Moneyanatomy - personal finance blog

Tuesday, June 22, 2021

Indexing simplified

Since I moved from active trading to indexing and dividend investing, I tried to simplify the indexing first. 

This is what I came up with so far. 

Indexing should run an autopilot. I researched in the beginning. After that I just follow the chosen strategy. It should be minimal time investment in the long run.  

Research in the beginning included ETF performance and costs comparison. 


1. I decided to mirror the most popular ETFs which mostly reflect the most popular ETFs: SPY, QQQ and RUT. 

2. I picked equivalent ETFs with lesser expense ratios. The equivalents I use are: SCHB for SPY, VGT for QQQ and VTWO for RUT. 

In the image below the red line is VGT, the yellow line is VTWO and the pink line is SCHB which follows the large CAP ETF SCHX (candlestick line) very close with almost no difference.  


 

The yearly dividends as of 6/22/2021 for those are:

SCHB: 1.43%
VGT: 0.70%
VTWO: 1.66% 


3. I decided to go equally with those three: SCHB, VGT and VTWO.

Below is the comparison table for the expense ratios: 



I am putting a certain sum every week equally into those three ETFs. This is not the same for the dividend stocks and I will describe it in another post.  

The weekly investing will have two functions:
1. It will follow the market closer than monthly. 
2. By checking in with the markets weekly I can see the time for the dividend stock investment time points weekly which is better than monthly. 








How to fix low self esteem?







M. asks: I like getting free stuff - how does self esteem play into it?

Who doesn't like getting free stuff? If you don't, there is something wrong with you. 

M. crafted her question very carefully. She is asking "how does self esteem play into it". Generally high self esteem is considered better than low self esteem. No one would worry about high self esteem. 
She probably just didn't want to ask directly if liking free stuff is connected to low self esteem. 

So the question actually asks: Is enjoying the "free stuff" has anything to do with low self esteem: Do I have low self esteem if I like free stuff?

I am not done yet taking apart this question. Actually mentioning of "enjoying free stuff" is a misdirection. The question itself points to a self esteem problem. The person asking this question is afraid being judged by others. People how are afraid of judgment usually have low self esteem.


Self esteem can be 
1. Low (adequate or inadequate) 
2. High (adequate or inadequate) 

The optimal is high and adequate. 

Self esteem is the price tag the person puts on him/herself. 
Just like with things, people can overprice, underprice or appropriately price themselves. 

The price tag on a person is connected to the resourcefulness. 

Someone with low self esteem can price himself either adequately (is not resourceful and has a realistic picture of it) or inadequately (has recourses but they are not considered or are discounted).

The same can happen with high self esteem. The person either prices himself correctly or is overpricing himself (has no resources but thinks of himself a lot). 


People who priced themselves incorrectly too low or too high, have a life full of emotional roller coaster. They feel that the price is not right and they constantly try to gage and adjust it by the reaction of others. If they are liked by others, the price mentally goes up until someone brings it painfully down. 

The people who are aware of their recourses and price them correctly have relatively stable mood. They are not moved much by opinions of others. 

The reasons for inadequate self-pricing can be different, from the inborn psychotype to the parental damage done wile upbringing. 

But independent from the reasons something can be done to fix it. 

One of the ways to fix low self esteem is to become a professional / an expert in some field. That will take time, but it is a sure way to get there. 

For example my geography knowledge is not good. But as my sister said once "She can afford not to know geography, she is a doctor". In that situation it was funny but the truth was there. You can hyper-compensate in one area and then you can slack in others.  

You can see many examples when people try to become experts in different areas, from law to Taro card reading. The more useful and respectful the area is the most certain is the way to the adequate increase in self esteem. 

Another way to fix the self esteem is to change the group. 

For example in schools or work places there is a certain group dynamic at play. 
Every group has a leader, several followers, the class clown. Most groups also have an opposition leader and a negotiator (who tries to keep peace between them). Most groups will have an outsider who is bullied. Sometimes there are also experts and wizards. 

The person with the lowest self esteem is the outsider. Working his way up, he can change groups and get in to the position of an expert or a wizard, dependent on his  interests and abilities. 
The expert knows something very well and is usually not bothered by the leader, especially if his knowledge is useful to the lieder.
The wizard is a variation of an expert. The wizard is an expert in weird stuff and sometimes scary stuff. He will also be left alone because weird is scary. 
When changing groups outsiders can never jump to the leader position. It is not natural for them. The easiest way to "advance" is to take a special spot of an expert or a wizard. 

For example, in school I was very shy. My grades were great, I almost never got any Bs. But my shyness made me a target of the group lieder. My self esteem was low and I was incorrectly pricing myself. To scare away the lieder and the followers who tried to bully me, I used foreign language (German) to put spells on those who bothered me. I made sure they know that I can put spells on them. I also learned card reading and palm reading and took the spot of the wizard. I was weird but useful and I was left alone and was not bullied. 

Later I thought that if I was born long time ago I would be a shaman. It later grew into the wish to become a doctor. Shamans, witches or wizards give you potions, doctors give you "potions" too - what is the difference? I am still a wizard. 


Getting back to the question: If liking free stuff and low self esteem are connected?

They are only connected on the level of fear of being judged by others. If you are afraid that others may perceive you as cheap, if their opinion bothers you, then yes, you have low self esteem. You price the opinion of others higher then your own. You are underpricing yourself and overpricing them.
 




Monday, June 21, 2021

Challenge "Cash flow" update for 2020

 


Corona has changed some things for me. 
After it hit and the markets tanked, I stopped any active trading. I didn't know what is going to happen and for how long the markets will be down. It reminded me on the market dip when we had Ebola scare. But it was magnified at least 10 times. 
After the Ebola scare the markets recovered quickly. The same with the Corona but it took longer and the dip was larger. The similarities are: people are scared about an infectious agent but the infrastructures are not damaged. 

