investing · Uncategorized

Should you invest your money in Palantir ($PLTR)?

While I invest in ETF’s for the majority, I also wanted to pick some individual stocks. I decided I will allow this for about 5%-10% of my portfolio.

Apart from the Galapagos stock I purchased recently there is as second stock that I’ve had my eyes on for a while and that is Palantir.

Palantir might not have much in common with Galapagos at first sight, however they do have one thing in common and that is that they are both growth stocks. That means they are taxed only when you sell them, unlike dividend stocks that are taxed yearly. Since I plan for the long term, and will not sell, I prefer growth stocks over dividend stocks.

Should these stocks ever pay out dividends then I should still be okay, as in Belgium the first 600 EUR of dividend payouts / year are free. Its just that I would want to avoid having to much dividend stocks.

Palantir has been highly hyped. It only made its IPO near the end of 2020 and was valued first at $9.5 / stock. This year the stock reached peaks up to $45! The stock has been extremely bullish and somewhat volatile while its trying to search its price range.

Palantir had its IPO in the same year Snowflake did, and also Flowflake had great first months. It seems any company with big data / AI is in fashion right now, but is it also a good stock for the long term?

What is the company About?

What exactly Palantir does has bit secretive so far, before the IPO it worked on top classified US Government Defense projects.

Now that Palantir is more public we have a bigger chance to find out what exactly they do.

Their business is around big data, although they state not to be a data company. The data they work with always remains inside that one company and does not go outside that company. They don’t collect or sell data.
They basically build digital infrastructure for data-driven operations and decision making. Their products serve as the connective tissue between an organization’s data, its analytics capabilities, and operational execution.

In other words they help company manage and analyze their data and make better use of all the data, wherever it is coming from.

Top 7 reasons to buy Palantir

#1 Cathie Woods bought the stock

Cathie Woods her ARK portfolio has managed to outperform the market by a long shot last year. She has an eye for stocks with a large growth potential and she took a huge position in this stock so it now has about 0.5% of some of het ETFs.

Not long after Cathie bought the stock the lock up period expired and the stock went down from 30$ to about 23$, partly driven by the news that the owners sold a large position in the stock they owned.

I don’t really blame the owners for taking some profit though, and I decided to ignore this when I purchased a position for myself. I was not the only one thinking this way as very close after me CathyieWoods decided to buy another 3 Million of the stock! Meaning just like me she believes in the long term potential of this stock.

#2 The company works with Big Data

As a Data expert myself I know how valuable Big Data is, and even more valuable if you have a simple way to make sense of data of big companies. Data of big companies is often a mess, if Palantir can furfill that promise they make then what they are doing is groundbreaking and could be a huge help.

#3 Palantir is working for the US Defense

The advantage of working for the US defense is that, while you can work in secret, while you work you can still create patents for the public market later on. Furthermore the budget of the US Defense is pretty much unlimited. Whatever you need you will get as long as it fulfills what it needs to do.

In 2020 they got a $823 million contract with the US Defense department.

This does also mean they are limited in what countries they can supply their tech to. For example they are not allowed to supply Palantir software to China.

#4 Palantir has a track record of signing large contracts across sectors

Apart from a huge contract with the US Defense department Palantir is signing contracts with huge companies all over the place. But what I really like is that these contracts are not bound to one sector. They signed contracts with the NHS in the UK for example, but also a multi year contract with the mining Giant company Rio Tinto which shows their tech is applicable almost anywhere.

#5 Great long term investment

With such a great track record in such a short time and with a lot of growth potential this is a great Tech / Data / AI stock. Its just a market where you should be in, and I believe that in the next decade Palantir’s tech will play a big role in this market.

#6 Increase in revenue

Palantir’s revenue has had an amazing growth spurt in recent years. It grew 25% in 2019 and even 47% in 2020. Expectations for Q1 2021 is another 45% compared to Q1 2020.

While some solutions might be scalable and Palantir is more bespoke work for their customers, this also means that customers will have a harder time to turn away from Palantir then with certain easy to scale up solutions. As what is easy to scale up, is also easy to scale down.

For Palantir this is all solid income for a long time to come.

#7 Fair price compared to similar stocks that IPO’d the same year

While Palantir went up from 9.5$ to the now 23$ its at, its valuation is around 41B $. Snowflake is currently at 73B $. Do I claim the stocks are worth the same? Hard to say. Snowflake has the big advantage that it can scale much much easier and this shows since it has been reporting faster revenue growth. At the same time Palantir is more profitable per customer.

