sunnuntai 30. kesäkuuta 2019

This Blog has a new name and look! - Check this out!

I wanted take writing more seriously, so my new blog address is :

Come on in and join me! I will post 1-3 articles per week :)

Lapin, Talvi, Lumi, Maisema, Talvinen, Suomi, Kylmä

torstai 27. kesäkuuta 2019

P2P-lending vs Dividend investing

Peer-to-peer lending: more risk, more return

P2P -lending has become more and more popular in just a couple of Years. Peer-to-peer lending basically means that you lend money to individuals or businesses through some online platform/service.

One example would be Mintos, which is established P2P-player in Europe. One has to just land some money to the platform and invest it in different loans. Diversification is important here, as some of the loans will never be paid back. Luckily, Mintos has a buyback guarantee which basically means that the loan originator will buy the loan back from the investor if it happens to be late more than 60 days. If you don't invest in loans that have a buyback guarantee, you usually get higher interest rate but also lose some of your money, because certain percentage of borrowers never pay their loans back. P2P -lending platforms usually provides pretty good interest returns for investors: usually from 9% to 12%.

Screenshot from my Mintos P2P -account

P2P-lending can be quite profitable, as you can see. Lots of new P2P-platforms have established their services in past 2-3 years. However, if we enter into a recession or global economic growth slows down too rapidly, P2P-lending can be very risky business. P2P-platforms have not yet been tested properly during any big recession. During a bear market it would only be natural if P2P-borrowers would not be able to pay their high-interest loans because of personal bankruptcies.

Dividend Investing: Relatively safe and secure

Dividend investing is an old way of accumulating wealth: you pay shares of businesses that do very well and thus are able to pay you dividends. Usually those dividends have a tendency to grow every year, if you decide to focus on these solid companies that have very good track record. Historically, companies that have been able to pay big dividends, have also been safe bets also with their growing share prices. Of course, during a bear market, there are very few stocks that actually rise. On the other hand, during the bear market, these dividend stocks are on sale. 

Compared to P2P-loans, dividend yields are not as big and juicy, but dividend yields are not the one and only thing you should focus if you invest in dividend stocks. While dividend yeilds are usually 0-5% annually, P2P-loans usually earn you 9-12% profit annually. However, dividend investing means that you buy shares of the company, which also means that the share prices can (and usually will) go up. Thus, dividend investing might be more profitable thatn P2P-lending in the long run, or vice versa. Who knows that? 

Dividend stocks usually earn the biggest capital gains 

It is not too easy to compare dividend investing and peer-to-peer lending. Both have their pros and cons. One thing to remember is, that P2P-investing has not been around that long, so please do not put all your eggs in one basket :) !

maanantai 17. kesäkuuta 2019

Facebook trying to get piece of Crypto - Sign of a bull run and future mass adoption?

Facebook is launching its own cryptocurrency, GlobalCoin, which will be used for payments in Facebook's platforms (Faebook, Instagram, Whatsapp) but also in partners platforms. These partners are rumoured to be Uber, Spotify and Ebay, only to name a few.

The purpose of Facebook's new, historical initiative, is to unlock new engagement and revenue streams.  The coin is not going to be a "real" cryptocurrency according to true Bitcoin nerds. It is going to be a stablecoin linked to a basket of fiat currencies in order to prevent high volatility. It is not going to be fully de-centralized as Bitcoin is. But, it will have same features which make Bitcoin unique from banks and traditional fiat money system. With cryptocurrency, you are free from banks, big fees, geographic restrictions and central banks.

This is something big. This will bring lot of attention to crypto space. If Facebook's GlobalCoin achieves even some kind of mass-adoption, people are more open to try other cryptocurrencies. I think that Bitcoin is already benefitting from Zuckerberg's effort. We have seen a steady bull run for 4 months already. 

tiistai 4. kesäkuuta 2019

How I track my daily expenses and why should you do it too !?

Tracking your daily expenses is a HUGE thing when you are pursuing for financial independece. It is one of the things that most people just don't do. I did not do it myself, until couple months ago I decided that I need to start doing it, because I spent too much on groceries and I wanted to limit my expenses even more.

Why should you track your expenses?

Many people don't know how much they are spending and what they are buying. It comes as a surprise for people that they spend so much money without even thinking it. Insurances, transportation, clothes, housing, hobbies, subscriptions, food etc. When you actually track all of the money you spend, you will easily see how your financial actions dictate your account balance. That is a crucial part when you are trying to became financially free. Most of the people in western countries save max 15%, but if you are aiming to achieve financial independence, that number should be at leat 50%. It is not even that hard, but you just have to be mindful about you expenses and reduce them whenever possible (without losing your quality of life).

Also, I know people who are even afraid to see their account balance, because they have spent too much money. You might have had the same feeling after a night-out when you wake up with a hangover and -100 $USD on your bank account.

It is easy to track daily expenses with modern technology 

Some people use Excel to track their spending, but it is kind of an old way to do it. I like to use Monefy - an app for tracking your money. The data from the app can be synchronized to your Google Drive, which is a very good thing.

Monefy is simple and easy to use.

