The Financial Dashboard – September 2020

The goals for September were:

  • Fix the bits on the cars I’ve already bought parts for – I’m terrible at buying parts and then never fitting them
  • Exercise four times a week
  • Sell five things

Checking the assets and liabilities:

These are taken, as always, from my Beast Budget spreadsheet. My pay appears to have levelled out, but yet to be asked to pay back the previous excess. After a couple of months of falling net worth as we spent on house renovations (new windows, some structural stuff, remodelling two rooms), my net worth increased by 5.23%. This was entirely due to an increase in the (paper) valuation of my home, which I take from Zoopla/ Nationwide data. My savings rate for this month was 21.93%, not too shabby considering the spending. The usual cash regular savers were topped up, and new money in the Freetrade S&S ISA went to increase previous holdings.

If you fancy a free share, sign up to Freetrade with this link (I also get one).

Goals:

Goal failed: Fix the bits on the cars I’ve already bought parts for

I continue to collect car parts, but work life has been busy and home renovations take up the majority of my spare time. Hopefully next month this will happen.

Goal achieved: Exercise four times a week

Regular exercise continues to have a huge impact on my general wellbeing. I’ve tried to get four sessions a week in exactly, but life is too unpredictable, so only an average has been possible. Now I’m in the habit hopefully it remains.

Goal failed: Sell five things

Again, too caught up in other things, but I did at least give some items away. Once renovation work is finished I should able to have a proper clear out.

Budgets:

  • Groceries – Budget £200, spent £181.42, last month £175.55
  • Entertainment – Budget £100, spent £97.16, last month £84.95 – Mainly takeaways and eating out with friends whilst we still could
  • Transport – Budget £250, spent £147.72, last month £144.72 – Minimal travel these days
  • Holiday – £150, spent £118.99, last month £78.44 – A little holiday
  • Personal – £100/ £87.26/ £123.76
  • Loans/ Credit – £50/ £50/ £50 – Repayments begin
  • Misc – £50/ £604.72/ £70.25
  • Fees – £300 /£268.60/ £129.97– Another month, another pound of flesh to work

In the garden:

Left to run wild. Marrows the size of your thigh. Time to get the scythe and spade out.

Goals for next month:

  • Fix the bits on the cars I’ve already bought parts for – I’m terrible at buying parts and then never fitting them
  • Sell five things
  • Read a book thee evenings a week

Happy October everyone!

The Shrink

Full English Accompaniment – Embracing change

I am increasingly frustrated by state and institutional approaches to long-term planning. Working in the NHS means I’ve long known the government takes a quick fix strategy, rather than actually calculating the most effective long-term solution. I naively assumed that this would not be the case for industry, or industrial planning. Proper industrial & financial planning has worked for so many countries, surely we would look at five-ten year plans in the UK. I was wrong, and it makes me sad.

What brought this to the forefront of my thinking? Government announcements this week about strategies to help with housing. Since the 1950s there has been low levels of housebuilding in the UK, and much of the UKs property market is underutilised. What is the Governments strategy? Fanfare-laden ‘Generation Buy’, a tagline for a plan to remove the financial risk restrictions imposed after the 2008 housing bust-up (1). 95% mortgages here we come. BoJo told the Telegraph he wanted to “create a “Generation Buy” of young people enabled to engage in the world of capitalism by investing in their own home” (1). I mean the only reason they can’t invest in their own home at the moment is the disequilibrium of house price/ earnings, but much easier to create further debt and financial risk than either a) increase earnings or b) decrease house prices. Plus the tory bedrock are satisfied as their house prices continue to increase after the COVID lockdown uptick (2).

All the while the world burns. Literally in some places. You’d be forgiven for missing the massive toxic waste spill that’s occurred in Kamchatka this month (3). Huge swathes of seabed sterilised. Only coming to light after surfers come ashore blind due to chemical burns. That doesn’t matter though. Much more important things going on that deserve column space, like mineral firms potentially becoming pawns in geopolitical battles (4).

Thankfully a few people pay attention to natures warning signs. Crusty suits and stuffy politicians may be avoidant of new ideas, but the market isn’t. Plenty of investors and companies, including among the FI community, are putting funds into change. DIY Investor UK is a great example, investing in a fossil free portfolio that follows his convictions (5). Gentleman’s Family Finances documents his experiences with Abundance, a platform that enables you to invest in bond/loan-type products for sustainable projects (6, 7). Both Abundance and rival Clim8invest are currently raising money through Seedrs/CrowdCube (7, 8). Where the is interest, there is a market.

I am left with a speck of hope. People will vote with their feet, and if enough people invest or spend sustainably then progress will follow the money, not Governmental plans. Change will happen.

Have a great week,

The Shrink

N.B. This is likely to be the last Full English for some time, for NHS/ personal reasons. The UK FIRE Blog RSS tracker will remain here for your weekly fix of posts: UK FIRE Blog Feed

News:

Opinion/ Comment/ Blogs:

References:

  1. https://www.independent.co.uk/news/uk/politics/boris-johnson-generation-buy-mortgage-deposits-b754599.html
  2. https://www.theguardian.com/business/2020/oct/07/uk-mortgage-approvals-at-12-year-high-as-house-prices-keep-rising
  3. https://edition.cnn.com/2020/10/07/asia/russia-kamchatka-toxic-marine-life-death-intl/index.html
  4. https://www.telegraph.co.uk/business/2020/10/04/us-invests-british-miner-fight-chinese-control-rare-metals/
  5. http://diyinvestoruk.blogspot.com/2020/10/fossil-free-portfolio-update.html
  6. https://gentlemansfamilyfinances.wordpress.com/2020/10/05/literally-investing-in-abundance/
  7. https://www.abundanceinvestment.com/
  8. ww.telegraph.co.uk/business/2020/10/04/us-invests-british-miner-fight-chinese-control-rare-metals/
  9. https://www.ons.gov.uk/economy/grossdomesticproductgdp/timeseries/dgd8/ukea
  10. https://www.thisismoney.co.uk/money/saving/article-8786339/Rate-cuts-come-fast-brutal-NS-blow.html%E2%80%A8
  11. https://www.theguardian.com/business/2020/sep/27/bank-of-england-rate-setter-backs-negative-interest-rates
  12. https://www.independent.co.uk/arts-entertainment/films/news/cineworld-close-cinemas-after-no-time-die-delayed-b772792.html
  13. https://www.fca.org.uk/news/press-releases/fca-bans-sale-crypto-derivatives-retail-consumers
  14. https://www.telegraph.co.uk/money/money-makeover/money-makeover-33-nine-buy-to-lets-can-retire-40/
  15. https://www.bbc.co.uk/news/business-54370026
  16. https://www.bbc.co.uk/news/newsbeat-54432739
  17. https://finance.yahoo.com/news/achieve-financial-independence-170047857.html
  18. https://earlyretirementinuk.blogspot.com/2020/10/end-of-month-report-september-2020.html
  19. https://sparklebeeblog.wordpress.com/2020/10/01/monthly-update-sep-2020/
  20. http://quietlysaving.co.uk/2020/10/03/september-2020-plus-other-updates-2/
  21. https://firelifestyle.co.uk/2020/10/03/financial-update-19-summer-is-over-october/
  22. https://playingwithfire.uk/september-2020-big-spending-alert/
  23. https://awaytoless.com/monthly-spending-september-2020/
  24. https://www.onemillionjourney.com/savings-september-2020/
  25. https://firevlondon.com/2020/10/04/sep-2020-update-on-a-zero-month-and-on-q3/
  26. https://pathtolife2.com/2020/10/05/financial-independence-update-september-2020/
  27. https://sassenachsaving.home.blog/2020/10/05/september-net-worth-and-goals-update/
  28. https://www.moneymage.net/2020-september-savings-report/
  29. https://www.thefrugalcottage.com/dividend-income-september-2020/
  30. https://thesavingninja.com/savings-report-27/
  31. https://adotium.co.uk/2020/10/03/autumn-2020-report/
  32. https://moneygrower.co.uk/third-quarter-dividend-income-2020/
  33. https://obviousinvestor.com/p2p-lending-portfolio-update-september-1st-2020/
  34. https://southwalesfi.co.uk/2020/10/09/fees-and-fire/
  35. https://averagemoneymanagement.wordpress.com/2020/10/09/cost-vs-value/
  36. https://www.itinvestor.co.uk/2020/10/10-years-of-fundsmith-equity/
  37. https://bankeronfire.com/office-puppet-show
  38. https://indeedably.com/millionaire/
  39. https://moneybulldog.co.uk/do-you-really-need-pet-insurance/
  40. https://littlemissfire.com/how-to-get-paid-to-walk/
  41. https://lifeafterthedailygrind.com/lifestyle-inflation-how-luxuries-become-necessities/
  42. https://sassenachsaving.home.blog/2020/10/11/the-true-cost-of-having-children/
  43. http://eaglesfeartoperch.blogspot.com/2020/09/conservatory-design-build-part-3.html
  44. https://www.ukvalueinvestor.com/2020/10/best-and-worst-performing-stocks-through-the-pandemic.html/
  45. https://simplelivingsomerset.wordpress.com/2020/10/09/padawan-recency/
  46. http://fiukmoney.co.uk/21-year-old-net-worth-and-fire-plan-update-2/
  47. https://diseasecalleddebt.com/what-are-the-financial-concerns-of-relocating-for-love/
  48. https://gentlemansfamilyfinances.wordpress.com/2020/10/02/month-end-september-2020/
  49. https://gentlemansfamilyfinances.wordpress.com/2020/10/07/home-improvement/
  50. https://gentlemansfamilyfinances.wordpress.com/2020/10/09/will-covid-affect-your-future-spending-patterns/
  51. http://diyinvestoruk.blogspot.com/2020/10/ocado-portfolio-addition.html
  52. http://diyinvestoruk.blogspot.com/2020/09/ceres-power-full-year-results.html
  53. http://diyinvestoruk.blogspot.com/2020/09/green-homes-grant.html
  54. https://asimplelifewithsam.com/2020/10/01/your-future-self/
  55. https://monevator.com/the-slow-and-steady-passive-portfolio-update-q3-2020/
  56. https://monevator.com/low-cost-index-trackers/
  57. https://monevator.com/are-you-ready-to-spend-all-your-money/

The Full English Accompaniment – Negative interest rates

Life’s turning into a real tough place to earn a return. Lots of talk from the BoE over the last couple of weeks about the potential for negative interest rates in the UK (1, 2). I’m not fully sold on negative interest rates. Japan has been trying it for several years with minimal effect (3). Feels slightly like a last roll of the dice from desperate men. This video from The Plain Bagel has a good explanation of how and why they’re supposed to work (4):

Couple that with NS&I, the last bastion of inflation-beating/equalling interest rates on savings announcing a cut to it’s interest rates, and things aren’t so rosy (5). Premium bond rates are also getting a haircut (6). Can’t really blame NS&I. They were tasked by the government with raising money through national savings. They were so wildly successful their IT systems have failed to keep up (7, 8).

So savings interest is getting chopped, and the stock market is looking bubbly. Speculation and individual stock manias appear to be driving at least a proportion of portfolio returns (9). The sustainability of the current run is debatable. Taken together I have concerns about the viability of my FI plan. There was an interesting article in the Telegraph this week, discussing whether the 4% rule for pensions will stack up in the era of low interest rates and volatile returns (10). Plenty of FI-ers plan using the 4% rule, based upon those ‘long-run averages’, to return necessary FI goal numbers. If we’re heading into a further decade of 1% returns on bonds/ savings, people will have to take more ‘risk’, diversify into property or equities to try and maintain their required 4%. Will house price increases or BTL supply those returns, or will it all come down to bull markets? The future is looking murky, and we continue to live in interesting times.

Have a great week,

The Shrink

P.S. I appear to be particularly miserable/ morbid/ grumpy today, so sorry about that.

