Route 2 FI - Free As A Bird #20 | The Perfect Time to Invest

Hi everybody!

Welcome to the 20th edition of my newsletter "Free As A Bird".



The Perfect Time to Invest

Like everyone, I sometimes struggle with waiting for the perfect time.

It’s no different with investing. If you’ve never invested before it’s hard getting started. It’s even harder if the market’s been steadily rising. Almost impossible when everyone is predicting a recession.

So what most people do is wait for the market to drop. They pick some random percentage: “Okay, when the market falls 10% then I’ll invest.”

Buy low, sell high, right?

It doesn’t matter what you tell yourself you’re going to do, because saying you’ll invest when the market drops is much different than actually investing when the market drops.

I know, because I’ve watched people play this little game. They tell themselves they’ll “get in” after the market falls just a little bit, and then just a little bit more, and then just a little bit more.

Always waiting for the perfect time, instead of just doing the thing.

This behavior often hurts investors. Dr. Jeremy Siegel, professor at Wharton, thinks the average Vanguard index fund owner gets just 50% of the published return.

If a fund is up 20%, investors will be up 10%.

Why? In reality, people aren’t buying low and selling high.

They buy high and sell low.

Like most things in life, investing is a lot like creating art. It’s easy to get stuck overthinking everything and trying to avoid mistakes and waiting for the perfect time.

What you need to do is just do the thing, and keep doing it.

Read The Article Here


My portfolio is at an all time high

I normally don’t check stock more often than once a month, but because I had some extra money to buy stocks for, I had to log into my account.

  • My index funds are now worth: $194,505 (1,755,807 NOK)

  • This year alone my portfolio is up 22,11% = $26,484 (239,075 NOK)

    How is your portfolio doing?


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Quote that got me thinking

How much money is enough for you to never worry again?

Shall I quit working completely or not?

The way I see it I got 3 options:

A) Quit my job when I reach a net worth of $600K. I assume this to be in about 4 years, when I’m 36 years old.

B) Start to work less now. I could easily go from 5 work days/week to 2 work days/week and still live my life as I do today. The only disadvantage is that I barely can invest at all when the income is lower.

C) Continue to work for a lot longer and build serious wealth. If I continue on this path for the next 20 years my portfolio will be worth $4,238,639.

But do I need it?

As one of my favorite Twitter-accounts stated:


red space clouds and stars

Have questions, comments or suggestions? I would love to help you.

If you liked this newsletter, I would appreciatethat you subscribe or like by tapping the “heart”.

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Thanks for reading,

Route 2 FI

Route 2 FI - Free As A Bird #19 | Rising Possibility of a Recession in 2020

fogs covering rock formations

Hi everybody!

Welcome to the 19th edition of my newsletter "Free As A Bird".



10 Essential Things I’ve Learned That Made Me A Better Investor

It is this risk that keeps investors in check and that keeps people from paying an infinite amount of money for shares in a business.

When you see the blood-red numbers in front of you on your screen, that panic you hear in people’s voices; those sights and sounds are the physical manifestation of the equity risk.

Stock investors get paid for facing these fears because so many others will not face them.

When nobody fears anything, stocks no longer work for investors’ long-term return needs.

When the possibility of loss goes away, so does the probability of gain.

Thinking long-term means you don’t act out of emotion.

It means that your goals don’t fluctuate with the market.

It means having a plan and sticking to it.

The most successful investors are able to ignore the things today that they know won’t matter tomorrow.

Read The Full Article Here


An Interesting Thing I Read This Week That Got Me Thinking

September Macro Update: Rising Possibility of a Recession in 2020 by The Fat Pich

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The balance of the macro data remains positive.

A recession starting in 2019 is unlikely, but, for the first time, a recession in 2020 is a rising possibility.

The bond market sees weakening growth. The yield curve has 'inverted' (10 year yields less than 2-year yields) ahead of every recession in the past 40 years. The lag between inversion and the start of the next recession has been long: at least 7 months and in several instances as long as 2-3 years. Notably, the yield curve finally inverted in August; on this basis, the current expansion will likely last through 2019 but 2020 is now at risk.

Unemployment claims reached a 50 year low in April (just 4 months ago). Historically, claims have started to rise at least 7 months ahead of the next recession.

In July, housing starts rose 1% yoy, building permits rose 2% and new home sales rose 4%. In the past 50 years, a median of 28 months has lapsed between new home sales' expansion high (arrows) and the start of the next recession; so far, the cyclical high was in June, just 2 months ago, which suggests that the next recession is still ways ahead.

