Quarterly Returns – Q1 2022

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.

Permanently chasing my tail on these, but it’s partly because I don’t have much interesting to share at the moment…

Q1 Returns:

  • Cash Accounts £17,600 (+£1,850)
  • Investments £12,700 (-£580)
  • Property £56,150 (+£1,100)
  • Cars £2000 (no changes)

My net worth has essentially tracked sideways, as money squirreled away in cash savings accounts gets offset by losses on the markets. The fact I can maintain my net worth at time when we’re running mortgage, nursery fees and all household bills on just my income is satisfying. I won’t say we’re lucky, hard work and budgeting have equal shares, but it was intentional that we could ‘manage’ in this sort of situation. Q2 will likely continue this vein, as MrsShrink doesn’t go back to work until Q3, and the baby is gradually upping her hours at nursery.

Investments:

Core/ Satellite Passive/ Active Split

My 2021 Financial Year ISA is in Vanguard, however I again didn’t pay in anything this quarter.  Activity in my Freetrade account was just topping up an existing holding in Unilever. (fancy a free share? Sign up to Freetrade using this link, and we both get one). I’ve got round to adding my crowdfunding account to my investment portfolio spreadsheet. This, combined with some good returns on my active stock selections and a fall on the trackers, means I’m now overweight on my active UK satellite portfolio. Any spare cash I do have hanging around once I’ve topped off emergency funds is therefore likely to go into dull ole trackers.

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

I will be amazed if I achieve this to be honest. Q1 saw a savings rate of 25%, all in cash. Given what my financial year is looking at I’m going to aim to keep it at that, and hope that a big return to saving can be achieved towards the end of the year.

  • Save £8k towards a new car – 40% prediction

This steadily ticks upward, with my cash accounts at their healthiest level ever. Should be ready to pull the trigger soon.

  • Finish the house renovations – 75% prediction

Some good progress made here, doing the sort of jobs that add little value but make a big difference to the state of the property. I painted a load of the stone and woodwork on the outside of the house, so it’s got a bit of kerb appeal, and we’ve started on re-rendering some other sections, along with painting the last few rooms. A friend recently commented that she would be willing to buy the house from us when we move, which would save a lot of hassle and fees, so we’ll see how that pans out.

Happy, wait is this supposed to be summer?

The Shrink

Q4 and 2021 Review

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.

It has taken me many weeks to properly unpack 2021. A year in which a lot happened, and also a lot of nothing. I remain in the same job, earning slightly more as I increase in seniority, watching the NHS continue to fall to a death by a thousand cuts. We live in the same house, with only minor repainting and renovations undertaken this year. We had no proper holidays away, and made no major (four figure) purchases. We started 2021 with the roll-out of a vaccine for COVID and we end with the Omicron variant seemingly left to run it’s milder course through the population.

Our year was punctuated by the arrival of our baby. We have gone from a DINK household to a one income and kid (so an OIK?) household. We are a happy family, but by god nothing prepares you for it. I thought I was prepared – I’ve worked abysmal rotas in my time, I’m a friend to sleep deprivation, how hard can it be? Seven 13 hour night shifts in a row at 60% staffing… done it. Living a life reminiscent of the scenes from ‘This is Going to Hurt’. Compared to that?

It was a totally different beast. The snatched sleep, the emotionally draining, energy sapping, unrelating nature of it, the quiet resignation to endurance. Yet, somehow, the positives of a tiny, happy, giggling face outweighs it. Evolution’s a hell of a drug.

In my 2020 review I set some goals for 2021, alongside a prediction of whether I could achieve them. These were:

  • Finalise emergency fund structure and pay off credit card – 80%Success
  • Save 35% of my income – 40%Failure
  • Make goalless time every month for hobbies – 60%Success

I made the final payment to my credit card on the 23rd of December, meaning over the course of the year I cleared a balance of £3,680. I also sorted out my emergency fund and the cascading system I use for immediate/<24 hours/ 24-72 hour financial requirements. I’ve a couple of legacy accounts yet to close, but we’re otherwise now at fighting weight. I missed my 35% savings goal by 0.86%, managing to somehow save 34% of my salary over the year (that’s not including the credit card). This will roll over to next year. I did organise my time to be able to spend an afternoon a fortnight on my hobbies. Past tense here, as infants are sleep and time thieves, and some hobbies have had to be sacrificed.

In an effort to test my forecasting abilities, I also began running a new SSC/ Astral Codex Ten-esque prediction experiment with conviction, where incorrect predictions will be struck through:

  1. UK vaccination will be completed before the July – 75% – A difficult one to assess, but based vaccination delivery rates for first jabs plateaued after July, and for second jabs after September. I did not account for vaccine hesitancy or government logistics nonsense. Stats taken from wiki (1).
  2. Greater than 200,000 UK COVID deaths – 30% – Happy to see that the cumulative death figure at the end of December was 148,624. Still staggering.
  3. UK has worst death rate as percentage of the population in the world – 60% – This was very flippant and pessimistic, as various countries in Eastern Europe and South America have been absolutely battered.
  4. Under-reporting in developing nations hides significant pandemic effects – 90% – I’m going to call this as correct, because from what I’ve read and heard it is, but the actual chances of proving it are very slim. An error of prediction writing.
  5. The UK tier system is still in use in December 2021 – 60% – I underestimated just how driven by political and economic pressure BoJo would be (2). I also assumed that he was aiming for clear messaging. I was wrong.
  6. The UK experiences another ‘lockdown’ in winter 2021/2 – 75% – This was mostly wrong. England’s Plan B rules were definitely not a lockdown, and while Wales’ and Scotland’s rules were stricter, I don’t think they can be called a lockdown.
  7. COVID-19 mutates into a form immune to the current vaccine – 40% – My estimate was <50%, therefore I thought this unlikely. It hasn’t and I hope it doesn’t.
  8. I am personally working in office >80% of the time again at some point in 2021 – 10% – Also never happened.
  9. Someone I am close to will die of COVID-19 – 25% – Didn’t happen, though that is dependent on the close clause.
  10. Endemic COVID-19 circulates in the population with lockdown easing and shops re-opening – 80% – I think this is pretty much where we’re at now. Government continues to publish figures, but we’re not far off back to ‘normal’, and I can see people using vaccine passports, testing and masks for years to come.
  11. … and self-isolation becomes normalised – 80% – Yes? Again error of writing predictions I think. I know the government has shortened the self-isolation rules, but I don’t know anyone not treating it as standard practice.
  12. … and higher death rates tolerated among the over 50s with consistent effect on life expectancy by end 2021 – 75% – I think we’re heading this way, but too early to call. Certainly life expectancy in the UK is falling slightly (3), but I’ve not read anything suggesting or attributing this to COVID. It seems more linked to poverty.
  13. Boris resigns – 60% – Wishful thinking, he’s a stubborn old gibbon.
  14. Keir Starmer above BoJo in the opinion polls – 80% – As per Britain Elect’s weight average tracker, BoJo had a 32.9% voting choice compared to Starmer’s 32.1% on the 3rd of Jan 2022 (4). They actually crossed over at the end of Jan 2022, but that doesn’t count. Again evidence I am not in tune with Joe Public.
  15. Inflation above 2% – 75% – CPI at a stunning 5+% (5).
  16. … due to Brexit-resultant shipping and food cost rises – 60% – Eh, I’m going to call this correct. Food, fuel, household bills and tech have all pushed it up, but you look at the reported cost of living crisis and it seems that way.
  17. There are resultant food shortages – 10% – So there are and have been some food shortages, but not to the point of seriously empty shelves, so I think this is correct.
  18. Homeless rate rises – 95% – Actually down 4% from 2020 (data for September to September) (6).
  19. Foodbank usage rises – 95% – Interestingly, though up from 2019, looking at the Trussell Trust figures for Apr-Sept it appears to be down from 2020 (7).
  20. House prices continue to increase – 75% – Yes (8).
  21. FTSE100 above 7,000 – 60% – Yes…
  22. FTSE100 remains above 6,500 – 80% – Yes…
  23. FTSE100 hits 7,500 – 20% – Yes… Closing at 7,358 on the 31st of December 2021. Ticked over to 7,500 the next day though. More positive than I expected.
  24. FTSE250 hits 22,000 – 60% – Yes, actually closing at 23,480 at the end of the year. Again more positive than I expected.
  25. S&P500 hits 4,000 – 75% – Yes, storming to 4,766.
  26. S&P500 hits 2,500 – 30% – Yes
  27. £ hits $1.40 – 50% – Nope. $1.35. I think the US did better than I expected.
  28. We have £100k in equity – 95% – We do.
  29. We start to overpay our mortgage – 30% – We didn’t. Baby swallowed spare cash (not literally).
  30. I have £15k invested – 30% – I do not.
  31. I am saving £1k/month – 30% – Quite unbelievably to me, my mean average monthly savings over the year were £1.3k.
  32. We have [redacted] – 90% – We did.
  33. MrsShrink [redacted] – 75% – She is.
  34. We replace one of our cars – 50% – Went to look at a few. Still looking.
  35. The project car gets repainted – 25% – I did not get time.
  36. The project car gets sold – 10% – I wavered, and then put it on axle stands.
  37. We have a holiday – 80% – I was pretty shocked when I sat down and worked out we hadn’t had a holiday away at all in 2021. Staycations yes, but nowhere actually away. A few coming in 2022.
  38. Outside of the UK – 20% – We didn’t.
  39. I learn another language – 30% – I didn’t.
  40. I continue to exercise at least three times/ week for the whole year – 75% – I did.
  41. I can do a pull-up again – 40% – I can’t.
  42. I can do a hand-stand press up again – 20% – I can’t.
  43. I return to [redacted] – 10% – I didn’t.
  44. I complete [redacted] – 25% – I didn’t.
  45. My ongoing work has not conformed to anticipated plans – 90% – It did not.
  46. I publish [redacted] – 90% – I did.
  47. I publish [redacted] – 25% – I did not, although it is under review.
  48. I publish on average four posts/ month – 40% – I did not.
  49. Most page views ever this year – 30% – My page views halved with my decreased posting frequency. I’m ok with that.
  50. This blog gets abandoned – 10% – Still here.

Calculations

In my predictions 50% is equivalent to sitting on the fence. Greater than 50% is a positive prediction, less than 50% is a prediction of negative likelihood; i.e. I do (former) or don’t (latter) think the predicted thing will happen. The variance from 50% is then summed, with correct predictions positive, incorrect predictions negative, before dividing by the total to produce a mean. The result was +0.141, suggesting that within a range of -0.5 to +0.5, my predictions are slightly positively predictive. I have predictions for 2022 in a little black book, and I’ll post them here in the weeks to come.

Goals

In terms of goals for 2022:

  • Save 35% of my income – 40% – Rolling over from 2021.
  • Save £8k towards a new car – 40% – My current car is… fine… but it is increasingly decrepit, and we could do with something safer and more comfortable for long journeys as a family. Maybe this counts as lifestyle inflation. Car prices are absolutely nuts at the moment, as you may have heard, with things I was looking at in 2019 for £3k now more like £5k. What I’m after sits around the £7-9k mark, so I’m aiming to save across the year so that I don’t need credit to purchase. At the moment, on one salary and with nursery fees looming this seems impossible, but it’s about what I put away across regular cash savers and paying off credit cards last year, so we will see.
  • Finish the house renovations – 75% – We have put a lot of time and effort into making our current house the way we want it. We have one room left to redo, plus some external maintenance and beautifying. Once this is done we can sit back a little, relax, and then inevitably sell and move as itchy feet and my Rightmove habit kick in.

Q4 Returns:

  • Cash Accounts £15,750 (+£2,230)
  • Investments £13,280 11,920 (+£1,360)
  • Property £58,960 52,900 (+£6,060)
  • Cars £2000 (no changes)

Bit of a bumper quarter. I was paid a fairly decent lump for some locum work, most of which went into cash savings accounts to prepare for potential future tax bills – hence the big bump there. Continued to add a bit to my regular savings account as well. On the investment front the growth this quarter came from the markets. As our household income has fallen my salary has been paying more of the bills, and I prioritised reducing debt over further ISA investments. The property jump comes from principal repayment (smaller proportion) and a revaluation of our property worth. A house on our street sold off the market at £290k in the summer, and another of a similar finish to ours recently sold (in less than a week) for £300k, so we have estimated that as it’s worth.

Investments:

Core/ Satellite Passive/ Active Split

My 2021 ISA is in Vanguard, however I didn’t pay in anything this quarter. All activity in my Freetrade 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). So what did I actually do?

Ratio of satellite active holdings to core passive trackers

In mid-October, while still trying to decide what to do proper, I bought Lucid (NASDAQ:LCID) as a conviction play after seeing a series of excellent reviews of their upcoming car. I bought at ~$25/share, and held as it jumped over the following weeks. After it crossed the $35/share mark I sold out, only to then watch it hit $55/share over the following month. I’m happy I took my gains, as it’s now back down to the $22 mark. Then when GME hit about what I paid for it, I sold out of that too.

I used that released cash to purchase Cornish Metals at 14p/share. Cornish Metals holds the mining rights to South Crofty, a very old, very big, tin, zinc, tungsten and copper mine that closed up in 1998 following the collapse of the global tin price (9). Since it started up in the 16th century it has absorbed a vast number of surrounding mines, to extend 2 and a half miles and 900m down. After closure the site was considered for redevelopment (as the surface mine workings sit in the middle of the town of Pool, between Camborne and Redruth), before going through a series of owners. I started following it in 2011 when Celeste Copper Corp assessed there to be £1.5 billion of tin left in the ground, before UNESCO got involved and it went into administration in 2013. Strongbow Exploration bought it out of administration, and since then have gradually been working through permits to restart the mine, along with changing their name to Cornish Metals (10). They’ve done further exploration which has extended the mineral resource estimate at South Crofty. The South Crofty rights also came bundled with a load of other mineral rights across Cornwall, including United Downs, last mined by Rio Tinto Zinc in 1991 (11). This whole area has been historically mined, and Cornish Metals went looking between some of the old mines. In 2020 they found virgin high-grade copper-tin, which they’re now applying for further permits to assess. As a final kicker, Cornish Metals have a tie-in with Cornish Lithium, who I have some shares in through crowdfunding. The share price of Cornish Metals rose in Nov/Dec, and has been bouncing in a range between 20p and 28p/share since. I’m planning to hold them long, as I think they have the potential for decent profitability based on future tin price estimates. To be nice and boring I then balanced my active purchase with some more Vanguard FTSE All World, just in time for the 2022 correction.

