Monthly Finances - January 2022
Well January, can go take a long walk off a short pier, I'm not speaking to January again this year!
Life, Health & Early Retirement - 21 Months Since Retirement
What in tarnation is going on with the world?
"Januworry" did not disappoint and I spent a lot of the month watching our life savings get progressively smaller. Russia seems to be willing to kick off World War 3, global Inflation resembles a helium balloon and the stock markets seem to have finally realised that we are in a global pandemic and that that might mean the economy isn't doing so great.
Oh, and it turns out when I wasn't able to say a final goodbye to my father before he died of cancer last year because I had to go into quarantine for 12 days, BoJo the UK Prime Minister and part-time Circus Clown was spending most of his days smashed on cheap wine doing the conga up Downing Street without a mask.
Other than that, it's been a fairly quiet month!
Health is good and I'm currently on a diet to shed the Christmas gut. I do need to go see the doctor to change my BP medication as I'm suffering with "Cankles " which is apparently a known side effect of my brand of meds. I've been hitting the EMS training hard whilst Mrs H has been taking it easy after laser eye surgery but can now see a fly's eyelash at 100 paces!
I'm in the final few weeks of my big consulting gig with nothing major in the pipeline and the 2 other gigs I'm working on seem to have dwindled to a few hours per month so I can literally taste the return to early retirement and spending my days doing what I want, the big difference this time will be that Mrs H will be here too so I suspect it might be more like: spending my days doing what she wants, hahaha
We've got a side hustle business trip to the UK in March which ties in perfectly to my mother's 80th birthday so we're going to extend the visit and see all of the family as well as a few days on our own in Scotland and the North of England so I guess this will be our first official retirement trip even if it is to where we lived for the first 40ish years of our lives! I'm trying to find us some cool Airbnb's for the trip but we're quickly realising that as we get older, we do like a level of comfort as the narrow boat and the yurt in the middle of a field got annexed after a few minutes of us going "wow, look at that place" so I suspect it will end up being a nice little cottage in the countryside.
Then my mother is flying back with us for her first holiday since my dad passed then my sister is also flying out so she can fly back with her. We better be winning the children of the year award this year.
Our Net Worth: R17,614,281 / $1,174,285 / £880,714
Previous Month: R17,905,584 / $1,193,706 / £895,279
Change: -1.7% (Previous Month +3.2%)
Bloodbath is the word that springs to mind when I think about the finances in January!
Everything went down and went down together. Worst of all is that my moon shot of getting to £1,000,000 net worth by 28th February 2022 is truly in the dumpster. February didn't start great either so I'll settle for £900,000 at this point and that might even be wishful thinking.
My personal tax return got submitted at the end of January which is a big weight off my shoulders as because it was my first year of retirement it was really hard to calculate what I might owe just simply down to the sheer amount of money I had moved around in investments and stuff. The good news is that it looks like the South African Revenue Service owes me quite a decent chunk of change. At the minimum it could be is R150,000 / $10,000 / £7,500 or at best it could be closer to R450,000 / £30,000 / £22,500 neither of which is too shabby!
Why two different possible amounts?
I'm glad you asked. It's all related to my Solar Investments which attract 100% tax relief in the same year you purchase them (because you're helping the planet and the SA energy crisis that is Eskom). I have learned a new SARS word and that is "Ringfencing". Apparently because SARS really owe me the bigger number above, they will probably "ringfence" my solar investments so I can only claim the tax relief out of the rental I receive from the solar panels. At first this seemed highly unfair but having thought about it a bit, the solar panels take about 8-9 years to pay for themselves so that means I won't pay tax on the rental income for that time. Also, as I reinvest the rental most of the time, it gives me some control over when it becomes taxable in the future. As an early retiree, it is super helpful to be able to control when you incur tax because some years are more profitable than others so when you can try and keep your tax in the lower brackets using those levers.
Most importantly is that there is a refund and not a bill so the refund is going to more than pay for our trip and any left overs will get reinvested, probably into more solar panels.
We're also starting to think about when to sell our home and move into a rental. I have to say, now it's becoming a reality it's quite a daunting prospect. We worked hard, really hard for 27 years to not have a mortgage/bond and own our own home and selling it when we're still under 50 (Well, I am) seems crazy.