At the same time I do feel Palantir has a more unique selling point, I don’t really see much competition in their level of technology.

I have a hard time comparing Palantir to any other stock, and its being so unique is exactly the reason why its so interesting.

Reasons not to buy Palantir

There is also reasons why you shouldn’t buy Palantir. Firstly a lot of their operations are still secretive, so it is hard to estimate the value of this stock.

Secondly stock has been very bullish. I generally am cautious about bullish stocks because they could go either way very fast. At the same time, I do like bullish stocks because they do have a great upside potential.

The top of $PLTR was around 45$ , right now its around 24$. Does this mean you are getting an amazing stock in discount or are you catching a falling knife?

Considering Cathy Woods is also investing, I don’t think you are catching a falling knife, but it did came from 10$ in a very short time. Although if you invest for the long term, like I am it doesn’t really matters what this stock will do in the short term.

Should you buy the stock?

I must stress that I am not a financial advisor. I am not qualified to give Financial Advise. I recommend you do your own research and do your own due diligence. What I can say is that I took a position in Palantir at 0.6% of my portfolio just Friday at about 23$.

I do feel as if this stock has seen its low points for now and the recent dip was in part to blame to the general market pull back, so I think we might have seen the bottom here, but only time will really tell us.

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investing · Uncategorized

Is Galapagos NV ($GLPG) undervalued?

After the (small) market correction in February and the stocks with bullish growth last year cooling down it might be time to look at other types of stocks. While I usually do not invest in single stocks and prefer ETFs, I do feel my portfolio at this point is large enough at this point to take a bet.

Galapagos is a stock I am very familiar with. I was actually invested in this stock heavily in 2019 when it was only 94 EUR. The stock skyrocketed and I eventually sold it with a 52% gain at 143 EUR. While it was a nice profit it continued to rise all the way to 225 EUR. so I missed off gigantic, but at the time I felt diversification was the most important.

I missed a lot of profit compared to the peak but I also missed a huge drop. Since its high peak Galapagos had a large bad news strike of non-approved medicines, the latest being Filgotinib, causing drop after drop.

I watched it all closely and with the stock reaching a new low of 71 EUR I decided this stock deserves my attention once more and this time for the long term.

The company had a stroke of bad news and many investors have lost confidence in the stock. When reading about Galapagos now on Blogs or Vlogs from Financial Influencers then you will mostly see that they are looking at he company’s past instead of its future. They see only the past and because of this they risk missing out. Most likely the fact plenty of people lost money has clouded their judgement about the future potential.

As for me, I remember what this stock did for me in 2019, but apart from emotional reasons I can see several reasons why this stock is worth a gamble.

#1 Sector advantage

With Tech stocks having risen more then any other stocks a correction for those type of stocks could be around the corner and is already starting. Pharmaceutical research company’s on the other hand have seen a modest rise and are expected to outperform the market in 2021 as investors look beyond tech stocks. Pharmaceutical research company’s will be in general a good investment in 2021.

#2 Galapagos has a huge cash position

The current cash position of $GLPG is actually worth more now then the company itself. They can buy up all their stocks and still have money left to go on a holiday to the Maldives with the entire company.

They could also use this money to fuel their pipeline for another 10 years. Which of course is needed since medicines do take a long time to go trough the timeline.

#3 Galapagos still has diamond in the mine

Galapagos projects are based on the idea that nearly all chronic diseases are due to malfunctioning proteins. Galapagos aspires to create effective treatments by developing molecules that alter the behavior of proteins – in such a way that the disease is minimized or eliminated.

An important fact for investors to consider is that there continues to be a huge amount of diseases without decent treatments. Galapagos attempts to develop treatments for some of these, like systemic sclerosis.

The risk here is very high, however there is also a high reward if new medicines get approved.

Galapagos still has a very big pipeline. Of course their medicines Filgotinib and Fibrosis failed unfortunately to get great results. BUT they still have 30+ programs in their pipeline, the most advanced being Toledo currently.

Toledo can treat auto-immune disorders. It can be a gamechanger for many patients because it literally changes the paradigm of treating these kinds of diseases

Clinical trials already started last year for Toleda and Galapagos is expected to report results on this mid 2021.

