August 2020 Savings ReportBy Money Mage · · Frugality, Savings
Welcome to our August Savings Report.
August celebrates our 1 year anniversary of being mortgage free.
We’ve had over £13K more cash kicking about this year because of our mortgage freedom. That’s money we’re able to invest. My part has been going into my pension to benefit from pension tax relief. We don’t regret clearing our mortgage one bit. Financially we’ve been mostly unaffected by COVID, we’re thankful for that and hopeful our good fortune continues.
I’ve been a little bit quiet over the past few weeks. I’ve been finishing off decorating the outside of the house. We live in a 3 storey house and there are a lot of windows and doors. I had a decorator lined up the job, but he pulled out of the job.
So I’ve been working away at weekends and evenings getting the windows, fascias and soffits painted, along with some tiling. It needed doing before the Scottish winter weather kicks in.
I have a post drafted about it, it should be complete next week.
It’s been good fun. The other-MM has been less pleased as I’ve been busy doing DIY. But I’m happy with the progress and cost saving.
I’ve finally got out of the house a little and went out for a drink last Friday. There is a local microbrewery about 5minutes from the house and they’ve opened a beer garden. It was well organised with tables distanced outside. Order at your table via an app. Pretty impressed, I hope they keep it going. After not drinking for months I had a pretty bad head on the Saturday morning. But it was good fun catching up with people.
Money wise, we’re still preparing for volatility. The market wobble at the tail end of last week is indicative of nervousness. I think we need to see our way through this upcoming winter flu season and into Spring 2021 before we really know what’s going on. And don’t forget we have Boris’ Oven Ready Brexit Bash to get through as well.
Anyway, let’s see how the Money Mage household Saving and Investment performance was during August 2020. You can get all Savings Reports at the best of Money Mage.
August 2020 Savings Rates
- SR = Savings Rate
- SRp = Savings Rate inc. Pension
August was not too bad despite us having some DIY spend flush through the credit cards. Mostly offset by some work bonuses. I had an unexpected £1K bonus, and a referral bonus at work of $1K. Half went into pension and half went into my S&S ISA.
This helped offset some planned spend to give us a really healthy ~83% SRp this month.
We’re averaging 77.5% savings rate (including pension contribs) across the year so far which we’re very happy with.
Towards Financial Independence
Our Financial Independence number is quite conservative. This table shows the number of years to achieve Financial Independence in various cases.
- FIh = Years to FI based on Total Assets.
- FIp = Years to FI excluding the house, but including illiquid pensions.
- FI = Years to FI excluding the house and other illiquid assets.
Our net worth increased in absolute terms by £5K this month. This is quite a bit short of the £20K we saw in July. This was mostly due to volatility in one of my pensions. I’ve dug into why, and it’s a little UK equity skewed. It’s one I might considering moving into my SIPP. I may do a bit of timing on and move at an upcoming dip.
We’ll see. It’s done me well over the years and is up over 80% over 5 years, so I may just leave it well alone too. We’ll see how much tinkering I end up doing.
The good news is our FI number is now 3 years including all of our assets. This is awesome news and is on track for us hitting FI when we are 40. We are aiming to be Financially Independent in our early to mid 40s, which is not that long away.
Our plans seem to be on track, but as we all know, the best laid plans…. So we’re just enjoying the journey.
I continue to warn you again this month: paying attention to net-worth fluctuations during periods of volatility is a fool’s game. The first week of September 2020 has shown a bit of a wobble, so we’re not over this yet.
It’s like Personal Finance Twitter has totally forgotten what happened just a few months ago. Some accounts I follow have gone bonkers again. Back on the ‘invest your emergency fund’. It’s complete bullshit. At a time like this, you have no idea what liquidity is going to be like. You want a good chunk of your emergency funds easily accessible. Even NS&I has liquidity problems - not due to lack of cash, it’s the Treasury, but slow call centres and slow withdrawals.
We’re still preparing for more volatility. We hold quite a chunk of our portfolio in Cash - about 12.5%. This acts as a very healthy Emergency Fund for us. We have this across a couple of different high street banks too. Sure the rate is ~1% but you know what? We value instant access and liquidity, and the peace of mind that no matter what hits us, we can deal with it.
Test and trace is basically not functioning in the UK, schools are back, Universities are back, and the winter cold & flu season is just around the corner. The furlough scheme is away to tail back and stop in the next 8 weeks. Travel and hospitality will be on its knees. I expect we’ll see a large number of new job losses, and this will start to affect other supply chains.
Aberdeen has just had to lockdown again, although they have eased it again. Glasgow is back in a partial lockdown, although they’ve kept the pubs open. Need a bit of punchy-punchy after an old-firm game eh? Infection rates in the young are increasing.
And this is ignoring Boris the Baker’s Oven Ready Barnstorming Brexit Deal and the complete disaster that’s coming there. Dundee is pitching to become a Free Port. I mean seriously. Sigh.
In happier news, the other-MM had some work stress over the past month or so. His work tried to impose a new contract. To cut a long story short, he’s stood his ground and told them to get stuffed. A couple of strongly worded letters later and they’ve backed down. So his terms are not getting eroded after all. Just waiting on signing on the dotted line. It does pay to stand up for yourself once in a while.
As I keep mentioning, I’ve been doing a bunch of work on the house. I’ll write about progress over the next week or so, but it’s been weirdly relaxing painting up a 7m scaffold tower.
I’m strangely looking forward to Autumn. It can be beautiful up here, especially on a crisp day with a blue sky.
Year on Year is still up a healthy 18%. You can find more details in the review of 2019.
Here you can see asset allocations this month compared to August 2019.
Whilst equity exposure appears very low, all pensions are in global trackers funds. Investment in equities is almost solely via pensions. We are now both contributing to a S&S ISA. I am now also contributing to an S&S ISA via Vanguard LifeStrategy 80 and a small holding in Vanguard’s FTSE All-World High Dividend Yield $VHYL. The other-MM is more risk averse, so has a slightly higher bond allocation. Overall, around 35% of our net worth is now in equities, but most of that is pension wrapped to stop tinkering.
You can see from the above table, we have quite a significant change this year. With nearly a 1500% YoY increase in asset allocation in non-retirement locked investments.
This doesn’t reflect growth, but our rebalancing for FI planning. As our pension contributions are growth are looking on-track for 57, it’s time to start focussing on our pre-drawdown plans.
This rebalancing is now starting to really take effect. We now have 15% of our net worth in pre-retirement savings & investments.
This chart shows our net worth growth since the other-MM started work and I graduated.
You can see our net worth has recovered from the bottom of the covid crisis and then some.
We’re mortgage free and on the path to take Early Retirement in our early to mid 40s. If we want to. Subscribe now and follow me on Twitter @moneymagery. I hope you like the charts, I am a fan of Tufte*.
How is your journey to FI going?