FIREceuticals Australia

My PILL for financial independence

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NET WORTH UPDATE February 2017: $281,408 (+$6,555)

Nice little increase this month, up 2.4% ($6,555) to $281,408.

Net worth divided into three sections; stocks, cash and superannuation, along with my expenses and subsequent savings rate.

My total net worth breakdown is as follows:

A breakdown of my “taxable” (cash and shares) and “non-taxable” (superannuation) components.

TOTAL NET WORTH = $281,408

  • Taxable (Stocks + Cash) = $188,544
  • Superannuation = $92,864

 

Monthly Net Income

  • Salary ($7,534)
  • Superannuation ($1,013)

Stocks = $185,007 (+$6,167)

Purchases: SPDR S&P Global Dividend (WDIV): $4,990

My target allocation to global value equities is 20%.

Cash = $3,537 (-$1,883)

Cash reserves are getting a little low. Get my company bonus in March so plan on replenishing this back up to $10k – $15k.

Superannuation = $92,864 (+$2,271)

A nice little bump, Aussie stocks seemed to do well this month. I’ve stopped making extra monthly contributions to super, but I’m still considering whether to start doing this again.

Expenses = $3,285

This month was a little higher than I’d have liked. However it’s still summer here so I tend to get out and about a little more, which means more the entertainment spend is up. I realise my expenses graph doesn’t look very good with the rising line, but I spent most of 2015 back with my parents (doh…). I am of course wary of lifestyle inflation. I expect this flatten out around the $3k per month level. My “income per month” based on 4% of taxable accounts rose from $614 to $628. It’s a nice motivator seeing this rise.

My current average is 64.7%, and I’d like to keep it at 60-65% on a long-term basis. My average for the 2016 year was 60.1%.

Another month gone. Time is flying already. I know many people give themselves a net worth target of “one million” and it seems quite arbitrary, but this number closely reflects my goals. I’m currently spending about $36k per year and I’m quite comfortable with this lifestyle. It covers my core expenses very comfortably, and leaves room for entertainment (and decent single malt!). To leave me a little more room to move, I’m targeting $40k. Based on 4% rule the target is $1 million.

According to my projections, 2022 is the year I may be around this mark. Based on 7% real return (perhaps a little optimistic) I should have around $700k in liquid assets (cash and ETFs) and $200k in superannuation. 2022 is a rough goal, and I realise that there is no way I’ll just stop working at that point completely. But it means I won’t have to keep working in a high pressure job (that I’m already beginning to enjoy less and less). I can take a good chunk of time to travel and reassess what I want to do with my life.

NET WORTH UPDATE January 2016: $274,853 (+$2,611)

A fairly uneventful, with my net worth increasing by 1.0% ($2,611) to $274,853.

Net worth divided into three sections; stocks, cash and superannuation, along with my expenses and subsequent savings rate.

My total net worth breakdown is as follows:

A breakdown of my “taxable” (cash and shares) and “non-taxable” (superannuation) components.

TOTAL NET WORTH = $274,853

  • Taxable (Stocks + Cash) = $184,260
  • Superannuation = $90,593

 

Monthly Net Income

  • Salary ($7,793)
  • Superannuation ($1,013)

Stocks = $178,840 (+$3,937)

Purchases: Vanguard FTSE Emerging Markets (VGE): $5,015

My target allocation to emerging markets is 20%.

Cash = $5,420 (-$1,105)

Nothing much going on here……

Superannuation = $90,593 (-$221)

Not much going on here either! The lack of data points on the graph back to 2010 indicates the fact I wasn’t tracking this monthly all the way back to 2010. I used six monthly statements to plot retrospectively.

Expenses = $3,607

January is always a toughie! Not only is it summer, with everything that entails, my car insurance and rego is due. It was about $1,200 or so. I don’t really have an excuse for having a car anymore. I live 4km from work, 5 mins from a tram and train station, 5 mins to shops, and 2 mins from the local pub! Everything I need really. All up my car expenses were $2,230 last year. Time to get a bike? So really, if I didn’t have the bloody car I would have had a good month expense-wise.

My “income per month” based on 4% of taxable accounts rose from $605 to $614. At least it’s not going down. I’ve been thinking lately that I should include my superannuation in this number, and use my total net worth rather than just my taxable (shares + cash) account number. I mean, this is still money I’m going to use, it just means this portion of it will be used when I’m 60+. Food for thought anyway.

