Wealth update – 31/07/2020

We have now been living in our new home in this shoddy part of Zone 2 in London for two weeks. Aaaaand… we hate it. It’s a dump because of all the homeless people who gather around the corner from where we live. They have also been to the forefront of our building to urinate and to bless us with some of that anti-social behaviour we have previously only heard about from TV news reports. Life in Central London was much better.

In addition, we had no warm water for a full week because the boiler was broken. They actually rented us a flat with a broken boiler. Not a good start. We haven’t even had an apology from the letting agents or landlord. Who rents a property out with a broken boiler and doesn’t let you know about it? I suspect more stuff like this is to come…

We can move out in eight months from the start of the lease i.e. we can serve our two-month notice after the first six months. We feel that we are very likely to leave as soon as possible.

It also surprises me that all – not even exaggerating – of our utility bills are going up. Our water bill is increasing from £20 pcm to £36 pcm (Thames Water estimate as we don’t have a water meter), electricity is almost doubling (again based on an estimate), gas is more expensive, internet is now £29 pcm (was £20, we had to change providers), council tax was £77 pcm in Central London and is now £125 pcm.

It’s also a bit of a mess to get the bills sorted. For example, the gas meter on the old gas bill was the one for our neighbour. Obviously, I don’t want to be paying for the gas somebody else uses up whilst racking up some kind of debt on the correct meter. The issue is still ongoing as it seems people who work at electricity companies struggle with sorting little things like this.

We are still waiting to get our security deposit back from our old flat. It’s been exactly three weeks since our old tenancy ended. My understanding is that they [legally] have 10 calendar days to return the deposit from the end of the tenancy. A week after the end of our tenancy we were told that they will not make any deductions and will refund the security deposit in full and it will take 3-5 working days. Of course, we didn’t get anything. We chased and were told it hasn’t been paid yet but were never given a reason for the delay. We’re still waiting.

My cash levels took a bit of a dive due to the moving expenses and the security deposit on the new place. This should even out once we get the security deposit back from the Central London flat.

My EIS valuations stayed the same, cash went down but all investments went up. My net worth increased by £9,733 this month (this includes £1,600 ISA top-up and £292 pension top-up and £50 into Premium Bonds). My net worth is now £109,846.

We also had some really good news. My girlfriend applied for and got a big promotion at work. She is now earning more than me. Her future is golden! I’m very proud of her.

On a slightly different note… I recently found out about effective altruism [Peter Singer: The why and how of effective altruism]. The idea is to support charities which do most good with the donations they receive. It turns out that the most efficient ones (i.e. charities which help the most people per £ donated) are the ones which help deworm Africans from parasites and fight neglected tropical diseases.

I’ve been donating £12 pcm to a charity which fights homelessness in the UK. This isn’t a cause I’m particularly drawn to… so I decided to switch it to a much more efficient one. I also decided to increase my donations to £15 pcm (also matched by my employer) to benefit The End Fund. Apparently it costs about 50p per person to cover a year’s worth of medicine to treat neglected tropical diseases. I’d rather save/help 60 people each month than pay for a few meals for the homeless in the UK.

In summary, it was a mixed month – some good, some bad. I’m glad my net worth improved and that my girlfriend is now in a significantly better financial position than she used to be.

Wealth update – 30/06/2020

It’s been three months since my last wealth update (30 March 2020). As you all know, the markets have gone up since then and this has helped improve my net wealth.

So what’s changed? One of the things I noticed is that some of my EIS shares have gone up a fair bit. I only have 3 EIS investments. One of them – Den (smart light switches and sockets with an app) – has already gone bust i.e. all the way to zero. I only invested £500 and got 30% tax relief on it (where I should get some loss relief)… so my loss will be about £300ish. The other two investments have done much better as the share price estimates have gone up and my EIS shares have now more than doubled (Yay… I guess!).

In all seriousness, I want to get out of my EIS holdings and just cash them in as I’m quite uncomfortable with the illiquid nature of these investments. I simply have no exit strategy. This worries me.

I crossed a big milestone on 1st July 2020 – my net worth exceeded £100,000. Apparently, the first £100K is a bitch to save up as it’s mostly made up of your savings rate, not investment returns. After that investment returns will do more of the heavy lifting in the portfolio. I’m looking forward to that.

