Stocktake: Q4 2016

Happy New Year, folks.

So the FTSE is at an all-time high… when measured in GBP, which is now worth even less than it was worth last quarter. Hold on tight, Brexiters, and let the flight begin. Let’s hope that taking back control doesn’t end in the proverbial fiery crash. Here’s the definitive analysis on the subject of whether the FTSE gains, which the Torygraph has been trumpeting about – ad nauseam over the past five seemingly endless months – are real:

Brexit Fuckwits Done It.jpg

2016 has been too depressing to think about. Though mind you, it’s still much better than 1665 when everyone caught fucking plague and died. #silverlinings

Let’s catch up on the progress with that FI project I’ve been working on.

Goal 1: 60% savings rate

The year to date average savings rate stands at 63%, mainly because of bonus salary sacrifice into pension back in Q1. The running average since 1 Jan 2015 is 61%.

4Q16 Savings Rate.png

Overall I saved c.£6k less than I had hoped to save this year, but gods know I needed those holidays this summer, and in the words of the Duke of Devonshire, “damn it, can’t a man have a biscuit!?”  Pass.

Goal 2: 10% mortgage overpayments

Abandoned.

Goal 3: Pension

The pension pot has increased by £74k this year. The increase comes from £60k new contributions and £14k investment return. Nailed it.

4Q16 Total Split.png

While my total pension savings are still lower than what they should be given my age and income (according to the ONS data somewhat crudely bastardised by yours truly), it’s significantly better now than what it was only a year ago.

The total net worth is showing some half decent growth. I’ve decided to not take into account property revaluations, so the home equity (aka “property”) piece in the below graph is a straight purchase price less outstanding mortgage. The valuation of Ho’s Keep I received this year was so out there that I (A) don’t believe it, because (B) if I did I’d have to face up to the fact that I can’t really afford my place and the correct financial decision in terms of achieving FI in the shortest time possible is to sell and start renting or buy somewhere cheaper. I have no intention of doing this, so what difference does it make what the place is worth if I’m going to continue living there?

4Q16 Total.jpg

Goal 4: Emergency Fund and Freedom Fund

Freedom Fund is getting its monthly contribution as per usual. The Emergency Fund will be raided in March for additional cash to stash into the pension, if required. It’s a pass for now, but 2017 won’t be a breeze, as whatever I take out of the Emergency Fund in Q1 I’ll have to put back there over the rest of the year.

Goal 5: Tax (added during the year)

I don’t mind paying tax if I agree with how the money is spent. Sadly, with Tories in charge and Brexit on the cards, that’s unlikely to be the case in foreseeable future. Hence a new goal: pay no more than £22k of income tax in 2016 / 2017 tax year. Based on my projection, and absent any unpleasant surprises in Q1 2017, it looks like I’m on track.

11 thoughts on “Stocktake: Q4 2016”

  1. Thanks for the FTSE in Euros and $ chart, it’s good to have the suspicion confirmed. It was better to have non-cash financial assets in the case of a brain fart of such stupendous magnitude as Brexit, but it’s best not to run away with the conclusion that I’m a fantastic investor because of the numerical GBP uplift. I do hope that the disaffected masses that voted Brexit will enjoy their higher food and fuel prices of this year, hopefully penury will be a price well worth paying to #takebackcontrol, eh?

    The Torygraph is getting tediously tiresome with Brexit triumphalism. And they have the brass neck to stick out the begging bowl against ad blocking AND paywall half their content – cheeky blighters.

    On a cheerier note, Happy New Year!

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    1. Thanks, ermine, and happy New Year to you too.
      A picture is worth a thousand words 😉 It’s ridiculous what’s happening to the sterling. The Chinese and the Americans could devalue their currencies with no issues, they’re self sufficient in all but energy, and last time I checked there was an oversupply in that particular market, so much so that even the Saudis were talking of selling family silver to pay for hospitals and such. Even the Euro could take some more battering before it becomes inconvenient. But our economy is built on a premise of a strong currency, and when it comes to things that we export – financial services, air&spacecraft, high end electronics, industrial equipment, medical equipment, pharmaceuticals, weapons – their quantity doesn’t vary in inverse proportion to price. Brexiters should have looked up demand price elasticity. Anyway, enough about this. One of my new year’s resolutions will be to stop moaning about Brexit and to just get on with it.
      Thanks for reading 🙂

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  2. The graph is great, and shows the need for diversification right there! For your tax rules, are you looking purely income tax or including national insurance?
    I’ve not seen a single government spent our taxes wisely so I also try to minimise my taxes, but that puts the challenge of being able to access them when I am eventually pull the trigger.

    Good luck for 2017, and happy new year!
    FiL

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    1. Thanks, and the same to you 🙂
      The tax number is income tax only, there’s very little I can do about the NI so I’m ignoring it for now. To be honest, I’m trying to arrange my affairs in such a way that I don’t have to rely on any payments from Her Majesty’s minions when I pull the trigger. Except for the NHS, of course. I think only very few people could afford to FI/RE if we didn’t have free healthcare.

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      1. Hi 3652,
        Thanks – I thought so, although depending on income it makes it harder to avoid it once any left over carryover of pension allowance is gone, but good luck!

        I am with you – NHS does make it easier, but I am also wanting to be completely unreliant on the government to pay me anything!
        Cheers,
        FiL

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  3. Few queries

    How have you exceededcthe annual pension contribution limit? Carry forward?

    Whats physical wealth in thos pie charts?

    If you’re salary sacrificing into pension how are you thinking you can’t do anything about NI?

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    1. Hi Rhino, thanks for stopping by 🙂
      Yep, I’ve been using my carry forward pension allowance. Been sailing close to the wind this year, reducing my emergency fund to stuff more cash into the pension, but it somehow feels less objectionable than financing Brexit Britain by paying more tax than I have to pay.
      I’m only salary sacrificing the bonus – my company doesn’t allow salary sacrifice on anything else, and I’m not nearly important enough to change HR’s policies on staff benefits. Hence there’s very little I can do about NI. Begetting a couple of kids just to save NI on childcare vouchers seemed too extreme a solution for my taste 😉
      ONS defines physical wealth here:
      https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/compendium/wealthingreatbritainwave4/2012to2014/chapter4physicalwealthwealthingreatbritain2012to2014
      In my case, these are a few personal items I own, which didn’t lose all their value the moment I took them out of the shop. Some might have even appreciated, if what I’ve heard is true. Since I could sell/pawn them if needed I recon they can be counted as part of net worth.
      Happy Near Year!

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  4. Suggestion for goal 3, second chart – move property to the top. Chart would then show you clearer the change in the 2 blue bits you do care more about

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