News:

Blogs/ Opinions:

References:

  1. https://www.theguardian.com/business/2020/sep/17/bank-of-england-keeps-interest-rates-at-01-but-warns-on-economic-outlook
  2. https://www.bbc.co.uk/news/business-54314971
  3. https://www.investopedia.com/articles/markets/080716/why-negative-interest-rates-are-still-not-working-japan.asp
  4. https://youtu.be/pX3_3NMZa0k
  5. https://www.theguardian.com/money/2020/sep/21/nsi-savings-rates-premium-bonds-prizes-direct-saver-investment-account-isas
  6. https://www.bbc.co.uk/news/business-54232018
  7. https://www.thisismoney.co.uk/money/saving/article-8775437/NS-plunges-meltdown-Delays-rates-tumble.html
  8. https://www.thetimes.co.uk/article/ns-amp-i-says-sorry-for-poor-customer-service-as-it-slashes-rates-2bmk7pvsl
  9. https://seekingalpha.com/article/4375276-macroview-newton-physics-and-market-bubble
  10. https://www.thetimes.co.uk/article/how-low-interest-rates-killed-magic-4-retirement-rule-vbbvvdt3c
  11. https://www.theguardian.com/us-news/2020/sep/20/leak-reveals-2tn-of-possibly-corrupt-us-financial-activity
  12. https://www.thisismoney.co.uk/money/markets/article-8750989/Nvidia-hits-bid-block-deal-tech-giant-Arm.html
  13. http://astrobiology.com/2020/09/phosphine-detected-in-the-atmosphere-of-venus—an-indicator-of-possible-life.html
  14. https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0237839
  15. https://www.airbnb.co.uk/rooms/44999445?_set_bev_on_new_domain=1600083186_IvH1VwA96IkDx8UK&source_impression_id=p3_1600083186_IFtPoKvH1zXUopRm
  16. https://www.winkworth.co.uk/properties/sales/goldhawk-road-shepherds-bush-w12/SHE121014
  17. https://www.rightmove.co.uk/property-for-sale/property-83955202.html
  18. http://quietlysaving.co.uk/2020/09/15/milestone-reached/
  19. https://www.firemusings.org/updated-cost-of-coffee-cake-cookies/
  20. https://pathtolife2.com/2020/09/17/financial-independence-update-august-2020/
  21. https://southwalesfi.co.uk/2020/09/18/why-dividend-stocks-arent-as-good-as-they-sound/
  22. https://moneygrower.co.uk/10000-in-cumulative-dividend-income/
  23. https://asimplelifewithsam.com/2020/09/18/ideas-for-meal-planning/
  24. https://www.moneymage.net/6-reasons-to-batch-cook/
  25. https://www.muchmorewithless.co.uk/ration-challenge-meal-plan/
  26. https://playingwithfire.uk/living-and-working-abroad-can-you-get-to-fire-sooner/
  27. https://www.onemillionjourney.com/millionaire-interview-series-6-educatorfi/
  28. http://thefijourney.co.uk/wp/2020/09/20/project-2235-september-2020-update-a-new-normal/
  29. https://indeedably.com/explain-money-to-me/
  30. https://sassenachsaving.home.blog/2020/09/26/musings-on-turning-fifty/
  31. http://diyinvestoruk.blogspot.com/2020/09/plug-power-portfolio-addition.html
  32. https://averagemoneymanagement.wordpress.com/2020/09/25/blocking-out-the-noise/
  33. https://www.foxymonkey.com/beat-inflation/
  34. https://drfire.co.uk/the-long-tail/
  35. https://bankeronfire.com/build-wealth-with-the-80-20-rule
  36. https://gentlemansfamilyfinances.wordpress.com/2020/09/19/trading-up/
  37. https://medfiblog.wordpress.com/2020/09/24/flight-distance-a-p2p-story/
  38. https://www.itinvestor.co.uk/2020/09/worldwide-healthcare-trust/
  39. https://www.mouthymoney.co.uk/beware-dodgy-sellers-targeting-wannabe-influencers-to-peddle-rubbish-goods-online/
  40. https://sparklebeeblog.wordpress.com/2020/09/23/september-activities/
  41. https://monevator.com/should-you-use-cash-to-bridge-the-gap-between-your-isas-and-your-pension/
  42. https://monevator.com/weekend-reading-daddy-what-did-you-do-in-the-great-pandemic/

The Full English Accompaniment – Spectres of our past

Just when you thought it was safe to peak out from under the covers, 2020 brings back that myopic decision to smash you in the face. A tetherball hit with venom and fury smacking the back of your head.

Image Source: The Thick of It

No, it’s not the impending second lockdown due to people getting too boozed up and handsy…

Brexit’s back in the news baby (1, 2).

Let’s distract the news cycle from that second wave and The Thick of It level of government with another joyous occasion. Spinning how the government has signed deals it’s not read and agreed to things it now wants to renege on. I mean mother beeb can put out good news articles about future trade deals (3), but it doesn’t detract from the fact BoJo& Co are looking at violating international law and breaking up the union. It just distracts.

Image source: The Thick of It

I’ve more or less tried to keep Brexit off these pages. I never thought it was a good idea, but there were glimmers of hope amongst the dung shovelled by greedy media-hungry political dilettante’s acting as the face of out. Maybe it could have been a grand vision. I had hoped we might see a Commonwealth trading block, bound together by shared history, serving to both compensate for our historic violence and crimes, and build prosperity for the future. Instead we’ve got this shower-of-shit government.

So I’ve started re-stocking the larder with long dated food. We’re re-tightening the proverbial household waistband; should MrsShrink lose her job. We’re parking cash for the rainy day and not sinking it into the vagaries of the market; expanding our emergency fund. 2020 has been a tasty warm-up for 2021. It’s going to be a long ride.

