The importance of F-You money, part 2: How to invest?

[Updated in February 2019.]

When it comes to F-You money, investing and early retirement, I find the philosophical part of it the most fun. It has greatly influenced my personal philosophy, which is apparent in the two most read posts of this blog: one about non-material value and another about thriving during hard times.

Part 1 of this post was also mostly about philosophical advice. Unfortunately, you can’t eat philosophy and eventually you need to invest. I found many investing articles incomplete and books too long, so I’ve written my own tutorial. Also, most of the published advice is written for Americans who usually have better offerings and simpler choices, but this post is aimed at Europeans.

I assume basic knowledge of terminology, so you should know what bonds, stocks, ETFs, TER, small-cap, real returns and others are. If not, reading the first ~10 parts of Jim Collins’ stock series and additional googling on Investopedia should help.

The short version

People usually invest their money via a bank or a retirement fund. They loan the money to someone or buy stocks. Bonds (=loans) have real yearly returns of 0 to 4% and stocks of 6 to 8%. All of these are average returns over the long term adjusted for inflation. Both banks and retirement funds typically charge 1–2% yearly, so your yearly profit is greatly reduced, for example you might get 4.5% instead of 6% each year. Lately, it has become very cheap to circumvent the middlemen via funds traded on stock exchange (ETFs).

You don’t have to have a super-high salary to invest this way. Here’s a simple rule of thumb: calculate 1% of the money you typically save every 3 months and check if it’s higher than broker fees for a single transaction (more on brokers later). With a low-cost broker like CapTrader, saving at least 400 € every 3 months fulfills the criterion.

There are 5 steps to a simple investing plan, especially suited for a beginner.

1. Get an account with a broker trading on the German Xetra exchange. CapTrader is a low-cost broker available in many European countries. Slovaks and Czechs can also use Lynx, which is based on the same platform and 20% more expensive, but they have phone support that speaks Czech.
2. When do you need the money and what is your risk tolerance? Would you risk higher expected growth for more risk? Answers to these questions determine your bonds/stocks ratio. Betterment has some nice charts that should help you find the right ratio. Young people saving for retirement can have up to 80% of their investments in stocks. This is by far the most important step, so take your time to figure out your risk tolerance.
3. For the stock part of the portfolio, I recommend one of these 2 global ETFs:
   
   • Vanguard FTSE All-World Accumulating, accumulating, TER 0.22%.
   • SPDR MSCI ACWI IMI, accumulating, TER 0.4%. Same as above but contains small-cap too.
   Accumulating funds reinvest dividends, so you are always fully invested. They might also be more tax-efficient in some countries.
4. For a portfolio with more than 60% of stocks (i.e. higher risk), choose one of:
   • iShares Core Global Aggregate Bond EUR Hedged, accumulating, TER 0.1%
   • iShares Core Global Aggregate Bond GBP Hedged, accumulating, TER 0.1%
   • SPDR Bloomberg Barclays Global Aggregate Bond CHF Hedged, accumulating, TER 0.1%
   These follow the same index and have the same TER, but are hedged in different currencies. Choose the currency that you want to spend your investments in. If you aren’t sure about the country you’ll settle in, you can pick a mix.
   Broad bond indexes are typically biased towards long-term bonds, which have better yields but also higher risk. In a low-risk portfolio (less than 60% stock allocation), you can open a savings account in a bank or search for ETFs with lower risk—short-term government bonds have the lowest risk. Also check out Betterment’s allocation for low-risk portfolios here and here. Bear in mind that you should bias towards Europe instead of USA.
5. Invest every time you saved enough money that the broker fees are less than 1% of your saved amount. Then, once a year, rebalance your portfolio. For example, if stocks over-performed bonds, sell some stocks and buy bonds to get back to your bonds/stocks ratio. This reduces volatility.

You can get more fancy and use more ETFs but for a beginner this is more than enough. It puts you ahead of 99% of other people who pay 1–2% in yearly fees instead of 0.1–0.4% for the ETFs above. The small difference in fees makes a huge difference in the long run thanks to exponential growth.

The long version

Read on if you’re fine with a more complex portfolio or want to know why I made the suggestions above.

US estate and gift tax

[Update February 2019: Investing via US ETFs is now very hard for Europeans, so this is no longer relevant.]

If you own US stocks, funds or real estate, you are subject to US estate and gift tax. They apply when you give your assets to someone or they inherit your wealth after your death. The tax is 40% and only applies to wealth above $60,000. Since the European offerings are pretty good and they will get even better, I see little reason to invest using US ETFs. An advantage of European offerings are accumulating ETFs, which are forbidden in the US.

