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Phew, it's been an interesting month to say the least!
Life, Health & Early Retirement - 16 Months Since Retirement
August was a bit of an odd month, but a good one. The consulting side has thankfully quietened off for a while so it actually started to feel like I was properly retired again. South Africa came out of hard lockdown so we're now allowed to stay out until 10 pm and drink alcohol again. Yipeee!
I took the latter as a bit of a challenge and enjoyed a little more than my fair share of the evil drink and have been paying for it for the last two weeks with a full on dose of the Gout. For anyone who has never experienced this medieval disease, go into your garage, grab the biggest hammer you've got and whack yourself as hard as you can on your big toe. Over the next few days you will experience what Gout feels like!
Needless to say I've been detoxing ever since it started.
We've started to get some warmer days now in Cape Town so I managed to get a good few days doing some woodworking, which I must say, I'm starting to get the hang of now. Mrs H is 50 in October (I normally wouldn't share her age but she's super excited about being 50 and is telling the whole world anyway) and has decided she is going ahead with her birthday party even though all of our friends from the UK who were planning to come out for it can't travel because of Boris Johnson's dratted "Red List". I still fail to see how South Africa is on the red list and India and the US aren't, methinks there is some political favours being pulled there. So Mrs H has given me my orders to turn her "She Shed" into a bar.
What she who must be obeyed wants, she who must be obeyed gets, so I've spent August building a Gin bar inside a 4m x 3m box in the garden. I still have a bit to do but I'm enjoying the challenge.
From a health perspective, I'm due to see the quack in a couple of weeks and if the kidneys are behaving, that should be me signed off. My kidney function has reduced by 50% for reasons that are still somewhat unexplained but the best explanation so far is that I have taken too many anti-inflammatory painkillers in my life like Ibuprofen whilst dealing with the auto-immune disease I was born with (Ankylosing Spondylitis). On the subject of that little inconvenience, the harsh winter in Cape Town has highlighted how much of my mobility I've lost in recent years so Mrs H and I have decided it's time to take action on that now (It never rains but it pours) so I'm due to see not one but two Rheumatology specialists in September to see what treatment I can have now good old fashioned painkillers are off the menu. Unfortunately it appears AS is not covered as standard in South African medical care (shocker) so I'm expecting some hefty medical bills in the next year whilst we assess the situation.
Mrs H has gone exercise crazy just lately and is spending at least three evenings a week at fitness classes including bouncing on a trampoline, swinging from the rafters on a length of silk doing yoga and dancing in a swimming pool doing aqua aerobics. Not really my scene but she seems to be enjoying it. I have however been shamed into doing a EMS introductory class tomorrow so looking forward to that (not!). For anyone who doesn't know what EMS training is, from best I can tell, I put on a badly fitting wetsuit for 20 minutes and some sadist instructor gives me massive electric shocks while I do lunges and twists and basically make a twit of myself. Writing it down now, it sounds a bit like something that would happen in a seedy back street brothel, but I can assure you it is all above board and may possibly improve my mobility. It is hella expensive though so I'll only be pursuing it if I see results after a few sessions.
Net Worth
Our Net Worth: R16,358,767 / $1,136,025 / £826,200
Previous Month: R15,856,059 / $1,132,578 / £813,133
Change: 3.1% (Previous Month +4.9%)
Firstly, you'll notice that whilst there is a big change in our Rand based net worth, the change in USD & GBP are smaller. That's because it's the end of the quarter and I've updated the exchange rates. The Rand has weakened against the dollar and pound so I get less offshore cash for my Rands.
Another major upgrade to our net worth again this month, which is the third big win in a row. In fact in the last 3 months, our net worth has increased by over R1.7m / £113k / £85k which is around 11% in just 3 months. I keep bracing myself for a correction but it doesn't seem to be coming as September has already had a strong start and we're only three days in. A correction has to come soon though and I expect a 10% hit at some point with a 12 month recovery so it's not time to order a glitter encrusted monster truck yet.
This recent growth spurt has had a profound effect on our retirement calculations and as I type, we're actually at our FI number. Woohooooooo!
One of the other big wins of the month was that I've never really included very accurate calculations on my personal tax liability so that has always been a skeleton in the cupboard. My accountant did my provisional tax returns for both the business and me personally (Mrs H has har tax deducted as PAYE so I don't need to worry about that), and whilst between those two returns I had to fork out a whopping R650,000 / $43,000 / £32,500 to the taxman, I am now theoretically up to date so our net worth for once is accurate up to the minute.
I have to say, whilst retiring before we were at our Fi number never really worried me too much as we always had around 20 years to make a plan, knowing that now neither Mrs H nor I ever need to earn another penny in our lives and we'll be OK (Whilst needing to live a little frugally) until we're 100+ is like a massive sense of calm washed over me. It was clearly something that subconsciously was weighing on my mind because in the last couple of weeks since we crossed the line, I've felt so much more relaxed about our finances. It's a great feeling.
Living Expenses
Living Expenses: R91,134 / $6,329 / £4,602
Budget: R68,000 / $4,850 / £3,400
There's no hiding from it, we blew the budget completely out of the water in August, it was a complete sh!t-show on the spending front!
I didn't really need to analyse the budget much, I could see it coming and there was little I could do.
First off was the full effect of winter and the ridiculous electricity price hikes we've seen from the seemingly incompetent and asset stripped nationalised electricity company Eskom. They inflated prices by 34% and despite the fact we have a solar powered house, the grey skies of August meant we only got around 50% of our electricity from Solar and as it's been freezing and I was too dumb to order firewood before the rains came, we've been using electric heating. This meant the electricity bill was R7,500 / $500 / £375 for the month when in summer it's around R1000 / $66 / £50, so that was 11% of the monthly budget up in smoke.
