How I beat the MSCI World by over 21,000% over 13 years
Part 3: My girlfriend with no financial know-how changed everything
You can find the first part of my investment story (incl. background and TL;DR) here: https://getqu.in/JldknL/
The second part here: https://getqu.in/Ptei6g/
Welcome to the third part of investing failures, bad luck and mishaps. What do you think? How many parts did I need to make a Netflix documentary out of it?
Money, money, money
In the meantime (2018), I had taken on first a small, then a slightly larger management position. How did I manage that? Quite simply. With the first one, I went on my boss's balls until I got it. At the second, there was a restructuring and my boss asked me. Once again, I was in the right place at the right time. My part-time degree (which I hadn't completed yet) certainly helped, as I was able to prove my resilience and stamina. This enabled me to increase my gross annual salary from 36,000 euros to just under 50,000 euros and later to around 75,000 euros. As my cost of living only increased marginally at the same time, I suddenly had a lot of money at my disposal. Reason enough for me to take a closer look at my finances for the first time.
Where to put all the money?
First of all, I started writing down and calculating my previous investments and the associated returns. Manually in a text file. Fortunately, there's getquin for that nowadays. However, writing things down by hand helped me to understand how returns and the like are calculated in the first place, what influencing factors there are, what effect they have, ... In any case, I had the feeling that my bank advisor always told me a lot of nice things, but the returns were usually terrible. And I was right.
So I resolved not to follow any more stupid recommendations from my bank advisor. Instead, I managed very well to continue making stupid decisions myself. This included, for example, an investment in a subordinated loan from a local company via crowdfunding (the risk/return ratio was terrible, but it worked out well) and a savings plan on an ETF with a high dividend and low return.
However, I also made some decisions that I would describe as "still okay". For example, the investment in P2P loans and in a DAX ETF. By chance, my savings plans in $IWDA (+0.99%) and an IT ETF. In a way, I invested in everything that wasn't up to scratch. @Koenigmidas I still do that today 😘.
However, most of my money continued to flow into fixed-term deposit accounts, as I still had my sights set on financing my own home.
A high savings rate can make stupid investments (partially) offset
My assets have now grown to a 6-digit amount. I don't remember exactly how much (and probably didn't know at the time). Maybe just under 200k. It's crazy when you consider that I was mainly investing in building society savings, life insurance, fixed-term deposits, Riester and mutual funds and the crypto market was at rock bottom. But my savings rate was simply phenomenal at the time, I started very early thanks to my parents and the unit-linked Riester pension was doing pretty well 🚀.
In 2019, I had finally completed my part-time studies after my Abitur, Bachelor's and Master's degrees and had also finished my one-year intensive English course. This gave me time to focus even more on my finances and learning. First on the agenda was crypto. I started to understand my crypto investments and realize what nonsense I had invested in. So I sold many (not all) of my altcoins and reallocated the proceeds into $BTC (+0.2%) and $ETH (-1.7%) reallocated. I no longer had an exit plan, but had written off the money and wanted to hodl until it became worthless or life-changing. When the bull run started in 2020, I reinvested in some nonsensical altcoins via a savings plan and tried out crazy crypto products on Binance 🤦. Needless to say, I only lost money.
At the same time, I bought my first individual shares. As an IT nerd, I stumbled across a book about companies with a modern corporate culture and a focus on IT. That was the only (!) basis for buying $ING (+0%) and $ETSY (+3.22%) 😅. As you can see, even a few years ago I was still traveling without sense and reason. Looking back, however, at 36 euros was an ideal entry price, at least for Etsy, and at 100 euros not a bad price to sell at. I was able to sell the ING shares at +/- 0 after holding them for a few years.
Water becomes wine. Fixed-term deposits become ETFs.
I was so convinced of myself and at the same time so convincing that some people developed boundless confidence in my abilities, who were actually at bank advisor level. This included my girlfriend, who I advised to start a savings plan on an MSCI World (lucky guess). And she did. With 700 euros a month 🤯. And I fed my ETF with 500 euros a month despite my higher income and supposedly higher financial building. That was the wake-up call for me. "Donkey" I thought to myself. "Donkey, how can it be that your girlfriend, to whom you have just explained the world of finance, has a higher savings rate than you?". I had to stop preaching wine (ETFs) and drink water (fixed-term deposits). And that's what I did. From then on, I saved significantly more in my poorly chosen ETFs and correspondingly less in call money and fixed-term deposits. Looking back, this was one of two decisive turning points in my investment career.
The second turning point in my investing career was Kellogg's $K (+0.74%). But more on that in part 4: https://getqu.in/d4GUta/
