Consumerism versus minimalism - can you freely choose for yourself?

M. asks again: What about consumerism versus minimalism? How to say when enough is enough? Half of me wants to declutter and become minimalistic but the other half (somewhat competitive) wants to chase the next good deal...


M. wants to declutter and at the same time she also wants to own more. 

The main question here is WHY? Why do you want to declutter? And why do you want more things at the same time? There might be a conflict between the perceived and the real need. 

The real need is based on facts. If you have no food in the fridge and you are hungry, that is a real need. 
The perceived need is remembered feelings of lack from the past. If you didn't have enough food in the fridge when you were child, you will keep your fridge full no matter what but you may still feel the need to fill the fridge with more. 


Real minimalists are rare. Those are people with naturally low necessity to own things. Most others just suppress their wishes for some particular reason. 

I watched quite a few YouTube videos about minimalism. Some of the minimalists show bare walls rooms which border on sensory deprivation chambers. Some have the same amount of things I have. There is no definite criterion how much do you have to have to qualify as minimalist. 

There is usually an underlying idea for minimalism. Some do it to "help to save the environment". Others use it to save money. I knew someone who called himself minimalist but actually he just didn't have enough money to buy anything, was embarrassed to admit it and tried to cover it up with minimalism. 


Minimalism just doesn't feel good to me because it jeopardizes my "enough".

I would prefer to use "enough" as my measuring stick. You can say that you have enough of something, let's say, shoes. When you really have enough, you know it. You  clearly don't feel any necessity to buy more. But everyone has a different level of "enough".  

Why are the levels so different that some people just can't stop buying and become hoarders?

It is all your parent's fault.  
If in your childhood you have experienced severe lack of money (true or perceived), you might still have the feeling of lack burned into your brain as a very stressful situation. 
The brain has a function to evaluate every situation and classify it as danger or not. Any stressful memory will get into the drawer labeled "danger". 
To re-classify the situation to non-danger it is not enough to just even it out. It has to be compensated well above the need.

When I was growing up, my parent's didn't have enough money for anything. I had to wear shoes which were too small and which were broken, worn out or had holes. 
Now, to remedy that I have to compensate. I will have to own more shoes than I need. I will have to own as many as my brain will consider "enough" and will stop worry. 

People with previous experience of lack usually have only few specific key lack areas. A good method to identify them is to go trough each area of the house and identify the most severe ones. 

I have identified  three key areas of lack: shoes, clothes and money. 
Logically money is the most important area. If you have money you can buy shoes or clothes. 


There is published research saying that when people reach yearly income levels of $70,000, there is no increase in happiness above that number. This smells like propaganda. Or maybe they didn't have enough people with childhood lack trauma in their cohort. This statement will never be true for me or anyone with experience of severe lack of money in their childhood or adolescence.


The childhood  trauma of lack is different from "trying to keep up with the Joneses". The main point here is the comparison to others. The new things will be constantly bought but there is no problem to discard them, because they already did their job. They were shown off and now have to make space for something new. This happens mostly when parents frequently compared their possessions and level of wealth to others and were bitter about not being on top. In this case there is no felt need to keep things. This kind of trauma doesn't produce hoarders. 


When you go trough your house and identify your key lack areas, you will also discover your "enough" areas. 

If you discover that you have too many coffee cups and you clearly feel that you have more than enough, pick out those you like. It is important to ask the question "Do I like this cap? instead of "Do I need this cap? The results will be very different. 

Make some space by cleaning out the non-lack areas, because you will need to expand the key lack areas. 

What if you will only feel good when you have 30 pairs of shoes when the common sense tells you that 10 pairs are enough? Get 30 pairs, if you have enough money. There is no such thing like balance in life anyway. 
Sort the shoes the same way, by asking the question "Do I like them?" Fill the space with liked once until you feel "enough".  

Sometimes you just have to admit that you are not normal and learn to live very well with that.  


