FIREhub Interview, Stocks & Crypto Gains, Career Opportunities (June 2019 Update)

Note: This post was written at the last day of the month (30th of June), same as every other monthly update. However, due to travel and unreliable internet connection, I’m posting it 3 days later. The numbers, data, and thoughts are based on the reality as of 30th of June. Enjoy!

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FIREhub Interview

So, first thing first, I did an interview for FIREhub.eu for their Bloggers on FIRE series and you can check it out on the following link:

Bloggers on FIRE – MonkWealth

It’s a part of a series they’re working on where they interview European FIRE bloggers with aim to build a directory of the European FI blogging world. I think it’s a great and resourceful project and am really happy to be a part of it and to see both the growth and exposure the European FIRE community experiences.

So thanks FIREhub for the opportunity and I really support your initiative! And of course, thanks to those who took the time to read it. We’re all in this together!

Now, about them Benjamins…

Financial Updates, June 2019

Both financially and personally, June was an amazing month.

Even in the first half of the month, witnessing the bounce of the S&P 500 and the continuation of the crypto bull run, I felt like there was a serious amount of capital gains. So, motivated by curiosity, I decided to plug the current numbers in my Excel net-worth calculator prematurely and see where I’m at with half a month to go.

So, I did it around 15th of June, meaning before getting paid for the month, and I was pleasantly surprised to see that I’ve almost matched my salary with my investment returns. And there were two more weeks until the end of the month!

Don’t get me wrong though, this is only a consequence of the S&P 500’s recovery after it wiped out two months of gains in May and the massive BTC surge. It’s still not something that I could expect month after month, but for the immediate future, I think we’ll have a few more months like this one.

Anyway, it gave me a sneak peek into how would it be when the passive income surpasses the actual income. It was always clear what it meant, but having first hand experience with it is hell of a strong reminder that it’s possible. What remains now is to make it consistent. 🙂

And by the way, I was still talking about the gains for the first half of the month… If feels SO good to finish the month with a net-worth increase significantly higher than your monthly income, even after all expenses and traveling from the month!

That’s exactly how winning feels.

Some Statistics

But once again, let me not get ahead of myself or trick myself into expecting this kind of growth month after month. If we take the available data set of my monthly snapshots of net-worth increases since 01.01.2017, the absolute amount of this month’s increase is actually 2,3 standard deviations of the mean.

Although I can’t really use this number to extract information of how (in)frequently I can expect similar results in the future, I know that, assuming the same mean and standard deviation of my gains, no more than 18,9% of the values can be in this range (Chebishev’s Inequality – regardless of the distribution, no more than 1/k^2 observations can be k standard deviations away from the mean).

I’d really like to present the measures themselves, but since I’m not openly sharing my actual net-worth, I’ll leave it for later. I’ll either think of a way to normalize it or represent it in percentages instead of the absolute numbers.

However, things have changed since 2017. Since then I had a handful of salary bumps, a job change and a promotion, more than doubled my salary, started investing in both conservative and risky asset classes, got a tighter grip on my budget, and optimized my housing and other expenses as much as possible.

So, if we use a sample containing the last 12 months of net-worth increases, which although smaller in size, give us a more realistic representation of the reality, we get to a slightly different number. More precisely, this month’s gains are only 1,72 standard deviations of the mean, with up to 33,8% probability of an observation being in that range.

My actual expectations

First of all, let me be completely open: I love data and I’m aware how much valuable information we can extract from it. However, I run these numbers mostly for fun and I’m not basing my actual expectations on them. Seeing progress is one of the few forces that keeps us active, so it’s nice to remind ourselves how much things have improved over time. However, I’m completely aware that everything can change tomorrow, with reasons ranging from Black Swans I have no control over to conscious decisions that could significantly change in my life.

I’ll stick to the potential factors between those two extremes, as they’re the most probable to happen. For example, the cryptocurrency bull run will eventually stop – it will turn into a bubble and pop. However, I still think that we’re far away from the growth potential it has, so I haven’t sold any portion of my position yet. It makes my allocation a bit crypto heavy, but I think it’s fine for a temporary distribution for a young guy with the appropriate risk tolerance.

Talking about asset allocation…

Asset Allocation, June 2019

It shifts so fast! That red portion indeed needs some trimming soon. I was already conflicted whether to sell 10% of my BTC when the price reached €12k, but I thought to myself:

• I don’t need the money
• I believe it will grow further
• I won’t feel FUD if there are corrections on the way (confirmed: I didn’t)

So here I am, still holding my coins. The right term for which is hodling, of course.

Anyway, although I’m foreseeing higher all time highs, as described in my How I Invest post, I’d still sell some as it approaches the current ATH. Yeah, it’s a bit strange that I’m not long all the way, but that’s exactly where the certainty and hope curves intersect.

The stock market recovery was also amazing and I’m really happy to see my gains where they were a couple of months ago. I also address my expectations in the How I Invest post.

Long story short, I expect more gains in both markets during parts of this and the next year. I expect crashes to follow in both as well, but I’m not happy with sitting on the side with cash in hand, because there are lots of profits to be realized until we get to those events.

Of course, I’m planning to sell portions of my crypto position as it continues to rise and just DCA in the stock market regardless of which phase of the business cycle were in.

My Career & Job Opportunities

My career is not something I talk about very much on this blog. Maybe because it’s not something I’m very focused on at this moment, but it was a really important part of my life a few of years ago. I was “hungrier”. I wanted growth – more money, higher positions, better skills…

I think I got to the point where all of those are acceptable, as in aligned with my long-term goals. Not perfect and I can still see room for improvement in all three, but acceptable enough to shift the focus elsewhere for a while. Having an inherent FIRE mindset, I was rarely sincerely happy or fulfilled because of my career advances.

So, recently I had opportunities to interview at two of the companies I dreamed of working for in the past, as an ambitious computer science graduate. Of course, I’m talking about “Big X” tech giants. I even did the initial screening for one of them, mostly because I was really interested in the difficulty of questions and problems they’re asking, and they were interested in continuing the process. However, I thought to myself: is that really what I want? Especially in this time with all the plans I have for this year? My priorities shifted! I have personal objectives that currently mean more to me than my career. Also, it’ll still be just a job at the end of the day… So, I decided not to continue and keep my current job for now.

Of course, this is subject to change as time goes by, but making career changes at this point in time is not really aligned with my goals. I was really close to proceeding, but detected the consistency bias by asking myself if that’s something I really want or just wantED.

I’ll give the details about my reasoning in a separate post where I’ll talk about my plans for the future. In this monthly update I just wanted to point out how happy I am with the control I learned I had – in the sense that career advances are becoming less of a factor when I evaluate my mid-to-long-term decisions.

And it’s a really nice place to be in – having a skill-set giving you the leverage to be picky and accumulated wealth giving you confidence to not jump blindly to every opportunity presented to you.

FIRE Progress, June 2019

Well, it was a nice month.

My FIRE progress got a record increase of more than 3% – from 39,8% to 42,99%.

I’m really eager to see what happens during July!