Semi-FI Update - Q2/2023 - Coasting to Financial Independence - Money Flamingo - FIRE & Lifestyle Blog (2024)

Welcome to our latest Semi-Retirement update, where we share the ups and downs of our Coast FI journey from Flamingo FI to full Financial Independence and beyond.

You can find an overview here if you are new to the blog and unfamiliar with our plan.

I’ll share a quick life update followed by our latest FI progress, net worth and some notes on our investment style, inflation and growth assumptions.

Life Update

Lately, I’ve been thinking a lot about how much having kids changes your life. Sure, when you first get handed your newborn baby, everything changes in an instant. But the real big changes happen slowly and gradually over time – priorities, plans, lifestyle choices.

Looking back just five short years ago, our lives and attitudes were so different.

We asked questions like “Should we relocate to Spain once we hit FI?” and “Should we buy a catamaran and sail around the world for a year?”.

Now the questions we ask are, “Which primary school should we send the kids to (and when)?”, “What’s the best local walking track for little legs?” and “Should we renew our annual zoo pass or have a break?”.

It’s safe to say we are very much in the thick of family life with young kids.

We spent the three months since the last quarterly update just living life – bike rides, park and beach picnics, bushwalks, playdates, swimming lessons, family visits, Lego projects, birthday parties… I’m sure fellow parents know the drill. No big trips or events for a change – and it’s been great. Sometimes it’s just nice to keep things simple for a while.

We spent so many years travelling, partying and exploring in our 20s and early 30s before we had kids that this family-oriented lifestyle still feels like such a novelty, although we are 4.5 years in now.

As you can see I’m much more of a Mummy Flamingo than Money Flamingo in daily life these days. 😉

A quick work update: In the last couple of quarterly updates, I mentioned that things have been “interesting” at my part-time job, with many changes happening in the company. This has actually opened up some new and unexpected options for me. I might share more information in a future post, but for now, I’ll just say that things didn’t play out as expected, but that might actually be a good thing.

That’s our life update for the quarter. Let’s move on to the money part (that you probably came here for).

FIRE and Net Worth Update

It has been a strong quarter for the FIRE portfolio, and at the end of June, it sat at 21x annual expenses (up from 20.5x). This means we are now 84% of the way to Financial Independence.

I have been getting a lot of questions about our asset allocation/investment style, growth assumptions and inflation recently, so I wanted to share a few notes on these topics.

Reminder: Instead of using dollar amounts, we display our net worth and portfolio value in years of living expenses. Real wealth is about time, not money, so I find this way of looking at things much more helpful.

Investment style

I don’t share the details of our asset allocation and investments anymore to be on the safe side (thanks again, ASIC…). However, I will say that our FIRE portfolio consists of several different asset classes. We are coasting to FI, meaning that we are not adding any funds to our portfolio anymore, as it will grow to our target number through compound interest over time.

This doesn’t mean we don’t manage the portfolio itself. In fact, we are probably slightly more active than most investors in the FIRE community. While the portfolio has a boring/standard core, we tend to adjust allocations once or twice a year in line with larger macroeconomic developments (which I’m very interested in).

Inflation

One danger with the concept of having a set “number” is that people forget to adjust for inflation. If your FI number is, say, $2 Million, and it takes you 15 years to get there, that $2 Million will buy you a whole lot less than when you first started out. This is why we increase our FI number for inflation on a quarterly basis. So when I say we are 84% of the way to FI, this is based on current CPI figures and not some arbitrary number we came up with years ago.

Growth Assumptions

I often get asked what the dotted line in our FI progression chart means. It shows our path/timeline to FI based on an expected annual return (inflation-adjusted) of 7%. I’m not implying that we think we will achieve a 7% return every year. However, I’m very comfortable with this assumption as an average over time. We’ve set things up in a way that means we will be ok even if we only achieve 3% returns over time (which is unlikely but gives us some peace of mind).

When we first reached Flamingo FI in 2020 we assumed it would take around ten years for compound interest to get us to full FI – by 2030. But now looks like we might get there by 2026 based on the 7% growth assumption. Pretty cool!

I hope this clarifies things a little. Let’s get back to our financial update with that out of the way.

Our overall net worth position, including our FIRE portfolio and all other funds and assets, increased from 25.8x annual expenses to 26.6x.

In summary , life is good, and the graphs are all pointing in the right direction. What more could you want? 🙂

And that’s it for our Q2 2023 update – thanks for reading!