Tony’s investment blog attracted my attention since the very first instant. It was likely because of his openness and honesty with which he reported on all his investing experience – on the good time same as the tough moments and bad decisions. In the world of money management, it seems to me increasingly more important to pay attention to direct people’s experience, reported without any PR, micro-marketing and self-improvement equilibristics which usually distort the whole picture. If you succeed you cheerfully share it, if you mess stuff up you admit it and let others to take the lesson. Well, this is why I brought Tony’s story and opinions directly to you in a small interview, exclusively done for Skejwin.cz.
So, let’s move quickly to the essential – who’s Tony? As for everyone, his story is pretty unique. He spent childhood and Uni time in Spain, graduated directly to the unpleasant spanish crisis in 2008, decided to move to the UK where he works as a design engineer for living now. Unlike many young investors, he started his investment journey equipped with quite a bunch of euros so you can study his portfolio developing to relevant size very quickly.
The main reason that drives me to amass at least a net worth of one million euros is simple: financial freedom.
And as anticipated in the intro paragraph, Tony is one of those who are able to admit bad decisions. In fact, his portfolio has experienced a dramatic permanent loss when his algorithmic forex account evaporated after a combination of unfortunate money market movement and a high leverage. Such „zero“ is something every investor is afraid of and imagining the possible consequences. Tony is a unique example of someone who went through this, got over and found a new source of motivation for his journey.
And this was one of the ideas behind the interview with Tony. To present the investment as something driven by humans, as something based on our fears, dreams, mistakes and intuition, not only cold rational calculus. Tony and I tried to think about what is the „psychology of fatal decisions“ and how to reconcile. Now it is up to you to squeeze out of it the message to you. 🙂
(I note that Tony’s and my opinions do not have to overlap which might be especially truth in case of forex and similar instruments.)
~ Hey Tony. Thank you for joining this interview. Let’s start with your financial dreams and goals. You aim to become financially free and earn a fortune of one million euro. Why do you want to achieve it? What is the deepest value here appealing to you? ~
The main reason that drives me to amass at least a net worth of one million euros is simple: financial freedom. I subcategorized this reason in 10 other reasons, such as spending quality time with others more often or fulfilling the need of a challenge. I wrote down all my reasons in this post.
Now, many say that I don’t need a million to be financially free. That’s right, I don’t necessarily need it now, but my preference is to build a buffer or margin of safety to avoid future shocks from unexpected outcomes (market crashes, life events, plans turning sideways, …). All this extra layer of safety it’s conditioned by my past childhood. My parents were very poor, and consequently we suffered a lot. I don’t want to go through a similar experience again.
So, a financial guru saying all you need to do is to accumulate stocks worth 25 times your expenses to retire doesn’t work for me. I rather build my diversified investment portfolio little by little in the most tax-efficient possible way while paying attention on building a trustworthy stream of passive income to fulfill my expenses.
In addition, I’ll say that one million isn’t as much as it sounds anymore:
I like the „financial independence“ more than the „retire early“.
If I take into account the compound effect of a yearly 2% inflation, in 30 years my expenses will double. I spent 16,115 EUR in 2019 at age 34. Considering that my lifestyle won’t change in 30 years (which it will as I have no kids yet), at age 64 I would need a stream of passive income worth at least 32,230 EUR to keep my FI status.
The safest investment is US Treasury bonds, which currently yields 1.6% (10 Years bond). Imagine that I would want to be extremely safe and invest the whole of my future million in this pot. 1 million x 0.016 = 16,000 EUR.
Maybe I will need two millions to retire comfortably?
~ What do you think about the FIRE („Financial Independence, Retire Early“) movement and its life philosophy? Do you feel being a “member” of this club? ~
Partly yes. I love the financial independent aspects of the FIRE community, or put differently, I like the FI more than the RE.