Savings Rate = 53.7%

Not too bad considering the relatively high spend this month. My current average is 65.1%, and I’d like to keep it at 60-65% on a long-term basis. My average for the 2016 year was 60.1%. This isn’t too bad and I’d like to keep it there this year.

Not a very exciting month, but I expect many to be as uneventful as this. I’ve been secretly longing for a crash or bear market recently (or I’m just lying to myself). Like everyone, I am happy when I see my portfolio rise and unhappy to see it fall. But I know I’ll be faced with a crash at some point, and I haven’t yet tested my tolerance to risk. This makes me somewhat uneasy. In my mind I feel that I have the self-understanding and understanding of the investing world to see my hold my nerve, but in reality when I experience a potential 50% drop over the course of a year or so there is no way to truly know I’ll be able to hold my nerve. Which is why I’d rather it happen when my portfolio is less than $200k than when it is over $500k or beyond.

NET WORTH UPDATE December 2016: $272,242 (+$18,723)

What a kick arse month to end 2016, with my net worth increasing by 7.4% ($18,723) to $272,242. I’ve only just reached the $250k milestone and I feel as though $300k is closing in.

Net worth divided into three sections; stocks, cash and superannuation, along with my expenses and subsequent savings rate.

My total net worth breakdown is as follows:

A breakdown of my “taxable” (cash and shares) and “non-taxable” (superannuation) components.

TOTAL NET WORTH = $272,242

  • Taxable (Stocks + Cash) = $181,428
  • Superannuation = $90,814

 

Monthly Net Income

  • Salary ($8,754)
  • Superannuation ($1,203)

Got a nice little bonus of about $1,200 net this month. My employee is “kind enough” to throw a little extra to us to contribute to our health insurance premiums…… I’ll take it.

Stocks = $174,903 (+$13,832)

Purchases: Vanguard Australia Shares (VAS): $4,953

My target allocation to Australian shares is 40%. The markets seemed to be on the move this month.

Cash = $6,525 (-$446)

Nothing much going on here. Like I mentioned in the last post, I’ll receive my bonus in March and add a little extra to both my stocks and cash positions.

Superannuation = $90,814 (+$5,337)

I have close to 60% dedicated to Aussie shares in my Superannuation account, and Aussie shares seem to be flying over the past few months. I’m in a “default” High Growth fund in this account. I don’t mind this default option for the time being, but may assess this in a few years as I get closer to FI, given the effect my allocations will have over the next three decades and my reliance on it once I can access (and rely on) it when I turn 65.

Expenses = $3,383

Not a great month in this department, but I took a hit for a $500 health bill, and December is obviously notorious as a big spender prior to Christmas. I have to giggle at all that marketing thrown at us throughout this month. Luckily my family choose not to give presents (strange, we prefer to enjoy each other’s company over the exchange of materialistic goods that none of us really need or want….. are we in the minority perhaps?). In addition, the nice little “bonus” income actually kept my savings rate for this month quite high.

Below is a breakdown of my monthly and average expenses since I began tracking at the start of 2015. My average is $2,543 (+$36). My “income per month” (monthly income from taxable accounts based on 4% rule) is now $605 (+$45). Like I’ve discussed before, this is a key number for my motivational purposes, and it has only taken me two months to cross from the $550/month mark to the $600/month mark. After plugging those number into The Earth Awaits website, it has opened up another couple of countries that I can potentially live in now based on the 4% rule; Ukraine and Philippines. I can’t say Ukraine is on my list, however I have a friend who has lived in Dumaguete in the Philippines and loves it. Not sure $605/month is quite enough just yet though. As a comparison on this website, they have Melbourne listed at $3,370/month (note: the search parameters I use are for one person living in the city centre with a “modest” lifestyle).

Savings Rate = 61.4%

Not too bad considering the relatively high spend this month. My current average is 65.6%, and I’d like to keep it at 60-65% on a long-term basis.

All in all a good month, and I think a good year overall. I am going to post a 2016 yearly analysis later this month (once I receive my dividends for Q4 2016). It has been my first full year of tracking all these numbers, so I think I should be able to improve upon a few things and really ramp up my progress. A lot of my focus from here will be more philosophical than practical I think. I’ve spent a lot of time on theory behind optimization of investing, savings rate, etc. But it is no point reaching FI if you can’t find anything within yourself to focus that renewed energy on. What do I want to do once I’m there? Do I want to work my arse off the next few years to get there sooner in my current high paying career at the expense of my happiness, or take some time off (or even change my career completely) to reach FI at a later date but be a little happier in the process? All things I need to think about.

