Well, I have received my first dividends for the new year, so I now have £1,300 to re-invest into some more shares. I will need to start looking at which shares look like the best option in terms of share price v dividend yield. I am concentrating on dividend shares and building my passive income to eventually equal my expenses to enable me to give up full-time work. I have NISAs, pensions and other savings but getting an income out of dividends and my rental will give me a baseline with everything else being an ‘extra’.
I have also heard that I will be receiving another special dividend in Feb for one of my share holdings so I will be getting another £1,000 that month too. So good news to start the year, I should be getting a small dividend payment from Glaxo this month, I did increase my holdings in Glaxo when the share price was down in Nov/Dec but they don’t qualify for this dividend.
A bumper 2 months of dividends to start the year, my dividend income will drop considerably after that 😦
The down side is that I have some unexpected expenses this month – my car – I have a cracked windscreen and broken fog light – fallout from the winter conditions we have just experienced in the UK. I need a car to commute to work so no ability to cycle and cut down my cuts. The only positive part of all this is that I am not commuting long distances as I was in Jan 2014, I don’t have a fuel card any more either but with the drop in fuel prices and the much reduced commuting distance I do feel like this is a positive rather than a negative aspect to the car. I will try and get a good price for the repairs and soldier on.
I have booked my summer holiday too (accommodation that is) – not very financially savvy as its a holiday in the UK – and based on costs I could get an all-inclusive holiday abroad for that price. This just goes to show how expensive UK holidays are. Having the holiday booked gives me a goal to look forward too later in the year.
My only big debt is my BTL mortgage and I am pondering paying down some of the capital on that (as I have cash that is earning nothing in savings accounts) so that over the next few years the income yield begins to grow so that as I near the crossover point with passive income, my rental income will increase and I will drop into a lower tax band and gain a bit from this too. Timing will be important so I need to start researching this and determine the best way to paydown this mortgage. The rental income currently confortably supports the mortgage payments. I cannot predict the future so I have no idea when I will have a void period on this BTL so need to account for this in my budgets. The current agreement is up for renewal in May so will have to wait and see if the tenant wants to renew or move on.
I am trying to include a minimal pension contribution into my expenses for passive income calculations as non-workers can contribute a minimum annual amount which will help to bolster my pension investment until I reach the relevant pension access age. MMM has a free app which calculates when you will reach FI, based on this I could reach FI in less than 5 years which means I still have another 4+ years before I can touch the first of my pension pots. That one will not really give me much income, current projections are forecasting an ANNUAL pension of £800 which really will not be much to live off, although the changes announced by the chancellor may mean that I am better off taking lump sums out. I have excluded this pension from the free app calculations. I have tried to be conservative with the numbers too as the app is based on US figures and UK is obviously a very different investment environment.
Off to research….