February 2018 Update

February is now down, it’s time for another monthly update!

I haven’t posted on this blog since the last update, I was in vacation in China for more than half the month. I hope to post more in March.

January 2018

After a very good start for 2018 with a very strong January, February was a very bad month for finances. I wasn’t able to save anything and lost about 42 CHF this month. This put my savings rate to 0.0% (after January at around 30%).

This month is very poor even though my salary increased by around 900 CHF. This should help for next month.

There are several reasons for this very poor result. First, following Chinese culture, I paid a dowry to my to-be father in law. Although it’s quite a correct number compared to some other families, it’s still around 25% of my salary, so it weighs very heavily on the budget. Moreover, I had to pay more than 700 CHF in visa and marriage fees. I don’t regret these fees since the end result will be to get married to my girlfriend, but it would have been much better if these expenses were dispatched over several months. Finally, the holidays costed me more than I had expected (around 600 CHF). We will have to be more frugal next time we go to China.

On the investment side, since I still had too much cash sitting in my savings from last month, I invested 1000 CHF more in my broker and 500 more in my 3rd pillar (retirement).

For my expenses, with 5991.75, this is well above average. Here are the details:

  • Insurances: 255CHF: Average
  • Transportation: 131.00 CHF: Below average. I didn’t need any gas this moth, but had to pay the Ferry from HKIA to Shenzen and back.
  • Communications: 118 CHF: Average
  • Personal: 3511.97 CHF: Very highly above average, as explained before
  • .

  • Food: 318.64 CHF: Average.
  • Apartment: 1300 CHF: Average
  • Taxes: 356.55 CHF: Below Average. Only had to pay the county taxes this month since I finished paying the state taxes already.

Next month, I will have to be very careful about what I use to compensate for this bad month. I wanted to finally buy some home automation components, but this will have to wait until April (and my birthday).

As for my net worth, it is currently at 55002 CHF. This is lower than last month, especially because of the loss of the USD against the CHF. This makes me want to reduce my USD allocation and increase EUR and CHF, but I don’t know exactly how I’ll do this.

2018 Goals

Here is the current status of my goals for this year:

I didn’t stay under 4500 CHF expenses this month. As for the other goals, I invested 500 CHF in my 3rd pillar account which makes for a third of my yearly (easy) goal. I’m now at 20% of my yearly investing goal (only due to good January). I think I will be able to invest the 5% in bonds this month. I still haven’t sold my last small PostFinance fund. I haven’t received any dividend this year, but I should receive a small dividend in March. I think that the objective of 500 for 2018 was set way too high. I’m also more than 80% done with my document scanning task, only one binder left and it’s already in good shape. Finally, for the blog, I already blogged 8 times (including this post) but I didn’t blog enough in February. I have several posts planned for March, so this should be good. I still think I’m going to be able to move the blog out of wordpress.com this month. And very good news, I signed the contract for my new job, starting the 1st of June.

March should be a good month. I don’t have any big spending planned (I moved some planned spending for later) and my salary increased in February, so it should be a good month.

If you have any comment on how I could have improved this month budget or how I could improve next month budget, I’d very pleased to hear about it πŸ™‚

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January 2018 Update

It is time for another monthly update!

January 2018

Financially, January 2018 was a really good month. I managed to save 31.28% of my income! That’s a great way to start the year!

My salary increased by around 100 CHF this month and I received quite a few gifts (650 CHF) for my Ph.D, so this helped improve my savings rate. On the other hand, some expenses could have been avoided.

I didn’t invest a lot this month, only 500 CHF in my 3rd pillar (retirement) because I will need a lot of money next month for travel to China and marriage fees. So I kept most of this month money in my checkings account. I will see at the end of next month to put more money into my broker account. This feels a bit bad but should be fine by the end of February or March.

