Part 234: FI Projections and the Value of Pensions

Hello and welcome back to Mortgage Advisor on FIRE.  This week I take a look at some FI projections, and explain why pensions are a worthwhile investment no matter your age.

Weekly Update

This week was mostly standard; working and then chilling out.  Oana has been preparing to start her new job, and just like the buses, after she was offered one job, several more offers materialised.  It will be strange as she will be working from an office much more than in her previous role, which was almost entirely home-based.  In that respect, the new job is a bit of a good news/bad news situation.  She is looking forward to having a routine and salary again, but not so much having to go to an office several times a week.

Advertisements

I’m fortunate in that I’ve not had to look for a job in well over a decade.  However, I’m still amazed at just how bad some recruiters are when I talk with friends and family who are looking for a new job.  I’ll give one example from Oana’s recent experiences.  She applied for a role with the government, and the vetting was being completed by a third party.  The fun started when they explained that they couldn’t accept applications from people who had an underscore in their email address, i.e. firstname_secondname@email.com.

As a result, Oana had to check they were ok using my email address.  She specifically stated that it was not her email account, and was her partner’s.  They said this was ok, but then in the next breath asked her to confirm this was her sole account and no one else had access to it.  Why do people not listen?  It’s like when I worked as a barista at university for a place that did two sizes of drink; large or big.  Conversations would go like this:

Customer: A latte, please.

Me: *pointing to the sign stating the two drink sizes; large or big* do you want large or big?

Customer: er… medium.

Me: I can see you weren’t burdened with an overabundance of schooling.

Anyway, back to the point at hand… 

Following on from that, the checks were absurd with multiple requests for the same information being sent, as well as emails coming through referring to a different job in another city to the one applied for.  It was a complete clusterfuck.  Requests for clarity went unanswered and the whole experience was a confused mess.  Despite being offered the role, Oana, understandably, declined.

It feels as though, over the last few years, people are increasingly rejecting bullshit from current and potential employers.  It used to be the case that most people felt lucky to have a job.  There may be some element of that still, but from my experience, people are becoming more aware of their value.

I always say that employment has little, but not nothing, to do with loyalty; it’s simply a business transaction.  The employer lists the various expectations of the role and the remuneration for completing the job to an acceptable standard.  It’s then up to the employee if they feel the trade-off is worth it.  Loyalty, or more accurately trust, comes into it when you have been treated well.  Then there is an element of quid pro quo, where you are more likely to exchange favours with your employer.

Advertisements

I stated earlier that my week has been mostly standard and I’ll now explain what the non-standard parts were.  I’ve got a lot of medical stuff going on and several appointments next week.  I have two different scans coming up, some blood tests, some diabetes-related checkups, and a minor procedure towards the end of next week.  It’s going to be stressful.  

On Wednesday I have to eat a restricted diet for most of the day and then fast from 8pm.  When I’m not under any restrictions for eating, I can happily go hours without eating.  The moment there is any sort of restriction I turn into a cat, feeling as though I’m going to starve because I’ve not been fed in the last ten minutes.  

Speaking of cats, I had a funny interaction with someone from Facebook Marketplace recently.  They wanted to buy a beanbag sofa thing we have in our home office.  It’s something we listed a while back but shortly after listing it, Poppy decided to claim it as one of her many beds in the apartment. 

See below for screenshots of what happened:

Screenshot
Screenshot

There’s something about random interactions like this that restores your faith in people a little.

Poppy

I love Poppy but sometimes she gets herself tangled up in such a way that you can’t help but stop and laugh.

Poppy got tangled up playing with a string and looks to be considering her life choices. She also likes to decide when Oana can do her puzzles.

Looking Back

If you missed the new Looking Back post from midweek, you can find it here.  I revisit Part 8 of the blog and comment on my thoughts about stock trading.  I also look back at the last positive trip we had to Romania.

What I am doing…

TV: MasterChef (BBC).

Audiobook: Heaven’s River – Bobiverse Book 4 by Dennis E. Taylor.

We’re still in the early stages of MasterChef and, as always, it’s good fun.  I’m not feeling as though I want to watch any other TV right now.  I might give Star Trek: Discovery’s last season a go, as I hear it’s linking back to a story from TNG, but I’m going to wait for the whole season to drop.  

I’m nearly done with all the Bobiverse books that have been released so far, but there’s another book on its way later this year.

Advertisements

Support Mortgage Advisor on FIRE

If you would like to show your support for my blog please comment, like, share, and subscribe.  All these things help the blog to grow.  If you want to make a financial contribution towards the running costs of the site, please use the donation form below:

Financial Update

Assets

Premium Bonds: £13,325.00. 

Stocks and Shares ISA: £69,605.59. 

Fuck It Fund: £11.10.

Pensions: £74,681.49. 

Residential Property Value: £229,818.00. 

BTL Property Value: £148,301.00.

Total Assets: £535,742.18.

Debts

Residential Mortgage: £172,638.93. 

BTL Mortgage: £104,885.22.

Total Debts: £277,524.15. 

Total Wealth: £258,218.03.

Investment Income in 2023: £2,109.04 (target £10,000).

Now that the ISA window is open again it feels like I’m making more progress.  It’s purely psychological though as the great thing about investing in index funds is that they are constantly working for you.  

We are still no closer to selling our BTL.  The market in that area just seems to be at a standstill.  It’s frustrating because every month that goes by is costing us hundreds of pounds.  I don’t want to have to rent it back out again, and we’ve already dropped the price a couple of times.  A few friends and acquaintances are also trying to sell a property and are finding it equally difficult.  Hopefully, something will come up soon.

FI Update

In some ways, it feels as though FI will never come.  I know, intellectually, that I’m making progress each day but it can feel like a slog.  The thing about FI is that it’s not one size fits all, and it’s not a simple binary outcome where you either succeed or fail.  There are degrees of success and degrees of failure.  

Now that I’ve switched from BTL being the focus of my FI plans to a more traditional ISA bridge model, I regularly play about with the numbers to see when I can realistically look to retire.

FIRE Projections

Shortly after posting, it was pointed out to me that I got some of the below numbers wrong, as I failed to account for the growth on the funds I’ve already invested when working out what I need to invest to hit my bridge fund goals. Please refer to Post 234: Corrections for the updated, and accurate, figures.

Ask a hundred people aiming for FI what their projections are and you’ll almost certainly get a hundred different answers, with variations on portfolio allocation, SWRs, geoarbitrage, homeowner versus renting, and so on.  My projections are not meant to be my opinion on what is right for everyone, but rather what feels right for me.  Working through these projections can get tricky because if you change one variable it will impact other variables.

For example, if I need a bridging fund to last from 48 years old to 58, I need a decade’s worth of money and I’ll have about 7 and a half years to build that pot from my current age.  However, if I move the target age back to 50, not only do I have a shorter period to bridge, but I also have more time to build that fund.  It’s a balance between a better, later, retirement or an earlier and more risky retirement.

Advertisements

Unless something major happens I will not be able to retire at 45 and bridge to the age I can draw down my pension.  It’s also important to note that when I do retire, contributions to my pension will cease, meaning my pension fund has to be at a value sufficient for coasting.  

A few weeks ago I ran through some calculations regarding the State Pension without knowing where exactly those calculations would lead, and it was a popular part of that blog post.  I’m going to do a similar thing here, where I work through the numbers assuming I retire at 47, and bridge until 58, and then assume I will be withdrawing over a 30-year period.  

I’m now closer to 41 than 40, so to make things simple I’m going to assume that I’m 41 in these projections.  

Bridge fund required: 11 years at £21,600p/a (£1,800p/m) = £237,600.

Current bridge fund: £70,000, meaning I need to accumulate £167,600 in 6 years.  

I would need to invest approximately £1,950 each month, with an assumed growth rate of 7% to hit that goal.  I can safely say that will not happen barring a major boost in income or coming into a lump sum of cash.  Maybe if I sell the BTL or win on the Premium Bonds.

There’s one factor I’ve not considered above, though.  As I draw the funds down, the remaining pot will still be experiencing growth.  So, I’ve looked at this from another perspective.  If I need £21,600 and am willing to go with a 10% withdrawal rate, Firecalc suggests this would work 72% of the time.  Also, with this, I’d need a slightly smaller pot of money; £216,000 instead of £237,600.  It’s still too high a figure for me to realistically achieve though.

Let’s move it back to 50 when I retire.

Bridge fund required: 8 years at £21,600 = £172,800.

Current bridge fund: £70,000, meaning I need to accumulate £102,800 in 9 years.

To achieve this I will need to invest approximately £715 per month, which is much more realistic.  So, assuming this is what I’m aiming for, I need to move to Stage Two.

“Welcome to Stage Two”

I need to make sure that my pension has enough time to grow to a level that will sustain me for at least 30 years.  My current pension fund is approximately £75,000, and I’ll have nine more years of contributions and growth, followed by eight years of just growth.

Current pension: £75,000 + 9 years of contributions and typical growth = £253,000

Future pension: £253,000 + 8 years growth = £442,200.

Assuming I need an income of £21,600p/a, that would be a withdrawal rate of 4.9%.  Firecalc suggests a success rate of 75%.

It’s important to remember that as you get older, you’ll probably be spending less money.  So the assumption that I’ll need £21,600p/a is probably not accurate long-term.  If the figure drops to £18,000p/a (£1,500p/m) then the success rate increases to 94.4%.

What can we take from these results?

The first thing is that FI looks achievable over the next decade, but achieving it sooner requires more income or a lump sum from somewhere.  I’m also approaching the exercise with the assumption that I will have a comfortable standard of living in retirement; not quite FatFI but more than just subsistence living.  My calculations also assume that I’ll either have my mortgage paid off, with no other mortgage or rental commitments.  

This decade, my 40s, is going to be vital.  By the end of the year, I’ll be looking to drastically reduce our mortgage debt, if not pay it off completely.  One thing that I need to decide, as I mentioned earlier, is whether I want an earlier retirement that might be less comfortable or a later retirement that allows more financial freedom.

I’ve calculated that £1,200p/m would be sufficient for a basic standard of living.  So, let’s run one more set of numbers based on that.

Projected FI age: 47.  This leaves six years for me to build the necessary pot.  

Bridge fund required: 11 years at £14,400p/a = £158,400.

Current bridge fund: £70,000, meaning I need to accumulate £88,400 in six years.

I would need to invest just over £1,000 each month to hit the required total.  But what about the success rate?  Well, the WR here is 9.1%.  According to Firecalc, this would be successful 80% of the time.

Another point to note, and it’s a point I’ve made before, is that success and failure here are not instant events.  If you are trying to make a bridging fund last 11 years, you’ll have a decent idea after a couple of years how things are progressing.  You can then change course if needed, perhaps by working a few hours a week.  Earning just £100p/w would reduce the necessary withdrawal from £14,400p/a to £9,200.  As a WR this is now 5.8%, which Firecalc calculates a success rate of 100% over 11 years.

Pensions

There are people out there who don’t see the point in paying into a pension because they feel they’re too old, or because they’re too young.  I’ve heard comments from both these camps recently, and both of these viewpoints are stupid.  The best time to start investing in a pension is yesterday, with the second best time being today.  The younger you are when start saving, the more time that money has to compound. 

Take the difference between having £25,000 invested for twenty years, compared to forty years.  Assuming growth of 5% you would have £68,000 with the former, but £184,000 with the latter.  Time in the market is vital.  Compound interest really starts to show its power the longer you leave it to work.  So not starting young makes zero sense.

