FIRE Progress — April 2021
My journey to Financial Independence by age 40.
First FIRE progress update of 2021!
Given my monthly updates towards my goals, which includes net worth, investing, and finances, I didn’t think it was necessary to update my progress towards FIRE every month. Instead, I’m going to update my progress every 3–4 months and when I pass a large milestone.
The first few months of 2021 are going pretty well!
Net Worth
In 2020, I made some really great progress on my net worth, growing it from $25,000 to almost $100,000. This was a huge increase, mostly due to a good savings rate, investing as much as I could every pay, and my investment portfolios growing steadily.
For 2021, I really want to reach a net worth of $200,000 — given my performance in 2020, I think it’s more than doable, but it will require more work and commitment towards it.
For the first few months of 2021 already, I have made some really good progress, mostly due to a very large increase in March due to my cryptocurrency portfolio kicking off (after initially buying into a few in 2017/18 and being pretty average for a number of years, it’s started to grow a lot with more people getting on board. It really is just about time in the market).
Check out the table below for a rundown of my net worth growth over time.
As you can see, there has been very steady and consistent growth with my selfwealth portfolio (ASX) and superannuation, and a nice slow decrease in my HECS debt.
As mentioned previously, I don’t really have an end goal for my net worth in regards to my journey towards FIRE. I just love tracking it and seeing it grow — it motivates me and makes me work harder to achieve my ultimate goal of financial independence by age 40.
My main metric of tracking my progress to FIRE is my selfwealth investment account — and as mentioned on my FIRE home page, my goal is to reach approximately $750,000 — $850,000 by the time I’m 40 years old.
Australian Selfwealth Portfolio
I started 2020 with a portfolio value of $37,589, which I managed to grow to $68,449!
For 2021, my goal is to reach a portfolio value of $100,000.
See below for a table of my performance since uploading my portfolio to selfwealth in December 2019:
My aim for my portfolio is to have an annual growth rate of at least 6–7%. This is what I’ve been basing my FIRE calculations on for the future. Whether that beats the market, matches, or even loses — if I can maintain an average annual increase of 6–7% then I’ll be happy.
Over 2020, my portfolio had a return of 14.5% — which is amazing, especially compared to the Australian market’s 1%. 2020 was a very volatile and strange year for the markets, but I’m glad it went so well.
2021 hasn’t been off to a great start — it’s been pretty flat so far. But even considering my poor performance for the past 3 months, my annualised return is at 13.47% so that’s good to see.
I have been placing my house deposits in my portfolio, and so when it comes time for me to buy a house, my portfolio value will of course drop quite significantly (about $20,000). I may still be able to reach my goal of $100,000 but it will be a challenge.
So far so good!
Savings Rate
Normally, my aim is to save and invest 50% of my income. In 2020, I only managed to save 39%. While that’s still quite good, rather than a savings rate percentage for 2021, I’ve decided to try something a bit different this year.
In 2021, I’ll be trying to replicate a year of financial independence, by only spending a certain amount of money for the year. This is based on my expected amount available at age 40, so I thought it would be great to see how it goes — and if I end up spending a lot more than the limit — then perhaps I’ll need to increase my target number.
Taking into account rent, and all other expenses, my goal is to only spend a maximum of $2,500 per month, totalling $30,000 for the year. This is the goal income I’d love to be able to live off when I retire (which ideally, a very minimal amount of expenses would be from rent/mortgage).
So far.. it’s not going the best due to a few very large purchases, as you can see below:
So already spent $13,800 in 3 months — I’ll have to see how this goes. I’m still hopefull, but at the same time, I don’t want to sacrifice too many things in my life that I enjoy — so by the end of the year, perhaps accounting for some large one-off expenses, I’ll need to assess whether I’m happy with how I lived my year or whether I would enjoy an extra $5,000, $10,000, $20,000 each year.
I’m really excited by this goal as compared to focusing on a savings rate! I’ve got my budget of $2,500 which is actually quite a lot per month, but expenses can quickly add up when you account for a few trips, eating out, and expensive experiences along the way. It’s all just an experiment to replicate a year of being FIREd — keen to see how it ends up!
The first 3.5 months of 2021 has gone quite well. My next update will probably be around mid-2021 or if I manage to cross the $150,000 net worth barrier sooner
I hope this gives you some inspiration and motivation — happy to discuss any of the above and would love to know your numbers!
Until next time,
Nathan