Happy winter everyone,

The Shrink

References:

  1. https://en.wikipedia.org/wiki/Timeline_of_the_COVID-19_pandemic_in_the_United_Kingdom_(July%E2%80%93December_2021)
  2. https://www.instituteforgovernment.org.uk/charts/uk-government-coronavirus-lockdowns
  3. https://www.onhttps://www.britainelects.com/s.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/lifeexpectancies/bulletins/nationallifetablesunitedkingdom/2018to2020
  4. https://www.britainelects.com/
  5. https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/december2021
  6. https://www.gov.uk/government/statistics/statutory-homelessness-in-england-july-to-september-2021
  7. https://www.trusselltrust.org/news-and-blog/latest-stats/mid-year-stats/
  8. https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/housepriceindex/november
  9. https://en.wikipedia.org/wiki/South_Crofty
  10. https://www.cornishmetals.com/projects/uk/south-crofty/
  11. https://www.cornishmetals.com/projects/uk/united-downs/

October 2021 – Mining

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).

There’s a theme here… (Image from http://www.lyngham.co.uk/cornishlads/lads2.html)

Strongbow exploration/ Cornish Metals

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.

References:

  1. https://en.wikipedia.org/wiki/Sirius_Minerals
  2. https://siriusminerals.com/investors/
  3. https://www.ft.com/content/c35b094e-7d89-3609-973b-8af441c4f01a
  4. https://www.ft.com/content/e99f113e-b1b3-11e8-99ca-68cf89602132
  5. https://www.proactiveinvestors.co.uk/companies/news/902964/losers-and-winners-of-the-sirius-minerals-saga-902964.html
  6. https://www.thisismoney.co.uk/money/markets/article-8583999/Sirius-Minerals-boss-pocketed-1-3m-investors-lost-fortune.html
  7. https://www.bbc.co.uk/news/uk-england-york-north-yorkshire-51736395
  8. https://www.thisismoney.co.uk/money/markets/article-7472389/Sirius-Minerals-shares-crash-fails-secure-funding-mine.html
  9. https://en.wikipedia.org/wiki/Wolf_Minerals
  10. https://miningglobal.com/smart-mining/wolf-minerals-and-drakelands-tungsten-mine
  11. https://www.proactiveinvestors.co.uk/companies/news/206786/wolf-minerals-ceases-trading-in-london-after-uk-subsidiary-enters-voluntary-administration-206786.html
  12. https://www.business-live.co.uk/economic-development/tungsten-mine-owner-explores-options-20565271
  13. https://www.tungstenwest.com/overview-and-strategy
  14. https://www.thetimes.co.uk/article/king-of-mining-ian-hannam-plots-devon-tungsten-float-lbppjmj0f
  15. https://im-mining.com/2021/10/12/tungsten-west-set-to-bring-hemerdon-tungsten-tin-mine-back-into-production/
  16. https://www.strongbowexploration.com/projects/uk/south-crofty/
  17. https://en.wikipedia.org/wiki/South_Crofty
  18. https://miningglobal.com/automation-and-ai/strongbow-exploration-list-london-stock-exchange
  19. https://www.cornishmetals.com/projects/uk/united-downs/
  20. https://en.wikipedia.org/wiki/Wheal_Jane
  21. https://www.mining.com/cornish-metals-granted-key-permit-for-united-downs/
  22. https://www.insidermedia.com/news/south-west/cornish-metals-makes-progress-on-sw-venture
  23. https://www.business-live.co.uk/economic-development/high-grade-tin-discovered-cornish-22054497
  24. https://www.proactiveinvestors.co.uk/companies/news/968381/cornish-metals-reports-high-grade-copper-from-united-downs-copper-tin-project-968381.html
  25. https://www.proactiveinvestors.co.uk/companies/news/173004/small-cap-movers-lithium-miners-start-to-shine-173004.html
  26. https://www.businessgreen.com/news-analysis/3025238/cornish-batteries-scientists-embark-on-satellite-search-for-lithium-below-cornwall
  27. https://cornishlithium.com/
  28. https://www.telegraph.co.uk/business/2019/07/12/cornish-lithium-miner-goes-digging-crowdfunding/amp/?__twitter_impression=true
  29. https://www.mining-technology.com/dashboards/deals-dashboards/cornish-lithium-funding-techmet/
  30. https://www.crowdcube.com/companies/cornish-lithium-ltd/pitches/qYERNq
  31. https://www.businessgreen.com/news/4019146/boost-british-lithium-cornish-mining-firm-wins-gbp500-backing
  32. https://britishlithium.co.uk/
  33. https://www.wired.co.uk/article/cornwall-lithium
  34. https://www.proactiveinvestors.co.uk/companies/news/224283/galantas-gold-advancing-omagh-mine-after-placing-sees-high-demand-224283.html
  35. https://www.scotgoldresources.com/
  36. https://www.theguardian.com/uk-news/2020/jan/02/gold-highlands-mine-scottish-jewellery
  37. https://www.albamineralresources.com/

The Fire Blog Cemetery (August 2021 Edition)

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

On life support (>6 months since last post)

  • Big Blue Money – Formerly Big Blue Money, now renamed to Coffee Money, posting intermittently.
  • Rockstar Finance – Was back under new management, but with a very barren site. Doesn’t seem to have added any posts for some time.
  • Left FI – Blogged from May to August 2019, with a bit of a hiatus before a further flurry back in May 2020, then another in February 2021.
  • 3652 Days – Fairly infrequently updated, but going since December 2015, so often dips into the three-six month warning zone. Last post Feb 2nd 2021.
  • Cashflow Cop – A fairly big name, who started blogging on the 5th of April 2019. Last post Feb 20th 2021. I’m aware they’re still around the FIRE bloggosphere.
  • FatFire – First post was on the 17th of December 2020, with the last 27th Jan 2021, so about six weeks total.
  • Money for the Modern Girl – First post in last was on the 22nd of February 2018, pretty active up until the 18th January 2021.
  • Middle Class Hustlers – Holy smokes! Blogged for about a month in 2018/9, then back with three posts in two days in January 2021.
  • My Money Tree – Only a few posts here, between December 2020 and the 1st of February 2021.
  • The FI Fox – A regular contributor from around the time I started (August 30th 2018), their last blog was January 30th 2021.
  • Zero To Freedom – Georgi started on the 13th of Jan 2019, last post 6th September 2020.