If you still want to use US securities, check out a tax guide by Credit Suisse. Also note that some countries have estate and gift tax treaties with the US, so the rules might be different for you (usually more favorable).

Stock investing

My thesis is that the stock part of a portfolio should be based on market capitalization indexes, containing thousands of stocks in multiple countries ranging from small- to large-cap.

Capitalization-weighted indexes

Stocks for the Long Run lists a lot of strategies that can beat the market, including the January effect. For small-cap stocks, you could have beaten the market by buying in December and selling in late January. The book mentions that the strategy still worked during the 1990s but stopped working since 1994, which is coincidentally the year the book was published. When a simple strategy becomes well-known, people start exploiting it and it soon stops being profitable.

The book also mentions high dividend yield and low P/E ratio as investing strategies that beat the market for decades. Random check showed that high-dividend yield strategy also seems to have stopped working in the last 3 to 5 years. The value premium is still there but there is a big academic debate whether that’s due to higher risk or not.

There are plenty of incorrectly priced instruments at this moment. However, you won’t take advantage of them with a strategy that is easily accessible to a layperson or implemented by tens of publicly accessible funds. Someone else with more money or resources has already beat you to it. I’m only using market capitalization indexes, because then my strategy is the average of all strategies. Yes, I’m only getting the average return, but the average is still very high.

I’ve read a few investment books and investment articles but most of them are intellectually dishonest. They spend 300 pages convincing you to not try beating the market and in the end they allocate exactly 5% to emerging markets (EM), when the global market allocates about 10% in EM right now (using MSCI’s definition of emerging markets). They don’t explain why 5% is better than 8.647% or any other arbitrary number. In fact, printing the percentage in a book is a mistake in my opinion, since it should be a moving target.

There are valid reasons for not investing exactly 10% in EM, for example because historically they have shown greater risk and higher volatility, which was rewarded with extra 1–2% yield. If you don’t want to take the risk, allocate less than 10%; if you like risk, allocate more. Betterment is the only place where they do it right in my opinion. It’s an American investment company (robo-advisor), but their ETF portfolios for various risk levels are completely public and you are free to take inspiration.

The 15/30-stock diversification myth

A Random Walk Down Wall Street, probably the most famous investing book, claims that you can achieve great diversification by only picking 15 random US stocks. Interestingly, Burton Malkiel is a coauthor of a paper claiming that this number is much higher now than 40 years ago, but he still hasn’t changed the text of the book in the newer editions (I might be misunderstanding something in the paper too). To be properly diversified, you need to own hundreds or thousands of stocks.

My stock portfolio

My own stock portfolio contains 3 ETFs that span 46 countries from small- to large-cap and contain about 5000 stocks in total. These ETFs roughly correspond to the MSCI ACWI IMI index that covers about 99% of the global investable market.

• iShares Core MSCI World, accumulating, TER 0.2%.
• iShares Core MSCI Emerging Markets IMI, accumulating, TER 0.18%.
• iShares MSCI World Small Cap, accumulating, TER 0.35%.

I own them in proportions determined by their global market capitalizations with a slight bias towards more risky emerging markets, so small-cap corresponds to 15% of the developed world and emerging markets to 13% of the whole world. The combined expense ratio is about 0.22%. Note that iShares funds participate in security lending, which offset the expenses by 0.04% for the EM fund in 2015.

Bond investing

While a lot of the stock investing advice applies to bonds (e.g. diversification), in addition there is a significant currency risk and bonds are more complex with parameters like credit risk and maturity. I understand bond investing less well and it seems the experts are equally confused. My thesis is that I should own multiple currencies, mostly long-term government bonds. Some home bias is fine, especially for low-risk portfolios. Also, currency hedging pays off for bonds.

Long-term bonds are more risky but also have higher yields in the long term, so they are fine in a high-risk portfolio. I see little reason to own many corporate bonds when I have a lot of stocks, since these two are correlated.

I own iShares Core Global Aggregate Bond EUR Hedged (accumulating, TER 0.1%), which is one of the bond funds recommended above in the simple portfolio. It's one of the cheapest bond funds on the market and it's hedged. There's little to be gained by mixing more funds.

If you want to know more about bonds, Betterment has informative articles with visualizations, for example here, here and here. As for books, in addition to Random Walk and Stocks for the Long Run, I highly recommed Rick Ferri’s All About Asset Allocation.

