Uncategorized

Savings rate May 2020 at 71.89%

May was a stable month, while I have managed to get my expenses in check, I must say that it is mainly thanks to my income that I managed to get this savings rate. One very fun surprise this month was that I was allowed to go shopping for a new company car!

Expenses

Lets start with the expenses and compare April with May

[visualizer id=”2634″] 

[visualizer id=”2827″] 

We can clearly see that while I managed to cut down on most of my costs, my housing expenses pretty much became my main expense. May was still a month that I spend largely in lockdown and that made it easy to keep my expenses low.

The highlights

  • Living costs increased to 1312 EUR, this includes my loan (about 550 EUR), electricity/gas (50 EUR) and my quarterly syndicate cost (+-700 EUR)
  • Its because of those quarterly syndicate costs that I decided to calm down and not buy much other things. The month went by quickly and it was surprisingly easy. For the first time ever my groceries where my second expense at 177 EUR.
  • Shopping came in a tie at 100 EUR with health. This included a pair of shoes of 80 EUR that fit me well!
  • Health: still quite high at 100, but it included one doctor visit of 70 EUR of which I should get a large part back from the insurance

Expenses overview for 2020

I decided to keep a more in detail track of my expenses this year. I found that I do have a general downwards trend so far this year. One thing I noticed is it remains hard to have low expenses in the four months/year that I need to pay my syndic. Lucky from May next year one of the loans we had to take on the roof will finally be paid off and those quarterly payments will be significantly lower.

Income

I got a high income this month, mainly because I got my quarterly bonus for travelling. This was still due from my travelling in Q1 2020. Additionally I got my holiday money, something we get in Belgium in June.

I also was quite happy to find out it was time for me to select a new company car! In Belgium many companies (especially in IT) give company cars to their employees. I will write a more detailed blog later to show you how I came to a decision and how it works these days.

Saving Rate

Even though the lockdown and some bonusses made things much easier for me, I am still happy to have gotten a 71.89% savings rate this month!

I have a competition with myself that I need to do 5% better then last year and right now I am wining that competition, but of course there is 7 more months to go!

2019 saving rate: 45.8%

2020 average (so far): 51.5%

Whats next

I will continue to do sports (cycling is almost free), watch my grocery expenses and try harder to control my shopping urges!

Since I stopped running I need to find another sport to supplement cycling and I decided to try out the gym. I doubted between the cheapest gym I could find or one of the more expensive ones. Surprisingly I decided to go for one of the more expensive ones. I always had a hard time to keep up with the gym and I feel if I will be surrounded by more high tech and luxury it will make it easier for me to go.

Interested to follow me? Then subscribe and join me on my Roadtrip to Financial independence!

Uncategorized

Your first steps on the stock market: DEGIRO Quick User Guide for beginners

In order to help you if you are new to either the stockmarket or DEGIRO I have written a small guide to help you get started. While its meant for beginners I believe it can also contain some good tips for the more advanced user.

In January 2020 I made the decision to move from Keytrade to DEGIRO as a broker. The low fees appealed to me. I noticed that its not yet clear to everyone how you can actually trade stocks / ETFs and funds on DEGIRO, so this entry guide will allow even the absolute beginner to start on the stock market.

disclaimer “Investing involves risks of losses”

DEGIRO Sign up process

The very first thing you will need to do is create an account (if you haven’t already). You can sign up for DEGIRO here. DEGIRO allows you to sign up from multiple countries. If your country is not in the list but you live in the EU then I suggest to pick a country where you speak the language. For example I live in Belgium and I signed up on the site of “Nederland”, and that works perfectly. Remember the account is 100% free. You only need to pay a small fee when you start to trade. I found that for the trading I do, DEGIRO is the cheapest stockbroker. I will explain this part further on.

Once you click on your country you will enter the sign up screen:

Click there on “Open a free account now”.

DEGIRO has a waiting list, the crisis has drawn a lot more people to the stockmarket. Don’t worry DEGIRO is processing the waiting list, but it can take some time for you to have an active account. Remember stock trading is for the long term, so don’t panic if it takes a while to sign up.

