Following smart people

There are a few things we learn from our parents while growing up. One thing my parents were preaching to me (which I really wouldn’t follow) was to stay close with smart people. Even better: People who would be smarter than me.

That’s a great advise. But one needs to be ready to truly understand it. As a young, arrogant smart-ass I certainly wouldn’t know many people who I would consider smarter than me. And if I knew some, I would make sure to be more fit or popular, or in any other way superior. I wanted to be better than anyone else and didn’t even consider learning from others.

However, this edge for competition gave me another source of energy: The humiliation of defeat. If I wouldn’t succeed in my endeavour, I would do what I can to become better on my own and try to make sure to not experience the same failure again.

Things changed when I grew older.

When I got older, something interesting happened. I kept my edge for competition, but I learned to use it in a more constructive manner. I started to hang out with stronger and smarter people.

If I wanted to become good in something, I would specifically search for people who were much better than me. I wouldn’t say that I became friends with them, but I would respect them and stay close. Observe. Trying to find their edge, their unique point that made them better than others, their weakness. Then I would spend hours to gather ideas and practicing, brushing up my own skills. In between, I would challenge them, over and over, until the day that I would become better in whatever that challenge would have been. Playing chess, martial arts, mathematics, languages, yes, even video games and computers.

With some of those people I have a bond even until today. My biggest and strongest competitors became my best friends, and interestingly no foes remained. While I made some enemies along the way, they all disappeared at some point into a non-existence of my world. My former competitors, masters and teachers remained.

We need to be thankful to those who help us to move forward

It was always those people who were better, smarter or stronger than me who were adding the most to my knowledge, passion for my job and my personal aspiration to grow. Therefore it is no surprise, that competitors became friends and that the bond behind this relation is stronger than any regular friendship.

I would like to say thank you to all those who helped me along the way. My friends from martial arts, who would beat me up occasionally to show me that I needed indeed a few more training hours. My supervisors at work, who would prove to me over and over that I wasn’t the smartest person in the room. My professors at university who appreciated my thirst for knowledge and, of course, my parents, for reminding me patiently that being arrogant is not a good thing…. and for sticking with me in good and bad times.

Why I want to retire early

As I mentioned previously, a crucial thing to consider when planning for financial independence is to think about the things we want to do once we reach our goal. Most people spend their lives by working relentlessly, to ensure they can have a roof over their heads, food in the fridge and their children dressed and in school. And this is perfectly fine.

For me however, this is not enough. I want to contribute to others and to this world in a more meaningful way and I just can’t do that if I have a limitation on my time and if I am restrained by financial responsibilities.

Money rules the world. It certainly does. But money alone is only 50 % of the equation. All the money is useless without the people, who channel this money into a certain direction.

Knowing this, I am an admirer of Bill Gates, who is doing probably more than any other human being on this planet to address planetary issues in order to improve life for everyone. I salut to Elon Musk, who might not be the best business person, but who managed to push an entire industry away from oil towards a more sustainable future. There are many more visionaries out there and people who do their best on even much smaller scale to tackle problems that concern us all.

I hope one day to travel more, and to meet those people. Small business owners who work on new solutions to old problems. Entrepreneurs with hope and ambition, and who might just need a little support to push their idea forward to the next level.

If we don’t help each other, don’t learn from each other and don’t collect our knowledge, what is the point of being alive? Why do we wake up in the morning and get out of bed? What is our goal?

There is no bad time to invest

It’s already the 3rd week of February. Think about that, we were JUST talking about new years plans and now we are already almost done with the first 2 months of this new year.

For the US, Dutch and some UK investors this doesn’t play a big role, but for everyone else, things are getting exciting. We are about to enter the main dividend season, and investors looking for some great dividend-plays have still plenty of opportunities to consider. On my part over the last 2 months, I have bought shares in Daimler, BASF, Royal Dutch Shell (RDSB), and AT&T.

AT&T

For AT&T I have increased an existing position, to cost-average-down my original purchasing price. This company is not only a great dividend stock, but I believe also that it’s about to reach a turning point this year. The acquisition of Time Warner will ensure a steady cash-flow to pay for the dividends, and the CEO promised to start focusing on paying down the companies debts. So these are 2 great reasons. Some people talk about the 5G roll-out and the potential benefits of this development, but I remain skeptical for now and don’t think it will have any significant contribution to the company’s bottom line for this or even next year. New technologies usually require stronger investments and it takes some time until those start turning into profits. Nevertheless, this may be anticipated by the market ahead, thus there is a chance for the stock to start moving up once those 5G plans become substantial. But no matter what you think, with a well covered 6,5 % yielding dividend payer on this scale, I don’t really see any downside at this point.