Next was yet another dentist appointment for Mrs H to pull out a tooth which has now cost us more than R15,000 / $1,000 / £750 in the last year! Being a scaredy-cat, Mrs H wasn't up for me whipping it out with a set of mole-grips in the garage and insisted on a full-on hospital admission and a a general anaesthetic. I didn't argue (much) but I could have cried when I saw the bill.
Next was the price of wood has gone through the roof and a bar and wood flooring uses a lot of it, so that was instantly another R12,000 / $800 / £600 on the "Household Maintenance" budget line
Then finally, it was our friends' birthday and we had a night away in the beautiful town of Franschhoek and spent a day on the wine tram which drives you around wine estates all day doing wine tastings (another major contributory factor to my Gout!). So with accomodation, food and copious amounts of drink as well as a few cases of wine I bought whilst inebriated, another R7,000 / £466 / £350 unplanned spend went floating up the chimney.
So all told, we spent about R14,000 more than planned in August but we've added some value to the house, stayed warm, got some wine for Mrs H's 50th party and she got to have a painless tooth extraction so I guess it's all worth it in the end.
Most importantly even after that little splurge, our average monthly spend is still at R69,000 so we're only R6,000 / $400 / £300 over budget for the year so I really can't complain (although I do).
Investment Performance
Monthly Investment Return: R450,501 / $31,285 / £22,725
Investment Return Percentage: +2.8%
Annualised Investment Return: +9.0% ( 8.4% Last Month )
We are so close to my self imposed 9.5% annual rate of return target, I can taste it!
As a reminder, my plan is to maintain a minimum annual return of 9.5% because we will live on 4% of our net worth, allow 4.5% for inflation and have a 1% contingency:
4% + 4.5% + 1% = 9.5%
In my early years of saving for FIRE, I stupidly trusted asset managers and finance houses with my investments and I paid the price. It was a really dumb thing to do and I see it now (hindsight is 20/20). A great example was I used a SA finance house called Carrick Wealth to manage our pensions when we moved to SA. We took all of their advice and invested where they told us to. In 4 years they managed to create an annual return of 1.2% for me. Needless to say, they are no longer in our employ and I dumped all of their investments and bought index tracking ETFs which eventually became my Magnificent 7 ETF portfolio and just 2 years later that same pension has produced a 21.2% annual return. Unfortunately as I'm carrying the legacy of that dumb decision, the lifetime return (which I use for my 9% calculation above) is still only 4% but goes up every month now.
All that means despite the fact that all of our investments together are currently annualising at 16.4%, we still only have a lifetime number of 9%. I expect we'll hit that magic 9.5% sometime this year and then I plan to try and grow that to 12% with the extra 2.5% increasing our budget (and therefore our standard of living)
Big investing wins in August were pretty much from the Magnificent 7 and my cryptocurrency robots. The pension ETFs showed a fantastic return of 1.8% and the crypto bots provided a massive 35% return in August.
Side-Hustles
After a couple of months of fairly heavy consulting, the diary is officially empty so I'm enjoying a return to 10am lie-ins and ignoring the phone and email.
There is a whole bunch of unconfirmed work in the pipeline between now and Christmas so literally anything could happen from a spell of working 5 days a week to having absolutely nothing to do.
I'm actually at a point where I don't mind so much either way. I'm really starting to enjoy not working now and the feeling of guilt of not doing anything productive is starting to pass after almost 1.5 years of retirement!
On the converse, I've now got a nice set of clients that I enjoy working for, I've worked out the work I don't want and stopped investing time in things that don't make money. So when I do work, I enjoy it and I'm paid well so I guess they call that balance.
The hard work of the last few months however has paid off on hitting our FI number and whilst I've only been working 2-3 days per week or the last couple of months, the invoices have been racking up and in total my income due from my busy spell from June to August will be around R1,500,000 / $100,000 / £75,000 which simply blows my mind that my little side hustle was able to give us that kind of income. Clearly there is costs to come off that and the tax man will take a massive chunk but it's still had a catalytic effect on our net worth.
Picking A Winning Stock 2021 - Monthly Update - Month 8
It's that time of the month again where we try and answer that burning question; "Is stock picking a science or a lottery?"
With two thirds of the year now gone, it's starting to look like the answer to the question is that it's definitely a lottery. In just a month the league table is all change again with no discerning pattern other than that StuffyUncle has the midas touch. I have shot down to the bottom of the table proving that all the research I did was frankly a load of bobbins.
The portfolio is still showing an annualised return of 15.3% and there have been a coupe of major wins masked in the numbers. Charlie over at Doginvestor.com actually has the biggest return with Redefine properties at a respectable 40% YTD and 65% annualised. Unfortunately, as he also picked AB Inbev and they are still suffering the alcohol restrictions they are showing a loss of 12.7% YTD which is dragging his overall performance down.
This is turning out to be an interesting experiment for investing on the JSE even if the outcome is still that it's a crap shoot.
Summary
So in summary, a momentous milestone has been hit in August by us hitting our FIRE number and becoming bona fide early retirees by the FIRE "rules".
We need to keep hold of the budget for a few months to make sure we don't lose control of that and I'm going to enjoy having nothing to do before the next side-hustle opportunity presents itself.
Apart from a throbbing toe which is largely of my own doing, life is good right now, I'm sure another test is around the corner but until then, I think I'll make hay whilst the sun shines.
Until next time, keep living