Stocktake: Q3 2017

If the gods their sure success foretell, if those of heav’n consent with those of hell to promise Italy, who dare debate the power of Jove, or fix another fate?

What’s new?

Nothing. Brexit negotiations are going to shit on schedule, and I’m trying to keep on trudging along with my goals for the year.

Savings rate: 60%

The actual year to date average is 66%. This won’t last, of course. Because: holidays and stuff. I’ll probably (just) make 60% for the full year. Probably pass.

3q17-savings-rate

Property wealth: overpay mortgage by £10k

Overpaid £6.4k so far this year. The jury’s still out on this one. Wait and see, I recon.

Pension wealth: use up all available allowance

The pension is finally approaching what I’d call a reasonable place. It’s nothing spectacular in absolute terms, but the sins of the past have been largely atoned for.

For those who didn’t know or have forgotten, I was once young and good looking, which somewhat compensated for an abject lack of competence in matters of personal finance. I paid a 60% marginal tax rate, didn’t contribute anything into any sort of a pension, and either spent the money or put it in an instant access bank account paying a 2% interest, or something stupid like that. And then I spent whatever was in that account on a piece of overpriced property. Because: I thought I could afford it.

3q17-total-split

But no more. I’ve changed, and although my digs still make up almost half of my total net worth, at least I now have a pension. Pass.

Financial wealth: Emergency Fund & Freedom Fund

The goal was to top up the Emergency Fund. A complete and utter fail.

Continue with regular savings into the S&S ISA. Pass.

Tax: pay no more than £23k of income tax in 2017/18 tax year

We’ll see, but most likely it’ll be a fail. In the rough calculations I did back in January when I set my 2017 goals, I forgot to take into account the tax on P11D benefits. Bugger.

8 thoughts on “Stocktake: Q3 2017”

  1. Interesting blog. I thought it was quite impressive for you to keep your annul tax to £23K as you’ve mentioned before you are in the 60% tax band. Is this achieved by using the full carrying forward of pension allowance for previous years? or are there any other secret weapons to reduce income tax.

    JC

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    1. It’s mostly the carried forward pension allowance, also using the full ISA allowance. The extra headroom with pension will run out soon, but I doubt I’ll go back to paying £45k income tax, plus £5k NI on top even when it runs out. I was just stupid before, there’s no other word for it…

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  2. I don’t think you were stupid at all, no one teaches you this stuff and there isn’t exactly clear information out there unless you’re lucky enough to stumble on the FI community. I’m in the same boat, have only just appreciated the error of my ways. Luckily though I have and taken action to address. Id be interested to know your views on mortgage debt, given recent rate rise I am considering taking more of an income tax hit to use cash to overpay my mortgage rather than locking it up for 20 odd years until 57? Are you considering choices on use of your income? The comment kid in a sweet shop rings very true, pension, isa, mortgage, emergency fund.

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    1. That’s the perennial question, isn’t it – to overpay the mortgage or to invest. I started writing a blog post about it months ago, but haven’t finished it, because I’m not sure if I myself am fully convinced either way. I hate owing money on a mortgage, but even with the rate rise, interest rates are still low and opportunity cost of not investing is rather high. Also, the mortgage hedges my exposure to GBP, so… It’s a tough one. Everyone’s situation is different. In my circumstances as they are today it’s probably best to use up all pension allowance first, and then decide between an ISA and mortgage overpayments. Probably 🙂

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  3. Thank you for the clarification, I read your blog with interest because I am a similar age to you and started to invest seriously for FIRE around 2015. Personally I try to invest as tax efficiently as I can, which means max out ISA, SIPP, LISA for myself, partner and children. still my tax bill is through the roof, anyway, keep up the good work.

    JC

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  4. Thanks for the reply, I’d definitely be interested to read your thoughts on mortgage v investment if you finish that blog. Equities being at market highs is one thing creating doubt for me at the moment, but having to pay a 60% marginal tax makes using up the pension capacity to minimise this a no brainer really. Ben Carlson wrote an insightful piece on investing at market highs, worth a read if you’ve not seen it http://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/. Thanks for writing the blog, enjoying reading it.

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  5. What on earth is physical wealth? If it weren’t for the property category I would have figured it was that… You don’t sound like the sort of fellow to have really expensive cars, golf clubs or sports gear. Makes me wonder if I have been remiss in overlooking a whole asset class!

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    1. Not at all 🙂 It’s just some stuff that didn’t lose all its value the moment I took it from the shop. Basically, things that I have to declare separately on my contents insurance and could sell or pawn for known amount of cash if need be.

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