How my financial position has changed when I don't work - a four year review

Nearly 5 years ago I decided to take the plunge and get out of the cat race in UK. I quit my job, sold my flat in UK, bought another one so I was mortgage free. Then I moved from UK to Taiwan in April 2016.

Taiwan is a relatively low cost country compared to UK, it's not as westernized or advanced as say Hong Kong or Japan, and even its capital Taipei is pretty local compared to other major Asian country capitals. I remember going to Bangkok last year, stepping into Icon Siam and thinking, wow I wish we had something like this in Taiwan.

Anyway, I degressed. Moving to Taiwan, meant I would live off my rental income and not have to work - at least that was the plan. Each month, I give myself an allowance for my living expenses in Taiwan. My monthly budget is NTD60k to cover all my expenses in Taiwan, this includes my rent. It equates to £1600 at the current rate. Considering a fresh graduate starting salary in Taiwan is NTD23.8k/£640, this is on the generous side by local standards. I wanted a decent quality of life and didn't want compromise my lifestyle too much. I mean I'm by no means living an extravagant lifestyle, and have cut back on a lot of things already. I just wanted to make sure I didn't feel miserable by living too frugal. I think I've earned this having worked for so many years.

NO CHANGE IN MY ASSETS

This is the state of my finances starting from April 2016 when I first moved to Taiwan. For obvious reasons, I won't be revealing actual numbers on my finances, I'll be talking about trends and movements. Some months I forget to do my finances but there's enough data to get the trend.

I've broken down my assets in three main categories based on their liquidity, cash, shares and funds. The purple big block is the trend of my total assets over the four and half years. The biggest message from this graph are the beginning and end points. They are pretty much level which means there is no change in the value of my asset over the period despite me not working. Great news!

The bad news is that I encountered my first and biggest setback in Jun 2016, two months after my plan started. BREXIT!!! Leaving UK didn't mean I was immune from it as my assets were mainly in UK. The £ tanked by 25% against the NTD after Brexit! When I did my original budget, the £ was worth NTD48, and my NTD60k monthly allowance cost me around £1200. Now it's £1600, a 33% increase!!! That's the main reason why my cash, the blue line above has depleted quite a lot. You can't see it very well in this chart, but it will be apparent later on.

Shares and funds were in a pretty depressing state back in April 2016. Since then, they've recovered quite well, particularly my funds (the geen line) which have improved quite significantly. I also swapped a stupid highish risk mineral based fund to a global industrial one. That's helped me gain some traction. Shares (the red line) did OK in the first few years till it lost ground this year during Covid and dropped back down. I don't actively trade in the market, I tend to buy shares and let them sit there for the long run. Most of the shares I bought have done pretty well making up for a handful lost making ones. But I really should take a look at my portfolio given the market is pretty low at the moment and see if I can pick up any bargains for the long run.

But overall, my asset value has increased since April 2016, till it dipped back down in 2020 and is around the same level as before. I think that's a not bad position to be in.

ASSET BREAKDOWN

This graph shows the composite of my assets over time. The blue area is cash, red shares and green funds. In April 2016 and November 2020 respectively, the split is, cash 31%/19%, shares 42%/34% and funds 27%/47%. The cash proportion has dropped as expected as it's more outgoings than incoming. Shares dropped due to the market tanking this year, plus I sold some shares over the period, otherwise my cash proportion would be even lower. Funds now take up the majority of portfolio. I'm still old school, and despite the fees and everything, so far the funds have done pretty well for me and I don't really have to worry about them.

If my financial position was healthier, ie the £ didn't tank so much and there was no Covid impact, I might have started a fourth category of assets - crypto. I had a little dab recently when I sold some Steem and invested in BTC. I bought some at around $9k, and was really chuffed when I made a modest 10% profit within a month. That was back in July. Why did I sell it???? Hindsight is always a great thing, and maybe I was just not meant to start a crypto portfolio.

THE REAL CHANGES

This is the chart that really tells the story about how my financial position have changed over the years. Taking April 2016 as a snapshot, each month I track how much the value of each category has changed compared to the snapshot. The changes takes into account of exchange rate impacts (some assets aren't in £) and changes in volume ( selling off some assets).

It won't come as a surprise the blue line is cash and is on a downward trend. My rental income doesn't cover all my living expenses, so I do have to dig into savings. The interesting thing is that from around June 2019, the cash position has remained pretty much. stable. One reason for this is because I started to realise some of my shares due to political and economic unstability. And during this year I have actually spent less due to lockdown. So at least one good thing has come out of Covid! Overall, by November 2020, my cash has dropped by 35% compared to April 2016.

The red line is stock and shares. It went up for two years and started to drop in June 2018. I can't remember the reason for that. Then there was another tank in October 2019, I have some exposure in Hong Kong, and the way Chinazi has gone about to trash Hong Kong definitely didn't help. The next tank was this year when Covid made its appearance on the global platform. In February the value of my shares fell by 7% compared to April 2016. It continued to dive and in September lost 20% of its value. The last data point shows a bit of recovery. That's because I did it today and it takes into account of the fantastic news about the Covid vaccine these few days.

CONCLUSION

After all these yo yos over the years - Brexit, Covid, economic and poliical turnmoil - the net impact of my financial position is a 6% increase in the value of my assets. Basically no change. I achieved my get- out-of-the-rate-race-and-not-doing-much life, and survived these turbulent times pretty much unscathed. What remains to be seen, is what happens in the next four year. Will I still be able to achieve that, and when will we come out of Covid?