September 2020 Savings Report

Welcome to our September Savings Report.

This report marks 12 months since the first-ever Money Mage Savings Report. If you’re a regular reader of these reports you know they are average. Trite. Maybe even a bit boring.

I don’t apologise for that.

Our net worth has increased over 25% since last September, and that is the lesson you should take from these trite reports: slow, steady and boring wins the Personal Finance race.

But to break from tradition, this September has been highly unusual. I’m not going to build up false excitement or anything. But our net worth is up 8% this month.

I quit a highly paid job last June. I took a big step down from leading an engineering organisation and looking after $2m accounts to just being an engineer again. It’s been great - I’ve been way happier.

But I took a 30% pay cut. I knew it was the right decision for my wellbeing, but I wasn’t sure if it was going to be a sensible financial decision.

The risk has paid off.

When I joined my new company I was offered a bunch of share options. I’ve had share option after share option throughout my career. I’ve got a cupboard full of them. They’ve always been a bit of a joke. Magic beans. Worthless.

The company I work for has had a liquidity event. Share options are now worth something! This is a big impact on our figures for September. It’ll also impact the coming months as I have more options vesting. This isn’t just a one off windfall but also effectively a healthy increase in income.

I’m now in a way happier place from a wellbeing point of view, but also financially too. I’m highly risk-averse, so I’m glad the decision to leave my old job has paid off.

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

September 2020 Savings Rates

Date	SR	SRp
September 2020	71.3%	86.7%
August 2020	77.6%	82.9%
July 2020	59.7%	74.8%

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

Given September’s windfall from work, it’s been the highest ever savings rate of 86.7% and a net worth increase of 8%. Both awesome.

We’re sticking by the pay yourself first rule. We’re not increasing our standard of living. It’s all going to our FI plans. With a bit of fun money obviously.

We’re averaging 78.4% savings rate (including pension contribs) across the year so far which we’re very happy with.

Towards Financial Independence

Our Financial Independence number is quite conservative but this is the first month where I’ve felt we’re going to hit it… This table shows the number of years to achieve Financial Independence in various cases.

Date	FIh	FIp	FI
September 2020	1.8	10.1	15.8
August 2020	3.0	11.4	16.8
July 2020	3.2	11.6	16.9

• 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 increased in absolute terms by around £40K this month, or 8%. This is abnormal.

We’re in one of those odd situations now where a jumps like this don’t affect our day to day at all. The jump has gone straight to our FI plans: our savings, investments, and tax-efficient pensions. It’s not affected our day to day life at all. We’re not wanting, or needing anything. And we know we’re fortunate to be in that position.

We had a decent meal to celebrate. We’ll have a wee break later in the year or once lockdown eases.

The great news is FI number is almost certainly going to be hit in 2021. This is exciting news, and we’re now on track for hitting our FI number when we’re 38. Which is sooner than we were planning.

The reality is we’re not going to stop working when we hit our FI number. It has made me think about some other investment opportunities as our FI plans are now ahead of where we were expecting.

But… the best-laid plans and all…. we’re just enjoying the journey and preparing for more volatility.

September 2020

Another lockdown is looming. We’re so fortunate to be in a good place.

We have toilet roll. We have pasta. We have our health. We are both earning. We’re both happy. Fingers crossed that continues.

I’ve been baffled at the lack of a harder lockdown. Not locking down sufficiently is going to make things worse come December & January. Lockdown now - and learn the lessons from the releasing of the last lockdown.

Universities in Scotland are full of the stuff. It’s blatantly obvious there is unconstrained community transmission on the go again. We’re back to where we were in February/March.

I have two hopes. One is that some of the other restrictions - face masks, hand washing, social distancing, and the joke that is track and trace slows or restricts transmission. Though given this weeks news of them developing in Excel, I don’t hold much hope of track and trace ever working in the UK. Seriously BoJo is a useless buffoon. The other hope is we know how to treat the seriously sick more this time, with IV plasma that contains antibodies from plasma donations from people who have previously had COVID-19 and recovered.

But we’re already beyond constraining ‘clusters’. We have nationwide community transmission.

I’ve also been baffled at the blasé attitude of some about lockdown and restrictions. Sure we need to balance the economy and people’s civil liberties, but oh my.

It’s going to be a dark and difficult Christmas for many. It won’t just be JK that’s cancelled.

We’re solitary folk, and we live in Scotland, so we’re sort of prepared for a dark and dismal winter anyway. We’ll entertain ourselves - get out for a run, walk the dog, play some computer games. We enjoy batch cooking, especially during the autumn and winter months. I expect we’ll cosy up in the front room and watch some films.

It’ll be fine. And we’ll all get through this.

In other news, the other-MM has resolved his 3-month issues with his work. They were trying to impose a new employment contract with horrendous new terms. I helped him respond, and they caved before it got nasty, which is awesome news. The other-MM’s job is in logistics, so it’s been somewhat immune to the pandemic as well. Goods have to get moved around still.

As mentioned, my big news is the company I work for has had a ‘liquidity event’ - I won’t go into boring details, but it means the share options I have in the company are now worth something. It’s meant a £40K month for us in September.

It’s been trickier to navigate than most banking I’ve done. Getting money back from a USD brokerage account in the states without having to pay US taxes and navigating scalping banking fees for wire transfers, or banks fudged exchange rates so they skim off even more. I’ll probably write up ‘what to do when your UK share options are worth something’ post before the year is out.

This is the first notable ‘windfall’ I’ve ever had. I lost my Mom a few years ago in 2017 but I refused to take any of the estate. I insisted it all stayed with Dad, so he can live as comfortably as he possibly can. This windfall wasn’t a huge event for us - sure it’s helped our FI plans - but we haven’t gone out and bought a new car or crazy new holiday. It’s gone into our savings & investments to speed up our FI plans.

The work on the house continues. We’re getting a man-shed. Party time. After all the DIY we’re both getting a bit sick and tired of some of our cupboards filling up with tools and other DIY man-stuff. We have far too much DIY man-stuff for two gay guys. So September had a bit of spend on a new shed for the garden. I was going to build a shed myself but the other-MM shat the bed at the thought. A hopefully decent quality pre-pack one is due for delivery end of October with some man-stuff assembly required. And I’ve got some DemiDekk to paint it.

Year over Year

Year on Year is now up a very healthy 24%. 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 September 2019.

The rebalancing of our assets out of cash into investments is continuing apace, really rapidly this month with the windfall from work.

We’re also skewing our pre-retirement accessible funds. Pensions are now ahead of plan so I expect over the coming months and years we’ll accelerate pre-retirement investments. We still hold around 10% of our assets in easily accessible cash.

Whilst equity exposure appears very low above, all pensions are in global trackers equity funds. Investment in equities is almost solely via pensions.

You can see from the above table, we have quite a significant change this year. With a 5000% 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 looking on-track for 57, it’s time to start focussing on our pre-drawdown plans.

Our planned rebalancing is now really starting to accelerate. We now have 20% of our net worth in pre-retirement savings & investments.

Lifetime

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

You can see our net worth has recovered from the bottom of the COVID crisis and then some.

We’re mortgage free and on the path to take Early Retirement in our early to mid 40s. If we want to. 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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