Quarterly Returns – Q4 and 2019 in Review

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.

Year two of tracking down, time for another review. After the tumult of 2018, 2019 has been a year of consolidation. There were no house moves, no big projects or events, and only one foreign holiday. It’s been a year focusing on finances and career, steadying and preparing for some big bills and life changes in 2020. But how did I get on for my 2019 goals?

Q4 Returns:

Net Worth

  • Cash Savings Accounts £7,600 (+3,200)
  • Investments £2,990 (+£1,440)
  • Property £40,500 (+£6,100)
  • Cars £2500 (£0)

My net worth now sits at £~49,700, a significant increase of £20k over the course of the year. I set a goal as part of my yearly targets to save 25% of my income in 2019. I narrowly missed out when you look at raw saved cash and investments, saving only 23.53% (15.59% pre-pension).

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 £6,700 in my name, and £1,800 held jointly. I reached the £6k figure as I’d hoped, but I’m not going to rest on my laurels. I currently hold over half of my emergency fund in high interest current accounts, and I’ve found it irritating to meet the requirements of my FlexDirect account (certain amount of transactions, certain amount in/out). The FlexDirect bonus rate is up fairly soon, and most of the high interest current accounts have dried up with rates falling back to those matching regular savings accounts (2, 3). When the interest period is up I’ll move it over to somewhere like Marcus. I also have £1.5k in my Starling account. Some of that is saved for a new car rather than a simple emergency fund, and in anticipation of that expense I’m going to be paying into my 3% Monmouthshire Regular Saver for the next ten months. Our joint account also pays into a regular saver, and I need to have a think about how I’m going to increase our joint emergency fund alongside paying for some property renovation work in the next few months. This will therefore remain a goal for 2020.

Goal 2: Pay off short-term debts

Debt

This was achieved in Q3, but I may yet make a dip into short-term borrowing to buy a replacement car or to pay for building costs. Some of you may be screeching ‘lifestyle inflation’, and I take the criticism. My reasoning is this: as described in the Bangernomics 2019 post, my current car is due some a serious amount of repair work and pro-active maintenance. This will cost more than it is worth. Rather than spending this money for no gain, the temptation is to trade in for the next cheap and cheerful daily. I am as yet undecided, and while I am deciding I accrue further savings to purchase outright. As for the property matter, we have renovated six of the eight rooms in our house. One of the final two needs some structural work, and is generally vile. The work is going to cost maximum £8-10k. With that done we will have a finished home in a sought-after area, which will be readily marketable if we ever had to sell quickly. Getting the work done ASAP will give us a generally nicer life, and increase our liquidity. We’ll use a combination of savings, 0% interest credit cards and possibly borrow again from family. Not ideal, but it fits our joint choices.

Goal 3: Save 25% of my earnings

Savings Rate

I calculate my savings rate using this formula:

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

So I sort of missed this goal. Remember how I said my raw saved cash and investments, for 2019 was only 23.53% (15.59% pre-pension). It’s always bugged me that my savings rate doesn’t include my mortgage payments. The increase in equity from the principle payment is a form of savings, right? So I changed my formula…

Savings rate as % = ((Income – spend) + Cash savings + Investments + Pension contributions + (half of principle mortgage payment)) / (Income + Pension contributions)

This makes more sense to me, as it means my savings rate comes closer to my absolute increase in net worth. Based on those numbers, my average savings rate for 2019 was 29.61%. My net worth saw a tasty 69% increase over the year, helped in part by increased equity as our property value went up. With this new formula, and a plan for incremental improvements, I aim to save 30% of my income in 2020.

Goal 4: Live more sustainably

Way back in January I took the WWF Carbon Footprint calculator, and we had a whopping 169% of our target footprint. At the end of the year, the calculator estimates we’re now down to 108% of the UK Average.

Carbon Footprint

Percentages

The main improvement has been from reducing my travel footprint through fewer flights. Our diet is more healthy, more local and seasonal. We lose points for the new furniture we’ve bought, our meat consumption (I have many thoughts challenging this, but for another time), and my work car commute. I refuse to damage my cavity walls with insulation. I think the loose top line goal has helped with all the simple changes we can make, so now it’s time to look in a little more in depth way. First, I want to know how much I’m saving by growing my own. Second, I want to look at changes I can make to reduce my carbon footprint.

