Sunday, 28 August 2016

A catch-up on how I invested my savings from March - August

One of my key goals for 2016 is to set myself on a path toward achieving Financial Independence. As part of my roadmap I intend to save money each month into my Freedom Kitty which is currently made up of two ISA's (one from the 2015-16 tax year, and one for the 2016-2017 year), and also into my Personal Pension which I hold with St. James Place. This post covers my investing choices for March - August.

Freedom Kitty Investment - March to April 2016

In March I used a combination of savings from February & March as well as profit from my flat sale to max out my 2015-2016 ISA with St. James Place. This saw me transfer in £14,810.53, meaning that the total money paid toward the ISA in the tax year was £16,010.53 (the excess over the annual ISA allowance of £15,240 was for initial fees).

Prior to making this lump sum transfer I'd only been investing £150 per month into the ISA and for that reason I'd been recommended to direct my money into just one fund. My lump sum investment therefore also went into this one fund. So my 2015-2016 ISA is invested in the UK High Income UT - Acc fund, a link for the Financial Times fact sheet on this can be found here.

At some point I will discuss with my financial advisor diversifying my fund choice a bit for the ISA - probably later this year.

Freedom Kitty Investment - May to August 2016

Of the available money I'd put aside for investing into my Freedom Kitty in May - August, I actually invested £2,500 of it. I was particularly busy with our house move during May and June so it took me a while to find time to investigate and choose where to invest for the 2016-2017 tax year. Making use of the Monevator's superb resource page "Compare the UK's cheapest online brokers" (which has been updated in August 2016), I finally made a decision at the start of July and opted to open an ISA with Lloyds Bank Direct Investments Online.

I decided that I would like to set-up a regular investment plan rather than just making ad hoc transfers into the ISA (in reality I will probably end up doing a combination of both). So I have set-up a plan to invest £1,000 per month from July onward. In addition to this, I also transferred a one-off contribution of £500 into the ISA in July so that I could test out how the investing process worked (seeing as I was completely new to online investing).

I have opted to keep things really simple for now, so my investments were as follows:

For now my ongoing regular investments are set-up to go into the Vanguard 60% LifeStrategy fund, but I may look to change this in future months.

Personal Pension Investment - March to August 2016

For the period March - August 2016 the following contributions from my Business Account were made into my Personal Pension:
  • March: £3,000
  • April: £3,000
  • May: £1,000
  • June: £ 350
  • July: £1,000
  • August: £1,000
  • TOTAL: £9,350

The amounts fluctuated because I was going through a period of not doing any work contracts (for 4 months), therefore without any income source I opted to reduce the contributions to my pension scheme slightly.

Since I have a financial advisor at St. James Place where my Personal Pension is held, they select the best investment options for me based on my propensity to accept risk. The approximate split for the current allocation of my investments is as follows (I've included links to the Financial Times fund factsheets):

SJP Global Equity - 14.5%
SJP Schroder Managed - 14.5%
SJP Strategic Managed - 14.5%
SJP AXA Framlington Managed Pension - 13.5%
SJP Global Managed - 13%
SJP Worldwide Managed - 13%
SJP International Equity - 9.5%
SJP Multi Asset - 5%
SJP Strategic Income - 2.5%

It's quite an interesting exercise for me to delve into the funds which are underlying my pension investments, because I have to confess that most of the time I'm largely unaware of where the money is invested having chosen to leave these choices in the hands of my financial advisor. I've received comments previously and have seen similar view points while reading other personal finance blogs, that the charges for my pension funds are considered high, particularly compared to what I would likely choose if I managed my pension investments myself. However, for now I'm happy with the status quo of where things are. Time is a very precious commodity for me, I have many projects I'm working on at any given time, so it's nice to be able to invest into my pension without having to worry about monitoring and selecting the investment choices. I'm having a dabble at my own investing in this year's ISA to see how that goes, maybe at some point in the future I'll reassess things, who knows!

The key thing for me right now is that I'm investing more money than I ever have before, and it's all moving me in the right direction to my goal of becoming financially independent by the time I'm 50.