Then I go look at how much I spent on Household Maintenance alone in the last year (R86,676 / $5,778 / £4,333) and I instantly remember why I don't want to own property anymore!
Living Expenses: R79,113 / $5,274 / £3,955
Budget: R68,000 / $4,850 / £3,400
Fairly significant overspend again in January but with the cost of everything going up right now, the budget I set 12 months ago now at R68,000 / $4,850 / £3,400 seems a tough ask.
There was one big R10,000 / $666 / £500 bill in January that wasn't in the plan and that was to fix the decking we wrecked at Mrs H's 50th Birthday party. 50 years young and still trashing the joint with her parties!
We have averaged the year right around R75,000 / $5,000 / £3,750 per month which I have decided is the budget for Financial Year 2023 which starts on 1st April. On one hand, I have been spending a lot more on petrol and lunch and stuff while I've been consulting which comes out of my own pocket rather than the business so that will fall away from March. But on the other hand, Mrs H is finally retired so we'll start spending more on travel and adventures so hopefully, one will balance the other.
There's a few areas we could tighten up on and the budget is going to look quite different when we are not homeowners so time will tell on that. Also, with my health being a big focus in 2021, we spent around R60,000 / $4,000 / £3,000 on top of the usual medical aid costs in the last year so that has also inflated the spending this year and hopefully won't next.
Food, Energy & Transport costs are all going to increase in 2022 so I'm planning to do more scratch cooking, I'm reviewing our car situation to see if there's anything that can be saved there and I need to consider if we move into rental, I'm going to see a big spike in energy costs as we're on solar power currently so we need to make sure our rental is fairly energy efficient.
Monthly Investment Return: -R152,537 / -$10,169 / -£7,626
Investment Return Percentage: -0.9% (+3.4% Last Month)
Annualised Investment Return: +9.6% ( +10.3% Last Month )
I normally look forward to writing this part of the monthly update and I guess that's because I was getting a bit complacent (investments only go up, right?). We've had 3 months of solid wins and whilst I knew a correction was coming, this one did feel a bit like Armageddon.
Firstly Bitcoin tanked and basically halved my Crypto returns. That was a tense couple of days because I'd been trading futures on margin (not for the faint hearted or stupid investor like me) and I came pretty damn close to getting liquidated. For anyone how doesn't know, when you trade on margin (essentially with borrowed money) you amplify your losses (and gains) I was trading on a 3x multiple which basically means if the market drops by 33.3% my loss is 100% but if the market goes up by 33.3% I gain 100%. If your loss drops to 100%, you get liquidated which basically means, the exchange sells all of your crypto at whatever price it can get and you probably end up with nothing, zero, zilch, nada!
Luckily I'm not as dumb as I look and had been carrying a buffer that meant I could swallow around a 60% drop in the markets. Which is good because the brakes only went on at around the 50% mark so I was literally locked in with no way out with only 10% of my stake left. Luckily (there's that word again) the bots I use are "Self-healing" so they keep buying and selling as the market fluctuates so as soon as the crash slowed down, they started to fix the problem and just a couple of weeks later I'm almost back to normal even though the Bitcoin price is still down around 30%.
Needless to say, there was some judgement and a whole bunch of luck in what happened so I have been working hard since to galvanise my crypto strategy so I can't get liquidated if this happens again (which it will). I'm still pro crypto but I realise I was still gambling a bit so I'm going to profit more slowly but stay in the game come what may moving forward.
Then there was the stock market, the bloody ugly, falling, red stock market. I've never seen markets go down so slowly and painfully in years. I've even stopped looking at it, its too emotional!
So far since the beginning of January, our stock market investments are down around R750,000 / £50,000 / £37,500. In about 5 weeks. HOWEVER, I am proud to say I haven't flinched, I haven't sold, I haven't panicked and I haven't stressed. I am now entitled to my FIRE veterans badge. I've now been through 2 major stock market crashes in the first 2 years of my retirement and it is now like water off a duck's back. This is about one of the biggest cornerstones of FIRE investing:
The stock market has always gone up in the end, so when the stock market crashes...DO NOTHING!
