Smash the System

As ever, I perused through the Money sections of the magazines over the weekend where they tend to throw out facts and information that, as a FIRE advocate, you feel should be on the front page of the main newspaper. Fascinating fact this week: over 80% of ISA’s held in the UK are held in cash accounts.

Isn’t that just gobsmacking? I mean, given current inflation, a lot of those “Savings” are effectively losing money. Why is it this way, when most of us who are piling our cash into stocks and shares saw our investments grow in mainstream index trackers  by fifteen percent plus (probably) last year?

Is it fear? Are people frightened of losing money if they invest in stocks and shares? I’d like to think that this was the case – this would be an indication that people had at least thought about their savings choices, although they might not have looked into the detail. I’d like to bet if you ask most people about the stock market, however, the main thoughts they’ll have about it are the Great Crash of 1929, the Dot Com boom and bust, or whatever it was that happened in 2008 when Northern Rock almost collapsed, or something. And yes, those were scary stories which, we are told, we’re pretty much guaranteed to see the likes of again in our lifetime. “The value of stocks and shares can go up as well as down”, is a mantra that almost everybody can quote, the equivalent of “Here be dragons” on one of those old maps you see in the movies.

The Movies. They’ve probably got a bit to answer for too. “It’s a Wonderful Life”, “Trading Places”, “Wall Street”, just to name three that spring immediately to my mind that don’t paint a very flattering picture of the stock market. All of those, and probably several more like them, warn that the market isn’t really for people like us. Unless you know what you’re doing in Orange Juice or Pork Belly Futures, steer clear.

The same people who shun the markets because they don’t understand them are often the very same people who’ll happily tell you that investing in the housing market is a safer bet than investing into a pension. At least that’s what the regular “Minor Celebrity Answers 20 Questions on Money Matters” interview attests to in the Sunday Times. Week after week I read someone answering the question of whether to invest in “Property or Pension” by stating definitively “Property”. About one week in ten someone answers “Both” and anyone answering “Pension” is an even rarer occurrence than that.

There’s another factor in the UK that might be keeping people away from the markets, and that’s a subject particular to Britain that I’ve mentioned here before: Class. I was educated in a Scottish mainstream comprehensive and I can honestly say that the thought of entering a career in finance, aside from accountancy, never crossed my tiny mind. Stockbroking, Merchant Banking and Fund Management? I’d never heard of those careers and, if I had, I would have classified them in the same career choice option as I’d have put “Astronaut”. At least I could have named an astronaut. I knew nobody who knew anybody who worked in the City. I wouldn’t even have known that term. If I had, I might have been interested, but the whole subject was so far from our little world that it was never discussed. Or, if it was, it would have been in an Economics class, and who listened in those anyway? Stocks and shares just weren’t for “people like us”, it was as simple as that.

These days we’re supposed to be more of a meritocracy, and lads from a working class background can make a big deal in finance. Blokes like Nick Leeson and Fred Goodwin, for example, where we all learned about their humble origins immediately after they almost wrecked the system. I do wonder what the background to the high earners in the banks look like? How many simply have the right network and connections? How I snorted with derision when I read how the (excellent) author Michael Lewis (Liar’s Poker, The Big Short etc..) broke into a career in the City. He happened to attend a dinner in London where he spent the evening sitting next to the wife of a partner in Goldman Sachs (as you do). She wangled him an interview, no doubt charmed and convinced he was the “right sort”.

To continue on this theme, I recently read an interview with a City investment guru who recounted that old chestnut about knowing when to sell “when my plumber and taxi driver start giving me share tips”. If this happened in New York, you’d shrug and move on, but in London the story smacks of class division – oh yes, when the ignorant masses start dabbling in the markets, it really is time to sell up and head for Saint Kitts.

Fortunately when I hit my thirties I came across The Motley Fool UK Investment Guide which, for me, deconstructed and poked fun at a lot of this “It’s not for the likes of you” rubbish, and I never looked back. These days I hope that the growing popularity of some of the web based bloggers and investment platforms allows that opportunity for millions more.