Goal 5: Commence investing

As a yearly goal, this is a win. I’ve gone from nought to £2,990 in investment accounts and seen a healthy return on my invested capital. I’m aware this is pretty small potatoes for most FIRE bloggers, but this is not a pension or a SIPP. The NHS pension provides me with (theoretically) something better (supposedly) than either. This is me breaking the psychological initiation barrier on a good old ISA. The next step will be to reduce cognitive drag, and automate.

Diversification

My investments remain solely in Crowdfunding and my Vanguard ISA. I have a small amount in my FreeTrade account, mainly there to be available for the free share offer. If you want a free share for joining FreeTrade, drop me an email.

Global

In the passive core of my investments, I paid irregular sums into my existing holdings (Developed World ex-UK and FTSE Global All Cap). Automating my investments should regulate the amounts, and following my incremental plan, I’m going to increase the amount I try to put in every month by £50. Looking at the graphs would suggest I’m US-heavy, as the market would expect. This visual representation bothers me, because although it’s true of my ‘portfolio’, it’s not true of my net worth. The vast majority of my that is in the UK housing market. I find myself talking across purposes, with goals and targets that differ depending on whether I’m talking about the ‘portfolio’ or total net worth. This is something I’ll be looking at in 2020, as I try to build my investments to diversify away from UK savings and property equity.

All this talk leaves me with the following 2020 Goals:

  • Goal 1: Build an emergency fund
  • Goal 2: Save 30% of my income
  • Goal 3: Calculate savings made by growing my own food
  • Goal 4: Make changes to reduce carbon footprint
  • Goal 5: Automate investments and savings

Good luck to everyone with their own 2020 targets,

The Shrink

References:

  1. https://www.reddit.com/r/UKPersonalFinance/
  2. https://www.bankaccountsavings.co.uk/calculator
  3. https://www.moneysavingexpert.com/savings/savings-accounts-best-interest/
  4. https://footprint.wwf.org.uk/#/

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 Financial Dashboard – April 2019

The goals for April were:

  • Sell £100 worth of stuff
  • Set up pots for holiday and personal money
  • Look at other ways to reduce environmental footprint
  • Set up regular stock investment
  • Finish my portfolio spreadsheet

Checking the assets and liabilities:

April AssetsApril Liabilities

These are taken, as always, from my Beast Budget spreadsheet. This month my net worth grew by £1,108, 3.34%. I put the final £200 in my 5% Santander saver, which matures next month. Santander have dropped the interest to 3% now so I’ll probably open a separate account elsewhere. We continued to pay down our family wedding loan. At the end of last month the clutch began to go on my daily driver, so I stumped up for a replacement. This went partly on my credit card, so swallowed up efforts to reduce that debt, but I was able to clear part using money put aside in a car maintenance savings pot.

Goals:

Goal failed: Sell £100 worth of stuff

Continuing to fight hordes of time-wasters, asking me to part with big ticket items for tuppence. Wearisome.

Goal achieved: Set up pots for holiday and personal money

Quick and easy win this. My accounts now have an organised flow, where my salary comes into my main account, then anything after bills and direct debits gets moved into my Starling. This has spaces set up, which I’ll start to fill with the budgeted holiday and personal money.

Goal achieved: Look at other ways to reduce environmental footprint

I’ve already spoken about moving to a sustainable energy supplier (Bulb) and trying to reduce our plastic usage. We eat local and healthy, though I admit with busier work comes decreased time to actually organise healthy food. We’ve reduced our plastic consumption for toiletries, using shampoo and soap bars, switching back to washing powder in cardboard boxes. Toilet roll was an issue. Most supermarket toilet roll isn’t recycled, the production process is surprisingly damaging and toxic, and then it’s all wrapped in plastic and shipped to us. A great case in point of clever branding is the new company Who gives a crap (1). They make a big thing of eco credentials; all their loo roll is either recycled or from sustainable bamboo, it’s wrapped in paper and 50% of the profits are donated to safe water/ waste charities. My major issue; all this loo roll gets containerised from factories in China invalidating some of the headline eco credentials.