Shell

RDSB, the Royal Dutch Shell shares which are registered through the UK and have therefore no withholding tax, is probably one of the best dividends stocks you can buy right now. 5,9 % with quarterly payments and exposure to not only one of the most profitable industry sectors in the world (oil), but also to a great company that is continuously shifting towards renewables and has a clear vision on where energy needs to go from here. Shell is not only investing on a large-scale in solar-energy but has also recently acquired the German company Sonnen, which is producing home-energy storage units. For me, Shell is just the right company for the conscious investor. It makes money with the energy of the past and sets itself up to become an energy leader with the energy of the future.

BASF

BASF is a German giant in the chemistry sector. The German withholding tax is terrible so this sweet 5,2 % yield on dividend (as of the time of writing this article) will shrink down to something around 3,4 %. But it’s still better than any savings account and the stock trades at lows that we have seen last time around 2016. I am not sure whether I will keep it as a dividend stock or trade it out of my portfolio when it gets back on track. Let’s see.

Daimler

Daimler is, of course, considered a risky play at the moment. President Trump could impose tariffs, Tesla could keep eating up market share, CATL could increase prices for the new batteries that Daimler needs for their new electric cars (cause they forgot to do some research & development on that front over the recent years)… there are many question marks and it sure is a risky investment. But as far as I see it, all these uncertainties are priced into the stock already and any good news might propel the company back to its highs. And the dividend yield of 6,45 % (or something around 4,6 % after tax) is pretty solid.

Disclosure: There are obviously many more dividend plays to think about and since I am not a professional advisor, please ensure to do your own due diligence before making any financial decisions that may include the purchase of stocks. As I wrote above, I owe stocks of all the companies mentioned in this article.

The great but also annoying thing about the stock market is, that it’s always moving up and down. There are always opportunities – and disappointments – but trying to time the market is wasted time. The most reliable way to profit from stocks is simply to keep investing and to buy stocks which present a great value to us.

In my opinion, one of the most reliable factors is the dividend, because if a company can pay and cover its dividends in bad times, then there is a great chance that the company will do even better in good times. And don’t be fooled. Those good times always come back, we just don’t know exactly when.

Counting Weeks

I don’t know about you, but when I was significantly younger, a year felt like a very long time. Christmas was always so far away, the time to my next birthday always seemed to never pass and my parents always looked the same. They didn’t seem to get older.

Today, at the age of 38, I see things very differently. A year has only 52 weeks. And those 52 weeks seem to be passing by faster, year on year.

My day routine is pretty caught up with working in the hotel from 8:00 – 19:00 hrs, commuting, then spending time with my family from 19:30 – 21:30 hrs, exercising from 21:30 – 23:00 hrs and while I cool down after the workout, I usually write on my blog or for my side-gig, The Motley Fool. For most days I go to sleep after midnight at around 1:00 in the night.

Having such a tight schedule was something that I actually never wanted. When you go to school or even study, you really don’t realize how much personal free time you have just for yourself. You might hate to wake up early and to learn all about history, biology and politics for 6 hours a day, but when you get out from school the clock will tick at somewhere around 14:00 or 15:00 hrs. Even if you would go to sleep early at lets say 22:00 hrs, this still means that you got 7-8 hours a day just for yourself! Day-in, day-out. Oh, and of course you have the entire weekend on top of that. And those long summer holidays, which are much longer than any future vacation you will have in any contract.

In the past, time seemed to be abundant, because I was just so much less busy. So much less occupied. I didn’t realized at that time, that my parents were covering such a huge chunk of my responsibility, which would catch up to me as soon as I would try to make it on my own.

Paying rent, having healthcare, covering for any means of transportation and of course, all those small pleasures in life… all those need to be paid for. And as we grow into the system, we trade our time for money. Money, which we spend to ensure that we can worry a little less. Unfortunately, this is an on-going process and your sense of security by paying rent and paying of your health-insurance, it’s a subscription based model. If you miss a payment, this subscription will expire and your worries will be back on.

So I keep counting the weeks, I keep investing, saving. And I continue to count… until I reach the point that I can finally break out of this system. That I won’t need to trade of time for money, and that my worries about my family and myself will become a thing of the past.

6 things you shouldn’t say when complaining in a hotel or resort

All right, today something not related to financial freedom. Let me share with you today something from my place of work.