One of my friends has been whatsapping me every few days bugging out at his losses and asking me what I'm going to do. Nothing is my answer. If I sell, I'll probably sell at the bottom and miss those critical days where the market jumps back. It has been proven time and again that a buy and hold strategy beats active trading and I can afford to wait1, 3, 5, 10, 20 maybe even 30 years for my portfolio to heal. And it will.
All that said, it's not looking good for February either so thank goodness the side-husting has been buoyant and I've been able to limit net worth losses. I'm also eying a few bargains to capitalise on the situation but I'm waiting to see if Russia and the Ukraine can find peace first.
The hustle has calmed down to a riot and Mrs H and I are working together again but only for a few days per week. I'm actually quite enjoying 3 days on 4 days off but that doesn't mean I'm not looking forward to 0 days on 7 days off which is what March and April are currently looking like.
I do keep wondering if I've just been lucky with all the work I got over the last 21 months and that it will soon dry up. Then another new client or opportunity seems to come out of nowhere and I start to wonder if this is just what running your own thing looks like, you never really know where the work is going to come from but the fact your business exists just means that eventually it will. I'm still planning to kill the consulting business on 1st May 2023 so we're close to the final year of operation.
I'm turning my attentions to the money I've invested from the profits. I'm taking a small salary now to cover our living expenses (instead of drawing down form our invetstments) but apart from that I haven't taken a penny out of the business and have ploughed all the profit back into investments. I have a meeting with my financial adviser next week on that very subject so hopefully I'll start to get some idea of what "Life After Consulting" will look like for my little side-hustle. I'm still keen to do something in social investing to do something good for the world while still making a bit of income to keep the wolves form the door. I'm excited about it even though I don't really know what it looks like yet
I'm also waiting for one of my friends who has also decided to take the step into a FIRE lifestyle next year so we've been doing some brain storming on what we could do together that would be fun and rewarding.
All I know is that I'm getting tired and bored of using the skills and expertise I amassed during my corporate career and I want to do something new and exciting. I have a few ides but I'm also not rushing to a conclusion, I'm a great believer that the opportunity will present itself when I'm least expecting it.
Picking A Winning Stock 2022 - THE KICK OFF!
So hot on the success of last years stock picking competition, the 2022 version is in the works, although the response has been somewhat less than overwhelming!
As I write, there has been 1,116 views of last months' post when I invited new entrants to pick a share of their choice in the UK, US or SA stock market that they think will do well in 2022 and drop it in the comments. So far we only have the following entries:
Mr H - Coinbase Global - US
Charlie - Sasol - SA
Shane Perrier - Sibanye & Prosus - SA (Someone always picks 2 stocks to make my life more complicated!)
StuffyUncle - Alliance Resource Partners - US
Whilst I'm happy for the four of us to battle it out, I do feel like I may have undersold the competition or not explained it so well so I'm extending the start date to the 28th February to give readers another shot.
The Tribal Fi 2022 Stock Pick Challenge - Rules & How To Enter
The competition is free to enter and is purely for fun although at my own discretion, I will provide the winner a prize of my choosing which may or may not (probably not) have a small monetary value
Anyone can enter and all you have to do is simply add your chosen stock ticker to the comments below this post and you will automatically be entered (This does mean you have to register on the blog but if you don't want to, I can also accept your entry via email to Enquiries@Tribalfi.com with simply the stock you want to choose and the nickname you want to be known by)
Each stock pick will have a virtual (Pretend) R10,000 investment made on the 1st March 2022 and for US or UK stocks, I will use the exchange rate on the 1st March to convert your R10k into USD or GBP and back again on the 1st January 2023
I will publish a league table each month on my monthly update with progress based on how well your stock has performed.
Whoever is at the number 1 spot on the 1st January 2023 shall be crowned the 2023 Tribal Fi Stock Pick Challenge Winner and will be forever known as such on this blog. They will join StuffyUncle our 2022 champion in an exclusive group of 2!
Mr H will be judge entrant and final decision maker on all disputes and will not be liable in anyway for anything, this is just for a laugh
And that's as complicated as it gets, get your entry in the comments below
A great month for the health and wellbeing and a momentous flop on the investing front. A more manageable pace on the hustle and an opportunity to work with the very talented Mrs H again. Some travel stuff to look forward to and lots of long summer days still to go in Cape Town before we go back into winter.