In looking for alternatives I found the shopping guides from the excellent website Ethical Consumer (2). They score and rank companies on their ethical and environmental merits to produce a list of bestbuys. We opted for the UK manufactured Ecoleaf, which is the same price as standard supermarket loo-roll, and half the price of Who Gives a Crap. We’ll be using the website again, as it’s got guides for most household products, which can be purchased on the Ethical Superstore (3).

Goal failed: Finish my portfolio spreadsheet

It’s surprisingly hard to find a platform for a portfolio that has all the functionality I want. I’ve amalgamated/ butchered YFG and Firevlondons’ spreadsheets, but I’m still not happy.  I’m going to give the Rebo app developed by Andy at Liberate Life a go (4, 5). May well end up drafting something new.

Goal achieved: Set up regular stock investment

A set amount a month is now going into my S&S ISA. I’m somewhat limited in my portfolio options at the moment, due to using Vanguard as my platform. I’ll cover what I’m going to do about it in my next Quarterly update.

Budgets

  • Groceries – Budget £300, spent £184.25, last month £207.01.
  • Entertainment – Budget £150, spent £99.38, last month £76.50.
  • Transport – Budget £460, spent £851.53, last month £329.90. Grim.
  • Holiday – £150, spent £0, last month £0.
  • Personal – £100/ £41.88/ £47.57.
  • Loans/ Credit – £350/ £88.97/ £748.44.
  • Misc – £50/ £121.92/ £81.77. Misc payments this month:
    • £40-odd at Dunelm for bathroom furnishings
    • £30-odd on chicken feed
    • £50 on bathroom fittings

In the garden:

Everything is starting to come up, my favourite time of year in the garden. We have: two types of tomatoes, two types of potatoes, two types of onions, radishes, salad leaves, lettuces, courgettes, spring onion and various beans. The clematis is in flower and the raspberry is shooting up canes. All good things.

Goals for next month:

  • Sell £100 worth of stuff
  • Finish my portfolio spreadsheet
  • Get two extra blog posts out
  • Remortgage
  • Set up new bank accounts

What’s in the pipeline: (Life continues to get in the way of blogging)

  • Our wedding pricetag
  • How I calculate my net worth
  • Stoicism and the finance world
  • Green Credentials
  • Property Renovation Lessons Part III
  • Plus the usual Full English Accompaniments and other drivel…

Happy May everyone,

The Shrink

References:

  1. https://uk.whogivesacrap.org/
  2. https://www.ethicalconsumer.org/home-garden/shopping-guide/toilet-paper
  3. https://www.ethicalsuperstore.com/
  4. https://reboapp.co.uk/
  5. http://liberate.life/index.php/2019/05/01/track-portfolio-rebo/

The Full English Accompaniment – Watch the population slump, and then the economy

What’s piqued my interest this week?

In the allocations section of my Investment Strategy Statement I mentioned that I favour emerging markets (a generalisation) because of changing demographics. Events of the past few weeks have prompted me to flesh my thought process out. I have a hunch/ theory/ feeling in my waters that long term stock market movements correlate to changing demographics (so far so normal), particularly the ratio of 20-40 year olds to other demographics. This has long been muted, but is difficult to prove, partially (I think) because it depends on where and how you define the demographics and stock market changes, and how you look at dependants (1). It should be noted by the passive investor because if you invest in a national index now you want to be sure that that same index is going to keep going up.

The Japan Problem

Japan is the canary in the coalmine. People have been noting for some time the relationship between Japan’s relatively stagnant growth and its ageing population. This has improved somewhat under Shinzo Abe, averaging around 1% growth over the past decade despite the significant headwind of a falling population. With the highest life expectancy in the world and a fertility rate of 1.4, Japan’s population is getting older, with the expectation the proportion of those >65 will go from 3 in 10 to 4 in 10 in the next 40 years, with the population shrinking by 25% (2, 3). By 2025 it will have an aged dependant per worker ratio of 75% (3).

This is a huge challenge for a social security system, as more people rely on pensions and the healthcare system than the funds that are coming in (4, 5). Public debt increases or the numbers of workers increase, or both.

