With another month and Halloween gone, has yours been more trick or treat? Life’s got slightly less busy for me than when I last posted, but not with enough headspace yet to return to blog-mode. While I have a
slight discomfort with having two adjacent monthly financial updates and no content in between, I’m just gonna have to live with it. 🙂 Time for a brew!
Work’s been crazy busy over most of the month, so finances moved to the back burner, along with most other things in life. That’s okay though in a way; the whole FI thing can become a bit obsessive, can’t it? Also, the fact I can immerse myself in work (despite also wanting to take a year out soonish) is somewhat of a comfort…. Right? Or is comfort the enemy of change? (Don’t answer that one… I know I need to think about this some more.)
This month, there have been no new investments. All I’ve done is put some money into long-term savings. Last month I’d resolved to focus on a amassing enough for a deposit for a buy-to-let within the next year or so. See here to understand what has driven me toward that direction. I’m not looking to put this growing deposit money into any investment that carries any risk, especially in the current politically volatile climate. I’ll either build my savings for a deposit within a regular bank account or put it away for 3-6 months.
Although I haven’t looked any further into property investment (I plan to read more on this in November), I did funnily enough go and help a friend (a first-time buyer) with viewing a property today. I hadn’t made the link until now; I should’ve been taking more notes! Anyway, the experience reawakened my anxieties around decision making on property buying, so I know I have to be willing to run with that but with just an investment head on. I’m going to return to those books I’d previously mentioned… and seriously try to pin a number in terms of what price of property I could afford. Definitely looking for a house aimed at families.
Meanwhile, if you hadn’t already heard, Vanguard is reducing many ongoing fees off their funds, including six of my eight holdings with them (see table below). In case you don’t know, Vanguard is one of the major players in the index tracker investment industry, and in quietly surprising news, index trackers surpassed active funds in the UK pretty recently! A major attraction of index funds are their low fees. It also takes a different philosophy of reflecting the market instead of trying to beat it (by essentially paying for ‘expert’ stock picking). While the further reduction in Vanguard’s ongoing charges is to be welcomed (as the index tracker industry continues to grow), the biggest changes are to my smaller funds so the difference for me will be very small. At least for now.
|Vanguard index fund fee reductions||Old ongoing charges figure (OCF)||New ongoing charges figure (OCF)|
|Emerging Markets Stock Index Fund||0.27%||0.23%|
|Global Small-Cap Index Fund||0.38%||0.29%|
|Japan Stock Index Fund||0.23%||0.16%|
|Pacific ex-Japan Stock Index Fund||0.23%||0.16%|
|FTSE Developed World ex-U.K. Equity Index Fund||0.15%||0.14%|
|FTSE U.K. All Share Index Unit Trust||0.08%||0.06%|
Outgoings: We’ve also booked a much needed winter holiday that’s fast becoming a Family Firelite tradition. It’s like an annual mini migration south. Since I managed to ratchet up visiting two new countries this year (a new record since having Little Firelite – reaching a total of 70 [bits of] countries now), we have settled on a bargainous all-inclusive to southern Spain just before Christmas, which we found last year was a really cheap time to go on holiday! It’s also a great way to escape winter for a bit and a break before / from the craziness of Christmas. It also forces us to get the Christmas shopping in early (theoretically omitting the stress of last minute shopping; works for me! Less for Mr Firelite). Plus there’s a Papa Noel who Little Firelite can visit that has hardly any queues and doesn’t actually charge any money – a win! Hmm, maybe this is where Santa has emigrated to since achieving FI? 🙂
Despite getting the free 30 hours per week childcare and my pay going up very slightly, I wasn’t able to keep to my ‘new target’ savings rate of over 60%… which admittedly was a tad disappointing! I started adding up the various unusual spends, such as ‘caving in’ to buying a new pushchair (that’ll carry up to 22kg, our ‘little bundle’!) to replace a just-about-functional-but-broken-in-two-places one – Mr Firelite and I disagreed on how much we valued a slightly more expensive pram for its usability and robustness, and in the end I thought it was worth the £40 difference in cost to make life easier for myself (and honestly wish I’d done it sooner!). We also had quite an expensive weekend away (as we bought a series of train tickets ‘on the day’, and for the joy of very cramped conditions for most of the journeys – whoopee).
|Cash at 2-year+ fixed rates||28200||£28200||28200|
|Tracker funds (ISA)||15000||£15000||12700|
|Bond index fund (ISA)||4000||4000||4000|
|Total FI stash (see here for pension and other assets)||94000||92500||93400|
|Savings rate (including my contribution to workplace pension)||57%||61.7%||65.8%|
In the end, I worked out that my savings rate would’ve been 68% had I not paid for the holiday, so with that, I feel pretty satisfied that my other spending hadn’t spiraled out of control to explain my 57% SR. I could’ve ‘fooled’ myself by paying the holiday off incrementally (e.g. by credit card or paying Mr Firelite back gradually), but I think overall I’m starting to favour the short, sharp shock ‘to see things for what they really are’. It’s funny that I’m thinking that a 57% savings rate is low..!
So, I’m not going to reach 100k by Christmas (one of my original aims), and my index funds aren’t doing so fantastic at the moment (1.05% return of investment), but overall I’m plodding along nicely. And I have a week away to look forward to in 6 weeks and counting! And yes, I very much enjoy the countdown, especially when work is getting me down physically or emotionally. It’s partly what makes a holiday worthwhile – the looking forward to.
I’m hoping to write again soon and definitely before the November update! How did your October go?