July update, 2018

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Part of a series:
Another reminder of mortality
Day 4 - Tumor in my liver
First week - tumor in my liver
Second week - tumor in my liver
Third week with liver cancer
Liver cancer, surgery
6 weeks post-op, news time
Cancer update
Liver cancer, Post-op 2
June Update 2018

July update, 2018
Chemo day 1 and 2

Chemo first cycle

Investing: Bank & Candy maker.. Both got a building block this month.

Cancer update: Second surgery turned out to be good. So no tumor left, the doctors will discuss if they'll put in chemo during next week. If so, then it will start ASAP, otherwise its done. So more information during the next week. But so far, knowing that they removed the tumors gives hope : )

The actual surgery wound in my chest has started to heal itself with record speed during the last 10 days meaning there is hope that it will be all healed during this month... I'll be home from work for another month and then try to start working again. Still no energy, evidently my blood value is still pretty low (101).
So far a good start for the month.


Why I am writing this? Not to feel sorry for myself, but as a way to handle the situation and hopefully someone else out there in a similar situation can find this helpful as well. The human body is strong and hopefully I'll come out of this stronger as well. Plan for the worst and hope for the best!

My current plan, April 2018

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Bank went down 20%..
So, just in time for reinvestment it is on a nice sale... Good...
A no brainer decision. Just stick to the plan and buy...
Dividends this year were quite large so a lot of extra investment power this month..

In other news, I am waiting for news on the new surgery.. Did another CT scan last week and this week I am back to work at 50%.
Not much else going on so I'll keep this short.

Until next time: Challenge yourself to do something new

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.

My current plan, Mars 2018

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Greetings from a snowy Sweden, during the previous week we have had at -15C!

I don't know about my decision last month. I did not do my research as I always do, I did not read all the reports for the 10 last years and I think I did the wrong move. Oh well, I guess I will live with the decision and time will tell if it was a good one or a bad one. Speculation, not investment... I guess I was stressed about everything else that was going on at the same time...
In hindsight I should just have bought the index instead of diversifying into another company. But oh well. In the long run I guess this will turn out good, just not going to put more money on it.

So a new rule:

If you are unsure, buy the index. 

Pretty much the best practice I tell others to do. But ... ah, a new month with new opportunities.

Last few weeks (since February 5th) I've really not been paying attention to anything as I went through a large liver surgery where they removed a cancer tumor. Just tried to take it easy and get more energy and heal up. So today I did some catching up on the companies.

This month I will again put the building block into the bank, the candy maker is still a little high in price from the extra dividend payout I guess. No real news from any of the companies since the reports in January.

Until next time: Challenge yourself to do something new

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.

My current plan, 2017 November

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Another month has passed.
This month I invested a building block in the candy maker. The reasons behind the decision was because had dropped to red numbers, i.e. I was loosing money.
Knowing that it is a stable company and that I still have trust in the management team and chairman I decided to invest into the price drop and thus getting more for the invested money.

Until next time, why not Stabilize your economy. Buffer and Savings

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.

Preparing your mind for a bear market

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Everything is going good at the moment... But knowing your history should make you prepared for the next market crisis that will eventually come.

When you are following the plan that I do, i.e. buying into a few companies and then increasing that buy in each month with the goal to build my own money making machine it will be hard to see market value disappear.
Since 2014 when I started investing in this way, the markets have grown stronger and stronger and I've not yet experienced the fall. How do you prepare for losing a lot of the market value that you have built up?

By not caring and sticking to the plan.
Yes, you lost a lot of market value but hopefully the companies that you invested in will still be there (you didn't invest in the hottest thing at the moment didn't you? instead look for long term survivors)
If your portfolio lost 80% of market value over night that also means that all company shares are 80% cheaper to buy. If there is long term revenue streams in the companies you invest in, then you should not really care about the markets valuation of the share price... Instead you should do the math yourself, if you see yourself holding the shares for 10 years or longer then chances are that the bear market will end and a new bull market will start.
If a disaster doesn't hit you during the fall (like losing your job and hence your investment power) you should continue to buy when the markets go down, maybe even consider increasing the investing power by selling stuff that you do not need anymore. This way, you may actually grow stronger when the markets are at the lowest and reap the rewards when the markets start to rise again.
There is no such thing as market timing, so do not try that.. Instead just buy each month and look at a falling market and red numbers as companies being on sale, and you could make a bargain!

