Financial Independence – October 2019

Man looking at sunset

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.

Savings rate

You can read more about saving rate in my article how savings rate influences your retirement. Our savings rate this month was 43.8%, much higher than I expected. It could mostly be attributed to my wife’s thirteenth check in her birthday month. It is always nice getting money you did not expect.

Then the big shocker in September month was 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 with my wife’s tax refund, which I suspect might only come through in December. Our savings rate can be seen below (3-month trailing average in orange). It is nice to see it picking up after the horrible month of September.

Our average savings rate is 35.7% (38% for the three-month trailing average). I like it when the three-month average is above the long-term average since it means we are improving. We hope to keep hitting the 40% savings rate sweet spot. I must admit the running costs for little Alex is not too bad (I hope I did not jinx it).

Spending for the month

Your savings rate is completely dependent on your spending habits. Let’s look at what we spent our money on.

Health and medical is up significantly. We received a few outstanding bills from the hospital stay during our son’s birth. The baby expenses are down from about 14% to 5.1%. It looks like we have bought most of the essentials to raise a baby and the rest will be recurring costs.

My biggest concern for this month is the food costs that increased by about 5% month on month. I will be keeping a close eye on this. Then finally our savings for this month was awesome and it allowed me to max out Alex’s tax-free savings account (I hope he supports us in retirement).

Financial independence

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 R1.732 million. This is a net-worth growth of R42 000 for the month. We had a good equity month in October. Largely due to a slightly disappointing mini-budget. Since most of our money is oversees, any rand weakening works in our favour. Having said that, we lost most of the gains in early November, but that is a topic for next month. At this stage, we are at 13.7% of our savings target. This is 0.7% behind where we should be.

Investment allocation

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 and cash are down about a percentage each while equities increased this month.

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. The three ETFs that I invest in are the Ashburton Global 1200 (52%), Satrix Top 40 (39%) and the Coreshares SA Property (changed its name this month) (9%). These percentages are skewed this month since I put all the savings in the Top 40 for two reasons. It went into Alex’s tax-free savings account (he will use it for studies if he knows what’s good for him) and it is better to hold local shares in your tax-free account, and I managed to sneak the purchase in just before the dividend payment.

My blog reads in October increased significantly from 13 408 to 19631 (up 46%). 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,


October articles

Cost of having a baby

Worst ways to withdraw retirement savings

How to save money

Quote of the week

"Money is a terrible master but an excellent servant." – P.T. Barnum Click To Tweet


Thank you for reading to the end. Apparently, the average person spends 8 seconds on a page, so you are special. If you have any suggestions, feel free to drop me a mail on the contact page. If I missed anything or you have questions, don’t hesitate to comment below. I might even notice it and respond. If you enjoyed this article and really want to throw me a bone, please share it.

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