About JSP

I have a dream. A world without financial worries. A life without the pressure that forces us daily to jump back into the rat race. And I have a goal: FIRE. Financial. Independence. Retire. Early. This blog is all about me getting there.

Breaking Rules

Nothing is as it should be this year. 2020 will go down in history as one of the worst years for my generations (X / Z – I am right on the brink). Highest unemployment in history across the globe. People restricted to travel between countries, in some areas even between cities. Foodbanks, charities and NGOs getting people through hard times even in the most developed nations.

Every weakness of our economic systems has been exposed by now. The mantra of a small government and an unhinged economy has been crushed to pieces. Whether it’s Germany, the US, UK or Thailand: Without government support it would all collapse.

It’s a terrible situation, but we will get through this. There is light at the end of the tunnel, and I am also confident that we will thrive again once this is all over. And having said that, as bad as it is, it’s also a great lesson and experience for us. Instead of lamenting and complaining, we have right now the opportunity to analyse the situation and to think about how we can handle a similar occurrence in the future.

The solution is, financial independence.

The rules that society is putting on us are still the same. They don’t change even in the current crisis. People talk about better education, job creation, minimum wages. And it’s all good and right. We need to work, we need to accumulate knowledge. We should be fairly rewarded for our input in the economy. But to really protect yourself, you got to break out of those rules and take ownership of your future. You got to get financially independent.

Being financially indpendent means that you have to ensure that you can afford a shelter no matter what, that you can get food on the table without relying on charities, and that your health is protected. Financial independence is not about getting rich. It’s about freedom.

The steps for reaching financial independence are only a few:

  • Earning as much as you can
  • Spending as little as possible
  • Saving and investing the surplus
  • Building passive income

Only four steps that explain it all. Simple and while not easy, definitely achievable with the right mind-set, plan and determination. And the benefits are immense. Not only may it allow you to retire early from your regular job. Achieving financial freedom will also empower you to pursue other paths and passions which you might have not considered previously due to financial commitments that couldn’t get neglected.

Even more importantly though, it will also prepare you for hardships, and situations as we are experiencing right now. It’s undeniable that those who build up emergency funds that cover 6-12 months of expenses, or who have passive income streams, are significantly less worried while the virus is causing panic and havoc across the world.

The FIRE movement is just a smart thing to do

When you explain the idea of financial independence and the FIRE movement to people who never thought about it, you will hardly find anyone who would disagree with it these days. There is nothing about massive unemployment, stagnant wages, and deteriorating economic conditions that would encourage people to go back to the old days.

And this is not a one-off event. It will happen again. Maybe it will be another virus. Maybe something else. But we know that hard ships are part of the equation throughout our lives. So wouldn’t it be a smart thing to do something about it? To prepare for it?

As my readers know, I am promoting investing in stocks. And surely, many companies got in trouble and had to cut or reduce their dividends, hence also impacting my passive income. But what this crisis showed me clearly is that while there is no 100% protection in this kind of environment, the odds are still clearly favouring investors over regular workers.

I work in the hardest hit industry of the pandemic: I am a hotel manager. And while my salary was cut by up to 40% as my hotel had to close for a few months, my passive dividend-income went down only by 9% on average year to date so far, and I expect it to remain on that level.

If you ever had doubts whether FIRE is for you, these doubts should be gone by now. And whether you invest in stocks or real estate, or any other way that generates passive income streams, it should be (or become) a part of your plan.

The pain continues… for some

We are now in the middle of the third quarter of 2020. August. And the world doesn’t look much better than it looked in the second quarter. In fact, despite all the happy talk that you might hear occasionally on some news, data points increasingly towards a bad fourth and final quarter as well.

So the pain will continue and might even increase. More companies will close their doors. More people might lose their jobs, or endure salary cuts. Many people will remain dependent on the support from governments, friends, families, or charitable institutions… and sometimes strangers.

The suffering is not equal

But some suffer more than others, and guess who is suffering the least? Well, from what I see, income investors have suffered very little in comparison to regular folks.

