Monthly Finances - November 2021
A whip-saw of a month that came out all right in the end.
Life, Health & Early Retirement - 19 Months Since Retirement
I can't quite believe it's almost Christmas!
I know everyone says that, but to me, this year has just been a blur and my life is totally different to a year ago and unrecognisable from 2 years ago when I had just resigned from Corporate life. I wrote the first Tribal Fi post on Christmas eve 2019 which was kind of the day when the reality set in that I had pushed the button and there was no turning back on our FIRE journey. I was officially bricking it!
And now 19 months later, it still all feels quite new.
November was a lot of fun, we started the month with a huge party to celebrate Mrs H's 50th and her retirement. I'm told I had a great time and the pictures back it up! No good deed goes unpunished though and late in the evening we decided to take a team photo of all 50 guests standing on our decking. Asking 50 people to shout "Cheeeeeese!" on pine decking had the inevitable outcome that the deck gave way and now my Christmas break will be spent lifting it to replace a couple of beams that snapped. Luckily nobody was hurt and it was much less dramatic than it sounds. Predictably, the insurance company blamed the installer and as the installer disappeared into thin air with a load of my cash a year ago, guess who gets to fix it?
I decided to take a break from hospitals and doctor's surgeries in November as it feels like most of September was spent there and overall my health has been pretty good. I've been faithfully going to the gym twice a week to offset my return to sitting behind a desk while I'm busy with the consulting gigs. Mrs H put her foot down this week though so I'm due to go back to the doctor next week to get my first update on the kidney situation since my hospital visit so fingers crossed there.
Day to day retired life has been temporarily suspended as it seems all my clients at once want supporting so I'm working full time in the day time for one of my UK clients and then working part time in the evenings for two of my US clients. This wasn't part of the plan!
Fortunately it is temporary and after the Christmas break I'll be reducing my daytime support down to 3 days per week and closing the contract completely by hopefully the end of February. That will probably leave me with about 10 hours work per week ongoing in bits and pieces which is exactly where I want it to be.
Other than that, there was a lot of socialising in November and one weekend we managed to do 4 separate parties between Friday and Sunday, I was so glad for an early night on the following Monday but it's nice to be getting back to seeing people. Although, looking at South African's Coronavirus numbers for the last week, that looks like it's going to be short lived.
Our Net Worth: R17,326,474 / $1,155,098 / £866,323
Previous Month: R16,790,488 / $1,119,006 / £839,524
Change: +3.1% (Previous Month +5.2%)
I honestly expected November to be pretty pants in terms of investment returns and predicted a drop in our net worth or at best a flatline with the stock market drop being offset with my side-hustle income but I was wrong. The investment performance was fairly subdued but it did give returns so my side-gig cash was all upside. This all resulted in a very respectable increase of R535k / $35k / £27k which considering our living costs are about 20% of that, I'm pretty happy with that result.
I am definitely starting to notice that we are getting to a point where compound interest is starting to take over and our monthly net worth increases are starting to be multiples of our living costs which I guess is exactly what's supposed to happen when you live a FIRE lifestyle but it is hard to believe that if I'd not found the FIRE movement and focussed, we'd still probably both be chasing the carrot in the corporate world and in our heads "Building our future" but in fact we'd be in very real terms worse off financially, mentally and physically, when simply focussing on spending and investing has meant that doing less has benefited us across all three....mind blown!
There's no doubt that the more than full time side hustling is fuelling the net worth gains right now and that won't continue for much longer but as we passed our magic number a few months ago, it feels like this is just building up a buffer which will give us a lot of comfort during the inevitable tougher times.
Regular readers will know I decided I would go for a "Moon Shot" in the 21/22 financial year and try and build our net worth to R20,000,000 or more importantly for my ego £1,000,000. That felt unrealistic at the time but a great leader I once worked for told me "If a target doesn't make you feel a bit scared of it, it's not worth going after" and as a philosophy, that approach served me well in my professional career.
Well, we have 3 months to go until the end of the SA financial year and incidentally my 46th birthday and whilst it still looks pretty unlikely I'll make it by that time, it's not going to be a million miles away. In fact, we hit another milestone on the journey in November and became European Millionaires as our net worth for November was equal to 1 million Euro for a couple of days. Unfortunately the SA Rand tanked after that based on the fact we identified the Omicron variant and became a global pariah!
