The Full English Accompaniment – The Thick of Brexit

What’s piqued my interest this week?

In the last month a couple of don financial bloggers have again weighed in with their opinions on Brexit. First as Brexit entered the terrible twos TI reflected on his opinions and public opinions of it during that time (1). If you want a case example of the arguments that result check out the comment section.

Then Ermine gave us a post in his usual semi-satirical fashion on how to prep for B-day (2). This was both informed on his financial prepping, and amused on the end-is-nigh front.

So here’s my opinion, in the form of a Malcolm Tucker quote.

I’m just fed up to the back teeth of it all. In fact, beyond the back teeth. Brexit is the acidic backwash dissolving my oesophagus so I can’t feel when I’m swallowing whatever witches brew bitter pill this coalition of the inadequate and unelectable cook up.

This week the white paper on what the government would like from the EU as a deal finally arrived (3). Boris postured and buffooned his way out of the door looking for a front page splash. Rees-Mogg said something Dickensian. Trump weighed in with his usual bleached orangutang demeanour in The Sun (4). The. Bloody. Sun. Proving once again he’s Zaphod Beeblebrox incarnate.

I actually thought the white paper represents a decent compromise. Mujtaba Rahman’s opinion piece in the Guardian hits the nail on the head (5). Brexit is such a divisive premise that no one political party can agree on what to do. It is one last political hand grenade lobbed as a ‘look that-away’ by the arch-distracter Cameron. Danny Dyer has the right of it (6):

Lloyd’s have followed other companies in suggesting that Brexit will hasten or push them to move abroad (7). There’s been so many companies threatening Brexit-related doom that I take it all with a pinch of salt. No-one knows what’s going to happen, as no-one adequately explained or researched what could. Brexit is such a nebulous concept everyone wants something different, and some lack the ability to articulate what they want anyway. Because of this, a government who’ve basically followed whatever the prevailing populous wants (or shouts loudest for) are paralysed, dithering. So much for leadership.

Have a great weekend,

The Shrink

Side Orders

Other News:

Opinion/ blogs:

What I’m reading:

Eric by Terry Pratchett – light relief

Religio Medici by Sir Thomas Browne – the theological and psychological reflections of a C17th doctor

Enchiridion by Epictetus – Bedside reading for a bad day

References:

  1. http://monevator.com/weekend-reading-brexit-enters-the-terrible-twos/
  2. https://simplelivingsomerset.wordpress.com/2018/06/28/battening-hatches-opportunities-brexit/
  3. https://www.theguardian.com/politics/2018/jul/12/brexit-white-paper-seeks-free-movement-for-skilled-workers-and-students
  4. https://www.thesun.co.uk/news/6766531/trump-may-brexit-us-deal-off
  5. https://www.theguardian.com/commentisfree/2018/jul/13/soft-hard-brexit-no-commons-majority-theresa-may
  6. https://youtu.be/-W77154J0-w
  7. http://www.bbc.co.uk/news/business-44805565
  8. http://www.bbc.co.uk/news/business-44807281
  9. https://www.bbc.co.uk/news/business-44819007
  10. https://www.bbc.co.uk/news/business-44823466
  11. https://www.moneywise.co.uk/news/2018-07-13/britons-too-scared-to-invest
  12. https://www.moneysavingexpert.com/news/family/2018/07/customers-urged-to-cut-water-usage-to-avoid-hosepipe-bans
  13. https://www.moneysavingexpert.com/news/shopping/2018/07/tesco-bank-customers-unable-to-use-online-and-mobile-banking-again
  14. https://www.theguardian.com/money/2018/jul/13/stoke-is-debt-capital-of-england-and-wales-followed-by-plymouth
  15. https://www.bbc.co.uk/news/business-44817930
  16. https://www.theguardian.com/money/2018/jul/07/heres-how-scammers-get-away-with-it
  17. https://www.nybooks.com/daily/2018/07/12/how-the-bbc-lost-the-plot-on-brexit/
  18. http://monevator.com/any-money-in-shares-is-better-than-none-at-all/
  19. https://www.ukvalueinvestor.com/2018/07/3-high-yield-capital-light-compounders.html/
  20. http://diyinvestoruk.blogspot.com/2018/07/my-strategy-is-evolving.html?m=1
  21. http://www.thefrugalcottage.com/dividend-income-june-2018/
  22. http://thefirestarter.co.uk/matched-betting-how-to-make-money-betting-each-way-horse-racing/
  23. http://thefirestarter.co.uk/matched-betting-how-to-make-money-betting-each-way-horse-racing-part-2/
  24. http://quietlysaving.co.uk/2018/07/14/holiday-toilet-rolls-2/
  25. https://www.mrmoneymustache.com/2018/06/30/tinyhouse/
  26. https://theescapeartist.me/2018/04/19/theres-something-you-need-to-know-about-fairness/
  27. https://firevlondon.com/2018/07/08/june-2018-the-liquidity-of-treacle/
  28. https://youngfiguy.com/p2p-lending-a-review-of-the-market
  29. https://youngfiguy.com/an-interview-with-david-at-lets-automate-your-money
  30. https://youngfiguy.com/financial-challenges-millennials-face-and-how-to-beat-them
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The Full English Accompaniment – Beginner’s guides to investing