Retirement Society

In my last post, I talked about the importance of knowing where your money goes and, in the way of these things, I chuckled when I heard a guru of “expenses tracking” – Vicki Robbin, co-author of the classic Your Money or Your Life – being interviewed by the Mad Fientist on his most recent podcast. I almost gave up on listening right through to the end of this interview however because, to be honest, this woman is a verbal Duracell Bunny on amphetamines. She just won’t shut up! The Fientist was lucky to get two dozen words in edgeways as the ideas, stories, recollections and events of Vicki’s life just poured forth like a torrent. It didn’t help that when the Fientist did actually lever a question in, she’d answer, “You know, that’s such a GREAT question”, an American cliche in interviews that’s becoming so common (like beginning sentences with the word “So”) that it’s almost an insult.

So I stuck with it, and in the end was glad I did, because as the podcast came to a close, Vicki began to talk about some subjects that I’d like to tackle myself in my blog, about some aspects related to retirement finance that you don’t necessarily think about. Or don’t want to think about. Top of the list was a comment she threw out from the welter of information she’s gathered over the years. “Loneliness is expensive”, she stated, and went on to talk about how vital it is to have a developed network of friends and community around you as you grow older. This was in the context of quite a lot of other material about community living and how to develop and look after yourself in retirement once you have the finances covered.

When I had my year out sampling early retirement, this was something that struck me personally quite hard – just how much my community, my network and several of my close friends, were actually all connected to my workplace. When that vanished, well, they didn’t exactly vanish too, they just receded rapidly over the horizon! People I’d spoken to every working day for several years were suddenly out of reach. Clearly I couldn’t call them on a daily basis just to chew the fat, but I made the effort to keep in touch maybe once a fortnight. Which then dropped to maybe once a month. Meanwhile the casual acquaintances at work, whose company I often enjoyed even if in small doses, well, they did vanish, only to be glimpsed occasionally on Linkedin as a reminder of the community I once had.

Okay, this seems obvious now, and I was cognisant of it when I was at work too – my workplace pretty much was my community. But leaving it was something I hadn’t really prepared for, nor was it something I was ready to pragmatically replace. I’m not, and never have been, a great fan of clubs or societies. I never liked the Scouts or the Boys Brigade as a lad, so thoughts of joining a “club” like the Round Table, or the University of the Third Age, or the local Historical Society, really didn’t appeal to me. Even clubs I was a member of, like my local golf club, I’d no interest in getting more involved with. In fact, the guys I do golf with, we all take an almost perverse pride in how little we join in with any of the club’s activities, slagging off our perceived notions of just how small-minded and parochial, if not downright snooty, that culture seems to be.

What other community interests and ventures could I take part in? I tried some voluntary work when I was retired but, ye Gods, after coming from the world of “real work” the way these organisations seemed to do things quickly drove me scatty. They were like how I thought the worst of the public sector might work. Meetings that would drag on and on with nothing really decided, or done. Hours spent discussing the organisation of a coffee morning or a checkout collection at the local village Tesco, while I’d be sitting there thinking “There are seven Tescos in our town, why don’t we do all of them, every day, for a week! Now that would raise some real cash!” When I voiced this opinion, the (elderly) members just looked at me as if I’d gone insane. Soon we’d be back focusing on the more important things, like who was going to organise the tea and coffee for the next meeting? And which biscuits should be bought, given the budget situation.

My wife’s managed to develop a wide circle of friends through her attendance of classes at the gym where I’m a regular member too. But, I don’t know, I find gyms really quite unfriendly and distant places, at least for men. Are blokes slightly embarrassed to be there? Or are the type of men interested in developing their fitness quite insular and introverted? Are we too competitive and proud to be friendly? I really don’t know, but in my experience gym’s are just not overtly sociable places. Perhaps this is the old “How did you find the people in the last village?”* adage, but I don’t think so. There’s more to it than that.