If you think you have a childhood trauma of lack, this is your to-do list:


1. Admit that more money will make you happier.
2. Get into high income field or marry someone with high income.
3. Get on track with your savings.
4. Identify key lack areas and support them.
5. Declutter the rest by asking "Do I like it?"
6. Enjoy abundance of items in your key lack areas.
7. Keep increasing your financial Independence and never stop.

ETFs fee war between banks - how can you win as investor?

There is an ETFs fee war going on. 

It started recently. This war is between ETF providers. As investor, I already enjoy reduced trading fees and watch what else is going to happen, because this war is not over yet. 

Vanguard has recently eliminated trading fees on almost all of their ETFs and some of it's rivals (more than 1800 of approximately 2000 ETFs available in the market, leveraged ETFs are excluded). Etrade offers more than 250 commission free ETFs,  TD Ameritade  - more than 300. Charles Schwab has over 200 commission-free ETFs and Fidelity has over 90. 

The new progress in this war is the $0 expense ratio Fidelity products FXROX and FZILX (which are mutual funds and not ETFs). Of course competitors will response to that. 

It is very possible that the $0 expense ratio may also soon come to the ETFs.

But how the banks make their money with a completely expense-free and trading fee-free product? 

The banks are fighting for the investor's money, so there must be some other ways than fees to get the revenue form a "free" product.  

ETFs are low cost investments but they generate significant profits for the banks. The scale matters and the more money is invested, the more revenue the bank will make. 

There are three main ways for the bank to generate revenue from an ETF/mutual fund:

1. Management fees (expense ratio). 

2. Dividend enhancements by reducing the amount of international taxes by having bank presence in other countries.

3.Securities lending. Legally ETFs and mutual funds can lend out up to 50% of their unlevered assets for interest. The usual borrowers are short sellers. 

So even if the ETFs will go completely fee-free for the investor (no trading fees and no expense ratio) the bank will still generate substantial revenue with the other two methods. The scale matters and that will make the fee war continue. 

Investors already had some benefits from the fee war: 

1. The trading fees are reduced among many brokers, not just for ETFs but also for stocks and options.

2. The low expense ratios are offered for many ETFs with many brokers (0.03% for SCHB is low considering 0.17% for SPY, I am still waiting for a low expense ratio ETF equivalent for QQQ).  

3. $0 expense ratio are starting to appear and they may become more frequent.

So what is the major factor in choosing a bank or a broker firm while the fee war still continues? 

Some of the major participants in the fee war are Vaguard, TD Ameritrade, Etrade, Schwab and Fidelity. Another (somewhat different) participant is Merill Lynch. 

I don't use Vanguard yet. I have accounts with Etrade, Schwab, Fidelity and Meryl Lynch. Most frequently I use Etrade and Schwab. But I only started to use Schwab after they lowered the trading fees for stocks from $7.95 to $4.95. I used their $0 trading fees ETFs before that. 

Fidelity has restrictions on their own ETFs - the Fidelity own ETFs have to be held in the account for at least 30 days. That is too restrictive for me. Schwab's own ETFs don't have such restrictions. 

Merill Lynch is interesting in another way. The trading fees are $6.95 per trade, but once you have $50,000 - $100,000 in assets (averaging over three month time), you have 30 free ETF and stock trades per month. And once you have above $100,000 in assets, you have 100 free trades per month. Options are not included.

I was looking forward to use so many free trades, but I discovered a very important (for me) issue - their unrealized gains web page is not updating real time after a trade was done and the value updates only after several days. Customer support representative told me that the updates happen after the trade has cleared and that is after 2 days. That is too long for me. I found a way to go trough the recent orders page which gives a real time quote per position but it is too cumbersome. My use of Merill Lynch will be limited for longer term trades until they fix that. 

In summary:

1. The fee war continues.

2. We know the banks can go lower because they have other ways to produce the revenue from ETFs.

3. The fees will stay low overall but are still the major factor in deciding which bank to choose. The comparison of trading fees and expense ratios will still stay the major factor. Per recent Schwab ETF survey, 45% of millennial and 39% of Generation X investors say they will move their account to a firm that offered commission free options. As a Gen Xer I agree. I don't like fees. 