My flat buying plans have changed. We are not buying anything this year. Instead, we decided to move and rent for a bit longer. This will reduce our costs a bit as the rent drops from £1,500 pcm for a studio flat in Central London to £1,150 pcm for a one bedroom flat in Zone 2. However, our travel costs will increase a bit (although these will still be minimal for a couple of months as we continue to work from home). There will also be a small increase in council tax. In the end we will have more flat for less money.

The new flat was listed for £1,250 pcm and we offered £100 less. At first, the landlord’s agent asked us to increase the offer but we decided to stay firm and told them we are happy to walk away if they do not accept. A few short minutes later we got an email confirming the landlord has accepted our offer. It was that easy. I would encourage everybody to negotiate a bit. This additional £100 pcm saving will add up over time.

We’ve had some redundancies at my workplace. Naturally, that worries me. However, both of us are still employed and continue to get a paycheck. It’s good to reduce our biggest expense (rent) as we’re early in this recession and I expect things to get much worse.

Let’s see how things go.

Wealth update – 31/03/2020

The markets are now closed and I have updated all of my portfolios (see my Wealth page for details). Unsurprisingly, March has been a negative month.

The only things which increased were my cash holdings and my pension. This is because I topped up my cash from my salary and sacrificed my bonus into my pension. All of my investments have lost money across the board – however, I kept my EIS valuations the same as last month as these are illiquid and it’s not possible to get a market value.

Not only did I get a bonus, but also a tiny 1.8% increase to my base salary – this, I presume, is to keep my salary in line with inflation (CPI is 1.7% right now based on Bank of England’s website). Better than nothing I presume and it’s always nice to see an increase in my earnings. My net salary will increase a tiny bit from next month as well as HMRC announced an increase in the national insurance bands. So, this has been a modest improvement.

However, my rent has increased by 4% and council tax has increased by 3.5%. These two largely negate the increases in my earnings.

I also switched my mobile service provider as I found an even better SIM-only deal than I previously had. Now, I’m saving a fantastic £1.05 p.m. on my mobile phone bill – I only pay £4.95 p.m. and get 2 Gb of data plus calls and texts, which have some limits but I hardly ever call anyone – and when I do I use WhatsApp. #Millennial The saving is small but still worth doing.

Next week, on 6th April, the new tax year will start. I plan to top-up my LISA with £4,000 from my current cash and invest it. Once the £1,000 LISA bonus is paid in (this will probably take 6-8 weeks), I’ll invest that as well. I’m going to hang on to my GIA monies for a bit as the market is very volatile and I don’t want to move it to my ISA just yet (as that would require a sale in the GIA and then buying it back in the ISA and maybe a few days of being out of the market). I will fund the ISA with my GIA later in the year when things have calmed down a bit.

I also started an application for critical illness insurance. However, the insurer needs to get a medical examination and a GP report, which are difficult to obtain during times of a pandemic. This is delaying things, probably for a couple of months. I estimate this to cost about £45 p.m. once it’s set up (I’m applying for a £100,000 critical illness sum assured with £100,000 of life cover to age 70, where the sum assured increases with inflation).

Why am I getting critical illness cover? Well, to cash in if I get cancer or some other horrible illness. For example, 1 in 2 UK people will be diagnosed with cancer in their lifetime – so if this happens before my age 70, I will get the sum assured and treat myself. The £100,000 figure is sort of random as I didn’t really know how much I need – on the plus side, I’m able to increase it during certain life events e.g. buying a home, having a child – without any need to do any further medical checks (but I will have to pay more each month to reflect the larger sum assured). So I’ve got some flexibility.

I find paying £45 p.m. quite expensive for £100,000 of cover, but the fact is that I’m not getting any younger. The later I leave it the more expensive this will become.

My girlfriend (24 y.o.) got the same insurance policy (but with a 40-year term as it’s more than 40 years for her to reach age 70 and the maximum term was 40 years). She was accepted without the need to provide any medical tests or GP reports and got the policy on the same day as we applied for it. I think it cost about £28 p.m. for her, I’m not sure. Oh… to be young…

And that was the month of March 2020.