March passive income overview

Edinburgh_märts2018

Southwestern Advantage sales leaders in Edinburgh, Scotland

Another month has passed and this time I try to sum it up in my English blog as well. I had an awesome month – it started with my braces been taken away, presenting in Riga about financial freedom and ended with ice-fishing with my son and editor of local fishing magazine “Kalale”. In between I had a chance to give lectures in several universities and highschools + I participated in a webinar as well. Also, we had a really cool trip with SWA salesmanagers in Scotland. While there, we visited local whiskey factory and castle. It was also fun to met our famous alumna, Robin Mukherjee, who lives in Scotland. He was an all-time legend in SWA.

Now, lets talk about money. As I have said, my goal is to build passive income that exceeds 10 000 euros per month. I do not count temporary loans and their interest in this calculation as many of these loans are short-term and temporary. Instead, I focus on mainly dividend income and long-term interest from P2P lending portals.

During March I made 1002 eur interest from Omaraha portal and incurred 186 eur of capital losses there. So net interest income was 816 eur. I also made 138 eur interest from Mintos (to try it out, use my referral code!).  So total was 954 euros. Not to shabby!

Dividend income was also good in March. As I have described, I am in the process of building forever-lasting DGI (dividend growth investing) portfolio through Interactive Brokers platform. Currently I have 49 positions and almost 200 000 usd working for me. March /June/September/December is the most common dividend pay-schedule for my companies and so March was a record-breaking month. I got (after 15% tax and currency conversion) 708,5 euros. Big thanks go to following companies (and their customers!): VGR, GM, CRI, QCOM, FGP, DAL, WPG, VIRT, O, SDLP, TGT, IBM, XOM, TNK, LB, TJX ja F.

In real-estate we are still in “paying-back-the-bank” mode and I do not count that income as qualifying passive income for my 10 000 eur quest. How was your passive income in March?

 

 

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Presentation in Riga, Latvia

Before meeting

Last week I had an honor to speak to Latvian college students about financial freedom, investing and money management. I think it went well – hour went fast, I got some good questions and people seemed to be interested. I promised to share my slides here as well, so you can download them here: Riga presentation 2018.

Opening account in IB

ibI have used Estonian broker LHV for my stock purchases for over 10 years. During that time I have paid thousands of dollars (and euros for that matter) for commissions and fees. I had always rationalized that one day I will move my business to discount broker but it was never urgent enough. Until I found out about Interactive Brokers and their 1 dollar commissions. I also found out from investing forums that many other estonians had opened account in IB and it was not such a big hassle after all. So in August 2015 when I was vacationing in Hiiumaa, I bought a local beer, created hotspot with my phone and finally opened an account in Interactive Brokers. And yes, it was easy indeed 😉

My goal is to build up dividend growth portfolio worth 100,000 usd+ that would generate growing dividend income for me and my family. I own this account as individual and so I will be taxed 15% on dividend income (this is automatically done by dividend withholding tax) and 20% on capital gains (I plan to use investment account tax strategy that will enable you to start paying tax only once you take money out from investments to consumption).

I have set some general outlines on stock selection and allocation. I plan to have 30-40% of my assets in IB invested in Berkshire Hathaway, 10-20% in Apple and 10% in speculations. The rest will be divided by dividend growth stocks.

I bought my first ever Berkshire shares!

berksihreYesterday was important day. You can say it was a small step for mankind but a huge leap for me personally. I bought my first ever Berkshire Hathaway shares. It took me over 10 years – I have been reading and watching everything connecting with Warren for a long time. But shares always seemed too expensive or money too tight 😉 Yesterday I spent 2,5 hours cycling and watching recent interviews with Buffett on Youtube and after that made up my mind that only way to start is to start.

Another reason is that I want to visit Omaha and his annual meeting next spring. And I really need some good diversification away from Baltics – as my assets grow bigger I need to take into account our geographical risk more and more.

New money book from Tony Robbins – get it for just S&H!

robbinsI participated last spring at Tony Robbins “Unleash the Power” seminar and since then I get occasionally couple of discount offers. Today I got one pretty good one – get brand new Tony Robbins money book for just S&H – pretty sweet deal! I am already anxious to read it as it is a first book in twenty years from Tony. Also Universe works in magical way – I happened to listen Tim Ferriss show today while cycling and there was interview with Tony about that very book!

