Well here we are already in the second month of post-retirement reporting, time is certainly flying at the moment. Financially it's been a pretty good month. We're still in COVID-19 lockdown in South Africa but all restrictions (except cigarettes) on shopping have been lifted so there has been a little "retail therapy" to cure the boredom of being in the house 24x7. There has been a further recovery in the stock market since the crash in March so like last month it's not what I would call a "Normal" month. However, I'm not complaining as we've now recovered a large portion of the losses to our pension pot, so long may it last, although I fear we haven't seen the impact of the virus on the global economy yet,
May 2020 - Monthly Finances
Total Pension Pot: R13,620,258 / $801,192 / £648,583
Previous Month: R13,514,216 / $794,954 / £643,534
A Steady Improvement & Ahead of Budget
Starting with investments, whilst not a mammoth increase to the retirement pot like last month, it was still a decent month. my target increase was R107,000 / $6300 / £5100 and the actual increase was R106,000 / $6250 / £5050 so largely on plan. Don't forget though I'm still making up for massive losses in February and March due to the COVID-19 stock market crash so I would have been pretty upset with a bad month. That aside, my internationally held investments did pretty well off the back of the US recovery but the rand got much stronger against the dollar which has a reverse effects and kind of "steals" some of my gains. I'm OK with that though as when the rand is super-weak against the dollar its a worrying time as living costs start to go up because we import a lot of things from abroad in South Africa. It also means I can't buy anything on Amazon in the UK or US because it becomes super expensive if you're paying in dollars or pounds and converting it to rand. South Africa investments did well towards the end of the month and for the first time in as long as I can remember an investment fund I have in South African property actually went up, hallelujah, I was ready to start writing down the loss on that one.
Another win was a couple of investments I've made in solar power. I've talked about these in other posts but basically you buy solar panels and they get sold for you to companies, schools etc and then they get the benefit of power from the sun and pay you a rental for the power your solar panels produce (which is cheaper than buying it from the utility) so everybody wins. The problem is from initially buying your panels to them being installed is a few months, so the finances take a bit of a temporary hit as you're getting no return for a while. I bought a lot of solar panels in the first half of the year so they've been weighing on my returns and then COVID slowed things down even further. The good news is 2 more sites went live this month so whilst it's not much, their will be extra income from those moving forward. The great thing about that investment is that it's pretty low-risk, pays back for 20 years, has a return higher than I actually need and increases each year to fight inflation so it really is prefect for what I need and is helping the planet.
In May I actually made my most money out of the investments that go against the plan completely. You see, passive index investing is without doubt the safest and best way to invest if you want to retire early but man it's boring. You put all your money in a reasonably safe investment and then do nothing for as long as you can and it eventually makes good money. That's great but I do like a little bit more excitement and risk in my life.
That's why I have a little "Fun Money" that I use to buy single stocks and play around trading bitcoin etc. it's a decent amount of money but not enough that if I lose it all we'll be homeless. I started with R50,000 / $3,000 / £2,500 in that account which is enough to buy shares in a few companies and take a bit more risk. Well this month that risk paid off big time as the South African oil company I bought right in the middle of the crash is now up almost 600%. Now hindsight is wonderful thing and I now wish I'd bought more but I only invested R2,500 / $150 / £120 because I kinda knew the oil price would eventually come back but I had the risk that the oil company went out of business before it did. Either way, I'm happy with my investment and have no plans to sell it as the dividend it pays each year will soon be more than I paid for it. The other massive piece of luck was that I bought a stock in a company that competes with Tesla and is planning to sell electric trucks. They announced they're going to start taking orders for their truck in a couple of months and the stock went through the roof! That's currently up 400% so my R10,000 / $600 / £500 investment is now worth R40,000 / $2300 / £1,900. Again, I'm not planning to sell it, it's just nice that I can if I have to.
Now don't get me wrong, I am not suggesting that anyone should consider a recruitment strategy by investing in single stocks, it's way too risky in my opinion. However, in the midst of a stock market crash, you don't have to be a genius to spot a couple of opportunities, it's just best to do it with cash you can live without if you're wrong. Anyway, I've been very, very lucky (believe me there's no skill other than reading the news here) so my R50,000 / $3,000 / £2,500 fun money account is now close to R100,000 / $6000 / £5000, I'll move some of that to the boring side of the retirement fund.
Overall investment growth
Investment Growth: R177,709 / $10,500 / £8500
Annualised Return on Investments 5.8%
I'm pleased to see my annual return percentage increase from 0.8% to 5.8% in just one month, it shows the pension pot is recovering nicely. This is probably my most important metric and needs to be at 9.5% for the plan to work (4.5% inflation + 5% Investment growth), so we're still a little way off but the number is so affected by the crash that I'm pretty happy where it is. This number also directly affects how long our money would last if things continued as they are for the rest of our days. Whilst it's a pretty depressing thought it does make you think about spending or alternatively not worry about it so much. At 5.8% our pension pot would run out when I'm around 64, which is up 2 years form last month's 62 so I'll take it. That number shoots up as your annual return percentage increases and when it gets above 9.5%, it shouldn't be long before it goes to infinity and our pot will last forever if we keep the same lifestyle. Now that's going to give me an easy nights sleep!
Living Expenses: R62,006 / $3,445 / £2,818
Budget: R62,000 / $3,444 / £2,818
Well you don't get much closer than that!
Being our first month in the new normal it's reassuring to know the budget is not miles out. I don't feel like we skimped or scraped and we both spent money on what we needed and if we wanted things for ourselves we bought it form our "allowances" and it all seemed to go ok. Mrs H is still not travelling to work though so we clearly saved on petrol and the gardener who normally comes one day every two weeks hasn't been (and while I've asked myself if I should just do the work myself, I'll be glad when he's back) so that's an expense that will come back. There are however a couple of expenses that were higher than planned like groceries, when you're in lockdown you want to spoil yourself where you can so we definitely overspent on food and drink so I'm hoping one can offset the other.
We do also have Mrs H's salary still coming in as she want's to carry on working for a couple of years before joining me in retirement and will receive no complaints from me so that is really on top of all this. I'm trying not to count it in the numbers (although it obviously makes a difference to the overall number) because one day it won't be there so we should try and get used to living on our post retirement budget.
All in all, a good month with us pretty much spot on the budget and spot on the investment returns. That's pretty amazing for the first real month of retirement so I must have the math pretty right. I am still a bit worried we're not living in a normal world right now and I'm worried there's more instability to come before they find a cure for the virus but we can only continue as planned. I've been thinking about a small side hustle or two that I'm going to start working on and I've had a few calls from people in the industries I use to work in so I'm hoping a few days consulting work might come out of that, I didn't dislike what I did previously it just took up too much of my time and didn't leave time for other things so if an opportunity comes up to do a few days here and there, I might as well do it whilst my skills are still up to date, Time will tell if anything comes up.
And that's pretty much it for this month.
As of 31st May 2020: At the current budget, investment performance and inflation rate, we have enough money to last until I am 64 - That's 20 Years.
Until next month, keep living.