What’s piqued my interest this week?

Over the last few weeks, in the breaks between sanding, painting, filling, sawing, strimming and all the other fun that comes with a new house, I’ve been reading lots of basic investment guides. Not the ‘you should invest here’ type, but general overviews of the mechanisms. Tim Hale’s Smarter Investing is of course in my reading pile (second, behind an exam textbook), but blogs and videos are excellent for five minute tea (or beer) stops.

My attempts at being more frugal, and aiming for some sort of FI life, started by lurking on the UKpersonalfinance subreddit. A long forgotten post pointed me to Monevator. The Investing for beginners guides there got me started (1). I was pointed to the MoneyMustache, and Weenie’s Quietly Saving. DiyInvestorUK and UK Value Investor have taught me more in depth about passive and active options.

Monevator’s weekend reading this week highlights a millenial-focussed investing and financial advice series from the FT (2,3). A more cynical person than I would say that millenials are more finance savvy out of necessity rather than choice.

Lately I’ve been really enjoying The Plain Bagel, a YouTube series by a young guy called Richard Coffin (4). As he’s based in Canada, a lot of the tax-reducing products discussed are Canadian or American, however it’s great for the basics. His ‘fundamental series’ consists of 13 <10 minute videos covering investment mechanisms, vehicles and psychology. Here’s a little sample:

Hopefully he gets support to keep producing great videos.

Have a great weekend,

The Shrink

Side Orders

News:

Opinion/ Blogs:

What I’m reading:

Eric by Terry Pratchett – light relief

Religio Medici by Sir Thomas Browne – the theological and psychological reflections of a C17th doctor

Enchiridion by Epictetus – Bedside reading for a bad day

References:

  1. http://monevator.com/investing-for-beginners-why-do-we-invest/
  2. http://monevator.com/weekend-reading-thrifty-business
  3. https://bit.ly/2m07LHQ
  4. https://youtu.be/I81xqr8HzBE
  5. https://www.theguardian.com/business/2018/jun/25/countrywide-property-sales-uk-estate-agency-profit
  6. https://www.moneywise.co.uk/news/2018-07-03/savings-update-rates-the-rise
  7. https://www.telegraph.co.uk/business/2018/07/04/savings-crisis-uk-households-8bn-red
  8. https://www.moneywise.co.uk/news/2018-07-06/japanese-knotweed-ruling-could-lead-to-more-claims
  9. http://diyinvestoruk.blogspot.com/2018/06/brexit-vote-revisited.html
  10. https://www.moneywise.co.uk/news/2018-06-25/buy-to-let-the-elephant-the-room-the-housing-crisis
  11. https://www.theguardian.com/environment/2018/jun/27/gestation-crates-farming-cheap-bacon-how-shops-and-shoppers-let-down-our-pigs
  12. http://www.schroders.com/en/uk/the-value-perspective/blog/all-blogs/five-famous-market-gaffes/
  13. https://www.wealthsimple.com/en-gb/magazine/money-diary-hector-bellerin
  14. http://aswathdamodaran.blogspot.com/2018/06/twists-and-turns-in-tesla-story-boring.html
  15. https://www.ukvalueinvestor.com/2018/06/uk-shares-uk-property-better-value.html/
  16. http://monevator.com/does-the-passive-label-put-people-off-index-funds/
  17. https://www.fool.co.uk/investing/2018/06/23/why-there-could-be-huge-opportunity-to-build-an-income-stream-with-ftse-250-dividend-stocks/
  18. https://simplelivingsomerset.wordpress.com/2018/06/22/the-concept-of-financial-freedom-is-an-unattainable-chimera/
  19. https://www.mirror.co.uk/money/money-saving-expert-martin-lewis-12766455.amp

The Financial Dashboard – June 2018

Apologies to regular readers (hello? anyone? awake at the back?) for the lack of Full English Accompaniment last week. MrsShrink and I have been moving home, which occupied all our time.