After I stopped the trading activities, I became busy at work.

Sometimes I watch the Russian billionaire's Igor Rybakov YouTube channel. He mentioned that when he was scared during the 2008 crisis an older guy told him, that this will pass too. But during those down times it is good to prepare for the time when everything will pick up again. Because it will. 

That is what I did.  Starting February-March our workload went down at least 50% and in some weeks it was down 75%. 
During those weeks I used the free time to validate a bunch of new immunostains and also designed and implemented a new training system for new residents, a kind of a "boot camp" for the first two weeks when they start. I also started a new audit program for billing. When the work picked up, we had the quality improvement in resident training, a new billing audit and we had a bunch of new stains to use.  

While I was busy doing all this work related stuff I watched the market less and less. Whenever I did, it felt stressful. Somehow I didn't want to have the same fast paced stress every day like when I was trading every day. And when the marked turned, I didn't participate much anymore. 

An additional factor in this loss of interest was the fact that I was getting closer to the "magic number", the amount I calculated I need to stop worrying. I am getting closer to that number and the closer I get to it, the less I worry. 
It feels like that I don't need to stress that much anymore for a little bit that is left, especially that I have still at least 10 years of working before retirement. I can see that I will reach it. 

So my investing shifted to using mainly index funds and dividend stocks.
In 2020 there is almost no active trading anymore. I only did it in January. After that it was mainly dividends. You can see it on the graph, the January is at above $15,000, the rest is not going much over $5,000 a month, depending on when the dividends are paid. 

The total cash flow from investments (mostly dividends) in 2020 was $52,895 (compared to the last year at $143,241, mostly active). 

That brings me down to the level 1 of my "Cash flow challenge" - "Floating".
But somehow I like floating right now. It is less work. Considering that the difference between $143,241 and $52,895 is $90,346. Those  $90,346 is taxed at the highest tax rate available and leaves me with about half of that. I am OK with having less daily stress and forgo on additional about $45,000 a year when I am getting closer to may goal anyway. 

Below is my cash flow per month and the S&P 500 performance for 2020. 




my cash flow






                                                                      S&P500 returns in %


At the time of this update it is June 2021 and Corona fears are subsiding. 
I decided to stay with index funds and dividend stocks. 
The investing turned into passive income for me now. 


google.com, pub-2401395848907192, DIRECT, f08c47fec0942fa0


Friday, June 18, 2021

Happy birthday 47

 





This year the number is 47. 

Getting closer and closer to 50. 

When do people start to write memoires? Probably best to do it before you start to forget all the funny things that happened in your life.  

I almost didn't post anything from my Happy birthday 46 post. 

It was not because I lost interest. There was a computer related change at work and the blogger function was suddenly blocked. I usually don't post anything from home, I have a lot of home related thigs to do at home. It is much nicer to do it from my office where I am alone and it is quiet. Especially proof-reading is easier with my slight dyslexia. This week I checked and found that the blogger function is not blocked anymore. And now I am back.

It was very surprising that the total blog views are now at about 20,000. A year ago when I posted last time they were at 3,000. 

It took 4 years to get to 3,000 and only one year to get from 3,000 to 20,000. 

The strange thing is that there are not many new comments... Maybe my writing style is not inviting to comment, I don't know... But is was actually a comment that prompted me to check if the blogger was still blogged. The commenter asked to continue to write and it was nice.

I need to update the Cash flow challenge for 2020, there were some changes. The last year was less stressful because I didn't do active trading anymore. Only after stopping I realized how tired it was making me. Now I am less tired  and it feels that I only have one job instead of two. 

My daughter is 11 and she wants to have a YouTube channel. I am reluctant because of my paranoia. I thought about that myself  and have looked up some ways to have an anonymous channel or one where you al least don't show your face, but I think I am not ready yet.  

Today I will add a photo of my cat, also no face. The cat is wearing my daughter's baby clothes and is eating his daily portion of ice cream. 


google.com, pub-2401395848907192, DIRECT, f08c47fec0942fa0

   

Thursday, June 17, 2021

Is Corona finally finished?

 It is June 2021. 

Just in the last few weeks I saw the masks disappearing form people's faces on the street, in stores and is schools. My 11 year old is very happy that everything is returning back to normal. She wants to go to a swimming pool again. 

At work (in the hospital) we still have to wear the masks. Doctor's offices still let us wait outside in the car and not in the waiting room. 


How do the statistics look like right now? 

Here are the images from the www.worldometers.com  website:

 



It is obvious that the case numbers and the deaths are both very low now. The peak in deaths was in January 2021. The deaths now are lower then the areas between the peaks. 


Will this virus stay or will it disappear? 

I think it will stay on a low level, just like it's "brothers" from the same Corona virus family. The virus is not lethal enough to wipe itself out. It is contagious enough to just continue travelling trough the population.

If the immunity to this one is similar to the others in it's family, it is not complete and after it wears off you can get another infection, maybe milder and it will continue and go on in circles.  It will become another reason for a common cold, with a few severe cases. 

I just hope that there will not be a mandatory immunization requirement for the hospital personnel. I had a quite large hematoma after the first shot (Pfizer) and a very large hematoma after the second dose. And after the second dose I had to take a sick day. It was my first sick day ever. I might have had some platelet reaction to that shot. There were some cases described where the shots produced a drop in platelet counts. 

What all this pandemic experience showed me?

- Most people play by the government rules and obey.

- Governments are easy to scare. 

- The economy is robust to hits like that where there is no structural damage.

- This RNA vaccine is different, I never had such a severe reaction to a vaccine.