June saw my net worth increase by 0.1%, with gains in investments, pension funds & savings largely offset by an adverse fx movement following the periodical revaluation of my foreign currency assets.
In order to minimise volatility & keep my spreadsheets simple i tend to only revalue my foreign currency assets when fx rates move significantly. My largest exposure is GBP/HKD, and with HKD having gradually weakened over the past 6 months with a recent acceleration in this trend, i've recognised the full movement this month. The impact was a reduction in GBP net worth of just under 1%, which offset most of the underlying gains across asset classes for the month.
The value of my investment portfolio increased by around 1% before the fx revaluation, but fell after factoring this in. Dividends were very high, with a number of ETFs paying large dividends in the same month. There were no major purchases other than the usual standing monthly investments.
Likewise, my pension fund unit values increased by around 1% before the fx revaluation, but fell after factoring this in.
Property rental income was paid in full & on time with no additional expenses. I'm in the process of renewing the tenancy, although this is unlikely to see an increase in rental income this time.
Cash balances were slightly higher with good income but some travel expenses in the month reducing my typical savings rate.
Year to date net worth growth: 17.1%
Year to date savings rate: 70%
Sunday 29 June 2014
Property: to buy, to sell or to hold...
I've been mulling over a number of decisions about property investments recently.
Firstly, the tenancy on my existing rental property is up for renewal so i took the opportunity to check the current sale value, which was materially higher than the value i'm currently holding the property at in my accounts. I was very tempted to sell & lock in the capital gain, especially given the steep rise in local valuations and the potential for these to fall back. However, i decided to hold on to it and continue to rent it out for another year, primarily as there are no obvious alternatives for investing the cash this would release at a comparable yield. I'm already struggling to manage down my excess cash balances so don't want to compound the issue further.
In addition to this i'm also looking at additional smaller property investments in a different location that has not seen similar price rises in recent years, and as a result offers more attractive yields. My current cash holdings are around 37% and whilst the overall cash balance yields just over 2%, incremental cash is earning closer to 1%. I'd therefore like to start managing this balance down, and the property investments i'm looking at could yield around 5%.
Given the high yield and lower valuations, i did also consider selling my existing property and buying on a much larger scale in the new location. However, for now this isn't attractive as (a) there's a chance i may return to the existing property location in the future so benefit from hedging against price movements there, and (b) i don't have experience of the market in the new location so will start small and see how it goes.
Firstly, the tenancy on my existing rental property is up for renewal so i took the opportunity to check the current sale value, which was materially higher than the value i'm currently holding the property at in my accounts. I was very tempted to sell & lock in the capital gain, especially given the steep rise in local valuations and the potential for these to fall back. However, i decided to hold on to it and continue to rent it out for another year, primarily as there are no obvious alternatives for investing the cash this would release at a comparable yield. I'm already struggling to manage down my excess cash balances so don't want to compound the issue further.
In addition to this i'm also looking at additional smaller property investments in a different location that has not seen similar price rises in recent years, and as a result offers more attractive yields. My current cash holdings are around 37% and whilst the overall cash balance yields just over 2%, incremental cash is earning closer to 1%. I'd therefore like to start managing this balance down, and the property investments i'm looking at could yield around 5%.
Given the high yield and lower valuations, i did also consider selling my existing property and buying on a much larger scale in the new location. However, for now this isn't attractive as (a) there's a chance i may return to the existing property location in the future so benefit from hedging against price movements there, and (b) i don't have experience of the market in the new location so will start small and see how it goes.
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