Wednesday, 4 January 2017

2016 Annual Review

2016 was an excellent year for my finances and exceeded expectations. These are a few of the key points:

Net worth
Net worth increased by 24%, compared to 16% plan and 18% in the prior year. This was driven by a combination of (a) higher than expected income, (b) strong equities performance supporting the investment portfolio and pension valuations, and (c) the impact of a large movement in foreign exchange rates post brexit increasing the value of my hkd assets in gbp terms.

Savings rate
Savings rate (net income after all expenses divided by gross income) was a very high 65%. This was in line with plan, but within this number both income and expenses were higher than expected, but in this constant proportion. My savings rate has been in the 60-70% range for five years in a row (since detailed records commenced), and although expenses have been increasing during this period, it has always been proportionate to increases in income.  Whilst this is clearly a high savings percentage, it does not feel like i've been particularly frugal and expenses reached a record high this year.

Income reached a record high, driven largely by higher than expected employment income, of which a growing portion is variable and may not all recur.  Aside from employment income, the passive income from my assets (property, cash savings and dividends on investments) continued to rise as my net worth and assets increased. Throughout the year i also crystallised some foreign exchange gains and realised some gains on the disposal of non core parts of my investment portfolio, taking the opportunity to simplify my range of ETFs as many markets hit long term highs.

Expenses also reached a record high.  Roughly half of the increase was unavoidable - home rental and taxation related,  the other half was more discretionary.  In particular travel costs were a lot higher than previous years with around 7 separate trips enjoyed during the year.  Property investment costs and bills were also higher than expected, including some costs associated with acquiring a new rental property towards the end of the year. General living expenses were also slightly over plan but with nothing significant driving the increase.

Overall there are far more positives than negatives here, along with a few one off factors i don't expect to recur consistently in the years to come.  I will dig into expenses a little further to see if there are opportunities to reduce, or at least stabilise some of the increases,  but overall i don't see much cause for concern. Income is less predictable so i can only hope for the best and keep maximising the parts i can control.

A 2017 plan will follow shortly.

Friday, 30 December 2016

December 2016 Review

December saw my net worth increase by 1% with good income, reasonable savings and increases in investment values.

The value of my investment portfolio increased around 1.7% with a mix of dividends on ETFs and increases in most equity values. There were no purchases or sales and the markets seem to end the year with a mild rally.

Pension unit prices were also up around 1% in line with improved equities performance.

Rental income was back on track with the tenant in areas catching up and paying some of January in advance as a good will gesture.  I wasn't expecting this so its a nice surprise, but will see how it progresses over the next few months before deciding whether to extend the tenancy. The other tenant also paid in full, as usual. No tenant yet for the recent purchase, probably a lack of interest over the holiday season. I'm hoping to find someone in January.  There were a few expenses in the month but nothing significant.

Cash balances were a lot higher with strong income, average expenses (apart from travel / gifts) and no new investments/disposals. Overall this has been another excellent year for my finances. I will post a full year review for 2016 along with expectations for 2017 shortly.

Year to date net worth growth: 24.3%
Year to date savings rate: 65%

Tuesday, 29 November 2016

November 2016 Review

November saw my net worth increase by 1.8% with a good savings rate and a favourable update to the fx rates used to manage my assets. This was to reflect the continued weakness in GBP v HKD/USD post Brexit and that my base currency is GBP.

The value of my investment portfolio increased around 2.5% and although underlying investments were slightly lower, the update of the fx rate used to convert my hk based investments back to GBP had an overall positive impact on the portfolio value. Unusually there were no dividends in the month but quite a lot are due next month.

Pension unit prices were fairly flat, but in GBP terms rose 6% as a large part are denominated in HKD.

My third property purchase finally completed during November, but it will take a few weeks before i can market the property for rental. I'm hoping there will be minimal further costs involved. Of the other properties, one paid rent on time as usual, but the other was unable to make their rental payment and the tenant appears to be in some financial difficulty. They are looking to pay double next month, and given they are coming to the end of their rental contract i'm hoping any potential losses will be minimal.

Cash balances were materially lower following the completion of a property investment. Expenses were average, including some travel expenses. Travel expense is well above plan but i'm not too concerned about that given the health of my overall savings rate.

Year to date net worth growth: 23.1%
Year to date savings rate: 65%

Monday, 31 October 2016

October 2016 Review

October saw my net worth increase by 1.3% with a good savings rate and improved investment performance.

The value of my investment portfolio increased around 3% although a lot of this seems to be foreign exchange related, and a consequence of having GBP denominated ETFs holding non GBP equities with a weaker pound. Dividends were higher than average.

Pension unit prices were fairly flat, with the hkd portfolio lower, and gap portfolio higher (probably also fx related).

All rent was received broadly on time. My new property investment will now complete in mid November and i'll look to get it on to the rental market as soon as possible after then. There should be minimal costs before marketing it.

Cash balances were a lot higher, with a net inflow from investments, higher interest and dividend income, and a good savings rate. Expenses were average, including some travel expenses.

Year to date net worth growth: 20.9%
Year to date savings rate: 66%

Tuesday, 27 September 2016

September 2016 Review

September saw my net worth increase by 0.8% with a slightly calmer and steadier month in the markets, and better savings.

The value of my investment portfolio increased around 1% as markets calmed a little after a lot of volatility over the summer.  I sold one small ETF position as part of the recent tidy up and downsizing of the portfolio. It is now 12% of total assets, down from a high of 15% a few months ago.

Pension unit prices were around 1% higher, in line with broader market performance.

All rent was received broadly on time., with one small expense related to a rental agreement being renewed. My new property investment is moving slower than expected but is expected to complete in October.

Cash balances increased with one small investment disposal and higher than average savings. Expenses were lower than most months this year with no one offs or travel.

Year to date net worth growth: 19.3%
Year to date savings rate: 67%