Image source: The Thick of It

Have a great week,

The Shrink

News/ Blogs/ Opinions:

References:

  1. https://www.bbc.co.uk/news/world-europe-54099257
  2. https://www.bbc.co.uk/news/business-54093220
  3. https://www.bbc.co.uk/news/business-54116606
  4. https://www.cnbc.com/2020/09/10/stock-market-futures-open-to-close-news.html
  5. https://www.cnbc.com/2020/09/06/tesla-could-be-the-most-dangerous-stock-on-wall-street-investment-researcher-says.html
  6. https://www.reddit.com/gallery/ioyq50
  7. https://www.bloomberg.com/opinion/articles/2020-09-06/big-tech-bubble-could-be-rivaled-by-china-s-food-and-beverage-sector
  8. https://www.joe.co.uk/comedy/someone-has-used-freddos-to-prove-that-minimum-wage-in-the-uk-should-be-18-hr-248521
  9. https://www.onemillionjourney.com/portfolio-update-21-august-2020-105404e/
  10. https://zerotofreedom.org/my-portfolio-review-september-2020/
  11. https://firevlondon.com/2020/09/06/august-2020-eat-tech-to-help-out-your-returns/
  12. https://www.thefrugalcottage.com/dividend-income-august-2020/
  13. https://www.moneymage.net/2020-august-savings-report/
  14. https://firelifestyle.co.uk/2020/09/10/financial-update-18-is-it-september-already/
  15. https://sassenachsaving.home.blog/2020/09/12/august-2020-net-worth/
  16. https://www.ukvalueinvestor.com/2020/09/selling-xaar.html/
  17. https://thehumblepenny.com/how-to-start-a-business
  18. https://www.itinvestor.co.uk/2020/09/china-investment-trusts-come-of-age/
  19. https://indeedably.com/business/
  20. https://bankeronfire.com/higher-taxes
  21. https://medfiblog.wordpress.com/2020/09/11/exam-hustling/
  22. https://gettingminted.com/dividend-cut/
  23. http://www.cantswingacat.co.uk/2020/09/11/low-interest-premium-bonds/
  24. https://theescapeartist.me/2020/09/12/when-you-want-to-help-people-you-tell-them-the-truth/
  25. https://gentlemansfamilyfinances.wordpress.com/2020/09/11/tesla-bubble-bubble-bubble-pop/
  26. https://gentlemansfamilyfinances.wordpress.com/2020/09/09/from-dinky-to-sitcom/
  27. http://diyinvestoruk.blogspot.com/2020/09/bg-positive-change-fund-update.html
  28. https://monevator.com/put-150-years-into-your-retirement-calculator-and-smoke-it/
  29. https://monevator.com/dont-wait-to-open-your-stocks-and-shares-isa/
  30. https://monevator.com/weekend-reading-what-gives/

The Financial Dashboard – August 2020

The goals for August were:

  • Read three books
  • Exercise four times a week
  • Sell five things

Checking the assets and liabilities:

These are taken, as always, from my Beast Budget spreadsheet. I was overpaid this month, so I’ve put the excess aside to wait for it to be requested back. This led to an ‘artificial’ savings rate of 50.76%. I think it should be closer to 20% with my new salary. My net worth fell slightly again, by -2.61%, as we put a load of our house renovation work on 0% finance. The usual cash regular savers were topped up, but I’ve now moved money out of my old Nationwide account and into premium bonds. New money in my Freetrade S&S ISA went to open in Vanguard’s FTSE All World.

If you fancy a free share, sign up to Freetrade with this link (I also get one).

Goals:

Goal achieved: Read three books

Completed The Intelligent Investor (finally) and then read two fiction novels which have been sat at my bedside for many months. Now alternating between Dan Jones’ book about the Plantagenets, and Aldous Huxley’s The Doors of Perception. Eclectic.

Goal achieved: Exercise four times a week

I achieved this on average, and feel better for it. Exercise has a huge effect on my mental health. I’m going to keep it on for next month to continue the momentum.

Goal failed: Sell five things

Too caught up in doing other things, I’ve actually acquired more stuff. I spent a weekend helping my father clear out some of his storage, and in doing so found some items I thought I’d already sold. Happily they should actually be worth something, so I’ll try to sell them this month.

Budgets:

  • Groceries – Budget £200, spent £175.55, last month £227.54
  • Entertainment – Budget £100, spent £84.95, last month £36.50 – Eating out to help out
  • Transport – Budget £250, spent £144.72, last month £279.02 – With the dramatic reduction in commute I’m cutting my petrol budget
  • Holiday – £150, spent £78.44, last month £0 – Long weekend away seeing friends
  • Personal – £100/ £123.76/ £91.66
  • Loans/ Credit – £50/ £50/ £0
  • Misc – £50/ £70.25/ £741.96
  • Fees – £300 /£129.97/ £370.91– Indemnity for work

In the garden:

Massive cut back, harvest of potatoes and tomatoes. Not much left now. Once the house work is done the next job will be further garden changes; new patio and planters.

Goals for next month:

  • Fix the bits on the cars I’ve already bought parts for – I’m terrible at buying parts and then never fitting them
  • Exercise four times a week
  • Sell five things

Happy September everyone, where has this year gone!

The Shrink

The Full English Accompaniment – The Lost Year

We’re almost two-thirds of the way through a year that seems to have disappeared. Memorable for COVID-19, lockdown and, if you’re that way inclined, the fastest bear market and reversal on record. We’re now back where we started in February/ March. Sports, bars and shops are re-opening. US markets are reaching all time highs. Almost like those six months didn’t happen and COVID has disappeared.

It certainly didn’t feel like that working in the NHS in March & April.

I’m finding it quite challenging to reflect on the past six months. It’s been a blur of lurching from hypothetical crisis to crisis in the news, averting potential problems, while simultaneously blending mundane existence. One of the consultants I work with has managed to squeeze in cheap holidays to Venice, France, and now Ireland, completely missing all quarantines. I envy him. Most of us have gone to work, gone to a food shop in a mask, watched Netflix, switched off. I wonder if this is what the routine of dementia-inducing retirement feels like?

The media has been commenting on ‘revenge spending’ – people splurging after they’ve been forced to save by lockdown (1). Apparently it’s driving lots of new car sales (2). Why the hell is it called ‘revenge spending’. “I’m sticking it to the ‘big man’ by dropping 20 large on a new Corsa”. What a load of dung.

Personally I think these are all attempts by people to do things worth remembering. ‘Remember that time we went to Zante during lockdown’. ‘Remember when we came back from holiday on an overbooked TUI flight and everyone got COVID’. ‘Remember when we replaced our three year old car with a new car’. Mentally marking the passage of time with big events.

Others seem to be taking comfort from doing the same old thing. Going to the same places. Visiting favourite restaurants previously shut. Spending £300/month on clothes you wear once (3). Publicly grumbling on an anonymous blog. We take pleasure where we can.

