Income Report – 2018 January

vuurtoren breskens lighthouse

So how did the back end of 2017 go…

Well, I can’t complain, a few ups and downs but healthy progress has been made overall.

I hit two out of my four targets, which is a tad disappointing…  let’s walk through things.

Recap of Previous Quarter

Target 1 was to add another £5000 to the ISA. To invest in one solid dividend paying company. Maybe IBM, bit more research required.

SUCCESS. Invested 5500 in ISA, that leaves another 4500 until I hit the annual limit of £20000. I bought £3000 worth of shares in AT&T after they missed an earnings target. They were on sale at $33.80. The yield on these shares is 5.85% so I’m content with that. I don’t think AT&T are going anywhere fast.

I also bought IBM, with an investment of £2500. IBM are slowly turning things around and I think their Artificial Intelligence arm will begin to start generating decent profits in the coming years. Bought for $154 on a dividend yield of 3.9%.

In addition to these two solid dividend payers I had a punt on a small Australian cobalt mining company (Cobalt Blue Holdings). I was reading about electric vehicles and Lithium and realised I’d missed the boat on that. However, cobalt is also a big component of batteries and I found this little diamond. I invested £500 at 19 aussie cents. At the time of writing the price has jumped significantly and I’m sitting on a healthy profit of over AUS$2600. Not sure what that is in real money but it would be enough to fly me down under. I might have to cash some of this in.

Target 2 was another £5000 in the house fund. I’d like to buy a place and start seeing some income. This would allow me to stretch out my emergency fund for longer.

SUCCESS. I had an epiphany on the house front. I realised I could create a new company for buy to lets and transfer cash from my existing company thereby saving myself a 32% tax hit. I’ve now cordoned off a chunk of my existing profits and used the cash in hand for living expenses. The net result is that my house fund has jumped from £21000 to £50000. Result.

Target 3 was to add £2000 to the emergency fund

FAIL. The emergency fund has been depleted another £1000 which is in the opposite direction to the plan. Setting myself up for sleepless nights here…

Target 4 was to open a SIPP. It makes sense with the amount of tax I can save. When I get to 55 I’ll take a chunk out to pay off my villa in Portugal (once I’ve found it). The tax savings make this a sound idea, despite the fact that it seems the distant future.

FAIL. I applied for a SIPP with AJBell and got caught in a catch 22 with their sign up process. Began to lose the will to live. Gave up on this for the quarter.

Target 5 was to open negotiations on one of my outstanding debts. I’ll see if I can negotiate a settlement over the next few months.

FAIL. I continue to receive letters about outstanding debts and my credit score is abysmal. This is affecting my ability to get a mortgage for the investment properties so needs to be prioritised a little more if I’m to hit my income goals. It’s gonna hurt but I need to stop putting it off.

Passive Income for previous 3 months

  • Property: £0
  • Dividends: £157.18
  • P2P Loans: £0.40
  • SideBiz: £0

The dividends came from four companies.

  • Medica Group = £4.68. Chipped in with less than a fiver. This company seemed poised to takeover it’s niche but it’s turned out to be a slow burner. I’ll re-assess my position in a year.
  • IG = £80.08. I invested the same amount in IG as I did in Medica Group. And its returns are 20 times better. Not to mention that it’s share price has risen over 30% since I bought it.
  • Greencoat = £52.44. Steady as you like. Quarterly payers like this are the way forward.
  • IBM = £19.98. This pays dividends quarterly, as is my other purchase – AT&T. If things goto plan I should expect over £100 each quarter from my trio of IBM, AT&T and Greencoat.

So this is a 10% increase over last quarter. And looking at forward dividends my total is just over £900. The two solid purchases this quarter have bumped up my expected yearly income nicely.

So the monthly income split is still dominated by dividends.

Passive Income 2018 January

Net Worth January 2018

  • Property Savings: £50000 (Previous £21833)
  • Shares Value: £27806 (Previous £19380)
  • Cash in ISA Share Account: £114.10 (Previous £165)
  • Zopa Account: £104.75
  • Cryptocurrency: £13000 (Previous £2102.18)
  • Emergency Fund: £1120.51 (Previous £2201.52)
  • Debt: £-16200 (Previous £-16200)
  • Total Net Worth:  £75,964 (Previous £29586)

So, with a little smart accounting I’ve bumped up my available cash for a property. I’ve had a nice boost on some shares along with investing additional funds.   On the crypto front I have now put in about £5000 which I timed nicely to take advantage of some ridiculous growth, this has added another chunk of paper money.

Net Worth 2018 January

In terms of diversification, I’m relatively happy with the split on the stocks. I dumped Interserve this quarter after they released a trading statement saying they might break the banking covenants.

Flirting with bankruptcy was the final straw for me so I sold them for 30% of what I initially paid. That’s turned out to be a smart move, since a chunk of that money was invested in Cobalt Blue Holdings which have gone up over 300% since I bought them. Very lucky timing on my part, which makes up for the depressing Interserve saga.

Portfolio diversification 2018 January1

So, with a little smart accounting I’ve bumped up my available cash for a property. I’ve had a nice boost on some shares along with investing additional funds.   On the crypto front I have now put in about £5000 which I timed nicely to take advantage of some ridiculous growth, this has added another chunk of paper money.

Aims for next quarter

Three of the five aims from the last quarter went unachieved so I will re-examine those. In order of priority my aims have to be

Target 1 – Buy an investment property in readiness for Student rental in July. There is 50k burning a hole in my bank account. I hope to turn this into a £400 monthly income.

Target 2 – Parlay my crypto “investments” into something more akin to a dividend and implement stronger security. There are some new energy cryptos such as restart energy and wepower which seem to offer a healthy income. I’ve missed the ICO train, but I plan to sell my more speculative coins for these and also investigate staking coins a little more.

Target 3 – Complete my ISA funding for the year. This requires another £4500 input, which would take me to £32000 value in total. With a 4% dividend yield I should be expecting forward dividends of £1280. I will stick to big dividend payers going cheap with a slim portion reserved each year for small stocks such as Blue Prism and Cobalt Blue Holdings. On the big dividend payers front I’m eyeing up Lloyds at the moment. I also keep reading about commodities entering an upwards phase in the market cycle so I might have to do some research…

Target 4 – Open a SIPP and deposit £5000. I don’t have a company pension at the moment since I’m flying solo. This is a backup should everything else go south. I’m planning on being retired before this is available, but it should serve as a nice boost when I get to 55. I might finally have found somewhere I want to buy a place and I’ll consider a lump sum to put towards that. At the moment I’m not even considering my pension on my net worth… I should probably amend that.

I think 4 targets per quarter is plenty, I don’t want to depress myself by continually missing them!

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