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  • Writer's pictureMr H

Monthly Finances -June 2023

C-e-e-e-e-e-lebrate good times C'MON! lets celebrate!


Hopefully.


Pineapples having a party

Life, Health & Early Retirement - 3 Years & 2 Months Since Retirement


I'm calling it people, and I don't care if I live to eat my words, I think the stock market crash of 2022 is over and it's safe to come out of the cave. The next few months will see if I'm right but I'm feeling good, the future is bright and as we've passed the winter solstice in the south of the globe, so are the mornings!


June was another one of those months that was just a blur. I think somewhat because it's probably the coldest, wettest most miserable month weatherwise in Cape Town and as a former dweller of the United Kingdom, a stark reminder of what it's like for 9 months of the year where I came from. Unfortunately "The Lair" has no heating of any kind and if there is sun, it only hits the building late into the afternoon, seemingly leaks if the rain is going in the right direction and has a 6m high roller door which provides zero protection from the wind, so to say my days were cold, was an understatement.


But I persevered and spent most of the month doing and end to end review of our finances and re-positioning everything for my predicted gold rush. More about that in the investing section. I also continued my "experimenting" with business ideas and have almost come back full circle after 3 months. Most importantly, I've decided to stop putting myself under pressure as it was starting to get a bit obsessive. I'm retired, I don't actually need to do anything according to the math and so I'm trying to spend more time enjoying and less time strategizing which is making me feel a lot less anxious.


Health wise, June was, and excuse my French, a shit show! Between May and June I managed to have the Man flu, some kind of slipped disc agonising back pain thing which literally the day after I finished the course of meds turned into the worst case of Gout ever! So I've done my sickness for the whole year in about 8 weeks. The good news is I should be galvanised now so the South African medical profession are getting diddly squat of my hard earned cash above and beyond the thiefdom they already extract from us every month.


Mrs H continues to be on a massive health kick and has now signed up for a year of punishment six mornings a week and while she isn't quite weighing her food any more, she is still living on a starter portion of poultry and veg, so conversely, I'm getting to cook what I like for me which is definitely neither healthy or starter size. She is showing amazing dedication though and I'm very proud of her, she looks even more amazing too which is a bonus!


I have however thrown myself full bore into a new hobby which is hydroponic gardening. I come from a long line of green fingered (or is it thumbed?) Yorkshiremen and my granddad was always wining prizes for his garden (they used to do that kind of thing in the UK during the last century) and I guess that sparked an interest in me. I strictly grow vegetables though, as flowers are for girls, so if you don't put something on the table, you don't get a space on my patch. These are however going to be the most expensive vegetables ever as I've now spent around R40,000 / $2,100 / £1,700 on kit including a new 3D printer to print my hydroponic towers and a whole bunch of nutrients, trays, seeds and electronic measuring devices. Oh yes, we're going full science on this one! I think it's the science behind it that interests me and as you get to see the results every day, it's kind of cool. I'm a massive fan of cooking and there's a lot of ingredients that are just hard to get or super expensive in South Africa so hopefully I can grow some of them. Although I must admit, of the 48 plants I currently have propagating, I think 20 of them are different types of chilli's as weirdly in the last couple of years I've become a total chilli head.


Anyway, I'm sure you didn't login to read out me growing veg so let's get to the numbers.



Net Worth


This Month Net Worth (New Calculation): R14,713,632 / $817,426 / £668,801

Last Month Net Worth (New Calculation): R14,084,889 / $782,494 / £655,111


Change: 4.3% (Previous Month +0.6%)

I wish I could put music to parts of my posts because this section should be accompanied by the sound of "Whoomp, there it is!" by the one hit wonder rap duo from the 90's; "Tag Team" so if you wouldn't mind logging on to your music streaming service of choice and playing that song while reading this, you'd be doing me a solid. I must warn you though, it isn't aging well.


And the reason for that is the same reason I reckon that the good times are beginning to roll again. 4.3% increase in our Net Worth is massive. and importantly if you read my updates monthly, you will know all is not well in the solar investing world so this is also after losses there which probably rounds us off to 5 percent in a month. Let me give some perspective to that, it took me 27 years of hard toil plus 3 years of consulting (It would be a lie to say that consulting is hard toil) to acquire our savings which is 360 months with our noses at the grindstone and in just 1 month of messing around with plants, we made enough investment returns to feed, water, clothe and shelter us for about a year. Mind blown.


