Financial independence – 2019 review

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. It will allow you to determine how long you need to save for your retirement based on how much you save. Our savings rate for December was 26.6%. This was mainly due to the travelling and accommodation expenses during the holidays.

Looking back at the saving rate this year, we averaged 37.2%. At the beginning of 2019, we set an ambitious target of 40% for the year. Our savings rate in 2018 was 26.9%, so we needed to ramp up our savings rate drastically. Although we came up short, I feel we took huge steps towards independence.

For 2020, I want to increase our average savings rate even further to 45%. My wife resigned her job to spend more time with the little one, so increasing the savings rate beyond this will be hard. It will require better management of our finances, slightly increasing our income and a bit of luck. Our savings rate can be seen below (3-month trailing average in orange).

Spending for the month

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

This month our transport costs were high. I had to service my car and replace the tyres. We also balanced my wife’s tyres before driving more than 2000 km over the holidays. This also meant that we spent a lot of money on petrol.

We also spent extra money on food this month. We were away from home for most of the month. This meant that we ate out a lot. Add to this the massive amount of food consumed during the family Christmas gettogether and you have a recipe for increased costs.

Lastly, our exceptions were high this month. We include our vacation costs in this category, so this was largely accommodation and flights. We also decided to renovate our room on the family farm. It gets extremely hot during the summer, so we added insulation to the roof, installed a new ceiling and gave it a proper coat of paint. Our spending breakdown for the year can be seen below.

It surprised me how much of our salary we spent on transport and fuel. Especially because we do not have any car debt. Our house costs were rather high but we do still pay a mortgage and bought some furniture during the year. The rest of the costs were more or less what I expected. It is interesting to see that our exceptions for the year came to 2.5%. I can use this figure when budgeting to get an estimate of what our exceptions will be for each month.

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 R1.823 million. This is a net-worth growth of R56 000 for the month. Although our savings rate was reduced, I made some money from a side hustle. This means that as a percentage, it looks bad, but the amount we saved was slightly more than we usually save per month.

We started the year on R1.395 million. This means that we increased our net worth by R428 000. Of this growth, we contributed R381 000. Consequently, this means that our investments grew by R47 000. This is free money and will eventually become our income during retirement, once our nest egg is large enough.

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.

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.

Since the beginning of the year, our property allocation has decreased from 51.1% to 41.3%. This has mostly been replaced by equity investments that are up from 18.6% to 31.8% of our portfolio. We have also moved some of our cash into equities to adjust the amount we save in our emergency fund. Cash investments are down 4% to 25.6%.

I also do a breakdown of our equity investments. The majority of our money is in global shares. The three ETFs that we invest in are the Ashburton Global 1200 (56.2%), Satrix Top 40 (35.6%) and the Coreshares SA Property (changed its name last month) (8.1%). Come March, I will put most of our tax-free savings in local shares and property. For this reason, I will invest in international shares until then to keep the correct split between our investments.

My blog reads in December decreased from 17 955 to 16 479 (down 8.3%). 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,


December articles

Breaking down the JSE All-Share Index

How to manage your finances like a diet

South African minimum wage; Good or bad?

Financial independence – November 2019

Quote of the week

“Don't look for the needle in the haystack. Just buy the haystack!” – John C. Bogle 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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  1. Pingback: 7 Steps to financial freedom - Tigers on a Golden Leash

  2. Nico

    Hi Hendrik

    Do you add the value of your properties less what you owe on them also into your net worth?

    Also – when you say you saved say 30% for the month – do you then split this between extra payments into your bond and ETFs or mainly ETFs? Also – what would you suggest in current times.

    When you ended 2019 with a higher net worth – did you take into account growth on your properties as well?

    Last question – your entertainment is very low – 0.8% for 2019 month on month – 37.2% for savings = +- R30k per month saved, and entertainment @ 0.8% is around R650 / month. Other is however at 5.8% , what would that typically be?

  3. Post
    Hendrik Brand

    Hey Nico,

    Yes that I how I calculate that portion of my net worth. I also don’t count my whole bond payment as savings, only the difference between the amount paid that month and the amount of interest the outstanding amount accrued. Then obviously what I spent on ETFs, RA and bonds additionally.

    To be honest I did not really see much growth on my properties this year but would have added this as well.

    Then in the other category, I include things like financial assistance I give my parents, pet food, cash withdrawals and a few random stuff.

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