tisdag 13 september 2016

How we stopped being victims of the system and started to create a life

In 2014 I got fed up hearing people, including myself, voice opinions like: “How can company X pay huge bonuses to their management and dividends to shareholders while at the same time run employee layoff programs?”. The general feeling seems to be that these kinds of businesses are bad, and that they should be avoided. I did not understand how things could be so unfair.
The problem that most businesses that we come in contact with on a daily basis seem to operate in this way leaves us with just a few options:

Option #1: Do nothing.
The first option basically means that you go on with your life and continue complaining and being a victim of the system. Nothing changes, basically you take the blue pill. You can click here stop reading now.

Option #2: Do something against it.
The red pill... Join the resistance. Become an activist or join a movement. Stay pure but in the same or a worse place than you began in. In other words, be an angry victim.
Option #3: Use it to your own advantage.
Just to continue with the popular cultural references: Join the dark side. Learn about the mechanisms that make the world tick, and then use that information to reap benefits that were outside of your reach before. I.e. figure out how to not be a victim anymore.

In the long run, we shape our lives, and we shape ourselves. The process never ends until we die. And the choices we make are ultimately our own responsibility.
-Eleanor Roosevelt

The before situation

We had a savings account, whatever was left at the end of the month ended up in it. Sometimes a lot, sometimes nothing at all and other times it was used to survive the month. In the end it was more like a buffer combined with savings. Whenever we had a goal (a trip, a new car etc.) we managed to put away quite a bit, but it was never anything close to systematic or long term.

What we did

When we bought a house 2 years ago (somehow we had managed to save up to a down payment), our bank had a deal of gold membership (discounts on interest rates for the house loan and insurances) if we signed up for an automated investments account. The deal was setup, and each month it would transfer some money to the new account.
Knowing that this would be the deal I started to read up on capital markets and how they worked. My bank had put the whole sum into one of their own funds. I ended up changing it to a low fee index fund pretty much directly and continue reading books.

Current situation

Today, 2 years later.. All I can say is that we've managed to take the first steps on a long journey, we are by no means rich but we do have a more stable economy than before. I look at this period as a proof of concept. Can we live without the money we are putting away and can we leave it alone? So far that has not been any problems. We still use a ordinary savings account to save money to something specific and hope that the investments we do on the side will yield some returns in the future. So far, we have reinvested everything and plan to continue doing that for quite some time.

The deal for me is to not be afraid of the markets, but then again to not get too involved either, just involved enough to get a nice return of investment that we potentially could live on in the future. On this blog I plan to post articles about that journey and things that I've learned in hopes that it will be a trigger for other people to start building their own money machines.

Today when my friends complain about the unfairness of bonus systems and owners, I can argue both sides and that makes a huge difference in my own life and hopefully triggers positive change in theirs as well.

The Plan

  • The plan is to continue building the money machine. 
  • Automatically transfer money each month into and investing that amount. 
  • Do more research myself and keep the plan simple.
  • Whenever extra cash comes our way, birthdays, bonuses etc. it should be invested, at least partly.
And allow ourselves to have fun.

Disclaimer. I am in no way an expert on capital management or investing. On this blog I only wish to share my findings, ideas and comments on current events and fields that interest me. I hope that my thoughts can entertain you. I expect that everyone reading take their time and do their own research before acting on anything read on this blog. Investing is not for everyone. E&OE.

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