The goals for June were:

  • Set up a Starling/ Revolut/ Atom/ Monzo account – Achieved
  • Sell five items from my hoard – Fail
  • Reduce daily living (groceries and lunch out) and entertainment expenses to budget – Achieved (ish)
  • Eat out a maximum of once a week – Fail
  • Repair or purchase a new bike – Fail

That didn’t go so well. Oh dear.

Net worth fell. Moving house is expensive.

June 2018 Dash

The value of my assets derived from my residence increased (bigger house) but my cash assets fell as we spent our emergency budget/ spare cash moving house. I’ve added data from our joint account now, as although it doesn’t generally feature on these pages, it does explain where some of my cash ends up parked. I also finally tracked down my life insurance figure, but I’m not including that in asset calculations:

June 2018 Assets
Goal achieved: I set up a Starling account, putting my money where my mouth is. I’ve talked in previous blog posts about Starling and it’s relative benefits. Once the dust settles from the house move I intend to move all my spending money into the Starling account, and use it’s ‘pots’ feature to split off money in that account (1).

The liabilities took a big jump this month with my increased mortgage. The credit card debt continues to reduce regularly, and we took a small amount of equity from the house sale to pay back wedding loans to family:

June 2018 Liabilities

Goal failed: Sell five items from my hoard. Everything I own is in boxes. Haven’t even begun to look.
Goal achieved (ish): Reduce daily living (groceries and lunch out) and entertainment expenses to budget

I have managed to reduce my outgoings in part. We’ve finally completed on our house sale 150 miles away, and have moved into our new home. This means we’re no longer paying rent and mortgage, so my costs for this have fallen.

I spent much less on eating out, having friends over for dinner rather than going out. I also tried to make more lunches or take things from home, but this remains an area to be worked on. I celebrated by paying nearly a thousand pounds for a professional exam. #thuglife. Daily driver insurance also fell this month, biting a hole into my finances where the absent emergency fund should have been.

I’m going to keep this goal on here, as I think I can keep improving.
Goal failed: Eat out a maximum of once a week – improving, as mentioned above, but I still ate out more than once a week.
Goal failed: Repair or purchase a new bike. Found a repair shop. Haven’t set foot in it. I can hear the tutting of mustachioed frugal community members from here.

Goals for next month:

  • Rein in spending on the automotive hobby by setting a budget
  • Sell five items from my hoard – carried over
  • Reduce daily living (groceries and lunch out) and entertainment expenses to budget
  • Eat out a maximum of once a week
  • Repair or purchase a new bike

Happy July everyone!

The Shrink

References:

  1. https://www.starlingbank.com/blog/6-ways-move-spending-saving/

Musing on… the future’s bright, the future’s green

A recent Grauniad article got me musing on energy futures (1).

MrsShrink works in sustainable energy and has had various roles from industrial purchasing to consultancy in the last 10 years. It’s probably the only thing she’d blog about on here, but for now I’ll lay some opinions on you with a big statement. Offshore power could be Britain’s next north sea oil. However, currently it is mainly overseas company investing, creating jobs and getting stuff done on the ground. See the massive investment by Siemens in the Humber region, which has made it ‘the envy of the world’ (2, 3). MrsShrink finds it barmy that as an island nation we can’t be energy independent using the resources around us. For a nice AV update, here’s a recent episode of Fully Charged News that covers some of the current investment:

I’m a great fan of Fully Charged, and plan to become a Patreon for all the hard work Jonny and Robert are doing (4).

The nuclear conundrum

This makes the recent decision by the government to invest massively in new nuclear power stations a bit bizarre. The new Wylfa power station on Anglesey will be built by Hitachi for >£15billion, requiring at least £5billion, but more like £9billion, of UK government money (5, 6). This is on top of the recent strike price of £92.50/MWh and investment in Hinkley Point C, run by EDF, which has been dubbed “the dreadful deal” (7, 8). This is not an argument against nuclear, per se. There is a defence argument for maintaining a number of active nuclear reactors to have the ability to produce military grade munitions (don’t let MrsShrink here me saying that). Hot off the press is commendable investment into new nuclear technology, to the tune of £200m (9). This includes £86m into a UK fusion programme (probably to replace our investment in the EU ITER, ejits), £32m for advance R&D for construction, £30m for supply chain, and commitment to clean up ‘legacy’ sites (10). Intriguingly, it will also see £56m for R&D into ‘advanced modular reactors’, seen by many as a move toward U-batteries; small reactors designed to operate intermittently or independently to decentralise supply (11, 12)