8/22/18
Update:
Just 6 days after I posted this article, the news came out that in September J.P. Morgan Chase is planning to start a service "You Invest" with free trades. That will include 100 free trades in the first year and continuing 100 free trades per year for balances above $15,000 and unlimited free trades for balances above $250,000.
I will check it out and if they will have real time updates, I might replace my inflexible Merill Lynch account with this new option.
I also hope that Etrade and Schwab will join and offer free trades too.


 

What is FDIC and SIPC? How much money is safe to keep per account?

Every proper bank has a disclosure on their web site: FDIC insured up to $250,000. But what does it mean exactly?

What happens if you have more money than $250,000? Is your money at risk?

Probably only people who approach $250,000 in an account will ask those questions.

There are 2 types of insurance for different types of accounts.

The FDIC insurance is for deposit accounts: checking, savings, money market accounts, sweep accounts and certificate of deposit (CDs).

Surprisingly the retirement accounts such as IRA and 401k are included. The $250,000 insurance is per depositor per account category.


The SIPC insurance is for securities held in a brokerage account. The brokerage accounts are protected for up to $500,000 for securities and $250,000 limit for cash.

Why is there limit of only $250,000 for cash? Brokerage firms use sweep accounts for cash and cash is swept into deposit accounts through bank sweep programs. These sweep accounts are covered by FDIC insurance, which goes only up to $250,000 limit per person per each account type. 

All deposit accounts are FDIC insured per depositor, per each account category. 

That means that if you have one joined checking account with two co-owners, the entire account is insured for $500,000 ($250,000 per co-owner). If you have more accounts of the same type with the same bank, the limit will be shared among all accounts of the same type.

If you have a checking and a savings accounts with the same bank, the amounts will not be shared because those are different type accounts.

If you have two checking accounts and one savings account and all of them are joined, the insured amount will be $500,000 for both checking accounts and another $500,000 for the savings account. 

If you have an additional singe non-joined savings account with the same bank, this single account will share the limit with your portion of the insured amount in the joined savings account.  

If in addition you have more than one CDs, they all are counted as one account type.

The interesting thing is that IRA and 401k are insured by FDIC, only up to $250,000. Both IRAs and 401k accounts are considered to the same type of account. Health savings account is also in the same category. That means that the FDIC insurance limits will be shared among all three accounts if you have them at the same institution and entire sum of retirement money in IRA, HSA and 401k will be insured only up to $250,000. It might be the best to hold IRA, HSA and 401k with different institutions unless you are sure you will never reach the limits.

You can use the Electronic Deposit Insurance Estimator (EDIE) to play with the numbers and see what is insured and how. It works OK to get the feeling.

But who keeps so much money in a checking or savings account? You want your money to work and produce returns.

A more interesting question is how brokerage accounts are insured.

As I was approaching the $250,000 in my brokerage account I wanted to know if I should start opening  more brokerage accounts with other banks to have all money covered.

The securities in a brokerage account are insured by SIPC for up to $500,000. If there is cash in the account, the cash goes into the sweep account and which will be insured by FIDC for the time being.

I usually don't hold more tan $250,000 of cash in that account (yet). It is a joined account, So the sweeped cash is insured up to $500,000 because of 2 depositors and the securities are insured up to $1,000,000.

With all that information it looks like in my joined brokerage account I can hold up to $1,000,000 in securities including up to $500,000 in cash. This amount in cash is not in addition to securities but as parking cash position when some securities are sold and before the new once are bought. So total will still be $1,000,000.

Obviously there is still time left before I will get over those limits and will have to open another brokerage account.

And I probably worry too much. My research on the web showed that the SIPC insurance had to be used are exceedingly rare and that FDIC was used more frequently than SIPC.  

What happens when a FDIC insured bank fails?

