Part 231

Hello and welcome back to Mortgage Advisor on FIRE.  This week I bring back the Quote of the Week, and discuss investing complexity.  Also, a special anniversary in our household, and some amusing suggestions on improving Lord of the Rings.  Finally, I share some thoughts on the Netflix adaptation of one of my favourite books; Three-Body Problem.

Quote of the Week

“I can explain it to you, but I can’t understand it for you.”

In the world of investing, success often hinges not only on access to information but also on the depth of understanding that people bring to the table, as well as their openness to learning. In this context, the quote “I can explain it to you, but I can’t understand it for you” takes on particular significance. Novice investors frequently seek guidance and advice from experts, but many times they fail to ask the right question.  For example, many people ask how to get rich, but not how to build wealth, and there’s a subtle, but important, difference in these two terms.  

Being rich is more about having stuff.  It’s about having money, designer gear, and all the trappings of money.  It’s surface level though; superficial.  Having wealth suggests more depth and permanence.  It’s about having stable financial foundations and living off the income your wealth generates as opposed to living off riches.  If someone asks how to get rich, they are asking the wrong question.

Investing can be complex, but also ridiculously simple once you grasp some basic concepts and change your mindset.  Unless you are extremely lucky, you are not likely to be gifted a huge sum of money.  Most people have to build their wealth.

How Investing Is Complex

If you know nothing about investing and you open up Google to look for advice on how to invest you will be presented with all sorts of different ideas, schemes, and terminology.  You’ll see everything from funds, to ETFs, commodities, crypto, P2P lending, and more.  You’ll see different types of accounts with different fees, benefits, restrictions, and possible tax implications.  It can be extremely overwhelming for some people and so they give up.  For the majority of people though, most of this stuff is just bullshit.  

How Investing Is Simple

The consensus of opinion in the FI community suggests the following; building long-term wealth requires a simple investment strategy.  You spend less than you earn.  You invest what you can into an investment ISA, and you invest in a global index tracker.  If you do this consistently for years or decades, the data suggests you will build wealth eventually due, in large part, to compound growth.  This is, broadly, the approach I am taking.  Is it right for you?  Well, that’s what you have to decide.

Although this is a popular approach, it’s not risk-free.  You should do the research yourself, and get to a point where you understand and accept that fund values can rise and fall over time.  Success can never be guaranteed, but few investment strategies have demonstrated a greater likelihood of success.  It’s important to note that the risks involved in investing do not always come from the investment itself, but rather from outside factors.  For example, you could put £20k into an investment ISA with the intention to leave it there for a decade or more.  However, you could have a nasty illness which results in you losing your job.  You may need that money now, but at the point you need it, the stock market may have crashed and you could end up only having £10,000 to withdraw.  However, had you left the funds in place for another couple of years the ISA could have increased to £30,000.  The risk does not always come from the investment, and you need to factor in risks from your own circumstances.    

All of the above is just my opinion though.  I can attempt to explain it until the heat death of the universe but some people will just not understand it because they don’t want to, or are unable to.  The question then arises, as to whether people should be able to invest in things they don’t understand.  It also raises the question of how much responsibility is on the side of the investor and how much is on the side of the company offering the investment product. 

This brings me back to an old subject; Football Index.

For those who don’t know, Football Index was a company that offered a unique take on gambling, in that rather than betting on matches, goals, or league winners, you would bet on players.  It was presented as a form of investment but was really a form of gambling.  You would buy “shares” in players, and then win when those players performed well or were mentioned in the media.  The fundamental problem with the idea is that it was a house of cards; it only worked if more and more people put money into it.  I briefly tried it out, realised what it was, pulled my money out and walked away.  A lot of people were not so fortunate, and some lost six-figure sums.  Many people who did not know better thought it was a form of investing.  It wasn’t.  It was gambling.  The company failed in 2021 and there is still a campaign from former users of the app to get their money back.

How much responsibility falls on the company to be honest and transparent in terms of risk to funds?  How much responsibility falls on the customer to understand what they are spending their money on?

I tend to think that it depends on the individual situation, but in general, the responsibility lies somewhere in the middle, assuming those involved are acting within the law.  In the case of Football Index, it seems that the regulators took their eye off the ball.  Should it have been regulated as a betting site or an investment platform?

I tried to explain to people why I felt Football Index was a risky venture back then, but as much as I could explain my doubts, I couldn’t make everyone understand.

Weekly Update 

Another week down, and another week closer to FI.  Time seems to be moving more quickly with each passing day.  I don’t quite know where all the time is going.  It’s that weird thing where the hours seem to drag at times, but the days and weeks are flashing by in a blur.  

With the Easter weekend upon us, it was a short week at work, with Friday being a Bank Holiday.  However, this Saturday was my scheduled one to work and I didn’t have the foresight to book holiday on that day.  So, my four-day weekend was interrupted by a few hours of working.

On Friday I went to Meadowhall shopping centre with Oana and my Dad.  It was stressful, not because of our own company but because Meadowhall is just awful.  It’s noisy, oppressive, crowded, and just sensory overload.  Sadly, it’s the only place in Sheffield you can find certain shops which means it’s not somewhere you can boycott indefinitely.