Some people say that the RE doesn’t necessarily mean that you must retire, but just having the freedom of choosing how you spend your time. To me this means being financially independent, a term that has existed for many decades. I can’t see the real value of adding the RE extension unless it’s to refer to people who really want to retire early and do no work at all (the need of blogging or being online influencer to sustain your lifestyle is not retiring).
I value money and I don’t enjoy spending it for things I don’t really need, because I am fully conscious of what happens when you run out of it.
Now, as I said earlier I love many aspects of the FIRE community, such as, their integrity, passion to deliver success, goal achievement, investing practices, mindfulness on spending, eagerness to learn and improve, planning and organizing skills, money values and supportive attitude among many others.
~ Journey to financial independence is about saving at the first place. What is your way to reduce the expenses? What was the most relevant decision in this regard – something like golden egg in your saving? 🙂 ~
I’ve pretty much always been a vivid saver. I guess I should attribute this to my childhood experience. When my parents started to have serious problems to pay the bills down, I unconsciously realized, as a kid, how important money was. I value money and I don’t enjoy spending it for things I don’t really need, because I am fully conscious of what happens when you run out of it.
Thanks to this gained skills on my early days, I’ve never needed a budget to put my finances under control. Over the last few years I applied the paying yourself strategy, transferring a set amount (30-40% of net income) every month to my UK investment account as an automatic payment after my pay slip.
However, I am always happy to improve on my savings rate, so I recently started to track how my money flows and where I spend the most of it using a Sankey diagram. I plan to do this for a while to see whether that has a beneficial impact on my savings rate or not. If it doesn’t, then I will use the time on something more productive.
I have a golden egg!
If you want to save, simply hang out with savers and watch the magic work for you.
~ The second ingredient to FI is to invest the excess money. It may sound both an easy and complicated task to do. Do you spend a lot of time by planning your investment and studying investing strategies? Is the investing more a hobby or rather a job for you? ~
Whether it’s easy or difficult everyone needs an investment plan, and that requires time, not only to write it down, but mainly to become financially literate yourself.
What I could observe is that those who are not passionate about investing end up allocating most of their capital in a well-diversified World Index trackers, while those who are a bit more curious or enjoy the money game (or gambling in some case) take a different investing approach.
My personal situation is a bit more complex than the average investor, as I am residing in a foreign country that uses a different currency (£), but a large percentage of my assets are held in Euros in Spain. That gives me a lot of investment options, but also a complicated mess in terms of taxes. The added currency risk is not helpful neither.
I enjoy investing and take it as hobby, although it can become too time consuming sometimes. I would rather have my investments set automatically in the future and only spend time on reading about dividend stocks and P2P platforms occasionally.
In investing, the major risk is oneself, I have no doubts about this.
~ When checking your investment portfolio, I learnt that you had about 42% in alternative assets, mostly P2P (P2B) credit market and real estate crowdfunding platforms. Why did you decide to add these instruments to the portfolio? What do you think about the risk of this segment? ~
Basically, to decrease taxes complexity. Almost all the Euro side of my portfolio is invested in P2P marketplaces or real estate platforms because taxes aren’t deducted automatically (except Housers).
Before that I was invested in a famous Spanish robot advisor. The overall experience was positive but, taxes were automatically deducted after every capital gain selling transaction. Avoiding tax payments is one of my investing principle priority, so taking the risk myself to pay the Spanish government first wasn’t a breathtaking experience, since I wasn’t even living there.
Besides, fiscal years in Spain and UK differ. The Spanish tax year runs from 1 January to 31 December, whilst UK from April to April, which is an incremented mess in terms of dealing with taxes.
Another option could have been to transfer Euros to Pound regularly, but this adds a currency risk that I am not willing to take easily, as we plan to move to Spain sooner or later at some point.
As we could recently see with Kuetzal and Envestio, investing in peer-to-peer lending platforms is a risky business. I am also concerned about its overall performance during a recession.
Consequently, I plan to gradually reduce my allocation percentage in this sector and reallocate the money into stable dividend companies.