Why does any of this matter for the stock market?

Equity prices typically fall ahead of the next recession, but the macro indictors highlighted above weaken even earlier and help distinguish a 10% correction from an oncoming prolonged bear market.

On balance, these indicators suggest a recession starting in 2019 is unlikely, but a recession in 2020 is a rising possibility.

The simple fact is that when the economy is expanding, the historical risk of a greater than 10% annual (not intra-year) decline in the stock market is just 4% (see figure below).

What is for sure is that a recession is coming.

We don’t know when, so you should always stay prepared.

How do I stay prepared?

I’m 100 % invested in index funds.

If the market drops 50 % I won’t be scared, because I know that this is normal in a perfectly designed market.

In the long run, stocks will go up.

And if your perspective is 10, 15 or 20 years, then why the hell do you worry about what happens today, this month or even this year?

Think long-term.

Always stay invested.

Recommended reading if you’re nervous in front of a possible recession:

”Why The Stock Market Always Goes Up”

Why The Stock Market Always Goes Up


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Quote that got me thinking

Golden words from Morgan Housel…


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Have questions, comments or suggestions? I would love to help you.

If you liked this newsletter, I would appreciatethat you subscribe or like by tapping the “heart”.

Feel free to reach out directly @Route2FI on Twitter or email me at post@route2FI.com

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Follow my blog here, or by tapping the picture below.

Thanks for reading,

Route 2 FI

Route 2 FI - Free As A Bird #18 | How I'm Going To Invest 30 % More Every Month ($3900)

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Hi everybody!

Welcome to the 18th edition of my newsletter "Free As A Bird".


How I'm Going To Invest 30 % More Every Month

Bilderesultat for stock chart

In a regular month I now invest aprox. $2,600 every month.

This month I’m going to invest 50 % more.

$3,000 —> $3,900.

How?

I’m lowering my tax rate on my income from 29 % to 16 %.

After taxes I will therefore get an income of $5,500 (earlier: $4,600)

By paying less taxes now, I have to pay the taxes back next year ( 29 % tax is the right interest rate for my income).

But, if I pay the whole tax amount back before 31th of May next year, there’s no interest rate at all to pay.

I see this as an form of leverage with 0 % interest rate.

I get the possibility to leverage my investments to a zero extra cost.

Have you done the same?

Would love to hear from you on your experiences!


An Interesting Thing I Read This Week That Got Me Thinking

Re-Framing the Next Downturn by A Wealth Of Common Sense

Here’s the list of U.S. recessions since World War II:

The average recession since 1945 has lasted nearly 11 months with a median GDP decline of 2.4%.

Through the end of July 2019, the United States has been in a recession 130 out of 895 months in total.

This means the economy has been in a recession roughly 15% of the time over the past 75 years or so.

Looking at this another way, 85% of the time the economy is in a state of expansion.

The problem for investors is most of us spend 85% of our time focusing on events that happen 15% of the time instead of the other way around.

It’s understandable that recessions are worrisome. Many of the worst bear markets of all-time have coincided with a nasty recession.

But a recessionary posture can’t be your default or there will rarely be any gains to hedge in the first place.


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Quote that got me thinking

You can save all you want.

Invest all you want.

But as long as you’re keeping up with the Joneses, you’re probably spending way more than you should.

Could you do something to improve your savings rate?

Read how I did it here:

9 Easy Steps I Took To Quit My Job


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Have questions, comments or suggestions? I would love to help you.

If you liked this newsletter, I would appreciatethat you subscribe or like by tapping the “heart”.

Feel free to reach out directly @Route2FI on Twitter or email me at post@route2FI.com

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Follow my blog here, or by tapping the picture below.

Thanks for reading,

Route 2 FI

Route 2 FI - Free As A Bird #17 | The Next Stock Market Recession

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Hi everybody!

Welcome to the 17th edition of my newsletter "Free As A Bird".


Stock Market Volatility - The Next Recession

Bilderesultat for stocks down

If the drop on Friday made you nervous about your portfolio to the point where you felt like pushing a button, you’re probably taking too much risk.

Remember that the S&P 500 is just 6% off its all-time high.

Nobody loves to see the portfolio value going down.

But this is the price which has to be paid for long term growth.

In most aspects of life, nothing worthwhile can be achieved without some amount of pain and sacrifice.

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Today Ben Carlson (A Wealth Of Common Sense) posted the table above on Twitter.

It shows that from the yield curve inverts (which happened recently) and the time until a recession begins, it takes from 10 - 22 months. That’s historically numbers, but gives an indicator that it’s not sure at all that the stock market collapses this year.

