Hello and welcome back to Mortgage Advisor on FIRE. This week I take a different approach to calculating my time to FI. Also, a look at people who refuse to leave an inheritance to their kids. I take a few jabs at the Tory party, and I consider whether to rebalance my ISA.
Weekly Update
I’ve always said that it takes more effort to be an asshole than to just be a decent person. It’s like some people have a default setting that is set to douchebag. I’m not suggesting that everyone should be happy, all-singing, all-dancing at all times, but rather people should not wake up and choose confrontation every single day. Apart from this, it’s been a decent enough week.
On Saturday we had arranged for a plumber to come and give us a quote for some jobs in the apartment. He said he could be here at 10:00, so we got up and had some breakfast while we waited. And waited. And waited some more. Eventually, around 13:30 he messaged saying he could be here for 15:00. We declined. I get that things can come up at short notice, but it just seems to be a general issue that tradespeople are awful at honouring appointments.
The Samsung Saga
Oana was finally able to get her new phone, although not from Samsung directly. They were supposed to deliver the new phone last week but then they delayed it and delayed it again. So we cancelled the order and she was able to get a new phone from Argos instead. She’s moved from iPhone to Android, but I’m trying not to judge her too harshly. No one is perfect and if she wants to use an inferior phone and operating system, then that’s her decision.
In all seriousness, I’m not an Apple fanboy. I prefer their products and I’ve had plenty of good experiences with them. My previous iPhone lasted five years and was still in great condition when I decided to upgrade. My previous Macbook lasted a decade before dying on me, whereas all my Windows-based laptops would only last a year or two.
One thing that has pissed Oana off, and by extension pissed me off, is the hassle of getting access to apps that have already been paid for. On her App Store account, Oana had, over the years, paid to have adverts removed on different apps and games. She’s downloaded these same apps and signed in to sync her progress but is now expected to pay again to remove ads. This is the problem with paying for digital content; you rarely own the content, you are just paying to use it.
It was more of a hassle trying to get logged back into her Duolingo account. Oana tried resetting her password but it said her email was not recognised as belonging to an account, so she tried to create a new account and it said the email was already being used for an account. Fortunately, she was able to get this sorted by Duolingo’s support, but they didn’t make it easy to track down their contact info in the app.
So many businesses are now more concerned about creating an ecosystem you can’t escape from rather than providing a good customer or user experience.
DSE Stuff and Reasonable Adjustments
This one is a little frustrating and I thought I’d briefly mention it with the person’s permission, to see if anyone has a suggestion. Someone I know is being given the run around by their employer when it comes to making a reasonable adjustment to their workspace. They struggle with headaches and migraines, and there is a real problem with glare on their monitor.
They’ve raised the issue and have been told to try sitting in other locations, but this has not made a difference. They’ve asked for a glare protector for their screen, something that can be bought fairly cheaply, but the business is asking them to have an eye test.
I find this confusing for a couple of reasons. First of all, it’s not an eye problem; it’s a glare problem. Secondly, I’m not sure by what will the results of the eye test be measured. Is there some sort of threshold beyond which the business will pay for the equipment or not pay? What is that threshold? Also, does the DSE rep have the necessary qualifications to make such a judgement?
Why do some parents want their kids to suffer?
Many celebrities have stated they will not leave their children any form of inheritance. I honestly don’t understand this decision. The explanations from the celebrities seem to be based on the idea that they made their money and success, and the children will have to do the same.
I can’t remember where I read this, but it might have been a Reddit comment, and it’s stuck with me since. I think it was about smacking children as a form of discipline, and some parents were saying they were smacked and they turned out ok. The response was, “So because you suffered, you want your children to suffer?” Or, to put it another way, “The fact you think it’s ok to hit your child would suggest you are not, in fact, ok.”
I had always thought that a parent’s job was to make the world a better place for their kids and to try and give their kids a safe environment to learn, grow, and become the best version of themselves. I’m all for parents trying to instil discipline, responsibility, and humility in their children, but the act of not leaving any inheritance just seems like an easy way out; “These are my riches and no one else’s.”
When we talk about inheritance in this way there’s a danger of falling into a false dichotomy, where the choices presented are to leave your kids everything or leave your kids nothing. There are other ways to approach this, and these are just a few thoughts from the top of my head…
You could put an inheritance into trust for the kids to be used only on certain things, like education, a home, career training and development, and so on. Or, you could arrange it in such a way that the inheritance provides a basic level of income allowing the children to avoid worrying about food, shelter, and so on while they find their way.
The inheritance could be structured in such a way that it’s paid in instalments based on certain milestones being met. There are many ways to leave behind assets to your family in a responsible way.