A quick bit of math tells me that we've been growing our net worth by around £22k per month over the last 6 months so with 3 months to go, we could add around another £66k to the pot. That would have us end the year at £932k which considering it started the year at £750k would be a win in my book. This is most definitely not defeat though and I still have my eye on the big prize so watch this space dear reader, I may pull something out of the bag of tricks yet!
Living Expenses: R87,341 / $5,823 / £4,367
Budget: R68,000 / $4,850 / £3,400
Somehow we managed to improve the spending in November which considering we threw a party for 50 people with an open bar and catering, I've been looking where I might have missed a digit!
Despite the improvement though we still came in close to R20,000 / £1500 / £1000 overspent which is not good but in our defence I do know why and it's not all bad.
Firstly the aforementioned party did come in as an additional spend of around R10k as I'd been acquiring what I could in the months prior to lessen the load, and it was a 50th so in my book, that was cheap as chips.
Then there was the dreaded car tax, last month was car servicing and repairs and due to our laziness, the car tax fell into this month. Unfortunately I learned a valuable lesson and that is never trust a friend who you sell a car to when you agree that he will submit the paperwork to the government. In order to tax our 3 cars, I had to pay for 3 more that I had sold 2 years ago to friends just to keep ours legal. With friends like them, who needs enemies! Luckily the newly retired Mrs H went and valiantly stood in the long queue and sorted the whole thing out. Only one of my friends paid me back so far but as I am now in the possession of their tax discs for the other two, I'm playing a waiting game as they'll start racking up tickets soon enough. All in all, that little debacle hit us for R6k.
Finally, the medical bills just kept on coming and Discovery just kept on not paying so that was another R5k evaporated and then reality has kicked in that the new fancy "Electric Muscle Stimulation" sessions that I signed Mrs H and I up to after my health scare are unbelievably expensive at R4k per month for the 2 of us. Whilst I planned to offset the cost somewhere else in the budget, it's really going to be on top of the existing budget as their is really no fat in the current plan.
And that was it, an extra R20k spent but if you consider the reason we started this journey was to have a better lifestyle and be healthy, it's hard to complain about what we overspent on, it could have been sex drugs and rock & roll just as easily!
So our monthly spend for the year is averaging R73,000 / $4,866 / $3650 which while I think we could get that down, I also think inflation is going to go wild in South Africa and you can already see it in the cost of pretty much everything so that feels like a good budget number for 2022.
On the topic of 2022 we have some big plans which I'll share in another post soon but what I do know is that our budget and spending is going to change completely, so I'm thinking that through at the moment.
Monthly Investment Return: R172,846 / $11,523 / £8.642
Investment Return Percentage: +1.0%
Annualised Investment Return: +9.6% ( +9.7% Last Month )
After achieving R1m investment returns last month for the first time ever, it was predictable that this month might swing the other way. Pleasingly though it didn't and whilst it looks pretty low in comparison, we should not lose sight of the fact that a 1% investment return per month is not only better than my 9.5% annual return target, it's right on my 12% annual "Stretch" target, so while it is not as impressive, it is right on the money this month.
Returns came from across the board with reasonable performance from the stock market and Cryptocurrency as well as some great returns from solar panel rent due to the onset of summer in South Africa. There was no real standout but I think I'm going to see some pretty massive upside form Crypto currencies in the coming months as I now feel like after almost a year, my Crypto trading bots are completely dialled in and whilst I obsessively watch them and tend to them like some kind of Tamagotchi (remember those) every day, they are actually pretty autonomous now and if I wanted to I could probably spend as little as 15 minutes a day checking on their wellbeing. In November, they produced around R62,000 / $4,100 / £3,100 in profits which is just amazing to me. I'm not adding or withdrawing any funds form Crypto and simply reinvesting the profit which kind of goes against the plan but because SA has pretty much banned the purchase of Crypto, I don't want to reduce my ownership as I can't put it back in later.
One issue in the Crypto plan is that the way the bots work means you're always realising your gains and because they make lots of trades (I checked yesterday and I've made 91,000 crypto trades since March!), the profit is classed as income so will be subject to income tax (Up to 45%) instead of Capital Gains (18%) so that's not great. I've made peace with that and now the bigger issue is when that tax bill finally comes, do I pay it by cashing in Crypto (and therefore losing it form my holdings) or pay it out of my real money savings which will increase the percentage of our net worth in Crypto? I don't know but it's something I need to think about before my next tax bill arrives.