From a ruminative Shrink, have a great week,

News:

Blogs/ Opinions:

References:

  1. https://www.telegraph.co.uk/luxury/womens-style/rise-revenge-buying-means-uk-luxury-retailers/
  2. https://www.telegraph.co.uk/business/2020/09/01/revenge-buying-drives-surge-sales-70-plate-new-cars/
  3. https://www.bbc.co.uk/programmes/m000m4bz
  4. http://www.independent.co.uk/environment/climate-crisis-ice-sheets-melting-global-warming-greenland-antarctic-a9699921.html
  5. https://www.bbc.co.uk/news/business-53995878
  6. https://www.ft.com/content/26b91aac-8c73-44cc-b8d7-1aae371ab951
  7. https://www.thisismoney.co.uk/money/markets/article-8698877/Technology-stocks-hammered-day-two-sell-off.html
  8. https://seekingalpha.com/article/4372406-u-s-stock-market-is-bubble-plain-and-simple
  9. http://www.cnbc.com/2020/09/03/markets-are-facing-a-potential-minsky-moment-collapse-strategist-says.html
  10. http://www.forbes.com/sites/investor/2020/09/03/the-crash-of-2020-into-the-end-game/
  11. https://www.ft.com/content/d8eb62ef-a1cb-4597-867b-15a79dbdcd5d
  12. https://www.ft.com/content/5d6fc188-2b9c-4df7-848e-a6c1795dc691
  13. https://www.theguardian.com/business/nils-pratley-on-finance/2020/sep/03/scottish-mortgage-wont-be-too-bothered-about-the-nasdaqs-wobble
  14. https://www.finumus.com/blog/do-not-currency-hedge-your-equity-portfolio
  15. https://earlyretirementnow.com/2020/08/31/the-half-percent-safe-withdrawal-rate/
  16. https://www.foxymonkey.com/all-weather-portfolio-uk/
  17. https://bankeronfire.com/magic-money-making-machine
  18. https://www.itinvestor.co.uk/2020/09/commodity-investment-trusts-are-all-the-rage/
  19. https://www.firemusings.org/should-we-consider-chunking-up-retirement-into-different-phases/
  20. https://southwalesfi.co.uk/2020/09/04/renting-v-buying-from-a-fire-standpoint/
  21. https://lifeafterthedailygrind.com/best-free-landlord-apps/
  22. https://sparklebeeblog.wordpress.com/2020/09/04/2020-reflections-so-far/
  23. https://theescapeartist.me/2020/09/06/the-what-did-we-learn-from-2020-chat-with-andy-hart/
  24. https://gentlemansfamilyfinances.wordpress.com/2020/09/05/all-time-record-house-prices/
  25. http://eaglesfeartoperch.blogspot.com/2020/09/conservatory-design-build-part-2.html
  26. http://diyinvestoruk.blogspot.com/2020/09/mid-wynd-trust-full-year-results.html
  27. https://indeedably.com/50-years-early/
  28. https://playingwithfire.uk/did-someone-say-coffee-could-you-save-money-with-a-sage-bambino/
  29. https://monevator.com/k-shaped-recovery/
  30. https://monevator.com/annual-isa-allowance/
  31. https://www.onemillionjourney.com/portfolio-update-21-august-2020-105404e/
  32. https://thesavingninja.com/savings-report-26-we-made-it-to-sweden/
  33. http://quietlysaving.co.uk/2020/09/04/august-2020-plus-other-updates/
  34. https://www.thefrugalcottage.com/september-aims-7/
  35. https://obviousinvestor.com/p2p-lending-portfolio-update-september-1st-2020/
  36. http://www.cantswingacat.co.uk/2020/09/02/august-income-report/
  37. https://www.earlyretirementguy.com/september-2020-networth-update/
  38. https://asimplelifewithsam.com/2020/09/05/august-review-2/
  39. https://averagemoneymanagement.wordpress.com/2020/09/05/freetrade-diary-8-august/
  40. https://awaytoless.com/monthly-spending-august-2020/
  41. https://pathtolife2.com/2020/09/05/my-fi-journey-one-year-on-how-did-i-do/

The Full English Accompaniment – Wheat from chaff

I stepped away from the blog for a few weeks. Clinical work got busier, home life got busy, and I had a short break away. In that time everything and nothing has changed.

Day-to-day life continues in a sort of limbo. Never quite knowing what you’re allowed to do or not. Constant slight thrill of risk, if you’re so inclined. Constant irritation if you’re not.

The markets are still bonkers. While tech companies run rampant, the rest of the market is stagnant. The NASDAW/ S&P500 are concentrating in a small number of very valuable companies. Tesla is doing a 5:1 stock split (1). AirBnB plans to float on the stock market, along with a host of other IPOs (2). Meanwhile high street stalwarts like WHSmith are cutting staff left, right and centre (3).  The UK has seen a GDP fall of 20% for the last quarter (4). Not unexpected given furlough etc, but how many of those jobs will come back? Furlough is coming to an end and the Gov can’t keep footing the GDP bill, even if it does foot your cheeky Nando’s bill (5). I’ve finished reading The Intelligent Investor, and Jason Zweig’s comments on the dot-com crash relating to tech IPOs ring prophetic.

Image Credit: A person on reddit (6)

Doom, doom, the end is nigh!

Always an easy call to make. This was a reckoning of our own making.

As a fellow member of the UK Finance community put it, the UK Government made a Faustian bargain, trading low unemployment numbers for zero-hours contracts and underemployment of the individual. UK productivity has been crap for years. In the last decade it’s been the worst since the industrial revolution, and it continues to fall (7, 8). Output per hour fell dramatically during the last quarter, and not just due to furlough (9). There’s been talk for the last decade of the benefits of improving productivity, but no clear routes to that goal (10).

The growth of the last decade has been bought through cheaper tech, offshoring, zero-hours contracts and credit. Zombie companies have continued to function thanks to cheap credit. MrsShrink works for one. They were told if the site shut down with COVID-19 it would not return, so they worked through and went cap in hand to investors. Now if I was one of those CEOs, and I had staff on furlough with low productivity, I would be very tempted to use the end of the furlough scheme as a way to cut the dross. The move to homeworking has shown who was really working in the office. It’s also a hell of a way for companies to cut overheads. Giants like BP are talking about slashing their real estate bill (11). I would not want to be in REITs.

