I checked and i really, really wanted to earn more than i need to spend for what is left of this year. So, if i am not clever enough (yet) to gain more money for the same amount of time (as Ramit Sethi would say - by the way, go fast to his blog, he is giving his book "I will teach you to be rich" for free at the moment, some good ideas there), coming back, if i cannot gain more money for the same amount of time, than i will work more time for more money. But i will keep the promises done to myself. We will see how efficient this step was at the end of this month. And year.

Meanwhile, market is rising, soon will be a good time to sell some of the shares i want to get rid off, right?

And to finish the post with some nice tips, if you are looking for a new hobby like building off-grid houses, here is a blog post with some free plans links.

So many projects, so little time...

*As my brother wedding came close, i just worked some extra hours. So i found that one of ours bigger expense is taxes. Now, this seems to be one interesting domain, and i will start to take a look at the problem, in the other UK blogs. If you know some great blog that i do not have it at my blog roll, just leave a comment. Thanks.
**My running was amazing until now, but i reach a moment where motivation is important. My total time decreased a bit, 1.07 hours versus 2.19 hours last week, but the week is not finished yet. I would say, even if i know that i will add maybe another 30 min to this week time. My running sessions are something like this:
Week 1 - 1 session
Week 2 - 2 sessions
Week 3 - 5 sessions
Week 4 - 2 sessions
In conclusion, i need to add some additional exercises to this, if i want to be more effective. Idea: i can challenge myself and run tonight and tomorrow. The magic of going out of my comfort zone. I said it. After finishing this post i go to run. Ha,ha!
***I managed to reach a nice number for food expenses last month, i will continue the experiment this week. It is called Do Not Be Lazy And Cook At Home Instead Of Fast Food (i consider pre-packed food fast food too). Last month i was buying fast food only twice, and i eat out 3 times, but i ordered some good proper food every times. October look good too, only one McDonald visit during working time - so i do not know if i count this one. Hmm, i eat it, it count. But it is really good for me to see what a difference make to buy the ingredients and cook your own food. (hell, yeah, i can cook).
****I have seriously progressed with my second book about healthy eating, i would say i am at 50% on my way to publish it. First book - that is so funny, but it was a test - is about poetry, in my native language, so as you can guess is not proving to be a hit, Yet. But i learn how to do it during all that experience of publishing it, so it did the job. I must add - income stream no.7- royalties. So proud of me now. Plus - childhood dream done - publish poetry book. We're good.

See you my friends, i go to run now.
George

Added later: I did it! I did it!

FIRE first aid or as i said FIRE crash course 1.0.1.

Ok. New post coming. But before i start i want to point to some very pertinent blog post of FI fighter. I just find it interesting and it is worth to take a peek on it. Another good post i found is about th Roseto effect - how to live longer, better and healthier. It is a simple solution, but a very effective one.

Now back to my story. One friend was asking me how can he learn to do what i do? As a close friend he could see the changes on my personal finance and net worth, and as we have at least 20 years from the time we first meet, he realized that i did in this year more than i did in the previous 36 of my life.
But here come with the catch. How can i learn somebody about FIRE in only 2 hours if i just start with the basics after 18 months of study of this phenomenon.

