Quarter 3 2020 – Internet price up 4.3%, 92.8% financial savings charge : fiaustralia

Quarter 3 2020 – Net worth up 4.3%, 92.8% savings rate : fiaustralia

TLDR; A type of journey posts. Internet price above pre-crash highs; financial savings charge good, dividends slashed.

r/fiaustralia - Quarter 3 2020 – Net worth up 4.3%, 92.8% savings rate

Quarter 3 2020 – Internet price replace: Up $103,000

After final quarter’s unimaginable reversal in fortunes, this final quarter has appeared positively sedate. There have been just a few bouncy days right here and there on the markets, however no definitive developments upwards or downwards (although I’m certain some chartists would disagree).

As an alternative, the entire world is ready with bated breath for information of a vaccine or therapy that places coronavirus to mattress.

I used to be really fairly shocked at how properly the Australian share market held up total throughout reporting season. There have been some winners, however most outcomes have been fairly weak-to-dire. And whilst you can argue that the market had already baked-in the ends in the costs, who can truthfully say with a straight face that August/September 2020 had the identical outlook as January 2019? Sorry, I digress.

Whereas world governments appear to be nonetheless grappling with the well being elements of coronavirus, imminent financial collapse appears to have been averted. I’ll have some extra ideas on potential ramifications from what has already occurred later within the month although.

On the stability of issues, I’m nonetheless fairly pessimistic in regards to the form of home and worldwide restoration. A vaccine remains to be some time away from being permitted, not to mention rolled out to the lots (mid-to-late 2021 earlier than us plebs get entry?). Authorities debt globally has skyrocketed. And within the private finance area in Australia not less than, the continued scaling again and eventual demise of JobKeeper funds will probably be one to look at. At stake is simply the native financial system, home costs, job safety, and the state of the ASX.

At the least Brexit appears to be going properly. Oh, wait. And who is aware of what’ll occur subsequent month within the American election now that the President has taken a flip. But it surely gained’t be boring no matter what occurs. 2020 retains on giving.

So with one other three months within the report books, how has our web price fared for Q3 2020?

Our monetary objectives

Earlier than going additional, right here’s a reminder to our present early retirement objectives. We’re trying to retire early earlier than the age of 45 (and we’re presently 35 and 36) with a pre-tax FatFIRE passive earnings of $150,000 a 12 months. Our web price goal is comprised of the next property:

  • $2,000,000 in shares

  • $600,000 in two funding properties

  • $700,000 in superannuation

  • $1 million primarily place of residence

  • Whole asset aim = $4,300,000.

You may observe our web price in our earlier posts.

July-September: Shares

In private information, we dipped our toes into the ETF waters for the primary time. We made purchases of $15,000 and $20,000 for a pair of internationally-focussed passively managed funds which have a dividend focus. They have been each buying and selling at round a 20% low cost to their pre-crash highs, so hopefully they’ll be an excellent long run funding.

Subsequent week I’m writing an article about how home shares can have an usually unacknowledged stage of worldwide market publicity. Nonetheless, our portfolio hasn’t obtained enough worldwide publicity from that alone give us diversification. So it was time to department out with some international-only holdings. In truth, about 80% of our remaining share investments will probably be in funds with a world focus.

That stated, we’re not solely out of the home share market funding sport. We additionally took up a Retail Entitlement Supply for one in every of our smaller share holdings. However that solely got here to simply beneath $1,000.

After beginning the quarter with $1,044,000 in our share portfolio, how did it finish?

On 30 September, we had a share portfolio price $1,091,000 – up $47,000 or 4.5% on Q2. As a part of that, along with the $36,000 in share purchases talked about above, we additionally obtained dividends – a few of which have been reinvested.

Nonetheless, you’ll want to attend for our upcoming Q3 earnings and bills report back to see what our dividend earnings got here to. Spoiler alert although: it’s not fairly.

All in all although, it wasn’t a dangerous consequence, given the ASX200 completed the quarter down round 1.4%. Much better than the devastation we noticed again in January-March not less than.

July-September: Superannuation

As talked about above, the native markets completed barely down for the quarter. So how did our superannuation fare?

Properly, we began Q3 on $423,000 and ended with $447,000 – a rise of $24,000 or 5.6%.

Solely a couple of quarter of that’s from employer contributions – as we’re not making further contributions to our superannuation. In order that’s nice outperformance! Much more impressively, that’s greater than the $428,000 that we began the 12 months on earlier than it hit the fan in February.

Provided that superannuation is a little bit of a black field, it’s arduous to inform why it outperformed a lot. However I do know that a big chunk of my private tremendous is in worldwide shares, so perhaps that explains it.

So whereas our share efficiency hasn’t been something terrific, not less than superannuation is popping as much as the social gathering.

