South African Mr Money Mustache?? early retirement guru

[SauRoNZA]

No, most of the money is not in liquid cash. We have a combination of sources but we do sell down shares as we need cash.

It doesn't really matter in the long run whether it's dividends or a sell down of shares - look at Berkshires, it never pays a dividend and you can live off dividends or capital, have a Google on Warren Buffet's analysis on dividend vs living off capital gains.

Oh I get it. Was just trying to figure out the strategy.

 

[ronz91]

How accessible must the cash be?

if one is saving for financial independence or early retirement, then I assume its staying in the account for long periods untouched. What are the best options?

 

[ronz91]

I store most of my investments (>70%) in low-cost index trackers, such as SA top 40 and then MSCI World-linked index tracker (something like DBXWD). The simpler the better - and low cost or tax consequences.

Could you explain abit more please?

 

[supersunbird]

if one is saving for financial independence or early retirement, then I assume its staying in the account for long periods untouched. What are the best options?

http://www.iol.co.za/business/perso...-were-simple-with-its-13-percent-rate-2030361

So, Nedbank is actually giving you a rate of 10.53 percent a year on its five-year Green Bond. (Standard Bank and African Bank’s five-year fixed-deposit rates are also “simple”, but they aren’t trumpeting them loudly in the media.)

Ironically, 10.53 percent is a very good rate and the Green Savings Bonds is a sound product, so why risk the reputation knock?

So that's one you could look at, Nedbank Green Bond.

 

[Alton Turner Blackwood]

http://www.iol.co.za/business/perso...-were-simple-with-its-13-percent-rate-2030361


So that's one you could look at, Nedbank Green Bond.

10% growth after five years? I'm pretty sure there are safe options which would beat that.

If you were just to jump that cash into your Easy Equities account and leave it there for 5 years you'd be in a much better position

https://www.easyequities.co.za/Content/Documents/EASYEQUITIES_Cost_Profile.pdf (last page).

 

[supersunbird]

10% growth after five years? I'm pretty sure there are safe options which would beat that.

If you were just to jump that cash into your Easy Equities account and leave it there for 5 years you'd be in a much better position

https://www.easyequities.co.za/Content/Documents/EASYEQUITIES_Cost_Profile.pdf (last page).

No, compounding, what the whole article is about...

 

[Pakka]

Thread revival!

We just recently managed to pay off both cars and our only debt is the mortgage (20% of household income, but the flatlet subsidises 40% of the bond) and a shortfall on another buy-to-let property (6,5% of household income).

Although I would like to buy another car which can take us off road and allow is to camp easier, it really isn't feasible at this stage.

Our goal now is to have the second property paid up a bit more to reduce the shortfall. Once that property breaks even or becomes cashflow positive, we'll look at buying another one (but this time a cheaper place).

Any salary increases we get for the next few years will to a great extent be used to increase our % of monthly savings. It's a bit too low now.

How are you guys doing with the goals you've set up for yourselves?

 

[ronz91]

Thread revival!

We just recently managed to pay off both cars and our only debt is the mortgage (20% of household income, but the flatlet subsidises 40% of the bond) and a shortfall on another buy-to-let property (6,5% of household income).

Although I would like to buy another car which can take us off road and allow is to camp easier, it really isn't feasible at this stage.

Our goal now is to have the second property paid up a bit more to reduce the shortfall. Once that property breaks even or becomes cashflow positive, we'll look at buying another one (but this time a cheaper place).

Any salary increases we get for the next few years will to a great extent be used to increase our % of monthly savings. It's a bit too low now.

How are you guys doing with the goals you've set up for yourselves?

Hey man

Thanks for the post. Yeah I'm all for keeping this thread alive. Letting those lines souls out there who seek financial freedom know that there are others out there.

I am still in my journey of learning and acquiring skills. Hoping to join the job market next year and start on the practical route.

Care to share more of your story?

 

[Cius]

2 years 6 months until the day I am debt free hopefully.

Plans took a bit of a setback after my daughter was diagnosed with Cystic Fibrosis. Medical bills above and beyond the medical aid are well over 100k in the last 18 months.

 

[Alton Turner Blackwood]

2 years 6 months until the day I am debt free hopefully.

Plans took a bit of a setback after my daughter was diagnosed with Cystic Fibrosis. Medical bills above and beyond the medical aid are well over 100k in the last 18 months.

So then you'll have zero debt at all? Noice

For me:

• I have a CC with a minuscule limit of R8k (judging by what the guys here buy with their CC's ). I hid the card, but forgot where and as a result of that haven't used the card in more than a year. I don't know the expiry date and CVV either so can't buy online
• A personal loan which I took to do some things around the house - I regret taking out this fscking loan every day, but I only have about 6 months left and it helped me increase the value of my house so it's not all bad
• A store account with a balance of R449 (this I'm clearing and closing next week)
• My bond, I'm giving this about 4 - 5 more years

I've been carless for more than 3 years. Someone made an accident with my car and the insurance didn't pay. I'm so used to taking the bus to work that I don't even consider buying a car - ever again. If I need to go somewhere I take the wife's car, which I bought with an inheritance just before mine was written off so we have no debt on that.