So i made a plan. Emailing books to read on the subject, 1 per week. Record every expense for 3 months on a notebook named with the fancy name of FIRE ESCAPE (i must to admit that i was inspired by Huw with this one). Categorize them after every month. Learn about your money before you start saving. Start budgeting expenses and food week by week, Stick with that amount. Download a running app. I use Runkeeper or Freeletics. A bit of physical preparation. Depending on the person i would recommend some supplements. At least when you start running again after 20 years. For him it was Multivitamins, Multiminerals, Magnesium, Fish oil to burn the extra fat, Melatonin to adapt faster to the new situation and some other things, Joints stuff - the one with condroitin. Make a blog. Put every link i provide on your blogroll. I give him most of the blogs i know. Set up to show the last post. Read them regularly. Now i have 2 Excel spreadsheet that i use. One to record the plan. With 4 pages. Risk. Safe. Dreams. Costs and strategy. Another one is using different pages, one for every income sources like dividends, interests, full time work, royalties, profit, capital gained and rental. Set up accounts. Start small and get bigger at some pre-set periods of time. He started with 8% for risk investment, 4% for safest ones and 4% for achieving childhood dreams (i used this as a helping hand as it is known that achieving childhood dreams can have as a result a dramatically improvement of your motivation. I have the full research on one of my journals,
Setting up the accounts. I went for one P2P account, one property crowdfunding, one for buying shares. He agreed to make a new bank account for this with TSB for the 5% interest, where he will save first a buffer cash sum, ideally 6 months expenses. Then we will set up direct debits for the investments options mentioned before, going with the option pay yourself first, worry about an eventual shortcoming later. As in automatically pay your rent, bills, transport (train pass) and savings first after you are getting paid your wages and make a budget for the remaining amount for food and any other expenses. Took us 3 hours at first and an additional one later instead of 2 planned, but we did it.

What would you do different? I am listening.

P.S. The blog just reach the 1000 readers bar, it is time to celebrate!

FIRE first aid

Let's say your good friend see that you are doing something, see the results and it is interested in doing the same. What are the lines of conversation and the information that you can give him? How will you explain FIRE if you have only 2 hours available before he will go to a far away country? How i did it? You will find out in my tomorrow blog post (as i still need to go to work at the moment).

Side Hustle - October 2015 - Travel club

As you probable have seen (or not) a new link appeared in my websites list. What is it about? It is a travel club that i use to travel around the world, with very good offers and conditions. I like them because they will return you 150% the difference if you find a cheaper alternative in the next 24 hours. And they have a interesting system of balancing the price, meaning that if they find a better alternative, they will send you back the saved money even without you asking for them. Although this option i have it as a member, so you will still need to check if it is available to non members.
The link is here.

Disclaimer: It is a referral link, so i will benefit if you will use it.

Quote of the day and a bit more.

A river cut through rock not because of its power, but because of its persistence. (Watkins)
This is something i need to remember every month, as it seems that my saving rate is going down lately. A need to reconsider my planning at least. And a bit of motivation. And more time. And more sleep. And stop travelling for one month. Really. I would never think i would say this last phrase. But it is late. Night time. And i work. And i am just talking nonsense. Or maybe not.

Talking about side hustles. I am seriously thinking to plant like 160 trees from a bamboo like family. Sel it in 4-5 years. 4-5k to do it. Sell it through futures contract. At 40-45k. So is like 10 times more in let's say 5 years. If i do the work. A bit less if i put someone else to do it. I got the land provided. And the good part. The trees need daily care only for first 6 months. After that just weekly checks.

Also there is a possibility to change the main job and jump from 18 to 35k. But to move in London. And work my **s out a lot. And pay the living expenses in London. I do not know what to do. I need to check out the expenses. Hard to decide. At the moment.

Financial independence and London

Not much for today's post, just some very interesting map that i found in newspaper. It is a map of the average price of a one bedroom flat within 1 mile of a specific tube station. For one FIRE adept (i like how cool this sound, FIRE adept, make me think at something magic), you can see than only moving few Tube station away you can really shorten you early retirement plans with few years. I presume everyone can do the math, so i will not bother you with the numbers. You can see it very clear in the picture. Just zoom in or save the picture and study it carefully. I got some ideas myself. 

September statistics

The relevant financial statistics at the end of September:

Money from interests and dividends this year (up to 1.10.2015) - 332 pounds (+12)
Month average (first 9 months of my early retirement project) - 36.66 pounds (+6)
Yearly ROI percentage prediction - 7.61% (-2.88)
Retirement fund percentage achieved : 5.14% (a depressing -0.06% due to market situation)
Security fund investment: 47.38% (-0.98)
Risk fund investment: 52.62% (+0.98)
Total investment: 5696 pounds (-66)
Total debt: 740 pounds (-40)
Net worth: 4982.09 pounds (-36)

Income:
Wages  - 1470
Investments - 12
TOTAL: 1482

Expenses: 1791

Seems that this month i just forgot the Rule No.1: Never ever spend more than you earn. Shame on me. I will need to focus even more on recovering last month deficit, but is still harder to do it than say it, as i will still have 2 more months with a lot of extra expenses. After October and November, a blissful period of accumulation and sound investing will follow, until April next year. Apparently. If nothing else happen. At least i reduced a bit of my debt, even if is by not such a significant amount. I need to study September seriously and see what i can learn from this month experience. I admit.

