Oops. In August my net worth has slightly decreased for the first time since I started tracking it. That happened because I didn't contribute anything. The only thing I did was relocate my money by buying more mutual funds in the middle of August. The stock market took a dip, and it hurt my net worth.
I look forward to the end of September with great anticipation. I have a little money to contribute, and I'll probably hit the $3K goal. Of course, I can't be absolutely sure, because everything financial is so unpredictable right now. Stocks are volatile, dollar/ruble ratio is constantly changing. We'll see.
Sunday, September 16, 2007
Friday, August 24, 2007
My Funds and the Current Turmoil
When I started buying mutual funds, I really didn't know much about stock market. But from the very beginning I decided that I wanted to invest for a long time, so I naturally chose "buy and hold" strategy. I promised myself that I would not sell my funds in the near future, even if there was a big correction.
During these months I saw that Russian stock market mostly reacted to local news. It also correlated with the price of oil a little, and, to a lesser extent, it was sensitive to the other emerging markets' performance. There were ups and downs, but the whole financial outlook was rather positive. This August our market suddenly became aware of other countries' markets. It tumbled down because European indices took a dip, then it closely followed the DJIA performance, after that Asian indices plummeted, so our market took a huge dip, too, and then turned back to the US. It doesn't care at all about the local data. Our market and my funds are just following the rest of the world.
Of course, I don't know what will happen next. I can't predict the consequences of the mortgage crisis, and I also can't say how it will influence the economy of my country. I still stick to my funds. When Russian indices were 10% lower than their recent historic high, I bought some more. We'll see how it will turn out.
During these months I saw that Russian stock market mostly reacted to local news. It also correlated with the price of oil a little, and, to a lesser extent, it was sensitive to the other emerging markets' performance. There were ups and downs, but the whole financial outlook was rather positive. This August our market suddenly became aware of other countries' markets. It tumbled down because European indices took a dip, then it closely followed the DJIA performance, after that Asian indices plummeted, so our market took a huge dip, too, and then turned back to the US. It doesn't care at all about the local data. Our market and my funds are just following the rest of the world.
Of course, I don't know what will happen next. I can't predict the consequences of the mortgage crisis, and I also can't say how it will influence the economy of my country. I still stick to my funds. When Russian indices were 10% lower than their recent historic high, I bought some more. We'll see how it will turn out.
Saturday, August 18, 2007
Identity Issues, part 1: Passport
In Russia, there is no analogue for the US Social Security Number. We do have Individual Taxpayer Identification Number, which is given when a person pays taxes for the first time. Many people, however, don't know their ITIN, because most often they don't need to. Driver licenses can be used as ID only in limited cases. So, the most important document here is a passport. I use mine in every formal procedure – when I buy mutual funds in my bank, buy train or plain tickets or get a package in a post office. I'm used to carry it around, because even when I pay with a card in a store, I'm sometimes asked to show my passport for verification.
What drives me mad is the necessity to get a new passport at some stage of life. It seems that the only reason for this is updating the picture, but a new passport also gets a new number. A person must get a new document when he or she turns 20 (my case) or 45, within a month after the birth date, at his or her permanent address (Hometown for me). Luckily, my birthday is in the middle of summer, and I could easily spend several weeks in Hometown while my new passport was being issued. So, after a couple of weeks of waiting, I got my second ever passport, with a new picture and a new number.
A month ago I bought a plane ticket to Moscow. It was rather cheap because of the special offer at the time. The problem was I bought it before my 20th birthday, using the old passport data. An airlines representative claimed the ticket invalid and suggested I should sell the ticket back (getting only 30% of its price) and buy another using the new passport data (the special offer expired). Isn't that ridiculous? After a bit of fighting they eventually agreed just to change the data in the ticket. When I'm in Moscow, I'll probably have to go to my bank and ask them to change my info in their database. And then there is my asset management company, which also uses passport number and such for identification.