MrsFIREShrink deals with plenty of civil servants who are aware of and pushing for a decentralised grid. She was involved in recent R&D funding pushing the current decrease seen in wind cost /kwh to the grid, with a strike price of £50/MWh achieved (13). While this is likely a temporary artificial low, it follows a decreasing curve in renewable energy prices /kwh and cost for installation. International R&D is driving this. The losers here are UK based ‘big-6’ energy companies, who are mainly invested in traditional power supply methods and only now coming round to renewable sources. Interestingly ‘the city’ is fairly evenly split, probably due to the split of UK-based and world-based investment. The disconnect at a political level is between the current politicians in power and the civil servants. I wonder why…

The issue of baseload is often touted as reasons for energy not to be fully renewable. Hydro and pumped storage are one element of the reply. Building pumped storage plants like Dinorwig will provide robust, large-scale storage back-up (13). More of these are being built in abandoned industrial quarries and workings (14, 15). However this continues to follow a traditional power supply train of thought working with a centralised grid. The energy infrastructure and supply field is changing tremendously quickly, and so 10 year old articles don’t cut the mustard.

The current focus of R&D and rapid development is battery storage to solve the cyclic demand for power. Tesla have opened a massive powerbank in Aus (16), however Tesla gets lots of fanboi hype despite being considered the world leader in energy density for batteries. This work is also going on in California, and with more energy dense Li-ion and potentially solid state batteries in the pipeline, the technology is moving as fast as it can be installed (17). The grid and suppliers are struggling to keep up.

Bring the system down

The wider move to decentralise the grid, utilising the smart grid and home/ industrial supply makes sense from cost to the consumer/ company, and from a strategic point of view. Hard to blow up the power supply to an area if every home and factory is contributing. The top end consumer market is moving to home PV and wind coupled to battery storage. Again the excellent Fully Charged show covers this (18):

It’s difficult to find a clear graph to demonstrate just how fast PV costs have reduced. Most data is based on US, Asian or Australian costs, which says something about uptake. These graphs are taken from submissions made by Friends of the Earth to the old Department of Energy and Climate Change (19). Biased, but the data they’re based on is factually correct:

1605vw06.gif

1605vw07.gif

Wind:

REW_Chart3.png

What’s the picture on the ground?

The actual amount in use is again difficult to calculate. The graphs below run to 2016, and since then the Government has been playing around with the feed-in tariff, reducing and dis-incentivising (20). Capacity can be assessed on the amount of feed-in tariff being utilised and the supply being provided to the grid (21, 22):

As prices come down it will make increasing sense to have a bit of solar PV on your roof and a battery in your house to decrease your energy cost from the grid. This is limited but not prevented somewhat by our old house stock. Industrial energy use is changing more rapidly. To briefly summarise it is currently cheaper for many offices to retrofit solar PV and wind, with a hookup to the grid for peak demand, than to just buy from the grid at standard rates. For larger consumers, Combined Heat and Power (CHP) and microCHP plants running off natural gas with grid electricity sell-back is cheaper and more efficient.

The future?

So to get back to the original point, we are reaching a crossroads where either the ‘big 6’ or others recognise that offshore wind coupled to onshore solar PV and battery storage are most cost effective over lifetime of installation than traditional power plants for supplying grid baseload. The cost cross-over is nicely demonstrated when looking at long-term solar PV changes (23):

To date experts have been astonishingly bad at predicting the uptake and use of renewable energy (24):

IEA Solar Predictions for Global Installations

I like graphs

What we find interesting is who is going to invest in this and when; is it the ‘big 6’ (E.On are starting to), is it foreign energy companies, or will it be a smaller network of UK based suppliers (25). The government can’t seem to decide, but is erring on the big companies side; vis Hinkley C’s strike cost of £92.50/MWh for EDF vs solar PVs £50/MWh strike cost and offshore winds £57.50/MWh (8, 12, 26). Big oil companies like Shell are starting to clue up and get in as a way of surviving the death of fossil fuels (27). We’re looking at using a small renewable-only energy supplier for our home. It’s a time of huge change and potential for the energy industry, with lots of great opportunities for investors and new companies. We just hope the UK can find a way to lead the change again.