If you have any thoughts on my investment choices, or anything else about this blog please do let me know in the comments below...

Wednesday, 10 August 2016

Income, Expenses and Savings catch-up for April - June 2016

Following on from my last catch-up post which covered my Portfolio Value and Net Worth from April to June, it's time to give a run down on how I've been tracking for my Income, Expenses and Savings rate. I like to track these to keep me on target for achieving my second goal for 2016 which includes the pursuit of Financial Independence.

Income - Apr to Jun 2016

In May I closed my Santander 1|2|3 account and opened a First Direct current account. This means "bye bye" to interest and cashback on direct debits, but "hello" to a nice introductory bonus from First Direct for switching. Since we opened a joint account too we got an introductory bonus for that as well - happy days. The reason for switching was because we've taken out an offset mortgage with First Direct and I wanted to have the money in my current account offsetting the mortgage (TheBF has his current account offsetting against the mortgage in the same way).

I also received some income from the profits on the sale of my house in May, which has gone straight into my Savings Stash to help cover future expenses.

I had more business expenses refunded this month, for business insurance purchased (£327.95). I also transferred funds from Paypal into my current account during June for eBay sales which I made earlier in the year.

My monthly income target (as noted in my FIRE Targets for 2016) is set at £3,332 per month, so I've continued to achieve that through April, May and June. BIG TICK!

Expenses - Apr to Jun 2016

Apologies for the tiny font size in this insert, it's the largest I could make the text while still fitting the whole table in!

Key points of note:
  • Household expenses were dramatically less in June because we moved house at the end of May and so I had less utility bills for my old house, and not all bills had started for the new one. Things will start to get back to normal in July
  • My car insurance was due in April which came out of my Savings Stash, but due to the house move I then had to pay more when I changed my registered address. Strangely the insurance is more expensive at our new house than at my old house which was on a busy road near a roundabout
  • I had some rare spending on clothes in June because I started playing badminton again and realised that I needed new kit to wear (my old sports clothes were long gone)
  • In April I went to the hairdressers to get my hair coloured and re-styled. Since it's quite expensive at my current salon, I only go about 3 times a year and I save up for it in my Savings Stash. I may try to find a cheaper salon in the coming year
  • Now that we're in our new house we've had some office and bedroom furniture to purchase. TheBF works from home so it's important that we have an office that he can work from. I have a personal aspiration to start working from home permanently within the next couple of years so I wanted to make sure that I also had a nice desk to base myself at. I used my Savings Stash to cover my portion of this one-off expense, and we're both very happy with the end results
  • I've begun experimenting with income generating activities since my time off earlier this year. These have involved a certain amount of investment up-front to get me going. The two I've tried so far are Kindle publishing and Matched Betting

Here's the split of how my expenses were covered from my Savings Stash (highlighted in yellow above) and from my monthly income:

Savings - Apr to Jun 2016
Subtracting my expenses (excluding expenses covered by the Savings Stash) from my income for each month I can see what I've got left to save into my Savings Stash and Freedom Kitty:

So my overall percentages of income saved each month are 48.73%, 64.22% and 77.39% respectively.

In terms of my savings rates into my Freedom Kitty (which will fund me in the 7 years between becoming financially independent at age 50 and being able to withdraw my personal pension at age 57), this is where I feel there is room for the most improvement. April and May were particularly low at 12.93% and 10.51% respectively, I think this is due in large part to going through the house move process where we spent more money on eating out for convenience, as well as various house related expenses.

My 2016 monthly target for savings into my Freedom Kitty is £1,000 per month. I'm pleased that I managed to exceed this target in June, but my monthly average to-date is £839.27 so I have some catching up to do if I'm to successfully meet this target for the year.

My Savings Stash usage looks like this for the 3 months:

So that's a pretty big catch-up, and I think this particular post has taken me the longest to write of all the posts I've done so far! I'm pleased to have done it though because I would like a history of my progress to look back on, as far as I'm concerned it's time well spent.

Do you track income, expenses and savings? If yes, how's it going for the year?