Coming out with a statement like, “I’m not leaving my kids anything because they need to find their success” seems to be more about the person making the statement than the children being referred to. It’s almost like it’s for shock value, and to be “edgy”. If you teach your kids about money, social responsibility, and personal development then you should be able to hand your wealth over and trust in your kids to use it wisely. Then again, it’s easier to just be a jerk and not do the work.
It’s often said that children learn about money from their parents. So what lesson will children learn from this? Probably to hoard wealth and not share it with the people they claim to love. It would be beautiful karma if, when the celebs are older, they need care. The kids could justifiably send their parents off to a nursing home rather than arranging for care in their mansion with the reasoning being, “Your parents didn’t get to retire in luxury so why should you?”
Everyone is the main character in their own story, but sometimes you’re the villain in someone else’s.
This Week’s Tory Clusterfuck
One of the most Tory-style items of news was reported this week as PM Rishi Sunak set off to visit one of the poorest parts of the land. This was newsworthy because he was wearing a backpack which cost £750, and sported the initials RS. I’m assuming this is for the same reason some parents pop their child’s name in their coat when they send them to school, and if this backpack is lost they will know who to return it to.
I initially set out to not make fun of his height, as it’s a relatively small issue (ooops) but I did chuckle when I googled him and found the following list of suggested terms:
What I’ve found incredible this week is that I’ve spoken with multiple people who are adamant that the Tories are best for our country.
Let’s look at child poverty first. According to UNICEF, in a sample of 39 countries the UK has experienced the worst change in child poverty over the last decade. Have a look at the report here.
I’m curious if there’s a single important metric that has improved under the Tory government. Our national infrastructure is, to be blunt, shit and expensive. You only have to compare the experience of getting a train in the UK to getting one in Italy, Belgium, or Romania. I’ve used trains in all these countries and it’s like night and day.
We could also talk about our water and how we are dumping vast amounts of raw sewage into our rivers in 2024, or even the water parasite outbreak in Devon. Then there’s the response to Covid, the cost of living crisis, the NHS on the brink of collapse, and many more issues. I honestly don’t know how anyone can look at the Tory government and think, “Yeah, they’re doing a good job.”
If you’re a Tory supporter reading this you might be thinking, “Well Labour aren’t going to be any better.” That’s another example of a false dichotomy. I’ve not mentioned Labour so far. They might be better, or they could be worse, although I doubt it.
What I would like to know is how things could get worse than they’ve been under the Tories; the government responsible for;
– phrases such as “let the bodies pile high” during Covid.
– almost collapsing the pension sector.
– causing food bank usage to increase from approximately 61,000 food parcels in the first year of the Cameron government (2010) to over 2.5 million in 2020/2021*. This number has increased to over 3 million in 2023/2024*.
* Figures for packages handed out by The Trussell Trust, the organisation responsible for approximately two-thirds of UK food banks.
If you are on a ship that’s sinking, you don’t refuse to get in a lifeboat because it might also sink later.
Letters to Oana
If you missed it, Part 1 of the series Letters to Oana is now live.
Looking Back
Part 12 of the Looking Back series is also live.
What I’m Doing
Audiobook: The War on the West by Douglas Murray.
TV: The 8 Show (Netflix).
I made the mistake of downloading an audiobook without reading the reviews, and The War on the West is one of the worst books I’ve come across. It’s a load of right-wing bullshit and I’m only finishing it so I can be 100% angry with it.
We recently finished an eight-part series on Netflix called The 8 Show, in which eight people are recruited for a brutal television show where they are forced to stay in a facility, and the longer they stay the more money they earn.
There are twists and turns along the way, and some of the points the show makes are less than subtle. At times it flirted with crossing the line into torture-porn and it will not be for everyone. The show kept me interested but it did feel like it was only made because of the success of Squid Game.
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Financial Update
Assets
Premium Bonds: £13,400.00.
Stocks and Shares ISA: £74,800.93.
Fuck It Fund: £45.69.
Pensions: £78,112.07.
Residential Property Value: £229,818.00.
BTL Property Value: £148,301.00.
Total Assets: £544,477.60.
Debts
Residential Mortgage: £172,359.25.
BTL Mortgage: £104,871.60.
Total Debts: £277,230.85.
Total Wealth: £267,246.75.
Investment Income in 2023: £3,656.99 (target £10,000).
I’ve been thinking a lot about whether to rebalance my ISA so that I cash in my units in the income fund I have and reinvest it all in the global all-cap fund. Now that I’m moving away from passive income to a more traditional FI plan of accumulating units to later sell-off, it might be a wise choice. The income fund comes with a higher fee, but a decent yield. The unit price of the fund is more or less static though, so the only growth comes from the income.