Honestly, I would rather just glue a new picture over the old one. I'm so glad that my birth certificate and ITIN need not be changed. It feels so odd, being the same unique person, but having to prove who I am just because some number in some document has changed.
What drives me mad is the necessity to get a new passport at some stage of life. It seems that the only reason for this is updating the picture, but a new passport also gets a new number. A person must get a new document when he or she turns 20 (my case) or 45, within a month after the birth date, at his or her permanent address (Hometown for me). Luckily, my birthday is in the middle of summer, and I could easily spend several weeks in Hometown while my new passport was being issued. So, after a couple of weeks of waiting, I got my second ever passport, with a new picture and a new number.
A month ago I bought a plane ticket to Moscow. It was rather cheap because of the special offer at the time. The problem was I bought it before my 20th birthday, using the old passport data. An airlines representative claimed the ticket invalid and suggested I should sell the ticket back (getting only 30% of its price) and buy another using the new passport data (the special offer expired). Isn't that ridiculous? After a bit of fighting they eventually agreed just to change the data in the ticket. When I'm in Moscow, I'll probably have to go to my bank and ask them to change my info in their database. And then there is my asset management company, which also uses passport number and such for identification.
Honestly, I would rather just glue a new picture over the old one. I'm so glad that my birth certificate and ITIN need not be changed. It feels so odd, being the same unique person, but having to prove who I am just because some number in some document has changed.
Saturday, August 4, 2007
A Birthday Present
In my life I've gotten a wide range of birthday presents. Sometimes it was a book, sometimes clothes, sometimes just cash. What all these presents have in common is although they are very nice, they are depreciating. I've read some stories on pf blogs, in which someone's children were given bonds or other assets. Such stories amused me, because I never knew anyone who gave their children appreciating presents.
This time my parents surprised me. They gave me €1,500 (about $2,000) put in a savings account. I think Russian high-yield savings accounts are somewhat similar to US certificates of deposit, because one can't take the money before a certain day. If one cashes it out early, he or she gets no interest. On the other hand, some accounts (like mine) allow depositing extra money. The terms are great, mine is a 2-year account with 7% non-taxed APY. As it was opened half a year ago, it matures in a year and a half, when I'll be graduating.
I would gladly add this money to my accounts, and then my net worth would boost to an amazing amount of $5,000! But the account is in my mother's name, because it was supposed to be a secret, so technically it isn't mine. I can't even check the account balance. So I probably wait a year and a half when this money will be legally mine. It will be a great graduation gift.
This time my parents surprised me. They gave me €1,500 (about $2,000) put in a savings account. I think Russian high-yield savings accounts are somewhat similar to US certificates of deposit, because one can't take the money before a certain day. If one cashes it out early, he or she gets no interest. On the other hand, some accounts (like mine) allow depositing extra money. The terms are great, mine is a 2-year account with 7% non-taxed APY. As it was opened half a year ago, it matures in a year and a half, when I'll be graduating.
I would gladly add this money to my accounts, and then my net worth would boost to an amazing amount of $5,000! But the account is in my mother's name, because it was supposed to be a secret, so technically it isn't mine. I can't even check the account balance. So I probably wait a year and a half when this money will be legally mine. It will be a great graduation gift.
Thursday, August 2, 2007
Jule Net Worth
This Jule I have nothing to brag about. My net worth almost didn't change. It's not surprising, as I didn't contribute anything to my savings, and my stocks, after a period of high volatility, have reached the level of the end of June. This is my first flat month since I've started investing and tracking my net worth, but I'm not upset very much. I knew my summer's finances would be boring.
Also this month I was very much absorbed by my offline life, but now I'm going to drag myself back to the blogging world.
Also this month I was very much absorbed by my offline life, but now I'm going to drag myself back to the blogging world.
Friday, July 13, 2007
8 Random Facts about Me
I was tagged by SF Money Musings and Millionaire Mommy Next Door for the latest meme!