I am open to answer to any common sense question about mine or yours retirement project.

Balance and balance again

One of my favourite blogger is James Altucher. He got this somehow interesting view of a freedom and independence that it is overlapping the financial part - financial balance, with physical, emotional, mental and even spiritual balanced style of life. In his vision the finance is just a part, and in order to be happy you need to put all of them in order. Interesting, isn't it?
Now, regarding me, as i just jumped from 170 to 190 pounds in just two months, i start running. 4 times this week only. And i plan to continue at least until i am able to run 5 miles. I am at 2.5 miles at the moment. I start with the physical part as it seems to be the easiest one. No sense to save a lot of money if we will not enjoy them at some moment in the future.
And soon will be 1st of October and i will need to check my monthly results. Hip-hip-hooray!

Income streams

Soon i will work out to a new formula of income streams, to change the old one. In the old one i had like 13 income sources in different categories. But after a bit of study i just reduce them to 7 main income sources.

They are:
1. Earned income. This is out main job, our wages.
2. Profit. This is the profit we obtain by side hustle or our own proper business.
3. Interest. Amount of money paid by bank for our savings deposit.
4. Dividend. Amount of money paid by a company of which we hold shares.
5. Rental. Money coming from rent (real estate).
6. Capital gains. Money coming from shares increasing in value or companies we own increasing value.
7. Royalties.

Strategy and vision.

One sours of income is not a good idea. Never ever. Probably 2-3 are safe enough. I think that 4 of them will give us a proper safety even in case of a global crisis. More than 5 will probably result in too much time to manage, let's not forget that our main objective is to trade money for time. Time we want to use for our own happiness.

Send me your opinions, as usual. I am curious what you think about this.

Such a powerful image

No comments

Who wants to live forever?

Queen's "Who wants to live forever" was always one of my favorites song. And this is how i start one of a somehow different blog post, but of the same relevance like my other posts. We all want to become financially independent, and to retire early. So, in the essence, that means that we want to live better, and to enjoy life when we are still young. In the light of this line of thinking, i would suggest to take a look at this article.

http://oneurbanfairytale.blogspot.co.uk/2015/09/pathways-to-longevity.html

And to tell me what is your opinion related to this.
Thank you.

Property crowdfunding - Most precious resource - Dan Zinger

* Today i will talk about a lot of interesting stuff. I will start with a property crowdfunding company called propertypartner.co, which invested massively in marketing lately. I would rate it 3/5 as the commission is not exactly stated, the monthly dividend is around 2-3%, the property valuation is updated monthly and seems to be alright, but the procedure used to send money back is a bit inconvenient as they will call you in the name of anti money laundering measures to check if you are real person and everything else. I would not use it as they are better companies on the market.

**  Did you ever heard about Dan Zanger? If not you should check on him and his portfolio, at least to learn how one will establish a world record ever, Dan took a portfolio of a measly $10,775 and turned it into an incredible $18 million in just 18 months. He shares his work because he loves his work, simple as that. How many people do you know that have done over 29,000% return in one year? None, and that is because Dan stands alone as the best of the best. Could be just luck? We will never know. A bit more data about him, he calls William O'Neills best seller, How to Make Money in Stocks, the “traders bible.” His website is something to study, even if it is a bit too flashy in my opinion. The link is www.chartpattern.com/  and his style is different than mine, but i was thinking that, even if i pick one thing and i improve my strategy with 1%, is still worth it.

