Friday, October 02, 2015

Retirement - second anniversary

As it has now been two years since my formal retirement at the end of September, 2013, here's a recap of how things have been going:

1. Financial (part 1): given the recent turmoil in the markets and the losses on my equity portfolio this year (compounded by adverse FX movements), I have obviously spent some time thinking about whether I should be worried about the sustainability of our finances. And while I have lost a bit of sleep over the issue, the short answer is "no". After adjusting for residual income received post-retirement and changes to accruals, the mark-to-market portfolio (the numbers I report monthly) have dropped by less than 1% after accounting for living expenses. Losses would have to get a lot worse before I would be at risk of outliving my resources. Also, my monthly net worth calculation does not reflect current property valuations - property is carried at historical cost. If I revalued the properties to current bank valuations, I would be comfortably ahead of where I was on retirement.

The consolidated balance sheet which includes Mrs Traineeinvestor's assets and takes into account current property values, is actually up from when I retired and does not yet reflect the most recent increase in HSBC on-line mortgage valuations.

2. Financial (part 2): the other aspect of our finances is cash flow. Cash balances have fallen due to a combination of new investments and spending exceeding income from investments. During the last two years, I have had to fully renovate two apartments in Hong Kong, paid a very large building renovation levy, had three months of vacancy on two properties while renovations where being done and paid for a master's degree. Assuming I don't get hit of any of these very large bills again, cash flow should be better going forward. Also, I can look forward to Q2 2018 when another mortgage will expire.

3. Work: I am still doing some very part time consulting. This has gone on for longer than I expected, but I'm enjoying it and am happy to continue as long as it doesn't interfere with anything else.

4. Health and Fitness: I encountered some unexpected health issues which were a cause of concern for a while but (hopefully) are no behind me. They did interfere with plans to improve my fitness but I am starting to get back into it again and plan to run a marathon at some point in the future.

5. Other activities: The highlight is completing a post-graduate degree and thoroughly enjoying the experience. I've also developed a few hobbies and habits which are keeping me occupied (mid-week hiking with another early retiree, a volunteer position with a non-profit and a few others), but need something to replace the formal study. I have finished the first draft of a novel and hope to finish editing by year end with a view to self-publishing early in 2016. One of the things I have learned about myself is that sitting around doing nothing is not something I enjoy.

6. Things I haven't done: I have a very long bucket list and while I am making reasonable progress, there are a lot of things which I haven't touched and sometimes I have a nagging feeling that I should be doing more. I'll review the list and pick a couple of items to bring to the front of the queue.

So far, I have no reason to regret the decision to take early retirement. It's been a great experience and I feel like I'm using my freedom well.

Financial Review - July, August and September

The last three months were a terrible time for my investments.
Net worth continued to fall on the back of falling stock markets with the losses being increased my adverse FX movements. Expenses were high as we moved homes (temporarily) and have mostly completed some renovations.

Here are the details:

1. my Hong Kong/China equity portfolio fell sharply. I added a few more shares in HSBC (HK:5) to the portfolio, attracted by the 6+% dividend yield;

2. my AU/NZ equities fell moderately. I purchased shares in Nine Entertainment (ASX:NEC) attracted by the 6+% dividend yield and the proposal to repurchase up to 20% of the outstanding issued shares which is currently being implemented; equity ETFs fell sharply (India, Vietnam, Hong Kong and China) in line with the local markets. There were no new purchases;

4. my commodities fell slightly. Silver is my only position;

5. all tenants are paying on time. We are currently living in one of our rental units while our primary home undergoes some long overdue redecoration. It will be back on the market next week;

6. currency movements were negative with the NZD and the AUD falling;

7. my position in bonds remains small;

8. expenses were very high as we have paid for our second round of moving costs and the second and third instalments on our home renovation project;

9.there were no transfers to Mrs Traineeinvestor this month.

My cash position fell. I currently hold 33.7 months of expenses in HKD cash or equivalents. 

For July, August and September, my net worth fell by 2.4%, 6.3% and 0.65% respectively.  The year to date decrease is 6.11%.