Quarterly return posts supplement my monthly Financial Dashboard, covering investments in detail and looking at my yearly targets. Here I track purchases and sales, document progress against my (in progress) investment strategy, and discuss re-balancing and changes over time.
TL:DR Another quarter on tickover whilst we function as a household on just one income.
Q2 2022 Net Worth
Q2 Returns:
Cash Accounts £10,400 (-£6,200)
Investments £11,800 (-£900)
Property £59,500 (+£3,400)
Cars £8000 (+£4,000)
My net worth at the end of Q2 2022 has nudged up about £1,500, having wobbled all over the place. Most of the increase is down to mortgage repayments, as everywhere else I’ve been in the negative. I also replaced my trusty, crusty, rusty old daily with something more executive and suitable for ferrying the infantShrink. #Lifestyleinflation. Cash reserves were raided, and have not been topped up as we run the household on just my income while MrsShrink is off work on maternity leave. The markets have been bearish, with some moderate impact on me.
Investments:
Core/ Satellite Passive/ Active Split
My 2022 Financial Year ISA is in Vanguard, however I again didn’t pay in anything this quarter. There was also no activity in my Freetrade account, as that slowly accrues dividends. I have further separated out my investment portfolio tracking to identify funds/ETFs and stocks/equities as individual sections of the pies. I’m heavily overweight active funds and stock at the moment, a combination hangover of putting some money into crowdfunding rounds and then a couple of companies massively outperforming the rest of the market. Time to be boring for a while in Q3/4.
Ratio of satellite active holdings to core passive trackers
Asset allocation ratios
Goals
In terms of goals for 2022:
Save 35% of my income – 40% prediction
Q2 continues Q1s poor run, as life events get in the way of a decent savings rate. I’m still hovering around the 20% mark, and it’s going to need some extra income (possible) or a fall in outgoings (in this economy?) to pull me up to the 35%.
Save £8k towards a new car – 40% prediction
Completed it mate.
Finish the house renovations – 75% prediction
Further progress, though not as quickly as I would like. Finished painting the exterior of the house on a hot week of annual leave, but there remains some flashing/ pointing/ rendering to be repaired. I have half an idea to book another week and lay a patio/ build a logshed to fill ahead of the winter. MrsShrink is busy painting the inside of the house in her time off, and the list of to-do jobs is gradually diminishing. We’re 90% sure we’re going to try and move at the tail end of 2023. The aim would be to get more space, but timing will depend on what’s for sale and the wider market. Our friend is still making noises about buying our house from us, which aids in flexibility – they’re a first time buyer with a deposit ready living in rented accommodation. Going with the flow a bit on that one, but getting damn itchy feet.
Last month I noticed what I think is the beginning of inflation telling on my monthly budget. A gradual creep over the year in the amount we spend each month on food, energy and general household goods. This has been in the news as well, with inflation apparently running at a decade-high 5.1% in November(1, 2, 3). The BoE don’t think this will change in the short term, with forecasts of >5% for 2022, before dropping off into 2023 and beyond (2,4).
The comment pieces on this news are all over the place. On one hand you get people like Chris Dillow of the Investors Chronicle (5). He reckons the BoE are overstating the risk; the inflation is due to higher gas prices, and gilts and commodities prices do not suggest there is much fear of ongoing inflation, whilst increased price pressure will weaken pressure from spending, and there really is no wage-price spiral as a shortage of decent staff pushes up salaries (5). At the other side of the argument are people like Merryn Somerset Webb (6). She argues surveys (I hesitate to call this data) from the British Chambers of Commerce showed most (66%) of businesses are worried about inflation, and while 30% say this is due to wage growth, 94% blame raw material price increase (6). This is reportedly due to increases in oil and gas prices, and they aren’t going down any time sooner because everyone is going renewable too quickly (6). Hogwash.
