• ETF Enthusiast

A time to be grateful

Updated: Apr 3

With the year in context, the opportunity just to be alive today gives me reason to be happy. I am lucky that I can look back on the last year with the most memorable experiences of my life to date. I got engaged (Jan), worked from home (Mar-present), conceived a child (May), got married (June), finished a post-graduate degree (July), improved our home (Aug/Sep), completed 13 peaks (Dec), had the best year in my career, and grew my net worth by a record value.

In certain ways I feel guilty for having a list of positives when thinking back on the year. I had some failings too. After being cautious and safe in the initial lockdown stages, my personal precautions eased as the lockdown levels dropped. I could have played a better part in reducing the culture of being outgoing. It takes someone close to you getting sick or worse to think about your actions and correct them. I can only say that I am lucky I never contraction C19 (that I know of) this year.

My wife’s year was nowhere near as easy as mine, being an entrepreneur is like being a superhero, and I don’t know how she and the business are still at least partially intact, although the long-term effects leave the business a fraction of what it once was. She did this all while carrying a child for 8 months of the year. I will need to play my part and prepare myself to support her if things get any worse next year.

With the knowledge of how lucky I have things, I have been waking up saying the following three sentences:

  • I am grateful to wake up with good health, four walls around me, food in my fridge and a partner, and family who love me dearly.

  • I am grateful to have the freedom to choose how I want to spend my day and have the hope that today can be great.

  • I am grateful to have a body and mind that is capable of achieving extraordinary things and to have a future which is bright with possibilities if I make today count.

A note on my finances for 2020

I mentioned that it was a record year for me. I managed to grow my net worth (asset – liabilities) by 26% compared to the same time last year.

One of the major reasons for this is just pure dumb luck, I happen to be working in a business which was not largely financially impaired from the pandemic. Level 5 hard lockdown was the only period where the business was at a complete standstill, and the business traded well from level 4 onwards. I faced no reduced salaries, forced leave encashments or retrenchment talk. The areas of the business which I look after performed well and I was lucky enough to receive a bonus, something I never budgeted for.

My investments also fared well in 2020. The JSE ALSI ended 4% in the green for the year and the S&P 500 index was up by 15%. With this in mind it’s no surprise that my offshore investments helped to drive my returns for the year. My index tracking (largely offshore) investments were up 21%, and my actively management (largely local) investments were only up 6% for the year. Bringing my total investments to 12% up for the year excluding any contributions I made.

My biggest fear with regards to my investment property was losing the reliable tenant that I had signed for the past three years. I had to confront those fears this year as my tenant gave notice to move out in June. I manage every aspect of this property myself and it was hard work to secure a new and more importantly reliable tenant. I was let down by potential tenant who had signed a lease and pulled out a month before moving in. After taking at least ten interested parties through a one-to-one viewing process I eventually signed a tenant who I felt confident with. I cleaned, painted and repaired all required work myself and ended the year with only one vacant month.

The hard work needed in these kinds of years towards an investment property has the potential to discourage many away from property investments, I am fortunate to have gained the experience not to let this work discourage me. I have a property which has increased in value by at least 6 to 8% per year (this is a conservative calculation based on the value I could almost certainly sell the property at, less any fees required). I feel that a lot of this return is due to the fact I bought into a small-scale well occupied development, something I highly recommend for first time property owners. Not only do you not pay any transfer fees, but it’s hard to put a value on receiving a brand new apartment with little to no issues.

After owning this apartment for 4 years (since development finished), I have only had one unoccupied month, no late payments, no major repairs work done, and only one year where the expenses were greater than the income received (marginally).

What’s ahead for next year?

Next year is completely unknown. The world is so volatile and it’s hard to bank on anything for certain anymore.

Given the magnitude of responsibility that comes with bringing another life into the world I have been working on my red file. This is something I can’t recommend highly enough, every person should have something similar.

With regards to my finances I continue to be guided by the principles set out in my financial plan. I have adjusted and enhanced this document during my year-end review.

Goodbye 2020, hello 2021!

ETF Enthusiast

Use your money to build assets which generate more income than you require to live