REITs (real estate)

I own SPDR Dow Jones Global Real Estate UCITS ETF (distributing, TER 0.4%), which is a global real estate fund. Unfortunately, the fees for REITs are still fairly high in Europe, so I only allocate a few percent of my whole portfolio to real estate.

No cash

Traditional advice tells you to keep 5 to 10% of your portfolio in cash, but I don’t do that. When you do the math, it’s not worth it. I’ve instead bumped the bond allocation percentage and I only keep twice my monthly spending available.

Choosing ETFs

If you want to search for other ETFs than the ones listed in this post, I recommend using justETF which contains all ETFs traded in Europe. You can limit your search by many criteria, including:

• Distributing versus accumulating: Accumulating ETFs immediately reinvest dividends, so you are always fully invested and your transaction costs are lower. They might also be more tax-efficient.
• Tracking error: Total expense ratio (TER) causes an ETFs to perform worse than the underlying index, but there are other factors at play too. I’ve already mentioned security lending and another one is replication method. Many ETFs don’t own the full index but only a subset of it, which introduces an error that can go either way. There are also synthetic ETFs that don’t actually own the underlying securities and do some magic instead, which also introduces tracking error.
• Replication method: I only use full-replication or sampling ETFs, because I don’t understand synthetic ETFs. Full-replication and sampling ETFs own the securities from the underlying index.
• Domicile: The most tax-efficient ETFs are domiciled in Ireland or Luxembourg.
• Cost of buying: Some ETFs are only available on exchanges with higher broker fees or in a currency that you don’t earn. They might also have a high bid-ask spread. All these make buying more expensive. However, since these are one-time costs, I don’t think they are very important. Recurrent fees are much more important.

How to be happy and build socialism (for real this time)

Recently a couple of friends started a mail discussion on where to live. Some people like to choose places with interesting work opportunities but I think that approach maximizes the wrong thing. I think that happiness should be the ultimate factor. When it comes to happiness the more important question is how to live instead of where to live.

So how should you live? I think science, namely psychology, can now offer an excellent answer. In the last couple of decades psychology evolved from a "quackery" into a solid science. The Happiness Hypothesis book by Jonathan Haidt does an excellent job of presenting the latest research on happiness. I particularly like Haidt's thorough scrutiny of known facts. For example, it is known that married people are happier. But are they happier because they are married or are they married, because they are happy and thus more attractive to others?

Here is my short summary of the book.

• Perhaps the most important factor is how well socially connected you are—your family, friends or local community are very important. When it comes to a local community, I have been a member of various sport clubs or volunteering groups and many of my happiest memories come from these communities. And don't let me started on all the memories with friends.
• Some people mistakenly equal comfort and pleasure with happiness, but it doesn't work that way. If you derive happiness from drinking wine, after a while it wears off and you would need to upgrade to a more expensive wine or find something else instead (see hedonic treadmill). Stoics and Buddhists were right: go ahead and take a cold bath!
• Nietzsche was right when he said "That which does not kill us makes us stronger". In the last 4 years I have struggled with health problems, but I think I'm happier as a result. I really appreciate ordinary things like a good friend or a day without pain. Also, lack of adversity is one of the reasons why overprotected kids end up being less happy adults.
• Money only buys you happiness until a certain level of income and then they don't matter anymore. If you want to use money to increase happiness, use them on other people or buy experiences instead. There is also new evidence that saving might be the best option.
• Altruism is a great source of happiness. Giving a gift is more beneficial to the person giving the gift rather than the one receiving it.
• Work is not as important as most people think, but it has a measurable effect particularly if you have some autonomy in your work. Also, many people experience flow when they are immersed in a challenging exercise. I remember countless nights when I barely drank or ate until a particular math or programming problem was done.
• Genes and early environment are an important factor in happiness but they are the thing of the past, so there is little you can do.
• The place where you live is not as important as people think. You'll be as happy in sunny California as in cold and dark Tromsø. Although there are some environmental factors that stress you out and make you less happy, like commuting or high noise levels. Stress in general is a bad thing and not just for happiness.
• Some sense of morality and meaning of life are important too. Traditionally these have been provided by religions but atheists also need them to be happy.

If I were to sum up the book in one sentence, it would be "Relationships matter the most and career, money and comfort are overrated." Your grandma would probably tell you the same thing, but it's good when scientific findings agree with reality for once.