At the other end of the spectrum, you have people who may be in their 50s and who already have some pension savings.  Just because you have some savings, it doesn’t mean you shouldn’t go for more.  If you are on a minimum wage job earning £11.44p/h and working 35 hours a week, you will gross £400.40p/w.  

If you pay 5% of your earnings into a pension, you are subtracting just over £20 from your weekly wage.  However, your employer will have to make up the difference so that, in total, 8% of your wage is invested into the pension pot.  When the employer puts in their contribution you are building up your pension pot by £32 per week, of which £12 each week is free money.  

Assuming you are ten years away from retirement, this is thousands of pounds of free cash you are refusing because you don’t think it’s worth it.  This all assumes that the employer pays the absolute minimum required into your pension, whereas many employers offer a better rate of matching as a benefit.  Some employers even go as far as 2-for-1 up to a certain limit, i.e. if you pay 5% they will pay an additional 10%.

Final Notes

That’s all for this week. Thank you for reading, and don’t forget to like, share, comment, and subscribe. If you want to donate towards the running costs of the site, please donate using the form below.

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

You can now find all my social media pages by checking out my Biolink:

bio.link/davidscothern.

Looking Back: Part 8

Originally published: December 19th, 2019. This was my last trip to Romania before Covid-19 hit, and I always liked Romania in the winter. It does get very cold though. I doubt we’ll ever return to Snagov, but that’s a story for another time.

Weekly Update

Hello and welcome back to Mortgage Advisor on FIRE.  I am writing this in Snagov, a small village in Romania about forty kilometres outside of Bucharest.  It’s a quiet little place on the edge of a forest and lake; the perfect place to come and write.  Unfortunately, on this visit, I have been very busy and playing catch up with sleep after a delay to my flight from the UK. 

We were scheduled to leave Doncaster airport at 22:15.  Just as I was booking an Uber to take us to the airport, I had a message come through saying that our flight was delayed until 01:15 the following morning, but we still had to get to the airport as though the flight was on time to drop our luggage off.  This was absurd.

We arrived at the airport and were given vouchers for food and drink as the flight was delayed by more than two hours.  Anyone who has flown from Doncaster will know that choices for food are limited between a six-inch or footlong Subway unless you feel like braving Wetherspoons.  Costa has now opened in the departure area so I was able to boost my caffeine levels just at the time I would normally be going to sleep. 

Advertisements

We asked what time the Subway and Costa were closing and were assured it would be around 1am.  It was surprising then, that when we tried to get food at Subway, the staff told us they were not serving any more sandwiches that evening.  Costa showed solidarity with their Sandwich Artist cousins by refusing to serve toasties or paninis warm.  We were offered them cold.  We refused. 

​The one silver lining was that we would be due compensation under EU law for the flights being delayed for more than three hours; we eventually left after 01:30. It was a strange flight though.  I’ve flown to Bucharest many times over the last few years and it’s normally a three-hour flight minimum.  We arrived in two-and-a-half hours.  I did some research and it turns out that you only get compensation if your flight is more than three hours late arriving; not departing. 

My theory is that the aircraft was ordered to fly faster to get to Bucharest less than three hours late as it’s cheaper to burn a bit more fuel than it is to pay compensation for a full flight.  Although we were more than three hours late departing, we were only two hours and thirty-five minutes late arriving.  We had to wait an hour for our bags, and then by the time we got to the house and showered it was after 8am.  Like I said, I’ve been catching up on sleep since then.

Financial Update

Premium Bonds: £9,900 (up £400 from last week).

Stocks and Shares ISA: £7,408.71 (up £123.37 from last week).

Credit Card Debt: £196.90 (up £196.90 from last week).

Loan Debt: £3,831.26 (down £24.69 from last week).

F**k It Fund: £1,075.85 (up £75 from last week).

Total Wealth Figure: £191,885.56 (total assets including residence valued at £173,501 by my lender) minus £138,625.59 (total debt including residential mortgage) equals £53,259.97 (up £426.16 from last week).

It still amazes me how much my ISA and apartment values have increased in just a few short years. They’ve both increased by roughly £60k, and that’s got to be decent progress by any measure.

​As you might have noticed, I have credit card debt for the first time in weeks.  In part 4 of this blog, I set out some ground rules, of which I have broken two.  I am not too concerned as there are explanations for both breaches. 

First, I have credit card debt because I am abroad and had to pay for some dental treatment.  This will be paid off on my return to the UK.  It is just that the publishing schedule of this blog, and my ability to pay the card off, have not quite lined up. 

I liked this dentist in Bucharest. He hardly spoke any English, but it was by far the cleanest and nicest practice I’ve been to. His work was great and the prices were excellent. He’s been taking care of Oana’s family for years.

Advertisements

The other rule I broke was that I would invest £100 every month into my F**k It Fund.  I only invested £75 this month, but it’s Christmas time and I’m abroad and had to unexpectedly pay for dental treatment; I only have so much money each month.  Into 2020 I might have to reign in the commitment to my F**k It Fund, but I guarantee that my credit card debt will return to zero by the next blog in this series.

Day Trading & Trend Trading

Before I discuss these trading types in detail, I think it best to start with a definition of both.

I should have just said, “don’t do it!”

“Day trading is speculation in securities, specifically buying and selling financial instruments within the same trading day, such that all positions are closed before the market closes for the trading day. Traders who trade in this capacity with the motive of profit are therefore speculators.” Wikipedia.

“Trend trading is a trading style that attempts to capture gains through the analysis of an asset’s momentum in a particular direction. When the price is moving in one overall direction, such as up or down, that is called a trend. Trend traders enter into a long position when a security is trending upward.” Investopedia.

Many people claim to have made serious money through these types of trading.  One thing I always point out is that for every success story, there are probably hundreds of people who have tried and failed, losing money in the process.  I believe it is possible to make money this way, but only under very specific circumstances.

Advertisements

​I believe that trend trading is a more realistic way to make money as it involves a detailed analysis of a stock before investing.  The stock is assessed before the decision to invest is made and if the business is healthy and making money, then it makes sense to invest.  However, the analysis of a stock is complex and there are often things the average person on the street will not find out even with a thorough analysis of the publicly available information. 

Trend trading is risky, but because it involves holding a stock for possibly days, weeks or months, it lacks the hyperactive nature of day trading.

What makes a lot of people lose money (day or trend) trading is that they lack the mental resilience to cope with immediate losses and if you trade with either of these systems it is guaranteed that you will lose money as soon as your trade completes.  It is guaranteed because of trading commissions and stamp duty.  I will illustrate with an example:

I’ve picked a stock at random, Centrica PLC, which is trading at 89.62 right now.  If you invest £5,000, you will pay £25 in stamp duty (0.5% of the value of the trade) as well as a commission from the company you are using to execute the trade.  Costs vary here, but you are probably looking at between £10-£20.  I will say £10 for this example. 

So, you have already used up £35 of your £5,000, meaning you have £4,965 to invest.  This will buy you 5,540 shares. For you to recoup that £35 you paid in stamp duty and fees, you need the stock to increase in value to approximately 90.25.  To make any sort of meaningful return, say 10%, you could be waiting a while as the average annual return of the stock market is around 7%-8% (it can vary wildly throughout the year though). 

To make a return you must pick the right stock, at the right time.  As the saying goes, “It’s not timing the market, but time in the market that counts.”  If you research your target stock, invest and hold, you will probably make money in the long term.  If you day trade with this example, for every 1p the stock value increases you will make £55 upon sale.  Hardly life-changing amounts.

Making money in the long term with individual stocks is not guaranteed. Businesses can crumble, and crumble very quickly. Investing in individual stocks is basically a gamble. So many people will hold stocks in the company they work for, which is just an extra risk. If the business goes under, you lose your job and your stocks.

So how do people make money through day trading? I will give another example.

If you invest £50,000 in Centrica PLC using the figures above, you will pay £250 in stamp duty, but the fees will be roughly the same.  As such, from your £50,000 you will have £49,740 to purchase 55,501 shares.  In this example, for every 1p the stock value increases, you could make £555 upon sale.  Now, imagine you had £500,000 to invest and you can see how the money is made.

Advertisements

​The difficulty for the average person is that you only have a limited Capital Gains allowance each year, and if you want to invest through an ISA you can only invest £20,000 per financial year as of 2019.  It is difficult to raise enough money to trade frequently and effectively within the limits of an ISA.  It’s not impossible, but it requires a healthy dose of luck.

I have tried my hand at both types of trading and lost money.  There are ways to mitigate losses, such as a stop-loss.  This is where you instruct your broker to automatically sell your stock if the price drops below a certain value.  I have heard varying advice about how low you should set your stop-loss.  If you set it too low, you risk losing more money than you need to.  If you set it too high, you risk selling prematurely before a stock has the chance to bounce back.  For example:

You purchase a stock at 100 and set your stop-loss at 95.  The stock drops to 95 and you automatically sell, losing 5 on each unit.  However, the stock could then bounce back and climb to 120 over the next few weeks.  If you had set your stop-loss at 90, the stock could drop to a low of 92 and then climb to 120 at which point you sell with a return of 20%. 

You could set your stop-loss at 85 and see the stock drop to 86 and then fluctuate between 86 and 89 for months though.  It’s a tricky subject and one for which there is no definitive answer. The safer, wiser, choice for investing in stocks is dollar cost averaging.  If you want to gamble, then day trading may be for you.  If you day trade, though, understand that it is just an educated gamble and you risk losing a lot of money very quickly.

Don’t gamble. I say again; Do. Not. Gamble.

Dollar Cost Averaging

I will refer to Dollar Cost Averaging as DCA from this point on.  Although it is called DCA, it does not mean you have to invest in dollars.  The term DCA can be defined as:

“…a strategy in which an investor places a fixed [monetary] amount into a given investment (usually common stock) on a regular basis. The investment generally takes place each and every month regardless of what is occurring in the financial markets.” Investinganswers.com

DCA is at the heart of my investing strategy.  I invest a minimum of £250 every month into my stocks and shares ISA.  The £250 is then split across individual funds and stock, which can all vary in value from day to day.  For the sake of clarity, I will use a simple example to illustrate how DCA works. 

At the moment, EasyJet is trading at 1,440 per share.  (Note: with regular investment plans, many ISA providers will not charge dealing commissions.  Stamp Duty is still payable, but this cost is the same each month and for extra clarity, I will ignore the cost in these calculations to demonstrate the principle of DCA).  £250 will buy 17 shares of EasyJet with money left over.  (Further note: some ISA providers allow you to buy fractions of shares if your total investment will not buy a whole number of shares). 

Advertisements

​The following month on your scheduled investment day, EasyJet might be trading at 1,504.  Your £250 will buy 16 shares.  The month after, the price may have dropped to 1,380 and your £250 will buy 18 shares.  Over time, the cost and value of your investment will smooth out.  You get more for your money when prices are low and the value of the stock you own increases when prices go up.  By investing on a regular and scheduled basis, it takes much of the worry out of investing. 

It’s impossible to regularly beat the market, so going with the flow of the market is how you build wealth in the long run.  To take DCA to the next level, rather than investing in just individual stocks you can invest in funds that track a whole index, such as a FTSE100 tracker or a FTSE250 tracker, or a US equivalent.  This is a hassle- and worry-free way to invest.  It’s not flashy or exciting but it will work and build wealth given enough time, but you must be patient.  This will not give you enough wealth to retire in a few years.  Over a decade or two, it could create a serious pot of money for you. 

There are a few instances when DCA may not be appropriate.  One common debate is what to do when you have a substantial sum of money, say £10,000 or more.  Should you invest it all immediately or spread your investment out into smaller sums throughout the year? 