As some of my readers know, I am a hotel manager and thus regularly confronted with guest feedback. Most of the time it’s great, but occasionally it happens that I receive some unpleasant comments.

Complaints from guests are part of the job. You just can’t make everyone happy and it does happen occasionally that something goes wrong. But no matter what happened and how things turn out, do yourself and the manager a favor and try to avoid those phrases:

  1. I traveled all over the world and stayed in the BEST hotels. It NEVER happened before. This one is a classic and a sure way for a manager and any staff around to roll their eyes in their head. You might have traveled the world, but we worked there. And trust me, chances are that we heard the same comments in all those hotels. Also, be careful if you mention any other hotel by name, as there is a chance that the manager you talk to actually worked there – and heard there exactly the same comments.
  2. This is not a 5-star luxury hotel! A tricky one. First, be sure that you actually know what you are talking about. Holiday Inn, Ibis, Ramada, Sheraton, Hilton. That’s not 5-star luxury hotels!
    But even if it’s a Kempinski, Six Senses, Four Seasons or a Ritz Carlton, you should bear in mind: Things in buildings or rooms break occasionally, no matter how many stars the hotel has. Services are still provided by human beings who tend to do mistakes. That’s how the world works. Do yourself a favor and relax. Tell us what happened and we will see to find a solution for you.
  3. I thought I will tell you this before writing on TripAdvisor. Ah, another classic. The blackmail approach. Yes, this is blackmail, especially when it’s followed by a request for compensation or additional benefit(s). You see, if you start a conversation and try to pressure a hotel manager by threatening him or her with negative online reviews, you are immediately losing all sympathy. And depending on the manager, you might lose much more. Because unless there is a really serious issue at hand, I for my part usually reject any further requests and won’t do anything more for you than absolutely necessary. A bad review is not good, but I rather accept it than allow myself to be blackmailed. And I will also point this out when I reply to your review or when I deal with your travel agent. In the worst case scenario, you might actually even get black-listed from an entire brand. Is it really necessary to go that way? Seriously, we are working in hotels to help our guests, not to fight with them. So why not have a normal conversation without trying to leverage anyone?
  4. I don’t want to complain, but… All right, to be clear: A complaint is not a bad thing. Just be straightforward and tell us what happened, and we will tell you what we can do for you. Our job is to help you, and we honestly want to do just that.
  5. How will you compensate me for this? It’s good to be straightforward, but unless there is a serious defect in your room or a service-incurred any kind of damage to you, there is actually usually no reason or entitlement to receive any kind of compensation.
    When there is a problem, then we will solve it. If you have an idea for an improvement, then we might consider it. But having a different perspective on something or simply not liking how something looks or is being done, it does not mean that you can get a room discount, a complimentary meal or a drink at the bar. I am actually constantly surprised how people do not feel embarrassed to request stuff. And no, compensation is not the equivalent to no service. Not taking care is.
  6. I paid A LOT of money for a luxury hotel. Well, this might be true – from your point of view. But in most cases, it’s not. Let me first clarify that luxury is a flicky term. Unless you are staying at a true boutique property with ultra-personalized service and with caviar and champagne on the breakfast buffet, then chances are high that it’s rather a glorified 5-star hotel. 5 stars don’t have anything to do with luxury. The stars barely give you an indication of the hotel facilities that you may expect.
    Trust me on that, if you can really afford to book a luxury property, then you would never bring up money as an argument. People who can afford luxury properties pay attention to get what they want, not how much they paid for it. One or two hundred dollars a night is NOT a lot of money and if you could barely scrap that together to get to the hotel you dreamed of, then you simply booked above your means. Even more so, if you booked a super promotion like a Groupon package or Luxury Escapes. Seriously. I understand everybody wants to get some feel of glamour from time to time, but it’s just not it. Luxury properties don’t participate in this kind of promotions.
    But back to the complaint… The right way to bring up a complaint here is to bring the magic word “value” into the conversation. Tell me that the value you receive is not matching your expectations and be sure that we will do our best to help you with that.

There are actually many more, but let me lead in on the hotel world with these five first. A book might follow once I finish my career.

The puzzle is not too complex

Reaching financial independence is best looked at as a game, a puzzle. There are all these little pieces everywhere, and your job is to get them into the right place. Only then the picture will be completed, and you can rest assured that your odds for a safe and free life have reached a comfortable point without worries.

