About being independent

I have been working now for about 27 years. I started in 1994 when I was 14. This was the legally allowed minimum age in Germany when teens were allowed to have part-time jobs at that time. And since I started, I never stopped.

Filling in shelves in supermarkets, fixing computers, tutoring math, working as a part-time instructor at our local martial arts gym, doing translations in German, Polish and Korean, teaching German and English. And when times got rough, I was working on construction sites, painting walls and fences or digging holes around houses. I also did two years of a vocational training in a bank and got certified as a martial arts stuntman. The day never seemed long enough to follow up on all my commitments, which continued throughout high school, university, and until I finally settled on the hotel industry.

When I started working in hotels in 2008 I was already 28 years old and just about to finish my Bachelor’s degree. I started with an internship, and then became a full-time employee.

I loved the job and the industry. Traveling the world, meeting people from all walks of life, and being paid to do that. I went to Korea, Japan, China, Scotland, back to Germany and finally to Thailand. I didn’t mind working 12-14 hours a day, often 6 to 7 days a week. I didn’t mind working when others had holidays, missing Christmas and New Years events. And I didn’t mind the low payment. All I wanted was to travel to exotic places and to be meeting people, learning about their stories, and solving the problems they had during their stays in “my” hotel.

This attitude and flexibility allowed me to promote quickly. By 2014 I was already 2nd in charge of a large hotel operation, and by 2017 I became a General Manager. Starting late and after only a little more than 8 years on the job.

Things are sometimes not what they seem

Becoming a General Manager was my dream. I wanted to be fully in charge. To make all the decisions. To be the one who can really make a difference and implement all the things that would make my hotel great.

But after becoming a General Manager, I became quickly disillusioned. Between the actual guest requests, the requirements of hotel owners, the corporate office, and the whims of the companies vice presidents and executives for operations, sales, marketing, finance, and all the other people involved, there is actually very little room to navigate.

I enjoyed being a GM for a very short time. Yes, the salary and benefits were finally coming closer to the actual effort, but I still didn’t feel to have the full freedom to do what I wanted and how I wanted. I still had to justify myself, had to restrain and to adjust my processes and ideas to what everyone else wanted. I used to think that the General Manager of the hotel has all the power to make a hotel truly great, but the reality is that a General Manager is barely performing a balancing act, holding up a house of cards that is constantly being pulled by different people from different directions, each of them with different agendas and varied interests. The job is truly not what I expected it to be.

Time to get real

That’s when I came to realize, that no matter how much I would push myself, how much effort I would put into my job, how much time I would dedicate trying to appease everyone who is higher in rank, I would never get to the point where I would consider myself to be free. Even IF I would pull off the impossible and become CEO of a hotel company, between shareholders, the board of directors, and majority stakeholders, I still wouldn’t be free to do things the way I want.

So there is only one solution. I need to do what I can to become financially independent, and then, only then, I will have the freedom to do things the way I want.

Starting my own business will be another key step, but given my current responsibilities towards my family, I need to be cautious. Every successful entrepreneur tells you how liberating it is to be your own boss, but having worked in a bank, I also know that more than 80% of businesses fail in the first year of operations. I can’t put my family through that.

So, I am working diligently, saving and investing. And in about 4 years from now I should get to the point that I can give real independence another try. I will be 45 by then. Maybe a little late. But the game is not over at half-time.

Breaking Rules

Nothing is as it should be this year. 2020 will go down in history as one of the worst years for my generations (X / Y – I am right on the brink).

Highest unemployment as far as I can remember across the globe. People are restricted to travel between countries, in some areas even between cities. Foodbanks, charities, and NGOs are stepping up and doing what they can to get people through hard times, even in the richest and most developed nations. Medical supplies are running short, equipment gets scarce. And governments are printing cash for people like there is no tomorrow.

Every weakness of our economic systems has been exposed by now. The mantra of a small government and an unhinged economy has been crushed to pieces. Whether it’s Germany, the US, UK or Thailand: Without government support it would all collapse.

It’s a terrible situation, but we will get through this, as humanity always did. There is light at the end of the tunnel, and I am confident that we will thrive again once this is all over.

And having said that, as bad as it is, it’s also a great lesson and experience for us. Instead of lamenting and complaining, we have right now the opportunity to analyze the situation and to think about how we can handle a similar occurrence in the future. Because we know that this wasn’t the first, and certainly won’t be the last pandemic that we will have to deal with.

Financial independence should grab more spotlight than ever before

The current situation showed lots of weakness in the structure of our society, especially to those who are in the rat race. As the crisis triggered massive unemployment, salary cuts, and put people in danger of losing access to their basic needs like shelter, food, and healthcare, it has never been more obvious that the rules we follow are flawed.

People are talking about jobs, minimum wages, worker protections. Protections from evictions, free medical support, and other measures to help all of us getting through the challenges of the pandemic. And it’s all good and right. We need to work, we need to have our rights protected, and we need a framework of rules to make sure those in power don’t abuse those who are not in a position to protect themselves.

Unfortunately, the same rules that protect us are also the rules that limit our opportunities. They push us into the rat race, into the dependence on people who employ us, and on governments that care for us. We give away some parts of our freedom and receive in return limited protection that helps us to make it through the days ahead.

