January 2020: 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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It’s already February 2020, and I’m still writing 2019. How long ist that going to last?

I hope everyone has had a great break, spend some quality time with family and friends. This time of year it’s easy to overconsume, both in terms of food and stuff. That got me interested in the idea of humans being hardwired to consume. We kept consumption down over the holidays, opting to spend quality time with people rather than buying expensive gifts. An exception was made for all the nibblings though.

For the month of January, I spent a lot of time looking into what funds I’m actually invested in, and how I can simplify my portfolio. It’s been an interesting exercise. Looking beyond the top 10 companies of a fund can actually be challenging. The information isn’t as readily available as you think. Moneyking has a great post on how to do this if you are interested in doing this exercise yourself.

I also looked into the finner details on how to calculate your net worth. It’s not always as straight forward as you think. I’ve been tracking my net worth as long as I have been investing and it’s been a great motivator for me. Since 2013, I have 4x my net worth. Sure- if you look at the real numbers it might not be that impressive, but relatively, I think 4x my net worth in 7 years is impressive. I recommend you calculate your net worth so you can track your performance as well.

Investment Update

I’ve been continuing to consolidate my investments in favour of reducing overlap and making it simpler. It’s easy to just buy fund based on the fund name with the online platforms available to us. But if you look deeper, there are overlaps between many funds, all of which charge different fees. Check out the post from Moneyking where we talk about fund shopping and having too many funds.

I’ve managed to get over my fear of selling funds and tided up all my NZ funds. Selling my Smartshares NZ Top 50 Fund, Smartshares NZ mid fund, and Smarshares Dividend fund- all in favour of the AMP capital NZ fund.

You may recall that this was the list of all the funds I was invested in at the end of 2019. I’ve scratched off several and I’m down to 7.

• Vanguard International Shares Select Exclusions Index Fund
• Vanguard Intl Shares Select Exclusions Index Fund – NZD Hedged
• AMP Capital NZ Shares Index Fund
• AMP Capital Australasian Property Index Fund
• AMP Capital All Country Global Shares Index Fund
• AMP Capital Hedged Global Fixed Interest Index Fund
• Smartshares – NZ Mid Cap Fund (NS) (MDZ)
• Smartshares – US 500 Fund (NS) (USF)
• Smartshares – NZ Top 50 Fund (NS) (FNZ)
• Smartshares – NZ Dividend Fund (NS) (DIV)
• Smartshares – NZ Property Fund (NS) (NPF)

I still have some money sitting in Smartshares US 500 Fund (USF), which overlaps quite a bit with my Vanguard investments but has a slightly higher fee of 0.34% to Vanguards 0.20%. I also need to have a deeper look at the AMP capital global share fund.

It may seem like I just jump in and out of funds a lot- and in some respects that is true, but the weight of some of my funds is very small. I use this as a tactic to motivate me to learn about the fund. It might not be the smartest idea but it works for me. You can get in and out of funds quite easily, and often without huge losses or gains. The majority of my investments are still in Vanguard- and that won’t be changing anytime soon.

Portfolio Update

Asset allocation

• Australasian Shares: 26% (-1%)
• International Shares: 31% (+3%)
• US shares: 4%
• Total Shares: 61%
• Kiwisaver: 12% (-1%)
• Peer to Peer Lending: 10% (-3%)
• Listed Property: 15% (+2%)
• Bonds: 1% (+1%)
• Cash: 1% (-1%)

Performance

• InvestNow: 24.37% (+4.46%)
• Genesis Energy: 26.82% (-4.35%)
• Kiwisaver: 8.36% (+1.74)
• Lending Crowd: 11.48% (-0.05%)
• Harmoney: 10.28% (+0.04%)

InvestNow: Returns from assets I hold are after fees and before tax for the last 12 months. Genesis Energy: Returns from capital gain and dividends in the last year. Calculated using Sharesight. Kiwisaver: Performance for the last year after fees and after-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.

Kiwisaver

I thought I’d share a little about my KiwiSaver- You might know that in August I switched to Superlife from ANZ KiwiSaver after looking into schemes from Simplicity, Juno, and Superlife.

I’ve been sitting on the fence for a few months at that stage, well over a year really. I know that I need to change from ANZ. The fees are just too hight. I left it on the back burner as the balance in my KiwiSaver wasn’t that great. I was a late starter with Kiwisaver.

Now that is a lesson for you. Join Kiwisaver as soon as you can! I use to not like Kiwisaver. But I’ve changed my tune- it’s actually the easiest return on your money you can find. And it doesn’t take as long as you think to change KiwiSaver provider.

My Superlife Kiwisaver Investments

The interactive chart below will give you an idea of the funds I have chosen.

Just like my other investments, I am going to have a closer look at each fund, consider why it’s there, and if there are any overlaps between any of them. I think I have again over-weighted NZ and Australia, which is easy to do since we love NZ, and …. the Australians aren’t that bad either…

But before I go and dig into my Superlife scheme to much, I’m going to be waiting on what InvestNow’s Kiwisaver scheme looks like. It promises to offer the same level of control over your investments as with a normal InvestNow account.

Goals

Road to 100K by December 2019

I haven’t yet set any goal since I reached my goal of 100k by Dec-19. A little more uncertainty has crept into my life, so to set a goal I need to do some projections to make it realistic. I’m still working through that. I think my next goal will be to set a percentage of income that I would like to save. I’m not sure at what level I am going to set that.

A savings/investing percentage goal is a good idea as all the other goals will stem from that. Financial independence is basically hinged on your saving rate, and so is your net worth or any portfolio size goals. So it’s the basic goal. The one to set, but set realistically.

Reduce my reliance on my car

It’s been a hard few weeks for biking to work- mainly because it’s been so bloody hot. I usually don’t like to complain about the temperature too much, because we can’t do too much about it. I’ve been having to take more time once I get to work just to cool off. It’s still quite enjoyable biking past all the traffic on my way to work through.

In Other News

January has been a cracker of a month for new visitors to my sight, more than double any other month so far. Along with the continued support from all of you, one of my articles was linked by Mary Holm in her NZ Herald column, and my site was featured in MoneyHub’s article the Top 10 New Zealand Personal Finance Experts. 

I’d just like to say thanks again for all your support, and if you could take the time to introduce my site to someone who might be interested, that would be awesome!

That’s it for the update- and this will be the last savings and investing update for some time- I did mention that I was going to have a hiatus on updates and that starts now- sorry, but happy savings!