Net worth update August 2014 (+0.76%) 16.30% YTD

Most of the return for August was driven through contributions to RAs and share investment accounts. August savings rate was lower than prior months at ~25% of take home pay. This was primarily due to pre-purchasing a few items for year-end at decent discount rates (around 50% off on travel fees), so my savings rate will pop back up for the rest of the year. For the year to date, savings still at 50% of take home pay. Goals are still on track for the full year, it will be good to reach a 20%  growth in net worth by year end. With quite a significant portion of wealth now stock-market linked, it could be a bit bumpy.

In terms of discounts for year-end, it seems in SA you can get very good deals if you plan and shop around. The only problem is my wallet is getting too fat with all these loyalty cards. Hopefully the iPhone 6 will make NFC payments a reality in the US, then in a few years we’ll be using our phone or back to a single card for everything again.

August wasn’t an exciting month for dividends, especially after the bumper one in July.

I have some cash that is building up from the savings and not too keen about any investment ideas at the moment. Stock market is still high (locally and offshore) so not too fond about putting my savings every month in there, but am still doing my quarterly investment for cost-averaging. Haven’t bought the JSE for quite some time, and am currently just managing my offshore exposure with my contributions. Anyway at least trying to automatically invest every quarter and not think too much about it. Am getting close to my target allocation – quite excited to start looking at property or fixed interest again, especially once interest rates have gone up a bit more, maybe we’ll even have a stock market correction… Anyway, for now am just staying with target asset allocation and saving as much as possible – time will do the rest.

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Net worth update July 2014 (+2.67%) 15.43% YTD

 

July was a good month – total net worth grew to R3.8m ($360k). Still on track for the R4m target by year end.

Growth this month came from some cash back on tax return filing, savings towards shares and RAs – this pushed our savings rate to just under 65% this month. There was little growth in the market value of existing shares in July and the exchange rates were mostly flat.

Have managed to increase savings for the future due to finally switching to Discovery Insure and its excellent 50% cash back on fuel expenditure from BP (capped based on their points system, go read about it on their site if interested). So that’ll probably drop our expenses by a further R600 ($55) per month with the aim of increasing this over time.

Also, made some changes on life policies to reduce the monthly expenses here slightly and hopefully switching to annual cash back rather than every 5 years. Based on our Discovery Vitality status we could get back to 50% of our premiums which always helps.

Net worth update June 2014 (+1.62%) 12.42% YTD

Net worth now at R3.7m ($345k). June was a reasonable month, with savings at around the 50% mark of pay. The net worth increase was primarily as a result of these savings channeled towards RAs and shares, with little overall movement in the stock markets to affect us.

The goal is to reach R4m (+-$400k) of net worth before year-end.

 

Net worth May 2014 +1.96%

Net worth reached R3.65m ($340k at current rand dollar exchange rate) up R96k from last month. Mostly an increase on the back of an overly aggressive stock market. JSE is trading at 19x PE, but lots of it due to recent exchange rate weakness,  and Chinese growth.

Still on track to reach R4m by year end especially if my private company shares pay out some dividends or a bit of a raise at work will help.

I still need to sort out lowering my insurance premiums,  just been too busy at work.

Net worth update (April 2014)

Breached the R3.5m net worth mark!

Main growth was in value of shares and cash saved. Was a good month for saving at 50% of take-home pay. Would be higher savings if I include the savings in the house payments (capital of bond less interest) – that pushes it close to 55%.

Hopefully can get some dividends soon from business ventures – they’re holding lots of cash and value that isn’t in the net worth.

At this rate, looking at passive income covering expenses by Dec 2020.

 

 

Reducing some costs (life insurance)

So been looking at making some changes to life insurance and car/home insurance in order to reduce some unnecessary costs.

A lot of great ideas for reducing this cost are explained in one of my favourite books, Living rich by spending smart

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that details one of the best ways to save cash is to increase excesses or to cancel unneccessary cover. Excesses can be increased since you have savings and are self-insuring. Insurance should only be obtained for catastrophic events.

Another site that explains this well is one of my favourite blogs, Mr Money Mustache: 

In my case that would be death or disability of a significant earner, theft of all household contents, fire, or third-party liability on motor vehicles.I have also kept my comprehensive insurance for the vehicles, since they’re both still 2 years old and have value in the R200k range – so not quite ready to completely remove my own theft and collision insurance and self-insure. I could move up the excess to like R20-R50k and still be comfortably insured, while reducing premiums – or use Discovery insure’s excess funder. But that is an idea for another post.

For now, I’m reducing life insurance premiums by removing unneccessary cover (life cover and income cover for my spouse as we have more than enough savings and we are not dependent on her income). The extra cash will just go towards our own investments.

Every Rand saved has two benefits:

1. One rand of extra savings, which compounds rapidly over time,

2. One less rand of costs that needs to be replaced with investments. This equates to R12 per annum less costs, and at a 5% withdrawal/income rate a total of R240 less in savings required. The R500 savings on the life insurance per month would be the same as having an additional R120k in savings.

 

My life insurance is through Discovery Life, and together with high credit card spending through their credit card products, being on Gold for Vitality (just reached in April), and their health intergrator products (through their medical aid) I have reduced the premiums quite significantly and reduced the increases. Their payback is awesome, so will be getting between 20%-50% back on my premiums after 5 years as well which further reduces how much I’m paying. I haven’t found anything else that comes close – the only option to further potentially reduce my premiums would be to switch to a life insurer that offers term insurance. DIscovery only does insurance that pays out at death, so you are guaranteed to get a capital amount, while term would expire at say age 65 at retirement. I think that I’ll probably cancel my life insurance long before that due to having enough savings to cover any life insurance payouts my dependents would actually get. Probably another 5 years or so.

Next up is reducing premiums on car and home insurance – looking at switching to Discovery Insure. With the paybacks on life cover (integrator product) as well as paybacks on fuel (required to be spent at BP) I might be able to cut the costs on this quite significantly. Will assess and see.

 

April 2014 progress

I have started tracking the amount needed to retire based on the 4 percent rule. Seems that at my current savings rate of 45% of after tax income it will require another 5-7 years depending on investment return assumptions. I’m currently assuming around 5% above inflation of 6%.

Am tracking monthly expenses with 22seven. Budget seems to be fine. Want to check a few expenses and alternatives.

Need to check:
1. Life insurance – do I need cover or for Mrs.
2. Home and car insurance – perhaps third party only? Or higher excess? Discovery insure with cash back?
3. Groceries – discounts, bulk…
4. Gifts – discounts,  sales and pre season shopping. Online and bargaining.

Just some areas to focus on for potentially reducing expenses. Easier to retire off low expenses than replace high income. More importantly get to spend money on things I really want.