Equities: We have some equity investments during the year but the amount was not significant. Satisfactory gains were made and all equity investments were sold prior to year end.
Property: Our self-use property rose in value in line with the market. There is a 20-year mortgage attached to the property and we are two years into the mortgage. Because of the low mortgage rate (Hibor + 0.7%), principal repayments represent around 80% of mortgage payments.
Savings: Our cash position rose significantly because (1) equity investments were sold in November; and (2) gifts were received from our wedding. Right now we have an excessive cash balance.
Our family net worth rose by 76% in 2012, mainly due to the rise in property value and savings from salary income. We are only four years out of university so we don't have a significant amount saved up, and the salaries from my wife and me represent a significant amount of our net worth.
What to do in 2013: Look for investment opportunities and lower the cash level. Right now, our only major investment is the self-use property, and we are looking to add other investments to diversify.
As (1) the global economy is seeing signs of improvement; (2) tail risks have eased after the US reached a compromise to avoid the fiscal cliff; and (3) equity valuation is still reasonable (13x P/E for S&P 500 and 11x P/E for HSCEI), I think it is a good time to add investments in equities.
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