January 2024 Portfolio Update
Monday 5th February 2024
€500k by 40 Goal Completed
Way back in July 2022, I announced a goal to try to grow our portfolio from around €260k to €500k in a little over 18 months. I turn 40 in April and I planned to try to hit the €500k mark on the portfolio by then.
In January, I officially hit that goal - two months ahead of schedule. This was largely thanks to some great returns in 2023, after withstanding the storm that was 2022. Initially, I was saving €10,000 per month and I did that for the first 11 months into the goal. I then cut back to saving €5,000 per month for the last 7 months - we ended up averaging monthly contributions of €8,079 overall during the 18 month period.
At the time my reason for wanting to build a portfolio of this size was to then stop making contributions and let the portfolio snowball. My way out of doing work that I didn’t like, was to work harder and longer, knowing that I had an escape plan. My attitude was, “well, I don’t like work, so I may as well just embrace it and work my way out of it” - I was basically digging myself out of a hole.
The idea of building up a large portfolio to €500k and moving to semi-retirement has been around for a while. Infact, I first wrote about the idea way back in May 2021 (wow, nearly 3 years ago). Back then, our portfolio was only around €150k, so €500k seemed a long way away.
But, here we are! I remember spending so many days fantasizing about this day - the day I could finally flip my manager the bird and kiss goodbye to full time work. Over the last 18 months, there were projects that I was literally counting down the days for the contract to expire, so I could move on to the next one in the hope it might be better.
Thankfully, though as much luck as anything else, around midway through the 18 month period, something happened... I found a project I like! I was able to secure a very well paid government contract to work on a popular government website. I have full flexibility over my work hours, only 4 very short meets per week, 100% remote work, zero fake deadlines or unreasonable expectations and I can work on tasks at my own pace and usually in my own order. The team I work with have become like family and I am well respected and liked within the team. While the job is technically full time, being a job in the public sector comes at a hugely different pace than the private sector, where work is more about what you deliver than time spent at the computer.
All in all, the reasons I wanted to build a massive portfolio back in April 2021 are no longer relevant. Infact, if I had what I have now back in 2021, I wouldn’t have even worried about setting such an extreme goal in the first place.
What an ironic twist that only at the time that I hit my huge financial goal, did I realise that what I needed to be happy wasn't a huge portfolio, but just to find work that I actually liked - don’t get me wrong though, the portfolio and FU money behind it all does help too!
Truth be told, after 20 years of working, I didn’t think it was truly possible to find work that both paid well, and was enjoyable. Then again, given the number of projects I have worked on over the years, it was likely only a matter of time until I found one that I actually liked!
Outside of working on my main government contract, I do take on freelancing projects for long term clients. Some of these clients I have been working with since 2004 and again, they are more like lifelong friends than clients. In the last 20 years, I would have worked on hundreds of different software development projects, keeping 3-4 clients that I like to work with today on an adhoc basis.
My whole work set up has left me in a situation where I pretty much have all the work-life balance that I need, while still being able to save €5,000 per month - albeit I am well aware of the fact that I don’t really need to contribute any more money to my portfolio.
The work I am doing, I actually enjoy and I don’t really have any short term plans to give it up. In December, I took a mini-retirement - a 3 week break of just staying at home and living life as if I were retired. The ironic outcome of this 3 week break was that it charged me up for work. I came back in January roaring to go and have had such a positive start to the year work wise, because I was so refreshed.
One option I have available, is to look to take more mini retirements moving forward, as many as 2 or 3 per year ideally. I am looking to take another 3 or 4 week break in July this year to embrace the mini-retirement idea again.
Even the plan I mentioned last month, about going back to freelancing in the evenings only, I have largely since decided that while this is something I could consider, at the moment I am so happy with my current work situation, that I don’t wish to give this up anytime soon.
Turning Down a High Paying Job
Back in December, I was contacted by a recruiter on LinkedIn trying to fill a software developer role for a well known, global IT company. I had experience working for one of the FAANG (Facebook, Amazon, Apple, Netflix, Google) companies back in 2022. The experience was pretty amazing and while it was hard work, it was extremely rewarding to have such a well known company on my CV. When another similar company reached out to me over LinkedIn, I couldn’t help but be interested in at least interviewing for the role.
After four quick interviews, I quickly found myself being offered a huge salary + bonuses + all sorts of additional perks. They were drawing me in, and for a while I was drinking from the kool aid.
It wasn’t until I sat down one evening and went through all the pro’s and con’s that I quickly realised just how good I have it as it currently stands. As much as I wanted to have a go with this well-known IT company, I just couldn’t bring myself to give up my current work contract.
I ended up declining their offer. It was the first time I didn’t make the “next career leap”. On reflection, I felt this was because of FIRE. I would say the majority of people in the same position would have taken the job - but for the first time, I was happy to leave money on the table. My decision wasn’t about chasing the bigger money, but instead ensuring that my happiness was put first, above the money. The additional money I would have been earning was not worth the happiness I would have likely lost as a result of taking the job.
While I have not yet moved to a semi-retired state, I am definitely on a slow path to semi-retirement. My work-life balance has found a happy medium, and while I would like to continue to reduce the amount of time I spend working per week, I am content with where things are at right now - I have found a nice balance in my life, while still being able to save €5,000 per month.
