Not the most successful month, house prices seem to have stabilised, and I don’t expect many increases on this front (likely a sell-off in the short-mid term). Still, I am happy to keep forward momentum in a challenging macroeconomic environment.
I’ve increased my pension contributions to 15% of my salary and 10% from my employer, I am putting 25% of my income into the S&P. I want to treat myself as poor before I become it, so I don’t inflate my lifestyle. It’s a psychological trick. My thinking is this is an excellent time to dollar cost average, and I’d rather put the money in my pension for a few reasons:
- Reduce my tax liability (it costs my £300 in takehome pay to get £550 in my pension)
- Reducing my student loan liability (and interest rate that is triggered by a higher salary threshold)
- Pound-cost averaging in a down market, into a fund that I cannot sell for 30 years when the market returns in 2-3 years to a bull-run I will have £30-40k invested for the run-up
- This prevents me from panic selling if (probably when!) the market goes lower
- Should I happen to make outsized gains, I can reduce my pension contributions later in life when I need all the cash I can get (IE if and when I have kids)
However, I may need to manage my cash flow in the coming months with increases in the cost of living. I currently have a limited margin of error each month and am using my bonus/stock to keep me going. This is not a sustainable long-term solution (especially in a recession!)
If I can maintain pension payments and mortgage payments alone, my net worth (house prices and pension staying at the same value) would increase by £1500 per month.
Downturns are where generational wealth can be made, you need to use the tools available to you. I am choosing to treat myself as poor each month so that I may thrive 10 years from now.
Follow along to find out how I get on.