Finance

Finance is a fascinating rabbithole you can endlessly dive deep into. It spans such a wide range of topics and has touchpoints to just about anything. I’ve mentally put finance under the category Caring for your self, as being in poverty has deep consequences on your wellbeing and even the smallest financial worries can put your mind in tunnel vision

I started properly taking care of my finances after getting kicked in the butt by Tony Robbins’ get the edge tapes. I found that creating a simple pragmatic system to live by is the foundation was the first step to create a foundational habit of finance. Only after establishing that foundation it makes sense to investigate and build more advanced investing strategies and asset classes on top of that foundation.

financial principals from my biggest influences

thinking in assets and liabilities

Understanding the difference between Assets (things that put money in your pocket) and Liabilities (things that take money out of your pocket) seems silly and childish, has completely changed the way I think about any money spent.

Of course you can’t spend all your money on assets, but you should at least structurally spend some of your money on assets. If you are not building a (side) business, then a house and investments are examples of assets that you can spend on.

sources: Kiyosaki’s Rich Dad Poor Dad

the true cost of a thing

Any product or service costs a certain price. But if that purchase does not gain value over time, it doesn’t actually just cost the listed price, but actually costs you the price plus all future dividends of that amount you could have accrued if you would invested it.

This is the type of thought that for me could not be un-thunk, and is a good question to ask before making (impulsive) buying decisions. Of course you shouldn’t go to far in this, and regret not spending any money at all.

sources: Money for the rest of us The True Cost of a Thing

income allocation to assets

This helped me create an easy to remember, easy to enforce rule how to allocate income. First subtract all your mandatory expenses (housing, food, insurance). With the money that is left over, divide into different financial buckets.

• +-33% growth bucket → invest in higher risk investments
• +-33% security bucket → invest in lower risk investments
• +-33% dreams bucket → keep separate as cash and (eventually) spend on things you like.

benefits:

• Having only a portion of your (disposable) income go to higher risk investing eases you into being able to deal with those investments falling (or growing) rapidly.
• Makes you feel extra ok about spending the part of your disposable income you allocate to dreams and things you like
• When all these steps are automated with periodic payments and periodic buy tools, you don’t have to think about them anymore and only tweak the strategies if you have the time and space for it.

sources: Tony Robbins Get the edge

(fiat) money is not a store of value

All national currencies are Fiat money. This means the currency is not backed by a precious metal and means that governments have freedom to appreciate or depreciate the value of the currency at their leisure. Federal banks aim to keep inflation (increased prices for goods) at a certain percentage but have a hard time keeping that promise.

Combined with low interest rates on savings accounts, this means that all money you save in your bank account loses purchasing power and you are actually forced to purchase assets and investments to maintain your purchasing power.

Sources:

• Money for the rest of us - What Is Money
• Ons geld is stuk

ideas (zettelkasten entries)

• 1c Society has the right to access a sound store of value
• 1c1 Society is forced to take investing risks to beat inflation

favorite asset classes

Criteria used to judge:

• etf should exist in my brokers portfolio
• should be buyable periodically without entry costs
• lowest TER (total expense ratio) in class
  • whilst still being diversified by asset class (hence the relatively expensive timber & forestry etf)
• dividend yielding (to have a choice where to reinvest dividends

Asset class	Type	Tracker	TER
	us stocks	Vanguard S&P 500 UCITS ETF	0.07
stocks	global reit	VanEck Global Real Estate UCITS ETF	0.25
	pacific equity	Xtrackers Nikkei 225 UCITS ETF	0.11
	pacific equity	Vanguard FTSE Dev. Asia Pac. Ex Jp ETF	0.15
	european equity	Xtrackers Euro Stoxx 50 UCITS ETF	0.09
	emerging	Vanguard FTSE Emerging Markets ETF	0.22
commodities	timber	iShares Global Timber & Forestry ETF	0.65
	gold	ishares physical gold	0.39
	gold	vaneck gold miners	0.53
bonds	corp corp	VanEck iBoxx EUR Corporates UCITS ETF	0.15
crypto	store of value	bitcoin	x
	smart contracts	eth	x
cash	cash	cash	inflation

Link to original

• Home ownership
• Crypto

interesting financial lifestyle philosophies

• Mini Retirements (from Tim Ferris The 4-Hour Workweek)
• FIRE

sources

• David Steins Money for the rest of us podcast
• Tony Robbins Get the edge book
• Planet Money podcast