Once you filled in your details go to your mailbox to activate your account

In the email you just got click “Complete your registration” to activate the account

You then go to a page that says Email address verified

Click Login and type there the username and password that you entered before.

At this point you will know your place in the queue. At some point 30.000 people tried to sign up, so that means that 6431 is not a bad place.

Updating your profile

Once you are accepted, one of the first things you should do is to make sure all your personal information is correct.

To check that hover over the usericon at the lower left and click “Profile” (on the screenshot its in Dutch but its on the same location everywhere).

When you click there you come on your personal information page.

The first thing you need to update there is “Personal information” (Persoonlijke informatie on the screenshot).

In that Area you will be able to update your adress.

The second area that is important is the area just bellow that, where you can set your bank account. If you set your bank account then any amount of money that you write from your bank account to DEGIRO will be automatically added to your DEGIRO account. I noticed that this is a smooth process and takes only a few hours.

What I also highly recommend to do is to check out the “Security” Area. There you have the chance to set two-factor authentication.

Using two factor authentication is highly recommended. In this case you will need to download an app called “Sophos Authenticator” on your phone. You can just download this free app from the Apple store or Play store.

DEGIRO will present you with a QR code. Once installed just select scan QR code. This menu pops up if you click the three dots in the top right screen.

Then a camera will pop up and you just point it to the QR code that DEGIRO has supplied you.

From this point on you will see a DEGIRO icon on your app. That means that every time you login you will need to write whatever number is displayed there. That also means that only if a User has both access to your phone and your password they can access your account, making it impossible to hack your account from the outside since they would also need access to your phone to get in.

DEGIRO Pricing

Before starting with investing you might want to know how much it will actually cost you to invest.

First its good to know that the tariffs are very similar across the EU, with some minor differences. In the Netherlands I noticed they are slightly cheaper but the difference is quite small.

You can compare the fees with other brokers for Ireland here for example or for the Netherlands here. You can also find a cost calculator on that page if you want to know it exactly.

Generally I found the pricing of DEGIRO to be really competitive. Bellow is an example of the pricing in Ireland for stocks and ETFs (DEGIRO is at the left, you can see a comparison with some other brokers)

Stocks Pricing

For ETFs there is even a list of ETFs you can purchase once a month for free (conditions applicable, read those here). If you only invest small amounts like 25 EUR / month then this could be an option for you. You can find a list of all free ETFs here.

However keep in mind that they will come with a higher yearly cost. So make sure you check the yearly cost. There is a few on the list where the yearly cost is reasonable. One example would be the ISHARES MSCI WOR A, with only a 0.24% cost. Its a good ETF because you are covered worldwide which will lower your risk. Its also located in Amsterdam what should be good for Taxes. If you can invest higher amounts per month there is also ETFs that are not free that will be cheaper actually. In the next chapter I will suggest one. If you decide to buy an ETF with a purchasing fee, it could also be worth it to save up two months before purchasing.

I would advise against buying funds since they usually come with very high yearly costs up to 3%! This will be a big cut in your profit. I would also stay away from more futuristic investments such as options or the futures market. The majority of the people do not make a profit there.

Your first purchase on DEGIRO

Transferring money

Transfering money is quite simple. You just need to transfer from the bank account you coupled to your DEGIRO account in the last chapter.

At the top right you normally see an icon to book money in and out.

When you click on that you should see the option to transfer money manually. This is the option you should use.

When you click on it you will get the bank details of the account you need to write to.

I suggest you first try with a small amount (1 EUR) and test that it works. Once it works you can transfer a larger amount. Remember you can only transfer money from the account you have added in DEGIRO.

On the same screen you have the option to book money back to your bank account, should you need it in the future. It can be interesting to also test this option and write the 1 EUR back to your bank account.

Get the right information on the ETF you are interested in

If you already have a stock or ETF in mind then I suggest to search for that stock. If you haven’t then go to the search box and enter SPDR MSCI WORLD UCITS. This is an ETF that invests in the top stocks in the top developed countries. I will show you how to get this information from the ETF itself.

When you search for this ETF you will get two results. One is in USD and the other in EUR. Lets choose the one in EUR so we do not expose ourselves to a currency risk.