Is Work Fundamental?
Edward, a member of the Limerick FI Group, shared an article on our WhatsApp group recently. His article highlighted the fact that work is not the enemy, but that meaningful work, and work with a lifestyle balance is really the key to a fulfilling life. I would highly recommend reading (and rereading) the article!
I know there is a huge sense of irony that the closer I get to FI, the more I am realising that work is a critical part of happiness. The great thing about my current situation is that I have realised this before I hit my FI goal. This has allowed me to slow down, reflect and build a better life today, rather than simply burning out on my way to FI.
The reality is, had I not realised this, I would still be chasing every opportunity I could and working myself into constant burn out, as I did back in 2022 when I was chasing the money and nothing more.
Infact, here is a quote from my June 2022 update:
“At the moment, I work for money. I don’t pretend to work for anything else. I work on a contract basis, I am hired to do a job. I don’t get emotional, I don’t lose sleep about the work. I get up, and do what is asked of me, and deliver...FIRE and building my portfolio is the only thing that keeps me motivated - and in truth, it isn’t a sustainable reason to keep getting up in the morning to go to work. I would love to work on projects that I was passionate about not because of the money, but because I actually liked the work. This will be one of the major things I wish to change in semi-retirement.”
There is a great sense of satisfaction knowing that I have actually found work that I am passionate about and the pay cheque is secondary. The fact that I was able to do this before I actually hit semi-retirement and can still do this while saving for FI, is a huge achievement.
If you need a final reminder that full FI isn’t really necessary as part of your FIRE journey, then look no further than Mr Money Mustache himself. Hidden in this article from March 2018 is the quote:
“It turns out I didn’t need all that money, because my needs and wants will never be more than I earn from my natural desire to do useful work.”
The reality is, that for the majority of us, the need to withdraw from our portfolio likely won’t be required until we hit the traditional retirement age. Early Retirement, at least in the true sense, is really nothing more than a myth. The reality is, those that “retire early”, really just go and find meaningful work that they are passionate about. It is really important to remind ourselves of that when we factor in our FI number - and if you can, try and factor this work in as part of your overall FI number.
However, there is one important consideration which I think is often overlooked. The option to be able to find meaningful work can only be considered once we secured our financial future. This is why the FI aspect of FIRE is so important. It is a lot easier to find meaningful work and not worry about taking work just for the money when there is a huge investment portfolio behind you!
€500k Breakdown Over Time
When I hit the €400k milestone back in May 2023, I presented a breakdown of how long each €100k had taken me. I thought it would be nice to update this based on the €500k portfolio:
| Amount | # of Months |
|---|---|
| €0 - €100k | 36 Months |
| €100k - €200k | 10 Months |
| €200k - €300k | 13 Months |
| €300k - €400k | 7 Months |
| €400k - €500k | 8 Months |
I guess what is interesting here, is the amount I was saving over the last €100k was typically only €5,000 per month, compared to the €10,000 per month I was saving between €300k - €400k. This just again shows the power of the compounding that I am starting to experience first hand on the portfolio - each €100k is getting a lot easier than it was early on.
January 2024 Portfolio Report
As mentioned last month, we got a bit of maintenance work done on two of our investment properties in January. As a result, our rental profit was down for January, however our stocks were well up, as the S&P 500 hit a record high. This can be one of benefits of having both stocks and property in a portfolio, when one is down, the other can be up, and so it can help keep things moving along nicely.
Ironically, after six years of investing, we finally received our first interest from a savings account! Wise.com pays interest on euro balances at a pretty decent interest rate. We recently moved our savings there rather than sitting in a current account, and it was nice to see some interest finally coming through after all these years!
Obviously the big news in January was the portfolio reaching €500k. Let the snowball keep growing from here I say!
| Portfolio Summary (as at 31st January 2024) | |
|---|---|
| Opening Balance | €498,900.39 |
| New Contributions | €5,000.00 |
| Portfolio Growth | €5,633.08 |
| Closing Balance | €509,533.47 |
Monthly Portfolio Growth Report
| Monthly Portfolio Growth Report | |
|---|---|
| Capital Gain + Dividend Income from Equities | €5,199.50 |
| Real Estate Income | €429.23 |
| Interest on Cash Savings | €4.35 |
| Total Growth | €5,633.08 |
| % Return | 1.12% |
Portfolio Breakdown
The table below shows the breakdown of my portfolio into the various asset classes:
| Portfolio Asset Breakdown (as at 31st January 2024) | ||
|---|---|---|
| Equities (Stocks) | €158,479.86 | 31.10% |
| Real Estate | €350,561.19 | 68.80% |
| Cash | €492.42 | 0.10% |
| Total | €509,533.47 | 100.00% |
Lifetime Portfolio Returns
Here are my returns since I started in 2018.
| 2018-2024 Growth Report | |
|---|---|
| Opening Balance | €0 |
| Contributions (Money Added) | €346,867.78 |
| Equity Release* | €41,220.21 |
| Real Estate Capital Gains + Rental Income | €91,569.36 |
| Equities Capital Gains + Dividends | €33,736.50 |
| Interest on Cash Savings | €4.35 |
| Other** | -€3,864.73 |
| Closing Balance | €509,533.47 |
| Portfolio Return | €121,445.48 |
* 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.