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Hoots mon! I've been tae Scotland!
Life, Health & Early Retirement - 23 Months Since Retirement
Apologies to those of you who have been awaiting this months update. I do try and get them done in the first week of the new month but Mrs H and I spent most of March on a trip to the UK. I've only just really managed to get my head back in the game so sorry it's late.
Our trip turned out to be fairly epic and productive. It was primarily a business trip to drum up a consulting gig or two but as you would expect and being former natives of England and Scotland, we took advantage of the opportunity to see friends and family whilst we travelled between our potential client meetings.
Luckily for me, it was my mum's 80th Birthday which involved a party and all of my family coming together so that instantly put a tick in the box on seeing family. We travelled through Scotland for about 10 days and got to spend a great weekend in an old country manor house with Mrs H's family so that was great and whilst we were travelling through Yorkshire we had a couple of days of heavy snowfall while staying in a small cottage on the side of a river in the middle of nowhere so really got to experience the UK we left behind for sunnier climes.
Inevitably we came back with more suitcases than we left with and I stocked up on ingredients for my cooking (as well as 7 tins of Scottish Haggis which I love) and slightly more randomly, Mrs H brough back a suitcase with about 20 rolls of wallpaper (which is about a quarter of the price in the UK compared to SA) for her furniture restoration hobby.
My mum returned with us to South Africa for a holiday and her first trip abroad since we lost my father last year and my sister is flying out for a week to travel back with her so it's going to be great to spend the rest of autumn's great weather doing touristy stuff in Cape Town over the next few weeks.
On the health side, Mrs H continues to be strong as an ox and is enjoying not having to wear glasses anymore after she had surgery for an eye condition which had the benefit of correcting her sight at the same time. In keeping with my never ending tale of health issues. I managed to get food poisoning a couple of days before we left for the UK (making the flight there absolutely wonderful!) so spent a day in the hospital in Leeds where I was prodded and poked and tested to make sure I hadn't brough the next strain of Covid from South Africa to the UK. Fortunately it was good old fashioned food poisoning and has been traced back to a portion of spicy chicken wings from South Africa's favourite fried chicken shop.
Screw you Colonel!
I also went for a routine eye test so I could by some new glasses on my trip (again, about a quarter of the price of South Africa) and the optician found a dodgy nerve ending in my eye which I now need to go see an ophthalmology specialist to get checked out. It literally never ends!
Financially another pretty horrendous month as Putin's invasion of Ukraine intensifies, inflation is at it's highest point of the century and the pandemic simply refuses to give up. We're in the perfect storm and my current strategy is the simplest of all; sit tight and do nothing.
Or it was......
Net Worth
Our Net Worth: R19,031,979 / $1,268,799 / £951,598
Previous Month: R18,974,251 / $1,264,950 / £948,712
Change: 0.3% (Previous Month 7.2%)
Thankfully in March I had the remainder of my invoices from my big consulting gig that ran from October to February paid so the net worth actually edged forward slightly and we covered living costs but that is masking some pretty significant losses on our stock market investments and with there being no paid side hustling in March, April could be a pretty bleak month if things continue.
R19m has become a a bit of a psychological benchmark for me through the current downturn in markets, which incidentally, I think are going to be around for a while based on the current inflation and supply chain issues across the world. If I can keep our net worth over R19m until we get to happier times, that will be a bit of a result and put paid to any worries of having to get an actual 9 to 5 job at some point which is now my idea of hell on a stick!
