Monthly Finances - October 2021
A solid bounce-back month with some out of control spending!
Life, Health & Early Retirement - 18 Months Since Retirement
Not really an anniversary but this month signals 1.5 years since I decided to get out of the rat ace and pursue a more content future. I still don't regret it a bit and as the hot weather finally arrives in Cape Town, there's a lot to be happy and thankful for.
Probably my biggest news of the month is that Mrs Has finally joined me as an early retiree just a couple of weeks after her 50th birthday and she's super excited about pursing a few of her passion projects but I suspect like me will start with a few weeks of lazy days and anxious moments wondering if she made the right decision! I'm excited for her and it's brought back all the memories of my last few weeks of work and then the release that was saying goodbye to my colleagues via video conference (due to Covid-19) and hanging up my corporate boots forever. She is however immediately joining my side-hustle to help share the load of what is a side-hustle growing arms and legs at the moment.
My health continued to dominate the agenda in October and finally we had some good news that despite my kidneys being just a hair's breadth away from total failure in September, the latest results show they have recovered to 80% of being "normal" so I am able to stop hearing words like dialysis and transplant hopefully forever. A quick thank you to all the readers of my blog that sent well wishes, I can't tell you how encouraging it was in one of the darkest and most helpless moments of my life, it truly helped me get through it. For anyone who's interested, it turns out it was completely down to some blood pressure medication that I've taken for years becoming too strong due to my improved health which is primarily down to living better since I retired. Who knew? Not my doctors apparently!
So a word to anyone who is pursuing a FIRE lifestyle, its great for your health but please get your medication checked when the stress of working for the man leaves your body, you might not need some of it anymore if you're like me.
From a lifestyle point of view I'm unfortunately side-gigging more than I'd like right now, which is annoying given Mrs H's new found freedom but the money is good and the medical bills are high so it's a necessary evil and I'm learning a lot about how I'm going to approach the side hustle moving forward but more of that later.
We're planning a huge party to celebrate Mrs H hitting the half century and her having the next half to relax so that is pretty much taking up all of the time I'm not working, but it's getting some much needed maintenance jobs out of the way. The youngest son was supposed to be arriving today for the party and to have a holiday with his new girlfriend but we just heard he rocked up at the airport without a PCR test (duh) so won't be here until tomorrow. His excuse was that he didn't think he needed one because he was double vaccinated which despite the obvious response of "And you didn't think to check this?", in his defence it does speak to how far we are still behind the rest of the world in South Africa but still gives me something to wind him up about for the next two weeks Well, that and embarrassing him in front of his new partner. I always say revenge is a dish best served cold and I've been waiting about 15 years to pay him back from the pain he put me through when his mother and I got together so this should be fun!
Our Net Worth: R16,790,488/ $1,166,006 / £848,004
Previous Month: R15,915,314 / $1,105,230 / £803,803
Change: +5.2% (Previous Month -2.3%)
Last month sucked financially but as it always seems to go, October was an absolute bonanza! This was my best performing month since retirement and even beats my first month when I got all of my company stock options and left over holiday entitlement cashed in. At over R875,000 / $60,000 / £44,000 increase in our net worth, we generated enough income to cover our living expenses for the next year in just one month.
This windfall puts us back ahead of our magic FIRE number and I'm quietly confident that we'll now stay there. I have some decent side hustle checks coming in for the next six months so despite the fact we now won't see any income from Mrs H working, if we can control our spending (unlike this month) we're actually in a really great position for the future and for me ditching the consulting side hustle at my target 3 years, of which I'm half way through.
A very special thing happens when you go past your FIRE number, the graph that tracks your net worth for the rest of your life becomes an exponential rise. What does that mean? It means that if you stick to your budget (and increase it for inflation) and you maintain your investment performance target (9.5% annual return for us), not only will you have enough money to last for your entire lives, you will leave a fairly substantial amount of money behind. Well based on our net worth, budget and investment performance today, my little calculator tells me Mrs H and I pop our clogs on our 100th birthday, we would still have a whopping R384,576,000 / $2,563,000 / £1,923,000 in the bank. Clearly, that's 55 years away so that won't buy anywhere near what it would buy today but it's still a chunk of change for the offspring (or the dog's home if they don't behave!).
