Q3 2019 – Exposing myself

Quarterly return posts supplement my monthly Financial Dashboard, covering investments in detail and looking at my yearly targets. Here I track purchases and sales, document progress against my (in progress) investment strategy, and discuss re-balancing and changes over time.

I apologies for the title of this post. I am, at best, an overgrown manchild.

Q3 Returns:

Q3 Net Worth

  • Cash Savings Accounts £4200 (+£1000)
  • Investments £1550 (+£675)
  • Property £34,450 (+£1150)
  • Cars £2500 (-£500)

My net worth now sits at £40,350, an increase of £4.8k over the past three months, which is a pretty damn stonking (I’ll come onto this a bit more in Goal 3). This makes my rolling twelve month increase £18,000. Remaining strong. I’ve written down the worth of one of my cars for depreciation.
Yearly Targets:

Goal 1: Build an emergency fund

My first 2019 goal was to build an emergency fund, as per the r/UKpersonalfinance flow chart (1). My goal emergency fund is three months total household expenses (£6k) in my name, plus a further three months (£6k) held jointly. I now currently hold £3100 in my name, and £900 held jointly. I need to double down on this over the next few months to try and achieve the £6k figure by the end of the year.

Goal 2: Pay off short-term debts

Short Term Debt Q3

This goal has been achieved. Done. Sorted. I dip into my credit card now only for purchases where I want the security of the Consumer Credit Act 1974. Moving on…

Goal 3: Save 25% of my earnings

Savings Rate Q3

I calculate my savings rate using this formula:

Savings rate as % = ((Income – spend) + Cash savings + Investments + Pension contributions) / (Income + Pension contributions)

Having paid off all my unsecured debt, I’ve been able to channel money into savings a bit better. My current mean savings rate for 2019 is 21.48%, still short of my goal but closing in.

The interesting aside here is my three month net worth gain does not marry up with my savings rate. Gaining £4.8k would suggest a £1.6k/month increase, and at a 35% savings rate (average over the last three months), I’d have to be earning £4.6k take home! I am not earning £4.6k take home. I am not earning £4.6k gross. Try half that.

So where’s it coming from? My investments have (aside from new holdings) mainly tread water, and the local house prices are holding firm. As ever I think this is a demonstration of how you can get numbers to show you anything you want. Here, the rise is due to my decreased student loan, increased property equity and increased joint holdings. It’s all noise.

Goal 4: Live more sustainably

Our drive to weekly healthy dinners has meant less packaging and more local or home grown food. We’ve also been enjoying the harvest glut, which means less imported food. An area to focus on next quarter.

Goal 5: Commence investing

I’ve been better at investing this quarter, but still not at the automated stage yet. Some subconscious barrier is preventing me, by telling myself that I need to hold it out for other positions not on my ISA platform. For the next three months I intend to invest in an automatic way each month into one of my current holdings. Because it’s now not just one.

Q3 Types

In the past three months I did the bad thing, first by opening a couple of CrowdCube investments. I put a small amount of money into the second of the two Freetrade raises, having missed out on the first round due to the CrowdCube glitch. I like what Freetrade are doing, I think they have a good model which has worked previously overseas (RobinHood in the US for example), and I don’t think they’re particularly overvalued (2). I have gone into the psychology of crowdfunding platforms, but suffice to say I don’t think FreeTrade were there to exploit the psychological ploys. It’s also a company I would, and will, use.

If you’re interested in trying Freetrade and want a free share to boot, drop me an email.

The other crowdfunding investment I made was in a small mining company called Cornish Lithium ltd (3). They were exploiting the psychological ploys, and this investment was pure, emotional, domestic-market-biased speculation. Laugh if you choose, it was the cost of a fancy dinner out and it’s sitting as a leaden, illiquid lump in my active satellite picks. I’m hoping it was a better bet than Sirius Minerals (or Wolf for that matter) are turning out to be (I hold neither).

Global Exposure.JPG

In the passive core of my investments, I opened an investment in Vanguards FTSE Global All Cap Index Fund (4). This supplements my current Developed World ex-UK holding, adding some emerging markets exposure and small cap. Is it worth bothering with? The Accumulator over at Monevator reflected last week on the 10 year returns across the market, and the little difference emerging market holdings have made (5). I was also torn between this and the Vanguard FTSE All-World UCITS ETF (6). Ultimately I decided to be a purist for the passive global argument; the All Cap is slightly cheaper (OCF 0.24% vs 0.25% for VWRL), and the concept is to capture the whole of the market. The All Cap Index Fund does just that, whereas the All-World lacks the small cap. The small cap gains probably won’t beat the dividend gains available through VWRL, making this a principled rather than pragmatic choice, but we’ll have to let history decide.

Until next time,

The Shrink

  1. https://www.reddit.com/r/UKPersonalFinance/
  2. https://www.crowdcube.com/companies/freetrade
  3. https://www.crowdcube.com/companies/cornish-lithium-ltd
  4. https://www.vanguardinvestor.co.uk/investments/vanguard-ftse-global-all-cap-index-fund-gbp-accumulation-shares
  5. https://monevator.com/10-year-retrospective-what-a-decade-of-returns-tells-us-about-passive-investing/
  6. https://www.vanguardinvestor.co.uk/investments/vanguard-ftse-all-world-ucits-etf-usd-distributing/overview

The Full English Accompaniment – Cognitive biases in crowdfunding

Continuing my current theme looking at crowdfunding, and in advance of some behavioural finance pieces I’m putting together, this week I’m pointing out some of the ways crowdfunding websites use cognitive biases to convince you to invest. For examples, I’ve pulled two pitches from Seedrs and CrowdCube which were at the top of their lists (1, 2).

Seedrs

Crowdcube

Crowdcube rewards

In my opinion, some of the main cognitive methods that these sites use are:

  • Bandwagon effect/ Confirmation bias
  • Overconfidence effect
  • Illusion of scarcity
  • Denomination/ reciprocity effects/ present bias

Bandwagon effect/ Confirmation bias

Confirmation bias is the internal yes-man, that disregards data that contradicts your opinion and suggests that ambiguous information supports your opinion (3). Your search for, remember and interpret information subconsciously to prove you are right. The bandwagon effect refers to the tendency of people to follow others, regardless of whether it’s a good idea (4, 5). It stretches into and is allied with groupthink and herd behaviour. It’s common in politics and consumer economics, and was also seen in the Dotcom bubble. Here confirmation bias and the bandwagon effect work in tandem, people will invest along with others thinking that it is evidence that they are making the right choice.

