Financial Freedom Sloth

achieving financial freedom one lazy step at a time

Page 2 of 4

The new job

This short post had some people thinking the new job was horrible. Which it isn’t. Like I explained in the comments, it’s more like returning from a blue sky, 25 degrees (Celsius, for the Fahrenheit using people) vacation in October. Even if the weather in Belgium is ok-ish, it’s going to be gray and rainy. And even if you know the weather is actually ok-ish your brain is going to be saying: well this sucks. Because, during those first days it will suck. Not because of how the weather actually is but to what you are comparing it: a near idyllic, paradise situation. And compared to that, almost everything sucks. There is a valuable lesson here: a lot of the time we do not see the things as they are but how they compare to something else. Change your base of reference and all of a sudden things look or actually are something completely different!

It was a bit the same for me, I really enjoyed the three months at home. Really, really enjoyed it. So those first days adjusting to the work life were, ahum, ‘challenging’. The fact that google has been going higher and higher doesn’t help as I know I would have made more by day trading a few hours a day than working 8 hours like I have to do now. I really need to stop thinking that way. Or grow the balls to call it quits now and go the early retirement route/day trading route. Which I am not going to do, so brain: stop thinking this way!

So a little overview of the positive and negative sides of the job might be in order.

The positive:

Steady paycheck

And a nice paycheck at that. I am right back at making the average wage for Belgium. It’s more than the interim I worked at for 9 months, but that one did pay out an untaxed bicycle allowance. So in regards to net wages the difference will not be big.

And let’s face it, the steady pay check is the main reason why I took the job. Emphasis on steady. My day trading did fill the gap between unemployment and the average wage I was used to making. But day trading is fickle. Good months will be followed by bad months. The way I did it, it’s good as a little side hustle to make a bit extra money. The unemployment benefits would also diminish over time (this deserves its own post as the Belgian social security system is neither social nor offers it a lot of security). And after some time the government would start wondering why I was still unemployed and start asking proof that I was still actively looking for work. Dealing with government bureaucracy is not something I particularly enjoy … No, a steady pay check is the final puzzle piece I need for this last leg of my journey to financial freedom!

12 extra holidays

Once my interim period is over I will work 2 hours extra each week which translates into 1 extra holiday per month. I like that. That is two whole weeks I do not have to go to work! The normal amount of holidays is 20, so this is a 60% increase!

Work from home.

Again, once the interim period, is finished I will be able to work from home one day a week. A big win in my book and it should help to keep up with my swimming regime!

 The negative

The job is in Brussels.

That’s a total commute of three hour each and every day. By train. And the train in Belgium isn’t very punctual. So there are delays, a lot of them, almost every day. The work from home will help with this. It is also the reason why I am really happy with those twelve extra holidays. Those are not only 12 days I do not have to work, but also 12 days I do not have to go to work. It will save me 36 hours of commuting in total. The interim I did before this job was near Leuven, I even went by bicycle most of the days! I loved it! I looked for a new job closer by home, but the bulk of the companies that need somebody with my experience are located in Brussels. My present plan is to stay here for at least 2 years (this will also put the ‘patchy’ part of my Curriculum more in the past, which will help in getting interviews) and then very selectively start looking for a job closer to home.

I also try to look at the train ride in another way. I try to see it as a chance to catch up on some quality series. Believe it or not, but even after three months of being unemployed I still have a huge back log in series I want to watch! I thought I would totally eliminate that back log, but I actually didn’t watch that many series when I was home. There were only a handful of days where I did nothing except watching series. Most days I had other more fun things to do. By the way: Westworld is f*ing brilliant!

My 10 minute walk from the central station to my workplace I try to view as my healthy morning walk. It is through some touristy area of Brussels so people travel thousands of km’s to snap a picture of buildings I walk past every day!

But even with trying to look with a positive attitude to a big part of my commute, the fact remains I leave home at 7:15 in the morning and am back at 18:15, except Tuesday and Thursday when I go swimming: then it is closer to 20:00 when I am back home. Two days of teleworking from home would be ideal. We’ll see if I can arrange that in the future (= extra motivation to do a good job!)

