Well what better than to wrap up and summarize 2017 than with the Cheesy Index? In this December 2017 Cheesy Index post we will also look at the portfolio allocation and some random financial statistics, which also showed we were FI in 2017! Too bad that from a cash-flow perspective we still have a long way to go….

December 2017 Cheesy Index

Despite not having posted the December savings rate or dividend incomes yet, we could already see that 2017 was going to be a great year for the Cheesy Index (see also the post form last month). We closed out the year with a Cheesy Index with a total of 69%! Just look at all the cheese stacking up, it’s just pretty ;-). We also shot past our 65% target for the year, in largely thanks to the stock market and our Real Estate income.

Here are the stats:

December 2017 Cheesy Index

December 2017 Cheesy Index

Portfolio Allocations

As you might be aware, we have divided our assets into three classes:

  • Income generating assets (stocks, real estate, loans, etc.);
  • Non-income generating assets (cash, our house, art, jukebox, etc.); and,
  • Depreciating assets (i.e. our car).

If you look at these three assets classes, and their development in 2017, you get this:

2017 Asset Allocations

2017 Asset Allocations

It is hard to miss the shift from ETF’s and Dividend shares to a Real Estate loan in November/December. But we now have more than 85% of our available wealth invested, that is good! However, we now have to work at getting some more cash for 2018. Primarily to pay for maintenance on our real estate and a 9 week road trip holiday (partially unpaid) in Q2 2018.

Portfolio Allocations – Income Assets

When you now breakdown the income assets into the following categories:

  • Our real estate;
  • The dividend shares;
  • Our Index funds;
  • The various crowdfunding loans;
  • Some sustainable investments (solar/wind); and finally,
  • Crypto-currencies.

And you dump all that into a graph for 2017, it looks like this:

2017 Income Asset Allocations

2017 Income Asset Allocations

As you can see, we are now heavily invested into Real Estate, followed by dividend shares. We currently have virtually no ETF’s anymore, very little crowdfunding left and only small positions in sustainable investments and crypto currencies. It’s unlikely that there will be major changes in this final distribution (from December 2017) during 2018.

Random Statistics and why we were FI in 2017 (and why not)

Ok, now for the fun part, here are some random statistics and notes for the financial year 2017:

  • Overall expenses covered by total investment income (before taxes): 107.6% (the bank decided to shift some charges to 2018, so it went up since this surprisingly popular tweet)
  • Total core expenses (excludes daycare and holidays/leisure expenses) covered by total investment income (before taxes): 149.7% (holy heck!!)
  • Total core expenses (excludes daycare and holidays) covered by net cash-flow (including estimated taxes): 91.8%
  • Target FIRE expenses covered by current net cash-flow (including estimated taxes): 83.9%
  • Overall 2017 return on investment (on income assets): 8.2%
  • 2017 was our highest income year on record, just a but higher than our previous record high from 2012
  • Net Worth increase in 2017: 20.1%

As you can see both taxes and cash-flow limitations are “killing” us right now. That being said, due to higher than expected yields we are close to FIRE than the cheesy index makes us believe. This is also not influenced by market valuations, which is promising!


Slowly but surely getting there! How about you?



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We are doing another historical review today, after we reviewed our historical savings rates earlier this week. However, this time we will be looking at the development of our income assets. We will look at the historical return on investment on those assets. And, in addition, we will also be looking at the return on investment on our total net worth.

Historical Income Asset Allocation

When we were doing the historical data evaluations for the savings rates, we obviously did more than just that. It was a great time to review most of our historical developments. it took at bit of time to get to this stage, but it is interesting and fun to see the (financial) developments match with life decision we made in the past.

Same as with the saving rates, data up to 2010 is a “best guess” based on income/tax statements, (partial) excel overviews of expenses and receipts from all kinds of purchases. As of 2011 the data is very accurate as we have been keeping track of our finances in detail. The result looks a follows:

Historical Income Asset Allocation

2006-2016 Income Asset Allocation

Income Asset Allocation History

We were able to reconstruct our finances back to 2006, which is when Mr CF got his first job out of University. The first few years we earned quite a bit of money so our savings rate was high. Unfortunately we did not invest much into the stock market at that time, only Mr CF had some ETF’s. This was a financial legacy from his parents (a gift when I turned 18, the fund were to be used for school/housing/etc.).

As interest rates were pretty good at that time, we deposited most of our money in “Deposito’s”, which are savings accounts with fixed interest rates for fixed durations. We got around 3.5-4.5% per year on most of these accounts (which is amazing compared to these days).  For the period between 2006 and 2009, we did not own a house (were renting at that time to remain flexible in our living locations). The percentage of our income producing assets was therefore high, but did not really grow organically over time due to a lack of real estate of stock market exposure.

