Passive Income Update (August)
Here is the monthly update to my passive income. I monitor both my net worth and my passive income each month as a gauge on my progress towards my savings goals and financial independence. Where net worth gives an overall total the passive income gives a level of investing efficiency of my assets.
Below is a rundown of the sources of my passive income. I also carry some debts so the interest on these is also counted to give a fair net value of my income.
Assets
Real Estate
As mentioned previously I own a rental property which I rent out for £500-a-month. I have some costs associated with this. I pay a letting agent 10% plus VAT for managing the property which amounts to £60-a-month. On top of this the apartment is in a building which has a service charge or factoring of £14-a-month. My landlord insurance is £190-a-year and landlord registration is the equivalent of £20-a-year (£60 for three years). Gas safety and electrical appliance safety testing is £126-a-year.
Total income £4,776
Peer-to-Peer Lending
I currently have two sources of income for this category. Zopa is my main holding. I have about £6,200 invested in the Access account at 3.7% and £6,500 invested in the Classic account at 5.1% (these rates include my 0.5% Early Adopter bonus). These figures are less than last month as I continue to withdraw repayments from this vehicle. The interest rate on the Access account also fell 0.2% compared to last month.
I also fund some real estate development projects using a platform called CrowdProperty. I currently have £2,500 invested there at 8% interest. This is also down on last month as one of the loans was paid back in full with interest.
Total income: £769
Cash Savings
The Virgin Money account is still open although is contains just £21 and at 0.5% interest this is negligible.
My Thai savings account continues to growth and has just over 150,000 Baht in it (just over £3,400) and earns a reasonable 2.5% interest rate.
Total income: £86
Stocks
I have almost £18,000 of my net worth invested in stocks through my pension funds. The fund in these do not pay out dividends and simply accumulate (or lose in fees which I fear is probably more accurate) the dividend income from these investments. Outside of the pensions I have a very small tracker fund which pays a 2.58% dividend.
Total income: £6
Liabilities
Unsecured Personal Loan
I took out a £15,000 five-year personal loan in 2016 to help fund the purchase of my buy-to-let property. The interest rate on this is fixed at 3.7% (by comparison the yield on the buy-to-let is about 8% after costs). The balance on this loan is currently just under £10,800 meaning the annual interest payments amount to £386-a-year
Total income: -£386
Credit Cards
I have two credit card balances at present. The first is currently £4,000 at 2.32% interest which expires in September. The second is a new loan taken out last month. I initially borrowed £5,000 at 4.95% which I have reduced to £2,168. Given the high interest rate (for me) it looks like I will simplify things this month and pay the remained of this loan off using funds from the Zopa account. At present these two cost £200-a-year in interest.
Total income: -£200
Putting it together
So from the above you can see the total income from assets comes in at £5,637 (less than last months figure). The interest on debts amounts to £586-a-year (also less than last month) which is the equivalent of a 3.46% interest rate (0.2% lower than last month). Putting these together gives a net passive income of £5,051 which on an asset base of about £88,000 gives a yield of 5.7%.
In the last 12 months my passive income has increased from £4,765 to £5,051 which is just over 6%. Compared to last month these gains have mainly come from paying down debts as opposed to new investments earning income.
My current living expenses are £10,178-a-year (up from last month due to the weakening pound) so my passive income amounts to just over 49% of this putting me (still) almost half way to financial independence.
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