Likewise, if I was an investor in one of these zombie companies I would be quite tempted to let it go to the wall. Ploughing millions into a staid institution with minimal innovation into changing markets? Sorry Debenhams, House of Fraser, WHSmith (though their airport/ hospital/ petrol station arms are doing a killing), etc.

Households have been able to buy new cars and new furniture due to cheap credit. Shares rose on Wall Street last week as the Fed said it will tolerate higher inflation (12). I’ve said before that inflation is probably the way out of the insane COVID government debt, but it’s not good for consumer credit. Higher inflation means higher interest rates. Amigo and other sub-prime lenders are sounding warnings due to the COVID payment holidays (13). Banks are setting aside massive sums to cover projected bad debt (14). The UK Government is mooting removal of the triple lock on pensions (15). Warning signs of increases in interest rates in the medium term.

So we may lose the zombie companies, the unproductive companies, and the unproductive individuals at companies. It probably won’t make much of a dent in tax receipts. The companies are unproductive, and the top 1% of UK earners account for a >1/3rd of income tax (16, 17). The death of bloated companies leaves markets for lean new ones. There’s the potential for a big boom in new industries (18). Maybe this is what the stock market is pricing in. Ultimately it feels like we’re on the precipice of a period of great financial change, after a couple of decades of stability. That change will bring opportunity, but also plenty of downsides. Exciting times.

The Shrink

News:

Opinion/ Blogs:

There’s been too many UK finance blogposts in the past month for me to condense them all here. My RSS feed for UK finance bloggers can be found here.

References:

  1. https://www.barrons.com/articles/tesla-stock-split-today-what-to-expect-51598620837
  2. https://www.thisismoney.co.uk/money/markets/article-8648013/Airbnb-pressing-ahead-floating-stock-market.html
  3. https://www.bbc.co.uk/news/business-53661767
  4. https://www.theguardian.com/business/2020/aug/12/uk-economy-covid-19-plunges-into-deepest-slump-in-history
  5. https://www.bbc.co.uk/news/business-53675467
  6. https://i.redd.it/zj5u6myjmnh51.gif
  7. https://www.theguardian.com/business/2020/feb/03/uk-productivity-slowdown-worst-since-industrial-revolution-study
  8. https://www.bbc.co.uk/news/business-49971853
  9. https://tradingeconomics.com/united-kingdom/productivity
  10. https://www.cityam.com/tackling-uk-productivity-crisis-could-yield-83bn-a-year-for-economy-says-pwc/
  11. https://www.theguardian.com/business/2020/aug/12/bp-mulls-radical-reduction-of-office-space-in-move-to-flexible-working
  12. https://www.theguardian.com/business/2020/aug/27/wall-street-shares-rise-after-fed-announces-soft-approach-to-inflation
  13. https://www.theguardian.com/money/2020/aug/28/lender-amigo-profits-dive-as-covid-payment-holidays-extended
  14. https://news.efinancialcareers.com/uk-en/3004265/writedowns-banks-covid-19
  15. http://www.thisismoney.co.uk/money/pensions/article-8666859/amp/Triple-lock-guarantee-state-pension-increases-curbed.html
  16. https://www.ifs.org.uk/election/2019/article/how-high-are-our-taxes-and-where-does-the-money-come-from
  17. https://www.theguardian.com/business/2019/nov/13/richest-britain-income-tax-revenues-institute-fiscal-studies
  18. https://www.cnbc.com/2020/08/12/depression-backdrop-will-spark-a-wartime-boom-market-bull-jim-paulsen.html
  19. https://www.bbc.co.uk/news/av/business-53534922/why-stock-markets-are-defying-a-shrinking-economy
  20. https://www.bloomberg.com/news/articles/2020-08-03/boe-avoids-repeat-of-2008-schism-for-now-even-as-split-widens
  21. https://www.bloomberg.com/news/articles/2020-08-06/goldman-says-time-to-think-about-a-shift-in-market-leadership
  22. https://www.cnbc.com/2020/08/05/nikolas-entire-quarterly-revenue-of-36000-was-from-solar-installation-for-the-executive-chairman.html
  23. https://www.theguardian.com/uk-news/2020/aug/12/dr-martens-repays-uk-furlough-cash-after-strong-lockdown-sales
  24. https://www.theguardian.com/technology/2020/aug/14/partys-over-airbnb-restricts-under-25s-in-uk-france-and-spain
  25. https://i.redd.it/jskjkodg3se51.png
  26. https://www.bbc.co.uk/news/business-53781515
  27. https://www.reddit.com/r/wallstreetbets/comments/i1u3rm/the_dollar_standard_and_how_the_fed_itself
  28. https://www.reddit.com/r/UKPersonalFinance/comments/i42of0/anyone_else_having_major_issues_with_premium
  29. https://www.businessinsider.com/personal-finance/obsessed-with-fire-movement-wasnt-right-for-me-2020-8?r=US&IR=T
  30. https://www.thisismoney.co.uk/money/investing/article-8651885/Baillie-Giffords-Scottish-Mortgage-Investment-Trust-soars.html
  31. http://www.scmp.com/comment/opinion/article/3099052/beware-us-china-technology-war-about-burst-tech-bubble
  32. https://www.thisismoney.co.uk/money/investing/article-8675409/Why-Buffetts-investment-philosophy-cause-celebrate.html

The Financial Dashboard – July 2020

The goals for June were:

  • Tidy the loft and begin to clear
  • Read three books
  • Audit regular spending ahead of job change
  • Track building work spending accurately

Checking the assets and liabilities:

July AssetsJuly Liabilities

These are taken, as always, from my Beast Budget spreadsheet. My savings rate according to my spreadsheet this month is -26.33%. This balances last months 86.9%, and is down to some payments coming out of my account late. My net worth fell slightly (-2.3%) which probably represents all the spending we’ve been doing on builders, plumbers and electricians. My usual cash regular savers were topped up, but our joint First Direct account has now finished. We’re going to use that money for DIY, topping up the emergency account, and ultimately start paying down our mortgage. New money in my Freetrade S&S ISA went to open a small position in Unilever (before it jumped about 8%) and DS Smith.

If you fancy a free share, sign up to Freetrade with this link (I also get one).

Goals:

Goal failed: Tidy the loft and begin to clear

Actually got round to this one, and have found a lot of books and items I will never use again. These will go on Gumtree, Music Magpie (or similar), or be given to charity shops. De-clutter time.