As of 2010 we sunk pretty much all our money into a McMansion (and cars/motorcycles). The drop in income producing assets is shocking to say the least! But we simply did not know any better at that time. Fortunately, we started with company pension plans and our income producing assets slowly grew again between 2010 and 2013.

The Income Asset Turn-Around Years

In 2014 we had our financial epiphany and started our turn-around. We withdraw money from out mortgage to purchase two rental properties that year. Significantly improving the amount of income producing assets.

We sold our McMansion in 2015, investing the money we got out of our house into our pension accounts (maxing our the RRSP’s), as well as unregistered investment accounts/crowdfunding. This process was slow and steady for about a year and a half. Some of the money “left” was used for the purchase of our home and associated rental properties in 2016. The resulting jump in income assets is pretty impressive! Not only in percentage, but also in return on investment which we will be looking at next.

Return on Investment – Income Assets

Due to a lack of data, we were not able to reconstruct the return on investment on income producing assets before 2014. But it is safe to say that percentages would have hovered around 2.0-4.5% for the period 2006-2010. Considering we did not have any stocks during the crisis in 2008 and 2009, we never actually “lost” any money. We therefore likely also did not see any negative returns on income producing assets either. For the period 2011-2013 they would have probably been between 4-6% considering we primarily held ETF’s within our RRSP accounts and the market was slowly recovering.

What we do know is the return on investment as of 2014 till now. Because our investment strategy is very diverse, and because of exchange rate variations (which were positive for us), the return on investment is actually rather good. Especially for 2014, when the market went up nicely and exchange rates shifted in our favour. The ROI for 2015 and 2016 is still very good due to climbing markets, but is dropping somewhat due to our real estate investments. The latter is however providing good cash-flow results, which is what we prefer.

We calculate Return on Investment on Income Assets (IA) as follows:

((Net Worth this year – Net Worth previous year) – Invested Funds ) / IA (previous year)

The results are as follows:

2014-2016 ROI Income Assets

Historical Return on Investment of Income Assets

Return on Investment – Overall

We also calculated our Return on Investment on All Assets (i.e. our Net Worth), which we did as follows:

((Net Worth this year – Net Worth previous year) – Invested Funds ) / Net Worth previous year

This is rough measure to figure out how well you have been doing with your money over time. For example, when you buy a big house, cars or go on expensive holidays. Your overall assets will decline (directly or over time) due to expenses and/or depreciation. However, if you are in an wanted area, your house may actually increase in value and add to your net worth. In our case, our home did increase in value, but this was offset by money we spend on the yard and basement development.

Return on Investment - All Assets

Our historical return on investment on our net worth

As noted prior, we purchased our house, cars and motorcycles in 2009 and 2010. This lead to a massive drop in our Return on Investment on our overall assets. However, this was not the only reason, the drop in 2009 (and the rise in 2011) were actually also significantly affected by fluctuating exchange rates.

That beign said, we are just very happy to see that since 2011 we have been doing well and our net worth is increasing steadily. This is partially caused by an bull market and partially by our FIRE revelations and decisions. We are working hard to keep the percentages as high as we can going forward.

Return on Investment – Yearly Average

Now this is the one that hurts the most. When looking at our total net earnings over the years (so income minus expenses) and compare that to our net worth at the end of 2016, you can calculate the average yearly Return on Investment (on all assets). In this case ours was……just 2.9%. We barely kept up with inflation (could be worse, we could have lost money)!

But if we now only look at the last three years (after we discovered FIRE and rearranged our finances), it’s a more respectable 8.7% yearly average. For two Duchies just winging it, that’s pretty decent. And it even included some rookie investment mistakes. We are a very happy couple 🙂

How did you do over the years, do you know your return on investment on your income assets?


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2016 Income Asset Allocations

Portfolio Allocations

This is the final 2016 overview and today we will take a bit more of a helicopter view of the portfolio. The data behind the Cheesy Index is obviously based on net worth. Our network consists of three types of assets:

  • Income producing assets (by dividend, cash flow or capital gains)
  • assets that do not produce any income (cash, our home, certain belongings)
  • Depreciating assets (i.e. our car)

If you add the value up for all these assets you get your net worth, when you then divide each category by this net worth value you get some idea how well your net worth is working for you. Ideally you want to have your income assets as high as possible, limit your non-income assets and have no depreciating assets (when possible). Our asset allocation for 2016 looked like this:

We are actually pretty pleased that we are now above 80% with our income producing assets. The ultimate goal is to have this exceed 90%, perhaps even get to 95%. For this we would have to rent our own home and find some small rental for ourselves or a very cheap property (perhaps abroad?).

Income Producing Assets

The income producing assets are obviously also able to be distributed into various sub-categories. For us these include:

  • Our real estate;
  • The dividend shares;
  • Our Index funds; and finally,
  • The various Crowdfunding loans.

