This month I put aside the extra money I’d got from a small October work. Like in the previous month the stocks continued to pick up, and the ruble rose a little higher against the dollar. To achieve my goal of 100K rubles I now need $4,050 instead of $4,000. At the end of October I had $3,516.
I think I have too much cash, and I’m eager to put a part of it in my mutual funds. However, I am not disposed to do it right now, because Russian stock market makes new highs every day, and stocks seem expensive. I want to wait for a correction.
Sunday, November 11, 2007
Thursday, October 25, 2007
An Exhibition
Recently I went to an exhibition "Personal Finances", organized by several banks, brokerage firms, insurance companies and publishers. I was interested to see what was meant by "personal finances" in that particular case. I wondered if I could learn something new. I must confess I have never seen people in real life who invests their money. Almost nobody will talk to me about handling money for more than ten minutes. All I know comes from books, magazines and the internet. So, I just wanted to see other people who were interested in pf.
Well, this exhibition turned out to be deadly boring. It was aimed at well-to-do middle class Muscovites and was held in a luxurious hotel in the center of the city. The visitors were mostly middle-aged men, several young men and few women. Somehow nobody would notice me and try to sell something to me. Sales managers probably couldn't perceive me as their client. They focused on more prosperous visitors trying to sell them average mutual funds with exorbitant fees, brokerage accounts (oh, trading is so in vogue here) and, strangely enough, tuition in private schools for their kids.
I went to a random presentation, where some pompous man gave a speech about stock market. The presenter told about disadvantages of mutual funds and encouraged everyone to buy stocks directly. He claimed he can easily get 100% ROI per year. This man hinted that successful people who made lots of money on stock market couldn't wear cheap bad suits. Apparently, we had to trust him, because his outfit did look expensive. Ugh. He obviously was a smart professional. But his speech was inaccurate and misleading, some facts were not true. My own experience and common sense sometimes disagreed with his words. I saw that his only goal was to make people set up a brokerage account with his employer and trade intensely, thus feeding the company with fees. I felt uneasy and wondered why the audience didn't laugh at him or challenge him (two men opposed him a couple of times but that was all). Then I realized that the majority of those sitting in at the presentation were listening intensely and actually believed what the presenter was saying. I remember a man in the audience ask "If I invest my money in stocks, will it be safe there? Will I get everything back?" He probably thought stocks to be some kind of bank deposit with extra high 100% APY. The answer he got was unclear and ambiguous.
What did I learn at this exhibition? Well, I believe that the personal finance industry in Russia is beginning to boom. The business seizes every opportunity to benefit from it. Not always their practices are and will be beneficial for their client. There's still little good advice on money matters and little information. People here need basic knowledge, like what a stock and a bond are. But at these presentations no one will muse on dollar-cost averaging, reducing debt, minding fees, long timeframes, indexing vs. active management and so on. There's a talk about 100% and quick big money. So people get easily impressed and start trading stocks actively, not really understanding how it works. They don't watch fees, they estimate the price of a manager's suit.
I also learned that I know enough to tell when people try to dupe me. I'm literate enough not to believe everything I'm told. I can make my own decisions. Thank you so very much, pf blogosphere :)
Well, this exhibition turned out to be deadly boring. It was aimed at well-to-do middle class Muscovites and was held in a luxurious hotel in the center of the city. The visitors were mostly middle-aged men, several young men and few women. Somehow nobody would notice me and try to sell something to me. Sales managers probably couldn't perceive me as their client. They focused on more prosperous visitors trying to sell them average mutual funds with exorbitant fees, brokerage accounts (oh, trading is so in vogue here) and, strangely enough, tuition in private schools for their kids.
I went to a random presentation, where some pompous man gave a speech about stock market. The presenter told about disadvantages of mutual funds and encouraged everyone to buy stocks directly. He claimed he can easily get 100% ROI per year. This man hinted that successful people who made lots of money on stock market couldn't wear cheap bad suits. Apparently, we had to trust him, because his outfit did look expensive. Ugh. He obviously was a smart professional. But his speech was inaccurate and misleading, some facts were not true. My own experience and common sense sometimes disagreed with his words. I saw that his only goal was to make people set up a brokerage account with his employer and trade intensely, thus feeding the company with fees. I felt uneasy and wondered why the audience didn't laugh at him or challenge him (two men opposed him a couple of times but that was all). Then I realized that the majority of those sitting in at the presentation were listening intensely and actually believed what the presenter was saying. I remember a man in the audience ask "If I invest my money in stocks, will it be safe there? Will I get everything back?" He probably thought stocks to be some kind of bank deposit with extra high 100% APY. The answer he got was unclear and ambiguous.
