Net Worth – ouch !!

I shouldn’t look – but I have.

My net worth is going down at the moment, since I ‘re-shuffled’ my portfolio to index trackers in my NISA, I have only seen my net worth and the NISA total drop for the past 3 months.

I should be grateful that I can continue to invest and must take the view – my next monthly buys will be at the cheaper price. Just keep looking long-term and in a few years time the indexes will have bounced back and all these units I am picking up at cheap prices will have grown.

My managed funds are still making a profit – even after charges – so the trackers are not looking good and I need to stop looking at the value erosion that’s going on at the moment.

The good news is that my pension transfer has happened, my old work pension has been moved to my personal pension. I have at least secured my transfer value.

I have noticed too, that there has been press coverage on this very subject and that the government want to change to rules so that companies cannot force people to close their pension when they have only worked for a company for < 2 years. They have realised that this will result in people losing out on fund growth.

If people didn’t take such big transfer fees out of the process it would help. In my case the value of the transfer was 30% less than the pot value! The actuary adjustment is a ridiculous value – where do they dream up these fees from?

Well, at least I have broken my ties with that fund and can only wonder what the pension will be like at my new company. Although I am not sure if they are following the rules – I thought that under auto-enrollment you had to join a pension from day 1? At my new job – I have to wait 3 months before I can join.

Off to do something else and stop looking at my net worth ūüôā

Are you better off than your parents?

This is the question being asked on Radio 4 this week (You and Yours programme).

An interesting thought given the current economic climate. I am in my forties and with no children I can only review the generations around me in my family.

As the “child” – I am better off than my parents, they live in rented accommodation and have struggled as one of the many working poor, bringing me and my siblings up in a rented house with limited cash. We tried our best to have a happy childhood, although compared to expected living standards today – it was below the poverty line. (We had friends who were living on benefits – and they had a better life than us! I am sure that there are more families living like this now)

My father had to pay maintenance to his first wife after their divorce, which meant that cash was tight. He had to support the mortgage on the old¬†house, so he could only afford to rent from that point onward. The house we rented was damp and cold, a pre-fab built with asbestos.¬†It was all my father could afford.¬†We use to get up on a winter’s morning to ice on the INSIDE of the windows as well as the outside. Mould and damp on the inside walls.¬†We slept in sleeping bags and loads of blankets on the beds and lived in hand-me down clothing and school uniforms. We lived in the kitchen as it was the warmest place in the house.

I remember being an outcast at school, as I had bad clothing (it didn’t fit me very well and would be handed-down to my sister). We would have to wear¬†our school uniforms¬†all week (glad we had¬†uniform as at least that stopped the ‘fashion’ police bullying)¬†as we only had one set of clothes, so would have to go home and change out of it and hang it up to air so we could wear it the next day. No wonder it was smelly at the end of the week and I had no friends. My shoes were always too big for me, as they had to fit me and my sister/mother who had bigger feet.

We lived off beans on toast, soup¬†and other basic meals all week and our treat was a roast chicken on a Sunday with whatever vegetables we grew in the garden.¬†We entertained ourselves with rides on¬†our bikes and anything that was free. No cinemas and take-out meals for us. My parents now live off state pensions which although they are no great – they at least have one and can ‘manage’.

I was lucky because I passed the 12-plus as it was then and attended the grammar school, this was my route out of poverty. I gained qualifications and due to a ‘free grant’ I was able to go to university and obtain a degree.

I was able to get a good job and have since tried very hard to work to gain some financial security and stability in my life. My siblings have done the same, working and owning houses and working towards their own financial security.

As the “parent” – Although I am not a parent, I have friends with children and I can see that this next generation do have big hills to climb. When I came out of university, degrees were an accepted way of getting up the career ladder and open up opportunities for higher paid jobs, there weren’t that many of us. Now, everyone seems to have a degree and so there isn’t the graduate openings there, completion is so fierce that it is now likely that your first job is a low-pay one. Likely that it will continue to be a low-pay one too. You have a student loan to pay off . There is a big deluded view of degrees now and what they will provide. You cannot just go straight into a chief exe job – but that seems to be the impression. It is not the golden ticket to a well-paid job, using the terms of today “its down to supply and demand”.

The ability to own a house is a struggle unless you have parents who can contribute. Jobs are temporary Рfixed term contracts, zero-hours contracts. Being treated badly(being laid-off easily) and having no career development prospects within the same company. Outgoings are high and the ability to save a deposit and also gain a mortgage with fixed-term contract employment is hard.