While I don’t agree with Merryn Somerset Webb’s “all aboard the coal train” bandwagon, I do agree that inflation isn’t going away. In my naturally bearish state I am concerned that the BoE is under-weighting long-term inflationary causes. Two points on this. First, all the CPI inflation graphs people refer to seem to go back to the late 80s/ early 90s. Inflation isn’t a modern thing, we’re just measuring it with the CPI now. The fairly fun in2013dollars.com reckons since 1920 the pound has had an average inflation rate of 3.86% (7). Actual proper peer-reviewed papers peg inflation since the mid-1950s at median average 4.3% and mean 5.90% (8, 9). So our current 5% looks like a reversion to mean. Five percent inflation (and theoretically associated interest rates) is not something the BoE wants, but might be good for national debt. For the rest of us debtors, 5% mortgage rates could pinch a lot of those stretched salary-multiplier high LTV mortgages, and rid us of some of the zombie companies floating about.
Point two. What is in the CPI. Have you ever looked at the basket of goods the ONS uses? It can be bloody weird, but seems like a fairly decent mix of households (10). Wholemeal loaf and dehydrated noodles, fair enough. Liver and canned meats, not round here. Rent costs for housing, materials for maintenance like MDF, bedroom furniture, and a new smartphone. That feels fairly normal. There’s a lot of items, but I’d encourage you to have a look.
The important point here is it’s not just about gas prices or wage growth. This is all the bits of stuff people buy or spend on. The price of laptops, the latest Apple watch, the latest Samsung smartphone, etc have all gone up because of chip shortages. That doesn’t seem to be easing. Same problem applies to new cars, and has driven up the price of second hand cars. Rail prices are going up faster than inflation. Air fares have gone up. Rent prices have gone up – have you spoken to anyone trying to rent recently? In our local area it seems to be almost impossible. One of my junior colleagues has been looking for nine months for somewhere suitable, staying with a friend in the interim. Brexit and COVID has meant fewer people available for hospitality, services and transport work, driving up wages (3). The headlines might be lawyers and lorry drivers, but everyone I’ve spoken to seems to be struggling to get staff.
And add-on the sustainability element. Fast fashion is in for a certain portion of the population, but for many it’s firmly on it’s way out. See the rise of Depop and Vinted, the fashion amongst the generation below me of reuse and recycle. On/re-shoring and difficulties with international shipping (COVID, Suez, Brexit, general fuel cost) means that it’s much more expensive to get stuff to the UK now. People can’t get raw materials or finished goods in. Food prices have continuously fallen over the last decade, meaning even as wages have stagnated many families have not noticed inflation on their food bill (11). It’s got cheaper thanks to cheap labour from abroad for UK farms, and cheap food imported from abroad. Farmers have been squeezed to the point of barely breaking even – watch Clarkson’s Farm. Both of these drivers are disappearing. This affects the poorest in the population most, as food makes up a greater proportion of their total spending (11). Food prices are going to start increasing, because the only way they can get cheaper is if farms become even more commercialized as agri-businesses, with lower welfare standards and quality in the face of fairly paltry Government replacements for EU subsidies (12, 13, 14). The alternative is importing more food, which is harder and more expensive due to Brexit. Or people pay more for better quality, more sustainable produce, the way that some public opinion is blowing.
So that’s my long-winded rant about why I’m adding £50 to my weekly food budget and monthly energy spend rather than a future eating soylent green and ChickieNobs in the dark. We can afford it. I’m going to account for 4% annual inflation in my future calculations. After a decade of low inflation and low interest rates, times they are a-changing.
December Finances
Checking the assets and liabilities:
These are taken, as always, from my Beast Budget spreadsheet. I saved (a surprising) 34% of my salary, bolstered by some locum work. I have also finally managed to clear my credit card. I’m not quite unsecured debt free, there’s about £1000 of 0% credit for a kitchen, but not too shabby. Savings this month were in cash and cryptocurrency – more on this in my Q4 review. If you fancy a free share, sign up to Freetrade with this link (I also get one).
Budgets:
Groceries – Budget £200, spent £297.80, last month £348.68
Entertainment – Budget £100, spent £31.93, last month £206
Transport – Budget £250, spent £258, last month £349
Holiday – £150, spent £0, last month £0
Personal – £100/ £272/ £199 – Christmas gifts
Loans/ Credit – £50/ £512/ £445
Misc – £50/ £207/ £153
Fees – £300 /£233/ £494
In the garden:
Found an old paraffin greenhouse heater in the garage. Played with it. Need more paraffin.
