May 2020 Savings Report

Welcome to our May Savings Report.

As I mentioned in April I lost my Aunt. Her funeral is next week. I’m unable to get to it due to travel restrictions (it’s over 400 miles away) and I’m not Dominic Cummings.

Instead, I’ll be dialling in. The family have said we’ll do a celebration of her life later in the year when the current chaos eases off. I am upset because I won’t get to see my cousins and my Dad.

I had said her death was unrelated to COVID-19 but it turns out that was a premature statement. We’re waiting on results, but she had unusual clotting on her lungs, which is now being reported as related to COVID-19.

So it seems like the Money Mage household was hit by this crisis, just not in a way I was expecting. The other-MM is being as supportive as ever.

Not much else has changed in the Money Mage household. But the rest of the world seems to be in chaos still. If you want a detour from Personal Finance you can find my thoughts on Medium. It’s important to stand in Solidarity.

Work-wise not much has changed. I am still WFH, away to roll onto another project. Other-MM’s work continues to pick up. Lockdown is being gradually lifted in Scotland. The parks and roads are getting busier by the day. I am looking forward to eating out again.

We’ve had another good savings rate month, due to low expenses. The other-MM and I have decided to start putting more into Investments. The other-MM has opened a S&S ISA. I put more into my S&S ISA and SIPP this month. We’re contemplating continuing that trend, and transferring some ISA allowance from Cash to S&S.

The blog is back up to partial speed. I took part in a Joney Talk’s Podcast, where you can hear all about our approach to Saving & Investing and my career ups and downs. It’s true, I do prefer sleeping at night rather than worrying about tens of thousands of potential or actual losses.

The drop in the markets is just a paper loss. They are not a realised loss unless you sell below your buy price. There is a good chance they will recover. Compare those market movement to being overly exposed to P2P at the moment, and the capital losses and liquidity issues you will suffer in that space at the moment.

But even those losses pale into insignificance when compared to the loss of someone you care for. So please, do continue to look after yourself and those you love. Wear a mask. It’s not ‘beta’.

Let’s see how the Money Mage household Saving and Investment performance was during May 2020. You can get all Savings Reports at the best of Money Mage.

May 2020 Savings Rates

Date	SR	SRp
May 2020	66.7%	75.6%
April 2020	70.2%	77.8%
March 2020	66.3%	80.6%

• SR = Savings Rate
• SRp = Savings Rate inc. Pension

Savings Rate continues to remain high this month due to us not leaving the house at all. I’m also due a tax-rebate due to 2019/20 pension contributions. I’ll be completing my Self Assessment in June, so this should be coming soon!

Towards Financial Independence

Our Financial Independence number is quite conservative. This table shows the number of years to achieve Financial Independence in various cases.

Date	FIh	FIp	FI
May 2020	4.0	12.1	17.1
April 2020	4.5	12.5	17.2
March 2020	5.0	13.2	17.4

• FIh = Years to FI based on Total Assets.
• FIp = Years to FI excluding the house, but including illiquid pensions.
• FI = Years to FI excluding the house and other illiquid assets.

Our net worth is finally back to where it was before Coronavirus stomped all over the world economy. Our path to FI which had stagnated now seems back on track.

We made some additional pension and S&S ISA contributions during the dip, so we should be well placed for some gains this year. Fingers crossed things continue the trend of picking up. Although I do worry the world economy is in a more dire state than the markets are signalling.

FI, which excludes our illiquid assets, is still trending down. FIp which is the number that really matters is racing down. The plan is FIp should continue to race down as we plough more into non-retirement-account Investments over the next few years. It’s currently predicting we’ll retire at 49.

I have been running some more data-driven simulations of a predicted retirement date. I plan to blog about the results this month. It’s not that far off this naive FIp figure.

May 2020

I continue to warn you again this month: paying attention to net-worth fluctuations during periods of volatility is a fool’s game.

May has seen markets recover further. One of my pensions is still down about £10K or 8% on the year, but it’s slowly recovering.

Month on Month recovered 3.12%. Against the calendar year, we are back in the positive by +2%. But that includes 5 months of contributions, so strictly our investment performance remains down.

I expect the 2% fall in the house price will pick up again later in the year, as the housing market unblocks itself. There are loads of flats for sale around where we live. It’s a student city, and all the students have gone. I’ve always contemplated investing in rental property, but it’d leave us overexposed to the local property market as we already own our house outright. So we’re focusing on building up S&S ISA investments instead.

We hold quite a chunk of our portfolio in Cash - about 12.5%. This acts as a very healthy Emergency Fund for us. It helps us sleep and weather storms. However, the banks have completely slashed rates following the UK Base Rate being cut further during the COVID-19 crisis. We are now rebalancing this into S&S indexed funds. I expect we’ll still aim to keep hovering around 10% cash though, so don’t expect a major change this year.

Year on Year is still up a healthy 12.56% You can find more details in the review of 2019.

Type	MoM%	YoY%

Asset Allocations

Here you can see asset allocations this month compared to May 2019.

Whilst equity exposure appears very low, all pensions are in global trackers funds. Investment in equities is almost solely via pensions. We are now both contributing to a S&S ISA. I am now also contributing to an S&S ISA via Vanguard LifeStrategy 80 and a small holding in Vanguard’s FTSE All-World High Dividend Yield $VHYL. The other-MM is more risk averse, so has a slightly higher bond allocation.

You can see from the above table, we have quite a significant change this year. With a 682% YoY increase in asset allocation in non-retirement locked investments. This doesn’t reflect growth, but our rebalancing for FI planning. As our pension contributions are growth are now looking on-track for 57, it’s time to start working on our pre-drawdown plans.

Lifetime

This chart shows our net worth growth since the other-MM started work and I graduated.

You can see our net worth is recovering somewhat. The continued trend upwards this month is quite welcome. Let’s see how the next few months pan out, but I am still expecting 2020 to below forecast.

Whilst we’re mortgage free, and on the path, FI let alone FIRE still seems a very long way away. Subscribe now and follow me on Twitter @moneymagery. I hope you like the charts, I am a fan of Tufte*.

How is your journey to FI going?

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