In equity investing, seeing your wealth going down, though it is temporary is the pain you’ve to go through for building long term wealth.

Just continue to stay the course remembering the long term results are always good for those willing to undergo short term pain.


An Interesting Thing I Read This Week That Got Me Thinking

Becoming A Millionaire Is A Letdown by Chris Reining (Reading time: 5 minutes)

On a recent Thursday night I logged into my brokerage account and saw an extra digit I’d never seen before:

$1,004,845

When I was in my early 20s, I didn’t think becoming a millionaire at 35 was even possible. Back then I didn’t have much money, but the little extra that I did have I saved and invested. So this is proof of what can happen when you do that.

You might think when your account rolls over to seven digits that fireworks light up the sky, confetti falls, and the champagne starts flowing. I can tell you that doesn’t happen, in fact it was pretty anti-climatic. I was like, “Oh, cool,” and then went back to work.

Honestly, the financial milestone that really mattered to me was making my first $1,000 from investing. That meant my investments could make me $10,000, which meant that they could make me $25,000, and so on.

What’s the secret to becoming a millionaire

I didn’t win the lottery, I didn’t inherit any money, and I didn’t start a company.

If you’re in the same situation I am, then the fastest way to $1 million is to earn more and spend less because those are the two levers you have control over.


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Sign up here.

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Quote that got me thinking

It’s so hard to leave your comfort zone.

I know, because I’m there myself.

I’m kind of risk-averse, and that’s why I’m not quitting my job right now.

Rather I want to be financial independent before I try business oppurtunities.

What’s your reason for staying in your comfort zone?


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Have questions, comments or suggestions? I would love to help you.

If you liked this newsletter, I would appreciate that you subscribe or like by tapping the “heart”.

Feel free to reach out directly @Route2FI on Twitter or email me at post@route2FI.com

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Follow my blog here, or by tapping the picture below.

Thanks for reading,

Route 2 FI

Route 2 FI - Free As A Bird #16 | Volatility is not risk, it is the source of future returns

black and yellow bird on branch

Hi everybody!

Welcome to the 16th edition of my newsletter "Free As A Bird".


Into The Wild

Bilderesultat for no matter how far you travel you can never get away from yourself

This weekend I’m going into the wild.

Not to Alaska, but to the norwegian mountains.

When I’m in nature I always get these deep thoughts about life.

Sometimes I get this fantasy of escaping society to live by myself.

Just to be in peace with nature and listening to the singing birds.

It is extremely seldom we’re in solitude, just being out there and listening to the nature.

Most of us are after results, achieving goals; we are forever overcoming and conquering, and so there is no listening.

It is only in listening that one hears the song of the words.


An Interesting Thing I Read This Week That Got Me Thinking

The Farce Awakens by The Reformed Broker (Reading time: 5 minutes)

Volatility is not risk, it is the source of future returns.

Drawdowns should be embraced, not fled from.

Historically, less than 15% of all ten-year periods offer losses to investors in the stock market. That’s not the best part. Over rolling twenty-year periods – starting in any month of any year over the last century – you’ve never lost money in stocks. Didn’t happen in the 20’s, 30’s, 40’s, 50’s, 60’s, 70’s, 80’s, 90’s or the 2000’s.

If you cannot parse the difference between volatility and risk (which I define as the chance of a permanent capital loss), then at least accept the fact that risk is a given no matter what. But you have a choice: You can decide when to take the risk, today or in the future.

Rational investors would prefer to take investment risk today, accumulating assets while coping with drawdowns and fluctuations in value. Only an insane person would choose to take their risk at the back end of their life – being short of money in old age when it is nearly impossible to earn more money.

You can risk the volatility today or the chance of being broke later, your choice, but you must choose.

Sitting in cash may temporarily feel better because there is a sense of security that comes over us when the value of our account ceases to fluctuate.

But you’re not safe, you’re merely gaining the stability of a unit of currency in exchange for the risk of losing future purchasing power.


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Like this newsletter?

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It’s totally free.

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Only one e-mail every wednesday with the freshest articles from the personal finance world.


Quote that got me thinking

How long is your investment horizon?


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Have questions, comments or suggestions? I would love to help you.

If you liked this newsletter, I would appreciate that you subscribe or like by tapping the “heart”.

Feel free to reach out directly @Route2FI on Twitter or email me at post@route2FI.com

If you like weekly wisdom on e-mail every wednesday, I would love if you signed up below.


Follow my blog here, or by tapping the picture below.

Thanks for reading,

Route 2 FI

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