April 2023 Portfolio Update
Wednesday 3rd May 2023
The Longest Week in History
Written last Thursday before finally finishing a five month project.
Have you ever noticed that some weeks seem to drag on longer than others? As I type this on a Thursday, it feels like Monday was ages ago! This week has been particularly challenging for me as I haven't been sleeping well. In fact, I woke up at 5am on Tuesday and lay in bed for an hour before forcing myself to get up and start work early.
What's different about this week compared to others? Well, it's my last week of working overtime. For the past 18 months, I've been pushing myself to take on as much work as possible to maximize my earning potential and get closer to achieving FIRE.
But at what cost? The first few months of working overtime were manageable, and the next six months were tolerable, but the last few months have been a real grind. Initially, the projects I worked on were fun, but as I progressed, I stopped caring about the type of work I was taking on and focused solely on the paycheck. As a result, I found myself working on extremely complex projects, with large teams and plenty of meetings.
Somewhere along the way, I lost sight of my short-term happiness and became fixated on the long-term endgame. It's a common mistake, but it can be hard to see it when the money offered is too good to pass up. Don't get me wrong, the money has been amazing. I've been making in a day what most people make in a week. However, the work-life balance has been completely out of whack.
Tomorrow will be my last day of working overtime. I'm finishing a major project that has kept me busy for the past five months, and I'm looking forward to transitioning to a more conventional, relaxed, and sustainable work environment. Time will tell if it was all worth it. I know I need some time to reflect, destress, and find myself again. It has been stressful, and I've had a hard time finding balance.
The best part is that I now know my limits - I know that I can save €10k a month if I need to, but at a much greater cost to my health and overall happiness. I plan to work sustainably, save €5k a month, and casually hit FIRE over the next four years or so, working on projects I enjoy. I am also considering simply paying off two of our mortgages and adopting semi-retirement - withdrawing a little and working no more than 10 hours per week. Either way, if the market takes a turn, I know that I could return to saving more, but definitely not for as long as I have over the last 18 months!
The Importance of Finding a Job You Love!
One thing the last 18 months has taught me is that working more and not enjoying your work isn't the right solution to achieving FIRE. One is likely to burn out by working harder and longer in a job they don't enjoy.
However, one positive outcome of the last 18 months is that I found a project I love. It has a great team, and 80% of what I do work wise, I enjoy. This has made an immense difference to my overall happiness and feelings about work.
Even though this project isn't the highest paying role I've had, it goes to show the power of finding balance in our journey towards FI. It also highlights that my approach of solely focusing on increasing my income over the last 5 years may have been partly wrong. While increasing your income is essential, doing it in a way that aligns with your passions and interests will make the need to rush towards FIRE disappear, and you can enjoy the journey a lot more.
Stopping Pension Contributions & Paying Down Our Mortgages
In April, we made some significant investment decisions. We decided to halt our regular monthly contributions into my pension and instead concentrate on paying down the mortgages on our investment properties. If we're going to pay off the mortgages, it makes the most sense to go all-in and move our new contributions to pay them off. Every extra repayment guarantees a 6.75% return, which is how high the interest rates are on our buy-to-let mortgages.
Last month, I mentioned four potential options for us to withdraw in early retirement without having to sell our investment properties. It appears likely that we'll adopt 'Plan One' or 'Plan Two.' First, we'll pay off the mortgage on our third investment property, which will take approximately 18 months with an additional €5k payment each month.
After that, we'll focus on paying down investment property two before deciding between 'Plan One' or 'Plan Two', or we may even decide to simply semi-retire after paying down two of our three mortgages.
Solar Panel Update
Our panels really kicked into action in April, in fact accounting for the electricity that we sold back to the grid, we nearly produced more electricity than we consumed. Keep in mind that we only get 21c per kWh that we sell to the grid, whereas our electricity costs 37c per kWh, so while this isn’t cost neutral, at least from an environmental view point, it is nice to think we are helping to ensure our electricity usage is carbon neutral.
I would also like to mention, we haven’t paid an electricity bill now since September 2022 and it is likely we won’t for another couple of months. The government electricity grants that all households received in Ireland for the winter we still haven’t fully used - in fact, we are still €257 in credit! This has been a real bonus, and has helped us keep our energy costs low during a tough winter. We still had to pay for gas for heating, which was up considerably, but it again shows the power of investing in keeping monthly costs down.
We consumed 262 KWh of electricity during April, buying 66 KWh's. Our solar panels covered 75% of our electricity usage, saving us €72.52 before depreciation (based on 37c per kWh). We received a credit back of €13.44 from supplying 64 KWh's to the grid. Our total savings accounting for depreciation was €62.86, giving an annual return after depreciation of 7.93%.