So, if you have done so already. It is time for you to device a plan of your own on how to handle the next financial cycle of the world markets!

Until next time: Challenge yourself to do something new

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.

Top 7 tips to maximize your investment power

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Two and a half year into our investment strategy I feel that it is going pretty slow. Judging by the daily stress about investment advice in newspapers and on the internet I am not the only one who wants to speed things up.
But in the back of my head I have my plan that is buy and hold for a long period of time, and that pretty much filters away all the advice in mainstream media. So what is there left to go on?
Here are some tips on how to maximize your investment power and improving your current financial situation.

1 Debts

Make sure that you have a plan to pay off your debts. Not the most fun compared to spending money on investments. But as long as you have debt that you pay interest on, you are not increasing your own investment power, instead you are making someone else's investment power raise. That interest ends up as dividends to the shareholders of the bank that you owe. So, step 1 pay off your debt.
If you pay 100 per month on loans, that is 100 per month that you could spend on investments.

2 Decrease your expenditure

Another relatively easy step to take. Stop that magazine subscription and put the cash to your investment account instead.

3 Pay yourself first AND increase the amount

I hope that you already pay yourself the first thing when you receive your paycheck. What you may not do is to increase the amount over time.

There are some events that that could trigger an increase normally. For example when you get a raise. But even if you do not get a raise, just login to your bank and increase your automatic cash move from time to time. If you can live without the amount you move automatically today, maybe €10 more from time to time doesn't leave an impact. But do not rush it, the idea is to invest the excess, not the money you need to live your life..

4 Take an extra job

Really? you may ask. But yes, really. If your goal is to start living on your investment in the future then maybe sacrificing one evening per week/month for an extra buck could be OK. It's not like you actually need the money, but you want to get that little extra to boost your investment so why not?
My father did this, he used to clean supermarkets during evenings... I have done it as a bouncer at a pub. What extra job you get is up to you and your qualifications. And as you don't need it, you can quit whenever you get tired of it.. : ) Whatever extra money you did earn and add to your investment will continue to work for you for years to come. The longer money can grow the bigger effect they will make. So sacrificing a little time now may be reaped for a long time.
But note that you may have an clause about competing businesses in your contract.. Make sure you don't break it as you may end up with losing your main job instead of getting an extra. Always read your legal agreements when you sign.

5 Study

You can always spend your time on studying. Knowledge is power, and this might get you from average to cutting edge. Or at least to your next promotion.
I have always spent time home reading. Much is around subjects that I work with in my main job. But from angles that I may not have the opportunity to try out at work.
Invest your time in yourself by studying and making you more attractive on the job market. Check your local university for available evening classes or enroll at an online class. My employer gives us access to pluralsight, that is full of classes on subjects related to software development. Maybe your employer has similar programs in your field, ask your boss. And make sure your boss knows that you want to progress. This way I have been given the possibility to study during work hours. But I guess it depends on the employer that you have. Some invest in their employees, some do not.
A question that I ask when I interview candidates for my team is what do they have that makes them interesting. Home projects and study in their free time is something that I value high. That and cycling :)

6 Forget about it

Find something else to occupy your mind with. If you are investing part of your salary each month, you can forget about it for a couple of years. Trust in the compounding effect.

If you continuously monitor the progress, you will not see the progress. Instead you will be tempted to meddle with the portfolio. If you instead let the investment work for you without any meddling the results will grow. This is the power of long-term investing.

Find a hobby, join a club. Meet people and live your life. Paying yourself first and investing in index funds (the easiest strategy) will just solve the issue. The 'slow' feeling is just in your head!

7 start a blog!

or not. At some point I thought that this would be a good extra income source but in reality it's not. But it might work for you, it has worked for some people so just because my blogs aren't generating revenue.... yours might.A really sucky number seven but I'm out of ideas.. if you have any please leave them in the comments!


