Well Happy New Year to one and all. Let's take out 2024 at the knees people
Life, Health & Early Retirement - 3 Years & 8 Months Since Retirement
Let me start by saying that I hope you hall had a cracking Christmas, New year, Honecker, Kwanza, Bodhi Day, Winter Solstice, Las Posadas or whatever flavour of festivity you prefer and thank you for coming back to read my ramblings in 2024.
And it's been a pretty good start to the year across the board really. Finances are looking relatively heathy, side hustling has been brisk and retirement has been relaxing and fulfilling. Maybe I should call a draw on 2024 now and bank the win!
December already feels a long way past as despite my best efforts to right this post earlier in the month, I've been doing some shocking procrastination since the break and really struggled to motivate myself to get back to doing anything especially productive, which is uncharacteristic for me as I'm generally incapable of sitting still for more than five minutes unless it involves alcoholic lubrication.
I do love the start of the year as it always feels like a good opportunity to do a fresh start and forget the stresses of the previous year. This year has been no different and I'm feeling chock full of hutzpah to get the new side hustle off the ground and embark on some new adventures.
Interestingly, and probably for the first time, I'm feeling a real desire to move away from the consulting side-hustle and I'm looking forward to closing off the last of my projects so I can focus on other things.
I've talked about that a lot in the past but I guess the alure of a juicy day rate always left me talking about stopping that stuff but deep down knowing that as soon as the phone rang with an opportunity the answer would be yes. I'm not really feeling like that now, in fact it feels a bit like a distraction. Exciting times.
Other than that, it s the usual New Year's Resolution of shedding a few kilos, drinking less, getting more exercise, blah blah blah. I'll probably get over that in a few weeks! One thing I have decided to do in 2024 is to stop giving quite so much of a shit about other people and their problems. I don't mean that in a nasty or uncaring way but I do feel like I spend an inordinate amount of time trying to help other people and taking on some of their stress at the same time. I then eventually stress my self out and get all resentful that I'm stressed because of other people's problems and throw myself a little pity party. Not this year people, keep your problems to yourself, haha.
Health wise, I think both me and Mrs H have had the longest stint of not seeing doctors or nursing ailments in the whole time in South Africa. Long may that continue. Unfortunately my faithful hound Winston the wonder puppy is currently suffering his annual bout of allergies which drive him nuts with itching and skin irritation so keeping him out of the pool in the current heat is a full time job and fairly heart breaking as it's the pupster's favourite pastime.
And by crikey it's been hot over the last few weeks. In Cape Town we've had several days at around 38c and as a fat lad from Britain, I don't cope well with anything over 30c. Its a good job we've got solar panels as I've been smashing the air conditioning all day every day for weeks. On that note, I got a comment asking for an update on 4 years since I converted the house to solar so I'll do that update in the next week or two.
This Month Net Worth: R16,124,715 / $858,184 / £677,188
Last Month: R15,653,466 / $845,917/ £667,363
Change: +2% (Previous Month +4.1%)
I'm a bit surprised we saw another good month after the 4.1% win that was November but a fair bit of that was getting paid for the solid 3 months of consulting work I managed to bag since September.
That has all duly been deployed into investments so I'm feeling suitably smug about that and as that takes us to the end of December, I thought I'd take a quick look into how the full financial year is shaping up.
Just to prevent any confusion, I don't monitor my finances calendar year, I do financial year as it makes it easier for tax planning so when I say I'm looking at 2023, I'm looking at 1st March 2023 to 31st December 2023, not the full 2023 year. I will of course do a full annual review in Mach when the financial year is done. OK, onward.
So the key takeaways for net worth in 2023 were:
Net worth grew by R2,623,775 / $138,093 / £109,324
That was an annualised return of 22.7%
Cost of living (annualised) came in at R799,965 / $42,103 / £33,331
Cost of living was 4.8% of our net worth and 30.4% of annual returns
Side-hustle working days (Paid days) in 2023: 96 days or 1.8 days per week.
I'll take that.
The highly contested but largely agreed recommended drawdown for FIRE early retirees is to spend less than 4% of your net worth each year. The theory is that most good long term investments will yield that 4% plus inflation and therefore your net worth pot will last forever.
What we see from our number is that our net worth is still too small to sustain us at our current cost of living as we drew down 4.8%. That means I still need some level of side-hustle at least in the short term OR we need to cut back on our spending which won't sit well with she who must be obeyed so it looks like I need to keep grinding in 2024.
The returns however are way beyond what is required, I would love to tell you I'm an investing guru and lord over my investing prowess but for anyone who has been following the stock pick will already know, that is simply not true! The market recovered in 2023 from a crash in 2022 so it's a big number off of a low base.
I do though feel the most confident I've felt in a long time about my portfolio so this could be the third way to get passed our magic number by a year of two of high returns. Unfortunately that is not a strategy, it's a crap-shoot so if it happens, great but I can't afford to "hope" for our future, action is required.
If anyone wants a breakdown of the current investment portfolio, just drop a comment below and I'll oblige in a future post.
Monthly Investment Return: R285,818 / $15,278 / £12,040
Investment Return Percentage: 1.8% (+4.6% Last Month)
So back to December and the markets continued to edge forward. Slower than November and it was definitely more choppy but the market sentiment seems to believe that interest rate cuts are coming and AI is going to change the world forever so it was a month of all-time high's against all the big US tech stocks which is where the bulk of my exposure is.