July-September: Main place of residence

Property costs have been surprisingly resilient amid the broken financial system. We’re nonetheless seeing properties in our space happening sale. What number of are compelled? Who is aware of. However costs don’t appear to be falling – but anyway – in our space. In truth, apparently Brisbane home costs went up 0.5% in September – loopy!

However what do our go-to property websites should say about our home value?

Properly, costs it at $775,000 – equivalent to each Q1 and Q2. Conversely, an ANZ property report stated our home is price $711,000 (down $2,000 on Q2, however up $40,000 on Q1).

Like up to now, utilizing a rule of not transferring the value until we’ve got a pair of sources agreeing on a value transfer in the identical path, we’ll maintain the home value at $655,000.

We nonetheless suppose costs within the $700,000s are an excessive amount of, however would gladly take it when it comes time to promote.

When it comes to calculating our web price, our mortgage is totally paid off with regard to having cash in an offset account. So the total capital worth is ours in that ledger.

July-September: Funding properties

With our PPoR sustaining its worth, what about our two funding properties?

Final quarter they rose again to the place they have been in Q1, and the story was a lot the identical in Q3:

  • – mixed worth $700,000 ($700,000 in Q2 2020).

  • ANZ – mixed worth $616,000 ($617,000 in Q2 2020).

With the ANZ property report coming down only a fraction and holding agency, we’ll maintain the mixed values at $605,000.

Not like our residence, these properties do have mortgages on them with cash owing. We began the quarter owing $369,000, however that dropped to $367,000 over the three months.

That offers us whole fairness of $238,000, a rise of $2,000 or 0.8%.

Additionally keep tuned for a sequence of articles on our funding properties beginning within the subsequent month or so. We’re going to be speaking in regards to the funds behind them in better element for the primary time.

Monetary state of the union

We completed Q2 2020 with a web price of $2,358,000. Right here’s how issues look three months later after Q3 2020:

Asset Worth
Shares $1,091,000
Superannuation $477,000
Funding properties worth $605,000
Funding properties debt -$367,000
Main place of residence $655,000
Whole $2,461,000

We landed on $2,461,000, a rise of $103,000 or 4.3%.

Like our superannuation, that’s really a small enhance now on the numbers we noticed on the finish of 2019 that was our earlier all-time excessive.

Whereas it’s good to really be making some stage of progress finally, it simply makes me really feel a bit like 2020 has been a little bit of a waste. All that work and saving for virtually nothing. However, that’s a primary world privileged downside to have for the time being.

All in all, an excellent quarter on the web price entrance. Subsequent up we’ll have our Q3 earnings and bills report. Sadly, the information there – significantly for our very important dividend earnings – is far, a lot worse.


r/fiaustralia - Quarter 3 2020 – Net worth up 4.3%, 92.8% savings rate

Q3 2020 earnings and bills: 92.8% financial savings charge

Life has slowed within the HHMG family. We’re not locked down like we have been in April-Might, however we’re nonetheless holding socially distant, and minimising going out and about. With weak mother and father, our actions don’t solely threat impacting ourselves. Nonetheless, it’s terrific to see the discount in coronavirus instances in Australia over the previous few months. Fingers tightly crossed we don’t see one other massive outbreak just like the one which occurred in Victoria.

That stated, the person days go by shortly sufficient. It’s good having the ability to watch TV over lunch, as an illustration. And you may’t beat common cat hugs.

Nonetheless, with an workplace solely 10 steps out of bed, issues are type of all merging into one. It’s a bit disconcerting that this working from residence, Covid-normal has now been in our lives for over six months.

One of the best information of all is that 2020 is 75% performed. We are able to’t wait to see the again of it. Certainly 2021 can’t be any worse?

However whereas the 12 months has been memorable for virtually all of the unsuitable causes, what about our funds? If you happen to noticed our Q3 web price replace, you’ll have seen that we recovered to our pre-crash highs. Sadly although, the information is much less good on this replace.

July-September: Earnings and aspect hustles

In excellent news, my spouse Ellie managed to attain herself a minor pay rise from mid-year, bringing in nearly $80 every week further after tax. It’s not an enormous quantity, nevertheless it’s higher than what I achieved: triple doughnuts or $0.00, with a pay freeze till subsequent 12 months. Frankly on this financial local weather, any enhance is a minor miracle, so nice work Ellie!

At present neither of our jobs are beneath imminent menace. However from subsequent 12 months onwards, we’re each fairly fearful that we’ll be beneath the termination microscope. I’m desperately making an attempt to cling on lengthy sufficient to realize lengthy service depart in early 2021 to present us a bit extra of a financial buffer if I used to be retrenched and wanted to discover a new job in a dire jobs market. Ellie has already reached lengthy service (as soon as once more beating my efforts).

