Monday 2nd August 2021
I often look back on my early investing mistakes with regret. Yes, I have learned from so many mistakes and I am now in a far better investor mindset, but the cost of the lesson has been significant.
In 2018 I invested around €36,000. Of that, €6,000 went into my pension and €30,000 went into high risk investments. Had the full €36,000 been invested in my pension in a US Index Fund, I would be a long way ahead today than I currently am - highlighting the cost of my mistakes in the past.
The more I look at my portfolio, I realise that I can break my portfolio down into four core categories:
In relation to “Other Investments”, I have decided to exclude most of these investments from my overall retirement calculations moving forward. Two of the investments were investments that I would definitely not make today and have lingered in my portfolio for too long. I am better off removing them from my calculations and moving on - I will provide updates in the future on these investments once I know if they were scams or not. I also made the decision to write off the remaining Peer to Peer investments. There was around €1,650 left in two platforms, however it is unlikely I will receive the bulk of this investment back - so lets make it easy and clear it out of the portfolio. As a result, the only investment which will remain in my portfolio from my “Other Investments”, is my investment in An Dúlra - an Irish based forestry co-op which I co-founded last year.
Two houses have also recently sold in the same estate as our buy to let for significantly more than what it has been valued for in my portfolio. I decided it was time to update the market value of the property. I have conservatively valued the property at €240,000 - it is likely it would sell for more than this, but this at least accounts for the amount I would get after the legal fees and auctioneers expenses.
The property was valued at €220,000 this time last year, and I had legal expenses of €3,834.64 related to refinancing the mortgage for the buy to let. I had originally capitalised this cost, and had worked off an overall property value of €223,834.64. The new value of €240,000 represents a capital gain of €16,165.36.
Here is a summary of the adjustment in the overall portfolio since I my update last month:
|Portfolio Amount as of 30th June 2021||€186,545.32|
|Less Peer to Peer Write Off||-€1,648.75|
|Removing “Dodgy” Investments||-€21,791.61|
|Capital Gain from Property||€16,165.36|
|New Portfolio Value||€179,270.32|
The updated portfolio as of 30th June 2021 can be broken down as follows:
One reason for breaking up my portfolio like this, is that it allows me to see the difference between funds which are only available to me from age 55, and funds which are available before then. It has become clear that I could attempt to retire before age 55 if I wanted to - I could simply sell our buy to let property at some point before age 55 and live off the capital gain until such a time that I could access my pension. I mentioned last month that this may not be optimal, given I will still have children that are dependent on our income, but it is something I am open to exploring, depending on how the portfolio performs over the next year or two.
Work wise, I am currently exploring ways to improve my work / life balance. Things have improved since my last update and I do feel like I am starting to find a nice balance - while still earning an income that is higher than what I need to based on my goal to retire at 55.
For now, I will continue to work off a goal of retiring at age 55, but I now have a clear path to retire sooner if I do get ahead of my goal.
Finally, I am looking to grow the amount of cash I have. Cash represents 3 important things for me:
1. It is our emergency fund and is available for us for any genuine emergencies.
2. It allows me to take advantage of market corrections. At the moment, we have asset prices at record prices - hedging against this by having some cash to take advantage of any market corrections is important.
3. Cash would allow me to potentially take a “mini retirement” or sabbatical at some point if I get well ahead of my target retirement age.
I wanted to give more transparency on the portfolio changes, so I will start breaking down the numbers in more detail.
My pension is made up of investments in Index Funds, REITS & Investment Trusts (with some cash which sits in the broker account to cover broker fees). Pensions grow tax free in Ireland, so having funds invested in a pension is extremely tax efficient.
|July 2021 Pension Changes|
|New Pension Contributions||€2,500.00|
The following table highlights the change in the amount of equity I have in our buy to let property.
|July 2021 Property Equity Changes|
My cash balance changes due to two factors.
1. Any new savings I add during the month.
2. Net Income Received from my buy to let - this is any left over cashflow after paying off the property loan, property management fees and any other expenses.
As a result, it can be confusing to see why my cash balance changes, but I will highlight the change in cash balance below:
|July 2021 Cash Changes|
|New Cash Contributions||€1,830.88|
|Buy to Let Net Income||€108.27|
Overall, my change in portfolio can be summarised as follows:
|July 2021 Portfolio Changes|
|Pension Capital Gains + Dividends||€1,720.76|
|Portfolio Breakdown (as at 31st July 2021)|
My goal is to retire by age 55. To achieve this goal, I need to grow my portfolio to €1,150,000 by the 31st March 2039. Based on my forecasting, I should have a portfolio value of €176,771.68 as of July 2021 to achieve this. I am currently 3 months ahead of this target, so I am on track to retire at age 54 and 9 months. I am currently 37 years old.
You can see my calculations for this goal by clicking here. If you click on “monthly” under Projection Breakdown, you can see what the value of my portfolio needs to be at each month to ensure I stay on track.
Finally, it isn't all just about money! I also work on projects because I want to make positive changes to the world! Here are some projects I am part of:
I launched The Irish FIRE Podcast in June 2019. While I did run ads back on the podcast when it first launched, these days I run the podcast as a passion project. The podcast shares my story on my journey towards financial independence.
An Dúlra Co-Op is an Irish initiative hoping to make a positive difference, by establishing Irish native woodlands. Irish residents can become shareholders of the co-op and become part owners of newly established Irish forests. I co-founded the co-op in September 2020. We are still looking for new investors, so definitely check it out!
Portfolio Tracker is designed for those who are pursuing financial independence and are looking for a software that will add accountability to your FI journey. Portfolio Tracker is a simple, flexible investment software that will allow you to see the growth of your portfolio over time, without being complicated to maintain. Click here to track your own portfolio.
I helped co-found four new hockey clubs in North Munster, introducing over 300 children to the game of hockey. Interested in your children playing hockey? Feel free to bring them along to any of the following hockey clubs - Castletroy Hockey Club, Ennis Hockey Club, Nenagh Hockey Club and Thurles Hockey Club.