Have a great week,

The Shrink

References

  1. https://www.theguardian.com/environment/2018/jun/19/huge-mistake-britain-throwing-away-lead-in-tidal-energy-say-developers
  2. https://www.bbc.co.uk/news/uk-england-humber-43808806
  3. https://www.hulldailymail.co.uk/news/business/siemens-boss-says-humber-become-1513169
  4. https://www.youtube.com/watch?v=HYr7aGf0-wA
  5. https://www.thetimes.co.uk/article/taxpayer-bankrolls-15bn-nuclear-plant-at-wylfa-in-wales-0p7dnxfhq
  6. https://www.theguardian.com/environment/2018/jun/04/uk-takes-5bn-stake-in-welsh-nuclear-power-station-in-policy-u-turn
  7. https://www.ft.com/content/00be1bc4-64c2-11e8-90c2-9563a0613e56
  8. https://www.theguardian.com/news/2017/dec/21/hinkley-point-c-dreadful-deal-behind-worlds-most-expensive-power-plant
  9. https://www.gov.uk/government/news/new-deal-with-industry-to-secure-uk-civil-nuclear-future-and-drive-down-cost-of-energy-for-customers
  10. https://www.bbc.co.uk/news/uk-wales-politics-44634580
  11. https://www.theengineer.co.uk/nuclear-industry-sector-deal/
  12. https://renewablesnow.com/news/solar-pv-gets-lowest-strike-prices-in-uks-cfd-auction-465462/
  13. https://en.wikipedia.org/wiki/Dinorwig_Power_Station
  14. https://www.theengineer.co.uk/first-new-uk-pumped-hydro-scheme-for-30-years-given-go-ahead/
  15. https://www.theengineer.co.uk/pumped-hydro-storage/
  16. https://www.bbc.co.uk/news/world-australia-42190358
  17. https://www.theguardian.com/sustainable-business/2017/sep/15/californias-big-battery-experiment-a-turning-point-for-energy-storage
  18. https://www.youtube.com/watch?v=Ym8emBsYdMs
  19. https://publications.parliament.uk/pa/cm201012/cmselect/cmenergy/1605/1605vw34.htm
  20. https://www.theguardian.com/environment/2018/jun/27/uk-home-solar-power-subsidies-costs-battery-technology
  21. https://www.r-e-a.net/member/uk-solar/feed-in-tariff
  22. https://www.solarpowerportal.co.uk/news/exclusive_uk_installed_1.553gw_in_q1_2016
  23. http://ramblingsdc.net/Australia/SolarPower2.html
  24. http://www.visualcapitalist.com/experts-bad-forecasting-solar/
  25. https://uk.reuters.com/article/uk-rwe-renewables/rwe-ceo-eyes-15-billion-euros-annual-investment-in-green-energy-idUKKBN1JJ00R
  26. https://utilityweek.co.uk/orsted-orders-turbines-record-breaking-offshore-wind-project/
  27. https://www.edie.net/news/10/Shell-collaborates-with-Carbon-Trust-to-drive-lower-offshore-wind-costs/

The Full English Accompaniment – How do footballers save their cash?

What’s piqued my interest this week?

A poor posting show on my part this week, as renovating our new property is sucking my spare time. In between sanding, painting, chiselling and sawing I’ve watched a bit of the World Cup. I’m not the greatest football fan. For me players spend far too much time finding ways to practice am-dram collapses to the floor, like a lot of very flustered Victorian ladies.

There is of course a huge amount of skill, time and effort required in the game. For this there is an eye-watering amount of money floating about. The received wisdom is that footballers chuck this away. See George Best’s quote:

I spent a lot of money on booze, birds and fast cars. The rest I just squandered.

Some definitely do, with 40% going bankrupt as soon as the cheques stop arriving (1).  Keeping up with the Jones’ is one aspect, with a culture for 4x4s and designer wash bags. Others lose it in bad investment schemes or through gambling. A study in 2014 found football players are three times as likely to have a gambling problem than Joe Public (1). Other qualitative studies have examined the reasons; reportedly the excitement of placing big wagers coupled with the boredom of life away from football (2). Claims litter the broadsheets and tabloids of footballers being fleeced through ‘mis-selling’ of investments, losing millions (3, 4). The argument from the footballers is they don’t have time to examine the nature of the investment fully due to their training schedule (1, 3).

The footballers with boardroom balls

The smarter footballers seem to invest their gains wisely. Liverpool, along with other teams, sits it’s new signings down with investment and tax advisers following signatures meeting dotted lines (1). Broadly footballers investments seem to fall into three categories:

  • Bricks and mortar. Robbie Fowler made millions buying a vast property empire, and now runs a ‘Property Academy’ (5). Current England footballer Marcus Rashford is seeking to follow in his footsteps (6). Ramon Vera, Frank Lampard and Steven Gerrard have also done well out of property (7).
  • Riskier investments. Michael Owen dabbles in Crypto, and also has a race horse stables (8).
  • Running companies. Flamini the current standout here, running a biotech called GF Biochemicals (9, 10). Danny Mills works for a private equity firm turning around SMEs (7). Rio Ferdinand has hands in lots of pies, including restaurants, along with Gary Neville and Ryan Giggs (7). Pubs still seem to be a major feature.

