Here it is! Our financial review for 2020. Below, we’ll detail how we each got on this year, including progress towards our FIRE goals.
If you want to see a more personal review of 2020, see this post by Mr Way.
Mr Way
As far as my FIRE journey is concerned, it has been steady away in 2020. I’ve spent a bit less than usual because of the restrictions, but the savings have just ticked over without too much thought.
I have a monthly payment of £1,000 into my ISA which leaves me more than enough for other spending. Another £250 goes into a regular saver each month with a reasonable interest rate. I usually let the rest stack up in my current account until I get round to putting an extra lump sum into my ISA! Probably not the most efficient way of working, but it works for me.
I did throw some extra cash into my ISA around March time when markets had taken a battering. This is kind of against the passive investor outlook, but who cares! It’s something I will probably continue to do, as I generally have a little bit of a cash buffer in my current account. If I feel like it, I’ll continue to throw this into my accounts when the markets take a wobble!
Having been lucky enough to receive a promotion this year, I’m now in the position that I can probably safely increase my monthly ISA payment. This feels like a ridiculous position to be in with so many suffering this year, but I’m not going to say no to the extra cash! I think my company has continued to be fairly profitable through Covid so far, so hopefully that continues longer term.
The Numbers
Here’s an overview of how my numbers look, in comparison to March, when we last updated.
| Account | Balance (March 20) | Balance (Dec 20) |
|---|---|---|
| Stocks & Shares ISA | £70,400 | £108,069 |
| Workplace Pension | £17,200 | £25,630 |
| SIPP | £3,800 | £5,802 |
| Total | £91,400 | £139,501 |
This means I am now 37.2% FI!
In March, I was 24.4% FI as detailed here!
The increase since March looks pretty shocking, but don’t forget where global markets were at that time!
I’m still a long way from reaching FIRE status, so the market fluctuations don’t worry me too much at this point. It’s nice to be able to continue to drop those monthly payments in through the turbulent times we’ve seen in 2020.
While it would be nice to be able to buy at low levels again, I’m not sure I fancy another year quite like 2020 for a while. I’ll take a bit of steady growth for a while please!
My FIRE goal is based on the 4% rule and annual spending of £15,000. If you keep up to date with our Monthly Spending posts, you’ll know this is quite a comfortable level of spending for me. This combination gives me a rough goal of £375,000.
Exclusions
As mentioned before, the above doesn’t take into account my emergency fund or our house equity.
My emergency fund is around 6 months’ spending. I currently keep it in premium bonds while there are no decent savings accounts to be had!
We have around £75,000 of equity in our house between the 2 of us. Our current spending (~£15k each per year) includes mortgage payments, but once paid off we would simply divert these extra funds into an increased holiday budget to make the most of our early retirement!
Bring on 2021!
That’s it for my 2020 financial review! It doesn’t feel like I do much towards my FIRE goals at the moment because everything is just on autopilot. I don’t like to spend much, so I never feel like I’m missing out. Fingers crossed this continues, as it’s nice to feel like you’re doing everything you want while also watching your bank balances take off!
Miss Way
2020 has been a solid year for Miss Way too. Her income hasn’t been as high as usual, due to starting maternity leave in July. She had quite a large cash buffer ready for this situation so has continued ISA contributions etc.
The table below gives a summary of Miss Way’s current ‘FI Fund’ balance. Again, this is compared to the last financial review from March 2020.
| Account | Balance (March 20) | Balance (Dec 20) |
|---|---|---|
| Stocks & Shares ISA | £47,400 | £68,309 |
| Total | £47,400 | £68,309 |
This means Miss Way is now 18.2% FI!
In March, she was 12.6% FI as detailed here!
As in my financial review above, this ignores Miss Way’s emergency fund and house equity.
Miss Way holds a larger emergency fund (>1 year spending). This is because she’s self employed and also now on maternity leave, so her work situation is quite unknown in the next few years.
The above figure also ignores Miss Way’s pension. The Teacher’s Pension is a defined benefit system. It is available from age 60. Unfortunately we don’t currently know how much Miss Way is eligible for so far, because their system is useless!
As we discussed in our New Year update, Miss Way is always likely to maintain some form of work, even post-FIRE. She finds the structure this provides benefits her mental health and general productivity levels. As such, she doesn’t technically need a full FI Fund in the same way. Considering this, she’s in a very strong position already!
Overview
All in all, it has been a pretty good year for our FIRE goals. Markets have done surprisingly well considering all of the uncertainty, so we’ll see what the coming years bring.
All of that is out of our control, so we’ll just continue sticking our monthly contributions in and see where we end up by the next financial review!
We’re hoping for a much more normal 2021 but whatever happens, we’ll keep you updated!
In the next few days we’ll be posting our usual monthly spending post as well as a summary of all of our spending throughout 2020.
Keep in touch, and have a fantastic 2021!