In rushing together these few months and quarterly posts I’ve noticed an uptrend in my boring household spending. Nothing dramatic, just a general creep. Some of this is down to added baby costs, and MrsShrink being at home fulltime eating, keeping warm, breathing. I don’t think this can account for everything though. MrsShrink used to spend about £25/week at her work canteen for breakfast and lunch, and baby nappies etc from Aldi/ Lidl aren’t more than a few pounds a week. So why has our monthly grocery spend gone from £300-400/month in 2020 to £500-600/month at the end of 2021? I think most of it is inflation, due to the obvious increased transport and wage costs, increased cost of production etc. ONS has CPI pegged at 4.6% for last month, and I suspect food costs are rising faster (1). It could well account for an extra hundred on our monthly food bill. There’s a lot of concern about the risks of this inflation to households in the media at the moment, but for now we can weather it on my single income (2, 3). We’re lucky as I’m not sure all will.
We’ve also been struck by the collapse of our energy supplier, Bulb (4). We always had good service from them, but it seems that behind the flashy front and customer service they we’re particularly well run, will allegations that they weren’t hedging their energy contracts. We’re now on the supplier of last resort run by Ofgem, from a practical sense still paying through Bulb at the price cap. This means we’re likely to see a fair rise in our energy spend when the supplier of last resort is wound up. Time to tighten the old belt.
November Finances
Checking the assets and liabilities:
These are taken, as always, from my Beast Budget spreadsheet. I saved a paltry 19.5% of my salary, which I’m quite content with. Maintaining this whilst also running the house on just my salary feels the sort of thing a family in the 1950s might have been able to do, but rare today. Again this was all saved as cash or in my pension, with no new investment. If you fancy a free share, sign up to Freetrade with this link (I also get one).
Budgets:
Groceries – Budget £200, spent £348.68, last month £201.48
Entertainment – Budget £100, spent £206.38, last month £113.55 – Going out, eating out, naughty things like the asian bakery round the corner
Transport – Budget £250, spent £349.06, last month £163.98 – MOT time
Holiday – £150, spent £0, last month £0
Personal – £100/ £199.22/ £288.23
Loans/ Credit – £50/ £445/ £159 – extra locum/ overtime pay is getting funnelled here
Misc – £50/ £153.14/ £594.76
Fees – £300 /£494.43/ £311.67
In the garden:
Basically just on life support now, with tender stuff tucked up in the greenhouse or under cloches to over winter.
Hope you’re all having a great Christmas and New Year break!
Quarterly return posts supplement my monthly Financial Dashboard, covering investments in detail and looking at my yearly targets. Here I track purchases and sales, document progress against my (in progress) investment strategy, and discuss re-balancing and changes over time.
Finding time over the Christmas break to catch up on these posts, as juggling work and a newborn has turned out to be time intensive. We had planned for around £2100/month of expenses (mortgage, all household bills, all household groceries and toiletries, any other activities as a family). This is proving to be pretty… lean. One of the actions for 2022 will be to re-look at this, as I’m not entirely sure where the cost creep is coming from. We seem to be spending more in supermarkets, and maybe that’s a combination of the inflation of food prices and the endless merry-go-round of visiting relatives requiring feed and water. More likely it’s all the little extra things we’re buying for baby; dummies, toys, books, odd shit you don’t account for like cot sheets and blackout blinds. It feels like these aren’t going away. There’s going to be a continual stream of random ‘essentials’ we ‘need’. Better update my cashflow.
Q3 Returns:
Cash Accounts £13,520 (-£340)
Investments £11,920 (+£320)
Property £52,900 (+£800)
Cars £2000 (no changes)
Increased spending on the newborn, and some dips in the market have meant my net worth has fallen back this month, but the savings rate is averaging 37.5%, just under my 40% aim. I continue to target paying off my credit card, aiming to get it paid off by Christmas, while also continuing to put away £250 in cash/month in the Principality Thank You Saver, which is a 1.4% regular saving offering for NHS workers in South Wales (1).