Sorry for the seventh tip, but for the rest the idea is to maximize the investment each month so that you can retire earlier. 10% of your income is a good start, 5% is a start but in the end you will want to grow that percentage over time so that you can fulfill your dream of retirement earlier. I read somewhere that 60% is the holy grail, seems quite far away but if you have the possibility to spend less and invest more. DO IT! The upside is that you learn to live on less.. meaning that you need less when you retire so that is also affecting how long it will take you to get there!

Hope this motivated/helped someone out there. : )
Until next time: Work to Live, Don’t Live to Work

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.

The grass is greener on the other side

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I think it is only human to think that it must be better somewhere else but here. Right? Is it based on the fact that you know the amount of work that needs to be done wherever you are right now and that it is easier to underestimate the workload elsewhere?

Currently looking at my current situation, worked at the same place for 6 years. Of course there are days when I think that things are hard, and look at the fence and think that maybe it is better on the other side? But then again, I've worked at other places and I know that there are positive and negative to be said of pretty much every job.

So, should I take a risk and jump to something new or stay and put in the workload needed to optimize the current situation. I know that a lot of people advocate a job-change every x months but I'm starting to disagree. Of course if you want a big jump in your salary that is probably the only way to go, but there is so much more to life than just money. A little strange to write that sentence on a blog focusing on investing etc, but hear me out as its not that contradictory in the end.
What I've been advocating is for people to stabilize their economy, start paying themselves first, paying off debt and start to save and invest for themselves. It has in the end not that much to do with getting rich, if that is what you want then by all means jump jobs and maximize that paycheck. But what I am after is quality of life, I want security and in the end be able to retire much earlier then 65. And for that you don't really need to maximize the paycheck, even if that would help.
If you work hard on getting on top of your personal finances, that debt you paid off will result in a bigger return per month then most job-changes and after that it will just escalate when that cash flow is put in investments instead.

In the end of the day, a bigger paycheck but lack of discipline will not get you closer to richness.

Of course there are things out of our control that can change the path that we are on, there are situations that would make me change my job, but at the moment it is not the pay (always open for suggestions tho :))

The same goes for investing, I am currently focusing on 2 companies and they are doing great. But from time to time, I get the feeling that I should own other companies as well. But my current strategy involves a focused portfolio and I really haven't found anything else that fits so well. So lets not rush into something that cannot be controlled and keep to the strategy that is in place.

In conclusion, don't rush into change, the workload is the same if not bigger on the other side. But if you have worked your butt off to maximize your current situation and there is nothing more to gain, then by all means go look over the fence for additional challenges that could improve your situation.

I don't really know if any of the above made any sense. It is getting late, 0125 in the night and I am watching the Oscars. So I'll blame my ramblings on that :)
Until next time: Work to Live, Don’t Live to Work

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.

My current plan, 2017 January

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Happy New Year!!!

A really lazy start of the year, as it should be...
The holidays are over, work is back to normal and this months investment went into my favorite candy company.
Why the candy company? It just felt that right...
My choice each month is either the bank or the candy company or find something more profitable. For the last few months the choice has been the bank, and now it was the candy company's turn just to keep some resemblance of balance between the two.

Last year was a good year, the money invested during the year also managed to grow 9,95%. So now to look forward to this year.

In a few weeks the annual report season starts (at least for me, some companies I guess have already started). Be sure to read up on my Annual Report series for ideas to keep in mind while reading the reports.. You are reading the reports yourself and not just some speculative analysis? Right?

• The Annual Report (Management)
• The Annual Report (Dividend)

Lets start the year with a video of 2 of our cats fighting or playing.. hard to tell sometimes..
At the time of the video, Prime (female) was 6 months old and Tiger (male) 2 years.. They love to fight each and every day.. Sibling love.

Since the video, we have renovated that room as well, so no more yellow wallpaper. The header image of this post shows the new wallpaper, and Tiger.. : )

Until next time: Work to Live, Don’t Live to Work

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.

The power of compounding

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I tend to keep away from actual numbers on this blog, mostly as they are not my strong suite and that I want to the readers to do their own homework.
So lets see how that goes when we will cover the subject of compounding.

Introduction

Compounding is the idea that when you receive interest on your investment and reinvest it you will start to receive interest on that interest as well. And next year, you will add another round of interest and so on. After some years, the snowball starts to build itself faster and faster.
This is the reason why you should reinvest your returns, be it interest rate or dividend payouts. The numbers go crazy after a few years.