Crowdcube Bandwagon

Seedrs Confirmation

In the two examples chosen, you can see (circled in orange) that the number of investors and their commitment to a theoretical goal valuation are given pride of place in the ‘pitch’. Both websites aim to convince you that it’s a good idea, as many others are doing the same. Others must have done the research (social loafing), and they’ve committed (sunk cost fallacy), so you should too.

Overconfidence effect

Tied into confirmation bias, the overconfidence effect is the subjective belief that a persons ability is greater than the objective results would suggest (6). This should be well known to anyone who has read Smarter Investing etc, and is the basis of the active investment mindset. It’s also the whole basis of the Crowdfunding system, offering a variety of ‘pitches’ which you then evaluate, thinking ‘I have the edge others do not’. It’s worth noting in this that. Adding to this, optimism bias makes you think you are less likely to have a negative outcome (like a company failing) than others.

To help you on your way in your overconfident selection, the websites use the framing effect (7). Information is presented in a positive manner. These are, after all, advertising pitches. Every page will play-up it’s ongoing good points. Causes of concern are never mentioned (except perhaps in the discussion section). To look at the company financials often requires an investment or access request, inhibiting due diligence.

Illusion of scarcity

Scarcity, in human psychology, boils down to the fact that we as humans place greater value on things which are rare than those which are common (8). The scarcity heuristic is the mental shortcut we do when we say, ‘this thing is rarely available, therefore it must be worth more’. Salespeople employ this to great effect as the basis for mark-down discounts, Black Friday, and the perpetual DFS sale. Scarcity can come from quantity, rarity or time. For quantity, our innate reaction to finding out there is a limited quantity of something is to believe our choice to have that something is threatened, and therefore we want it more. For rarity, we place value on items we perceive to be unique. In companies this is often played on with pro-innovation bias, where we will favour innovation over the status quo and ignore flaws in the innovation (9). Such a pitch could be ‘look at our innovative unique idea, set to change the world’. For time, the scarcity heuristic is simple; time is running out, you don’t have time to do the complex thinking, the short cut answer is to buy, buy, buy.

Crowdcube Scarcity

Seedrs Scarcity

Once again these methods are front and centre of our two chosen pitches. You have limited time left to choose (time scarcity). There’s a limited quantity of available investment (quantity scarcity), at odds with the over-funding concept. Ask yourself why the data is being presented in this way?

Denomination/ reciprocity effects/ present bias

Denomination effect is a cognitive bias in currency where people are more likely to spend an equivalent value in small denominations than in large denominations (10). I see this alot, as MrsShrink will actively avoid spending big sums, but £<10 in Tesco on tat twice a week is not an issue. You are more likely to buy multiple small crowdfunding investments than one large investment, which also fits with diversification bias, the tendency to opt for a selection which gives you options or variety in the future (11).

Crowdcube rewards

Crowdfunding sites pitch your investments in small amounts. They also offer rewards, which works on reciprocity effects and present bias. Reciprocity is responding to a positive action with a positive action, leading to positive regard from both sides (12). If the company rewards you for an investment, you are more likely to see it in a good light. You are also more likely to pick a company which rewards you for an investment due to present bias (13). This incorporates hyperbolic discounting, but essentially can be said that if we are offered £100 tomorrow or £100 in a month, we’re more likely to choose tomorrow. If we’re offered £100 tomorrow or £110 in a month, the choice will depend on the person and how much they discount the worth through time delay. As all crowdfunding investments are essential gambles set for an uncertain future, a present day reward sways our choices.

TL:DR

These are just a few of the methods that crowdfunding websites use to part us from our hard-earned. There are many, many more, and I encourage everyone to read up on behavioural finance and understand when cognitive biases may be at play. The post may come off as harsh, so know that I invested in the last month on one of these crowdfunding platforms. It’s all about doing your homework and looking beyond the sales pitch. If you can be bothered.

Have a great week,

The Shrink

Other News

Opinion/ blogs:

The kitchen garden:

What I’m reading (affiliate links):

Food Of The Gods: The Search for the Original Tree of Knowledge: A Radical History of Plants, Drugs and Human Evolution – Terence McKenna – An ethnobotanist explores humanitys’ fascination with hallucinogenics, and the role of altered states of consciousness on the development of human society.

References:

  1. https://www.seedrs.com/anna-money/sections/investors
  2. https://www.crowdcube.com/companies/justpark-1/pitches/bk7Aeb
  3. https://en.wikipedia.org/wiki/Confirmation_bias
  4. https://www.investopedia.com/terms/b/bandwagon-effect.asp
  5. https://en.wikipedia.org/wiki/Bandwagon_effect
  6. https://en.wikipedia.org/wiki/Overconfidence_effect
  7. https://en.wikipedia.org/wiki/Framing_effect_(psychology)
  8. https://en.wikipedia.org/wiki/Scarcity_(social_psychology)
  9. https://en.wikipedia.org/wiki/Pro-innovation_bias
  10. https://en.wikipedia.org/wiki/Denomination_effect
  11. https://humanhow.com/en/list-of-cognitive-biases-with-examples/
  12. https://en.wikipedia.org/wiki/Reciprocity_(social_psychology)
  13. https://en.wikipedia.org/wiki/Dynamic_inconsistency
  14. https://www.bbc.co.uk/news/business-49884247
  15. https://metro.co.uk/2019/09/30/chancellor-sajid-javid-raises-national-living-wage-10-50-10834020/
  16. https://www.bbc.co.uk/news/business-49849484
  17. https://www.bbc.co.uk/news/business-49891141
  18. https://www.bbc.co.uk/news/business-49919189
  19. https://www.thisismoney.co.uk/money/markets/article-7535061/Recession-fears-hang-global-economy.html
  20. https://www.thisismoney.co.uk/money/news/article-7541673/Cautious-Treasury-loses-Sirius-Minerals-millions-failing-company.html
  21. https://www.businessgreen.com/bg/news/3082227/new-gbp120m-low-carbon-greenhouse-project-set-to-deliver-one-in-10-uk-tomatoes
  22. https://www.getrichslowly.org/early-retirement-extreme/
  23. https://www.marketwatch.com/story/why-we-ditched-the-fire-movement-and-couldnt-be-happier-2019-09-30
  24. https://monevator.com/10-year-retrospective-what-a-decade-of-returns-tells-us-about-passive-investing/
  25. https://monevator.com/qa-thursday-with-lars-kroijer-session-1/
  26. https://gentlemansfamilyfinances.wordpress.com/2019/09/30/month-end-accounts-september-2019/
  27. https://drfire.co.uk/september-2019-report/
  28. http://www.thefrugalcottage.com/september-2019-a-month-in-review/
  29. http://www.thefrugalcottage.com/dividend-income-september-2019/
  30. http://eaglesfeartoperch.blogspot.com/2019/10/investment-review-september-2019.html
  31. https://asimplelifewithsam.com/2019/10/01/september-review/
  32. https://asimplelifewithsam.com/2019/10/04/saving-for-the-future/
  33. https://www.msziyou.com/net-worth-updates-september-2019/
  34. https://thesquirreler.com/2019/10/02/september-2019-update/
  35. https://thesavingninja.com/savings-report-15-getting-a-job-at-google/
  36. https://playingwithfire.uk/october-update/
  37. https://monethalia.com/monthly-savings-report-september-2019/
  38. https://awaytoless.com/monthly-spending-september-2019/
  39. https://firevlondon.com/2019/10/05/sep-2019-q3-review/
  40. https://gettingminted.com/reviewing-the-situation/
  41. https://grizgalonfire.com/do-i-need-a-personal-pension/
  42. https://indeedably.com/backwardation/
  43. https://thefifox.wordpress.com/2019/10/01/how-to-successfully-merge-finances-without-breaking-up-over-it/
  44. https://www.ukvalueinvestor.com/2019/10/the-hidden-debt-of-lease-obligations.html/
  45. http://diyinvestoruk.blogspot.com/2019/10/itm-power-finals-key-partnership.html
  46. http://www.retirementinvestingtoday.com/2019/10/human-being-and-2019-q3-review.html
  47. https://www.theguardian.com/food/2019/oct/03/always-cooking-the-same-thing-try-a-weekly-food-box