In reality, right now I have three levers for that:
Control Spending - It's fair to say that I have loosened off on the vice like grip I had on our expenses when we first went into retirement and regular readers will definitely have noticed some lifestyle creep over the last 12 months which resulted in our living expenses going up from around R62,000 / $4,133 / £3,100 per month to R75,000 / $5000 / £3,750 which might not at first seem massive but when you look at it as a percentage, it's a 21% hike in our living expenses and that simply means we need 21% more cash in the bank to stay retired OR live 21% less time, which is not my idea of a viable plan! In a FIRE lifestyle, spending is nearly always more important than saving so we need to tighten the belt on the spending and look for opportunities to reduce our outgoings. Action 1: Reduce Living Expenses
Side-Hustling - A fairly obvious one this but I had already planned to downscale the consulting operations as they were getting a bit out of control before Christmas and I now have only 1 year left of my self-imposed 3 year timeline for side-hustling related to my previous career. Given the current environment, I need to make that last year count so I'm actively looking for opportunities to do a little more hustling until the economic depression passes. That was really the driver of the UK trip, to drum up some work and I'm pleased to say the investment was worth it but more about that later. Action 2: Earn Some More Cash
Crypto - Whilst cryptocurrencies are affected by economic factors, it is also possible to make money in Crypto regardless if what happens to the price of Bitcoin or any other crypto coin or token. I'm now almost 18 months into my crypto learning journey and have made some decent profit as well as building up a nice set of income generating investments. It's time to start hiving off some of those profits ad either using it to offset our living expenses, or re-investing it in the stock market while prices are on-sale. Action 3: Re-allocate Crypto profits
Living Expenses
Living Expenses: R73,688 / £4,911 / £3,682
Budget: R75,000/ $5,000 / £3,750
Living expenses were a bit of a dog show in March primarily because of our trip. We had to pay for a dog walker for Winston the wonder puppy and friends were looking after the house so that came with some extras and then there was additional medication and all that good stuff.
Then of course there was the massively inflated cost of food in the UK versus South Africa so the grocery bill for the month topped out at an eye watering R20,269 / $1,351 / $1,013 and that was even after a number of business meals that were paid for out of my business expenses or by my client so I estimate that would have probably added another 50%. I've been away 8 years but I simply could not believe how much prices have increased there and I think I must have said "How much? I'm not paying that!" so many times I was even starting to get on my own nerves.
Outside of that I had double municipality bills this month as I paid it late last month so that hurt and we didn't really benefit from being away on things like electricity and water because we had house-sitters.
We did save a little on petrol which I guess is why the budget is still fairly in line.
Winston also had a check up and some annual inoculations in March so there was a vet bill for around R2,000 which is a bit of an exception also.
I've been looking at where we can tighten up and there's not that much room for improvement with the exception of Groceries which for 2 people and a pooch are pretty ridiculous when I look at it.
In the last year, we've averaged a monthly grocery bill of R18,000 / $1,200 / £900 per month which has to be able to be reduced. To be fair, that is everything including food, alcohol, cleaning products, pet food and treats and Mrs H's cigarettes. I'd like to get that down to R15,000 / $1,000 / $750 so that's my objective.
Mrs H has already given up her premium brand cigarettes for the cheaper ones and is even threatening to try and quit so that would be a massive win. My contribution is going to be more scratch cooking and less buying of pre-prepared food like ready made pizzas, oven chips and desserts etc.. We don't eat loads of that stuff but it is super expensive compared to what I can make it for and given I'm a foodie with time on his hands that loves cooking, there's little excuse not to be making cheaper and healthier food at home form scratch.
Investment Performance
Monthly Investment Return: R158,796 / $10,586 / 7,939
Investment Return Percentage: 0.8% (-1.1% Last Month)
Annualised Investment Return: +8.9% ( +9.0% Last Month )
After hard losses the previous two months, it was nice to see a positive result in March although that mostly came from Crypto. All stock market investments were down across the board, both onshore and offshore. It did look like there might be a bit of a recovery coming towards the end of March but it's been wiped out again in early April so there's a good chance that slight upside in March might get cancelled out again.
The biggest thing that's troubling me at the moment is not the downturn in the stock markets, they'll come back they always do, but the first rule of investing is buy cheap and sell high. My problem is I'm doing nothing, I'm not buying stock at a discount at the moment to galvanise my portfolio and that is because I haven't really been holding any of our net worth in cash which I knew I wasn't and actively made the decision not to, but now there is a fire sale in the stock market and all of our capital is tied up.