Here is a breakdown of our solar panel usage since they were installed in July 2022:
| Solar Panel Return - August 2022 to April 2023 | ||||
|---|---|---|---|---|
| Month | Percentage Covered by Solar | Electricity Saving (after depreciation) | Credit from Supplying the Grid | Annual Return |
| August 2022 | 83% | €29.42 | €34.86 | 7.95% |
| September 2022 | 62% | €28.90 | €7.98 | 4.57% |
| October 2022 | 45% | €22.98 | €4.20 | 3.38% |
| November 2022 | 31% | €12.05 | €2.10 | 1.76% |
| December 2022 | 24% | €1.69 | €1.89 | 0.45% |
| January 2023 | 20% | €0.95 | €1.47 | 0.30% |
| February 2023 | 38% | €14.64 | €2.52 | 2.15% |
| March 2023 | 47% | €26.11 | €6.30 | 4.08% |
| April 2023 | 75% | €49.42 | €13.44 | 7.93% |
| Monthly Average | 47.2% | €20.68 | €8.31 | 3.62% |
April 2023 Portfolio Report
During April, we replaced a boiler in our second investment property, which had been on the to-do list for a while and was part of the renovation plan for the property. We have a budget of around €10k for renovation work, and there's still more to do over the next couple of months. My brother-in-law, who has been renting the property for the past few months, plans to move out soon as they have purchased their own house, so we need to get it ready to rent in the open market, including new carpet, painting work, and tiling.
Once the renovation work is completed, I'll revalue the property, which has definitely gone up in value due to the renovation work we've done and the property market increasing since we went "sale agreed" on the property in April 2022. For now, I've been capitalizing any renovation work that I do on the portfolio rather than expensing it because it has a positive impact on the property valuation long term. The majority of the renovation work on our third investment property is now completed, though we still need to replace the boiler.
I'm hopeful that I can revalue the properties in the June update, but if the renovation work is delayed, I'll wait until it's completed before updating the portfolio to reflect the new market value.
Lastly, the higher interest rates are definitely having an impact on our overall rental profit. We've seen our monthly mortgage payments increase by around €400 per month on the three properties, effectively reducing the overall cash flow by €400 per month. It simply justifies our decision to pay down the mortgages to give ourselves the cash flow we will need for retirement.
| Portfolio Summary (as at 30th April 2023) | |
|---|---|
| Opening Balance | €380,594.84 |
| New Contributions | €10,000.00 |
| Portfolio Growth | €1,966.63 |
| Closing Balance | €392,561.47 |
Monthly Portfolio Growth Report
| Monthly Portfolio Growth Report | |
|---|---|
| Capital Gain + Dividend Income from Equities | €664.18 |
| Real Estate Income | €1,302.45 |
| Total Growth | €1,966.63 |
| % Return | 0.50% |
Portfolio Breakdown
The table below shows the breakdown of my portfolio into the various asset classes:
| Portfolio Asset Breakdown (as at 30th April 2023) | ||
|---|---|---|
| Equities (Stocks) | €133,843.15 | 34.09% |
| Real Estate | €254,248.57 | 64.77% |
| Cash | €4,469.75 | 1.14% |
| Total | €392,561.47 | 100.00% |
2023 Year to Date Returns
Here is a summary of my year to date returns for 2023.
| 2023 Year to Date Growth Report | |
|---|---|
| Opening Balance | €342,734.85 |
| New Contributions | €40,000.00 |
| Equities Capital Gains + Dividends | €6,955.24 |
| Real Estate Capital Gains + Rental Income | €2,871.38 |
| Closing Balance | €392,561.47 |
| Portfolio Return | €9,826.62 |
| % Return | 2.57% |
Lifetime Portfolio Returns
Here are my returns since I started in 2018.
| 2018-2023 Growth Report | |
|---|---|
| Opening Balance | €0 |
| Contributions (Money Added) | €296,445.78 |
| Equity Release* | €41,220.21 |
| Real Estate Capital Gains + Rental Income | €49,310.78 |
| Equities Capital Gains + Dividends | €9,449.43 |
| Other** | -€3,864.73 |
| Closing Balance | €392,561.47 |
| Portfolio Return | €54,895.48 |
* In 2020, some of the new contributions came in the form of an equity release, as we turned our primary residence into a buy to let and purchased a new home to live.
** In 2018 & 2019 I made several bad investments in peer to peer lending, forex trading and unregulated investments, which resulted in losses overall.
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