July saw my net worth increase by 3.7%, following a rebound in the performance of my pension funds and investments, along with an increase in the valuation of my property.
The value of my investment portfolio increased by over 3% with most of the ETFs improving after a poor June. Metals & the China ETF continue to lag, and the only investment in the month was a small standing monthly order of the HK index.
My pension fund unit values increased by over 5% largely offsetting the falls in June, helped by a higher UK weighting.
My property remained occupied, although i'm expecting a few small expenses to come through over the next couple of months. I've increased the value i hold my property at by around 4%, the first change in almost a year, following consistently higher local market valuations.
Cash balances increased strongly with good income, average expenses and no major investments. I'm expecting my savings rate to fall as the year goes on as i'm planning a few holidays in the coming months.
Year to date net worth growth: 31.3%
Year to date savings rate: 76%
Wednesday, 31 July 2013
Tuesday, 30 July 2013
Cash update
Back in April i provided a summary of my approach to managing cash balances. I view this very much as a continual work in progress and i'm always making small changes as competitive savings rates come and go.
I've made a number of changes in the past couple of weeks, largely in response to a couple of accounts maturing and some other rates being reduced. In summary, these have been to move cash from maturing accounts into new longer tenor fixed term accounts, increasing the average maturity profile of my cash balances.
These can be summarised below:
April 2013:
July 2013:
The net result is an increase in yield from around 2% to 2.3%, with minimal impact on the amount of cash instantly accessible. I've also given more certainty to the yield, locking in fixed rates on the assumption that the Fed, BoE and ECB are unlikely to raise interest rates for another year or so. Whilst this does introduce some opportunity cost or re-investment risk, i'm prepared to take this on to obtain a higher yield in the short term.
I've made a number of changes in the past couple of weeks, largely in response to a couple of accounts maturing and some other rates being reduced. In summary, these have been to move cash from maturing accounts into new longer tenor fixed term accounts, increasing the average maturity profile of my cash balances.
These can be summarised below:
April 2013:
| On demand | <3mths | <1yr | <2yrs | >2yrs | Total | ||
| % of cash | 49% | 19% | 3% | 23% | 6% | 100% | |
| % of assets | 18% | 7% | 1% | 8% | 2% | 36% |
July 2013:
| On demand | <3mths | <1yr | <2yrs | >2yrs | Total | ||
| % of cash | 46% | 3% | 7% | 36% | 8% | 100% | |
| % of assets | 16% | 1% | 2% | 13% | 3% | 35% |
The net result is an increase in yield from around 2% to 2.3%, with minimal impact on the amount of cash instantly accessible. I've also given more certainty to the yield, locking in fixed rates on the assumption that the Fed, BoE and ECB are unlikely to raise interest rates for another year or so. Whilst this does introduce some opportunity cost or re-investment risk, i'm prepared to take this on to obtain a higher yield in the short term.
Tuesday, 23 July 2013
Investment portfolio update
Its been a while since i presented the performance of my investment portfolio. As a quick recap, i started building the portfolio around October 2012, in an attempt to reduce my cash assets and increase my passive income. The focus has been high yield and broad diversification.
Here's the current position:
Here's the current position:
| Description |
Total
Return
|
CAGR | % Portfolio | |
| UK listed ETFs | ||||
| SEDY | EM High dividend | 2.7% | 3.4% | 9.1% |
| IASP | Asia Pacific property | 6.1% | 8.1% | 9.4% |
| SHYU | High yield corporate debt | 10.4% | 13.8% | 9.9% |
| IUKD | UK High dividend | 24.9% | 37.0% | 11.0% |
| IDVY | Eurozone High dividend | 16.0% | 26.3% | 6.1% |
| IAPD | Asia Pacific High dividend | 1.3% | 10.7% | 9.0% |
| VHYL | Global High Dividend | 6.8% | 106.8% | 8.7% |
| INFR | Global Infrastructure | 0.6% | 2.0% | 8.2% |
| HK listed ETFs | ||||
| 2800 | HK Index tracker | -0.7% | -2.2% | 5.9% |
| 3049 | CSI 300 China tracker | -9.5% | -26.7% | 2.5% |
| Other Equities | ||||
| AV.B | Aviva Pref Shares | -6.8% | -22.1% | 8.3% |
| AAPL | Apple | -0.9% | -2.3% | 2.5% |
| Metals | ||||
| Gold | -22.9% | -29.3% | 7.3% | |
| Silver | -26.8% | -64.4% | 2.1% |
Overall, the core high yield ETFs have performed well, in particular the UK & Eurozone ETFs. Gold and Silver have been a bit of a disaster but in some respects they were bought more as a hedge to the equities and i don't intend to sell.
I've roughly estimated the portfolio to be yielding around 4% in dividends, which is a lot more than i can currently earn on cash. I added a few new ETFs during the June downturn (including VHYL) and the portfolio has recovered well so far in July.
I'm not looking to aggressively grow the portfolio at this stage, but will keep looking out for bargains and buying opportunities.
