2024 update!

It's been a long time since I've done a new blog, and my word a lot has changed in the past 2 years! This update will aim to bring you up to speed with what my circumstances look like, what has worked, what hasn't, what my current strategy is and how it has altered from 2 years ago.

Strap in, there's a fair amount of Excel charts going on!

Summary:

• My Net worth in Q1 2022 was £699k, it now stands at £961k! Staring down the barrel of becoming an actual millionaire in a few months time!
• In my last post I still had a mortgage. This got paid off in Q2 2022 and we've been mortgage free for a couple of years now
• I've changed job. Similar role and sector as well as wage, but very different working dynamic. Still as flexible as ever regarding working hours and location which is my priority with 2 young kids and wanting to be a present Dad.
• Pension has gone from £143k to £242k

Family / holidays:

• I've been intentionally spending more on holidays and experiences in the past year.
• Having read Die With Zero by Bill Perkins, it acted as a bit of a counter-argument to the FIRE movement and emphasises the compound memory returns you get if you spend on experiences.
• In 2023 we did:
• Disneyland Paris (Feb)
• Edinburgh (Jun)
• Camping - Skipton and Humberstone (Summer)
• Music Festival Camping - Y Not Festival (Aug)
• Copenhagen (Sep)
• Lake District (Oct) For me and my wife's 10 year wedding anniversary
• In 2024 we are planning:
• Billund for a long weekend in Easter. My son is obsessed with Lego, we really liked Denmark last year and we can get decent flights around Easter.
• Germany for 10 days in June. Travelling around Bavaria and the Austrian border and visiting friends in Munich, also paying a visit to Legoland Germany (seeing a trend?)

I never thought we'd be planning to visit two continental Legoland resorts in the same year, but my son is a typical 8 year old boy and it seems right to strike whilst the time is right!

Net Worth trend:

Above is how my net worth trend is looking. The exponential curve is really starting to show! In the last year it has jumped up over £150 which is almost 50% more than what our pre-tax household income is.

The breakdown of the increase in the last year is as follows:

2023/24 targets:

The above chart shows what my financial targets are for the current tax year, in priority order from left to right. In addition to the above, I have been sacrificing 34% of my wage into my pension, although in the past month this has changed with me getting a different role, more on that below.

Work:

Towards the end of 2023 I handed in my notice at my last place of work and joined another Cyber Security company in a similar role and a similar wage.

I was actually all set to leave my role and take some time off without having anything else lined up, however a recruiter contacted me at the right time and had a good role lined up for me.

The biggest difference in compensation for my old job and new job is how my pension is paid. I was able to salary sacrifice 34% of my wage (plus 6% employer contribution) to my pension pot, but my new employer operates a 'relief at source' mechanism instead with a 5% matching contribution.

In addition, the default pension provider my new workplace use is NEST. Now, NEST has high front loaded fees and I was extremely keen to avoid using this if possible. I set about researching different providers and quickly found that my beloved Vanguard don't actually allow employers to contribute to their SIPP accounts. I came across Interactive Investor which operates a flat fee structure and offers all of my beloved Vanguard funds at the same price. In addition, they were also offering a healthy cashback incentive as well. Not only have I moved my old workplace pension to ii saving a whack, but I asked my new work if they could pay into ii and they said yes! High NEST fees swerved!

I found that:

• £200k in Aviva (old workplace platform) costs me around £700 a year (0.35%)
• The same with Interactive Investor will cost me £156 (flat rate!)

If anyone is considering Interactive Investor then they still have their cashback offer on, and you can also benefit from the first year fee-free if you register via this link (message me for my details):

https://www.ii.co.uk/recommend-ii

The switch was extremely easy and much quicker than I thought. My money from Aviva was in Interactive Investor in less than a week. I'm currently debating moving my ISA over there as well, although I could be tempted with the current Hargreaves Lansdown cashback as well.

Pension:

My current pension pot totals £242k, with £50k of that being a DB pension from my time working in the public sector.

In the current tax year I aim to contribute another £12k, which after tax relief will get me an additional £16k in the pension pot. Using the above compound interest calculation, this amount will tick up to roughly £1m by my pension age. This should be more than enough to live on given I have a paid off house and live relatively sensibly.

It is for that reason that for the next few years I am switching my strategy from heavily paying into a pension to concentrating on my 'bridge' pots, predominantly ISAs and GIAs.

I will still be contributing into my pension to get the employer match (£4k me, £4k employer), however I am still in two minds whether to put anything additional in over and above this. One of the major reasons why I did was to also benefit from not having to pay the High Income Child Benefit Charge (HICBC), which effectively meant I was paying 64% tax between £50-60k income once the Child Benefit had been paid back.

It might be a prudent option for me to assess where I am this time next year, and it may be an option to transfer some post-tax savings in my GIA/Premium Bonds to my pension pot.

A lot of it depends on income tax thresholds, pension tax relief, CGT and Child Benefit thresholds all of which I imagine will change a lot over the next 12 months, both from the Conservatives offering carrots in the budget next month but also from what Labour will implement when they (inevitably) come into power.

2024/25 targets:

Above are my targets for the next tax year. As mentioned above, a lot could change with thresholds/limits and so this is a rough draft a the minute.

One of the key differences is that I will be ploughing a good amount into a GIA for the first time. Unfortunately this also coincides with a reduction in the CGT allowance from £6k to £3, so I have set my target for the GIA at £20k and would plan to 'Bed & ISA' at the end of the tax year. This allows the GIA fund to make 15% return before I need to worry about paying CGT. 

ISA:

I'm really please with how well my S&S ISA has done over the past year, as you can see from the above chart the two lines (contributions vs balance) is starting to really take off and compound.

I've worked out what income my S&S ISA has given me over the past few years. The above bar chart shows that buying the dip during the COVID crisis really helped my pot, and after a couple of years of low (but still positive) returns, the returns from the current tax year have been the highest yet.

Phew. Well, there's a real high level of what has been going on, and what my strategy is going forward. Like I said, I aim to give more regular (hopefully shorter!) updates going forwards. As always, I welcome your feedback either on here or on my Twitter account.