Year 2019 in Review

This post has been more than half a decade in the works. I've just been busy, that's all. And I'm still busy, but today was the day when I just decided to return the blog for a while.

So, let's look at the year 2019. 

I got fired in 2019 

What happened in 2019 was that the economy wasn't good, my employer-at-the-time was struggling financially and I ended up getting fired. Needless to say, it was a very stressful time, especially having received a second child the year before. The redundancy negotiations took a long time, maybe 6 weeks and I remember feeling very stressed throughout those weeks. I couldn't work on some days due to the stress. 

Salary

There was a silver lining however. When I was made redundant, I received a lump-sum compensation of about 35k euro or about 7 months salary at the time. On top of that, I was able to get into a new job with a competitor company almost immediately. So essentially, I was earning two salaries for about half the year. In hindsight, it worked out but having lived through it, it was super stressful. Would not want to relive that! Overall, my gross income was about 101k euro in 2019 (about 61k euro in 2018).

Taxation in Finland is tough, highly progressive, so my net income rose way less. Net income was about 62 500 euro in 2019 (was 45 000 euro in 2018).

Savings

With the redundancy package, I was able to save a lot. My yearly savings went up tremendously! Savings to portfolio in 2019 were 36 689 euro! Way up from 13 677 euro in 2018, but then again 2018 wasn't a particularly good saving year. The savings almost tripled from 1098 euro to 3057 euro per month!

My savings rate pretty much doubled from 30% to 59%. 

Market returns

2019 was great year in the markets. My portfolio returned about +27% or a about 36 542 euro. Portfolio size at the end of 2019 was 196 198 euro (up from 122 965 euro at end of 2018). 

Portfolio valuation and savings. The blue line is the value of my portfolio and the red line is cost of the portfolio, i.e., savings.

The below chart shows the TWR return calculation (in green, left axis) and the EUR/USD currency rate (in burgundy, right axis). 

In 2019 the market returns were off to the races at the outset for the year, the portfolio was in the green from first day of the year and never looked back! TWR ends a little over +27% in the green. 

My portfolio is quite heavily weighted towards dollar nominated stuff so there's a correlation with the EUR/USD exchange rate, but in 2019 the rate was essentially flat, hovering around 1.15 to 1.10 range.

The S&P 500 was up about +31-32% and with a small boost from the Euro strengthening, S&P 500 for a Euro investor was up about +34%, the strongest performance in a long time. Stoxx Europe 600 was up about +23%. Emerging markets were up about +18%.

TWR return calculation (in green, left scale) and the EUR/USD (in burgundy, right scale) currency rate.

Mortgage and net worth

During 2019 I also paid off 5 375 euro of my mortgage. There's still plenty left. As the Euribor rates are still essentially zero, I don't see any reason to contribute more than minimum to mortgage for the time being.

I can't tell yet if this will be considered an investment or not but if it were considered an investment, my total contributions to my net worth would be 42 065 euros or 67% of net income.

My net worth during the year was up about 67 700 euros to roughly 221 600 euros but I don't really track my net worth. I'm mostly interested in my money generating portfolio.

Conclusions

2019 was a great year in terms of portfolio returns and savings, both absolute numbers and savings rate, but overall the year still sucked. Big time! It might have been the most stressful year ever for me. Getting laid off was a shock to me. And waiting for 6 weeks to hear if you will potentially be laid off was suffocating. 

Still, getting laid off also validated that I am on the right path. Getting to financial independence is the way! And even though I was stressed out, I knew I wasn't in a really bad spot, I could have lived on my savings for a long time. When at the end part of the year, I had landed a new job, I could finally relax. 

Buffett and Munger always talked about how the first 100k is bi*ch but you got to do it. This year I made my second 100k in terms of net worth but it didn't feel like much of anything really. On to the next one.

Year 2018 in Review

No. That's still not a typo. I'm really going back to look at previous years' performance as I haven't been doing that for a while.
Review of 2017 is here and the review for 2016 is here. 

During 2018 I became a father for the second time which has been awesome in a way words cannot describe. Photo by mulan from Flickr, not my children.

Savings

This chart shows my 2018 portfolio value changes. The end of the year doesn't look too good..

Portfolio valuation and savings. The blue line is the value of my portfolio and the red line is cost of the portfolio, i.e., savings.

