2014 Annual Review

2014 was another great year for my finances. Here's a more detailed review of the year:

Net worth:
Net worth grew by 28%, well ahead of the 17% i had planned.  The main reasons for the higher growth were strong performance across all asset categories, along with higher than expected income. Within the year, each individual month also resulted in positive net worth growth.  FX movements were fairly neutral, worsening during the first half of the year but then improving rapidly towards the end of the year.

Savings rate:
This was 64% for the full year (calculated by residual savings after all expenses and tax, divided by gross income).  The was almost exactly in line with plan (63%), however given income was higher, this demonstrates that expenses were also higher than expected.

Income:
Income was well ahead of plan, mainly through higher employment income.  Interest on cash and dividends from investments were also higher, as i continued to grow my asset base and invest in higher yielding products.

Expenses:
Expenses were around 10% ahead of plan, mainly due to slightly higher travel costs and a few personal treats.  I made a conscious decision to improve my quality of life in a few areas (in particular travel), given continually higher income and an already very healthy savings rate.  I expect this to continue at a similar level going forward.

Property:
The value of my rental property continued to increase materially (up around 15% in 2014) and remained fully occupied for the full year.  In terms of income & capital growth, my property has returned well over 15% a year for the last 4 years, and continues to be my most successful asset category.  I am considering additional property investments for 2015.

Investment portfolio:
The size of my portfolio grew by around 50% with regular investments throughout the year, mainly adding to existing ETFs. The annual return (capital plus income) was roughly 9%, a lot better than the prior year, with particular strength in US, Europe & China equities, partly offset by weakness in emerging markets.

Pension funds:
In additional to regular monthly contributions, unit values increased by around 8.5% during the year, driven by increases in global equities markets.

Cash:
Despite a number of investments during the year, cash continued to grow and remains above my desired asset allocation.  This is mainly a result of strong income and a high savings rate.  I've been pushing the maturity profile out a bit further to boost the average cash yield to over 2.5%, but still keeping a large amount of cash immediately available for investment opportunities.

So in conclusion, net worth, savings and all asset categories exceeded expectations for the year, making it a very successful year.  I'll post separately on the outlook for 2015.