Now if those results are promising the stock will for sure make a jump. If its disappointing however another drop can not be excluded. But there is right now another 6 months to go to those results, so enough time to grow a bit and prepare for a drop if it comes. If it turns out to be good news then by the time the new comes it will be to late to purchase the stock at a good price.

#4 The stock is cheap

After the stock dropped from 250 EUR to 70 EUR, knowing that their cash position is huge, it is difficult not see potential in this stock. I really believe the stock is cheap right now and has a huge potential. The main reason why its trading so low is because Galapagos had a streak of bad news in 2021.

Investors have lost confidence in the stock, and that’s good news for us because it means the current price does not reflect its actual value and we can pick it up at bargain price.

#5 They have tested their platform

While the FDA did not approve their top 2 medicines, they do managed to test their pipeline and their platform. Galapagos now owns a great target discovery platform that can yield valuable molecules. This is something they have despite of the non-FDA approval.

#6 They do have some short term revenue prospects

While Filgotinib’s is not approved by the FDA, it is approved in Europe and Japan and Galapagos is researching Filgotinib’s effectiveness for other diseases like ulcerative colitis, Crohn’s disease, ankylosing spondylitis and psoriatic arthritis. So that means that Filgotinib can still generate cash for Galapagos

#7 Galapagos is located in Pharma Valley

Being from Belgium I happen to know the climate for pharmaceutical companys is amazing here. Belgium really is the Silicon valley of Pharma also known as Pharma Valley.

Pharma company’s choose Belgium en-masse to settle. The reasons being that there is a great amount of knowledge here, but also because the Belgian Government is investing hugely in this sector. Of course its also perfectly located to export medicines when created.

Have a look at this map. It contains all locations that are involved in researching or producing covid vaccines. Almost every vaccine that the EU bought is researched or produced here. This includes Pfiver, Curevac, Johnson & Johnson and AstraZeneca but also a few that are still in the pipeline.

Should you buy Galapagos?

I must stress that I am not a financial advisor. I am not qualified to give Financial Advise. I recommend you do your own research and do your own due diligence. What I can say is that I took a position in Galapagos at 0.6% of my portfolio just today at about 71 EUR and am certainly considering to raise this with another 0.3% next month if there would be another drop the next weeks.

The stock price of Galapagos in 2021 will mostly depend of the results Toledo yields. So my position is small enough to be able to stomach a loss in the short term in case that Toledo underperforms and big enough to have an impact on my portfolio if it fulfills my expectations and outperforms.

No matter what 2021 brings, it is likely that there are some successful projects in their 30-projects big pipeline, so long term I absolutely believe in their future.

For now I’m strongly looking forward to the mid-2021 results of Toledo and will be following up this stock closely.

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Earning · Uncategorized

The Belgian world of extralegal advantages: thirteen perks my company offers me

Belgium is one of the highest taxed countries in the world. But what most people don’t know is that companies have the chance to give great benefits that they get tax advantages for. Especially in IT companies go trough great lengths to convince wanted professionals to come work for them.

I am pretty open about my wage in my savings rate reports, or even how my wage grew in my yearly overview, but I am yet to report on my extralegal advantages.

Find out which ones I have, I will list them in term of popularity.

Remember I did not study IT myself, and I am a strong believer that everyone can get a high paying job in IT if they really want.

Disclaimer: this post might contain affiliate links but only of products I own and fully support.

1. End of year bonus

73% of the employees actually have an end of year bonus in Belgium. I also am lucky enough to get one.

2. Meal cheques

Meal cheques are in a way a guarantee of the government that you will not cross the border to buy food. Or maybe its a way to make sure you spend at least part of your wage on food? I don’t always understand some of these tax benefits, but I do get these as well. I get one meal cheque per worked day valued at 6.91 EUR.

3. Hospitalization insurance

I have a decent enough hospitalization insurance trough my work with DKV. Its not the very best one out-there, for example it will only pay for a hospital bed in a shared room, however it does pay for almost anything apart from that.

4. 13th month

I also get a 13th month or a holiday bonus. It usually comes around May and it is supposed to be some extra money you can spend during your holiday. You worked hard for an entire year so you earned a vacation right.

5. Group-insurance (pension saving plan)

Now we are arriving with the less and less common perks. Only 53% of the employees actually get this perk. Not only do I have a group insurance, my employer also contributes 6.3% to that every year. Thats quite high! I have not heard of any companies giving more so far.

