Sunday, 2 April 2017

March 2017 Review

March saw my net worth increase by 7.4% with very high income along with pension gains.

The value of my investment portfolio was fairly flat and is now having minimal impact on net worth following a number of disposals. I need to give some thought to investment strategy going forward as i am likely to have some residual cash spare to invest again following a planned property purchase.

Pension unit prices were up around 2% driven by equities market increases.

Property income was lower than plan.  One property paid on time, one missed their rent payment (i now expect them to leave soon) and one remained vacant. A tenant for the vacant property had been found but appears to have pulled out, so it will go back on the market.  A fourth property investment is planned to complete in the next month or so.

Cash balances were significantly higher following a lump sum of income. Whilst this will come down with a planned property purchase it is still likely to remain on the high side for now.

Year to date net worth growth: 12%
Year to date savings rate: 82%

Tuesday, 28 February 2017

February 2017 Review

February saw my net worth increase by 2.3% with high income along with investment and property valuation gains.

The value of my investment portfolio was fairly flat but there were a lot of disposals in the month. I've decided to cash in on large capital gains in emerging markets, asia and europe ETFs, just holding on to a handful of core holdings.  The proceeds from these disposals may be diverted towards further property investments as equity valuations seem on the high side.

Pension unit prices were up around 1% as markets seemed a little calmer than recent months.

Property income was back on track although my most recent acquisition is still vacant.  There have been few viewings in the last couple of weeks so i'm hoping for a tenant to be in place soon. I've also updated the values of my properties for the first time in over a year. One had increased (with lots of observable market references to go by) but i also lowered another which was more subjective. Overall this resulted in an upwards revaluation of around 3%.

Cash balances were significantly higher following strong income and investment disposals. Whilst i'm less inclined to get straight back into equities with this surplus cash, another property investment is a possibility in the coming months.

Year to date net worth growth: 4%
Year to date savings rate: 67%

Monday, 30 January 2017

January 2017 Review

January saw my net worth increase by 1.6% with high income, lower than average expenses and a strong month in the markets.

The value of my investment portfolio increased around 3% as equities continued to rally. I've sold all my remaining fixed income ETFs given the increased expectations of USD rate rises through 2017, and continued devaluation of RMB (the RMB bond ETF was closed down as it seemed everyone was heading for the door!).

Pension unit prices were also up over 3% in line with strong equities performance.

Property income was a mixed picture. One paid on time, but some large maintenance costs are expected over the month. One was late, but are making an effort to catch up - we're staying on a short term rolling contract for now at the mutual agreement of the tenant and landlord. The recent purchase remains vacant but had a few viewings. If the market looks quiet i may consider lowering the rent to get it occupied as soon as possible.

Cash balances were lower with a lumpy tax bill more than offsetting high income, lower expenses and an investment disposal. The tax had been fully accrued for so no impact to net worth.

Year to date net worth growth: 1.6%
Year to date savings rate: 62%

2017 financial plan

After a very successful 2016 for my finances i'll be hoping for more of the same in 2017.  In preparing a simple financial plan for 2017 my working assumption for most items will be to expect income and expenses to be broadly consistent with last year.

Regarding income, overall this is expected to be quite flat.  Employment income will likely be a little lower, but hopefully property income will hopefully be higher if i can rent out my recent property investment.  The big unknown will be if there are further foreign exchange movements, which were a big factor last year, but my working assumption is flat fx rates against current levels.

In expenses, tax and rent are expected to be similar, although my own rental agreement is up for renewal in the summer.  Investment property expenses will likely be higher but should hopefully be covered by income. I've put some buffer in general day to day expenses as i've had my eye on a few luxuries for a while now.  Travel costs are also a bit of an unknown for now, probably not as high as last year but i've budgeted for a similar number of trips.

Overall, if this goes to plan it should be another year with a savings ratio in the mid 60%s range and net worth growth of 18%.  All investment, pension and property values are assumed to be flat, and will no doubt bring some volatility given all the political and market issues unfolding around the world...

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.