November 2016 net worth update (+0.74%) 50.37% ytd

That’s not me kite-surfing, although I wish it were!

 

November’s increase was pretty non-descript. The majority of the increase came through an increase in cash savings getting us up to the R8.7m ($626k) mark in investment assets. Still hope we can push through December and get to the R9m mark.

Savings wise it wasn’t a bad month, we didn’t have any large expenses although as per the graph below you can see we were a bit above our average. Pretty standard month also on the earnings side.

I’m enjoying see the average expenses and 4% Safe Withdrawal rate lines converging steadily, particularly after our big boost earlier in the year.

Perhaps 2017 will be the year of the crossover?

expenses-passive-income-2016-nov

income_expenses-2016-nov

Till next time, 2016 is a wrap!

May 2015 net worth update (+0.40%) 15.65% ytd

We haven’t done an update for some time, in fact since November 2014, oops!

First of all, 2014 ended up being a reasonably good year with ~24% net worth growth in Rands, about 9.5% in US$. The difference? Rand currency and Dollar strength did not help the cause here.

Anyway, so far 2015 has been a good year, we’re up 15.6% YTD in Rands, ~11% in US$ so it’s been going well.

Onto the actual figures:

Assets: R5.7m (+13% ytd)

Cash: R400k

Property: R1.8m

Retirement annuity: R500k

Shares: R2.9m

Vehicles: R100k

Business investments: (not recorded)

Liabilities: R922k (-1% ytd)

Home loan: R884k

Tax: R38k

Net worth: R4.7m (+15.6% ytd)

On to what the individual accounts represent:

Cash

Primarily just cash sitting in savings accounts for planned expenditure for the house, or vacation. However, a decent chunk of this (bit more than half) is sitting in the share trading accounts as we rand-cost average recent cash received. I haven’t pulled the trigger as I still feel the share market is quite high, but it isn’t enough cash to justify buying a property or business. I will probably invest this over next 2-3 months, depending on what happens with additional cash coming in from side business ventures.

Property

This consists of our investment property (house) and our personal residence. Not much has changed here in ages. I grow these by small amounts each year from their original value, but they’re still tracking over 30% below current market prices, so it feels quite conservative.

Shares

Decent split between international shares and local shares. I’ve been steadily buying shares over past 10 years.

Vehicles

Two cars, 3-4 years old each now. I am writing these down to zero over 5 years.

Business investments

These are not recorded at a value. They may or may not pay off, but we did receive a reasonable amount of cash from them this year so far.

So overall it was a good month of May. Most of the growth this year has come from savings and cash received, growth has been approximately 1/3 from capital growth and 2/3 from savings/dividends.Next few months should be interesting as to whether we get some more cash from the business investments. Still on track to achieve the target of R5m by year end.

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.

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 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.