Looking at the above graph you can see that we are heavy on real estate and dividend paying companies. Which we are ok with, but we are considering two options:

  • From now on adding only new capital to index funds and dividend share; or,
  • Cashing in on the Index Funds and/or some dividend share and purchase more real estate.

The first option is pretty straight forward, income from work and rentals is use to purchase more individual share and ETF’s. This would diversify our portfolio and also improve liquidity (i.e. we can get to money faster). Considering cost averaging, this could be a nice way to get to FI in the coming years.

The second option is interesting because you can use leverage of a mortgage or loan to increase your number of rentals and get relatively high yields. But this would also mean more management and some head-aches with related to issues that need fixing and/or high bills from contractors (which is not helping cash-flow). Considering we would like to be location independent at some point (with potentially periods of long-term stays abroad), real estate is doable, but dividend shares and ETF’s are definitely preferred options for us.


We have not decided what to do at this time and are considering various scenarios. What are your ideas about our portfolio? Which one has got your preference from the above two options?

Oh, and crowd funding will be brought down in both scenarios, as noted here earlier. This money will be reinvested as it comes available in the next few years. Fortunately it’s only a minor portion of the portfolio.

How is your portfolio allocated? Are you happy with it?

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The Cheesy Index took a hit in July, just as expected. The main reason is the costs for the closing of the home purchase. This caused the total cost of the house to become more than the assessed value of the property. No surprise here. And, as shown in the post on the July Saving Rates, we had several expenses in July that affected the Cheesy Index as well (as in, we did not add as much to the portfolio as we normally do in a month).

The Cheesy Index up to July 2016 is as follows (still a solid 47% complete):

201607 CI

A bit more detail on how our assets have developed over time in 2016 can be seen in the two graphs below. The first one provides the distribution of the income, non-income and depreciated assets. The first category includes all real estate, stocks, index funds and loans. The non-income assets include the house (the portion we are living in), cash and some valuable personal possessions (art/jukebox). The depreciating asset is our car. Side note, the asset allocation does not include debt or debt corrections (i.e. the mortgage).

There is clearly an uptick in non-income assets in July, but this can be explained by the fact that we now own a house again, which obviously currently does not generate any cashflow (its an expense so to say). However, if we were to move, we would rent it out and make it into an income asset (it’s a non-activated income asset).

2016-08 Asset Allocation

In the second graph provided below, you can see the more detailed distribution of the above income asset columns above. Again, you see an uptick in real estate, which is because we added 3 rentable units to our portfolio. As a result the percentage of the other groups fell, despite small additions to some of these group (dividend stocks, crown funding and index funds) in July.

2016-08 Income Asset Allocation

How is your FI number doing, and your portfolio? Let us know!

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Now that 2015 is definitely history, it was time to assess and visualize the data behind the Cheesy Index. As Mr. CF loves spreadsheets, this fortunately was not a monumental task 🙂

The total foundation on which the Cheesy Index is based consists of three asset groups:

  • Income generating assets (our stocks, Index funds, real estate, crowdfunding loans, etc.)
  • Non-income generating assets (e.g. cash, art, etc.)
  • Depreciating assets (i.e. our car)

In percentage this looks as follows:

2015 Asset Allocation

The reason for the increase in non-income producing assets in December is because we sold some shares that were up to potentially fund another real estate transaction. Unfortunately, this fall through on new year’s eve. So, we now have more cash to pour into a volatile stock market, great!

If you breakdown the income producing assets, you will find the following:

2015 Income Asset Allocation

Our target for the various groups can be found here, so we still have some work to do!

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Below is an overview of our dividend stock portion of our wealth portfolio.  It has been a good month for dividends (i.e. another increase).

Below you can find a quick overview of the total monthly dividend payouts for 2015:

20160101 Monthly Dividend

Here is an overview of our dividend stocks:

20151231 Dividend Overview

If you group the above dividend stocks by sector, the distribution of our portfolio is as follows (based on market value at close of markets on December 31, 2015):

20151231 Dividend Stock by Sector

Major updates include the selling of VOPAK and ABN Amro, as we needed to make sure we had sufficient cash on had for a pending real estate transaction, which unfortunatly fall through. However, now we can reinvest into another couple of stocks that fit better within the portfolio. The good thing is that we did make some good capital gains on both stocks!.

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Below is an overview of our dividend stock portion of our wealth portfolio.  It has been a good month for dividends (i.e. another increase), but there are also some concerns with the portfolio regarding certain stocks (albeit not completely unexpected, it still is worrisome).

