Last month I showed you how the share market really hurt my progress. I barely added to my net income, despite saving quite a bit of money.
My focus for this month was to get back on track and grow my net worth as much as possible. And despite every house bill known to man hitting me this month, I was able to do it with a little help from my friend ‘airline compensation income’.
Sometimes bad events (like a cancelled flight) have silver linings (free money). Let me tell you what happened…
Why do I post Net Worth Reports?
It’s very scary opening up my wallet and showing the world how much money I have. It forces me to consider some very confronting questions like “have I made the right decisions in life?” and “am I strong enough to show the world my failures?”.
But overall I think that there is value in documenting my journey to early retirement. Not only can people try to emulate my successes but — perhaps more importantly — they can avoid my failures
So here’s a full view of my income and expenses, and net worth, for November 2018. If you want to check out my other Net Worth Reports, you can check them out here.
What happened this month?
November was not a very eventful month. It sits smack bang between my anniversary month (October) and the silly season (December).
I spent about 8 days in total in Melbourne for work. I’m not sure what other people think but work travel really takes it out of me. Living in a hotel room for 5 days feels so lonely and isolating. 🙁
But it did give me plenty of free time away from distractions. I spent that time writing the first analytical post in my Safe Withdrawal Rate series. In that post I showed that you can safely withdraw 4% of your retirement portfolio balance for 30 years and not run out of money — as long as your portfolio is made up of at least 75% equities.
People seemed genuinely interested in the analysis and appreciative of the post. I can’t wait to expand on the calculations and test longer retirement lengths, different asset allocations and more. And I’m really keen to hear requests for analysis, so please email me if you have any!
Now onto my finances…
There are a few interesting things to note in this month’s income statement.
On the one hand, it was a painful month for house bills. Literally everything hit this month: strata, water, gas and electricity. I’m almost certain that doesn’t happen in any other month.
On the other hand, I have a chunk of additional income that’s over-and-above my salary income. In my July Net Worth Report I spoke about my amazing, 5 week trip to Europe. Unfortunately, my girlfriend and I had lots of bad luck with flights; one was cancelled and one was delayed enough to miss a connecting flight.
The silver lining is that Europe has very generous compensation laws, which force airlines to pay their passengers compensation when they cause a delay or cancellation. We successfully claimed compensation from two airlines and one of the payments came through, totalling $1,200 AUD. I’ll have to split that with my girlfriend but it’s still a nice little windfall!
Overall, in the month of November I was able to save a little over $4,200. Although my savings rate of 39% was a little below my personal best, my total dollars saved was the highest of any month ever.
Nothing too much to report on the balance sheet. There were no major changes to my superannuation or investment accounts, apart from transferring $5,000 into the investment account and then purchasing more VAS.
In the month of November, my total net worth grew by about $5,150 (+1.5%). One of my best months ever.
This month’s key insight
This month I am going to borrow an insight from my Safe Withdrawal Rate Series.
Most portfolios are better off with a high equity allocation; you just need to be comfortable with volatility.
Irrespective of whether you’re saving for retirement or already retired, the analysis shows that you will better off in the long term if you invest more in equities. But it’s scary, because the GFC taught to that we must expect swings of up to 50%.
If you have the strength to ignore wild fluctuations and keep pumping money into equities, you should do it. And you should only add bonds if you think you can’t stomach the volatility.
It sounds a little strange. But if you don’t believe me, please just wait for the next few posts in my Safe Withdrawal Rate Series.
Until next time!
All the best,