I'm at a point where I'm saving and investing just under a third of my salary, the only thing stopping me from increasing that is the fact that we have a single income household (by our choice from when our first one was born 9 years ago) so basically I have to pay my wife a salary

I have to add, a lot of my saving and investing was because of this forum, we used to live lavishly a few years ago and I didn't give a schit about saving.

 

[Cius]

So then you'll have zero debt at all? Noice

For me:

• I have a CC with a minuscule limit of R8k (judging by what the guys here buy with their CC's ). I hid the card, but forgot where and as a result of that haven't used the card in more than a year. I don't know the expiry date and CVV either so can't buy online
• A personal loan which I took to do some things around the house - I regret taking out this fscking loan every day, but I only have about 6 months left and it helped me increase the value of my house so it's not all bad
• A store account with a balance of R449 (this I'm clearing and closing next week)
• My bond, I'm giving this about 4 - 5 more years

I've been carless for more than 3 years. Someone made an accident with my car and the insurance didn't pay. I'm so used to taking the bus to work that I don't even consider buying a car - ever again. If I need to go somewhere I take the wife's car, which I bought with an inheritance just before mine was written off so we have no debt on that.

I'm at a point where I'm saving and investing just under a third of my salary, the only thing stopping me from increasing that is the fact that we have a single income household (by our choice from when our first one was born 9 years ago) so basically I have to pay my wife a salary

I have to add, a lot of my saving and investing was because of this forum, we used to live lavishly a few years ago and I didn't give a schit about saving.

Very nice. Yep, personal loan sucks. Rather save and do cash. We just extended the house and it cost a bit was done cash and was worth every cent. Lots more useable space now. The only worthwhile debt in my mind:
1. modest house
2. Education
3. Perhaps a modest car (try avoid this too if you can)

Debt is the biggest enemy of wealth creation due to interest and lifestyle is second. Funnily the two are often related.

 

[ronz91]

3. Perhaps a modest car (try avoid this too if you can)

against owning any car, care to elaborate?

 

[ronz91]

Hey guys

Just had a thought, since we are all striving towards a similar goal (financial independence/early retirement etc), what if this thread or another thread were used to provide info to each other such as tips for saving on specific things that you have come across, which type of product to purchase to save money over the long term, investment advice and queries, opportunities that come up that may be useful to other members here etc

Good idea?

 

[supersunbird]

My aim is to be able to retire at 55. So 17 years to go. Important to still enjoy life along the way.

 

[ronz91]

My aim is to be able to retire at 55. So 17 years to go. Important to still enjoy life along the way.

investments already in place?

 

[supersunbird]

investments already in place?

Jip, 24% of gross income going into retirement savings since that 27.5% limit came into affect this year, will try to push it to the limit next year. Got a rainy day fund. Car very nearly paid off. Still haven't been able to start contributions to a TFSA.

 

[ronz91]

For those who have not seen it.

[video=youtube;LfKaLQkTZfQ]https://www.youtube.com/watch?v=LfKaLQkTZfQ[/video]

Enjoy!

 

[ronz91]

There's not much to it actually. It honestly surprises me that every professionally employed person doesn't save. I've worked three jobs in my life. The first for pathetic pay, then I took some time off to go enjoy life after getting told the pathetic pay wouldn't be increased. Something I could do thanks to having saved so well. The next job was a decent increase, and after that I took one for less pay that I wanted more. I got regular better than inflation increases, and like all good investments, they compound!

That took care of the earning side. For the spending side of things I always had a goal to live on half my salary. In the beginning that meant I had to live at home, and then with a room mate, but I did it. It didn't feel like deprivation at all, I've just never thrown money around. I've always bought used cars, and paid cash. I've never had debt for clothing accounts etc, or any other type of consumer debt. Never been too image conscious, so there are very few expensive name brands in my cupboard. I do have a child, but only one. He is the light of my life, but there won't be another. Fortunately for me, my new wife agrees with that! We both prefer spending on experiences rather than things. I'm completely anti-stuff to be honest, but she still likes things. We go on one very cool overseas trip per year. The Seychelles last year where we got engaged, and a few months ago we eloped to Paris for a fantastic wedding/honeymoon. Our families know we're weird enough not to worry about a "normal" wedding, so they were happy for us too. Plus we got to take awesome wedding photos like this:


I won't go into my budget in numbers, but percentahe wise about one third of my budget is for housing expenses, one third goes to looking after my son, and one third is my costs. It feels really comfortable that way and I don't feel like I lack for anything. My budget is probably lower than you imagine, and in my circle of friends it's comfortably the lowest. Still far higher than the majority of South Africa sadly. My friends keep asking when I'll get a new car, but I love my 11 year old Nissan Almera. It's super cheap to run, and still drives like everything is connected, not like a computer runs it. I like that I can feel when the road is rough through the steering wheel, and that when I change the throttle the noise changes straight away. It's also really cheap to insure and I don't feel bad pretending it's a 4x4 in the pilansberg, or loading it with camping gear when the three of us go away. I'm a big bicycle fan too, so I tend to bike the same distance I drive every month. It does help that I built a pretty decent electric bike...

On to investing. Sadly I never got into ETFs and the stock market until a few years ago, but I did own three properties over time. One for myself, and two rentals. They never did well relative to the stock market. Live and learn. Thankfully three years ago a now banned member called Marco got me on the right track. He made outrageous claims, that while potentially dangerous, was true. There were actually investments out there earning 20% plus per year. I crunched numbers, took a safe approach and got into the market. While the days of 20% are over, I know that in the long term I'm sitting pretty. I only do ETFs, I'm not smart enough to pick shares, or maybe I'm too smart!

So how did that all pan out? Well I'd say. I don't own a house anymore, thank god, but I'm currently sitting on about 300+ times my comfortable monthly spend in invested assets. The dividends alone could cover my bare ass budget if I stopped working at the end of the year. I've also got a reasonable pension fund, and if I included that, you could say I've got 400+ times my monthly spend invested, but there's no way I'm going to touch that money, and when I turn 62 it'll start paying me enough money that even in the worst case, I won't have to live in a box on a street corner.

The next question I get from people who understand finance is why am I still working? Well there are a few reasons. I love part of my job. Sadly I loathe a lot of it too, and that part seems to be growing. I'll see if I can hang on for the next 3 years 3 months. If I can, it get's my pension to match my comfortable living expenses, and my dividends should also be around that number. If I can't I'll most likely still be perfectly ok. I might take some fun work for a little while, or I might just begin living my dream life.

Incidently, I dream big. I'd love to bicycle tour ALL of Europe. I also did my skippers license a couple of years back (spending on experiences instead of things again), and I'd love to go explore the oceans at some point. Probably when my boy finishes school so he can come along.

This post turned out longer than I intended when starting, so sorry if it's a slight hijack. I do have a blog about things, including my views on money, spending, life etc if you're interested http://www.investorchallenge.co.za/blog/ but otherwise If there's anything else you'd like to know just ask-within reason I'm happy to share.

[video=youtube;LfKaLQkTZfQ]https://www.youtube.com/watch?v=LfKaLQkTZfQ[/video]

Hey Patrick

MMM says in the video that his talk applies to people in rich countries? Does SA qualify as rich in your opinion and with regard to the video contents? What modifications or caveats would you add to the video for people in SA?

 

[Oopsie]

I wonder how much money MMM makes from his presentations. He seems to spend a lot of time constructing his videos and stills. I think this is his only income and his job.

It is true what he says about lifestyle spending. Me and wife never had a single account for ~18 years and rented. Had an old Conquest that we drove into the ground.

We managed to save R475k after the 2008/9 crash but made it up back to 7 figures within 3 years and retired early. Since we retired our worth has increased by R220K even after withdrawing for our monthly cost of living over the past 4 years.

I am not bragging but simply stating that buying a big house and car with all the bling will make you work longer and perhaps never retire.

 

[cguy]

I wonder how much money MMM makes from his presentations. He seems to spend a lot of time constructing his videos and stills. I think this is his only income and his job.

I probably said this much earlier in this thread, but MMM really makes retirement look like very hard work. To me it looks like more of a "how not to have a traditional boss", than anything I would consider retirement.

It is true what he says about lifestyle spending. Me and wife never had a single account for ~18 years and rented. Had an old Conquest that we drove into the ground.

We managed to save R475k after the 2008/9 crash but made it up back to 7 figures within 3 years and retired early. Since we retired our worth has increased by R220K even after withdrawing for our monthly cost of living over the past 4 years.

I am not bragging but simply stating that buying a big house and car with all the bling will make you work longer and perhaps never retire.

What do you think your position would be if you had bought a house? Assuming you paid it off before retirement, I would expect it to be much more than your savings. I definitely agree that buying a "big" house (i.e., beyond one's means) is a terrible idea, although a reasonable house is generally a good mechanism for "forced savings".

I don't know if you've see the "tiny house" craze in the US (google it if you want to see some crazy ****), but it seems like a terrible idea to me. Most of these people won't save their money, and will only have a $10k house at the end of the day to show for it.