I had two options, be brave and learn from it or spend my days crying and hiding in the bed.
~ At the very beginning of your investing journey, you experienced a painful permanent loss. Your case is, unfortunately, not unique at all but you are very open about your story (which is unique). Let me talk about it.
Based on your posts, you were aware of the generally tragic statistics regarding success rates of forex traders before you engaged in an algorithmic forex trading company. Tell me, how does it happen that an informed intelligent guy loses his precaution and jumps into a trap like this? Do you remember what convinced you and blurred your evaluation of the situation? ~
Yes, the truth is that I initially believed in the system. I thought I was doing the right thing at the time. After Trump won the US elections, the markets became very volatile, especially the USD/EUR and I wasn’t confident that the bull market would last much longer.
Me being aware of the low success rate of traders was what created a deeper believe in algotrading. This system is used by banks and big financial institutions, it exists, and it’s the main reason why day traders lose money, because they competitors’ equipment is “unbeatable”. It’s like a Viking fighting against a modern soldier, there’s a clear winner.
That’s what blurred me, I trusted a system and its people without looking at the negative consequences and then realized late on the journey that it was all a set up for investors ending up losing money. I was simply naïve in this respect.
In investing, the major risk is oneself, I have no doubts about this.
~ When your automated forex trading started to earn money, you enjoyed some months of warningly high returns. It had to be special feeling. How was it? What do you think distracted you and made to overlook suspicious indications like these? ~
It was a roller coaster feeling. Sometimes my open positions were in negative for days and weeks, and then a Trump tweet or Fed meeting would turn most of them green.
High returns in Forex are possible because of the leveraging, so this seemed logical to me. My suspicions started when their main bank account in Denmark was taken down by local financial authorities due to breaching money laundering rules. This is when I suspected that my money was all gone. Automated Forex trading systems that works can make huge returns, but obviously at the price of taking huge risks.
If I wouldn’t have lost 45K I would still be smoking like a chimney. I can’t recover what I lost, but I can at least change who I am and who I want to be.
~ Later, in March/April 2019, a fluctuation of an exchange rate ruined your account balance. This is something many investors fear of but never experienced. How did you get over it and reconcile? How did you find the motivation and courage to continue in investing your money? ~
It’s a take it or take it deal. I had two options, be brave and learn from it or spend my days crying and hiding in the bed. It took me a lot of effort to get where I was professionally, so I didn’t intend to give up on other aspects of my life that I had accomplished so far just because of a mistake, I mean, we learn from them, don’t we?
I can’t deny the fact that negativity took most of my optimism at first, but I managed to look at things from a different perspective, there’s always a positive view to look at.
That’s when I started my 45K project fund, stopped smoking and implemented new exercising habits that are being so beneficial to my well-being. If I wouldn’t have lost 45K I would still be smoking like a chimney. I can’t recover what I lost, but I can at least change who I am and who I want to be.
I was hesitant to continue with the blog, but I decided to keep it to help raising awareness in the community and fight against similar scammers. That adds a huge personal purpose to my blog. My readers were also super supportive and gave me energy to continue with my one million dream.
“Don’t let any bad experience vanish the pursuit of your dreams”
~ Since then, have you ever revealed a similar “pattern” in some sort of investment that looked interesting to you at the first glance? I guess there are many of such waiting for investors. ~
No, I completely forgot about the idea of finding any “money making system”, it’s just way too complex for me to develop. I don’t consider using anyone else’s robot due to the lack of control of your own money and high risks of being a victim of fraud.
Some people have reached to me (mainly on Twitter) saying that they use an efficient algo system to trade crypto currencies. I warned them about the fraud risks and ignored me. As per today I haven’t heard more about them and are all gone. Guys watch out! Scammers are everywhere!
The only pattern that exists to make money fast is to start your own successful business. Besides that, I don’t believe in any other fast money maker system and I am extremely skeptical with any crypto related business.
~ Thank you, Tony, for joining us and good luck on your journey. ~