What do we learn? Footballers are getting smarter and investing more wisely. The flash-cash culture remains, but for many putting money away is now seen as a norm. Footballers fall foul of the same errors every other investor does. Do you our research chaps/chapesses.

Have a great weekend,

The Shrink

 

Side Orders

News:

Opinion/ Blogs:

What I’m reading:

Eric by Terry Pratchett – light relief

Religio Medici by Sir Thomas Browne – the theological and psychological reflections of a C17th doctor

Enchiridion by Epictetus – Bedside reading for a bad day

References:

  1. https://www.fourfourtwo.com/features/why-do-so-many-footballers-end-broke-fourfourtwo-investigates
  2. https://www.moneynest.co.uk/bankrupt-footballers/
  3. https://www.independent.co.uk/news/people/former-arsenal-and-manchester-united-stars-face-ruin-over-millions-in-unpaid-tax-a6725926.html
  4. https://www.mirror.co.uk/news/uk-news/footballers-caught-30m-investment-scam-9203381
  5. https://www.mirror.co.uk/money/how-robbie-fowler-became-one-6647339
  6. http://www.mortgagesolutions.co.uk/news/2017/09/06/england-footballer-marcus-rashford-sets-property-investment-firm/
  7. https://www.standard.co.uk/lifestyle/esmagazine/net-profits-the-ex-footballers-winning-in-business-9531960.html
  8. https://www.cnbc.com/2018/03/21/michael-owen-former-england-footballer-joining-cryptocurrency-space.html
  9. https://www.ft.com/content/9ce7490c-184e-11e6-bb7d-ee563a5a1cc1
  10. https://bit.ly/2to2Y70 (Google search)
  11. https://www.bbc.co.uk/news/business-44479925
  12. https://www.bbc.co.uk/news/business-44570931
  13. https://www.bbc.co.uk/news/health-44516123
  14. https://www.moneywise.co.uk/news/2018-06-18/equitable-life-shuts-down-what-should-policyholders-do?
  15. https://www.moneywise.co.uk/news/2018-06-19/visa-responds-to-treasury-committee-its-system-failure
  16. https://www.thetimes.co.uk/article/house-prices-set-to-rise-20-in-three-years-3pbdwk2nz
  17. https://www.theguardian.com/environment/2018/jun/19/huge-mistake-britain-throwing-away-lead-in-tidal-energy-say-developers
  18. https://www.theguardian.com/commentisfree/2018/jun/20/millennial-house-home-ownership-renting
  19. http://monevator.com/weekend-reading-brexit-enters-the-terrible-twos/
  20. https://youngfiguy.com/how-i-invest-my-money
  21. http://diyinvestoruk.blogspot.com/2018/06/sipp-drawdown-year-6-update.html
  22. http://www.retirementinvestingtoday.com/2018/06/resignation-in.html
  23. http://financialindependenceuk.com/2018/06/19/1356/
  24. https://littlemissfireblog.wordpress.com/2018/06/19/1179/
  25. https://cashflowcop.com/net-worth-share-not-share/
  26. https://sexhealthmoneydeath.com/2018/06/16/heigh-ho-heigh-ho/
  27. https://simplelivingsomerset.wordpress.com/2018/06/18/shares-beat-housing-even-in-blighty/

The Full English Accompaniment – Question Time Chapter I

What’s piqued my interest this week?

I’d like to start off this week with a little thank you to Weenie, YFG, TI, and a welcome to all new readers. After a few discussions with YFG and Weenie on last week’s Full English, Weenie said some very kind things in her blog (1).  This combined with a mention on Monevator by TI in this week’s weekend reading has meant my readership exposure has shot up (2). When I saw the stats, my eyebrows tried to keep pace with the graph. Hopefully they’ll be return from my hairline soon.

Following our discussions, YFG, Weenie and I all appear to have set up accounts with Starling bank. If you’d like to join too, this link will act as a referral code (3). There’s no monetary reward, but I do get some little hearts in my app. Ain’t that nice. Since Martin Lewis recommended them on his ITV show the application process has slowed a little, but it’s still pretty painless (4).

Back to The Full English proper. This week I’ve been starting to develop an investment strategy. Monevator, as the doyen of passive investing UK blogging, of course started my journey with the guides to passive investing (5). Tim Hale’s Smarter Investing, Intelligent Investor and the essays of Warren Buffett are also in this list and in my reading pile.

