August 2019: Journey to Financial Freedom update

Welcome to Passive Income NZ, my Journey to Financial Independence. Every month I share how I am tracking towards financial freedom by providing you with an update of where my portfolio is at and how far I am from financial freedom, and how my spending is tracking. My definition of financial freedom is not really the same as everyone definition. It’s not to just stop working, it is much more than that. It’s about living a more intentional life.

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August has been a volatile month. Business confidence is down to the level in 2008. Export log prices are down, dairy prices are down, and tourism is down. Some of which can be linked to the trade wars between China and the USA. And to top it all off, the reserve bank slashed the ORC rate down to 1%-a larger than expected drop. All this has lead to many people speculating that it’s likely to get worst than better in the coming months.

As much as this news is worrying- I haven’t been changing any of my investment strategies. They are firmly set in my budget and completely automated- So I can get on with my life rather than lose sleep over things that are not in my sphere of influence.

In August, I had a good look at Hatch Platform. They offer the ability to buy US shares directly. That’s not what got me excited about Hatch thought. What’s interesting is that Hatch allows you access to over 500 passive index funds that are not available in NZ- like the many alternative Vanguard funds- some of which have fees of 0.05%.

There are many Vanguard funds offered on the Hatch Investment platform
Look at all those Vanguard funds available on Hatch!

I’m going to do some more research into the fees and exchange rate to work out if investing in these index funds makes any sense over the long term.

I also managed to stumble across two new NZ startups. I discovered Cove while reading some threads on how to save money on Car insurance on Reddit. So I compared them to the well-established insurance companies and indeed they were cheaper. I would love to hear your experience if you have a policy with them.

The other NZ startup that I stumbled across was Anyspace- the AirBnB of spare space. You can list all sorts of space with them. They currently list parking spaces, garages, and spare offices. I contacted the founders so I could get the back story- they both sound like amazingly dedicated people.


Investments in August

Our savings rate for the month sat at 45% for August. That is the amount of money invested or principal paid on the mortgage as a percentage of income.

For the month of August, as a percentage of spending;

  • Investment: 20% (-12%)
  • Mortgage: 25% (-10%)

Portfolio August 2019

Asset allocation

New Zealand Personal Finance and Investing blog, all about Money budgeting debt credit cards and insurance for Kiwis NZ
  • Australasian Shares: 28%
  • International Shares: 27%
  • US shares: 4%
  • Total Shares: 59%
  • Kiwisaver: 11%
  • Peer to Peer Lending: 17% (-1%)
  • Listed Property: 12%
  • Bonds: 0%
  • Cash: 0%
New Zealand Personal Finance and Investing blog, all about Money budgeting debt credit cards and insurance for Kiwis NZ
Probably need to look at developing a cash emergency fund
New Zealand Personal Finance and Investing blog, all about Money budgeting debt credit cards and insurance for Kiwis NZ
Slowly getting to 100K

Performance

The monthly performance of my InvestNow funds has taken a hit over the last month- dropping down from 17% to 3%. Monthly data is always more volatile than yearly data.

  • InvestNow: 2.92%
  • Genesis Energy: 49.53%
  • Kiwisaver: 8.73%
  • Lending Crowd: 11.64%
  • Harmoney: 10.35%

InvestNow: Returns from assets I hold are after fees and before tax for the last month- annualised. Genesis Energy: Returns from capital gain and dividends in the last year. Calculated using Sharesight. Kiwisaver: Performance for the last year after fees and before tax and membership fees. Lending Crowd: Net average return (NAR) is a calculated annualised return for your investment portfolio that’s calculated monthly on the 1st day of each month. Harmoney: Realised Annual Return (RAR) is a measure of the actual rate of return on funds invested in the Harmoney platform.

Goals

Road to 100K by December 2019

I’m not 87% there. But with only 4 months left, I may not make it. I need to find and save an extra $1750 on top of my automatic savings every month to hit this target. That’s an extra $875 per week. That’s not easy- we will see how it goes- maybe my goal was a bit ambitious.

Switch Kiwisaver

Been procrastinating on this one- but I’ve finally changed providers! More details in an upcoming post on how long and how hard it is to change Kiwisaver schemes.

Happy Spring Everyone.


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2 thoughts on “August 2019: Journey to Financial Freedom update”

  1. Was reading an old post and was wondering if you had finally changed your KiwiSaver! Had to skip through to the end just to find out. Was paralysis by analysis eh? Be interesting to hear how switching went, from what I’ve read it seems like it should be very easy.
    The big question for your next spreadsheet though might be, how much has the procrastinating/researching/indecision cost you in different returns and higher fees based on when you first realised ANZ was too expensive compared to when you did eventually jump?
    I’m guessing it will be similar to the comparison of investing a large lump sum immediately vs breaking it into smaller chunks and using dollar cost averaging.

    Reply
    • Haha- yea it did take me a while to decide which fund to move to. I have a post coming up about my experience in switching. That would be an interesting topic to look at. I think for the numbers to be significant you would have to calculate the compounding effects over time.

      To be honest- my biggest mistake was that I didn’t join Kiwisaver when I got my first job!

      Who do you have your kiwisaver with?

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