Monthly Finances - May 2023
Updated: Jun 25
It's all getting a little bit real!
Life, Health & Early Retirement - 37 Months Since Retirement
So here we are, heading into year 4 of the new life and currently freezing my bits off in a wintery Cape Town. The house is producing new water leaks which I'm desperately trying to ignore whilst reminding myself it only rains for a few weeks every year!
I can't quite believe that we're almost half way through 2023, its bonkers. May seemed to just disappear and I'm not entirely sure what I achieved during it. Mrs H is on a full on health kick and is at the gym 6 mornings a week, eats greenery and chemicals (protein powder) for most of her meals and is, shock horror, not drinking alcohol. After a month of this torture she's looking amazing but is giving me disapproving stares every time I pour myself a drink or eat anything remotely tasty! I am dieting in my own way by fasting from 9pm to 5pm the next day and then eating and drinking whatever I want in the 4 hour window, which I have to say, now I'm used to it is pretty easy, time will tell if it actually has any affect on my every burgeoning waistline.
I'm also currently hobbling around because I've put my back out. I was putting the dishes away and bent over to put some cutlery in a draw and heard a distinct "twang" as I clearly trapped some nerve and have been in agony ever since, currently 4 days. Thank goodness for retirement as I can just make the call to lay on the sofa all day if I want to, although I've read that trapped nerves benefit form movement so I've been trying to keep moving. This little present occurred literally the day after I got over a week of the Man Flu (yes, it is a thing) so I'm currently feeling particularly sorry for myself. Mrs H is a wonderful woman but her bedside manner is completely non existent so no sympathy of any kind has been received, in fact I just know she's thinking "bloody hell, pull yourself together you massive wimp" every time I have to carefully lower myself into my seat. However, her getting the slightest injury or sniffle has her expecting to have round the clock butler support and a full download of her condition in detail every 15 minutes!
On the hustle side, I'm continuing to ramp down the consulting activity and having a little bit of a wobble as the monthly income that it afforded is also now dried up. But more on that later.
This Month Net Worth (New Calculation): R14,084,889 / $782,494 / £655,111
Last Month Net Worth (New Calculation): R14,018,896/ $778,827 / £637,222
Change: 0.5% (Previous Month +1.5%)
A modest improvement on the net worth this month which has mostly come from my offshore investments due to the ongoing weakening of the rand.
This is one place where I'm immediately seeing the affect of the loss of consulting income. For the first time really, we're actually drawing down from our savings to fund our life which is kind of scary. I guess that was always the plan and according to all plans, there is enough cash to survive until my 100th birthday, but it doesn't make it any less real. I guess it will feel even more frightening when my net worth actually reduces which is something that hasn't really happened since I began this journey.
It doesn't help that I have about R100,000 / $5,500 / £4,500 of household maintenance jobs that I know need doing. Luckily I'm hopefully receiving a tax refund of about the same amount in the coming weeks. On that subject, it really makes me laugh that if I pay my tax bill just 1 day late, I'm fined by SARS but when I've over paid, they take 6-12 months to pay me back and I'm apparentyl allowed to fine them diddly squat.
I'm also spending a lot of money on materials and tools and stuff for my new side hustle which is slowly taking shape but is going to take a loooong time to build up to making any profit. So it's fair to say the outgoings are going to outweigh the incomings for probably the rest of the year and I'm starting to feel the pressure.
I do however thrive under pressure. I'm inherently fairly lazy in most circumstances but having been as poor as a church mouse in my early adult life, the one thing that lights a fire under my arse is the prospect of being broke. I guess that the equivalent of that now would be having to get a job which is not what I'm scared of, having a boss is what I'm scared of or even worse, a boss I don't like. I had a few great leaders in my corporate career but I also had my share of talentless tossers and I definitely don't think I could go back to that environment now I've had a taste of freedom.
So efforts are being doubled and nervousness is being funnelled towards ingenuity to make sure that situation never becomes a reality.
Monthly Investment Return: R155,678 / $8,649 / £7,240
Investment Return Percentage: +1.1% (+1.1% Last Month)
I've been saying for some time now that I think all of the bad news is largely priced in to the stock prices and I've never believed that more strongly than this month. The sentiment in the financial news has changed from "oh my god, Armageddon is coming, save yourselves" to a more gentle "It might be safe to come out now, the worst might actually be over".
The stocks in my portfolio are bearing that out and I'm starting to see an improvement on my returns across the board. I should mention at this point that as I'm primarily invested in the US stock market, that is what I mean, the SA market is still firmly in the doldrums with no discernible good news coming any time soon in my opinion, we'd need actual electricity for that to happen.