Should I do sooner then this insurance also acts as a life insurance for my relatives.

You can see this group insurance as part of my portfolio update.

6. Paying back work-home traffic

I never considered that this should not be paid back, but in the last 5 years I have probably not spend one euro to get to a customer. Be it by car, taxi, plane, bus, tram, subway, (high speed) train or even renting a bicycle, I expensed all those and basically any kind of transport I had to take to get the job done. The only thing I did not expense yet is my shoes!

7. Laptop

I do get a laptop from work. I no longer have a PC or laptop of my own. I was probably still a student when I bought my last PC. The fun part of a laptop from work is that you get a new one every 4 years. That is usually the time it starts to get a little bit slower.

8. Smartphone

I am also entitled to a phone from work. However I have the choice between a smartphone that my work selects, or they contribute 300 EUR to whatever phone you decide to buy. But if you choose that and it breaks you need to pay for a new one yourself.

I have been with OnePlus for a few years now, so I decided to get my job contribute 300 EUR for my OnePlus 6. The phone is almost three years old now and that gives me the right to buy a new one, although I see no reason for that just yet. The phone is great and I love it.

I dropped it a ton of times and after 3 years I still notice no delays in using my phone (as you have with some other high-end phones). Click the image bellow to check out the OnePlus 7.

The reason I chose the OnePlus 6 was: fast charging, great camera, but most of all dual sim. Something you don’t have with iPhone for example. Being on the road so much for work having a dual sim is really so convenient. I just couldn’t go without it anymore.

9. Company car

41% of the Belgians have a company car. While is bellow average, I still think 41% is quite high! For those who read my may update they have read that I had to order a new car this month.

I had to select a car that can be withdrawn at least 65% of taxes and has less then 119g CO2 exhaust. I long wanted to get an SUV but the CO2 limitations also limited my choices. I was happy to see there are still some manufacturers who create SUVs with limited CO2.

Lucky I did not had to worry much about all this because I got access to a very convenient tool that contained a list of all the cars that fell in my budget.

After a successful test drive I decided to configure a BMW X1 with a CO2 exhaust of 109. I must say compared to my first company car about 10 years ago, things have gotten a lot easier. In no time I was able to select the best car and the best options tailored for me. One of the options I particularly longed for was getting a tow-bar. As my most loyal readers know I mountainbike and right now I always put my mountainbike in my car. Not very convenient or clean.

I decided on the following options:

  • Color metalic grey (like on the photo bellow)
  • Automatic Gears (no stick and this will be my first time…)
  • Leatherlook seats
  • Park Distance Control
  • Park Assist
  • Tow-bar
  • Electric outside mirrors
  • Heated front Seats
  • Remote Services (so you have access to your car from your phone)
  • Navigation/GPS + Real time traffic information
  • Bigger fuel tank
  • Airconditioning
  • Cruise control

It felt a little bit like shopping in a candy store.

I could also see in the tool that I would need to pay about 200 EUR monthly to the state for this car. But this would come from my Brutto wage so it would cost me less then 100 EUR in the end.

After saving my configuration, I was able to send it to HR that ordered the car. Delivery times where huge but now that I have it I am extremely happy with it.

The BMW X1

9. Expense reimbursment

Strangely enough companies also have the ability to offer a NET expense reimbursement for any additional costs you would need to make for your work. For me this is about 180 EUR per month. Its also one of the less common perks. Only 34% of the employees get this perk.

10. Additional bonuses for travelling

I also get additional bonuses for travelling. I get a daily and a quarterly bonus. For the quarterly bonus I need to have traveled at least 50% of my time. While these are very appealing and quite high, I must say it does come with a personal sacrifice as well. Being away from home 50% of your time is really quite high. You have the chance to get new experiences, but you also miss some you can do at home.

My daily allowance is not taxed as its meant for food expenses abroad. My quarterly bonus is taxed like normal wage.

Don’t get me wrong, I prefer to stay in Belgium actually, but if I do travel (when Corona allows it), I am happy to get this bonus. Without it I probably would be much less eager to travel so often.

11. Yearly bonus

I am also entitled to a yearly bonus. This bonus depends on how much billable time I get every year. Billable time is something my company can charge to the customer. My target is usually to be billable for about 70% of my time. I usually am closer to 100% then 70%. By receiving the bonus under the form of warrants I am taxed a bit lower on this bonus then on my regular wage.