Goal failed: Read three books

I am still reading The Intelligent Investor. Close to the end now, and rewarding myself with some fiction. Should be done this month.

Goal achieved: Audit regular spending ahead of job change

My change of role is actually reducing my pay slightly. With that in mind I’ve followed Martin Lewis of MoneySavingExpert’s advice, and audited my direct debits and standing orders. I was previously paying £100/month on gym memberships (a couple for different purposes). With lockdown many of these were temporarily frozen, and it’s given me time to assess what I wanted and what I was using. I’ve simplified my membership down to a single one for £65, which I’m hoping will be enough to motivate me to do more.

One of the benefits of my new job is a shorter commute, so I’ve reduced my monthly fuel budget. I’ve been putting money aside for holidays, and that has gradually been accumulating, so I’m going to hold off adding to that for now. I’m not completely sure what my new salary will be, so if further pruning needs to happen it will come at the end of the month.

Goal achieved: Track building work spending accurately

I have kept a google sheet for this, and input all our spending. As with any grand design, there’s been a fair creep in budget.

Budgets

  • Groceries – Budget £200, spent £227.54, last month £237.31 – We’re continuing to spend lots on groceries as we host rather than eat out
  • Entertainment – Budget £100, spent £36.50, last month £56.50
  • Transport – Budget £460, spent £279.02, last month £432.65
  • Holiday – £150, spent £0, last month £0
  • Personal – £100/ £91.66/ £137.18 – Random tat
  • Loans/ Credit – £0/ £0/ £0
  • Misc – £50/ £741.96/ £724.15 – Building supplies, and the builder
  • Fees – £300 /£370.91/ £347.17– GMC/ Royal College

In the garden:

Everything has sort of been left to grow wild while we focus all spare hours on DIY. The pumpkin patch is now the pumpkin third, engulfing all in it’s spread. Sunflowers are just ending their thing, but are doing a good job of acting as climbing support for french beans. To top it off we have loads of lettuces, and the first of our tomatoes.

Goals for next month:

  • Read three books
  • Exercise four times a week
  • Sell five things

Happy August everyone, where has this year gone!

The Shrink

The Full English – The Working From Home Collapse

A big theme among the associated press/ copywriters this week has been working from home. Indeedably provided us with a fab view take on what’s going on, and what it’s like to be in That There London (as opposed to us provincial capitals) (1). When lockdown first kicked off and people moved to working from home I believed it was a flash in the pan. As a species we’re primed to dislike change, especially as we get older and higher up the ranks. It would be a few months, and then we’d all be back. But the longer this ‘new normal’ goes on, the more I think that we’re seeing a transformative change.

Neither I or MrsShrink have worked from home. It’s difficult to work from home as a Doctor. You can’t perform a physical examination. As a psychiatrist, I can’t assess the subtle interpersonal behaviours which form part of our reviews. The NHS, notoriously slow in it’s monolithic tech, won’t allow most IT solutions for security reasons. MrsShrink meanwhile, off in manufacturing, is managed by gammon-types with grey suits, grey hair and grey skin. They struggle to understand the role IT plays in their zombie company on a good day, never mind working from home. Reminds me of the Japanese IT Security Minister who had never used a computer and didn’t understand the concept of flash drives (2).

My view is therefore coloured by my experience. For most professional office jobs the story is different, and the narrative coming out of press offices says so. Google and Natwest have both told staff to stay home until next year (3, 4). Barclays are a bit more old-fashioned, but have still said a return to office will take time (5). BoJo & Co of course want everyone back in the offices, because a large proportion of our economy is structured upon those offices and the surrounding service infrastructure (6). They don’t want that to change. But people do. Commuting is miserable, and working from home means less spent on the commute and more time with family (7). For the top brass it’s an opportunity to flex/ impress with your home environment (8).

The Agrarian Revolutions, Inclosures Act and Industrial Revolution all saw massive shifts in the way people lived and worked. We’ve gone from serfdom, through shifting to villages and working on manorial lands, to living in cities/ towns working in factories/mines. The last century has seen industrial production offshored, and those productive factories replaced by service factories. Transport infrastructure has improved, but we still travel to hubs of work. Is that about to change, and if so, what’s the fallout?

For companies it offers the opportunity to lay off layers of staff and automate (9). For the worker it cuts the commute to a crawl, enables greater family time, saving cash, and geoarbitage. As an NHS worker we geoarbitaged early. I get paid the same wherever I am in the UK, so why live somewhere with a high cost of living. Now more people get that opportunity.

The fallout? House prices outside of the South East skyrocketing, as people move to lower cost of living, less polluted, less commuted areas. Commercial property? I wouldn’t touch REITs right now. If all those offices close what will the buildings become? And then there’s town and city centres. Most high streets were already hearing the grim reaper’s call. Will they transform, shorn of their officeworkers into shopping and nightlife centres. Or is this the final call? That service infrastructure left empty, sandwich artists placed on Universal Basic Income. If we’re about to see wholesale change in our working lives it’s worth thinking about what will happen to what is left behind.

Have a great week,

The Shrink

News:

Opinion/ Blogs:

References:

  1. https://indeedably.com/ghost-town/
  2. https://www.theguardian.com/world/2018/nov/15/japan-cyber-security-ministernever-used-computer-yoshitaka-sakurada
  3. https://www.wsj.com/articles/google-to-keep-employees-home-until-summer-2021-amid-coronavirus-pandemic-11595854201
  4. https://www.bbc.co.uk/news/business-53484767
  5. https://www.bbc.co.uk/news/business-53579428
  6. https://www.theguardian.com/business/2020/jul/31/coronavirus-companies-defy-boris-johnsons-planned-return-to-work
  7. https://www.bbc.co.uk/news/uk-53580656
  8. https://news.efinancialcareers.com/uk-en/3004187/bankers-lifestyles-pandemic
  9. https://www.cnbc.com/2020/07/29/lots-of-companies-are-saying-they-have-operating-leverage-thats-just-code-for-firing-people.html
  10. https://www.thisismoney.co.uk/money/mortgageshome/article-8560157/Now-City-watchdog-tells-banks-reject-loans-took-break.html
  11. https://www.businessinsider.com/bernie-sanders-calls-elon-musk-a-hypocrite-over-stimulus-tweet-2020-7?r=US&IR=T
  12. https://www.theguardian.com/environment/2020/jul/28/worlds-largest-nuclear-fusion-project-under-assembly-in-france
  13. https://www.bbc.co.uk/news/business-53563601
  14. https://www.telegraph.co.uk/technology/2020/07/30/monzos-losses-rise-114m-banking-app-warns-slowing-growth/
  15. https://www.forbes.com/sites/vineerbhansali/2020/07/29/what-locust-swarms-tell-us-about-robinhood-kodak-and-covid-mania-in-the-stock-market/
  16. https://www.thisismoney.co.uk/money/comment/article-8552729/Five-key-areas-capital-gains-tax-reform-impact.html
  17. http://thefirestarter.co.uk/3-months-in-thoughts-doubts-panic-perspective/
  18. https://gentlemansfamilyfinances.wordpress.com/2020/07/31/vcts-for-financial-independence-part-3-making-it-work-for-you/
  19. https://simplelivingsomerset.wordpress.com/2020/07/29/holidays-in-the-sun-are-not-a-human-right-people/
  20. http://quietlysaving.co.uk/2020/08/01/july-2020-plus-other-updates/
  21. https://firevlondon.com/2020/08/02/july-2020-shambles-and-zombies/
  22. https://moneygrower.co.uk/july-stock-purchase-a-polarised-market/
  23. https://www.onemillionjourney.com/income-expenses-savings-july-2020-1869-saved/
  24. https://earlyretirementinuk.blogspot.com/2020/08/end-of-month-report-1st-of-august.html
  25. http://www.cantswingacat.co.uk/2020/07/30/july-income-report/
  26. https://pathtolife2.com/2020/07/30/financial-independence-update-july-2020/
  27. https://averagemoneymanagement.wordpress.com/2020/07/31/freetrade-diary-7-july/
  28. http://fiukmoney.co.uk/july-20-net-worth-and-monthly-update-23-569001-36-89-fi/
  29. https://monevator.com/freetrade-how-to-build-your-portfolio/
  30. https://monevator.com/the-agony-of-alpha/
  31. http://diyinvestoruk.blogspot.com/2020/07/tesla-new-addition.html
  32. https://www.itinvestor.co.uk/2020/07/smithson-closes-in-on-2-billion/
  33. https://bankeronfire.com/not-fade-away

The FIRE Cemetery (July 2020 Edition)

Here lies a list of blogs now deceased, moved on to fairer lands…

On life support (>6 months since last post)

  • Early Retirement Guy – First post 2014, most recent was the 18th of January 2020, with an annual net worth update from Guy after an eventful year
  • Big Blue Money – Formerly Big Blue Money, now renamed to Coffee Money, posting intermittently
  • Finance Your Fire – Marc participated in lots of the FIRE blogging scenes Thought Experiments etc, but last posted in August 2019
  • Mess and Marigolds – Last posted on October the 15th 2019, their blog (mainly about cleaning with a bit of saving) started in September 2016.
  • Ready Steady Retire – Posted for about two months, from November 7th 2019 to December 21st 2019.
  • Little Miss Fire – We’ve been here before, and sad to see. LMF changed sites last year, and the new one appears to have been left while their spirits company takes the focus. First post sometime in 2018 I think? Last post 17th December 2019.
  • FIDdom – Bec started posting way back in November 2017, with her last post on the 17th of November 2019.
  • Bangkok 2 Blighty – Another big name, they started posting in April 2018, last post in October 2019.
  • Fretful Finance – Blogged from December 2nd 2018, with the most recent update on January 25th 2020.
  • 3652 Days – Fairly infrequently updated, but going since December 2015, so I suspect their post from January the 19th 2020 won’t be their last.

 

In the morgue (dormant for >1 year)

  • Fire in London – First post in Nov 2016, last in December 2018
  • Deliberate Living UK – First post 2017, last from Wephway was in January 2019
  • Sex Health Money Death – Jim first posted in August 2015, and the last post was August 2018. At that point he was close to retiring, so he may well have blogged his last.
  • Under The Money Tree – One of the original few, now dormant since December 2017
  • UK Girl on Fire – First post April 14th 2019, last on July 31st 2019. A fair amount of indeedably inspired work on their site.
  • Fire the 9 to 5 – A fairly big poster, last wrote on July 22nd 2019, first post February 28th 2018. They had retired early, so hopefully they’re off doing better things.
  • Formerly Skint – Weekly money diaries started in January 2018 and dried up in January 2019
  • Make Save Invest Money – Leon was posting from December 2017 to January 2019, and then appears to run out of steam
  • The Finance Zombie – Last post in February 2019, infrequent prior but had been going since the 25th of September 2014.

 

Dead and buried

  • Young FI Guy – One of my favourites, a titan, gone but not forgotten
  • Mr Squirrel – Another titan, sorely missed
  • The Fire Engine – About a month of posting
  • Middle Class Hustlers – Lasted about two months
  • Some Things Don’t Change – Been gone some time sadly
  • Financially Free by 40 – the latest addition, Huw’s last post was in mid-2018. The domain is now up for grabs.
  • Grizgal on Fire – Last posted on the 8th of October 2019, their website is now dead.
  • Pursue Fire – Dan started in July 2018, last post in January 2020 winding up the blog.
  • Liberate Life – Last posted on 11th September 2019, before deleting their website
  • Chuffed 2 bits – Last posted in November 2019, the disappeared from this plane of existence
  • Next Chapter FI – My records show they last posted on the 2nd of January 2020, before puffing into void.
  • MsZiYou – Feminist FIRE fan, who at one point was podcasting as well as blogging. Close to FIRE and changes in life circumstances led her to close her blog.

 

The Lazarus circuit

These are bloggers who have returned from the edge, touched the void, etc:

  • Sparklebee – After a six month hiatus returned to posting with the news they quit their job and were truly on countdown to FIRE!
  • Rockstar Finance – Is now back under new management, but with a very barren site.

 

If you can think of any more please leave a comment below, and I’ll periodically return to update.

I am indebted to /u/reckless-saving over on /r/FIREUK, who makes this post so much easier.