As I write this, I think, “Maybe I’m just becoming a crotchety old git?”, Victor Meldrew over the back. But surely he was such a strong and popular character because he ciphered some hard home truths to people about how they might become if they’re not careful? Victor Meldrew is seriously no role model for retirement but not because he’s ridiculous. It’s because we see in him traits that we can see in ourselves but find difficult to face up to. As you grow older, your tolerance bandwidth shrinks unless you work to enlarge it.

To return to the podcast, Vicki talked about how we’ve put work and money on a pedestal while sacrificing just about everything else before it. We’ve no time, or energy, or inclination to nurture much outside of family – if we actually get to see the family much itself, after the commute and long day at work.  There’s some statistic that about 50% of us don’t even know our neighbours names these days. Arguably that’s a good thing but, if I take out the facetiousness, it clearly isn’t a good thing at all. Especially not for older people.

There’s now some interesting data being punted around about how the biggest division in society is between people who leave their home town and those who don’t. People who value community ties before the career path. Guess where the Brexiteers and Remainers sit? Well, forget the cliched politics of the stereotyping that this debate has grown out of, I find it a relief just to read of a way of looking at our society that’s not fixated on class, money, status and the individual. If Brexit sparks a debate about the importance of culture and community outside of the economic factors then that’s a good thing, is it not? As we grow older we need a social and community support network almost more than we need cash. Given that the generation coming up isn’t going to have much of the latter, we need to think an awful lot more about how to nurture the former.

*The Parable of the Two Villages
A man who was traveling came upon a farmer working in his field and asked him what the people in the next village were like. The farmer asked “What were the people like in the last village you visited?” The man responded “They were kind, friendly, generous, great people.” “You’ll find the people in the next village are the same,” said the farmer.

Another man who was traveling to the same village came up to the same farmer somewhat later and asked him what the people in the next village were like. Again the farmer asked “What were the people like in the last village you visited?” The second man responded, “They were rude, unfriendly, dishonest people.” “You’ll find the people in the next village are the same,” said the farmer.

Tales of the Unexpected


I read an interesting article recently where a journalist was saying that she’d noticed a growing division amongst her friends, between those who were heading toward their sixties financially comfortable and those who weren’t. It wasn’t that the latter group were heading toward poverty, or anywhere near it (she’d have to head North to have friends like those!) they were just realising they wouldn’t be able to keep up with their very nice middle class lifestyles once they stopped earning. From the skiing week  in Courchevel before the big long haul holiday in the summer, to the odd bottle of half decent red most evenings and the spontaneous weekends away, such middle class dreams often require a salaried funding. When it stops, or radically reduces, these people sometimes find they have been living well beyond their future means in quite a big way.

Those friends of the journalist who were facing a financially restrained future had often had unforeseen events happen to them that subsequently hobbled their plans.  A messy divorce, an illness that didn’t want to wait on NHS for treatment,  a hoped for inheritance being rapidly burnt up in care home expenses or a sudden and unexpected end to employment. Well, such calamities happen, but having a level of spending that they just hadn’t realised they were burning through on a week to week basis is less excusable. No, strike that, it’s just NOT excusable, and most readers of this blog will probably nod in agreement. How can you NOT know what your spending levels are, or where the money goes on a month to month, if not day to day, basis? The people who are going to be caught out are financially in the “Unknown unknowns” zone, and they only have themselves to look at when this realisation dawns. How many are in this situation? Well, when I was talking to a headhunter friend recently he was telling me  how depressing it was to meet with fifty something executives, desperately pleading with him to help find them a job paying “Just fifty or sixty thousand a year, that’s about all I need”. They’ve no idea how difficult it is to find those roles once you’re a certain age. “And Jim”, he went on, “these guys are living literally from pay cheque to pay cheque, you’ve no idea how many of them I see. I tell you, the desperation sets in pretty quick”.