But those who really want to get at least a slice of their freedom back, they got to break out of the rules and take ownership of their future. It’s especially situations like the current crisi, when financial independence becomes more important than ever.

Being financially independent means that you can afford to have a shelter without relying on the government, that you can put food on the table without relying on charities, and that your health is protected. Financial independence is not about getting rich. It’s about freedom.

The steps for reaching financial independence are only a few:

  • Earning as much as you can
  • Spending as little as possible
  • Saving and investing the surplus
  • Building passive income

Only four steps that explain it all. Simple and while not easy, definitely achievable with the right mind-set, plan and determination. And the benefits are immense. Not only may it allow you to retire early from your regular job. Achieving financial freedom will also empower you to pursue other paths and passions which you might have not considered previously due to financial commitments that couldn’t be neglected.

Even more importantly though, it will also prepare you for hardships, and situations as we are experiencing right now. It’s undeniable that those who build up emergency funds that cover 6-12 months of expenses, or who have passive income streams, are significantly less worried while the virus is causing panic and havoc across the world.

The FIRE movement is just a smart thing to do

When you explain the idea of financial independence and the FIRE movement to people who never thought about it, you will hardly find anyone who would disagree with it these days. There is nothing about massive unemployment, stagnant wages, and deteriorating economic conditions that would encourage people to go back to the old days.

And this is not a one-off event. It will happen again. Maybe it will be another virus. Maybe something else. But we know that hard ships are part of the equation throughout our lives. So wouldn’t it be a smart thing to do something about it? To prepare for it?

As my readers know, I am promoting investing in stocks. And surely, many companies got in trouble and had to cut or reduce their dividends, hence also impacting my passive income. But what this crisis showed me clearly is that while there is no 100% protection in this kind of environment, the odds are still clearly favouring investors over regular workers.

I work in the hardest hit industry of the pandemic: I am a hotel manager. And while my salary was cut by up to 40% as my hotel had to close for a few months, my passive dividend-income went down only by 9% on average year to date so far, and I expect it to remain on that level.

If you ever had doubts whether FIRE is for you, these doubts should be gone by now. And whether you invest in stocks or real estate, or any other way that generates passive income streams, it should be (or become) a part of your plan.

3 Things you should know about FIRE

The dream of financial independence and early retirement has gained a lot of steam in recent months. But despite the popularity of the movement, there are some important points that need to be understood and which I would like to point out.

It’s easy – and it’s not

Frugal living, saving as much as possible, investing. The concept is simple and easy to understand, easy to copy. In theory. Putting in practice, there is a lot of sacrifice along the way and even after all the hard work, chances are that you won’t be living like a king, but will need to maintain a frugal mindset for the rest of your life.

Here is some overview on how to get started: Let’s say you purchase stocks or ETFs that will generate a yield of 5% annually after tax. You might do better. You might do worse. But from my investing experience so far it’s a pretty realistic expectation to have.

Let’s do the math then, which means that for every 1000 Euro invested, a 5% annual return will generate 50 Euros each year. Let’s put that in lines:

  • 1.000 Euros invested = 50 Euros / year
  • 10.000 Euros invested = 500 Euros / year
  • 100.000 Euros invested = 5.000 Euros / year
  • 200.000 Euros invested = 10.000 Euros / year
  • 500.000 Euros invested = 25.000 Euros / year
  • 1.000.000 Euros invested = 50.000 Euros / year

You can play around with the numbers, the %, and your saving targets, but I think this pretty much explains the whole challenge: You need to save and invest a lot to get to a point that you could seriously relax. And even if you get to the point that you have a Million Euros on your account, a return of 50.000 per year is hardly an amount to live on to consider oneself rich. Comfortable? Yes. Rich? No.

If your target is really to completely retire early, not only would you need to save up a lot, but you would also need to maintain a frugal and simple lifestyle to make sure your income and your wealth don’t get drained too early on. The last thing you would want is to turn 70 and see how others retire on their hard-earned social security while you start to worry about your funds and income. Because if you retire at 35 or 40 and didn’t pay much into the system, then it would be blatantly wrong to expect the system to cover for you later on.

Most who achieve FIRE keep working

Given the staggering amount of money required to really and fully retire early, most people don’t go all the way. Because it’s too hard and it takes a too long time. BUT what many do is to turn to their passions and their actual idea of looking for a purpose once they reach a point of feeling secure enough to do so without going broke.

Say you have saved and invested 200.000 Euros and receive a 5% annual return after tax, 10.000 Euros a year. That’s not enough to retire. But living in the right place, it may be enough to pay your rent. Having “shelter” secured, you might not feel the pressure anymore to chase for a high paying job that would be required to protect you and your family. You could choose another profession or challenge that may suit your personal goals much better, and even if you would bring only another 25.000 Euros a year back home, that could be already enough for a decent living with the good feeling of doing something that you actually really appreciate.