12. Possibility to working at home

While it does not come with any perks, and might actually cost you money on electricity and heating, I must say that the ability to work at home from time to time is quite nice.

During Corona I actually worked 100% of the time from home. I am happy to have a job that is so flexible and allows this. Emotionally it hasn’t always been easy but at the same time I am happy to be with a company that cares about their employees health.

13. Saving points for hotel & airline bookings

When I am working a lot for the same client abroad then my company sometimes books a hotel & flight for me. On some occasions I can also book this myself, allowing me to save points with various hotel chains or airlines that have a point saving program. Later I can redeem these points for travelling and stays abroad.

This has affectively allowed me to stay for free in a few amazing luxurious hotels.

Conclussion

While taxes are very high in Belgium, the state does offer options to companies that want to attract highly sought profiles. Especially in the more technical professions these perks seem to be quite common. If you want to have more perks yourself, it can’t harm to do some shopping. I think if you can find a job that pays (considerably) more you should absolutely switch.

Just remember the grass is not always greener on the other side.

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Uncategorized

Hedge Funds scramble as reddit army strikes. Is it to late to get in the GameStop mania?

What a ride it has been for GameStock! Reddit has gone absolutely crazy about the GameStop frenzy! See this guy from the reddit forum known as “Deepfuckingvalue” who made a HUGE profit on GME. He got in very early in this fenzy as he bought his first stocks at 2$ and they now rose to over 350 EU! The gain he got in such a short time is incredible!

What happened exactly?

It feels a bit like Occupy Wall Street all over again. In 2008 when the banks died Governments spurred into action to save the big banks. At the same time the small investors were left in the cold and saw their small portfolios vaporize over a matter of months. Occupy wall street was a protest against inequality, but failed to make a big impact as inequality is bigger then ever in the US.

What some Reddit forum users started to notice was that Hedge Funds were shorting certain stocks massively. Basically what Hedge funds are doing is they are borrowing a stock, selling the stock and then they are betting for the stock to drop so they can buy it back at a lower price and return it. Or to explain it with the words of a reddit user (who also tend to refer to themselves as “Apes”).

XRPJon (@JMIV1) January 29, 2021

Reddit users argue Hedge Funds are making money on the backs of the company and the individual investors who are owning the stock.

How did GameStop started rising?

What the subreddit “wallstreetbets” noticed was that GameStop was being shortened massively. As short positions can only be opened for a limited amount of time before they expire and the Hedge Funds have to buy the stock back (and thus taking a loss if the stock goes up).

So for a good cause, in a battle of the rich vs the poor, the small investors vs the big hedge funds and the knights of old outdated company’s the reddit army started buying GameStock massivly! In a matter of weeks the stock skyrocketed like we have only seen in Crypto before.

Under the moto of #yolo (you only live ones) these guys did not care if they were going to get huge gains or they would lose everything.

The subreddit forum is not called WallstreetBets for now reason. Its a gamble, they could win a lot or lose a lot in a very short time. There is stories on this subreddit about huge gains but there is also stories about huge losses. While they claim they do not care one thing about this, deep down nobody likes to lose money.

To the moon?!

Image result for I am not a financial advisor

Well firstly you need to keep in mind you are buying into stocks they do belong to a company and that company can also actually go bankrupt. At the same time there was already other stock holders and they might be eager to sell of when the stocks surge. So you could lose everything.

GameStop stocks also rose from 0.2$ to 350$, the higher it goes the more people will be put off to buy in at the top. Its a pyramid and at this point you don’t know if you are buying in at the peak or at the bottom.

But that does mean a few people who saw it coming in an early stage made some great profits on this. Including the Financial Independence blogger Fighttofire that I follow, and I am greatly looking forward to see how it plays out in his Q1 portfolio update!

So do I support this movement? Hell yeah!! This is way to entertaining to follow! Just have a look at some memes that are doing the round on twitter, they are simply hilarious!

January 29, 2021

Do I think its a solid long term investment? Well its very different then my long term solid ETF strategy, I would not see this as an investment per se, but more as a ticket to be part of a movement. But I have been wrong before in the past and I sure hope for those who did buy that this thing will go to the moon!