On the slab (dormant for >1 year)

  • Finance Your Fire – Marc participated in lots of the FIRE blogging scenes Thought Experiments etc, but last posted in August 2019.
  • Fire in London – First post in Nov 2016, last in December 2018.
  • 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.
  • The Finance Zombie – Last post in February 2019, infrequent prior but had been going since the 25th of September 2014.
  • Bangkok 2 Blighty – Another big name, they started posting in April 2018, last post in October 2019.
  • Your Freedom Pot – Started blogging in Feb 2018, with monthly updates to July 2018, then nada.
  • Girl vs Money – Another short blog, with a few personal finance posts from July to September 2018.
  • Fire Fans – Posted seven times, five in Dec 2019, one in Jan 2020, and a final one in Feb 2020.
  • Financial Anvil – Also started in Dec 2019, lasted one month longer, March 2020.
  • Money By Choice – First post on 17th of April 2020, with last post 10th July 2020, a four month survival.
  • The English Investor – Last post in July 2020 titled “The English Investor is back”.
  • Psyfitec – A potential competitor, blogging on psychology and finance. They started in Feb 2009, and have had a few short hiatuses along the way, so I suspect their March 2020 post won’t be the last.
  • The Saving Journey – Starting in October 2017, with frequent monthly updates, their blogging peters out up to May 2020.
  • Want Less – Started blogging way back in June 2015, but blogging has slowed in the last two years, with the last post in July 2020.
  • The Canny Contractor – Started posting about their dividend growth portfolio in Q3 2016, with their most recent post in April 2020 covering Q4 2019. Now shoes security warnings.
  • Baldrick’s Early Retirement UK – First post 5th March 2020, last post 23rd April 2020.
  • Frugal Student – Posting from August 2016 to March 2020, mainly about investing.
  • Prudent Programmer – Pages comes up with safety warnings, but is accessible. First post September 2019, last post August 2020.

Dead and buried

  • Mr Squirrel – Another titan, sorely missed
  • The Fire Engine – About a month of posting
  • 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.
  • 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. Now redirects to a completely unassociated blog.
  • 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.
  • Mess and Marigolds – Last posted on October the 15th 2019, their blog (mainly about cleaning with a bit of saving) started in September 2016. Domain now dead.
  • Ready Steady Retire – Posted for about two months, from November 7th 2019 to December 21st 2019. Another dead domain.
  • FIDdom – Bec started posting way back in November 2017, with her last post on the 17th of November 2019. 18 months to two years seems to be about average for survival time.
  • Fretful Finance – Blogged from December 2nd 2018, with the most recent update on January 25th 2020. Also now deceased.
  • Formerly Skint – Weekly money diaries started in January 2018 and dried up in January 2019. Now ‘parked’.
  • Make Save Invest Money – Leon was posting from December 2017 to January 2019, and then appears to run out of steam. Now another dead link.
  • Money Doesn’t Talk – Wasn’t blogging long, from 7th November 2019 to 13th November 2019.
  • Liberate Life – Blogging for about a year, now dropped off my radar and with a dead site. Last post September 2019
  • Adotium – First posted on October 19th 2019, now showing as a dead domain. The waybackmachine reckons they were posting until the 30th December 2020.
  • Finumus – A great blog which began in December 2019. As of April 2021 the author now writes for Monevator.
  • Plan on Fire – Started posting 15th June 2020, last post 28th July 2020. Domain now dead.
  • Financing Freedom – First post 4th April 2020, last post 25th July 2020. Site now comes up for sale from Go Daddy.
  • The All Round Investor – Ran from May 2020 to September 2020. Now barren.

Crossed the finishing line:

These bloggers finished their FIRE journey or completed goals, and signed off with distinction:

  • Young FI Guy – One of my favourites, a titan, gone but not forgotten
  • Fire the 9 to 5 – A fairly big poster, first post February 28th 2018. They had retired early, and posted a sign off blog entry in November 2020. Hope they’re enjoying their time.
  • Pursue Fire – Dan started in July 2018, last post in January 2020 winding up the 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!
  • Early Retirement Guy – Now redirects to MatchedBettingGuy, where he continues to blog.
  • Little Miss Fire – LMF changed sites in 2019 and blogging was patchy after the swap. First post sometime in 2018 I think. As of October to December 2020 is back posting regularly.
  • Deliberate Living UK – First post 2017, then a big hiatus between 2019 and the end of February this year.

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, along with friend of the site Indeedably via the magnificent Sovereign Quest, who make this post so much easier by curating blog posts.

Quarterly Returns – Q2 2021

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.

A bit late with this update, as during the past quarter we’ve had a new arrival in the FireShrink household and we’re pretty tight for time these days. I write this while the rest of the household nap, sterilisers and washing machines whirr, and test match special plays softly in the background. We had cash-flowed the possible expenses over the next year and we’ve received a huge number of kind gifts from friends and family, but nothing had quite prepared us for events of the last couple of months. Exciting times that mean investment plans may get put on hold, and plans changed.

Q2 Returns:

  • Cash Accounts £13,860 (+£1,760)
  • Investments £11,600 (+£1,950)
  • Property £52,100 (+£3,100)
  • Cars £2000 (no changes)

Continued steady growth, well on track for my 2021 targets with an average 40% savings rate. I’ve been really targeting reducing my credit card debt amongst the routine investment, paying off between £200-500/month, with a plan to clear it in the next few months – I have a few invoices for locum work which will cover this. I’ve continued to put away £250 in cash/month, building the emergency fund further in the Principality Thank You Saver, which is a 1.4% regular saving offering for NHS workers in South Wales (1).

Investments:

Deployed cash ratio in investment accounts
Active/ Passive investment split

Core/ Satellite Passive/ Active Split

I’m not paying in to Freetrade for this years ISA, so all activity in that account has been churn on the active side (fancy a free share? Sign up to Freetrade using this link, and we both get one). I sold out of GME with a return on investment of ~160%. Those funds went through a succession of memes stocks (I was browsing WSB a lot at the time), with a slight loss on NEE (-6.5%) and gain on INO (+38%). It’s now in Coinbase (COIN), bought at £164/share (currently +14%), and UWMC, bought at £6.87/share (currently -20%). My lessons from this quarter are in the madness and profit of crowds, and that I really do not have any particular skill in the markets.

For the 2021 ISA I have returned to Vanguard, adding £400/month to my old friends their Dev World ex-UK and Emerging Markets accumulation funds. I need to look further at how I’m calculating my global allocation split, as I think my current system is over-weighting me to emerging markets even with my aggressive tilt. I’ve also been persuaded by Monevator’s recent series on emerging market bonds (2), however the most recent article points out now might not be the best time to open that investment avenue (3).

While I’m continuing to invest and act passively I feel generally concerned about the state of the market. US and UK housing markets seem peaky, with marked rises in house prices in the UK which don’t seem entirely sustainable. I expect them to flatline rather than fall, which isn’t really an issue for me. Equities markets also seem frothy – those all time high P/E ratios haven’t gone away. The NASDAQ and S&P500 have been on an absolute tear since the lows of March 2020. How long can this remain? If/when we see a fall, I am concerned about what ammo central banks and governments have in their locker, given they’re yet to unwind 2020s financial stimulus. Bonds remain at all time lows, with crappy returns. What are long term options?

A gamble play is crypto, so I have bought some Ethereum. My logic is that gold and silver are long-term stores of value, but have been on bull runs for years as bearish investors load up. I am not convinced that gold or silver would negatively correlate in the face of a sustained combined equity/bond recession, and I wonder if crypto might. I don’t think cryptocurrencies are going away. I’ve been following Bitcoin since 2010, but never had deployable cash or a use case for it. Ethereum seems to be a much more functional coin, and I feel we have crossed the threshold where it is only likely to get more widely used. It’s therefore partly a 20-year play on growth, and partly a hedge against a BIG crash. It’s beer money, and will test the correlation theory in event of future recessions.

