June 2021 Savings ReportBy Money Mage · · Frugality, Savings
Welcome to our Q2 2021 Savings Report.
This is the second in a new Quarterly report format. My monthly reports were becoming a bit same-old, and I have had other draws on my time.
Slow and steady wins the personal finance race, and this report is no different.
The good news is: we are doing well, and our finances are doing very well.
I hope you are well, and that your finances are doing well too!
Anyway, let’s see how the Money Mage household Saving and Investment performance was Q2 2021 (April 2021 through June 2021). You can get all Savings Reports at the best of Money Mage.
April - June 2021 Savings Rates
- SR = Savings Rate
- SRp = Savings Rate inc. Pension
Yet another quarter of consistenct >80% savings rate. Nothing huge to report on the savings rate front. We’re just trucking on. I don’t see this changing for the rest of 2021 and into 2022 unless we have an unexpected change in circumstance.
We are noticing some inflationary pressure on some goods and services, but pay-rises are outpacing for now. The 4% Bank of England warning on inflation by end of year is a bit of a concern.
Towards Financial Independence
In November 2020 we hit our FIh number - which means we are Financially Independent if you include our primary residence.
But that isn’t the full story…
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.
To put this into perspective: if we stopped work now we have a runway of 9 years of liquid assets at our current rate of spend. We’re 20 years from my retirement drawdown age - so need double our liquid assets over the next few years.
So, we’re still working on our non-pension and non-property locked assets.
Everything is pointing to us achieving full FI in our early 40s:
- Our FIp (our FI number excluding our property) (~5 years)
- Monte-carlo simulations of our finances (~4 years)
- My poor-mans predictions in our monthly finance tracking sheet. (~3 years)
All three point to us achieving FI in the next ~3 to ~5 years.
April to June 2021
I mentioned in December I had a bit of a health scare. My health has improved and stabalised. I’m not quite back to where I was prior to Christmas but I’m feeling a lot better. I’m back to running 5 to 10km weekly.
I’m so glad to see my health improving again.
I’ve taken a promotion at work. The team I am on is growing. 70% year over year revenue growth for two years in a row. I work in software. My career to date has been as a leader. When I switched company in 2019, I took a step back to just being an individual contributor. But the team needs to grow, and I can help - so I’ve put myself out of my comfort zone a little again.
It’s going well - and the leadership in the rest of the group are supportive and capable. Which is more than I can say about my previous job. Seriously, terrible companies don’t deserve you.
The other-MM had another paybump and a promotion and it’s coming through in paychecks. He is struggling with what can only be described as a terrible manager. A lot of his legitimate grievances last year were resolved, but understaffing of his team continues, despite dropping work all over the place and repeated requests for more staff. Other teams get the resource they ask for - though. Terrible manager, like I say.
Lockdown depression has eased significantly. In my last report I was quite bad. It was the end of a dark, cold and snowy February. I was pretty miserable.
But now the ligher nights are here, and lockdown is easing. I’m feeling a lot better.
We’re not quite out and about yet. We haven’t risked going out to a restaurant. But I have been out for an outside beer or two with some friends.
My second jab is due at the end of July. I’m going to get away to see my Dad, who I haven’t seen in 18 months now. I’m dreading the journey on the train, full of arseholes. But that’s life. I’ll just buy a first-class ticket and hope the dickheads don’t make it that far up the train.
We finally got away. At the end of June we had a weeks break. After two failed staycations last year, and one earlier this year, we were about to give up the ghost. But we got an amazing wee break in a traditional cottage right next to a beach up near Inverness.
And to round off on finance: Last tax year I capped out my ISA and Pension Allowance. I completed my tax return this weekend just gone. I’m waiting on a pretty hefty tax rebate for some higher rate pension relief. I’m hoping it comes through quickly, last year it was a matter of weeks. I’m on track to cap out my ISA and Pension Allowance again this year - and I’ll make use of some more unused Pension Allowance - which you can backdate 3 years.
I’m still continuing to diversify out of my company stock options and RSUs. About 10% of our net worth is in stock for the company that pays my salary. We’re over exposed given this. I’m diversifying out by selling periodically and contributing to my pension (for tax relief) and into my ISA. I can contribute around £60K/year gross. It’s a balance of risk vs tax efficiency.
Year over Year
Year on Year is up a very healthy 47%, which our best year ever. It is somewhat artificial though, given our equity asset holdings have increased significantly, during one of the biggest drops and rallies on the market, and we’re currently at all-time equity highs.
Here you can see asset allocations this month compared to June 2020.
The rebalancing of our assets out of cash into investments is continuing apace.
When we cleared our mortgage, our house was 60% of our net worth. Way too high. That is now rebalanced to under 40% of our net worth - still too high, but reducing.
Cash is down to 8% of our holdings now. We plan on keeping cash around ~10% of our portfolio going forward, so we will top it back up soon. We have a fixed-rate account maturing soon, which we’ll retain in cash rather than diverting to equities.
Almost all of our investments are held in low cost globally diversified passive funds. We have a balance of bond to equity that suits our risk profile.
This chart shows our net worth growth since the other-MM started work and I graduated.
I don’t often talk about absolutes. We added £100K in just 9 months.
Our first £100K took 8 years. The next took 4 years. The following 2 years. Have we been paying attention to superlinear growth recently?
Don’t worry if you start out slow. Our snowball is rolling. Yours will too.
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?