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I am retired and live off my portfolio income and real estate rental income. I follow a simple investment strategy: (1) spend less than I earn; (2) use the savings to add more dividend paying stocks and rental properties to my portfolio. By doing this for many years, I've been able to grow my... More
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  • Basic Street Finance For Expat Retirees.

    (click to enlarge)Lisbon

    I am a long, long way from suburban Washington, DC. My family and I moved to Barrio Alto, in Lisbon, just a few days ago. We've traded in our multi-bedroom, multi-bathroom house for a two bedroom, one bathroom space in a renovated convent. Here's the street we live on.

    My first major concern in moving here was practical: our apartment in Lisbon has no air conditioning. Coming from a blazing hot, humid, sticky Washington, DC summer, the idea of not having air conditioning is, well, it is implausible. My concern, however, has now been dispelled. The weather in Lisbon this time of year is breezy and cool, with the exception of a few hours in the middle of the day. It will be hot under the sun during the mid afternoon, but comfortable in the shade. Our apartment has stone walls that are over one meter thick, which acts as perfect natural air conditioning.

    My second major concern is space. We are used to spreading out in our house in DC, and there is more than enough privacy for our small family of three. We ultimately decided that we don't actually require the amount of space we have in our DC house. Our goal is to get by with less of everything. Less furniture. Fewer pairs of shoes. Our aim is to become far more streamlined, but there is a long way between setting a goal, and actually enjoying that goal.

    My third major concern is purely financial. My wife and I don't work, and our visa in Portugal prevents us from obtaining employment in Portugal. What that means is that while we cannot work for a paycheck, we can most certainly work for ourselves. That's something I very much plan to do. I will be looking at old buildings to restore and then rent out, once I have learned enough Portuguese to get by and once all of my wife, my son and I have decided that this is a country where we want to stay for more than just a year. We have a bit of financial breathing room because our portfolio consists almost entirely of dividend paying companies, most of which have at least a twenty year track record of paying consistently growing dividends. We have also rented out our house in Washington DC, and the combined income streams are roughly twice what I expect our monthly expenses will be.

    Lisbon is very reasonably priced compared to Washington, DC. Maintenance charges and property taxes on our apartment (which includes a 24 hour doorman, and groundskeepers for an extensive garden) is only $200 a month. Our water bill is $17 a month. Phones and internet come to $90 a month (that's for three phones with almost unlimited minutes for voice, and for unlimited internet access at home). I just did an extensive food shopping, enough for one person to last two weeks, I'd say, with plenty of fresh seafood, cured meats, wine, cheese, and also including all the basics for maintaining and cleaning a home. That came to $75. Our son's private school is $3,000 a trimester (each being slightly over 3 months). That includes a meal plan and school uniforms and supplies.

    I have learned a few practical financial lessons, though. First, do not even bother carrying anything over a 20 Euro note. Some places will not even accept larger notes (such as 50s or 100s). Also make sure to carry plenty of smaller notes or Euro coins. Taxi's are cheap (you can traverse downtown Lisbon for about 5 to 7 Euros), but drivers don't enjoy making change, and if you hand them a 10 or 20 Euro note, they will stare at you with an expectant, hopeful look as they tell you that they don't have any change. Another practical lesson - if you move here and are looking to set up phone service, or indeed, any sort of service (bank cards, you name it) make sure to bring your fiscal ID number everywhere with you. Also bring your passport and some sort of proof of your address (such as a water bill).

    The best financial lesson I have learned is to eat at home from time to time. I went shopping at a local mercado, and bought cheese, wine, fresh mellon, some bata negro (dried cured ham), bread and home made butter, and made myself a spread. This comes to a about 3 Euros (including the wine). Our apartment is not huge, but we do have an enormous private garden here at the convent. You can sit under one of the verandas, watch the sun go down, and eat like royalty to the sounds of birds and wind blowing in the trees. Eating dinner outside is a great way to put aside some of the day's lessons (none of which was too hard to begin with).