Some people argue that it is safer to invest in smaller sums throughout the year.  I’m afraid I have to disagree.  If you are investing a finite amount of money, rather than a regular sum on an indefinite basis, I think you need to get the cash in the market as soon as possible.  As I quoted earlier; “it’s not timing the market, but time in the market that counts.”

Rather than spreading the cash over time, I would suggest splitting the sum into two or more smaller amounts and spreading the money across different funds and stocks.  If I had £10,000 to invest in a lump sum now, I would put £2,500 into the Vanguard FTSE100 tracker, £2,500 into iShares Emerging Markets Equity Index, £2,500 into the Vanguard US Equity Index and the remaining £2,500 into the Vanguard Global Bond Index.  Yes, I like Vanguard. 

Now, it would all go into a global index fund, still with Vanguard.

If you invest your lump sum as soon as possible, you might hit the market at a peak but it’s statistically unlikely.  Even if you do, over time the market grows anyway.  The key to investing, and the fundamental principle behind DCA, is that you cannot regularly time and/or beat the market.  So, rather than swim against the tide, go with the flow. 

Final Notes

I’m flying back to the UK on 20/12 and have an early start.  I have to be at Otopeni airport at 6am Romanian time (4am UK time).  I would rather have flown via Amsterdam or Paris but I’m flying into Heathrow before a connecting flight to Manchester.  Then, a train journey back to Sheffield awaits.  I don’t feel like I’ve had a lot of time to relax on this trip; it’s been very hectic, but I’ll be back in June. 

​My girlfriend’s parents have three dogs and a cat.  One of the dogs, Nica (short for Veronica) is old now, but still very happy.  I love her to bits.  In the last year or so she has aged a lot.  A couple of times on this trip, when we’ve taken her for walks, her legs have given way and she’s stumbled.  The winter in Romania seems quite mild so far with temperatures around 6-10 degrees.  This time last year it was -10 degrees at one point in the day.  I hope Nica is still here in June when I come back, but I’ve said my goodbyes to her for now.

Oh, Nica. What a sweet lady. She was the purest dog you could meet. She was loyal, friendly, playful, and happy. We loved taking her for walks in the forest and now she’s at peace. Fortunately, we were able to see her again, and we were with her as she passed. I was in pieces. I still miss her.

Me and my favourite Romanian lady.

Next week will be the last instalment of this blog for 2019.  I will have a look back at some of my worst financial mistakes and regrets in the hope that it helps some of you avoid making similar mistakes.  Thank you again for your time and I hope you all have a great Christmas. 

Part 233: Sample Bias and Investment Decisions

Hello and welcome back to Mortgage Advisor on FIRE.  This week I discuss luck and how it can change the course of you life.  Also, sample bias and investing; why people need to think critically when presented with data.

Quote of the Week

Never confuse wisdom with luck.

Ferengi Rules of Acquisition

I’ve had a few interactions this week that have all stemmed from a lack of understanding when it comes to statistics and critical thinking.  Life is so much easier when you stop to think about information you are being presented with, but unfortunately many people don’t take the time to just think for a moment about what they’re being told.

I was chatting with someone who works with defective products.  I’m not going to be too specific as I don’t want to point any fingers, but they were talking about how they would never buy this product as they’ve only ever seen people having issues with it.  I let them finish their mini rant and then asked them if they’ve thought about this from another angle.  

I explained that, in their job, they will only see people who have problems with the product because that’s exactly what their job is.  They would never have a customer come to them to state that the product works fine, because their job is to handle the products that aren’t working.  Their sample is not representative, and so their view on the product is skewed.  In research this is known as sampling bias, and it shares some overlap with survivorship bias.

Click here to support Mortgage Advisor on FIRE. All donations gratefully received.

Those who fall victim to survivorship bias will assume that a successful, or surviving, sub-group is representative of the whole population.  One of the most famous examples of this bias comes from the Second World War when it was noted that many Allied aircraft were returning from missions with bullet holes in the same general areas; the wings and fuselage, with the engines and cockpit less frequently damaged. 

As losses were mounting the Allies were scrambling to find a way to better protect their planes.  Using the data gathered from the bullet hole analysis, it was decided that extra armour should be concentrated on those areas showing the most direct hits from enemy fire, i.e., the wings and fuselage.

The Fundamental Error

The planes that were returning from missions were damaged in their wings and fuselage but still survived to return home.  Planes that were hit and damaged elsewhere were being destroyed, and that’s why they didn’t return home.  So, in this case the decision to reinforce the areas on surviving planes that showed the most damage was wrong.  They needed to think a little outside the box and reinforce the areas that showed little to no damage, because the data is suggesting that damage to those areas was lethal.

In cases like these the error is not taking the thought process on an extra step.  It’s not a complicated concept, but most of our thinking is done on autopilot.  Sometimes you need to look for what is missing rather than what is in front of you.

Advertisements

In life there are rarely times when there’s one clearly correct choice and one incorrect choice.  Often we can only guess at what the long-term consequences of our decision making will be.  The key is to make the best decision you can with the information you have, which includes factoring in the information you don’t have.  If your decision later produces negative results, you still can’t really say it was wrong if you did the best you could with the information your had at that time.  Ultimately, you can make all the right choices in the moment, and still end up in a losing situation.  Captain Jean-Luc Picard said it best;

“It is possible to commit no mistakes and still lose.  That is not a weakness; that is life.”

How does this relate to investing?

There is a whole genre of books about self-made entrepreneurs and investors who picked themselves up by their bootstraps, and claim that anyone can do it if they follow in their footsteps.  

Interlude

I’m fascinated by etymology and all things related, and I just wanted to share where the term “picking yourself up by your bootstraps” comes from.  It originates from the idea that you can lift yourself up from the ground by grabbing your bootstraps and, well, lifting.  Under gravity this is impossible, but also hilarious to watch people try.  

The phrase isn’t meant to be taken literally though, and is instead used to describe the act of pushing through and achieving through your own hard work, grit, and determination.  In more general terms, it refers to the act of building something up from within with no outside help.  This is also where the term “booting” or “rebooting” a computer comes from.  

Back in the early days of computers so much had to be done manually, but now you simply push a power button or flip open a lid, and the computer springs to life, because it’s been programmed to turn itself on and load the necessary software; the computer is picking itself up by its own digital bootstraps.

Back to investing…

These books are often inspiring, and I’ve read plenty of them.  However, I always pay attention to what is not said.  I understand that it’s human nature to share success stories.  We all get a kick out of telling the story of how we achieved this or that purely through our own hard work and intelligence.  Not many people will admit that their success is also, in no small part, due to chance.  This can be being in the right place at the right time, catching a client at the right time, getting a break because of a natural disaster, or winning the genetic lottery and looking the right way.  

There are so many random things that can direct the course of a person’s life.  Like being caught in a traffic jam, and missing your flight, which later crashes, or being stopped for directions and narrowly missing the out of control bus that smashes into a group of pedestrians, or finding £20 on the floor so you decide to treat yourself to a coffee where you bump into your future partner for life.  When you think about it, an absolutely insane amount of what we experience is down to chance, and that’s why I think many of these self-help, motivational books are dangerous and misleading.

Just because it worked for one person, it doesn’t mean it will work for every person.  I come back to sampling bias and survivor bias.  To be blunt, a book about a failed follower of FI who ends up sitting at a desk crunching numbers until 70 is not going to sell as much as a book about a young business person who networks and trades their way to millionaire status before the age of 30. 

People want success stories and they want to believe it could happen to them.  It might, but it probably won’t.  For every person that makes it and writes a book about it, there will be many more who fail.  It’s the same with new businesses.  The vast majority fail, but we mostly remember the success stories.

Advertisements

This is why I find books that advocate drastic changes annoying and irresponsible.  Always remember to ask yourself, when reading these types of stories, what the author is not telling you, and especially what they are not saying about the part luck played in their journey.

Weekly Update

It’s time for another round of Life Should Not Be This Difficult.

A couple of months back I was referred for a test by a consultant.  This was to be done on the NHS because they had the better equipment compared to the private hospitals in my area.  I was told I’d get a call or letter in the coming weeks.  A month ago I received a call whilst I was working, so the call went to voicemail.  I checked it a little later and I heard that it was the hospital calling to arrange an appointment.  They left a phone number and asked me to call back.  At the time, I didn’t have anything to record the number, and it was read out very quickly in the message, so I pressed the option to save the message, or so I thought.  I actually deleted it.  Yeah, that one is on me.

Anyway, I called the hospital’s general number and asked for the relevant department.  I was transferred through and left on hold for over 20 minutes before I gave up.  I asked Oana to call for me, and this is what happened…

Call 1: My call where I was on hold for ages.

Call 2: Oana calls and speaks with someone who explains there is no one available to take the call, and we’ll get a call back.  

We did not get a call back.

Over the next couple of weeks…

Calls 3,4,5, & 6: I call and go through to the right department only to be told there is no one around who can take the call, so I’ll get a call back.  This never happened.

Call 7: I call back and get through to someone and I start explaining my problem, only to be cut off midsentence; “let me stop you right there.”

If there was one phrase that was going to get my back up, it was this.  I let the person explain that there’s no one available and someone will call me back.  After they finished I let the silence hang for a beat and then ask, “would you mind letting me finish explaining what the issue is?”

After I’d finished explaining, I got a call back within a few minutes to get it all booked in.  It shouldn’t be this difficult.

A common issue for autistic people is that they can often be overlooked or pushed out of the medical system because of the sheer amount of bureaucratic incompetence.  I hate talking on the phone, but I suck it up and do it when necessary.  Without fail, it always leaves me drained and stressed out.  Some autistic people have it much worse, and it’s easy to see how some would give up in this situation.  It’s not good enough.  It’s pure incompetence and bad management.

More Cats…

Bobby a.k.a. Bobbity

Oana and I also got a little annoyed with the vet we took Poppy to.  For all the cats we’ve had, we’ve used the same vet and generally been happy with them.  Our last cat, Bobby a.k.a. Bibby, Bobbity, Bobbers, Buddybobs, had to have his teeth taken out.  This was done under general anaesthetic and not, as a friend implied, by the vet hitting the cat with an uppercut (they were not promoting animal cruelty, it was just another batshit conversation this friend and I have).  Bobbity was at the vets all day recovering and we paid just under £300.  This was in September 2021.  

So we had Poppy at the vet this week and they mentioned that they needed to possibly take a tooth out, and it would be done under general anaesthetic.  They said that stage one would be seeing how we get on with a powder to add to her food, and stage two (I had to suppress a giggle at this point; IYKYK) would be the operation.  We were given a quote for the surgery, and it came to £900.

In the space of less than three years the cost of this surgery, which is the removal of one tooth, and not several, has increased from just under £300 to £900.  That price better include dinner because I liked to be wined and dined before I get fucked.

We called a random vet and asked for an estimate for this type of surgery and was told roughly £500, maybe slightly more or less depending on the exact nature of the problem.  We also called our usual vet to query this and were fobbed off with some general statement regarding cost of living increases and what not.  I get that, but I can’t see how that can account for the price tripling in the space of less than three years.

Looking Back

If you missed the new Looking Back post from midweek, you can find it here.  In this post I discuss employee benefits including pensions and shares.

What am I doing?

TV: MasterChef (BBC).

Audiobook: All These Worlds – Bobiverse Book 3 by Dennis E. Taylor.

Advertisements

Support Mortgage Advisor on FIRE

If you would like to show your support for my blog please comment, like, share, and subscribe.  All these things help the blog to grow.  If you want to make a financial contribution towards the running costs of the site, please use the donation form below:

Financial Update

Assets

Premium Bonds: £13,300.00. 