I am also not sure if the actual goal of a “real” retirement would fit with the character of any FIRE aspirant. Because to get to the point that you could actually retire on your savings and investments is really hard work. It requires dedication, patience, and real commitment. Something that you see mostly in career and goal-oriented personalities. Now they might not be always the corporate types, but considering how much work and effort they put into reaching their goal, it’s hard to imagine that they would be able to stay idle right after hitting their target. There are simply too many exciting and interesting things to do in the world to waste time on doing nothing.

It’s really about time and independence

In reality, investing and generating passive income, escaping the rat race… it’s a mind game. Because with every step along the way, with every additional income you create for yourself and with every day you get closer to become financially independent, you are reducing the burden on your shoulders. The burden and the responsibility to yourself, to your loved ones, to society.

Financial independence empowers you to make conscious and responsible decisions, without the seductive element of money attached to it. When you live frugally and have a minimalistic mindset, when you know that you have “enough” and don’t need to compromise your values, your convictions and your personal goals for profits and gains, then you can act true to yourself at all times.

You can also take the time to think things through. To consult with people who matter and you will have more opportunities to do “the right thing”, which more than often goes not well along with the profit and benefit-oriented thinking of many corporations and individuals out there.

I am not sure how many other people out there see it this way. For me, this should be the ultimate outcome. I intend to keep working until I die, but not in the traditional sense and not on other people’s terms. I don’t want to deal with CRAP any longer than necessary and this is why I follow the FIRE movement.

Having said all that one thing should also be very clear: Without those companies which are striving for profits, without all those people who prefer to have a regular working life and who actually appreciate going to an office every single day, FIRE wouldn’t be a thing at all. Otherwise, how would we expect a 5% annual return after tax on our investments?

Why investing in Pharma makes sense

Today, let me dive a little into the topic of income-investment and why I believe that every income-focused investor should have some pharma stocks in his or her portfolio.

As my readers know, my goal is to escape the rat race with the help of investments in the stock market. With my eyes targeting financial independence, having a passive stream of income is crucial. One way to get it is to invest in dividend-paying companies. The strategy is called income-investing and it is a reliable strategy of building up passive income, large enough to be able paying bills (and more) once the decision to retire has been made.

When it comes to income-investing ideas, how to pick a stock, and what one needs to be aware of, the pharma industry emerges quickly as a good direction to look at.

Profits for years to come

My personal portfolio contains shares of two pharmaceutical companies: AbbVie (ABBV) and GlaxoSmithKline (GSK). They are not THE biggest in the industry, but large enough to reward their shareholders with frequent dividends for many years now. And chances are good that this won’t change anytime soon.

Big Pharma is a term that is being used in a mostly negative manner. Overcharging customers, abusing their power, and either way, health should be free for all, shouldn’t it? Maybe. Maybe not. But what is pretty certain is that this industry has a tremendous cash-flow that is only increasing with a growing and ageing population.

People get sick. It’s how humans work. We get sick, we get better. For most of the time anyway. But the part of getting better for most of the time involves medications, treatments, surgeries, vaccines, anti-biotics, hospital stays. It’s a never-ending battle that will always require someone to develop, produce and distribute all those essential products that help us to have a long and healthy life.

They can do what no one else can

Some people may think that supporting Big Pharma can’t be the only way to get things done. Some smaller companies should be able to pull it off as well, right? Research, development, production, distribution. Well, the bad news is, that smaller companies simply can’t do all this. And even if they try to share the work process with other companies, chances are that they either fail or can’t make enough profit for a sustainable contribution.

There was a recent story about a company called Achaogen that comes to my mind. The company was working on a new type of antibiotics. The scientists and researchers were looking for a way to develop a new type of antibiotics, as the currently widely available versions are becoming increasingly less effective. They were largely successful in the beginning but failed after a very short time in operation. The business was just not profitable enough to sustain.

This case highlights the need for some for really large economies of scale, cross-incentives among products, and distribution scale that a small company simply can’t sustain. And we are talking only about antibiotics. How about those much larger and even more cost-intensive projects. Cancer, HIV, dementia. There are so many challenges in front of us. They require the right people, with the right education and research experience, the right equipment, sufficient funding, the right connections for distribution and the stamina to dive through ups and downs of the world without going bankrupt.

Bill Gates, for example, is working closely with many companies including GlaxoSmithKline through his Gates Foundation. When asked about the reason for this collaboration instead of just using his immense wealth to simply find solutions on his own, he said it very simply: These companies can do things that no one else can do.

This is a powerful statement for any investor out there. It says that, to a large part, there are not many alternatives. That’s a big moat to cross and perfect protection for any long-term investor.

The risks are limited

Unsurprisingly, AbbVie and GlaxoSmithKline are both considered to be rewarding long-term investments for income investors not only by me but by pretty much every analyst out there. The combination of the long-term focus, available resources, knowledge and power of distribution, together with a reliable and stable cash-flow give pharma companies excellent risk/reward ratios.

Some analysts point out that the big cash-cows might at some point disappear, especially when cheaper alternatives come to market. When patents run out. When the competition catches up. These concerns are legit. It will happen. But unlike some electronic toys or tools, health is a different story with plenty of areas that are still under development and which are almost impossible to copy in a simple and cost-efficient process. The electronic cycle for product improvement is only roughly 1 year and has very limited regulations in place. Health related products take 10-15 years to develop and are subjected to heavy approval processes and regulations. This will always keep the competition at pace, even if some profit margins might occasionally suffer or take a blow.

