Friday 3rd June 2022
Ben from the Limerick FI group made the suggestion in the recent meet up that financial Independence is “just a mathematical problem”.
One could argue truer words have never been spoken. FI of course is just about getting the numbers to work in your favour - naturally, in practice it is a lot harder than that.
I am trying my best to stay humble at the moment. I know how fortunate and lucky I am to be in a position where I am earning good money for something I am skilled at and which I can do from the comfort of my own home. I am currently working long days, working both a full time role and moonlighting in order to really push on with our FI journey.
We saved another €10k in May. While this is always great to see when I sit down and update the portfolio every month, it does come at a great cost. Burn out is definitely setting in and time away from family, exercise and friends is starting to take its toll. However, I am reminding myself that this is a short term sacrifice for what would be hopefully 50+ years of freedom.
I had hoped this month to report on how we plan to produce cashflow in retirement. I have decided however to hold off on reporting this. There is just so much unknown in the world right now, between inflation and interest rates. Trying to plan for a retirement based on income right now is increasingly difficult.
I will make the comment however, that I am currently in two minds between owning say three investment properties and paying down the mortgages, or owning say 5 or 6 investment properties with mortgages. Three properties without mortgages will produce cashflow and allow me to retire, but owning more properties with mortgages would ensure our financial security in the long run, as at some point those mortgages will be paid down as rent is collected and the 20 year mortgages are paid off.
Part of me thinks that I am better off chasing the latter and simply focus on building equity rather than cashflow at this stage of my life. It may mean I will need to work part time or casual hours as a freelance software developer in retirement as I may not be able to withdraw 4% as easily as if I had fully paid off properties, but as I have mentioned before, I largely expect to work in some capacity anyway - partly because I have a family and our expenses will be higher than our long term expenses, but also because I do enjoy working (though ideally a lot less than I am doing now).
Ultimately, my reasons for becoming FI are less about retirement, and more about financial security and time freedom. There will come a point where I opt for either Coast FIRE, Slow FIRE or Flamingo FIRE - but for now, we will keep trying to add €10k a month to our portfolio.
It took six weeks, but we finally received an update from our lender that our finance was approved. We are also nearly ready to sign contracts, so I expect we will close in July.
We added another €10k to our portfolio in May. Equities were down again, which was expected, but I will admit that it does make this whole process of working long hours a lot harder when you see your returns dropping every month. I constantly remind myself that a falling share market is actually a welcome thing when one is still contributing to their portfolio - so for now, I will just stick to the plan and keep cost averaging in.
My investment in An Dúlra paid out a 4% tax free dividend during May (I compounded them into more shares). An Dúlra is a co-op I co-founded in 2020 - we buy land and plant native trees, with returns coming from the tax free forestry premiums. We are currently buying a third site, so if you are interested in investing in something a little different, then click here to learn more.
Of the €10k new contributions per month, I typically look to allocate €2k a month into equities via my pension and €8k a month into saving for another investment property (which we will buy through my Web Development Company).
Assuming I was able to keep making €10k monthly contributions and assuming a 5% real return from this point, I am currently 11 months away from hitting Flamingo FIRE and 3 years & 5 months away from hitting full FI.
|Portfolio Summary (as at 31st May 2022)|
|Monthly Portfolio Growth Report|
|Capital Gain + Dividend Income from Equities||-€2,292.38|
|Real Estate Income||€783.24|
The table below shows the breakdown of my portfolio into the various asset classes:
|Portfolio Asset Breakdown (as at 31st May 2022)|