Yes, this generation have technology, more freedom and flexibility. They can travel the world more freely and experience things that I or my parents would never have the opportunity to at that age. But opportunities actually seem to be more restricted and their work life will be longer and lower paid than the previous generation.

More reason to look at FI and frugal living and getting out of the consumer economics that is slowly degrading life, pleasure and happiness. I am glad I am not  a teenager now, opportunities seem to be lacking or only open to those with the network contacts. Pay is low, jobs scarce and short-lived. I would not be able to achieve the financial status that I have now.

I feel blessed that I can live and have achieved what I have to-date.

October – where am I?

Its been quite a dramatic month so far. I am still managing to work through my redundancy notice and I have just 1 week to go before I leave the business. I am effectively on garden leave, working from home, checking my email and basically doing odd jobs around the house while I have the time. More of the ‘benefits’ are being removed (which is breach of contract) but the company’s stock response is – “we are looking at alternatives to replace those that are stopping”. As someone who will not be remaining with the business, it seems that I will lose out.It’s been very stressful and I am worried about the new job being right for me but I need to work at the moment – so need to go with the flow.

I have been spending my time working on my house, I have painted and de-cluttered and have new carpets fitted.¬†I have just finished getting my utilities changed to better deals so I should save money this winter. I am on direct debit payments – which isn’t always the best way to work in some ways – but it does give me the best discounts (DD and online bills, etc). The recalculations have been completed and my direct debit is being reduced by ¬£20 per month (¬£240) saving. This will be good if I can achieve this – it is all based on projected use which all depends on how bad this winter will be?

I have renewed my car insurance and tax (using the new online system). I just have to cancel my breakdown cover as I have a better deal linking it to my car insurance as a package Рanother £60 saved Рand an increase in breakdown cover too.

I bought some Unilever and Glaxo shares this month with my investment cash, I am trying not to look at the current prices as I have lost money on them due to the current economic conditions. Within days of buying them, they dropped like a stone. They are running at about 6 to 15% loss at the moment, bring on the dividends to try and get some value out of them and ignore the capital loss.

I don’t even want to look at my Tesco shares at all, they must be at about 65% loss at the moment – I have held shares for some years, so this isn’t good at the moment. Looking at the Motley Fool, they were recommending them until recently as one of their ‘shares to retire on’. They have now replaced Tesco with another. It is not worth me selling them at the moment, I will ride out the storm as I am in this for the long term, I am not in need of the money at the moment so will concentrate on other avenues to increase my FI finances.

My pension from my old employer should transfer this month – why you may say are you doing this?

Basically, I have no choice, I had only been in the scheme for 16¬†months and their rules state that if you ‘leave the business before 2yrs is up, you have to close the pension’ – which as I am employed by a company which has been sold by the parent, I had effectively left the business. My options were – take my contributions or transfer the pot value to another scheme – Oh! and you have 3 months in which to do this – or we will by default pay back your contributions.

Active pot value was : £9,900

Transfer Value : £7,700 (70% approx)

Contributions only : £3,200 (30%approx)

As you can see, this is a real rip-off, you don’t get the full pot value, you get what they calculate as the transfer value, how I can lose 20% as some kind of ‘admin fee’ is ridiculous and just goes to illustrate why people have so much fear and dread over pensions and that they are just rip-offs. Money just disappears out of them for no real justifiable reason except to line the pockets of the companies that run them.

At least I have something and a pension is part of my FI plan. As I am currently a high-rate tax payer I can utilise the tax advantages to increase the amount I am saving into them and gain some additional benefit from the value. It is something to call upon when I reach staged retirement ages such as 55, 60 & 67. With the changes being introduced next year, I can use them as cash pots to draw from over the years.

Into October and the Autumn season

Well, it is really starting to look like Autumn now.

I have almost finished preparing my house for the winter which I think could be a harsh one this year. Boiler is serviced, meter changed so I can change to a better tariff for the winter and I have almost finished painting and de-cluttering.

My financials are taking a bit of a battering this month, I bought some more Glaxo and Unilever shares this month and their share prices have been plunging ever since – I am not a day trader – so will hang onto them, I don’t have that urge to sell them in a panic. I want to try and create a small dividend portfolio of reasonable shares/companies to hold for a few years. I will not look at the price, forget them for a while and see what happens over the long term. Once I start picking up some dividends from them, then I can start to really assess where the portfolio is going.