Other apps/sites to track your money are for example MINT and Personal Capital. These are good if you want to manage all of your wealth in one place.

perjantai 31. toukokuuta 2019

Why the rich get richer and the poor get poorer?

There is this old saying which is pretty accurate and true in most cases. I never thought about it deeply, until I realized that it is actually very true.

When you grow up, you start learning. You mimic your friends, family members, relatives basically anyone you are interested of. You have your own reality, but most likely, you parents guide you throughout your life. They encourage you to do certain kind of things they believe in. If your parents know nothing about handling money, there is a great change that you will not learn these things anywhere else. If your parents believe that economic markets and investing is for rich frauds, you will not get very appropriate financial education from your family.

Education is highly inheritable. The level of education of the parents of the child defines usually quite precisely how educated the kid will be. The same applies usually for financial education and knowledge. For example, I learned a lot about investing in my home from my mother.

When you learn how to put money working FOR YOU, you can get rich.
10 years of S&P 500 - an example how the money can work for you
It is a cold fact, that the more you make money, the more you can invest, thus enjoy the benefits of a compound interest. And the earlier you start, the better. It is a recipe for riches. That is what rich people do more often than poor people. That is why they get richer and the poor don't get richer.

perjantai 24. toukokuuta 2019

Differences between USA and Nordic Europe - from an economic view

I this post, I want to write about the differences between USA and Nordic Europe from an economical point of view. I have visited in USA and Canada a couple of times. I have also visited in every Nordic country + I live in one of those ;.

This is an interesting topic for me, because I read many blogs that are based in USA. There are some differences when it comes to investing and saving. There is a stereotype that Americans are little bit unconscious about every other country than USA. Well, now I will tell you how are things in Nordic Europe from an economical point of view.

School system

In USA, there are lots of different schools to choose. In Nordic countries, we don't have private schools that much. Schools are generally pretty same, they don't differ that much compared to each other. There are small gaps between top schools and the lowest-performing schools. That is not the case in USA.  Here are some reasons why Finnish education system has done very well compared to many other country. Teachers are also more educated in Finland than in the US.

Because of high taxes, universities are mostly free or very cheap for students in Nordic countries. Students also get pretty good economical support from the government. American students have to take much bigger student loans than us, which is why they usually graduate with great debt. However, Americans usually have bigger wages and not as high tax-rate, so bigger student loans are not necessarily a problem.

High taxes and small differences in income

Public sector is bigger than in USA, thus we pay high taxes and have a good social security.
We have this idea that everyone should be in the same level, and there should be no differences in incomes. Nordic countries are the most equal countries in gender issues. But we also have very small income differences compared to the rest of the world. We have high taxes and a good social security. Public healthcare is almost free, and you have pretty (too) good economical security if you can't find a job.

Top-3 are all Nordic Countries. Canada is close.

Investing and saving

It is much easier to save and invest money in America, because in many states, tax-rates are very low compared to Nordic Countries. Nordic Countries have quite good salaries, but the cost of living and high taxes mean that it is not the easiest thing to save money, especially If you live in some big city  with not-so-big salary.

In Nordic countries, if you make, let's say a 100Keuro a year (111885 USD), you pay more than 50% of you salary to taxes. In addition to high income taxes, there are also high tax-rate for capital gains and dividents (25-35 %). 

keskiviikko 22. toukokuuta 2019

FIRE (Financial Independence, Retire Early) - Why there are haters and doubters

Whenever you open up to someone about investing, financial independence and the possibility to retire early, they get almost offended. Thus, it is not always easy to tell your friends about your plans and actions. FIRE is usually out of their reality. They just don't simply believe it's possible. Haters stem from the insecurities that people have. If someone is doing great, and you are not, it indicates that you are a looser (extreme example).  That creates negative feelings which usually come out as feelings of hate. It is easy to start blaming others, rather than grab the bull by the horns. 

Too many people are living from paycheck to paycheck because they can't handle their money. They are victims of too much consumerism. Most of the people are not used to think outside of the box. They are sheep who follow each other and do as they are expected to do, by society, by parents, by friends, by anybody else. Society has set up certain expectations for you: study, work, pay your taxes, shut up, and die. Most of the people follow these rules and are slaves of rat race almost their whole life. They have become accustomed for it, yet they still secretly want to win the lottery every saturday. 

People are not usually very satisfied with their jobs. Modern work is pretty demanding and consuming because the world is changing so fast. There is more and more uncertainty in the air. 
Back in the days, our grandparents and even parents had very promising career prospects with enough certainty, at least if they had a university degree. Nowadays, even a degree does not guarantee you a safe job for the next 40 years. That makes things very complex and creates lots of uncertainty.

Yet, most of the people are not aware of the power of compound interest and its possibilities, especially if investing is started in your 20s. 30s, 40s or even 50s is not too late, because people live longer and longer nowadays. When my parents were at my age, there were no Internet, so information did not flow as smoothly as it does nowadays across the world. Luckily, because of Internet, more and more people are getting interested in investing and financial markets nowadays. 

I feel that my mission is to inform and educate as many people as possible about the power interesting and compound interest.