Tidy Portfolio, Tidy Mind
I'm not going to lie, I'm a messy son of a gun. When I cook, I use every pan in the house, when I change clothes, I leave the old ones "close" to the washing basket and when I fix anything, my tools sty around the house until the fairy puts them away (and then I accuse everyone in a 10 metre radius of borrowing my tools and not putting them back when I can't find them!). I'm improving with age but its a personal trait I've carried my whole life.
Mrs H is better then me but far from perfect, my pet hate is she never actually finished a drink or empties her plate for reasons I don't think I'll ever explain, so washing up starts with scraping plates and emptying glasses (and me complaining loudly that it's like living with a 5 year old!).
Luckily we have our housekeeper who frankly deserves a medal for keeping our home presentable. Between me randomly dropping things everywhere except where they're supposed to be, Mrs H's little leftovers like Santa and Rudolph were expected every night and Winston the wonder pup depositing pillows throughout the house because he learned a trick when he was a puppy that it was cute to bring people a gift of a cushion, she must have the patience of a saint.
I'm learning that my untidiness also plays into my investing. Anyone who read my post about my 2021 Portfolio could not have failed to notice the sheer amount of investments I own which at that point totalled a massive 50+ different investments across probably 20 providers.
I diligently update a super-spreadsheet that tracks my net worth across every investment daily, not only so I have all the data to update Tribal Fi with progress and my experiments etc. but also to constantly remind myself we have enough money to survive another year without jobs. It's actually enough currently to last about another 20 years but it's still less than 1 year so I pushed the FIRE button so I'm still getting to grips with the idea of actual retirement!
This morning I had a realisation that has been brewing for a while that I'm now spending 2 hours a day managing that data and the effort is now outweighing the reward so it's time for a financial spring clean (or autumn clean if you're in the southern hemisphere like me). It's going to be emotionally difficult but it's time.
So, to the approach.
I broadly invest in 5 categories these days and they are:
South African Based Funds & Stocks - This is everything I buy that is stock market related but is bought in my personal capacity and is purchased in South African Rand. The main providers here are Ninety-One, Investec Wealth & Investments & Sygnia. This also includes our SA based retirement funds (RA & Preservation Funds)
Offshore Equities - This is mostly our offshore retirement funds and my offshore share dealing account. Suppliers here are Sovereign Group (offshore retirement) & Interactive Brokers (offshore Stocks)
Alternative Investments - This is Solar, Bees, Blueberries, Cattle and Delivery Bikes. Suppliers here are The Sun Exchange, Fedgroup, SV Capital and Livestock Wealth
Business Profit Investing - This is all the profits from my side-hustles which get invested into a mixture of each of the 4 categories above but has to be completely separated from my personal investments so I don't make any mistakes from a tax perspective.
As you can see, a big opportunity to condense all of this cash into 1 or at most 2 suppliers for each category.
So, to the strategy
One of the primary drivers for doing this now, other than what I've already mentioned is that with Mrs H edging closer to the idea of retirement, I need to start prepping to make sure we can execute on our plan to go travel and have adventures without me having to always be finding wifi to check on investments or make trades. The solution to that dilemma is to hand over controllership of my portfolio to my trusty financial adviser and accountant combo (more about my search for a virtual CFO in a week or two) so that I can get on with the job of living. I'm still not mentally ready to do that and it is going to be one of the biggest "releases" of my FIRE life to date but I'm committed to it so need to start getting things ship-shape to make that happen.
So I'm good with my 5 investing categories and don't feel the need to change them, but I do feel I need to have a plan to simplify the living begorra (good word) out of it all.
So here is the cunningly simple strategic objectives (blimey, I sound like I'm back in a boardroom, I need a break from all this side-hustling)
Consolidate each category to one supplier if possible
Stop investing new money (reinvesting profits is fine) in my personal capacity and prioritise growing the business investment portfolio only
Focus on low fees, good app/website self service and easy access to funds
Prioritise Solar in alternatives and stop faffing around with cattle, solar is better.
Leave at least 3 years of living expenses in liquidable personal assets to draw down from.
It shouldn't take more than 30 minutes to do a full analysis of the portfolio
That should do it
So, to the master plan
South African Investments.
