September – a month of sorrow

September 2022 was a momentous month. First we had a new Prime Minister and shortly after she was appointed, Her Majesty Queen Elizabeth II passed away.

As a nation we always knew that this would happen but nothing really can prepare you for what would come. I am not a die hard Royalist but I was surprised at how sad I found it. I think if you’ve lost someone close, in my case my father, an event like this brings up a lot of emotions.

Anyway she had a good life and I thank her for her service. Long live the King.

The additional bank holiday was a bonus and the period of mourning had a strangely subdued atmosphere.

Work has picked up and I was actually fairly busy for a change after a few months in the doldrums. It was also strongly hinted that I’m to be promoted next year but as always with these things I’ll save the celebrations until it’s official.

Mrs Wealthster and I purchased a new sofa. Our current sofa is about 12 years old and has passed its best. It is our first significant joint purchase together as a married couple. We initially looked at this sofa back in April or May but left it as we were busy with the wedding. It worked out well as the shop was having a 15% off sale so we saved several hundred pounds. I like it when things work out that way.

The markets were abysmal this month. With both the pound and S&P500 falling I was in a strange situation where occasionally the losses were not evident in my portfolio. However this was an illusion, much in the same way that the Pound is a real currency but in fact is not. Despite the Pound’s crash at the end of the month its value has returned to a less dire situation than where it hit an all time low against the dollar.

Interest rates are climbing too. I have a fixed rate (0.99%) mortgage until July 2023 so I will be ok until then. I also pay a very low mortgage of £740 per month which probably wouldn’t even get a single room in London these days so I count myself very lucky. When I bought my place 10 years ago I was on a 5% mortgage which was about £1250 pm. In short, I am not worried about the interest rate rises.

Property prices are set to fall too, which in my position, might give me a chance of moving up the property ladder at a reasonable cost. Although because mortgages are based on affordability, it remains to be seen whether my purchasing power will be reduced as a result of higher interest payments.

My thoughts do turn to friends who may have pushed their resources to buy a property in the last few years as they may find they are in for a nasty surprise at the end of their fixed rate deal. Their response is usually “Well I’ve got a 5 year fixed until 2024” or similar but there seems to be an assumption that the interest rate rises will be temporary. The shock on a mortgage of £600k would be the monthly payment rising from £2544 at 2% to

£3877 at 6% (up £1333) and £4244 (up £1700) at 7%.

The shock may seem to be far off in the distance but it will come and it will hit hard. In many ways I’m glad I didn’t fall into that trap. Interest rates were always going to rise (they were the lowest they had ever been) so in my opinion it shouldn’t be a surprise that this happened.

We are entering a “brave new world” (terrifying) with a new King and Prime Minister and an economic dark winter looming. I’m in a great financial position to weather the storm but it’s still going to hurt.

I have done my figures but as I’m at the airport writing this on my phone I can’t give them in the usual way.

Net worth is down £7145 to £457k in the month.

FI fund is down £7651 to £257k in the month.

I did manage to invest £1400 in the market and also received around $700 of dividends.

Savings rate was at 51% in September.

Peace out.

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