If you've been reading this blog throughout 2021, you would remember I've set myself a personal financial goal to try and build our net worth to R20,000,000 / $1,333,000 / £1,000,000 for no other reason than my ego. I've always dreamed of being a millionaire in British Pounds. I'm not really driven by status anymore so that's no longer the main reason but I did want to take a couple of years after retirement to prove to myself I could have been successful if I'd just followed my dreams and struck out on my own at a much earlier age rather than spend 25 years climbing the corporate ladder at a massive personal expense to my life, health and wellbeing. I set myself the lofty target of achieving that in the 2021/2022 financial year (1st March 2021 to 28th February 2022) and on the 1st day of my challenge our net worth was £743,000 meaning I need to try and make £257,000 or an increase of 35%. It felt pretty impossible 8 months ago but I prefer to shoot for the starts and hit the moon and if I'm honest, thought £900,000 would have been an absolute win. Well today at £848,000 with still 4 months to go, it's starting to feel like less of a moon shot and has reminded me one of one of the most useful things I learned in the corporate life; "You will be amazed what you can achieve if you set your mind to it"
I'm still shooting for the million, as much to scratch my itch so I can stop focussing on earning money and start focussing on doing some good with it and to be honest, start focussing on enjoying spending some of it. With Mrs H now officially on board, there's nothing standing in the way of our retirement so the only people holding us back form living the dream is us, no more excuses!
Living Expenses: R89,998 / $6,250 / £4,545
Budget: R68,000 / $4,850 / £3,400
Meanwhile, back on planet earth, we managed to blow the budget completely out of the water for the 2nd time in three months!
This time though it was expected and largely unavoidable. Firstly it's car month, October is when the cars are due for their full service, licenses need renewing, and generally they get a full overhaul with all broken bits fixed. Mrs H's little sporty number needed a new alternator as the battery was going flat so that doubled the cost of the servicing. My camper van (affectionally known as the bus) needed 2 new tires, a full new set of brakes a new spotlight (kerbed it) and a few bits and bobs that just needed replacing due to old age. That little maintenance jobs came to a cool R25,000 / £1,600 / £,1250 and immediately put us on the budget back foot.
Next was my nemesis; household maintenance. The only problem with throwing a party is you have to fix some stuff, the only problem with fixing some stuff is that hardware shops and tradesmen are, in the majority, rip-off merchants. Case in point: Mrs H decided to make some cushions for our outdoor benches. 4 pieces of foam, not special foam, just foam. R1,600 / $106 / £80.....what the AF? Maybe I'm getting old but foam, does not feel to me like something that costs more than, say a three course meal for twa at a really good restaurant? Or a couple of cases of half decent wine? Or 2 full tanks of petrol? Luckily I'm over it (just) but between that and all the other little purchases to prep the place for geusts, we spent R11,200 / $750 / £560 on maintenance in October.
Finally it was more medical expenses, the medical aid savings account was wiped out on specialists and blood tests for my kidney issue and Mrs H is also nursing a busted knee due to going a bit heavy on the trampolining classes and the aerial yoga (I know, right!) so between, doctors, tests and medication, we managed to rack up R11,500 / $7700 / £585 on top of our medical aid subscription in October. To add to the pain, Mrs H had our medical aid paid from her salary previously so I just got a new R6,000 monthly bill added to the budget.
With the party and guests in November, Christmas in December, All the visitors we get over the SA summer and a trip we're planning towards the end of March to visit my mum for her 80th in England, a visit to see Mrs H's family in Scotland and our first retirement trip for a tour of Ireland all in March, I feel a budget review coming on.
Financial year to date, we're at just short of R72,000 per month so we're about 6% above our plan which is not too bad but I'm starting to wonder if I either need to plan for a year end figure of R80,000 and suck it up or simply tighten the belt and try and keep things as they are. I suspect I might plan an increase for the Medical Aid and then reset the budget in March at whatever our 2021 average closes at, that then feels like a "No Excuses" number for 2022.
Monthly Investment Return: R1,082,650 / $75,184 / £54,679
Investment Return Percentage: +6.8%
Annualised Investment Return: +9.7% ( 7.9% Last Month )
It's hard to comprehend making over a million Rand in month on our investments and we shouldn't forget I lost over R300,000 last month but that is streets ahead of any other month's return in my entire life. The numbers are very glamorous but what's a much bigger deal for me is the Annualised Investment Return. That is now 9.7% and my target is 9.5% so I'm generating more income than we need now which is massive. To be clear, the Annual Investment return is the average yearly return since I started this journey so goes right back to June 2018 when I started our FIRE journey and we had a net worth of right around R10m / $$666,000 / £500,000 so when you look at this months result, we made a 10% increase on our starting investment in a month. That is the true power of compound interest, the longer you leave it, the faster it will grow.
To illustrate compound interest in action, If I look at my investment returns over 1, 2 & 3 years you can clearly see the affect:
3 year investment return (annualised) = 5.9%
2 year investment return (annualised) = 9.5%
1 year investment return (annualised) = 15.5%
Now some of that will be me making better investment decisions as I learn more and more about how and where to invest as this has somewhat become my hobby so learning about investing is something I enjoy BUT as much as I'd like to believe I must be an illegitimate offspring of Warren Buffet without knowing it, I'm not doing anything particularly ground breaking. I'm just making sensible long term investments that reflect a risk profile of 10 years plus. The rest is compound growth. We're getting interest on our interest and growth on our growth and every day, month and year that compounding amplifies and as long as the markets ultimately move forward in the next 10 years, and as they always have since they existed, we'll continue to make more and better returns.
