financial freedom, 2040 finance, fire, early retirement, financial freedom, Millenial, retire early
Update #1 - How I Manage Payday, My Portfolio Allocation, and 1414 Degrees IPO
Posted on: 16 / 6 / 18
What Happens on Payday?
I love payday. For me, that’s once a month.

What happens on payday? Usually I’m checking my bank at the end of the day and get a little bit excited to see that its gone in.

Once its in and the number is there (I don’t know why I care about the number, it’s the same every month) I start spending it.

First I have my bills automatically stripped from my bank account and manually pay those ones which crop up from time to time like car rego. I then work out how much i'll survive on for the rest of the month and leave that aside for me – LAAAAAAME… but necessary

The exciting bit is when I spend on investments!

Most people probably get excited by having the money to buy a car, clothes, phone, or house. I get excited by analysing my portfolio and dropping money into an investment. Absolutely thrillseeking.

I even have a little spreadsheet that I made up years ago that I always consult. The file name is actually still has “May 2016” in it.

This details what money I have where, how much return I get, or think I will get, and the percentage of my overall portfolio which is allocated to that. Lets me plan, project, predict. 

For a long term goal like early retirement, I feel this is important. What is monitored gets managed.

My Portfolio Allocation
portfolio allocation, early retirement, yield
I don’t factor in capital growth into these numbers, though I do estimate them elsewhere
portfolio allocation, high risk, millennial
Hard disclaimer - this is what I do with my cash. Everyone's situation is different and just because I do something doesn't mean you should. Also, there are some affiliate links below on the Coinspot and Raiz.

I leave my 7k in savings as my emergency fund. It’s very common amongst personal finance enthusiasts to have some cash on hand. 

For me, 7k is roughly 3 months of living expenses. If for whatever reason I lost my job, couldn’t work or had to pull cash from somewhere, this would be where I’d go first. The interest on this is a measly $207 a year or about $16 a month but its purpose isn’t really to generate money, its to be easily accessible if I need it.

The Mortgage Trust is a way I like to gain exposure to real estate without actually buying a house or using Brickx, which I’m very sceptical about. The 10k is tied up in Trilogy’s Monthly Income Trust and as far as I’m concerned, this is simply money that sits there and spits out about $65 a month for me which I can put into other investments.

Ratesetter is a peer to peer lender, essentially lending money to other people (like a bank). This money is tied up for 5 years but does return a decent amount, as it should for the risk I’m taking. Like the mortgage trust, this generates a fairly stable $232 per month for me which I just reinvest back into more lending – oh yeah, compounding the gains.

Shares is the general pool of cash I have tied up in the sharemarket. I personally like stock picking even though there are easier and more consistent ways of investing. I do this because it interests me though. The money I get is based on dividends which, when spread across so many companies results in a very uneven distribution of the cash. 

March, April, May, September and December are typically the months that most of my dividends pay out. This part of my portfolio actually needs a bit of a clean up so I’m going to go through it in the coming weeks.

Investment income from 2017. Note the spikes are when alot of dividends came in. The lower months (around the $300 mark) are made up of fixed income sources like Ratesetter, interest from the bank or the mortgage trust.
Raiz, previously known as Acorns, is pretty much a dumping ground when I can’t allocate money elsewhere. Minimum trading values on the stock exchange around $500. Adding to the mortgage trust must be in lots of $1000. If I have say a spare $50, Raiz lets me invest it without worrying about minimums. The returns over the last 2.5 years haven’t been too bad for myself, averaging about 7.6% including capital gains. This also gives me some exposure to overseas markets.

Gold and silver are an interesting holding. I’ve been a bit of a fan of having some gold in the portfolio as a hedge against turmoil and government deficits. While the shiny metals don’t return anything, I see them as a bit of insurance for my portfolio, especially since I’m heavily invested in shares and other ‘riskier’ assets.

The cryptocurrency section is a small allocation. Its about 2% of my overall portfolio at the moment. Even during the crypto frenzy that happened late last year, I was still very conservative in my allocation, even banking my original investment and just leaving the original profits invested. These saved me a lot of pain when the bottom of the bitcoin market fell out.