Investments:
Active/Passive Satellite to Core ratio
Core/ Satellite Passive/ Active Split
My 2021 ISA is in Vanguard, and for two of this quarters months I paid in £400/month to my old friend Dev World ex-UK. I also bought some more Ethereum, which I now include in my active satellite % calculation, again as a hedge against inflation/ bond weirdness as outlined last quarter.
As I’m not paying in to Freetrade for this years ISA, all activity in that account has been active attempts at stock picking by selling holdings to buy new (fancy a free share? Sign up to Freetrade using this link, and we both get one). Towards the end of Q2 and into Q3 I sunk around 10% of the value of this account (essentially my GME gains) into some US mortgage brokers, following further meme posts (NYSE:RKT, NYSE:UWMC). These then promptly lost 20%, proving that I am not good at timing my herd following. I also bought back into GME at a price peak, and at the end of Q3 still hold that (small) position, awaiting another price peak.
With all of these positions in play I got annoyed at progress, at the active/passive split and at the general makeup of my portfolio. When I looked over my account (ignoring passive funds) I was holding GME, RKT and UMWC as meme stocks, Unilever (LON:ULVR), Greencoat UK Wind (LON:UKW) and The Renewables Infrastructure Group (LON:TRIG) as sustainable dividend investments, and IQE (LON:IQE) and Coinbase (NASDAQ:COIN) as growth conviction plays. I.E. A bit of a nonsensical mess. I sold a small amount of my passive EM holding (slap wrist) to provide some liquid capital. I then closed my positions in UKW and TRIG. I held these two positions since May 2020, during which time both of their market prices essentially flatlined. That’s kind of what I was expecting; these were essentially investments aligned with my attempt to be more sustainable in general, and were also supposed to be for dividends, not growth. The dividends on these holdings have been the drivers for return, seeing 10% and 11% over the 17 months. I also sold my RKT holding for essentially what I paid for it, and my small IQE position for a healthy 43% loss. This left me with a collection of cash, ULVR and COIN in the positive, and UWMC and GME in the negative awaiting suitable exit points. Where is this portfolio going? Not fully decided yet, so watch this space.
I have a confession to make. I really love mining. I don’t know if it’s something in my blood, as my ancestors made money from coal and iron, or just formative years spent amongst decrepit mine shafts in former industrial heartlands. I absolutely love it. I probably should have gone and done it as a degree. Pulling wealth out of the ground!
It’s not really pulling wealth out of the ground though. Gone are the days, and the mineral resources, where you could just rock up and pull money from crevices in the rock (except maybe if you’re a forest freeminer). These days mining has crazy overheads, economies of scale, and you need proper cash to be a player.
I’ve followed the fates of various UK mining concerns over the last decade. I’ve invested in some, and not really lost money. Let’s talk about a few.
Sirius Minerals
If you’re interested in investing, particularly with a UK focus, I think you’d be hard pressed not to have heard of Sirius Minerals (1, 2). They were a company building a mine to extract polyhalite , a type of potash used as a fertiliser compound, in North Yorkshire. It was/is a vast project, with a 22 mile underground conveyor to comply with North York Moors planning requirements, and the potential for £2.5 billion annually in exports. There was also a focus on local jobs, and a lot of local people stumped up cash, alongside institutional investment hype. Repeated rounds of junk bond sales were needed to raise the funds to build such a monster mine, and gradually investment dried up (at the time allegedly linked to Brexit) (3) . Without continued investment the project withered, and where it had previously been the ‘darling’ of the FTSE, it suddenly left a lot of small investors holding big losses (4, 5). People lost pensions and life savings, as ultimately Anglo-American bought out the company at a bargain price (6, 7, 8).
I didn’t invest in Sirius Minerals. By the time I heard about it it was making lots of new in the mainstream press, and I considered that too late to jump aboard. It also looked a bit like a giant white elephant in a deep hole. It remains to be seen whether Anglo-American can turn it around.