This puzzle may look different for everyone, but if summarized into a few short key points, it would probably look something like this:

  • Health
  • Job & career
  • Expenses
  • Family & friends
  • Emergencies
  • Savings
  • Investments
  • Home
  • Other

Each of these points can have several sub-points and sub-topics which require consideration, but overall I would say that this is probably what most of our lives are about. The order of the points is not chosen by accident. This is, in my opinion, where a higher amount of focus should be distributed, when you start planning your own path to FIRE.

Health always comes first. No matter what you want to do, or what you like to do, or what you plan to continue doing – if your health drops so will all your plans.

A successful career or at least a stable job comes right after that because as we know, you need money to generate more money. Good or bad, our world is designed around money and without it, nothing gets done. So, in the beginning, you simply need to do your part and join the rat race. Without inheritance, a serious portion of luck in a lottery or casino, or any other completely uncommon circumstances, there is simply no other way. It is worth noting though, that pushing your career straight up quickly is a powerful method to escape the rate race significantly earlier. Simple logic: The more money you will have to save and invest, the sooner you can call it quits.

Controlling your expenses is on par with a career as the most powerful tool to reach FIRE. It doesn’t matter how high your salary gets, if you waste all that money on things that don’t matter, then you will have nothing to invest. In fact, it is probably one of the most difficult things to learn for the majority of people. You read all the articles about credit card debt? Education loans? Mortgage payments? How much money people spend on eating out, transportation, travel, parties, etc.? That’s right. You need to have control over your spendings, otherwise, all your efforts will be for nothing. Personally, I recommend to embrace and learn about a minimalistic quality lifestyle. More on this another time.

Balance is important, and things are not fun if we have no one to share them with. The goal for any FIRE aspirant is to have more freedom – and more time. But this freedom and this time are best spent by sharing with someone. Family and friends are an important pillar stone to keep your sanity, staying down to earth and to start appreciating all the benefits that life has to offer. It’s easy to neglect those ties when you focus on your career and try to keep your spendings at bay, but make sure to never let them tear apart.

Being prepared for emergencies is a very basic risk-control measure. All your hard earned money and all your savings can be eradicated in a glimpse when a sudden accident or incident will require you to pull out cash from your accounts. Basic insurance and a reasonable emergency fund will ensure that you can sleep well at night.

Savings & investments are a diversified topic. As my readers know, I favor the stock market. However, there are tons of other options for how money can be saved and invested. No matter how and where you start, just make sure you do it regularly. Make sure you get regular interest or dividends paid out. And make sure to re-invest those, to let the 8th world wonder of compound interest do its magic.

Home is on my last spot, for a simple reason. Home is a flexible concept for me. We all have our dreams, plans, and goals, and choosing a home can play a crucial role in your life. Repeatedly. What do I mean by that? Well, in the beginning, it might make a lot of sense to chose your home for a place where you can maximize your savings. Low tax, plenty of affordable shopping options and neighbors who don’t care about what type of car you drive really have a strong influence on your daily expenses, your lifestyle, and ultimately on how quickly you will be able to grow your nest-egg. Later, you might think more about a comfortable lifestyle, move to a tropical paradise or get back closer with your family. For a FIRE aspirant, buying a home is seldom a good investment and rather a loose and flexible concept.

Putting these pieces together and understanding what you want, how you want it and where to put your focus is the first step to understand who you are, what you want and how a realistic plan to get there might look like. Why not start thinking about it today?

Why everybody should invest

I strongly believe that the majority of people who don’t invest their money, most probably also don’t understand our economic and monetary system. There is otherwise no other valid explanation or reason, why any sane person earning enough to build up savings would not routinely and diligently contribute at least a small part of their savings into some kind of investments.

Investing itself is no rocket science and requires almost no effort. It actually only requires commitment and patience. There are many different ways of how investments can be pursued, but the easiest and most accessible one is certainly the stock market via ETF-index savings/investment plans. Therefore also the advice from one of the richest person on the planet, Warren Buffett, that the best investment most people can make, whether they’re wealthy or just have a few hundred dollars to invest, is a low-cost index fund.

We can, of course, have a debate about this and we could find some cases and examples that could undermine this statement – in some cases. But I actually like to learn from smart people who simply know what they are doing, who learned the lessons and are more than happy to share them with the world. It would be just not smart to ignore such learning opportunities.

Why it got to work out

Are there risks involved? They certainly are.
Is it a totally safe investment? It certainly isn’t.

So why should you put your hard earned money there? Well, because at the end of the day it just got to work out. Here is the idea behind it.

