Annual Overview 2019 and Goals 2020

What a year! 2019 was particularly generous in financial terms. I mainly wanted to use the first two years since the start of the small capitalist to discover, experiment, and learn. That worked out well. In addition to setting up an investment portfolio, we made the first repayments, closed our first savings deposit, and invested in crowdfunding and peer-2-peer loans. I have found that dividend growth investing in combination with index trackers suits me best.

Goals vs realization

Although I never posted about our goals, we did write them down. The plan was to invest $17,000 in 2019 in our route to more financial freedom, evenly divided between repayments, investments and savings. An amazing amount, especially for a family with three grown children. Although we had an extremely economical year, we did not achieve this goal. We had more costs than expected for maintenance, car, orthodontist, and to top it off, we bought a garden set. The bar may have been a bit too high. Changing behavior can hurt a little.

The repayments are the simplest, we had already completed them in August. This enabled us to reduce our fixed costs by $23.75 gross per month for the next 18+ years. We want to continue making repayments at the same pace in 2020. It feels good to see the monthly costs fall further and further. Currently, we are saving $250 + 24.75 per month = $3,297 per year for repayments. So we need other sources to reach the $6,000 targets.

The investments are already a bit more complex. I have included the pure investment on all investment platforms: DeGiro, Flatex, Brandnewday, OnePlanetCrowd, Kapitaal op Maat and Mintos. Not included are a welcome bonus, dividend payments and reinvestment, and tax refunds. Over the past year, we have invested more than intended. This is partly due to the good stock exchange climate and the pleasure I get from finding attractive investments. In 2020, we want to invest EUR 6,000 in pure deposits. That is therefore the same as the 2019 plan, but less than the realization. If the stock market takes a big dive, this can be more at the expense of savings.

The savings balance gives headaches. Included is the monthly contribution to our 17 jars and the withdrawals for repayments, care, holidays, and other matters. Not included are the savings deposits for the mortgage and two extraordinary benefits that we should never ever expect in a normal year. In 2020, we want to save $0. Yes, you read that correctly. We think the reserve is sufficient, and we have two big wishes, of which we want to fulfill at least one this year. Probably a foreign road trip through several countries during the summer vacation. Our FIRE plan is still perfectly feasible.

Passive income

In 2019, we received $358.86 in passive income. Of this amount, $281.38 came from dividend payments. As a bonus, we may still reclaim the withheld dividend tax on the tax return. The rest came from interest income. Still, quite high emotionally, given the ultra-low savings interest. The savings deposits have helped a bit. Because we invested in loans through crowdfunding and Mintos in 2019, I expect interest income to increase significantly in 2020.

In addition to dividend and interest income, we had EUR 267.50 paid out by Euro clix, we sold $248.50 via Marketplaces and received $50 in other side hustles. All in all, around $925 in income in addition to our salaries. It is striking that we get almost as much income from Euro clix as from dividends.

Net worth development

Last year, our net worth was $100,312. That increased by 32% in 2019 to $132,202. A sturdy growth that roughly consists of two components. The equity of our home increased by $15,278. This increase was caused by:

  • $6,010 in repayments
  • $3,268 in the savings mortgage balance
  • $6,000 in market value

The remaining $16,612 of the increase in net worth is due to savings, investments and returns. This includes contributions for pension investments and savings for our children, i.e. money that is not freely available. Most notably, we can look back on a particularly good stock market year and the dividend portfolio has performed excellently. Although about 85% of my attention is focused on optimizing this portfolio, the return makes up only 8.5% of the increase in our net worth. Although the portfolio is still small and the impact limited, this is something to consider.

In conclusion: an excellent year

In September 2018 we decided to change course and I wrote my first message about it. In the past period we have made a plan, cut, saved, paid off and invested. All these actions have contributed to improving our financial position. Much more important than the lower monthly costs and the return on investments, however, is the decision itself. Without it, we would probably only have seen the savings increase a bit, but maybe not. By being more active with money we consume many times less. It feels good to make the first repayments and to make money work for us more and more. However, it does not happen automatically. In 2020, we will also take the next step in our route to more financial freedom. But with a little more air compared to 2019.

Felix Tammi

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