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.

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 80^th 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!

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’.