NET WORTH UPDATE November 2016: $253,519 (+$8,500)

Quite a good month following the Trump election; markets increased a little and my net worth followed suit, increasing by 3.5% ($8,500) to $253,519. Fuck yeh finally at the $250k mark! It’s the little things isn’t it?

Net worth divided into three sections; stocks, cash and superannuation, along with my expenses and subsequent savings rate.

My total net worth breakdown is as follows:

1-total-breakdown-nov-2016

A breakdown of my “taxable” (cash and shares) and “non-taxable” (superannuation) components.

TOTAL NET WORTH = $253,519

  • Taxable (Stocks + Cash) = $168,042
  • Superannuation = $85,477

 

2-net-worth-nov-2016

Monthly Net Income

  • Salary ($7,319)
  • Superannuation ($1,070)

Stocks = $161,071 (+$5,613)

Purchases: Vanguard FTSE Europe (VEQ): $4,964

My current target allocation to developed Europe shares is 20% (plus a bit that is in my World Dividend fund). This is a relatively new Vanguard fund, only released around January of this year. It hasn’t really tracked too well so far (Brexit anyone?), but I’m only slightly down and not concerned. I’ll just keep buying cheap and reinvesting the dividends quarterly.

Cash = $6,971 (-$210)

This balance is still a little lower than what I’d like, but that’s fine. It will be bonus time in March and I should net close to $10k. I plan on putting another $5k in shares and use the rest to top up my cash.

Superannuation = $85,477 (+$3,097)

I recently stopped my extra 4%/month extra contributions (to receive a 2% company match). This was in addition to the compulsory 9.25% (or whatever it is) of my base salary that my company has to pay. I’m still not totally convinced this is the best move, but it all comes down to being unable to touch this money until I turn 60. The tax breaks and company match just don’t come up trumps against this fact. I have too many years to live before I reach that point, and I want to reach my pre-super FI number as soon as possible.

3-super-nov-2016

Expenses = $2,727

I try to keep my expenses between $2,500 and $3,000 to keep my savings rate high. This month was smack bang on the mark. Had to dish out a little chunk for a health issue but given the outcome of that, a little cash is nothing for peace of mind. This was the biggest health scare of my life, and a potential death sentence if it was a bad result. It has woken me up a bit. I have to say, it is the worst feeling in the world when you are told of a potential death sentence. Working in the Medical field, I am very aware of the potential in this area.

Anyway back to happier times. Below is a breakdown of my monthly and average expenses since I began tracking at the start of 2015. My average is $2,507 (+$10). My “income per month” (monthly income from taxable accounts based on 4% rule) is now $560 (+$18).

The monthly income ($560) number is something I track closely, mainly for motivational purposes. I have drafted a post around this number, but need to get around to posting it. We all need something to keep us on track. Its fine having your big motherfucker of a goal (FIRE), but I think it’s just as important to have sub-goals to keep you on “the path”. I recently stumbled upon a site (The Earth Awaits) that compiles all available data on the cost of living in various cities. Each time I pass a $50 increment in my monthly income number (like I did this month, moving from $542 to $560), I plug my new data into the search and add the new cities to my list. I’m not sure if I’ll ever live overseas, but I do aim to do a lot of slow travelling when I’m FI, and if I find a place I really like then I may settle down for a while. Who knows though? Currently I can only live in a dozen or so cities in India, and in Cairo (Egypt), but that’s a start. I think once this number gets to the $1,000 to $1,500 level things will get really exciting. That will open up a lot of places in Asia (Chang Mai anyone?) and beyond.

4-expenses-nov-2016

Savings Rate = 63.8%

My aim is to maintain at least a 60%+ savings rate. My current average is 65.7%, which includes 6 months living with my parents in 2015. So I expect this average to drop, but I’d like to keep it at 60-65% on a long-term basis.

5-savings-rate-nov-2016

Another month gone. I must admit time is absolutely flying right now. I always look forward to this time of year. Summer in Australia, cricket and beer with mates, Christmas day with the family eating and drinking on a lounge in the backyard of my folks place. Then before you know it, another year gone.

NET WORTH UPDATE October 2016: $245,019 (+$762)

What a flat month; markets dropped a little and net worth increased slightly by 0.3% ($762) to $245,019. I’ll say it again….. ALMOST at the $250k mark! Looks as though I’m being made to work for it though.

