I am sharing my road to Financial Independence (FI) to help me get my shit together, or at least get you to think about where you are. The reality is that we all want to be financially independent. FI does not imply quitting your job and is not a synonym for retirement. It is the freedom to ignore finances when you make life decisions. It means choosing what makes you happy.
You can read more about saving rate in my article how savings rate influences your retirement. Our savings rate this month was 23.4%. Significantly down from the previous few months but for good reasons. Firstly, our little one came early so we had the costs for the emergency c-section, anesthesiologist and hospital stay. Luckily Discovery covered way more than we expected. The whole outing ended up costing about R5 000 (actual cost about R62 000) and we spent another R7 000 on items that we still needed. Here is a sneak peek from his first photoshoot.
Then the big shocker this month is that we finally managed to register for our rates and taxes, only to find out we owe R22 000. So we have started to pay this back with an instalment of R10 000 in September and the rest we will pay in October. Our savings rate can be seen below (3-month trailing average in orange). To be honest, I’m just happy we managed to stay in the green this month.
This month’s savings rate decreased our average savings rate to 34.3% (35.1% for the three-month trailing average). We hope to keep hitting the 40% savings rate sweet spot. Although I think that little Alex might make a dent in our savings rate.
Spending for the month
Your savings rate is completely dependent on your spending habits. Let’s look at what we spent our money on.
Our spending on fuel and transport was up significantly as I had to service my car this month. I drive long distances for work and service my car every nine months. Food was up slightly (jungle juice is expensive) and health and medical was also higher. Then, as I mentioned, the costs associated with the birth and the unpaid rates and taxes made a serious dent in our savings rate.
I also track our progress towards financial independence. For this, I set a target using the 4% rule, which I tested in the article back-testing the 4% rule. The methodology can be seen in the March financial update. Our progress towards financial freedom can be seen below.
We ended the month on a net worth of R1.690 million. This is a net-worth growth of R22 000 for the month. The markets climbed slightly this month, adding to our net-worth. At this stage, we are at 13.4% of our savings target. This is 0.8% behind where we should be. It looks like it will be necessary to accelerate our income or reduce our spending to catch up to our target.
Our portfolio is weighted towards property. I am in the process of reducing our exposure to this asset class. You can read more about this in my articles why I’m selling my real estate and 9 reasons why I don’t want to retire with property. At this stage, we still have two properties left. Our allocation can be seen below. Property is down about 0.4% while equities and retirement annuities increased.
Any new savings goes predominantly towards share investments, as Exchange Traded Funds (ETFs). This month I invested all our savings in ETFs. We’ve stopped contributing to property altogether. This will see the weighting systematically shift towards equities.
I also do a breakdown of our equity investments. The majority of our money is in global shares. I wanted to increase this to 60%, but changed my mind and decided on 55%. The three ETFs that I invest in are the Ashburton Global 1200 (55%), Satrix Top 40 (35%) and the Coreshares Proptrax Ten (10%).
My blog reads in September decreased slightly from 13 497 to 13 408 (down 0.7%). I really appreciate the massive amount of support I’m receiving. Thanks for reading and if you have any specific topic requests please feel free to let me know. I also started a forum, which I hope will create a community of likeminded people that can discuss financial topics openly.
Be safe out there,
Quote of the week“A journey is best measured in friends, rather than miles.” – Tim Cahill Click To Tweet
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