For anyone who disagrees that the markets are improving, let me share a couple of SA investment stats that might surprise you:
The Sygnia FAANG Plus Equity Fund which any South African can buy is a way of getting exposed to Facebook (Meta), Alphabet (Google), Amazon, Netflix and Apple shares. That fund is up 69% in the last year and up 22% in the last month.
The Sygnia S&P500 ETF which gives you exposure to the US economy , again available to all SA'ns is up 29% in the last year and 13% in the last 3 months
The Sygnia MSCI World ETF which gives exposure to the global economy is up 26% in the last year and 10% in the last 3 months
They are the 3 stock market investments I am most heavily invested in so whilst it might still feel a bit doomy and gloomy, things are definitely turning around so lets hope that continues and maybe, just maybe, good times are here again.
And it's a good job the stock market is looking up because my alternative investments are looking quite the opposite. Well, more specifically, my solar investments which I have 35% of my net worth invested in are looking shakier than they've ever been. The problem seems to be three fold. Firstly, a couple of big projects have been unable to pay for their electricity and that has a big impact for me as I have close to R2,000,000 / $120,000 / £100,000 invested in just those two projects so not receiving income from them hurts and it's not like you're going to get it back later, once it's gone, it's gone. The second issue is the damn rolling electricity blackouts in South Africa. Lots of the solar projects are "Grid-Tied" which means that they still use grid power when there's no sun, the problem here is they have to switch off when there's no grid power so they don't accidentally feed electricity into the grid and fry some mechanic who might be working on the supply lines. That means that even though the sun is shining the consumer can't use the solar power for up to 8 hours a day currently. And then the final issue is that Solar equipment breaks down and whilst fixing it shouldn't be an issue, the demand for solar in South Africa due to the aforementioned rolling blackouts means that solar panels, inverters, batteries and all the components to join them all up are currently in such demand that you have more chance of buying a pile of unicorn manure than you have of getting the parts you need on demand.
So my "preffered investment" is currently my most frustrating and to give you an idea of the size of that problem, We should be getting in the region of R35,000 / $2,000 / £1,700 per month in rental payments and in May, we got just R10,000 / $550 / £470. Considering that investment was part of my plan to offset our R75k per month living expenses, it's a big problem.
So clearly I have halted investing in Solar until the situation is significantly improved, which might never happen but fingers crossed as I still love it as an investment, I just need the company I invest with to be better at managing this stuff. The alternative is that I'm directing my investment funds to SV Capital and more specifically to their cattle investment which historically pays around 15% annual returns and has less risk when compared to solar although without the warm glow of saving the planet.
One final update on the investment side is that it has been one year since I started "grid trading" on Easy Equities which is pretty simple, I bought R10,000 each in 70 ETFs (pretty much every SA ETF that is based on an offshore investment) and I simply maintained the R10,000 level of each one. every time one dropped by 5% in price, I bought more to get it back to a value of R10,000 and every time one went up 5% I took the profit and maintained the value at R10,000. Well the good news is that after a year, the experiment worked, kind of. I did some detailed analysis and if I'd just bought and held the stock, the value would have increased by around 13% and through my grid trading, I have returned 18% to today so around 40-50% better than the market. Now I need to put a massive caveat on that before anyone shoots off and starts grid trading. The reason this worked is because the market has been relatively flat over the last year, in that it went down in the first half (so I bought) and then it went up in the second half (so I sold) therefore it worked, It wouldn't have worked if the market had just been going up. My grid trading strategy is actually helpful in a falling or undulating market, in a rising market you would make more money with a buy & hold strategy. So I've put that on pause now as my prediction is that the market is going to be going up overall in the short term.
Budget & Spending
This months expenses: R76,480 / $4,249 / £3,557
Budget : R75,000 / $4,150/ £3,500
Pretty much on target for the spending this month and it does feel like R75k is the sweet spot right now and we can manage it despite the odd surprise bill or renovation project. Prices are still soaring in Cape Town but that also feels like it's starting to calm down to a riot. The energy bill is going to spike in the next few months as it's really cold so gas fires and electric heaters are on constantly and I haven't seen the sun for a while so the solar system is just about keeping us going through the black-outs but that's it.
We're using a bit more petrol now as Mrs H travels to the gym most days and I'm in my office / warehouse / Lair on weekdays which is only about 15 minutes from home but it's still trips we didn't make previously.
