Portfolio & Savings Update #41 Q3 2022 – €180,883

Hola amigos/as! I am glad to finally have some solo time, so I can write another portfolio & savings update to count Q3 2022 in the books.

Q3-2022 In A Nutshell

Putting my portfolio on the side, Q3 was a good quarter on a personal basis. I am still having some ups and downs after my mum’s death, but these are becoming less frequent. Christmas will be perhaps a bit harder to digest, as I can foresee I will miss her. But, well this is part of the recovery cycle, so I am happy to see I am feeling better as time goes by, it would be worrying if that weren’t the case.

Job-wise, it’s been great. I’ve been working on a rather complex project for the last 4 months, I am learning at speeds never experienced before. That alone keeps me quite motivated. My boss seems to be happy with my work, so he’s offered me a permanent contract and a pay rise :). I was worried that this wouldn’t be the case, and so I would have to start looking for a new job to get a permanent contract.

Now, having a permanent contract means that I am ready to finally purchase a house. This has been on my mind for quite a long time now, so can’t wait for it to materialize!

We’ve been now living in Liverpool for over six months, that’s time enough to find out which areas we like and match with our lifestyle. We notice a big difference between Liverpool north and south. Housing is cheaper in the northern area, but it comes at a price of lower levels of safety, which is not really great given that my partner would need to walk around where we live and use public transport often as she doesn’t drive. The southern side appears to be safer, has nicer parks, and is closer to the river Mersey, which adds up to nice landscape views when running. However, as you may expect, housing is way more expensive and OLD! Liverpool city centre is great, we like it and love the vibes and all of that, but the properties are mainly flats and that’s not what we want :(. So here we are once again! Still not quite finding the right place for us, which is now becoming a bit frustrating.

Given our frustration, we are considering other areas such as Warrington, which is located midway between Liverpool and Manchester. That opens the array of working options and would even improve my current commuting conditions, as I’d avoid crossing Liverpool city centre daily. In addition, Warrington seems to be safer as crime rates in Liverpool are claiming at undesirable speeds!

The UK seems to be entering a financial turmoil that is affecting mortgage rates. This as a consequence should put some pressure on housing prices. Will I have the chance to buy a house “undervalued”?

This last quarter I’ve also been busy doing some side work as a freelancer for my previous employer, which has added some extra hours of work during weekdays and weekends. I reached a point in which I felt overloaded, although I still managed to socialize, assisted in some meetups in Liverpool, went hiking out of the city in the lovely countryside a few times (especially enjoyed the Ingleton Waterfalls Trail, the money tree shown on the cover picture was taken from there), spent a week in the Czech Republic and another week around Girona sunbathing and enjoying warm temperatures. So far this tax year, I’ve invoiced slightly over £4K. I’ve been offered more work for the next 12 months, but I refuse to leave my current job at least until I have bought a house, as lenders won’t lend me a thing without a permanent contract.

That’s been roughly my quarter in a nutshell, now let’s jump into the numbers, shall we?

Quick Recap of Q3-2022 Numbers

• Net worth: €543,658 (+4.2%) – details HERE
• Portfolio value: €180,833 (-3.05%) – details HERE
• Quarterly growth from investments: €-357
• Passive income: €3,680 – details HERE
• Savings Rate: 44.6%

Comments

My net worth increased despite being another bad quarter for investments. The reason for this is that I found a buyer for my flat who was willing to pay more (€90K) than I originally accounted for in my books (€72K), so this was updated and has had a positive impact on the NW numbers. I signed what is called a “renting with buying rights” contract, a fairly popular one in Spain. Basically, the buyer has one year to fully purchase my flat, otherwise, he loses a 9K deposit he paid me and €1,200 he pays in monthly instalments of €100 each. This is to give him time, so he can sell his house to pay for my flat. The good thing is that during this period I don’t need to take care of bills, so I am saving around €1K yearly in costs. It would be nice to sell the flat soon, though, so I can exchange Euros for Pounds at a time when the Pound is weak. I will therefore have more cash to pay as a deposit for a new house or to be used as a refurbishment.

I now have over £50K in cash nicely saved in saving accounts with rates above 2%. Recently, I realized that I may even exceed the £1,000 interest income allowance if I don’t get to use the cash for a house down payment soon. These savings are counted in my NW numbers, but not in my portfolio.