I'll get into the detail of how this little cracker came about in the investment bit but needless to say, that is a release to the pressure valve as it's been a solid 12 months of flat or declining markets and whilst our investments are structured to see us through bad times (through alternative investments), having a crash in the earliest part for your FIRE retirement is one of the worst things that can happen.


The math of FIRE is not complicated, you save 25 times your annual cost of living and you invest it. You need it to return 5% on top of inflation and theoretically, as long as you stick to the plan, your money will last forever, no matter what age you retire at. For us, that means that we need at least 9.5% annual returns as over the long term, South Africa inflation is around 4.5% (although you wouldn't believe that looking at it right now). Luckily for us, the historic return of the S&P500 (basically the top 500 companies in America) has returned around 10% annually for the last 100 or so years. So it wasn't a complicated decision for me to invest our life savings primarily in S&P500 ETFs as well as a few alternative investments that should yield in the region of 12% over the medium to long term. Easy right?


Well not quite.


You see, the FIRE math is as much simple as it is dumb and there are a ton of different factors it doesn't consider. It does factor in stock market crashes and all that good stuff but there is one big problem it doesn't and that is a thing called "sequence of returns risk". I've written about that at length in an earlier post so I won't bore you with it but in it's simplest terms, if you have a stock market crash early in your retirement, the risk is that you take your spending from your savings and not from the interest on those savings, and you might even need to sell some investments for less than you bought them for and that hurts your cash pile even more. As soon as your starting cash becomes less than 25 times your expenses, you've got a problem. The only answer to that is to either cut your expenses, get a job or hope for the best, none of which are going to create a stress-free retirement sitting in the sun on the lawn sipping your 3pm G&T.


Luckily for us, two factors come into play, firstly, I continued to earn the equivalent of our living expenses for the first 3 years so when the crash came at the end of the second, we were able to not draw down against our savings. The second is, FIRE assumes that you pop your clogs leaving behind the same amount of cash you started with (presumably to leave to your kids etc.). We're not doing that. there will be money for the kids and grandkids, but it won't be the full pile, it will be a slice of the pile. We worked 30 years to get that cash, you bet your granny's teeth I'm going to enjoy it!


So to get back to the point, the fact we're coming out of the crash is not just good news from a returns perspective it means we've survived one of the worst things that can happen in early retirement and hopefully (and I'm touching wood), the fact we've had one means we're good for while. There is obviously a chance it's not over, but we must be past the worst. For god's sake we had a global pandemic, the likes of which none of us have ever seen and are probably unlikely to ever see again in our lifetime, the only way is up from here people.


Investment Performance

  • Monthly Investment Return: R669,340 / $37,186 / £31,132

  • Investment Return Percentage: +4.8% (+1.1% Last Month)

Unless you have been living in a cave, you will have almost certainly heard talk of AI or Chat-GPT in the last week. And that is because it's the latest and greatest buzz word which everybody is thinking is going to change the world as we know it. And it might, but it might not also. remember any of these?


  • Virtual / Augmented Reality

  • Metaverse

  • 6 Sigma

  • Robot Process Automation

  • 3D Printing

  • Web 2.0

  • Web3

  • Embedded Analytics

  • Cloud Computing

  • Self Driving / Flying Cars

  • Non Fungible Tokens (NFT)

I could go on. They all exist in some capacity today but did any of them truly change YOUR world. No, mine either and I expect Artificial Intelligence will be the same.


However, as I mentioned, our net worth is centred around the S&P 500 and guess what the lion's share of the S&P500 is centred around? You guessed it, companies who can sell, benefit, preach, leverage and teach AI. And they are selling the socks off it. Microsoft, Google, Nvidia, AMD, Meta. Tesla, Apple are all banging the AI drum and trying to convince you and me that they have cracked it and will lead the way to the great new world where we don't have to lift a finger as our AI bot will think on our behalf.


