January saw my net worth increase by 1.6% with high income, lower than average expenses and a strong month in the markets.
The value of my investment portfolio increased around 3% as equities continued to rally. I've sold all my remaining fixed income ETFs given the increased expectations of USD rate rises through 2017, and continued devaluation of RMB (the RMB bond ETF was closed down as it seemed everyone was heading for the door!).
Pension unit prices were also up over 3% in line with strong equities performance.
Property income was a mixed picture. One paid on time, but some large maintenance costs are expected over the month. One was late, but are making an effort to catch up - we're staying on a short term rolling contract for now at the mutual agreement of the tenant and landlord. The recent purchase remains vacant but had a few viewings. If the market looks quiet i may consider lowering the rent to get it occupied as soon as possible.
Cash balances were lower with a lumpy tax bill more than offsetting high income, lower expenses and an investment disposal. The tax had been fully accrued for so no impact to net worth.
Year to date net worth growth: 1.6%
Year to date savings rate: 62%
Monday, 30 January 2017
2017 financial plan
After a very successful 2016 for my finances i'll be hoping for more of the same in 2017. In preparing a simple financial plan for 2017 my working assumption for most items will be to expect income and expenses to be broadly consistent with last year.
Regarding income, overall this is expected to be quite flat. Employment income will likely be a little lower, but hopefully property income will hopefully be higher if i can rent out my recent property investment. The big unknown will be if there are further foreign exchange movements, which were a big factor last year, but my working assumption is flat fx rates against current levels.
In expenses, tax and rent are expected to be similar, although my own rental agreement is up for renewal in the summer. Investment property expenses will likely be higher but should hopefully be covered by income. I've put some buffer in general day to day expenses as i've had my eye on a few luxuries for a while now. Travel costs are also a bit of an unknown for now, probably not as high as last year but i've budgeted for a similar number of trips.
Overall, if this goes to plan it should be another year with a savings ratio in the mid 60%s range and net worth growth of 18%. All investment, pension and property values are assumed to be flat, and will no doubt bring some volatility given all the political and market issues unfolding around the world...
Regarding income, overall this is expected to be quite flat. Employment income will likely be a little lower, but hopefully property income will hopefully be higher if i can rent out my recent property investment. The big unknown will be if there are further foreign exchange movements, which were a big factor last year, but my working assumption is flat fx rates against current levels.
In expenses, tax and rent are expected to be similar, although my own rental agreement is up for renewal in the summer. Investment property expenses will likely be higher but should hopefully be covered by income. I've put some buffer in general day to day expenses as i've had my eye on a few luxuries for a while now. Travel costs are also a bit of an unknown for now, probably not as high as last year but i've budgeted for a similar number of trips.
Overall, if this goes to plan it should be another year with a savings ratio in the mid 60%s range and net worth growth of 18%. All investment, pension and property values are assumed to be flat, and will no doubt bring some volatility given all the political and market issues unfolding around the world...
Wednesday, 4 January 2017
2016 Annual Review
2016 was an excellent year for my finances and exceeded expectations. These are a few of the key points:
Net worth
Net worth increased by 24%, compared to 16% plan and 18% in the prior year. This was driven by a combination of (a) higher than expected income, (b) strong equities performance supporting the investment portfolio and pension valuations, and (c) the impact of a large movement in foreign exchange rates post brexit increasing the value of my hkd assets in gbp terms.
Savings rate
Savings rate (net income after all expenses divided by gross income) was a very high 65%. This was in line with plan, but within this number both income and expenses were higher than expected, but in this constant proportion. My savings rate has been in the 60-70% range for five years in a row (since detailed records commenced), and although expenses have been increasing during this period, it has always been proportionate to increases in income. Whilst this is clearly a high savings percentage, it does not feel like i've been particularly frugal and expenses reached a record high this year.
Income
Income reached a record high, driven largely by higher than expected employment income, of which a growing portion is variable and may not all recur. Aside from employment income, the passive income from my assets (property, cash savings and dividends on investments) continued to rise as my net worth and assets increased. Throughout the year i also crystallised some foreign exchange gains and realised some gains on the disposal of non core parts of my investment portfolio, taking the opportunity to simplify my range of ETFs as many markets hit long term highs.
Expenses
Expenses also reached a record high. Roughly half of the increase was unavoidable - home rental and taxation related, the other half was more discretionary. In particular travel costs were a lot higher than previous years with around 7 separate trips enjoyed during the year. Property investment costs and bills were also higher than expected, including some costs associated with acquiring a new rental property towards the end of the year. General living expenses were also slightly over plan but with nothing significant driving the increase.
Overall there are far more positives than negatives here, along with a few one off factors i don't expect to recur consistently in the years to come. I will dig into expenses a little further to see if there are opportunities to reduce, or at least stabilise some of the increases, but overall i don't see much cause for concern. Income is less predictable so i can only hope for the best and keep maximising the parts i can control.
A 2017 plan will follow shortly.
Net worth
Net worth increased by 24%, compared to 16% plan and 18% in the prior year. This was driven by a combination of (a) higher than expected income, (b) strong equities performance supporting the investment portfolio and pension valuations, and (c) the impact of a large movement in foreign exchange rates post brexit increasing the value of my hkd assets in gbp terms.
Savings rate
Savings rate (net income after all expenses divided by gross income) was a very high 65%. This was in line with plan, but within this number both income and expenses were higher than expected, but in this constant proportion. My savings rate has been in the 60-70% range for five years in a row (since detailed records commenced), and although expenses have been increasing during this period, it has always been proportionate to increases in income. Whilst this is clearly a high savings percentage, it does not feel like i've been particularly frugal and expenses reached a record high this year.
Income
Income reached a record high, driven largely by higher than expected employment income, of which a growing portion is variable and may not all recur. Aside from employment income, the passive income from my assets (property, cash savings and dividends on investments) continued to rise as my net worth and assets increased. Throughout the year i also crystallised some foreign exchange gains and realised some gains on the disposal of non core parts of my investment portfolio, taking the opportunity to simplify my range of ETFs as many markets hit long term highs.
Expenses
Expenses also reached a record high. Roughly half of the increase was unavoidable - home rental and taxation related, the other half was more discretionary. In particular travel costs were a lot higher than previous years with around 7 separate trips enjoyed during the year. Property investment costs and bills were also higher than expected, including some costs associated with acquiring a new rental property towards the end of the year. General living expenses were also slightly over plan but with nothing significant driving the increase.
Overall there are far more positives than negatives here, along with a few one off factors i don't expect to recur consistently in the years to come. I will dig into expenses a little further to see if there are opportunities to reduce, or at least stabilise some of the increases, but overall i don't see much cause for concern. Income is less predictable so i can only hope for the best and keep maximising the parts i can control.
A 2017 plan will follow shortly.
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