Saturday morning saw John Lewis return to our apartment for the third time in recent weeks to have another look at the oven they installed.  In short, we ordered an integrated oven from them and paid for installation.  We then had a call a few days after installation where they explained they had not installed it correctly and needed to come and fix it.  Then, following that appointment, we had a further call explaining they needed to come for a third time to fix what the second person did wrong.  Now we are left wondering if the oven is actually safe to use.  

Poppy

On Friday we celebrated the second anniversary of adopting Poppy.  From the moment she arrived at our home, and climbed on my chest to sleep within the first few minutes of leaving her carrier, she has made herself at home.  She’s amazing.  She’s got such a playful, sweet, and goofy character.  Adopting older cats is great.  They are so loving and thankful to have a home.  I hope we have her for a long time to come.  We bought her a salmon fillet which we gently cooked.  She had some of it, but it seems she wasn’t in the mood for it.  One of our old cats, Sweep, used to smash his way through cooked cod.  Different cats have different tastes though.

Lord of the Rings – PG13

A good long while ago someone pointed out that the Lord of the Rings films were rated PG13 in the US, and as such each film was allowed to drop one F-Bomb.  So, the debate started as to where you would place the F-Bomb.  If you are a sensitive soul and don’t like swearing, I suggest you scroll past this.

The Fellowship of the Ring

Bilbo: “No, thank you! We don’t want any more visitors, well-wishers or distant fucking relations!”

Boromir: “They have a fucking cave troll.”

Elrond: “I was there, Gandalf.  I was there three thousand fucking years ago.” 

Gandalf: “Fuck.  I have no memory of this place.”

The Two Towers

Treebeard: “We have only just finished saying ‘good morning’.”

Merry: “But it’s fucking nighttime, already!”

Gollum: “The fuck is ‘taters, precious?”

Gimli: “Give me your name horsefucker, and I shall give you mine.”

Gimli: “He’s got my axe embedded in his fucking nervous system.”

Faramir: “A chance for Faramir, Captain of Gondor, to show his fucking quality.”

Theoden: ‘The Horn of Helm Hammerhand will sound in the deep, one last fucking time!’

Return of the King

“The beacons are lit! Gondor calls for aid.”

“Fuck Gondor.”

Gollum: “Stupid fucking hobbit.”

Gollum: “Up, up, up, up the stairs we go, and then a fucking tunnel.”

Gollum: “Smeagol fucking lied.”

What Am I Doing?

TV: Three-Body Problem (Netflix).

Audiobook: We are Legion (We are Bob) by Dennis E. Taylor.

The Netflix adaptation of The Three-Body Problem dropped recently and I’ve now finished it.  Taken on its own merit, it’s not a bad show.  The setting has been changed from China to the West, and almost all the major characters are inventions of this reimagining.  With the first season only having eight episodes (the Chinese version had over 30) they absolutely race through the plot.  I felt as though a lot of the substance and depth was missing as a result.  It’s not a bad show; it’s entertaining and keeps you engaged, but it just lacked that extra bit of content that could have elevated it.  Had the season been given 12 episodes instead, I think they could have done something pretty special.  In the end, it all felt very rushed, and as such lacked some of the emotional impact that the books have.  

Assuming it is renewed for a second season, I’m looking forward to seeing what they do with the Wallfacer project.  In the books, the Wallfacers are not introduced until the second part; The Dark Forest, which absolutely blew my mind the first time I read it.  I really hope they do the books justice.

Financial Update

Assets

Premium Bonds: £13,225.00. 

Stocks and Shares ISA: £64,515.19. 

Fuck It Fund: £6,055.44.

Pensions: £76,200.89. 

Residential Property Value: £228,116.00. 

BTL Property Value: £147,203.00.

Total Assets: £535,315.52.

Debts

Residential Mortgage: £172,897.27. 

BTL Mortgage: £104,891.96.

Total Debts: £277,789.23. 

Total Wealth: £257,526.29.

Investment Income in 2023: £1,163.39 (target £10,000).

I’m within touching distance of hitting £80,000 in my pension, which was one goal I’d hoped to hit by the end of 2024.  At this rate, I could get closer to £90,000.  By the time the next part of the main blog is posted, the new financial year will be upon us and we’ll once again be able to max out our ISA.  I’m thinking that I might drop some of my Fuck It Fund into my ISA, and then invest monthly for a while until we eventually sell the BTL.  Then, the funds from that sale can be used to try and get the ISA maxed out early on.  Once that’s done, I can turn my attention to building up my pension and Premium Bonds.  

BTL Update

We decided to drop our asking price a little more, and that’s resulted in three viewings being booked for this Tuesday coming.  Hopefully, those viewings will lead to offers on the property.  Now that the weather is starting to get better, and we’re getting closer to spring and summer, I’m hoping more people will be looking to move.  

I do wonder what value agents bring to selling a property.  From the outside, it seems like they get photos taken, and then write up a bit of info for the Rightmove listing, and then arrange to show people around.  I’m just curious how much active promoting of properties up for sale they engage in.  I remember when I was looking for more BTLs, most of the agents who showed me the properties could not answer basic questions about the properties, like how long was left on the lease, or what the service charges or ground rent were.  If I was trying to sell something, I’d at least try to get a handle on the basic features and benefits of the product.  Here’s hoping that by next week I can report back that we’ve accepted an offer.  

That’s all for this week, so thank you again for reading.  I hope you have a great week ahead.  Don’t forget to like, comment, share, and subscribe.  Also, if you’re feeling generous you can make a payment towards the running costs of this site using the payment form below.