Mother, why do we work?

When I was young, I didn’t ask much questions concerning work life. The average Belgian guy goes to school, learns a profession or goes to university and starts his career. At the age of 60-something, you retire and enjoy life. Along the way, most people start a family, buy a house and do some travelling or other entertainment. It’s what we are indoctrinated at home and learn at school. There’s just no other way to live.

Concerning me, coming from a normal middle-class family, I never thought it could be any different. Study well, get a nice degree with a decent income and save for a house. Tralalala, boring. Working for 45 years, enjoy your last “good” years and then become a needy, old grandpa. Would you sign up for this kind of life?

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That was until I got to know the concept of FIRE. At the first glance, I was amazed about the possibilities of early retirement. The power of compounding interest, especially at an early age, is endless. I didn’t need much persuasion, I was immediately a strong supporter of the DGI strategy. I added a bit of value investing myself (based on Graham, Buffett), to prevent me from overpaying and only pay a price that I am happy to pay. The strategy became real.

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But now, why do we work? For the money, at least the majority of the people. We sell our skills and time, and in return we ask money. The money is used to cover our cost of living, going from the bare need expenses to outrageous luxury. Over the years, our standards have become higher, we always want more. If we don’t, we don’t consider ourselves happy. It’s not only about security, safety or survival anymore. Spending becomes some kind of social status, a competition we don’t like losing.

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Who wouldn’t like to go for a late night swim with a panoramic view on NYC?

Money has never been the ultimate goal to me, although it is the currency used to reach the ultimate goal: freedom and fulfillment. The freedom to choose what paths you walk in life, the freedom of not having to work a boring job to cover your yearly expenses, the freedom of choice. It’s something I heavily lack right now. My life is tight scheduled and doesn’t have much room for own input. This should better in 1-1,5 years, but that’s another subject.

Fullfillment on the other hand, is something that continues on the path of freedom according to me. Once we have freedom, we can start working at our inner fullfillment. To me, fullfillment comes from accomplishing your personal goals, the things that really interest you. Whether they are work or non-work related, doesn’t matter. By selling your time on a daily basis to your employer, we accept the opportunity cost of not being able to invest the time in something that really matters to us. Don’t get me wrong, I don’t say people should hate work. Ideally, our job is our hobby.

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Unfortunately, this isn’t the case for most people. I would for instance love to have my own investment vehicle and own a couple of businesses, but this is not the case. A) I don’t have enough money and B) I lack knowledge.
I would also love to learn spanish, travel the world, shake the hand of Buffett himself, visit companies all over the world, obtain a helicopter pilot certificate… which isn’t possible right now due to lack in time and money.

When I chose the way I would go, I admit money was a big factor. It has given me financial success, reaching €100k at age 21. It has also given me frustration, lack of me-time, opportunity cost of learning other things, social compromises… Eventually, everybody has his own ups and downs in the job, as long as the end-balance is positive, we shouldn’t regret anything. I chose to give up a couple of years of my life living a life other people don’t want, in order to live the rest of my life as other people can’t.

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This whole money thing seems pretty obvious, although I don’t like the psychological factor of it. Being an employee, we only make the business owners wealthier or better long-term. I have always preferred ‘owning’ things, and this isn’t different with businesses. Ideally, other people work for you. Many people choose the life as employee out of fear, the fear of not succeeding themselves or the fear of not having an income. I’d rather take the shot, blame myself for failure and keep trying. I prefer the fast lane as ERE formulates it.

Then why did I decide to go with the army? While money was a factor, there was another big one too. Personal development & leaderskills. The formation I follow, prepares me to be a platoon commander. Child language: I am supposed to manage 30-50 people. This managing task isn’t only in  good circumstances, but also in more risky situations (some life threatening even, if we take it into the extreme). Having the opportunity to manage that amount of people at my age, is a gift. In my view, if one can manage people in shitty situations, good situations should be a walk in the park. Robert Kiyosaki, author of Rich dad poor dad, joined the army for the exact same reason. I only figured out this one lately. Did you know that Alex Gorsky (CEO of Johnson&Johnson) graduated from the U.S. Military Academy at West Point? (This is an Officer formation). He spent six years in the United States Army, finishing his career with the rank of captain and earning the Ranger tab and Airborne wings. He served in Europe, the United States, and Panama. (source: wikipedia) Point is, even though life sucks sometimes (ok, pretty often), I should come out a better version of myself. These skills taught are hard to find through other instances/companies… and I am sure they will prove usefull in later life. I want to keep on learning and investing in myself.

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Have you ever made similar decisions? Did you ever choose to walk down a path which can only bare fruits in the long-term?

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Results 2016 & Goals 2017

Time for an examination of how the portfolio has grown through 2016 and if I was able to accomplish all the goals set.

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Let’s start with a small recap of the original goals for 2016:

1. Invest a fresh €20,000 in the stock market to improve my dividend income and work my net worth towards €50,000.

–> Smashed it! I already hit the target with only my work income, but I decided to transfer cash savings to my broker account to invest too. I saw no point in having 30K+ in cash… 30,000 employees just laying still?!

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FYI, including dividend reinvestment, I poured €41,800 into the stock market.
Next year will be significantly less as this was due to a non-recurring event.

2. Put at least €10,000 out of the €20,000 in ‘iShares Core S&P 500 UCITS ETF – Acc’ (CSPX).

–> Failed miserably. Why? I invested all the money in individual stocks. I couldn’t restrain myself from seeing op
portunities in the market (and they didn’t turn out to be bad).

3. Clean my portfolio some more

–> Succeeded +/-. As I didn’t start with the same knowledge and strategy as know (actually pretty much no strategy), I had 3 stocks I didn’t want to hold for the long-term. I still have 2 of them in my portfolio, but the news surprised in a good way so I’ll be holding onto them longer to maximize gains and eventually sell.

4. Receive at least €1,000 in dividends

–> Kaboom!  €1088.76 in dividends were received. Next to this I received €244 intrest on a 8k bond. I also received some chump change intrest on my cash, but too small to be noticeable.

 
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5. Stay in shape

–> Accomplished.


I can be a happy man looking back to 2016. It has been a good year.


2017… Bring it on.

Goals?

2017 goals in letterpress wood type1. Invest €26,000 in the stock market. I expect income to be around €30,000 and expenses around €4,000. This will be a tough challenge.

2. At least €6,000 in an index tracker
(i.e. S&P500 or All-World)
. A lower target than 2016 has been set as I would like to reach
the target this year and gain more investments
with less time consuming characteristics.

3. Receive €2,250 in dividends. This doesn’t look very ambitious !but! the ever-greedy Belgian government decided to raise the withholding tax on dividends from 27% to 30%. Acquiring accumulating ETF’s don’t distribute dividends but I will count them as 2% dividend. Also, undervalued growth companies don’t distribute that much dividend (yet) but are set to grow dividends at a much faster pace than behemoths. I don’t only want the dividend, I want the growth as well. If this means I have to settle for a net 1,5% dividend yield, I’ll deal with it. Growth perspective has its price too.

4. Reach a net worth of €125,000. This will be made up of stocks, bonds, pension funds, saving accounts but excluding the pamper account. This is a prudent forecast as my current own net worth is around €98,000. I don’t calculate much stock appreciations as you can see.

5. Read at least 5 books about management, economy, finances, stock market…

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Have a good 2017!