The FDIC replaces cash up to insurance limits. It happens within few days of bank closing and it provides the insured with a new account at another bank and the insured will receive a check with the amount. If the money exceeds the limits, the bank assets will be first liquidated and the proceeds will be divided between debtors pro-rata.

Paying off student loan aggressively versus maxing out 401k?

 

My friend M. asked me following question: "Initially we were going to pay off the student loans aggressively and be done in 12-14 months. Now we are considering maxing out both 401ks to get the tax benefit. What makes more sense?"
 
 
The question is about prioritizing. Prioritizing maxing out 401k versus paying off loans.
But there are few more things which are in the priority list.
Usually after finishing residency most physicians have following major items where a lot of money has to go:

Loans
Student loan
House mortgage
Car payments
Insurances
Term life insurance
Disability insurance
Car/home/liability insurance
Savings
Health savings account
Savings for retirement
 
 
How to prioritize them?
 
One way is to prioritize by risk/consequences.
 
Prioritizing by risk means to prioritize by the most detrimental impact which have to be taken care off first. For example, if the breadwinner of the family dies, his/hers income should be replaced in some way.
 
The insurances can be grouped together and should be taken care of first:
 
1. Disability - will cover lost income.
2. Term life - will pay out a certain sum of money to cover lost provider, is necessary is the loss of provider will be financially very hard on spouse and/or child.
3. Car/home/liability insurances - helps with large assets in the worst case scenario if they need to be replaced, liability gives additional protection in case of unintentional harm to others.
 
After you are done with that, you can move to the group of Savings and Paying off loans:

1. Health savings account - for current or future disease related expenses.
2. Savings for retirement 401k, Roth IRA - if prioritizing by risk, tax-deferred accounts should be put before paying off mortgage because there is a better protection for retirement accounts in case of a bankruptcy - you get to keep your pension and retirement plan funds. In Tennessee tax-exempt retirement accounts, including 401(k) are protected. Roth IRA is protected up to $1,283,025 as of 2018. (This amount is adjusted every three years. For detailed information for your state go to NOLO.com.)
3. Car payment, house mortgage and student loan - I would group them together especially if they have similar low interest rates. They are not as well protected as retirement accounts.
 
 
But what if you say: Yes, prioritizing by risk is all good, but I personally think that the bankruptcy risk is very low for me. Maybe it will be better for me to pay off the student loans or mortgage first, before maxing out 401k and Roth IRA?
 
 
I already wrote about the difference of paying off the mortgage early versus investing the money that was used for the extra principal payments. Investing comes out ahead.

With current interest rates, it makes more sense financially to invest instead of paying off the mortgage early. If your interest on student loan is in the same ball park as the current mortgage rates, that would have the same effect. And by investing in a tax-deferred account like 401k, you will also receive tax savings. 


How much tax savings can you get?
 
If you contribute maximum ($18,500 for 2018) to the pre-tax 401k, you will save $5,920 in 32% tax bracket and $6,475 in 35% bracket. This is a significant amount which can be put into Roth IRA ($5,500 in 2018, see my post on how to use the back-door Roth IRA).

In 2018 most physicians will be in the 32% or 35% bracket.
If both spouses are maxing out their 401k, the tax savings are doubling and will be $11,840 in 32% bracket and $12,950 in 35% bracket, which is enough for maxing out both Roth IRAs.
You will not get those tax savings if you choose to contribute to Roth-401k (see here why I don't do Roth401k).
 


If you are 45 years old now and will make yearly contributions of $18,500 to your 401k, then at the age of 65 with 6% yearly growth and 3% inflation the balance will be $700,949. The number is of course approximate because returns will vary.
 
If you decide to pay off your student loans first, you will have less years left to contribute before tax. Dependent on how many years you will have left to contribute, you will forgo on:

19 years left:
401k balance at age 65: $643,297
Difference in total savings balance at age 65: $57,652
Lost tax savings, 1 year: $5,920
 
18 years left:
401k balance at age 65: $588,907
Difference in total savings balance at age 65: $112,042
Lost tax savings, 2 years: $11,840


But that is not all.