Stocks and Shares ISA: £69,411.64. 

Fuck It Fund: £1.10.

Pensions: £76,510.13. 

Residential Property Value: £229,818.00. 

BTL Property Value: £148,301.00.

Total Assets: £537,341.87.

Debts

Residential Mortgage: £172,638.93. 

BTL Mortgage: £104,885.22.

Total Debts: £277,524.15. 

Total Wealth: £259,817.72.

Investment Income in 2023: £1,192.76 (target £10,000).

A few things to point out this week.  We’ve now entered a new financial year so I’ve been able to start investing in my ISA again.  I withdrew almost all my Fuck It Fund and used most of it to top up the ISA, and a little to top up our contingency fund for the BTL.

One boost this week was that our index valuations increased on our two properties.  This means that our residential mortgage is now under 75% LTV which means we can look at interest only.  The plan would be to put the mortgage on IO and then start making payments off the parts of the mortgage which have the higher rates of interest.

BTL Update

We’ve had a few viewings this week but so far no offers.  Some of the feedback we’ve had has been fairly neutral; some good points and some not so desirable points.  So we’re just waiting for some more viewers and hopefully something will happen soon.

The Case Against BTL

I’ve had a couple of people approach me this week for advice on BTLs, and whether they should go for it.  This isn’t a question that has a definitive right and wrong for all people.  However, as a general guide I would suggest that it’s probably not a profitable venture for most people.  It seems like the only way to make money from BTLs now is if you have multiple properties.  This way if one property has a problem the others can pick up the slack, so to speak.  If you have one property and you have an issue with it, you could find that your one source of income has vanished and you still need to pay a mortgage, council tax, utilities, and so on.  

The thing about BTL is that you are starting from a negative position.  Once you add up the various costs of a typical deal, you are already behind on your investment.  Let me give you a basic example;

Purchase Price: £150,000

Deposit (assuming 25%): £37,500

Legal Fees: £1,500

Stamp Duty Land Tax: £4,500

On top of those costs, you potentially have fees for your letting agent drawing up the paperwork and completing the relevant safety checks.  There may be product fees with the mortgage lender.  You also have insurance to consider, as well as the potential funds to maintain the property whilst searching for a tenant, and a contingency fund to cover void periods, repairs and so on.  

Even if we just go with the three big expenses I mentioned, you have put down £43,500.  So you have a mortgage of £112,500, and an asset worth £150,000 but even if you sold it immediately, you would not break even due to legal fees and associated selling costs.  To make money, you need to rely on either capital gain, income from the property, or both.  

Our BTL was last rented for £725 per month, and from that we deducted our mortgage, insurance, agent fee, and an amount for tax and void/emergencies.  From that £725, we were lucky to draw down £250pm as pure income.  It would take six months of income to pay back the legal fees, and then a further 18 months to pay the SDLT bill.  As for the deposit, you are pretty much relying on capital gains.  The £37,500 could have been invested in stocks over two years which, after a further ten years growth at 6%, would almost double in value to £68,200ish.  

The thing about property is that if you are lucky (see the start of this post) you can snap up a property below market value, that is in great condition, find a fantastic tenant, and never have to pay for a repair.  Or, you could end up with a property where the electrics are fucked, and your first tenant leaves the property trashed and the ground floor ankle deep in water.  Yes, this happened to us.  You could have your second tenant trash the light fittings, curtains, break the cooker, and have one of the internal doors ripped off.  Yes, this happened to us as well.  

It’s actually amazing that we could still potentially turn a profit if we sell for a reasonable price, but the whole experience has not been worth the time, effort, stress, and money.

If you have the funds to go out and snap up three or four properties without needing any other funds, then I can see how it could work.  Having one BTL is just a pain in the ass.  If you’d asked me a few years ago about property I would have given a very different answer but experience has beaten the enthusiasm for property out of me.

That’s all for this week.  Thank you for reading.  Please remember to like, comment, share, and subscribe.  If you’re feeling generous, please leave a donation on the form below.

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 

You can now find all my social media pages by checking out my Biolink:

bio.link/davidscothern.

Looking Back: Part 7

Weekly Update

Hello and welcome back to Mortgage Advisor on F.I.R.E.  It’s a brave new world; or rather a depressing descent into a dystopian world.  I’m very disappointed in the outcome of the general election.  A Tory government is probably best for me but for the country over the next decade or so, I think it will be a disaster for the vulnerable sections of society.  I voted for what I thought would help the country, as I believe that if the country does well, I will eventually do well anyway.  I guess we will see over the next few years what the consequences of this election will be. 

Safe to say that my prediction about the Tory government was largely correct. They’ve been an absolute disaster to the country, and their handling of Covid was disgraceful. Now, we’re left with a country that is worse off by almost every measure.

Later today I fly to Bucharest with my girlfriend to spend some time with her family in the run-up to Christmas.  I will fly back on 20/12 and my girlfriend will stay on until the New Year.  It will be the first time she will have spent Christmas at home in a decade and I’ve told her she should take advantage of the opportunity.  I will be spending the holidays with our cat, Sweep. 

He’s an older cat and last week we had his one-year adoption party.  He is sixteen years old and for most of his life, he was with an elderly couple.  When they passed away Sweep was taken to Cats Protection where he stayed with a foster carer for several weeks.  He was rehomed briefly but did not settle.  Then, we adopted him, and it’s been great ever since.  He settled in very quickly and is a loving soul.  It’s always hard leaving him at the cattery when we go away but it’s only for a week and then I’ll be back with him. 

Awww my buddy Sweep. I miss him every day. He was the most loving and affectionate little guy. When I was working from home he would wait until I was finished and then come and sleep on my chest for a bit. When I was working from the office I would come home at lunch to see him, and we’d sit down together and he’d start trying to clean my head.

A photo my girlfriend captured of me and Sweep having a nap.
Sweep looking regal.

​This week I will be looking at employee benefits relating to pensions and share save schemes, and the composition of my Stocks and Shares ISA, but first it’s time for the weekly financial update. 

Advertisements

Financial Update

Premium Bonds: £9,500 (no change from last week).

Stocks and Shares ISA: £7,285.34 (up £394.23 from last week).

Credit Card Debt: nil (no change from last week).

Loan Debt: £3,855.95 (no change from last week).

F**k It Fund: £1,000.85 (no change from last week).

Total Wealth Figure: £191,287.19 (total assets including residence valued at £173,501 by my lender) minus £138,453.38 (total debt including residential mortgage) equals £52,833.81 (up £394.23 from last week).

It’s been one of those weeks where not much happens financially.  I get paid on the 20th of the month and most of my investments take place shortly after payday.  In the last couple of days, my ISA provider executed my deals which saw the value of the ISA increase.  There was also a little boost from the election result.  Everything else has remained the same and will do until my next payday.

Click here to donate towards the running costs of Mortgage Advisor on FIRE. All donations are gratefully received.

Employee Benefits

Pensions

I would say this is the most common benefit that employees in the UK will have access to.  At the time of writing (December 2019), your employer must opt you into their pension scheme so long as you earn at least £512 per month (£118 per week/£472 per four weeks – source: gov.uk).  Although there are minimum amounts that must be contributed by both the employee and employer, there are ways to increase the amount contributed and often these increases have a tax advantage.

Many employers will offer to contribute more than the minimum required amount to an employee’s pension.  The exact amounts can differ, but some employers will match your contributions so that if you pay 5% of your salary into your pension, they will also pay 5% from their pocket.  In effect, you are getting 5% of your salary again for free, paid into your pension.  Some employers offer even more generous provisions, where they will not only match your contributions but double them.  For example, you pay 5% of your salary and they pay an extra 10% on top. 

With pensions, the earlier you start contributing the better.  I am fortunate to work for a business that offers a fantastic pension and I have increased my contributions to take full advantage of what matching payments the business will make.  It’s free money.  Why would I turn it down?

So many people still fail to realise what an amazing benefit this is. It’s free money. If your employer offers pension matching, or something better, it’s an easy way to boost your FI plans.

​I would suggest that if you are unfamiliar with your employer’s pension, you take some time to research it and speak with your HR department to see how you can best maximise the opportunities available to you.

Advertisements

Company Share Schemes

I have worked for several companies that have offered share incentive plans.  The most common one I have encountered is a monthly savings plan which matures after 2, 3 or 5 years.  It has worked in the same way with each company I have opted into this benefit with. 

The company will offer the chance for you to buy shares at a discounted price.  This is often 20% lower than the average market price for that day.  For example, if the average market price that day was 50p per share, the company would offer you the chance to buy that share at 40p share. 

If you agree to take part, you choose how much you want to invest each month.  Let’s assume you choose to invest £100 per month and you go with a standard three-year plan.  Over the three years, you will invest £3,600.  When the three years are up, you have a choice.  If the share price at the end of the investment is less than 40p you can choose to get all your money back.  Your capital is secure, but it may be worth a little less due to inflation.  The second choice is you can exercise your option to buy the shares at 40p per share.  The third option is you can buy the shares and immediately sell them.

The beauty of this type of plan is that if you work for a healthy business, it is likely that the shares will have increased in value over the three years, especially as you bought them at a 20% discount.  In this example, you would have purchased 9,000 shares at 40p per share.  If we assume the shares grow at a rate that sees the price at 50p per share at the end of the scheme, if you then sell those shares at 50p per share, you will return roughly £4,500.

A share save scheme of this nature is an easy way to accumulate shares, although you must be careful not to put all your eggs in this one basket.  A few things to remember; unless you are high up in your business or privy to high-level knowledge, you are probably being fed the company line that all is well with the business.  Do some research on your business first before committing huge sums of money. 

This is a significant danger with investing in any single company; there will always be things you don’t know, whether it’s a looming sanction from regulatory bodies or. a soon-to-break news story that the board have been cooking the books. There’s always a risk when you put a decent chunk of your portfolio in a single stock.

​If you take part in this type of scheme, you can often opt into a new scheme each year which means after three years you will have a new scheme maturing each year.  The worst that can happen is that the share price does not rise, and you get your money back.  Well, thinking about it I suppose the worst that could happen is the business goes under, but should that happen you would probably have bigger problems to tackle. 

Thinking about it some more, I suppose the worst that could happen would be a zombie apocalypse and/or a gamma-ray burst heading our direction. Either way, it means that you won’t be working the day after.

My Stocks and Shares ISA

My ISA is my long-term wealth plan, in contrast to my plans for BTL property which is very much concerned with immediate cashflow.  Whenever I speak to people about my ISA, they seem unsure about what a Stocks and Shares ISA is.  I don’t think these types of accounts have been explained well enough in terms that the general public can understand, but I firmly believe these accounts should form the foundation on which everyone’s wealth should be based.

For this explanation, I will now refer to a Stocks and Shares ISA as simply “an ISA”.  There are other forms of ISAs, such as a cash ISA.  However, to save typing out the full name again and again, when I mention the word “ISA” I am referring to the Stocks and Shares variety.

Advertisements

The ISA can best be conceptualised as a shell within which assets are free from Capital Gains Tax (CGT).  This is the main benefit of the ISA.  The ISA, or shell itself, does not generate wealth though.  You enter the shell, and from there you can access information about a variety of stocks and investment funds.  You can buy individual stocks, for which you will still pay broker fees and Stamp Duty, but if you then sell the shares and make a profit, that profit is free from CGT.  As a result, some day traders favour buying shares this way.  The downside is that you can only invest up to £20,000 per year into an ISA (correct at the time of writing).  So, if you draw money out of your ISA, you cannot necessarily invest it back in that same year. 

