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Please could everybody stand up for a moment of silence for our net worth................. thank you.
Life, Health & Early Retirement - 24 Months Since Retirement
Well, I made 2 years at this early retirement game and my summing up so far is the somewhat clichéd statement that "I wish I had done it years ago"!"
April was mostly spent at home in Cape Town with visitors and all the touristy stuff that comes with it. My mum (Mrs H senior), came back with us from the UK and my sister (Miss H esq.) came out for just over a week to be her travel companion back home.
It was great to spend time with the family and enjoy what was pretty great weather for this time of year, doing a bit of sight seeing and visiting all the places you just don't really go when you've lived her a long time. It was however fairly exhausting and because we didn't have a break between our trip to the UK its been over 6 weeks of "holidaying" so Mrs H (the one I'm married to) and I are feeling a bit worn out really. Add to that that we have hit the spending fairly hard with all of the eating out and travel and May is going to be a fairly subdued affair.
All that said, it has been pretty amazing to spend 6 weeks doing what we want (almost), when we want and without the distraction of phone calls, diary management and zoom meetings which is how our lives were for so many years. The UK trip was always going to be our first real retirement trip and whilst it was side-hustle driven and based around ticking the box of visiting all of our family and friends post-covid, it has still been a great taste of what real retirement is going to be like. The next trips hopefully won't be based around pleasing other people quite so much and we can start living a bit more for ourselves which will be a fairly new phenomenon for both of us!
Health wise? I think we're OK, I've been putting off a visit to see the doc about my reaction to some new medication which has turned my formerly beautiful ankles into cankles but my prescription is up next month so I have to go anyway. I'm seeing the skeleton specialist in May for my auto-immune disorder and an Ophthalmologist for my eyeball issue in early June so I might as well make the most of the quiet gime in May. Amazingly, for all of the above, the wonderful medical aid we pay R4000 / $166 / £200 per month for will pay exactly zero towards that little lot. I've decided, it's not medical aid, it's hospital aid. I'm putting Mrs H under pressure to stop smoking as she has a particularly persistent (and mildly annoying) smokers cough which seems to get worse with each passing year so whilst she is good at making me see the quack, she is about to get a taste of her own medicine if you'll excuse the pun.
I'll go into detail in the appropriate update sections but the finances have taken a pounding of note in April and it's all looking a bit of a dog show to be honest so I've given the financial advisers and accountant a kick up the arse as it's time to make a plan and it might as well be in May. Whilst my side hustling is still fairly tame at the moment, I probably need to put my nose to the grindstone a bit if things are set to continue on a downward trend.
Net Worth
Our Net Worth: R17,962,032 / $1,197,469 / £898,102
Previous Month: R19,031,979 / $1,268,799 / £951,598
Change: -6% (Previous Month 0.3%)
OUCH!!!
Over a million of a reduction in net worth in April is enough to bring tears to my eyes.
It was only last month that I was saying that R19m has become a a bit of a psychological benchmark for me. Well that goose has been well and truly cooked! Seeing 17 as the start of my Rand based net worth is all the motivation I need to get a little more active in the finances.
I set out a 3 point plan last month and now the holiday is over the rubber is starting to hit the road, I've been revisiting our expenses, generating some side-gigs and putting some controls around the crypto to de-risk it so I can start hiving off the profits into something slightly less "wild west"
I also luckily received a nice tax refund of around R400k / $26.5k / £20k which was kind of already counted in the net worth as I knew I was getting it but has now given me some investing power to buy up some stock while prices are in the bargain basement.
All of this downside has resulted in us dropping below my target of having enough cash to last until my 100th birthday and it has dropped all the way back to 70 which is a sobering thought!
Living Expenses
Living Expenses: R73,792 / £4,911 / £3,665
Budget: R75,000/ $5,000 / £3,750
Living expenses landed pretty much the same as last month which I'm pretty pleased about given all the extra expenses on entertaining and feeding the extra mouths of our visitors.
The distraction of visitors also reduced the time I could spend doing the dreaded household maintenance so that is really where the underspend is. I thought I'd blow the grocery bill out of the water as the braai (BBQ) has been constantly lit and we've been eating more steak than burgers since we got home so I was fearing the worst although costs actually went down which I think is because I did more scratch cooking as opposed to buying ready prepared food. I'm going to keep that going and see if I can shave 20% off our food costs which might be wishful thinking the way prices are increasing here at the moment.
Health, Medical & Fitness is going to need some attention. For 2 months running we've spent R13,000 / $866 / £650 in that area and I only budgeted for R7,000 / £466 / £350 so either I need to adjust the budget by making savings somewhere else or we need to make a plan. It breaks down pretty simply into Medical Aid, Gym and our EMS training sessions (basically being given electric shocks while prancing around) and the latter is R3,700 / $246 / £185 for the two of us monthly and was never budgeted for so that's the culprit. Gym is just R375 / $25 / £18 per month for both of us so that's a bargain (I wonder if they have plug sockets I could use for my own version of EMS!) and the Hospital Aid is just over R4000 / R266 / £200 so that leaves a largely unexplained amount of around R5,000 / $335 / £250 a month going into "medical expenses" that on closer investigation seems to be getting spent on prescription medication and then on miscellaneous items at Clicks (The South African version of Boots or Walgreens). Sounds like a prime opportunity for a saving right there.
