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DIY investment Notes ~ Issue #0

euge
9 min read

My current objective is to achieve financial independence in 3 years (= living off passive income and long-term assets), by diversifying my current availability in various asset buckets.

I want to achieve my objective and reducing my overall risk with the following priorities:

  1. having 24 months of current cost of living at the living standard of my family (~ € 2000/m) put a side as a resilience fund in case of job loss and any consequence of recession, inflation and stagflation scenarios. ✅ with early inheritance
  2. acquiring long-term access to natural assets that provide me with direct benefit (water, shelter, food, safety and ideally energy too) ✅ with Azores ~ (TODO: write why Azores)
  3. Always make sure that you have a monthly source of income that match or exceed the current cost of living at your current living standards
  4. the monthly income I receive always go to cover the resilience fund if negative, or to invest if positive: never have money around that you are not using for these two things. If you need to have an extra expense you can always divest, sometimes ask for a loan, or distribute the cost through installments etc.
  5. having one or more source of passive income with MRR (e.g. content / knowledge; nodler; renting stuff etc.) to reduce time for money trading. And in general increase any opportunity of value for money trading
  6. keeping myself employable by learning new specific future-proof skills
  7. actively monitor 'illiquid' assets to adjust choices: present (i.e. private equity, crypto, loans etc.) and future (i.e. assets that I might acquire in the future due to sales, inheritance etc.)

Life is meant to enjoy so always applying principle of happy money:

  • learn and do things you are passionate about
  • put money in things you like, understand and are aligned with your value
  • if you can reasonably reduce the cost of your living standards without sacrificing essential part of your self than do it
  • in general think as a producer rather than a consumer, when you are forced to think as a consumer think as an investor and buy things that last, or that you can resell easily if you can afford the expense

2022 Chronicles

It's the year I move beyond the adolescence of only trading in crypto for fun into a more serious and holistic perspective on wealth management in my life.

Crypto

I suffered 90% in crypto like most people and move past the point I consider that asset bucket something viable in the middle term, so I just keep holding to what's left. Keeping stable coins for most of the year and fearful of inflation rising, in Q4 I moved everything mostly in ETH 16% and BTC 82%.

Loans & Private Equity

Good bits like and some friendly RBV loans not sure when they will pay off. Plus borrowed some money to friends that needed it. In general, like Crypto represents a diversification but I'm not counting on it.

Real-estate

In January, with a great timing I sold an apartment in Italy that I inherited from my grandfather. I was able to sell it at a good price before the market crashed bringing VUCA on the real estate market too. The apartment had a mortgage that was already fully paid, it was located in a middle-high class residential area of a major italian city, and it was paying off its expenses but wasn't really generating income. On top of that, 1. the real estate market in Italy is not projected to go well, and 2. likely I wouldn't be using this apartment myself in the next 30 years, so the idea to sell it in order to get enough liquidity to apply for a mortgage in Berlin was more appealing.

Despite its currently overpriced real-estate market (resulted from a 10+ steady growth), Berlin has still a lot of room to grow imho.

However, the idea of becoming a landlord, dealing with toilets, tenants, laws in a language I don't speak and indebting myself to buy a house in a city I'm not sure I want to live forever seemed a very bad idea and definitely not adhering to the principle of happy money.

So I flipped the question from 'what's the best way to acquire an apartment in Berlin?' to 'how can I use the money I got from the apartment sale in Italy in a more productive way while still granting myself and my family the optionality to have a shelter in Berlin at a controlled cost in the next 10 years?'

Holding this question allowed me to see other opportunities to solve the living part of the problem, like:

  • lending money to a friend to finish the renovation of his apartment for income in Berlin in exchange of two years rent at fixed cost of utilities (warmmiete in German). A huge luck and huge deal in this moment of crazy commodities prices and rent increases. This is the apartment I'm living at the moment since Sept 2022 and that I will occupy with my familty untill Oct 2024
  • joining a house-cooperative in Berlin that will be having a condo ready in 2025 in which I will have access to a small apartment at very reasonable rent or 'mantainance' price (circa 1/3 of the current purchase price per sqmt/€ 900). It's a good deal in terms of the optionality it gives me in my current situation: I know I want to live in Berlin for a while, but don't know for how long; rental market / real-estate rising and uncertain;  {TLDR: optionality vs ownership, ethics, applied for credit, having a pied-à-terre in Berlin can always sell, not inflation adjusted, cost is 900 sqmt : left is 19k}.
  • joining a village building effort in Azores, Portugal that besides providing shelter, in the long run it will also provide me climate and geo-political resilience plus a huge (if not the total) component of the current living costs I'm bearing in terms of form of food, energy and safety ~ therefore reducing my need to produce income to keep the same living and investment standard.