While I didn’t time the market at all, what saved me was managing my risk from the start. For me this was an exercise in risk management which paid off. Even though my view is that cryptocurrencies will slowly encroach into our everyday lives without us noticing, it is still a long road to that point and I want to be on that bandwagon as it continues on its journey. I use Coinspot for buying and storing some of my holdings but also have my own Ether Wallet (for those who understand what that means)

1414 Degrees IPO - My Investment This Month
Tangent aside, so this month I actually had to put a little bit less towards investment than I would’ve liked. I’ve been saving up for my wedding and honeymoon later this year so have been trying to push cash into that pile every month. I also underestimated my spending habits last month which I admittedly still stuff up from time to time. 

I was wondering what to put my investment cash into this month and recalled a company an old work colleague of mine mentioned had their Initial Public Offering (IPO – when shares first get listed on the sharemarket).

1414 degrees, thermal, energy storage, heat, latent heat, silicon, south australia, australia
Its like a battery but not a battery... its a heat battery
This is a South Australian company known as 1414 Degrees. Without getting into the technical, they are essentially a company which has developed their own patented energy storage technology.
Note, isn’t another fancy lithium ion battery. It technically isn’t even a battery at all. It stores energy as heat.

The science behind it is that silicon melts into liquid form at 1414°C. The company harnesses latent heat when the silicon changes from liquid to solid and back to solid from liquid.

What is latent heat? As an example, let’s have a pot of water and start heating it up. When we add heat (or energy) to this, it goes up in temperature until eventually it will start to boil at around 100°C

But even when you bring water to 100°C, the water doesn’t instantly turn to steam because its reached boiling point. It takes more time and you need to keep adding more energy to convert it all to steam.

Even though you added heat to get the water to 100°C, the molecules need that last kick of energy to break their bonds and become steam.

That extra kick of heat or energy is known as latent heat. 

1414 degrees, latent heat
The idea with 1414 Degrees is that they’ve developed this energy storage technology which stores heat. From there that heat can be used to heat an industrial process or, can be used to drive a turbine to generate electricity. 

South Australia, as we know, has had blackout issues before. One of the biggest issues we have around the more common renewable energies is that they can’t be called on whenever we want – the sun only shines at day time, wind will only blow when it wants to. This is a pain as the energy grid works on an average usage and a peak usage. This peak usage during the middle of the day in summer and usually when people come home at the end of the day and use the TV, air con, heater, oven etc.

For the future to be renewable energy driven, effective storage methods need to be developed in conjunction with the power generation side of things.
1414 degrees, thermal energy storage, industrial energy storage
Thermal energy storage attempts to be a scalable, medium sized energy storage solution
So sciencey details aside, 1414 Degrees has spent years researching and developing their technology and is currently trailing their pilot plant with South Australia Water. Their success as a company hinges a lot on the success of the trial, which we won’t know for another 12-18 months.

Having said that, the SA government backs the project and has already provided grants to the company (similar to how Tesla received funding for his batteries). They’ve also generated a lot of interest with industrial plants.

For me, this is a speculative investment. There are risks as the company still needs to prove its technology before it even builds a customer base. It likely won’t turn a profit for years, if at all.

However, the support it appears to be getting from the South Australian government, combined with the support and potential it has within other industrial plants leaves so much potential for growth. The patents it holds stand in several other countries as well so there could be potential for global growth if all goes well.

As such, I’ve decided to buy into the IPO of 1414 Degrees. The minimum buy is 6000 shares for $2,100 (35c a share). For me this is about a 1% total portfolio valuation which I think is acceptable for a risky, speculative share.

As before, this is what i'm doing. Feel free to take ideas and whatnot but always consider your own situation.

EDIT - As of 14/7/18 the IPO has been extended to August to and bonus options are on offer. At this stage am not sure whether I will contribute more to the IPO and I will likely keep my initial investment amount.

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