How I Saved and Invested Money in 2020
It's already been a year since I began my 10-year journey to financial freedom. So, I thought of sharing with you how I saved and invested money in 2020.
I had my doubts before I began filming this video. Who feels comfortable when sharing his finances?
Then I thought that transparency rarely fails. I myself get hooked to content where creators break down their income and talk of their financial plan or struggles. So, why not me? Let's begin.
Making and Saving Money in 2020
My main income comes from my web publishing business. I decide what I pay myself each year. That usually equals to my family's annual expenses, which come down to about 33,000 euros. Of course, there was nothing usual about 2020!
So, I was able to save enough money in 2020 due to the lockdown. Not only did I pay myself less, but I managed to invest some of my personal income, as well!
My company paid me 28,000 euros this year, 5K less than normal. I kept 2,000 in cash for my emergency fund. I invested 4,000 in cryptocurrencies and I currently have 5,000 for next year's expenses. In total, I saved or invested 40% of my income.
Where I Invested Money in 2020
Now let's talk about my investments.
I didn't invest everything on Bitcoin. In fact, the last time I bought Bitcoin was in the beginning of January. I have been buying Bitcoin for years, so I took a break during the COVID-19's first wave.
The Stock Market in 2020
Because, you see, back in March the stock market had got my attention. US markets were plummeting 10% every day. We now know it was a great time to buy stocks. I myself needed to diversify my investing portfolio and own some stocks. I had none. The timing was perfect. Buy fear, sell hope they say. But I was too afraid myself to buy.
My research predicted a more brutal second wave of the virus in winter. The one the world is facing right now. So, I didn't see an end to the market's turmoil. I convinced myself to wait for a bigger drop, as I expected a small correction during summer, before the world ends in flames.
Much to my surprise, we had a V-shaped recovery. The financial markets are hitting new all-time highs while the pandemic soars in Europe and America right now. Of course, with so much printing and helicopter money going on, assets were going up. Meanwhile, cash is losing value fast. So, since I lost that opportunity of the decade in spring, I had to get rid of my cash. And by cash I mean US dollars.
Gambling on EUR/USD
My company is incorporated in the USA. Its revenue is in USD, but my family lives in the Eurozone. So, I always keep an eye on the Euro/Dollar exchange rate. And sometimes, I like to take a gamble.
I decided to do a small trade on forex. I bought Euro predicting a big climb, while the Fed were printing money, sending stimulus checks and bailing companies out. Unfortunately I was stopped out and lost 200 euros, before Euro skyrocketed.
Investing in Cryptocurrencies
That was the only trade I did in 2020. I used the rest of my investing capital to diversify my cryptocurrency portfolio. So, 3,000 euros have gone into Ripple and Monero coins. That makes my current holdings in crypto 75% Bitcoin, 15% Ripple and 10% Monero.
I do not intend to sell any of my Bitcoins, but I do plan to sell my Ripples once my profit target is met. The strategy is to get half of my position out at 100% and convert it into Bitcoins, Monero or Ethereum. In the end, I should have the same crypto allocation, but without Ripple. The general financial plan is to dollar cost average in those coins, but mostly Bitcoin.
Investing in Commodities
I also own some gold from previous years but I didn't invest in that in 2020. The only commodity that got my attention was oil. You don't get to see oil trading below zero that often! Once the dust settled, my gut told me it was a great opportunity to buy at the $10-20 range. Yes, electric cars are the future, but oil is oil. And besides, owning both oil and Tesla stock would have been ideal in 2020!
Once again, I was too afraid of how the markets would react in winter. So, I skipped yet another trade that would turn out profitable.
The Lockdown Way to Save Money in 2020!
So, there you have it. I saved the most money in 2020 I have ever saved in a year and invested most of them in cryptocurrencies. At the same time, I added some cash to my emergency fund and saved for next year. I'll hopefully be able to invest even more in 2021!
If only lockdowns were meant to stay! As I've been working from home for 15 years, I didn't have to adapt to them. In fact, if I didn't have a family, I wouldn't have even noticed!
I do hope, though, that you aren't struggling too much under these circumstances. Not everyone is accustomed to remote work, let alone finds it fun to stay at home 24 hours a day. I've found that a great way to overcome depression is to keep yourself busy. It doesn't have to make you money. Just don't overspend it!
For more updates of my journey to financial freedom or doom, make sure to subscribe and hit the notification bell. And let me know how this year has been for you. I can't be the only one who spent less money in 2020!