Why don’t I just bang my spare cash in a Vanguard LS100 or LS80? Certainly the Evidence-Based Investor further supported the previous analyses that I’d expect better returns than most active funds (6). It’s too simplistic for me; I want more control.

So what about some active funds, which ones to choose? How do you pick your international exposure, and is it (should it be?) something that changes over time? I had a read through Moneywise’s first 50 funds for beginners (7), and started to build a list of active funds which contained interesting companies and investments. This is by no means finalised.

I was led to wonder should I just invest directly in shares, and cut out the middle man. After all, stocks and shares go up over time (8). Some fantastically-timed posts came out from the diy investor UK and John Kingham at the UK Value Investor (9, 10), highlighting the basics of share investments strategies. There was also a guest post over at TheFireStarter about investing outside of the UK and the FTSE100 (11). I started to build a list of companies I’d invest in, mainly in mining – a whole separate blog post.

To balance the risk of shares, I thought about bonds. Good timing as ever, in the week that NS&I cut it’s maximum bond deposit from £1m to £10k (12). I went back to Monevator again to look at corporate bonds (13). A short hop from there to P2P lending, including Ratesetter, and then through TFS again to The House Crowd for property investment (14, 15).

A lot to take in and muse on, without even getting into Cryptocurrency. Five years ago a financially savvy friend suggested I buy some bitcoin. At the time as a student my main financial concerns were the effect on alcohol prices of inflation, the corresponding waistline inflation, and how many pound-a-pint nights my student loan would stretch to.  I continue to prefer the volatility of a works night out to bitcoin valuation.

Which is where this blog ends with a question. Where did you, reader, find the information to guide your investment strategy?

 

Have a great weekend,

The Shrink

Side Orders

News:

Blogs/ Opinion pieces:

What I’m reading:

I’ve recently finished When Breath Becomes Air, by Paul Kalanithi, and would completely recommend it. Wonderfully written, it’s the memoirs of a neurosurgeon who sought to find meaning, fulfilment and an understanding of purpose in his work and through a masters in literature, before finding it as he approached his own death from cancer in his 40s.

Eric by Terry Pratchett – light relief

Religio Medici by Sir Thomas Browne – the theological and psychological reflections of a C17th doctor – new to my bedside

Enchiridion by Epictetus – Bedside reading for a bad day

References:

  1. http://quietlysaving.co.uk/2018/06/14/murmuration/
  2. http://monevator.com/weekend-reading-pervasive-passive-investing-is-becoming-the-reality-of-financial-services/
  3. https://www.starlingbank.com/referral/?token=4M8AJ64A
  4. https://www.thesun.co.uk/money/6517056/starling-bank-account-martin-lewis-recommendation-app-crash/amp/
  5. http://monevator.com/category/investing/passive-investing-investing/
  6. https://www.evidenceinvestor.co.uk/good-vanguards-active-funds/
  7. https://www.moneywise.co.uk/moneywise-first-50-funds
  8. http://awealthofcommonsense.com/2018/06/why-do-stocks-generally-go-up-over-time/
  9. http://diyinvestoruk.blogspot.com/2018/06/become-dragon-owning-shares.html?m=1
  10. https://www.ukvalueinvestor.com/2018/06/stock-market-investors-think-like-property-investors.html/
  11. http://thefirestarter.co.uk/guest-post-dont-invest-ftse-100/
  12. https://www.thetimes.co.uk/article/treasury-backed-bank-national-savings-and-investments-slams-door-on-wealthy-savers-tfmpfz3fr
  13. http://monevator.com/what-are-the-benefits-of-corporate-bonds/
  14. http://thefirestarter.co.uk/may-expensesincome-report-honey-bought-shed/
  15. https://www.thehousecrowd.com/property-investment-opportunities
  16. https://amp.theguardian.com/careers/2018/jun/11/starling-bank-anne-boden-diversity-financial-crisis
  17. http://money.cnn.com/2018/06/15/news/companies/citibank-libor/index.html
  18. https://www.bbc.co.uk/news/business-44466063
  19. https://youngfiguy.com/the-annual-allowance
  20. http://quietlysaving.co.uk/2018/06/08/i-like-driving-in-my-car/
  21. http://thefireeng.com/trialling-fi/
  22. https://deliberatelivinguk.wordpress.com/2018/06/08/may-2018-review/
  23. https://quittingteachingblog.wordpress.com/2018/06/07/may-2018-holiday-spending/#more-202
  24. http://www.thefrugalcottage.com/you-need-to-find-your-why/
  25. https://firevlondon.com/2018/06/11/may-2018-exits-behaving-like-buses/
  26. https://www.ukvalueinvestor.com/2018/06/bt-ceo-jumps-ship.html/
  27. https://rockstarfinance.com/create-your-own-basic-income-before-its-too-late/
  28. http://monevator.com/life-insurance-and-protection-a-primer-or-why-you-should-buy-renewable-term-life-cover-most-of-the-time/
  29. https://www.moneywise.co.uk/scams-rip-offs/fight-your-rights/investment-opportunity-or-load-bull

The Full English Accompaniment – Are banks safe?