*** And few words about resources. If Leonardo Da Vinci had enough ideas to cover four centuries of progress, but not the right resources to build his inventions, today the situation is completely different. We got almost any kind of resource needed to accomplish anything, but not enough ideas. And jumping from one idea to another, do you know what is the most precious resource on earth? No, it is not diamonds, platinum or gold. It is not Uranium either. It is TIME. And even if every one of us instinctively know that, we are still wasting our time carelessly sometimes. Because do not forget, as a FIRE trader, we are trading our hard saved money for time, in the end. And when we are gaining 15-25 years, retiring early, we are in the unique position of being rich beyond compare. Other would think themselves lucky for having a few extra months, and we got years. Just think about. I hope this would motivate you to save even more, and to get at that point of becoming financial independent even faster.

Good luck my friends! See you tomorrow!

MrMoneyMustache versus Ramit Sethi

How do i see it and who is winning this epic clash in my mind? Probably only a handful of people know what i am talking about. But i will do this post, mostly because those two are the one who inspired me to start my journey to financial independence. In the left corner of my mind ring we have MMM, the silent assassin of the useless desires, the stoic, MR. MONEYMUSTACHEEEE! In the right corner, the olive skinned toreador, and his golden cape, RAMIT SETHIII! Betting are on, who gonna win?

And despite my warlike scenario, the two of them like each other, i could say, even if they do not approve completely of their 'arch-nemesis' strategy. But they offered a beer one another's, and i see them drinking one of MMM home brew, or a Golden flake 12.000 dollars beer, depending on who is setting up the place.

Regarding me, i was always an adept of learning from everyone, so i applied some of techniques inspired by both. I would say that most of the time i go towards a Mustachian style of life, but then I would ask you, which way are you going if you will be asked to choose a position in between those two?

P.S. I am talking about the following blogs: MrMoneyMustache,com - personal finance and early retirement blog and iwillteachyoutoberich.com - a blog about how to reach a luxury lifestyle

Pathways to financial independence

Why i like Tony Robbins? Maybe because he can give a voice to my underwhelming bunch of thoughts and make it seems classy and elegant. And easy (even if i learned by now that it is not easy at all).  And this is what he was saying in 2013. By now he even finished his book Money - master the game, a book that is motivational enough to give it to some curious friend to read it instead of you  trying to explain the whole concept. My idea of a test. If he/she will read it then the basics are already covered and we can discuss more about. If not even this rised the interest about FIRE, then i will not waste my time.

Just watch this. Got some very useful ideas, right?

FinCon 2015

What a list, my friends, what a list!
Just take a look here and you will see: http://finconexpo.com/attendee-list/

For those who do not know, FinCon is a peer conference for the money media community. At the annual event each Fall, this is what they do:

- attendees connect with others in the community,
- learn to create, promote, and profit from compelling online content, and
- discover new trends in personal finance and investing.

Originally called the Financial Blogger Conference, the event was shortened to simply “FinCon” to reflect changes to the scope of the attendees.

Their Mission: “To support the movement that is reaching millions of people with a positive money message.”

My only problem? Is happening right not in U.S. What about it, my British friends, shall we do something like this in UK? Even if it is on a much smaller scale?

Bonds are forever (fun fact)

Did you ever heard about perpetual bonds? One of the five oldest bonds ever, emited around 16th century, is still paying dividends today. Yale university is the one to be paid, and you can find more about at this link: http://www.bloomberg.com/news/articles/2015-09-16/yale-to-be-paid-interest-on-dutch-water-authority-bond-from-1648.

What do you think about?

Creating trends - Life extension - Anti-aging - Biotech

An important part of investing is being able to recognize trends and use them to invest your high risk percentage (mine is 10% of the total that i have allocated, that i invest in high risk high reward companies and projects).
For today i will take a look at the companies that research specifically to increase the life span. Just in case you don't know, our life expectancy at the actual moment is increasing with 4 hours per week. Just imagine that.