Investment Performance
Monthly Investment Return: -R1,426,225 / -$95,082 / £71,311
Investment Return Percentage: -7.5% (0.8% Last Month)
Annualised Investment Return: 6% ( +9.0% Last Month )
It doesn't really matter which currency you look at it in, it's a MASSIVE loss. Its actually worse than April 2020 when the S&P 500 crashed as the pandemic hit. Its going to take a little while to recover from this setback but it was all getting a bit too easy anyway!
I do have to confess to one, well two, major stuff-ups on my part which contributes significantly to that number:
Crypto Trading - Just recently, the software I use to do my crypto trading was updated with a lot of new functionality which will help me to get much better returns in the future. I'm not really one for instruction manuals so I decided to figure out the new functionality "on the fly". That was a stupid thing to do as I mis-calculated my risk and ended up having to cancel a load of trades at a loss to prevent me losing everything and in the blink of an eye and the click of a mouse, I was R250,000 / $16,700 / £12,500 poorer. Psychologically, I've put it down to school fees and I'm still up around 130% on my crypto in the last year so I'm over it and I've moved on.
Pre-Paid Tax - This was more of an accounting screw-up than an investing one but I've been carrying the tax I paid mid year in my accounts as pre-paid tax. When I put my returns in and paid the rest of the tax bill, I forgot to delete that entry as it's no longer pre-paid, it's just paid. That was R600,000 / $40,000 / £30,000 and basically means that the R400,000 / $26,600 / £20,000 doesn't even register and I've actually added R200,000 / $13,300 / £10,000 to this months woes.
So now I've cleansed my soul of my sins, what's the plan to close the gap?
I'm glad you asked, it's cunningly simple. I'm going to take the R400k tax rebate and invest it carefully in some stock that has taken a beating and will now recover. I haven't decided in what yet and it probably needs spreading around a bit but there's a few contenders. Netflix or Amazon are a good example. Both of them are massively down after some ropey results but I think the market has overreacted and in a years time we'll all still be trawling through Amazon Prime Video or Netflix on Saturday nights trying to find a decent movie we haven't seen. Amazon will still be the number one retailer in the world and Geoff Bezos will still be laughing at us on his superyacht or penis-shaped spaceship. They're not going anywhere and they're not going to suddenly die because there is no worthy competition globally and until there is, they will continue to make profit. I may not choose to invest in them (and I'm certainly not suggesting you should, do your own research) but there are quite a few examples of these massive companies going through temporary pain and that is an opportunity.
I like a good target and I've decided to motivate myself accordingly. I want a new car, well to be more precise I want a bakkie (truck), and I know which one I want. It only comes out next year and is going to cost a bit more than R1,000,000 / $66,000 / £50,000.
Now buying a new car is about as un-FIRE as you get, it's literally on page 1 of the rule book "You shall not buy a new car, and you should ride a bike or at best a 10 year old nasty little hatchback if you have to". Now I'm a FIRE disciple but I like to interpret the rules in my own way and I've decided to take the value of said nasty little hatchback and invest it until it's enough for a shiny big diesel burning off-road truck, and I'm going to do it in about a year. The rule is simple, make back the R1.5m loss from his month and get back to at least my psychological comfort zone of R19m / $1.26m / £950k and then make another R1m / $66k / £50k on top of that to pay for the truck. Simples!
the rest will be figured out over the coming weeks and months but it gives me something to focus on and an amazing prize at the end when I pull it off.
Side-Hustles
Things are starting to warm-up again on the hustle. The two leads I uncovered on my UK trip have progressed and one has turned into a paying gig for about 25 days work in 2022 and the other has been quoted for and will be probably another 10 days this year. I have an existing client who I do 1-2 hours a week for which will probably run the rest of this year so I have about 1 day per week's work for 2022 which is awesome. I'm on the look out to fill another half day and that would mean 3 mornings per week work to cover living expenses and a little bit extra for company expenses and investing and I'm back in the business of being in business.
If I can keep it at that, it's perfect and genuinely qualifies as a side-hustle and not a full time job. I've already started to close out on some discussions which were taking up time but not generating income and I've decided to stop getting involved in anything that's "speculative" as that seems to be turning into code for me working for free. I'm also really noticing my stress levels going up in line with the amount of work I have on and I'm noticing that is now more important than my previous greed for making money which is a real change for me as I've always been highly financially driven. Maybe I'm just starting to grow up.
Picking A Winning Stock 2022
Talking of stock picking, it continues to be an open(ish) race on our 2022 competition:
With the exception of my future favourite uncle and all around Tribal Fi investing oracle Stuffyuncle, profits are down across the board. I'm no stranger to being in last place in this competition but I honestly believe I'm still in with a solid shout, the crypto market is down like everything else but I think it's going to come back quicker and stronger and my bet on Coinbase is positioned to take full advantage of that.
Did I convince you? No me neither!
There's a long way to go and we're only really 2 months in so whilst it would be easy to call a winner at this point, we are not living in normal times and there's some solid companies in that group so time will tell.
What will be interesting is if our collective minds can make a profit overall in these bear markets or is it going to be a crap-shoot of a year.
Summary
A hellish month on the finances and a wake up call to stay in control and not to become complacent. A quiet month ahead presents opportunities to take stock and make sure our FIRE plan stays on the rails for the many more years it has to run.