Net worth divided into three sections; stocks, cash and superannuation, along with my expenses and subsequent savings rate.

My total net worth breakdown is as follows:

1-total-breakdown-oct-2016

A breakdown of my “taxable” (cash and shares) and “non-taxable” (superannuation) components.

TOTAL NET WORTH = $245,019

  • Taxable (Stocks + Cash) = $162,639
  • Superannuation = $82,380

 

The only thing that saved me this month was the usual $5k/month contribution to my stock portfolio.

2-net-worth-oct-2016

Monthly Net Income

  • Salary ($7,319)
  • Superannuation ($1,311)

Stocks = $155,458 (+$2,723)

Purchases: SPDR S&P Global Dividend (WDIV): $5,003

My current target allocation to my global dividend fund is 20%. This is something I might increase slightly in future to 30%, perhaps if I drop my allocation to Australian shares to 30%. The inclusion of this fund was a tough decision; I naturally wanted to stick with all Vanguard funds for simplicity, but wanted an underweight exposure to US shares given their high valuation. I could have just included a lower allocation to VTS I suppose. WDIV has about 25% allocated to US stocks, given me an overall allocation to the US of about 5%. Fees are also something to always consider; WDIV is at the high end of what I’d like at 0.5%. As my portfolio grows and the importance of fees and asset allocation grows, I’ll continue to try and develop my knowledge and fine tune my portfolio.

Cash = $7,181 (-$1,724)

I try to maintain a relatively constant cash balance, but it’s slightly low for my liking right now. It has been slowly decreasing and this month hurt with a tax bill of $1,200. Tax optimisation is something I’ll have to look into; being a “salaried employee” in a high income tax bracket really hurts, and I have minimal ability to offset my tax.

Superannuation = $82,380 (-$238)

Not much to say here. My company contribution didn’t match the decrease in the markets. I made an important decision this month; I decided to cut my voluntary contribution of an extra 4% of my before-tax salary to super, and thus losing the 2% match that my company makes for me doing this. The government tries to persuade you to make these extra contributions because you only get taxed at 15% (instead of your marginal tax rate, which for me is 39% of every dollar earned over $80k). So it’s a matter of weighing up the tax benefits versus the fact that in Australia you cannot access your pension until (at least for me) the age of 60. I have decided that it’s more important to have access to this cash (which will now bring me an extra $200 or so per month) immediately rather than have double this added to my super account that I cannot tough until after 60. This decision comes into effect next pay, so I should now be netting over $7,500/month for my salary.

3-super-oct-2016

Expenses = $3,431

I try to keep my expenses between $2,500 and $3,000 to keep my savings rate high. This month was actually pretty decent, except I had the $1,200 tax bill!

Below is a breakdown of my monthly and average expenses since I began tracking at the start of 2015. My average is $2,497 (+$67). My “income per month” (monthly income from taxable accounts based on 4% rule) is now $542 (+$3).

4-expenses-oct-2016

Savings Rate = 53.1%

My aim is to maintain at least a 60%+ savings rate. My current average is 65.8%, but that includes 6 months living with my parents in 2015. So I expect this average to drop, but I’d like to keep it at 60-65% on a long-term basis.

5-savings-rate-oct-2016

That’s it for this month. Not a great month. I don’t like seeing that savings rate drop, but I think I’ll be able to stabilize it at 60-65% over the long term in these high income earning years, giving myself a lot of flexibility in five or so years to start travelling more, perhaps living overseas for a while, and cutting down my working days or even switching to a more fulfilling career.

NET WORTH UPDATE September 2016: $244,257 (+$5,148)

Another fairly standard month, with the markets not really doing much either way; net worth increased 2.2% ($5,148) to $244,257. Almost at the $250k mark! A bit of a psychological boost.

Net worth divided into three sections; stocks, cash and superannuation, along with my expenses and subsequent savings rate.

My total net worth breakdown is as follows:

1-total-breakdown-sep-2016

A breakdown of my “taxable” (cash and shares) and “non-taxable” (superannuation) components.

TOTAL NET WORTH = $244,257

  • Taxable (Stocks + Cash) = $161,640
  • Superannuation = $82,618

 

I feel like I’ve really come a long way in the past year and a half or so since I began taking FI seriously and tracking my finances. My net worth has almost doubled since May 2015; from $124k to $244k. Most of this has been the consistent $5k/month contributions to my index portfolio.