Countermovement

Be aware however that there are forces trying to stop users from buying these stocks. Robinhood a free broker was actually one of the first to block users from buying $GME. Robinhood was not the only one, IG, eTorro, Interactive Investor, DEGIRO, Trading 112 and Freetrade all put some restrictions of some sorts.

That being said the reason why they put the restrictions is unclear. Robinhood argued that because of the sudden surge they needed time to get more liquidity first.

The actions of these brokers were not really welcomed by the reddit crowd, who then left huge amounts of negative reviews on the Google Play Store. These then in turn got removed by Google.

Robinhood is planning an IPA soon so its hard to say how this will affect the Robinhood stocks. For sure they have lost a portion of their supporters when they blocked $GME.

At the same time the SEC is keeping a close eye on the whole situation as they vow to punish abusive activity.

How they plan to do that is hard to say, if I buy a $GME stock, how could they possibly consider that abusive? Perhaps they will go after some individuals who bought these up massively but it will be a difficult case.

At the same time it was not unexpected. Institutional investors do not like volatility and they might stay away from investments as they look how the market evolves. SEC wants to avoid that.

What is the next $GME?

With $GME having risen 175% in value already in a few weeks, it might not be tempting to invest your money there.

I think the main thing you should keep in mind if you decide to buy a #yolo stock (as they are also referred to), that you should be prepared to have large losses. Keep in mind you are not just buying a stock you are buying your ticket to a movement.

A chance to be part of something big, and if you will enjoy to go on the reddit forum and be part of the movement then by all means get your ticket.

The subreddit Wallstreetbets does not only hold the tag Gains, but they also hold the tag Loses for a reason. There is users who have lost 100ks in stock betting who are publicly posting their story.

Unless the SEC can actually find a way to stop this, I do think we will see more of this. The subreddit forum Wallstreetbets has seen an enormous growth the last weeks,

From my side I would be lying if I said I was not tempted to try my luck with a gamble of some of these #yolo stocks myself, and I have been scouting the markets to see what the wallstreetbets subredit might jump on next. So far I am undecided if I will be buying or not.

Wallstreetbets seems to have a preference for older stocks reminding of the good old days, GameStop (selling used videogames) is such a stock, but you also have $AMC, a cinema chain, Nokia who used to be the king of mobile phones, and Blackberry of course.

I would say that Nokia is actually a good stock to have. While their mobile phone business is down, they are still a top 3 player when it comes down to cellular phone networks. And one of these players (Huawei) has to face accusations of spying for the Chinese government.

I am not sure about the other stocks. Its hard to say if these stocks will also go up. It does feel like gambling to invest in these stocks now though.

Unexpected winners

A few unexpected winners came out of this frenzy, and that is company’s who already had large amounts of a certain stock. Silver Lake for example had a huge amount of #AMC stocks and sold them off when the stock jumped from 2$ to 20$ making a 113$ million profit and making #AMC lose over half of its previously gained value again.

Same goes for MUST Asset manager, a South Korean company who held GameStock stocks and sold them all at the peak, of 420$. They made a billion in profit and caused the first dip.

But there is also losers..

With all these winners come also losers and a few people have bought in at the top and don’t mind to share their losses on the subreddit Wallstreetbets.

If the Frenzy would die out and people would stop buying they run a serious risk of losing a lot of money. They are aware of this and usually state that this will go to 0 or to the moon.

Conclussions

I was planning to write this as a subsection in my monthly portfolio update coming next week, however I realized I had so much to write about that it makes more sense to put it in a different section.

I would not see this as an investment but it is for sure an interesting movement, and I wish them the best of luck. I will be watching and cheering as this plays out.

Should you wish to join, then see this as a ticket to the movement, or a bet in the casino. Do not see it as a proper long term investment.

I personally prefer to have ETFs in my portfolio, but I do have a few high risk items as well inthere such as Startups. I think its ok to bet with a small portion of your portfolio as long as you are aware of the risks.

I have made loses in alternative investments in the past so I am very careful right now to invest again.

Want to start with investing? Check out my beginners guide on DEGIRO to find out how to start.

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Uncategorized

Where did my 25.000 EUR go?

In 2020 I spend almost exactly 25.000 EUR. I said it before, but I started working at a 1270 EUR wage and I still remember this. So spending 25.000 EUR in one year is a huge amount. I have to admit I have been hit by lifestyle inflation, and because my money kept growing I never really paid much attention to it.