One time investment: Savings account vs. reinvesting

A very simplified scenario. Say you invest 100000. And each year, you will receive 6%. The following table shows the growth with and without reinvestment, i.e. compounding for the first 25 years. I.e. plain is your savings account with 0% interest.

year	savings account	reinvested
1	100000	100000
2	100000	106000
3	100000	112360
4	100000	119101
5	100000	126247
6	100000	133822
7	100000	141851
8	100000	150363
9	100000	159384
10	100000	168947
11	100000	179084
12	100000	189829
13	100000	201219
14	100000	213292
15	100000	226090
16	100000	239655
17	100000	254035
18	100000	269277
19	100000	285433
20	100000	302559
21	100000	320713
22	100000	339956
23	100000	360353
24	100000	381974
25	100000	404893

The difference is a whooping 304893. Just by locking in your money and reinvesting each year the original investment has grown 4 times!
OK, the example is a little biased against the savings account. So lets look at a more realistic calculation.

Continuous investment: savings vs reinvestment strategy

In a more realistic scenario you would continue to invest new money each year, say 30000 per year the numbers would be the following:

year	savings account + additional savings	reinvested + additional investment
1	100000	100000
2	130000	136000
3	160000	174160
4	190000	214610
5	220000	257486
6	250000	302935
7	280000	351111
8	310000	402178
9	340000	456309
10	370000	513687
11	400000	574509
12	430000	638979
13	460000	707318
14	490000	779757
15	520000	856542
16	550000	937935
17	580000	1024211
18	610000	1115664
19	640000	1212603
20	670000	1315360
21	700000	1424281
22	730000	1539738
23	760000	1662122
24	790000	1791850
25	820000	1929361

The difference now would be 1109361. That's a lot of money.

Living on the yearly returns

If you, like me, plan to live on the returns from your investment, given the above numbers the following would be paid out per year if you stop reinvesting.

years	savings account	savings account  + additional investment	reinvested	reinvested  + additional investment
10	0	30000 for 10 years	10137	30821
15	0	30000 for 15 years	13565	51393
20	0	30000 for 20 years	18154	78922
25	0	30000 for 25 years	24294	115762
30	0	30000 for 30 years	32510	165062

Savings accounts: you would need to do withdrawals to get any money as most accounts have 0% interest rates.
After 10 years, the reinvesting plus additional investing will generate an extra investment unit of 30000 per year by itself. And after 25 years, it adds the initial investment each year!
And going from 25 to 30 years adds another ~50000 per year.

Conclusion

I know my plan. Continuously invest and reinvest all dividends! Event if the 6% per year rate is just fake and in reality it would be different depending on a number of variables, taxes, costs, market fluctuations etc. But the effect of interest on interest on interest over and over again is just something that must be leveraged in any long term investment plan.

Hope this helped a little bit in showing how this effect works :)

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.

How to read an Annual Report part 1: Management

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The one key indicator of how well your business is performing is The Annual Report.

Before putting your hard earned money into a business, make sure that you read up on the annual reports for the at least the last 5 years, preferably the last decade. This may sound like a lot of work, but you want to get a picture of the business before handing over your cash. In the end, it is better to discard one too many companies than invest in a rotten one.

This is part of my series on The Annual Report. Please read the other posts for other perspectives on the matter:

How to read an Annual Report part 1: Management
How to read an Annual Report part 2: Dividend

Management perspective

Let's start with the part that usually comes in the beginning of most reports. This is the part where the chairman of the board and CEO (chief executive officer) make tell you their view of the business. They should go over major events of the past year and tell their plans for the future.
By reading up on the past decade of reports, you should get a pretty good view of how trustworthy the top management is in what they tell their shareholders.

Is there passion?

Do you want the management team to passionate about the company, or only their own careers? Passionate people take the extra step and put in the time that is needed to get things going.

Do they include not only the positive side of the story but also the negative? 

All years are not success stories, that's the way of life. If it is a trend that every year is only described in positive terms in the report then maybe there is something left out.

In my mind this should be a deal breaker if the chairman and CEO leave things out in the communication to the shareholders, then maybe you should go find another business to invest in.

Are they focusing on the share price or on the value generating streams in their business?