Below you can find a quick overview of this month’s total dividend payout:

20151201 Monthly Dividend

Here is an overview of our dividend stocks:

20151130 Dividend Overview

If you group the above dividend stocks by sector, the distribution of our portfolio is as follows (based on market value at close of markets on November 30, 2015):

20151130 Dividend Stock by Sector

As you can see in the dividend overview there are several stocks that have not done so well since purchase (understatement…). One is of them is NewAlta Corporation, an engineering and environmental firm working in the oil and gas industries, another example is Liquor Stores N.A. Ltd.

When we bought the shares, they were off their peaks by about 50-70%, so a few months back we thought that this was a good time to buy (and they seemed a nice addition to a balanced portfolio). Turns out we were too fast in purchasing these stocks at they have now plummeted even further, primarily as a result to the continuing drop in oil prices and negative sentiment in their main market area (read Canada’s oil province Alberta).

These stocks were fairly high dividend payers to begin with, but are now either reducing their dividend or considering it (still good yields though!). As oil prices are cyclical, and assuming the companies are strong enough to survive low oil prices for a while (both have been around for 20-25 years), the stock price and dividends should rebound in the future.

We try to keep a long term outlook here, selling now would just be a kneejerk reaction and would most likely do more harm than good. But as you can imagine, it does not feel good and scares the hell out of us.

Too bad this article came too late….. (still, we should have known better)

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This should be the first post in (hopefully) a long (or short?) series of updates on our way to financial independence. As noted here, we had some difficulties deciding which assets we would use to become financially independent. We saw upsides and downsides in all types of assets, so we decided to try them all.

This post series will be solely dedicated to our dividend stocks and will cover dividend income, purchase of dividend stocks and ultimately year over year increases.

So without further ado, please find below an overview of our dividend stocks:

20151120 Dividend Overview

The experienced readers among you will note that these stocks are primarily traded within only two countries (and the USA is not one of them), this is not a coincidence and has to do with limitations as a results of retirement accounts and avoiding double taxation. We are already, and will be in increased capacity, exposed to American stocks via the Meesman Worldwide Stocks ETF, so we ok with not directly owning US dividend stocks (note, this may change in the future, but with the declining value of the Euro vs. the mighty greenback, this probably won’t happen in the near future).

If you group the above dividend stocks by sector, the distribution of our portfolio is as follows (based on market value as of November 20, 2015 at 10:00 Amsterdam time):

20151119 Dividend Stock by Sector

As you can see in the above figure, not all industries are represented. Two major industries not included are IT and healthcare. This was not done on purpose but a result of available stocks and research done to date. Over time we may add stocks from these sectors to our portfolio, and we will likely also try to re-balance the distribution to avoid being too heavy on energy stocks (energy stocks are a double edged sword, as they can be both lucrative and volatile).

Since inception of the dividend stock portfolio in July 2015, this is what our dividend income has been so far:

20151101 Monthly Dividend

We had the opportunity to drastically change our portfolio by mandatorily selling ETF’s as a result of changing retirement accounts and receiving a significant sum of money as a result of our home sale. As a result we have a considerable cash pile to re-invest in dividend stocks. Our month over month dividend growth will therefore be rather large initially, but this will taper off in the next year once the majority of the cash pile has been invested. For all beginning dividend investors reading this post, please don’t compare our growth with yours as it would be an apple to pear comparison!

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We at CF like to have a well diversified portfolio to limit our risks, but still generate a decent return on investment. We are generally risk averse and therefore do our research before investing in any asset. However, having learned to look at the longer term, we have incorporated some higher risk/reward assets to our portfolio over the last year.

Investment Portfolio

Investment Portfolio

Investment Portfolio

Our current portfolio consists of the following assets:

  • Real estate (we own and operate a real estate firm, which owns several properties);
  • ETF’s (we have recently started to invest in Meesman “index funds”, and still have several ETF’s in another investment account);
  • Stocks (we prefer dividend stocks, but will occasionally buy stocks purely for their growth potential and not their dividend); and,
  • Crowd Funding loans (we have done several investments via Geldvoorelkaar, a Dutch crowd funding platform).

Due to various reasons our portfolio currently has a high percentage of cash and is not well balanced. As we stand today (Sep. 2015) we have approximately the following split:

  • Real estate (50%);
  • ETF’s (5%);
  • Stocks (15%);
  • Crowd funding (1.5%); and,
  • Cash (28.5%).

The Investment Portfolio Goal

The large cash reserve will be brought back to around 1-2% within the coming months and used to increase both ETF and Stock portfolios (yes, we are very much enjoying the market correction at the moment).

Our portfolio goal, after re-balancing in the coming year(s), is anticipated as follows (+/- 5% on the main three asset classes):

  • Real estate (35%);
  • ETF’s (30%);
  • Stocks (30%);
  • Crowd funding (4%); and,
  • Cash (1%).

The focus of our portfolio is to provide a relatively stable cash flow (from rental income and dividend) while also making capital gains to sustain our expenses during financial independence. It’s not perfect but we feel comfortable with this arrangement.

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