Good or bad, our economic system is designed for growth. As long as we keep developing, building, expanding, increasing consumption, researching etc. – our economies will grow. As long as the growth is intact, money is being created and wealth is increasing. However, as everyone noted by now, only a small percentage of people worldwide actually participate in the growing wealth. You might have guessed it: Largely, the investors.

There are people who think that we are approaching a limit for growth. I won’t debate about it but let me just say: Those people couldn’t be more wrong.

The world population is still growing, technology is increasing faster than ever and I am pretty condifent to see humanity going beyond the limits of earth within my lifetime. You remember how your parents were always telling you that there are no limits to what you can achieve? They were probably wrong, but there are certainly no limits to what humanity can achieve. This is what I believe.  And this is also, why growth and wealth creation will continue.

What can go wrong

Now, despite being very optimistic, there might be some bumps along the way. If economies stop growing and a country or the entire world falls into a recession, wealth is being reduced. This is not a theory, but a regular occurrence. The most popular country caught up in a recession is probably Japan. Despite it’s amazing technology development, large population and being home to some of the largest and strongest companies in the world, wealth creation has stagnated or even declined in Japan.

This is the reason why every time you watch news, people are really getting serious about growth. Even small percentages or differences can cause heart attacks, since the outcoming results can be devastating. But exactly, devastating for who?

Now, here it get’s tricky, because while the wealth of investors can be significantly increased during growth periods and reduced during a downturn, investors are probably not the ones who will suffer the most. The one who suffers the most will be the average Joe. Why is that?

Well, the simple point is that investors can control a few things and actively reduce their risks and protect their wealth through active risk management. This may include many different options, from increasing efficiencies at their business, working on better economies of scale, merger & acquisitions… but it may also include simple, old-fashioned cost cuts. Closing down factories, reducing work-force and everything else that might be deemed necessary to reduce their losses or to protect their profits.

This may sound cold and terrible, but it is a purely logical process. Something everyone of us would do, even on a much smaller and simpler scale, like for example when managing our household budget. You might not be able to “fire” members of your family when times get tough, but you might consider sending everyone who reached working age to some kind of work. You might scale down on your house-helpers or gardeners if you had some before. You might cut your Netflix account, put tighter limits on your credit cards, swap your groceries purchasing routine from monthly to weekly or even daily, get rid of you 2nd car, move to a smaller house or condo, etc. Well, in business all the same things are being done, simply on a larger scale.

Why it’s the average Joe without investments who suffers the most

This is the main reason, why being invested is the best thing you can do, in good, or in bad times. Because if your company needs to scale down and you lose your job, then there is probably not much that you could do about it. The same goes for, if your work benefits are being reduced, or your pensions shrink or anything else that the business needs to do in an attempt to reduce their own risk. The average Joe without investments got no say and no alternative.

When you are invested, some part of you is on the other side of the game. Because the money you invested makes you, to a very small part and depending on how much money you put in, a partner and co-owner of the business. It means that all these things that the business will do to protect either its survival or its profits, or simply to reduce its risk exposure, all those things are actually being done for you. To protect your investment.

And not only this. When focusing on dividend stocks or index funds that payout dividends, as long as the business makes profit, it will also keep paying you. While others get their pay-checks cut, you will most likely still keep getting dividend payments.

A dividend cut may occur, for various reasons, but if it happens, then in most cases it will truly be the absolutely last resort for the company. And even if the business should require to propose a dividend-cut, well, as an individual owner of the company shares (not so with an index fund), you will have a vote on this. How many employees get to vote whether they can keep their jobs when a difficult situation comes up?

Investing is the only smart thing to do

On the other hand, as a simple employee without investments, you are not even participating in the game. When you lose your job and the economy takes a dive, you will need to tap your savings, to borrow money or to go for social security. Neither options is pretty. For those who were parking money regularly on a savings account things can get even worse, because just within a few months they might deplete and completely destroy all their years of savings in the process.

As I mentioned, there are no guarantees and even the best investors lose money sometimes. BUT in the long run, as an investor, you have a realistic chance of accumulating tremendous wealth, build up passive income and to actively participate in the wealth creation in the process through dividend growth and compound interest.

It is truly the only, reasonable and proven system to accumulate wealth, which doesn’t require any effort, skillset, or qualifications. All you need to do is to simply invest regularly, disciplined and with patience. Time, growth, and dividends will do the rest. This is why to escape the rate race, the stock market is my way to go.