My Financial Goals for 2018

It has been a remarkably dangerous week since i last wrote on this modern rune stone generator. Vikings do not do well with the heat of the unusually hot summer. Most of the week i was hiding in my cave trying to print some money in there. As a result I can tell you this: going for a raid to the neighboring village is much more simple than trying to squeeze money papers out of my money paper - like squeezing water out of a stone. I did get a few metal coins out of the effort and ended up with my first treasure from this new technology - 33 copper coins that this new generation of people prefers to call cents or euro cents.. 

A wise conqueror would have put the coins in a chest and bury it somewhere safe marked with an X but seems like humans these days have gone crazy! They kept saying: "Trust me, if you give us back these coins you just got, we will give you back even more! You just have to wait!". "Insanity", I thought to myself but i do like adventures and have a few good chests stored with the banking people so i agreed to give it a go! They call this magic P2P lending.

I only started investing in June so it is reasonable to miss the start of the year by 6 (almost 7!) months to set the financial goals for the year. I actually have had the idea to write about it for a few weeks but setting goals for myself is apparently a complicated and time-consuming process!

I came up with these goals:

1. Earn at least 100 euros of passive income in total,
2. Buy (and hold) at least one non-baltic stock,
3. Invest at least 10 000 euros,
4. Read 4 books about anything investing-related.

Four goals seems to be a reasonable start considering it's only for half a year. Let's go through them and dig a bit deeper.

Earn at least 100 euros of passive income in total

Trying not to get too greedy. The stocks i have bought so far have been bought for dividends and will not really bring me any passive income before the next year (hopefully). One of the ways to make some progress right now would be to increase investments in P2P lending which seems to be slightly short on the demand side these days so the interest rates are going down. The other option would be to go for the stocks that are going to make more dividend payments this year but picking stocks just based on this criteria is not a wise move.

Buy (and hold) at least one non-baltic stock

This one is a challenge to go a little further in the stock market. Took me a while to do my first transaction in the Baltic stock market and i made sure to understand how the buying part works by letting a friend of mine talk me through all the options i have. As with most things it turned out to be easier than i was afraid of. Before buying something from the USA market i want to make sure i find the best option to minimize the expenses i will have when keeping the stocks for dividends. If anyone has a good blog post or some other resource about how to have the lowest upkeep and transactions fees in Estonia then feel free to hook me up!

Invest at least 10 000 euros

I am a rather conservative person when it comes to putting my money anywhere but my bank account because there it seems to be the safest. This year however i have realized more than ever before that by keeping the money on the bank account I am actually slowly burning it from one end while pumping more of it in through the other end. The burning itself intensifies as the amount i have stored gets bigger. Therefore it has been an eye-opening year and this goal is meant for me to overcome the aforementioned fears with the thought at the back of my mind that I am okay with losing some of the money at least temporarily.

Read 4 books about anything investing-related

I do like reading blogs and other shorter media formats but have had a slightly tougher time with going through books. I have books lined up i want to read so it is mostly about picking them up from somewhere or ordering them online. 

What do you think about my initial goals? Which ones will i be able to likely achieve and which ones not?

Enjoy the summer but also don't forget to continue to fight the modern war for financial freedom!

Mintos gave me the first interest cents of my life!

Woke up today, feeling positive and the first thing i did was to open my laptop and log in to Mintos to check my account balance as I have made it a habit to do on a daily basis. I have heard stories of how exciting it is to look at the first interest drops falling onto your P2P lending account and i can confirm they are not urban legends - it really has been an exciting morning.

Besides this emotional thrill I do remind myself this is my money I am gambling with and should remain aware of the risks of the money lending business. But don't get the idea I haven't calculated in my head how much I am willing to risk for the potential rewards. I am putting rather conservative part of my savings into this platform and so far going in 100-200 euros a week to ease into the platform.

