Part two.
So started a very small shop about 8 years ago - and, through a bit of trail and error learn't a few important things. The owner is the last person to be paid - and I mean, the VERY last. In fact, if you do not make the effort, you might not get paid at all! Although I did reinvest all profits back into the business, which is good to a point, at some time you do need to start taking some out and setting it aside - I did not.
I also found out I was a better manager than owner when staff where concerned - bit soft really. I am also fairly lazy so some checks and balances where throw out the window. I am a good buyer though and have an ok "small business brain" - so did grow my one shop into three and into better locations. And then closed them all - in the reverse of how I opened them. No 3 was closed purely because of staff, 2 was the gold mine but closed when two large chain stores moved in. So I was left with shop one, the first one and a hell of a lot of stock (1mill plus)that came from the other two and still had a year and a half to go on the lease and carrying around R300K worth of stock debt.
Now around this time I found out that my farther was going to make my sister and I beneficiaries in a smallish trust my grandfather had set up - rather nice of him. Paid out 30K in 2013, 40k in 2014 and 2015. It looks like this is set to continue for a while, but my farther has first dibs if he needs it - so not guaranteed, but a handy about of cash.
So I started doing calculations to see if i could survive not working - and how much I would need to invest and what return I could expect. But more importantly, finding out how much I need to live - as luck would have it, not much. I have never had a store card in my life and the only debt have ever had has been linked to my shop. With a bit of trial and error I have found R5500 p/m does the trick nicely. I do though have medical aid - which would probably be good, but the local hospital is fine for most things and have a private clinic that charge R350 per visit including medication - think I've been twice in 8 years or so.
That R5500 includes a bike ride to a spur for sunday breakfast every week and we normally can squeeze in one comedy/ classical or Jazz night in CT. Basically gets divided into R600 p/w (food/spur/petrol) R1200 p/m (insurance/rates/elect/dstv/internet) - gives around R1700 for that big OTHER category (gifts/DIY/monthly outing).
But as said, no holiday cash or medical aid. And please note, my wife still works from home and has no intention of retiring, nor would she have anything to do if she did - and all bills are split, so we are actually spending double on the figures quoted above.
Now I give my wife 10% of what I get from the trust and I need R5500 per month so R5500 x 12 = R66 000 per year - R36K (R40K - 10%) - I need to generate R30K per year out of what I could salvage out of the last shop. I figured with a bit of luck I could squeeze R500K out of it (after paying expenses and stock debt and car debt) I with a bit of luck get 5% of dividends using a mix of REITs ( at around 6 - 8%) and decent dividend paying shares ( at 3 - 5%) and this would give me 5%.
I am not sure why I decided the dividend approach "clicked" with me - I know it doesn't really matter, but the fact I am not selling the capital really makes sense and just sit's well with me. Also I think I worked it off R5K per month - so it did work on paper. i have only recently found the extra R500 p/m makes it all work well - funny how a relatively small amount makes quite a difference
Anyway - after making a spreadsheet with my new financial goals, set about putting it into action - and I am happy to say it all worked quite well. Ended up putting in R650K into my main account (did include around R60k from the trust) so an ok but not great return from my original investment - I did spend a bit on the house adding pool and walls and lot's of other bits/ and very full wood workshop - I am not a minimalist at all. Plus got an old motor bike and a new bakkie that should last me 20 or so years.
Have been retired just over 6 months - the R650K has grow to R900K (but was invest monthly from 2 years ago, so very hard to work out a yearly return - plus way more came at the end as debt was paid). So far this year it is on 12% - I do not expect or need it to shoot the lights out, but 15% per year on the capital would be great. I am more interested in the dividend obviously - and that is what I look for in SENS. I hope that dividends out strip inflation and essentially I get richer as I get older -
I work on 6 months/ 6 months - 1 being the trust and 2 being all the dividends for a year.
Now I need to go my a thermostat for my oven - cannot handle burn't muffins anymore, part three later.