Disclosure: I own all stocks mentioned in this article.

Get independent and stop dealing with CRAP

There are many reasons to strive for financial independence. For me, some of them are company politics and the never-ending dealing with CRAP. It’s one of my favourite acronyms:

  • Criticism
  • Rejection
  • Assholes
  • Pressure

You can’t become a leader in any organization without it. It’s part of the deal. No matter what you do, once you are in charge of others, CRAP will be part of your daily experience. It’s to a large part the reason why people in higher positions get higher salaries. It’s not really about their skillset, but more so about their ability to deal with CRAP.

And some might even enjoy it for a while. The constant competition, attention and the feeling of winning whenever you come out on the top. But in the long-run it is tiring. Exhausting. And you are not always winning, you will be losing frequently. In fact, the amount of times that you got to pull yourself together, to get up after you have been beaten down and to push through things that might not match your moral or ethic standards, your expectations and believes, it is so much higher compared to the few wins that you collect along the way.

Some just accept it for what it is. But for others, this might lead to depression, frustrations, the occasional loss of faith in humanity, and burn-out. On top of all that, it is really time-consuming and you might start asking yourself, why you are doing all the effort. What is the actual purpose of your journey?

Serving others is the true purpose of any company out there

Tim Cook said it once and he is absolutely right. Every company, every product and every service is meant to be for someone, to solve some problem, challenge or requirement. Solving problems creates value and pricing follows. So whatever we do when we work, we do it to serve.

When you recognize this to be the case, you have the best chances to really understand the purpose of what you are doing. Knowing your purpose gives you passion, and aligning with it leads to dedication. Dedication leads to success. Success doesn’t necessarily mean a monetary reward, but it often comes along with it.

But serving others is a never-ending task. There will always be a problem. A challenge. An obstacle. A restraint, limitation or a sudden turn of events. And there are always other people. Foes and friends. Competitors. Supervisors. Investors. Shareholders. Politicians.

The more success you have, the more lives you will affect. Whether you want it or not, your actions will have an influence on the lives of other people. On the dreams, which you might elevate or destroy for those who work under you, to the pressure and constant rejection by the supervisors who you work for. Shareholders and investors will always keep you under pressure to deliver the best possible financial results. Sometimes forcing you to action things that might go against your conscience or against what you might consider being the right thing to do.

Cut the CRAP

And I think it’s all actually OK. It’s important. Going this path for a while can help you to understand how human minds work, about group dynamics, all the different agendas out there that people follow. Personal and business-wise. It will give you a deeper understanding of different perspectives, sometimes unexpected connections, incentives and occasional shocks on what may seem like irrational behaviour or unforeseen turn of events. Pushing towards success helps us to develop, to learn and to understand the world around us a little more.

But I don’t think you need to do this your entire life. There is a point when the whole thing becomes overwhelming. A burden. Your mind will be dragged down, your physical condition will start to suffer, your personal relations will get affected and step by step you might start seeing only the problems around you. Depression may follow and with it a steep fall from your high ground at work, and possible medical repercussions.

We call this a burn-out. It doesn’t happen overnight, but when you climb the career ladder, it will slowly creep into your work-life. Usually, when you notice it it’s already too late. So knowing all this, how can you avoid it from happening? The answers are, firstly by becoming financially independent and secondly, by choosing when to stop.

Financial independence comes first, because it’s the tool that allows you to go for the second step. When you become financially independent, you can cut the CRAP at any given time without the need to worry about any repercussions on your life. Your shelter, food and healthcare can remain protected. If you really think about it, you will realize that this is quite a lot, more than most people on the planet have today.

Find your inspiration

For me, CRAP is one of the most important reasons for working even harder to reach FIRE. This doesn’t need to be the case for everyone. Some people might enjoy regular work. Having their 7 to 5, the daily soap operas at the office, the feeling of belonging somewhere. Those may find their inspiration for FIRE somewhere else. But for me, after independence and freedom, CRAP is the next immediate reason on my list of motivations to get out of the rat race.

Depending on work is not a smart long-term plan

I don’t remember whether my parents were asking me about my aspirations when I was young. I also don’t remember hearing them talking to neighbours, friends or family about what I am going to do when I grow up. They never really tried to push any particular profession on me. Maybe because they wanted me to discover the world on my own. Or maybe because as a kid I was not easy to talk to.

We went to school, learned all the basics that were considered important to find our passions, to figure out our talents, sharpen some skills, and to give us a hint of a direction towards some of the opportunities that were out there for us.

What nobody talked about were the things that would stand in our way. The things that would hinder us to develop, hinder us to grow, hinder us to follow our passions and hinder us to truly try to discover our full potential.

To some part, I understand. I wouldn’t believe anyone who would tell me that there was a very high probability to end up doing a job that I might not really care about, for people I might never get to know, to receive some money that will be just enough to cover my living expenses. Mundane tasks day in and out, without passion and without any true commitment, just to get through the day.

This is what we call the rat race and a reality for so many people in the world.