Get your copy for just $6.95 here!

You can also download free first chapter from here.

50% Club in life

ChrisAs you can all see, I have been pretty slow on reporting on my progress towards my 10 000 euro challenge. The main problem has been that I have been busy writing my Estonian only blog and getting new version of the book to the printing press. Also, it has been tragic times on personal front as just last week my first boss, salesmanager, mentor and friend Chris Adams passed away in tragic motorcycle accident. This still seems so unreal – every day I catch myself thinking about something connected with future plans with Chris – only to realise seconds later that Chris Adams is no more. Sad, sad – makes you wonder about your own priorities and life plan. Actually, out of this came also today’s blog post.

I have been a big advocate of 50% Club – save at least half of what you make – but I never thought about it in context outside of money. Chris’s sudden death made me realise that the 50% Club is not only for your money but should be also for your life – live 50% in today (so you enjoy life and do not postpone things, vacations and time with your loved ones) AND also live 50% in tomorrow, so you would have resources (time, health and money) to keep living the todays long into future. Chris was great example of this principle in practice – he always took great care of himself (we were always wondering how come he keeps looking younger as he got older) but always enjoyed the moment as well.

So my challenge for you – start living 50% today and 50% tomorrow!

My starting point for the challenge

wecandoitAs promised, I will do some digging in the numbers and go over the assets and liabilities I currently have. I have been tracking my finances since I was 10 years old – first with pen and notebook, then with old Macintosh computer and since 2002 I have been using Excel.

I have tracked my NAV (net asset value) monthly since June 2005 when my NAV was 384,335 Estonian kroons or 24,564.43 euros. I started calculating monthly passive cashflow since February 2007 when my passive cashflow was 5,552 kroons or 355 euros. So you could say that was my starting point.

As of now, I have made some pretty nice progress. I currently have a bit more than 6,800 euros coming in every month in passive income. But the tricky part is that quite a bit of that cashflow is interest from risky short-term notes, so when they get paid back, I will need to reinvest money with high interest (18+%) again or my passive income will drop. On the other hand, I have not taken into account majority of my real estate investments as those are held in different company and currently all income is 100% re-invested.

So as of June 2014 my passive income portfolio looks like this:

  • 110 eur monthly rent from real estate
  • 2,258 eur monthly dividend from dividend stocks
  • 5,786 eur monthly interest from notes and loans given out

So my total monthly positive passive cashflow is 8,154 euros.

As far as liabilities go, my monthly passive cash outflow is:

  • 660 eur monthly interest on personal loans
  • 628 eur monthly interest on company loans

So my total monthly negative cashflow is 1,288 euros.

That makes my current monthly cashflow 6,866 euros. So good news is that I am more than half done with my 10,000 euros goal. But like I said, bad news is that about half of interest income is short term and needs to be replaced soon.

All in all, I have progressed nicely (in as late as October 2012, my total cashflow was just a bit over 3000 euros) but still long way ahead.

 

10 000 eur monthly cashflow challenge!

jaak familyMy name is Jaak, I am currently 32 years old and I live in Estonia. I am married to Maria and we raise a son called Jako. I work as a sales manager, investor and blogger/writer.

My financial goal is to build 10 000 eur (ca. 13 000 usd) passive income portfolio from three asset classes – rental real-estate, dividend stocks and private loans.

I will give you frequent updates on my journey towards the goal and hopefully you will find some motivation and investment ideas from my posts as well.

Why 10 000 euros? Well, Interet is full of blogs of achieving financial freedom by frugal lifestyle and low daily expenses (some that come to mind are: Dividend Mantra, Freedom 35, Wherewebe, Early Retirement Extreme, Money Mustache). When it comes to other focus – that is making and keeping more money, I only found 2 million journey (if you know more, please link them in comments). So my goal is not to focus so much on the expenses side of the coin but to focus on income and passive income investing. 10 000 euros will give me 5000 euros free cashflow monthly to spend as I wish (I am a lifelong member of 50% saving club). That will do the job of nice and comfy living in most places of the world and certainly in Estonia.

Let the journey begin 😉

In the next post I will cover in more detail my starting position and what my gameplan will be. Stay tuned!

P.S. If you want to know more about me and you do not mind reading Estonian, then check out my blog roosaare.com