Once you click on the ETF you will end up on the overview page of the ETF. If you like to see how the ETF performed in the past you can play around with the buttons bellow:

  • YTD = how it performed this year
  • 1D how it performed the last day (standard)
  • etc

First we would like to get more detailed information about this ETF. We want to know for example how much the yearly cost is, if it

For that click on the documents tab on your screen.

Once you are there you can click on the download button to go to the documents:

I noticed that there is no direct link to the document but once you are on ssga you can search for the ETF

In the top right type SPDR® MSCI World UCITS ETF and click the first one that pops up.

Now you are at the overview page of the ETF.

We can for example read the desciption of the Index:

The Index captures large and mid cap companies across Developed Markets countries. The index covers approximately 85% of the free float-adjusted market capitalization in each country. Securities are weighted by market capitalisation.

If we scroll down (or click on “Holdings”) we can see the Geographical weights, so you should realize that this ETF is focusing more on the developed countries.

Other things you can see is what stocks it exactly invests in currently and what sectors they are in. The thing with ETFs is that a bigger stock such as Microsoft and Apple will also carry a bigger weight. A much smaller stock that is at the bottom. Apple for example has 3.35% weight, while the smallest stock (HEICO Corporation) at position 1579 only has weight of 0.000068%.

Now scroll further down and open the document called KIID

Click on KIID

This is actually an overview of the ETF in a standard format. Apart from some general information you will be able to see the yearly cost and the risk factor.

In this case the fund has only a 0.12% yearly cost and that is why it is one of my favorite ETFs.

We can also see that the ETF is not handing out dividends. How? Because it does not have Acc (=accumulating) in the name. If you are in a country where they have taxes on dividends then you want to avoid Acc ETFs. If it does not matter for taxes then I would go for Acc ETFs since its always encouraging to slowly see your dividends go up over time. Should you receive dividends you will also be able to see in this file how often you get the dividends. Usually this is quarterly but there is some ETFs that give it yearly or monthly.

Dividends are a sum of money paid regularly (typically annually) by a company to its shareholders out of its profits (or reserves).

Your first purchase on DEGIRO

Now that you are armed with more knowledge about the ETF or stock you want to purchase its time to do the actual purchase.

You can do that by going back to the ETF in DEGIRO and click the green button that says “Buy” (or “Koop” in Dutch)

In the next screen you will need to then set how many stocks you want to purchase and at what price:

I usually will set the purchase price a bit higher then the actual price. The system will still buy at the lowest possible price but then you are sure it will go trough fast.

You need to enter the max purchase price in the box next to Limit Order. Under the box limit order you need to enter the number of stocks or ETFs you want to purchase. The system will then calculate the max purchase price

For example I have entered the following and the system has calculated that it will cost me MAX 985 EUR, but most likely I will pay less.

Remember unless you chose a free ETF you will need to save 5-6 EUR for taxes and fees from the DEGIRO. Once you click on “Place Order” you will find out exactly how much the costs for DEGIRO is.

I can also see the impact on my free space, so I can actually see that I could have actually purchased 3 stocks more.

Once you are ready confirm your purchase, you will then have placed an order on the market. If you put your limit high enough, it will be purchased really fast.

Checking your current wallet

Now that you have some stocks in your wallet you can click on Portfolio to find out how your stocks are doing.

In my case I can see that I currently have an 8% loss, but we need to keep in mind that this blog was written during the corona crisis. At the height I was actually at a much higher loss in March 2020 as stocks had dropped 30%. Its good to note I have not lost one night of sleep over this drop as I know that ETFs cannot go bankrupt and if you pick one that is spread over multiple countries and sectors it will always reward in the long term. Always invest for longer periods. Five years is really the minimum but preferably you should be investing for a horizon of at 20 years. The stock market goes up average per year 6-7%. Also remember: the best time to invest was yesterday. The second best is today.

Conclussion

If you are new to investing I really hope this was a good overview for you. Please let me know in the comments if there is anything else you would like to know or if there is any place I can improve. And if you like to know more about investing then leave your email so we can stay in touch.

Uncategorized

Savings rate April 2020: a record high 85.71%!

