February 2020 Savings ReportBy Money Mage · · Frugality, Savings
Welcome to our February 2020 Savings Report. Alternatively known as COVID-19-panic. Get your Coronavirus here. There is a case in Dundee, so it’s only a matter of time before filthy jobby-hands kill us all.
If you frequently watch BBC News as we do, I’m surprised you are not running for your bunker with your Doomsday Prepper boxsets under your arm.
I am sure most in the Personal Finance community will have felt some contractions during February. The other-MM and I are among you.
I hope you’re all singing Happy Birthday whilst scrubbing your bits with hot soapy water. Just like BoJo said to.
Jesting aside, if you are directly affected, thoughts with.
We are relatively conservative with our investments. So our net-worth hasn’t taken a significant dive. Yet.
The wider economic outlook looks poor, and you can understand why the markets are reacting as they are. Supply chains globally are going to be affected. Those supply chains are going to be pressured with panic buying especially in food and health products. There hasn’t been paracetamol on the shelves of our local Tesco for about 6 weeks. Productivity will bomb with more home working and more time off. The aviation and travel industry is going to face serious turbulence with work-enforced travel bans, with Flybe already failing this week. Deals that businesses thought were going to close, will not, putting pressure on cashflow and runways.
I am expecting the volatility to continue well into Q2. Here’s hoping a bit of warmer weather stems spread.
It won’t change our saving & investment approach. All of our investments are 10+ year horizon. We’ll just carry on as we always do.
I am concerned if there are work shutdowns or isolations in Scotland. Whilst I can work from home, the other-MM can’t. If we’re told to self-isolate it will impact income. We also both have autoimmune conditions, the other-MM more serious than mine. This puts us more ‘at risk’ than most. It moves your thinking from single-digit probabilities to double-digit. Especially for the chance of serious complications.
Anyway, let’s see how COVID-19 impacted this months Savings Report. You can get all Savings Reports at the best of Money Mage
February 2020 Savings Rates
- SR = Savings Rate
- SRp = Savings Rate inc. Pension
Savings Rate was slightly down as more funds were put into our pensions. But overall savings rate including pensions is unaffected, if not slightly up. This was planned. As it’s nearing the end of the tax year we wanted to make use of our Pension Allowances.
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.
There is an expected stagnation in FI numbers this month as our net-worth dropped due to COVID-19 market corrections.
We’re only talking about a month delay though. Let’s see what happens through March and into the summer.
Contributions to my S&S ISA continue, though it’s been impacted in February with a drop in the markets.
February 2020 Recap
February is the first real market blip I’ve paid any attention to. I blame these Savings Reports!
All of our Savings & Investments are 10+ year horizon. Usually, both of us just squirrel away and pay little attention. We might look once a year at pensions. With these Savings Reports, I’m looking at least once a month.
This brings a big risk: Tinkering. Emotional Tinkering.
The other-MM and I have a general principle of Keep Investing Stupid Simple. All investments both inside and outside of pensions are in simple low-cost passive funds.
Yet I have tinkered a little in February: Opened a Vanguard SIPP which finally became available. I also consolidated two group personal pensions into one.
The Vanguard SIPP is still washing its face through February given the tax relief. I opened the SIPP because we wanted to top up pension contributions this year, making use of my Pension Allowances and higher rate relief.
Trying to make a single contribution to the four group personal pensions we have between us was like going back to the stone ages. Cheques, paper forms, and Financial Advisors. Utterly nuts. I literally had my work-appointed Financial Advisor email over a scanned-in form with a section they had to fill in. No thanks!
At least with the new Vanguard SIPP I can just pop in a debit card and shove it in a low-cost passive fund.
The pension consolidation is likely to work out in my favour as it’s a cash-transfer. The transfer certificate showed the transfer happened at the top of the market in the middle of February. Amazing luck. Certainly not intentional timing. But a bit of timing that will likely work out a few grand in my favour when Scottish Widows finally complete the transfer and buy some equivalent units cheaper.
We’re looking forward to our holiday in a couple of weeks. A cheap self-catering let. We’re going to stay on the edge of the Trossachs and Loch Lomond national park. It’s about a 70-minute drive from home. If I am honest, I think living so close to such beauty trumps the low cost of living. I am a fan of small, cheap holidays as you know. This year it looks like we may get in 5!
As mentioned, we also ploughed a couple of grand into pensions this month to make use of our Pension Allowances. Additional tax relief which will come through in May/June I expect.
The other-MM had a change in working hours, as the bus route to his work got altered. This led to us both being a bit knackered for a week or two as body-clocks adapt to the change.
The other-MM’s exercise regime fell on its ass. We now have a mostly unused exercise bike. Remember if you want to shed the weight, build a habit, not a fad.
- Stress levels are still way down. I am actually enjoying work at the moment. Just finished up a project that I’ve been leading. Rolling onto a new project next week.
- Money Mage continues to go well.
- Reading! I’m back into reading. At least an hour most nights. This is really helping me wind down. I finished the first book* in the Confederation Series by Peter Hamilton. I am now onto the second, which is The Neutronium Alchemist*
Should do better
- My mom died at this time of year 3 years ago. It always gets me down. I don’t really know why. It’s mostly subconscious.
- On the drinking front, I got pure steaming at an ex-colleagues leaving night. Other than that, pretty sober.
- Still eating a bit too much. The latter half of February was much better though!
- Stop thinking about tinkering with savings & investments!
February hasn’t been too bad, considering the chaos in the markets.
I will warn you, paying attention to net-worth fluctuations during periods of volatility is a fool’s game, so please just hang up now. Carry on traveller? Kill Jester?! Very well, let us begin…
Month on Month net worth was down by -0.63%. Considering the drop in the markets this month I think the diversification of our portfolio has shielded us quite well. At least so far.
You can see the biggest hit is in pensions. Despite contributions this month they are down nearly 3%. Our pensions have a 20+ year horizon though until we can even drawdown as we are only 36. So frankly who cares!
A 0.63% drop this month pales into insignificance compared to the nearly 4% drop when we bought the house. But look how that worked out. We are really quite pragmatic. If anything, we can buy more units in our pension & investment funds next month. Cheaper units for us! Yay! Unit Cost Averaging for the win!
The drop this month is just a blip on a much longer journey.
Year on Year is still up a very healthy 19.71%. You can find more details in the review of 2019.
Here you can see asset allocations this month compared to February 2019.
Whilst equity exposure appears very low, all pensions are in global trackers funds. Investment in equities is almost solely via pensions. Although 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.
This chart shows our net worth growth since the other-MM started work and I graduated.
Net worth is growing well and as expected.
Whilst we’re mortgage free, and on the path, FI let alone FIRE still seems a very long way away. 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?