Wolf Minerals/ Tungsten West
I did stick some money through the AIM listing in Wolf Minerals (9). Wolf developed and ran a tungsten and tin mine outside Plymouth, on the edge of Dartmoor. The mine itself has been there for decades (centuries?), with the enormous deposit of high grade tungsten being used during WW2. It lay essentially dormant until rising tungsten prices prompted a relook, with a feasibility study suggesting low-cost, high-grade ore was available. At least £170 million was ploughed in, developing an open cast pit and low environmental impact ore recovery plant on site. Once producing, it never met volume expectations, tungsten prices fell and it ran at a huge loss before falling into administration in 2018 (10, 11).
The Drakelands mine may potentially live on; it’s still a high-grade resource with the world’s 3rd-largest deposit, planning and infrastructure. It has gone through various hands, ending up as Tungsten West who bought it out of receivership in 2019 (12,13). Tungsten West is also market-listed, and I may well buy in (on sentiment) after I’ve read some more about them. Their plan is to re-open the mine, and with increasing tungsten prices and general onshoring/ mineral security concerns they are certainly interesting (14,15).
I’ve been following the mineral resource held by Strongbow Exploration, now renamed Cornish Metals, for at least a decade (16). They hold the rights to South Crofty mine, an enormous tin (and previously copper, arsenic and tungsten) mine under Camborne/ Redruth/ a lot of Cornwall, that has been producing ore since 1592 (17). It went into decline in the 1980s into the 90s with the collapse in the global price of tin, shutting down in 1997. Since then, as the price of tin has increased, there have been periodic attempts to restart the mine, but with progress slowed by planning problems (it sits underneath the towns of Camborne and Redruth, with old surface mine sites prime for redevelopment) and the involvement of UNESCO (it’s within a world heritage site). Through gradual purchases it now covers an area of 34 former mines, and after Strongbow bought the site out of administration they have been drilling, re-assessing, permitting, and are now de-watering the old South Crofty site (16).
It’s a common story across the Devon, Cornwall and rest of the UK. These mines did not shut due to exhaustion of the resource. The cost of recovery was too high versus the price of the ore. South Crofty’s previous owners, the Celeste Copper Corp reckoned there was >£1.5 billion in ore left in South Crofty. Cornish Metals has now listed on the AIM, and I’ve seen quite a nice profit from them (18). I think their recent rally has come because of new results from a separate site. South Crofty came packaged up with a lot of other rights, permits and sites, including the old United Downs near Gwennap. It had the richest copper reserves in the world in the 18th and 19th century, but shut down due to global competition and low prices (19). Wheal Jane, a mine in the area covered by United Downs, was run by Rio Tinto Zinc into the mid 90s (20). Cornish Metals have an agreement with Cornish Lithium (below) whereby Cornish Lithium can look for lithium in areas covered by Cornish Metals rights. Cornish Lithium were busy drilling for lithium in 2020 when they struck a potentially massive unknown copper/tin lode in the United Downs area (19). Since then Cornish Metals have been getting permits and test-drilling the site (21). These have come back positively, and I’m fairly bullish on this company (22, 23, 24).
Cornish Lithium
Lithium, so hot right now. The market loves it for it’s potential in batteries. This has been going on since 2017, with the potential for small cap growth (25,26). So when Cornish Lithium popped up on a crowdfunding site in 2019, I dipped my toe (27,28). There’s hard rock lithium scattered throughout Cornwall, and Cornish Lithium’s spin is that they have both access from a maiden hard rock mine and from brine in mine water from sites like South Crofty (27). There’s been further industry investment and crowdfunding rounds, so it will be interesting to see how it pans out (29,30). Cornish Lithium have a rival, British Lithium, who are also busy developing a hard rock mine in Cornwall to produce battery-grade lithium, backed by UKRI funding (31, 32). They’re not publicly listed, but I’ll be following their progress to see what happens, as there seems to be a lot of competition and interest in bringing lithium production to the UK – this WIRED article is excellent (33).
Gold
There’s a couple of UK gold resources being explored/ mined, and what better way of finding portfolio diversity. Sod the gold ETFs, buy the miner. I’m watching Galantas, who are developing a mine in Omagh, and Scotgold, who have the Cononish mine in Scotland (34, 35,36). I’ve also got half an eye on Alba Mineral Resources, who hold a few rights and are doing exploration in the old Clogau welsh gold sites (37). I’ve not invested in these yet, but dependent on what happens with the broader markets I may open positions, and develop myself a little mining portfolio. Would welcome comments and thoughts from readers.