Well, here are eight facts about me:
1. Extracurriculars
When I was in school, I took ballet. It was hard, but I really enjoyed dancing. I think I danced on my points rather well.:) However, it started to be very time-consuming, I realized I didn't want to become a ballet dancer and quit. I entertain my friends by performing ballet movements now and then. Oh, by the way, it seems to me that I earned my first money from dancing. There were some events, people bought tickets, we danced and got money. The amounts were ridiculously low, but still.
2. Foreign languages
At five I decided to start learning English on my own. I remember that my first words were "a cat", "a rat" and "a bat". I explained to my friend in kindergarten that the object from which she used to drink tea was actually "a cup" – I must admit, I was a bit of a show-off. Oh, I even learned the word "a dandelion"! When I came to the words "a tame quail" and the sentences like "The cock's beak is not so sharp as the eagle's" I felt a little overwhelmed and thought English language to be too difficult. So, I made a pause. In my school everyone was to learn French from the first grade. At 12 we started to take a second foreign language, and that's how I continued to learn English.
3. Personal transport
I have never driven a car. My family have never had one, even though I'm sure my parents could afford it. I've always lived in places with well-developed public transport networks, and I'm perfectly able to dispense with a car. However, sometimes I think that I should get a driving license just in case. Maybe I'll need it someday.
4. Cooking
I can cook a lot of meals in a microwave oven, not only thaw or heat up something. I can cook rice, pasta and chicken fillets in it. Once I even microwaved an egg. You shouldn't try boil an egg in shell (it will explode), so I cracked the egg into a glass full of water and microwaved it. The egg was cooked into a shapeless something, but it tasted OK and was fit for salads.
5. Food fastidiousness
My food preferences change with time. For example, I used to dislike eggplants and cauliflower, but when I started college I suddenly found out that eggplants and cauliflower are delicious. Maybe I have grown up? I am still wary of dates. I had to eat them in kindergarten, but I hated them. Now everyone I know adores this fruit and can't believe I don't. To be fair, I don't even remember the taste of dates, so I might give them another chance.
6. Writing by hand
I have bad handwriting. Other people are always being polite by saying it's OK, but sometimes even I can hardly decipher it. Fortunately, I live in the era of computers, so chances are I won't suffer from my bad handwriting in future very much. I really like typing more than writing by hand. The problem is, I still have to make notes in class and then use them to prepare for exams:)
7. Pets
My favorite pets are parakeets (budgies). I had a green one for nine long years, since I was 8. He used to wake me up in the mornings and entertain my family with cheerful songs. I was very attached to him.
8. Media addiction
I don't watch TV. When I started college, I didn't have a TV in my room. I soon figured out that I could live without watching TV programs. The Internet is another story. When it's down, I feel uncomfortable.
Well, I took part in this meme rather late, so the majority of those who I know have already been tagged. I intended to tag Millionaire Mommy Next Door, but while I was writing she was tagged by someone else, revealed 8 facts about herself and tagged me:)
I will tag 3 Things About Money.
Well, here are eight facts about me:
1. Extracurriculars
When I was in school, I took ballet. It was hard, but I really enjoyed dancing. I think I danced on my points rather well.:) However, it started to be very time-consuming, I realized I didn't want to become a ballet dancer and quit. I entertain my friends by performing ballet movements now and then. Oh, by the way, it seems to me that I earned my first money from dancing. There were some events, people bought tickets, we danced and got money. The amounts were ridiculously low, but still.
2. Foreign languages
At five I decided to start learning English on my own. I remember that my first words were "a cat", "a rat" and "a bat". I explained to my friend in kindergarten that the object from which she used to drink tea was actually "a cup" – I must admit, I was a bit of a show-off. Oh, I even learned the word "a dandelion"! When I came to the words "a tame quail" and the sentences like "The cock's beak is not so sharp as the eagle's" I felt a little overwhelmed and thought English language to be too difficult. So, I made a pause. In my school everyone was to learn French from the first grade. At 12 we started to take a second foreign language, and that's how I continued to learn English.
