Just as we thought 2020 was a strange year, 2021 was even stranger. I feel like 2021 was perhaps worse simply because it really feels like a wasted year. However, as I sit here in Melbourne in the sun having enjoyed Christmas here, there is a lot to be happy about.
From a life point of view my goals for 2021 were as below:
- FI Fund of £230k – PASS
- Net worth of 430K – PASS
- Increase income by £20k. – FAIL
- Maintain savings rate of 67% – FAIL
- Purchase a car. – FAIL
- Establish a growth fund for my investments. – FAIL
- Get promotion at work. – FAIL
- Cycling at least twice a week. – FAIL
Hmm. Well, I’m being honest with myself I haven’t achieved most of the goals that I set out to achieve. Let’s go through them one by one to review the damage.
The FI fund goal has been smashed. I’m sitting at £255,433, up from £180,431 in December 2020. That’s an increase of about £75,000. That’s £26k more than I had wanted! Interestingly that is the same increase as last year, but my contributions were £57,000 in 2020 compared to £39,000 this year. That means that the return was higher, which is largely out of my control.
My investments into my pension were £13,191 which included the employer’s contribution. I had decided to decrease these as my calculations showed that even conservatively, I’d blow through the life time allowance. So that would mean my efforts were better focused on filling the ISA.
I have contributed £15,500 to my ISA and GIA account so far. Last year I had maxed out the ISA in 2020 due to my redundancy payment so had a fair amount in the GIA which I then transferred to my ISA. I left the Tesla shares separately as my broker won’t let me buy TSLA in my ISA for some reason (I think as it’s a US share). I have £5800 to go to max it out this year by April 2022. This is very achievable.
My progress to FI was 24% in December 2020 and is now 33% in December 2021. The fund has increased by 30% in the year (which includes contributions and growth).
My returns in 2021 have been excellent: 20.5%! I calculate these using the bogleheads returns calculator.
My previous years:
Three years annualised return: 12.2%.
The graph above shows that since I started my investing journey in 2018, £10,000 has now become £14,634. That is a great return from effectively investing and forgetting.
My biggest investing moves this year was to change the balance of my portfolio away from the UK to make it US focused. I sold my FTSE 100 tracker and bought VUSA (SP500) and VWRL and VWRP. This turned out to be a very good idea as my returns increased from 1.4% to 20.5%.
I own a small number of individual shares in Tesla (up 59%) and BP (up 69%) and they have done very well this year too.
Net worth hit £455k which is again, well above the £430K target. It’s an increase of £76K from £382k at this point last year. I have not included any increase on my flat’s value as I don’t believe it is saleable due to some leasehold issues. It is certainly not £0 value, but it’s not increasing. That’s another story which hopefully will be resolved in 2022.
I also paid off £6,083 of my mortgage. Not a huge amount but it’s chipping away bit by bit. And my policy is to invest rather than pay this down as it’s on 0.9% interest rate. I’m beginning to see results from choosing this path and I now have the confidence it was the right decision.
Savings rate was 53%. I’m pleased with that even though it was below 67%, which was last year’s rate, and was unlikely to be achievable as it included me saving most of my redundancy payment, and being locked down. We also spent more on life this year and less time locked down. Overall, a win for me.
Car purchase was a goal, but I actively decided not to purchase one. I came close several times but as prices in the used market were increasing dramatically and as I have no trade in, it seemed like I’d be paying over the odds for a used car. I’m waiting until the production of new cars increases a bit and prices start to fall again. I don’t need a car in London, so this was going to be a waste of money. I still want a car and will probably get one on some sort of finance this year. I’ve got by using Zipcar and renting cars for my holidays. I believe this approach saved a significant amount of money.
Establish a growth fund
Again, this was something I researched and then decided against. I’m sticking to index funds. The closest I came was buying Tesla stock which has been good so far. However, the effort required to research stocks and the fact that the market for tech growth stocks plummeted this year put me off. This goal was influenced by the amazing returns that people were reporting during 2020. However, I think many of these same people are quietly licking their wounds after tech growth stocks cratered.
Get a promotion at work
I did not gain a promotion at work. I am hopeful I will get one early in 2022. Quite frankly I was annoyed I didn’t get one in September but apparently promotions are rarely given in the September round. So, I’ve had to be patient. I’m teeing up some recruiters who have contacted me about jobs. I think if no promotion is forth coming, I will promote myself and leave the company. I also have not increased my income by £20k. I did get a bonus of £3500 and I’m expecting a further bonus which will be announced next year. So, it could be possible I will break through, but I can’t see me getting a £16,500 bonus.
Cycling twice a week
This again has been a failure. I did some cycling early in 2021 and was knocked off my bike by a car. As much as I tried to not be affected by it, it has put me off cycling for some time. I do love cycling but I’ve found motivation hard following the crash. I have instead been doing running to make up for the lack of exercise.
So, in review, it looks like I have smashed two goals with my FI fund and Net worth, opted out of my growth fund and car purchases goals, and failed on getting a promotion, cycling, and savings rate. I’ll take that. The promotion was really beyond my control, so I’m not really annoyed about that, and the savings rate was still good. Cycling was the one I’m annoyed about not achieving.
I am reluctant to set goals for 2022 having seen the goals from 2021 change due to circumstances outside of my control. I think I will limit them to financial goals this year.
Assuming I can contribute £36k next year to the fund and allowing for growth of 7%, my goal should be £255k * 1.07 + £36k = £308,850. So, call it £310k.
Savings rate goal for 2022 of above 50%. I think this is more realistic and as I achieved it last year, I will do so this year. I also want to spend more money on fun things this year so will have to accept my savings rate will reduce.
I got engaged in 2020. We didn’t make any plans for a wedding due to the pandemic and families being apart in the UK and Australia. Perhaps 2022 will be the year! I think it will be a small affair. We have been thinking of just getting a registry office wedding and then a celebration in a local pub. Keep it simple and small.
We are thinking of having a baby too. I’m not getting any younger and neither is Ms Wealthster. This could end my FIRE journey for good. There is a risk that we need to get IVF as we are both older.
Move to Australia
We have been thinking of moving to Australia for a while. Maybe this is a stretch goal for 2022. The idea is I want to get a decent amount of experience under my belt in my new field and then go to Australia. Lifestyle seems so much better here, and we’d be able to afford a bigger place to live with a better climate. It’s very hard to think about leaving London and all my friends. However, I know countless people who’ve left and never looked back.
So in conclusion, that is my 2021 review and a start at creating some goals for 2022.
Let me know what your goals will be for 2022 in the comments.