I did make the decision to invest a chunk of my side hustle income into more solar panels and made a purchase of R340,000 / $22,500 / £17,000 of my hard earned cash which will now provide a return of around 11.5% for the next 20 years. I still love this investment but it's getting harder and harder to buy panels in a project as its becoming more and more popular so the projects sell out quickly. The other issue is that COVID is screwing up the global supply chains so it's taking a long time for projects to go live which effects your returns slightly. All that said, I now have R2,500,000 / $166,000 / £125,000 worth of solar panels on roofs across South Africa now and plan to double that in the next few years. That should then mean on solar alone, we will receive enough income to cover our monthly spending.
How cool would that be to have the actual sun fund your entire life?
Finally on investing, I'm thinking of consolidating the magnificent 8 ETF's into just 3 funds: S&P 500 (VOO), Total US Stock Market (VTI) and US Mega Cap Growth (MGK) as they continue to be my favourite low cost index tracking ETFs by far. That does make me heavily weighted on the success of the US economy but I think I'm OK with that. I may just add in one global fund like maybe Total International Stock (VXUS) to make sure I don't miss out if South Africa becomes the next superpower.
As I already mentioned, Side-hustling continues to be full on right now and I have to say, I'm on the brink of not enjoying it at all.
The work is interesting and it's what I'm good at but I have to admit, it's hard to get excited about. The money however is great and that alone is motivation enough to do a good job and keep my client's feeling like they've made the right decision in choosing me.
I'm not going to talk any more about consulting this month as it feels like a repetitive story from last month but needless to say I am nose to the grindstone until Christmas when things will ease up and then should return to a nice drip-feed by March. Looking forward to that.
My mind has been drawn back to the real reason to have a side hustle in retirement and that is to do something you love. Its very early days but I'm starting to incubate an idea of doing something that combines my love of travelling, food and my post-retirement passion of making stuff.
I still plan to transform my consulting business into a micro investment house, that hasn't changed, but I'm also cultivating an idea around perhaps getting into food import & export and perhaps even getting into the spice trade. I love to cook and invent and travel and it feels like I could do all three with something around this. Perhaps coffee even. It's still early days but I have this kind of stereotypical picture in my head of flying into China to find exotic tea or South America to buy coffee, Madagascar for chocolate or Morocco for spices. If I could make a business that funds exciting adventures like that, that would be a side hustle worth pursuing.
Still an embryo of a thought right now but just thinking about it gets me inspired and if we're going to do something exciting in retirement, that could tick a few boxes. More on that to come in the future!
Picking A Winning Stock 2021 - Monthly Update - Month 11
It's that time of the month again where we try and answer that burning question; "Is stock picking a science or a lottery?"
With just 1 month to go, it looks like the podium positions are starting to solidify with only myself and fundyourfire battling it out for the wooden spoon! (and he's winning right now)
Interestingly, every single pick is now in profit and had you invested in this little portfolio in January you'd be now showing a respectable return of 17.5%. This is mostly down to Stuffyuncle who's random pick is now showing a massive 61% profit. I really hope you took your own advice and invested in Argent Stuffy?
My fellow expat TheGroses has also done a great job with a 33% return after close to 6 months in the doldrums. That is my classic kind of share, does nothing, I sell it, then it goes stratospheric! A good lesson for the buy and hold strategy.
What is looking conclusive is that researching stocks on the JSE to make your investment decisions is largely pointless as my science based approach has delivered just 3% whilst the "pin the tail on the donkey" strategy deployed by Stuffyuncle provided a 20x return on my attempt. Luck or judgement? Only you can decide.
Next month will be the official crowning of the 2021 Tribal Fi Stock pick competition winner so make sure you tune in for that, I can promise it will be an underwhelming occasion! I wonder who might win?
Do start considering your picks for the 2022 version as you'll have the chance to enter via the comments section in next month's monthly update. I'm actually trying to find out if I can legally give a prize to the winner next year (I think they call that managing expectations Stuffy!)
A good month overall with lots of socialising, living and a bit too much working backed by another decent return on our investments which our successfully funding our early retirement as planned.
Until next time, keep living