Medical continues to be the millstone around our necks and those sweethearts at Discovery health ( our medical insurance company) have had another bright idea and changed the rules around prescription co-payments (the bit of your prescription they don't pay for) which has seen the cost of our monthly medication double. Of course they hid it behind a marketing campaign about giving us R10,000 of free cover for things we don't need or use . I already hate insurance companies but medical insurance companies are a whole new axis of evil. Anyhooo, all of this means that our medical spend is averaging R7,300 / $430 / £350 per month which is almost 10% of our living expense for probably 2 visits to the doctor (which I have to pay extra for) and for 24 prescriptions for pills per year.
Other than that, the bills are pretty predictable apart from the fact I know I need to get some repairs to the house done. The guttering is shot, we have a massive hole in our perimeter wall from where I had 2 bee hives removed, the kitchen roof is leaking, the swimming pool is leaking ( I know, first world problems) and we have a set of sliding doors which need attention. Just thinking about trying to get all that work done without getting fleeced by dodgy tradesman gives me anxiety. These are unfortunately jobs I can't tackle myself so they'll need to be done. Hopefully I can find a trustworthy jack of all trades who can do most of the work. Then we need to revisit selling the house and going into rented as that is also going to score high on the living expenses ratio under "household maintenance"
This area is where I'm spending most of my time. I'm pretty much going into the Lair for full days at the moment, which is Ok because I do enjoy it when I'm there and I think Mrs H enjoys having me out from under her feet too! I've still got a couple of small consulting jobs going on but they're mostly finished and I've been telling most of the companies I work with that I'm done and dusted. I'm hoping to keep working for a couple of my better clients but they have no work for me on the horizon so if it could be next year before I'm needed. I still feel good about the decision to stop most of the consulting as it's allowing me to focus on other things. I think the worry will subside once I start making a little money doing something else.
The something else is how I'm spending most of my days. I'm still not 100% locked down on what it is but I'm pretty sure it's making things to sell. I've been dabbling a lot in the last month and I've done quite a bit, a quick list of some of the things I made this month include:
I made a custom LED lighting rig that could be used in a home cinema
I learned to do simple coding using Arduino and ESP32 development boards
I created a layered map using my laser cutter
I engraved personalised designs on aluminium water bottles
I made a house sign for a play house my friend is building for his daughter
I flattened some giant tree slices to make some cool side tables
I made a set of giant scrabble tiles to use for some wall art
I made a neon sign
So as you can see, it's all a bit random, but it's been great fun and is part of my process to figure out what I can get excited about. I do now need to start honing in on a theme fairly soon so I can actually try and make some money, What I've learned so far is:
I like the idea of making items unique for the buyer so start with a basic product and let customers customise it
I need the final product to be of a relatively high cost e.g. there's no point engraving a pen and selling it for R30 / $2 / £1.50 as I would need thousands of customers and that's not realistic in South Africa.
I want to be able to manufacture on a small scale with the equipment I own which include a full woodworking, metalworking and electronics shop, a CNC machine and a laser cutter.
I want to use as many of the skills I've gained from my hobbies as possible including, Wood working, Home Automation, IT, Food, Finance and Business.
I want to try and manage the workload myself and put off having any employees as long as possible
It has to be something I enjoy or it's a waste of time.
I'm heading towards it but there's a fine line to working on a business idea and faffing about and I need to pick a product and get on with it so I've set myself a target of launching the online shop by end of August with 10 well thought through commercially viable products that I have made myself.
Lets see. In my experience of starting small businesses, you rarely end up where you thought you were going to be but along the way you spot an opportunity that makes money aligned to your plan but different. I suspect that will be the case here but I'm enjoying the journey and Mrs H is getting all the "presents" of my prototypes. Not sure whether she sees that as a good thing or not, hahaha
Stock Picking Completion 2023
And now onto the serious business of being the pride of Tribal Fi with a visit to the stock picking competition.
So lets take a look:
Ross has furthered his early breakout from the pack and is already showing a 18% profit just 3 months in. StuffyUncle holds the current record of a 42% annual rise in 2022 so that might get challenged yet.
Not too far away in second place is Spike with Tesla who have been firmly on my radar the last couple of weeks due to a strong surge forward. Tesla has been moving up even when the wider market has been dropping and we all know what happened with Elon's company in the past, so one to watch
Lawrence has retreated and is currently completely flat and the only other contender not to be showing a loss.
At the pointy end, Shane and Charlie are suffering with the only other SA listed plays, Transaction Capital continues to take a massive pounding and is currently down 86% in the last year. With such a drop though, it could be a ripe contender for a recovery with still 9 months to go.
Our current reigning champion and myself are around mid table, accompanied by Reef with his casino play which is currently less "Elvis - Viva las Vegas" and more "Kenny Rogers - The Gambler"
Its a long way to go before this tournament is done but we've never seen such a split in the pack so early on. Keep those fingers crossed Ross and good luck