The Full English – The Crowdfunded Bubble

Calling economic bubbles is a no-lose situation for a blogger. If you’re correct, whoop-de-do, celebrate your foresight. If you’re wrong, you’re a grumpy pessimist but no worse off. With that caveat readers may recall a couple of weeks ago, in the last Full English, I mentioned that Curve had completed crowdfunding with a pre-money valuation of £201,000,000 (1). Yes, that is the correct number of decimal spaces. It left me asking, how the hell are people valuing these companies?

Turns out I’m not alone in wondering that (2). The hard data suggests that the price paid for a percentage of the company by the crowd is far higher than private equity pays (3). For your more expensive price you get B class shares and rarely see information about the valuation in the prospectus. How did we reach this point?

In a world of low interest rates investors are looking for returns. We’ve all read Smarter Investing, we know we should be avoiding active funds that would typically partake of Venture Capital. We exist in an economic climate that favours growth over value strategies. We see success stories like Facebook, Instagram, Monzo, Brewdog, Uber. We want a slice of that growth, and there are new and exciting ways to access it (4). So we apply some cognitive biases; illusion of control and confirmation bias. We can surely pick the winners.

We look to platforms like CrowdCube, Seedrs, etc to find a way in at the ground floor of the next unicorn. Because our purchase is fuelled by optimism (and a whole lot of sales psychology), we’re willing to pay over the odds for the ground floor. This drives competition for shares and increases the valuation of the company. Basic economics. When the company lists on the stock market you get off at the penthouse suite, suddenly a millionaire. The tech IPO procession continues (5).

But that competition for a slice of the pie ignores the companies bottom line. Crowdfunding platforms are slick presentations to consumers, not like the due diligence of a traditional capital firm. The position of power is with the listing company, not the lender. This again drives up the valuation of the market.

The companies, overvalued with optimism, get valued by the market fairly and fall from their listing price. The tech companies that have gone through the IPO process are losing money (6). And people are taking notice. IPOs are being shelved, most notably the recent WeWork delay (7, 8). Traditional institutions do not want an overvalued investment, because in the long run they won’t get a return. They don’t want to see their shares costing billions of dollars through the efficient market (9). While the stock is unlisted the return and gain/loss is not realised.

This isn’t stopping profitable and strong companies going public. AirBnB continues to voice that it will soon, now setting a timeline for next year (10). However as Crowdfunding grows it will continue to offer a window into murky investments, promising a lot but with little to report. It will continue to inflate prices with optimistic opinions of growth. At some point all the optimism becomes a little too sweet, and it’ll be interesting to see if we end up in a crowdfunded private-company rerun of the dot-com crash.

Have a great week,

The Shrink

Other News

Opinion/ blogs:

The kitchen garden:

What I’m reading (affiliate links):

Food Of The Gods: The Search for the Original Tree of Knowledge: A Radical History of Plants, Drugs and Human Evolution – Terence McKenna – An ethnobotanist explores humanitys’ fascination with hallucinogenics, and the role of altered states of consciousness on the development of human society.

References:

  1. https://www.crowdfundinsider.com/2019/09/151157-fastest-startup-to-ever-hit-4-million-crowdfunding-on-crowdcube-curve-kills-it-now-at-5-5-million/
  2. https://en.wikipedia.org/wiki/Unicorn_bubble
  3. https://www.forbes.com/sites/goncalodevasconcelos/2015/05/27/valuations-in-crowdfunding-are-we-all-barking-mad/
  4. https://monevator.com/venture-capital-investing/
  5. https://www.theguardian.com/technology/2019/mar/30/lyft-ipo-stock-market-unicorns-uber-airbnb-slack
  6. https://www.spiked-online.com/2019/09/13/uber-and-out-why-the-tech-unicorns-keep-losing-money/
  7. https://www.bbc.co.uk/news/business-49687338
  8. https://moneyweek.com/515081/proof-that-the-tech-company-unicorn-ipo-bubble-is-bursting/
  9. https://marketrealist.com/2019/09/wework-ipo-shelved-unicorn-stocks-lose-luster/
  10. https://www.bbc.co.uk/news/business-49761461
  11. https://www.thisismoney.co.uk/money/mortgageshome/article-7452637/Never-ending-Brexit-saga-continues-drag-UK-housing-market-RICS.html
  12. https://www.bbc.co.uk/news/business-49752883
  13. https://www.thisismoney.co.uk/money/saving/article-7468833/Almost-half-banks-cut-fixed-rate-savings-August.html
  14. https://www.theguardian.com/business/2019/sep/17/britons-are-still-worse-off-than-in-2008-new-research-claims
  15. https://www.bbc.co.uk/news/business-49738869
  16. https://www.bbc.co.uk/news/science-environment-49567197
  17. https://www.theguardian.com/business/2019/sep/16/more-than-1400-uk-restaurants-close-as-casual-dining-crunch-bites
  18. https://www.bbc.co.uk/news/business-49721436
  19. https://www.thisismoney.co.uk/money/markets/article-7472389/Sirius-Minerals-shares-crash-fails-secure-funding-mine.html
  20. https://www.bbc.co.uk/news/business-49766418
  21. https://www.bbc.co.uk/news/business-49720446
  22. https://www.cnbc.com/2019/09/20/you-may-have-more-time-than-you-think-to-achieve-financial-security.html
  23. https://www.mrmoneymustache.com/2019/09/12/michael-burry-index-funds/
  24. https://earlyretirementnow.com/2019/09/17/market-peak-upcoming-recession/
  25. https://monevator.com/weekend-reading-how-could-the-financial-services-sector-better-cater-for-the-likes-of-us/
  26. https://monevator.com/my-biggest-fi-demon-status-anxiety/
  27. https://monevator.com/what-is-a-master-trust-pension/
  28. https://www.ukvalueinvestor.com/2019/09/mitie-dividend.html/
  29. https://cashflowcop.com/csi-finance/
  30. https://theescapeartist.me/2019/09/18/translating-financial-independence-from-american-to-british/
  31. https://theescapeartist.me/2019/09/11/the-ice-sculpture-the-turkey-and-the-rollercoaster/
  32. http://diyinvestoruk.blogspot.com/2019/09/afc-energy-portfolio-addition.html
  33. http://diyinvestoruk.blogspot.com/2019/09/first-solar-new-addition.html
  34. http://diyinvestoruk.blogspot.com/2019/09/bluefield-solar-trust-full-year-results.html
  35. http://www.thefrugalcottage.com/aiming-for-fire/
  36. https://littlemissfire.com/erase-and-rewind/
  37. https://littlemissfire.com/why-im-the-fire-underdog-and-thats-ok/
  38. https://www.msziyou.com/money-is-political/
  39. https://www.msziyou.com/net-worth-updates-august-2019/
  40. http://thefirestarter.co.uk/random-update-aka-what-the-hell-have-i-been-up-to-over-the-last-3-months/
  41. https://thesavingninja.com/how-to-get-a-first-class-flight-for-free/
  42. https://thesavingninja.com/savings-report-14/
  43. https://asimplelifewithsam.com/2019/09/13/august-review/
  44. https://www.iretiredyoung.net/single-post/2019/09/13/Early-retirement-costs-targets—August-2019
  45. https://pursuefire.com/monthly-update-15-august/
  46. https://pursuefire.com/pursue-fire-updates/
  47. http://eaglesfeartoperch.blogspot.com/2019/09/tax-planning-for-retirement-savings.html
  48. https://thefifox.wordpress.com/2019/09/12/how-to-calculate-your-personal-investing-rate-the-usability-update-that-savings-rate-desperately-needs/
  49. https://simplelivingsomerset.wordpress.com/2019/09/12/db-pension-options/
  50. https://gentlemansfamilyfinances.wordpress.com/2019/09/13/the-importance-of-being-earning/
  51. https://gentlemansfamilyfinances.wordpress.com/2019/09/15/exit-strategy-update-is-it-best-to-quit-your-job-face-to-face/
  52. https://indeedably.com/telephone/
  53. https://indeedably.com/volte-face/
  54. https://indeedably.com/own-goal/
  55. http://quietlysaving.co.uk/2019/09/19/random-shares/
  56. https://lovelygreens.com/tips-for-starting-a-new-vegetable-garden/
  57. https://www.jackwallington.com/allotment-month-46-tomatoes-edamame-apples-raspberries-and-sunflowers/

The Full English Accompaniment – Crowdfunding maturing

What’s piqued my interest this week?

Over the past few years I’ve watched the crowdfunding field grow, with various platforms and companies gradually expanding into robust and trusted investment sources. I’ve thought about trying Crowdfunding investments before, the 2011 Brewdog prospectus still sits on my old laptop, but I’ve always been dubious about the liquidity. As a student I chose to spend my cash on beer in my hand, rather than beer in a portfolio. Other bloggers did invest, and have been stuck trying to reduce their exposure and sell up (1). Due to this liquidity risk I lump all crowdfunding and P2P investments together, including all of the stock, property and loans in one big, high risk, ‘invest and don’t expect to get it back’ bucket. They’re all basically junk bond grade investments. The percentage returns on these investments supposedly account for this risk of losing your money.

I think my concerns are largely justified. If you look past the odd moment a few months ago when Seedrs stopped it’s own investment round due to it’s own rules, there’s been plenty of warning signs (2). We’ve had Lendy’s collapse, and there could be more on the way (3, 4). In response the FCA is bringing in new rules to clamp down on poor practice and protect investors (5, 6). The P2P and Crowdfunding market is maturing, less wild west. P2P and Crowdfunding is going mainstream (7, 8).

So, if everyone’s doing it, I might as well too. I decided it was time to start dipping my toe, as part of my satellite active investments. But for me this wasn’t about attempting to increase my returns with a >10% P2P loan, like the one Monevator affiliated RateSetter offer (9). This was about getting in on the ground floor, like I coudla-shoulda-wounda with BrewDog, with a small amount of throwaway money. I was tempted by a number of options: MoneyDashboard (too many competitors, unclear valuation and monetisation strategy) (10, 11); Curve (not happened yet) (12); Tickr (too many competitors, unclear valuation) (13). I became aware of the gameification of crowdfunding investment, and the methods employed to prey on the ‘fear of missing out’.

My first Crowdfunding investment went on FreeTrade. I missed out on the earlier round after the glitches meant it was closed before I could complete (14). I got in with a small, test the waters, investment sum on the June round (15). This means, like Weenie, I have free stocks to share (16). I have concerns about FreeTrade, not least the proliferation of other free trading apps, and the recent move of Robinhood into the UK (17, 18). If it goes tits up, then I put in enough to be along for the ride. Invest, forget, and definitely don’t bank on the returns. (And if you want a free share, contact me or leave me a comment!)

Have a great week,

The Shrink

Other News

Opinion/ blogs:

The kitchen garden:

What I’m reading (affiliate links):

Food Of The Gods: The Search for the Original Tree of Knowledge: A Radical History of Plants, Drugs and Human Evolution – Terence McKenna – An ethnobotanist explores humanitys’ fascination with hallucinogenics, and the role of altered states of consciousness on the development of human society.