We’re additionally presently making an attempt to max-out our annual depart balances as a lot as potential to make use of them as a substitute checking account in case we lose our jobs. It simply appears prudent within the present atmosphere.

Nonetheless, let’s discuss cash. For our salaries, we had six pay cycles in Q3 – one down on Q2. In whole our salaries earned us $38,062 after tax for the quarter. That’s a small enhance of $936 or 2.5% on final 12 months.

Coronavirus continues to affect our bottle assortment efforts for this 12 months. We managed to make one journey in the course of the quarter, accumulating $83.40. We’re solely selecting up just a few right here and there as of late, with most coming from our mother and father. That’s properly down on the $235 we had this time final 12 months. The weblog itself earned $249.89, solely from Google Adsense funds from adverts displayed and clicked.

After seeing our earnings from on-line surveys rising, Ellie additionally revealed an article in the course of the quarter on what on-line surveys are and which of them we use. True to type, our earnings from them for the quarter hit a brand new excessive of $460. That’s a rise of $175 on this time final 12 months. This autumn is already shaping up properly on that entrance as properly.

Our aspect hustles amounted to $793.29 for the quarter, giving us a complete lively earnings of $38,855.29 between July and September. That compares to $37,765 final 12 months – a rise of $1,090.29 or 2.9%.

And that, of us, is about pretty much as good because the information right now goes to get.

July-September: Dividends

Time to take a deep breath.

Okay, that was extra like an apprehensive wince.

Q3 is normally an necessary quarter for our dividends – the largest of the 12 months when many shares present ultimate distributions. Naturally, this 12 months is like no different that we’ve skilled. So let’s see what the harm is whereas evaluating the earlier two years:

Q3 2018 Q3 2019 Q3 2020
DRP/DSSP reinvested/Direct debit, excluding franking credit $15,465.78 $16,439.23 $10,218.59


A complete of $10,218.59 for July-September represents a dividend discount of $6,220.64 or 37.8%.

That’s not good. Like we’ve stated earlier than, our aim is for share dividends to make up the majority of our early retirement earnings. So shedding properly over a 3rd of that’s… dangerous.

Whereas our Q3 2020 web wealth rose above pre-crash ranges, clearly that is an space we’ve gone backwards in.

Our excessive publicity to the banks is de facto our largest undoing right here. Fortunately over the past two years we’ve been investing closely away from them, figuring out it was probably a deadly flaw. On this occasion, it has confirmed to be the case with one hell of a stress check.

As an alternative we’ve not too long ago been investing in Listed Funding Firms, and solely throughout this final quarter did we purchase our first ETFs. On the LIC entrance, issues are literally fairly encouraging. These quarterly dividends solely mirror three out of six LIC dividends we’re receiving on this half of the 12 months. All of our LIC holdings have now introduced dividends, and the largest reduce to dividends was “solely” *cough* by a couple of third, whereas a pair have really elevated their dividends. So not less than the technique to put money into LICs for his or her capability to clean dividends appears to be paying, properly, dividends.

All in all, fairly sobering outcomes, however we’re not too depressed but. We’ve beforehand mentioned that we all the time anticipated there to be some lean years as soon as we hit early retirement, and 2020/21 is trying to be a prototype of that.

In retirement, so long as we’ve obtained sufficient earnings coming in to cowl our fundamental dwelling bills (which will probably be bigger than they presently are), we’ll nonetheless have a nice life – with the power to chop again additional if required.

Along with dividends, as soon as we FIRE we’ll even have some rental property earnings coming in. As telegraphed in our earlier Q3 web price replace, we’re offering an replace on these properties within the coming month or two to present a greater concept of how issues stand there. So a nasty consequence with dividends alone gained’t essentially sink our early retirement hopes both.

That stated, from the dividends which have been introduced it appears like This autumn will probably be a little brighter than the drubbing we simply skilled. Nonetheless, one factor that’s sure is that dividends gained’t rebound in a single day. The second half of this monetary 12 months will probably be very fascinating.

*The numbers listed above are ‘considerably web’ – for the needs of calculating our financial savings charge. It consists of franked and unfranked dividends – however not franking credit (that are primarily pre-paid tax credit). For the unfranked dividends (and a small further 7% portion of the franked dividends because of our marginal tax charges), we pay further tax in direction of the top of the calendar 12 months. For reference, we obtained a further $3,409.69 in franking credit for the interval – giving us a complete of $13,628.28 in gross dividends for the quarter.*

July-September: Bills

Let’s check out our bills for Q3 2020, with a comparability to Q3 2019:


In whole we spent $3,528.22 for the quarter, in comparison with $4,272.89 final 12 months – a lower of $744.67 or 17.4%. Whereas at face worth that must be lauded, in actuality our automobile service (Q3 final 12 months) was pushed ahead a month this 12 months (to Q2). So actually our spending is roughly flat, which we’re nonetheless comfortable about. That stated, there are just a few tales behind the numbers price mentioning.