Let's look at the numbers for my portfolio cost and value in more detail in a table:

	31.12.2017	30.12.2018	change
cost (= savings)	86 392 euro	100 069 euro	+13 677 euro
value	118 336 euro	122 966 euro	+4 630 euro

Turns out 2018 wasn't a great year. During 2018 I managed to save only 13 677 euros which was down considerably from previous years (2017 was 19 807 euros, 2016 was 16 127 euros and 2015 was 12 167 euros). 
I can't say that I'd be disappointed with that number but I can't rejoice such a big decrease. That yearly savings works out to be 1140 euros per month. 

During the year, my net income was 45 151 euros which is roughly the same as last year.
(46 245 euros in 2017 and 37 600 euros in 2016). The net income went down because I paid some of last years taxes now this year, and this explains the lesser contribution also to some extent. I did get a raise at work which meant a couple of extra grands but not enough the outweigh other stuff. 

I also bought a car during the year, which swallowed a couple of grands. I went the frugal route and bought an old cheap clunker but had to make acute repairs to it, costing money but mostly a lot of effort. 

My savings rate for 2018 was only 30% of net income which I'm not happy about. 2016 and 2017 were both at 43% of net income. 

Growth

2018 wasn't great in the markets either. My portfolio is up in value by 4 630 euros during the year. But this is only due to savings. The market was down about -7.5% during the year which for my portfolio meant being down a bit over 9 000 euros.

2016 and 2017 were both up years of a bit more than 9k, so 2018 wiped away one of those years. Down years are inevitable in investing so I'm not too concerned about the loss.

The below chart shows the TWR return calculation (in green, left axis) and the EUR/USD (in burgundy, right axis) currency rate. It was looking a like a good year until about the start of October but then things went south fast! The year ended about -7.5% in the hole.

My portfolio is quite heavily weighted towards dollar nominated stuff so there's a definite correlation with the EUR/USD exchange rate as seen below.

TWR return calculation (in green, left scale) and the EUR/USD (in burgundy, right scale) currency rate.

Mortgage and net worth

During 2018 I also paid off 5 340 euros of my mortgage. There's still plenty left. As the Euribor rates are super low at the moment, I don't see any reason to contribute more than minimum to mortgage for the time being.

I can't tell yet if this will be considered an investment or not but if it were considered an investment, my total contributions to my net worth would be 19 017 euros or 42% of net income (2017 was 54%, 2016 was 56% and 2015 was 46%).

My net worth during the year was up about 13 600 euros to roughly 153 900 euros but I don't really track my net worth. I'm mostly interested in my money generating portfolio.

Conclusion

2018 wasn't a particularly good year. Neither for savings or in the market. My savings were hindered by last year's tax trickery, while Mr Market turned negative in October. 

The year was also made worse by me doing tax loss harvesting sales on 28th of December 2018 which turned out to be the bottom of the market, so the worst possible day to make those sales. As a learning point, I should do tax loss harvesting throughout the year, not just on the last days.

Still, with constant dollar-cost-averaging during the year, my portfolio made new records during the year: 120k in May and 130k also in May. 

Outside of saving and investing, during 2018 I also became a father for the second time which has been awesome in a way words cannot describe.

All in all, 2018 wasn't great but it didn't suck either.

Year 2017 in Review

No. That's not a typo. I'm really going back to look at 2017 because I haven't had time or the energy to review my progress. The last yearly review was for 2016. I also plan on doing reviews for later years. 

Savings

This chart shows my 2017 portfolio value changes. 

Portfolio valuation and savings. The blue line is the value of my portfolio and the red line is cost of the portfolio, i.e., savings.

Let's look at the numbers for my portfolio cost and value in more detail in a table:

	31.12.2016	30.12.2017	change
cost (= savings)	66 585 euro	86 392 euro	+19 807 euro
value	89 189 euro	118 336 euro	+29 147 euro

Woot? So, during 2017 I managed to save an astonishing 19 807 euros (2016 was 16 127 euros, 2015 was 12 167 euros). I am really happy with that number. That's 1 651 euros per month.

During the year, my net income was about 46 245 (37 600 euros in 2016). The big gain in net income is mostly explained by me adjusting tax rates. I also got a raise that explain a couple grands of the amount but mostly I adjusted my withholding to be artificially low. Basically this means that I took a short-term investment loan from the government that I'll need to pay back next year. My savings rate ended up being the same 43% of net income as last year. 

