2016 in Review

The year of 2016 has been a year of growth, in many aspects of life. Financially, relationships, goals, prospects, meaning…

The FI journey is important in that you need to evaluate what is important in your life first and foremost. Most things in life we have is finite, time, money, food, resource.. The earlier you realise that the earlier you can focus on living in the moment and investing for the future.

The principles you value, the friends you enjoy just being with, the people you meet along the way that you look at them with your heart and think these are beautiful people with beautiful lives. The key thing though is that you need to live to figure these out. My predilection for stories, fiction or not and the moral of the story helps in some way to gain some sort of insight (whether true or false).

Net Savings

monthly-cash-savings-bar-chart

It seems that I am doing fairly well being in positive balance most months of the year. The missing months of July and August is down to poor record keeping. However because of how I track my net cash worth, it will likely reflect in the following months values, hence the yearly net savings value should still be fairly accurate.

One method I found that was very motivating for helping me keep up to speed on a monthly basis was to join a savings community online. There are various threads over at the MoneySavingExpert Forums where people keep each other motivated with their monthly savings and what’s been happening in their various lives that makes savings difficult or easier. Unfortunately, this is not so much as an exciting topic over dinner with friends or mates over beer, hence I have to do it over the online community to gain some encouragement.

Portfolio

portfolio-volatility

My YTD value of my portfolio is up just about 12%. How well have I done compared to the indices?? Worst than some, better than some… Does it really matter? Perhaps. Would it change anything I do? I hope I have better sense than that. I am waiting for a bear market at a appropriate circumstances where I am in a stable financial situation to sort out my mentality with regards to risk. That would be the real test of my mettle I reckon.

This is all really a big ‘experimentation’. I mean you can only know how much you hate or enjoy the rollercoster only after you have experienced it right? However, better buckle up my safety harness!

 

Decade of Deaths, Weddings, and all the rest.

2016 is also the year when my granddad passed away. This was a fairly novel experience for me and my generation and it has taught me some lessons. There are people you love, and you want to be with them when they need you. You want to be able to be with them when they need you. That is important. Two of my friends my age had similar experiences as well and I think I can see some similar reflections on their part. This will happen more often from now on, this is inevitable.

The ages of 20s is also when there are numerous wedding invitations flying across through the mail and where social media is just flooded with wedding photos. I attended 2 of them myself this year and I took it more of an opportunity to reminiscence with old friends and also to figure out what it is all about. I enjoyed it immensely but hope not to get caught up in the hype. I really wished them all well and hope to see them do well themselves.

So the Decade of 20s is now known as the decade of Deaths and Weddings.. Perhaps by the late 20s, I will be used to this.

Imagine a Life of You and I

Everlasting Strawberry Summers

Sneezing at pink blossoms

Sharing stories like no tomorrow of soft rye, work and  adventure

Morning coffees on rain fell weekends

Late night brews and chats

Train rides across the city

Napping in front of moving pictures

The heart yearns for The silhouette of my dreams and likewise the mind is occupied

yet Life is such a stoic existence that the only way is to

Swallow that bittersweet feeling and call it living

Pieces of Me by haleshine

I hope you had a decent 2016. Time provides all and takes all in the end. Enjoy the journey.

-Fireplanter

I Wished I had a Barbershop

I wished I had a business like this.

There is no future in house work.

Maybe when I save some money I can have a barbershop someday.

But I can never save.

Money slips through my fingers like that.

Trouble is I have lived up to every penny I’ve earned.

Why shouldn’t I?

We’re here today and gone tomorrow and then where are you?

Quote from Hannah from The Great Dictator

This classic from Charlie Chaplin has his stylistic style of satire slapstick and moving lines. And then I found this quote which made me stop and record it down.

Now we can all relate to the difficulty of saving, of living up to every penny  we have earned. After all, we have worked hard enough to make the dough, why shouldn’t we be able to enjoy the fruits of our labour??

“You Only Live Once!”

This is especially true in times of true hardship where there is no visible sight of the exit route, where your future looks bleak and you feel trapped by debts, lifestyle inflation and costs of living. The middle class trap. Hence it is very easy to take the easy way out and spend to release the steam or stress. Some even make the mistake of spending on credit, which is basically spending future earnings.

‘Money Slips through my fingers like that’

Ouch.

Fortunately, the start of the line offers us a solution. Own a barbershop. A Barbershop is a business which has a capacity to produce an income. In the real world, this translates to use your savings to buy assets and assets tend to produces an income. 

Assets

There are various asset classes that we can own. They are the following main classes:

  • Cash
    • We all know what cash can do. It appears to be the most apparently valuable and useful asset to us given its liquidity and ability to allow us to buy goods and services. It also can provides us a buffer from dipping into the our more volatile aspects of our portfolio in turbulant markets. Cash is King sometimes
  • Fixed Income assets
    • This includes Treasury bonds, UK Gilts, Corporate bonds. Basically a IOU from the government/company that you lend money to for a set time-frame and they agree you to pay you back a set percentage of interest. The complexity comes from the IOU having a value that can rise or fall with the markets.
    • Risk/Return is higher than cash but less than equities.
  • Equities
    • Owning a business or a slice of the business in the form of stocks/shares and getting a return from dividends. Nothing beats owning a business and it generating a return itself.
    • Key thing is the value of the business/stock/share is only as valuable as the next buyer is willing to pay for. Hence market sentiments and how well the business is run plays into this.
    • It is risky to own just one business but the idea is owning hundreds of companies through a tracker fund would diversify the risk of a few companies not performing as well.
  • Property
    • I call it the ‘Romantic asset’
    • People have this romantic idea that house prices never fall and always rise and will continue to rise and is the best to own as an asset. However the same has been the case for Equities. All asset prices tend to rise with inflation!
    • The disadvantage of property is that it is extremely illiquid and requires some effort in manging the property. 
    • If you are owning to stay in, it doesn’t even count as an asset as it does not provide a source of income. 
    • I would consider investing in it as a diversifer in my portfolio though through Real Estate Investment Trusts as it behaves differently to equities though the market cycles.
  • Commodities
    • The bad boy asset: Steel, Copper, Gold, Oil…
    • The most volatile asset out there! Just reading about Oil price drop over the past year, I get the sinking feeling of one that owns the oil companies. Same for minerals and rare materials, steel price drop affecting the Australia/UK markets.
    • Might be useful at some point but at the size of my investment, it would be a long while before I look at this asset class more closely.
    • Buffet hates these. They don’t produce anything.

Key message is to Diversify Diversify Diversify. Have your finger in every pie (that is worthwhile having your finger in). Don’t put your eggs in one basket. etc etc etc.

Well you get the message.

And hopefully I shall own my own Barbershop one day!

–Fireplanter