It never rains, but it pours........................ What a stupid saying!
Life, Health & Early Retirement - 3 Years & 3 Months Since Retirement
You know when you have one of those months when everywhere you turn there's an unexpected bill?
Just when you think you've deflected, defended and defeated the plague of locusts that have decimated your hard-earned cash, there's one more d***head shows up to give you one last kick while you're on the mat?
That was July. I feel like I've done 10 rounds with Mike Tyson's accountant!
I wouldn't mind so much but it saw me interacting with my four nemeses (and yes, I had to Google what the plural of nemesis is), the actual four horsemen of the apocalypse, the axis of evil, the four points of pain: South African Medical Aid Providers, Insurance Companies, Household Maintenance Tradesmen and the worst of all, an Angry Neighbour!
It was actually only two "events" but it made about R100,000, $6,500 / £4,500 disappear into thin air in a way only David Blane could achieve (Shazam)
First off, if you're with discovery health for your medical aid you'll probably have been spammed about their "WELLth Fund" (I wonder how long it took to come up with that grammatically challenged marketing gem). Well, if not, Discovery is claiming that "They" are investing in all of their members to give them R10,000 per membership for...erm.... health stuff. Now having spent my career managing corporate contracts, I am no stranger to the small print and filed their relentless bombardment of marketing under B. Mrs H, however, is softer hearted and decided to get involved and do some...erm...healthy stuff. Well I won't bore you with the detail but a few weeks later and I'm already R16,000 / $900 / £800 lighter than I was and I don't feel any more Welllthy at all, in fact I feel quite the opposite. Well played, discovery, you win this round.
Secondly, and as they say, no good deed goes unpunished, my new neighbours came round a couple of months ago to advise me that there was a beehive in their boundary wall but that the bees were entering on my side and their daughter is allergic to bee stings. I seized the opportunity to be a good neighbour and offered to arrange the removal of said beehive and even offered to pay for the removal bit but warned them that there may be some damage to their wall during the extraction process (Signposting to them that whilst I see that the bees accessing his wall from my side of it, could arguably be my responsibility that it was, all the same, their wall). Well almost a month later and I've spent a total of R20,000 / $1,300 / £1,000 removing no less than 3 beehives and repairing not only my side of his wall, but he also came around and asked me to repair his side of his wall and now claims that the repair work damaged his electric fence and is seemingly expecting me to pay for the repair of that also, with that bill still to arrive!
Meanwhile, his wall, which was previously unmaintained for the last 10 years (at least), looks amazing despite his cost being a very definite zero so far.
Of course, all of this was completely unexpected and came with the backdrop of us having a list of maintenance jobs to do which have now been put on hold due to lack of budget just halfway down the list.
So, as you can imagine, my mood this month has been similar to one of a grizzly bear being prematurely woken up from hibernation. Luckily for Mrs H, she doesn't need to put up to my moaning and ranting about the state of the world and blaming the damn millennials for everything wrong with it. She has headed off to the UK for a couple of weeks so there's only Winston the wonder puppy here to listen to me and he whole heartedly agrees with me on all points, especially the Millennials bit which he feels particularly strongly about.
As you can probably tell, I'm not over it yet, far from it.
This Month Net Worth: R14,960,420 / $831,113/ £650,437
Last Month Net Worth: R14,713,632 / $817,426 / £639,732
Change: +1.6% (Previous Month +4.3%)
But despite the vampires trying to suck the life out of me and my bank account, we still managed to post a positive result for the month.
I have to say, I was a bit surprised after such a massive gain last month and expected at best a 1% target month but we're up about 60% from that.
Most of it came through the investments as the markets continued to surge in July, although August is looking like a bit of a correction after 7 months of upward motion which is to be expected. I didn't generate any income really through side hustling in July as the focus was definitely on spending and not earning. We have managed to complete some much-needed maintenance on the house and with a few jobs still to do, we should be ship shaped by the summer.
I went on my first ever hunting trip this month with a group of friends. Well, I say hunting, technically it was more a drinking trip as my liver would testify and whilst I don't support Trophy Hunting (basically hunting just to say you killed something), I should make it clear this was hunting with the primary purpose of obtaining food. I didn't shoot anything (If I'm honest, I'm not sure I could) and we had a pro hunter with us to ensure that everything was done properly, humanely and above board. The result was that I now have a freezer full of organic, grass-fed game so that will hopefully cut the food bill over the next couple of months.