Growth

But I'm even more happy with the next number, the value of my portfolio is up 29 147 euros during the year. That means that the market produced about 9 340 euros or about +9% in gains for me. In euros the gain was about the same as last year but percentage-wise last year was a bit better. But I'll gladly take 9% gains over a long period of time.

The below chart shows the TWR return calculation (in green, left axis) and the EUR/USD (in burgundy, right axis) currency rate. The TWR was quite smooth throughout the year, with most of the gains coming within the September to November timeframe. My portfolio is quite heavily weighted towards dollar nominated stuff so there's a definite correlation with the EUR/USD exchange rate as seen below.

TWR return calculation (in green, left scale) and the EUR/USD (in burgundy, right scale) currency rate.

Mortgage and net worth

During 2017 I also paid off 5 198 euros of my mortgage. There's still plenty left. As the Euribor rates are super low at the moment, I don't see any reason to contribute more than minimum to mortgage for the time being.

I can't tell yet if this will be considered an investment or not but if it were considered an investment, my total contributions to my net worth would be 25 005 euros or about 54% (2016 was 56% and 2015 was 46%) of my net income.

My net worth was up during the year about 31 750 euros to roughly 140 250 euros but I don't really track my net worth. I'm mostly interested in my money generating portfolio.

Conclusion

2017 was a good and busy year. I made a withholding tax trick that allowed me to put more towards savings. I might write about that in some later post. In the markets the year was a pretty good one with my portfolio making +9%. The TWR return shows a pretty boring chart, nothing major happened in the markets during 2017.

I achieved some new record numbers during 2017, including 90k in January, Six figures or 100k in May and 110k in October. All in all, I'm happy with 2017.

Year 2016 in review

What a year this has been once again, what a year! A lot has happened in world politics and my personal life. At the same time the markets have gained some more and been, in my opinion, overall less dramatic than I would have expected.

Savings

This chart shows my 2016 portfolio value changes. That bump on the last day is a contribution of 2 500 euros to my savings account I made on the last day of the year. This money is going to be put to work in a more efficient manner once I decide the place.

Portfolio valuation and savings. The blue line is the value of my portfolio and the red line is cost of the portfolio.

Let's look at the numbers for my portfolio cost and value in more detail in a table:

	31.12.2015	30.12.2016	change
cost (= savings)	50 458 euro	66 585 euro	+16 127 euro
value	63 820 euro	89 189 euro	+25 369 euro

Woot? So, during 2016 I managed to save an astonishing 16 127 euros (2015 was 12 167 euros). I am really happy with that number. That's about 1 344 euros (1014) per month.

During the year, my net income was about 37 600 euros so my savings rate was a very nice 43% (last year was only 33%). Where exactly the extra savings came from I'm not really sure, probably less upkeep on the apartment, but I didn't really skimp on anything, just lived life as before.

Growth

But I'm even more happy with the next number, the value of my portfolio is up 25 369 euros during the year. That means that the market produced about 9 242 euros or about +12% in gains for me. This is super sweet and the biggest gain in terms of euros I've ever made!



The below chart shows the TWR return calculation (in green, left scale) and the EUR/USD (in burgundy, right scale) currency rate. The TWR was down more than 10% in February but crossed over to the positive side during the summer and made most of it's gains in the last two months (thanks Mr Trump, I guess...). My portfolio is quite heavily weighted towards dollar nominated stuff so there's a definite correlation with the EUR/USD exchange rate as seen below.

TWR return calculation (in green, left scale) and the EUR/USD (in burgundy, right scale) currency rate.

Mortgage and net worth

During 2016 I also paid off 4815 euros of my mortgage. There's still plenty left. As the euribor rates are super low at the moment, I don't see any reason to contribute more than minimum to mortgage for the time being.


I can't tell yet if this will be considered an investment or not but if were an investment, my total contributions to my net worth would be 20 942 euros or about 56% (2015 was 46%) of my net income.

My net worth was up during the year about 27 500 euros to roughly 108 500 euros but I don't really track my net worth. I'm mostly interested in my money generating portfolio.

Conclusion

In last year's review, I went on to ponder whether we were headed off a cliff, and in February it certainly looked like that until it all turned around. I'm still inclined to think that the future is uncertain: stocks are the only game in town as interest are so low and market valuations are very high. The probability of good returns in future is diminishing as the current bull marches on. So what will I do? Keep adding to my portfolio with dollar cost averaging, just like until now. Godspeed for 2017!