I have a two-pronged approach to my ISA.  I invest in several index tracker funds as well as a small selection of stocks I have picked myself.  I would strongly advise you, before investing, to educate yourself about how to select funds and stocks.  Here are a few good books to start with:

How To Own The World by Andrew Craig

The Naked Trader by Robbie Burns

I Will Teach You To Be Rich by Ramit Sethi

I am now firmly of the opinion that investing in single stocks is risky and generally a bad choice. If you get shares from your employer, then it can make sense to hold these under some circumstances. As I’ve mentioned before, the average person can do all the research in the world, but they’ll still never be able to predict the next big scandal. It’s safer to invest in the market as a whole, rather than isolated stocks.

For the general, long-term, investor, I believe it makes more sense to concentrate on index funds.  These funds will track a whole index which means you ride out the rough and smooth.  There are dozens, if not hundreds, of books about how to pick stocks but most of it is luck.  There are things you can do to research stock in detail and I have had some success with it in the past, but it’s hard work and for all that work luck can screw you over or be your best friend.  Trading individual stock is more of a gamble than taking a more cautious approach and investing in tracker funds primarily. 

However, there is something fun about researching stocks and picking ones you think will perform well over time.  The four stocks I have picked are in different sectors and have a good track record of paying dividends.  I may add a few more stocks to the mix once I have built up a decent holding in the four stocks I have already. 

It’s fun but it’s gambling, and it’s been shown time and time again that gambling can produce a little mental high. For the avoidance of doubt, gambling is bad, and so is picking individual stocks. You might get lucky, but you’re more likely to lose money. When investing in individual stocks you are more likely to chase losses and make risky trades.

My ISA is made up primarily of funds (80.5%) with the remaining 19.5% comprising stocks.  Approximately 45% of my funds are in the US with around 20% in the UK.  The rest of my funds are split around emerging markets and Europe.  Most of my stock holdings are focused on one stock which makes up over 75% of my total; in effect, roughly 15% of my total ISA value is dependent on that one stock.  I should probably dial back a little on that stock and concentrate on balancing elsewhere.  However, I believe that one stock is significantly undervalued and will improve over the next two to three years. 

From the new year, I am going to diversify into bonds.  Currently, my whole ISA is based on stocks and many of my funds are wholly stock-based as well.  Much of my research has suggested it is wise to keep a fraction of your total investment in bonds.  I am going to aim for a 10% share of my ISA being invested in bonds going forward. 

Final Notes


This has been a bit of a rushed entry, I’m afraid.  Sometimes life just gets in the way.  Next week, I should have much more time to put together a more polished article and I will be looking at day trading in more detail, as well as looking at the advantages of dollar-cost-averaging. 

Thanks again for reading and I hope you visit this blog again next week.

It’s fascinating looking back at my attitudes towards investing from a few years ago. My beliefs have changed so much. I used to argue for stock picking, property investing, and other schemes which I now cringe about. I’d like to think that my knowledge and experience have made me a better investor. I guess the proof will be in whether I successfully retire early or not.

Part 232: The link between the Fermi Paradox and Compound Interest

Hello and welcome back to Mortgage Advisor on FIRE.  This week I discuss the link between compound interest and the Fermi Paradox.  Also, some updates on our BTL, and our neighbourhood cats.

Quote of the Week

This question, or something like it, was asked by physicist Enrico Fermi in 1950 whilst discussing the possibility of intelligent alien life with his colleagues.  The universe is huge, I’m sure you don’t need to be told that, but on a smaller scale so is our galaxy.  It’s almost beyond comprehension how vast the cosmos is.  

The view held by many is that the universe is so large, that it’s a statistical improbability that there is no intelligent alien life out there.  I think we have to be careful citing statistics in this argument because we only have a single data point; Earth.  So far we’ve not discovered life anywhere else; intelligent or otherwise.

The Milky Way galaxy is roughly 100,000 lightyears across and contains hundreds of billions of stars.  Within just 50 light-years of Earth, there are approximately 1,800 stars spread amongst a lower number of star systems; binary systems are quite common.  We have been pumping out radio and other types of signals of our presence such as pollutants in our atmosphere that would be visible to observers within such a distance.

Advertisements

We can deduce the atmospheric composition of far-off exoplanets, so it’s not much of a stretch to assume that alien civilisations could do the same.  Certain gases are mostly produced artificially, and if there’s a concentration of them in the atmosphere you can be fairly confident that something is producing it.  I’m thinking of methane and dimethyl sulfide specifically.  

When methane is produced it is not stable enough to survive for long periods.  In our atmosphere, it reacts with ozone to produce water and carbon dioxide.  If there is a constant source of methane, then it does point to the possibility of life.  

The Fermi Paradox

The Fermi Paradox is the conflict between the idea that life must be abundant with such a vast number of stars out there, and the fact we’ve seemingly not had any contact with it or discovered any conclusive proof of its existence.  

I’m not so convinced that this is a paradox though.  The vastness of space can support the argument for there being life out there, but it can also explain why we haven’t discovered it yet.  It takes light years to reach our nearest neighbouring systems, and as far as we understand physics, travelling faster than light just isn’t realistic.  Even sending radio or laser signals to other star systems depends on the signal being strong enough and not suffering divergence over long distances.  Interstellar communication, even at light speed, would be a massive undertaking and assumes both parties would be communicating in the same way, at the same time.  

I’m not going Full Nerd on this because it could take up several hundred thousand words and I still would only have scratched the surface.  However, one of the main reasons I’m doubtful that there’s been an advanced alien race in our galaxy can be linked back to finance and investing.

What am I thinking of?

If you said von Neumann probes you would be correct.  A von Neumann probe is a type of self-replicating spaceship that is designed to explore space and harvest materials to build more of itself.  Then, the ones that have been built proceed to build more, and the process continues.  It’s essentially compound interest.  It would not take too long, in the context of the age of the universe, for a species to start a project like this and then see that project expand so that the probes have visited every corner of the galaxy.  Assuming the probes travel at 10% of C then the probes could cover the whole galaxy in a few million years.

Compound Interest

It’s just not realistic for most people to achieve FI without taking advantage of compound interest.  You need your money to make more money, which in turn makes more money.  Your wealth replicates like the way von Neumann probes self-replicate.  You need your money to be working for you every hour of the day, every day of the year.  Unless you are earning an absolute fortune or come into a huge sum of cash, this is the only way to FI.

Weekly Update

Our week started on a bit of a downer.  We had four viewings booked for our BTL, but two of them cancelled and the other two just didn’t show up.  It’s not a great way to start the week.  We need to get the property sold and I’m not sure why four separate groups or individuals would book an appointment to view somewhere, and then either cancel or not turn up.  One or two would be understandable, but all four not taking place seems strange.

I’ve decided I need to cut down on my caffeine consumption.  I read one of those lists, on Bored Panda I think, where people talk about the best little changes they’ve made in their life.  One person commented that when they cut down on caffeine, their anxiety massively reduced.  It makes some degree of sense with caffeine being a stimulant.  I’m not sure I could ever totally give up caffeine, so I’m going to try and go from four cups a day to three, with the third one being decaf.

Oana has had a few more interviews for jobs and has a good feeling about a couple of them.  Hopefully, something will come along soon.  I don’t think either of us expected the search for a new job to take this long, but it is what it is.  I’m convinced there’s an element of racism involved, whether it’s conscious or not.  

John Lewis

We had our third, and hopefully final, visit from John Lewis last weekend.  This was to correct the wiring they’d failed to install correctly the previous two times.  I sent a fairly detailed email to John Lewis about it, and their reply essentially ignored all the points we made and stated that they needed to come out a third time to make sure it was all correct.

Advertisements

If there’s one thing that is guaranteed to tip me over the edge it’s when I explain an issue to someone, covering all the relevant points, and they take some time to think about before coming back with a response that is just repeating the same information.  It went something like this;

My Email to John Lewis (abridged)

We ordered an oven with installation.  Your guys did not install it correctly and you called me to explain you needed to come out again.  Following that second visit, you called me again and explained that the repair work had caused another issue that you needed to sort out.  During each visit, the engineers were polite, but not very clean.  For example, we gave them a blanket to use as they needed the rest the oven on something that wouldn’t damage our flooring.  Following this they put the blanket back on our clean sofa.  Also, I’m autistic and hate having strangers in my personal space.  

JL’s Reply (abridged)

Our records show that it was necessary to come out two further times following the initial installation, and this was because our quality assurance team highlighted errors with the work that had been completed.

That was it.  Their response to the complaint was just to slightly reword things and tell me the information I already knew, and they should know I already knew because I told them that same information.

John Lewis also failed to acknowledge many of the other points we raised and it just seemed like a “we don’t give a shit” response.  All in all, a hugely frustrating experience.  To have three separate appointments to install an oven is crazy, and we’re now left wondering if the installation is even safe and/or correct now.

Looking Back

In case you missed it, I posted another instalment of the Looking Back series earlier in the week.  I discussed budgeting and the concept of Paying Yourself First.  

Kelham Island Cats

I’ve often mentioned our cats in this blog and I thought it was only fair to share the love for the cats in our neighbourhood.  Oana and I know many of the local cats, and we always stop to say hello when we meet them as we walk to the shops or are just having some fresh air.  These cats are all pretty friendly, and we’ve met most of their owners.  Here are some pics:

Felix

Felix lives around the corner from us and is a big cat.  He’s friendly and comes to say hello when we see him out and about.

Valentina
Yuriko

These two cats are small and live together a few doors down from Felix.  We only found out their names on Saturday.  They’re very friendly and come over for head scratches.  They can sometimes be found playing with Felix.

We’ve not seen this cat outside, but the house it lives in has full-length windows and a cat tree up against the window.  This cat will often be on the tree either sleeping, cleaning, or just generally watching the world go by.

This little fella is a cat I’ve seen for a few months now.  When I would walk past it would come bounding over and want attention. We have named the cat Squirrel because, well, why not? Anyway, Squirrel always comes running to us when we are nearby and always gets scratches and plenty of compliments.  We don’t know much about Squirrel except for which house they live in.  I think this kitty is very young still, but seems happy enough.  It always brightens our day when we see this sweet young cat.

What am I doing?

TV: MasterChef (BBC).

Audiobook: For We Are Many – Bobiverse Book 2 by Dennis E. Taylor.

MasterChef has started up again, so now we can start judging people’s cooking whilst sitting at home eating pasta.  The early rounds are always funny with some real disasters in the kitchen.  Other than watching this on BBC, I’m not watching anything regularly.  I’m more focused on writing and listening to audiobooks and podcasts.  I’ve also been watching a lot of YouTube, specifically the channels The Infographics Show, Cool Worlds, Ownage Pranks, and then various sci-fi-related videos.  

I’m also enjoying my new book series which is a sci-fi story involving self-replicating spaceships all controlled by multiple versions of the same person, Bob.  I’m almost at the end of the second book and it’s proving to be a refreshing and entertaining story.  I think there are four books in the series and I’m looking forward to seeing where it goes.

Support Mortgage Advisor on FIRE

If you would like to show your support for my blog please comment, like, share, and subscribe.  All these things help the blog to grow.  If you want to make a financial contribution towards the running costs of the site, please use the donation form below:

Financial Update

Assets

Premium Bonds: £13,225.00. 

Stocks and Shares ISA: £65,157.63. 

Fuck It Fund: £6,076.10.

Pensions: £76,810.77. 

Residential Property Value: £228,116.00. 

BTL Property Value: £147,203.00.

Total Assets: £536,588.50.

Debts

Debts

Residential Mortgage: £172,638.93. 

BTL Mortgage: £104,885.22.

Total Debts: £277,524.15. 