References:

  1. https://gentlemansfamilyfinances.wordpress.com/2019/02/13/how-to-put-out-a-fire-use-liquidity/
  2. https://www.altfi.com/article/5635_seedrs-suspends-its-own-shares-after-entering-advanced-stages-of-a-new-funding-round
  3. https://www.telegraph.co.uk/business/2019/07/28/wake-lendys-collapse-britains-peer-to-peer-lending-bubble-go/
  4. https://www.altfi.com/article/5404_dont-panic-but-were-in-the-middle-of-a-peer-to-peer-lending-crunch
  5. https://www.fca.org.uk/news/press-releases/fca-confirms-new-rules-p2p-platforms
  6. https://www.independent.co.uk/money/spend-save/peer-to-peer-investing-maximum-limit-fca-regulation-a8947886.html
  7. https://www.moneyadviceservice.org.uk/en/articles/peer-to-peer-lending–what-you-need-to-know
  8. https://www.moneyadviceservice.org.uk/en/articles/crowdfunding–what-you-need-to-know
  9. https://monevator.com/ratesetter-high-interest-offer/
  10. https://www.insider.co.uk/news/money-dashboard-raises-46-million-18983490
  11. https://www.bbc.co.uk/news/uk-scotland-scotland-business-48349943
  12. https://www.finextra.com/newsarticle/34273/curve-set-to-embark-on-a-mighty-crowdfunding-campaign/retail
  13. https://www.altfi.com/article/5470_impact-investment-tickr-200-crowdfunding-target
  14. https://www.altfi.com/article/5290_freetrade-shutters-19m-crowdfunding-round-technical-difficulties-new-round-june
  15. https://www.cityam.com/freetrade-to-close-7m-in-second-crowdfunding-round/
  16. http://quietlysaving.co.uk/2018/05/25/wisdom-of-the-crowds/
  17. https://techcrunch.com/2019/08/07/robinhood-fca/
  18. https://qz.com/1684107/robinhood-is-heading-to-the-uk-where-it-will-compete-with-freetrade-revolut/
  19. https://www.bbc.co.uk/news/business-49356248
  20. https://www.theguardian.com/money/2019/aug/14/south-of-england-house-prices-fall-for-first-time-since-2009-brexit
  21. https://www.theguardian.com/business/2019/aug/08/house-prices-fall-unexpectedly-pre-brexit-caution-bites
  22. https://www.thisismoney.co.uk/money/mortgageshome/article-7382937/Britains-expensive-cities-including-London-Cambridge-affordable-buyers.html
  23. https://www.theguardian.com/world/2019/aug/09/chase-bank-cancels-all-credit-card-debt-for-canadian-customers
  24. https://www.thisismoney.co.uk/money/pensions/article-7333403/Government-comes-fix-doctors-pensions.html
  25. https://www.thisismoney.co.uk/money/news/article-7341053/Interest-rate-cut-cards-pound-takes-leg-down.html
  26. https://www.bbc.co.uk/news/business-49352760
  27. https://www.bbc.co.uk/news/business-49452366
  28. https://www.express.co.uk/news/uk/1164081/pensions-news-national-insurance-stamps
  29. https://www.thisismoney.co.uk/news/article-7385337/Investors-ploughed-cash-Kevin-McClouds-business-told-expect-lose-penny.html
  30. https://www.theguardian.com/commentisfree/2019/aug/14/the-guardian-view-on-brexit-and-the-economy-storm-clouds-on-the-horizon
  31. https://www.theguardian.com/money/2019/aug/18/meet-people-saving-retire-by-40-fire-movement
  32. https://www.mrsmummypenny.co.uk/financial-independence-why-i-think-it-is-unrealistic-and-unachievable/
  33. https://www.telegraph.co.uk/money/money-makeover/money-makeover-earn-36k-can-retire-15-years-age-47/
  34. https://thefifox.wordpress.com/2019/08/06/crunching-the-numbers-should-we-be-overpaying-our-mortgages-or-investing-instead/
  35. https://monevator.com/how-to-invest-as-an-expat/
  36. https://monevator.com/weekend-reading-75-not-out/
  37. https://www.mrmoneymustache.com/2019/08/22/1000-per-hour/
  38. https://www.ukvalueinvestor.com/2019/08/stagecoach-investors-bumpy-ride.html/
  39. https://theescapeartist.me/2019/08/06/milestones-on-the-path/
  40. https://theescapeartist.me/2019/08/14/heres-whats-in-it-for-you-right-now/
  41. https://theescapeartist.me/2019/08/21/getting-rich-with-property/
  42. https://cashflowcop.com/financial-independence-reality-check/
  43. http://diyinvestoruk.blogspot.com/2019/08/orsted-half-year-results.html
  44. http://diyinvestoruk.blogspot.com/2019/08/legal-general-revisited.html
  45. http://diyinvestoruk.blogspot.com/2019/08/scottish-mortgage-trust-portfolio-sale.html
  46. https://firevlondon.com/2019/08/16/how-to-become-a-millionaire-in-london-on-40k-p-a/
  47. http://quietlysaving.co.uk/2019/08/09/return-of-the-dogs/
  48. http://quietlysaving.co.uk/2019/08/19/manchester-fire-meet-up-in-sept/
  49. https://drfire.co.uk/uk-government-to-raise-the-state-pension-age-to-75/
  50. https://drfire.co.uk/my-newfound-appreciation-for-podcasts/
  51. https://www.msziyou.com/veggie/
  52. https://www.msziyou.com/intergenerational-unfairness-part-2/
  53. https://awaytoless.com/inheritance/
  54. https://www.iretiredyoung.net/single-post/2019/08/09/Early-retirement-numbers
  55. https://www.iretiredyoung.net/single-post/2019/08/23/Why-we-lie-about-being-retired
  56. https://asimplelifewithsam.com/2019/08/20/how-to-live-a-balanced-life/
  57. https://simplelivingsomerset.wordpress.com/2019/08/08/work-is-not-a-job-and-the-web-of-life/
  58. https://simplelivingsomerset.wordpress.com/2019/08/21/monzo-metal-cards-and-bullet-journals/
  59. https://gentlemansfamilyfinances.wordpress.com/2019/08/21/6-personal-finance-numbers-that-are-bullshit-2/
  60. https://pursuefire.com/pursue-fire-updates/
  61. https://indeedably.com/a-goldilocks-decision/
  62. https://indeedably.com/meltdown/
  63. https://indeedably.com/fools-errand/
  64. https://ditchthecave.com/perfect-day/
  65. https://thesavingninja.com/what-is-happiness-to-you/
  66. https://lovelygreens.com/vegetables-to-grow-for-autumn-harvests/
  67. https://agentsoffield.com/2019/08/11/its-all-systems-go-almost/

Q2 2019 – Green Credentials

Quarterly return posts supplement my monthly Financial Dashboard, covering investments in detail and looking at my yearly targets. Here I track purchases and sales, document progress against my (in progress) investment strategy, and discuss re-balancing and changes over time.