The work

Well, it’s work. It is sitting behind a computer doing stuff for around 8 hours. There is a lot I need to learn but there will be enough variety in my day. Which is good. I like variety, it makes the day go by faster. I actually did spend a lot of time behind my computer when I was home also. I like surfing the net, reading about interesting stuff, figuring stuff out or go on the hunt for classic techno tracks from my youth (spend the bulk of my last weeks at home doing this, still haven’t finished!). The difference is, now I have to do work stuff. Which I find a lot less interesting than all the stuff I did when home. But that is ok. I did it before: usually I build in some rewards during my day. Finish task A, then read a blogpost. Finish task B, then take a little break. Finish task C, time for lunch! … It breaks the work day into 4 blocks or more and makes the day go faster. When I am able to do this system it actually improves my productivity!

 Conclusion

Although at 42 I am in a way better position than most of my peers in the ‘having to work’-department the fact remains I am on a course to achieve financial freedom (even with some work once this is achieved) when I am 47 or 48. Although this is 20 years less than the official age I find this pretty, pretty old. Hell, I find 42 pretty old. I now know 35 (or perhaps even 32) should be possible if one starts young enough on this path. The solution for this is part letting go of the fact I did not follow the optimal route and part of the solution is getting in better shape. I know for a fact that improving my physique and losing weight will make me feel younger again (I have a very interesting story about that 5 month window where I lost a lot of weight and experimented with a testosterone booster, it sure made me feel a lot younger!).

So even if I did enjoy the 3 month test run of early retirement immensely, the reality of life is that I still have some work to do. Work in the house (finish the home renovations), work on my health (lose weight, build muscles) and work on the stash (it needs to be bigger).

I guess it is time to get to work again!

Monthly expense report: April

Another somewhat ‘wonky’ month due to the big tax return last month. As of next month income and expenses should return to a somewhat more stable rhythm (famous last words …).

Also the first month ever where I kinda did a withdrawal from the stash. As mentioned here I started day trading a bit just to hurry up the renovations of our house. Option premiums will remain in the investment account and hopefully help build up the stash a bit but day trading profit as of now will be used for home renovations. i could withdraw it in one go but that would make these monthly overviews very ‘wonky’ again. So, I will also try to smooth out highs in expenses or lows in income with it. In the end it doesn’t matter as I will withdraw all day trade profits from this year in this year. It will just look better this way.

Personal account:

Income: 2 039,50

Expenses : 1 557,88

Savings: 481,62 or 23,61%

Income was 1 430 euro unemployment benefits, 330 euro profit participation from last year when I still worked for a few months at the big bank and a 250 euro day trading withdraw from the investment account. Total profits of the day trading are at the moment 2 250 euro so I still have 2 000 euro’s ‘at the bank’. It remains to be seen how much day trading I will be able to do now I am working again.

No payments to the joint bank account as we are still eating up the tax return from last month but we did book a 12 day holiday to Lanzarote which has been paid in full. Most other expenses are pretty standard. Another 60 euro for fun stuff for the retro techno evening we will be holding and around 70 euro for the train for the job interview and signing of the contract stuff and such. I am pretty glad that that last budget line will be zero again (train abo paid by work again, yeah!).

The joint bank account

Income: 71 euro

Expenses: 2 955,58

Savings: – 2 884,58 or -4060% (haha)

Income, well we couldn’t really leave it at zero as then we would have had a negative to infinity savings rate here!

Expenses are high mainly due to a 545 euro maintenance fee for the car. having the car checked (a legal obligation in Belgium) also cost us 46 euro. The car is 11 years old and has driven 210.000 km. So all in all we are ok with these costs. Hopefully we can squeeze two more years of life out of the car without major expenses.

Groceries are also higher with 543 euro. We have been eating less frequently and less healthy this month. I am to blame for most of this as I still have not started my new diet.

Add to that a nice present for the birth of the second child of some good friends of ours and we end up with the most expensive month for our joint account off the year.

May holds no weddings and no births so here’s hoping the expenses next month will be closer to the 2 000 euro mark than the 3 000 euro mark!

Anyway, my half of this joint expense comes to 1 442,30 euro.

Even adding my personals savings of 481,62 euro to it keeps me deeply in negative territory. I guess it’s a good thing I have a job again!

Important public announcement

After being home for three months and having worked for a week I can with certainty say that life is a hell of a lot better when you do not have to work.

That is all.*

 

 

*Brevity is the soul of wit

Special circumstance investing – April update

I am still waiting to be able to sell the UVX put I bought at a profit. I know this eventually will happen as the UVX is guaranteed to lose value. But I must confess I am not a fan of the product. The liquidity is so low and spread so big on the options on this, that selling it is not always a given. I find this annoying so once I exit this position I will probably not do it again. It is an almost certain way to make some profit. But the annoyance I have with the product and the fact that you can only deploy limited money in it (due to the low liquidity of the options) make it unattractive for me.

