End of Year wrap up 2020

2020 has come to an end. And what a year it has been. March tested our risk tolerance with a historic drop in world share markets of around 25%. Early in March, I had a look at past viral outbreaks and their effects on the share markets.

There was a suggestion going around that pandemics and epidemics effects on the market are fast-moving and often short-lived. And that the markets almost always recovered in about six months after the epidemic. This is what has happened previously. And that’s almost with the NZX50 what happened. The 6 months from Dec-19 the NZX50 returned -0.60%, and 12 months from Dec-19 the NZX50 returned 13.92%.

I update the graph from that post showing several past pandemics and epidemics and their effect on the NZX50. You can see that Covid-19 had a massive effect, but the drop was indeed a short term reaction. The NZX50, by the way, has hit another all-time high in late 2020.

After March, I felt like we’ve skipped April to December- with the two lockdowns in March-June and August-September. Much of 2020 was a blur. But I continued my fortnightly automatic investment plan. I have switched most of my automatic investments into Kernel. My Kiwisaver kept ticking along. And our spending has been much lower due to the whole situation.

Some Numbers

Everyone likes numbers- So here are some numbers for 2020-

• $38,000 deposited into my investment accounts in 2020- higher than the $29,500 for the year 2019.
• $9,833 total return after tax for 2020 from my InvestNow account- slightly lower than 2019 at $10,711
• 11.56% return before tax and after fees for my InvestNow account- which is less than half the return for 2019 which was 24%.
• $1,233 total returns before tax for my Kernel account
• 13.20% return for my Kernel account.
• 11.07% after tax and fees return for my Superlife Kiwisaver
• Since starting this blog in early 2018, I have invested a total of $92K- see graph below

My main investments are held in several accounts- with the majority being in InvestNow. In 2020 I started investing with Kernel as well. I joined Kernel to maintain some exposure to an NZ index fund since AMP had increased their buy-sell spread. And I felt that I wanted to diversify between investment firms. So right now I have money invested with;

• InvestNow
• Kernel Wealth
• Kiwisaver with Superlife
• Harmony Peer to Peer
• Lending Crowd Peer to Peer
• Genesis Energy shares
• Investments in two startups– both went bust- but it was a great learning exercise.
• Bonus Bonds (not really an investment)– wound up in 2020

I’m slowly getting out of Peer to peer completely- with any returns and capital being invested into index funds. Winding up my peer to peer could take me through to 2023, as many of the loans had 5-year terms.

Plethora of Funds

So all up I now have a plethora of funds- again- I’ve basically switched all the Smartshares funds I had last year and converted them into Kernel funds. Here are the funds that I have invested in;

• Vanguard International Shares Select Exclusions Index Fund
• Vanguard Intl Shares Select Exclusions Index Fund – NZD Hedged
• AMP Capital NZ Shares Index Fund
• AMP Capital Australasian Property Index Fund
• AMP Capital All Country Global Shares Index Fund
• Smartshares – US 500 Fund (NS) (USF)
• Kernel NZ 20 Fund
• Kernel Small & Mid Cap Opportunities
• Kernel NZ Property Fund
• Kernel S&P Global Dividend Aristocrats Fund
• Kernel S&P Global 100 Fund
• Kernel Global Infrastructure Fund

Again, there are many overlaps between the funds. As I mentioned earlier- but with a significant amount of money with InvestNow, I wanted to diversify a bit, hence why I now have the Kernel funds. Although I know the custodial system that protects investors in New Zealand should be sound, I feel more comfortable spreading my investments with multiple companies now.

Goals to start 2021

To help you wrap up 2020 and look towards the future, I thought I would put together a few goals that you might want to consider aiming for in 2021.

1. Set an Investment/saving Goal– The beginning of the year is the best time to set a new savings/investment goal. And if you really want to achieve your investing goal, automating your finances is the best way. Funnel your money into your savings/investment accounts when you get paid. That way, as long as you don’t fiddle with it, your goal will achieve itself. For the year 2021, my goal is to grow my investments to the next milestone of 200k.
2. Top off your Emergency fund– Covid is exactly what your emergency fund was designed for- so you may have dipped into it a bit over the course of 2020. In 2021, with vaccines coming to market and hopefully an end to this virus (although I think it will be more like 2022) it might be smart to top up your emergency fund to were it should be. If you’ve managed not to touch your emergency fund over the covid period you have been fortunate.
3. Assess your KiwiSaver– Contributing to Kiwisaver is the best thing you can do if your working and living in New Zealand. You’re not going to find any other deal that gives you the same return. I’ve previously advocated for not contributing more than 3% as there is no more benefit in locking your money away- but if you have no investments outside of KiwiSaver, you might want to reconsider that. 3% contributions may not be enough if you rely only on your KiwiSaver for retirement- and contributing early is much better than contributing late.
4. Review your mortgage– Interest rates have continued to decrease during 2020. You might want to review the rate you are currently paying. Some advertised rates have dropped below 2.5%, and there may even be room to negotiate a lower rate directly with the bank.

Top Posts for 2020

And if you want to go back and read some of the most popular posts of 2020 by visitor numbers- here they are;

• What is the NZX50
• Vanguard Through InvestNow Or Hatch: Which Is Cheaper?
• Top 10 Kiwi Personal Finance Blogs
• DIY Investing In Funds And Shares In New Zealand: Popular Investment Platforms For Kiwis
• 10 Steps Needed To Achieve Financial Independence In NZ
• NZX50 Past Percentage Returns Table

And Finally, Happy 2021

I want to sincerely thank you for taking the time to read what I have to say. I learn so much by writing these posts. I hope that they have helped you too. You have kept me motivated and accountable to reach my goals on the way to financial independence. And I hope that you have achieved some of your goals in 2020, and continue to work towards FI in 2021.

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