November 2020 Savings Report
By Money Mage · · Frugality, SavingsWelcome to our November Savings Report.
I’m writing this in December. I can’t believe the end of 2020 is already in sight. This horrible year has flown by. It doesn’t feel like 9 months have passed since work sent us all home to work from home.
And the house is bloody freezing in the day, so I’ve had to buy some slippers and put the heating up, like some old man.
I haven’t been out for a coffee with friends since March. It’s starting to wear a little thin.
But November has been a great month financially. Mostly down to market recovery, stock options and a new stock grant I’ve had.
In huge news we are now Financially Independent based on our ‘aggressive’ FI number. Based on our total assets.
I find this number a little meaningless, as about 40% of that is tied up in property equity. We’d have to downsize, or let this place out and move into rented, which we’re not going to do today…
But we’re happy. And we will celebrate.
Anyway, let’s see how the Money Mage household Saving and Investment performance was during November 2020. You can get all Savings Reports at the best of Money Mage.
November 2020 Savings Rates
| Date | SR | SRp |
|---|---|---|
| November 2020 | 70.49% | 88.66% |
| October 2020 | 75.1% | 81.4% |
| September 2020 | 71.3% | 86.7% |
- SR = Savings Rate
- SRp = Savings Rate inc. Pension
I exercised a bunch more share options this month, which went straight to pension which is why SRp is up at nearly 90%.
Most of these windfalls are going straigh to pension, which I’m now almost certainly going to hit my £40K annual allowance. I’m going to have to see if I have some backdated unused allowance, which I think I do, or some of my remuneration into the first quarter of 2021 is going to get hit by silly-tax… And I don’t like paying for Tory cronyism.
But seriously, I don’t mind paying tax. But >60%!!
We’re are on track to average just shy of 80% savings rate (including pension contribs) across the year so far which is the best year ever. That’s what mortgage freedom does.
Towards Financial Independence
In huge news, we’re now Financially Independent.
Our FIh measure is now at 0.0 months remainining. Party-o-clock. It may waver a little due to volatility, but we’re there.
This is progress. Twelve months ago, we were tracking to hit FIh in 4.7 years. We managed it in 1. 2020 has been a roller coaster to say the least. At one point, my pensions were down 30%. But we’re invested on a long term horizon (20 years) so who cares about the roller coaster?
But we’re not done, this table shows the number of years to achieve Financial Independence in various cases.
| Date | FIh | FIp | FI |
|---|---|---|---|
| November 2020 | 0.0 | 8.1 | 14.5 |
| October 2020 | 1.1 | 9.4 | 15.3 |
| September 2020 | 1.8 | 10.1 | 15.8 |
- 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.
Whilst we’ve hit our our FIh number sooner than we were planning it’s been another one of those non-celebratory life events. Like clearing your mortgage.
Anyway, I don’t believe in that FIh number. Which you might have guessed by the other two measures. And my tone over the months.
Whilst our FIh number gives us £23K/year (27% above actuals costs, and 60% above minimum costs), 40% of it is made up of property equitiy. We’d have to downsize. Or let out this place and rent somewhere smaller.
We’re actually working towards our FIp number, which excludes our primary residence. In reality, FIp is going to be more than we need. We’re planning on downsizing from our 4 bed detatched house in later life. So somewhere between our FIh and FIp numbers is our sweet spot.
I reckon we’ll be there in our early 40s.
The other-MM and I have now started seriously talking about winding his hours back in a couple of years time. Semi-retiring the wife, well man-wife. The plan is the other-MM would dial back his hours, as he does 50 hour weeks.
And we’ve also started talking about what he’d do with that time. Goals are important…
We’re talking about other possible investments. This time next year our property equity is estimated a at being <35% of our wealth. Would it hurt bringing that back up to 40%? Is 2021 or 2022 the years where we make use of some leverage on other property to accelerate our plans further? Could the time the other-MM gets back by going part-time be used to manage property? Or does that defeat the purpose? Or do we just keep on trucking and be happy?
Talking finances and plans with your spouse/partner is vital. It’s one of the reasons we’re aligned in our lives.
November 2020
Dundee’s Tier 3 Scottish lockdown hasn’t hugely bothered us. But I won’t be seeing Dad for Christmas, which I am worried about. He lost his Sister in March to COVID, and he’s on his own for the first time this Christmas.
It’s now firmly dark and dreich, so my running group are starting to get all ‘not this week thanks’. So I’m out running on my own. I’ll probably step this up to a 5K mid-week and a 10K on the weekend. I managed to do my first sub 5minute kilometer since 2018 on Thursday last week. Weight is pretty stable at 78kg for pretty much the whole year, and I’m feeling better for it.
To brighten things up, our Christmas decorations are now up. Love it.
My new job is going really well. I had a 6% pay rise last month, and granting of more stock. This is going to accelerate our plans.
My problem is taxation. I am more than happy to pay more taxes than those who earn less than me. But 60% is obscene. When the richest 1% pay an average of 25% tax, I get all red-eyed.
So I will be making as much use of my tax advantaged accounts as I possibly can. My Pension Allowance & ISA Allowance specifically.
The stock grants are honestly insane. You can see why people in tech aim for FANG jobs (Facebook, Apple, Netflix, Google) with their equity awards. Whilst I’m not at FANG, I am lucky to be working in a company where I’m valued and that supports me working in a career I enjoy working in. If you are reading this and are thinking about what to study, or have kids who are thinking about what to study, I thoroughly recommend Computer Science. I’ve loved computing since I was a young teenager, and I’ve managed to build a career out of a passion.
In less finance talk:
It’s the other-MMs birthday in December. We’re going to do something for that. And given we’re FI now, we’ll buy a bottle of Asti and spray it all over the dog.
We’ve booked a holiday for March next year. We haven’t been out of the Dundee/Fife area since March 2020. Now that COVID vaccinations are approved for use in the UK, we’ve just booked a wee staycation up north. We’ve gone with full cancellation, so if lockdown prevents travel we just wont go.
Looking forward to my Christmas break, and the end of what has been the weirdest year of many of our lives…
Year over Year
Year on Year is up a very healthy 35%, which is one of our best years, and our best year in absolute terms.
| Type | MoM% | YoY% |
|---|
Asset Allocations
Here you can see asset allocations this month compared to November 2019.
The rebalancing of our assets out of cash into investments is continuing apace.
You can see from the above table, we have quite a significant change this year. With a 6,020% YoY increase in asset allocation in non-retirement locked investments. This doesn’t reflect growth but our rebalancing towards non-retirement accounts for FI plan.
I’m going to be maxing my ISA and Pension allowances this year, for the first time ever. If this growth continues we’re going to have to look at a general investing account and CGT implications.
Skewing our pre-retirement accessible funds is continuing ahead of plan, and is starting to accelerate. We now have 24% of our net worth in pre-retirement savings & investments. We have increased our equity exposure by 15% of our net-worth during 2020 too.
Rounding out 2020 looks like our rebalancing will go to plan. Our investments are now at 50%, property at 40%, and cash 10%. A much better position than when property was >60% this time last year.
And it’s only taken a year.
Lifetime
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?