What did I do?

The two put options I wrote on ABI have expiration May. Strike is 100 euro, current price 103 euro, there is only two weeks left and the dividend has been paid. I am almost 100% sure these puts will expire worthless. So I am letting them run their course but I did write 2 new puts, again strike 100 but expiry July. I explained last month why I prefer not to get assigned but I do not mind picking up another 400 euro. And the cash I have is really working hard for the next two weeks. It is

A) insurance if I have to unwind my leveraged position -buffer there is still healthy-

B) covering the put that expires in May and

C) covering the put that expires in July.

I love it when my money works hard since it means I can be lazy 😉

Do not forget I earned this cash by creating a leveraged construction in January. So this is money I earned by borrowing money. This why I keep it in cash so I can unwind the leveraged position if necessary. But thanks to these puts on ABI the cash will have earned 5% in the first half of the year!

I have also been day trading a bit in April. I started with Monsanto as I found that very safe due to the offer by BASF. Volatility was a bit low in Monsanto so it didn’t make a very good day trading stock. But I did make a bit of a profit on it and by some dumb luck I happened to have a position in Monsanto when it went ex-dividend. Hooray for a lucky extra 210 USD! I switched to Google afterwards which turned out to be a good choice. Current total profits of day trading are 2.250 USD which is exactly the amount I needed to bridge the difference between unemployment benefits and my previous wages (not a coincidence!). Since I am now working again, day trading activity will be very sporadic (the evenings my girlfriend has to work until 22h). But I am going to try to continue, so I can speed up the home renovations a bit.

Update: the 2 new ABI puts didn’t actually go through so they have been replaced by 5 contracts on ADM (Archer Daniels Midland Company), strike 40 and expiry June. Full explication in the comments, grr how does work dare to intervene with my investing!!

The girlfriends portfolio

I did a merger arbitrage play on Monsanto in the girlfriends portfolio at 1x leverage. Now I have to confess, I can be a bit pushy when it comes to investment stuff. So I kind of just did it, and then went and explained it. Thing is, my girlfriends ethical side is a lot more developed than mine. Which means that ethics play zero role in deciding where the money goes. The only deciding factor is if I can make a profit at a low risk. Actually, if it didn’t carry those big expense ratio I would have bought a bit of the Vice fund for the sole reason to annoy some of my friends. It turns out that for my girlfriend it does matter where her money is invested.

So she actually wasn’t too happy to be invested in Monsanto and to profit of the merger. So after hearing her compalin about it for almost two months, I have unwound this arbitrage play. With a profit of course, and after the dividend pay out!! But at a lower price than the current one, so her ethics have cost her over 400 USD already. And it will cost her more as I am still convinced the merger will go through! But hey, a happy girlfriend makes a happy sloth. And a 1.200 USD profit in less than 2 months isn’t bad either.

Since she didn’t have any leveraged position any more I did do some day trading in her account also. Profits there are around 500 USD.

As said, I am working again so for May i just hope to finally be able to sell the UVX puts and do a little bit of day trading if I feel like it after a loooong day at the office.

I am a creature of two worlds

I was originally going to write a short post about the fact that I love outlet centers. Real outlet stores like D’store in Bierbeek which sells last year’s sports outfits at a very nice discount. I snagged the walking shoes below for 35 euro (50% off) and had I found a second pair in my size I would have gotten 75% off on that second pair! Shoes are a necessity of life and I love to get that at a low low price because it means I do not need a lot of money to provide for it for the rest of my life. If they last me 2 years of daily wear and I would need 2 different pairs to cover the different occasions in life, that would mean an annual financial burden of 40 euro a year x 25: 1000 euro stash and my feet are covered in early retirement!

So there I am, being all happy to have saved 35 euro on shoes. And then I come home and access my broker account and see my stash moving around a couple of 100 euro per minute. And it is strange.

Normally I ignore my stash. It’s there, I do not touch it and now and then I do a trade. But I am lazy so I do not do a lot of trades. Thus it is easy to ignore it. It is easy to ignore the day by day fluctuations if you do not see them. In my day to day life I am like anybody else. I have my -limited- resources and I try to cover my bills with it. It is in this day to day life that I am happy with a savings of 35 euro. Because in this life those savings matter. In my day to day life I am down to 900 euro in my accounts (we replaced our bathroom and kitchen a few months back and I just prepaid my holiday for September). And with a few renovations still necessary, I will need to continue to life within my – very narrow – limits for a few more years.

