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  • Writer's pictureMr H

Monthly Finances - June 2020

Updated: Jul 27, 2020

Time is definitely flying at the moment, it feels like I just got finished on the May report and June is already overdue. A pretty good month in May and another milestone met.

Calculating the Financial Budget

June 2020 - Monthly Finances

  • Total Pension Pot: R13,985,843 / $822,697 / £665,992

  • Previous Month: R13,620,258 / $801,192 / £648,583

  • Change: +2.6%

A better than plan monthly increase with a touch of overspending.

With the stock market seemingly completely disconnected from reality this month we saw a great return on our pension pot but it now has me pretty worried. Lockdown is still happening across the world and there's is zero sign of a cure or the COVID-19 pandemic coming to an end, business are closing left, right and centre and unemployment is at record levels, but somehow the stock market keeps ploughing forward. This shouldn't be happening and it seems nobody knows why it is but the markets keep storming forward. I decided this month to take a little profit from my "Fun Money" investments as some of them had grown by 50-100% with on oil share I bought now up over 400% in 3 months!

There's no way this situation is sustainable so I decided to take the profit on all of those risky investments to create a little cash on the sidelines to either buy back in when things start to go south to stem my losses or to have a small emergency fund if things do go down so we don't have to draw down on our investments. However, this is just a small portion of our investment portfolio, the bulk will be left as per the plan to buy and hold low cost index funds and not touch them for as long as possible. A milestone to be ticked off for this month is our finances have completely recovered from the stock market crash. That took just three months from the crash which is great as it could have taken a year or more, let's hope it stays that way.

Needless to say, this craziness resulted in a great month with our investment returning over R200,000 / $11,800 / £9,500. There was also a little extra windfall in the shape of a bonus from the company I used to work for. Because I planned the timing of my retirement carefully, I qualified for my 2019 bonus which due to COVID-19 was paid late. Because bonuses are variable and generally are not totally in your control, I never plan my bonuses into my financial budgets, they are what they say on the tin; a bonus! I also wasn't sure if it would even get paid as the industry I worked in is heavily affected by the lockdown as it's a people business. Luckily for me, the company took the view that the bonus was for performance before the virus arrived so shouldn't be a reason to penalise people. That was an admirable thing to do and I'm very grateful to them for that, I suspect bonuses will be much harder to come by this year for the colleagues I left behind. As it's not in any of the plans, Mrs H and I have decided to invest that money in some much needed household maintenance and a little creature comfort or two so whilst it's boosted this months numbers, it will come back out as a deficit later down the line.

I also ventured into the oldest form of investment in Africa this month, Cattle!

Yes, we have a new member of the family, I've decided to call her Gertrude:

Gertrude is three and a half years old, she is a Bonsmara breed Thai Milking Zebu cow and is pregnant.

Before you think I've taken leave of my senses, I do own Gertrude but she's not in a pen in the back garden, she's safely being cared for on a farm in South Africa by farmers who will look after her and ensure her calf is fit and healthy. I've never met Gertrude and am never likely to. I'll own her for just 6 months at which point she will give birth and I'll then receive the proceeds of the value of the calf.

Mind blowing right?

This is all part of my "Social Impact" investment strategy to help others and the environment with my saving s whilst still making a return big enough to pay for our retirement. I'll be writing a whole post about this investment in the coming days so if it's of interest to you, subscribe now so you don't miss it. needless to say, I'm feeling quite good about being a proper "Virtual Farmer" and looking forward to a healthy return on my investment.

So including my bonus and buying Gertrude, the investment returns look pretty awesome for June:

Overall investment growth

  • Investment Growth: R356,585 / $21,505 / £17,408

  • monthly Investment return: 2.7%

  • Annualised Return on Investments 6.7% - (5.8% Last Month)

I'm relieved that my annualised return is showing almost a 1% improvement from last month and is now up from my all time low of 2.7% in April during the stock market crash caused by the corona pandemic. It's a long way to go still to get above the 9.5% that I need but as the effect of the crash works through the numbers it should keep going up every month and be recovered by May 2021 (I hope). 2.7% investment return for the month would annualise at 32.4% so if every month was like this one, we wouldn't be just retired, we'd be balling! Now we all know that isn't going to happen but as I need 0.8% per month return on investments in order to never have to get a job, 2.7% in June is more than three times what I need. The way I see it is I now have 2 bad months in my back pocket, and having that cushion is important for my quality of sleep. So overall, a really good month for month 3 of my new life.