Europe

The problem I see is the EU isn’t that far behind. There’s a big post-boomer bubble coming, made up of those born 1955-75 (6). Shock! Millenial not slating the boomers.

We’re already starting to see one sign of the problem, as companies struggle under the weight of increasing pension debts. It’s one of the things that’s dragged down BHS, Debenhams, HoF, and look at the ongoing saga with private railway company operators. Stagecoach and Virgin don’t want to be on the hook for the Railways Pension Scheme deficit (7). As the working population reduces and the dependant population grows this chasm in the unfunded public sector pension schemes will yawn wider. Executives are looking down the barrel and running for the hills, to mix metaphors. This is across Europe. Germany and Italy have expanding dependant populations, Bulgaria has a birth rate of 1.5 and has seen its population fall by 2 million in 30 years, Poland is closing schools due to the lack of children (8, 9). Some countries though, like Sweden, are bucking the trend through immigration.

The Global Picture

Look wider and there are notes of caution but also reasons to be cheerful. Globally birthrates are falling, the low levels in the developed world balanced by high birthrates in India, the Philippines and Africa (8). Emerging market populations are growing faster than the developed markets are shrinking, so the population will keep growing, but at a slower rate (9). This is good news for the planet, which can’t sustain the current growth rates indefinitely, but bad news for those who dislike immigration, as migration will be required to maintain labour forces in the developed economies with shrinking populations. Or will it?

Before I move on it’s worth focusing on three more countries: India, the US and China (9, 10, 11).

Things are looking peachy for India, which has an expanding population likely to drive greater growth even as it modernises and develops (although this is not without its issues). The US is in better shape than most of the developed world, with forecasts for a relatively flat or increasing population before you even take migration into account (12). This is one of the reasons, combined with global corporate and technological monopolies, that I don’t believe the NYSE is about to undergo a crash when the boomers call time and cash their retirement cheques. But what happened to China? The single child policy. We’re past its peak, and now China is looking at a reduction in its working age population of 212 million by 2050 (10). 212 million less people working. That’s the current population of Brazil. That’s what state top-down planning gets you.

‘Abenomics’ and ways out

So how do we get out of our slump? Well we could open our borders to a motivated migrant workforce, but that would just be too sensible and easy. Some authors look back to Japan for the way out of this population pickle. Shinzo Abe has sustained growth in the face of a falling population primarily through recruiting more people into work who previously were not, alongside technological productivity developments (13). Japan in many ways is a deeply conservative country. The perceived social norm continues to be men go to work all day, women are home-makers. In 2013 Abe introduced ‘Womenomics’ (there’s a theme here), increasing female participation in the labour force through a number of methods (13, 14). I don’t feel this would necessarily translate to western European cultures, where women working is the norm. I think efforts in our economy to bring those out of the labour market for whatever reason into work, like zero-hours contracts, have been less successful. There’s more people in work, but productivity and earnings aren’t necessarily increasing.

Technology and automation, on the other hand, probably are solutions. Automation enables greater output with fewer workers, and can be applied to manufacturing, construction and some service industries, as it has in Japan (14). It’s not good news for the factory workers and low-skilled employees, which is all the more reason for Universal Basic Income – an argument for another time. There will continue to be some jobs robots will struggle with; caring roles or where intuition is required. As a shrink I’m probably safe. Robots are yet to understand human emotions.

Major caveats

Important flaws in this whole essay:

The stock market isn’t necessarily correlated with population demographics.

There’s lots of arguments and evidence of this. It can basically be boiled down to:

  1. You can’t correlate specific bear markets, like the dotcom bubble, to demographic/ population change points – this is often identification error
  2. External factors and drivers such as politics (e.g. the fall of the Berlin Wall/ communism etc) have unpredictable effects on a) markets and b) demographics
  3. The timescales and effect sizes are such that the end result on the stock market appears negligible (15, 16).

Add in the fact that we have an increasingly interconnected world, with global corporations taking earnings from multi-national operations, and it all gets murky. I don’t think any developed market is about to crash while companies listed on it’s market utilise cheap developing world labour (17). Just also don’t ignore a developing market with increasing capitalisation (18). Which is why I aim to hold more in certain developing markets. But you, as usual, should do your own research.

