A not so new beginning

This blog has two purposes.

  1. A place for me to set goals, track them and hold myself accountable.
  2. A place for treasuring things that I study.

I’m a 35 years old Israeli.  I know that by the standards of the FIRE community I’m considered quite old.   In the FIRE community 35 is more or less the age that most people aim when they say they want to retire early. Well, guess what. I’m not retired!

I first heard about FIRE around 2012. Jacob Lund Fisker’s Early Retirement Extreme has really changed my life. I was miserable at my job and I thought I found the panacea.

I could blabber about my past but maybe I should leave that for later. For now I’ll cut to the chase so that you get the main picture :

  • Spent my entire twenties working for the government. Saved a lot, but didn’t invest much. I was completely fed up and drained by age 30 – so I “retired”.
  • In the following year I started a a little online venture that still produces passive (or semi-passive) income. Today it produces around 2,000 ILS per month but is not very stable.
  • Went back to school. I loved it, mostly retrospectively. I felt young again. I miss it so much these days, especially with the coronavirus disaster.
  • I finished my degree. Thought it’d be a waste not to do a full internship.
  • Went to a year of internship. It was OK – after a  5 year hiatus from salaried work I had to adjust myself, but I managed.  Kept saving and investing.
  • Completed my internship. Thought it would be a waste not to
  • Moved to another city, with my GF (now fiancee). Separate finances with a joint account for common household expenses.
  • Started a new job. Officially unretired.  Very long hours. Pay is not very good – about 10,000 ILS per month. I’m still learning – if it gets too boring I’ll quit.

Money wise…

  • I own an apartment (which I don’t live in). Present value is estimated at 1,638,000 ILS, Not sure if I should include it in my net worth as it Is not liquid. No mortgage on that asset. I rent it out. It produces about 4,000 ILS per month.
  • I have a pension fund. It has about 106,000 ILS. I can’t touch it until I’m 60. It’s fully invested in stocks.
  • With the recent downturn, my liquid  investment portfolio is currently worth about 1,700,000 ILS, with about 20% in tax advantaged accounts.
  • Roughly 51% of my liquid net worth is invested in stock index funds (mostly accumulating), 22% in short term bond index funds, and 27% in cash.  For years I thought this was a sub optimal asset allocation but in this market environment I prefer to err on the side of safety.

There is however one obvious problem that needs to be fixed at once. My main lesson from the Coronavirus crisis is that I should tilt towards income producing assets. Dividend accumulating funds are very tax efficient and are generally l fun and games when the market keeps roaring higher, but the thought of having to sell funds in order to “generate” the income in times of need make me shudder. No thanks. I want some hard cold cashflow!

For years I’ve been an avid Boglehead. I owe these guys alot. But there is some dissonance with the fact that Bogleheads say “never sell stocks in a crisis, because you lock your losses this way” but then again… what if the market forces you to sell? A man’s gotta eat after all…

This is why I want to use at least a portion of my cash allocation to create a sustainable dividend producing machine. I want to transition from index fund investing to dividend stocks and other income producing assets. My hopes  are that I’ll be able to do it here and document the progress as I do so.

So, this is the story.

Quick recap for the TLDR folks: 35 years old, FIREd, UnFIREd. Total NW (including RE & pension): 3.45 Million ILS (875k Eur, 957k USD) of which 1.7 Million is liquid.

Average monthly income is around 16,000 ILS per month (4,438.50 USD / 4,060.1 Eur), 62.5% of which comes directly from selling time to the Man. My most immediate goal is to change that ratio to 50:50.

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