2020 Budget review

In this blog I want to have a closer look at how I did in 2020 (as opposed to 2019), where the money went, I also want to budget for 2021, but that might be a follow up blog. Something I never tried in the past as my income was always higher then my expenses, but a change in expense can really do a lot to reach Financial Independence.

At the same time I don’t want to drastically cut costs, there is a few things that remain important to me, that I will not cut on.

Would you want to reach Financial Independence to realize you have nothing to live for? I don’t think so. So I do feel its important to keep investing in living, but at the same time I do need to admit there was certain things I bought that now I wonder why I have them. So the main thing I want to do less in 2021 is buy stuff.

Where did the money go?

The easiest way to find out is the visualize this in a flow chart.

2020 Expenses

When seeing the flow chart it actually makes much more sense. The large majority went into Housing Costs (11261 EUR), which is mostly my loan (I include the principal + interests), and syndic costs (a stunning 2600 EUR this year). Then we have groceries, again a little bit on the high side, but not completely unrealistic.

What stands out the most is Shopping at 2646 EUR and Hobby’s at 2848 EUR. I don’t really blame myself for spending so much on hobby’s, as I said I do think its important, but it would be great if I could cut back on Shopping. I actually do feel I have to much stuff in my home already!

I do want to compare with 2019, so I did the same exercise then.

2019 Expenses

So I actually spend almost 6000 EUR less in 2020.

Where are the differences? Much higher hopping, restaurants, holiday expenses and slightly higher housing costs.

In all fairness in 2019 I spend almost 100% of my workdays abroad. I do get a small reimbursement for this which is specifically meant for food like going on restaurants, and is at least as much as the extra expenses I have on restaurants. I do not always have the option to cook at home, especially if I’m on a hotel. For that matter I really think the restaurants costs are okay, even if at a first glance my expenses seem much to high. I also went to South Africa in 2019, and I do think the 3500 EUR spend on vacation was worth it as this was really a once in a lifetime trip!

At the same time I do think its to high and I am happy I was able to reduce my expenses with 6000 EUR in 2020, and feel I should try to reduce it further.

Budget for 2021

So for the first time I will budget my expenses in the hopes that it will make it easier for me to reach lower expenses.

I would like to set as target to spend 2,5% less in 2021.

It’s possible if there is big changes in my life that I will recalculate this budget however right now I feel its realistic. I will also be checking my monthly savings rate to see that I am still on budget.

Total 2020Target 2021Budget per month 2021
Activities2515013
Business Expenses52026022
Costs73992377
Day trips34934929
Gifts24036030
Groceries29672670223
Health76060851
Hobbys28482848237
Holidays12332467206
Housing Costs1126111261938
Restaurants14201278107
Shopping26461217101
Transport93938
Total Expenses25101244842040

What has changed?

In total I am hoping to spend 2,5% less in 2021. I see 2021 as a special year as I am planning a move, and will rent a place. I expect there will be a few months overlap between my loan and renting. This is the main reason my housing budget will remain the same as in 2021, its only in 2022 I expect this to cut in half.

I have foreseen more budget for activities (post-covid), costs (expecting extra car costs), gifts (more parties in 2021) and doubled my Holiday budget.

I have cut on Business Expenses (lowered my wordpress subscription from Business to Premium – I have 2 sites), Groceries (I feel I can do better then last year by going to the Aldi), Health (no Mouth mask purchases planned and Im in better health then last year), Restaurants and Shopping (severely cut back, I want to buy less stuff!).

I kept my planned expenses for hobby’s identical, as said before this is really important for me.

For housing I also made a more detailed calculation what my costs would look like the next 3 years if I found an apartment for 750 EUR rent / month and moved in May. As you can see both the moving date and the amount it will cost me to rent are a bit hard to predict. I would be okay with renting for 800 EUR to probably.

The most important thing is that its clear that there is a constant drop in costs during the year, so even if I would be spending more in 2021 I know there is a drop coming. This drop is mostly thanks to paying off my loan on my first property. If renting out my first property goes well, I might buy a second apartment at one point.

I will be checking if I am on budget during my monthly saving rate check ups of course!

What did you expenses for 2020 look like? Do you feel I spend to much or to little? Post a comment and let me know?

Interested to find out if I manage to stay on budget? Follow me to find out more.