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Another year comes to a close!
Life, Health & Early Retirement - 20 Months Since Retirement
Firstly, Happy New year to Tribal Fi readers everywhere, may 2022 be your best year yet!
I literally couldn't wait for the Christmas break to arrive, the consulting was getting a little out of control and I was starting to feel like I was back in full time corporate employment (oh the horror of it).The Cape Town summer is now in full effect and some serious downtime was needed to get back to what's important, doing whatever we want, even if that is nothing.
And with 2022 upon us, my New Year's resolution is to say "No" more to side hustle gigs when I've already got a steady flow on my plate. That and giving up roller blading, it's just not for me anymore!
December started out with a visit to see the quack and get some bloodwork done to see if my unruly kidneys had come back into line. I'm not going to lie, that was a tense few days both in the run up and waiting for the results (which fortunately only took 24 hours). I had been feeling a bit under the weather in the late part of November so had put the tests off for a few weeks but she who must be obeyed put her foot down and sent me off to the surgery with strict instructions not to come back with the same amount of blood that I left with.
I did the needful and got a quick check over by the doc whilst I was there and was reassured that the fact my previously well turned ankles currently look like balloons is just a side effect of my new medication and nothing to worry about. The next day I was in a clients office and got the call with my results. All good news, the GFR (the filtration rate of your kidneys) was 72 and I had previously been at 17 ( 2 points away from total Kidney failure). An absolutely perfect kidney would be around 120 but they say you should deduct your age from 120 to gauge what it should be at your particular life stage, so as I'm 45, 75 would be normal.
So I'll take 72 all day long. I may even get the extra few points back yet if I behave myself (which I'm not known for)
So that was the best news I've had in a while, certainly medically and signals my wake up call to try and be a bit more healthy. Mrs H and I try to go to our Electric Shock Therapy (The proper name is EMS - Electric Muscle Stimulation Training) twice a week and I've even started using my Virgin Active gym membership I bought in September. I look quite the sight as the sweaty fat kid on the cross trainer but I'm over it. "Get out of my way skinny, it's time for the gun show!"
And then with one health step forward we took two steps back, Mrs H went for a routine Covid test before going into hospital for a procedure and came back positive. That was us locked down for 10 days. Luckily, I had had my booster jab just a couple of days earlier (I get shunted to the front of the queue now due to my comorbidities) so we took a couple of lateral flow tests that we brought back from our trip to the UK and both showed negative. Luckily Mrs H didn't show any symptoms so we think it was probably a false positive but it made the month a pretty quiet one.
As the bloody virus had also scuppered our original plans to go back to the UK for Christmas this year, the whole festivities were a fairly quiet affair, and we ate drank and slept a lot which was not entirely different to what we do when it's not the holidays :0)
So all in all, December was a fairly uneventful month with a couple of weeks off side-hustling and a bit of a chance to recharge. Financially however it was a bit of a roller coaster that I really thought, fortunately incorrectly, was going to result in negative growth for our net worth.
Net Worth
Our Net Worth: R17,905,584 / $1,193,706 / £895,279
Previous Month: R17,326,474 / $1,155,098 / £866,323
Change: +3.2% (Previous Month +3.1%)
Despite global markets being all over the place in December and Bitcoin tumbling, it all seemed to come right in the last few days of the year and markets recovered pretty much back to where they were and even grew a little in some areas. One of my big wins was on side hustling income. Despite my grouching about being over worked in November / December, the hard work does pay off and a couple of invoices got paid which boosted the business bank account which is perfect timing as the tax bill has to be paid in January and if my math is right, that is also going to empty the bank account again (I've been investing the profit as I've earned it). I've also got my personal tax returns due and while that should be a refund as I paid tax at 45% on my last couple of pay cheques and the company shares I sold when I left corporate, you just never really know when the tax rules keep changing all the time in South Africa.
Net worth growth for the month was right around R580k / $38k / £29k which even with some excessive spending over Christmas is still multiples of our monthly expenses which is great. However, this is the fourth consecutive month of positive returns and January is already looking a bit bleak on the financial news front so I feel like a correction is coming soon. Our previous longest winning streak was 7 months between November 2020 and May 2021 so who knows but I'm guessing the side hustle income will be what carries us through the next few months.
Finally on the subject of Net Worth, my moon shot seems to be going down to the wire. As a reminder, I'm trying to hit R20m / $ 1.3m / £1m by the end of February as a personal goal for this financial year, more to fuel my ego one last time and get it out of my system than anything else but I promise I'll be a better man after that!
