Asset Allocations

I thought I would have a look at my asset allocations as I do need to review how to make my money work for me – I don’t think it is even breaking a sweat! I don’t think I am investing wisely and need to shuffle the money around to give me the best income and growth long term, while enabling me to draw down and live – balancing risk.

I have read on a number of blogs how people have a lot of money/net worth tied up in property so I thought it would be good to see how my allocations compare.

On the left is my ratio for:  cash, equities, bonds and property.

So 34% of my net worth is tied up in property. This is across 2 properties, my own home and my BTL. I don’t have one huge house; just two small properties, with a mortgage on the BTL. What is interesting is how I have only 40% in equities, I thought I would have more but it just shows how I am holding quite a bit of cash. This cash is in a mix of general savings and NISA accounts and includes my emergency funds; my own and the BTL –  to cover any expenses that may crop up including covering the void periods.

On the right is my ratio excluding property: Cash, equities, bonds and pension.

Now in all my figures I have excluded my DB pension which is now sitting dormant with an old employer. I will not be able to access this until I am 65. I am not sure what its value is, all I do know is that it should pay out a fixed income (£12,000 p.a.) when I reach 65. It should have a small annual increase included when it is drawn. The current state pension age for me is 67, at the moment I don’t think I have paid in enough through NI to obtain a full state pension. You need 30 qualifying years and I don’t have this yet.

Some of my equity allocation will be split into bonds but I haven’t tried to go to that much detail here. I have just highlighted the explicit bonds. Seeing my DC pension in double figures is impressive as the value seems so pitiful. Its the value from 2 employers pension schemes and a personal stakeholder which I setup after leaving my DB so I could have something ‘on-the-side’ to drop money into when I was feeling flush with bonuses – not that I have received any in the past 2 years. I saw the stakeholder as a personal scheme independent from any employer into which I can place spare cash which I know I couldn’t access until I was 55.  Maybe I should have opened a SIPP but now I am not working there are limits on what you can invest in pensions annually(?).

The cash will start to deplete as I enjoy a period of freedom and also reallocate this towards equities to gain more income and growth.

I need to read the Tim Hale book and look at allocation ratios to really sort this as I think I have too much cash doing nothing and need to rebalance my equities to get a good return! If anyone has any book recommendations feel free to let me know. At the moment my equities are returning 9% annually.

I will also look to use some of the cash to start a new hustle. Not sure what this will be yet, I may just go contracting to earn some income in the future, using the honey pot as my backup during the lean times. Income streams are important and I need to make sure my assets are working for me not against me!

Time for some serious reading.

First week out of the Office

Well, the saying – “how did I ever have time to work” – springs to mind.

This week I have been sorting out my BTL, painting and sorting some of the issues before the new tenant moves in. Had a tree surgeon round to quote for work on a tree at my BTL – I didnt know but the tree is under a TPO – so I have to get council approval before I can do any work on the tree. Its quite damaged from the strong winds the other week and needs attention to tidy it up and make it more presentable as the tree is in an open space at the front of the property, the neighbour has complained –  under the deeds, I am responsible for it. 😦

With all this sunny weather I have caught up on all those odd-jobs I should have done on my own house too. Plenty more to do too.

At the moment, I am living off my salary from last month and I am getting everything sorted so that I can have a few months off before considering any new work – whatever that is?

I have already started to get calls & emails from recruitment agents – I guess some have heard I have left and they will probably be trying to fill the gap I have created after my escape, so they are trying to find out what I am doing too, extra commission! These will be contract jobs based on the agents who have called; looking at the permanent roles going, the salaries are dropping all the time. I have seen a reasonably interesting perm job – about a 45 minute commute and its paying 20% less than my last job!

Unless I take a contract role, it looks like I have no choice but to take a drop in pay if I went back to doing my last profession. If I want to earn equal or more than my last role as a permanent employee, I would have to apply for the next level up the ladder – not a role that excites me. The job market is favouring the employer. There must be plenty of competition around for these roles – supply and demand at play.

Being out of the Office and away from The Man for a while may do me some good. I just need to keep an eye on my spending and look at ways of earning some cash. When you look at most other FI escapees they havent really escaped, they have other income streams on the go and are looking at ways of making them fit into their new working profile. At the moment, I have income from investments and my BTL, something else is required and I need to look at options to supplement this income.

In the short-term, I am going to enjoy the good weather and get my bicycle into working order and get out there and cycle and enjoy the summer and the freedom. Improving my health and getting some outdoor air will be great. I am already feeling the difference from being in the Office cell. My eyes are already feeling better and the DIY and walking I am doing will help to get me fit. My headaches and general ‘stress’ signs have already disappeared.

I am looking at a few online courses to see if there is something of interest to open my mind up and get those creative thoughts flowing again and wake up from the stupor I have been in for the past few years – or even decades – lol.

BTL – the transition

One of the ‘joys’ of being a landlord is the transition between one tenant and the next. This has been my first transition as I only bought the house just under 2 years ago and prepped it for the first tenant and they stayed for 18 months. Now they have moved out, I have the mop up. The agent has done the inspection and based on the report, I have lost the fridge (looks like the tenant has took it!) and there are a few battered walls that need to be filled and re-painted. They have also left a few items that they were supposed to remove on departure!

So I can see that next week I will been visiting to sort out a few of the issues and generally inspect the property before the new tenant arrives. I guess these are part of the landlord’s chores for renting and the void periods can be quite long, this time the void is only 3 weeks, so I should be grateful. As I dont have cheap tradesman to go in and fix things it is up to me to go in and do so. I can then track whether this is a good investment when it comes to time and money in the long-term. Good job I dont have a day job now 🙂

This is all experience to log as part of the review of whether being a landlord is a good thing or not. It’s the maintenance and keeping the property in good condition that’s hard when the tenants do not. They have no incentive to do so as they don’t own the property. Good job a deposit it taken to cover these situations. I don’t think I will supply a fridge for the next tenant, only fixed goods such as the built-in appliances. General wear and tear is one thing to think about when operating a BTL and upkeep of the property is another over the long term. This is a fairly new house so shouldn’t need lots of work but it is something to keep an eye on when it comes to its market value in the future, it needs to look tidy and reasonably well kept otherwise it will not provide any profit on its sale. Not that I am expecting huge gains in its value – looking up the value based on Zoopla* it’s increased by 3% which isnt a lot in cash terms – it is a starter home after all.

*Zoopla valuations have a lot to be desired as while looking up the property value, it has other houses recorded with lower or higher current values so I dont know how they calculate them, how can the same format house (its a pretty standard house estate development – have such a big difference in valuations). It is intersting to see the difference between last sale and current value as some have dropped significantly. If anyone can suggest a better site for house valuations then let me know. I take the valuation provided with a pinch of salt – it is worth what a buyer is prepared to pay.

Last Day working for The Man

Well, that was quick! my last day, phew…I will miss the guys I have been working with as they have been fun to work with. I will miss the banter but will not miss the work and the general stresses of the daily grind.

I have probably spent more time in meetings this week that I have all the time I have been there. Doing handovers to others and wrapping up all the lose ends – not there were that many ends to tie.

I have learnt a lot from working there and maybe that will be something I can use in the future for any work I decide to take on. I have even had people offering to help me find work and recommend me ! A great way to end the day.

Now for some downtime and a rest from the office cell….