Everybody likes pictures more than text and here is how my overview looks like now (first loan was bought 2 weeks ago):

To break the first cents down: 1 was from a loan that was supposed to be returned on Monday last week and wasn't. Therefore it made extra 3 cents in being late fees. The rest of the 4 cents came from a company loan without a buyback guarantee since these first investments were made with one of the predefined Mintos strategies and i had yet to learn more about the buyback guarantee option. The returning principal is already making more money. I transferred an extra 99.92 euros today to make those 8 magical cents go and work for more!

PS: Don't forget to appreciate the little things in life! :)

Use this Mintos referral link if you have decided to join me on the platform to earn some extra income for the both of us based on your average invested capital.

My Financial Story

When i was young my parents pretty much lived from paycheck to paycheck as most normal people do and looking back, i wasn't really helping with saving some money. Always had to have some  cool toy or a pc or a laptop and so on. They are kindhearted people and so they didn't really hold back much of what they could spare for their children. The term investing didn't even come up for discussion. They did a decent job with keeping up with money so we weren't heavily in debt at any point during my childhood.

When i went to the university, i was still partially relying on my parents income along with the scholarship the university provided for good grades. On top of this i took on my first ever loan. It was a student loan and in today's currency it amounts to about 2000 euros. 5 years back it was a whole lot more money than nowadays. And no, i did not spend it wisely as a big part of it went to enjoying the social side of the university life.

On the second half of the second year at the university one thing led to another and I somehow got myself to look for a job. Now that i think of it my mother probably was pushing me with this at the time. I was amazingly lucky to land my first job as a programmer from the first few places i got an interview at. From this point on I was able to support myself fully for the first time in my life.

Throughout my career i have always been a natural saver. There is something that makes me feel safe and good when i know i live below my means and can stash away quite a bit of my income every month. There have only been a few where I have done otherwise and those pain me enough to make me avoid such spendings.

A few years later i had saved enough to pay back the student loan. I always keep a healthy buffer so by the time i decided to pay the loan back i probably had twice as much saved for whatever should come up in my life.

Having paid off my only debt, i had already started preparing for my next big goal in life - owning my own apartment. Ideally i would have loved to pay in cash for the whole thing but ended up with around 30% downpayment by the time i got the chance to buy an apartment.

Being a really conservative person i went for an almost maxed out loan term which was 29 years instead of 30 because the bank preferred it for some reason. After the downpayment i still had enough in the emergency fund to make me feel comfortable. 

It has been around a year since i bought my apartment and i haven't changed my lifestyle and since the income keeps rising, i am comfortable with being in the 50% club - a term i hadn't even heard of about a few months prior to writing this post. For those of you not familiar with the 50% club - it is a term used for people belonging to a group of individuals who can save up 50% or more of their income every month and direct it towards becoming wealthier.

And here I am now, listening to podcasts like investeerimisraadio (Estonian), Dave Ramsey (USA). Reading books from Jaak Roossaare (Estonian), different blogs about investing and so on. The only classical wish i have is that i would have liked to have started way earlier because in the investment world.. it's not just "Time is money" it's "Time is more money".

This is where you hop on. Hopefully I can make some wise decisions and keep this blog interesting with achievements and probably some failures! Thank you for reading this through and I'll see you around. Keep building up the pot of gold (well, gold is also an investment but mostly for tougher times!) and fighting the war for financial freedom!

Mintos P2P Lending: Custom Auto Invest Strategy Configuration

As promised, here is a guide for myself and anyone else interested on setting up auto invest beyond the platform predefined strategies. The guide is based on my limited experience with the Mintos P2P lending platform and is for reference only. Make sure to leave me feedback if i have made some mistakes or left out nuances.

1. Let's start by creating a new auto invest strategy:

2. Choose the Custom Strategy option:

 3. Initially you will see that no loans match your criteria since no originators have been selected:

 4. Let's imagine we can select from a list of 6 loan originators (lenders) A, B, C, D, E, F and based on our research we have decided to only include everyone besides F. Here is how we would do it:

Lender F is not included so their loans will not be represented in our portfolio. You can go even more specific with the choices per lender: loan type, country, buyback guarantee and additional filters. The UI is pretty self explanatory. For the lender C i have unchecked the "no buyback guarantee" option (highlighted) and in a real strategy I would do the same for B. Notice how on the left hand side we can see 672 loans matching our criteria now. Much better.