And then I access my broker account. 90% of my stash is in 1 stock: Berkshire Hathaway class B shares. For a grand total of 1500 of them. If that price moves by 1 USD, it makes a difference of 1.500 USD right there. But a movement of 1 USD  on a stock price of 166 USD. That’s a movement of 0.6%. It is going to move more than that! Actually, I have a leveraged position that makes movements even worse! My stash went up 30.000 USD in something like 2 months. Then it went down by 20.000 USD in one month. Hell, my leveraged position costs me 43 USD in interest EACH AND EVERY day (do not worry, the position earns around 90 USD per day also, so I am making a profit on it).

All this is easy to ignore when I do not see it. But as mentioned before, I am again doing a little bit of day trading again. Not only do I now see the stash (and it’s fluctuations) on a daily basis. The day trading actually makes matters even worse. Just today I have bought 100 CfD’s on Google 6 times and sold them (and made a small profit each and every time: yeah me!). I have bought and sold for 558.000 USD in Google stock!

So day to day life: 900 euro in the bank and really happy when I make a 35 euro savings on shoes.

My investment life: daily fluctuations of 1.000’s of euro’s in the stash, bought and sold more than half a million USD in Google stock in half a day!

Like I said, a creature of two worlds.

I have to say it is weird. But it must be weird for all mustaschians. I read blogs of people living on 50.000 a year but where the stash sometimes moves 100.000 USD in a month because their stash is over 2 million. It is this strange spa-gate between big stash and frugal living all of us will need to learn to handle. Ignoring the stash usually works. So time to get back to work where a 100 euro still equals a full day of work and not some small movement in the google stock price (even if I would love to be behind my screen when it crosses the 1.000 USD mark for the first time!).

Unemployment and financial freedom

As mentioned in my monthly expense report I am currently unemployed. there was a time not that far ago when this would have annoyed me. Not because off the fact that less money is coming in but more because I had a plan and things are not going to plan!! Grr, Hulk mad, hulk smash!

Growing as a person

Part of my personality has always been that I am a planner. I think most people in the early retirement community are planners. You need to be to achieve financial freedom (well, at the very least it helps)! And there are a lot of positives with being a planner. The thing is, as with all things, you should not overdo it. And I did make that mistake. My future vision was too strong and often stopped me from enjoying the present. I worried too much. Both about things I could not control and about things I could control. When I was home last year I didn’t enjoy it (I’ll delve deeper into this in another post). Things not going to plan annoy me still. But I try to limit its impact on my mood or on me enjoying the present.

Not working costs me around 750 euro a month. There is no way I would have spend almost 3.000 euro on a Vespa while being unemployed last year. This year I did. And I have enjoyed it immensely! What changed is my perspective.

Another perspective

The plan, in general terms, is to work another 5 a 7 years in a decent paying job so I can save enough money from work to finish renovating our house. These years would also give the stash enough time to grow big enough so it would reach the point where I could limit my working time to a couple of months a year and live of investments for the rest of the year.

Previously, I would have seen being unemployed as a derailment of the plan. Being unemployed and having less income each month would mean I would be older when I could stop working full-time.

Now I see this period of unemployment as a test run for later. I see it as a temporary mini-retirement because at the moment I DO NOT HAVE TO WORK. if I truly enjoy this time, it will be a mini-retirement! if I spend all day worrying and being annoyed because I am not following my plan it will not be a mini-retirement. So I chose to enjoy it.

Enjoying unemployment

That is why I did decide to buy a Vespa. It gave me a lot more mobility and it finally got me to go swimming again. I have to say, I really enjoy going to the swimming pool when almost nobody is around and having a lap all to myself.

I enjoy planning and preparing a little retro house party with a few friends at our place. Did you know that for 39 euro you can buy a pretty nice laser for your home! My inner gadget freak squealed in delight with all the new fun little toys that exist now (apparently I am not the only one who enjoys some techno in his living room).

And it was great fun hunting down all the classics from my youth. Did you know winamp still works on a windows 10 machine? Yes, I mean it when I say I am going retro!