Our electrical energy utilization went up 28.3% because of working from residence. Nonetheless, our invoice was solely 19% dearer because of a authorities aid fee for households because of coronavirus. However with 13.4kWh per day consumption, it’s indicative of what kind of every day utilization we’d have in retirement if we have been residence all day. It provides up having further TV time over lunch, the microwave and kettle operating just a few instances further a day, and a few computer systems operating continuous once they beforehand weren’t. In different information, we’re swapping electrical energy retailers in October to what must be a barely cheaper plan. We’ll see how issues change subsequent quarter.

Talking about working from residence, each Ellie and I will probably be claiming the Australian Taxation Workplace’s shortcut technique to assert $0.80 per employee, per hour labored from residence between 1 March and 30 June once we lodge our tax returns in This autumn to get a few of these further bills again! Although look into your tax choices to work out what works finest for you.

We additionally began the method of swapping web plans to the NBN (lengthy story – we’re nonetheless not on it and gained’t be for some time – extra particulars in This autumn). We have been solely a few months wanting getting kicked off ADSL, so it was compelled on us. One of the best plan we may discover was $55 a month in comparison with the $50 we’ve got been spending. With further working from residence we felt we actually couldn’t do with probably the most fundamental of plans accessible. It additionally meant we would have liked to purchase a pair of WiFi dongles to go together with a brand new (free) modem. Our present modem simply used good previous RJ45 ethernet cables, however due to the situation of the NBN outlet we would have liked to go together with WiFi.

Persevering with the IT theme, Ellie’s laptop additionally died in the course of the quarter. Ultimately we purchased a refurbished one from eBay for $109, which wasn’t dangerous in any respect. It was a gentle gamble shopping for it, however to date it has paid off and he or she’s pleased with it. The occasion additionally impressed the article on how we are able to’t keep away from some bills eternally.

My driver’s licence renewal additionally arrived, in order that was an additional expense in comparison with final 12 months – nearly $350 for the 12 months to date with Ellie’s additionally arising initially of the 12 months. On the similar time although, the financial savings in gas prices in comparison with this time final 12 months greater than make up for the licence charges.

In whole, in the event you take out our New Zealand vacation from the beginning of the 12 months, our bills for the year-to-date are similar to final 12 months’s at this stage – $12,083.81 in comparison with $12,710.74 in 2019. (If you happen to offset us being away for a few weeks in February, our bills can be just a few hundred {dollars} larger. The extra issues change, the extra they keep the identical.)

How are we monitoring? Q3 financial savings charge

As all the time, let’s throw all of it collectively to work out our financial savings charge:

Q3 Worth
Earnings $38,855.29
Share dividends $10,218.59
Bills -$3,528.22
Whole financial savings $45,545.66
Financial savings charge 92.8%

With whole financial savings of $45,545.66 for the quarter, that’s a 92.8% financial savings charge.

It’s an excellent consequence, although tempered by the discount in dividends. Regardless, we’re essentially in an excellent place at a horrible time. We’ve been extremely lucky up to now, and it’s not one thing we wish to take without any consideration. Our personal job safety is slowly approaching the road, so we have to take advantage of the chance we nonetheless have for so long as we’ve got it.

Looking forward to This autumn, identical to final 12 months our tax invoice is now a looming concern. We haven’t lodged our tax assessments but, however we’ve got calculated them. We anticipate that our tax will probably be will larger than final 12 months. In order that’ll be one big financial savings charge killer in This autumn.

Even when we hadn’t gone on holidays initially of the 12 months, and nonetheless achieved fractionally small financial savings throughout year-to-date because of coronavirus, we’d wrestle to hit a 90% financial savings charge for all the 12 months. It could be potential, however extremely unlikely. Nonetheless, an even bigger tax invoice will put the ultimate nail in that coffin.

After all, a number of the largest financial information of the 12 months hit this week after Q3 ended, with the delayed 2020 Federal Price range lastly breaking cowl. It appears like we’ll be about $4,000 a 12 months higher off (too late for 2019-20 and our upcoming invoice, although!). However we’ll have to attend and see how issues go together with backdated tax cuts and the passing of the laws. Regardless, we hope you’ll get a pleasant profit from the tax cuts your self in the event you’re an Australian.

2020 has been one heck of a rocky experience to date. Hopefully the top of the 12 months brings some positively and indicators of a return to normality. Sadly, I believe that even as soon as we get previous the virus with a vaccine (and that’s actually nonetheless an if) we’ll have a bit extra instability forward of us because of financial and budgetary harm that’s already occurred. However earlier than then, we nonetheless have to make it via the ultimate three months of 2020. Gulp.

Till we meet once more, we hope you keep protected and safe.




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