Happy summer everyone,

The Shrink

References:

  1. https://www.principality.co.uk/savings-accounts/everyday-savings-accounts/thank-you-online-saver
  2. https://monevator.com/emerging-market-bonds/
  3. https://monevator.com/bond-credit-risk-valuation-rule-of-thumb/

May 2021 – r/wallstreetbets, Gamestop and millennial investors

I am feeling very torn of late. MrsShrink calls me an eternal optimist, and worries I get ripped off by hustlers looking for their next mark. I must admit I am hopeful about life (and finances), but that hope hides a deep-seated cynical miserable bastard. Said miserable bastard is stirring, moved by the sight of the markets and inflation. But let’s start at the beginning.

GME

I started following r/wallstreetbets in 2019, mostly for the memes if we’re honest. There has always been some decent analysis (DD in the parlance) on there, although since the GME prompted flood of interest in January it’s mostly drown out by noise. I’ve never really invested based on r/WSB info, though I have read along with interest. This applied to when /u/DeepFuckingValue posted some analysis in mid-2020 about the long term view on GameStop (GME).

A lot of the media take on the subsequent GME squeeze in January and March has been of a collection of millennial neckbeards sitting in darkened basements “sticking it to the man” and organising themselves into groups to game the market. Troll armies swarming the walls of Minas Walls Street.

Have you tried to organise people online? It makes herding cats look easy.

GME took off because enough people read the analyses on r/WSB relating to institutionally oversold short float to be able to put pressure on the price. There might be a lot of apes on r/WSB, but there’s also enough smart private investors with decent portfolio weight to lend power to this. This lead to ‘gamma squeeze’ and further price movement. Forbes actually did a great analysis of this (1, 2). As the price began to move it added to the narrative of the little guy making the institutions pay, leading to narratives like this (3). It’s worth a read for the emotive angle. The actual owners attempting a restructuring of GME towards a new sustainable business aren’t about to knock it (4). As a generation millennials spent formative years around the time of the 2008 financial crisis, and to many, the institutional banks just carried right on with no repercussions. This was not helped by institutional weight and alleged attempts at market manipulation (e.g. pressure on Robinhood to stop retail purchases of GME) which ultimately led to that weird congress hearing.

WSB nonsense (5)

Millennial Investors

The footsoldiers in the media-spun frontline of this war are my generation, millennials, investing via the free-to-use apps like Freetrade (plug below), Robinhood, Trading212 etc. This appears to have garnered disdain from some corners, the suggestion that investing is something better done late in life with the addition of wisdom and grey hair, or a string of letters after your name. My grey hair argues otherwise. Previous generations could get a simple savings account that offered >3% annually if they wanted to save for a big purchase and beat inflation. Those products no longer exists, so thousands of young people saving up for their first home are looking for places to put their money. When NS&I, the last bastion of savings rates >1%/inflation, pulled the plug last year savers removed billions (6). Where do you think that money went?

The removal of friction and democratization of stocks and shares opened the floodgates (7, 8). We’re all on board with equities beating inflation in the long run averages (9). Passive trackers make it easy. If you want to dabble in the casino based on your hopes for growth, companies you love might make you millions (10, 11). Where does accurate price discovery sit in this?

The roaring twenties

The COVID-19 related recession/correction in the stock market of Feb/March last year taught us a few things. The market fell by a eye-watering sum, but had reverted back to it’s previous level in <6 months. Turns out borrowing and injecting funds at infinite limits into the market will do this sort of thing. The Spanish Flu epidemic of 1919 knocked back stock markets briefly, before they surged upwards into the roaring twenties (12, 13). So maybe we’re seeing the same, a fall, an adjustment to new normal, and the acceleration of changes that were likely to happen anyway but have now been precipitated by force; home-working, online project management, a reduction in the high-street mainstream business economy and move to online sales, a reduction in commuting and the move of wealth from London to the provinces.

We also learnt that bonds aren’t a great hedge for stocks anymore. We’ve seen bond returns go negative, and central rates hover above the 0% mark. This has mapped to nice cheap mortgages, but bugger all return on savings or bonds. As people fled the market in Feb-March 2020 it put more pressure on returns. Many FIRE followers work on the 4% rule; long run averages suggest withdrawing 4% from your portfolio annually will allow growth and prevent depletion. Safe options for the 4% return become more challenging in a 0.5% bond environment, meaning you push to stocks and shares (14). Increased risk. At the same time stocks and bonds are becoming positively correlated; when stocks fall bonds fall, when stocks rise bonds rise (15). Timing the market and pre-empting a crash, then watching your bond holdings rise in value no longer works. When the market goes down, everything goes down. This is probably ok, it just makes your asset allocation decisions harder (16).

Play the game

So let’s play this thought experiment out. Passive tracker options have grown in popularity, and cheap frictionless methods to buy them have proliferated. Passive tracker growth means more big funds buying the same stuff with no thought to price discovery (Michael Bury’s new bubble prediction (17)), and while active funds are cutting prices many are also buying similar portfolios to the trackers in an effort to be the least worst. Meanwhile ‘meme stonks’ and general growth focus has pushed PE ratios to silly levels, and weird investment vehicles like SPACs have emerged (7, 18). See the image of the S&P 500 P/E ratio from the fantastic Banker on FIRE (18).

S&P 500 PE Ratio
S&P Historical P/E Ratio, shamelessly stolen from bankeronfire.com (18)

So is the efficient market still efficient? Assuming it somehow is, we’re still all trying to beat inflation, but as Banker on FIRE points out, there’s a lot of reasons why the outlook of a 10% annualised market return for the future isn’t rosy (18). But what other option do you have? Bonds, with yields at 1% and correlated to the market anyway. Property and BTL seems to be one option, but the market there looks frothy. REITs, when the high street is shut and companies are moving to slash overheads by a working-from-home and hotdesk hybrid?

There’s inflationary pressures too. The US continues to pump money and there appear to be blips. In China there’s the combo of a rampant sub-prime lending shadow lurking, and pressure on the increasingly weather and middle-class populace to knuckle down and shut up, else you end up like Jack Ma (19). I think the UK is particularly poorly positioned for future inflation. Anyone watching the housing market in the UK can voice for a spike in prices. There are also issues with import/ export costs due to (pick one) Brexit, COVID, Suez, and actually finding workers since we cut off the cheap European labour supply. But as Monevator says, someone is always crying “inflation, inflation” (9).

How do you plan for the uncertainty? You could do an ermine, VWRL and bags of gold (20). Or what the mega-rich are doing; buy shitloads of farmland (21, 22, 23). Personally, I’m going to keep doing what I’ve been doing, buy passive ex-UK equities. And maybe dabble in a bit of GME and BTC on the side. Because as Keynes said “the market can remain irrational longer than you can remain solvent”.