2-net-worth-sep-2016

Monthly Net Income

  • Salary ($7,293)
  • Superannuation ($1,311)

Stocks = $152,735 (+$4,903)

Purchases: Vanguard Australian Shares (VAS): $4,993

My current target allocation to Australian shares is 40%. It was a fairly uneventful month for stocks. Although I spent a lot of time thinking and deciding on my asset allocation, I am seriously considering my allocation to Australian shares. Perhaps 30% would be a more appropriate allocation. As I’m sure anyone deciding on a % allocation to Australian shares would know, it’s a matter of weighing up several different factors here. Arguments for a low allocation to Australia include 1) the fact that Australia only accounts for 3% of the total world markets, 2) Australia is dangerously overweight to only a handle of companies in two main sectors, Financials and Resources. The four big banks and couple of mining companies concern me. On the flip side, arguments for a higher allocation are 1) franking credits on dividends (companies may pay much of the tax on their income meaning you don’t have to and to a lesser extent 2) home country bias and less currency fluctuations. I think the arguments for a lower allocation have a greater weight in my opinion, which is why I went for lower than 50%. I can think about this a little more over time. It will make more of a difference as my portfolio grows.

Cash = $8,905 (-$343)

My cash balance usually remains relatively constant. I have two accounts; a high interest saver (currently paying a bit over 3% interest if making $200/month contributions) that I try to keep around $10k, and my everyday transaction account. I don’t hold any bonds (why would you, interest rates only have one way to go), so as my portfolio grows I think I’ll need to consider increasing the amount in my cash reserves for peace of mind and to take advantage of market corrections when they occur.

Superannuation = $82,618 (+$579)

Increased very slightly this month, only because of my employer’s compulsory contribution. Because I only started tracking my net worth properly in June 2015, I used 6-monthly statements going back to 2010 to “extrapolate” my superannuation since that time. So really, it can be said that this graph is only accurate from June 2015.

3-super-sep-2016

Expenses = $2,451

I separate my expenses into the following categories; Rent, Utilities, Car, Groceries, Alcohol, Entertainment, Health, Personal and Miscellaneous. I try to keep my expenses between $2,500 and $3,000 to keep my savings rate high. I am happy with $2,451, which is about my average since I began tracking.

Below is a breakdown of my monthly and average expenses since I began tracking at the start of 2015. My average is $2,431. My “income per month” (monthly income from taxable accounts based on 4% rule) is now $539 (up $15). I track this on the graph for motivational purposes more than anything else. Seeing that yellow line converge on my average expenses is exciting. Reaching that crossover point is obviously the end goal!

4-expenses-sep-2016

Savings Rate = 66.4%

My aim is to maintain at least a 60%+ savings rate. My current average is 66.7%, but that includes 6 months living with my parents in 2015. So I expect this average to drop, but I’d like to keep it at 60-65% on a long-term basis.

5-savings-rate-sep-2016

Another average month but average is fine. Just ticking along…

NET WORTH UPDATE August 2016: $239,109 (+$5,032)

A fairly standard, non-eventful month…. net worth increased 2.1% ($5,032) to $239,109

I have broken down my net worth into three sections; stocks, cash and superannuation, along with my expenses and subsequent savings rate.

My total net worth breakdown is as follows:

total-breakdown-sep-2016

I also like to track this over time, but separating my “taxable” (cash and shares) and “non-taxable” (superannuation) components.

TOTAL NET WORTH = $239,109

  • Taxable (Stocks + Cash) = $157,080
  • Superannuation = $82,029

 

net-worth-sep-2016

Monthly Net Income

  • Salary ($7,293)
  • Superannuation ($1,311)

Stocks = $147,832 (+$4,438)

Purchases: Vanguard FTSE Emerging Markets (VGE): $4,898

My current target allocation to emerging markets is 20%. It was a fairly uneventful month for stocks.

Cash = $9,248 (-$550)

My cash balance usually remains relatively constant, given I keep some “dry powder” on hand as part of my emergency fund. So in my “savings” account I have $8,034 and my “everyday” transaction account I have $1,214.