5. Let's look at the summary for these loans (opened from the highlighted "Show summary" link on the previous picture):

One of the more important doughnuts here is the last one. We want to see all of our selected originators represented. E seems to have a rather small representation in our example so we might have a problem getting our investments diversified once we have invested a proportional part into all the loans of lender E and we still have money left that was meant for lender E so we would have to go fine tune our criteria a bit more.

6. Set up your preferred loan term and interest rates:

Setting up these ranges will influence the loans matching your criteria on the right so after tuning these values go back to point 5 to make sure all your selected originators still have enough loans that will be invested in. I personally don't see a good reason keeping the originators that have 0 matching loans or not enough loans to take up a proportional part in my investment strategy.

7. Give your portfolio a good name, define the amount of money that will be invested with this strategy and the minimum and maximum amount per loan:

I would set the investment in one loan to the minimum of 10 euros (can't go below this apparently) and maximum the same to keep the diversification as high as possible. If you want the returning money to keep being invested and making more, mark "Yes" to the "Do you want to reinvest?" option. I would say "No" to "Include loans already invested in" (such exist if you have previously manually invested in some, or your other strategies have included some of the loans matching the criteria in this strategy). To take the most diversification out of your selected originators, set "Yes" to "Diversify across loan originators".

8. You can go even more specific with how to diversify among your chosen originators by clicking the "Diversification Settings" link on the previous image. This will bring up a popup:

We can tweak how big of a part each originator should get in this strategy. There are links to even the percentages out. If you do trust an originator more and want to go heavier on it, you can adjust these percentags manually. Make sure the end result is 100% for the Total value.

If we marked that we want to invest 100 euros with this strategy and divided the strategy evenly across 5 chosen lenders, we should end up with 20 euros in each lenders loans with 10 euros per loan. This is given that each lender has at least 2 loans matching our criteria. If let's say originator E only has 1 loan then to my knowledge the other 10 euros reserved for this lender will not be invested and will remain on your account until a loan for that lender should come for sale on the market. That is money not doing work so you might want to try to avoid such situations.

Now it is time to Save and activate your strategy. If you had enough money for this strategy free on your account before activation, the investing should happen within  minutes and you're off. If you decide to make a deposit later or it hasn't made it to your account yet, it will be invested once it makes onto your account.

Hopefully this helps you a bit. Feel free to leave feedback on this guide and if you do decide to join me on Mintos platform, help us both by using my Mintos referral link for registration.

Mintos P2P Lending: Originator Selection, Autoinvest and More

I have been digging more in depth into P2P lending and since Mintos is my first ever platform it is inevitable that the learning curve is the steepest i will experience trying to navigate this domain. So far what i have noted down for myself when looking through different blogs, websites, reviews, comments, etc:

• All loan originators (lenders who let you finance their loans so they can give out even more loans) have the option for a buyback guarantee. There seems to be no logical reason to go for the loans without this guarantee as the extra risk does not seem to bring a substantial (if any) return on your investments. I made sure to untick the options for including loans without this guarantee. Buyback guarantee means that if the loan is late for 60 or more days, the loan originator will buy it back from the investors meaning you can get you money back and continue investing in new loans.
• Even if a loan has a buyback guarantee, it is not a 100% guarantee. Apparently there have been issues with a certain originator lately for not holding on to this guarantee.
• One of the worst things that can happen in this P2P lending world is if a loan originator should go bankrupt. This is where the investors will lose money from the loans of the originator. Also a good argument for diversifying across multiple originators. This has happened at least once in the history of this platform.
• If you want more control over which originators you want to focus on, there have been a few researches made to compare them to each other. I will include one link at the end of this post. They are not official and meant as a reference point only. In the end you are responsible for the final choice you end up making.
• Autoinvest diversifies the best if you have the max amount you want to invest with this specific strategy available on your account and your criteria includes enough loans from all the selected originators (dont forget to tick the "Diversify across loan originator" checkbox). I will go through a strategy creation flow in my next post.