 

What’s piqued my interest this week?

One of my threads of thought this week has followed the TSB issues and a Radio4 Moneybox episode a few weeks ago. It transpires that fraudsters used the opportunity to see others bank account information during TSB’s blunders as a a good ticket to cash-out town. This week we had the admission from TSB that at least 1300 customers lost money due to fraud as a result of their IT changeover (1). Nils Pratley at the Guardian sums it up nicely; for all TSB apologises, it doesn’t change the incompetence (2). Between this, and a discussion with YFG on an old Full English about the TSB debacle, I decided to have a chat with some friends who work IT security. One is a white-hat hacker, the other works as an IT security consultant and provides subcontracted coding services (as well as currently writing some code for a little spin-off). Both confirmed what I had read before; that the monolithic goliaths that are the main high street banks have pitiful IT infrastructure.

It makes sense. These are banks founded on the premise of an on-site vault, a list of ledgers and a network of staffed branches. Their IT was adopted ad-hoc, as a necessity, developed or brought in to fit the old model. The old model was anachronistic, it included human foibles and errors, and a degree of leniency to allow for it. Trying to bring in coders, explain and then cram all that into Windows 3.1, then 95, then 2000, etc was never a long term solution. IT departments are not the moneymaking focus of a high street bank, they don’t win all the praise, so the funds will only stretch to essential patching. This is not safe. Threadneedle street is trying to combat this by setting cyber security challenges to recruit IT experts to bolster their security (3)

Sadly, there lies my concern. A bank, by definition, should be a safe place. Your money no longer resides in a huge locked vault. It sits on an online ledger, protected by minimally patched although mostly secure firewalls and security systems. Security systems prone to outages and instability, as Tesco Bank customers found this week (4).

Which is why I find ‘challenger banks’ so tempting. The Starling Bank CIO, John Mountain (strong name), was interviewed last September about working at a bank that is challenging traditional IT thinking (5). Starling have released their API and ran a hackathon of their systems at London Campus in April this year (6). Anne Boden, the Starling CEO, is reported to have said that a bank should not have an IT department, as it’s whole business is now IT. In John Mountain’s words:

“We don’t run a technology function here because the whole business is a tech function”

Will I move all my money into ‘challenger banks’? Probably not. The Rothschilds’ don’t throw their banking system out with the bathwater every time there’s a systemic crisis. Traditional banks will have to learn the hard way, as TSB are doing. For the time being I’ll split my pots as, after all, a bit of diversification can’t help can it?

Have a great weekend,

The Fire Shrink

Side Orders

News:

Blogs/ Opinion pieces:

What I’m reading:

When Breath Becomes Air by Paul Kalanithi – Useful for a sense of perspective

Enchiridion by Epictetus – Bedside reading for a bad day

References:

  1. https://www.theguardian.com/business/2018/jun/06/tsb-admits-1300-customers-lost-money-from-accounts
  2. https://www.theguardian.com/business/nils-pratley-on-finance/2018/jun/06/tsb-apologises-a-lot-but-its-real-problem-is-about-competence
  3. https://www.cio.co.uk/cio-interviews/bank-of-england-cio-robert-elsey-sets-cyber-security-challenge-3678401/
  4. https://www.theguardian.com/business/2018/jun/05/tesco-bank-customers-shut-out-from-online-and-mobile-services
  5. https://www.computerweekly.com/news/450426542/CIO-interview-John-Mountain-Starling-Bank
  6. https://www.starlingbank.com/hackathon/
  7. http://www.bbc.co.uk/news/business-44366731
  8. https://www.telegraph.co.uk/finance/newsbysector/transport/8613090/Crossrail-financed-by-600m-bond.html
  9. https://www.theguardian.com/society/2018/jun/08/nhs-workers-agree-pay-rise-three-years
  10. https://youngfiguy.com/why-having-your-hopes-and-dreams-crushed-can-be-a-good-thing
  11. http://diyinvestoruk.blogspot.com/2018/06/equities-outperform-bonds.html
  12. http://blog.letsventure.com/investor-insights/top-9-tips-to-be-a-successful-angel-investor/
  13. http://www.collaborativefund.com/blog/the-psychology-of-money/