July 2020 Savings ReportBy Money Mage · · Frugality, Savings
Welcome to our July Savings Report.
The world has opened up a little since our last report. Although maybe a bit too quickly, given the local lockdowns in Aberdeen and the north of England.
We’ve managed to get a couple of our favourite restaurant meals in, take away only. They’re local and independent, so we wanted to support them. I can’t quite face actually sitting in a restaurant, but at least they are open and trading again.
I’ve been shocked at the number of people flying out to Spain, and even more shocked at the response of those caught up in the 14 day quarantine reintroduction upon their return. I mean, seriously? You’ve taken an overseas holiday in the middle of a global pandemic, it’s hardly a black-swan event you might get quarantined upon your return.
For us, we’ve stayed at home. We didn’t push for a refund for our cancelled March holiday, under the expectation they’ll let us reschedule.
When or if we reschedule, who knows.
If we do get away this year, it’ll be a local holiday let, and we’ll get some money into the local economy. That feels like the saner thing to do. But it’s certainly looking like we’re not going to get our four holidays in this year
On the Personal Finance front, July as predicted was an expensive month. We had the Car MOT & service, house insurance, and some tradespeople doing work on the property for essential maintenance.
But in good news, pension recovery continues. And so does house price recovery. This month we’re up nearly 20 grand. Which is insane. Given we take home less than a fifth of that.
The snowball is really starting to roll. And it’s a great feeling.
Anyway, let’s see how the Money Mage household Saving and Investment performance was during July 2020. You can get all Savings Reports at the best of Money Mage.
July 2020 Savings Rates
- SR = Savings Rate
- SRp = Savings Rate inc. Pension
As mentioned July was quite an expensive month with the Car MOT & Service, home insurance, and critical maintenance on the house.
This is our lowest savings rate (excluding pensions) of 2020, and the lowest since August 2019. It seems this time of year is always a bit expensive for us.
I did received my tax refund for pension contributions which helped compensate our savings rate inclusive of pensions.
We’re still averaging 76% 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 nearly another £20K this month. We’re well above the bottom of the COVID crash, and well above the start of the year.
Our FI numbers are now under 4 years including all of our assets. That’s impractical, so excluding the house we’re looking at just under 12 years. Which is awesome.
This month I wrote about how these naive FI figures are a slight over estimate, and how we are aiming to be Financially Independent in our early to mid 40s, which is not that long away.
If you look at these numbers, FIh has us retiring in our early 40s, FIp in our mid to late 40s, and FI in our early 50s. So either way, we feel we’re doing pretty well and our plans appear to be on track. There is no way we’d ‘retire’ to a golf course and do nothing, we’d be working if not for ourselves, on some business ideas.
I continue to warn you again this month: paying attention to net-worth fluctuations during periods of volatility is a fool’s game.
Q2 house price index figures has seen our house value recover and then some.
And markets have further recovered and stabilized. One of my pensions is nearly back to where it was in January, not quite, but nearly.
But given the spikes in cases around the world, and even in some cities in the UK, 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.
The other-MM has had some stressful news. His work are imposing a new contract, with pretty unreasonable terms. No consultation or negotiation just a blanket new contract. And threatening to fire & rehire. We’ve been having the discussion about what to do, put up & shut up, challenge, or move on. My view is any company that treats it’s employees like that doesn’t deserve good employees. But it’s completely his choice.
We’ve had to spend nearly a grand on critical maintenance on the house. We have more spend during August as the outside woodwork needs painting. A decorator was lined up to do this before the end of the summer, but he’s pulled out of the job. Finding him took about 2 months, so I’m just going to DIY instead. Tradespeople honestly. I’ve bought a scaffold tower and have hald of the job done already. It’s work that needs to be done to maintain the house.
This will undoubtedly impact our numbers over the next month or two as spend flushes through our reward credit cards.
Year on Year is still up a healthy 17%. You can find more details in the review of 2019.
Here you can see asset allocations this month compared to July 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.
You can see from the above table, we have quite a significant change this year. With over a 1000% 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 2% of our net worth in pre-retirement investments. Overall, around 35% of our net worth is now in equities. Most of it pension wrapped.
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.
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?