Have a great week,

The Shrink

Other News

Opinion/ blogs:

The kitchen garden:

What I’m reading (affiliate links):

The Right Way to Keep Chickens – Virginia Shirt – Another guide to our new pets.

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://bit.ly/2UVX1x6
  2. https://www.indexmundi.com/japan/age_structure.html
  3. https://www.weforum.org/agenda/2018/12/japans-economic-outlook-in-five-charts/
  4. https://www.economist.com/the-economist-explains/2018/11/26/the-challenges-of-japans-demography
  5. https://www.project-syndicate.org/commentary/japan-demographic-lesson-european-growth-by-daniel-gros-2017-11?barrier=accesspaylog
  6. https://www.indexmundi.com/european_union/age_structure.html
  7. https://www.theguardian.com/business/nils-pratley-on-finance/2019/apr/10/unloved-stagecoach-may-have-a-point-on-rail-franchise-pension-risks
  8. https://www.theguardian.com/business/2019/mar/31/birthrate-crisis-require-new-mindset-growth-population-prediction
  9. https://www.businessinsider.com/2-charts-tell-the-global-demographic-story-2015-12?r=US&IR=T
  10. https://www.businessinsider.com/changes-to-working-age-population-around-the-globe-2016-12?r=US&IR=T
  11. https://www.indexmundi.com/united_states/age_structure.html
  12. https://fat-pitch.blogspot.com/2018/05/demographics-growing-prime-working-age.html
  13. https://www.wsj.com/articles/how-aging-japan-defied-demographics-and-turned-around-its-economy-11547222490
  14. https://www.cnbc.com/2018/02/09/what-is-japans-secret-women-and-technology.html
  15. https://medium.com/street-smart/the-demographics-of-stock-market-returns-part-ii-a41a46622198
  16. https://global.vanguard.com/portal/site/institutional/nl/en/articles/research-and-commentary/vanguard-voices/demographics-and-equity-returns-vv
  17. https://www.economist.com/finance-and-economics/2019/03/28/slower-growth-in-ageing-economies-is-not-inevitable
  18. https://www.forbes.com/sites/advisor/2018/08/01/should-long-term-investors-own-more-emerging-market-equities/#3fcebc6854ee
  19. https://www.bbc.co.uk/news/business-47609539
  20. https://www.theguardian.com/business/2019/apr/04/sales-new-cars-fall-uk-consumers-continue-shun-diesel-brexit
  21. https://www.theguardian.com/business/2019/apr/04/us-china-risk-house-price-slump-trigger-recession-imf-lending
  22. https://www.theguardian.com/business/2019/apr/01/was-the-us-stock-market-boom-predictable
  23. https://www.theguardian.com/business/nils-pratley-on-finance/2019/apr/01/fca-supervision-lcf-london-capital-finance-investigated
  24. https://monevator.com/the-slow-and-steady-passive-portfolio-update-q1-2019/
  25. https://monevator.com/what-is-a-sustainable-withdrawal-rate-for-a-world-portfolio/
  26. http://quietlysaving.co.uk/2019/04/01/march-2019-other-updates/
  27. http://quietlysaving.co.uk/2019/04/11/freetrade/
  28. http://www.mrmoneymustache.com/2019/04/01/how-i-sold-this-website-for-9-million/
  29. https://gentlemansfamilyfinances.wordpress.com/2019/04/01/month-end-accounts-march-2019/
  30. https://gentlemansfamilyfinances.wordpress.com/2019/04/03/fire-health-the-diabetes-epidemic/
  31. http://diyinvestoruk.blogspot.com/2019/04/trig-share-offer-completed-update.html
  32. https://youngfiguy.com/audit-reform/
  33. https://simplelivingsomerset.wordpress.com/2019/04/09/through-the-brexit-looking-glass/
  34. http://eaglesfeartoperch.blogspot.com/2019/04/financial-planning-2019-annual-review.html
  35. https://www.msziyou.com/net-worth-updates-march-2019/
  36. https://www.msziyou.com/dating-as-a-feminist/
  37. https://indeedably.com/random-acts-of-bastardry/
  38. https://indeedably.com/feels-like-home/
  39. https://indeedably.com/designed-to-fail/
  40. https://www.ukvalueinvestor.com/2019/04/rightmoves-share-good-value-dividends.html/
  41. https://www.ukvalueinvestor.com/2019/04/three-value-traps.html/
  42. https://www.ukvalueinvestor.com/2019/04/three-value-traps.html/
  43. https://tuppennysfireplace.com/how-to-stockpile-food-shortage/
  44. http://twothirstygardeners.co.uk/2019/04/building-a-raised-bed%EF%BB%BF/
  45. https://sharpenyourspades.com/2019/04/13/allotment-gardening-and-the-power-of-to-do-lists/

