At Niteo, we like to be anti-fragile so that we can focus on the long term. We want to be able to survive an economic crisis or our projects suddenly spiraling out. For this reason, we keep monetary reserves to cover nine months of average expenses.
To not lose this considerable chunk of money to inflation, we invest it into appreciating assets.
Reserves in safe and liquid assets. We try to keep the currency equally split between EUR and USD to not have all our eggs in one basket. Minimum 30% of all reserves should be in this pool so that we have cash on hand if we need to act quick.
Assets:
- cash on bank accounts (minimum 15% of total, default reserve)
- bonds (15% of total) with Vanguard BNDW (World-wide investment-grade bonds, in USD)
Reserves in more risky or illiquid assets. The currency split is irrelevant because most of these assets are global investments. Up to 70% of all reserves can be in this pool. Most of these should be ETFs, as they are less illiquid than others1.
- stock ETFs (max 40% of total) with Vanguard VWRA (global stocks, in USD)
- private funds (max 20% of total) with Calm Company Fund, Ben Tossel's No-Code Fund, etc.
- real estate (max 20% of total) with Niteo House (EUR)
- loans (max 10% of total)
- FOMO (max 5%) -> crypto stuff, individual stocks
Keep in mind the above percentages are maximum for each asset class and are not supposed to be all maxed out (that's why the total comes out to 110%). For example: if we have maxed out real estate, stock ETFs and private funds, we're already over the recommended maximum for long-term pool, and need to refrain from buying more crypto.
Refer to Scrooge to see the current state of reserves.
Footnotes
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About ETF liquidity: Generally, we consider ETFs illiquid, as they shouldn't be traded often -- market timing does not work. We must, under no circumstances, sell ETFs "when markets are bad", or just generally, at a loss. The only permitted time to sell ETFs is when we have a clear investment to make in our projects, with a good idea about ROI. For example, we have a solid marketing funnel that brings 150% ROI. We need cash to shovel money into the funnel. We can sell equity in the project, we can take credit, or we can sell some ETFs (but only at a profit!) instead. ↩