    (click to enlarge)Picnic

    Aug 03 2:52 PM | Link | 6 Comments
  • Retiring Abroad

    I am 45 years old. I retired several years ago after spending close to 16 years practicing law in a variety of different law firms. When the last firm I worked at dissolved, I decided to work full-time managing my portfolio. It's a form of self-employment which I enjoy tremendously. My wife is 45 years old. She has had many jobs - English teacher, Japanese translator, financial writer, brand manager, and registered nurse. We have ten year old son. In three days, we will move out of our house in the Washington DC area and land in what will become our new home: Lisbon, Portugal. We are not Portuguese. We have no friends or family in Portugal. We don't have jobs in Portugal. We are leaving the familiarity and comfort of our current lives to live in completely unfamiliar circumstances. Why?

    The reason why is because we are comfortable and familiar with our current lives, and because Portugal is, for us, new and unknown. But this isn't the first time that we've packed up and left the country. The first time was shortly after September 11th, 2001. We were living in lower Manhattan at the time, and decided to quit our jobs, sell our apartment and move to Puerto Rico to try and make a new life for ourselves there. We made more than enough off the sale of our apartment to live very comfortably, in a tremendous upstairs rental apartment with atriums and vines growing down the walls. Wild birds nested in the crystal chandeliers! It was magical, waking up in the morning, listening to the little yellow birds chirping away as we started our coffee machine and went from room to room opening the thick wooden shutters on the windows.

    We weren't the only ones who noticed the birds, though. So too did the stray cats that would enter our apartment at night from the upstairs roof deck, who would creep through the iron bars at the gate, and maraud around the apartment while we slept. In time, they sprayed the couch. They graduated eventually to leaving droppings. The birds flew away, or course, and I would sometimes marvel at the fact that only months before, I had devoted most of my mental capacity to structuring international trust structures for private family businesses worth billions of dollars. In Puerto Rico, I devoted my mental energies to stringing up chicken wire to keep wild stray cats from using our apartment as a vast litter box. If humans are defined by the problems they solve, I can say beyond question that living in Puerto Rico changed me.

    We lived there for many months until one day, very suddenly, I had an urge to do something meaningful with my life. I wanted to work. I MISSED going into an office, making decisions, making things happen. I started looking for jobs in Puerto Rico, asking around at law firms. In New York City with a resume like mine, I could have (and generally did have) any job I wanted. I figured Puerto Rico would be a cake walk by comparison. I learned otherwise. I started looking at the employment section of the San Juan Star - looking at opportunities to work as a bartender rather than a highly paid corporate tax attorney. Somehow, making that switch didn't appeal to me. Eventually threw in the towel and went back to New York. Where I got an exceptional job at a great law firm where I thrived for many years.

    Some years later, our son was born and we moved to Paris, France. We'd always dreamed of living there, and a friend of ours had an apartment there he needed to rent, so we took it. My wife speaks French fairly fluently, and even knew a few people from business school who were based out of Paris.

    We didn't live long in Paris, though. For one thing, we were there without visas, living semi-surreptitiously and completely unofficially. This meant there would be absolutely no future for our infant child in Paris, not until we went legit. That, we saw, would prove difficult. Prices for apartments in Paris were high, I saw no potential for work, and both my wife and I started to have a profound craving for a settled life where we could send down roots. That's when we moved to the Washington DC area, where we have lived for the past nine years.

    But with Portugal, it's different this time. Unlike our time in Paris, we've planned our move to Portugal 100% by the books. We have visas, and local attorneys to assist us with our residency permits and tax filings. Our son is older now, and the nesting instinct you see with new parents isn't as strong with us as it used to be. Besides, we already have a nest in Lisbon: we bought a small apartment there several months ago. In Paris, by contrast, we had an off-the-books, month to month sublet with no written agreements with anyone that we wouldn't get tossed out on our ears at any moment. Unlike our time in Puerto Rico, I don't want to look for a job in Portugal. I feel like I am bringing a great job with me. have one. I'll be spending time managing our investments (which is to say, reading shareholder reports and making exactly one investment per month), and finding new opportunities to buy run-down apartments in Lisbon that I can renovate and then rent out. All in all, the chance to live in Portugal seems like it could have more lasting power than our other two excursions off the beaten track.