Total Wealth: £259,064.35.

Investment Income in 2023: £1,192.76 (target £10,000).

The numbers are looking good with gains across the board.  It’s a shame that mortgage rates have gone up as we’re not making a lot of progress in reducing the debt.  I had a little extra income at the start of the month with interest from bank accounts.  

ISAs

There’s been some more talk about capping ISAs in the news this week.  The thought is that ISAs are removing a lot of funds from the tax system, and as such the government is losing a lot of tax revenue.  I don’t buy this as an argument.  I think the real fear from the Tory government is that more young people want to use ISAs to try and escape the rat race.  

Almost everyone chasing FI is using an ISA as a major part of the plan.  In 2021/22 it’s estimated that approximately £34B was invested into ISAs in the UK, whilst the annual budget for the UK was somewhere north of £1T.  We’re talking about a tiny fraction of the UK GDP as well, which was over £2T.  If ISAs were scrapped, or capped, it’s not going to raise huge sums of money when placed in the context of the budget and GDP figures.  Also, one has to consider the impact of many people not having ISAs to fall back on in the future, and these people will have to draw upon state benefits.  To me, the argument that scrapping ISAs would generate more cash for the country just seems wrong, and a cover for the real reason which is to try and stop social mobility.  

If you ever wonder why something is being done, ask the question “Who will benefit financially?” and the pieces normally fit together pretty quickly after that.

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 

You can now find all my social media pages by checking out my Biolink:

bio.link/davidscothern.

Looking Back: Part 6

Originally Published December 5th, 2019.

Weekly Update

Hello again and welcome back to Mortgage Advisor on F.I.R.E.  I am writing this on Wednesday 4th December intending to publish on Friday as normal. 

I used to publish the main blog on Friday but that never gave me time to focus on writing when I’m working a job that is, for the most part, standard office hours.

Over the past few weeks, I have normally done the bulk of the writing on the Thursday before having the post checked over and published the following morning, but that routine will have to change.  I am now back at work and have to find time to write around my working hours, so I find myself writing a day earlier than normal. 

Going back to work after a prolonged absence is always a strange situation.  When I walked into the office it felt like I had never been away.  Then, after several hours of catching up with emails and new policy it came time to start dealing with mortgages again.  I am frustrated at another spell on the sidelines in 2019 following shoulder surgery earlier in the year that saw me off work for almost two months.  With a month absent with my ankle, I have had a quarter of 2019 off work through ill health.  2020 must improve. 

Advertisements

Last week I wrote a little about my new approach to eating.  It is still going well and I feel different; better.  The most difficult part is learning to accept feelings of hunger and realise that those feelings will be addressed when the next mealtime comes around.  It’s all about delaying gratification, which is something we, as a society, do not practice to any great extent.  I have a long way to go until I am back at my healthy weight, but at least I am now moving in the right direction.

I was due to discuss the election this week but I’ve changed my mind.  The whole subject of the election is saturating the news at the moment and it occurred to me that readers may want an escape from all things politics.  So, I will discuss budgeting and the idea of Paying Yourself First instead.  First things first, however, my Financial Update.

Financial Update

Premium Bonds: £9,500 (up £350 from last week).

Stocks and Shares ISA: £6,891.11 (down £177.03 from last week).

Credit Card Debt: Nil (no change from last week).

Loan Debt: £3,855.95 (no change from last week).

F**k It Fund: £1,000.85 (up 85p from last week).

Total Wealth Figure: £190,892.96 (total assets including residence valued at £173,501 by my lender) minus £138,453.38 (total debt including residential mortgage) equals £52,439.58 (up £495 from last week).

It’s still mind-blowing to me that in just a few years my ISA has increased by roughly £60,000. There’s every possibility that within the next 18 months or so it will be into six figures.

My stocks and shares ISA have taken a little hit in the last week, but I suspect this is due to ongoing tensions between the US and China.  It’s not unusual for the ISA value to fluctuate weekly or monthly.  As I’ve stated before, the ISA is a long-term investment and I’m confident that over years and decades, it will increase in value. 

​I was able to free up £350 to invest in more Premium Bonds over the past week.  I had money on one side that was earmarked for a purchase which I’ve now decided not to make.  So, rather than leave it sitting there I decided to put it to good use and move closer to the £14,850 target for my share of a BTL deposit.  

Advertisements

Budgeting

Note: If you are in financial difficulty and/or have debts that you feel you can’t manage, seek help from one of the following sources: The Money Advice Service, Stepchange or Citizens Advice.  This blog is for information and entertainment purposes and does not constitute financial advice. 

There are lots of books out there that go into detail about budgeting.  The common view of budgeting is that you have a spreadsheet that itemises every single penny of spending.  This can be time-consuming and, in my experience, not sustainable long-term.  However, I use a spreadsheet to budget my household finances.  So, why the discrepancy between what I believe and what I do?

It comes down to detail and automation.  My budget does not try to itemise every single penny I spend.  My spreadsheet takes a high-level approach to finances.  It is broken down into three columns: my finances, my girlfriend’s finances (she requested long ago that I help manage her finances) and then our joint finances. 

In each column is a list of our direct debits and regular payments.  The joint finance column has our mortgage, utility bills, food shopping and so on.  Next to each commitment I enter (rounded up to the nearest £5) how much that commitment is.  We are paid a flat salary each month.  The difference between our commitments and our income is our spending money.  It’s that simple.  So rather than itemising how much we have for going out, buying coffee, lunches and so on, the spreadsheet looks at general areas of spending. 

One piece of advice I give people when it comes to budgeting is to look back at historic spending before trying to create a plan. People are generally bad at estimating how much they spend, and lots of little things like a coffee here, or a sandwich there, can add up over a month. If you want to create an accurate budget, go back through your bank and credit card statements for the last few months and get an idea of what you have been spending when you haven’t been monitoring it.

Another aspect where my budget deviates from what many people do is that my investment contributions are treated as financial commitments.  In my column, I have an entry for “BTL deposit” and another for “ISA”.  Those are the first things to be paid when my salary is credited.  Rather than finding room to save after I meet my living costs, I find room to meet my living costs after I Pay Myself First.

Advertisements

Pay Yourself First

I first came across this phrase in Robert Kiyosaki’s Rich Dad, Poor Dad, the book that changed my life.  The phrase is common amongst investors and it encapsulates the mentality of a seasoned investor.  You make you your main priority.  Now, I can hear the grinding of teeth from some people who, rightly, argue that to pay yourself first you need to have spare money each month.  That’s right, you need to have surplus cash to be able to save or invest.  When you dig a little deeper, you discover that it’s a bit more complicated.

I have worked in finance for a long time; over a decade between mortgages and personal banking.  When I worked in a branch of a UK high street bank, I had access to many accounts and the vast majority of people were perpetually in their overdraft and had a collection of direct debits that made for scary reading.

Telling people how to spend their money is an emotionally charged subject.  I’m not going to sit here and say that if you have a premium entertainment package or a few beers at the weekend you need to stop.  What I am going to encourage is more mindful spending.  In the age of austerity under the rule of the Evil Empire and Darth Cameron, May and Johnson, the UK has seen an increase in poverty.  I can’t do much or recommend much when your basic cost of living exceeds your income.  It’s a tragic situation and one that should be unacceptable in a 21st-century, first-world economy.  The next few paragraphs are not directed at that part of society but rather the segment of society that has an average (for the UK) income but still has no surplus cash each month.  

Hierarchy of Financial Needs

This is modelled on the Hierarchy of Needs put forward by Abraham Maslow in the 1940s.  The Hierarchy of Needs is a pyramid which has five levels of needs that humans have.  At the base of the pyramid are physiological needs, then safety, love/belonging, and esteem with the tip of the pyramid being self-actualization.  My Hierarchy of Financial Needs is based on shelter, warmth and food, with the next level being clothing and personal grooming.  The middle tier is utilities, followed by entertainment and the tip of the pyramid is luxuries.  From what I’ve witnessed in the course of my career in finance, many people do not conceptualise their spending in this way.  Luxuries are viewed as necessities by many.  I have had a few people ask me how I’m able to take as many holidays as I do.  The answer is simple.  I rarely drink alcohol.  I don’t smoke.  I don’t have a subscription to Sky, Virgin or BT.  I don’t drive.  I don’t have kids.  

Some brief Google-fu suggests that the average UK household spends £72 per month on alcohol, the average smoker may spend as much as £50 per month on cigarettes (often more), and a subscription to Sky can easily cost £50 per month as well.  The cost of running a car, not including the purchase of the vehicle, is estimated at £160 per month and although figures vary, it’s suggested that the cost of raising a child is around £700-£1,000 per month depending on child care. 

I’m not telling people who smoke and drink to stop; that’s not my place.  What I’m encouraging people to do is be more mindful of what their money is being spent on.  If you are an average drinker and smoker, with a car and a premium TV subscription, you can very easily be spending almost £350 each month which is almost a fifth of the average UK net salary. 

The figures quoted above may well have changed over the years, but the concept is the same.

Advertisements

Small Changes and The Latte Factor

I recently read a book called The Latte Factor by David Bach and John David Mann.  The book is educational but framed as a work of fiction.  The story unfolds through a series of conversations between a young woman and an older coffee shop owner.  It was very basic for someone who has read extensively about finance and investing, but it is an ideal entry point for anyone starting to invest.  The title comes from the idea that forgoing small, daily, purchases and investing that money instead can have huge long-term rewards. 

I’m not the sort of person who argues you should cut your cloth until there is no cloth left, but rather that you should be more mindful of your spending.  For example, I used to buy three lattes a day as a minimum.  That was costing me almost £10 a day, five days a week.  I spent £20 on a good quality thermos and started making my own coffee to take to work.  The cost of buying coffee in bulk and taking it to work is significantly lower than buying three lattes a day. 

Sudden, extreme change is never sustainable.  This is the case with anything from throwing oneself into an intense workout regime with no build up to crash dieting.  Small, gradual change is more sustainable and more likely to lead to good, long-term habits.  This is also the case with financial management.  If you are the person who drinks, smokes, has an expensive TV package, runs a car, and subsequently finds you have no money to spare, are there any areas where you could free up some money?  What would you do if you had to free up £1 per day (£30 per month)?  What about £2 per day?

£1 per day might not seem like it would make a difference and you may be thinking that saving £1 a day would be pointless, as it’s just £1 per day.  Well, if that’s the case, why not save it?  Assuming you have 30 years until retirement if you commit to investing £30 per month and achieve a reasonable return on your investment in line with historical averages, you could amass £65,000 in 30 years.  £60 per month sees the potential reward more than double to £135,000.  If you found yourself with £5 per day free to invest, you could amass over £330,000 in 30 years.  £5 per day is what the average household spends on running a car.  

Again, these figures may no longer be accurate with inflation and cost of living increases, but the point remains the same.

Automating Finances

One piece of advice I came across early in my financial education was that the process of accumulating wealth should be mechanical and automatic.  The money works for you, not the other way around.  Almost all my spending is automatic.  All my bills are on direct debit.  My investment contributions are taken automatically each month.  Furthermore, the vast majority of these bills and investment contributions are timed to come out of my account in the day or two following my salary credit.  Two or three days after I am paid, the money left in my account is my money. 

The best advice I can give to anyone wanting to budget effectively is to automate as much as possible through direct debits and arrange for those payments to come out just after you are paid.  There has been a huge campaign over the last few years from various sources telling you to contact your utility providers, mortgage lenders and media providers to check if you can get a better deal.  If you haven’t done this in a while, you might as well be throwing money in the bin.  Even if between your electricity and media providers you only save a tenner a month, it is still a tenner a month you could be investing whilst not changing your net monthly income/outgoing balance. 