What did I learn at this exhibition? Well, I believe that the personal finance industry in Russia is beginning to boom. The business seizes every opportunity to benefit from it. Not always their practices are and will be beneficial for their client. There's still little good advice on money matters and little information. People here need basic knowledge, like what a stock and a bond are. But at these presentations no one will muse on dollar-cost averaging, reducing debt, minding fees, long timeframes, indexing vs. active management and so on. There's a talk about 100% and quick big money. So people get easily impressed and start trading stocks actively, not really understanding how it works. They don't watch fees, they estimate the price of a manager's suit.
I also learned that I know enough to tell when people try to dupe me. I'm literate enough not to believe everything I'm told. I can make my own decisions. Thank you so very much, pf blogosphere :)
Tuesday, October 16, 2007
My New Card
Till recently I had two debit cards, given to me by my college, but issued by different banks. Both of them are free for me, and both are Visa Electron. (By the way, I was so surprised to learn that this type of Visa cards is not issued in the US, Canada and Australia. It's the most popular debit card here in Russia.) Well, the first one is an excellent card which is very convenient. But I never liked my second card. It has no online banking, the customer service is poor, and the number of available ATMs is limited. But my college puts my stipend on it, it costs nothing, and I need to have a second card in case the first one is rejected at a point of sale. So I kept using it.
I've just gotten a new card, which is a debit Visa Classic. It's also free, has convenient online banking, gives me a 5% discount at my grocery store and the location of ATMs is good. The checking account linked to the card will earn me 7.00% APY for one year, insured. Actually, I was wary when I was offered this card. It seemed to me that it was too good to be real (and free). Before signing up I scrutinized closely the terms and conditions, searching for hidden fees or something like this, and reading the reviews on the web. But everything seems clear.
The APY is something I'm very happy about. It's not that much, because the inflation rate this year is going to be about 9%. But earlier I used to earn close to nothing, because none of my other accounts offered me more than 1% per year. (Savings accounts with higher APY work like certificates of deposit and require a high minimum balance, which just doesn't work for me.) In December, when the "7% for a year" offer is closing, I'm going to sign up for a MasterCard with the same features. Thus I will get extra two months of earnings. Maybe using debit cards as savings accounts sounds weird, but it will probably work, at least till the next December.
One nice feature of my new card is that it can be used in online transactions as a perfectly normal Visa Classic. (Electrons can't.) So, I can now shop at Amazon or eBay at last! Honestly, when I found out about this possibility, I felt an immediate desire to splurge. For a long time I was longing to buy some books that I couldn't find anywhere in Moscow, but wasn't able to because I lacked a proper payment method. Now that I have such a means, I still must think twice, because the shipping rates to Russia are something to count with :)
The drawback of this full functionality is a higher risk of fraud. My first two cards are really safe. They have no CCV and cannot be used in internet or phone transactions. That's why even if someone learned my Electrons' numbers, they couldn't do anything harmful. Now I have to be cautious and protect the number, CCV, and expiry date of my new card.
So, my second card goes on holiday. I intend to use it once a month to cash out my stipend, and then I will roll the money on a better card. It seems that I’ve found a good deal.
I've just gotten a new card, which is a debit Visa Classic. It's also free, has convenient online banking, gives me a 5% discount at my grocery store and the location of ATMs is good. The checking account linked to the card will earn me 7.00% APY for one year, insured. Actually, I was wary when I was offered this card. It seemed to me that it was too good to be real (and free). Before signing up I scrutinized closely the terms and conditions, searching for hidden fees or something like this, and reading the reviews on the web. But everything seems clear.
The APY is something I'm very happy about. It's not that much, because the inflation rate this year is going to be about 9%. But earlier I used to earn close to nothing, because none of my other accounts offered me more than 1% per year. (Savings accounts with higher APY work like certificates of deposit and require a high minimum balance, which just doesn't work for me.) In December, when the "7% for a year" offer is closing, I'm going to sign up for a MasterCard with the same features. Thus I will get extra two months of earnings. Maybe using debit cards as savings accounts sounds weird, but it will probably work, at least till the next December.
One nice feature of my new card is that it can be used in online transactions as a perfectly normal Visa Classic. (Electrons can't.) So, I can now shop at Amazon or eBay at last! Honestly, when I found out about this possibility, I felt an immediate desire to splurge. For a long time I was longing to buy some books that I couldn't find anywhere in Moscow, but wasn't able to because I lacked a proper payment method. Now that I have such a means, I still must think twice, because the shipping rates to Russia are something to count with :)
The drawback of this full functionality is a higher risk of fraud. My first two cards are really safe. They have no CCV and cannot be used in internet or phone transactions. That's why even if someone learned my Electrons' numbers, they couldn't do anything harmful. Now I have to be cautious and protect the number, CCV, and expiry date of my new card.
