Before I share with you our September 2021 results, I promised you something in July 2021’s results’ post. I promised I’ll share with you what we’ve been up to the past month. After that, we can talk about the numbers.
What have we been up to this week/month?
This month, just like August, was also about family.
This time, it was Lazy FI Mum’s side of the family.
It started with her brother coming over for roughly a week. We went out to a few restaurants (yes, through mystery dining). We even managed to fit in a visit to Epping forest, that place deserves a separate post.
The day he left, his mother arrived.
Lazy FI Mum’s mum stayed for around a week and a half. during her last few days (in the UK, this sounds morbid for no reason) we went out of London. It started with a day trip to Windsor on Saturday and then we all went on a holiday to Canterbury from Sunday to Tuesday. We had a great time. We also went to the beach (Whitstable) and a wild animal park.
It was incredibly helpful having them here because September was full of Jewish holidays, which meant our daughter’s childcare was closed for most of the month.
Before all these visitors came over, I also took a day off work and took our daughter for a day out in Greenwich. It was one of the best days of my life, we had so much fun. We went to a soft play place, Cutty Sark, Nando’s (of course), the views from outside the observatory, the painted hall, and we even popped down to Canary wharf. We had so much fun, it was great.
2 days later I took another day off, where we went to the Sky Garden (top floor of the walkie talkie building) and of course… to Nando’s.
In case you were wondering, yes- we went to Nando’s in Canterbury too (twice). Our daughter loves their food so we’ll keep going back.
Now, to the less positive part of this month.
Work, 100%. Work was so busy this month, it was crazy. Thank god I took all this time off, definitely needed it. Don’t get me wrong, my job is still interesting, it’s just a very busy period at work (all jobs have this I guess). The contrast between the intensity of work and spending relaxed time with family motivated me to reach FI even more.
One thing I told Lazy FI Mum while we were at the wild animal park was that I noticed it was so quiet there. It was because it was midweek, everyone was at work. If that is how FI life looks like, sign me up!
Speaking of FI, let’s see how our August 2021 results look like.
September 2021 results- savings rate
Our savings rate for August 2021 was 60.66%. As a reminder, my long term target is 40% with 50% being an ambitious target.
Our (weighted) average savings rate for the past 6 months is 58.84%. As March 2021 resulted in a negative (!) savings rate, it is (finally) not included in the 6-month-weighted average savings rate. Our 12-month-weighted average savings rate is 52.42% (phew).
For the second month in a row- all three (monthly, 6-month and 12-month) savings rates are above 50%, I’m very happy with that.
September 2021 results- What was different this month?
Every month something unusual happens. Sometimes it’s a one-off expense and sometimes it’s a one-off income. The fact that this happens every single month amuses me but also makes it harder to analyse the savings rate and draw conclusions. That’s why I also use the 6-month (and 12-month) average figure to “smooth” the data.
Anyway, what was different this month?
Not too much to be honest.
As we had guests over, the “going out” and “eating out” categories naturally go up.
A category that went up is “Mystery dining”, which you can read more about in the post I wrote about it. I had some visits (mystery dines) for which I paid for but will only be reimbursed in October. If I had no visits in October, that would result in a “negative expense” but I do have some booked so we’ll see when I’ll get reimbursed for those.
The biggest increase is, of course, the “holiday” category. That’s due to our 3-day trip to Canterbury, which includes the costs of train fare, the Airbnb costs, activities while there and most other expenses.
“So how did you manage a 60% savings rate?”
First, it’s automation. In our July 2021 results, I shared with you a new conclusion I reached. I noticed that even if we spend everything that we (net) earn, we’ll still hit a 40% savings rate. That means that just by continuing to contribute to our pensions as we normally do and paying our mortgage (which is mostly principal), we should reach a 40% savings rate even if we spent and income left over.
Second, one of our biggest expenses is childcare. However, we pay this by contributing towards our daughter’s tax-free childcare account once a quarter. There were no contributions needed this month, which means lower expenses, which then means a higher savings rate.
September 2021 results- Net worth
In September 2021, our net worth increased by 0.15%. The 0.15% is made of 2 parts:
- Our actual savings increased our net worth by 1.29%
- Our investments went down in value, which decreased our net worth by 1.15%
I know this sums to 0.14% but that’s due to rounding. 0.15% is the more accurate number.
While Mr Market did try to show us who’s the boss, our savings did manage to offset the dip in the market. However, I’m humble enough to know that this will not be the case if a real crash comes around.
Achieving FI– how far are we into our journey?
Reminder: I set our FI number (how much we need to retire) in July 2020 and update it every month for inflation (I use CPIH* index).
At the end of September 2021, our net worth is 28.18% (August 2021:28.32%) of that number.
The 0.14% decrease in our FI journey (as a percentage of our FI number) from 28.32% to 28.18% means a real (inflation-adjusted) decrease of 0.48%** (28.18/28.32 – 1), which can be broken down into these two parts:
- Our nominal net worth increased by 0.15% as mentioned above.
- The CPIH index increased by 0.63%, which decreased our real (inflation-adjusted) net worth.
Despite our (small) increase in net worth, inflation hit us with an increase. That means that while we have a nominal increase in net worth, we have a decrease in real net worth.
As you can see, 3 factors aren’t in our control:
- The market performance (are our investments worth more or less this month?)
- FX rate (are our Israeli Shekels worth more pounds or less compared to last month?)
- Inflation (are things more expensive than last month?)
As these factors are out of our control- I’m still happy with this month’s results as we crushed it where we did have control, our savings rate.
When can we achieve FI (and possibly retire)?
Based on my current calculations, I and Lazy FI Mum should both be able to retire in 2030/2031 if we wish to. This is the same result as last month. I only look at full (tax, April-April) years so it takes a lot to move a full year.
However, I run 2 more calculations each month:
What if we only pay our mortgage, contribute to our pensions and max our LISAs (no other savings or investments)?
Well, this will push our date back to 2031/2032, 1 year back. Same as last month.
What if we don’t even contribute to our LISAs and just pay our mortgage and keep our pension contributions?
This will push us back by 2 more years to 2033/2034. Again, same as last month.
I’m still happy with these results. They mean that I will be able to reach FI at the age of 46 even if we reduce our investments significantly.
Well, that’s our September 2021 results, have a great weekend everyone!
*CPIH- “Consumer Price Inflation including owner-occupiers’ Housing costs”. As we are consumers and we do, partly, own our home- I think this is the best inflation metric for us. You can see the changes in the index here.
**The calculation in the brackets gets you to a 0.49% real net worth decrease but that’s due to rounding differences. 0.48% is our actual real net worth decrease for September 2021.