Well we're pretty much at R18m with 2 months to go so it's looking tough, but I'm OK with that, this is an "Aim for the stars and hit the moon" kind of deal so close is good enough. In order to achieve the goal I took on 10 months ago, I needed to generate a return of around 25% on our net worth at the time. At the end of December I was on 19.8% which I'm super happy with. My resolve has not changed and I'm still going for it. time will tell, well, about 8 weeks will tell to be more precise.
Living Expenses
Living Expenses: R75,698 / $5,047 / £3,784
Budget: R68,000 / $4,850 / £3,400
I was surprised to see that December's spending wasn't the blowout that it usually is and whilst over budget, I've mentioned before it's time the budget went up to fund the additional costs we now have on Medical Aid (previously included in Mrs H's salary) and the ridiculously expensive gym memberships I keep justifying to myself as necessary for our health. I'm going to wait until 1st March to change the budget (new financial year) but R75,000 feels high for a FIRE lifestyle but right in the current environment (on that note, my fellow South Africans, have you seen the price of petrol right now? Yoh!) with me incurring extra costs for travel to side-hustle gigs, buying in lunch etc.)
There were no massive over spends as such when I look at where the money went but Health & Medical which is now Health, Medical and Fitness has averaged R9,000 / £600 / £450 per month when it used to be around R200 / $13 / £10 which used to just be the odd prescription. Fortunately it looks like the endless doctors visits and blood tests are now over so I think this will stabilise around R6000 / $400 / £300 per month for Medical Aid and gym memberships. The dreaded Household Maintenance came in at R7,700 / $513 / £385 which continues to just wind me up. We're still planning to put the house onto the market this year so I look forward to the day I can say goodbye to wasting thousands of my hard earned cash on fixing stuff or paying people to fix stuff which they seemingly do badly or not at all in a fairly consistent manner.
Other than that we seemed to spend less on food and take outs in December which seems counter intuitive for the time of year but I think we did more scratch cooking because we had time so that tends to cost a bit less. I can promise you I didn't eat less in December so it must be that! Also, transport costs came down massively after all the car servicing and licensing that was required in October and November so that would explain why things don't look too bad for what is usually the most expensive month of the year.
Investment Performance
Monthly Investment Return: R593,352 / $39,557 / £29,667
Investment Return Percentage: +3.4% (1.0% Last Month)
Annualised Investment Return: +10.3% ( +9.6% Last Month )
There was a very significant "happening" this month that I've been waiting a long time for. If you've read some of my other posts you would know my annualised return target is 9.5% and without explaining it for the umpteenth time, that target means our current net worth will last forever and we don't have to work unless we choose to, and anything we do earn is upside. Well we have officially moved into upside territory as our annualised return has jumped up to 10.3% from 9.6% which might not sound like much but when you consider that number is made up of our average returns each month since I started to properly track our FIRE journey in May 2018, it takes a fair bit to make that number move in any direction 3.5 years later.
So what? I hear you cry. Well part of my fire plan was that rather than become one of those FIRE guys who ends up with $30,000,000 in the bank and still insists on living on beans in a shack in the woods with only his fiddle and a 50 year old push bike to keep him from going bat-shit crazy, I intend to jump off this mortal coil with as close to zero in the bank as is possible. Yes there'll be an inheritance for the offspring (based on how happy them make their mother over the next 40+ years), but I strongly believe life is for living and money is for using, whether that be on our lifestyle, new experiences or simply trying to help the world be a bit of a better place.
So to get to the point, any returns over 9.5% will be for reinvesting in our quality of life (or maybe even the quality of someone else's life, who knows), and whilst I haven't actually figured any of that out yet, there is a "savings pot" due for creation in the not so distant future where those surplus returns can be hived off outside of the FIRE machine for our discretionary spending. More on that in the coming months.
In terms of wins and losses in December, my Thematic ETFs, which were one of my 2021 experiments have turned out to be a total bust, on average they're down about 27% for the year with no signs of recovery. I've decided (possibly stupidly) not to dispose of them and bank the loss but to hold on until the virus is completely gone and see if there is a surge of recovery. they are an absolute dog though, no doubting that.
Conversely, whilst I desperately don't want to be a "crypto guy", it's just win after win with those investments. Even after a 40% fall in the crypto markets in the last couple of months, my crypto investments are up 139% for the year, totally unbelievable. I'd love to tell you I had invested a couple of million but I'm definitely not that brave and slowly built up to around R230,000 / $15,000 / £11,500 so whilst the return is awesome, the Fanta orange Lamborghini is not on order yet. I am in the process of withdrawing the last of my original investment though and have decided to keep the profit invested for the foreseeable future, If I could do 100% return again in 2022 that then starts to make a noticeable difference to the Net Worth.