And i do not talk about this rare "disease" that is slowing aging, or about foundations and charities like Strategies for Engineered Negligible Senescence (Sens) Research Foundation, Ellison Medical Foundation, Paul F Glenn Foundation for Medical Research but about proper companies that are researching difference pathways on their ways to technological immortality

When we talk about U.K. we think at Britain's booming biotech industry. Few facts that are good to know. Venture capital funding went up by 71 per cent to $430bn (£280) in 2014. IPO activity reached £408bn in 2014 - almost equal to the amount raised in the nine previous years. Two IPOs have already happened in 2015. The UK has outperformed the rest of Europe in the last five years. The future look bright in this sector.

Biggest and most known names in UK are:

AstraZeneca
Pharmaceutical company
AstraZeneca plc is a British-Swedish multinational pharmaceutical and biologics company headquartered in London, United Kingdom.

AstraZeneca PLC
LON: AZN - 15 Sep 17:07 GMT+1
4,328.00 Price increase 43.50 (1.02%)

Shire plc
Company
Shire Plc is a Jersey-registered, Irish-headquartered global specialty biopharmaceutical company. Originating in the United Kingdom with a large operational base in the United States.

Shire PLC
LON: SHP - 15 Sep 16:56 GMT+1
4,766.67 Price increase 23.67 (0.50%)

Some small companies are known for different reasons, like  

Oxford BioMedica
Company
Oxford BioMedica is a biopharmaceutical company specialising in the development and commercialisation of innovative gene-based medicines. It was established in 1995 as a spin out from Oxford University.

Oxford BioMedica plc
LON: OXB - 15 Sep 16:36 GMT+1
8.45Price increase0.00 (0.00%)

Big world companies that are doing well (or not very well lately) are:

Pfizer
Pharmaceutical company
Pfizer, Inc. /ˈfaɪzər/ is an American multinational pharmaceutical corporation headquartered in New York City, New York, with its research headquarters in Groton, Connecticut. It is among the world's largest pharmaceutical companies by revenues.

Pfizer
LON: PFZ - 15 Sep 16:43 GMT+1
33.00Price increase0.11 (0.33%)

Novartis AG
Pharmaceutical company
Novartis International AG is a Swiss multinational pharmaceutical company based in Basel, Switzerland, ranking number one in sales among the world-wide industry in 2013

Novartis AG
VTX: NOVN - 15 Sep 17:30 GMT+2
93.40Price increase1.10 (1.19%)

Sanofi
Pharmaceutical company
Sanofi S.A. is a French multinational pharmaceutical company headquartered in Paris, France, as of 2013 the world's fifth-largest by prescription sales.

Sanofi SA
EPA: SAN - 15 Sep 17:37 CET
87.99Price increase0.36 (0.41%)

GlaxoSmithKline
Pharmaceutical company
GlaxoSmithKline plc is a British multinational pharmaceutical company headquartered in Brentford, London. It was the world's sixth-largest pharmaceutical company in 2014, after Pfizer, Novartis, Sanofi, Hoffmann-La Roche and Merck

GlaxoSmithKline PLC
LON: GSK - 15 Sep 17:07 GMT+1
1,290.00Price increase5.00 (0.39%)

AbbVie
Company
AbbVie Inc. is a research-based biopharmaceutical company.

AbbVie Inc
NYSE: ABBV - 15 Sep 18:26 EDT
59.20 Price increase 0.26 (0.44%)

Calico Resources Corp and Human longevity inc are some companies good enough to keep an eye on their evolution.

Pros and cons - financial education in schools?

Yesterday i was reading on some regional newspaper, i do not say which, big one. And i was like what?, i could not believe it. Some reporter made an article about how people lose money monthly with workplace pensions because of automatic enrollment. And like a lot of people shared this on Facebook and we're upset because of this. "I lose 50-60 pounds monthly because of that" was one of their opinions. So really, i could not believe how many of them are not properly informed about. My next thought was that probably financial education is a good idea for college or university, even as some extra curriculum activity or club, if not mandatory.
Just imagine, even if seems a bit of science fiction, how cool will be to learn about early retirement when you are ready to start your first job, what will be the impact on your life and what the consequences ?

What do you think?

HMRC change of details - Passive income - Biochemistry of early retirement - Quote of the day

1. If you didn't know what to do with this, just read at the following link https://www.gov.uk/tell-hmrc-change-of-details .

