April 2021 update: expenses, income and wealth


If I don't manage my money monthly, I'll just be surprised at the end of the year at how much I spent. And unless I track how much I'm making, I won't be able to re-allocate my assets.

For example, it looks like my stock portfolio gained 44,800€ between February and March. That's insane. But then again, I've taken on a ton of risk with growth stocks and it paid off.

Have a closer look and see how it's progressing.

Expenses 2,756€



April's expenses were a little over budget. The big ticket item was income tax that I am paying in advance. I estimated my this year's passive income and the tax authorities decided it's best I start paying the taxes throughout the year. I am, of course, also paying a significant witholding tax from my salary.

I'd much prefer to count only net income and not include taxes as expenses, but due to my setup, it's much easier to track things this way. It reduces my savings rate, which is not accurate, but it's good enough.

By the way, these charts are done using my free budget and expenses tracker for Google Sheets. Feel free to snatch yourself a copy.

Savings rate 46%



April's savings rate was 46%, but the total year-to-date is still 75%. That's better than 95%, so I'm very satisfied. Of course, corona year Vol. 2 helps in savings rate.

I calculate savings rate only from salaried income, not from passive income, which is why it's so small.

Total gains 37,430€

Yes, you read that right. thirty-seven thousand four-hundred thirty euros.

Okay, March was a super month for some of my stock holdings. I happened to be holding a significant amount of UPST with an average price of $59.08 and it just skyrocketed to $130. I also held SEM at $25 that jumped up to $38. Many other stocks happened to increase too, but UPST contributed to about half of it all.

Lainaaja, Bondora and Crowdestor were my biggest P2P income producers, but the reason for that is that those are the most difficult to draw cash away from. I wanted to go more to stock market last year on the dip, so had to lighten my P2P portfolio. However, I'd rather draw attention to these IRR charts:



For the moment, Mintos and Estateguru are some great favorites of mine. Both of the platforms have really solid IRR (aka CAGR) performance.

I also really like PeerBerry for diversification, also since it belongs to Aventus Group (check my PeerBerry review). Although the platform has other loan originators, they also use loan originators from their own group, for which they vouch for.

RoboCash and Swaper have also very solid IRR charts, but on and off they have a wee bit of cash drag.

One of the best investments I have is a rental duplex we own together with the wife. It currently has an IRR of 37% due to incredible leverage. That's of course going down towards closer to 4% over 20 years.

The investments are tracked using my free investment tracker for Google Sheets.

Net wealth 558,273€



My net wealth took a nice jump in February with great stock market performance, but I'm sure it won't be long before we will go down again. That's the name of the game.

Economy gives very strong signals, too good. The big concern I have about the stock market is that valuations are again super high. Shiller PE is over 37, which it has been only once before, before the dotcom bubble when it reached 44. Maybe that's how it's going to be. And besides, there's always something to find on the stock market. The Shiller PE is heavily impacted by large cap tech companies, which I don't own that much.

In order to get the optimal returns to risk however, I'm going to keep my assets diversified as the Modern Portfolio Theory suggests. That includes having not just stocks, P2P, nor real estate, but to have them all. About 50% is currently in the stock market, 1/4 in P2P and 1/4 in real estate.

I'm in the process of making my wealth tracker also public and free. Stay tuned!

How far am I to financial independence?

As my COVID life costs about 2000€ per month, of which 500€ is taxes I wouldn't need to pay if I had less income, it gives a good idea of my base expenses. I could easily live off 1500€ per month, if I just wanted to. Not a problem. Well, a small problem. I don't want to.

Of my net wealth, about 400k€ is investments that I can use. The 4% rule stipulates you can take 4% from your investments annually, safely. That means 1,333 € per month that I need to likely pay some tax for. To be conservative, let's say 30%, leaving 933€ per month. So, I still need to cover about 600€ additional per month.

In truth, I don't think I'll ever truly, completely stop earning money actively.

Any comments? Catch me on Twitter @thewealthyfinn

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