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.
Saturday, 31 May 2014
May 2014 Review
May saw my net worth increase by 1.1%, with gains in investments & pension funds, along with moderate savings.
The value of my investment portfolio increased by around 1.5%. Purchases were limited to standing monthly purchases of the HK & China indices and an RMB bond ETF (using up my spare RMB cash), with quite a few dividends in the month.
My pension fund unit values increased by around 2%, with gains across most equities markets.
Property rental income was paid in full & on time with no additional expenses.
Cash balances were flat with good income but higher than expected expenses, with a number of social events in the month. Expenses are running well above plan this year, which is becoming a bit of a concern, albeit more than offset by higher than planned income. The was just one medium sized investment in the month.
Year to date net worth growth: 17%
Year to date savings rate: 73%
The value of my investment portfolio increased by around 1.5%. Purchases were limited to standing monthly purchases of the HK & China indices and an RMB bond ETF (using up my spare RMB cash), with quite a few dividends in the month.
My pension fund unit values increased by around 2%, with gains across most equities markets.
Property rental income was paid in full & on time with no additional expenses.
Cash balances were flat with good income but higher than expected expenses, with a number of social events in the month. Expenses are running well above plan this year, which is becoming a bit of a concern, albeit more than offset by higher than planned income. The was just one medium sized investment in the month.
Year to date net worth growth: 17%
Year to date savings rate: 73%
Tuesday, 29 April 2014
April 2014 Review
April saw my net worth increase by 3.3%, with positive movements in all major asset categories.
The value of my investment portfolio increased by around 0.7%. Purchases were limited to standing monthly purchases of the HK & China indices, with no dividends in the month. I am still in two minds about whether to continue increasing my exposure to China but the monthly investment is currently very small.
My pension fund unit values increased by around 2%, with gains mainly in western equities.
Property rental income was paid in full & on time with no additional expenses. I increased the recorded value of my property by another 5% following strong market increases & local sales. It is still held at around 10% below the implied market value, reflecting my skepticism around the sustainability of current valuations.
Cash balances increased with good income & average expenses. The month's expenses included holiday expenditure that had been budgeted for.
Year to date net worth growth: 15.7%
Year to date savings rate: 76%
The value of my investment portfolio increased by around 0.7%. Purchases were limited to standing monthly purchases of the HK & China indices, with no dividends in the month. I am still in two minds about whether to continue increasing my exposure to China but the monthly investment is currently very small.
My pension fund unit values increased by around 2%, with gains mainly in western equities.
Property rental income was paid in full & on time with no additional expenses. I increased the recorded value of my property by another 5% following strong market increases & local sales. It is still held at around 10% below the implied market value, reflecting my skepticism around the sustainability of current valuations.
Cash balances increased with good income & average expenses. The month's expenses included holiday expenditure that had been budgeted for.
Year to date net worth growth: 15.7%
Year to date savings rate: 76%
Wednesday, 2 April 2014
Property valuation
I was shocked again today to see how quickly some UK property prices are rising, particularly around the London area.
Whilst its only around 3 months since i last reviewed and increased the value i record my rental property in my personal finances, checking local valuations again today showed another material increase. The valuations appear to be genuine too, with a neighbouring (and almost identical) property just being sold for around 18% above the value i was holding mine at.
I have therefore decided to add an extra 5% to my property value in my assets and net worth calculations. While this still keeps it around 10% below 'the market', it does reflect the recent increases and allows a margin of error for some fluctuations going forward.
I am also keeping a close eye on potential capital gains tax changes which may determine whether i continue to hold or sell this property. Whilst it is tempting to sell now and realise a large tax free gain, my cash balances are already too large a proportion of total assets and the rental yield is double what i can earn on cash.
Whilst its only around 3 months since i last reviewed and increased the value i record my rental property in my personal finances, checking local valuations again today showed another material increase. The valuations appear to be genuine too, with a neighbouring (and almost identical) property just being sold for around 18% above the value i was holding mine at.
I have therefore decided to add an extra 5% to my property value in my assets and net worth calculations. While this still keeps it around 10% below 'the market', it does reflect the recent increases and allows a margin of error for some fluctuations going forward.
I am also keeping a close eye on potential capital gains tax changes which may determine whether i continue to hold or sell this property. Whilst it is tempting to sell now and realise a large tax free gain, my cash balances are already too large a proportion of total assets and the rental yield is double what i can earn on cash.
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