Everything has a price-tag

The grown-ups give us a lot of hope when we are young. They tell us that we can be anything we want. Do whatever we want. And achieve whatever is possible. In reality, it’s all not that simple.

Once we move out from home and leave the protective roof of our parents home and their care, reality quickly kicks in. We need money. Money to pay the rent, groceries, utilities, to go out, to travel. Everything in this world has a price tag on.

So whether you want it or not, you have to start to work. And the moment you get your first job, you enter the rat race. We all got to make a living and yes, living has a price to it. Shelter, food and health. These are the basics and to secure them one needs money.

The bad news is that as long as our financial system exists in its current form, these price-tags will never go away. They just grow larger. With inflation always present, you will experience that over your lifetime prices for everything around you double and triple.

It always starts with trading time for money

I started when I was 14 years old. My parents couldn’t pay me too much pocket money and sometimes cash would be short even for the simplest basics like new shoes or a jacket. So I just found a job to be able to afford what I wanted and needed. I started filling up shelves in a grocery store.

From there on, I would sacrifice every Saturday for it. 6-8 hours every Saturday morning, putting milk cartons into the shelves, sorting frozen pizzas, yoghurts, re-fill soda bottles and occasionally guiding some customers through the store. My salary was something around 6 EUR per hour if I remember correctly. I would earn 36-48 Euros for each Saturday, being paid-out in cash by the end of each week. A huge improvement to the 5-10 EUR that I would get from my parents per week.

This is how I learned to trade time for money. When I needed money, I went to work. When Saturdays earnings were not enough, I would free up an afternoon during the week and work one more day after school. Suddenly I could afford to buy new shoes, to get rid of my glasses and buy contact lenses. I had money to spend when hanging out with my friends. It seemed to be a great concept.

What I obviously didn’t think about at that time was that at some point in my life I would have to pay the rent on my own. Utilities, food, to have my own medical insurance. I didn’t think about how many hours I would need to spend in that grocery store to be able to afford all of it.

Depending on money is killing your opportunities to grow

When you grow up, before you even know it, you start trading most of your time for money. Regular work contracts in Europe have something around 35 working hours per week on them. In Asia, it’s around 48. And more than often, this one job is just enough to secure the previously mentioned basics: Shelter, food and health.

Those who want to be able to get a little more out of life start taking part-time jobs, freelance online and adding up hours of work. This is what they know, what they learned. To trade time for money. But as more and more of their time is being traded out for cash, their opportunities in other areas shrink with every traded minute. Learning new skills, discovering new passions, spending time with their loved ones. The time to do those things disappears with every traded hour. Minute by minute.

How long can you work

And the big question is, how long can you actually do this? What will happen when you get old? Will your social security be enough to live on? What if you get sick? Handicapped? When your mental ability goes down?

And how about all those things you always wanted to do in life? Going for a trip around the world, feel some wanderlust in the Swiss Alps, climbing in the Himalayas, snorkelling in Thailand, drinking Mojitos in Cuba or visiting the Empire State Building? Do you think that you will be able to pursue your dreams once you left the workforce?

We are not smart enough to consider all those things when we are young. I wasn’t smart enough then to think about the next logical step when I started to work in the grocery store. But as we get older and develop a deeper sense of logic, we certainly should be smart enough to put it into consideration, shouldn’t we?

Working is not bad – depending on work is

There is of course another way. A way to develop passive income and to stop being dependent on any job. This does not mean to stop working. Absolutely not. I can’t imagine a life without work. I want to do something. I want to work.

But I don’t want to worry about money.
I don’t want to have to work for money.
I don’t want to depend on work for money.

Those whose minds are trapped in the system won’t understand this idea. How could they? They never learned anything else. But, what if we could work for our passions, our beliefs, our aspirations and our dreams? Wouldn’t it just be something else entirely?

FIRE is all about that. About freeing up your time, your mind and your passions. Because once you reached financial independence, you can focus on things that will truly matter to you. Isn’t this a goal worth striving for?

Everyone is a nobody to somebody

I don’t really remember where I read this quote, but it’s so accurate and so much matching my way of thinking, that I really felt like needing to write about it. Everyone is a nobody to somebody. Why do I consider this important for this blog?

The truth is that nobody cares about who you are…

The rise of social media is, in my opinion, a strong sign that people really feel… well, the right word may be “insignificant”. They might be not fully aware of this, but deep down most of us must know how unimportant we actually are as an individual person. And we are trying to compensate this through social media.

By connecting with thousands of people and bombarding them daily with posts and pictures of what we do, what we eat, where we go and how amazing our lives are, we are desperately trying to stand out from the crowd with the hope that actually anybody cares.

Every “like” we receive is a confirmation of the expected recognition, every comment makes us happy… but in fact, since everybody does that, it’s really meaningless. As long as you are only trying to convince others that you do stand out from the crowd, nobody really cares, no matter how many likes you get.

Don’t be sad or disappointed. There over 7 billion people on this planet, why would you think that you are special? Do you actually care about anyone else from your social media network to a degree that you would actually call this person occasionally? I mean like a real call, having a chat for half an hour? I bet the list of people who would match even only this one simple requirement is really short… it is, therefore, only logical that most of your connections think exactly the same.