The employers contributions were not taken in account yet.

How much employers contribute is variable. The total maximum on total contributions (employee plus employer) is $55,000 in 2018 (or 100% of your salary, whichever is less).
This means that your employer could contribute up to $36,500 in 2018. 


In summary, if you compare paying off a low interest loan like a mortgage or a low interest student loan, versus investing in a taxed account, you will come out ahead with investing.

If you compare paying off a loan versus contributing to a tax-advantaged account like pre-tax 401k, you will not only come out ahead with investing but also have your savings grow fax free, you will save on taxes and you will get employer's contributions.




 

How to manage lifestyle inflation?

Lifestyle inflation - is it a problem of control?


Since I started working as an attending my expenses increased compared to the expenses during my residency.


Things that have changed since the new job:


1. I drive a more expensive car. The reason to buy a more expensive one was: I need a reliable car because I am expected to be at work as scheduled. Calling in because of a broken unreliable car is not professional. This expense makes sense and is justified. My old car was not reliable at all and when I traded it in for the new one a light smoke was coming out from under the hood. They still took it.


2. I buy more business/official looking cloths and shoes. This is also justified. I don't wear scrubs or a white coat and as a laboratory director I have to look accordingly to project competency and authority to both sides, personnel and administration. Old or non-professional looking cloths won't cut it.


3. I go on more expensive vacations. That is just for fun and I know that I am not overspending. I decided that spending $10,000 per year on vacation is fine.


Things that didn't change:


1. We still live in the same house we bought during residency. At the time of the house buying I read that most people buy a smaller "starter" house first and later move to a larger one. We decided not to do that and bought a right sized house from the start. 


2. We go out to eat about as frequent as during residency. The expenses didn't change much but the feeling has changed. Now I don't look at the prizes when I order. So the costs may have gone up a bit, but not significantly.


3. Nothing else changed really. Mostly we spend money on the same things as before, just the feeling is different, it just goes with ease and without any guilt feelings.


Some would say that I have a good self-control or will power. I would disagree. My will power is weak. But I have a trick.

I have worked out a decision process to use when spending money on something and that process became a habit.

Once you make a habit out of something, the will power is not necessary anymore.


How does this process work?


1. I have my major savings goal in mind and I update the status on how close I am to my goal once a month.

My major goal is to reach my savings magic number.  I update the balance monthly and I know where I stand. I know how fast or slow my progress is. I also know approximately how long I still need until I reach my goal. That gives me an idea on how strict I have to be with spending money.

2. I ask myself only one question before spending money on something.


Questions NOT to ask:

Do I need it? - is a wrong question. Your brain will always fool you into the need. The function of your brain is to keep you safe and to prepare you for any possible adverse situation.

Do I like it? - is also a wrong question to ask. I noticed that I like a lot of things.

Do I want to have it? - the same, most of the times you would want to have it.

The question to ask is this: 
How sad will it make me if I will die before doing that?


Here how the connection between savings goal and this one question plays its role: 
I know that I am not there yet and I still need a few years to complete the savings goal. I know that the job safety is not guaranteed and the way to the goal might get longer. But I also know that I will not live forever, that at some point I will die. That might happen before I reach my savings goal. 
All this information is balanced in the background. It is processed partially subconsciously and at the end I have my simple answer.  

The degree of sadness will tell you everything: if you should do it immediately or if you should wait and if wait then for how long.


I always dreamed about a romantic morning at the Ritz hotel somewhere in Europe with strawberries and Champagne for breakfast. 
After asking myself, how sad will it make me to know that I will die before I will get a chance to have my Champagne with strawberries for breakfast at a fancy hotel, the answer came immediately.
It would make me very sad. I didn't even want to wait for the hotel. Next day I went and bought fresh strawberries and Moscato vine (which I like more than Champagne).  I had my special breakfast every Saturday and Sunday for 2 months in a row.

