Showing posts from September, 2021

My money past versus my current spending pattern

The first time I had to challenge my money patterns was when I was in my 20’s. At the time I thought that spending was what was expected in life (it wasn’t until much later it dawned on me that it’s not). Back then I had countless sleepless nights because I was worried about money and paying my bills. I had debt and a terrible spending pattern. One night I decided that it had to stop. That I had to change my life and that money should never again be a reason for lack of sleep. And since that day I haven't had a sleepless night because of debt or money problems.  The cure was a book by a danish author Anne-Mette Davidsen, where she asked a range of in-depth questions about my relationship with money and had me reflect on my money present, past and future. I had so many aha-moments while reflecting, and I made so many decisions to stop certain patterns and biases, that my relationship with money drastically changed from one day to the other. Some examples of ways my pattern changed

What should you do during a market crash?

A stock market crash is defined by equities declining 20% or more in a rapid downwards movement, and usually it's triggered by some event. A stock market correction is a quick drop between 10-20% in prices. When a market declines over a period in time it's called a bear market. If you experience a crash, correction, bear market, or small drop it's important to stay calm and these are my top tips on how to act and how to keep calm during a downturn, regardless of the severity of the event. Tip #1: Don't Panic! When the market drops, and everything turns red a lot of investors experience acute stress. It's time to take a deep breath and not panic sell your shares! If you own stocks and experience a double digit drop in your shares, this is the worst possible time to sell for a value investor. Revisit your company case / the answers in your checklist and remember why this is a Wonderful Business. After the financial crisis in 2008-09 some shares fell 50-70% only to qua

Will the Stock Market Crash?

It's a questions that I hear a lot these days and in this article I will explain how we value investors look at the stock market overall. Though we primarily focus on individual businesses it is a good idea to follow some of the important macro trends. Value Investor Howard Marks of Oaktree Capital Management writes that the stock market swings like a pendulum: from euphoria to depression. But how can we know where the pendulum is at right now? To answer these questions the “Buffett indicator” can help. In an interview in 2001 Buffett said that the stock market capitalization-to-GDP ratio as “the best single measure of where valuations stand at any given moment.” Let’s translate that into plain English... Buffett says there’s a relationship between the stock market value and the health of the American economy – GDP. If GDP is going up, the stock market is likely to go up. In the perfect world, the stock market and GDP should move proportionately. The “Buffett Indicator” tracks the

Learn How to Invest with This Simple Practice

The book that changed my life was "Invested" by Danielle Town. After I turned the last page, I didn’t want the feeling of joy and bliss to go away, so inspired by the chapters in the book, I scheduled a topic in my calendar. Every month I would immerse myself into a topic from the book and after I completed to topics from the book, I continued with topics I chose myself. This turned out to be a game-changer for me because it allowed me to keep momentum and focus. And I want to pay it forward, so you also get to approach investing in a structured way! I’ve created 12 months of investing practice topics that you can download and use in your own practice. The next step after downloading – which is really important! – is to schedule it. Timing and is different for everyone, so set a reminder on your phone. For some people mornings before work might work, while for others prefer afternoons after work or for some evenings works better.  Download For me weekend evenings after the k

Why is investing better than saving?

Are you saving up to live a good, secure life later? I used to be such a “good girl” saving my money in a savings account for times of trouble. But is saving the right way to grow your money? The answer is a clear no.  At the time of the publishing of this article interest rates are low, which means that most savings accounts give 0% in interest. And in some parts of the world, like Denmark, you have to pay interest to leave money in your savings account. And then there’s inflation - a phenomenon controlled by governments around the world. Inflation will eat those savings one small bite at a time. The global inflation rate is currently 3%. Take a good look at this graph because it’s pretty scary information: In 30 years $100 will leave you with $40 in spending power. $40!! 💸 And now this message is more important than ever. Have you heard inflation is increasing? What the graph means is that you’ll have to get an interest rate that’s higher than avg. 3% per year to not end up with les