Live like my parents

My parents have lived their life as preached by Happiness Hypothesis even though they haven't read it. They have very strong social ties, spend money mostly on travelling and don't work a lot.

For example, my father is a doctor but he is better known as the head of an orienteering club. He doesn't have an impressive professional career but he has a spectacular career as a volunteer. Did you know that Pezinok once hosted the World School Orienteering Championships? Alright, you have probably never heard of the small town Pezinok, but still...

When it comes to money, they spend most of it on experiences. My brother and I didn't have a lot of fancy things while growing up, but by the time I was 10 years old I have been to half of Europe. They still travel a lot with their small community of 20–30 people, doing things like biking for a week in the Alps. Most people my age wouldn't dare to go on the bike tours these almost retired people manage to do.

Economic systems

Do you know what is absolutely essential in capitalism? Reputation and trust. When you buy a meal in a restaurant, you trust the employees that they will not serve you spoiled food that makes you sick. If they did that, you wouldn't come back and you would tell all your friends to stay away from the restaurant. The reputation of the restaurant would get damaged, people would trust them less and the restaurant would get fewer customers. They might lower their prices as a result.

If this happened repeatedly, you would mistrust restaurants altogether and stop eating out. This would then lead to an inefficient outcome: you could be doing your normal job instead, get a higher salary for that and then use it to buy an excellent meal. Instead you forgo your salary and cook a mediocre meal at home, while the restaurant decreases its revenue. When people don't trust companies, everyone is worse off—the regular people as well as the companies. By the way, high level of trust (and capitalism) is one of the secrets behind the Scandinavian success.

Sometimes capitalism doesn't lead to good outcomes. People near a major tourist attraction just come and go, so the owner of a restaurant might not care about reputation and serve bad food (word of advice: don't shop near tourist attractions). In a closely knit community you can't afford cheating like that, because people would gossip about you and maybe even exclude you from the community. Evolutionary psychologists theorize that our obsession with gossip makes a community well-functioning. Gossip is a great tool, you quickly get to know who's a cheater and who's honest.

When you are doing transactions in a community, you rarely pay the market price, if you pay at all. When you help a friend move, you might get a lunch as a reward. Even a friendly outing to a bar is a transaction: you trade your time and company in exchange for theirs.

Being a member of a community gives you access to goods that capitalism is bad at providing. Only a friend's hug feels like a friend's hug. Only your grandma can cook a pork knee exactly like your grandma. Only your friend can plan a vacation tailored for your small gang taking into account everyone's preferences. No company can ever do those things, although the Japanese would disagree.

The economic system I just described is very similar to socialism. Socialism and capitalism have both its place in a society and both have advantages and disadvantages. Once you start applying them where they don't belong, you'll get into trouble. If you charge your partner each time you have sex, your relationship won't last long. If you make a whole country use socialism, it will also end in a disaster, because it takes enormous brain power and gossip to track reputation in a huge community. The people who founded the Soviet Union overestimated the capacity of our brains by a factor of about one million.

A small community has a cultural advantage in addition to an economical one. You can ignore your country's culture, since you spend most of your time in your own subculture. You can also ignore politics to a large extent. When a politician messes up unemploymeent benefits, you stay calm, because you have 10 people who would help you if needed.

Work is less important

Apart from work not being the main factor in happiness, I see many other problems with prioritizing work over everything else. For example, if you move to a different place solely for work, you severely cut your social ties. Most people think they will find new friends in the new place, but that rarely works out. Most expats end up befriending other expats and only integrate with the locals very slowly. If you really want to prioritize work, choose a place with more expats.

I also realized that where and what I work with doesn't matter that much. I like to do many things and most of them can be done almost anywhere.

• I really enjoy writing and people seem to enjoy reading my articles. My most successful post I wrote for Spotify has been viewed 49 000 times until now.
• I also like to organize vacations for my friends and they trust me that I pick good places. In the summer I can barely focus on regular work and I often procrastinate by planning vacations.
• From the jobs I have actually been paid to do, I have enjoyed teaching the most. That is another option that can be done almost anywhere.

All jobs mentioned above—writer, travel guide and teacher—usually don't offer high salary, but that is not an issue if you don't care about money, as I explain below.

Early retirement

My life turned around by 900 degrees (that's 360 + 360 + 180 for the mathematically inclined) when I started reading about saving, investing and early retirement. Did you know that you can retire in 17 years if you manage to save half your salary every month?