I would like to say that thanks to my cunning saving plans I managed to get a nice savings rate, and while I can say that my expenses are actually the lowest in over a year, I could not have done it without also having a boosted income in April! Read on and find out how I managed to get such a high savings rate. Everything will be reveled!

Expenses

Lets compare April with March and see what moved exactly:

 [visualizer id=”2480″] 

[visualizer id=”2634″] 

The highlights

  • Living costs remained at 645 EUR
  • Restaurants costs dropped to 0 for the first time ever!!! I did not go on a restaurant once, and I had no take away food either! Such a huge saving here!
  • Grocery Shopping dropped to 156. It’s much lower then I usually have, but if you recall it was a bit higher in April when I bought some extra supplies, and now I was able to live off those supplies for a part. All things considering its actually still quite high!
  • Health: apart from my yearly health insurance contribution I also had some doctor visits for my back. This resulted in medicines and some tools to help me out, leading to probably the highest health expense I had in a year in one month. But my back allows me to do sports so its important that it gets the best possible care. I also should get some money back from insurance.
  • Shopping was my guilty pleasure this month. I spend about 300 EUR on clothing (I had not bought any in a few months) and also bought some new furniture for 300 EUR. That’s the thing with spending a lot of time at home, you start noticing what furniture you are missing

Income

For income this is my favorite time of the year. In March we find out if we get a raise, and in April we find out how much our bonus is for the year. My yearly bonus came in May last year, but this year I was lucky and we got it in May.

I made almost all my taxes last year and even outperformed. If me and my department made all our targets I would get 25% of my usual wage in a bonus. Almost all of them were met and I got a 24.3% bonus!

Now cash bonuses are heavily taxed in Belgium. Actually you would only get 46% of your bonus after taxes. For the first time my company gave us the choice to choose warrants instead.

What is the difference between warrants and cash? Well to start with, neither the company or the employee pay social security on warrants. That alone saves you 28% in taxes. However the personal income tax is slightly higher, but not high enough to be as high as social security. So whats the catch? The catch is that warrants are listed on the stock market. And in these very uncertain times there is a Risk. For some of our company this risk was the reason they did go for the cash bonus.

But I know the market well, and I realized you could sell the warrants already the next day. So the market risk is only one day! In times we saw the market drop 10% in one day there is a still a risk, but the risk is so small that I decided to take it. The market decided to go up about 1% that day and I ended up with an about 30% higher bonus then I would have if I took the bonus in cash, and ended up paying “only” about 40% of taxes.

As travel is still suspended I am afraid my daily bonuses I get when travelling are still reduced to 0. My company still has all travels grounded until June, so for the time being this will not change. At the same time I do enjoy spending time in Belgium and I am not that eager to go back on the road.

I am also getting meal cheques, this month is was 168 EUR. I forgot to actually add these to my income while I believe they should be part of it. I have corrected it for all of 2020, so my saving rate for 2020 is slightly higher.

Saving Rate

So despite of the loss of income from business trips and mainly thanks to a small cut back on expenses and my yearly bonus I managed to get a 85.71% saving rate, outperforming any previously recorded savings rate!

I have a competition with myself that I need to do 5% better then last year and this is the first time I actually see some improvement, but I do see a difficult month ahead with some housing expenses coming up in May that I will need to tend to.

2019 saving rate: 45.8%

2020 average (so far): 46.4%

Whats next

I will continue to do sports (running / cycling is almost free), watch my grocery expenses and try harder to control my shopping urges!

Interested to follow me? Then subscribe and join me on my Roadtrip to Financial independence!

Uncategorized

Savings rate March 2020: drop to 32%!

Like I mentioned in my blog about Corona my initial expectation during the lockdown is an increase in expenses on some levels and a drop on others. I would expect groceries and shopping to go up, and restaurants to go down. At least for my specific case, and this mainly in the first month.

Expenses

Lets compare February with March and see what moved exactly:

 [visualizer id=”2482″] 

[visualizer id=”2480″] 

Its a bit like what I predicted. Restaurant costs have plummeted, groceries and shopping expenses went up.

