Well, i’m a bit late but I thought it’s about time I reflected back on my achievements (or lack of) over the last 12 months, particularly in the financial sense.
Good Bye Mortgage
By diligently following the mortgage over payment rules I’ve managed to pay off a whopping 22% of the total outstanding balance from the mortgage(s) on the home we live in. Of course I still have plenty of other mortgage debts to my name (3 x buy to lets) however I’m not overpaying them as doing so would expose me to an income tax liability.
Hello Stock Market
The iShares FTSE 100 (ISF) ETF returned +19% during 2013. Over the same time period I’ve managed to cajole my stocks and shares ISA to return +19% too. While it’s a bit disappointing not to outperform the benchmark, particularly with all of the hard work put in, however I’ve had a lot of fun trying.
Looking at my portfolio now I need to further diversify my holdings. Too high a proportion of the single name holdings are in the utilities and oil/gas sectors and overall I am too dependent on UK markets. While this has worked pretty well for me in 2013 I’ll be looking to add more international diversification in 2014.
Goodbye Cash
With interest rates remaining so low and available returns seemingly continuing to fall, I’ve pretty much stopped increasing the cash holding portion of the portfolio. Instead, any surplus income received each month is either reinvested in equities or used to pay down the mortgage debt on our residential home.
Same Old Same Old
I’ve survived another year of rat race.
Being a prudent sole I never take my job and/or wage for granted. Once you’ve worked in Finance for a few years you know how quickly it can all come to an end, often without any warning. As a young lad I never yearned for a career in finance so I’m relatively sanguine about whatever may happen to said career n the future.
I’ve seen several colleagues and friends have their comfortable jobs whipped out from under them at no notice. Going from financial hero to zero overnight typically tends to be the making or breaking of them, rarely anything in between. I’d like to think it would do the former to me.
This year I’ve witnessed a handful of colleagues get called into that fateful meeting that they didn’t have in the diary, never to return to their desks again. I always half expect it might be my turn next. All the more reason to grow the money tree.
Net Wealth
It’s increased, by a reasonable chunk. I’ve diligently been following the first law of personal finance all year.
Costs. Our household costs have been kept reasonably low as usual and there’s been no major purchases in the year. Inflation has obviously eaten away at our household expenditure throughout the year but thankfully we’ve not noticed it too much apart from the seemingly relentless increase in our rail season tickets.
We’re still very proud of the fact that we have by far the worst/cheapest/scruffiest car in the train station car park each morning. Nestled in among the BMWs and Range Rovers that dominate the car park sits our little [not so] hot hatch from the 1999 vintage. Despite a few odd noises and having to de-ice the inside of the windscreen on frosty mornings (!), she’s made it through another year without any repairs required. With the third party insurance (third party only….no point in fire and theft cover!) renewal coming in at just £126 this year it continues to provide excellent value.
Income. Overall income has remained relatively static. With no salary increases in the household this year we’ve had to rely on our investments to increase the household income. With all dividends being re-invested and more capital being added to the equity portfolio throughout the year, the dividend income was higher than ever before in 2013.
Thankfully we’ve managed to up the rent (in line with inflation) on two of the rental properties and the mortgages (2 trackers, 1 fixed) have remained constant, increasing the net income the properties produce. While the media keep telling us property prices are still rising I don’t really care – we’ve managed to reduce our LTVs to very comfortable levels (51%, 62% and 68% based on very conservative valuations) and are in the buy to let market for the long term income potential.
Investment income from all sources has been reinvested and we’ve saved/invested more from our salaries than ever before this year. Both the major asset classes in our portfolio (property and equities) have performed well for us in both increased income and capital growth.
All in all then it’s been a good year!
All that remains is to assess how we can keep the momentum going and improve the performance again this year….
Have a great year everyone!