If the main goal for the top management is the market price of the company, maybe it does not suite your long term investment plans. In other words, if you try to ignore the whims of Mr Market, shouldn't the businesses that you invest in do the same?

Management Turnaround

Is there a continued red line in the management? Does the CEO change every year?
You should be able to trust the management in your investment and trust is hard to build up.
Is the top management invested in the business (this may not be clear in a report, check the Insider Trading lists of your market to find out more)
Of course you cannot expect that a CEO stays a decade in the same company, there are numerous legitimate reasons to change the CEO and even the Chairman but in the long run, it should not require detective work to figure out the red line in the management structure.

Fulfillment of goals

Goals that are set one year, are they followed up and in the end fulfilled?

Here's the reason you should read back on annual reports over a longer period of time. You get the backstory. If the management is new, look up what other companies they have worked on and if they got things done there.

Conclusions

In the end the question to ask is:
Do you trust these people to operate your business on a daily basis.


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.

My Current Plan, 2016 October

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As I've hinted in previous posts, I don't follow the diversified investing strategy or invest in index funds myself. I still think that that is the best risk averse way to invest, perfect for your retirement plan or when you are saving for your kids and most of all when you do not want to put any real time into it.

That being said... I have too much time..

So, after reading a lot on the subject. Going through Graham, Buffet and numerous books that I don't remember the names of, that could be the subject of another post I devised my own strategy.
So lets go through the overall ideas that influenced me to form my own plan.

There is no one way to wealth, everyone do it in their own way

Some preach diversification, others are into value investing and then again others only want dividend payers. Buy only companies that are cheaper than the money they have in the bank, or buy into big well proven companies that are stable. Buy and hold or Buy and sell?

So there is no single path to riches.

There is no such thing as market timing.

At least not in the long run and I am in it for the long run.
This seems to be the least common denominator that everyone agrees on. Everyone meaning the authors and investors that have a horizon of a decade or five.
Graham didn't have to time the market as he basically bought the whole basket and then micromanaged that portfolio to see when things were ripe for harvest. Others buy at a nice price (not always the best) and hold the investment for a long period and see it grown.

What I look for

Management

Do I trust the management to drive the company forward into a money maker for me?

Dividend payout

I.e. a cash flow that can be re-invested. And when time comes, a cash flow that can substitute a full time job or 2. Best deal if it has a long term increased dividend strategy.

I can figure out how they make money

This is key. I don't want buy into a company if it is in a field that I don't know about. If it is unclear how the money gets created, then it is a no.

A Great Company

I don't want to go through the endless waves of small unknown companies that may become the next [insert any skyrocketing company here from your local financial news]. I want a boring old money maker with a well recognized brand that is out there and has 'always' been. Think Coca-cola.

Does not ask shareholders for a cash-in from time to time

Another no way. Steady long term business that is able to finance itself and pay a dividend.

Not my employer

I like my employer, I like working for them. But, a big but if.. If they go out of business and I loose my job, I don't want to loose my investment at the same time. Or the other way around. Just think about it. You see your investment go into ruins and the next day you get fired. Not an ideal situation. I don't buy my employer.

Is  better than the ones I already have?
If the proposed return of investment isn't better then from worst company I already own, then I might just as well buy more of the ones I know of.

When to I plan to sell

Never :)

But honestly, no.. I do not have an exit plan. I do have an emergency plan for when the

Management turns sour

As time goes by, the management team of a company change their members or the bigger shareholders want a change and it may turn out to be in a direction that I am not comfortable with. When trust is lost, that's when I might sell. Emergency plan, not an exit.

Until that happens, the market may do whatever it likes. If I trust my companies, then I'll hold on to them. Preferably for me would be if the market thinks the worst, as it just gives me an opportunity to buy more shares at a cheaper price.

So. That was a summary of the strategy that I follow. Currently holding 2 companies and buying more of them every month. Until something better comes up, I'll stick to those two.

Hope this gives some ideas to other people starting out in building their own future :)

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.

Tips on finding extra income sources

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So far I have assumed that we have a fixed income from a day job to work with. When you start to get more interested and involved in investing you will soon notice that the investment potential of an ordinary paycheck is not that huge. How could we find additional streams of income that we can add to our investment?
Lets look at some options.

