Self Reflection Sunday

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Oct 16,2016
Self Reflection

I love the classic story a Christmas Carol. I will always remember the 3 ghosts that appear in the story, the ghost of Christmas past, present, and Yet-to-Come. It has inspired me to write this post in it's honor.

Past
This past week I was successful in working out for 3 days. It was not easy as the rainy season has started so running outside was not an option, I am afraid of getting pneumonia (just look at what happened to Tiny Tim). I do not have time for pneumonia, and my medical coverage is minimum, so I also do not have money or coverage for pneumonia. Instead, I opted to workout at the nearby fitness center. Not quite as enjoyable as being outside but it will have to do.

I was less successful with the property analysis, again due to computer issues. I was able to conduct 50 analyses, but I was not done until today. No real estate team yet, I will have to double my efforts on that front. I will also need to learn how to generate capital for that initial down payment, most of the properties will require 20-25% down payment before the bank will lend out money. Also interest rates are much higher on a rental property than a primary residence, I will need to see if I can attempt to buy a second home, then rent it out. 

Present
I have decided. I will be making a phone and laptop purchase this year, preferably around Black Friday when the deals are out. I realized that the time lost due to my phone and laptop crashing is substantial, though I will still need to gather the funds to make the purchase. Most likely I will be buying a refurbished laptop and an older model phone to save money.

On another financial front, I have started looking into investing with Wealthfront. Wealthfront does robo-investing, where you take a short survey to determine your risk tolerance, and they create a portfolio for you to invest in with automatic adjustments. All the asset allocations are dictated by an algorithm or a computer. Typically I would never use a funds manager because the management fees of 1-2% is much too high. Repeated analyses have shown that index funds will beat mutual funds because the mutual funds eat away any earnings that may have been generated. The reason I am investing with Wealthfront is that the first $10,000 you have in it will be managed free. This means that if the fund is truly able to beat the market, then I will keep all of the earnings. After the initial free managed amount, then the management fee goes up to 0.25%, or less than a quarter of what most funds managers may charge. That 0.25% only applies to any amount above the free managed money. So if you have $10,000 managed free, and $15,000 portfolio, then your management fee is 0.25% of $5,000. If you are interested, you can use my link (Maslow's Wealthfront) to get an additional $5,000 managed for free.

The bank that handles my student loans sent me a letter recently, they are going to increase my interest rate. The interest rates increases roughly every 3 months, and has risen from around 2.85% to 3.75%. Each time that the interest rate increases, I have to reassess whether it is more worth it to pay down the student loan or invest the money. After a few rough calculations, paying back student loans at 3.75% is almost the same as generating 6.5% returns on investment for short term stocks and 5% returns on long term stocks held over a year. Typical stock returns are around 8% so we are getting real close to a break even point. The primary difference would be that paying back student loans is a guaranteed savings, which makes it very attractive. By my calculations, if the interest rate exceeds 4.75%, then it will be better to pay off the student loans. Here's to hoping the interest rate holds steady for a while.

This past week I was able to celebrate a friend's birthday. It is always good to be able to take time away from the debt and worries to be around friends even if just for a few hours. I also attended a Toastmasters International Humorous Speech Competition, and listened to some exceptional speeches. Each person had their own style and it was great watching and listening to them perform. I am proud to announced that members of my club took home 3rd place in evaluations and 1st place in speaking. Both speakers are incredible at what they do, and I look forward to learning from them.

Yet-to-Come
My life financial goal is to become financially independent, being able to work a job but not having to because I have revenue streams available. I would very much like to retire well before age 60 when my 401k and Roth kicks in, but I do have them just in case things turn sour.

For this coming week, I will workout for at least. I was also able to workout today, finally putting me ahead of schedule. I had not been starting my workouts until the middle of the week so starting early should give me more options later on. I will continue to analyze 10 more properties and learn to invest more. Finally, this week I will be the Toastmaster at my local Toastmaster's club. It will be my first time, and I am excited for the opportunity.