Superannuation = $82,029 (+$1,143)

I am in a “High Growth” option, and have $82,029 in my super account. This increased slightly, partly to do with $1,311 compulsory contribution by my employer and partly to do with the market recovery. Because I only started tracking my net worth properly in June 2015, I used 6-monthly statements going back to 2010 to “extrapolate” my superannuation since that time. So really, it can be said that this graph is only accurate from June 2015.

super-sep-2016

Expenses = $3,058

I separate my expenses into the following categories; Rent, Utilities, Car, Groceries, Alcohol, Entertainment, Health, Personal and Miscellaneous. I try to keep my expenses between $2,500 and $3,000 to keep my savings rate high. This is at the higher end, but acceptable.

Below is a breakdown of my monthly and average expenses since I began tracking start of 2015. My average has increased slightly to $2,430. My “income per month” (monthly income from taxable accounts based on 4% rule) is now $524 (up $13). I track this on the graph for motivational purposes more than anything else. Seeing that yellow line converge on my average expenses is exciting. Reaching that crossover point is obviously the end goal!

expenses-sep-2016

Savings Rate = 59.3%

My aim is to maintain at least a 60%+ savings rate, which I will usually accomplish. My current average is 66.7%, but that includes 6 months living with my parents in 2015. So I expect this average to drop, but I’d like to keep it at 60-65% on a long-term basis.

Savings Rate (Jul 2016)

Another month gone. Quite an average month, nothing much happened; but any month where I can continue to pump $5k into stocks is a good month. At least I still see the net worth ticking on in the right direction. And heh, if it started going in the other direction I’ll keep buying those units at a discount. I have however had two main things on my mind lately; % allocation to Australian shares (currently 40%…. should I lower this to 30%), and also my overall allocation to shares. It is high. Although I FEEL like I have armed myself with the knowledge (and have the temperament) to have a very high risk level, I also understand that I’ve never experienced a bear market. Some food for thought, especially as my account grows over time.

NET WORTH UPDATE July 2016: $234,007 (+$16,603)

Quite a good, the markets recovered nicely from the overreaction and obviously panicked selling caused by Brexit. My net worth increased a nice 7.6% ($16,603) to $234,007. As always I will break down my net worth into three sections; stocks, cash and superannuation, along with my expenses and subsequent savings rate. To reiterate my long-term plan – adding around (on average) $5,000/month ($60,000/year) into index fund ETFs and rebalancing as I do this, to maintain my desired asset allocation.

My main “Net Worth” graph that I post monthly includes the TOTAL NET WORTH of my superannuation, and my taxable components (cash and shares).

Taxable (Stocks + Cash) = $153,191

Superannuation = $80,886

TOTAL NET WORTH = $234,007

Net Worth (Jul 2016)

Monthly Income (Net)

  • Salary ($7,288)
  • Superannuation ($1,311)

Stocks = $143,394 (+$11,961)

Purchases: SPDR S&P Global Dividend (WDIV): $5,000

WDIV is a fund I selected to give me global exposure to companies that have a track record of increasing their dividend each year for at least 10 years. One of the reasons I selected this (besides the obvious benefits of hopefully stable dividend yield and global diversification) was to gain US exposure yet underweight the US in my portfolio. The currently high valuation of US shares (judging by Schiller PE, or “CAPE”) concerns me. The US represents about 25% of the WDIV fund (and thus approximately 5% of my overall portfolio), and screens out glamour growth stocks such as Apple and Facebook. With this buy and the growth in the share market, my share account rose $11,961 to $143,394

Cash = $9,798 (-$13)

My cash balance usually remains relatively constant, given I keep some “dry powder” on hand as part of my emergency fund. So in my “savings” account I have $9,012 and my “everyday” transaction account I have $785. That $785 should (hopefully!) see me through to my mid-month payday in July.

Superannuation = $80,886 (+$4,656)

I am in a “High Growth” option, and have $80,886 in my super account. This increased slightly, partly to do with $1,311 compulsory contribution by my employer and partly to do with the market recovery. Because I only started tracking my net worth properly in June 2015, I used 6-monthly statements going back to 2010 to “extrapolate” my superannuation since that time. So really, it can be said that this graph is only accurate from June 2015.

Superannuation (Jul 2016)

Expenses = $2,305

I separate my expenses into the following categories; Rent, Utilities, Car, Groceries, Alcohol, Entertainment, Health, Personal and Miscellaneous. I am very happy with this monthly spend; it falls within my desirable monthly mark of around $2,500 to $3,000 and thus keep my savings rate high.