Reinvest your returns

This should be a no-brainer, during the build phase of your money machine you should reinvest everything. For funds, many of them do this automatically and you don't have to think about it. If you are investing in common stock of businesses then there is a chance that there is a dividend payout from time to time. You should add this sum to your next investment.
Over time, this approach together with your normal savings/investments should start to yield larger and larger return.

Start a business on the side.

If you have the know-how, why not monetize on it on your spare time? Register a small business and start doing extra jobs. Could be anything from photography and web-design to household chores.
If things go well, this could turn out to become your main business in the future. And until then, put all returns into your investment portfolio.

Garage sales

Sell off some stuff that you do not need anymore.
Advertise in a local newspaper and remember to figure out a pricing system that you want to follow on the big day.

• Make sure that you have a permit if it is required in your area.
• Bundle items. Lower valued items together with medium valued can boost the sell factor
• If you have more valuable items, try researching a little to figure out the price-tag that you can put on them. But expect that people will haggle about the price no matter what.
• Get extra change so that you don't stand there empty handed when someone hands you a large bill.
• Put on price labels that are easy to read.
• Use prices that match the change you have available at the start.
• Make sure there is enough parking place outside of your house. If you have advertised, there can be a real rush and its not fun to see potential customers go somewhere else. If 5-10 cars cant park then try finding an other location. 
• In the last 30 minutes, lower prices to get rid of the last things. You've already decided that you don't want it anymore, then turn it to a profit even if it is less than what you asked for in the beginning. 

In the end, if you feel that you have got the hang of the haggling business, you could try starting a side business. Buying items from other peoples garage sales and then selling at your own. Its quite a lot of work but a fun way to meet people.

Write

If you have knowledge of a subject, why not write about it?
For information on how to publish your own book, go to Writersdigest.com they have a large in-depth guide on the subject.

If you instead want to write smaller articles that maybe not suite as a book, try out blogging.
With the correct ad-placement you can turn it to a revenue stream as well. Key notes on blogging is to have a continuous publishing schedule to keep people coming back for more. This is something that I am not that good at. I tend to write a lot of articles and then have huge gaps until I get into writing mode again.
If you have your own hosting, try out wordpress. Their free service does not allow advertising (as they put their own ads into your blog). If you do not have your own hosting, then blogger is the way to go.
Also, make sure that you use high quality images that convey the subjects. Best are of course photos and images that you create on your own, but using one or two images from various free stock image sites can upgrade the quality feeling that you get at a glance.

Another way to monetize on articles is to sell them to magazines, try contacting a magazine that writes in the field that you want to write in. Put together a portfolio (could be your blog) and send them a question if you could write for them.


Good luck :)

Step 3: Index funds

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This is step 3 of my private economy, saving and investing series. Be sure to read the other posts as well:

Step 1: Stabilize your economy
Step 2: Expectations and mindset
Step 3: Index funds

An index fund. The simplest way to invest in a diversified way.
Lets start at the basics and look at Funds in general.

What is a Fund

An investment fund is a way to put together a sum of money from a number of investors and then investing that sum into some kind of financial resource, it could be common stock, bonds or more advanced instruments or a combination of all.
Funds usually specialize in certain specific areas. For example geographical funds could be focusing on for example:

• Japan
• Asia
• Eastern Europe
• Asia excluding Japan
• and so on

Other funds specialize in different sectors. For example

• Industrial
• New technology

The standard funds are usually managed by a business that takes out a fee for the trouble. The trouble being to decide what resources to invest in, when to invest and when to sell those holdings.

Many funds are rated based on their performance, many are measured against how well they manage to beat the market. Meaning, how good was the manager in picking stocks and timing the market during the previous week/month/year.

But there is a catch, nothing about their past performance can predict a funds future performance. Meaning that even if a fund did all the correct moves during last year, there is no way to predict if it will continue to do so.

In recent years, there have been many scandals where these money managers basically hug the market index that they are measured against and still collect huge fees.

So what to do? Managed funds have huge potential but at the same time there is a downside.