3. Personal transport
I have never driven a car. My family have never had one, even though I'm sure my parents could afford it. I've always lived in places with well-developed public transport networks, and I'm perfectly able to dispense with a car. However, sometimes I think that I should get a driving license just in case. Maybe I'll need it someday.
4. Cooking
I can cook a lot of meals in a microwave oven, not only thaw or heat up something. I can cook rice, pasta and chicken fillets in it. Once I even microwaved an egg. You shouldn't try boil an egg in shell (it will explode), so I cracked the egg into a glass full of water and microwaved it. The egg was cooked into a shapeless something, but it tasted OK and was fit for salads.
5. Food fastidiousness
My food preferences change with time. For example, I used to dislike eggplants and cauliflower, but when I started college I suddenly found out that eggplants and cauliflower are delicious. Maybe I have grown up? I am still wary of dates. I had to eat them in kindergarten, but I hated them. Now everyone I know adores this fruit and can't believe I don't. To be fair, I don't even remember the taste of dates, so I might give them another chance.
6. Writing by hand
I have bad handwriting. Other people are always being polite by saying it's OK, but sometimes even I can hardly decipher it. Fortunately, I live in the era of computers, so chances are I won't suffer from my bad handwriting in future very much. I really like typing more than writing by hand. The problem is, I still have to make notes in class and then use them to prepare for exams:)
7. Pets
My favorite pets are parakeets (budgies). I had a green one for nine long years, since I was 8. He used to wake me up in the mornings and entertain my family with cheerful songs. I was very attached to him.
8. Media addiction
I don't watch TV. When I started college, I didn't have a TV in my room. I soon figured out that I could live without watching TV programs. The Internet is another story. When it's down, I feel uncomfortable.
Well, I took part in this meme rather late, so the majority of those who I know have already been tagged. I intended to tag Millionaire Mommy Next Door, but while I was writing she was tagged by someone else, revealed 8 facts about herself and tagged me:)
I will tag 3 Things About Money.
Monday, July 9, 2007
Back into a Parallel Universe
So, I'm back to Hometown. I've grown so accustomed to living in Moscow that now it feels like I am in another world. It's said very often, that Moscow isn't Russia, because it's very different from other Russian cities. The capital and its people has money. Life is more expensive than in the rest of the country, but the wages keep up with the prices. In an average Russian city life is so much different.
I'm amazed at the prices here. A bus ticket costs around 20-40c. Apartments in good districts cost much less than $100K. The price of a cup of tea in a side street café is $0.39! A reasonable cab fare is somewhere between $3 and $5.
As far as I know, an average net income in Hometown is $400 per month or $4800 per year. I still can't find where to buy business or personal finance magazines here. I guesstimate that only several hundred people in this 600,000 city have put their money in stocks or mutual funds.
On the other hand, people seem to be more kind here. I think they are less sophisticated and more open. It's so peaceful and quiet in Hometown, that I'm beginning to forget about big city frenzy.
That's what I do every time I go to or from Moscow - I switch between two so different worlds.
I'm amazed at the prices here. A bus ticket costs around 20-40c. Apartments in good districts cost much less than $100K. The price of a cup of tea in a side street café is $0.39! A reasonable cab fare is somewhere between $3 and $5.
As far as I know, an average net income in Hometown is $400 per month or $4800 per year. I still can't find where to buy business or personal finance magazines here. I guesstimate that only several hundred people in this 600,000 city have put their money in stocks or mutual funds.
On the other hand, people seem to be more kind here. I think they are less sophisticated and more open. It's so peaceful and quiet in Hometown, that I'm beginning to forget about big city frenzy.
That's what I do every time I go to or from Moscow - I switch between two so different worlds.