Q2 Returns:

Q2 Net Worth

  • Cash Savings Accounts £3200 (+£400)
  • Investments £1550 (+£1000)
  • Property £33,300 (-£1000)
  • Cars £3000

My net worth now sits at £~35,400, an increase of £2.2k over the past three months, which is a little less impressive than the previous quarter. This makes my rolling twelve month increase £14,900. Cannot complain.

Yearly Targets:

Goal 1: Build an emergency fund

My first 2019 goal was to build an emergency fund, as per the r/UKpersonalfinance flow chart (1). My goal emergency fund is three months total household expenses (£6k) in my name, plus a further three months (£6k) held jointly. I now currently hold £2650 in my name, and £300 held jointly. Some way to go.

My Santander 5% saver matured, so those funds were moved into a new high interest Nationwide current account. I used the excellent Bank Account Savings website plus Money Saving Expert to select another regular saver, opening a joint current account with First Direct for their switching bonus and then a linked 5% savings account (2, 3). I’ve also started squirreling cash into a Starling pot. The intention is to have liquid savings spread across three or four independent banks, with different card providers (MasterCard vs Visa). Protection against business and liquidity risk.

Goal 2: Pay off short-term debts

Short-Term Debt Q2

This has been the area of greatest progress. At the start of 2019 my short terms debts stood at £1.25k to family and £2.6k on 0% interest credit cards, then £250 and £2k respectively at the end of Q1. Those figures are now £0 and £650, and the credit card should be cleared this month. This will leave me free of unsecured debt for the first time in (I think) four years. Once the debt is clear, my money is free to be channelled into…

Goal 3: Save 25% of my earnings

Savings Rate Q2

I calculate my savings rate using this formula:

Savings rate as % = ((Income – spend) + Cash savings + Investments + Pension contributions) / (Income + Pension contributions)

My current mean savings rate for 2019 is 18.4%, short of my goal. I had a March outlier thanks to a tax refund, and in May my effective savings rate was close to zero due to work-related bills (exams, course fees etc). Worth noting in the NHS it’s expected you pay for your exams, courses and training yourself. You can claim it back through tax, but only certain elements. The rest you take on the chin.

Goal 4: Live more sustainably

I’ve been pretty crap at keeping track of what we’re using from the garden rather than purchasing. With summer in full swing we’re getting at least two dinners a week just from home-grown produce. We’ve also made lots of little changes around the house to move away from plastic. These have included:

  • Switching toilet roll

We looked into the brand ‘Who Gives A Crap’, but I was pretty pissed off to find out all their recycled/ bamboo eco loo-roll comes on a slow ship from China (4). Not exactly sustainable. Instead we used The Ethical Consumer, an amazing website that ranks consumer products by multiple ethical/ sustainable/ fairtrade measures, to find Ecoleaf by Suma (5). Suma are a co-operative in the UK who have been producing sustainable, fairtrade products since the 80s.

  • Shampoo bars

Again we tried to use The Ethical Consumer. We actually found the Lush ones are pretty good, and despite costing £8.50/each, they seem to last a couple of months (6).

  • Washing powder ball

The Ecozone Eco-balls we bought are supposed to last 1000 washes (7). A recent change, so we’ll wait to reserve judgement.

  • Switching cleaning products to Method

Nice and easy as they’re stocked in mainstream supermarkets.

There’s loads of guides and blogs out there with tips on how to live with less plastic. I’d recommend starting off with the 100 Steps to a Plastic-Free Life (8).

Goal 5: Commence investing

I’ve not been very disciplined investing this quarter. In April I topped up my existing holding, but in May I held cash back to open a crowdfunding investment (still pending). My cash savings are calculated towards my Personal Allowance, whilst my investments are held in my Vanguard ISA. I have managed to get my investment portfolio spreadsheet at a stage I’m happy with (for now), so here’s a few example graphs:

Tax Efficiency Q2

Region Allocation Q2Country Allocation

Because I’m contrary, I’ve decided to actually try to calculate my worldwide exposure on a country by country basis. I currently just hold Vanguards Developed World Ex-UK Fund. I’m far more exposed to the US than I’d like, and so I’ll be opening some new holdings to diversify over the next two quarters.

Until next time,

The Shrink

References:

  1. https://www.reddit.com/r/UKPersonalFinance/
  2. https://bankaccountsavings.co.uk/
  3. https://www.moneysavingexpert.com/savings/savings-accounts-best-interest/
  4. https://myplasticfreelife.com/2017/09/who-gives-a-crap-recycled-or-bamboo-toilet-paper-without-plastic/
  5. https://www.ethicalconsumer.org/home-garden/shopping-guide/toilet-paper
  6. https://www.independent.co.uk/extras/indybest/christmasgifts/fashion-beauty/shampoo-hair-soap-plastic-free-green-beauty-environmentally-friendly-a8505026.html
  7. https://www.ethicalsuperstore.com/products/ecozone/eco-balls/
  8. https://myplasticfreelife.com/plasticfreeguide/

The Full English – Tech bubble or Tech revolution?

What am I buggering on about this week?

This week we’ve seen Slack join ranks of tech startups on the stock market (1). It’s price surged immediately after listing and remained up, a distinct difference to the Uber IPO in May and the Lyft IPO in March (2). Perhaps due to the state of Uber and Lyft’s respective balance sheets (3, 4). Perhaps due to the methodology of the listing, with Slack following in Spotify’s footsteps in utilising a direct stock listing rather than an IPO. This model means that current investors are allowed to list their stock for sale, but no new stock is offered, and the positive uptake of Slack and Spotify is spurring other companies to consider this model (5, 6).

It’s been a big year for new tech listings, with Pinterest, Zoom, Beyond Meat and Fiverr also coming to the market, and AirBnb, WeWork, Palantir Tech and Peloton all touted to be in the pipeline (7, 8). This is inevitably raising the spectre of the last time we had lots of tech companies listing… the late 90s (9). So what’s to set the current market apart from the dot-com bubble, and what comparisons can we draw (10).

