Personal finance decisions during COVID-19

Lean back everybody, and hold on, cause we are about to embark on a bumpy ride.

Trying to build that perpetual money machine that will allow you to reap the yields of the capitalist markets has not been that easy so far this year. What started out, as just a continuation of last years calm and steady markets, gradually ticking higher and higher, all of a sudden came to an abrupt stop when the world was infected with the COVID-19 virus.

A lot can be said about this virus, but that will not be the topic of this blog post. Also, a lot can be said about how this virus has hit the financial markets first, and second the underlying real economy. All very fascinating and intriguing, and both subjects will be the topic of academia within health and economy for years to come. It truly is something for the history books.

As you all know, one of the reasons I started this blog is because I generally think the openness around our personal finances is way too taboo. Peoples wage levels, our savings, our net worth, our investments, all of it is generally not the hot topic of the dinner table when having guests over. Its sad though, because how else will we learn.

I guess the great corona market shake up is in many cases also an excellent show case for how “secret” much of our financial lives are. I bet you will come across some one who NAILED it either shorting the DOW at 29K or going long at 18K in march, but are you getting the full story. Which other positions did they not disclose? When did they stop the positions out? And further, what are they doing with their mortgages, retirement funds, real estate and so on and on.

Which is why I thought it would be good for me to do a piece on all the personal finance decisions I have made since the start of the year. How has a small fish like me, trying to build that early retirement fund navigated through the first four months of the year? And by putting it down in a blog, I guess it will also be my own little contribution for the history books. (Just hope it wont be – “hey look at this stupid guy back in march 2020, what a smock!) Well anyways, below is the Dow Jones Industrial average from the start of the year up until today. I have overlaid the graph with small info graphics on when I have made some sort of decision.

Personal fin decisions 2020

Buy icon The buy icon.

Retirement iconThe Retirement fund icon

Child saving iconChild Savings Account

We basically started the year off a bit hesitant. Usually we will have around 7.500 USD from our wage salary to place in the markets, but at the start of the year every thing just seemed very high, so our first purchase of the year, too place on jan 14th with around half of that buying Norwegian telecommunications company Telenor. Funny thing is, way back in January, I also heard the first news about the “still new and exciting” coronavirus out of China. I actually mentioned it in an earlier blog post I wrote about me and the misses being away on a hotel weekend trip, which you can find here; How to choose experiences over consumption of stuff

Still markets kept feeling high, and with news of virus in china, we did a new purchase on feb 4th in Danish insurance company Topdanmark. Again only ½ of our monthly amount. By this time, markets in China was being hit, and during February and towards the end of February it really started to hit world wide as well, with the Dow dropping down below 26.000. We had just gotten February salary, and then put almost 9.000USD into a global index fund. By this time, reasoning being that this is hitting world wide, and its too early to know which single stocks might be hit the most. Started to sanity check the current portfolio, but as most of it is in Danish dividend companies, we didn’t panic or anything, so until now, we have not sold off anything.

It was at this point in time, that I told my wife that we better open up investment accounts connected to our children’s savings accounts (which are locked up till age 21, and has so far only been placed in bank deposits). Took forever to get done, so in the mean time on March 10th I changed the risk profile on my retirement scheme which until now has been in a low risk profile (75% bonds 25% stocks). Switched over to a high risk profile (75% stocks and 25% bonds) around when the Dow was at 24.000. In total around 80.000USD got moved. (too early though stupid!)

Time goes by, and by mid march the Dow is crashing to almost 18K, and boy do I look stupid. This is where we decide to throw our last cash at the market and buying around 3.000USD worth of Carlsberg B stocks. I decide to take the other (smaller) retirement scheme I have and bump up from high risk(75%/25%) to 100% stocks.

By March 23rd, the investment accounts for our three childrens savings accounts are finally done, and over two turns (March 23rd and April 8th) we buy roughly 15.000USD worth of global index funds for them.

These are now up roughly 15% – who would have thought my children would turn out to be better investors.

Having thrown everything at the market, we have to wait until payday to finally add an additional 3000USD worth of Carlsberg B and 3000USD worth of a global index fund.

Roughly a month goes by (april) and markets are gradually coming up again. To the disbelief of almost every financial commentator in the world. But trust me, governments and reserve banks have thrown so much at this market it is yuuuge. We are left watching, with no more dry powder to fire, and not until 5th and 6th of May can we make 4 additions of Apple, Volkswagon, Adidas and Telenor for each 3.000USD.

Currently we are sitting on approx. 7.000 USD in cash which we will most likely throw after 1 or 2 stocks during May if a red day shows up.

And that’s all folks….for now at least.

I have decided that I will not conclude anything about our actions, as it really is too early to tell. COVID-19 is still not over, lock-downs are gradually being lifted though, but a second wave might come by later, so who knows, right.

I’m not too happy, not too disappointed, but at least we didn’t get stuck in the headlights.

/Minimal5

 

 

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4 thoughts on “Personal finance decisions during COVID-19

  1. This is a really great post and I appreciate your openness about your finances and your market plays. I have also been throwing everything I’ve got at the market over roughly the same timeline as you, as I see great opportunity in these times, just like in the 2008 Great Recession.

    I recently also read another article about a FIRE retiree who talked of devastation in the FIRE community and the shift to DIRE. I have a completely opposing viewpoint and would offer that crises like the Great Recession and Coronavirus are in fact great opportunities to improve a person’s financial position and fast-track FIRE.

    I would love to discuss further, but the basic ideas are found on my blog here:

    https://www.jasonheitmann.com/post/fire-through-crisis-5-steps-to-financial-freedom-through-a-recession

    Best wishes to you and your family for health, safety and happiness.

    Like

    1. Hi Jason. Thank you very much for the kind words. I too have noted some people declaring the death of FIRE, which to me seems completely weird. If anything, it will get a new and bigger revival.

      Like

  2. How do you end up having 6000 USD each month to buy for. Seems like alot for a family of 5…? Most people have that kind of money for two people and before tax, so that is why i am wondering 😁

    Like

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