October Finances
Yes, I’m very behind here. Baby’s are time consuming. Hoping to catch up over the Christmas period…
Checking the assets and liabilities:
These are taken, as always, from my Beast Budget spreadsheet. I saved a paltry 14% of my salary, as household bills on one salary have started to bite. This was almost all saved as cash or in my pension, as items for the baby meant I didn’t have any spare cash (even paying myself before) to invest. If you fancy a free share, sign up to Freetrade with this link (I also get one).
Budgets:
Groceries – Budget £200, spent £196.58, last month £396.02 – More on track this month, but still need to rein this in ahead of the decrease in household income
Entertainment – Budget £100, spent £113.55, last month £133.45 – Making the most of the few warm days with babysitters
Transport – Budget £250, spent £163.98, last month £384.92
Holiday – £150, spent £0, last month £0
Personal – £100/ £73.85/ £78.71
Loans/ Credit – £50/ £159/ £960
Misc – £50/ £69/ £145.83
Fees – £300 /£149.57/ £421.85
In the garden:
Winding down in the cold and wet, I harvested the last of my kale, pumpkins, squashes and spring onions. A few other bits plod on, but it’s mostly down to the greenhouse now, and my intention is to let everything run wild while occupied with other activities.
Inspired by an amazing post by The Accumulator from December 2020, Indeedably has challenged finance bloggers to pen their financial origin, and the course that led them to blogging about finance (mostly FIRE if we’re honest) (1, 2). You can find the other contributors at his latest venture, the excellent Sovereign Quest(2).
The mix of people’s experiences seems to be split into different camps – exemplified by The Accumulator and The Investor. Some bloggers ended up here because they’re wired to save, they always have, and it feels natural (e.g. Dr Fire, TI) (3,4). Some have experienced the full-fat lifestyle and found it wanting (e.g. FatBritAbroad, Saving Ninja) (5,6). Money is not the route to fulfillment. Others have learnt from personal or family experience, bumping against the limits of financial constraint and vowing never again (e.g. Weenie,Cashflow Cop) (7,8). Or a combination of the above.
My story is possibly a combination of the latter two, but I’ll let the reader decide. I suspect it is certainly different.
Personal motivators
I was brought up in an averagely wealthy family, in an expensive part of the UK. Neither of my parents went to university; one a teacher, the other a tradesperson. I have vague memories of the impacts of economic recessions in my childhood, but my parents never let it effect us. Money was spent when there was some, and the belt tightened when there wasn’t; e.g. holidays camping in Cornwall one year, then a villa in Tuscany the next. Both were enjoyable to me as a child, and I knew no different. My parents have lived fairly financially uneventful lives. They never had a desire to ‘keep up with the Joneses’, but we always had good quality stuff, usually second hand.
When a grandparent died while I was in my teens, my parents used the inheritance from the resultant house sale to pull me out of the very poor local comprehensive, and put me through private school. The cost of this was not hidden, and my parents framed it as an investment. I was not as fish-out-of-water as I could have been, for reasons soon explained. I progressed academically, and went off to study medicine.
Throughout my childhood I was taught the value of money. This went from 50p pocket money on sweets in the village shop, to paper rounds, to pub work in my later teens. My parents fell in that awkward bracket where you don’t receive a student bursary, and the student’s living costs are expected to be supplemented by the parents. Mine didn’t, so I worked to pay my way. I also partied hard (medic, obvs), so had to always keep a rough budget and worked in cash. Despite the budget, when I graduated I had around £2k in a student overdraft and £2k in credit card debt. I paid it off sharpish, and then wondered where to go next with my money. So far so normal…
Family motivators
My family is not wealthy. My extended family is not wealthy. My ancestors were eye-wateringly wealthy. Family crest, motto, estates… the works. My parents are the first in many generations in those family lines not to go to university. One of my grandparents (from the wealthiest ancestral line) used to talk about what they would get the servants for Christmas, and hunting over the estates. Two hundred years ago, on both my mother’s and my father’s sides, my family would have been in the Times Rich List of the day. One side through inherited very old money. The other through banking and investing during the industrial revolution.