When I look at my income portfolio, it looks as bad as it gets with current total performance in value development of -29%. Almost a third of the money I invested has disappeared. On paper. In reality, it doesn’t disappear until I sell the shares – which I have no intention to do within the next 20 years or so.

But interestingly, my dividends for this year will be holding up much more stable. According to my most recent forecast, my dividend income for this year will fall only about -8%.

Cash is king

In a crisis like this, income investors have the advantage that most of their investments are/were around financially strong companies, which generate either strong cash flows or which are simply rich.

In addition to this, many dividend-paying companies tend to offer essential services. Whether it’s water, energy, food, or our most addictive tech-entertainment. Those companies keep earning money no matter what and can largely sustain their dividends even in a global crisis.

Having strong cash flows and/or a well-prepared emergency fund, those companies can navigate through the storm, and even use their strong cash position to grow and expand their business. One should not get surprised if the strongest among them come out even stronger after the crisis.

Technology is unstoppable

I have this year so far only added money to my speculative portfolio which has several technology titles in it that either benefit from the pandemic, or which are simply not relevant to the pandemic at all. And while my income portfolio shows a -29% performance, my speculative tech portfolio is already back up with double-digits and +25% in market value.

Some people are wondering why the technology sector keeps rising despite the harsh reality that we experience across the globe right now. But in fact, it’s not surprising. Technology will be moving forward no matter what, and being invested in a few solid technology-focused companies will probably serve as a great diversification to any portfolio for the foreseeable future to come.

Keep investing

So yes, I keep investing. I am currently not adding money to my dividend income portfolio, but plan to do so around October. August and September look still awfully bleak and we might see more bankruptcies, more unemployment, and more suffering. But the longer it will be going on, the closer we will get to a solution. I am, however, putting money into my speculative portfolio.

History has taught us, that after every crisis the market recovers. As a young investor, you should therefore not hesitate. Whether you go in with an ETF or individual stocks. Crisis or not, keep investing regularly, and diligently, and as we get closer to a solution to this awful pandemic, your efforts and trust in the market will very likely plan out according to similar events of the past and reward you in the long run.

There are of course no guarantees, but what is guaranteed these days anyway?

Investing in space

I mentioned it somewhere before, but I like to point it out one more time: Investors are in general positive people. Especially those who focus on the long term prospects of the world. We might be in a pandemic that is devastating economies across the globe right now. But most investors know that we will pass this, that the economy will come back, that new jobs will be created, and that this is not the end for humanity.

So naturally, every crisis is an opportunity, and when things turn doom and gloom for many, investors are trying to look beyond that, always on the look-out for some fresh straws of grass that start to (re-)grow from the ground.

Where does humanity go from here?

One such straw of grass for me is a future trend that is gathering tremendous momentum. The space industry.

I know: Space stations, space mining, space exploration, it all sounds like crazy stuff. And if you are not actively researching about it you might believe that this is something still far beyond our reach.

But you might get surprised how this is, in a sense, not a new industry at all, and how many players are already actively working in this field. I recently stumbled upon this amazing infographic from a company called “Seraphim Capital”, a specialist investor group:

The most recent launch of a SpaceX shuttle was a moving moment for me. It went so smooth and stable, one would even wonder how it was a special moment at all. But for those who don’t appreciate the significance of this: Sending people into space in such a safe and controlled manner, is like setting foot on a proper boat to cross an ocean for the first time. It opens up a new world for us. For an investor, this is an entirely new frontier opening up. Literally, a new world to discover.

Personally, I am invested in two companies that focus on this future business: One is Virgin Galactic (SPCE), and the second one is Hexcel Corp. (HXL). The first one is focusing on bringing people to space. Whether as tourists, future astronauts, or general space flight training and transportation. The second company is developing structural materials that can be used for various kinds of vehicles and protective systems, like for example hulls for planes and space ships, or possibly protective walls for a moon base.

