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Monday 3 July 2017

A Quick Update On The Early Retirement Plan

Top Secret! 
"Wait, what - didn't you do an update like 6 months ago?"

Well yes, I did. And although it may not seem like it, I am currently at a bit of a milestone along my 15 year journey to financial freedom. June 2017 marked 18 months since I started seriously pursuing early retirement, and when you realise that 15 years is 180 months, it becomes apparent that I am now 10% down. (Time flies when you having fun!)

So this seems like a nice spot to take stock and have a look see.

Paper Millionaire

Paper - flimsy
Looking a little further back, to the end of April, we became paper millionaires as our total investments crossed the magical 7 figures. (Only paper millionaires because just a couple of percent off the markets and we will be back in 6 figure territory.)

This milestone was something I had been looking forward to for a long long time. But strangely enough, when I got there it was decidedly underwhelming. Meh. Of course it's a nice achievement, but I guess I just got much bigger fish to fry - to hit my magic " you can stop working now"number. It also made me realise that in the greater scheme of things R1 million rand is actually not going to get you very far. When I was a kid, R1 Million was a lot of money - these days, well, not so much. (R1 Million will only get you an income of around R3500 a month (using the 4% rule)).

And after that little side tangent, time to take a look where we currently at...

It's Been Tough - I Am Behind

My plan says that we should have around R1.161 Million. But woe is me, we are currently behind that with R1.022 Million. Market performance continues to be pancake like. But, glass half full, still not in the least bit stressed, there is a long way to go.

Time for some pictures. Let's check out how the little blue worm Timmy is doing.

First up, the bigger picture picture chart. This one shows my current investment value (in blue) versus the value I should have according to the plan. The blue line has been slipping, and you can see it just starting to lose ground of late.

The tale of Timmy the blue worm

Zooming in on the 2017 section of the above chart:

No no Timmy, the other way!

This one shows a little more clearly that the blue line is struggling to keep up, and more recently has turned down. Come on Timmy, that's the wrong way!

Expressing the deviation from above in percentages:

Lagging behind

I am now around 12% behind from where I should be. This is the most behind I have been since I began the journey. Not lekker.

And then a picture showing what the value of my investments are as a percentage of the value I would need to be financially free at the end of the given year (2017 gets a cool asterisk because we are not done with it yet). At least this one is still moving the right direction:

Getting there slowly...

And then finally, I like to keep track of the allocation of my investments in terms of the various wrappers and retirement products we have. Below is the picture at the end of 2016 versus end of June 2017:

Side by side pies

I am happy with the trend of my TFSA (Tax Free Forever) allocation increasing (12% versus 8%) while the Pension + Provident (taxable at retirement) allocation is decreasing (61% versus 62%). Also worth mentioning that I got some matching shares in my companies share matching plan (read more about that here) but decided to cash some of that out and allocated some of the proceeds to my bond (there's going to be some tax payable, so it can park there for now), and some to my normal equity account. I do not want the share matching portion getting too big - a single company investment carries higher risk.

The Plan So Far

Of course I am disappointed that I am behind where I should be, but markets have been tough. I am however still confident that I will be able to make up the deficit when markets return to doing what they do best (moving up!). It's been tough out there, but I can't control market returns - what I can control is my contributions to my investments. So I will just keep doing what I have been doing, I am in this for the long haul. 

10% down, 13.5 years to go...

Maybe also a good time to mention - there have been some recent whispers in the Stealthy household about a possible second child. No final decision on that yet, but some big discussions coming up...

This will no doubt have an impact on the plan, however, this may be mitigated somewhat by our trump card - the investment property we still have in Sandton. I will be taking a closer look at the returns of that property in a future blog post, and some possible scenarios for us going forward...

Till next time, Stay Stealthy!
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