Below is a breakdown of my monthly and average expenses since I began tracking start of 2015. My average has decreased ever so slightly to $2,398. My “income per month” (monthly income from taxable accounts based on 4% rule) is now $511 (up $40). I track this on the graph for motivational purposes more than anything else. Seeing that yellow line converge on my average expenses is exciting. Reaching that crossover point is obviously the end goal!

Expenses (Jul 2016)

Savings Rate = 68.4%

This is what I want to see every month! My aim has been to maintain at least a 60%+ savings rate, which I will usually accomplish. My current average is 67.1%, but that includes 6 months living with my parents in 2015. So I expect this average to drop, but I’d like to keep it at 60-65% on a long-term basis.

Savings Rate (Jul 2016)

There we have it, a good month. I doubt every month will see my net worth increase by almost $17k. This is a good psychological boost but there will always be months where if feels like I’m going backwards. My biggest psychological test will be the next bear market. I haven’t experienced this before. However I think I’m armed well with the knowledge that I am confident in my asset allocation and know that when the market falls, I will continue to buy shares at a discount with my $5k/month contributions.

NET WORTH UPDATE June 2016: $217,474 (-$1,697)

Not so good this month, and I’m sure you can guess why; the Brexit vote caused turmoil in the world’s stock market. Am I concerned? Not at all, a mere blip along the journey. Net worth decreased this month for the first time in a while – a decrease of 0.8% (-$1,697) to $217,474. I will once again look at my net worth in three sections; stocks, cash and superannuation, along with my expenses and subsequent savings rate. To reiterate my long-term plan – adding around (on average) $5,000/month ($60,000/year) into index fund ETFs and rebalancing as I do this, to maintain my desired asset allocation.

My main “Net Worth” graph that I post monthly includes the TOTAL NET WORTH of my superannuation, and my taxable components (cash and shares).

Taxable = $141,244

Superannuation = $76,230

TOTAL NET WORTH = $217,474

Net Worth graph (Jun 2016)

Monthly Income (Net)

  • Paycheck ($7,288)
  • Superannuation ($1,311)

Stocks = $131,619 (+$814)

Purchases: Vanguard FTSE Europe ETF (VEQ) – $5,000

Unfortunately managed to purchase this prior to Brexit, but that’s what happens sometimes. I’d rather keep consistent on a monthly basis and keep adding my $5k to ETFs as soon as my pay hits the bank mid-month. With this buy and the fall in the share market, my “taxable” account rose $814 from $130,619 to $131,433

Cash = $9,811 (-$1,736)

My cash balance usually remains relatively constant, given I keep some “dry powder” on hand as part of my emergency fund. So in my “savings” account I have $9,012 and my “everyday” transaction account I have $799. That $799 should see me through to my mid-month payday in July.

Superannuation = $76,230 (-$776)

I am in a “High Growth” option, and have $76,230 in my super account. This decreased slightly, but again expected following the recent market volatility. Because I only started tracking my net worth properly in June 2015, I used 6-monthly statements going back to 2010 to “extrapolate” my superannuation since that time. So really, it can be said that this graph is only accurate from June 2015.

Super (Jun 2016)

Expenses = $4,143

I separate my expenses into the following categories; Rent, Utilities, Car, Groceries, Alcohol, Entertainment, Health, Personal and Miscellaneous. Unfortunately this is my biggest monthly spend since I started tracking my finances in mid-2015! In fact I’ve never been over $3,500. However there is good reason for this; I forked out $1,200 for health insurance. For non-Australian readers, you probably aren’t aware that high income earners in Australia get slugged extra tax (anywhere from 1% to 1.5% depending on how much they earn) if they don’t have health insurance. Therefore each year I buy the cheapest insurance I can to avoid the tax (which would be around or higher than $1,200 anyway). So hopefully for the rest of the year I’ll be able to keep my monthly spend to my desirable mark of around $2,500 to $3,000 and thus keep my savings rate up.

Below is a breakdown of my monthly and average expenses since I began tracking start of 2015. My average has now increased to $2,403. My “income per month” (monthly income from taxable accounts based on 4% rule) is now $471. I track this on the graph for motivational purposes more than anything else. Seeing that yellow line converge on my average expenses is exciting. Reaching that crossover point is obviously the end goal!

Expenses (Jun 2016)

Savings Rate = 43.2%

The high monthly spend adversely affected my savings rate. My aim has been to maintain at least a 60%+ savings rate, which I will usually accomplish. My current average is 67%, but that includes 6 months living with my parents in 2015. So I expect this average to drop, but I’d like to keep it at 60-65% on a long-term basis.