2. Active versus passive income. What are they? How we do it? Crash course.
Passive income is usually found on paper, or lately online accounts. Shares, government or company bonds, ETF or mutual funds, this is first type of income.
Passive-active income like real estate is the second type of income.
Active income like your own business is the third type of income.
In order to become financially independent, even if you do not want to retire early, you need a mix of first and second type of income, and occasionally the third. At least two of them types are required in order for you to be protected in case of a global crisis.

3. The biochemistry of early retirement - What part of the brain do you need to achieve early retirement? I will tell you. The prefrontal cortex is the seat of executive control, or self-regulations - the part of the brain responsible for planning, self control and will power, complex cognitive behaviors, personality expression, decision making and regulating social behavior. The prefrontal cortex allows you to differentiate between conflicting thoughts, predict outcomes, set expectations, suppress urges that might lead to non-resourceful outcomes.
Homework for everyone: find at least 3 ways to make your prefrontal cortex to be more efficient.

4. And finally the quote of the day is:

"I'd like to live as a poor man with lots of money." - Pablo Picasso, artist (1881-1973)

Two of my favorite shares for dividend portfolio

All of us have some favorites. I usually use mutual funds but from time to time i buy individually shares. Two of them that i always liked are:

Halma plc
Technology company
Halma plc is a group of technology companies that makes products for hazard detection and life protection.
LON: HLMA - 10 Sep 16:38 GMT+1
745.82 Price decrease 0.18 (0.02%)

Pearson PLC
Publishing company
Pearson PLC is a British multinational publishing and education company headquartered in London. It is the largest education company and the largest book publisher in the world.
LON: PSON - 10 Sep 16:52 GMT+1
1,145.62 Price decrease 15.38 (1.32%)

Do you have any companies that you really like?

Big crash - Small crash

Prices goes down, everyone panic, what we can do? I will not talk about the ones keep printing dollars like there is no tomorrow, or the situation in China. I will just suggest one very wise point of view.
 “If you believe the stock market may not come back this time, then you have much more to worry about than your investment portfolio.” –Rick Ferri
That is so true. And we must endure. The portfolio value will go up and down. I doesn't matter for us. Because we are looking at the end of the road. Not at next month, or even at next year. We will endure. And we will prevail. (Knight rules, isn't it?).
Just one small note, According to Charles Schwab, over the past 50 years, the average length of a bear market has been a little over one year, and the average time for the market to recover and reach its previous highs has been less than four years.

What is the secret of becoming financially independent?

I always asked myself, why some people get whatever they want, even if they do not deserved (in my eyes), when other never had a chance, even if they probably deserved (again, in my eyes). There is one thing above all that make the difference, and the one that said "where there is a will, is a way!" was very close to the truth. "One ring to rule them all". (i know, i know, i am a nerd!)
One word.
Commitment.
Did you get it? I will say it again. Now think about it. You will find that i am right
COMMITMENT.
That's it. No secret behind the secret. You need only to do it, again and again, despite problems, despite being bored or despite the lack of results. Keep going. And never stop. Never.
One day you will be there. You will. I am sure.

Commitment - by Abe

Added 10.9.2014: And looking around i found this wonderful article about commitment. Click here to read it. 

Best financial advice ever

"The secret is there are no secrets." John Bogle say it and it is no more true than ever. In the Internet era we got access to every bit of information. We have every data starting from the "Richest man in Babylon" book to the last struggle of George in his way to achieve financial independence. We got everything and all we need is the desire to succeed. If you do not know what to do, just take a look at my blogroll, choose one of them and read it. That's all you need. Others already did it before you. They say that a clever men learn from his mistakes, a wise one learn from everyone's mistakes. Be wise. This is my advice for today.
Good luck!

