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.
Saturday, 3 January 2015
Tuesday, 30 December 2014
December 2014 Review
December saw my net worth increase by 1%, mainly a result of gains in equities, pension funds, and foreign exchange movements during the month.
The value of my investment portfolio increased by around 1% with sharp falls in early December more than offset by increases towards the end of the month. There were also a number of larger dividends earned during the month and a large capital gain was realised. I've done a separate post summarising December's purchases & sales.
I updated the fx rates used to assess net worth, following a sustained strengthening of HKD/USD against GBP.
My pension fund unit values also increased around 1% despite weakness in early December
Property rental income was paid in full & on time.
Cash balances were higher, with investment sales exceeding purchases. Savings were also reasonable, despite some travel & Christmas related expenses.
Year to date net worth growth: 28%
Year to date savings rate: 64%
I'll follow this with a 2014 full year review post, and a separate look ahead to 2015.
The value of my investment portfolio increased by around 1% with sharp falls in early December more than offset by increases towards the end of the month. There were also a number of larger dividends earned during the month and a large capital gain was realised. I've done a separate post summarising December's purchases & sales.
I updated the fx rates used to assess net worth, following a sustained strengthening of HKD/USD against GBP.
My pension fund unit values also increased around 1% despite weakness in early December
Property rental income was paid in full & on time.
Cash balances were higher, with investment sales exceeding purchases. Savings were also reasonable, despite some travel & Christmas related expenses.
Year to date net worth growth: 28%
Year to date savings rate: 64%
I'll follow this with a 2014 full year review post, and a separate look ahead to 2015.
December 2014 Investment update
During December i made a few purchases and one notable sale.
Purchases:
Continuing my recent trend of adding to existing ETF positions, i purchased additional units of IAPD.L (Asia Pacific high dividend) and VUKE.L (UK FTSE100 tracker).
The increase in IAPD was mainly to keep balance to the overall geographical mix of my portfolio, following a number of recent purchases of UK, Europe & Emerging Markets. The VUKE purchase was a little more opportunistic, following a fairly sharp fall in the UK index during early December. Both have been delivering solid reliable dividends over 4%.
The unit prices for these purchases were around GBP19.38 for IAPD, and GBP27.84 for VUKE.
Sales:
During the month i sold my entire holding of the 3049.HK (the CSI300 China index tracker). Following a very sharp rise in China equities over the last couple of months, i decided to carry out a long overdue rebalancing to reduce my overall exposure to China / RMB.
I currently have a reasonable holding of the HK Index tracker, along with a large amount of China government bonds. In addition, my HK pension fund is heavily weighted towards HK equities, which in turn are made up of both a large amount of China H shares, and companies heavily dependant on the China economy.
In selling my direct exposure to China equities, it reduces my the proportion of my investment portfolio allocated to HK / China to around 25%, making the overall portfolio roughly 50% USA, UK & Developed Europe, 25% HK & China, and 25% other Asia Pacific & emerging markets.
I sold for around HKD7.08 per share, realising around a 33% capital gain, most of which arose over the last couple of months.
Purchases:
Continuing my recent trend of adding to existing ETF positions, i purchased additional units of IAPD.L (Asia Pacific high dividend) and VUKE.L (UK FTSE100 tracker).
The increase in IAPD was mainly to keep balance to the overall geographical mix of my portfolio, following a number of recent purchases of UK, Europe & Emerging Markets. The VUKE purchase was a little more opportunistic, following a fairly sharp fall in the UK index during early December. Both have been delivering solid reliable dividends over 4%.
The unit prices for these purchases were around GBP19.38 for IAPD, and GBP27.84 for VUKE.
Sales:
During the month i sold my entire holding of the 3049.HK (the CSI300 China index tracker). Following a very sharp rise in China equities over the last couple of months, i decided to carry out a long overdue rebalancing to reduce my overall exposure to China / RMB.
I currently have a reasonable holding of the HK Index tracker, along with a large amount of China government bonds. In addition, my HK pension fund is heavily weighted towards HK equities, which in turn are made up of both a large amount of China H shares, and companies heavily dependant on the China economy.
In selling my direct exposure to China equities, it reduces my the proportion of my investment portfolio allocated to HK / China to around 25%, making the overall portfolio roughly 50% USA, UK & Developed Europe, 25% HK & China, and 25% other Asia Pacific & emerging markets.
I sold for around HKD7.08 per share, realising around a 33% capital gain, most of which arose over the last couple of months.
Monday, 1 December 2014
November 2014 Review
November saw my net worth increase by 1.6%, mainly a result of gains in equities and pension values during the month.
The value of my investment portfolio increased by around 3% with noticeable increases in China, along with recoveries in the UK & Europe indices. I added to my emerging markets exposure which is looking relatively cheaper at present.
My pension fund unit values also increased around 3% following a stronger month in equities markets.
Property rental income was paid in full & on time.
Cash balances were higher, with a good savings rate (despite planned travel) and lower underlying expenses more than offsetting the month's investment.
Year to date net worth growth: 27%
Year to date savings rate: 65%
The value of my investment portfolio increased by around 3% with noticeable increases in China, along with recoveries in the UK & Europe indices. I added to my emerging markets exposure which is looking relatively cheaper at present.
My pension fund unit values also increased around 3% following a stronger month in equities markets.
Property rental income was paid in full & on time.
Cash balances were higher, with a good savings rate (despite planned travel) and lower underlying expenses more than offsetting the month's investment.
Year to date net worth growth: 27%
Year to date savings rate: 65%
SEDY.L Purchased
Following my recent trend of re-investing in existing portfolio components, i added to my holding of the iShares emerging markets high dividend ETF earlier in November.
This ETF has been struggling with falls in some emerging markets along with adverse fx movements impacting some of the components. That being said, it has continued to be a solid dividend payer, consistently yielding well over 4%.
I'm trying to avoid adding new ETFs to my portfolio at present as it is already quite large and well diversified, so instead i'm looking to re-invest to (a) maintain a reasonably well balanced portfolio in terms of geographical / industry mix; but also (b) to opportunistically take advantage of market pull backs as buying opportunities, as was the case last month with investments in UK & Europe ETFs.
The unit price for this purchase was around GBP15.45, making it the cheapest tranche of this holding to date.
This ETF has been struggling with falls in some emerging markets along with adverse fx movements impacting some of the components. That being said, it has continued to be a solid dividend payer, consistently yielding well over 4%.
I'm trying to avoid adding new ETFs to my portfolio at present as it is already quite large and well diversified, so instead i'm looking to re-invest to (a) maintain a reasonably well balanced portfolio in terms of geographical / industry mix; but also (b) to opportunistically take advantage of market pull backs as buying opportunities, as was the case last month with investments in UK & Europe ETFs.
The unit price for this purchase was around GBP15.45, making it the cheapest tranche of this holding to date.
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