Living Expenses: R72,849 / $4,285 / £3,469

Budget: R62,000 / $3,444 / £2,818

Unfortunately, my investment success in June was slightly offset by my spending habits.

Last month , my feeling was that the living costs budget was pretty accurate and that hasn't changed a lot, I'm just starting to realise it's pretty tight at the moment for "extra curricular activity" we were only about 15% over but we are still pretty much locked down, so there was basically no entertainment in there like meals or drinks out and petrol was also well under budget. We did however keep ourselves busy with a few household maintenance projects and DIY materials. Tools are very expensive in South Africa compared to other countries so the overspend there was pretty much equivalent to the total overspend which is kind of reassuring. Mrs H also had an unexpected trip to the daylight robber.

Did I say daylight robber? Oops, sorry I meant Dentist.

That 10 minute sit in a chair cost an extra R3,000 / $175 / £140 that wasn't in the plan. Is it me or is the dental profession the biggest scam of all time? Don't get me wrong, if I'm going to stick my fingers in people's mouths all day and smell the stale breath of someone with questionable oral hygiene, I want to be paid well for it too. But to brush my teeth for me and once charge me more than I spend a year on toothpaste and brushes for the other 730 times a year I do it myself, is pushing your luck.

If the answer from the dental community is "I had to train for a gazillion years and am highly skilled", then why, when you still need to use pliers and your foot up on the chair to pull a tooth out does that cost R6,000 / £350 / £280? I can get a handyman to pull multiple nails out of wood with pliers for R200 / $12 / £10. #JustSaying

OK rant over, needless to say, I probably underestimated our small Health & Medical budget thinking our health insurance and health savings plan would cover most of our expenses. The dentist may well need its own line as we get older (or we're getting dentures!)

Our main expense by far is still the grocery bill which came in at a whopping R19,000 / $1100 / £900 which for just two of us and Winston the wonder pup just seems ridiculous. Even my budgeting software tells me when spend 80% more than the average family in South Africa which feels very wrong. I budget for R15,000 / $880 / £720 per month which still feels like a lot but we don't seem to get close. I shop at the mid-range supermarket, order our meat online, look out for the bargains but we are definitely doing something wrong. My definition off Groceries is somewhat loose as it includes food, drinks (including alcohol), cigarettes for Mrs H and all of our "stuff" like cleaning products, bathroom products etc. Basically if you can buy it at the supermarket, it's classed as groceries. This is my focus for July, to at least understand where the cash is going if not to reduce it. My motivation is going to be that if I can reduce our grocery budget by R4,000 per month to bring it in line with the plan, we will spend that saving on a holiday in a year's time. That would be R48,000 / $2,800 / £2,300 on a trip for Mrs H and I and we could go somewhere pretty cool for a couple of weeks with that (I seriously fancy South America). That should make me think twice before choosing steak over mince!

Monthly Summary

So weighing up the month, a strong result and ahead of expectations, a little tweaking of the budget and tightening of the belt is required in time for what I think is going to be another stock market crash within the next 12 months but that is based on zero knowledge, just a disbelief that the world economy is doing well in the current situation. Sooner or later that is going to show an effect and if I'm right, that won't be good for us early retirees in the short term.

We'll cross that bridge when we come to it though and three months in, I don't regret my decision to retire early one bit, let's hope it stays that way! With the jump in our investments this month, I've added 4 years to how long our retirement pot should last, and that dear reader, is great news.

As of 30th June 2020: At our current budget, investment performance and inflation rate, we have enough money to last until I am 68 - That's 24 Years.

Until next month, keep living.

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