To use an appropriate South African word that I think translates well, I think that is a pile of "Kak". I am more than happy to benefit from it though and benefit we are. I own all of the stocks mentioned above either directly or through ETF's probably for about 70% of our portfolio. And what a time to be alive as they're all pumping. My current challenge is when to get off the merry-go-round to bank the profit which is what I'm working on but right now, those stocks are heading north and have been since the start of the year. Everyone loves a good upward graph so let me show you a graph for Facebook (or META as they renamed when they were trying to convince us that they would rule Metaverse which was also going to change our lives until AI happened).


Fest your eyes on what has been happening to their stock price since January:


A graph showing the facebook Meta Stock price rise this year

From $100 per share to $300 in just over 6 months. This is not some penny share with a rumour it's secretly discovered a new oil reserve, this is Facebook, and it's been around since 2004.


I could show you pretty much the same graph for Apple or Nvidia or even Microsoft. Tech stocks are back, at least for now.

Budget & Spending

This months expenses: R62,597 / $3,477 / £2,845

Budget : R75,000 / $4,150/ £3,500


And the good news just keeps on coming in June, we were way under budget on living expenses although that was primarily down to the fact I accidentally paid the municipality bill twice last month so got a month off this time. The other area where we saved a few shekels was on petrol which actually seems a bit odd so we either drove less or the price pf petrol is coming down at last.


We've got a bunch of maintenance to do and SARS finally managed to find time in it's busy life to refund me my tax overpayment from almost a year ago so I'm hoping that will cover everything or the dreaded household maintenance bill is going to take a beating. We really need to finish the kitchen we started over Christmas! Top be fair, it's all the little annoying bits, it's not like we're living in a building site. Mrs H is putting the foot down though so it's not optional.


I'm glad we're managing to keep control of the finance as we have a trip to the UK in November to see family, some of my clients and it's my sister's 50th birthday so that is going to be a big expense. As Mrs H's family live in Scotland and mine in England, the hire car, petrol, accommodation and just simply the cost of living in the UK makes it a super expensive trip. I love to see all the family and friends, but it can never be described as a holiday for us as trying to keep everyone happy and not miss out on seeing anyone means easily a thousand kilometres of driving and 4 or 5 different beds over a couple of weeks. It's always good though and it does mean I get to eat all the foods I miss and come home with a suitcase full of goodies, my personal contraband of choice is Scottish haggis which I am a mahoossive fan of.

Side-Hustle


Like I said earlier, I'm kind of going with the flow on the hustle side of things right now and I think I'm OK with that for the rest of this year, I have worked on a bunch of ideas and my conclusion currently is that I could suck the enjoyment out of a good hobby buy focussing too much on building a business around it.


That's not to say I won't but I realised I was rushing into doing something because I felt like I needed to and that's simply not the case. I think that continuing down the path of exploration that I'm on is OK and the right thing to do and when the business opportunity presents itself I'll be ready.


I have had a couple of small consulting opportunities come up which may be probably less than 5 days work in total but that's still good as it would offset the cost of the UK trip.


I have also invested in not one but two high speed 3D Printers for the business as between them, the laser cutter and CNC machines I bought, I can definitely tick the box on the ability to start a small-scale manufacturing business. All it needs now is for me to decide what to manufacture. As I said, no rush on that but I'm poised and ready and, in the meantime, if anyone needs anything cut or printed, hit me up in the comments hahaha!


Tribal Fi Stock Picking Competition - 2023


And with all this talk of recovery and pumping stock prices, let's see how that translates into this month's competition results:


A table of monthly results for a stock investing competition

About those tech stocks!


Quite a bit of change this month with me and Spike breaking away from the peloton with our tech heavy electric vehicle plays. Tesla continues to surge but in my opinion is tailing off a bit. Not sure if NIO is just following suit or has something up its sleeve but I do know that Elon is distracted by Twitter getting crushed by Facebook's new Threads app so that might play into my favour.


All that means Ross's similar tech play in Snowflake is doing well but just not quite well enough as he's fallen back to third position.


Mid table is lucking lacklustre at the end of the first trimester of the competition with not much to call between the mid 3 players although noticeably Lawrence is the only SA stock showing any upside.


It's not going well for Charlie or Shane with their SA stocks showing an average loss of around 35%, that huts! Definitely not too late for a comeback story though and stranger things have happened.


Until next time, keep living.


As of 1st July 2023 at our current budget and investment performance, we have enough money to last until I'm 83 which is 36 years away




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