I guess the other piece of net worth news is that I have to admit I was wrong (there, I said it). I know it's hard to believe but I was. My financial adviser and I have agreed to part company. It wasn't that he was necessarily a bad financial adviser, it was that there is a reason that FIRE retirees don't use financial advisers, we don't need them.
I've learned a lot about the process of Financial Advising over the last few years and what I've learned is that in SA (and I suspect the world), the financial industry makes its money through a process I'll call Margin Stacking. What is margin stacking? I'm glad you asked.
Essentially, a fund manager picks on a bunch of companies to invest in and then bundles them up in a fund which he gives a fancy name to like "Tarquin Capital Equity Fund" or "Blunderbuss Fund of Posh Funds" and charges people, let's say 2% to invest in his amazing fund. Then, he offers his fund to financial advisers at a discounted charge of 1%. They then sell the fund to their clients (you and me) at the same 2% charge that we could get it directly and then they get a nice 1% kickback from the fund manager.
Sounds logical right?
However, this process pre-assumes that the Fund Manager has some expertise to pick companies that will outperform the market so he can justify why paying 2% to him to invest on your behalf rather than just buying a index tracking ETF is a good idea. It also pre-assumes that your financial adviser picks the very very best fund managers to make sure you have the very very best opportunity to make better return on your investment than you could do without him.
Weeeeeell, now this is starting to feel like a bit of a stretch.
And where it kind of unravels is that it's your money, they don't put anything in and therefore take no risk and have nothing to lose, so if it all goes wrong, the only person that suffers is you, because guess what?
They still take their 2% even if they picked rubbish companies or rubbish fund managers. They literally can't lose and don't really have any motivation other than having ongoing access to your money to get it right.
And while the above has nothing to do with my divorce from my financial adviser, you can see why a financial adviser just needs customers who want to give them their money, by the fund and wait for it to rain cash, and without being rude, the less those customers understand the markets, the better.
Surprisingly, I'm not that kind of customer, so I wanted my Financial Adviser to do something different from that, which involves a lot more work and almost certainly a lot less reward if it doesn't go well.
Needless to say, they were keen at first but eventually, it seems I was more work than I was worth for them, and they weren't worth their fee to me. We've been very grown up about the whole thing and I wish them no ill, but needless to say, I spent a lot of money on financial advice to find out I don't need a financial adviser.
Every day is a school day.
Monthly Investment Return: R239,611 / $13,312/ £10,417
Investment Return Percentage: +1.6% (+4.8% Last Month)
July was more of the AI fuelled market rally nonsense and the only thing that stopped it from being another bumper month was that the Rand strengthened up a bit against the dollar for most of the month although it looks like it's going South again in August.
That meant that that my US investments did well, but the profits were wiped out by the foreign exchange adjustment. I'm continuing to simplify my portfolio and have now reduced the investments in our pensions to just a few ETF's and a couple of stocks. If anyone is interested, our future is invested in the following:
Vanguard S&P 500 ETF - VOO - Essentially one of (if not the) cheapest way to invest in the S&P 500. Annual charges are just 0.03% so a no brainer if you believe US companies will do well over the long term.
Vanguard Total Stock Market Fund - VTI - This is a catch-all stock for the US economy as a whole and is essentially a proxy for the entire US stock market. Again, cheap as chips at 0.03% annual charge
Vanguard Mega Growth Fund - MGK - Slightly more expensive at 0.06% annual charge but gives you exposure to the US mega corporations. Think Amazon, Apple, Nvidia, Tesla, Facebook, Visa etc.
Berkshire Hathaway - BRK-B this is a direct stock not an ETF or fund and is founded by the famous Warren Buffet and Charlie Munger who have been outperforming the S&P 500 for decades. They find great companies with great leaders and then buy some or all of the business.
Apple - APPL - Needs no explanation. I'm personally not an Apple fanboy but I know plenty of people who are and are happy to shell out massive amounts of cash for the latest iPhone or Macbook at a huge premium to what they could get similar tech for and are actually happy to do it. I am equally happy to take their money as a shareholder of Apple.
