Personal Finance - Know Your Destination

" To get there you need to know your destination"

This is one of my favorite quote's and I use it a lot in work related tasks and with my personal goals. I really don't understand people who love to wonder around without destination and goals, but you see those quite often. Also, I heard time to time people saying; when I have more this and that, then I will do start to do this and that. To me this sounds like they are wondering around and soon they will be lost or at least they will not achieve their goals.

There is a popular quote in Finland; "money does not grow on trees" and you cannot avoid hearing it. Time to time it is use even by the middle class which should have money. But there is a trick, you just need to check they car and you probably understand why they don't have the money. Like Robert Kiyosaki has said, middle class buy liabilities and rick buy assets. Please check Rich Dad Poor Dad if you haven't.

So, how to avoid all these circumstances? You need to have a plan! Next time when you are starting to think; I cannot afford that one, stop it and turn the thinking around! How can I afford it and is this an asset or liability? And if it is a liability please think twice before buying it.

And how I use these thinking? For example, I have created a plan to my financial freedom. I know exactly how much money I need for retirement or freedom from work. At this stage and with current savings plan my freedom is 25 years away. My goal is to get portfolio to grew up to 600 000€ (~685 000 USD) and with 4% rule I think this is enough for me.

 

So, it took around 10 mins for me to create this plan you can see above. By doing this, it is much more understandable for me what I need to do and how much I need to save. This is only an one example, but you can use this ideology in many other topics and tasks when you think a little bit outside the box.

Happy Summer!

Regards,

CVM

Stock Investing For Dummies - Compound Interest Made Simple

Impact of Compound Interest

Hi,

Today I will talk about one of my favorite topics, the compound interest. Even Albert Einstein has said that this is the 8^th wonder of the world! Albert was a very clever man and that’s the main reason why his quote about this topic can be found from my blog (and off course because the quote is true). The quote goes:

" Compound interest is the 8th wonder of the world. He who understand it, earns it... He who doesn't, pays it."

In theory, compound interest means “interest on interest” and this is calculated by multiplying the amount by one plus the annual interest rate raised to the number of compound periods minus one. Too scientific? No problem 😀 I will make an example.

Let’s think about a situation where “John” invest 1000 dollars to a stock. The stock pays dividend of 5% for the investment annually. So, let’s check what has happened to investment in 1, 5, 10 and 20 years. The value of the stock hasn’t changed during the years (yeah, I know, this will change (on an average of +7%) but not in this example, for the sake of learning 😀).

	once time investment	Compounding dividends	Without compounding	Compounding benefits	total amount compounded
year 1	1000	50	50	0 %	1050
year 5	1000	276,2815625	250	11 %	1276,281563
year 10	1000	628,8946268	500	26 %	1628,894627
year 20	1000	1653,297705	1000	65 %	2653,297705

Like you can see from the example above, the impact of compounding investment always needs to be done long-term, in this cases it means +10 years. The benefit of compounding increases when the investment time gets longer. 

Unfortunately, nobody didn’t teach me the compound effect 20 years ago, but this is something which I can teach to my kids and I can use this wisdom when I make investment plan for them and for myself.  

But hopefully this simple example gives you a understanding what compound interest is and how you can benefit from it. Please tell me if you want to see an example(s) where the stock growth, dividend re-investments, monthly purchases, etc. are included.  

Regards,

CVM

The Start

Like i already stated in introduction one goal of this blog is to follow my path to financial freedom. It is totally another topic will I achieve it or not. At least I tried 😀

Situation as today is:

Company	Shares	Prices (€)	Total (€)
KONECRANES PLC	161	34,15	5 498,15
Nordea Bank AB	43	11,36	488,48
Intrum Justitia AB	36	33,54	1 207,48
Ocean Yield	136	7,01	952,82
Austevoll Seafood	95	8,45	803,00
Norwegian Finans Hold.	93	8,68	807,20
Fingerprint Cards	174	5,50	957,38
Verkkokauppa	136	7,25	986,00
Suomen Hoivatilat	125	7,55	943,75
Albemarle	14	89,00	1 182,51
		Total Sum	13 826,77

Expected dividends for next 12 months will be around 450€ minus the tax.

I know already that there will be some changes in my portfolio during next few months and i will write an article about these in coming posts.

Unfortunately I don't have any nice graph from year 2016 to show you, but last year was really good what comes to investments. Total portfolio grew around 30%.

Targets for year 2017 is to achieve 10% growth, increase the amount of dividends and decrease the amount of Konecranes shares and replace those with some other stocks.

Regards,

CVM

Introduction

Hi,

I have been thinking about a long time will I start a blog or not. Finally I decided that I will. Let's see will I regret my decision 😀

First thing one to tell you is that English is not my native language and I am quite sure that you will notice during my posting (if not already).

The purpose of this blog will be following my investments, publishing book reviews, probably some self help topics (mainly for myself 😁) and some other topics which comes to my mind.

My personal goal is to increase my passive income so that those would cover my expenses. Let's say, where not there yet 😀

And finally few words about the me. So, I am a male in mid 30's living in northern part of Europe, Finland. I have two kids and working as an engineer in an international firm.

Regards,

CVM