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:

	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.

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:

	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.

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.

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.

June 2013 Review

June saw my net worth fall by 0.6%, with a sharp drop in the value of my pensions and investments more than offsetting savings for the month.  This has been my worst month on record, and the first down month for over 4 years.

The investment portfolio was down 5% with sharp falls in the emerging markets and fixed income components in particular.  Gold & Silver continued their decline. I added positions in a global high dividend ETF and an asia pacific high dividend ETF, along with a small HK iBond subscription.

My pension fund unit values fell by over 6% with global equities falling, but emerging markets in particular.

My property remained occupied with no out of plan expenses.

Cash balances fell with the new investments. Income was strong but the savings rate was lower than average, with a couple of out of plan expenses associated with renewing my tenancy agreement.

Year to date net worth growth: 26.7%
Year to date savings rate: 77%