There are endless options and the race is on

As you can see from the infographic, there are plenty of companies for investors to choose from. For those who prefer ETFs. I also found some which are focusing on space investments, but I can’t trade them in Europe so I also won’t talk about them here just yet. But whether it’s computer software or hardware, engines, communication systems, satellites, drones, navigational systems, data crunchers, launch services, protective equipment, … the opportunities seem endless… and the race is on!

Disclosure: I own SPCE and HXL.

Keeping investing in difficult times

There is a lot of “happy talk” from governments around the world promising a swift recovery and promoting a way back to a “new normal” on the immediate horizon. However, when listening to politicians we always need to keep in mind what their incentives are. Politicians have a vast interest in painting positive pictures because their positions and their re-elections might depend on it.

In times of crisis, it is better to listen to other voices, and in particular to businesses. Not to their press releases, which are also often overly positive to keep investors patient and calm. The more relevant information is flowing in the background: Are they hiring people or did they freeze their payrolls? Are research and development projects being continued? Did they request their financial partners to extend credit lines? Are assets being sold off or do they continue to add value with acquisitions? Are they scrambling to get through the crisis, or do they take the opportunity to eradicate weak-points in their business models?

You don’t need to DO the research

For large companies, you can trust that somebody is doing this research for you. Financial magazines, newspapers, analysts, online blogs. There is a lot of work being done by many people out there. All you need to do is to find this research, to read it, to evaluate it, and after reading a few of these sources, to form an opinion based on the information you received.

You can do this for individual companies, but as an investor, you definitely should do this for entire markets. The world’s most famous and successful investors read a lot, and the majority of what they read are assessments, opinions, and evaluations of products, services, trends, and opportunities.

People like Warren Buffett, Bill Gates. You don’t need to like them or to necessarily agree to their ideas and positions. But you should acknowledge that they have a significant amount of knowledge about what is happening in the world. They use this knowledge for their decision-making process, where to invest, which project to support. Which idea or business model, or charity offers the best chance of success, adding value to the market, to investors, and to potential customers or recipients of the product or service.

The picture is pretty bleak

Looking at what is happening in the markets right now, the picture is pretty clear. And pretty bleak. We are in a recession, one that might last a few years.

Almost every colleague of mine is on a salary cut, furloughed, or anxious that he might get into a challenging situation in the next few months to come. Companies in the travel sector are obviously heavily impacted, but also other sectors experience similar challenges. Job cuts, sales of assets, and project delays are mentioned daily basis in newspapers around the world. And while some economies started to slowly re-opening, cash-flows are still very far away from where they were in 2019. The numbers for the first half of 2020 will come in and will be reported in the next weeks to come, and it’s pretty safe to say that there will be some shocks ahead to those who kept listening to the happy talks of politicians.

All this doesn’t mean that you should stop investing

As I mentioned in a previous article, this could nevertheless be a great opportunity for investors. Every crisis has survivors and losers. And survivors usually come out stronger every time when they are challenged and pushed to improve, to re-invent, and to innovate. From my point of view, this crisis has pushed us into new investment territories by emphasizing the importance of sectors that were neglected in the past.

Technology is already a clear winner (again), but it’s worth taking a deeper look into it. Some areas of technology will shift into a stronger focus than others. Cybersecurity for example is such a sector. Work and freelance platforms are another.

Producers of hygiene products and business which focus on health & safety can expect long-term benefits for the years to come. But the same goes for companies which not many had on their radar like waste management systems, and water supply and filtration technologies. You know where all your germs go to every time you shower or visit the toilet, right?

Plenty of opportunities in every crisis

When you read enough, gather a sufficient amount of information and knowledge, and adapt your thinking to understand that there are opportunities in every challenge, then you will quickly realize that, crisis or not, there is no reason to ever stop investing.

The only limitation I would see is when you are running out of time. When you get old. But by that time, your portfolio should be the last worry you have. By that time, I would hope that you have had a successful investment history and that you can happily retire on your monthly dividend income.

Doing the right thing – with conscious investments

There is lot’s of discussions about whether investing in a company does anything to support it, hence whether purchasing shares of a company puts you in a position of responsibility for what the company stands for and for what it does. Let me address this today and tell you my point of view on this highly debated topic.