Next Steps

I would strongly suggest that if you have not reviewed your finances for some time, you take some time out to do it.  I would start by reviewing all your direct debits and regular payments that leave your account.  Go back over the last month and add up how much money you spend on household shopping.  Group your spending into broad categories.  The key here is not to cut down your spending, but to get an accurate idea of what you are spending.  Until you know what you are spending, you don’t know what and where you can cut down on unnecessary spending. 

Once you have reviewed all your direct debits and regular payments cancel the ones that you are not tied into and that you feel are unnecessary.  The ones for services you want to keep, give them a call and ask for a lower payment.  Don’t skirt around the issue; be clear and to the point: “I want a better deal.”

If you have nothing saved or invested already, challenge yourself to find £1 per day in your finances that you can free up and use to invest. 

Note: If you are in financial difficulty and/or have debts that you feel you can’t manage, seek help from one of the following sources: The Money Advice Service, Stepchange or Citizens Advice.  This blog is for information and entertainment purposes and does not constitute financial advice. 

​Thank you again for reading this blog.  Next week I will look at employee benefits and pensions and ask whether you are maximising what opportunities are available to you.  

Autism, Money, and Suicide

Content warning: Suicide

Living in a neurotypical world is difficult for autistic people, and the reasons for this are varied and differ from person to person. The common theme is that life in an NT world is a constant battle for ND (neurodivergent) individuals. Broadly speaking, many of the difficulties ND people face come from sensory and social triggers. Places that are too busy, too noisy, with lots of competing demands for sensory attention cause so much stress and anxiety that it can leave ND people feeling rough for days after.

Think about a bucket of water, which represents your mental stamina or “will to live”. Everyone has a bucket like this, and every demand on someone’s time or attention creates a leak in that bucket. However, from time to time the bucket is refilled. For many people, they get by in daily life with the bucket being refilled at the same rate it’s emptied, and there’s no problem here. For many ND people it’s a completely different situation.

Going to a restaurant…

Let’s assume that you are an ND person, and you are due to go to a restaurant you’ve not visited before. You research the restaurant and the best way to get there, as well as where the entrance is. You look at the menu and build an internal script for what you want to order and how you will do it. However, when you get to the restaurant they find that the normal entrance is closed for repair and you have to use a side door.

*ding*

The bucket now has a hole and water is slowly leaking out.

As you enter the restaurant you notice it is very busy. All tables are full, and there’s music coming from speakers, and the hustle and bustle of staff moving back and forth serving food.

*ding*

Another hole has been created in the bucket.

Advertisements

The competing demands on your attention are causing a lot of stress and anxiety. Your vision is starting to blur and you’re looking around in a sense of increasing panic trying to find your friends. Eventually you spot them, and stumble to the table, and sit down whilst trying not to have a panic attack.

After a while the panic seems to be subsiding, and then the waiter comes over to take your order. However, your mental script is thrown out because what you wanted to order is no longer available. You look at the menu feeling pressure as your friends look at you, waiting for you to order. Each second feels like an eternity. Your eyes can’t focus on anything. You eventually mumble an order and sigh with relief as the waiter walks away. You are on the verge of breaking down.

*ding* *ding*

Another couple of holes in the bucket. You are now leaking water pretty quickly. Every minute you are in this situation you can feel your energy draining. You need to leave. You need to leave now.

You somehow manage to hold it together, and then a little kid escapes from. their table and runs past screaming. The sudden noise is almost physically painful.

*ding*

Another hole in the bucket.

By the time you make it home, you are almost completely spent. A couple of hours of being out of your home has drained you to the point you need days to recover.

If you are autistic, you may see yourself in this scenario. You may have experienced something like this, but in a bar, workplace, shopping centre, or countless other places. This is not just feeling a bit overwhelmed. For autistic people, it’s like an overwhelming sensory barrage. It’s like wearing headphones playing multiple different songs at the same time, but all a little too loud for comfort.

Advertisements

A couple of stories about autistic people…

In the last 24 hours I’ve seen two things involving autistic people that have been upsetting in their own ways. The first was, on the face of it, fairly minor, but it’s just one example of the repeated micro aggressions that autistic and other ND people face. On social media a debate was ongoing about some part of popular culture, it doesn’t matter what exactly, and I want to protect the person’s identity. They had a little back and forth with someone and it was all polite and seemingly in good spirits. One of the participants explained that he’s autistic and had read this comment through a couple of times to make sure he understood. Someone else then replies telling them “don’t bring your disorder into the conversation.”

This was completely unnecessary and added nothing to the conversation. The only impact would have been on the person the comment was directed at.

The second story was about a young woman in the Netherlands who has chosen to be euthanised next month. This 28 year old woman is autistic, and has struggled with her mental health for some time. Now, she’s decided she wants to end her life. I’m not going to criticise her decision; it’s ultimately up to each person how they want to live and die, or at least it should be (within reason). If someone wants to end their life, and they are not doing it in the spur of the moment, and it’s a rational decision they’ve come to then I’d rather they did it in a medical setting rather than through some more traumatic means where someone has to discover the body.

Suicide is one of the leading causes of death for autistic people with a rate much higher than found in NT populations. Also, the life expectancy for autistic people is much lower than the NT population. There are many reasons why it’s more difficult to live in this world as a ND person, and there’s no single magic solution that will improve the lives of all ND people. One part of this is the financial difficulties autistic people face.

Research published on gov.uk suggests that autistic people face the biggest pay gap from any disability when compared to otherwise NT and non-disabled people. ND people earn roughly a third less than their peers. When considered in the context of reduced access to health care due to anxiety or not being taken seriously due to being autistic, it’s easy to see how autistic people can fall out of employment. People who are ND are more likely to be out of work, and living either on benefits or through the charity of others. There are exceptions, like with anything, but I’m talking about the collective ND population. If you have more financial worries, it will have an impact on your physical and mental health.

One of the leading causes of stress, depression, and ultimately suicide is money worries. If we can improve the financial literacy of autistic people, and their earning potential, then it may play a part in improving the lives of these people and lifting them out of the risk of suicide. Money isn’t everything, but it’s a lot when it comes to life satisfaction and mental health.

Autism and FI

I started down the FI path before I was identified as autistic. I had suspected for a while, but once it was confirmed it felt like a weight had been lifted in one sense. I am so fortunate that I found my job before I realised I was autistic because my autism related burnouts would have made it impossible for me to secure a job like this now. I can do my job to a good standard, but I don’t think I have the mental resources to start a new career now.

Like many autistic people my experience of a NT world is stressful and has left me somewhat diminished. I’m not in too bad a place right now; I’m getting by and have moderate levels of daily stress. It’s manageable. Much of this is due to the level of financial security I’ve created. Many autistic people do not have this luxury and for them, life is a constant struggle. I’m curious as to whether there’s a higher proportion of autistic people in the FI population than the general population, but that would be difficult to ascertain.

So, what’s the point of this post? If you are autistic then I encourage you to educate yourself about money. Once you know the rules of the game, you stand a better chance of winning at it. If you aren’t autistic, try to be conscious of the challenges autistic people face in their daily life. It might not always be obvious, and it might not be the same from person to person. Just try to be kind to each other whether you are ND or NT.

Thank you for reading. If you are struggling with mental health and/or money worries, please contact one of the organisations below:

StepChange

National Debt Line

Samaritans

If you want to support this site and this blog, please make a donation towards the running costs on the form below. If you can’t donate, please share, like, subscribe, and comment.

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.

Advertisements

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.

Advertisements

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.”

Advertisements

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.

Looking Back: Part 5

Hello and welcome back to another instalment of the Looking Back series. This blog was originally posted on 28th November 2019. I was still struggling with my ankle but was gradually getting better.

Weekly Update

Hello again and welcome to Mortgage Advisor on F.I.R.E.  I am in good spirits at the moment.  The pain in my ankle and foot has reduced considerably.  I have been able to take a taxi to the city centre and have lunch, but I still cannot walk for more than a few minutes before needing to rest.  My other leg still hurts but the pain is not as severe as the problems that have kept me holed up inside my apartment for almost a month. 

I wrote last week about my weight and how it has increased due to comfort eating and my not being able to exercise.  Just over a week ago, I started a new type of diet.  It is something I have done before with some success, but I did not stick with it long-term.  It’s nothing too revolutionary; I simply have three meals a day and one snack.  Between meals, I do not eat anything.  No grazing or snacking is allowed.  I am, however, allowed to drink water or coffee between meals.  I keep myself on track between meals by setting a timer on my phone.  A typical day looks like this:

8am – breakfast.  Timer set for 4 hours.

12pm – lunch. Timer set for 7 hours.

3pm (ish) – latte.

7pm – dinner. Timer set for 3 hours.

​10pm (ish) snack.

I’m not too concerned with the content of each meal, within reason.  The point is not to count calories but to get out of the habit of pointless grazing and snacking.  In the last ten days or so I have lost a kilogram doing this whilst being physically inactive.  I do get hungry, but glancing down at the timer on the phone and seeing it ticking down second by second is bizarrely motivating me. 

I might have to look at this again. My weight is fairly stable at the moment but I could do with losing some more to be on the safe side.

Advertisements

From next Tuesday, 3rd December, I should be back at work full-time.  I have the rest of that week, and the first part of the following week before going to Romania for a week to spend time with my girlfriend’s family.  Then, I have a decent schedule over Christmas and before we know it, it will be 2020. 

It’s so strange thinking about a world pre-Covid. Certain events in our history have a real sense of before and after. Before Covid, the last such event was 9/11. The interesting question is whether I would do anything differently knowing that Covid was just around the corner.

I am thinking that in the New Year, I will be making a slight change to the blog.  The whole point of this blog is to chart my course to financial freedom through passive income.  So, from 2020, I will keep a running track of the passive income received that year.  The aim, as mentioned in the first instalment of this blog, is to get to £1,000 per month passive income.  At first, I expect a slow start, but it should be encouraging to watch the income snowball over time. 

As for this week, I will start with my weekly financial update and then discuss the concept of Safe Withdrawal Rate (SWR) and look at how short-term goal setting can help one stay on track for the long-term goal; financial independence. 

Financial Update

Premium Bonds: £9,150 (no change from last week).

Stocks and Shares ISA: £7,068.36 (up £177.61 from last week).

Credit Card Debt: nil (no change from last week).

Loan Debt: £3,855.95 (up £5.95 from last week due to initial interest).

F**k It Fund: £1,000 (no change from last week).

I am removing the tech fund and surplus cash from the equation, as those figures will eventually be spent and not invested.  This is still a new blog and I may make changes like this going forward.

​Total Wealth Figure: £190,719.36 (total assets including property now valued at £173,501 according to my lender) minus £138,774.78 (total debts including mortgage) equals £51,944.58 (up £772.66 from last week).

It’s crazy how much my wealth figure has increased since 2019; over £200k progress since this was originally posted.

Advertisements

Safe Withdrawal Rate

The SWR is a rule, or guideline, as to how much of your investment you can withdraw each year whilst making sure you do not run out of money in retirement.  There is much debate about what WR is safe and it will vary according to your age, expected remaining life, inflation and the economy in general.  I have heard figures ranging from 3% to as much as 8% from different authors and experts. 

