Doubling: party!

A startup I used to know for had ‘doubling parties’. Every time the business doubled in size, there was a party. For the first party they had a glass of prosecco per person… by the 7th or 8th party, the bash was a pretty major affair.

The big picture I cling on to on my investing journey is Doubling. I want my portfolio to double as fast, and as many times, as possible.

Closely connected to Doubling is the Rule of 70 (strictly, 72). The Rule of 70 is mental shorthand for doubling: it says that if you compound growth of X% per period, you will double in 70/X periods. I.e. if you grow at 7% per year, you will double in 10 years. More to the point, if you grow at 10% per year, you will double in 7 years.

I started my rigorous portfolio tracking at the beginning of 2013. I unitise my portfolio, so I am tracking ‘underlying’ growth, stripping out deposits and withdrawals. One question I’ve been keen to answer is: how long will it take me to achieve my first Double?

Read the rest of this entry »
Advertisements

Does this house really believe it should be included in the FIRE net worth?

I had some fun this week teaming up with Mr YFG to debate whether your primary home is one of your FIRE assets or not.

The great housing FIRE debate

Or did I? The mighty Monevator was kind enough to host the post and the comments following the post are excellent, and flesh out the debate brilliantly. And as they highlight, everybody’s milage will vary. In particular, one needs to be careful to define whether the net worth calculation is the FIRE net worth calculation.

One of the things I enjoyed about writing that post was having to argue the opposite case from what I normally would say. Hats off F Scott Fitzgerald and Charlie Munger.

To set the record straight, my actual approach is to exclude the value of my residence (the Dream Home) from my FIRE calculations. What I try to explore in my blog, is the challenge of FIRE (Financial Independence, roughly) without needing to change my lifestyle. For me, London epitomises this challenge – it has an excellent lifestyle, but it is expensive. So the FIRE dynamics are particularly challenging here, at least compared to the ‘frugal’ approaches followed by some in the FIRE community.

Clearly, if one is prepared to sell up and reorganise one’s housing arrangements, in Cyprus if need be, then one’s house is just one asset among many. But if, like me, you are happy where you are, and want to know when working becomes optional without having to move neighbourhoods / sell assets / disrupt the pets, then it is easier to focus on your investment income (and decumulation potential) and your spending (and potential spending).

So, my own calculations about investment income and spending assume I need to continue to fund the (considerable) expenses of living in the Dream Home, and that I need to do so from other assets. No Rent-a-Room for me.


Feb ’17 returns: Kraft + Unilever? !$£€

Another month, another stream of Trump headlines.  You have to hand it to him, he certainly knows how to drive the ‘ratings’.

However for me the biggest news of the month was Kraft/3G’s aborted bid for Unilever. Unilever is one of the biggest companies in Europe/UK.  Its share price has done pretty well of late, courtesy of the ‘flight to safety’ and the ‘bond proxy’ trends towards the reliable defensive inflation-proof stocks that it represents. But the fact that Kraft, a company with less than half its revenues, can table a bid for it including a takeover premium suggests there is obviously significant room for further value creation. I’ve got a reasonable position – of a ‘buy and hold’ type – so I’m paying attention.

Meanwhile, how have the markets and my portfolio done this month?  Read the rest of this entry »