In other good news, one of the big projects I had invested waaaayyy more than I should have done in has come back on line after months of non-payment, legal wrangling and general tom-foolery. That project alone should produce around R20,000 / $1,052 / £833 of income every month as I invested close to R2,000,000 / $100,052 / £83,300 of our hard-earned cash into it almost 2 years ago. It's currently bringing more like half of what it should as there was storm damage to the equipment (You couldn't make it up) but that should also recover in time.
I have been pumping all our solar income into livestock to generate a second passive income stream via SV Capital and that is starting to grow now so I'm trying to keep away from the stock market as in my opinion, it's looking awfully expensive right now and although I'm enjoying the upside, I've learned over many years that when it looks as though you can pretty much by any stock and it will go up, that is when you should be getting out. If I can hold a little pot of cash outside the markets, if it does crash or even correct, I will be positioned to pick up some investments on sale.
Budget & Spending
This months expenses: R77,107 / $4,124 / £3,249
Budget : R75,000 / $4,150/ £3,500
Not a bad month considering it was Christmas holidays. We very consciously didn't go crazy over Christmas as we knew we would have family and friends out from January to March so we were only slightly over the budget.
The subject of allowances has come under scrutiny again from Mrs H so I'm going to be looking at the finances over the next few weeks to see what can be done to make my life happy by making my wife happy!
For any new readers, our approach to living expenses is fairly simple I manage the budget and pay all the bills etc. from our joint bank account and then we both spend on that account for incidentals like groceries and the like. We then both get paid a monthly "allowance" to our personal bank accounts to spend on all of the things that are just for us, like clothes, gadgets, hair cuts, beauty treatments and all of that good stuff.
Currently that allowance is R12,000 per month each. And whilst I need to tread carefully on this subject, that amount is more than enough for me and I tend to save mine up and then by big stuff likepower tools or some cooking gadget or go on a shopping spree when we travel etc. Mrs H struggles to make it work as she has more regular "maintenance" than me (think hair, nails and whatever else goes on in those parlours).
This all means we're in deep negotiations on what is a reasonable amount without putting pressure on the numbers. I'm waiting to see what the 2025 income tax rates look like as that pretty much answers the question
The 2024 income tax bracket for 26% is R370,500 so between us we can draw down R741,000 from taxable investments and side hustles and then our tax paid and capital gains savings need to make up the rest. Our current budget of R75,000 a month is R900,000 so its already quite far north of that target. Our other option is to go up one more bracket and pay up to 31% tax which would men we could draw down R1,025,600 and not take anything from capital gains and tax paid savings. That is a bit more complicated than it's sounds but would boost the monthly budget to just over R85,000 per month. That feels like a lot for 2 adults and a puppy in early retirement. It also means the magic net worth number becomes R25.5m / $1.34m / £1.06m which literally makes my hair stand on end.
A decision not to be rushed.
Thankfully the consulting side of my side-hustle has peaked and is now fully on it's way to troughing so I have nothing in the pipeline of any magnitude and I'm having some down time during February as my lifelong pal from the UK is coming out for a holiday. I then intend to immerse myself into the new side-hustle of coffee and try to get that off the ground with my partner.
There has been a level of progress there and we now have a website (unpublished so far), online payment processing is setup and we are currently in the process of building our inventory and setting up the sales channels so I would guess we're about 60% of the way to being open for business. How very exciting.
The one reality that is kicking in is the sheer volume of coffee related product we need to move to generate two half decent salaries. I won't bore you with the numbers but t's a lot, a hell of a lot. But Starbucks and Amazon started somewhere so we have as much chance as anybody else of making it a success.
One big advantage of setting up this kind of gig when you're already retired is that whist we would be stupid not to factor wages into our planning, we don't actually NEED to take a salary in the early stages which means more of the profit can go back into growing the business. That is a huge advantage as long as you can keep motivated as there's nothing more motivating than having an empty bank account as I learned so well in my young adult years.
Other than that, I've been gifted a coupe of 3D printing orders from friends of mine so whilst I don't make much doing that, it's forcing me to learn CAD design which is a massively useful skill to have these days and as I get better at it, I can design things more quickly and better and that means I can charge more for less effort and therefore maybe bank a few shekels.
Tribal Fi Stock Picking Competition - 2023
And the bit that I know at least 7 of you have been waiting for is the latest update on the stock pick challenge. We have 2 months to go and this year's competition is not getting any less interesting.
It is at this point that I have to do something that doesn't come easy to me, and that is to eat a slice of humble pie. I will admit that I may have scoffed at Lawrence's stock pick, there was scoffing, I own up. But it now represents the single biggest return we've ever seen on Tribal Fi, with a massive 207% return. That's not bad, not bad at all.
I even went to check if there'd been some kind of stock split but t would appear not, that is 207% winning right there ladies and gentlemen.
It really seems a bit pointless looking at the rest of the scores but I will mention that Ross is also fostering a 36% win after he has finally been paid off by Snowflake and an honourable mention goes to Charlie who has clawed his way from the doldrums of the lower ranks into a small but respectable profit of 5%, well done both.
The rest of you, including me, suck at this game, hahaha
Looking back at 2023, a really good year for the retirement pot and a great starting position for 2024. Feels like the stock markets are all a bit inflated right now so I suspect there may be turbulent times to follow in the coming months so time to galvanise the portfolio and batten down the hatches. Finally feels like a "Passion" side hustle is about to emerge which is well overdue but I'm sure will bring about more challenges and adventures.