November 2014 Update

November update here.

It was good to see the bounce back this month as all that red was looking a little depressing.

I have been practising a little market timing, hanging on and waiting to sell another £10,000 of my CIS UK Growth fund until it came back up to the price that it has been hovering around for most of the year. This fund has beaten the UK All Share index over the last 3 years so it does feel a little strange to be cutting down on it, but my portfolio is so unbalanced and having so much in one UK based fund is not such a good idea so I went ahead with my plan and sold when the price was right.

I must admit that I struggled with what to spend the money on. I read up on where those in the know (is there such a thing?) think the value is and the consensus seems to be that Europe, Japan, emerging markets (and to some extent the UK) are not over expensive so I split the money between my trackers and Investment Trusts in those areas. (ermine has just put up a great post on this subject which confirmed what I had gone with which cheered me up). I also put another £1000 into my Global Clean Energy tracker.

However, I didn't manage to re-distribute all the money and still have £3,000 sitting there in cash which I need to do something with. I've missed the 23rd of the month which is Interactive Investor's day for regular payments when trades only cost £1.50 and I only have £12 commission credit left, so I'm loath to pay £10 per trade and spread it around. This means I either have to put it all in one place or leave it till next month when inspiration might have hit about what to buy.

I've still got very cold feet about a US tracker which is what my masterplan says I should be buying but maybe I really did ought to bite the bullet on this - see below for current asset allocation which still looks very unbalanced in favour of the UK despite the fact that I've halved my UK Growth fund and been buying elsewhere. Must try harder :-)

Asset Classes	Total(%)
UK Equities	34.3
Money Market	18.8
UK Corporate Fixed Interest	7
US Equities	4.9
Property Shares	3.6
Europe ex UK Equities	2.1
Japanese Equities	1.9
Commodity & Energy	1.9
German Equities	1
Other Holdings	24.5

What would the end (of profit) look like?

Scenario 1 - Climate Change. Ever since the IPPC climate change report last month I have been pondering on the much quoted tenet that we can trust in the markets to continue to provide growth, despite the occasional small or large setback, until the point at which we will have much more to worry about than the state of our investments. That is , until the political, economic and social fabric of the world breaks down and all hell is let loose. This "fact" is generally meant to be reassuring, in a "don't worry, it won't happen yet" kind of way. I tend to think this is an over optimist view of the situation. Things are getting pretty bad and nothing much is being done.

Scenario 2 - The Blight of Inequality. My thoughts on How Rich Are You on C4 this week were "thank goodness these facts and ideas have made it out into the public domain, shame it had to be done in such a simplistic way, but at least it's a start". The trouble is that solutions seem few and far between. On the surface the problem is not one that should worry those of us who are lucky enough to be able to take advantage of the shift from labour to capital, that is those of us with money in the system, but the real issue affects us all. That issue is social unrest and fragmentation, the failure of the state and the further breakdown of social justice. How would wealth feel in an increasingly "nasty" and unbalanced society. Not my idea of the good (profitable) life.

Scenario 3 - The "Interstellar" effect. I saw this much hyped film at the weekend and then read this review of it this morning which crystallised my unease about its slant as regards climate change but also its more general message. We are suffering from a similar type of political defeatism in the UK at the moment. There is very little strength of purpose, imagination or moral fibre in the messages being given by main stream politicians who seem to live in fear of saying the wrong thing rather than be shouting out the right things (I exclude the Greens from this). The fear of making choices because they may be unpopular is not what we need from politicians and, in the case of some issues, things are fast reaching (and may have passed) the tipping point.



Depressing mid-week thoughts I'm afraid, but we live in dangerous times.

Talking to the Taxman about Rental Income

Getting the tax sorted on our studio flat rental has always been a real pain. Don't get me wrong, I have no problem with paying what I owe, especially on rental income as it's not even earned, but I do object to the waste of time trying to find out what we need to do and when we need to do it. Especially as this seems to depend on the personal viewpoint of the officer on the other end of the phone, rather than a properly defined process.

Because our income from the flat is a fairly small amount and we split it between the two of us, we are below the threshold for needing to fill in a self assessment form (£10,000 net pre deductions and/or £2,500 net after allowable deductions). This is good news on one hand as we don't have to worry about the forms, but bad from another as sometimes (depending on the tax officer we happen to speak to that year) we end up having to do the work of supplying all the documentation anyway, along with an accompanying letter. This takes more time than filling in the form would have done and has been known to generate months of letters back and forth as they ask supplementary questions, eventually deciding we don't owe them anything anyway.

Up until this year that is. We paid the mortgage off last December and so no longer have the mortgage interest as an expense to offset against the tax. In tax year 2014/15 we are actually making a profit! Along with the fact that our letting agent expenses have shrunk enormously this year and we have gained control of the whole process, this means that I finally feel that the flat is a reliable asset in our income strategy. It is a very good feeling.

We phoned up the tax office this week and gave our estimates for how much profit we think we will make this year having offset the allowable expenses (letting fees, service charge, 10% wear and tear and the costs for the maintenance we've carried out). We were both lucky and got through to officers who were prepared to take the figures over the phone and simply adjust our PAYE codes so the job was done there and then.
Fingers crossed for next year.

October 2014 Update.

Portfolio update here.

 It's been a rollercoaster of a month that finished on a high - apparently due to action taken by the Bank of Japan to stimulate the economy. My portfolio certainly looks a lot better for it.

In other news I am feeling very pleased with myself for two reasons:

 1) Making such a success of ditching our letting agent and finding a new tenant with only 6 days lost revenue between rentals. I have OpenRent to thank for this and am driving everyone bonkers singing the praises of their service which I really can't believe only cost us £49. I'm still pinching myself.

 2) Fixing my broken Chromebook myself rather than taking the easy route and buying another. I took out the screen from the one with the scrambled OS which died last week and couldn't be revived and put it into the one with the cracked screen I dropped last year. The whole thing was as easy as pie (aided by an instructional video on YouTube) but, I'm ashamed to say, not the kind of thing I would usually attempt. A good lesson to learn. Along with "Be more careful with your ChromeBook" .