Looking at it dispassionately it’s the logical thing to do, but it feels a bit like admitting defeat. It’s generating a fraction under £200pm which isn’t to be sniffed at, but will the yield increase at a better rate than the growth in a low-cost index accumulation fund? Probably not.
Compound Growth – Again
Take a look at this chart a friend sent me:
Having run some rough and ready calculations the numbers appear to check out. The mindblowing part of it is that the total journey time is a little under 31 years, but at the halfway point, i.e. 15 years in, your total pot would be worth approximately £250k, meaning that almost all the growth comes in the latter half of the plan. This just takes a slightly different approach to demonstrating the power of compound growth.
It reminds me of the example I’ve seen before in that if you start with 1 and double it nineteen times, you have roughly half a million. One more doubling results in a figure of over a million. More than half the total growth comes in the final act of doubling.
The plan outlined in the chart assumes that a person is only going to invest £10k per year, but in my situation, I’m able to invest more than that. On a typical month, I’m looking at anything from £1,000-£1,500 being invested. At the lower end that is £12k p/a. Using that figure and taking into account my ISA and pension pots, I could achieve a £1m pot in 17-18 years. Fortunately, I don’t need a million.
I’ve been running a few different scenarios and reckon I need an ISA balance of £200,000 to act as a bridging fund to get me to the age I can access my private pension. I would need a pension fund value of £700,000-£800,000 to give me a comfortable retirement. So what does the road to that outcome look like…
My ISA sits at roughly £75,000 at the moment. If I want to get to £200,000 in a reasonable timeframe of, let’s say, 7 years, I’ll need to invest £720pm, which is well below the £20k annual allowance. That figure is more than achievable.
The pension may be a little more difficult. My pension sits at around £78,000 and has 17 years to grow to the required value. I would need to invest £1,150pm to get to £700,000 in that time. In total, I need to be investing a little under £1,900pm to hit these targets.
There are other factors to consider. I can reduce the required investment as my employer makes a contribution to my pension, and there’s a tax break when I invest in my SIPP. In reality, I need to invest roughly £1,200pm of my own money.
When I look at these figures in this way, it looks very positive.
The situation looks even better when you consider that I can turbocharge things by investing more than required in my ISA and pension now so that the compounding has more time to work on a higher balance. I still have £15k of my ISA allowance for this financial year. Assuming I use it all, which I should, it’s way more than the £720pm needed. Also, now that Oana is back in work we can start allocating more money to investing. This means I could realistically invest more than required in my pensions now so that I don’t have to invest as much later. By investing more now, we reduce the need to invest more later.
BTL Update
Things are moving along with the sale of the BTL. It’s frustrating waiting for the wheels of bureaucracy to slowly turn but it will be worth it in the end. Our solicitors have reported that they’re just waiting for some information from the buyer’s end, but things are progressing.
That’s all for this week. Thank you for reading, and please remember to share, like, and subscribe. If you have any thoughts or questions, please leave a comment. As always, the donation form is below if you want to support my content and this site.
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:
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That graph looks very interesting that your friend shared, especially considering that when you hit the half way point the monetary value is so far below the half a million points. It’s also interesting to see that from £500k onwards you’re hitting a £100k growth every 30 months or less. It’s at this point where compounding really is like having another person contributing for you alongside your standard contributions.
I’d say the plan sounds like a good one. Contributing more now turbo charges your ability to benefit from compounding, and when you get closer to the magic figure you can take your foot off the gas. In reality, if you have £600k at 7% returning £42k, adding your own £10,000 isn’t really moving the needle significantly.
As a fan of Worlds Strongest Man, when they do the truck / plane pulling event, the hardest part is getting it moving and it then builds momentum. Investing is the same thing. The initial point of adding money and seeing growth at a level that is the same value as a cuppa and a cake isn’t exciting, just like a strongman pulling a plane with all their might and it moving a centimetre or two, but to get to the figures of £30k+ growth in a year (or the end of the event I’m strongman), you need to do the hard part which is putting effort in up front and trust the process before seeing it actually work for yourself. Once you get to the higher figures, you have knowledge the process works.
Looking at your own wealth graphs and figures, we’re starting to see that compounding machine take shape.
Some of the numbers we are talking about are crazy, considering how much progress has been made in a relatively short period. If only I’d started earlier… It is all about momentum. It’s like when a rocket launches from Earth; about 90% of the fuel is used just getting off the ground and up to escape velocity. Then, once you’re in space your momentum continues until it’s acted against.