If you buy stock in a company you become, to a tiny part, owner of that company. As a co-owner of a business, you obviously take on some responsibilities of that business.

The most obvious one is that you receive votes to influence major company decisions, which you can exercise once a year at the annual general meeting of shareholders. The other responsibility you take on is the financial responsibility in relation to the share price. If the company goes bust, your money will be gone. However, should the company keep succeeding, you are entitled to participate in that success through a rising share price and/or dividends.

Does your investment have an effect on the share price?

Your purchase may increases the share price, or support in stabilizing it. The effect that you as an individual with only limited purchasing power might have on the share price will be very small in most cases. Some might say it’s negligible. But, there is certainly an effect.

If you purchase shares which are rising in value, you support the move up by showing confidence in the company through your willingness to pay more for it. When the share price is falling, your purchase also supports the company. This is due to a stabilizing effect that it will have on the sellers. If you wouldn’t buy the shares at the lower price, then the seller would have had to lower the price further, thus increasing the down-turn for the shares price of the company.

So whenever you buy shares, to a tiny amount you either contribute to pushing the share price higher, or help stabilising it on it’s way down at a certain level.

How does that influence the company?

The share price of a company determines the companies value. Based on the value, the company receives a range of financial options, including loans, debt issuance, credit lines and guarantees to grow or improve its operations.

Furthermore, as mentioned above, your voting rights are a benefit and a responsibility you have as an investor.

Admittedly, with only these two main points, your influence is an individual investor is very small. With limited purchasing power and therefore a small amount of shares you might purchase, your voice doesn’t get too loud. But it doesn’t mean it isn’t there.

Your part is comparable with let’s say a presidential election. Your vote alone might not appear strong, but the more people follow those same ideas and convictions you hold and exercise their rights, the more of an impact it will have on the company.

You get a voice

Looking at the points above, the process of becoming an investor is another version of a democratic system on an enterprise level. You get actively involved in it by purchasing shares of a company, and to a tiny amount, you do influence the company by purchasing shares.

Once invested, it will be up to you whether you continue holding the shares, thus contributing in keeping the share price stable. And whether you will exercise your voting rights, thus contributing to steering the company in the direction you believe to be the right one.

Do the right thing

In my opinion, investing is the only way to get a voice and a say with even large companies. For many it doesn’t sound like much, but I see it otherwise. It’s a great opportunity to have influence beyond the small bubbles of our own lives.

For example: Just imagine, if all members of an environmental NGO would unite and purchase shares of a company which is responsible for environmental pollution.

With enough shares and votes on hand, they would very likely receive the opportunity to change the direction of a company. They would receive the rights to support or to reject decisions on who runs the company, where money is being invested, and which policies are being drawn going forward. With only as little as 10% ownership they already could assemble veto rights, and insights into the companies internal processes and decisions which they won’t get in any other (legal) way.

So, if you want to help others doing the right thing. Invest. Invest consciously in good companies to continue supporting them in doing the right thing. And if you want to contribute in bad companies becoming better (or less bad), purchase shares of bad companies and exercise your voting rights, to help the company doing the right thing.

The WireCard fiasko and newspapers

I have been slightly absent from this blog this month as I got busy with the re-opening of my hotel here in Thailand. I am also working with a friend on a tiny online business, and yeah, the day has only 24 hours. But of course, plenty of things happened on the investment front and one topic deserves an honorable timely mention. I am speaking about the German DAX-quickie-candidate WireCard.

WireCard was the latest addition to Germany’s main stock index, the DAX. It joined the ranks of the most valuable German stocks roughly a year and a few months ago. But it has been a very short ride. Just yesterday the company was forced to file for insolvency.

About newspapers

I won’t go into details of what happened, who’s to blame or make any predictions on the future. There are tons of articles on these points out there. But I will say this: Reading newspapers really helps, and a paper like the Financial Times has much more credibility than any internet blog or forum out there.