As for my expenses, with 3916.27, this is a below average month, so that is quite good I think. Here is the detailed view:

  • Insurances: 550CHF: Really above average, I had to pay my legal insurance
  • Transportation: 257.42: Slightly above average, I had to change the lights of my car, pay the yearly highway fee and I had to purchase train tickets for next month.
  • Communications: 120.75 CHF: Below average, my internet rate is now much lower than before andΒ  next month my mobile rate will also be lower!
  • Personal: 640 CHF: Average, but I went a bit overboard with about 100CHF spent in my current game.
  • Food: 342.55 CHF: Average. My groceries were well below average, but I allowed myself to buy good Nespresso coffee, making it average.
  • Apartment: 1300 CHF: Average
  • Taxes: 705.45 CHF: Average

As for my net worth, it is currently at 56319.90.

2018 Goals

Here is the current status of my goals for this year:

I managed to stay under 4500 CHF expenses this month. The other goals did not move a lot. I invested 500 CHF in my 3rd pillar which 16% of my yearly goal, but this is an easy goal in a year, I’m only at 5% of my investment goal which is below the monthly goal. I may invest the 5% of bonds in March if everything goes well. On the bright side, I only have one PostFinance fund left to sell and this is the smallest one (less than 200 CHF), so I’m almost done with this and I’ve greatly reduced my overall fees of investment. I’m also around 60% done with my document scanning task, only two binders left. Finally, for the blog, I already blogged 7 times (including this post) so this is well higher than I thought, but not every month will be like that. I’ll probably move the blog out of wordpress.com in March after my vacations. As for my next job, it’s almost done, just need to pass the final background check.

As I stated, February will not be good at all for savings. I’m traveling to China and I’ll have to pay a lot in marriage fews (and dowry). On the other hand, since my salary will increase again next month, I hope I won’t spend more than my income, but nothing is sure.

Book Review: Rich Dad Poor Dad

The most recent finance book I’ve read is “Rich Dad Poor Dad” by Robert T. Kiyosaki. This is my short review of the book. This book is fairly different from the others, in several ways.

First, it’s not really well written. At least, the author is honest on that point and says he’s not a great writer, he’s only a great seller. Which makes sense. The organization of the book is a bit hard to follow in my opinion. The author tells us the story of its two dads but it’s a bit all over the place I think.

Moreover, the point of the book is very different from other books in personal finance, and a lot of people in the FIRE (Financial Independence Retire Early) dislike the book for this. Where as a lot of books and blogs encourage you to save as much as possible of your salary and invest what you are able to save in the stock market (and bond market), Rich Dad Poor Dad wants you to stop working for other people and get your own business going. Something, he calls getting out of the rat race. The idea is that you don’t want to spend your whole life working for other people and spend most of what you gain in taxes, but you want others to work for you and generate more money and acquire more assets. For the author’s, this is achieved with real estate, but a few other examples are given throughout the book. One important point here is that the rich don’t work for money, the money works for the rich. Another important point in the book is that the education system is not adapted at all for people to get rich. In fact, the education system forces you to spend a lot of years in school to then make you work a lot of years in a company, for others. Moreover, he also states that the system does not teach some basic, but very useful, skills like accounting that you should really master. A point that was quite interesting is that the author encourages you to work, not for money, but to learn. Indeed, the knowledge you’ll gain by working on a company or on a project or on your own business is very valuable. You can then use this knowledge to improve yourself and do even better for your next project. Moreover, you should never be afraid of failure and losses, they will make you learn, you need to take some ricks.

Basically, the point of the book can be stated as such: Work for yourself, have others work for you and make your money works for you as well.

While I don’t fully agree with the book, it makes some very good point. One thing is important with this book, it is not made to make you financially independent, it is made to make you rich. The difference is very important. You’ll not get rich by being frugal and saving most of your salary. You’ll get rich only by taking on risks and try to get your own business going on. I think this is quite true. However, not everybody wants to be rich and not everybody wants to be a business man. I personally really don’t want to start a business and I don’t have a problem going to work and saving some part of my salary in order to retire earlier and be financially independent one day.

While it’s not a great book, it offers a different perspective on money and getting rich that I think it’s interesting. If you are only focused about FIRE and not interested in getting rich, you should probably not consider this book, but if you want to have a broader perspective, you could take a look at this book.