May’s Finances

Checking the assets and liabilities:

These are taken, as always, from my Beast Budget spreadsheet. I saved around 49% (42% not including pension) of my salary, a return to form. New invested money has gone into a new cryptocurrency holding.

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

Budgets:

  • Groceries – Budget £200, spent £200.77, last month £243.91 – Better
  • Entertainment – Budget £100, spent £99.95, last month £100
  • Transport – Budget £250, spent £177.91, last month £233.97
  • Holiday – £150, spent £0, last month £0
  • Personal – £100/ £143.68/ £246.48
  • Loans/ Credit – £50/ £60/ £250
  • Misc – £50/ £52.50/ £191.14
  • Fees – £300 /£33.27/ £476.77

In the garden:

I have to agree with Monty Don off Gardener’s World, our garden is about two weeks behind last year. Having said that, potatoes are well up and early peas are cropping. Getting huge amounts of salad in the form of various lettuce leaves, sorrel, radishes, spring onions and the tail end of land cress. Courgettes, squashes and pumpkins are almost ready to plant out, tomatoes are getting bigger and the french beans have started climbing their poles. Grass hasn’t quite recovered from last years building work, so will need some more re-sowing and watering.

Happy June everyone!

The Shrink

N.B. After all that doom and gloom, here’s a list of a load of ways in which we’re making the world a better place (24).

References:

  1. https://www.forbes.com/sites/georgecalhoun/2021/03/05/gamestopgamestonk-has-nothing-to-do-with-the-madness-of-crowds/?sh=4e05e55b25d0
  2. https://www.forbes.com/sites/georgecalhoun/2021/03/10/gamestop-the-second-surgeanatomy-of-a-gamma-swarm/?sh=30472fd64225
  3. https://www.reddit.com/r/wallstreetbets/comments/l6omry/an_open_letter_to_melvin_capital_cnbc_boomers_and/
  4. https://www.theguardian.com/business/2021/jan/27/gamestop-three-largest-shareholders-earn-over-2bn-amid-stock-surge
  5. https://www.reddit.com/r/wallstreetbets/comments/l8rf4k/times_square_right_now/
  6. https://www.thisismoney.co.uk/money/saving/article-9111337/Savers-withdrew-staggering-6-2bn-NS-accounts-November.html
  7. https://monevator.com/the-sci-fi-stock-market/
  8. https://fortune.com/2021/06/02/changing-stock-market-meme-stocks-day-trading-reddit-crypto-investing-robinhood-btc-tsla-gme-eth-amc-nfts/
  9. https://monevator.com/beating-inflation/
  10. https://www.bbc.co.uk/news/business-55391571
  11. https://www.theguardian.com/business/nils-pratley-on-finance/2021/jan/19/dr-martens-flotation-may-create-around-50-instant-multi-millionaires
  12. https://www.wsj.com/articles/the-stock-market-barely-faltered-in-the-1918-20-pandemic-is-history-repeating-itself-11599480001
  13. https://www.tandfonline.com/doi/full/10.1080/13504851.2020.1828802
  14. https://www.forbes.com/sites/stevevernon/2020/05/20/withdrawing-from-retirement-savings-is-four-percent-a-safe-rate/?sh=691e62411ab7
  15. https://www.bloomberg.com/opinion/articles/2021-06-01/stock-bond-yield-correlation-suggests-inflation-is-a-real-concern
  16. https://www.institutionalinvestor.com/article/b1rpyq8lgqdll2/Stocks-and-Bonds-Have-Moved-in-Opposite-Directions-for-Decades-Here-s-What-Could-Change-That
  17. https://www.bloomberg.com/news/articles/2019-09-04/michael-burry-explains-why-index-funds-are-like-subprime-cdos
  18. https://bankeronfire.com/future-stock-market-returns
  19. https://www.theguardian.com/business/2020/dec/28/china-orders-alibaba-founder-jack-ma-break-up-fintech-ant
  20. https://simplelivingsomerset.wordpress.com/2021/06/08/the-coming-gilded-age-and-vanguards-mustelid-indigestion/
  21. https://www.theguardian.com/news/2018/feb/15/why-silicon-valley-billionaires-are-prepping-for-the-apocalypse-in-new-zealand
  22. https://thehustle.co/09162019-land-billionaires/
  23. https://farmfolio.net/articles/why-bill-and-the-mega-rich-are-buying-farmland/
  24. https://www.reddit.com/r/AskReddit/comments/m8o6iq/what_makes_you_hopeful_that_we_can_reach_net_zero/grjhsxt/

Quarterly Returns – Q1 2021

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.

Time seems to be passing so quickly at the moment. I’m sure COVID and restrictions have removed our mental ability to signpost time with activities and events. Through this blur we’re into Q2 of 2021, which means a bit of a financial update…

2021 Net Worth

Q1 Returns:

  • Cash Accounts £12,100 (+£100)
  • Investments £9,650 (+£1,700)
  • Property £49,000 (-£700)
  • Cars £2000 (no changes)

This quarter has mainly been steady-as-she-goes from a financial point of view. I reduced the property valuation for our home to something more conservative, which has resulted in a nominal paper loss. We’re actually up in equity, and moving to a new 5-year fixed rate at 1.69%. Slow and steady has seen my net worth rise by about £3k so far this year, a few percent. Not sure if I’ll match last years 20% rise maintaining this rate.

Investments:

I’m not going to review my goals each quarter this year other than to say I have somehow managed a mean 41.5% savings rate so far (target 35%), I’ve knocked £1.1k off my credit card (£3k to go), and I’m enjoying spending more time pottering with hobbies. Instead the Quarterly Returns will focus more on what I’m doing with investments. I’ve continued to put away £250 in cash/month, building the emergency fund further in the Principality Thank You Saver, which is a 1.4% regular saving offering for NHS workers in South Wales (1).

Rough Global Asset Allocation
Cash-Equity Split in Portfolio
Passive Core vs Active Satellite Ratio

Core/ Satellite Passive/ Active Split

Been busy in my Freetrade account this quarter (fancy a free share? Sign up to Freetrade using this link, and we both get one). January just saw further purchases into iShares MSCI EM and Vanguard FTSE All World. February was much more active. I added to previous holdings of Unilever, whom I am mainly buying as a solid, dividend paying consumer staple. I do not see Unilever going anywhere any time soon (see Warren Buffet school of thought – buying something you can forget about for 10 years and expect to still exist), and they have a very strong corporate sustainability goals which I approve of. I also bought a small amount of IQE, a South Wales computer chip firm. Their share price is volatile (++) and I’m currently down about 15% on the beer money that went in there. This was a bit of a home market bias purchase, but also a potential future growth buy as they’re in the 5G game and chip manufacturers are currently struggling to keep up with demand. There’s also massive investment into S Wales computer chip foundries by Welsh Gov, so thought I’d get some skin in.

Towards the end of Feb I sold out of DS Smith (held for about a year) at a 45% profit. That money got put back into further Vanguard FTSE All World. Around this time I was nosing around r/wallstreetbets, and jumped on the AMC/GME bandwagon, riding these meme stocks up for a 65% return. I bought a small amount of Palantir, another meme stock, again beer money. This one is at a fairly daft PE ratio, but as I dabble more in big data through work I can see the difference this will make to retail/ government/ industry in the future, and this small holding is a gamble towards that. I sold out of GME at the end of March, buying further Vanguard FTSE All World with the stake and profit. GME continues to be a casino, waiting for that lift off to the moon that may never come.