What happens when I save enough to retire? I won't start laying around doing nothing! I might just do something else than before, like starting a travel agency specializing in bathing in ice-cold lakes all over the world. Perhaps I could write books or teach courses about bathing in those ice-cold lakes. These ideas might not be very profitable but that doesn't matter, since my investments would provide enough income anyway. Interestingly, I achieve flow more often when working on hobby projects than in regular jobs, so doing this should also increase my happiness. And I would also like to work less than 40 hours a week to have times for activities and people that make me more happy.

You might think that saving 50% is impossible, especially in this economy. This is nuts, because you have it 10 times easier than your great-great-grandmother. People in the US spend less than 13% of their income on food, while in 1950 it was 30% and I bet similar development has happened all over the world. A couple of centuries ago sometimes even 100% of your income wasn't enough during a famine. People are so poor that whenever I go to a shopping mall in any modern country, it's always full of people. With such enormous economic prosperity and wealth people still have trouble surviving from paycheck to paycheck and happiness is not increasing. Everything is amazing right now and nobody is happy.


Buying expensive things doesn't make you happy, so why would you waste money on them? If you imagine yourself retiring in 15 years and having more time to do things that make you truly happy, getting rid of your expensive habits becomes a piece of cake.

The rise of the robots and artificial intelligence is also a very good reason to save as much as possible, because we will all lose jobs sooner or later.

Conclusion

The message of all the knowledge about economics, stock market and the science of happiness is crystal clear to me. Use capitalism to get wealthy, retire early, embrace the power of socialism and increase your happiness in the process. Marxists used to say that socialism is the next step after capitalism and I guess they were right. I still think that Marxism is a dangerous ideology that killed at least 100 million people, but deep inside of it lies a bit of truth.

A good place to look for wisdom is where you least expect to find it: in the minds of your opponents. – Jonathan Haidt in Happiness Hypothesis

Why Slovakia and Sweden are two superwealthy countries

According to Wikipedia, "at the most general level, economists may define wealth as anything of value". But what is value?

People mistake price for value. Why would you do that, if you don't plan to sell your stuff? I paid a lot for my skiing and mountaineering equipment, but I would be willing to pay 5 times as much, since it had brought so much fun to my life. And I would feel even more wealthy, if I lived closer to mountains and could use it more often.

Most of my skiing and mountaineering equipment on one pile

On the other hand, I wouldn't pay even 1/10 of the price of some other things, because they have very little value to me. Diamonds are a good example: I have seen more beautiful stones in nature and they are overpriced anyway, thanks to a cartel and heavy marketing.

We also value things that don't have a price attached to them, like friends and family. It's impossible to sell a friendship, yet we benefit a lot from it.

Not everything that can be counted counts, and not everything that counts can be counted. – William Bruce Cameron

If you ask me which countries are superwealthy, I might say 30% of them. The world is a great place right now:

• Global poverty has been decreasing faster than ever. In 1950, the average American household spent 30% of its budget on food while it's only 13% now (I suspect similar progress in the rest of the world, too).
• The world is most probably the safest it has ever been. Even with the two world wars, the 20th century was mostly likely the most peaceful century so far. If you were a man in a hunter-gatherer society more than 10 000 years ago, you had about 25% chance of being killed by someone else. This number has been estimated to be at most 3% in the 20th century and it will mostly likely be lower in the 21st century.
• We live longer and we almost eradicated some diseases through vaccination at some places.
• Societies around the world are more tolerant and free. A few centuries ago you were stuck in the same social class as your parents. In the 1950's in the US, black people were still subject to heavy discrimination. If you lived in the communist block in 1989, you could not travel out of your country freely.

With so much prosperity and development, it's surprising to me that we keep consuming and working so much. One measure that is not getting better, is happiness and a contributing factor is materialism.

I hope everybody could get rich and famous and will have everything they ever dreamed of, so they will know that it's not the answer. – Jim Carrey

We also keep hearing that we need consumption to keep the economy going, but this is one of the most common economic fallacies. Mr. Money Mustache wrote a great explanation of it in What if Everyone Became Frugal?. The world gets richer by saving, not by consuming.

Slovakia and Sweden are two countries where I have been living permanently, so I know them pretty well. Here are a few reasons why they are superwealthy in my opinion and it has little to do with material wealth.

System for talented students, a point for Slovakia

TopCoder is an American company organizing regular programming competitions. Each person has a rating, similar to the one used in chess or tennis. If you have rating above 2200, you reach red color, which is a status that only about 300 people on Earth have at one time. A couple of years ago, someone made a ranking of countries by the number of red programmers per capita and Slovakia was first. I don't think this is a coincidence.

