The Pension Gamble
Disclamer
Completely different topic has been promised for this one; however, it takes much more time and preparation to find the answer to the best way between mortgage principal early repayment and mortgage term reduction. So, sit tight, it’s gonna happen, I promise.
Money gone
Since I was born and raised in Belarus, I lack any kind of financial education. Around my twenties, I realized two things: the taxes I pay from my salary cover pensions for the current elderly (don’t ask, it’s a budget black hole), and if I die before my sixties, all those taxes that were supposed to be mine are gone.
So, basically, there’s a simple promise between a person and the government: ‘We (the government) take a part of your income in order to save it for your future, when you’re not going to be able to work.’ One tiny addition to that—if you don’t make it that long, your kids and relatives won’t see a penny. This promise applies to many countries, as far as I know.
Sounds like a SCAM!!!
AnOther way
The most common advice about finances is to invest. Another crucial one—start saving for your future. In developed regions, people are able to start investing right from the legal age; moreover, some parents open portfolios for their kids even before school. Denmark puts pension-dedicated taxes into world stocks, and it has never declined. Seems wise.
Long story short, two years ago, we decided to give it a try—more like a random shot. Each month, I put a tiny amount of money into the app and buy some. I’m not aiming to reach a job-free life before my forties, just playing and observing. The plan is to start by preserving and possibly obtaining a solid number, then jump to a more trusted broker. The current one, eToro, I wouldn’t recommend, but it does the job.
So far so Good
I don’t do any deep analysis or research before buying, but I have a few rules:
- I’m familiar with the company.
- I always buy at the lowest point for the current year—though I can’t predict it, of course, and the bottom can be hit more than once.
- I spread the total value across enough positions so I won’t regret any failure on one particular stock.
So here is the original proportion of the total value being put by category.
By Index I mean common ETFs. The Other category includes goods, health tech companies, and commodities.
Throughout the two years, the Tech sector has grown a lot; nevertheless, I have a few declining positions, and it’s a pity to get rid of them with more than a 40% loss.
Hoooooold!
Here is the current proportion of the total value by category.
It has changed significantly. I’m thinking of recalibrating for the first time. This exercise should become a nice habit, involving a short review and retrospective. Half a year should be perfect!
And the most beautiful one—profits proportion! Tech keeps showing some outrageous results; I bet it won’t last forever—it never has. Still, it’s so fun to see some companies related to the AI market, like NVDA, skyrocketed twice in a year.
Especially when you managed to get into the rocket before launch… with a penny! :)
One does not simply predict
Back to the topic of this post: I don’t really believe my taxes will ever return to me in full, so here we are. My minimum hope is to outpace inflation. I’m putting 70-80 percent into common ETFs and saving the rest for some ‘play.’ So, let the force be with me—lucky force!