… unless you have something that others want

Things change however if you have something that others want or need. Usually, this comes down to only three relevant things: Money, power or influence.

Everybody wants to have more money. Money can not only make your life easy and buy you stuff, but it also can give you access to a better and longer life, even more success (you need money to create more money), a privileged style of living, or simply the convenience of not having the same worries as millions of all other people who have neither money nor power. Money creates a feeling of greed and jealousy.

Power can be generated by money or create money in the process of being executed. It can be physical, intellectual, political or even lethal. Power puts you in control of others in the most direct way possible and is therefore mostly feared but also adored.

Influence can be generated by money and/or power, or it can work out vice versa, creating money and/or power in the process of executing your influence. It’s a sneaky and smart approach that is often being despised in its ways but adored in its results.

If you will be identified as a person with either money, power or influence, your life may change dramatically. But mark my words: Not necessarily for the better.

It’s good to be a nobody

Because once you have been identified, you will become something we call a “public person”. A politician, a billionaire, a movie star… you might be jealous of their glamorous lives, but if you really, reaaaaallly think about it, are you sure that you would want to be a public person?

Having money, power or influence is automatically putting a lot of responsibility on your shoulders. People want some part of it, and hold you responsible for all your achievements. If you become rich, people want to know how you became rich and you can also rest assured that they will judge you on it. Same goes for your power and influence. How you got it and how you use it, with who you share it – everything will become public and in many instances, somebody will want to have his or her cut of it. Whether it will be in the form of taxes, public pressure or even physical or mental enforcement. People will start coming after you.

That’s why when aiming for the riches, I personally would probably never reveal to anyone anything about my success. I will reduce or even completely seize my social media presence, and ensure to live a humble way of life without standing out from the crowd in a too obvious way.

From my point of view, escaping the rat race is about getting your time back for yourself. This just doesn’t happen if you become a public person. This is the reason why I intend to become a nobody once I reached the stage of calling it a day, quitting my job and start following my passions.

There is no real right or wrong here and everyone will have his or her own view on it, so I leave it to you to decide how you will prefer to handle this, once you reach your financial targets. Just make sure that you take a moment and really think about it.

The dividend season is coming!

As the calendar has continued to roll into March, we are quickly approaching the dividend season in Germany. While most companies in the US pay out a dividend every 3 months, German companies do so only once a year. One could argue about which system is better or worse, but that’s a topic for another discussion.

In Germany…

The majority of companies in the largest German Stock Exchange Index (DAX) is paying out dividends from April to June. Right on time before summer vacation, to ensure that we get the necessary pocket money to go on holidays. Well, or if you are smarter, to re-invest it.

Traditionally over the last years, right before the announcements for upcoming dividends will happen, share prices start to rise as analysts evaluate and predict the expected payouts. And despite challenges across the globe, 2019 does look like a great year again. To understand the significance of this season, you need to take a look at some numbers. The expectation for 2019 alone for the DAX companies is a total payout of 35 Billion Euros!

35.000.000.000

That’s the number. Can you even imagine to have something like this on your account? Well, most people can’t and most people will never come even close to it, so this doesn’t really need to be your target. But receiving a piece of that pie is definitely worth the effort.

This is even truer if comparing dividend yields with traditional saving accounts. While it is currently quite easy to find companies which offer a yield on your investment of 3% or more, most saving accounts will be still below the 1% margin. It means that even with a modest 3% yield, you can receive 3 times the money that you would get if it’s parked on a traditional savings account. Just think about that. This the reason why investing simply makes sense.

In Thailand…

Interesting enough, Thailand has 2 major dividend seasons as most Thai companies pay dividends twice a year. The first season is similar to the German one, between April to June. The second one is around September and October.

I didn’t write much about the Thai stock market yet as I am still gathering experience, but I am setting up a stock account for my wife. As you might have guessed, I prefer stocks over life-insurance. Interestingly, Thai companies offer much higher dividend yields across the board and while some might think that investing here is risky, the truth is that the risk is pretty much controlled.

Due to the close relationship between politics and business, major companies are pretty well protected and with the country growing and moving forward, their profits are almost on autopilot. I will write more about this at a later point, but for now, I am getting ready for the dividend season here as well.

Re-investing is the key to long-term success

Receiving dividends at much higher yields compared with savings accounts is a beautiful thing. Even more so is the fact, that many dividend-paying companies tend to increase those dividends year over year. Re-invest those payouts, and you will create the 8th world-wonder: The magic of compound interest. Or compound-dividend. This is the one and only true key for long-term success, which any average person can achieve with very little effort.

Regular, growing dividends will enable you to escape the rate race much sooner. Or, if you prefer to keep working, offer you a nice supplement to your monthly paycheck or retirement payout. While many financial advisors will discuss with you about the 4% rule and about taking out money from your savings/retirement account when you get old, dividends offer you a much better option: Not taking out any money at all. If you are invested long enough, you can receive dividend-yields of 5-6% easily without selling even 1 stock, thus being able to enjoy a great lifestyle until your last breath.

This is no hocus-pocus. This is the power of investing.

2019 – Drop the resolutions!

Yes, you read right. The new year started but we don’t do the resolution stuff. We start the year with serious targets.

