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.

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%