We are looking for our Dream House

“The open floor encompasses four spacious bedrooms with room for sleep, study and storage … Here is one of two bathrooms and there is the stylish gourmet kitchen … other highlights include a charming fireplace, just look at the exposed bricks … every detail was quality crafted and carefully selected … And here you see the expansive living room opening up to the wonderful garden with beautiful old trees …”


(painting by the author)

You may have guessed it. We met with some real estate agents last week and read a ton of property descriptions. I have been running numbers since then. Now, my head is aching and my eyes are burning! Continue reading We are looking for our Dream House

How to use Jaws Ratio to improve finances

While the Jaws Ratio is commonly used in corporate finance and security analysis, you rarely hear or read about that measure in the context of personal finance. This is to some surprise, as households – like businesses – have to manage their economic resources and taking into account various financial risks and (life) events. Almost everyone has money issues – companies and people alike – so why not use that concept to increase your personal savings rate to put you in a position to make more of the money you earn?

First, I want to show you what that Financial Ratio stands for, how it is calculated and then – and this is most important – how you can benefit from knowing that concept.

Continue reading How to use Jaws Ratio to improve finances

Disney is a Wonderful Company but is the Price fair?


Disney’s stock seems to be out of favour for many investors because the company’s growth rate is expected to slow down due to some problems in its Media Network segment. Why is this such a big deal causing people to avoid the stock?

We all know Disney characters such as Mickey Mouse, Donald Duck, Arielle or Marvel-Heroes such as Spiderman. But if you take a look at the financial reports you can immediately see, where the company earns really big money. Disney operates in four segments, the contribution to the operating income of the company is as follows (as of second quarter 2016): Continue reading Disney is a Wonderful Company but is the Price fair?

Financial Independence is not just for millionaires


drawing by the author

Financial Independence describes the state in which the assets of a person generate enough income to sustain or even exceed his or her expenses. Financial independent people don’t have to work anymore to cover their basic needs as their wealth throws off enough passive income (e.g. dividends, rents, interests etc.).

Continue reading Financial Independence is not just for millionaires

Why I don’t mind market fluctuations

“Wow! your portfolio outperformed the benchmark indizes!”

“To be honest, I don’t care.”


My first investing experiences

I started investing by the end of 1999, somewhere near the peak of the so-called “Dot-com Bubble” buying stocks of two high-tech companies.

By investing in two companies from the same sector being completely overvalued at that time all my eggs were in one basket. I had done a lot of research before and knew these two businesses had a very wide economic moat. Probably one of the few things I did right was to focus on quality. But I had listened too much to the analysts and the media at that time justifying the high prices of these companies, the sector and the stock markets as a whole. Finally I had become greedy when everybody was and overpaid for the stocks. The biggest mistake however was to invest money I actually would have needed for my studies at the university.

As you certainly know, the “Dot-com Bubble” burst in march 2000 and of course my stock holdings plunged rapidly. I was scared and literally paralysed finding my portfolio with a book loss of aproximately 70 % few months later. My nest egg had nearly evaporated.

But I held on to my stock positions. After all I had done my homework and knew that these companies would thrive for decades to come. But I had overpaid which makes the engagement in a good company a terrible investment. What I did was to grind my teeth and hold these shares for several years. They recovered finally and I immediately sold them. Including the dividends received the total return was … zero.

Hindsight I must say that it is quite dangerous to hang on positions hoping that they recover one day from their book losses. Benjamin Graham refers to such a behaviour as long term speculation (in my view, before investing, everybody should read at least one of his great books “Security Analysis” and “The Intelligent Investor”).  The oportunity costs can be huge as money is blocked for many years. In my case that money would have served me well during my studies. I managed the situation by working part-time and slashing my spendings.

My investing approach

After my daunting experience, I never wanted to invest again. I took it personally and felt discourage. After all I wanted to build wealth in the stock market but all I had found was just a lot of hassle.

But my experiences served my well. I was still interested in businesses and I love reading books about finance and investing. My key take aways in a nutshell: invest consistently and be patient. Investing is a process. I focused to put a system in place allowing me to invest on a regular (monthly) basis slowly building a powerful portfolio over time. I also learned that bear markets can (and should) be seen as friendly conditions to buy stocks or Index Funds at attractive prices.

I had a different mental framework now and my view on the market completely changed. I stopped listening to the noise and wrote a list, my personal watchlist, with companies I wanted to own a piece of (Nestle, Novartis, Roche, Swiss Re etc.).

I stood at the sidelines until 2009 and since then I invest according to following “system”: (1) saving at least 50 % of my income to increase my stash, (2) investing in Index Funds and shares of high quality companies with a wide economic moat according to my watchlist, (3) reinvest the dividends and (4) repeat over the years. I focus only on investments I am willing to hold for decades (or even forever).

What really matters for me from a financial perspective is the saving rate and the amount of money I am able to put to work on a regular basis. That’s going to determine my economic future much more than a particular failure or success I have with my investments. I have neither the time nor any interest in handling daily market fluctuations.



You are responsible for your own investment and financial decisions. This article is not, and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.

How to shape your Finances? Track your savings rate

To grow your nest egg quickly and big enough to gain financial flexibility during your working career, targeting a high savings rate is the key. The savings rate is the percentage of your income that you are not spending.

In order to calculate your savings rate, you need to know your income and your spendings. These are the two levers in building your wealth you need to watch and manage: money in (income) and money out (spendings).


Continue reading How to shape your Finances? Track your savings rate

You are not a millionaire man, you are just living high

img_0450“Glimmer” (copperplate by the author)

A few months ago, I followed a conversation between two guys, one of them planning to buy a house for USD 1 Mio. He 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. Continue reading You are not a millionaire man, you are just living high

Cooking at home makes us strong

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).

Continue reading Cooking at home makes us strong

Nestlé Dividends made generations of investors a fortune

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. Continue reading Nestlé Dividends made generations of investors a fortune