Saturday, 27 August 2016

The bad "good" news

...or as I wanted to say, this is my face when the Santander 123 bank account interest dropped from 3% to 1.5%, but it is still the best available if you have more than 20k on it.

Wednesday, 24 August 2016

Financial independence overnight

Let's say that you just won the big prize. You are a normal person, who never had any specialized financial education. What to do next?

1. You still need to pay your tax for the money you won, so it is recommended to find out what you have to pay and pay it.

2. If you have any debts, student loan or mortgage, pay them.

3. You need basic control over your emotional state, in order to understand your comfort zone and your limits. If you buy shares, for example, and the price goes down, will you sell? Or will you buy more? Are you prone to make impulsive decisions? You need safeguards and restraint in order to not spend it all in the next few years? Do you feel tempted if someone come to you with a investment with a 25-75% annual return (this is too god to be true, you know that, right) ?

4. Keep your identity and lifestyle the same if possible, maintain a low profile, and a need to know basis. You can tell to your wife, and your kids, maybe. If word goes by, a lot of people will come to you with real or not so real problems, asking for financial help. It is better to remain anonymous and support the causes that are important for you.

5. Priorities, goals and values. Do you want to live in another country, or countries? Do you want to still keep your work or stop doing it? Do you want to have another career that you always dreamed off, but you did not have the time and the money to follow it? Do you want to spend more time with your family? To travel around the world? To buy another house or car? Your partner have the same priorities like you or you need to compromise?

Keep in mind that 9 out of 10 lottery winners end up broke 5-10 years later.

Tuesday, 23 August 2016

One simple algorithm for early retirement

A. Do you want to retire?

Yes - Go to B                      
No - Stop reading (Some people are lucky enough to to something they like, so you can see the necessity to retire if you have a better alternative. Of course, it is much rewarding to go to your actual work as volunteer knowing that your bank account is big enough so you do not need to work another day of your life if you do not need or want.)

B. When do you want to retire?

At the retirement age, as everybody else I know - Stop reading.
Before the retirement age - If this is your wish, my friend. You need to start saving. And more than that, you need to know how much you need to save, therefore you need to calculate your retirement expenses and to know how to provide your retirement income. Go to C.

C.  What will be the estimate cost when you will retire?

You are rich - Stop reading.
You know why you want to retire and when, now you need to know what your expenses will be and how to cover them -  You need a decent plan on how to generate wealth and passive income (because of ageing), and how to overestimate a bit your needed income (because inflation, global crisis and stuff). Go to D.

D. The plan

Once you are here, you have your plan, and you can divide the years until your retirement to find how much you need to save yearly. Then you need to start saving, record everything, reach the retirement date, retire and make a good book about this. Do not forget to sent me the book. I promise i will read it.

Saturday, 20 August 2016

Testing, testing!

Here are the results of my latest experiments:

1. Moneybox  is live and kicking, rounding up my expenses and investing the change in shares, gilts and bonds. Click on the link if you want to test it. It is still a beta version, but seems to run smoothly and it is easy to set up.

2. Dollarupload website is working and seems to be a good opportunity for some, but not for me. At the moment I had few tries but my account there is still a big Zero.

3. The brilliant idea of the guys behind the Mondo Card is up, and i am waiting for mine soon. I will make a review after I used it for a while. We are talking about a current account completely managed from your smartphone, with no fee for anything you buy, anywhere in the world. More about it here. We will see what's next!

That's all for today, see you soon.

Wednesday, 17 August 2016

Financial freedom - how do I start?

Trying to reconsider my portfolio, I was just asking some of my friends about some ideas. Sadly enough, many of them proposed simplistic solution, and I would often tell them, is this what you would do if you were in my place? My understanding that we need a real financial education seems more needed than ever. But the thing is, that so many think they already know everything they need to know, and despite this, they do not act upon it. They just react to the environment. And this little difference is what we make us to reach financial independence, to retire early, and to enjoy many years of happy, fulfilled life. Being active instead of reactive is all we need. When someone see my results and ask for help, I advice my trademark beginner strategy. Save enough cash to cover 6 months of basic expenses and buy a piggy bank and save something daily in it. At the end of the month, just take whatever you saved and put it in a savings account. Why I do this? Easy, saving a six months basic expenses will make you to feel committed and ready to tackle the issue of your financial freedom, while building the habit of regular saving is also helped by the daily piggy bank deposit, even if it is only 0.01 per day. The habit is the goal, not the saving per se. Later, when this is already part of your normal life, we can start to make a plan. Most of the times, saving 30-50% of your income is not only recommended, but also possible, and the final goal is within your reach. Five to ten years later, you are financially independent. End of the project. And then the real adventure begin.

Monday, 15 August 2016

Rent or buy?

This is one of my struggles lately, and despite knowing that I need to rent where i want to live, and buy where i want to rent, I am still trying to convince myself about this true fact. I am still dreaming to build a house as i would like, projected and furnished by me, for me. I am in the middle of both sides, like Aesop's donkey, missing them both, but still feeling guilty if i would chose one of the two options.

What to do? What to do?

Friday, 12 August 2016

Quote of the day

"Rent where you want to live. Own where you can rent."

This could be a real estate investing mantra. When you are financially free, you want to be mobile. You can live whenever you want, literally. One year in Thailand, near the beach, one year in Prague, learning everything about beer and baroque architecture, and maybe one year in Paris or Barcelona. But you want to own a house near an university, or a place with lots of warehouses, for example. Anyway, is a good tip.