Another year and another review. I’ve been working as an IT contractor this year, but, in terms of employability, I think my age if finally catching up with me. My latest contract will end in a few days and I think that might be it!
This year has been a very good year for asset values, but of course, what goes up can also come down (and most likely will!).
Headline Figures
| 2021 | 2022 | Planned 2021 | |
|---|---|---|---|
| Cash | $490,941 | $334,861 | $92,328 |
| Superannuation | $1,904,632 | $2,142,843 | $686,557 |
| Primary Residence | $1,636,052 | $1,658,700 | $1,134,261 |
| Investment Property | $360,088 | $360,050 | $275,573 |
| Shares | $0 | $206,711 | $0 |
| Total Assets | $4,391,713 | $4,703,165 | $2,188,720 |
| Asset Change | 7.09% | ||
| Change from 2021 to 2022 | Change from Planned to 2022 | |
|---|---|---|
| Cash | -31.79% | 431% |
| Superannuation | 12.51% | 177% |
| Primary Residence | 1.38% | 44% |
| Investment Property | -0.01% | 31% |
| Shares | N/A | N/A |
| Total Assets | 7.09% | 101% |
Total asset growth was 7.1%. I get the property values from the bank evaluation, which hasn’t been updated for a while, and isn’t reflecting the latest boom in prices in Sydney. If I use valuations from a popular real-estate site, the real value of the total assets change is 16.6%.
I have invested some of the cash funds ($200K all up) in a Vanguard Aussie Share ETF. I plan to keep this for quite a while and use Super prior to using the shares.
Spending and Income in 2021
Spending in 2021 was just over $40K, which was quite good and lower than last year (this may have had something to do with the lockdowns…!). Taking into account rent received, the total outgoings were under $30K. Considering the pension is about $38K we are doing quite well!
Here is how our spending was broken up:
We had two minor (single vehicle!) car accidents which caused the car expenses to be quite a bit higher than last year. Per month spending is shown below:
Income in 2021 was $115K (I only worked part of the year) and savings were about $75K, about 65% of income (a little less than last year).
Share income was $3.1K, but the last $100K was only recently invested, and the first $100K has been in the market for about 9 months. So looks like I might expect an income of about $8K per annum (maybe more with the infamous franking credits), and this will be very handy. Rental income at $10K was higher than usual.
Updated Spending Patterns
Here is the updated spending patters assuming we stay in the PPOR (I have added shares to Super as a good approximation):
Average planned expense is now $141K, which is about a 19% increase from the figure last year (taking into account inflation). Note that this year for the first time average planned expense is higher than income!
If I use my online calculator, the figure comes out at $143K, a bit higher.
If I include the sale of the investment property at a later date, I get the below:
Conclusions
I expect an income of about $30K next year (2 x tax refunds and one more monthly pay). That means we will have about $360K in cash. If we keep our spending to our historic levels (which we may not want to do – i.e. we may want to enjoy ourselves more!), and taking into account rental income and assuming that deposit rates can keep up with inflation, that is enough for 12 years. That is plenty to exist on if there is a major crash, so I think the cash level is about right now (and definitely has been too high previously).
This year I have invested in shares, and also used so-called neo-banks for improved term deposit rates (which are still lousy!).
When I hit 60 next year, I will move all the Super into a Pension account. I don’t expect to necessarily spend the minimum amount, so, depending on the state of the market, some may stay in cash or some may go back into Super accumulation of shares.
Inflation last year (Sept 2020 to Sept 2021) was 3%, which is historically quite high, and significantly higher in the US. This makes investing more complex as it mitigates against holding large amounts of cash. Time will tell which is the best investment mix.
Retiring early for Australians 