Financial Update: October 2018

Well, it’s been one month of MonkWealth’s existence.

Really happy to welcome you to this special type of series in which I will share my financial independence progress after each month.

But let’s start with some casual updates before going to the actual numbers. The first highlight of this month was the 10th of October, when the stock market dipped ~4% and continued downwards the following day.

I haven’t touched this subject so far, so I’ll mention it here for the first time: my investment portfolio is 100% stocks. This asset allocation is considered risky, but I would say that it depends on how diversified one’s portfolio is. In my case, I’m following a monthly DCA strategy in an ETF that tracks the S&P 500, and I think that the index is too broad to classify one’s risk tolerance as high.

That being said, this was actually the first pullback I’ve experienced since I started investing and it didn’t affect me in any way. The reason I’m sharing this information is because I was really glad that I could almost intuitively apply what I’ve learned – pick a broad index, don’t time the market, and never sell.

I’m also glad that I resisted the urge to “buy low”, reminding myself that sticking to a plan beats any other strategy on the long run.

And a few days later, when the market bounced back, I was actually sorry that the decline didn’t continue. A recession restarting the longest bull market in history would have been a great time to be not-retired in and invest in discounted stocks.

However, towards the end of the month we got another plunge and I happily bought my shares… And watched them plummet until today.

By the way, if you’re new to my blog, the concept of FIRE, or investing in general, you may encounter confusing terminology, so check the glossary for any term you’re unfamiliar with. Also, I’m preparing an upcoming “Become an Investor” series, part 1 of which comes up next week, and will serve as an introduction to investing for people who are new and don’t know where to start. Start there.

October Asset Allocation

So, this is my asset allocation as of October 31st.

I have to admit, my portfolio is too much cash heavy for my taste, but I have a few reasons for this allocation. I’m actually preparing for a bigger purchase at the beginning of next year, in the form of a down-payment, so I can make use of the low interest rates in The Netherlands and stop “losing” 1000€ every month. More on this later.

That being said, when I receive my salary at the end of each month, the first thing I do is put >100% of it in the market. You don’t hear this that often, but for someone who started after hoarding cash for a couple of years (me) it’s the right balance between DCA and lump-sum investing.

I’m still hodl-ing some cryptocurrencies, but I’m not contributing to my crypto portfolio regularly. However, I have a few Nvidia GTX 1080 TIs mining through NiceHash, so they make it a little bit bigger every month.

Unlike my stock allocation which is all in one ETF, I hold various cryptocurrencies (BTC, BCH, ETH, LTC, XRP…), but won’t go into details about the distribution, as they’re just a small part of my full portfolio.

If you’re from Europe and can’t find info on good brokers outside of USA, I’d recommend checking out DeGiro (no affiliation) and if you want to get into Crypto, I’d recommend Coinbase (we’ll both get 10$ worth of Bitcoin when you buy or sell 100$ of digital currency). I will have full reviews and detailed tutorials for both in the future.

October Savings Rate

This will be a little bit hard to measure because, as I mentioned above, I put more than I earn into the stock market each month. However, I have a nice Excel sheet where I make monthly snapshots of all accounts which contain or can be converted to EUR for both me and my girlfriend. So the final result doesn’t only contain the money we saved, but also the volatility / difference from our investment accounts.

As I said in the post Afford Anything by Living Frugally, I only track my net worth, but not my monthly spending. However, since it’s a financial update post, I feel obliged to share how much I save, so I’ll produce a number somehow.

Well, based on the quotient of this month’s increase of our net-worth and the sum of our net salaries, some smart estimates, and gut feeling, our saving rate for October was between 60 and 70%.

Actually, with the few exceptions in months when we traveled or purchased items that don’t contribute to our net worth, our saving rates were always in that range.