I have been reading Tim Hale’s book -again- and looking at how to re-balance by ISA so that I have a bit more exposure to the Global market, I’m a bit too UK centric and I also need to look at some defensive options for my money so that I can start looking at an FI future in a few years time. It would be good to lock in some of the gains I have made over the previous years.

I would love to leave the rat race tomorrow but I don’t have the funds yet to do so. I could cope with a job loss for a while but couldn’t live or class myself as completely FI. At least I can feel comfortable and relaxed as I have more financial security than some of my friends and work colleagues. I must stop stressing and get down the the real point of life – living!

I am living frugally but happily. I have lost that consumerist head that most of my friends have. I will enjoy seeing and experiencing things that make me happy.

I need to go out there and enjoy the world and see it in all its glory. I love seeing the Autumn turn and the fabulous colours. I need to get my camera sorted and get out there taking photos. I want to start doing more artistic activities – given that this gives me the most pleasure. I love being creative and need to re-activate those lost ‘creative thoughts’ dulled by work and stress.

The start of October

Where has this year gone?

It seems to be rocketing by and I still have so much to do and learn. I have been reading Tim Hale’s book. I am trying to work out my portfolio split. Luckily my ISA account gives me this info for my ISAs (its a 70/30 split between equity and bonds).¬† But I also have shares held outside my ISA and also cash held in accounts as well as my pension funds – one of which is on a 90/10 equity & bond split at the moment.

All this nice time ‘working’ my notice out has meant I can spend some time reading and getting my house sorted before I start my new job with a new employer next month. My new job is a pay cut – looks like that is the way at the moment in the UK. If you want a job that’s near to your home – then expect a pay-cut! Employers are expecting more from their employees for less.

The offset of benefits v. rewards in action. The roller-coaster ride of my redundancy continues as it has now been announced that the company I currently work for has been sold again! So another owner – wow – I think that is 3 owners in the last 6 months!

SO with this new bombshell, another restructure is on the cards and just after we all thought we knew where we all stood, those with continued employment are now under threat again. I am so glad I am leaving soon, only 4 more weeks to go and counting down the days! I have been given work to do – a shock to the system – and it has been good as it means it will not be a big shock when I start my new job and have to work harder than I am currently expected to.

BUT –¬† now we have a new owner – the projects are now back under review and are likely to be canned. The new owner has their own system, so the IT team’s days are numbered as they will want to consolidate the team – that’s what I would do if I was the new owner. The new owner has plans and as the parent, it will have the say over what happens, which will be to merge the operation into their current system and offices. I worked for a company where a ‘company buy’ took place and as the parent company, we went in and merged their system into ours to reduce costs and consolidate. Then just kept the staff that were needed to fill specific roles, which for the IT side was none.

The plus side to this news is that maybe the new owners will let us take PILON and let us go for the last month rather than have us clog up the office.

I have asked the question – don’t ask, don’t get – and up to now it has been refused. Maybe these new owners will have better sense. It will make our pension arrangements even more confusing – as I am still waiting for the new pension pack for the ‘back-dated’ employer contributions and my ‘now’ 1 months pay contribution.

The new owner has their own scheme and under TUPE, they have to provide a continuous pension – so what will happen as I have just 1 month left – where will this sorry payment go? Under PILON – the pension payment does not happen – so it would reduce their costs and get them out of this sorry state.

I want to get the employer contributions I am owed as its all free money to help me reach FI! So I shouldn’t give up on this to easily. I have found that I cannot join my new employer’s pension scheme until next year! I have to wait 3 months, so there will be gap in my pension contributions.

Getting a reasonable pension provision and savings is worthwhile for me at the moment due to the tax breaks. It also means I can review my FI plan, use equities/rental/investments to provide me an income up to pension age, then use my pension as my income pot.

I need to do my monthly income report and see where I am. All this turmoil in the markets has been hitting my share values – I own Tesco ‘oh no’ and the market seems to be going down. An opportunity to buy some cheap stocks but not until I have read Tim Hale’s book some more!

I am steering well clear of supermarket stocks and will try and ride out the storm on Tesco – as they are still a big player in their sector – as I am in for the long-term so could do with covering my costs and then maybe moving the money to another sector, I can wait. This is where Tim Hale’s comment on spreading the risk is so apt.

Right, off to do my monthly reports…