Resources:

Lender ratings (unofficial): http://explorep2p.com/mintos-lender-ratings/

Forums discussing Mintos (unofficial):  http://p2pindependentforum.com/board/76/mintos

If you have calculated your risk tolerance and feel like you want to take on the risks of P2P lending for some extra earnings on your capital, be sure to use my referral link so that we both can earn some extra money for investing.

I doubled my Mintos investments!

Took a pint of strong mead after waking up from a pillaging frenzy last night. Someone must have hit my head with a plank to knock me out. Anyway, this mead is soothing my headache and giving me the courage to go where no viking has gone before! To fight the hordes of foreign invaders for cash and glory!

Since the initial Mintos investment is still not giving me my expected feel of this platform, i doubled it to speed the process up a bit. The only payment i should have received by now is late for 5 days already. Might get the chance to see what the buyback guarantee entails in 55 or so days. Anyone can enlighten me if it will be just the principal or also the unpaid interest and being late fees?

My DOUBLED investments overview:

I know it's not impressive but it's still a portfolio in the sandbox phase. Tweaked the autoinvest settings again. Among other changes increased the remaining loan term to 9 months and reduced the selected loan originators to those that seem to be more reliable.

To be honest I am kind of too excited and therefore holding myself back from opening my wallet too heavily at the start of this fascinating adventure. I know when the next repayment date for the next loan is yet i still log in daily to check out how my loans are doing. Starter fever - heard it goes away after a while. :)

Paying Off Mortgage Early versus Investing

"To pay off my mortgage or invest the savings" - this is the question I have been internally debating a lot as of late. The only debt i have right now is the mortgage for my apartment. Technical details:

Attribute	Value
Principal Remaining	70 000 €
Term	28 years
Monthly Payment	300€
Interest Rate	1.85% + EURIBOR (0%)

If we do a quick calculation the total repayment comes close to 101 000 €.

My thoughts for now go towards letting it tick as the payments are around 15% of my monthly income and the interest rates are pretty low. I will probably tackle the loan full time once i feel like it becomes an emotional burden but right now I am thinking that I am still relatively young (28) and it seems to be a good idea to try to make the money I earn work for me better than the sub 2% interest rate which i am being drained off yearly and i believe i can do it.

What would you do in a similar situation? Would you pay off your mortgage in a few years if you had the chance or try to make the extra money work for you in other ways knowing the risks? Or maybe you are/have been here before in which case I am curious to hear about your experiences and journey.

Some views on this topic from a few people i have seen discussing the topic:

Pro-investment (ppcian): https://www.youtube.com/watch?v=6ExsZJm2dds

Pro-mortgage-repayment (Dave Ramsey): https://www.youtube.com/watch?v=_O0MrVKGcWo

Dave Ramsey Baby Steps from the perspective of a European citizen

I have been following the investment legend Dave Ramsey for almost a month now. Since I am not from the USA myself, it is interesting to follow his radio talk show and see how people are doing in America.

Who is Dave Ramsey? He has become a person helping out many people with getting out of debt and paving a road to becoming rich after that. I have mainly been listening to his podcast and also watching his show on Youtube.

How is he helping so many people? He has a program that is called the "Baby Steps". I think people all over the world can benefit from this so I will share it here as well in case you find you are also struggling with a debt burden and would like to get out of it.

1) Have an emergency fund of 1000$ that you keep on another account than the account you usually operate with. I believe we can easily convert it to 1000 Euros as a European equivalent. The idea behind having this fund  is that you have this small buffer to help you get out of unforeseen issues like a car breaking down or water leakage at home or similar. Having this will prevent you from going into more debt (by taking out another loan) if some relatively small unfortunate event should occur.

