February 2013 Review

February saw my positive start to the year continue, with a net worth increase of 1.6% for the month.

My investment portfolio continued its positive trend, increasing by just over 1%.  The ETFs performed well, despite a few volatile days around the Italian election.  There were no major new investments in the month apart from a small standing monthly purchase of the HK index tracker.  Gold fell by around 4%, which limited the growth of the overall portfolio.

My pension funds also continued their positive run, increasing by around 1% on top of the monthly contributions.

My property was occupied, and the tenant agreed to stay for another year at the same rent. I expect some maintenance costs to come through in March or April as a few issues have recently emerged, nothing too serious though.

Cash balances increased with a much healthier savings rate for the month, expenses were broadly in line with plan. Cash remains above target and is expected to grow with a couple of positive one-offs expected in March. I remain on the lookout for more investment opportunities.

On a year to date basis, my net worth has increased by 3.4%.

Current investment thoughts

I've been sat on the sidelines for a few weeks now looking for investment opportunities that either look attractive from a value perspective, or offer solid reliable returns. Here's a few of my current thoughts:

Precious metals have been declining, primarily on improved confidence in the US. I'm holding a modest amount of paper gold at the moment which is around 4% below my average cost price.  Whilst it is quite tempting to buy into the falling market to average down my entry price, i'm resisting the temptation.  This is partly to avoid concentration, and partly due to its lack of yield.  However, if metals continue to fall i might diversify into silver or another alternative, albeit probably in small quantities.

I've mentioned before that my investment portfolio is lacking exposure to US equities (apart from my pension funds which are globally diversified).  With the S&P reaching 5 year highs and US equities yielding lower than the UK & Europe it doesn't feel like the best time to be adding this to my portfolio.  However, i must say i'm slightly tempted by Apple, which has fallen from around $700 to well under $500.  Regardless of all the media hype it attracts, with a PE of around 10, a dividend yield of around 2.3% and a lot of cash on its balance sheet, it is starting to look reasonably valued.

Bonds are still not appealing to me.  Some yields have shown signs of improvement, but i would be concerned about capital depreciation in bond funds / ETFs.

Property is still attractive (although not in HK!).  Whilst i don't think a new investment in this field is imminent, the likelihood may grow later in the year if i'm struggling to find alternative places to park my cash.

Holidays

One of the benefits of living in Hong Kong is the easy access to a large range of great holiday options.  Although i've made quite a few short trips around Asia in the last couple of years, i've still barely scratched the surface on the places i'd like to see.

Holidays and travel is one area of expenditure i'm quite happy to increase. I made the mistake last year of not really planning anything, and ended up drifting through the year only managing to squeeze in a few long weekends & family visits.

This year i'm going to make a conscious effort to plan ahead and organise some trips to new places throughout the year.  I'm expecting a busy year with work and probably won't be able to take a prolonged break, but will certainly be able to take at least a week each quarter, along with a few odd days here and there.

I've budgeted for 4 trips this year, and i'm determined not to under-spend on this part of my budget again!

Tenancy renewal

Today I received the welcome news that my current tenant would like to continue renting my property for another year.

I agreed to maintain the rent at the current level, given the market is fairly flat and the rent is already a good level for the area.  The current tenant has been very reliable with no issues arising in the last year.

I'm a strong believer in the value of retaining reliable & trustworthy tenants, and will happily choose to sacrifice a rental increase to keep a good tenant and avoid periods of vacancy & the inherent risks in finding someone new.  Of course I would pursue a rent increase if the market rate had clearly increased.

I always think that just 1 week of vacancy equates to around 2% of annual rent, so i'm probably likely to make a higher return in having zero vacancy when the market is fairly flat.