So, my second card goes on holiday. I intend to use it once a month to cash out my stipend, and then I will roll the money on a better card. It seems that I’ve found a good deal.
Sunday, October 14, 2007
September Net Worth
The September was quite favorable for my finances, even though I had to pay dorm fees. The $3K mark was passed rather easily. The main reason for that is I got the stipend and financial aid for July, August and September. By the way, since this September stipends in Russia will be 50% higher than they used to be. A nice bump! Also, the stock market picked up substantially. The ruble rose quite sharply against the dollar, so the change of my net worth in dollars is greater than it is in my currency.
I tweaked my goal bars in the sidebar to make my net worth goals more clear. It now states my short-term goal is $4,000 by February. At my rate of saving it seems rather doable. Why do I pursue exactly this not very impressive number? At the current dollar/ruble ratio $4,000 equals precisely 100,000 rubles. The six-figure line is important for me psychologically, because it's like getting on the next level. I guess after that it will be all the same, 123K, 150K or even 200K. I'll concentrate on tracking my NW in dollars, because small numbers are more convenient. But right now I'm so excited to approach one hundred thousand milestone.:)
I also decided that I want to have $10,000 when I graduate in June 2009. Right now I have about $3,000. I keep in mind that by that time my birthday deposit of about $2,000 will have matured. I think I'll be able to save the other $5,000 in the next two years.
I tweaked my goal bars in the sidebar to make my net worth goals more clear. It now states my short-term goal is $4,000 by February. At my rate of saving it seems rather doable. Why do I pursue exactly this not very impressive number? At the current dollar/ruble ratio $4,000 equals precisely 100,000 rubles. The six-figure line is important for me psychologically, because it's like getting on the next level. I guess after that it will be all the same, 123K, 150K or even 200K. I'll concentrate on tracking my NW in dollars, because small numbers are more convenient. But right now I'm so excited to approach one hundred thousand milestone.:)
I also decided that I want to have $10,000 when I graduate in June 2009. Right now I have about $3,000. I keep in mind that by that time my birthday deposit of about $2,000 will have matured. I think I'll be able to save the other $5,000 in the next two years.
Saturday, September 29, 2007
Back-to-School Expenses
In September I had to pay dorm fees. It's the only money I have to pay to my college. This year the cost of living in the dorms slightly rose, at least for me.
In the past every student used to pay the same fixed amount of money, but this year the dorm fee correlates with one's electricity consumption, which is calculated on the number of electric devices one has in their room. In the beginning of September one was to make a list of devices and hand it in. Nobody knew if any formal checks would be made to verify the list. (I think now that such checks are probable but highly unlikely.) I honestly declared that I used a desktop computer, a printer, a microwave, a mini-stove, a fridge, a teakettle, a hair-drier and an iron. Even after my roommate paid me for the devices we share, I was still a person who seemingly paid more than anybody else. All my acquaintances decided that hair-driers, irons and printers were not worth mentioning, and as laptops were sort of inferior to desktops, they could be forgotten too. Some people were even surprised at my honesty. They told me I could have saved money by omitting several items. But I decided there were other ways of saving money, which would keep my conscience clear. At least now I know that everything I use is absolutely legal, so if any check occurs I'll be okay.
And, by the way, do you know how much I paid? It was only $246 for the whole year. I really find this sum very affordable, especially when I remind myself that I'm getting an education for free, and I'm paying only a fraction of the actual cost of living in the dorms. If I had come up with a blank list, I would have saved about $130. I personally think it's not worth the lying and tricking.
In the past every student used to pay the same fixed amount of money, but this year the dorm fee correlates with one's electricity consumption, which is calculated on the number of electric devices one has in their room. In the beginning of September one was to make a list of devices and hand it in. Nobody knew if any formal checks would be made to verify the list. (I think now that such checks are probable but highly unlikely.) I honestly declared that I used a desktop computer, a printer, a microwave, a mini-stove, a fridge, a teakettle, a hair-drier and an iron. Even after my roommate paid me for the devices we share, I was still a person who seemingly paid more than anybody else. All my acquaintances decided that hair-driers, irons and printers were not worth mentioning, and as laptops were sort of inferior to desktops, they could be forgotten too. Some people were even surprised at my honesty. They told me I could have saved money by omitting several items. But I decided there were other ways of saving money, which would keep my conscience clear. At least now I know that everything I use is absolutely legal, so if any check occurs I'll be okay.
And, by the way, do you know how much I paid? It was only $246 for the whole year. I really find this sum very affordable, especially when I remind myself that I'm getting an education for free, and I'm paying only a fraction of the actual cost of living in the dorms. If I had come up with a blank list, I would have saved about $130. I personally think it's not worth the lying and tricking.
Sunday, September 16, 2007
August Net Worth
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.
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.
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.
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