I am reading and following several blogs and forums that give advice on stocks. I have also subscribed to several newsletters that supply me with daily updates and info about interesting opportunities and market developments. And often I can find some interesting stock picks there that are suitable for both, short and long term investments. WireCard was often cited as a shining star among German most promising tech and growth companies. And while the reports from the Financial Times were frequently mentioned, the narrative was mostly still being spun around to a more positive one.

But let me say this: When a major newspaper like the Financial Times starts to report on dirt about a potential investment and doesn’t back off even when being sued, then you better wait until things get clarified – beyond any reasonable doubt.

WireCard dropped like a stone when all the allegations and suspicions turned out to be true. Within only 3 days the stock dropped 98%, from slightly above 100 Euros down to 2 Euros.

WireCard found the perfect niche

I had a tiny speculative position in the company. 5 Shares which I bought at around 80 Euros apiece. On the day when the internal investigation report was announced, I moved quickly to sell and got rid of them just on time during the first drop at slightly above 50 Euros. I got lucky to get out with a small loss.

Despite the reports in the Financial Times, I also bought into a positive narrative. The propagated business model and the online news cycle for WireCard were very encouraging and promising. Of course, I still had my suspicions which is why I kept only such a small stake. But my hope was that the doubts about the company would have been eradicated during the investor’s conference. The shares would then have probably doubled in value by now and the company would show great potential to become a solid long-term investment.

Keep your emotions at bay

But greed and hope are seldom good advisors. Knowing this, there are strategies to control your risks.

First, you must know yourself and whether you are ready to take on the risk. If so, then control your stake, and have a plan in place to limit your losses. As in my case, I kept my stake at a very low level and made sure to have enough time to react when the news broke. This helped me to reduce my loss substantially.

If you are however not ready for any risk, then it’s pretty simple: Stay out of it. Wait for things to clear and rely on information and quality data. This approach will always serve you as a better advisor in the long-run. Yes, you might miss the opportunity to profit from a potential quick gain in the share price when news brake and the stock jumps to new heights. But if a success story is confirmed and gets in place, then the shares will likely keep rising for some time to come. Long enough to generate substantial gains for you over the years to come.

And the last point to mention is that whenever you are looking for quality information, remember that professional newspapers still have the best value proposition in terms of actual research out there.

Internet research forums, blogs, people like I, we are not really professional researchers. We dig into numbers and reports which are available online. Journalists are the ones who do the real work. Like in the case of WireCard, they got on a plane to Dubai, only to find empty offices. They tried to find connections across Asia, only to return empty-handed and with more questions than answers.

This is much more than any of us regular writers do. And of course it is, it’s their job. So you won’t do badly in putting some trust in them every now and then. Especially when it comes to making decisions that might concern your financial future.

Disclosure: I am not affiliated with any of the companies mentioned in this post.

The next downturn is coming

The last few weeks have been pretty interesting. First the stock market crashed. Then it started to rise and became “the most hated rally” in history. And now it’s back to crash again.

What I did over the recent weeks was observing which shares were rising and falling faster than others, and I did make some purchases. For most parts I bought shares of companies in the tourism and real estate sector, which fell dramatically, but which also show the most promise of rising back up swiftly once the real recovery starts.

The real recovery might take time

But indeed, the real recovery might take much longer than people, and the market, are anticipating right now. Since I work in the hospitality sector, I know very well the projections, and the expectations we are facing in the real world. And the stock market will adjust to these realities at some point.

The swings up and down right now are really extreme and show that many trades are being executed on impulse, on emotions. But in a few weeks these sporadic reactions will reduce, and real data will take over. The crazy daily swings will become moderate, and we will get back into a more stable trend.

The big question is of course whether it will be a positive, or a negative trend. And it’s really hard to determine, but personally I still expect an overall market downturn, because the recovery will take time.

The service industry is crucial – and so are spending habits

The service industry includes hospitality of all kinds. Hotels, bars, restaurants. And these businesses form not only the largest employment sector on the planet. They are also based on the idea of bringing people together. Sitting together. Spending time together.