2) The debt snowball. You write down all your debts and start paying them off from smallest to largest while in the mean time making minimum payments on the rest of them. This way you should be able to attack each debt with a stronger and stronger force since eliminating one debt will leave you with more free income to attack the next one and so on. Discipline, budgeting and a purpose for every euro are the important keywords here.

3) Once you are debt free besides the mortgage payment, increase the emergency fund to 3-6 months of expenses. The specific number depends on your lifestyle. For me personally it would be around 6000 Euros. This fund basically serves a similar purpose as the fund in the first baby step but will also cover you in case you should lose you job for whatever reason or if you should have some sort of a bigger emergency.

4) Invest 15% into retirement. I am not quite familiar with Roth IRA and other pension options in the USA but for me in Estonia this would be investing a part of my income into the second (mandatory) pillar and third (optional) pillar.

5) Invest into kids college. This is less of a thing in more socialistic countries as the college in Estonia for example is free (state funded) given good enough grades from highschool.

6) Pay off your mortgage early. This is the one I am at right now. I am trying to figure out the benefits of paying off a mortgage with a 1.85% interest rate (+EURIBOR which is currently negative) versus investing more and getting better returns on my money. I am pretty sure Dave would suggest attacking this but i will write more about "paying mortgage off early versus investing" in another topic.

This is an investment blog but saving and becoming debt free is one of the prerequisites of being able to max out your investment potential so it is in it's fair place in my oppinion.

If you are interested in getting to know Dave Ramsey or just listening to his show, i suggest starting out with his Youtube channel: How To Get Started On Baby Steps?

Be sure to let me know what you think of Dave Ramsey and his program in the context of your own country.

Mintos - a P2P Lending Platform

There have been a few different options i have been looking at in terms of investment diversification and one area that has caught my eye has been crowdfunding. Out of all the blogs i have read and podcasts i have listened to the one that caught my eye was Mintos. I have been dabbling with it for a few days so far and if everything goes as expected i should earn the first cent of interest today thanks to financing a short-term loan in Denmark.

My view on how it works so far:

1) Create an account.
This was pretty straight forward and i doubt anyone would have issues with this part.

2) Make a deposit.
There seems to be an option to make a deposit in several different currencies: EUR, CZK, PLN, DKK, GBP, SEK, RUB, KZT, USD. Clicking through them i noticed that the thing that changed for those was the bank(s) you could use to make the deposits from. I will be focusing on EUR currency since this appears to be the main currency of the site with the most features available to it. For EUR i had the option to make a deposit using the LHV bank. For all the currencies the deposit options include TransferWise, PaySera, Currencycloud, CurrencyFair and EasyChange.

After making the deposit it takes some time before the money is delivered to your account. I believe they stated it could take 1-2 business days. My first experience was that i made the payment before going to sleep and in the morning my money was already divided to serve different loans all around the world.

3a) Manually pick which countries and what kind of products you want to invest in.
I have not tried this option yet but i will give an insight to manual loan selection if i happen to have the time to dwelwe into it. Seems to be the best option if you want to have the biggest possible control on where and for how long your money gets invested.

OR

3b) Set up the feature called autoinvest.
This is a very comfortable (and therefore likely slightly riskier) option that prevents you from having to put too much time into operating your Mintos account. There are two options here - either you choose to put together a custom investment strategy (likely the preferred choice as you get more familiar with the platform) or you choose one of the Mintos premade strategies:

I decided to initially go for the Short-term strategy. Then i reviewed what settings it had applied and i tweaked it myself to the countries that are geographically closer to me so i can more easily keep an eye on how they are doing financially and assess the risks of handingout loans there. 

One of the things i would like to note is the minimum and maximum investment in one loan. For diversification maximization i went for 10 EUR - 10 EUR range which is also the smallest investment you can have per loan. Other options that you can tune is if you want to automatically reinvest the money that has come back, if you want to diversify across different loan origintors, if you want this investment strategy to invest in the same loans that your other strategies might have already invested in.