The Similarities

These are fairly obvious:

  • Loss-making tech companies making well over valuation at initial IPO. Promising dot-com companies that make millions going public but never turn a penny profit was a hallmark of the dot-com bubble, and we’ve yet to see Uber or Lyft make money…
  • Linked to the above, 84% of companies going public last year were not turning profits, the highest % since 2000 (11)
  • A market that is (depending on your measure) over-valued (12)
  • Economists are predicting a recession, as they did in fear of the millenium bug
  • Investors are chasing returns through new startups as the traditional markets slow

The Differences

A defining trait of humanity is it’s ability to learn, so you would hope we’ve learnt from the dot-com bubble and won’t repeat the mistakes. Let’s not do a Nathan Barley (a Charlie Brooker masterpiece) (13).

Looking at the recent tech listings there are some differences:

  • The internet is more mature

The internet in the nineties was still a thing of wonder. It’s potential seemed limitless, so valuations naturally followed. It wasn’t yet clear how this could be translated into a money-making machine, and that was a partial cause of the downfall. The internet has matured in the intervening 20 years, and the FAANG stocks in particular have demonstrated how to capitalise on it. They now dominate the market with eye-watering profits. Their growth may be slowing but they’re unlikely to collapse given their hoarded cash reserves (14).

  • Companies funding streams are more complex, but also more transparent and under greater scrutiny

Many of the companies being listed are not the fully VC-backed start-ups of old, selling a fairly unspecific dream. Companies are staying private for longer, with pressure for their finances to be under public scrutiny. Others are utilising P2P/ crowdfunding streams like CrowdCube and Seedrs. You can’t just pitch any old crap with a domain name!

  • Companies are disrupting traditional models (IMO)

Arguable this one, but I think many of the companies that went bust in the dotcom years were basically trying to take a traditional economic model and translate it to an online format with minimal idea on how to gain market presence or be profitable; see Pets.com and eToys.com. Compare this to the current round of stock offerings.

The global tech revolution

Here’s where I see the real difference. Amazon, Netflix, Google etc are massive global players, making profits around the world. They developed their own markets. AirBnB, Spotify, Slack, Uber etc are all doing or have done the same. Their founders have identified a niche or a gap, and placed a product which is a natural fit. Why else would they become so ubiquitous if they were not so obvious. Improvements in the infrastructure of technology has made this possible, and will continue. Starling and Monzo, which I talked about last week, are also disruptive, but banking still has further to go.

We’ve seen wholesale changes in almost all aspects of our lives. There are apps for pretty much everything you do; shopping, leisure activities, work, investments and loans, sleep, music, etc. What hasn’t changed? Banking and central economics. Governments and central banks still set interest rates, still co-ordinate and oversee financial structures and currencies. Which is where Libra, the new cryptocurrency backed by Visa, Mastercard, PayPal, Uber and Facebook comes in (15).

There’s plenty of arguments against Libra (I’m looking at you Ermine), not least security and the prospect of having Facebook digging through your earnings (16). But it’s backed by lots of major players, and could be truly disruptive. Like all blockchain cryptocurrencies it’s decentralised, beholden to no central bank (17). This has got the regulators in a right tizz; if it’s globally decentralised who can/ would regulate it (18). How will government lobbyists get their greasy mitts on it?!?

The clever move that puts Libra over and above Bitcoin and other blockchain cryptocurrencies (beyond it’s big industry support) is asset-backing (19). Backing with physical assets (probably cash/ bonds, but interestingly also could be equities) removes the wild price swings seen with Bitcoin. If it’s globally backed then you suddenly have a currency which tracks global inflation automatically, can be accepted in any country, and allows you to purchase across borders without incurring currency conversion costs. No wonder Mark Carney reckons it could be ‘systematically important’.

We live in the age of a global economy. Corporations are multinational, straddle borders and look to leverage international differences to increase earnings (moving jobs offshore for lower wages for instance). I don’t think central governments/ banks are about to relinquish their stranglehold on economic policy, but Libra offers a window into a future where this might be the case. Where your earnings are paid in a global currency by a global company, wherever you are. Where geoarbitrage becomes the norm, forcing international parity. Where interest rates on your loan are not set based on a baseline from central government, but by global market inflation, or a combination of your credit score and what a credit union of your Facebook contacts are willing to lend. Governments and global banks (Rothschilds etc) have long held a hegemony on money. Now there’s a chink in their armour.

Have a great week,

The Shrink

Other News

Opinion/ blogs:

The kitchen garden:

What I’m reading (affiliate links):

Food Of The Gods: The Search for the Original Tree of Knowledge: A Radical History of Plants, Drugs and Human Evolution – Terence McKenna – An ethnobotanist explores humanitys’ fascination with hallucinogenics, and the role of altered states of consciousness on the development of human society.

References:

  1. https://www.bbc.co.uk/news/business-48707622
  2. https://www.bbc.co.uk/news/business-47741990
  3. https://www.bbc.co.uk/news/business-48451339
  4. https://marketrealist.com/2019/05/why-lyft-stock-has-declined-21-since-its-ipo/
  5. https://www.bloomberg.com/news/articles/2019-06-21/with-slack-sitting-pretty-its-bankers-eye-more-direct-listings
  6. https://markets.businessinsider.com/news/stocks/slacks-direct-listing-bill-gurley-says-startups-call-morgan-stanley-2019-6-1028298641
  7. https://www.marketwatch.com/story/slack-listing-comes-during-banner-year-for-tech-ipos-despite-uber-and-lyfts-troubled-debuts-2019-06-20
  8. https://www.vox.com/recode/2019/6/20/18650993/tech-ipo-tracker-uber-lyft-slack-zoom
  9. https://www.barrons.com/articles/chewy-fiverr-and-crowdstrike-ipos-recall-the-dot-com-bubble-51560553067
  10. https://en.wikipedia.org/wiki/Dot-com_bubble
  11. https://www.vox.com/recode/2019/6/20/18650993/tech-ipo-tracker-uber-lyft-slack-zoom
  12. https://eu.usatoday.com/story/tech/2019/06/17/goldman-sachs-says-technology-stocks-overvalued/1483689001/
  13. https://www.digitalspy.com/tv/tube-talk-gold/a399600/nathan-barley-is-10-looking-back-at-charlie-brookers-debut-tv-series/
  14. https://marketrealist.com/2019/01/the-tech-sector-is-finally-slowing-down/
  15. https://www.forbes.com/sites/panosmourdoukoutas/2019/06/22/libra-could-make-or-break-bitcoin/
  16. https://simplelivingsomerset.wordpress.com/2019/06/18/all-you-cash-belong-to-zuck/
  17. https://www.wired.co.uk/article/facebook-libra-startup-privacy-analysis
  18. https://www.bbc.co.uk/news/technology-48688359
  19. https://www.theguardian.com/business/2019/mar/20/lorraine-kelly-theatrical-artist-tax-tribunal-judge-rules
  20. https://www.theguardian.com/business/2019/jun/19/consumers-being-badly-advised-on-pensions-says-regulator-fca
  21. https://www.cam.ac.uk/employmentdosage
  22. https://www.independent.co.uk/money/spend-save/help-to-buy-house-prices-loans-first-time-buyers-savings-a8958056.html
  23. https://indeedably.com/marriage-of-ultimate-doom/
  24. https://indeedably.com/ownership/
  25. https://simplelivingsomerset.wordpress.com/2019/06/20/playing-with-fire/
  26. https://monevator.com/visualizing-investors-emotions/
  27. https://www.ukvalueinvestor.com/2019/06/royal-mail-dividend-yield-is-13pc-but-i-still-wouldnt-invest.html/
  28. https://cashflowcop.com/best-guide-to-selling-on-ebay/
  29. https://cashflowcop.com/maternity-leave-for-men-tips-for-dads/
  30. http://diyinvestoruk.blogspot.com/2019/06/sipp-drawdown-year-7-update.html
  31. https://firevlondon.com/2019/06/17/ive-paid-for-my-dream-home-in-less-than-4-years/
  32. http://quietlysaving.co.uk/2019/06/20/crowdfunding-road-trip/
  33. https://ditchthecave.com/may-2019-update/
  34. https://thesavingninja.com/what-is-fire/
  35. https://www.msziyou.com/net-worth-updates-april-2019/
  36. https://www.msziyou.com/bros-scared-me/
  37. https://awaytoless.com/a-way-to-less-what/
  38. http://www.thefrugalcottage.com/my-updated-porfolio-june-2019/
  39. https://gentlemansfamilyfinances.wordpress.com/2019/06/19/green-money-greencoat-uk-wind-share-offer-success/
  40. https://gentlemansfamilyfinances.wordpress.com/2019/06/18/hard-lucks-and-let-down/
  41. https://gentlemansfamilyfinances.wordpress.com/2019/06/21/booze-and-babies/
  42. https://www.earlyretirementguy.com/summer-2019-networth-update/
  43. https://www.iretiredyoung.net/single-post/2019/06/21/My-early-retirement-or-midlife-crisis
  44. https://twothirstygardeners.co.uk/2019/06/interview-urban-foraging-whiskey-cocktail-making-john-rensten-bushmills/

How I calculate my net worth

Prompted by some comments, I’ve decided to lay out the sums I use to calculate my net worth each month along with a copy of my Beast Budget spreadsheet. Some bloggers will notice elements stolen from their own spreadsheets – it’s very much a mutant offspring!

My spreadsheet actually calculates two different net worth values; a current net worth and a month end value. The month end value is the sum I report. It’s a pretty theoretical figure really, a sort of “if I had to liquidate everything now back to the banks where would I stand”.

Example dash

The first page of my spreadsheet is the Dashboard. The net worth figure shown here is the sum of all assets and liabilities on the day viewed (using the TODAY function of excel plus lookup tables). The buttons on this page hyperlink to the net worth tracking page and the summary assets and liabilities pages.

Net Worth Example

The net worth tracking page (‘NW Track’) gives a heads-up of every account and it’s change over the year. Beige boxes need to be filled by hand, whilst grey boxes autopopulate. The first table tracks the month to-date value in each account using a mixture of links and lookup functions. It will then calculate your net worth as:

Net worth = (property value – outstanding mortgage) + (all savings accounts) + (all investments) + (all bank accounts) + (pension cashout value) – (student loan) – (all credit cards) – (all other loans/ debts)

For my own net worth I halve my property value and outstanding mortgage, as it’s jointly owned between us. The table will also calculate your net worth without your equity or student loan.

Savings rate example

Table two tracks absolute net worth increases, percentage increases and savings rate (derived from table three). Enter your previous net worth in the equation for January to show the increase.

Savings percentage example

Table three calculates your savings percentage. It will calculate your take home income vs expenses amount using the figures for your primary bank account. The savings percentage calculation is (total saved) divided by (your take home income + your pension contributions). Table four is a countdown to FI calculator which I pinched from another FIRE blogger. TFS I think? It’s adapted to work with the rest of my spreadsheet.

Countdown example

The third page/ sheet is the Assets dashboard. This summarises the state of all your accounts on that day. Where pages exist for the accounts they’ll autopopulate, otherwise have a play about. The Liabilities dashboard does the same thing for accounts holding debts later on.

Assets example

Liabilities example

The following two pages are sample bank accounts. Your primary bank account should be the one your wages go into (although the NW calculator will pull income data from all of them). I think this was originally an excel template which I’ve modified. Enter your expenses and income as they come in.

Bank account example

The savings account page and credit card pages are very simple running totals that you manually input information to. Remember to make all credit card purchases negative. I added a graph to the credit card page because I like pretty pictures. Following the savings account is the investment page, which at the moment is really simple. I’m working on a separate investment workbook that includes live pricing, which I use to update this.

Credit card example

Mortgage example

The last few pages are very similar. Both the student loan and mortgage calculator consist of a summary page and an amortisation page. Enter the values in the first five grey boxes of the inputs section on the summary page and it will do the rest, producing monthly figures and an amortisation table. I’m most proud of the mortgage amortisation (as an excel novice). If you overpay one month, enter the new figure for the appropriate months payment in the amortisation schedule page and it will automatically recalculate all future payments and duration. You can get the student loans calculator to work out how much you pay monthly based on the sum below for Plan 1, or alter it for Plan 2. I tend to just put the payment values in by hand on the amortisation for my student loan, because they change so much and don’t fit a standard loan pattern.

Student loan monthly payment = ((yearly salary /12) – (Plan threshold)) * 0.09

Where (Plan threshold) is for Plan 1 £1,577 and for Plan 2 is £2,143. The percentage increases to 15% (0.15) if you also had a Postgraduate loan.

The link to the google sheets version is here:

Make a copy and save if you want. It’s pretty fugly in Google Sheets as I run it in Excel.
So there you have it, I look forward to constructive criticism.

Cheers for reading,

The Shrink