The highlights

  • Living costs were not so bad and stayed at 772EUR this month, even though they are my biggest expense, 772 EUR is really fine as it includes a 550 EUR / month payment of my loan
  • Restaurants costs dropped from 500 EUR to 99 EUR and a further drop is expected in April as all restaurants are closed! Good news for my wallet!
  • Grocery Shopping increased to 400 EUR which is 200 EUR more then usual but its expected when I don’t go out eating. However I am paying more attention now to the things I buy in the supermarkt so I am hoping it will drop next month
  • I spend 532 EUR on a Virtual Reality Glasses (Oculus Quest) that I classified under shopping, any games I bought I classified under hobby’s. I bought 4 games in total costing me about 100 EUR. It was a really good purchase in the end as it is helping me to go trough lockdown.
  • Otherwise no abnormal spendings, just a regular month

Income

I also had a drop in income as I get bonuses when I travel for work, and I was able to travel much less for work. So while my expenses remained about the same I have a drop in saving rate. I plan to spend a bit less next month to compensate better. I could still travel the first 9 days of March, so the drop is still limited, but I expect it to be even larger next month.

But there is also good news. My company noticed that in march all projects can continue as its business as usually. The next 3 months will be hard to sign new contracts but also to recruit new people. End of march is usually when we get to hear if there will be a raise or not. I was really afraid it would be 0% this year, but I am happy to say I did got a raise that I am happy and grateful with given the circumstances. This will most likely help me to improve my saving rate on the long run!

Saving Rate

All in all I can’t complain. I’m healthy and so is my family, I still have my job and am able to work from home. So even if my saving rate dropped to 32% I’m still happy. I hope that you and your family are also in good health and you are able to keep your income stable.

The moment you have all been waiting for 😉 The graph with my savings rate. Compared to last year its not looking so good, but I am happy where I am so far and I will try to keep my shopping in check 🙂

I have a competition with myself that I need to do 5% better then last year. Its not looking good, but I feel April could turn things around! I went in a trip in May Last year and Paid some items in April. And guess what I am not able to do this year? Yes Travel! So let’s see how this will give me a chance to turn things around!

Whats next

I will continue to do sports (running / cycling is almost free), watch my grocery expenses and try not to shop to much in April!

Interested to follow me? Then subscribe and join me on my Roadtrip to Financial independence!

Uncategorized

Will the Corona lockdown help you to live more frugal?

By now its clear that 100s of Millions of people are in lockdown. In Europe alone we are talking about Italy, Spain, France, Belgium, and now also UK and the Netherlands are going in lockdown. In America US states are starting lockdown procedures and India has already put 1.2 Billjard people in lockdown. In total we will be approaching 2 Billjard people in lockdown worldwide! What effect will this lockdown have on your wallet?

Your income side

Needless to say that being lockdown has a very bad effect on our income. I am not talking about dividends, passive income, rental income or any kind of income on investments, but I am talking about wages.

Anyone working in profession that cannot be done by working remotely is by default at the very least technically unemployed. In most developed countries we can fall back on some kind of government supported replacement income. People might lose their job or fall in some kind of temporary unemployment system.

Additionally people who have to travel a lot for work will also get a burst in their income. Personally travel is a part of my job, and not being able to travel costs me probably 25% of my income. Lucky I am fortunate enough that I am able to work from home for most parts of my job.

Your expense side

What do Europeans spend money on?

Pre-Corona according to eurostat, the European household spends mostly money on Housing 24%, Transport (13,2%), and Food (12,1%), but of course there is quite a few smaller expenses that also take a bite of the budget.

For sure some expenses will go up. You will spend more on electricity, heating, water, coffee, … all these are normal effects from having to spend more time at home. But at the same time some will go down. So the what will have the higher effect (not taking the income side into account). Will living in lockdown automatically make you more frugal?

What will you spend more on?

In a first stage I can imagine people will be spending more money on things they require when they spend more time at home. People in lockdown land in a situation that most will not have planned for.

At best they will see the lockdown coming a few weeks ahead. At this point I can imagine (and we actually see this happening) people will shop more for groceries they require during lockdown. We have seen an increase in almost all countries for grocery shopping. Especially less prepared countries have seen a rush on supermarkts causing empty shelves.