View at Medium.com

Quarterly Returns – Q1 2019

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.

This post marks one year of my blog. One year of posting rants and general waffle. It marks a new year, and the end of the old tax year, so how did I get on in my Q1 of 2019?

Q1 Returns:

Net Worth Q1

  • Cash Savings Accounts £2800 (+£1000)
  • Investments £1000 (+£1000)
  • Cars £3000

My net worth now sits at £~33,200, an increase of £4.7k over the past three months, and up dramatically from the £~20,000 I first wrote about twelve months ago. I’m fairly sure I won’t be able to keep up a 60% increase in net worth, but I’ll keep a twelve month rolling calculation out of curiosity.

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).

I’ve continued to add to my Santander 5% regular saver, which will reach maturity this month. It currently stands at £2200, which is a month of total household expenses at our current spending, or two months of my half. I’m now looking to set up another regular saver. I’ve parked some extra cash to pay for upcoming car and work related expenses. In the past three months I’ve decided I’m going to define my goal emergency fund as three months total household expenses (£6k) in my name, plus a further three months (£6k) held jointly. This seems a fairly realistic target for the next year.

Goal 2: Pay off short-term debts

Q1 Short Term Debt

At the start of 2019 my short terms debts stood at £1.25k to family and £2.6k on 0% interest credit cards. In the past three months I’ve paid £1k off our loan to family, but some significant work expenses had to go on my credit card, so that figure has only come down by £600. I’m going to have to work hard to achieve my goal of clearing my credit card by the end of Q2.

Goal 3: Save 25% of my earnings

Q1 Net Worth

In the past three months my savings rate has gradually increased, but it’s a bit early to take averages, particularly with the March outlier. I calculate my savings rate using this formula:

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

Where income minus spend equals the money left from my income in my accounts at the end of the month. It’s important to note I don’t include any mortgage payments in this (i.e. increased equity), nor do I include reductions in debt. This is purely the amount I have been able to save out of my earnings. I see some arguing that imputed rent or equity increases should be included in savings, but for me this figure is a literal savings percentage. Equity/ debt changes show up in my net worth, which accounts for the rapid increase in net worth concurrent with a piddly savings percentage.

Goal 4: Live more sustainably

Some success here. We’ve reduced our plastic usage, we’re eating more locally and sustainably sourced food, and I’ve finished setting up our mini-market garden with new raised beds for veggies and some pet chickens. As things start to crop I’ll add them up and work out cost savings from homegrown produce.

Goal 5: Commence investing!

Q1 Tax Efficiency

I’ve taken the plunge. March’s tax rebate has been quickly squirrelled into a Vanguard S&S ISA. I opted for the FTSE Developed World ex-U.K. Accumulation Fund, buying at £352.62/unit. I learnt a quick lesson in a) market timing and b) not checking investments too frequently, as literally the day after the price fell to £341/unit. I’m not in it for short term gains, I told myself.

Since then I’m trying to avoid impulsively checking the NAV every hour (bloody idiotic), busying myself building a spreadsheet to track returns and allocations. Like many others my intention is to unitise my portfolio (1, 2, 3, 4). I’ve been reading about this methodology through (as usual) Monevator, and also Bogleheads which has a fantastic portfolio spreadsheet (5, 6). Hopefully by the end of Q2 it should be ready to be unveiled.

Until next time.