Given that the behaviour of people has been altered due to the current pandemic, and also that it won’t likely change significantly unless there is a vaccine or cure, it’s therefore probably realistic to assume that a real recovery can only begin when this problem is solved.

Now a workable vaccine may come sometime by the end of this year, more likely during the 1st or 2nd quarter of 2021. Also, there is a high chance that the first generation of the vaccine won’t be as successful as some investors might think. The reason is simple: The first generation of vaccines is usually not the best one.

Given all these details, I would rather see any meaningful recovery to begin around the 3rd quarter of 2021. And until then, people will keep losing jobs, spendings will be marginal, travel will be restricted, and cash-flows will remain on the lower levels. Less spendings means lower revenues, lower profits, lower investments, fewer jobs, … you get the picture.

Good time to start investing

But again, as mentioned in this previous article, it might be a great opportunity for many people to start investing. While the short- and medium-term might look insecure, the long-term prospects are still in favour of investors.

Buying great companies at a fair price

Yesterday I watched an interview with Warren Buffett. It was actually from February this year, but I hadn’t that much time to focus on such a long single video then. The interview went on for over 2 hours. Now, with working from home and my hotel closed, this was an opportunity to seize.

Warren Buffett is a fascinating individual. Humble, simple, outspoken but more than often speaking in riddles. I watched several of his interviews and speeches in the past and what strikes me every single time is that he constantly keeps repeating the same 2 core messages.

His first recommendation for the average investor is to simply purchase an index fund. Not spending too much time with picking individual stocks. Not pretending to be smarter than the market by spending hours and hours analyzing shares with some sophisticated metrics. Especially when this time can be better spent doing something else.

For those who prefer to purchase individual shares, however, he does have a second piece of advice. And he keeps repeating this one over and over for many years.

Buy a great company at a fair price

As people who don’t understand the stock market like to refer to it as just another form of gambling, the fact of the matter is that when we purchase shares, we are actually becoming co-owners of that particular business. We are taking a stake in that particular venture, for the good and for the bad side of it. Warren Buffett puts, therefore, the investment thesis down to a simple formula: Do you believe that the business you want to buy will exist and do better in 10, 20, or 50 years from now?

If the answer is yes, then you should invest in it. Of course, you should still do your due diligence, research some more details about the management, structure, and check on the valuation, but these are not the key factors. The first thing to clarify is whether the company has a solid business model, whether it offers solutions to problems people have and will remain to have, and if it’s smart enough to do it in a sustainable and profitable way.

Obviously, this is not the “get rich fast” approach. And as he once famously stated, his advice is being constantly disregarded or misinterpreted because “nobody wants to get rich slowly“. Nevertheless, this approach is what real investing is all about and how he became one of the richest people on the planet.

There are always great companies at a fair price – but especially so during a recession

Every crisis offers opportunities for smart investors. With markets in panic mode, stock prices of even the best companies are often being dragged down together with the rest of the market. The now expected recession and downturn will be no different. It might be therefore a good idea to put some cash aside, and to closely observe companies that you believe have a bright future ahead. It might be your opportunity, to purchase a great company at a fair price.

About emergency funds

This post is probably 12 months late. As we are in the middle of a global pandemic, people are losing jobs, lives. But even more are coming to realize that they miss something truly important: An emergency fund.

I got to admit, I am also not a great role-model here. Over the last 5 years, every penny I got was being invested right away. Therefore I have not built up a proper emergency fund. This is changing now.

How much is enough?

I read several surveys from Germany and the US last year. While I don’t remember exactly the numbers, they were overall pretty similar in their final assessment. A majority of citizens (of each of the countries) are not prepared to handle even smaller unexpected (emergency) expenses out of the pocket. How small? We are talking about 300 Euros or 350 USD.

I was honestly shocked by reading about it, because 300 Euros is very little, especially when we are talking about the US or Germany. For most people, it wouldn’t be enough to cover monthly rent, groceries, let alone a potential hospital bill or car repairs.

So obviously 300 Euros is not enough and wouldn’t qualify as an emergency fund. An emergency fund is meant to offer us protection in times of real need. When something happens that threatens our 3 basic needs (shelter, food, health), possibly over a prolonged period of time.