Friday, July 6, 2007
It's Like a National Holiday
Yesterday was a big day for my country, because the city of Sochi was chosen to host the Olympic Winter Games in 2014. Frankly speaking, I wasn't very much interested in this 2014 campaign. However, when I heard the decision of the Olympic committee, I felt really proud and happy. It seemed like everyone in Russia was bursting with joy, and I don't remember the last time when I saw so many people smiling and laughing!
And now the personal finance aspect of this event. Real estate in this Black sea resort has been rising for several years, since the first speculations about Sochi-2014 emerged. In 2002, a one-bedroom apartment in the center of the city cost $15,000-20,000, in 2007 it costs about $180,000-200,000! Now, when Sochi has become the official host of the 2014 Olympic games, the prices are expected to rise even more. Well, in 2002 real estate in Sochi was a great investment. I say, the net worth of an average homeowner skyrocketed there!
And now the personal finance aspect of this event. Real estate in this Black sea resort has been rising for several years, since the first speculations about Sochi-2014 emerged. In 2002, a one-bedroom apartment in the center of the city cost $15,000-20,000, in 2007 it costs about $180,000-200,000! Now, when Sochi has become the official host of the 2014 Olympic games, the prices are expected to rise even more. Well, in 2002 real estate in Sochi was a great investment. I say, the net worth of an average homeowner skyrocketed there!
Thursday, July 5, 2007
Choosing My Mutual Funds
The other day I was reading a Russian personal finance magazine. There was a review of mutual funds, and my two funds were named the best based on their performance in the last 6 months! I've been investing in them for 7 months. This report was a very pleasant surprise indeed, but I understand that 6 months is a very short period to draw any conclusions. What's important is that I have an inner feeling that I have made a right choice.
When I started investing, I was so naïve, so overwhelmed by a variety of available funds, I just couldn't choose the right one. Looking back, I'm glad I didn't make any of major errors that beginners are said to make usually.
Some basic things that I think I did right
1. I didn't base my choice only on past performance. There was one fund at that time that boasted about its 1-year 90% return (after fees, before taxes). Well, even considering that 2006 was a year of surprisingly high returns on Russian stock market, 90% was overwhelming, and thus very, very appealing. Luckily, I didn't yield to temptation. If I had put my money in this super fund 6 months ago, I would have been in the negative territory now.
2. I wasn't influenced by advertisements. There were a lot of aggressively advertised mutual funds, but I took an effort to look for more options and compare different funds. Some of those advertised funds turned out to be not so great at all.
3. I wanted to get good returns, of course, but I was not driven by greed. If I had been obsessed with the idea of getting the best return, I would have failed, because no one can predict the future performance, and no fund can be the best forever. So I decided to find funds which would give me good returns, run by a reliable company with good service.
The company
I found my ideal investment management company. It happened to be a subsidiary of my bank. I liked it because it offered a good index fund. It also turned out to be very convenient. The thing is, I couldn't just make a few clicks on a site, send a check or use a credit card - done. I had to visit the office of a company every time I wanted to make an investment, and this company had an office within a five-minute walk from my dorm which was open even on weekends! A bit later I found out it offered free Internet banking, so now I can invest using the Internet, though I haven't tried it yet. Also, due to the fact that this company is affiliated with my bank, I don't pay any fees for transferring money to my funds. It is big and super reliable - something you really want to double-check in Russia.
The funds
Choosing the right fund out of hundreds can be headache. I decided to choose my funds according to their strategies. That's how I ended up with an index fund and a fund, focused on an industry sector.
Fund #1
I think that six months ago index funds were not a popular kind of investments. I didn't see them advertised, they weren't included in popular surveys and reports because they were considered to be a special kind of mutual funds. I learned about index funds by spotting the offers at investment management companies' sites. What I did next was get more information about them and compare figures. It was a revelation for me that the majority of actively managed funds performed worse or close to indexes. So I thought - why not an index fund?