Friday, 12 July 2013
2013 objectives: Mid year review
Back in January i posted my financial and non financial goals for the year. I thought now would be a good time to see how i'm doing, six months on:
Financial goals:
1) Reduce cash balances towards a medium term target of 20% of total assets.
This hasn't gone too well, with cash balances actually rising to 36% following a couple of large one-offs. It isn't all that bad though, i've been adding regularly to my investment portfolio which has kept cash below 40%. As i'm averaging just over 2% income on my cash so there's no urgent need to decrease this. I'll just carry on investing as & when opportunities arise.
2) Maintain investment discipline.
Apart from one hiccup where i lost money on a more speculative preference share investment (getting greedy with yield) this has gone reasonably well. Whilst gold, silver and a couple of ETFs are under water, overall the portfolio meets my goals of broad diversification and high yield. I am also seeing market dips as buying opportunities rather than panicking like i may have done in the past.
3) Achieving a high savings rate.
This is going very well, partly thanks to the one-offs earned early in the year. My current year to date savings rate is around 75% and whilst this will decline through the second half of the year, it should still end up in the high 60s. Stripping out the one-offs my savings rate would be around the target 60%. I've enjoyed a few treats this year, but will be comfortable spending a bit more in the second half, given i'm well on track with this goal.
Non-financial goals:
1) Improve fitness
Well logging my diet & fitness failed terribly, but i have been getting to the gym around 2-3 times a week at least. I'll try to pick this up a bit for the rest of the year.
2) Improve work/life balance
Workload has been bad this year, worse than last year. Whilst it has been quite stressful i've managed to keep weekends free and have maintained a decent social life. I think i can do better switching off out of work and will make a bigger effort to do this. I've also booked some time off for holidays in the second half of the year.
Overall, financially it has been a great start to the year, but there are definitely points here that i can improve on. Reading these objectives again has certainly helped to refocus for the rest of the year.
Financial goals:
1) Reduce cash balances towards a medium term target of 20% of total assets.
This hasn't gone too well, with cash balances actually rising to 36% following a couple of large one-offs. It isn't all that bad though, i've been adding regularly to my investment portfolio which has kept cash below 40%. As i'm averaging just over 2% income on my cash so there's no urgent need to decrease this. I'll just carry on investing as & when opportunities arise.
2) Maintain investment discipline.
Apart from one hiccup where i lost money on a more speculative preference share investment (getting greedy with yield) this has gone reasonably well. Whilst gold, silver and a couple of ETFs are under water, overall the portfolio meets my goals of broad diversification and high yield. I am also seeing market dips as buying opportunities rather than panicking like i may have done in the past.
3) Achieving a high savings rate.
This is going very well, partly thanks to the one-offs earned early in the year. My current year to date savings rate is around 75% and whilst this will decline through the second half of the year, it should still end up in the high 60s. Stripping out the one-offs my savings rate would be around the target 60%. I've enjoyed a few treats this year, but will be comfortable spending a bit more in the second half, given i'm well on track with this goal.
Non-financial goals:
1) Improve fitness
Well logging my diet & fitness failed terribly, but i have been getting to the gym around 2-3 times a week at least. I'll try to pick this up a bit for the rest of the year.
2) Improve work/life balance
Workload has been bad this year, worse than last year. Whilst it has been quite stressful i've managed to keep weekends free and have maintained a decent social life. I think i can do better switching off out of work and will make a bigger effort to do this. I've also booked some time off for holidays in the second half of the year.
Overall, financially it has been a great start to the year, but there are definitely points here that i can improve on. Reading these objectives again has certainly helped to refocus for the rest of the year.
Monday, 8 July 2013
Property value update
I've recently noticed the valuation of my rental property has increased a lot since the last time i looked.
As a recap, i periodically update the value of my rental property in my net worth calculation, based on a conservative interpretation of a local valuations / sales. I've decided to include this at market value in my net worth and forecasting by nature of the property serving more as an income generating investment rather than a primary residence.
The last update was in August 2012, and since then, the market value seems to have increased between 5-10%.
As such, i'll be increasing the value in my records by 4% this month. I've chosen to use a slightly lagging value with infrequent updates as (a) i prefer not to make lots of up & down changes and instead want to slowly reflect a longer term trend, and (b) i have no immediate plans to sell so the exact monthly value is less of a concern.
As a recap, i periodically update the value of my rental property in my net worth calculation, based on a conservative interpretation of a local valuations / sales. I've decided to include this at market value in my net worth and forecasting by nature of the property serving more as an income generating investment rather than a primary residence.
The last update was in August 2012, and since then, the market value seems to have increased between 5-10%.
As such, i'll be increasing the value in my records by 4% this month. I've chosen to use a slightly lagging value with infrequent updates as (a) i prefer not to make lots of up & down changes and instead want to slowly reflect a longer term trend, and (b) i have no immediate plans to sell so the exact monthly value is less of a concern.
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