The final note is to say that this portfolio calculation does not include my CrowdCube gambles/investments. I recently had an email to say that Freetrade are offering a share sale opportunity as an institutional investor buys in. The share valuation from that sale puts my holding up about 80%. I’ll continue to hold that to see where it goes.

Happy spring everyone,

The Shrink

References:

  1. https://www.principality.co.uk/savings-accounts/everyday-savings-accounts/thank-you-online-saver

Quarterly Returns – Q4 and 2020 in review

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.

So that’s 2020 done and dusted, a global annus horribilis. For some it’s seen mounting debt, for others an opportunity to save. I’ve spent a lot of time reflecting. Here’s the update.

Q4 Returns:

Net worth excluding my DB pension & student loan
  • Cash Accounts £12,000 (-£1,300)
  • Investments £7,950 (+£1,850)
  • Property £49,700 (+£1,100)
  • Cars £2000 (no changes)

This quarter we finished some major house renovations, had a tiny UK-based holiday, and spent the rest of the time locked down and hermit-like at home gorging on fancy food. House renovations sucked up some saved cash, but my net worth was boosted by my continued investment and the stock market bounce back.

As a result of the above my net worth now sits at ~£67,500. This has continued the rough progression of £20k/year increases; my end of 2018 net worth was ~£28,500, and end of 2019 was ~£49,700. Unlike previous years this increase hasn’t been smooth, and has seen decreases in some months (renovation spending, stock market falls). I’ve mean averaged a monthly net worth increase of 1.7%, combining to a year total of ~20%.

Yearly Targets:

Goal 1: Build an emergency fund

My first 2019/20 goal was to build an emergency fund, as per the r/UKpersonalfinance flow chart (1). My goal emergency fund is three months total household expenses (£6k) in my name, plus a further three months (£6k) held jointly.

I currently hold £12k in cash accounts, so by rights this goal should count as complete. I’ve learnt over the course of the year that holding cash in our joint current account is not sensible, as it tends to evaporate purchasing nice things for our house/ life. Lifestyle creep I suppose. £8,800 of my emergency fund is in my name, split about 50% premium bonds, 40% cash saver, and 10% Starling ‘pot’. The Starling emergency pot is the instant access option, with the cash saver available in 24-48 hours, and the premium bonds <5 days.

For 2021 £12k remains my emergency fund target. Our stripped back monthly household expenses run around £1,800-2,000, so £12k allows a six month buffer. I plan to make my emergency fund (almost) entirely separate from the rest of my cash accounts. This means upping a few pots to be about £6k premium bonds and £4.5k cash saver, with the rest in my Starling pot and our joint current account. I also need to get my unsecured debts back to £0. So for 2021, the goal is: Finalise emergency fund structure and pay off credit card.

Goal 2: Save 30% of my income

I calculate my savings rate using this formula:

Savings rate as % = ((Income – spend) + Cash savings + Investments + Pension contributions) / (Income + Pension contributions)

2020 Savings Rate

Despite the wobbles thanks to (a) NHS payroll and (b) house renovations, I’ve smashed my savings rate goal with an end year mean average of 34.7%. This is way above previous years (2018 15%, 2019 23.5%). I blame lockdown. In line with my plan for incremental goals, 2021 will be: Save 35% of my income.

Goal 3: Calculate savings made by growing my own food

This goal proved to be harder than expected for two main reasons. First, it’s kind of hard to work out how much you’re actually savings; it requires tabulating all your produce and then cost comparisons with supermarkets. It’s a level of spreadsheeting that I couldn’t bring myself to. My little gardening notebook goes bare when the renovations took over my time, but I kept a rough tally. I spent ~£50 on seeds (yes, a lot) over the course of the year, and grew about ~£80 worth of veggies. Second, my own apathy as a result of the first.

I’ve learnt something important from this goal. Making targets, goals and objectives for hobbies can make them a chore. Gardening, cars and blogging are all hobbies I enjoy. They’re supposed to be relaxing. If I’m trying to reach a target then it stops being something to enjoy. The Mad Fientist covered this well in his recent post “A Better Alternative to Resolutions and Goals(2). Instead I need to just make time for the process, and let outcomes result as they will. Goal 3: Make goalless time every month for hobbies.

Goal 4: Make changes to reduce carbon footprint

It feels like lockdown has enforced this on so many people. We have not flown or been abroad for holidays. My commute is a fraction of what it was. We continue to eat local produce, and we use Splosh for our household cleaning (3). If you want to give them a go use referral code YQL240THX1 to get 15% off. We use Bulb for our energy. We rarely buy new clothes, and if we do they are organic sustainable cotton or wool. We’ve been buying gifts and household items from the local zero-waste shop. Our veg/ fruit comes from either the local organic co-operative, or if from a supermarket we only buy seasonal UK stuff. Our meat comes from a fantastic butcher who only sources local, high welfare animals. We’ve reduced our meat consumption so it’s a treat, roughly now three veg, two fish, two meat/ week. Next steps will be switching to milk bottle delivery, and getting our fish delivered by the local fishmonger from UK catch. Overall, I feel like we’ve made quite a few low-hanging lifestyle changes.

From here, it’s thinking about bigger impact changes we can make. Switching to an electric car is tempting, but probably not meaningful given the tiny amount of driving we do in efficient, older cars. Installing solar panels/ ground source heat pumps etc are probably not economical until we have a larger home. Suggestions welcome.

Goal 5: Automate investments and savings

Another success from this year, automating things so I pay my Freetrade account first. My regular savers have come to an end, and as noted above, I’m pretty close to my emergency fund target. I’ve recently found out about the Principality Thank You Saver, which is a 1.4% regular saving offering for NHS workers in South Wales (4). Lovely stuff. I’ll be using that to top off my emergency funds. In my investments, I’ve mixed adding new funds/ stocks and topping up existing holdings.

Rough Global Asset Allocation
Asset Allocation in Investment Portfolios
Core to Satellite Ratio

Core/ Satellite Passive/ Active Split

I’ve basically spent this quarter topping up my iShares EM ETF and Vanguard FTSE All World holdings (fancy a free share? Sign up to Freetrade using this link, and we both get one). The YTD time-weighted rate of return is 13.44% in my Freetrade ISA, whilst my Vanguard ISA has a 23.15% absolute return. The graphics in my Freetrade account suggest my time-weighted rate of return is a couple of percentage points above VWRL, whilst maintaining a smoother progression thanks to holdings in TRIG, UKW and a couple of consumer staples. I really need to benchmark my investment spreadsheet to properly calculate this.

I continue holding some cash as a buffer. I’ve gradually realised I am actually more risk averse that I thought. I idealise that I am gung ho, and willing to YOLO on individual stonks. My behaviour pattern is quite the opposite, as although I’m holding lots of equities and DIDN’T SELL!!1!!111!, I didn’t buy cheap tech stocks, instead purchasing counter-cyclical holdings. Hindsight is 2020.

