March 2024 Portfolio Update
Thursday 4th April 2024
Oops, I did it again!
Back in 2021-22, I made the brave decision to work on multiple projects at the same time. Over the course of an 18 month period I worked harder and longer than I ever had before, burning the candles at both ends so to speak. Hourly and day rates for software development were booming and I was able to maximise my income and thus increase our savings rate at the time to around 75%.
The trouble was, it was hard, long work. I suffered burn out and was exceptionally tired. In early 2023, I started to reduce my workload and since then have found a nice balance for the most part - albeit our savings rate decreased to around 50%.
In March, I was offered an opportunity to take on another project. I decided to accept it. This might seem like a strange decision, especially as I had only turned down another work opportunity only two months ago to work for a well known IT company. So why take this one? This time things were a little different. The project was a perfect technical fit for my skill level and only involved one 15 minute meeting per day. The hours were fully flexible, so I would be able to continue working my current projects while working alongside this project. It would mean my day would be slightly longer, and I would need to work a couple of hours extra in the evenings to ensure I complete all my work for the day.
There is a big difference between taking on a project for a multinational company compared to a smaller company where I am only reporting to one person. Given the flexible working hours, I felt I could take on an additional project without tipping the balance too far over the edge.
The upside of course, is that it has allowed us to push our savings from saving €5,000 per month, to €7,500 per month. This might not seem like a huge difference, but given my current goal is to start clearing off the mortgages on three of our properties, it will make a big difference to the timeline. Infact, by saving that extra €2,500 per month, it helps reduce our time to FI from 4 years to a little over 2.5 years, assuming we try to pay off all 3 mortgages.
As it is, given I plan to work casually in retirement anyway, there is a chance I will pull the plug before we pay off the three mortgages. For example, I am now on track to pay off two of the mortgages by the end of 2025. We are talking in 21 months! This just doesn’t seem that long away.
This is the really interesting part about being on the other side of one's FI number. The second half can be far quicker if one wants it too. I know over the last couple of years in particular, I have pushed the idea of semi-retirement and slowing down. This all makes sense when FI is years and years away. However, there is a sense that as one gets closer to that magic FI number, that it is OK to push on.
I don’t run as much as I used to unfortunately, but I always find it ironic that when I go for a run, the hardest part is around the 10 minute mark. Assuming I am looking to run say 5km, I might be expected to run for 25 minutes, yet the most challenging part to overcome is after the initial kilometer. I find it even stranger, that my best kilometer is often my last one! It is far easier to go faster when you know the end is near.
My FI journey feels the same. There becomes a point where the future is in one’s reach. A point where delayed gratification isn’t really that delayed anymore. Sure, I could leave full time work today and wait another 10 years for my three mortgages to be paid down naturally from the rental income and work part time in the meantime, or I could just rip it for another year or so and get there far sooner.
The big difference this time is I have been extremely careful in the projects I pick. Back in 2021, I took any project that was paying the highest rate. This ended up being a big mistake as not all projects are created equal. In recent times, I have deliberately turned down projects where I identified potential red flags, instead taking on projects only where I knew they were a good match and where I could deliver value.
So I have taken on another project. I am looking to push myself a little more. This has tipped the balance a little - especially being back to working a little in the evenings. It is the core reason why I haven't been releasing podcast episodes as frequently as I would like recently. At the moment, the routine is working out well and I am content - and equally happy to be pushing the savings rate up a little. How long I look to continue on this path, I don’t know yet - but I am happy to take it one month at a time for now.
March 2024 Portfolio Update
March is always a tough month for our rentals. Property tax goes out in March, so this does have an impact on our rental profit in March. On top of that, two insurance renewals fall in March, and we always pay yearly to maximize our discount on the insurance policy.
Our fourth rental property also required a new power shower to be installed in March, as well as some painting work. The boiler also stopped working towards the end of March, so a repair will need to be carried out in April on it.
Our shares were up again and this helped keep things ticking along. Overall, the portfolio ended up just short of the €540k mark, which is amazing when you think that it was only in January when we crossed the €500k mark. Onwards and upwards and all that!
Probably the most interesting thing is the mortgages we need to pay down. We have three mortgages to pay off for us to hit FI - so interestingly, the actual final FI number isn’t so important - but rather our ability to pay down our mortgages. An ideal scenario would be for us to pay off the three mortgages, for me to adopt full retirement and live off the rental income - working casually on a freelance basis as I see fit and to cover any unexpected expenses or loss of rental income.