The good:

• Diversified investment
• Professionally managed

The bad

• High fees that eat into your profits
• By nature, fund managers want to beat the market and to do so they need to buy and sell the resources that they invest in. There is a risk that the fund will be worse than the average index.
• There have been incidents where fund managers mimic the fund that their performance is compared to. And still take out high fees. Just make sure you understand the philosophy of the fund.

The index fund

So, why trust in a person/business to select what to invest in when you can buy into a fund that is automatically managed to mimic one of the market indices. As the fund is automatically managed, these funds usually have much lower fees.

The good:

• Diversified investment
• Automatically managed / Passively managed
• Lower fees
• Not much trading in the underlying resources. Only when a company is moved out of the index and new ones are introduced.

The bad

• Booooooring. You just add money to the pile for a long period of time. Not a 
• Easily automated, as it is just adding more money each month.
• Other investors can foresee when a large index fund is going to sell or buy and thus do an index arbitrage. This affects the whole underlying index and thus, when comparing the funds performance to the index it is not seen. But it is something that exists, but should imho not really affect your investment.

My conclusion

When I started out investing I was a bit unsure what strategy to take so I followed the following:

if you invested in a very low cost index fund – where you don’t put the money in at one time, but average in over 10 years –you’ll do better than 90% of people who start investing at the same time
-Warren Buffet

Ok, I haven't invested for 10 years so I have no way to prove the above statement, but when looking at historic data of indices it seems like this is the way to go.

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.

Step 2: Expectations and mindset when investing

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This is step 2 of my private economy, saving and investing series. Be sure to read the other posts as well:

Step 1: Stabilize your economy
Step 2: Expectations and mindset
Step 3: Index funds

Now we have done some ground work.

An automated savings plan is in place and a buffer is filled for the rainy day. So whats next?
By now you might have noticed that the ordinary savings account has a pretty low interest rate, if at all. It has become more and more common for 0% interest rates on savings accounts.

For us it was a deal with the bank to start an investment account to get a better interest rate on our house loan.
We did not know much about how the capital market worked when we signed the deal, only what we picked up in the news and movies. The popular cultural view includes

• A lot of trading. Movies love day-traders and Wall Street corruption. Buy! Sell! Follow the markets up and downs.
• Speculation and the quest of finding the next big winner. In my ears this sounds like a lot of work and a high risk.
• Small daily variations in trade make big head-lines in financial news. But then again, real journalism seems to be hard to find these days.
• The market always has the correct pricing due to the volume of trade.
• Stocks are just numbers that can be statistically analysed.
• Stock picking is everything there is to it.

The first book on the subject that I read was The Intelligent Investor by Benjamin Graham and the biggest eye-opener for me was the notion that when you buy into stock of a certain company, you actually own a certain part of that company. If your company does well, it will pay you back, if it goes bad it will not.
The strangest thing is that I never thought of that before. The abstraction of a share has taken over.

Definition of the word Invest.

"To commit (money) in order to earn a financial return"
-merriam-webster.com

"Put (money) into financial schemes, shares, property, or a commercial venture with the expectation of achieving a profit."
-oxforddictionaries.com

"To put money, effort, time, etc. into something to make a profit or get an advantage"
-dictionary.cambridge.org

The investing options discussed on this blog follow these definitions. The common idea is to put money or time into something and expect a return on that investment in the form of money.
Many people think of their house or apartment as an investment but in my mind the money you put into your house is in a very grey area, even if you make a profit when you sell it you will still need somewhere to live.. Buying an house and renovating it and then reselling for a profit is a investment. Your home should not be. If you earn some extra cash on moving, see it as a bonus and put it into your investment plan.

Don't expect to get rich fast, it will take time but in the long run if you stick to the plan you will start to get returns that in the end will blow your mind.

Mr Market

Grahams famous allegory of Mr Market goes something like this: once you become a shareholder you will start to get daily visits by Mr. Market with a price quote on your shares. But some times the quote is ridiculous and it is up to you to either trade with him or not. It does not matter if you do or not, because if you are still a shareholder the next day, he will come back. Mr Market listens closely to every piece of information and follows every lead when setting the price tag on a share.

Lets fast forward to present time, today Mr Market comes to visit more frequently. He pretty much comes multiple times per hour if we let him. But it is still you, the shareholder, who must either accept his offer to trade (either buy or sell) or not to.

