November had a lot of highs and lows. Some great family time, meeting with freinds (old and new), everyone happy, healthy and the Lady goes and gets herself Covid.
We’ll see how the virus plays out. So far, so good it seems and like all sensible people we are vaccinated. In any case, it won’t stop is (even if I am a single parent now since the Lady is quarantined in our upstairs living room +complete with work desk, bed and chamber pot.
Income & Outgoings
Our after-tax income was about £6,050 while spending was £5,450. Childcare costs are around 20% of that, household costs around 12% and the rest falls into the black hole of “discretionary spending”. So, a measly savings rate of around than 10%/£600. I had a good October for work which was paid in November but taking most of 2 weeks off in October but a dent in the invoice. In November I was very busy, and it looks like December too – so I expect strong income for the rest of the year.
Spending was bad due to our October holidays in England. It’s also becoming apparent that whilst of our nursery costs are getting cheaper, the kids are costing us a lot in classes (ballet, gymnastics, swimming, skiing, tennis, drama and so on) it’s a constant drip, drip, drip. The birthday parties we had were paid for too – funny how sometimes (against the explicit letter of the Rules of FIRE) spending money can make you happy.
Being able to cover our spending on income alone is nice.
If I’d written this piece a few days ago I’d have better news but, the recent scare in the markets has wiped at least £20,000 off our net assets. Easy come easy go I say. Net worth was up £1,200 in part due to saving £500 and in part due to growth of £700 elsewhere. A new line on the Family Finances spreadsheet is for a new stooze debt of about £5,000 – which came in handy to invest a bit this month.
Dividends / Side Hustle
Total dividends/income was £1,250 excluding the side hustle. The side hustle brought in £3,650 – which was a nice counterbalance to the drop in asset values. These numbers are close to covering our spending – but there’s no certainty with the side hustle and our other dividends are nowhere near our spending.
I like the measure of IODA – Income, Outgoings, Difference, Assets. I do it every month where I look at our incomes, what we are spending money on, the monthly difference in net assets and finally where are out assets. A step deeper has a cash flow forecast of where the income less outgoings, dividends and other monies are invested and where.
This month it shows a relatively stable performance which doesn’t seem that realistic. £6,050 / £5,450 / +£1250.
Can you guess what high spending does to any SWR calculation? Well, our personal withdrawal rate is about 5% and edging upwards and for pre-pension “FIRE” funds it’s over 12%. That means we’d run out of money in about 8 years if we stopped work. Unfortunately, there seems to be no let up in the work situation, so we keep on our “earning and burning”.
Black Friday Sale!
There was a big sale on Black Friday where all investments were steeply discounted. The FTSE100 was 3.5% off, Oil was 10% cheaper and my favourite VWRL was 3% cheaper! Apparently, the world is going to end, and the new virus is coming for us all! By Monday it was getting better and on Tuesday it was getting worse! What should you do?
I did the only rational thing and over-reacted, sold everything, hid under the table in my tin-foil hat and became depressed with sellers’ remorse as the world doesn’t end.
Or maybe I just did nothing, neither buy nor sell and watched on with indifference. I did check our investments and we lost well over £10,000 – but I am genuinely unemotional about it all. Our investments dropped back to where they were in August, and I didn’t feel like jumping out a window then – so a small blip along the way isn’t going to worry me. And, since we are still earning more than we are spending – we have the money to invest and, in that case, cheaper stocks are better for us.
Even if we were in drawdown, it’s the long run value of your investments that really matters – what they are worth in 20/30/50 years’ time that counts, so today’s price/value is largely meaningless. Having a longer time horizon helps insulate you from making daft decisions on a whim.
Monthly Investment Moves
I ended up having a lot of spare cash, so I decided to participate in the recent Greencoat Wind capital raise.
I did this because it seems like a good way to invest in a sustainable company that is environmentally friendly with decent low risk returns. It’s beat inflation even before dividend are taken into consideration and pays a generous dividend.
I subscribed for around £20,000 and got about £17,500 as it was over-subscribed with £450m being raised. Shares were placed at 132p and at the time of writing they are 136.2 meaning a paper profit of £550. By comparison, if I had invested in a global ETF, it would have lost me £550 in the same period. I’m £1,100 to the good, I got lucky.
I also signed up for an account at Interactive Investors to participate in the capital raise. I have not used them before, but they seem great to use – award winning, low cost without being low quality. Their fee structure is good in that for a fixed £9.99 a month you can hold an ISA and GIA and for an extra £10 a SIPP. You get a free trade each month and regular investing is free. And if you want to get zero fees for a year if you invest £10,000 or more? I can refer you if you follow this link and say that email@example.com told you or use this: www.ii.co.uk/recommend-ii
They make some bold claims about how much you can save on fees compared to other brokers and it seems like a good deal if you have a sizeable ISA/SIPP/investments and trade occasionally. There is a referral bonus in it for me, so be warned but it seems like a genuinely good platform to use and the intro deal of a year of free fees is pretty good.
That’s about it from me. I’ve got lots more to say though – from why inflation is irrelevant if you are on the path to Financial Independence and some family updates – maybe a post about kids’ parties (waste of money or worth every penny?) and the Lady has covid and I’m stuck with the kids for 10 days – oh the joy!