Today is the 6th of January, so the 1st week is almost gone. This means that we have roughly another 51 weeks to meet our own, ambitious but still realistic expectations on 2019. What can be done in 51 weeks? Here are my targets:

  1. Improve on time management. As you all know, and as the sub-headline of this blog indicates it: It’s all not about money, it’s about time. Time is our most precious resource and it needs to be managed well. A day has 24 hours. After deducting those 6-7 hours that are necessary to re-charge our batteries, plenty of things can be achieved each and every single day, if we allocate the remaining time efficiently. I would rate myself rather poor on this skill so far, as I still spend way too much time with my phone, while I could allocate more time to this blog, to my side hustle, to stock analysis, and to my workout routine. I will start slowly by:
    • trying to leave work on time,
    • delete useless apps from my phone and
    • to schedule my workout routine a little earlier throughout the day (so far I was always exercising after 10 pm)
  2. Increase side hustle earning by 50%. Right now I am writing about 1 article a week on average. I will try to increase this to 6 articles a month to curb my side-hustle income and to have more cash available for investments.
  3. Increase my dividend income by at least 10%. That’s right. While this should be not a problem, I put it on my target list. Most of my stocks will increase the dividend throughout this year anywhere between 2% up to 25%. However, I can also increase my dividend output by buying more stocks of companies which I already owe and which had been dragged down throughout 2018. This will cost-average down the stock-price in my portfolio and thus increase my average yield on cost per stock.
  4. Prepare for a larger market crash by saving up enough cash to be equivalent of 50% of my current stock portfolio volume. That’s the biggest and most difficult one, because this would require me to really try to achieve my savings target of 40% of my total annual income. Not impossible, but a tough one.
  5. Find a new job and re-negotiate my base salary by at least +20%. As mentioned in the last post, it should be possible due to my current situation, but I will aim even significantly higher. With perks and benefits, the total value increase should be at around 35%.
  6. Take a break for 1 month in between jobs. Yes, I put this in my target list also. I need time to recover and re-charge after my current assignment. I have now worked almost 2 years with a 6-day workweek, spending on average roughly 65 hours a week in my hotel. This does not include my side-hustle activities, my family time and my exercise routines (which takes 1,5 hours per day). So yes, to ensure I get no heart-attack before time, taking a break for a month will be commendable.
  7. Visit Japan and/or Korea this year. Indeed, it is about time. I haven’t gone to Korea and Japan since 2012 which is a real shame. I know my parents want to see my daughter and want us to go to Europe, but Japan and Korea is the reason why I moved to Asia in the first place and I seriously need to visit this beautiful places once again. On top, I have promised my wife this trip for a very long time.
  8. Exercise routine annual target:
    • 36,500 push-ups (100 per day),
    • 18,250 burpees (50 per day or 150 every 3 days),
    • 18,250 squats (50 per day or 150 every 3 days),
    • 3,650 pull-ups (10 per day),
    • Fresh-up of all my martial arts / kata routines
  9. Actively teaching German and English to my 3 year old daughter for 30 min a day
  10. Actively involve my daughter in my exercise routine to practice with me. She already started to sit on my head when I do squats or push-ups and loves to hang on to me when I try to do pull-ups, but this can be fostered more

So yeah, many things to do and 51 weeks is actually a short time. The older we get, the more we realise how precious time is. Let’s make the most of it.

And no, you really don’t need 8 hours sleep. The day is just too short to spend 1/3 of it with doing nothing.

This year, I also intend to write more about individual stocks and my investments. So just to give a brief heads-up, here a list of stocks which will be discussed and possibly purchased sometime in 2019:

Monthly dividend paying stocks:

  • Gladstone Investment
  • Main Street Capital
  • Realty Income
  • Apple Hospitality

Regular Stocks:

  • Ares Capital
  • Cisco Systems
  • Starbucks
  • Microsoft
  • McDonalds
  • Coca Cola
  • Merck
  • Pfizer
  • Iron Mountain
  • Tesla
  • Bayer
  • BASF
  • Aumann
  • DÜRR
  • GlaxoSmithKline
  • Royal Dutch Shell (B)
  • Baozun
  • Alibaba
  • QQQ

ETF:

  • iShares MDAX UCITS ETF

Disclosure: Some of those stocks I already owe, some I had in my portfolio in the past but sold them with a profit and plan to buy again when prices drop.

So get ready for a furious, active and hopefully rewarding 2019!

2018 in retrospect

So this is it. Tomorrow is Christmas, and only a week later we will already be saying “goodbye” to 2018 and “hello” to 2019. I will be working – a lot – over the next 10 days, so let me write my last words on this blog for 2018 today.

Obviously, since the blog is about personal finance, let’s start with that.

Personal Finance

I was not able to hit all my goals and targets for 2018, but some. The most important one is obviously my savings buildup. In 2018, I managed to save / invest 32,3% of my total income. A little bit better than 2017, when I saved 31,16%, but far away from my target of 40%.