Plans for 2021:

Some changes here. I’ve been reading a lot of Slate Star Codex, and in that vein I am going to start assigning goals predictions on whether I will achieve them. I’ll also make some rough predictions with conviction percentages for the next year. I already do this in as part of my Investment Strategy Statement and in a paper diary about my personal life, so I might as well move it here, with passages redacted. This is essentially an experiment analyse my underlying bullish/ bearish traits at future predictions. Therefore, targeted goals:

  • Finalise emergency fund structure and pay off credit card – 80%
  • Save 35% of my income – 40%
  • Make goalless time every month for hobbies – 60%

Predictions.

  1. UK vaccination will be completed before the July – 75%
  2. Greater than 200,000 UK COVID deaths – 30%
  3. UK has worst death rate as percentage of the population in the world – 60%
  4. Under-reporting in developing nations hides significant pandemic effects – 90%
  5. The UK tier system is still in use in December 2021 – 60%
  6. The UK experiences another ‘lockdown’ in winter 2021/2 – 75%
  7. COVID-19 mutates into a form immune to the current vaccine – 40%
  8. I am personally working in office >80% of the time again at some point in 2021 – 10%
  9. Someone I am close to will die of COVID-19 – 25%
  10. Endemic COVID-19 circulates in the population with lockdown easing and shops re-opening – 80%
  11. … and self-isolation becomes normalised – 80%
  12. … and higher death rates tolerated among the over 50s with consistent effect on life expectancy by end 2021 – 75%
  13. Boris resigns – 60%
  14. Keir Starmer above BoJo in the opinion polls – 80%
  15. Inflation above 2% – 75%
  16. … due to Brexit-resultant shipping and food cost rises – 60%
  17. There are resultant food shortages – 10%
  18. Homeless rate rises – 95%
  19. Foodbank usage rises – 95%
  20. House prices continue to increase – 75%
  21. FTSE100 above 7,000 – 60%
  22. FTSE100 remains above 6,500 – 80%
  23. FTSE100 hits 7,500 – 20%
  24. FTSE250 hits 22,000 – 60%
  25. S&P500 hits 4,000 – 75%
  26. S&P500 hits 2,500 – 30%
  27. £ hits $1.40 – 50%
  28. We have £100k in equity – 95%
  29. We start to overpay our mortgage – 30%
  30. I have £15k invested – 30%
  31. I am saving £1k/month – 30%
  32. We have [redacted] – 90%
  33. MrsShrink [redacted] – 75%
  34. We replace one of our cars – 50%
  35. The project car gets repainted – 25%
  36. The project car gets sold – 10%
  37. We have a holiday – 80%
  38. Outside of the UK – 20%
  39. I learn another language – 30%
  40. I continue to exercise at least three times/ week for the whole year – 75%
  41. I can do a pull-up again – 40%
  42. I can do a hand-stand press up again – 20%
  43. I return to [redacted] – 10%
  44. I complete [redacted] – 25%
  45. My ongoing work has not conformed to anticipated plans – 90%
  46. I publish [redacted] – 90%
  47. I publish [redacted] – 25%
  48. I publish on average four posts/ month – 40%
  49. Most page views ever this year – 30%
  50. This blog gets abandoned – 10%

Let’s see how this bit of fun plays out.

Happy 2021 everyone. Let’s hope for a better year,

The Shrink

References:

  1. https://flowchart.ukpersonal.finance/
  2. https://www.madfientist.com/mastery-over-goals/
  3. https://www.splosh.com/how-it-works
  4. https://www.principality.co.uk/savings-accounts/everyday-savings-accounts/thank-you-online-saver

Quarterly Returns – Q3 2020

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.

2020 continues to be the weirdest year in a while, so how are we faring financially?

Q3 Returns:

Net worth excluding my DB pension & student loan

  • Cash Savings Accounts £13,300 (+1,100)
  • Investments £6,100 (+£1,000)
  • Property £48,600 (+£5,700)
  • Cars £2000 (no changes)

Slow increases in my cash savings, which comes as a bit of a shock to me given the amount of spending we’ve been doing on house renovations. My investments have actually gone down slightly, with a gain over the three months of less than I’ve put in. Reasonable jump in our property equity consistent with an increase in local house prices, and this has driven the rise in my net worth.

Yearly Targets:

Goal 1: Build an emergency fund

My first 2019/20 goal was to build an emergency fund, as per the r/UKpersonalfinance flow chart (1). My goal emergency fund is three months total household expenses (£6k) in my name, plus a further three months (£6k) held jointly.

Source: https://flowchart.ukpersonal.finance/ (1)

This has steadily increased, but recent DIY and impending builders/ plumbers/ electricians fees mean that attempts to stay above £10k are unlikely. The goal remains achievable.

Goal 2: Save 30% of my income

I calculate my savings rate using this formula:

Savings rate as % = ((Income – spend) + Cash savings + Investments + Pension contributions) / (Income + Pension contributions)

YTD Savings Rate

My savings rate has been all over the place this quarter, thanks to some early/ late payment of my salary, and then a subsequent overpayment and underpayment. Wish my payroll department could sort itself out. I’m still averaging 37.17% over the year, so on track to beat my goal.

Goal 3: Calculate savings made by growing my own food

This goal has been somewhat forgotten, as I got distracted from the garden by house renovation. We have had a good glut from the harvest; toms, potatoes, courgettes, marrows, pumpkins, french beans, peas, carrots, onions and plenty of salad veg. I have failed to maintain my spreadsheet, but I have been keeping a diary of what’s grown well (or not). I’ve had great success with varieties bought from the Real Seed Company, so would recommend them for next year (2).

Goal 4: Make changes to reduce carbon footprint

I continue to work from home, we’ve only had a couple of long weekends away in the UK (so no foreign hols), we continue to eat local produce, and we use Splosh for our household cleaning (3). I’ve spoken about them before; they’re a zero waste refillable start-up, and unlike most of the eco washing stuff we’ve tried, their stuff actually works really well. We’ve found we actually save money as well, as the concentrate is strong stuff even watered down, and we use less. If you want to give it a go use referral code YQL240THX1 to get 15% off.

Goal 5: Automate investments and savings

My regular savings account and FreeTrade investment is all now automated and working nicely. A few of the savers have come to an end, and I’ve pivoted that money to pay off new credit card debt from house renovations. My final regular saver comes to an end in December, and I’ll need to have a think about the best direction for that cash. In my investments, I’ve mixed adding new funds/ stocks and topping up existing holdings.

Core/ Satellite Passive/ Active Split

After purchasing a few stocks and active funds in Q2, it was back to slow and steady drip feeds into my iShares EM ETF and Vanguard FTSE All World holdings. Both have hovered around my buy price through the quarter, and I wouldn’t be surprised to see losses. I’m currently holding a reasonable chunk in cash to deploy if necessary and as an extra buffer for the next 3-6 months. Or at least that’s the cognitive trick I play on myself to tell myself that I’m not timing the market.

Fancy a free share? Sign up to Freetrade using this link, and we both get one.

Hope everyone else (outside of lockdowns) are seeing gains,

The Shrink

References:

  1. https://flowchart.ukpersonal.finance/
  2. https://www.realseeds.co.uk/
  3. https://www.splosh.com/how-it-works

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/