It's not the end of the world but it does feel like a missed opportunity so I'm going to spend some time thinking about where I could invest where I can get a good return but easily access the cash when opportunities like the current stock market situation occur. I have a feeling that the answer is going to come to me rather than me finding it and the answer is rising interest rates.
Whilst high interest rates are a bit of a nightmare of normal hoomans who have a bond/mortgage and/or lots of debt on credit and store cards, FIRE community members generally have zero debt, no bond/mortgage and a high amount of savings. That means that high interest rates are simply brilliant for us because it means we can get a return on any surplus cash. This is true in South Africa where we could easily see bank savings interest rates go above 8% in the current climate. That really makes keeping cash on hand a no-brainer compared to the 3.75-4% rates we've been seeing in recent times which is less than long term inflation so is effectively a zero % rate.
The one problem at the moment is the SA banks which largely have the scruples of pack of rats and take full advantage of the South African public whenever they get the opportunity. They seem to be profiteering from the current situation by increasing their lending rates in line with the rising interest rates but don't seem to be passing on rate hikes to their savings rates, like I said; Rats.
This is certainly what is happening with my bank and I'm considering voting with my feet and taking my business elsewhere, unfortunately my initial analysis seems to be that South African Banking is somewhat of a boys club and they behave remarkably similarly. I would obviously not suggest that this is a Cartel (ahem) but what I do know is that there is a massive need for some disruptive online banking offerings that smash the current mould and make these antiquated institutions wake up and provide a bit of competition. At the moment, Capitec seem to be the most progressive of the bunch so I'll be checking them out in the coming weeks. I'll report back on what I find.
Without going off on too much of a tangent, the current investing strategy is to take profit from Crypto, buy cheap stocks at rock-bottom prices and continue to build the solar portfolio for long term income whilst creating an "Emergency Investment Fund" that is totally accessible and about 3% of Net worth so around R600,000 / $40,000 / £30,000 for opportunistic investing.
Doesn't sound too complicated.
Side-Hustles
Side hustling has almost ground to a halt which has been nice for a few weeks but I'd be lying if I didn't say i missed the big numbers in my spreadsheet for outstanding invoices!
I'm currently owed nothing and this week I did one hour of consulting for which I'll be paid R3,750 / $250 / £188 for in about 5 weeks so it's fair to say I'm pretty much doing nothing.
I did manage to win two new contracts while I was in the UK and planted seeds for a couple more. The first one is a short term piece of work which will probably just be 5 or 6 days of work but will be quite interesting and enjoyable to do so that will be good. The other is a piece of work that will run until the end of the year and probably be 1 day per week which is EXACTLY the kind of work I've been looking for.
Consulting is pretty profitable because you essentially have no costs making it all profit. I of course have quite a few business costs for software, travel , insurances etc. but largely profit margins are around 80% so a little work goes a long way when you think that a traditional small retail business might run on a 20% to 30% margin so needs 3-4 times as much work as I do for the same returns. 1 day per week for the kind of consulting I charge my best rate for would cover our living expenses so if I can average 2 days per week for the year I have left of my consulting side-gig, I'll cover our living expenses in the next year and give myself a little pot of cash to invest in my next "non-career related" side gig.
So one day per week down, one to go.
Picking A Winning Stock 2022
A quick monthly update on our 2022 competition and some interesting results forming as we come out of the blocks and battle commences:
Well not much to say about this months results, apart from they suck!
I am actually thinking of asking Stuffyuncle if he'll adopt me as his nephew so he can be my proper rich uncle as he has smashed the first month with a massive 20% profit!
The rest of us managed to post losses ranging from bad to terrible to OH MY GOD WHAT ARE YOU DOING MAN! yes, that was me with a massive 20% loss on my crypto based gamble
That said, it's month 1 so there's a lot of water to go under a lot of bridge before this competition is open but with a 40% gap between last and first place, it could be an interesting competition.
Summary
A great month of travelling and spending time with friends and family and some good business meetings and a bit of new side-hustle work to make it all worth while. Its now time for action instead of gormlessly staring at my portfolio as it goes down so there is much to do. Next month marks my 2 year retirement milestone so some good news would be nice.