Fund #2
About a month after making my first payment to the fund #1, I decided to consider a mutual fund which invests in electric power industry. The reason is it is now the hottest industry sector in Russia. There was a single huge enterprise owned by the Russian government, but now it's being divided into many smaller enterprises which are going public. There's a lot of IPO's and buyings by strategic investors that eventually lead to the increase of the industry stocks.
So...
What I did was simply find an investment management company that was ideal for me, choose two of its funds with strategies I liked and start investing. So far it worked for me. I like the returns and the convenience of investment, provided by my investment company. And it turns out that, according to the magazine, it's the best placement I could have made 6 months ago - something I couldn't imagine half a year ago:)
When I started investing, I was so naïve, so overwhelmed by a variety of available funds, I just couldn't choose the right one. Looking back, I'm glad I didn't make any of major errors that beginners are said to make usually.
Some basic things that I think I did right
1. I didn't base my choice only on past performance. There was one fund at that time that boasted about its 1-year 90% return (after fees, before taxes). Well, even considering that 2006 was a year of surprisingly high returns on Russian stock market, 90% was overwhelming, and thus very, very appealing. Luckily, I didn't yield to temptation. If I had put my money in this super fund 6 months ago, I would have been in the negative territory now.
2. I wasn't influenced by advertisements. There were a lot of aggressively advertised mutual funds, but I took an effort to look for more options and compare different funds. Some of those advertised funds turned out to be not so great at all.
3. I wanted to get good returns, of course, but I was not driven by greed. If I had been obsessed with the idea of getting the best return, I would have failed, because no one can predict the future performance, and no fund can be the best forever. So I decided to find funds which would give me good returns, run by a reliable company with good service.
The company
I found my ideal investment management company. It happened to be a subsidiary of my bank. I liked it because it offered a good index fund. It also turned out to be very convenient. The thing is, I couldn't just make a few clicks on a site, send a check or use a credit card - done. I had to visit the office of a company every time I wanted to make an investment, and this company had an office within a five-minute walk from my dorm which was open even on weekends! A bit later I found out it offered free Internet banking, so now I can invest using the Internet, though I haven't tried it yet. Also, due to the fact that this company is affiliated with my bank, I don't pay any fees for transferring money to my funds. It is big and super reliable - something you really want to double-check in Russia.
The funds
Choosing the right fund out of hundreds can be headache. I decided to choose my funds according to their strategies. That's how I ended up with an index fund and a fund, focused on an industry sector.
Fund #1
I think that six months ago index funds were not a popular kind of investments. I didn't see them advertised, they weren't included in popular surveys and reports because they were considered to be a special kind of mutual funds. I learned about index funds by spotting the offers at investment management companies' sites. What I did next was get more information about them and compare figures. It was a revelation for me that the majority of actively managed funds performed worse or close to indexes. So I thought - why not an index fund?
Fund #2
About a month after making my first payment to the fund #1, I decided to consider a mutual fund which invests in electric power industry. The reason is it is now the hottest industry sector in Russia. There was a single huge enterprise owned by the Russian government, but now it's being divided into many smaller enterprises which are going public. There's a lot of IPO's and buyings by strategic investors that eventually lead to the increase of the industry stocks.
So...
What I did was simply find an investment management company that was ideal for me, choose two of its funds with strategies I liked and start investing. So far it worked for me. I like the returns and the convenience of investment, provided by my investment company. And it turns out that, according to the magazine, it's the best placement I could have made 6 months ago - something I couldn't imagine half a year ago:)
Tuesday, July 3, 2007
June Net Worth
In June my net worth increased 12.2% to $2,814. Thanks to my final exams I didn't have much time for shopping and eating out, so I managed to save quite a bit. I also got my June stipend (I had thought I wouldn't get stipend in summer) and financial aid ($58 given by the college now and then). All that money went straight to my savings. My stocks have finally started to pick up.
So I have to save only $186 to reach $3K. I'm pretty sure I'll hit this milestone in September.
So I have to save only $186 to reach $3K. I'm pretty sure I'll hit this milestone in September.
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