Portfolio-wise, Q3 was a red month, but rather less red than Q2, more details will follow soon, and my passive income level has not varied much compared to the previous quarter.

I reduced my monthly portfolio contributions down to £500-1000, as the priority now is to raise as much cash as possible to use as a house deposit. Given the higher rates environment, the less we have to borrow the better, but obviously without stopping buying equities every month now that they are cheaper and can benefit the most from DCA.

That’s how the value of my portfolio is evolving:

It’s sad to see one’s own portfolio dropping in value so rapidly, but well that is part of the game, we just need to keep playing it! It’s worth mentioning though that most of the loss is due to the Pound being weak, so I can only hope that it will eventually recover, and hopefully after I have sold my flat and converted all my Euros to Pounds! Of course! ;-p.

Monthly Income and Expenses

This quarter, savings amounted to £7,685 (8,661 EUR).

This is the outlook of my income and expenses in 2022 so far:

This quarter, I saw my average savings rate for this year increase from 40.6% to 44.6%. This is still below my 50% target. In September, I had a big one-off expense of €2,200 as I needed to pay the notary to sort out all the inheritance paperwork. I am also carrying slightly over £1,000 on my credit card which I have been using to pay for fuel, new front tyres and to repair car faults. This will need to be repaid at some point, but given the higher interest rates these days, I will try to delay the repayment as much as possible without affecting my credit score too much.

Portfolio Performance

As I like to do on a quarterly basis, this is a breakdown of all my current and past investments:

Please note, links containing a star (*) are either affiliate or referral links. P2P lending is a risky business, so you could end up losing all your invested money if you choose to join any of these platforms.

** 20 % discounted to estimate future withdrawal tax payments

The worst-performing assets this quarter were my Crypto Fund, Dividend Portfolio, and S&S ISA accounts. When I look a little bit more into detail, I see that global equities are in fact in the green zone, whereas global bonds are deep in the red. I didn’t think that a global bond would be so volatile during a market downturn, but it seems investors prefer to buy US treasury bonds and dump all the others in a rising interest environment. I didn’t see that one coming, and my equities/bond split strategy has been a bit of a disaster as the non-correlation has not been kept. It would have been completely different If I stuck to my original strategy of investing in US treasury bonds only, but being European I also wanted to contribute to other countries, hence why I ended up buying global bonds. Anyway, interest rates won’t raise forever, and as soon as the US lower rates, the global fund price will rise, although I will also expect equities to raise, which means it was pointless to hold bonds in the first place. I will need to reassess my investing strategy and perhaps dump all bonds altogether.

I am tracking my index funds in a separate spreadsheet that I share in this page, if you feel curios, go and have a look!

No major changes in the P2P side of things, it’s all going well on Estateguru and Reinvest24. I have a few project extensions on Reinvest, but we receive regular updates and no major issues have been raised despite the loan extension. The Crowdestate existing progress still continues to go well, although I have two loans that have defaulted, properties will go into auction soon to try to recover money for investors, that annoyingly may take a while. Housers didn’t pay much, and I experienced losses on my Crowdestor account this quarter. On Property Partner, I am just waiting for PP management to sell the last property I’ve got in my portfolio.

In case you’d be interested in joining Estateguru or Reinvest24, you are welcome to use my links below. Also, check out this comparison between the two.

Dividend Portfolio

Now I get to look into my dividend portfolio which has generated €181.7 of passive income this quarter (€148.81 last quarter).

I added a new stock to my DP, BlackRock (BLK) which is the global leader of mutual funds and assets under management. BlackRock had been on my watchlist for a long time, the recent market drop has made it more attractive, and decided to press the trigger at $593. The stock has been further down since then, but I plan to DCA while it stays at these good prices. My current gross yield on cost is 3.29%, which is more than acceptable at payout ratios around the 60s, a high dividend growth rate of 12.3% in the last 10 years, and a AA- credit rating. I consider BlackRock to be within the high quality profile of stocks.

I also bought some more Microsoft shares, and Home Depot and reinvested dividends in the same stocks except for AT&T and 3M.

This is how my dividend portfolio allocation is looking now:

Dividend Payments

I received dividend payments from these beauties:

Here’s an update on my year-over-year dividend comparison:

That’s the end of my life/financial quarterly report, next one will be in January 2023.