Finally, I've been ploughing all the company profits into more solar panels and now that more projects are going online (I've mentioned before that there is a fairly long lag between investing and getting the first rental cheque) the rental income is starting to be more significant. Between my business solar investments and the panels I invested our personal money into, the rental cheque is now around R15,000 / $1,000 / £750 per month and as that will continue to grow essentially every month for the next 20 years my plan for solar to offset our living expenses is starting to take shape.
Side-Hustles
I stretched myself close to the limit in December on the side hustle front and it actually sucked all the enjoyment out of it. I was working full time for one of my clients in the UK and then doing additional meetings for 2 US clients in the evenings and weekends. No Bueno!
Luckily I have agreed with my UK client to go down to 3 days per week for the time I have left with them and have also roped in Mrs H as a full time employee to support me so that has massively lifted the pressure and has made me feel much more positive about the whole thing. As I said earlier though all that hard work came with rewards and my Accounts Receivable (the money I'[m owed by clients) is into 7 figures going into January. lets just hope they all pay on time and the tax man doesn't take all of it.
Being so busy pretty much distracted me from everything else including this blog, regular readers will notice I've only managed to post the monthly update for the last 3 months which is pretty much due to my health scare and then more recently working like a trojan. We're coming out of the other side now so I'm hoping to find more time to write more in 2022 as I really enjoy it and my readers who comment seem to get value from it also. At a minimum this blog is a record of our FIRE journey I can come back to in a few years as a reminder of this exciting part of our life. On that subject, if any reader wants me to cover a particular topic in 2022 or has a question they've been dying to ask, that's what the comments are for, I'm more than happy to answer any questions or do a post on any aspect of our FIRE journey or plan.
Picking A Winning Stock 2021 - THE FINAL RECKONING!
Drum roll please!
We have finally reached the answer to the question you've all been asking (possibly) ; "Is stock picking a science or a lottery?"
It's just slightly less than a year since I placed our virtual bets of R10,000 per player. 6 of us took part making a total virtual investment of R60,000 and I'm pleased to say that we made a very respectable 20% return on the JSE in 2021. Considering the non-stop doom and gloom you read about how investing in South Africa equities is a fools errand, I think we may have busted that myth at least for last year. Also consider this doesn't include any dividends of which most of our picks paid out and a rough calculation tells me that we could probably add another percentage point to our returns at least.
The larger question was though that is making money on the JSE in 2021 still possible and is it worth doing detailed research or just applying common sense and picking something that looks good value? It's always going to be hard to say but I picked the best stock on the JSE based on detailed research using some pretty fancy algorithms produced by a leading stock analysis web site, and................It was a complete waste of time!
With just a 2.5% return plus a decent 2% dividend, I just about kept up with inflation, I would have been better off sticking my R10k into a bond ETF which would have paid back around 7% in 2021 with minimal risk.
Conversely, the top half of the table was dominated by a random pick, a tip-off from a seasoned investor and a baby being born and the father being impressed by the process in the hospital (Happy Birthday to the baby in question who must be just turning 1 years old). So whilst there is some science there, it's definitely not heavy duty analytics and research.
So in summary, and in my opinion (not investment advice blah blah) there is more value in the current climate to pick a stock investment based on some fundamental common sense like do they have a product in demand? Are they priced well in their market place? do they do a good job? is their positive sentiment toward them by their customers? Asking these questions in an unbiased way before investing will probably yield some decent results over time.
A massive well done to StuffyUncle for his pick on Argent Industrial which posted a massive 61% annual return. Stuffy is officially crowned as Tribal Fi Stock Picker of The Year 2021 a moniker that many would swim through shark infested waters to have bestowed upon them. Bravo!
And a massive thank you to the other players who took part, not one of us actually lost money (despite my best efforts) so my conclusion is that money can be made by investing in the JSE still.
We will of course be having a 2022 Tribal Fi Stick Pick Competition but I'm going to make it a little more interesting this year. You can pick any stock from the SA (JSE), USA (NYSE or NASDAQ) or UK (FTSE) stock exchanges. Please place your pick in the comments below this post and I'll automatically add you to he competition and post monthly progress. There will be a prize in 2021, I just don't know what it is yet but rest assured it will likely be completely underwhelming. All stick picks need to be in by 30th January and virtual investments will be made on Monday 31st January. Good Luck, Bon Chance and Get 'Er Done!
Summary
Another great month financially and a step forward on the health and wellbeing front going into the new year. The side hustling is back under a level of control and providing a decent income and there is now little stopping us from us executing on some of our retirement plans in 2022. I'm excited about this year and looking forward to really getting into retired life now that Mrs H has also jumped off the corporate hamster wheel. Good luck to everyone who reads Tribal Fi in 2022 and I hope all of your early retirement dreams and plans progress this year.