September 2023 Portfolio Update
Saturday 7th October 2023
The Boring Middle
I don’t have a huge amount to report on in September. In many ways, I have hit the “boring middle”, a period in one’s FI journey where the hard work is done, we simply are in the waiting game until we hit our FI number.
We closed on investment property four in September and we arranged to get a tenant into the property. It is always a little stressful onboarding a new tenant. Even in this case, this property was in turn key condition, there is still stress to get everything sorted.
The tenant mentioned a day into the lease that the shower wasn’t working correctly and two toilets weren’t flushing. It ended up being caused by an airlock in the pipes - part of the joy of buying a house that has been sitting for a while. I managed to get my plumber to call out and solve it - and after getting a dishwasher and dryer installed, all was set. So far so good.
Our other property had a sink fall of the wall. I kid you not - right off the wall. I was just thankful no one was hurt. Again, another pain to sort and €340 later by the time a new sink was purchased and fitted. All part of the fun of being a landlord.
The plan now is just to pay down the mortgages and retire. It is likely to take around 4 years from here, so nothing terribly exciting in the way of investing, other than paying down that mortgage debt and slipping off into the sunset.
What will retirement look like for me?
I spend a lot of time thinking about what retirement would be like for me. In truth, anyone raising a family will be able to relate to this - I likely won’t feel that retired! Raising children is a full time job, and other than the few hours between 9am and the 1.40pm pick up, there isn’t a huge amount of time in between that.
I also don’t think I will be truly retired in the true sense of the word. I will leave full time work, and no longer have a traditional 9-5 job, but I still plan to maintain a couple of freelancing clients, working anywhere from 5-10 hours per week. This work will be 100% optional however, but it will bring in a small income of around €500 per week. I think some work is important, just to keep the mind ticking over.
The other big thing holding me back from a traditional retirement is the investment properties. Being a landlord is not passive, and with 5 houses (4 investment properties + our own), maintaining properties takes work. Because of this, I think my true state of retirement can likely be more referred to as “semi-retirement”. I will be retired from the traditional 9-5 work lifestyle, will work casually here and there, while maintaining our properties in the meantime.
My traditional retirement will come when I am older, which is why it is very likely that we will sell our investment properties at some point in the future - but this won’t come until our 50s at the very earliest.
I guess the big question is, if I know what my retirement will look like, why not just semi-retire now? In truth, this is a question I ask myself often. I could in theory leave the traditional 9-5 now, semi-retire and work say 10 - 20 hours per week. Cover our expenses while waiting for our mortgages to be paid down by the tenants.
This might be something I will consider down the line. For now, I know I have 4 years left on our current path. My reason for not considering this yet, is for the following reasons:
1. We are carrying a lot of debt at the moment. With 5 properties, our mortgages total over €500k. My gut feeling is that paying down the mortgages makes sense to limit the risk. Without a working income, we are relying 100% on a tenant paying the rent to cover the mortgage, and this seems an unnecessary risk.
2. Work freedom is what I am really looking for. I have mentioned this in the past, but I love the idea of not having to go to work. I want work to be 100% optional, so that I can completely enjoy it without the need to do it for the money. While I could embrace part time work today, I would still have to go to work. It wouldn’t be optional.
3. Ironically, because full time work is no longer a requirement (in theory I could work part time from today), it makes full time work that much more enjoyable. I actually like working full time at the moment and am taking great joy from adding contributions each month to our portfolio. I have also found a great balance between work and play and don’t feel the need to make a change at work at the moment.
4. Because I know I am on a countdown, I want to embrace the next four years. This might sound strange, but I feel like a 61 year old man when it comes to where my career is. I don’t stress about work that much, because I know I am at the tail end of my career. I’m not looking for career progression, rather I am happy working on tasks I can do in autopilot mode and am happy to work at my own pace and work on tasks I enjoy. I find myself pushing back more at work when I am asked to do something I know I won’t enjoy and instead have tried to work on tasks that I know I can handle well, without too much stress.
I work from home as a computer programmer. I get to work around my family's schedule, listen to my own music all day while doing problem solving and being well compensated for it. The truth is, after I retire, I will look back on my career and it will sink in how good I had it. It is rather ironic, because for years I have complained how much I disliked work. Isn’t it funny how rosie life is when we look back on it.
September 2023 Portfolio Report
My stocks were down in September, with the market taking a bit of a tumble. This really isn’t a concern at all - the pension really is nothing but a long term back up plan now. It does make for interesting reading - the loss from the stocks was basically offset by the income from the rent of our four properties.
My financial broker contacted me during September asking if I wanted to rebalance my pensions. I got to give him the old reply “Not to worry, my pension is for the long run”. It was an interesting situation to be in - the work I did over the last 16 months or so buying the three properties has really set us up so nicely now, that the pension is really nothing more than a back up plan. I suspect I will get to 50, take the 25% to pay down the remaining mortgage balance and leave the rest to be there in case we ever need an injection of cash.
| Portfolio Summary (as at 30th September 2023) | |
|---|---|
| Opening Balance | €459,916.80 |
| New Contributions | €5,000.00 |
| Portfolio Growth | €-310.03 |
| Closing Balance | €464,606.77 |
Monthly Portfolio Growth Report
| Monthly Portfolio Growth Report | |
|---|---|
| Capital Gain + Dividend Income from Equities | €-3,420.96 |
| Real Estate Income | €3,110.93 |
| Total Growth | €-310.03 |
| % Return | -0.07% |
Portfolio Breakdown
The table below shows the breakdown of my portfolio into the various asset classes:
| Portfolio Asset Breakdown (as at 30th September 2023) | ||
|---|---|---|
| Equities (Stocks) | €142,925.77 | 30.76% |
| Real Estate | €320,579.26 | 69.00% |
| Cash | €1,101.74 | 0.24% |
| Total | €464,606.77 | 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 | €70,400.00 |
| Equities Capital Gains + Dividends | €15,867.93 |
| Real Estate Capital Gains + Rental Income | €35,603.99 |
| Closing Balance | €464,606.77 |
| Portfolio Return | €51,471.92 |
| % Return | 12.46% |
Lifetime Portfolio Returns
Here are my returns since I started in 2018.
| 2018-2023 Growth Report | |
|---|---|
| Opening Balance | €0 |
| Contributions (Money Added) | €326,845.78 |
| Equity Release* | €41,220.21 |
| Real Estate Capital Gains + Rental Income | €82,043.39 |
| Equities Capital Gains + Dividends | €18,362.12 |
| Other** | -€3,864.73 |
| Closing Balance | €464,606.77 |
| Portfolio Return | €96,540.78 |
* 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.