Sometimes I think of going on vacation to Ireland. I spent 6 moth in Ireland and I like this country very much. When I ask myself how sad it would make me if I die before I go to Ireland, it makes me just a little bit sad, like 10 out of 100. So it is not an urgent item and I don't spend much time thinking about it at this time.

Another example:
My friend went to China. When I ask myself how sad will it  make me if I don't get to go to China before I die, the answer is surpizing: it will make me said if I do go there before I die. I don't know why. With a feeling like that I don't plan to go there.


Using this method makes the question about the lifestyle inflation mute and replaces it with a true personal value of things tailored exclusively for you.
But you have to be honest and only listen to you own feelings. It might not work for those who try to keep up with the Joneses. They have to work on their self worth and psychological self-sufficiency first.

                                             

Mixing family and money - Good idea? Bad Idea?

My friend M. asked me this question:
"Mixing family and money - Good idea? Bad Idea? My brother has lots of student loans. Is it a good idea to help him out after we pay off our student loan debt? He is almost 37 years old."


Purely financially - No. For you it is not a good idea. You may end up with less money, if he doesn't return it. For your brother, your idea is good, because he will end up with more money. 
But such an answer is too obvious. I think it is not a financial question at all.
This question aims at the consequences: will there be a change in the relationship if you give money to him.  


There  definitely will be consequences.

When you enter a "transaction of giving and receiving help" you are entering a deal. This deal has levels.
The material level - the money changes hands.
The subconscious level - the perceived positions of strength are changing when money changes hands. 
And there will be consequences on both levels.  
 

On the material level it is easy: the money will be taken, returned, or not returned.


On the subconscious level following things will happen:


A person in possession of recourses and capable to give is positioned superior to the person who has no recourses and is not capable to give. The resourceful person is dominant.
When this resourceful person is giving recourses to someone, this person visibly demonstrates the dominance and this dominance is directed toward the receiving person. 

On the receiving site, the other person automatically moves into the position of weakness.

If the receiving person asked for help, this person acknowledges his weakness and your dominance from the start. This happens voluntary, which is important. 

If the person did not ask for help, then the giving person is pushing the other person into the position of weakness demonstrating dominance. The receiving person feels that and may resist.


From here it can go 2 ways.

1. Helping weak will make you weaker.
2. Helping strong will make you stronger.


How does it work?


1. Helping weak will make you weaker.

The receiving person easily steps into the weak position.

Which person will easily agree to take a weak position?
It is either the person who is used to be weak, or a person who frequently uses others by demonstrating weakness as a bait to receive benefits and this person is actually an aggressor masquerading as weak. 
With both of those types your chances of being used and not getting your money back are very high.

The habitually weak person is used to be weak and he/she will not resist a new weak position very much. This person may not even try to repay the debt because there is no motivation to get out of the weak position.

You will feel being used unless you will forgive the debt completely. But even then the relationship will be awkward. This is because a good friendship usually requires people to be in equal strength positions.
If the balance is disturbed, there is usually an effort to even it out. That is when friends help each other and don't leave unpaid debts of financial or emotional kind. Uneven positions are uncomfortable because this inequality is felt subconsciously at all times. 


The masquerading aggressor will also not be motivated to return the money. He/she will actually start to actively research the ways how to get more out of you. You may not see it clearly but you may get the feeling that you are being used. It would be best to cut  the losses, stop the contact and stay away from this person.   
   

2. Helping strong will make you stronger.


The receiving person needs help but really doesn't like to be in a weak position.


This is usually a strong person in a temporary need. 
The strong person in temporary need is the best variant you can get. This person will try hard to get back to at least even strength position, but more often the strong person will feel the need to compensate for the time spent in the temporary weak position. Those usually pay back with interest.

If you refuse to accept the re-payment from a strong person, with interest or not, you will get a strong enemy instead of a strong friend. By refusing the re-payment you insist on keeping your dominant position. If you accept, the relationship will most likely stay good. When the positions are evened out again the normal friendship can continue. You might even ask you friend for a small favor, just to help even out the positions.