    We are only able to make this move because we have sufficient financial means to do so. But we aren't fabulously rich, either. We own a portfolio of REITs, MLPs, dividend growth stocks and dividend-oriented ETFs, which churn out a fairly reliable stream of passive income that's larger than our average spending. We have also been able to rent out our house in the DC area, which boosted our net income by over 11% this year. The approach we used to purchase our apartment in Lisbon was to do a cash-out refi of our DC house, and to apply the cash towards the purchase of the Lisbon apartment. The real estate in Portugal is cheap enough that we could basically use one mortgage to carry two properties. By the same token, rents in DC are high enough that our rental can cover the mortgage on both properties, with a little something left over each month. In effect, it's like using someone else's money to hold two properties, and having a third party pay back the loans for you. Finally, the cost of living is far lower than the cost of living in DC. There should be more than enough income left over each month for me to stay busy finding new opportunities.

    On an unrelated note, the end of the month is approaching, which means I will be paying our bills and turning around to invest our savings. This month, I plan to purchase additional shares of Chevron. The stock is down explosively, and shows no sign of recovering any time soon. The stock seems mired in negative sentiment. The PE ratio dipped into the single digits today. It's true that earnings might be lower in the future due to the falling price of oil, but I am looking at the PE ratio using an average of the last ten years' worth of earnings - which smoothes out the temporary earnings spikes and collapses. The dividend yield is enormous now - about 5%, and the payment history is still very solid (although the company failed to raise it's last dividend, breaking it's long string of annual increases). I have no clue what will or will not happen with Chevron's earnings this year, or even over the next five years. I'm fairly confident that the business will eventually turn around, and equally confident that Mr. Market won't wait around patiently for that to happen. I can be far more patient than Mr. Market, though, thanks in no small part to Chevron's generous dividend. Of course it is possible the diviend could be cut at some point, but it's high enough now that even a 50% reduction in the dividend would still leave Chevron stock paying a yield that is quite a bit higher than the S&P500. I will place the trade next week, and then won't look at the market or any of my investments (unless I get a shareholder communication or see an interesting research report) again until the end of next month. By then, I'll either be looking for more stocks to buy, or starting to save up to buy another (much smaller) apartment in Lisbon that I can rennovate.

    Jul 24 5:15 PM | Link | 2 Comments
  • Another Phone Scam

    What is it this time? I find myself asking that with increasing regularity whenever I check my voicemail on my home phone number. I sometimes wonder why I even bother - none of my friends or family calls me on that number. It's mostly solicitations for various charitable causes and, increasingly, more nefarious calls.

    The latest was a stern-sounding, ominous voice from someone who identifies himself as "Richard", calling to notify me of "Important Legal Action Against You That Requires Your Immediate Attention." "Richard" goes on to explain that there will be two, and only two, attempts to deliver "A Formal Legal Complaint" to my home or place of business (I have to giggle at that one), and that I must be prepared present two valid forms of government identification. He then leaves a phone number I can call, although interestingly, the voice message does not explain why I would want to, or even should, call that number.

    This doesn't prevent me, though, from doing a reverse phone number search, pulling the address associated with the phone number, and then doing a Google map search of that address so I can take a street level view of the address in question. This one seems to be a nondescript row house somewhere in a residential section of Philadelphia.

    I practiced law for almost 20 years, and have no idea what a "Formal Legal Complaint" is. I know what a subpoena is, and I know what a notice of a claim is. And I'm rather familiar with how service of process unfolds in civil litigation. Here's a hint - my process servers never call in advance. But a "Formal Legal Complaint." Hmmm, I'm stumped. Sounds rather serious, though. Sounds like I should maybe call that phone number and start divulging my personal information over the phone to "Richard" so I can find out what the nature of this spooky sounding, very official sounding, "Formal Legal Complaint" might be. Maybe give some bank account information too, effectuate a wire transfer perhaps, in order to forestall the dreaded "Formal Legal Complaint."

    Well, I'm not going to. I do what I always do when I get scam e-mails and now, increasingly, scam phone calls. I hit the delete button. What bothers me, however, is the realization that there are many elderly folks, or people who are less familiar with the legal system, who might really get scared by these phone calls and end up falling for the scam, sharing all manner of personal information with crooks and even potentially sending money. It's something to be on the lookout for - especially if you know or care for people who could be vulnerable in some way, shape or form, to these sorts of scams.

    Jul 20 7:27 PM | Link | Comment!
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