What has lockdown done to my finances?

Rainy Sunday mornings are perfect times to do household admin. In my case household admin centres on my personal finances. This gave me an opportunity to examine what has happened to my income and expenditure during lockdown.

Lockdown in England began on March 23rd, just at the end of Q1. Normality, by which I mean pubs/restaurants, resumed to a large extent on July 4th – just at the start of Q3. This makes Q2 a good period to examine what happened as a result of lockdown.

Income: down 32%

This simplified analysis just looks at cashflows entering/exiting my accounts. This is net of taxes (unlike my annual review which considers gross income and treats taxes as an expense).

 

Inflows, net of tax, Q2 last year vs Q2 under lockdown

The graph above shows what’s happened to my inflows. Dividends fell by ‘only’ 15%. Rent halved. And my earnt income dropped by 30%.

However, to interpret the graph we need some context. In Q2 last year, I moved my Previous Home from ‘rental property’ (with tenants) into ‘for sale’ (empty). So it gave me some rent in the quarter, but not a full amount. I finally sold it in February this year, and moved the proceeds almost immediately into the stock market (at the market’s record highs, sigh). This makes rent and dividends somewhat interchangable across these time periods.

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The worst crash in history: the view from the front seat

It seems reasonable to think that this is the worst market crash in history. Stock markets are a relatively well-documented phenomenon since their invention only a couple of dozen generations ago, and the data seem clear.

And I was there.

I’ve been actively following this crash every day the markets traded. And I’ve been trading too. Ouch. This post is deliberately something of an ermine-esque ‘reflections from the front’, recording some of my thinking/recollections, as they occur to me and while they are fresh.

Wasn’t January a long time ago?

I remember reading about the Coronavirus in January. I was travelling through Hong Kong myself that month. The virus hadn’t reached HK; it was a story in the business pages about China.

Continue reading “The worst crash in history: the view from the front seat”