A little bit of cheating

Now, most off you will be thinking: ‘that is really great Mr. financialfreedomsloth. Fantastic that you have not only identified a personality trait that stood in the way of your happiness and are trying to work at it. Kudos!’ And you should be thinking that! I am really happy with the evolution I have made in the last year. Yeah for me! I could stop here. But I want to be honest with you guys.

And the thing is, I am now enjoying being home so much I kinda want to have the house finished as soon as possible. I want to be able to sleep more people so I can have more guests at the techno parties I will organize. I want to have our office room finished so I can turn it into a chill out room for the party. I want the roof and attic finished so I can have my own private cinema-room because I already  enjoy the hell out of running my own Synology NAS with the Plex server connected to our flat-screen. Having a big ass screen, surround sound and perfect darkness is going to be heaven for the movie geek in me (and I know I can do it under a 1.000 euro once the attic is finished).

So I have been day trading again. I did it last year and well, my brain is pretty good at pattern recognition. It might not be day trading like the professionals do, but I did make 2.450 USD last year. That money stayed in the investment account. The goal now is to at least make up the difference between unemployment and my previous job (I am at 1.200 USD at the moment) so I can hurry up with the home renovations!

Some might say I just found a way to reconnect with my original plan and that is why I am actually enjoying the unemployment and not because I have found a new perspective. But I swear on the heads of my pet pigs (didn’t see that coming did you?) that I was already enjoying it before I started day trading again. I actually enjoyed it more before I did the day trading. I do not find it particularly fun to do: it is staring at a computer screen for hours on end. But for me, it is easy money.

Monthly expense report: march

How time flies when one is having fun! This month is going to be a bit ‘wonky’ for several reasons. I am afraid this will be true for the next month as well

As mentioned before: no investment gains are taken into account and our monthly mortgage payments (which are by far our highest expense) are viewed as an expense.

Personal account:

Income: 1 545,88

Expenses : 1 889,55

Savings: – 343,67 or – 22,23%

Income: 1 545,88

Expenses : 1 889,55

Savings: – 343,67 or – 22,23%

A negative personal savings rate!

Biggest reason is the drop in income due to the fact that once again I am unemployed. The temporary job came to an end 31st of january and well, I suck at job interviews! This is where a nice stash comes in handy as I am not particularly worried finance wise. If it was not for the house renovations we still need to do I would have been tempted to pull the plug now. It is something deserving its own post so more on the whole ‘being unemployed’ in the future.

Another reason was expenses. My part for the Vespa came was 1 500 euro which was the bulk of my expenses. second highest expense for me was actually 60 euro to go swimming again. Yes I have started to exercise again: feeling good and also something that deserves its own post!

No payments to the joint bank account as we had a nice tax return this month. Let’s take a look at that.

The joint bank account

Income: 5 771,43

1 100 euro each and a tax return of 3 571,43, we front load our joint account that is why this month the joint account still received funds of each of us where we did not incur the cost this month. The joint bank account will receive no funds in April as we will first eat up the tax refund.

Expenses: 2 907,84

Savings: 2 863,59 or 49,62%

Things now get a bit tricky to calculate my own savings rate. Best I could think of is add half of the tax refund to my ‘income’ of the month and then add half of the savings on the joint account to my savings.

Total income would then be 3 331,59

total savings would be  – 343,67 + 1 431,80 = 1 088,13 or 32,66%

Not bad for an unemployed person who also bought a Vespa!

Next month will be the reverse: good savings on the personal account and deeply negative on the joint account. This will all average out when I do a full year round up so I am not that concerned about this wonky month.

We also had an expensive restaurant visit and a wedding to attend this month. Otherwise we would have been closer to 40% savings rate on the joint account.

Buying a vespa 125cc

Two weeks ago I bought myself a Vespa GTI 125cc

If I am totally honest about it, I bought it because I wanted one. They’re great looking scooters and even driving it around our block I was immediately transported back to my youth. I had some of the best moments of my life being 16, 17 years old. Totally worry free and just cruising the scooter I had back then (a Honda Camino 50cc that legally only could go 45 km/h but i off course had it souped up to around 75 km/h, yes I was that type of guy …). I still remember one summer where Belgium had one of our rare heat waves of + 30 degrees celcius, cruising down the streets of my home town to meet up with some friends and then go swimming in a fishing pond my parents rented. The fact that a few nice looking girls decided to join us for a swim was a fact that made those days all the more enjoyable for my teenage self …

The frugal part

But was it also a frugal purchase? In some ways it was.