Day-traders continuously negotiate with Mr Market and trade with him multiple times per day to gain a profit. They do not look at their shares as parts of a real physical business but more like paper with a price-tag on them. In my mind, this is a very high risk game and the only real winner is Mr Broker.

Introducing Mr Broker

Where Mr Market is the provider, I like to see Mr Broker as the pusher. He wants you to do business with Mr Market.

Mr Broker is the guy you call each time you want to trade with Mr Market. He does all the paperwork and takes a small fee for the favor. In the end, if you trade a lot, he is the only real winner. Think of it as the house always wins at the casino. So the key is to involve him as little as possible. Mr Broker loves the news and the manic-depressive Mr Market as they increase the amount of trades per day. Mr Broker is a very very rich guy.

One of the things with Mr Market that Graham left out of his allegory is that he is a pretty bad guy, not only does he have manic-depressive traits, he is also a stalker. Even if you sell every share that you own to him on one day, he will come back the next. And continue to do so. Meaning that you will have a pretty good picture of if the decision you made was a good one or a bad one.

Grahams strategy to battle Mr Market is to diversify your holding. Meaning that you buy into businesses in different fields, that are undervalued by Mr Market and when they rise a little you sell them back to him for a profit. And you continue to do so until you get rich one step at a time.
In my mind this requires a lot of work even though the risks are quire small.
Or you could just buy into an index-fund that is built to automatically mimic a certain markets index. This is what I did when I started out. More on that in a later post.

In conclusion.

If you get into investing with the mindset that shares are owner certificates for a businesses you will probably have a better outset than most. View yourself as an owner and read up on their business instead listening of the wild speculations done by news, media and the market in general. Take your time to read a report or two, perhaps even go to an annual meeting, and only engage in a trade with Mr Market on your own terms and limit the number of trades so that Mr Broker doesn't steal your profit.
If you do not want to do that, then stick with Grahams diversification plan and buy into an index fund with a low fee whenever you have a nice sum of money to put away.

Continue to the next step: Index funds

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.

Step 1: Stabilize your economy. Buffer and Savings

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This is the first step of my private economy, saving and investing series. Be sure to read the other posts as well:

Step 1: Stabilize your economy
Step 2: Expectations and mindset
Step 3: Index funds

As a first step before we even start thinking about investing is to lay out the foundations for a stable living. A buffer and a savings account.

Savings account

My old approach to saving was pretty much ad-hoc:

1. Get paycheck
2. Pay bills
3. Go on with life
4. Receive next paycheck and move whatever was left to the savings account.

Many times it was nothing, and some months I took instead of put money into the account.

Needless to say, it felt very hard to save for something specific.

The big issue with the ad-hoc approach is that there are a lot of variables in life and even if you cut away something, it is a long way for it to actually get to the savings.

The first change to do is to change the order of things. Namely, to put away money as the first thing instead of the last. This will result in a more deterministic savings.

Deterministic savings mean a lot of things.

• You will put away the same sum each month. 
• This allows you to plan your future financial situation. 
• You can automate it, meaning that it is more likely that you keep your plan if you never actually see the money on the spending account.

It also means that if you plan to save a certain amount each month, you need to stick to the plan. After the money hits the savings account, you should look at it as if it is out of reach and not usable. We usually refer to it as monopoly cash or toy cash. It looks and feels like real money, but you are not able to use it.

If you want to increase your savings per month, try removing from the other sections by for example canceling a subscription. Do you really read that magazine? Directly when you cancel, also change your automatic savings amount. This way you actually save the money and not just use it on something else.

The buffer

From time to time, life happens and your paycheck is not enough and you need to solve the situation by going to the savings. But in the section above we agreed that the savings account was off limits, how do we solve this?

By creating an extra account, preferably an actual account in the bank. How big this has to be is up to you, but the key is to always have it at the level that you have decided.

If you need to take money from it one month, you pay it back the next before all other savings or bills.

If you need to use the buffer continuously, then you need to change some habits. Maybe cancel a subscription, skip a restaurant visit or something similar.

Conclusion

In the end, it is not that much work but quite a lot of determination to keep to the plan. The key idea being to pay yourself first before doing anything else. Start small, and grow it over time.

Continue with step 2: Expectations and mindset

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.

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

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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.