In terms of specifics in October, everything did pretty well but in particular, US stocks are doing great and the Magnificent 8 ETF portfolio is now posting a 15% annual return.
My offshore stocks which I hold in South Africa also were boosted by the weakening Rand and are now showing a 21% annual return
Crypto also went a little crazy in October and I benefitted from that through my crypto trading bots. My total investments in Crypto are now just a bit short of the R300,000 / $20,000 / £15,000 mark which is just 1.7% of our net worth but has grown in the last year or so to be worth right around R400,000 / $26,7000 / £20,000 which is 2.3% of our net worth and a return of 33%. I'd like to increase our Crypto investments to around 10% of our net worth but it's increasingly difficult to buy crypto from South Africa and the tax rules are still too vague for me, so I'm going to wait until my accountant has done all the tax returns for the year and make sure I'm fully legal and compliant and then I may take some money offshore using my yearly allowance and increase our allocation.
Side hustling is probably where I'm spending most of my physical time as well as my thinking time at the moment.
I've got two big items on my mind that I need to firstly think lots about and secondly make some big decisions on.
The first one is the more complicated. I'm busy, really busy and probably more busy than I'd like on the consulting side. Its a really great problem to have as the money is great but right now I'm working full time and despite only being temporary, that was never part of the plan. I committed to myself to consult for three years after retirement and I'm exactly half way through. I don't dislike the work but it's basically what I've been doing for the last 20 years and its formulaic and from a mental health perspective, I associate it with some negative energies like ego, politics and simply corporate bullshit. The fact is; I'm good at it and it pays well so I shouldn't be ungrateful for being in demand but my recent health scare as reminded me that the side-hustle was supposed to be doing what you love and not for the money and the consulting is not that, so I need to think hard about the next 18 moths and what I'm willing to sacrifice for money.
The second quandary is I guess completely liked to the first. I am at the point that there is more work coming and I'm maxed out. That puts me firmly at a crossroads. I can turn down the work, which will ultimately stop it coming in the first place. That feels Ok right now but things are going great, what if things change and there's a massive market crash or life changing expense that comes out of left-field? Then turning down work now may turn out to be a dumb thing. The alternative is; do I recruit some help?
That feels like I'm committing to being a business owner and not a side-hustler. I then have employees (other than just me and & Mrs H) and responsibilities to keep the work coming in and lots of new things to care about. However, maybe that could mean I could get the best of both worlds, make some money without needing to do all the work myself, maybe it's a good thing and I'm just not seeing the opportunity that may present itself. What if the business grew a lot and I could sell it at some point? What if I could do a couple of hours a day and make the equivalent of working full time? Would that be ok?
I don't have answers but I need to get some as the work is coming. I'm the kind of guy that goes out to eat and can't make his mind up what to order but the second I'm asked by the waiter, I immediately choose something. I think this will be one of those decisions I can't decide until I'm forced. But when I do decide, you know I'll go after it like Winston the wonder dog chasing the squirrel that has setup home in our garden!
One notable update on the side-hustle is I got my first pay check as I finally decided to start paying myself a small salary to cover our living expenses now Mrs H has left her full time job. Additionally, Mrs H has agreed to become employee number 2 as she plans to do a little consulting herself while she eases out of full time work and is also going to help me with some of the heavy lifting admin stuff while I'm busy so after working together at the same companies for our entire career, we have decided to continue the trend and work together again instead at our own company. I guess I need to give her a proper job title. I think Director Who Must Be Obeyed might work well!
Picking A Winning Stock 2021 - Monthly Update - Month 10
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 2 months to go, I actually had to go and double check the numbers this month as it's all change again in the Tribal Fi stock pick challenge. Most notably, TheGroses made an epic comeback after spending almost the entire year in the lower echelons like a rocket into second place. Something massive happened on the 13th October sending Long4Life up 32% and it looks like it has some more to go meaning we have a new contender in the race. StuffyUncle continues to hang on to his lead though with Argent showing a massive 55% increase year to date. I am proudly holding onto the last place spot with a dismal 9% loss on Impala Platinum but don't count me out, the resources markets seem to be warming up nicely.
What you can clearly see though is that the markets are hot right now and our portfolio is now showing a very tidy 18.5% return so far, which for South African stocks, is not too shabby.
You would think that by month 10 we would have a clear winner, but right now, I think any of the top three contenders is still in with a decent shout and if Platinum suddenly runs out globally in the next few weeks, I think I'm still a possibility for the win!
A great month financially and some major milestones hit with Mrs H finally getting off the hamster wheel. A relief on my improved health which has encouraged me to revisit my objectives and perspectives on early retirement and make some fundamental decisions about our future.
Until next time, keep living