The Shrink

 

References

  1. https://firevlondon.com/2017/01/17/my-investment-tracking-spreadsheet/
  2. https://www.ukvalueinvestor.com/2018/08/how-to-manage-a-portfolio-of-shares.html/
  3. https://simplelivingsomerset.wordpress.com/2019/01/11/unitising-my-portfolio-shows-i-sucked-last-year/
  4. https://en.wikipedia.org/wiki/Unit_valuation_system
  5. https://monevator.com/how-to-unitize-your-portfolio/
  6. https://www.bogleheads.org/wiki/Calculating_personal_returns#GoogleDocs

 

 

 

 

 

 

 

 

The Full English Accompaniment – Making your day more environmentally friendly

What’s piqued my interest this week?

As part of our goals for this year MrsShrink and I are trying to live more sustainably. Recently we’ve got a bit stuck for ideas, and a friend recommended we go through our daily routine to look for places where we couple replace things. Here’s part of MrsShrink’s day as an example:

  • Morning shower:
    • shower gel – swap for soap bar
    • plastic loofah – swap to natural loofa
    • venus razor – ceramic or wood with replaceable blades?
    • face wash – home made
    • face exfoliator – home made
  • Brush teeth:
    • electric toothbrush heads – bamboo heads?
    • toothpaste – tabs?
  • Creams/ lotions/ make-up:
    • moisturiser cream
    • lip balm – metal tins
    • deodorant – bars or powders
    • make-up – plastic free
  • Clothes:
    • buy from charity shops
    • natural fibres only
  • Tea & coffee:
    • teabags (contain plastic) – loose leaf instead
    • coffee – buy beans from sustainable source and grind

This method has helped us recognise areas where we can change. Some of the ideas we came up with are probably more expensive, but we’re going to try and implement the cheaper ones. So why not give it a go as another way of budgeting and accounting in your life.

Have a great week,

The Shrink

Other News

Opinion/ blogs:

The kitchen garden:

What I’m reading (affiliate links):

Tombland – C.J. Sansom – I love the Shardlake series, detective novels set in the Tudor period with a crippled lead character. Beautifully written.

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.thisismoney.co.uk/money/bills/article-6799495/Are-solar-panels-good-investment-feed-tariffs-slashed.html
  2. https://www.thisismoney.co.uk/money/news/article-6804455/Official-outlook-finances-five-graphs-Spring-Statement.html
  3. http://www.morningstar.co.uk/uk/news/182247/fca-to-clamp-down-on-exit-fees.aspx
  4. https://www.dailymail.co.uk/money/mortgageshome/article-6781531/House-prices-grow-highest-record-February-fall-January.html
  5. https://www.bmj.com/content/364/bmj.l998
  6. https://nypost.com/2019/03/01/archaeologists-uncover-ancient-graffiti-penis/
  7. https://www.mrtakoescapes.com/low-beta-investing-the-anomaly-of-lower-risk-and-greater-returns/
  8. https://www.morningstar.com/articles/919059/understanding-and-navigating-etfs-premiums-and-dis.html
  9. http://diyinvestoruk.blogspot.com/2019/03/foresight-solar-it-new-addition.html
  10. https://www.ukvalueinvestor.com/2019/03/why-centrica-no-longer-meets-my-investment-criteria.html/
  11. https://youngfiguy.com/mrs-yfg-my-top-tips-for-getting-your-partner-on-side/
  12. https://cashflowcop.com/fi-score-test-fist-where-are-you-on-the-journey/
  13. https://gentlemansfamilyfinances.wordpress.com/2019/03/15/saving-ninja-thought-experient5-from-gff/
  14. https://thesavingninja.com/a-close-up-look-at-death/
  15. https://firethe9to5.com/2019/03/15/early-retirement-early-days-what-ive-learned-from-the-first-3-months/
  16. http://quietlysaving.co.uk/2019/03/15/gin-and-win/
  17. https://monevator.com/tax-efficient-saving-for-children-and-grandchildren-with-jisas-and-sipps/
  18. https://www.foxymonkey.com/best-passive-income-investments/
  19. https://indeedably.com/incurable-optimism/
  20. https://ditchthecave.com/shame-poor/
  21. https://www.msziyou.com/tale-of-two-coffee-shops/
  22. http://twothirstygardeners.co.uk/2019/03/how-to-season-wood/
  23. https://sharpenyourspades.com/2019/03/12/peat-free-coco-coir-compost/

The Financial Dashboard – February 2019

The goals for February were:

  • Sell £50 worth of stuff
  • Calculate and set a budget for Entertainment
  • Reduce consumption of single use plastics
  • Finish the raised beds
  • Set up an account with an investment platform

Checking the assets and liabilities:

Assets Feb 2019Liabilities Feb 19

These are taken from my Beast Budget spreadsheet. This month my net worth grew by £984 (~3%). For the first time I’ve ended the month with a net worth >£30k. I put another £200 on my 5% Santander saver, paid down our wedding loan to a family member and my credit card bill. I also put money aside as budgeted for future professional and car expenses.