Savings Rate (Jun 2016)

That finishes up another month. I’d like to say “a step closer to FI” but it’s a slight step backward. This will happen occasionally. As long as the total ups are more than the total downs over the years, I’ll get there eventually. Hopefully I’ll get the time at some stage to write other posts on some topics such as my decisions surrounding my asset allocation and my “magic number”….

NET WORTH UPDATE May 2016: $219,171 (+$13,519)

A good month, mainly due to the stock market. Net worth increased by 6.6% ($13,519) to $219,171. I will look at my net worth in three distinct sections; stocks, cash and superannuation. But i’ll also include sections on expenses and subsequent savings rate. I track everything in a spread sheet. My primary goal is adding around (on average) $5,000/month ($60,000/year) into index fund ETFs (pay yourself first!), and I find this a good way to “rebalance” as I go; adding to a fund that is temporarily underperforming. I will talk more about my investing philosophy and decisions on asset allocation in a separate post.

My main “Net Worth” graph that I will post monthly is fairly self-explanatory; it includes the TOTAL NET WORTH of my superannuation, and my ‘taxable’ components (ie. outside superannuation – cash and shares).

Taxable (cash, shares) = $142,166

Superannuation = $77,006

TOTAL NET WORTH = $219,171

Net Worth

Monthly Income (Net)

  • Paycheck ($7,288)
  • Superannuation ($1,311)

Stocks (+$8,531)

Purchases: Vanguard FTSE Europe ETF (VEQ) – $5,000

This is a relatively new ETF in Australia’s Vanguard arsenal, but this purchase has taken me to my desired global asset allocation (a discussion for another post). With this purchase and the rise in the share market this month, my ‘taxable’ investment account moved from $122,088 up to $130,619.

Cash (-$39)

My cash balance will always remain relatively constant, given I keep some “dry powder” on hand as part of my emergency fund. So in my “savings” account I have $10,467 and my “everyday” transaction account I have $1,080. That $1,080 should see me through to my mid-month payday in June.

Superannuation (+5,028)

I am in a “High Growth” option, and I now have $77,006 in my super account. This increase came from the monthly addition (compulsory and small voluntary contribution) of $1,311 from my employer, and the increase in the stock market. Due to being in a high tax bracket, along with a company matching scheme, I choose to salary sacrifice 4% additional into superannuation in order to get a 2% company matching. This graph is a little deceptive. Of course, the stock market never goes up in a straight line. Because I only started tracking my net worth properly in June 2015, I used 6-monthly statements going back to 2010 to “extrapolate” my superannuation since that time. So really, it can be said that this graph is only accurate from June 2015.

Super

Expenses (-$2,571)

As a long-term renter (try buying property in Melbourne!…. and real estate investing isn’t for me), I separate my expenses into the following categories; Rent, Utilities, Car, Groceries, Alcohol, Entertainment, Health, Personal and Miscellaneous. I am happy with $2,571, and is similar to my average of $2,307 over the past year. Especially given I was living with my parents for a while last year, so naturally I’d expect my expenses to be toward the higher end this year. Below is a breakdown of my monthly and average expenses over the past year since I began tracking. As expected, the average has been increasing since I moved out of the folks place, but I am hoping to keep my monthly spend around the $2,500/month long-term. You may also notice the yellow line. In its simplest form, once the yellow line (monthly income from taxable accounts based on 4% rule) reaches my monthly spend, I am Financially Independent. That’s right. I say income from ‘taxable’ accounts, because I do not consider my Superannuation as something that contributes to this. That is a nice little bonus that I cannot touch until at least 65 anyway. It’s the gap between now and then that I need to finance my lifestyle.

Expenses

Savings Rate (64.7%)

I am happy with this also. Since moving out, my aim has been to maintain at least a 60%+ savings rate. My current average over the past year has been 68.4%, but that includes 6 months living with my parents. So I expect this average to drop, but I’d like to keep it at 60-65% on a long-term basis.

Savings Rate

So that’s it for May. Another month gone, a step closer to FI. I plan to keep posting these updates each month, but also to delve a little deeper into other topics such as my asset allocation and general philosophy. Everyone goes about this differently, but I believe with enough smart research, having confidence and sticking to your methods is the most important part of all this. And enjoying the journey along the way!

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