Keeping a Resilience Fund in times of VUCA

After having allocated what necessary in the above, I took all the remaining liquidity and put aside 24 months of the current cost of living as a as a resilience fund. This is money that I won't touch and that I always make sure stay true to the statement: 24 months of my current monthly family expense at our current living standard.

That means that if loose my job or other source of income I have, or the cost of living increases (e.g. we get pregnant with a baby or whatever) I would start eroding this current resilience plan and I would need to find ways to replenish it asap. It also means that if I'm net positive on top of it, the remaining can be invested.

Of course at the real bottom there are all other illiquid assets that in extreme scenarios I can sell (i.e.  valuable objects, things co-owned with my brother/family etc.), but we shouldn't get there.

Financial Market

What has remained after all this is what I can technically loose and that I will therefore invest in the financial market:

  • Now the way I'm approaching this is first by learning as much as I can combining my understanding of macroeconomy and geopolitics over the years with the expertise of more specific financial analysts that I trust: overview in platforms like Seekingalpha, Chamath Palihapitiya on his podcast, Micheal Burry on Twitter, Lyn Alden on her blog and various podcasts she hangs out on, New Money and other channels on YouTube etc. Most of this people are talking about 'a 2023 in which fortunes will be made' ' as the market is set to adjust significantly. Yes, we haven't scratched the bottom yet especially for overpriced assets like tech blue chips that are keeping up due to their popularity in the retail trading sector: when this people start to freak out and panic sell then we will begin to see the adjustment we are talking about. So at the moment I'm keeping most available liquidity for the 2023 to buy blue chips of various sectors at a bargain.
  • Second I researched what's the most suitable platform for a retail investors like me, that is located in Germany, good enough English UI & Customer Support, has a good offering of products, trustable etc. At the end I went for scalable.capital all things considered. It offers a brokerage interface and a robo-adviser wealth manager. I might diversify with another service as well but tbh it doesn't turn me on to manage multiple trading platforms at the moment.
  • Over 2023 I will try to accumulate a basket of 30-40 specific stocks that I'm researching. I will prioritize the following: EU/USA REITs and farmland, metals and certain commodities (with a bias for emerging batteries and technologies, like Vanadium), a very few tech and traditional business blue chips.
  • The rest I will diversify through funds & indices across all their advanced portfolios of the Wealth management robo-adviser. I will have a bias towards Value stocks, All-Weather, Raw Materials and Megatrends. I'm more inclined to invest in renewables after 2023 as I expect this sector to yield in a longer time horizon and also to wait at least one year since it's also a sector that will be subjected to the consolidation of the tech bubble: we will see who has underwear when the tide goes down.

REITs resources

The 3 Best European REITs To Buy In 2022 - WiseStacker.com
Compared to the U.S., dividend investors have fewer options to choose from when it comes to European REITs. I present 3x undervalued gems.
‘The Big Short’ Michael Burry Buys Real Assets Hand Over Fist
60% of Michael Burry’s hedge fund is invested in real asset stocks. We explain why he is investing so heavily in real assets and how you can gain similar exposure.
High Yield Landlord - Marketplace Checkout
Become a “Passive Landlord” with our 8% Yielding Real Estate Portfolio.
2 REIT Stocks To Buy Amid War In Europe
Russia’s attempt to invade Ukraine is causing great uncertainty. We believe that REITs are a safe haven. Find out our two Top Picks to buy amid war in Europe.

Uranium research

10 Reasons Why I’m Investing in Uranium Stocks.
Uranium is the most energy potent raw material we can use for our energy production. A New Dawn For Investing in Uranium Stocks Is Upon Us.

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Top dividend stock: search and understand

Top Quant Dividend Stocks | Stock Screener
Stocks with high Quant ratings for Dividend Safety, Dividend Growth, Dividend Yield and Dividend Consistency.

Top value stock: search and understand

Top Value Stocks - Ratings Screener
Finding value stocks is one of the most popular methods for investing. Discover the top rated value stocks by using Seeking Alpha’s stock rating screener.

Wardley maps for investing

BABA and a few others Chinese

TODO:

  • reads and assemble new strategy on spreadsheet for 2023