Invesco QQQ Trust - QQQ - Another ETF that represents a large index, this time the Nasdaq which in turn is essentially all of the major tech (and randomly some non-tech) related companies listed in the US. Again, think Microsoft, Amazon, Apple, Pepsi etc. This one has a 0.2% annual fee so is my most expensive but also is where the potential for big returns sits, a bit like the current AI frenzy.
And that's it, I'm now 47 and Mrs H is a bit older (a gentleman never asks a ladies age) so as we're allowed to start drawing down those pensions at 55, I'm hoping this is the last time I make changes to those pension stocks until at least we begin to cash them in, at which time, I'll probably lower the risk and just go for a couple of the broad index trackers like VOO & VTI.
Budget & Spending
This months expenses: R91,877/ $5,104 / £3,995
Budget : R75,000 / $4,150/ £3,500
I'd love to tell you that this encapsulated all of my ranting about unexpected bills at the start of this post but it only scratches the surface as most of those bills will appear in August's budget. It does include some of the building work and hopefully all of the great discovery wellth heist of 2023. They make up pretty much all of the overspend so I guess there is some positive to pull out of this.
August is going to be painful, but I also need to remember I had a tax refund cash injection that was to cover all of the maintenance work. As it stands, about 50% of that is done and the money is gone so whilst I need to find the cash for the rest of the work, there's only a couple of essential jobs and the rest can wait until the next windfall.
The cost of food in SA seems to be surging again and my benchmark block of cheese that I use to keep an eye on prices has now risen from around R90 at the start of the cost-of-living crisis and is now at a peak of around R175 (an 850g block of Parmalat Mature Cheddar in Pick & Pay for anyone who's wondering) so almost double in the space of about 18 months. Crazy! Other things seem to be coming down, like cooking oil but are still well inflated. Most worrying is that you can start to see the greed of the food retailers who are seemingly normalising these high prices whilst we get used to it so I fear that there'll be no return to normality anytime soon, but the food retailers will be posting record profits in the coming year, mark my words.
I'm in one of the annoying stages of having your own business right now where I am doing a lot of work quoting for stuff or "Networking" (I hate that word as much as I hate the activity) with potential clients but all of that is no charge and no income. Worst of all is that I know at least half of the people I'm talking to just want my experience and knowledge for free or close to free so I have to think of innovative ways to politely tell them to jog on. Unfortunately, you kind of have to kiss a few frogs to find a decent client who actually wants your help and is, shock horror, happy to pay for it.
Between schmooosing, I've been 3D printing like a boss and have developed both a hydroponic vegetable growing tower and a portable wind turbine that can keep a battery charged to power the pump on the hydroponic tower making it possible to use anywhere without a power supply. I am actually really enjoying it and have been working on designs and electrical circuits and generally just being a geek which I am at my heart. My brain is running overtime on if I could create a product that is eco-friendly, sustainable and could help at least in a small way to improve the abject poverty that exists in parts of South Africa. I'm not sure the current idea is the answer, but I love the idea that I could do something that generates and income whilst helping people. It has to put food on my own table too though, so I need to be careful not to go down a rabbit hole too much but there's no question I've found something I really want to get my teeth into. Let's see if it goes anywhere.
Tribal Fi Stock Picking Competition - 2023
And finally, there is a lot of turbulence in the market right now so let's see how that has affected our leaderboard:
Well, you could knock me down with a feather, look at that!
Lawrence has surged ahead from mid table leaving everyone else in his wake. 4sight holdings is up a massive 60% since our last outing. Go Lawrence!
With Spike and me fighting over the other podium slots with our EV plays, there is starting to be some blue water between top, middle and bottom of the table. Ross was looking strong, but I hear Snowflake's results were met with a muted response last week and Caeser's seems to be struggling to call blackjack for Reef.
Unfortunately, the South African representatives continue to suffer with a comeback looking less likely as time goes on. No comment on our current title holders slightly obscure next gen battery play, but I learned a long time ago not to question Stuffyuncle's methods as anything can happen!
Well, that's it for this month, sorry it's a bit late, I was trying to get out of my bad mood before I put fingers to keyboard. I haven't succeeded that yet but there's no month left!
I think underlying things are looking up and I'm really looking forward to some warm weather, I need to have a little word with myself and stop going into a decline every time the budget takes a beating!
I have a lot to be thankful for and probably need to accept that there are always going to be unexpected events and they will generally include stupid people or people/companies trying to take advantage of me and getting angry about it, is only affecting me and not them.