Although the SWR is an interesting way to conceptualise how one will fund retirement, I think it’s looking at the issue backwards.  Any WR assumes that you will be selling the assets you have and then using the cash received to fund retirement.  Once the asset is gone, you can’t get it back.  Once the cash is spent, it’s also gone.  Operating from a passive income perspective assumes that the assets will remain in place indefinitely and the income they generate will fund retirement instead.  There is, however, something to be taken from SWR and applied to my situation.  When I do achieve F.I.R.E., I will want to continue investing in some form.  I don’t want my assets to stand still.  I want them to continue to grow so that my position improves over time instead of just treading water.  Factoring in continued investment once I have obtained financial independence, helps to safeguard against a stock market crash.  When the next crash comes, and it will come, if I continue to buy stock, I will be buying it at a lower price and getting more bang for my buck. 

My interpretation of the SWR will be somewhat different as a result.  Instead of asking myself “How much do I need to sell to maintain my standard of living?”, I will be asking “How much of my passive income is it wise to spend?”

It’s amazing just how much my thoughts on this have changed over time. Life is a constant learning experience, and my views on funding retirement have evolved and I’m now on board with using a withdrawal rate and selling units as I go. I will keep hold of some investments that pay out a regular income, but I’m putting more emphasis on acquiring units in accumulation funds that I can then cash in later down the line.

​Once I achieve F.I.R.E., I think that the property income will be the backbone of my regular income and the income from stocks will supplement the rental income.  I may not need to spend the dividend income from stocks so that money would be reinvested.  

The rental income didn’t work out so well, did it? Again, incredible how much my thoughts and opinions on all this have changed over time.

There may be a time at which my total wealth is large enough that it hits critical mass.  What I mean by critical mass, is the point at which the investments are compounding at such a rate, that I can sell some assets safely and still have my investments intact. 

I had to laugh at the above statement because it’s following the path of safely selling off assets in line with a planned withdrawal rate. The very idea I was seemingly against.

However, if I were to sell stock in the future, I think it would only be to reinvest that money in another asset such as property.  Selling off assets to live off the proceeds feels a little too much like killing the goose (the investments) that produce golden eggs (the passive income).  If you have only invested in assets that produce capital growth, then you will not have much, if any, income from them.  This is one reason why I prefer income-generating assets over capital growth.  There are some exceptions to this.

Advertisements

​Within my Stocks and Shares ISA there are several funds I invest in, such as the Vanguard FTSE100 Index and US Equity Index.  My holdings are of the Accumulation class.  This means that profit earned through the fund is reinvested to increase the value of the units owned within the fund.  No income is produced as such.  Once I get to a certain age, I will transfer those Accumulation units into Income units which means my holding within the fund will produce an income.  I could, in theory, continue with Accumulation units and then sell them off bit by bit in retirement and follow SWR guidelines, but that just seems so counterintuitive.  I think it would be better to transfer those Accumulation units into Income units and live off the income generated. 

​In addition to the value generated through those types of funds, I do invest in a selection of individual stocks that have an established record of dividends.  As per the rules I posted last week, any dividend income received over the next few years will be reinvested.  However, once I achieve financial independence, I may choose to keep half the dividend income to spend and then reinvest the rest.  The balance I achieve at this point will be a personal equivalent of the SWR.  

Goal Setting

Goal #1: My goal for the first six months of 2020 is to save another £5,700 towards my BTL deposit. 

The first goal is to get that first BTL.  It will be a huge psychological boost to have that first property bought and let out.  Once I see that rental income coming in, this whole journey will feel like it’s underway.  Now, I feel like I’m in the queue waiting to drop my bags off at the airport.  Once I have that first property let out, it will feel like I’m hurtling down the runway. 

In the end, having that first BTL felt like being stuck on the plane waiting for a departure slot. For four years.

To get the first BTL, I need to finish saving my deposit.  So, my first goal is to gather £14,850 – my share of the money needed to fund the deposit, legal, tax and refurb costs associated with buying a property to let out.  My JV partner will be contributing an equal amount.  I need my share by the end of May’20, giving me six months to accumulate £5,700.  I’m currently saving a minimum of £400 per month towards the deposit, although this month I saved £500.  Even at £500 per month, I would still be £2,700 short.  However, I will receive £1,800 in December as well as a bonus in March’20. 

Assuming a worst-case scenario and I only save £400 per month for the next six months, I will be £3,300 short.  The £1,800 received next month reduces that deficit to £1,500.  Typically, I would expect my bonus to raise my salary by around £1,000 net for that month.  So, the deficit is roughly £500.

Goal #2: My goal for 2020 is to receive at least £2,000 in passive income. 

Passive income is the name of the game.  Ultimately, I am aiming to receive £12,000 per year in passive income.  My goal for 2020 is more modest.  Based on my calculations for anticipated rental income from the first BTL, for the latter half of 2020, and considering projected dividend income it is not unreasonable to aim for £2,000 in passive income in 2020. 

Final Notes

As we are only a few weeks away from the election, I will discuss how the new government could impact my plans next week.  I will also look at some contingencies I have in mind if BTL becomes a non-starter.  So, check back next Friday for part six of Mortgage Advisor on F.I.R.E. 

​Thanks for reading, and if you have any questions, comments or feedback, I would love to hear from you in the comments section.

Part 230

Hello and welcome back to Mortgage Advisor on FIRE.  This week I discuss student loans, and a frustrating story from Reddit.  Also, another milestone passed in my abstinence from gambling.  

Weekly Update 

This week saw me pass 1,700 days since I last gambled, which was a nice boost.  The time when I was gambling was a dark one, and I feel better for having stopped.  The gambling industry is evil, and I don’t use that word lightly.  The practices of these companies and how they get their hooks into vulnerable people are just abhorrent.  The more I’ve read about what goes on behind the scenes, the more angry I get.  If you are struggling with this addiction, please reach out.  I’ve said it before but it needs repeating; a large part of what helped me stop gambling was the After Gambling Podcast by Jamie Salsburg in the US.  

I saw an interesting post on Reddit this week where someone shared a story from another subreddit.  The OP had stated that he and his wife had been aiming for FIRE by the age of 45, and had both stated they were paying into pensions and investments.  Anyway, it turns out that she had lied about all the investing.  She put in for divorce and got a huge chunk of the OP’s assets.  This guy had a pension fund of approximately £750,000, with emphasis on the word “had”.

Advertisements

What Lesson Have We Learned?

Well, apart from the fact that I don’t agree with marriage or the idea that the government gets to decide how a relationship ends, I think it’s important for there to be a healthy amount of transparency in the finances of any stable couple.  I’m not saying there needs to be total transparency, or that one partner needs to be able to exercise control over both of their finances.  But transparency, honesty, and trust are vital.  When you are in a relationship with someone you make yourself vulnerable, and you put trust in the other person not to abuse that vulnerability.  Whether we like it or not, money is a massive part of life, and we need to trust our partners with it to be able to have a happy life.  

Assuming that the facts of the story are true, as we only heard his side, then this just feels wrong.  The one bit of comfort that the guy can take from this is that he’s responsible with money and she is not, and for him, this will simply be a setback.  Someone who is utterly clueless with money will do the same thing they always do; spend it on crap.

Student Loans

On the subject of spending money on crap, I was thinking about my days at university, and trying to work out if it was worth the financial cost.  There was a story in the news this week about student loan debt in the UK.  According to the Student Loans Company, the average student in England will have loan debts of £44,940 when graduating.  That student, assuming they find a job earning £40,000, will pay £95pm towards their student loan whilst the interest will be approx £290pm (based on the current rate for a Plan 2 loan at 7.7%).  

In the above example, our student will not be making any inroads into the debt itself.  For the sake of simplicity let’s assume they work in the same job for thirty years, with no change to pay, inflation, and interest rates.  Thirty years of paying £95pm comes to £34,200.  After thirty years the Plan 2 loans are written off, and you can see that the vast majority of loans are not repaid in full.  Rather than being a loan, for most graduates, it’s a tax.  

I’ve looked through my loan documents and worked out that I have borrowed £29,072.  I’ve paid back approximately £17,500.  I still owe £23,034.34.  Until Liz Truss and Kwasi Kwarteng were allowed to govern without supervision, I was making decent progress in reducing the balance.  Since interest rates have increased, I’m now paying a small amount off the balance each month, but not enough to realistically clear it by retirement.  So it is, for all intents and purposes, a tax.

The whole university system in this country is bullshit.  It’s a simple transfer of wealth.  Young adults, basically children, are expected to make a huge financial decision which will impact the rest of their lives.  The universities can now charge more or less what they want, and the kids are told to not worry because their student loans will cover it.  It’s all just bullshit and a way to generate income for the universities and other people in positions of power.  

If I could go back and do it again, I wouldn’t bother.  The expense isn’t worth it.  Unless you are going to study something like medicine, law, sciences, or courses that have a direct route into a career or things of that nature, the expense just isn’t worth it.  Too many kids go to university because it’s expected, and end up being financially crippled by a debt they’ll never pay off.  For the majority of students, it becomes a lifelong tax.

Advertisements

Site Update

A few people have asked recently about sections of my blog I’ve not included for a while, such as the Quote of the Week, and This Week’s Tory Incompetence.  If either of these are popular enough, I may bring them back.  So please let me know below if you want to bring either of them back to future parts of the blog.

What Am I Doing?

TV: Three-Body Problem (Netflix).

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

The Three-Body Problem series of books is one of my all-time favourites.  The more accurate name for the series is Remembrance of Earth’s Past, but everyone seems to call it Three-Body, and that’s what I’ll do.  Last year I watched the Chinese adaptation, which I thought was generally excellent.  It was 30+ hour-long episodes, but I would say only a handful of episodes in the middle were filler.  

Netflix have now released their adaptation helmed by Benioff and Weiss who ruined adapted Game of Thrones for TV.  For the first season, Netflix has produced eight episodes.  We are three episodes in and my feelings on it are mixed.

A large part of the appeal of the series, for me at least, comes from the fact it’s rooted in Chinese culture.  The Netflix version has been reimagined and seems to mostly be taking place in and around London.  Except for a couple of characters, the ones here are new creations.  The central character of book one seems to have been switched from male to female and then split into at least two different characters.  It’s all a bit rushed, but then again I’ve read the books a few times and watched a pretty faithful adaptation from China.  I’m curious what people think who are watching this new series having not seen or read anything else about it.  

Financial Update

Assets

Premium Bonds: £13,225.00. 

Stocks and Shares ISA: £64,422.77. 

Fuck It Fund: £6,048.51.

Pensions: £75,813.74. 

Residential Property Value: £228,116.00. 

BTL Property Value: £147,203.00.

Total Assets: £534,829.02.

Debts

Residential Mortgage: £172,897.27. 

BTL Mortgage: £104,891.96.

Total Debts: £277,789.23. 

Total Wealth: £257,039.79.

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

Another crazy week of gains in the stock market.  I had a goal of wanting to get my ISA and pensions to £80,000 each by the end of the year.  It looks like the pension could do that before the halfway point in the year.  My ISA is going to take a little bit more investment I think, but the next two months will see two sizable dividend payments which should add a further £2,000 or so.  

BTL Update

Still no significant update.  It’s pretty frustrating.  Each month that passes by the property is costing us at least £400 in mortgage and council tax payments.  Even if we get an acceptable offer this coming week, it will likely take a couple of months to go through.  I was saying to my Dad earlier that if we don’t get an offer in the next month or so, we could end up having this property until the end of the year.  

We are going to wait a little longer before making any decisions about how to proceed.  The choices are clear as I see it;

  1. Continue listing the property for sale.
  2. Change the agent and try remarketing the property.
  3. Rent it out again.
  4. Try selling at auction.
  5. Offer the property on a rent-to-buy basis, where it is initially let to a tenant on the understanding they can buy the property with a discount further down the line.

I’m not too keen on the more complex options and would rather just sell the property and be done with it.

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.

Advertisements