It needs to be therefore large enough to cover our regular monthly expenses for a specific timeframe. Most financial advisors recommend 3 to 6 months.

Therefore, to determine the size of your emergency fund all you need to know is about your monthly expenses and multiply this amount with a minimum of 3 months. If you are a cautious type or consider yourself for whatever reason to be more at risk, you might want to multiply it with 6 or even 12 months.

How to get there

Of course, you are not supposed to put this money aside right away. If your monthly expenses are around 1.500 Euros, it would mean that your emergency fund should be at a minimum of 4.500 Euros to cover expenses for 3 months. If people can’t get 300 Euros out of the pocket, how can they save up 4.500 Euros?

The solution to this is of course time, consistency, cautious choices, and the occasional sacrifice.

If you are saving monthly for a certain financial goal, a part of that monthly savings needs to be redirected towards your emergency fund. When you get a salary raise or a bonus payment, you might want to skip the celebrations and put the money into your emergency fund. If you are a coffee addict, how about skipping two cups of those soft lattes each week and putting 10 dollars each week in your emergency fund instead.

This step by step approach might take time, but unless you have an emergency every few months, you should be able to get to your goal within a reasonable timeframe.

The last option is to take on a side-gig. Sacrificing a little more time for a few months or a year might prove the right choice down the road. Having an emergency fund in place will protect you not only by covering any expenses that might unexpectedly pop-up. It will also protect your investments and other financial assets. Because you won’t get under pressure to sell them when money becomes an issue.

Keeping it liquid

An emergency fund needs to be liquid, which means that it must be easily accessible and not tied up to anything. Usually, you will, therefore, keep it in cash, on a simple savings account, or as a fixed deposit which can be easily withdrawn.

I have decided to split it. I keep one month of expenses in cash, and over the next 6 months I will set up a fixed deposit account with enough money in it to cover another 3 months of expenses.

No matter which way you chose, but having some money on the side for the next pandemic, the next wave of cost cuts in your industry (meaning when you get furloughed), or the next car accident, is surely worth the effort.

Who gets all the money?

As I mentioned in my last post, investing makes a lot of sense for people who want to retire earlier, safer, and with a higher degree of protection than one would have with a regular job. This is applicable to basically everyone.

I explained this with the distribution of all the freshly printed cash that is being pushed into our economy. This is especially true in times of a crisis as we are currently experiencing. The difference in the amounts of cash that ends up in the hands of ordinary people, and in comparison with how much of that money goes to companies, is astounding.

But don’t rely on my word for it. The ones who know about this best are obviously the ones who get all the money, and I recently stumbled upon an article in my Flipboard account about that topic that explains it further very well.

You can find the entire article HERE, but let me take out and quote the most important paragraph of the read:

“All the signs are that coronavirus will increase inequality even further. The government is accumulating debt to subsidise the wages of the employed and self-employed unable to work because of the lockdown. Businesses are taking out loans to keep afloat. This debt is being used to pay bills and rent to those who own assets.

The money goes to those who own assets

Now, The Guardian is not my favorite paper but every now and then there is a good article. This article also has some weak points that might be debatable, but in the essence, this paragraph as highlighted above explains it really very neatly. I underscored the key points above.

Governments are printing money, issuing bonds. Interest rates are being pushed down to make loans cheaper thus more attractive. And all this money, trillions of dollars and euros, is ultimately being pushed to and ends up with those who own assets.

It’s your choice to make

I know, it’s easy to get offended by this system. It’s easy to blame it for all the problems in the world. But as I learned early on in my career, complaining solves nothing. You need solutions. Just complaining for the sake of it doesn’t help anyone. You need to have a solution, some viable alternative. And the fact of the matter is that currently there are no alternatives to the system we live in that would assure us to end up on a better path.

Politics aside, everyone has a choice here. You can be outraged, you can complain, and you can think about alternatives, go into politics, and plan for a better future. Or do nothing.

But in the meantime, it might be smart to own some assets.