I bought it second hand for 2.750 euro and it was very well taken care of, with less than 11.000 km of use. New they cost around 4.300 to 4.800 euro’s.

It’s a 125cc, which means that I can drive it with the my current driver license. When you have a car driver license for over a year you can drive motorcycles up to 125 cc in Belgium (this apparently does not apply for the Netherlands).

Insurance is very cheap since we can add it to our car insurance: it will only cost 93 euro for one year.

The fuel economy is a lot better than our car (we have a Opel Combo) so I will probably save more than the insurance cost on car fuel.

It will avoid us from needing a second car with all the costs that entails while still giving us a lot more mobility options: I am in the centre of Leuven (20 km distance) in about 30 minutes. Going to the swimming pool only takes 10 minutes and no more worrying about parking space.

A friend of mine has the exact same one, he is a trained mechanic and is part of a Vespa Scooter club: maintenance will be cheap.

The not so frugal part

We already own an excellent electric bicycle. I could use that. I did use that bicycle to go to my temp work for about 9 months (distance also around 20 km). But I did also use the car when the girlfriend did not have to work. Not having to go to work with the bicycle every single day was really, really nice. Having to cycle home, after swimming was really, really annoying. I am just not in good enough shape for that!

Continuing to use the electric bicycle would have saved me all of the money.

I could have bought a cheaper model. You can find nice, good running 125 cc scooters for 1.500 euro or even less. Most other Vespa models are even cheaper than this one. I definitely could have saved 1.000 euro on the purchase price and gotten all the same advantages of owning a 125cc scooter I have now. I went for the nicest model.

Conclusion

I know my most hard core frugal days are behind me. I am getting soft in my old age. And there even is a pattern to detect. I didn’t own a bed until I was 38 years old. But when I bought one, I bought a very nice full oak one. It’s fantastic! In the dilemma between buy cheap or buy once for the rest of your life I usually advocate for buying cheap so you can get more of your money working for you. But one some things I appear to fall in the buy once for the rest of your life. I will probably never buy another scooter in my life. And I know for a fact I will never buy another bed in my life time. And I wanted a nice looking, great scooter for the rest of my life!

It is also only around 1% of my stash, so for the young people reading this and still building their stash: use your bicycle or buy a cheap scooter and use it until it falls apart and build your stash! And then buy a nice scooter!!

Ps. For those of you wondering, yes that is my drive way and no, the building in the back is not my house. It’s a barn (which we don’t really use). And yes, to the right there is an old green house (we don’t use that either).  I’ll do a post or two about our house in the future. Not buying it would have brought me really close to FI right about now, so the house probably added about 5 years of working. Well worth it in my opinion.

Changing credit card

Up until now I had a classic Visa card which cost me 18 euro per year. Since most of my on line shopping and all of my off line purchases are being paid with my regular bank card this card was more of an extra security measure in case something was wrong with the main bank card. Or when travelling abroad and the Visa card was the only card that was accepted/worked. It is always good to have an extra card with you!

Streetlife

A little real life example will illustrate this. A few years ago a friend of mine went to the USA for work and since the EUR was strong back then I asked her to bring me back a digital camera. Since I had known her for years and trusted her completely I gave her my visa card and code. She said this was unnecessary but I did not want the hassle of having to calculate the exchange rate when paying her back in euro’s and this way everything was nice and easy for the both of us. A week later I received a call. She needed to stay a few days longer and since she also had to bring back a few Iphones (for persons who had not given her their credit card) and there was also a security deposit blocked by the hotel. She was now at her limit on both her own cards! Could she please use my card to pay for the extra nights? Sleeping on the streets of New York avoided, by having my extra credit card with her!

Money, money, money!

So yes, an extra card never hurts. But 18 euro a year just was is too much for this feature. I used to have a free one with Keytrade (before I shut that broker account down and when I went to work for the big bank I also shut down my Argenta account) and my fiancée still has a free one at Argenta. But I wanted to do better than free and preferably find a card with some cash back possibility.

pile of credit cards

I landed on the Extra world MasterCard via Beobank: a 5 euro per year cost and a cash back of a 100 euro a year. A far cry from or the credit card hacks in the USA but 95 euro for switching to another card and using that one while grocery shopping? I’ll take it!!

Slashing the 18 euro of recurring costs reduces the seize of my stash need by 450 euro!

