November Update 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 stop working; it is much more than that. It’s about living a more intentional life.

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Well, it’s almost Christmas! And you know what that means- hopefully, a bit of time off, Christmas work functions, followed with family BBQs, trips to the great beaches around NZ. And all the associated spending.

It’s starting to feel like summer too- the days are getting longer and warmer. And the lawnmowing rota has been increased to weekly since the grass is growing so fast- I know- it’s the homeowner’s dream to mow the lawns every week /s.

Two weeks ago I wrote my review of the InvestNow Kiwisaver Scheme. Wow, did people respond to it. It was my busiest single traffic day since 2018- when I posted a post about the Power of Incrementalism, which got picked up in the US. I guess you were all anticipating how the InvestNow Kisiaver scheme was going to work just like me.

I spend quite a bit of time reading several different product disclosure documents and asking InvestNow several questions. InvestNow has always great at answering my silly questions. We all know that we should always ask smart people dumb questions. I hope that the review was useful for you.

Juno Increases its fees.

In case you missed it- Juno has had an incredible year given how bad 2020 has been. They have been ranked #1 for KiwiSaver performance for the September performance. I’m not sure this justified their recent increased fees. Does their claim “Low monthly fees help grow your balance” still hold?

BalanceNew Fee
$0 to $5,000$30 Per Year
$5,000 to $15,000$60 Per Year
$15000 to $25,000$96 Per Year
$25,000 to $50,000$240 Per Year
$50,000 to $75,000$480 Per Year
$75,000 to $100,000$720 Per Year
$100,000+$1080 Per Year
After which you will be charged an extra $30 per month for every additional 100k invested.

So I thought I would take a look at how they compare to my favourite KiwiSaver providers, including Simplicity, koura, Superlife, and InvestNow. The comparison is below- and includes providers membership fees (if they charge one).

Comparison of Kiwisaver fees vs balance invested. Superlife fee is the average fee for all their funds. InvestNow fee is the average fee for the passive index funds they offer- not their active funds.

The new fees do mean that Juno’s fees aren’t as low as they once were, but they are still lower than the average. I don’t really subscribe to their active philosophy, but if you are that way inclined, then they are still a good option.

I’m still working through whether or not my Superlife KiwiSaver is still the best option for me after my review on the new InvestNow KiwiSaver scheme. I would go with InvestNow but I still need to work through what impact their buy-sell spread is going to have.

Investment Update

As I write this post, I have hit a significant milestone of having $100k Invested with InvestNow. All my funds are well in the green, and overall I’m currently enjoying an annual return 12.08%. It seems crazy to me that the share market has recovered so fast following March.

Here’s just a recap of how my funds have been invested over time.

It’s actually scary for me to look at the above graph and how naive I was having over 60% of my investments in peer to peer. Granted, they have been averaging over 10% return, but it wasn’t very diverse back in 2018. Given 2020, I’d expect to see some more of my remaining Peer to peer investments to start to default- but P2P only makes up 3% of my portfolio now so I’m not too worried.

I guess we all learn with experience- that’s why I think you need to start doing whatever it is that you want to learn and you will learn over time.

I’ve also pulled back a bit on how much I voluntarily invest- my automatic investment is still automatically doing its thing. As I mentioned in my last update- I’m re-evaluating my goals in life and finance. Trying to get the balance right.

In terms of returns though- it’s been my best month ever, with a return of $8k. That does not beat my biggest loss ever in March of $15k. Again- it would be best if you remembered that both these are paper values- they only crystalise when I sell all my fund units.

I’ve also been working on a new spreadsheet to track my investments. My current sheet has been around since 2015 and has become a bit unruly. I think 21 tabs is a bit much. Over the last few years, I have really honed my skills in excel, so my new sheet will include a few data entry macros to make my life a bit easier.

I can also remove all my spending tabs as they are now in my Pocketsmith. I use to have to download all my transactions from both my banks (yes, I have accounts at two banks) and categorise all transactions manually. That took a good morning once a month. It’s so much easier now with Pocketsmith. I would say around 80% of my transactions are automatically categorised- the weekly shop etc. And the rest will need to be organised once a month.

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