If you are interested, you can get it from Amazon: Rich Dad Poor Dad: What the Rich Teach Their Kids About Money That the Poor and Middle Class Do Not!

How I saved 10 CHF by changing my mobile plan

Hi,

Before I already had a very cheap mobile plan for my mobile phone. I was using MBudget Maxi One with 2GB of data per month for 29CHF/month. This is pretty cheap as Switzerland goes. However, I’m very rarely using mobile data on my phone. I’ve got Wifi at work, Wifi at home and Wifi at the gym. Some restaurants are starting to have Wifi, but this is not a lot in Switzerland.

So I decided to switch to the MBudget Mini One plan with 600MB of data per month for 19CHF/month. This will save me 10CHF/mo (120CHF/year). It’s not a big saving but it’s a correct one and a easy one. I’ll have to be a bit careful about using my phone when going out, but it should be fine. Since there are no delays, I can also switch back to Maxi One if I cannot keep below the limit, but this should be fine. This month, I’ve use less than 60MB on my phone.

So, if you pay a lot for your phone, be sure to check if there are no alternatives that could be more advantageous and try to save some money!

Book Review: The Bogleheads Guide to Investing

Here is another book review about an investing book. This is the second book I read in my way to personal finance enlightenment: The Bogleheads Guide to Investing, by Taylor Larimore, Mel Lindauer and Michael LeBoeuf.

This book is a complete guide about personal investing, how to save money and how to invest it. I personally think it’s a really good book, well-written and full of very good advice. The book is full of quotes from other financial figures and every argument is well supported by facts.

What is really good about this book is that it’s very complete, it covers a lot of different subjects and contains really tangible advice that you can follow.

This book contains several very important messages:

  1. Avoid debt: This one is a no-brainer πŸ˜›
  2. You should start to invest early: By the magic of compounding, starting early even with small sums, will amount to a large amount
  3. Know what you are buying: This one is very important. You should only consider investing in assets that you actually understand. If you don’t understand an asset, you should not invest, you should always research before you invest or seek advice
  4. Know how much you need for retirement: If you plan to retire early, you should know exactly how much money you’ll need and how much expenses you have each month.
  5. Keep it simple: Invest in few index funds that are replicating the entire stock market and stick with you strategy
  6. Minimize the costs of your investments: Only use no-load funds with very low fees.
  7. Don’t try to time the market: Market timing is not possible in the long term, simply stick with your long-term strategy.
  8. Rebalance if necessary: If some of your assets are doing extremely well, as will be the case for stocks in a long run bull market, you should rebalance by selling some of your stocks and invest them into bonds. This should help you by buying low and selling high automatically. Not everybody likes this rebalancing idea, so you need to be careful about that. The important thing is to be aware that unbalancing will occur eventually.
  9. Diversify: Don’t put all your eggs in the same basket. There is no point in investing in two funds that have the same assets inside.

All these messages (and a lot more) are quite well explained and well supported by facts.

Overall, I think it’s a great book that deserve to be read. If you are willing to invest but don’t know exactly how, you should definitely take a look at this book and profit from its advice in order to elaborate a sound investment strategy.

IF you are interested, you can buy it on amazon: The Bogleheads’ Guide to Investing

Goals for 2018

For once, I’m gonna try to set clear goals for this year! I’ve set up a nice spreadsheet for my goals for this year (credits to retirebyforty for the spreadsheets idea):

I’ve tried to not see goals that are too high but still strive for better than this year. This is my first attempt at setting yearly goals, so maybe I’ll add new goals during the year, but I’ll not remove any goal nor downsize any goal.

Financial goals

The first goals and probably most important goals are the financial goals.