1 September - monthly statistics

Just few of my relevant financial statistics:

Money from interests and dividends this year (up to 1.08.2015) - 320 pounds (+48)
Month average (first 8th months of my early retirement project) - 40 pounds (+6)
Yearly ROI percentage prediction - 10.66% (-3.58)
Retirement fund percentage achieved : 5.20% (still the same 5.20 after all decreased and i added funds)
Security fund investment: 48.36% (-3.38)
Risk fund investment: 51.64% (+3.38)
Total investment: 5762.09 pounds (+50)
Total debt: 780 pounds
Net worth: 4982.09 pounds (+50)

Income:
Wages  - 1646
Investments - 48
TOTAL: 1694

Expenses: 3567

So, on the paper is somehow disastrous, but my nephew was born, I started a new job and i was surviving on my saved cash until i was paid at the end of this month, i just had a holiday in Malta and Norway for me and Mrs and my cash reserves is literally ZERO. (I still consider it a success as i still got 11 pounds in bank after i paid everything - bills, rent, flight, food etc). Time to rebuild the cash now. A wedding at the middle of November and not much until then.

I am open to answer to any common sense question about mine or yours retirement project.

Just a few toughts

1. Market is down, All shares are falling. Do not despair. Take 70% of your cash stock and buy. Now it is the time. Look for shares that paid good dividends in the last 10-20 years and increased the dividend amount regularly. For example one of my favorites is Pearson (click on PSON.L for more info)

2. Take a look here and have a good laugh. The link is http://www.nakedtruthbank.com/ . True and funny, if it is not about you. If it is about you, then you need to do something, right? Positive cash flow ring a bell?

Think big... And just do it!

One friend who is very good in practicing the art of abundance teached me this. Look for the highest note of the money you use in your country and always have 2 of this notes in your wallet. Whatever happen. If you spend them, put another 2 back. Usually you will be reluctant to spend on small items just because you will get a lot of change. But, if some opportunity appear magically in front of you, you will have a decent amount of money to seize it.

My idea on his idea. On your way to financial independence you need to think big. Do not invest £20 every day of the month. The fees will just eat your profit, or even if it is a free fee thing, the time lost will not justify it. Instead of this, put all the money in the box, for example, and at the end of the month add it to your cash account. Invest in big amounts. £1000, £5000, something that it is significant for you. Sometimes if you invest more than 1000 you get a good cashback. 5% or more. Sound much better than that 3% fee, right?  This could mean 100k more money for you in 10 years time.

And added bonus, it will make you feel good, efficient, serious about the bussiness. Emotionally and physically better, Dopamine and oxytocin will be released. We could talk about the quality of life that will increase too. Just by doing something aparently irrelevant. Try it and tell me how this worked for you. Because it worked for me. Good luck.

Hint of the day - One myth about eating healthy and organic - it is not so expensive as you think.

Myth: It’s too expensive to eat healthily

Why it’s rubbish: Ready meals and frozen food will cost more than if you bought the ingredients and made it yourself. Likewise, a banana or an apple is a cheaper snack than a chocolate bar or packet of crisps. Also, homemade meals can easily be spread over more than one meal, saving you even more money in the process!
Than why to go for the obvious unhealthy choice, especially if some long term research showed that over time we pay more in health bills than we would pay for healthy organic food ?

An international team of experts led by Newcastle University has shown that organic crops are up to 60% higher in a number of key antioxidants than conventionally-grown ones.
Analyzing 343 studies into the compositional differences between organic and conventional crops, the team found that a switch to eating organic fruit, vegetable and cereals – and food made from them – would provide additional antioxidants equivalent to eating between 1-2 extra portions of fruit and vegetables a day. The study, published today in the prestigious British Journal of Nutrition, also shows significantly lower levels of toxic heavy metals in organic crops.  Cadmium, which is one of only three metal contaminants along with lead and mercury for which the European Commission has set maximum permitted contamination levels in food, was found to be almost 50% lower in organic crops than conventionally-grown ones. Newcastle University’s Professor Carlo Leifert, who led the study, says: “This study demonstrates that choosing food produced according to organic standards can lead to increased intake of nutritionally desirable antioxidants and reduced exposure to toxic heavy metals. You can find more about this here.

Another approach can be found here, and the results were that eating organic cutting meat in the same time will cost similar to eating normal or GM food.