Slovakia has a great system for talented high schoolers in many scientific disciplines. This tradition started already when Slovakia was part of the Austrio-Hungarian Empire. In the historical rankings of International Mathematics Olympiad, Hungary is number 4 and in International Olympiad in Informatics, Slovakia is number 7. Both countries are very small compared to other countries in top 10 (Russia, China and USA are dominating both).

This system is so great that I decided to contribute 1% of my income forever to Trojsten (thanks Kubo for inspiration). Trojsten is a foundation that organizes competitions and training camps in math, programming and physics for high schoolers. When I was at university, I helped running it, giving back what I got when I was in high school.

Additionally, my alma mater, Comenius University, was very good. Sometimes the talented Swedish high schoolers ask me for school recommendations and I half-jokingly recommend Comenius even before MIT or Oxford. At Comenius you are not swamped with homeworks and projects, so you have plenty of time to do other things, like volunteering or part-time work. Even though the course load was low, we still learned a lot from the courses.

Psychologists claim that children these days spend too much time in organized activites and play too little, leading to underdeveloped social skills and creativity. I think there is too little play even among university students. Some of them spend a lot of time in classroom, while they could be doing something else, learning valuable skills that can't be learned while sitting in the classroom. When we organized our week-long training camps, there was often noone older supervising us. This was our way of playing and we had a lot of fun doing that. In many ways, what I learned there is now more valuable than my formal university education.

As you can see, if you are a talented student in Slovakia, you have plenty of opportunities for development, but unfortunately such system for talents doesn't work in Sweden. For example, the Swedish programming olympiad gets only very little money from the state (33% of my income taxes last year).

I have been told that the reason is the famous Swedish striving for equality. As is often the case, the Swedes get the equality wrong: since we are all equal, there are no talents. Contrary to this statement, the Swedish state supports sports and young talented sportsmen with a lot of money. I have been competing at international level in both sports and programming/math and I think there is very little difference between the two. Talent is very important but you also need to train a lot, you need a good coach and a community of other competitors to stay motivated.

At KTH Royal Institute of Technology in Stockholm, there is such a community for university students with coaches supported by the university. A couple of years ago I invited few high school students living in Stockholm to our trainings at KTH. These students are so talented and hard-working, that they already won the Nordic Championships in programming, beating all university students in Scandinavia, while still being in high school.

Ironically, the Swedish equality ideal only leads to inequality of opportunities. If you are a talented high school student living in Stockholm, you are lucky and can get great coaching and meet other talented programmers. We want to improve this by organizing a training camp where students from the rest of Sweden could come, but getting money for it is hard.

Level of trust, a point for Sweden

Last fall I spent a couple of weeks in Berkeley and one weekend we decided to go to Yosemite. We booked a car and the rental company was supposed to pick us up and drive us to the rental station on the other side of town. They were late, so I called them twice and they promised the car would be there soon. The car didn't arrive, so I called again and it turned out that they were lying to me, the car was not on the way and we had to take a bus instead.

How could anyone lie to me like that? Then I realized that I have been in Sweden for too long. In Scandinavia people don't lie that much and there is little corruption, which leads to trust in strangers and public institutions. Scandinavian countries top the list of countries by the level of trust.

When people don't lie, steal and corrupt, there are very few lawsuits, they don't have to install expensive protection in their houses and the government is more efficient. In the end people are more productive and can work less than in countries with lower trust. Such countries are in fact richer even with a slightly lower GDP.

Slovakia is far behind in this regard but things are improving. During communism corruption was often the only way to get things done, but the number of people giving bribes has been steadily declining for a while.

Nature, points for both

Both countries have amazing nature. Here are two photos made by me for illustration.

My friend Martin and Tatras, the highest Slovak mountain range.

Frozen lake in Tyresta national park. In winter a ski track is prepared on the lake.

Nature has many benefits even though we don't have to pay for using it. You can have a week long camping vacation in the mountains for free, provided you have the right equipment. Such a holiday would be more fun for me than a lazy week on the beach that costs a lot. Spending time outdoors in nature also has many measurable benefits, like improved mood and concentration.

Conclusion

This was a highly subjective list but as I said earlier, each person can define wealth in their own way. For example, the value of the Trojsten community is that it gave me many great memories and valuable friendships. I'm excited to meet many of them in a couple of days in Italy.