  1. Save 10’000 CHF: This was already my goal last year but I failed. This a really important goal for this year but I don’t know if it will be possible since I’ll have some big expenses planned.
  2. Monthly expense < 4500 CHF: I want my average monthly expenses to be below 4500 CHF this year. Again, given some very large expenses that are planned this year, I don’t think this is possible, but I’ll strive for it anyway.
  3. Max out my 3rd pillar (3000 CHF): Since I have a 3b life insurance, I can invest only 3000 CHF in my 3rd pillar directly, but this is something really important. I don’t think this will be an issue. I already did it last year.
  4. Dividend Income 500 CHF: I’d like my dividends to give me 500 CHF this year. I think it’s pretty doable with my new portfolio, especially if I’m able to save enough money to contribute to it.
  5. Add 5% EUR Bonds to the portfolio: I plan to change a bit my portfolio in order to add 5% bonds from the euro zone. I haven’t decided on which ETF to choose, but it will probably be an ishares.

Blog Goals

I don’t have great ambition for this blog, it’s more a hobby and a motivation tool for me, but I’ll try to develop it a bit more this year:

  1. Blog 24 times: At a minimum, I would like to blog around twice a month on this blog. This will probably be easy, but I didn’t want to put this goal higher in order to avoid pressure to post mediocre content.
  2. Get the blog out of wordpress.com: Currently the blog is simply a sub domain of wordpress.com. I plan to buy a .com (or .ch) domain for the blog. I don’t yet know if I will host the blog myself or get it hosted at wordpress.com, but I’ll see to that later. I’ll also do some SEO in order to give the site some visibility, but nothing fancy either.
  3. Add DEGIRO referral link: I plan to add DEGIRO referall link to the website as a small monetization tool.

Personal

A few personal goals, somehow related to this blog:

  1. Finish scanning all documents: I started scanning all my documents to store them safely in PDF format. This will save me quite some space at home and will also help me to find these documents if necessary.
  2. Get a new job from 01.08: My current job will finish the 31.07. By the end of March, I would like to have a contract signed for the next job.

Conclusion

That settles it for these goals. I think having clear goals like these will help me focus my effort during the year.

If you have comments on these goals, don’t hesitate to let a comment πŸ™‚

Book Review: The little book of common sense investing

Since I started to pay closer attention to my finance, I’ve read a few books about investing and finance. I’m going to review them on this blog.

The first book I have read is “The little book of Common Sense investing”, by John C. Bogle. It is coming from the founder and former CEO of the Vanguard Mutual Fund Group. This book is highly recommended by a lot of people in the bogleheads community, so I decided to give it a try.

This is a good book, with sound basis. The idea of the book is simple: You should only invest in low-cost, no-load, mutual funds that replicate the entire market (index funds) and you should buy-and-hold these funds for as long as you don’t need the underlying money (no market timing). This message is quite repeated along the book. I honestly think that this book insists upon itself. It could have been much shorter than it his. Most of the chapters are simply showing, using strong facts, that most active funds cannot beat the market. Therefore, index funds are better for indexing, since over a long time, your returns will the same as those of the market. Moreover, the costs of passive index funds are generally significantly lower than active funds. The costs of the funds is actually one of the only things you have control over, therefore you should always minimize them. However, this book is quite well written and there a lot of strong facts with evidence. The author advice mutual funds rather than Exchange Traded Funds (ETFs). However, it is stated that ETFs are a good alternative as long as you don’t trade them but buy them and hold them.

Let’s review the main points of the book:

  • Prefer passive index funds rather than active funds
  • Use index funds that replicate the entire stock market or the entire bond portfolio
  • Choose the funds with the lowest costs (no-load, low TER)
  • Buy and hold for long-term
  • Never time the market
  • You can use ETFs but not trade them (buy-and-hold)
  • Minimize taxes

Overall, it’s a good book. If you already are convinced that passive index funds are better than active funds or stock selection, then, you probably wont’ learn anything new in this book. On the contrary, if you prefer active funds or prefer to hold stocks, you should probably read this book to get a different point of view. On the other hand, it lacks in advices on exactly which ETF to use, which allocation to bond and to international stocks, but it’s a very good starting point.

If you are interested, you can buy it on Amazon: The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns (Little Books. Big Profits)