DISCLAIMER: The annual returns you can see on the picture above are only an indication of your potential earnings. This is not a risk free investment option and nothing is guaranteed so make sure to accept the risk of possibly losing some of your assets or them not being liquid for longer than the calculated repayment dates suggest.

4) Wait for the money to come back
I Started off with 100 EUR which was divided into 10 different loans with a 1-3 month repayment date. I am thinking of putting in 100 a month for starters to go slow and steady and increase my involvement in this platform if everything goes as I expect. When you log in you can see a nice overview of how you are doing, mine looks like this at the moment:

5) Go back to step 2 or 3.
If everything goes well and your money is working for you, you can choose to reinvest the money you get back from the successfully repaid loans automatically or manually.

There is also a campaign going on right now called "refer-a-friend" in what we both can participate in to earn some extra bling to spend on the platform. It works in a way where if you register using someone's link, the platform will check if you have deposited money into the platform after 30 days and it will calculate the average amount of the money INVESTED in that time and we both get 1% of the average invested amount to add to our investment portfolio on that platform. If the average should go up it will be reviewed after 60 and 90 days and we will be treated with more money. I joined with someone's referral link so i will be making them and myself 1 EUR after 30 days and more if i decide to invest more on this platform.

You can read more about this campaign here: Mintos refer-a-friend campaign

And if you feel like i have given you something useful with this post, you can give us both a treat by using my referral link:

A link to treat Yourself and the Viking

I feel like i am obliged to remind again anyone reading this post that these kinds of investments are not risk free and since the platform mostly operates with short-term high-interest loans, there is no way of telling how bad the situation can get if there should be an economic crash again.

I am still waiting for my first ever investment profit cent for the loan ending today to celebrate with some mead and chicken!

PS: The limit they allow for the refer-a-friend campaign per account is 25 000 EUR (it would make us both 250 EUR!) so if you decide to become my friend, don't go overboard, okay! :))

June 2018 Overview - Hello investment world

As a programmer often the first thing to write in a new language is the so called "hello world application" to test the waters with it. I will apply the same concept here. I feel like there is so much to write about but nowadays it is better to keep everything that you have to say, simple. So i will try to pace myself!

First of all a bit about me. I am 28 years old and only this year found out about the huge world and possibilities of investing (thanks to the nudge of a friend who also started with investing in the past year). I'll be honest, at first i was overwhelmed by the information and options and i guess that hasn't really changed. Still, the best way to get into things is by getting straight to the business and so i did.

My first non-real-estate investment in my life was buying some Tallinna Kaubamaja stocks (ticker symbol TKM1T) in the Baltic Stock Exchange. Some of my colleagues hinted it would be a good time to start with it since the price seemed to be nudged down by the IPO of Tallinna Sadam (ticker symbol TSM1T). I was observing the price and found 9.06 euros to be a good enough price to cash in at (or opt-in to the stock). Wanted to start with a 2x bigger position than i did but due to some technical difficulties missed the opportunity.

I guess you could say i got carried away and didn't stop there. The aforementioned IPO was something i also didn't want to miss and i secured the minimum guaranteed amount of stocks from it. Was pleasant to see the 1.7 euro final price which pumps the potential dividend outcome compared to the 1.8 euro offer price.

I guess the starts of investment careers are kind of boring in the sense that at least I personally like seeing the profit numbers and rejoice with the bloggers themselves if they go up. I won't leave you without some graphs and numbers though (however simplistic they might be right now).

After all the expenses i managed to save a good 60% of my income so i started strong in the 50% club.

Current portfolio size: 31949.47 Euros. That cash percentage hurts since it's mostly money sitting and burning slowly on the bank account (ohh that nasty inflation monster) but i will have to pace myself not to teach myself the hard way when taking the baby steps in this fascinating new world.