Irish Financial Independence & Personal Finance Podcast

November 2021 Portfolio Update

Wednesday 1st December 2021

The Problem with The Mexican Fisherman

Back in 2019, I did a podcast episode on The Mexican Fisherman about living today like you're retired. It is still one of my favourite episodes, but there is one aspect which is missing from the tale. The Mexican Fisherman has to get up each day to fish! There is no option for him to take a day off. Yes, he loves fishing now, but will he always love fishing? Will his health always be good and allow him to fish each day, or what if his boat is blown away by a storm. Here lies the issue I was facing when deciding to adopt the semi-retirement lifestyle. I could adopt a semi-retired lifestyle now, and coast for the next 10-20 years, but what if I want to take some time off? What if there is a major recession in the next decade and I can’t find work, or if I get sick or injured and I can’t work.

I reflected on The Mexican Fisherman story when deciding whether to take the new work opportunity I mentioned last month. I had been planning to reduce my workload considerably and move to part-time work again, before a work opportunity came through which would allow me to earn considerably more money and improve our monthly savings from around €4,500 per month to around €10,000 per month. Was taking this opportunity going to be worth it, or would I be better to shift down to part time work? I have already been complaining recently about working unsustainably - living an unbalanced life where my health, time with my family and fulfillment was being neglected. Was taking this opportunity and grinding out for another year or two going to be worth it long term?

I went back and forth on this about whether to adopt a semi-retirement phase or stick to full time work, but in the end, I decided I would look to take the new opportunity that I had been offered. This has meant staying on a full time work course for now, however my income potential has never been higher and this will start to be reflected in my monthly portfolio contributions moving forward. A year or so of staying on this course will make a huge difference long term.

FU Money & Work Optional

We know the ultimate goal is to become financially independent, but I started to ask myself, why am I trying to do this. What is the thing that I am actually looking to change? The answer was that I wanted to make work optional.

Much of this FI stuff is about attitude and knowing that by having an investment portfolio, you were giving yourself options. There is a term for this - it is known as “FU Money” - I will share the full definition here:

FU money means that you have reached a state of financial stability, where you no longer rely on a specific job for a paycheck. You have enough money saved and invested that now you are the one in control as to whether you'll stay at your job or not.

Note that the reference there is financial stability, not financial independence - this is important. FU money is the concept of building up enough money so that you feel you can leave your job if you want to, without fear. You have enough to cover your expenses for an extended period - not forever, but for long enough to safely find another job on your own terms.

The Real Purpose

Making work optional has been my purpose all along. There are times in my life where I love work, I enjoy getting up on a Monday and look forward to working. Then there are other times, where I would love nothing more than to be on the golf course 4 times a week, or just staying at home spending time with the family and doing housework. It sounds lame, but my real motivation for me trying to achieve financial independence is just to allow myself to make work optional.

I recently applied for what I would consider my dream job. It was a role with Hockey Ireland and the position was titled ‘Munster Development Officer’. The job objective was to help set up hockey clubs in Munster and promote hockey at grass roots level - it was pretty much exactly what I had been on a volunteer basis over the last 3 years or so.

I felt I interviewed well, but unfortunately wasn’t offered the role in the end. While I was disappointed, I knew deep down it was the wrong time for me to be taking such a role. It would have meant a significant pay cut and I wasn’t in the position yet to take such a drop in pay - I wasn’t in a work optional position yet.

I know that what I needed to do was work towards putting myself in a work optional position. This would mean working full time for a little longer, but I want to know that if a position like that comes up again, I will be in a better position to take it.

Alternatively, it might just mean taking some extended time off and rolling with the punches for a while, or taking on a software development project at a lower rate than normal because it is a project that I am passionate about , or just freelancing on a casual basis.

Portfolio Forecasting

I want to make a final point, that trying to forecast what life will be in the next 2, 5, 10 years is really difficult. 2 months ago, I was planning on cutting back my work - an opportunity come along, and things quickly change - this is human nature.

I am back to full time work, and my earning potential is better than ever, but this isn’t to say this won’t change. I literally take things one day at a time. With young kids, working long hours comes with a price, and there are days where trying to balance family life, work life, volunteering commitments and my health is really difficult. I will continue to push on as much as I can - but I am totally OK with cutting back at any point if I need to.

I am also very aware that my FI number is flexible. Given that around €9k gross income per year is used just to cover our mortgage payments, another strategy would be to build a smaller portfolio and focus on paying off the mortgage. I know others would simply argue to keep buying as much real estate as I can. There is so much I could be doing, and truthfully, all that matters at the moment is that I continue to add monthly contributions which I know will bring me closer to early retirement. My gut feeling is, at some point my portfolio will get large enough that I will be happy to just let it compound and I can adopt a Coast FI path and work part time until the portfolio gets to a stage where I am happy to start withdrawing.

November 2021 Portfolio Report

Stocks were up again in November and I added another €4,000 to our portfolio.

Portfolio Summary (as at 30th November 2021)
Opening Balance €206,318.22
New Contributions €4,000.00
Portfolio Growth €3,890.75
Closing Balance €214,208.97

Monthly Portfolio Growth Report

Monthly Portfolio Growth Report
Capital Gain + Dividend Income from Equities €3,283.80
Real Estate Income €606.95
Total Growth €3,890.75

Portfolio Breakdown

The table below shows the breakdown of my portfolio into the various asset classes:

Portfolio Asset Breakdown (as at 30th November 2021)
Equities €109,658.28 51.19%
Real Estate €88,702.79 41.41%
Cash €15,847.90 7.40%
Total €214,208.97 100.00%

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