Last time I shared with you a story from my new book Pathfinders from a reader in Ukraine, Roman Koshovskyi, titled Staying the Course in War-Time.
Today we hear from Artem Voronov, a reader in central Russia, on what staying the course looks like when your country has become a global outcast .
Last May, when I announced I had inked a deal with Harriman House to publish my new book, Pathfinders, I invited those of you who had embraced The Simple Path to Wealth to share your stories.
The response was amazing and, unfortunately, there were simply too many to include them all.
Those that we have included comprise a wonderful collection of stories from all over the world, from people of all ages, background and walks of life. Each at a different point and with a different take on the path.
As you’ll see should you decide to read the book, they are organized into nine different sections. To give you a flavor of these stories I want to share these two from Russia and Ukraine with you.
Both come from the section titled Staying the Course.
Pulling two from the same section is probably not the best marketing strategy, but I chose these as they are quite literally ripped from today’s headlines: The war in Ukraine.
Hopefully, as we enter this New Year we are looking at the year that will bring peace to that part of the world.
Now, here’s Artem…
When Your Country Becomes a Global Outcast
Naberezhnye Chelny, Tatarstan, Russia
I live in the center of Russia with my wife and nine-year-old daughter. When I was in elementary school in 1991 the Soviet Union, where I was born, broke up into several countries. In the decade that followed, my new country, Russia, went through a painful transition to a market economy and integration into the world community.
Democratic momentum and political reforms, as well as the first economic collapse in my memory in 1998, eventually led to an unprecedented economic recovery in all sectors. International companies opened local industries, wages rose, ordinary people could afford to buy previously inaccessible commodities, a new car and more comfortable housing. During this golden era, I graduated from university and began my professional career in the automotive industry.
Although my income never grew as quickly as when I started out, my spendings were always less than my income. I remembered the example of my parents, whose bank accounts were devalued by hyperinflation after the collapse of the USSR; all subsequent financial opportunities passed them by. Today they live on a social pension and are completely dependent on the state. Compared to them, in my old age, I always wanted to have wider choices: the opportunity to move to a warmer climate with F-You Money, for instance. $250,000–$350,000 would be enough for me. I began to think about ways to invest my savings.
At the beginning, I had no clear plans and continued to spend a little more than I should have, and save a little less than I could. I have long been acquainted with the stock market, and tried active trading and investing in individual stocks. Without a strategy, I was afraid to invest a large amount, so I did not achieve any results—except to waste my time.
Meanwhile, the government of my country has taken a number of adventurous geopolitical steps, accompanied by a continuous depreciation of my income from increased inflation and a falling national currency. The more my lifestyle deteriorated, the more active the propaganda. I saw how dissenting mouths are shut up, and democratic institutions are methodically dismantled. In such an environment, it became obvious that investing requires global diversification into assets supported by economic freedom and property rights. My current life in Russia was still comfortable, I loved my homeland, but my view of the future became rather gloomy. Sooner or later I expected a failure of economic policy. I could not imagine the reality of the military catastrophe before that.
Around 2014, I came across JL’s Simple Path. That’s how I became an index investor. Whenever I tried to be smarter, I got worse results. Possibly my biggest mistake was taking lightly the recommendation to invest in Vanguard funds—instead, I opted for the UCITS ETF on the broad US stock market, domiciled in Ireland and available for purchase through a Russian broker.
My choice to invest through the Russian stock market was justified, among other things, by tax benefits for Russian residents, as well as by the fact that a significant amount is needed to open an account with a foreign broker. We also have investment accounts like IRAs with a tax deduction on deposits and the ability to sell stocks tax-free after three years. As long as the tax benefits exceeded my fund’s fees (TER=0.9%), I planned to accumulate about $150,000 in it over several years, and then transfer these funds to a foreign broker and buy a low-cost Vanguard index fund.
But this was not destined to happen.
The outbreak of armed conflict between Russia and Ukraine was unexpected by most people, myself included. The severe international backlash that followed led to a halt in communications between stock markets and the continued disruption of economic interconnections. This caused processes that neither I nor the FI community could have imagined. Hopefully humanity will pass these times with as few casualties as possible, lessons will be learned, and the perpetrators will be punished.
At the moment, the trading of my ETF from Russia is completely frozen, as is the access of foreign investors to Russian stocks. True cross-border risk has materialized for me. Can I get my capital back one day? I hope so. Meanwhile I have to leave my $47,000 portfolio alone—almost all of my personal savings. Currently my asset allocation is nearly in line with Warren Buffett’s famous recommendation of 90% S&P 500 and 10% US government bonds. Who knows, maybe after retirement, my daughter or I will regain access to assets worth millions. Certainly this will not happen until the authoritarian government of my country changes.
It was probably a mistake to strictly follow the rule of not panicking or selling. It works well to overcome psychological handicaps during financial panics—it helped me stay on course during the Covid sell-off in March 2020. But it kept me from being able to maintain control of my capital before the bridges were raised.
After such a blow, it took time to pull myself together. But now I have started collecting emergency funds again and gradually investing in the remaining available index tools.
Today, foreign brands are closing production and leaving my country at an accelerated pace. Output in the automotive industry has collapsed by 80%. I still have a job, and my wife has her own small business, we live in our own house and we have no debts.
I have no doubt about humanity’s ability to cope and thrive, and that markets will recover. During the last 15 years I feel I have already experienced every threat possible: financial crises, climate disasters, pandemics, even war. I probably won’t raise an eyebrow when aliens arrive. The world is still out there, and the S&P 500 is higher than it was when I started out.
I am anxious about the future of my country and do not want my daughter to grow up with a sick ideology, isolated from the rest of the world without prospects of a decent standard of living. Recently, I have been thinking more and more about emigration, although I am still indecisive—today a Russian passport is unwelcome almost everywhere.
I keep walking, and I understand better that JL’s Simple Path to Wealth needs both the strong legs of the pathfinder and strong tarmac underfoot if you are to succeed.
I still hope the best lies ahead, and I believe I have time to see it one day.
Pathfinders is now available for preorder in hardcover and eBook all around the world. Pre-ordering a book is one of the biggest ways you can help support it, and I hope you’ll consider preordering Pathfinders. These are important stories from around the world that deserve to be heard and that can help those who hear them.
Bookshops monitor pre-orders closely, and good levels get them excited – and more likely to order and promote a title. It also guarantees you will get your copy at launch. The book will be available at your favourite online retailers and you can order it at any bookstore (including your favorite local independent). Here are some links to help:
Release date is Tuesday 31 October 2022.
Thanks for your support!