July 2023 Portfolio Update
Saturday 5th August 2023
The Last Asset We Will Ever Buy
We went ‘sale agreed’ on investment property number four in July. A nice 3 bedroom cottage 20 minutes from Limerick City. I wrote in April about potentially looking for one more property to purchase - this is very likely to be the last asset we will need to purchase as part of our FI strategy.
This might seem strange, given we are only just a little over halfway to FI. However, we can now just follow the plan - pay down the three mortgages and live off the rental cashflow. We will still have a mortgage on our first investment property, but given this is owned by us personally, it doesn’t make sense from a tax point of view to pay this off early (we would be subject to 50% tax rates to withdraw the funds from our company to clear the mortgage).
Four investment properties is more than enough, between managing tenants and paying down five mortgages (four investment properties, plus our own property) - I think we can call it a day on property. If we had another 2008 housing crisis, naturally I will reconsider, but short of an opportunity like that, we have put ourselves in a very strong position.
The other changing factor is that since cutting back at work and valuing my work freedom, I am far more conscious about using my time effectively. Buying property is hugely time consuming - between looking at properties online, viewing, bidding, closing a sale etc. We have gotten to the stage that we are in a very strong financial position, adding more properties doesn’t really change that reality. The extra time (and stress) that goes with adding more properties to our portfolio just doesn’t seem worth it as much as it once did. I know it likely sounds a little arrogant by writing this, but it also highlights the mindset shift I have been going through - a bigger investment portfolio buys more time freedom and so enjoying the time we have becomes more important than chasing more money or another investment.
I have mentioned this before, but since hitting Flamingo FI, our need to continue pushing on becomes far less. Compounding will do its thing now - even the last couple of months, compounding has helped our portfolio grow from €400k to €450k very quickly. This is the work freedom stage of the journey - that ability to step back a little, take work at my own pace, enjoy life a lot more and patiently wait for the portfolio to hit that magical FI number.
Solar Update
This is the final monthly update I will do on my solar panels - this update completes 12 months of solar updates. I recently published a podcast episode on solar panels which you can listen to by clicking here.
We consumed 219 KWh of electricity during June, buying 57 KWh's. Our solar panels covered 74% of our electricity usage, saving us €59.94 before depreciation (based on 37c per kWh). We received a credit back of €28.77 from supplying 137 KWh's to the grid. Our total savings accounting for depreciation was €65.61, giving an annual return after depreciation of 8.33%.
Here is a breakdown of our solar panel usage since they were installed in July 2022:
| Solar Panel Return - August 2022 to July 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% |
| May 2023 | 79% | €52.01 | €42.21 | 11.91% |
| June 2023 | 80% | €46.09 | €42.00 | 11.16% |
| July 2023 | 74% | €36.84 | €28.77 | 8.33% |
| Monthly Average | 54.8% | €26.76 | €15.65 | 5.33% |
The bottomline? Solar panels have given us a tax free return of over 5%! We haven’t paid an electricity bill since September last year and with the government recently saying they will likely introduce electricity credits again, we are odds on to go through the whole year without an electricity bill.
As I mention in the podcast episode, I could have gotten a better return by focusing on more panels and no battery or Eddi. Certainly, if you plan on staying at your property long term, installing solar panels should definitely be a consideration - be sure to shop around for quotes.
July 2023 Portfolio Report
We selected a new tenant for one of our properties in July. It was a crazy process - it was the first time we have needed to put a property on the open market (previously we have rented to friends of friends, or family). The listing went on Daft on a Monday night, and by Tuesday lunch time we had over 80 enquiries. How we were meant to select someone from such a massive list, it's impossible to say.
It was an eye opening experience and I really felt first hand how bad the housing crisis is. To those looking to rent, the only advice I can really offer is to have your references, have your payslips and be quick to reply to emails. Also, be sure to take the time to introduce yourself in the first email. It was amazing how many half hearted emails we received, with no follow up when we went back looking for more information.
Stocks were up again in July. It has been ironic, as stocks have been up every month since I stopped making pension contributions. My pension has really become nothing but a bit of an FI back up. I don’t plan to add further to it, and nor do I really need to withdraw from it in my current FI plan. Pensions are a fantastic tool, but I have been left a little locked out of my pension, as I am well on track now to retire before I can access it.
| Portfolio Summary (as at 31th July 2023) | |
|---|---|
| Opening Balance | €442,853.66 |
| New Contributions | €5,400.00 |
| Portfolio Growth | €5,982.59 |
| Closing Balance | €454,236.25 |
Monthly Portfolio Growth Report
| Monthly Portfolio Growth Report | |
|---|---|
| Capital Gain + Dividend Income from Equities | €4,111.83 |
| Real Estate Income | €1,870.76 |
| Total Growth | €5,982.59 |
| % Return | 1.33% |
Portfolio Breakdown
The table below shows the breakdown of my portfolio into the various asset classes:
| Portfolio Asset Breakdown (as at 31st July 2023) | ||
|---|---|---|
| Equities (Stocks) | €147,827.61 | 32.54% |
| Real Estate | €293,788.84 | 64.68% |
| Cash | €12,619.80 | 2.78% |
| Total | €454,236.25 | 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 | €60,400.00 |
| Equities Capital Gains + Dividends | €20,769.77 |
| Real Estate Capital Gains + Rental Income | €30,331.63 |
| Closing Balance | €454,236.25 |
| Portfolio Return | €51,101.40 |
| % Return | 12.68% |
Lifetime Portfolio Returns
Here are my returns since I started in 2018.
| 2018-2023 Growth Report | |
|---|---|
| Opening Balance | €0 |
| Contributions (Money Added) | €316,845.78 |
| Equity Release* | €41,220.21 |
| Real Estate Capital Gains + Rental Income | €76,771.03 |
| Equities Capital Gains + Dividends | €23,263.96 |
| Other** | -€3,864.73 |
| Closing Balance | €454,236.25 |
| Portfolio Return | €96,170.26 |
* 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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