In search of the right strategy

In search of the right strategy

Right after finishing my masters degree in 2017 and entering my current position it was clear that I have to start investing in order to gain more independence and freedom.

The first step towards getting control over my financial situation was getting into the right mindset. I decided to treat my financial life like a business. Tracking income, expenses and investing in the right assets at the right time was the way to go. 

After getting my expenses under control I started budgeting and investing in a rainy-day-fund, which sits in a saving account. The ease of mind that comes with having a soft cushion to land on, if something unforeseeable happens, is priceless.

The urge to let my hard earned money work for me was strong right after seeing the first salary in my checking account. But since the number one priority was getting the rainy-day-fund up and running the journey of real investing started slow.

Even when starting with only a few euro per month the process of deciding on which investing-wagon to hop on is an important one. 

Not knowing where to start I watched many Youtube videos, listened to hours of podcasts and read many books. At the time the german blogger scene was all over ETFs (Exchange Traded Funds) so I bought the german “bible” on ETF investing:

Souverän investieren mit Indexfonds und ETFs

Equipped with new knowledge and confidence I decided to invest in a mix of the MSCI World and MSCI Emerging markets. Since I was – and still am – young and willing to take risks, I decided against balancing the portfolio with any kind of bonds. Having a rainy-day-fund lets me sleep well without worrying about what’s happening with the invested money.

The heights and lows of the crypto-world

Instead I saw the crypto hype coming and went all in (remember I was still building my rainy-day-fund so all in is relative) on crypto. I entered the coin market a few months before the big hype and bubble of late 2017. Since the available stack for investing was small I was sadly no millionair by christmas ‘17. Nonetheless I gained quite a lot during a small period of time. 

I invested mainly in ethereum, a platform to run smart-contracts on the blockchain. After many hours spent reading technical papers the fundamental ideas behind ethereum excited me. I was, and still am, convinced that ethereum has a bright future. So in late ‘17/early ‘18 I decided against selling for profit.

Also the FOMO (fear of missing out) was strong during this time.

So after the bubble busted I went down with the sinking ship and stopped pumping more money in ether.

To this day I don’t think that the whole crypto adventure was a mistake. I learned many important things during this time that shaped my attitude toward investing:

  • Fuck FOMO → always check for and avoid FOMO.
  • Avoid the pornography of analysts-news.
  • My risk assessment was good. The lost money never really hurt.
  • Ignore technical analysis. They don’t quite work as long there is no massive manipulation with bot-trading that follows them.

Dipping a toe into the P2P world

2018 started as a really boring year. I invested passively in my ETF portfolio. The strategy still consisted of a combination of the MSCI World + Emerging markets. The performance was okay but investing was boring.

The next change in course followed a bit later in 2018. An interview with “passives Einkommen mit p2p” (german blog about p2p investing) on a podcast (Aktien mit Kopf) aroused my interest. I opened an account at bondora and started with 50€ to test the water. 

Setting up the auto-invest feature and – Abracadabra–  everything runs on its own. After one month the first interest accumulated and got reinvested. Feels good. Trying bondora for a few month went well so i decided to diversify the p2p branch of my portfolio. The next platform I tried was Mintos. Tinkering with Mintos’ settings was a bit tricky but now everything runs as i want it to. 

P2P investing was my first step entering the territory of passive income. I started to like the idea of getting a monthly stream of income to potentially support my cost of living. Looking for more ways to generate a steady income I remembered the yearly dividend one of my ETFs is paying. 

Entering: Dividend Growth Investing (DGI)

Since three month I’m learning about DGI and started actively investing in selected dividend paying stocks two month ago. I’m still learning but I can tell by now that this specific style of investing clicks with me. Searching and investigating the companies to invest in is fun and steadily increasing the dividend income is highly motivating. 

That's it

Everything that happened in the last 2 ½ years with regard to my investments can be summarized by one graph:

Starting with a pure passive investing style focused on ETFs I went crazy in actively pumping money in Crypto and ended up actively creating a passive income. I never blindly followed a specific strategy and was always open to learn and try different paths. Not everything went as planned or expected but it resulted in creating my own strategy that fits my interests and needs. 

Right now I’m investing a monthly in ETFs, P2P-platforms and dividend paying stocks. 

You can find my current portfolio here.

Will I follow this strategy for the rest of my life? 

I don’t know. But that’s the fun part of investing, isn’t it?

I think that there is no perfect strategy that fits all needs. The best thing to do is to start with one style of investing and slowly start creating your own. 

Even if the specific strategy is not set in stone and may change over time, one thing is as clear to as it could be: I’ll keep on learning as much as possible and let my past mistakes guide me to make better decision in the future.

You can follow my journey in the future on this blog. I’ll post monthly updates or whenever something interesting happens. 

To end this post I leave you with a fun animation of the historic development of my portfolio. 


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