Be careful of people who only appear strong and the only strong part of them is their ego.

With the person who is not strong but wishes to be strong and has a "strong ego", the situation is more difficult. If he/she has no capacity to re-pay, this situation feels very insulting to that person. It makes him/her feel even weaker then he/she really is.
The person hates this feeling and transfers the feeling of hate onto the helping person who produces this feeling.
With or without repayment this feeling will stay and many times it will grow, the longer the situation goes on. No one will be a winner in this scenario. The future relationship is lost.



Back to the brother.


Did he ask for help?
Which category does he fit into?
Is he a weak person who will stay weak or is he a strong person in temporary need who will get stronger? As I already described above, the only settings where the friendship can stay the same or get better is if a strong person asked for help and is motivated to get out of the temporary situation of weakness.
With the weak who will stay weak, the wanna-be strong with "big ego" and the masquerading aggressor - the relationship will get worse.



How to offer help?

If you realize what happens subconsciously when you offer help (financial or not) to someone, you might start thinking twice before doing it.  And you might think even more if that involves money or good friends. Offer help very carefully considering the types and the financial and emotional consequences.


How to refuse to help if asked?

Every "help transaction" is actually a deal. And you need to evaluate that deal just as any other deal. Just like if you are buying a car.
What type of person is asking? What are the consequences for you you enter this deal?
Is it a strong person - you might take the deal. With other types - most likely not. Closeness, niceness or family relations should not be a major factor in this deal.

Relatives are just like other people. They became your relatives by chance and it doesn't give them any rights to demand a deal that is bad for you or induce guilt feelings in you (usually used by weak and by masquerading aggressors).


If you don't like the deal, you can just say that at this time you really can't help.
You don't need to explain why, but the refusal is always accepted softer if you try to lessen you perceived dominance buy saying that you have a lot of payments yourself.

If after that the person doesn't give up and keeps trying to persuade you, you are dealing with masquerading aggressor and it is ok to lie to get rid of him. You might even turn the deal 180 degrees and ask him for help. Masquerading aggressors disappear very quickly after that.

Would I use real estate crowd funding?

Would I use real estate crowd funding?
 
No, I wouldn't, at least not at this moment.

Why?



The real estate crowd funding is a relatively new thing.
It might be a good thing, but probably not for me.
I am very suspicious of new things and I feel that it might be not safe enough for me.
 
I don't have any facts to support that feeling. I just have relatively high safety requirements and anything new feels risky to me if there is no long tern tracking of the results.

The more money I accumulate (and it accumulates slowly, slower than I would like), the more careful I become.
I am not hunting for high returns.
I don't even specifically target percentage of my own returns. For me, the main goal is that my gains and returns can cover my expenses.
If I can reach it in a very safe way, I do it. If I can't yet, I will try until I get there. And that is reflected in the choice of my investments.

I use indexing, because I don't think that a major index will go down to zero and that even if it will get down 50% it will come back up. I also use individual stocks, but I limit my exposure to them because they can go to zero unexpectedly and if they go down significantly, they may never get back up.

I generally don't trust very new things, where the specifics and regulations are still in the process of being worked out and I don't want to let others to experiment with my money.

The closer I am getting to retirement, the less risk I take and the real estate crowd funding is just too much risk for me.

But in case if you are interested, here is a link for a post with a great resource on real estate crowd funding from www.passiveincomemd.com. The author appears to have researched the world of real estate crowd funding very well and he shows some of his own results he could produce in the last few years.
 

 

Challenge "cash flow" update - May 2018





For the year 2017 the overall investment income was slightly over $49,000. I was very close to challenge status "swimming" which is $50,000. But since I didn't reach it, I am still "floating".


The counts reverted to $0 on January 1, 2018. A little more than 4 months passed since the start of 2018 and today I broke $50,000! January and April were very good months.

      My returns per month until 5/10/2018 

Below here is the S&P500 monthly return in %. Data for May is not available yet because the month is not complete.

S&P monthly returns