Ambitions are good, but if setup too high, it can become frustrating to chase them. So for 2019 I will drop my target slightly and try to reach 35%. This should be manageable, because as of 1st Jan 2019, I will have no more monthly instalments for my car in my budget plan. That’s right. I paid down my car early (within 3 years) with several extra payments along the way. Thus, these payments will disappear from my monthly bills and shifted towards my savings plan.

In 2019 I might also skip vacations in Europe, which are a costly family event. This is not due to my savings plan though, but rather due to an anticipated job-change sometime around the middle of the year. So instead of 4 weeks in Europe, I might just do 2 weeks in Japan or Korea.

Either way, I was promising my wife vacations in Japan basically since the first day we met – 6 years ago, so yes, it might be the right time to get set this record straight.

In terms of stock investments, we have had a negative sentiment in 2018 and in 2019, the markets might very well crash. Therefore, for the first 6 months, I intend to collect cash and to get ready for the stock sell-off. When markets crash, there are usually plenty of great opportunities on hand, and I want to be ready for it. IF markets should drop by 40-50%, it means that I should have at least a quarter or better half of my currently invested amount available in cash – to cost average existing stocks and to add some new ones which will come as great bargains.

Maybe just a word about cost-averaging.… even the most optimistic stock-maniac (such as myself) needs to understand: When a stock drops by 50%, it will need to rise again by 100% just to be back at square 1. So if your stock drops by 50%, it might make sense to double down on it and to purchase the same or even a larger amount of the same stock at half price. This will reduce your average cost per share and your losses in % down to 25%. A loss of 25% can be recovered much faster than 50% and you will end up with higher profits – provided the stock comes back to the point where it was before the crash.

I don’t intend to sell any of my stocks. Most of my positions pay a solid dividend. In 2018, based on received payments and invested total amounts, my dividend income settled at 3,2%. It’s not a great number, but it’s only that low due to the constant additional cash that I poured into my account. For 2019, I expect the dividend income to increase to something around 4-6% and for 2020 to reach a range of anywhere between 5-8% returns. Once I reach double digits will be the point where I stop adding cash to the portfolio.

How is this achievable? Well, among a few other factors, it’s the power of dividend growth and the cost-averaging of some of my positions. Let’s take a look at the European energy giant E.On, which is one of my core holding positions. In 2018, the received dividend came down to only 2,32% after taxes. E.On paid a dividend of 0,30 Eur per share in 2018 and the withholding tax on dividends is roughly 26%. In 2019 however, the dividend will be raised to 0,43 Eur per share and for 2020 the expectation is around 0,60 Eur per share. That’s almost a 43% increase in the first year and a 100% increase over 2 years. Apple (another core position of mine) is expected to raise its dividend by at least 20% year on year, for many more years to come. Royal Dutch Shell returned to me only 2,7% on annual basis, but I purchased the shares just in June, so I missed the first 2 payments in the first half of the year, which I won’t miss in 2019. Thus the income will grow to a minimum of 5,4%, given the company will not cut or increase the dividend and of course provided that I don’t add more capital to it.

I have only 1 company in my portfolio that is not paying a dividend – and it is my biggest loss this year. My VOLTABOX shares are down 53%. However, since I don’t see any valid reason for the sell-off, I will probably add some more shares of this company to cost-average down and see how things play out in 2019.

Maybe another word of advise: During rough times, focusing on dividend paying stocks has proven to be a successful strategy to minimise risks.

Career

I have pretty much reached the first top of my career ladder and don’t expect any significant position-jumps over the next years. My target for 2019 is to switch jobs, to move to a larger hotel (I am a hotel manager) and to negotiate a salary increase of approx. 15-20%. This should be possible, as I am still within the lower salary-range within the standard frame for my profession.

My current hotel was my first assignment as a General Manager and I made a couple of mistakes when negotiating the contract. Obviously, I won’t repeat those mistakes, so the 15-20% salary increase is realistic.

Other

I will continue my side-hustle and keep writing for The Motley Fool Germany. Working with the team there since July 2018 was great fun and I learned a lot. I can actually imagine doing this for many more years to come, even after I retire early (the target is at the age of 45 – in 6,5 years from now).

During the last few months I have sent some money to my parents. We are fixing a small house in the countryside in Poland and are planning to open a small bed & breakfast. Nothing large, just 3-4 rooms, but there is great opportunity to support my parents about their retirement income from that. This is also the main reason why I couldn’t increase my own savings in that amount as I was originally planning to do. However, I believe that in the long-run it can turn out to be a very beneficial move for my entire family – so it’s absolutely worth it.

Merry Xmas and a successful New Year!

That’s it. Writing things down in a blog is my way of taking the time to structure some thoughts and to re-consider my approach for things to come. It’s a great exercise, and while you don’t need a blog for that, I urge and recommend you to do just that. Take some time, think about your goals and dreams, and make a plan out of it.

There is a quote, that might be politically not correct, but it doesn’t make it any less true:

“Nobody ever wrote down a plan to be broke, fat, lazy, or stupid. Those things are what happen when you don’t have a plan.” – by Larry Winget

And one more:

“A goal without a plan is just a wish.” – by Antoine de Saint-Exupéry

Take it as a constructive feedback and keep working on your plan.
It’s the only way to escape the rat race.

 

Disclaimer: I have all the stocks mentioned in this article.