Part 216

Hello and welcome back to Mortgage Advisor on FIRE.  Some positive developments in my mental and financial health.  Also, a look at tipsters trying to beat the market.  

Weekly Update

Last week wasn’t too bad overall.  I started with an appointment with my psychologist, and I continue to be impressed by her.  The techniques we are practising and changes to my medications are moving me in the right direction.  I also have to give a shout-out to my girlfriend, family, and friends for their constant support; thank you all.

This week Oana and I met up with a mutual friend for some Mexican food.  We had a good laugh, as we always do, and some excellent food at Street Food Chef.  We wanted to get dessert though, and we craved tiramisu.  We figured we’d try Pizza Express just up the road.  The restaurant was less than half full and we were seated quickly.  After being handed the dessert menu, and not being told of any unavailable items, we then waited almost half an hour for our order to be taken.  It was at that point we were told they sold out of tiramisu earlier in the afternoon.  If they’d just mentioned that when handing us the dessert menus it would have been better for everyone. 

The rest of the week has been spent getting things sorted for Christmas as we will be hosting dinner this year.  We still need to get some of the fresh ingredients but we plan on doing as much food prep and cooking in advance as possible.  

For the last week or so a few people close to me have been struggling with a nasty cold. I had managed to avoid it and was about to sigh in relief, but I can feel the early stages of it coming on. At least it should be done for Christmas, I hope.  For now, I’ve got a sore throat and headache.  In the best of British tradition, “there’s something going around.”

It’s that time of the year when I start thinking about the year ahead, and also look back at the year gone by.  2023 has been a year of real highs and some awful lows.  I thought 2020 was a bad year for my mental health, but there were times this year when I felt like I was actually losing my mind.  It was quite scary at times, and I had to shield a lot of it from people because I think it would have freaked them out.  But, now, I feel like I’m on something of an upward swing and can start looking ahead to 2024 with some small flashes of optimism.  I’m planning on a more detailed post reviewing this year and discussing my goals for next year, and it should go live on NYE.  

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What Am I Doing?

TV:  The Crown (Netflix).

Audiobook: One of Ten Billion Earths by Karel Schrijver (audible).

I am as anti-royal as they come, but I have enjoyed The Crown for what it is; essentially a work of fiction.  The last season was good, but I feel as though as the show has progressed it has felt increasingly rushed.  In terms of production values, there are few, if any, shows around that compete with The Crown.  Another thing I love about the show is the music, and how it elevates the story.  Bad music can detract from your enjoyment, whereas decent music just hangs around not drawing attention to itself.  Occasionally, though, you get a show that has a soundtrack that is simply perfect and it adds so much more to the experience.  The song on the soundtrack that everyone seems to agree is the best is Duck Shoot, so if you’ve not heard it I suggest you fire up your music player and search for it.

I’ve been enjoying my science books lately and I stumbled across a free download from the Audible Plus Catalogue; One of Ten Billion Earths, by Karel Schrijver.  Now, this guy is basically living my dream life.  He’s an astrophysicist who has worked on some incredible projects.  He spends his time writing, travelling, and hiking in nature.  He lives in Portland, OR, a city famed for its liberal attitudes, street food, and culture.  And, most importantly, he has a frickin’ German Shepherd dog.  Anyway, it’s an interesting book discussing the search for exoplanets, and how planetary systems form and develop. I’m not jealous at all. 

Financial Update

Assets

Premium Bonds: £11,625.00. 

Stocks and Shares ISA: £61,848.59. 

Fuck It Fund: £10,444.74.

Pensions: £67,849.47. 

Residential Property Value: £227,512.00. 

BTL Property Value: £146,814.00.

Total Assets: £526,093.80.

Debts

Residential Mortgage: £174,247.55. 

BTL Mortgage: £104,924.60.

Total Debts: £279,172.15. 

Total Wealth: £246,921.65.

Investment Income in 2023: £8,040.04 (target £8,500).

I won’t hit my investment income goal for the year, but I will get very close.  I still have a couple of more payments to hit my account before the end of the year, which should take me to around £8,300. Overall, I have to be happy with that.  

Coast FI and Lean FI

One thing I wanted to touch on is the realisation that I’m probably further on in my FIRE journey than I first thought.  I’m within touching distance of being able to coast through to retirement with the value I have in my pension pot.  Granted, it would not provide a luxurious retirement, but I don’t need luxury; I need peace.  Roughly speaking, my current pension pot growing at 6% with no further contributions should be worth approximately £200,000 in 18 years.  Using the 4% rule, it would provide an income of £8,000; not a huge amount, but enough to supplement other income streams like dividends and potential rental income on our apartment when we decide to move.  

Coming back to my pension pot for a moment, if I continue to pay into it for a further three years, and then let it coast for fifteen years, I’d be looking at a pot of over £270,000, resulting in an income of approx £10,800.  These are only projections but that’s all any of us have to work with when planning our financial future.

The main attraction of Coast FI is that I’ll have more freedom when choosing how and when I want to work.  I’ll only have to cover my living expenses whilst being able to let my investments grow in the background.  If I can get my ISA and pension pots to £100,000 each in the next 2-3 years I will be delighted.  If 2024 ends up being a bumper year, then I reach those goals even quicker.  

If you are reading this you are, in all likelihood, interested in FIRE.  I would guess that most of you have done some calculations or projections on your financial future, and there is nothing wrong with doing that; it’s a fundamental part of financial planning.  We can’t predict short-term trends, but we can say with a decent degree of confidence what the market may look like in 20-30 years.  

Anyway, a friend of mine, a fellow FIRE enthusiast and self-identified numbers geek, shared some articles from an investment advice website.  We couldn’t believe what we were reading as it was just one post after another rehashing the same clickbait bullshit, with claims that by investing a few hundred pounds a month they could have millions in just 20-30 years, with enough value to provide passive income of over £80,000.  

Now, let’s be generous and assume that you are aiming for £1m in 30 years from a standing start i.e. £0 in your investment pot.  Assuming a reasonable rate of growth, say 7%, you’d need to invest approx. £885 per month, every month, for 30 years.  That’s a tall order for most people, but not completely unrealistic.  However, when you hit that £1m goal, if you refer to FireCalc and run the simulation on the success rate of a withdrawal rate of 8%, you will run out of money 80% of the time within the next thirty years.  The person writing these posts seems to be suggesting that you could have a portfolio of stocks that pay a dividend of 8%-10% which would mean you’re not selling units to fund retirement.  

None of the individual factors mentioned, in isolation, are unrealistic.  They are extreme, but plausible when considered alone.  Someone could invest almost £900 per month, every month, for a prolonged period.  Someone may stumble upon a selection of stocks that pay a healthy dividend for a sustained period.  Someone may fall lucky with their timing and see gains to such an incredible rate that they can sustain an 8% withdrawal rate.  Expecting someone to fall lucky with all these factors in combination is like expecting to win the jackpot on the lottery several weeks on the spin.  It might happen to one person, but they would be the exception, not the rule, and it would be down to luck more than judgment or skill.  You can’t beat the market consistently over the long-term.  It just doesn’t happen.   

Disclaimer

The views and opinions in this blog are my own, and do not represent the views or opinions of my employer, nor should they be considered advice.

If you want personalised financial advice, seek an appropriate professional.  If you are in financial difficulty, seek advice via the resources below:

StepChange

MoneyHelper

Biolink and other links

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Also, check out Darren Scothern’s blog which talks about autism, being autistic, and general mental health:

www.darrenscothern.com

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