The 100 euro of cash back even adds a further reduction of 2500 euro! So almost 3.000 euro reduction in the seize of my stash!

Travel hacking

And then FOB wrote about the Flying Blue-American Express card. Finally available in the Netherlands and the best available choice for some travel hacking! So I checked if it was available in Belgium as well. Beobank had it, but nowhere do they mention it being free for the first year. And I wanted a cheaper card, not a more expensive one!

There is a nice little overview here of available travel hacking cards in Belgium. Nothing as good as the deal FOB got.

Why do the Dutch get better conditions than us Belgians? Not faire!

I looked and looked but cannot find a similar deal as the Dutch. Did I miss something, anybody found a better cash back credit card in Belgium (with no or low annual costs)? My application for the Beobank one has not yet been send so if there is something better out there, let me know!

Special circumstance investing – march update

The UVX put I bought will take some time to move into a profit. And I am getting bored again.

What I did

So yesterday I sold 2 put contracts on ABI, strike: 100 and expiration in May.

This gets me a premium of 3,95 euro which is not a bad return for a 2 and a half month time period. Another 790 euro of cash added to the stash. This is actually less than 0,3% of the stash but if I can do it 2 more times I will have added another 1% to my return this year!

If I get assigned I buy a great company with a decent dividend at 96,05 euro a share. I chose the lower strike of 100 euro as I do not really want to be assigned. I do kind of have the money to pay for the shares. You see, my special construction (which I do not explain since it is highly leveraged stuff) pays me a lot of cash up front: around 38 000 USD. Financing fees will eat up around 14 000 USD during the life of the construction but in the end I should end up with around 24 000 USD in profits. I keep all this cash as cash as things can always go wrong and then I need to move fast and close the construction. But with the recent rise in stock prices I now have a nice little buffer and I abhor cash not working for me! These puts are a way to get some return and most probably still keep the cash buffer intact. I have to admit that I do like making money on money I made with money I do not own!

stack of stones

balancing my investments on top of each other

The risk of things going bump in the night

If everything goes well I’ll have made a bit off extra cash. If stocks start going down again I will close the construction (which I would do anyway) with a small profit. I will then not have enough cash for the 200 ABI shares. But if I do get assigned the ABI stock, I still have the ability to buy them with borrowed money from Lynx. This will then be the only leveraged position I have. It will be less than 10% of my total portfolio. Dividends of ABI would cover most of the financing fees for this leverage so I could keep it for a very long time. Most likely I would also write covered calls on the position, more than generating enough cash to cover the financing fees. With leveraged plays I always look at the possible downside and then determine if the risk is acceptable.

Variation on a theme

Whendoyouretire did a similar trade but at 110 euro strike. That’s actually pretty smart of him because he does want to get assigned since he is a dividend growth investor! If the stock does go higher, he will have earned one hell of a premium! Since I would prefer not being assigned I chose a much lower strike. But that is one of the main advantages of options. With put and call, sell and buy, moving the strike price or the expiry date, options actually offer you a very big pallet of possibilities for a whole lot of different purposes.

The girlfriends portfolio

I only figured out the construction in June of 2016 and I first wanted to test it out in my stash. This meant that the girlfriend was a bit late to the party. Her construction ends in March. At present prices I do not feel secure in repeating the construction for her. So yesterday I unwound the construction in her account. Total profit of it was around 7.000 USD. Not bad for 6 months. I also opened a new 1 x leveraged position (the construction was 2 x leveraged) in Monsanto with the use of CfD’s. Only 1 x leverage as I want to avoid any possibility of margin call on her portfolio in the small change that the merger between Bayer and Monsanto falls through. I am also keeping her construction profits in cash as an extra precaution and to cover the overnight financing fee’s of the CfD’s. When Monsanto moves higher and the risk of losing money on the leveraged position gets smaller I will look for a way to invest some of this cash. Financial Velociraptor did a similar merger arbitrage play but without the use of any leverage I think. The merger arbitrage of Monsanto first came on my radar when I read Berkshire Hathaway did it. But one should always do one’s own homework. I am not that impressed by the performance of Monsanto but the 2 billion USD breakup fee if the merger would not succeed convinced me. If the merger does not go through (and Bayer has 2 billion reasons to make sure it does happen) Monsanto will be sitting on a mountain of cash!

That is me done until I can profitably sell my UVXY put. Time to start concentrating on my diet!

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