Hi, everybody!
My first post here, although I’ve read many of your precious threads for the last year. Thank you for all the interesting info and hope you can take a couple minutes to analyze our case and maybe make some suggestions.
We are a couple, both 31. We live somewhere in Eastern Europe (where we’re from). We lived for 7 years (23 to 30) in the US and worked really hard to ER. Fueled by my desire to ER before we’re 30, we worked in those 7 years an average of 60 hours / week each, 52 weeks / year, no vacations, working every weekend (working in sales, so weekends were crucial). It’s not as bad as it sounds; we had a lot of fun too, but in truth it was a lot of time and work dedicated to making and saving money and our social life was limited to the people we were meeting through our job (both working in the same company).
Paying particular attention to our spending, we managed to save an average of 71% of our paychecks, considering that rent was taken care by our employer. Right before we were 30 and being homesick, we decided to return to our country, confident that we saved enough to ER. After a bit more than 1 year living in our country, although we didn’t look / get a job, we are not convinced that we are truly retired. I’ll give a couple of numbers and explain what I mean. I’ll convert the Euros in US dollars.
Our Net Worth: $ 632,480 of which
$ 96,480 our current apartment in a mid-size city
$ 215,000 in real estate investments (rentals)
$ 321,000 in CDs (about 140,000 of that recently converted into cash by selling a property, trying to explain why so much in cash)
Our expenses here are considerably lower than they used to be in the US (with a comparable lifestyle and adding vacations):
$3,000 Car (gas, service, insurance)
$1,540 Home Utilities
$3,200 Food
$500 Misc
$900 Charity
$4,100 Trips
These were the expenses for 1 year. The amount for the trips we took is a bit higher than we expect it to be in the next years (probably around $2,000), but that’s because we didn’t take a vacation in the last 7 years. The amount for the car expenses doesn’t include depreciation, which I calculated at about $2,400 per year. Right now, the car is paid for, same goes for our apartment and we have no debt. Property tax and home insurance are ridiculously low, like $100 / year.
Everything seems smooth: pretty high nest egg, low cost of life. The problem is that we feel we don’t do the best with our money. The money in CDs bring us 3.5% interest and the 2 rentals we have are at about 5% before taxes and other expenses, to give a “true income” of about 4%. We actually work ourselves on the properties we have to keep them in good shape, change whatever needs changing and so on. Therefore, it feels that the return of 4% is really low and that’s why we sold recently another property we had. Last year CDs were 4.5%, so we made more money there. Anyway, the return on our “investments” is about 4%. Taking into account the inflation of 1.4% for the last year in Europe, that leaves us with a “real” return of around 2.6% which barely covers our expenses (car depreciation included).
Our nest egg doesn’t seem to be eroding at least, but we feel that we don’t exploit it to the max. Taking a job is out of the question for the next 3 years as we are back in school and the work we do on our properties we consider it our PT job. And then there is the question: how ERed am I? We feel that we do something wrong and we need to attain financial maturity.
We considered putting some of our money into the US Stock Market, money that we wouldn’t need for a long time, but which would grow at a higher pace and give us a sense of security for the long term. We considered choosing a couple of dividend stocks (Dividend Aristocrats), buying them, having the dividends reinvested and forget those stocks there for the long term.
My questions for you:
Is it wrong to expect an annual growth for such stocks of 5% + average dividends of 2.5% (which are to be reinvested)?
Taking into account that we are really risk aversive (worked hard for the money so we don’t like to gamble), do you see a better vehicle (risk-wise) for our money to get a comparable return?
Any observations / advices to the big picture?
Observations: to anticipate some questions – we have no kids, maybe we’ll have one in the next two years; we are not planning to go back to the US soon (maybe in 10-15 years) because we have family members we need to take care of here; we would not invest in the local stock market as there is a lot of inside trading going on.
My first post here, although I’ve read many of your precious threads for the last year. Thank you for all the interesting info and hope you can take a couple minutes to analyze our case and maybe make some suggestions.
We are a couple, both 31. We live somewhere in Eastern Europe (where we’re from). We lived for 7 years (23 to 30) in the US and worked really hard to ER. Fueled by my desire to ER before we’re 30, we worked in those 7 years an average of 60 hours / week each, 52 weeks / year, no vacations, working every weekend (working in sales, so weekends were crucial). It’s not as bad as it sounds; we had a lot of fun too, but in truth it was a lot of time and work dedicated to making and saving money and our social life was limited to the people we were meeting through our job (both working in the same company).
Paying particular attention to our spending, we managed to save an average of 71% of our paychecks, considering that rent was taken care by our employer. Right before we were 30 and being homesick, we decided to return to our country, confident that we saved enough to ER. After a bit more than 1 year living in our country, although we didn’t look / get a job, we are not convinced that we are truly retired. I’ll give a couple of numbers and explain what I mean. I’ll convert the Euros in US dollars.
Our Net Worth: $ 632,480 of which
$ 96,480 our current apartment in a mid-size city
$ 215,000 in real estate investments (rentals)
$ 321,000 in CDs (about 140,000 of that recently converted into cash by selling a property, trying to explain why so much in cash)
Our expenses here are considerably lower than they used to be in the US (with a comparable lifestyle and adding vacations):
$3,000 Car (gas, service, insurance)
$1,540 Home Utilities
$3,200 Food
$500 Misc
$900 Charity
$4,100 Trips
These were the expenses for 1 year. The amount for the trips we took is a bit higher than we expect it to be in the next years (probably around $2,000), but that’s because we didn’t take a vacation in the last 7 years. The amount for the car expenses doesn’t include depreciation, which I calculated at about $2,400 per year. Right now, the car is paid for, same goes for our apartment and we have no debt. Property tax and home insurance are ridiculously low, like $100 / year.
Everything seems smooth: pretty high nest egg, low cost of life. The problem is that we feel we don’t do the best with our money. The money in CDs bring us 3.5% interest and the 2 rentals we have are at about 5% before taxes and other expenses, to give a “true income” of about 4%. We actually work ourselves on the properties we have to keep them in good shape, change whatever needs changing and so on. Therefore, it feels that the return of 4% is really low and that’s why we sold recently another property we had. Last year CDs were 4.5%, so we made more money there. Anyway, the return on our “investments” is about 4%. Taking into account the inflation of 1.4% for the last year in Europe, that leaves us with a “real” return of around 2.6% which barely covers our expenses (car depreciation included).
Our nest egg doesn’t seem to be eroding at least, but we feel that we don’t exploit it to the max. Taking a job is out of the question for the next 3 years as we are back in school and the work we do on our properties we consider it our PT job. And then there is the question: how ERed am I? We feel that we do something wrong and we need to attain financial maturity.
We considered putting some of our money into the US Stock Market, money that we wouldn’t need for a long time, but which would grow at a higher pace and give us a sense of security for the long term. We considered choosing a couple of dividend stocks (Dividend Aristocrats), buying them, having the dividends reinvested and forget those stocks there for the long term.
My questions for you:
Is it wrong to expect an annual growth for such stocks of 5% + average dividends of 2.5% (which are to be reinvested)?
Taking into account that we are really risk aversive (worked hard for the money so we don’t like to gamble), do you see a better vehicle (risk-wise) for our money to get a comparable return?
Any observations / advices to the big picture?
Observations: to anticipate some questions – we have no kids, maybe we’ll have one in the next two years; we are not planning to go back to the US soon (maybe in 10-15 years) because we have family members we need to take care of here; we would not invest in the local stock market as there is a lot of inside trading going on.