Goals:

Goal achieved: Sell £50 worth of stuff

Sold some car parts, got £50 in cash, spent it on soil (rock ‘n’ roll). I’ll increase this for next month to keep the impetus up.

Goal achieved: Calculate and set a budget for Entertainment

Again I went back over the past year’s spending to calculate what my average is. I’ve previously classed entertainment as daily living type costs, and kept gym and hobby fees separate. For this year and to produce a proper budget I’m going to include them all together, so that it encompasses eating out, the cinema/ theatre/ concerts/ events, the gym and my other esoteric hobbies. There’s been a lot of variance in monthly spending, from £~50 to £~250, accounted for by concert tickets and times when we’ve eaten out a lot. In the last couple of months we’ve spent around £100, but we’ve barely left the house. I’m going to budget £150/month for the future, and anything left over at the end of the year can be used to top up ISAs.

Goal achieved: Reduce consumption of single use plastics

Gradual progress here, through small changes. We’ve moved to only buy loose fruit where possible. Our veg is delivered loose. Our meat is delivered wrapped in waxed paper. We’ve switched some of our cosmetic items, so that we only buy paper earbuds, and we’ve made re-usable face-wipes for makeup from old material. We’ve switched to shampoo bars, which are more expensive but seem to last much longer (this sort of thing). We’ve switched back to soap bars from liquid hand soap. Slow but steady, with plenty more to do. Next month I want to look at other ways we can reduce our environmental footprint.

Goal failed: Finish the raised beds

I’m tripling my veg patch size by rebuilding the raised beds using fly-tipped or old pallets and free/ cheap soil. This is taking bloody ages. Trying to scrounge free or cheap soil through gumtree and facebook is slow. I’ve probably put in about five tonnes of soil so far, with the same to go.

Goal achieved: Set up an account with an investment platform

I’ve spent much of the month looking at online brokers using Monevator’s excellent guide and a few other websites (1, 2). As we’re coming to the end of the tax year my first purchase will be pretty simple. I’ve opted to go with Vanguard directly and have set up an account in anticipation for making my first payment in March.

Budgets:

  • Groceries – Budget £300, spent £207.01, last month £185.03 Continue to underspend.
  • Entertainment – Budget £150, spent £92, last month £97.30.
  • Transport – Budget £460, spent £405.44, last month £124.75. MOT and tax costs came in under budget, so a little carries forward for next month.
  • Holiday – £150, spent £0, last month £133.09. Need to start putting a little away here.
  • Personal – £50/ £5.50/ £61.52. Had a rejig here which I’ll explain next month
  • Loans/ Credit – £350/ £288.99/ £-445.78. This is now net change for the month.
  • Misc – £50/ £186.45/ £123.34. Had a rejig with the new spreadsheet here too. Misc payments this month:
    • £50 cash on soil (plus £50 from the car parts)
    • £20 cash for a work event
    • £50-odd at B&Q on more house things

In the garden:

See above for a raised bed update. The greenhouse is now full of seedtrays with early crops, and the dining room table covered in potatoes being chitted.

Goals for next month:

  • Sell £100 worth of stuff
  • Finish the raised beds
  • Calculate and set a budget for Personal spending
  • Look at other ways to reduce environmental footprint
  • Purchase first stock investment

What’s in the pipeline:

  • Stoicism and the finance world
  • Green Credentials
  • Property Renovation Lessons Part III
  • Plus the usual Full English Accompaniments and other drivel…

Happy March everyone,

The Shrink

References:

  1. https://monevator.com/find-the-best-online-broker/
  2. https://www.moneysavingexpert.com/savings/stocks-shares-isas/