If you are reading this post, we hope you and your family & friends are safe from the COVID-19 disease.
Unfortunately, the same wasn’t be true for the safety of our equity investments. During the last 6-8 weeks, the equity markets have plummeted across the globe and we’ve also faced its severe impact on our financial progress. Read more – https://www.bloombergquint.com/markets/10-things-that-define-the-worst-march-for-indian-markets
Below are the highlights of our financial progress during the 1st quarter of the calendar year 2020.
Salary increments
The year started on a positive note as both of us received a two-digit %increment in our salaries. As a result, our take-home salary from January-2020 onwards is higher than in 2019. By avoiding lifestyle inflation(increase in spending when income goes up), we would be able to save and invest more this year.
International travel
By combining a company-sponsored business trip of one with a self-sponsored leisure trip for the other, we were able to save substantially in a 1 week-long international travel. This approach allowed us to save food and lodging costs which were already covered by the company. Further, we got enough time for sightseeing after office hours and during the weekend.
Credit card reward points for flight booking
We had accumulated a lot of points on our credit card for the last 2-3 years. While booking the international flight tickets, we redeemed all the points to get a substantial reduction in the amount that had to be paid from the credit card. As we don’t add credit card points in our retirement corpus, the utilization of points was a win-win.
Healthy savings rate
January – 75% savings(it was lower due to expenses incurred for the travel).
February – 86% savings(our best so far)
March – 84% savings
As expected, our savings rate is higher this year by keeping our expenses similar(or lower) than 2019, even with the increased income.
Expenses
Rent and utility bills continue to be the biggest chunk of our expenses. There is no scope of reduction in these as we are happy and satisfied with the value we are getting out of our rented home.
Travel was the second biggest for this quarter. We wouldn’t plan any major vacation this year so this category would not take such proportion in the future.
The remaining expenses were within our defined limits for each category.
No expense for clothes as we already have enough to satisfy our needs.
Below pie-chart depicts category-wise expenses:-
Huge losses in equity investments
Since the worldwide outbreak of Coronavirus, the share markets across the globe have fallen around 30-40%. In order to control the spread of the virus, governments have imposed international/domestic travel bans and lockdowns. Global businesses and economies are under huge pressure and news of a major recession is making headlines. Until there is a breakthrough in developing, testing and releasing vaccine(s) for this Virus, equity markets are expected to remain highly volatile.
We have also faced the brunt of this carnage as the value of our equity investments has fallen down by Rs. 7 lakhs in the last two months. We are worried but haven’t lost hope. We will continue to invest in quality mutual funds and stocks during this downfall.
March 2020 was the first month where we witnessed a reduction in our net assets from the previous month.
Passive Income
Interest income from the savings bank account, fixed deposits in banks and NBFC was Rs. 34,000.
Dividend income from stocks was Rs 5,000.
Cashback of Rs 500 from Google-pay, Paytm and Cred
Outlook towards the coming months
It’s important to acknowledge that the situation is bad. We are in lockdown for our own good, equity markets are falling, the interest rate on debt investments(FDs, RDs, PPF, etc.) have also been slashed, more +ve cases and deaths from the coronavirus are being reported every day.
Among all the negativity, we have to find some silver linings – more time to spend with our families, the environment getting better, sharp reductions in pollution levels, etc.
Another important lesson is how insignificant money can become in the bigger scheme of things. No matter how rich or poor, billions of people are sustaining their life by fulfilling the basic needs(food, water, shelter). The importance of having insurance(s) and building an emergency fund would now get attention. We hope that people would get better at managing their finances, once this crisis is over.
We should be able to achieve an 80%+ savings rate over the next quarter. If the lockdown extends, groceries is the only expense category that is expected to increase. We will be more cautious and patient with our equity investments. As for the debt instruments, the strategy needs to be reviewed due to the decreased interest rates from FY 2020-21.
That’s all for now.
Stay home, stay safe! And remember “This too shall pass“.
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