Millionaires live below their means

Posted on September 10, 2016 in Personal Finance

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It was a few years ago that I followed a conversation between two guys, one of them planning to buy a house for USD 1 Mio.

That guy told that the down payment would be USD 250’000 and that he has saved that amount during the last 10 years.  He said that his nest egg surpassed at least his “spending budget” of one year. As the conversation went on, the future home owner said that – considering his high salary – his bank better offered him an attractive interest rate for the mortgage. After all, he added with a wink in his eye, he was now a millionaire.

That conversation shows a general misconception many people have on wealth and income. Wealth is what you accumulate over time, not what you earn. The key factor in the process of wealth building is the saving rate. A high salary does not automatically translate into substantial wealth. Read more… »

Cooking at home makes us strong

Posted on September 8, 2016 in Lifestyle

We love eating out but never made it a habit.

Cooking at home is an exciting element of our systematic approach to keep our savings rate consistently over 50 % and there is plenty of room for further improvement (see page Savings Rate and post How to shape your Finances? Track your savings rate). We

  • rarely eat out,
  • do not buy our lunch out at work,
  • waste as little food as possible (actually many people underestimate that food waste accounts for a large portion of grocery bills),
  • buy in bulks,
  • rarely buy processed food,
  • carefully consider where we grocery shop and
  • always use a grocery list (which has actually not change for years).

Read more… »

Nestlé Dividends made generations of investors a fortune

Posted on September 4, 2016 in Investing

img_0465 I love ice cream, chocolate and coffe. To consume and to invest in (drawing by the author)

In my view Nestlé, the Swiss-based world largest foodmaker is one of the very view companies being indispensable for my portfolio. For me, it is an investment for life. In the last decades, it offered higher returns on equity which led to even better long-term wealth creation than its competitors such as Unilever or General Mills (of course each of them too has been excellent as long term holding). Have a look at the Nestlé’s brands list and its financial fundamentals and you will see, this company plays in a league of its own. Read more… »

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How I think about wealth and why I started this blog

Posted on September 3, 2016 in Lifestyle, Personal Finance

I have never been a big spender. I have always been a much better saver instead. Money is energy, often traded against time and effort. It is too valuable to be wasted. The consumerism mantra “one earns to spend” is a very tricky one.

You cannot have a voluntary, independent life while drowning in debts and living from paycheck to paycheck. As long as you have to work hard for your money to make a living, you are stuck in a treadmill and will never be free. You cannot rise to the top of your capabilities and pursue your dreams.

drawing draw and shape your (financial) life

drawing by the author

You must put yourself in a position – financially and mentally – in which you have options. Read more… »