The alternative is for us to pay off say 2 mortgages, live off that rental income and supplement our income with a bit of casual freelance work. The main difference between the two approaches is that in this approach I HAVE to work. The rental income from two properties won’t cover our full expenses, so I will be dependent on some form of working income.
In truth, I love the idea of working casually in retirement, but I do worry about relying on the income. For me, true financial independence is when one does not HAVE to work - and it is the one thing that is keeping me wanting to pursue a full FI approach. I also love the idea of working not for the money, but because I am truly passionate about the project - I don’t want to have to take on a project for financial reasons.
There is a lot to be said for FIRE people who over save, who grind away for too long, to build a huge portfolio only to never actually withdraw from it. In our case, because we will be relying on rental income (at least in the initial 10 years), we won’t have any fear withdrawing the income. Our assets will still be there, we are simply looking to cover our expenses via the rent received.
We have approximately €317k of mortgage debt to pay off on the three mortgages. I don’t know yet if our savings contributions will remain at €7,500 per month, but assuming they did and with the rental income we receive, we will be able to pay off the three mortgages by December 2026. If we were to pay off only two of the mortgages, our end date is December 2025. Effectively, it is deciding if I want to continue working the extra year to pay off that final mortgage once we get the two paid off which is going to be a big decision at some point.
This is all speculation anyhow. I don’t like to look too far ahead, partly because we don’t always know how the future will play out, but secondly because I tend to change and adapt so quickly that it can be difficult for me to plan that far ahead. I am also assuming a best case scenario - there are so many black swan events that can happen between now and then - both on a global scale, but also micro level. If a tenant stops paying the rent, or an issue happens with one of our properties (roof repairs etc), then the whole situation changes.
So I am realistic about goal setting and forecasting. I also don’t want to make a goal for the sake of setting a goal. I love the idea of being able to hit FI within 10 years of starting, but there is no other reason for wanting to do that, other than I feel it's a nice story to know it is possible to do in Ireland. But realistically, I also need to factor in my own preferences and what sacrifices my family and I are willing to make.
So definitely watch this space - it is another exciting time in our FIRE journey. For now, we will continue carrying on, on a month to month basis, knowing that each and every month is a step closer for us to full FI.
| Portfolio Summary (as at 31st March 2024) | |
|---|---|
| Opening Balance | €524,904.21 |
| New Contributions | €7,500.00 |
| Portfolio Growth | €7,169.01 |
| Closing Balance | €539,573.22 |
Monthly Portfolio Growth Report
| Monthly Portfolio Growth Report | |
|---|---|
| Capital Gain + Dividend Income from Equities | €5,393.14 |
| Real Estate Income | €1,771.67 |
| Interest on Cash Savings | €4.20 |
| Total Growth | €7,169.01 |
| % Return | 1.35% |
Portfolio Breakdown
The table below shows the breakdown of my portfolio into the various asset classes:
| Portfolio Asset Breakdown (as at 31st March 2024) | ||
|---|---|---|
| Equities (Stocks) | €170,048.73 | 31.52% |
| Real Estate | €366,207.16 | 67.87% |
| Cash | €3,317.33 | 0.61% |
| Total | €539,573.22 | 100.00% |
2024 Year to Date Returns
Here is a summary of my year to date returns for 2024.
| 2024 Year to Date Growth Report | |
|---|---|
| Opening Balance | €498,900.39 |
| New Contributions | €18,500.00 |
| Equities Capital Gains + Dividends | €16,768.37 |
| Real Estate Capital Gains + Rental Income | €5,390.45 |
| Interest on Cash Savings | €14.01 |
| Closing Balance | €539,573.22 |
| Portfolio Return | €22,172.83 |
| % Return | 4.29% |
Lifetime Portfolio Returns
Here are my returns since I started in 2018.
| 2018-2024 Growth Report | |
|---|---|
| Opening Balance | €0 |
| Contributions (Money Added) | €360,367.78 |
| Equity Release* | €41,220.21 |
| Real Estate Capital Gains + Rental Income | €96,530.58 |
| Equities Capital Gains + Dividends | €45,305.37 |
| Interest on Cash Savings | €14.01 |
| Other** | -€3,864.73 |
| Closing Balance | €539,573.22 |
| Portfolio Return | €137,985.23 |
* 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.