How much cash, FI should have in hands?

Dear all,

I just read the new post of Rich Neighbour (Scared by All Time Highs?), where I gave my opinion on this critical subject that affect all of us.

I would like to develop a little bit the subject. I mention that my ideal cash position is between 10%-15%, which based on our portfolio value represent between 100k to 150k Swiss Franc. I see already some of you, having big eyes about this value. Yes, it is a significant amount of cash, which are not bringing dividends. But now let’s look at some example:

Cash value invested in stock.

  • our average dividend paid is 2.5%, so the 100k will give us: 2’500CHF

Cash kept until next market dip of 4% within current year:

  • For the last 10 years, a yearly dip of 4% in the market or a specific share happened more than once, so it will give us: 4’000CHF.

Cash kept for more than one year if no market dip happened:

  • Low probability, but let’s take it, your bank will probably gives you a fantastic 😦  0.5% interest, so 500CHF. Enough to pay half of our car insurance.

So based on the 3 above scenarios, the 2nd is most likely to happened, so in the end, you will be able to save more and therefore have higher dividend income the next year.

At the moment (23rd), we have a cash position of 60k, which will increase significantly with the annual bonus that will arrive tomorrow (24th), the vested stock option (PM) and the dividends of our portfolio (that I will detail in my next post), so by end of March, our cash position will turn around 100k-120k. Ready for some big dip 🙂 or re-investment during the ¨ex-dividend date¨. Which is one of my strategy that will comment in a later post.

And you, what is your cash position strategy?

Cheers, RA50

Advertisements

Portfolio decrease or future increase?

Hi All,

What a title for a post, yes, I agree it is a bit a strange, but am going to explain you the reason. In our current portfolio, we are indicating a position of PMI stocks, which were not physically in our position as it was stock options, I received 3 years ago and are vesting this month. This mean that I will receive physically the shares and sell them to get the cash.

Now, after evaluating our current portfolio, I am building a cash position that will allow us to enter new positions, in stocks or in funds. It’s what I am evaluation at the moment as well as when will be the best time to do that.

This is the reason of the title, the portfolio decrease now but will grow in near future.

Cheers,

Portfolio decrease

Dear Friends,

Today, we sold our Adecco shares at a value of 73.90CHF, this give us a net gain of 3’267.0 CHF or 6.32%.

We decided to sell Adecco as this gain makes a significant upside to our portfolio. If we would kept the shares until the dividend distribution, we would have only a 975.0 CHF net gain.

Now our available cash stand at around 60k, which will increase with the upcoming dividend season.

I will update you as soon as all the companies have reported their 2014 results and dividends proposal. But as of now, I can already say that we are going to surpass by a large margin our dividend gain estimation, thanks to cash distribution (net of taxes) that most of the companies have decided to give to shareholder.

I have updated our portfolio based on today action.

Cheers,

¨Flexibility¨ at work

Hi All,

I just finishing reading the post of No More Waffle (The Importance of Proper Fork Usage), and wanted to share with you what the company I work for in January (FLEXABILITY), no, no it’s not a typo. This new program has for objective to provide workers a higher flexibility in the time management to improve work-life balance as well as consider the preference of each of one and finally to improve performances and engagement.

The ¨Flexability¨ concept is dividing in several points:

  1. The new core hours are from 10:00AM till 05:00PM from Monday to Friday (still 40 hours per week).
    1. No meeting before 10AM or after 5PM and Friday is considering as NO meeting day;
    2. Friday is also a day where you can work from home as there is no meetings.
  2. For a specific period of time (couple weeks/months), we can do a compress week, meaning that we can work 10 hours per day and work 4 days (Friday off);
  3. Can buy up-to 10 additional days of vacation per year;
  4. Increase the sabbatical leave to 1 year;
  5. and some others.

I really think this program will boost the productivity of each employees as it really give us much more flexibility to improve our work-life balance.

In my case, I love to work early morning but cannot work in the evening, so now not having meeting after 5PM works great for me as I can leave the office without nobody looking at me with big eyes and making comments like you do 1/2 day today.

The compress week is also something that will try in summer for example, imagine that in July you work 4 days and then have a long weekend every week, great!

I know that this kind of program is not new and many companies have implemented it already for some time, but in our case that is big change for a company like ours.

Let see how effective this program is in a couple of month.

Cheers and have a good work week

Yes, Yes and Yes

You will tell why all these “yes”???

Because today, I get the fantastic news that my annual bonus is 35%, yes you read correctly 35% higher that what I had estimated!

I see some of you already saying, yeah but it was a very conservative estimation, yes and no, this bonus take into account the company performance using different set of financial indicators and objective achievements (which I can’t really estimate properly, under-estimated by 12%) as well as my own performance which is judged by my boss based on my achievements. So it’s where I under-valued my performance by 21%.

So I am very happy for two main reasons, the first is that my performance was recognized very well, which in my opinion really reflect the hard work and the achievements of last year. The second reason is more financially, because this massive difference (around 5K), will allow our portfolio to increase even more and therefore put more snow on our snow ball…

So now, which strategy should we go:

  1. Buy share(s) as soon the cash in the account;
  2. Wait for the up-coming ex-dividend period (mostly March till May), where the share will drop significantly their value and that will allow us to buy more share, average down our positions or start new positions;
  3. Put this money aside and wait for the next big plunge;
  4. Re-fill our safety net account;

Not easy choices, as they all have their pros/cons. Anyway, the cash will not be in the account until the end of this month, So still have some time to reflect and weight pros/cons.

I would love to have your opinions on the subject, what would you do?

Cheers,

Saving calculation

Hi all,

Based on different comments on our posts, I would like to develop and have your opinion.

I see that we have differences between us, bloggers and FI seeker related to the calculation of our saving rates:

Should we include all our savings that for us working class, would include, gov. retirement fund, company pension fund? This is  what we decided to apply in our this post (Saving %), this way we  know exactly how much we are saving and how much we will have when we retire/leave Switzerland. And you, what are your thought about it?

Regarding our monthly budget, we include our taxes. Some of you are calculating their budget after taxes, so is there a better way to do or not?

I believe that it is up to each of one to feel comfortable with the budget or saving calculation. Do you agree?

In waiting your comments, I am wishing an excellent week.

Cheers, RA50

104 views on Feb. 5th

Hi all,

I would like to thank all of you that passed by our blog. I am very happy to had that number of views, I know that we are far away from some other blogs that count 1000’s and more of views, but still it’s a an achievement.

I enjoyed reading the post from No more Waffle about 3 errors that rookie investor may do, it is why that I recommend it to you.

Three Rookie Mistakes in the Quest for Financial Independence

Good weekend to all of you.

Cheers,