Finances

Financial independence update: May 2020

The sun is out, followed very closely by what feels like the near constant tune of the ice cream van, aaand lockdown is starting to relax.

File:Ice cream van, Cambridge, July 2010 (02).JPG - Wikimedia Commons
Consumer confidence may be sinking, but does that mean saving is on the rise?

With Firelite Junior poised to return to nursery on Monday, change is certainly afoot. I’ve mainly kept out of any debate, but how the ensuing months will look like for the economy is certainly something to muse about. Will there be a second wave? Are we entering a depression? Will everyone suddenly go on holiday lured by the promise of free flights? I don’t know the answers but I’m bracing myself for the ride!

Main investments

With my index funds rallying at -0.26% toward the end of May (was -7.03% a month ago!), you’d think my investments were in a parallel non-Corona-riddled universe. Don’t get me wrong, I’m not complaining At All, but there are clearly economic consequences to lockdown that aren’t really showing in the books yet. I added £500 into the Vanguard FTSE Europe ex-UK fund earlier in the month as there’d been quite a drop, which didn’t hurt in closing that negative rate of return.

My main goal is still saving for that buy-to-let deposit. This month, I think I’ve become a little clearer in my property goal, which is to buy a city flat costing around £100-£125k with a 25% deposit. Which means I’ve pretty much met my goal, yay! I am researching morgage providers now. (A separate post on my property adventures to follow soon, but if you’re interested, see here and here for my main reason for choosing property as one strand of my FI strategy.)

If you didn’t catch my last blog post, one reason I’m upping my game on educating myself in property is that I’m in the midst of considering taking voluntary redundancy. The big leap. It would ‘ruin’ my FI plans though if I did though! I plan to start viewings soon, but may yet still hold out as a big fall in the property market may be coming after an initial surge in interest. Who knows? I just wish I had more time to research.

Savings rate

My savings rate this month has been 82%! (That’s 87% of take-home pay.) Woah. Lockdown makes saving a breeze! Any other time, I’d be in disbelief, as it’s not like I’ve had to try very hard! It was my dad’s 80th birthday, so his present was probably my biggest single spend. With Junior re-starting nursery and lockdown easing, I expect I’ll never beat this SR!

Full net worth, including pension here

So, this brings my average SR this year to 71.8% so far. My new year goal had been to improve on my 54% average last year, ‘clear by a few percentage points would be good‘, I paraphrase. So, the good times ain’t a-rolling for buyer confidence but on the flipside, they’ve been a-rolling for savings!

And if you think my SR is impressive, the other half told me the other day he’s spent about 30 quid this month besides bill-type payments and his joint account contribution. Jeez! But it does go to show also that so much of our spending in pre-CV19 times was on experiences.

Mini-share portfolio

As I wasn’t buying much, I decided to treat myself (whoo-hoo) by breaking the rule I made last month on only investing £100 per month in my Freetrade account, lol! Unprecedented time an’ all. I invested an extra £100, mainly in stuff no one wanted right now and had experienced big drops, and to try my hand at a US fractional share that Freetrade is trialling now.

Yes, I’m the proud owner of 2.7% of a single Alphabet (Google) share! In other news, I got a 2p dividend from my free ETF share.

I hope you conclude, dear Reader, that I still acted with restraint to only invest £200 when there are so many apparent bargains about! Of course, this is just for fun and not recommended as part of a FI strategy. The best climber so far has been Cineworld. Is it a sign of things to come? (Reopenings, that is.)

Savings accounts

Besides investments, all banks are decreasing their savings interest rates. I must admit I was (irrationally) annoyed by Sainsbury’s who offered 1.06% for balances over £1k on their defined access saver, and are now reducing it to a measly 0.6%. And that’s allowing only 3 withdrawals a year! Well, I closed the account! It was part of my emergency fund, but will go towards the BTL (or stamp duty! Double ouch?). For the first time in my life, premium bonds are looking very attractive!

So, overall, a pleasing month for me financially, with my stash rocketing up £3.5k! Not bad for a basic rate tax payer, eh?

But obviously, the elephant in the room is whether I’ll take the redundancy offer or a year out unpaid – both options on the table. Well, the elephant can stay put in the room, and so can the table, as I’m determined to enjoy a sunny weekend! We are making a new ritual of walking over half an hour in the sun to sit on a wall to share a large bag of restaurant-quality chips and some Tesco lunch deals. Just don’t get caught out like I did last weekend by needing the loo!! What are your new rituals?

Thanks for reading and hope your May has been a good one! See you in the ‘new normal’.

6 thoughts on “Financial independence update: May 2020”

  1. Also just started with my first buy to let investment back in the UK. I think with the salary ranges in the UK it is harder to reach FIRE than it is in say the USA but buying good deals on the buy to let scene seem to be a good way to go about it!

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    1. Hi Turtle, great, have you already bought? Would be fantastic if you had any tips to share from your experience! Did you go with a mortgage advisor?

      Interesting observation re FIRE in UK vs US. Wasn’t sure what you meant by salary ranges. Guess in the US, you have some earning a tonne partly as a lower tax society?

      Interesting quotes on your blog! Thanks for visiting. 🙂

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      1. Hi yes I bought already. It was a repo from the bank so I got it for about 60% of its value. It was also a bit of a mess so had to do some work inside it. When i got it revalued the valuation had gone up by double the cost of the repair works. Yes went with a mortgage advisor but only because my situation is unique – ie dont pay income taxes in the UK. You might be fine with a normal high street lender. I would recommend looking for distressed properties 🙂

        I meant in the USA the salary is usually higher for the same job. My position pays double in USA than what it was in UK for example. Cost of living is similar to the area as well. Taxes are generally less but you have to also pay health insurance so it balances out mostly.

        Thanks for your words

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  2. 87% – what a ridiculously epic savings rate, haha! Well done! 🙂

    I know exactly how you feel about topping up your Freetrade ‘fun’ account – I’ve just gotten paid but have restrained myself by investing into my ISA as normal. Next week, I’ll throw a bit at the fun account and will pick up a few more fractionals! I too have a bit of Google, as well as all the other big tech companies now.

    All the best with pondering over what decision to go for regarding work.

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    1. Thanks, Weenie, the savings rate is somewhat surreal given I’ve not really taken any special action not to spend. Lockdown has been enough change though to get me thinking about my habits, so maybe that’s had an effect too. With Firelite Jr back at nursery, I guess next month’s SR will be much lower… but maybe my wellbeing improved, lol.

      I haven’t read enough about what’s going on with the economy stateside to invest much in the fractionals. To take an example, I noticed you invested in McDonalds. I’m surprised the share price has returned to its previous levels. It goes to show how much confidence there is over there… I think? Global Clean Energy ETF (I think it’s called) is doing so well! I wish I’d bought some but just still got the 1 share!

      Liked by 1 person

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