In Belgium I figured empty shelves were a thing you only saw on TV happening in less developed countries, but even here there was a traffic outside to get into the store. While in the 2,5 weeks we have been in lockdown I never came to a situation where there was no fresh items to buy, for sure there was some items that could not be purchased occasionally. The biggest rush here is over by now, but I can imagine in some countries this can lead to severe shortages. I am convinced almost everyone who could has at least grabbed a few items extra, be it knowingly or unknowingly and some of us have stacked up quite huge, preparing for a long isolation or a period where items might be more difficult to find in the supermarkets.

Another expense will be healthcare. In a first place I can see people stocking up on items to prevent them from getting ill. This includes items like mouth masks, matterials to make mouth masks, gloves, but also medicine they can use in case they fall in such as Paracetamol or Dafalgan. In the worst case scenario people will get infected and will have to go to the hospital. In Belgium the financial effect of this would be limited, but in some countries this can leave you with huge hospital bills.

Then there is hobby’s. You might not be foreseen on doing things at home and most of us will not be prepared for the sudden large amounts of spare time they have. You might get bored and want to purchase some things for you to do at home. This can include fitness items for at home or for digital entertainment.

You could spend a lot more if you would have spend it on the most expensive thing

What will you save on?

Travel! You will probably not be able to travel for a few months. At least in Belgium the government is recommending not to book any holidays for this summer. At best people will be able to enjoy a holiday in their own country. For people usually travelling in summer (unlike me), this will be a large cut back.

Another big expense you will save on is restaurants and bars. I believe most people don’t realize how much they spend on this. I personally did not notice it until I started keeping track of my expenses. I found out I spend more then any other hobby on this. Its quite a huge saving that I can no longer go. It will actually be a very good exercise for me to spend less on restaurants!

Clothing is another item you will probably save on. Who cares about what they look when they can’t go out and barely see anyone apart from family. There is no need for a new outfit for a fancy party you will attend. If you have to dress up for work then this is clothing you won’t need to purchase anything for a while either.

There is little need to worry about bills for public transport or cars. Roads look abandoned and trains drive around with no passengers.

Since the cultural sector is pretty much closed for business any fans of theater, movies, museums, dancing, will not have to worry about their wallets as there is no way to spend any money on these items.

Transport, culture, recreation, travel, restaurants, bars , clothing account for about 35% of Europeans budget and all of these will have a very large drop when going into lockdown. So yes I absolutely believe that the lockdown will help us to live more frugal. Extra expenses to adapt to our new situation will be temporary while items on the expense side have a rather permanent character. At least permanent as long as the Corona virus is raging in our cities.

This is a similar effect I expect on my expenses. Probably break even the first month, due to extra purchases to help me with my new situation, and after that I really do expect a positive effect on my expense side.

That being said as many people will have lower income, being in lockdown will not automatically give a higher savings rate!

This is your chance to embrace Frugality!

If you are not frugal yet, or had trouble to get certain expenses under control, this is your chance to do so!

If you had large expenses that you had trouble to get under control pre – lockdown, now is your chance to start with a new habit.

Did you used to go for beers every evening after work coming home with a big bar bill?

Did you go to expensive cocktail party’s every saturday?

Did you had a big restaurant bill every month?

Did go on a citytrip every month?

Did you hire people to do chores in the house?

Did you took anything that broke in for repairs instead of trying it yourself?

The lockdown will teach you that you can actually do these yourself! Perhaps you will finally become the cook or cocktologist you always wanted to be. Perhaps you will finally learn how to replace a flat tire on a bicycle. Perhaps you will learn that spending some relaxing time as home has its charms as well.

So instead of seeing this as a time of despair see this is as an opportunity to pick up some new frugal habits!

Those who have been reading my blog know I spend to much on restaurants! Since the lockdown I have been cooking fresh food myself every day, and I have even been trying some new recipes. I look forward to changing this habit permanently as it will be such a money saver!

Did I miss any effects of the virus on your wallet on the expense or the income side? Are there any habits that you are happy to chance while in lockdown? Let me know in the comments bellow!

Interested to find out more and see what affect Corona will have on my saving rate? Then join me on my roadtrip to Financial Independence!