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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In May, I wrote a post about how you can grow wealth on an average salary. I used estimates on food and housing expenses alongside average household income data. And as long as you manage to save and invest 20% of your income, you will end up growing wealth. It’s all about incremental steps which lead to large results.
I also wrote a post about the downside of Kiwisaver. Don’t get me wrong, kiwisaver is great. It just puts a false sense of security on people. “I’ve got kiwisaver, I’ll be fine for retirement”. Saving only 3% with a 3% match isn’t enough. As I showed in the post, how you can grow wealth on an average salary, you need to be well into the 15 to 20% saving and investing range.
But before you start investing 20% of your income, you need to get rid of debt! But do you use the snowball or avalanche method? That’s the big question in the personal finance space. And to be honest. It doesn’t matter. Just make a plan and pay down the debt as fast as you can!
Spending in March
Every Month I share the same thing with you all about our expenses. That is “its been an expensive month!”. I’m not sure if it’s of any value to share with you guys our monthly expenses. Since we budget quite a bit the expenses seem to be roughly the same each month, with the odd exception of annual insuracne payments. Remember your premium is lower if you decide to pay annually.
So, instead, I am going to share with you the percentage that we achieved to invest, with the goal of achieving 30% investment into my index portfolio and 30% paid towards the mortgage.
For the month of May;
- Index portfolio: 30%
- Mortgage: 26%
Portfolio March 2019
Asset allocation
I am still not sure how to best allocate my money into my different investments. Further reading is required- let me know if you have any good references on investment allocation.
I’ve definitely diversified away from peer-to-peer investing which I am happy with. My next goal is to reduce the number of index funds I currently hold. I currently have 9. Many of which overlap each other in terms of diversification.
Even though I have invested in 9 different funds, my average fee across the board, weighted to how much I have invested in each fund, is 0.35%. I can’t say the same for my Kiwisaver, which is with one of the large banks charging a fee of 1.11%. I’m looking into what other options are out there for lower fee kiwisaver schemes. Maybe Juno?
- Australasian Shares – 27%
- International Shares – 26%
- Europe Shares – 2%
- US shares – 4%
- Total Shares – 58%
- Kiwisaver – 10%
- Peer to Peer Lending – 20%
- Bonds – 0%
- Cash 4%
Goals
Total Portfolio >100K by December 2019
My goal of reaching $100k invested still stands. I’m now 79% of the way there. I now have only 6 months left to achieve my goal. That means I need to invest at least $3,500 per month. I managed to save $2,900 last month. I need to do better if I’m going to reach this goal.
I hope you enjoyed my financial update. I’m considering including my net worth in a future one. Let me know if you would be interested in that. I still suffer from the stigma of sharing financials with total strangers, it kind of feels like bragging- but in reality, I want to help you out by showing how I’m doing, what I’m doing right, and what’s not working.
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I’m curious why you are moving away from P2P lending. Is it the risk? And in that case why did you go into it in the first place?
I haven’t tried it myself but I hear a lot about it. Personally I just don’t like that most people use it to buy crap they don’t need. But that doesn’t mean there’s no opportunity.
Two reasons really. One is that when I started around 65% of my investment where P2P. That’s not that diversified. The decrease in overall % isn’t all to do with me withdrawing money, but that I have increased investments elsewhere.
The second reason is that there are very few loans for the last several months, especially Harmoney- so I had quite a bit of fund just sitting doing nothing. If there were more loans to invest in I would probably stay with it.
Has P2P been financially rewarding, in that case? I’ve read some articles about the strategy of spreading your risk across multiple loans. I forget whose it was, probably yours!
I would say it has. I use to get 12%pa on Harmoney- that’s dropped down to about 9% now. And 11% on lending crowd. It’s finding loans to invest in that’s the issue. I spread my risk and only ever invest $50 into each loan.
That’s a pretty good return! I’ll probably give it a shot once I get more research in. 😃
🙂