Investec Wealth & Investments & Ninety-one have been pretty good to me the last 7 years whilst I've been in South Africa but they've been paid well and their fees are off the chain when compared to Sygnia. Investec share dealing has one massive flaw in that it takes 2-3 days to pay money into the account and you have to phone them up to make a withdrawal so they're in the bin for that reason. Ninety-One have launched a new online self-serve portal which is OK and they are quick on funding and withdrawals but their fees are shocking. I'm also going to reduce my exposure with them but I can't get rid of them completely as I get reward points with my Investec banking that I can use to buy Ninety-one funds and that is usually around R500-R1000 per month of free investments and offsets my banking fees so I'll reduce to one fund (commodity fund I think) and keep ploughing that free money in there.
So the winner of the pack is Sygnia which I'll move all of those investments into. Sygnia has a great website for tracking progress but their transacting is slow and painful and their data is always a few days behind real time, so for that reason, I'm going to have try number 16 at opening an easyequities account for my day to day SA based share dealing. 16th time's the charm as they say!
No change here simply because I can't. Our offshore pensions are held in Gibraltar as part of a British government scheme which should mean we only have to pay 2.5% income tax on our retirement savings and we never have to buy an annuity so unless the rules change, that is our golden ticket to retirement. Also, IBKR (Interactive Brokers) was a massive effort to get setup but was well worth it. $1 per trade and essentially 10 trades a month for free (your $10 monthly subscription is reduced by your trading charges) it's a no-brainer. Plus IBKR is truly portable so wherever I am in the world I can trade without issues.
This is my favourite area and is my longer term strategy. I felt I needed to diversify until I understood it but I'm at a point where having 4 suppliers is just stupid. I'm going to stop investing in Fedgroup because there returns are lower than everyone else and it's just not such a great customer experience and there are no fixed dates for income and things. Livestock wealth are good and pay out and give the returns they promise but their website is very bad and I couldn't get setup with them properly with a business account so they unfortunately need to be kicked to the kerb. SV capital made setting up a business account easy and whilst I don't like their fee structure, they seem to pay a little more than Livestock wealth on Cattle, they also are the only option for the delivery bikes which I quite like so they will be used for the business investments only. On a personal basis, I'm just going to reinvest my profits in Solar so that will be my only personal investment to manage. On the business side I'm going to use SV capital for short term investing (6-18 months) and The Sun Exchange for long term investing (20 years+). Both have reasonably good support for businesses and you can transact entirely online.
This is the new kid on the block and whilst I'm not heavily invested, it is my best performing category. It's critical I keep personal and business separate so I'm going to use Binance for personal and FTX for business. The main reason is that I'm fast and loose with my personal crypto as I'm pretty much cashed out so I take a lot of risks as I have essentially nothing to lose. On the Business side, it's a much more conservative strategy of buy and hold as a way of storing some of my company profits in a way that should show good growth over the long term, a bit like a savings account.
I've covered a lot of this above but this is the most important category, I plan to side-hustle for another couple of years but want to build myself a micro-investment house in that time where the business has zero debt and has a decent amount of money in investments so I can fund new side-hustles and maybe buy a business or do some angel investing in the future to build our wealth so at some point we can draw down a salary from it. Mrs H has some side-hustle ideas and will probably also do some consulting so that will essentially become the family business. I'm going to invest heavily in Solar to offset costs with income and then look for opportunities with excess profit as they arise. The crypto side will be to store surplus cash until it's ready to be deployed into projects. This is the part I'm most excited about as if I can keep it seperate from our FIRE money that funds our lifestyle this will represent the opportunity to increase our lifestyle if and when it becomes a self sustaining business.
And that's kind of it. If I can pull all that together over the next couple of months, I'll end up with 5 categories, maximum of 20 investments with probably 8 providers. That might still sound like a lot but it's probably 35% of what I have today. Most importantly it gets me closer to the point that I don't even look at my investments on a day to day or even week to week basis and I can focus on the important point of spending it on the life we've always wanted.
I'm hoping over the next few months Tribal Fi will become a bit more balanced and there will be a bit less writing about how to make more money and a little bit more about what retired life is like in your forties as well as a lot more on our impending new lifestyle. If there is any aspect of FIRE or Personal Finance you'd like me to write about or have specific questions or topics you'd like me to cover, don't hesitate to drop a comment below or send me an email with your request, I'd be more than happy to oblige.
Until next time, keep living