It’s now all gone.
My parents’ cousins were the last ones with inherited wealth, the male heirs holding the last farms. Now sold to pay for their retirement.
Those parts of the family didn’t work. The family had never worked. Not in generations. The estates provided for the lavish lifestyle.
When death dues came knocking a few fields were sold off. Then the Caravaggio. When the bills for the 70 room manor got too high they downsized, buying a few farms, one for each offspring. My great-uncle sold off the last of the London estates in the 1960s to pay farming bills.
Multiply this down the generations and there’s nothing left to live off, and no work ethic to acquire more.
Our family get-togethers would involve reminiscing on faded glory. I was brought up on an odd diet of old money opinion; the nouveau riche were to be looked down upon, anyone who needed to flaunt wealth had no class, quality was everything. There was a reason we didn’t keep up with the Joneses. That was for the proletariat.
It cast long shadows on Joe Bloggs arriving at private school in daddy’s Porsche, then skiving the day off to smoke and shag behind the bikesheds. Earning loads of dosh, flashing it about, building a nest egg, multigenerational wealth plans, it all didn’t matter if your kids or grandkids frittered it away. Common sense and financial literacy mattered more than millions in the bank.
I grew up very conscious of all that had led to where we were. As I started earning I set goals to not drain from the family coffers, but to stand financially independent. The wealth of past generations may be gone, but I could acquire more.
And maybe, one day, I might buy back the family silver.
Fix the bits on the cars I’ve already bought parts for
Sell five things
Read a book thee evenings a week
Cut down on takeaway spend
Checking the assets and liabilities:
These are taken, as always, from my Beast Budget spreadsheet. A bit of ship steadying after the wobbles since the change of employer. My salary appears to have stabilised, and most of our home improvements are now done and paid for (or on a 0% credit card). I managed a 30% savings rate, with a 2.47% increase in my net worth. My previously smooth curve on my net worth graph has had a jagged section, but I’m back to all time highs. The usual cash regular savers were topped up, although my 3% regular saver with the Monmouthshire is due to end next month, and new money in the Freetrade S&S ISA went to increase previous holdings.
Goal passed: Fix the bits on the cars I’ve already bought parts for
Success, I actually got round to doing these things in time for the MOT. The old daily will continue to soldier on, as it flew through with only a couple of minor points, and I’ve worked out I’ve done 1,500 miles in the six months since the job change. I’m rewarding it by ordering yet more parts (which hopefully won’t sit in the garage for months). Next goal is to get the garage cleared for the project car to return to hibernation.
Goal failed: Sell five things
I’m giving up on this for the time being, as all I’m doing at the moment is monthly dump runs.
Goal passed: Read a book thee evenings a week
I’ve been reading Dan Jones’ The Plantagenets, which is a bit of a beast and not my usual fare; I don’t generally read non-fiction unless it’s for a purpose. It’s interesting stuff, and making the time in the evenings has been relaxing. I want to keep this up, so I’m going to roll this goal over.
Goal failed(ish): Cut down on takeaway spend
We got into a bad habit in October of ordering takeaway every time we saw friends. Prior to the event we would usually go out for food once a week with various people. With that off the table we’re using takeaway instead, and actually I should just make the food. In September we spent about £180 on takeaway(!), and this has came down a bit to £130 for October, but it’s still superfluous spending, and the further £80 we spent in November is too much.
Budgets:
Groceries – Budget £200, spent £218.11, last month £216.97
Entertainment – Budget £100, spent £74.50, last month £65
Transport – Budget £250, spent £470.33, last month £129.54 – MOT time!
Holiday – £150, spent £0, last month £17.63
Personal – £100/ £2108.46/ £280.50
Loans/ Credit – £50/ £98/ £43.70
Misc – £50/ £442.02/ £705.75 – The sooner these end the better
Fees – £300 /£131.98/ £629.75
In the garden:
Just ticking over now. Planning to dig over the raised beds and add compost over the Christmas break.
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
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.
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…
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.
The FIRE Shrink 