(Believe me, I could write, and will write some day, about the job market for the over fifties. It’s horrible in so many ways that I’m afraid if I start, I might finish myself off!)

I often hear my friends jibing each other about employment in the private sector versus the public one, and there’s an increasing edge to it as we approach pensionable age. This is because the public sector workers often have the iron clad, defined benefit pension pots that will simply never run out until their dying day. The guys who are in private employment generally now have defined contribution schemes (the self-employed blokes, I’m afraid to ask). With a DC plan, it’s beginning to dawn on them, from Day One of  their retirement that pot starts to run out. How to ensure it doesn’t? Buy an annuity? Seriously? Those who have done the calculation often feel their jaws drop at the paucity of the returns. Surely they must get more than that?

I’m lucky, I have an experience of both with a DC and a DB pot. But I still fret about the future. What if my DB company scheme gets into severe difficulty? It’s already carrying a substantial deficit that I’m frankly too scared to look into. What if my self invested DC plan implodes in a market meltdown? Having lived through the internet bubble and the 2008 crisis I’ve seen the latter happen, but in those dismal days I was earning and buying the cheap market month after month, pound cost averaging and keeping my fingers crossed. Once retired, that avenue of earning won’t be open to me, or potentially not in any easy or financially significant way.

With both types of pension to hand, I can be a bit sanguine about the potential financial impact of unexpected events. Other consequences of them, who knows, and I find I really don’t want to dwell on subjects like divorce, bad health, ageing parents and the rest. Old age is not an unexpected event all the same, and at least I did plan a bit for when it arrives, although the older I get that harder it is to define when Old Age is actually going to happen to me. It’s always about twenty years away, isn’t it? So that gives me plenty of time to plan…..





Spread the Word

I overheard a conversation in my work the other week, which went along these lines:

“So I intend to overpay on my mortgage by £250 a month and get it down as fast as I can”.  I was surprised – people talking openly, and seriously, about personal finance in the office?! I wandered over with my cup of coffee to join in.

“I know”, replied the colleague. “I have money sitting in a cash ISA doing nothing. I think maybe I should pay a lump of the mortgage off with it instead, but it’d make such a small dent in the scheme of things.”

It was at this point I felt I must rip my shirt open to display my blue T Shirt with MMM (Or ERE) – that’s Mr Money Mustache or Early Retirement Extreme – emblazoned across the chest.

“Ehrm, why would you want to do that?”, I asked. “If your mortgage is costing 2% and you could invest the money and get maybe 7%, wouldn’t you be better sticking it into a stocks and shares ISA?”

“Well”, replied my colleague, “I understand mortgages. I don’t have a clue about the stock market”. The other bloke nodded vigorously in agreement.

I asked them if they’d heard of of Index trackers?” Blank looks. Passive investing? Nada. Getting a life? (only kidding). We chatted on for a few minutes with me thinking that this was one of the few informal conversations about finance and investing I’d ever had at work. I offered to send across some links that might let them look more into things and paced back to my desk.

Now, what to send my colleagues to get them started on the road of passive investing? Well, Monevator of course, but when I clicked over to the site and looked at it from the perspective of a complete newbie I wondered if it was ever so slightly intimidating? I picked the post entitled “Five Reasons You’ll Love Index Investing”, and noticed that almost by the second paragraph references were being made to ETF’s, something that I don’t fully understand myself. Was it already getting too complicated?

I sent the link anyway and tried to resist sending any more. They’ll either be interested or they won’t, and if the easy and straightforward style of Monevator doesn’t grab them, what will?

I mulled other options though. What if I offered to host a “Canteen Coffee House Investor” morning one day before the nine to five day starts? These guys were in by eight fifteen anyway, maybe they’d be interested in chatting informally about investments, or shares, or pensions once a month? I know I would, and maybe one or two others in the office would too? Mind you, what if they became enthused, and sank their life savings into a US Tracker just as the market uncovers another Lehman Brothers? Would they hold me responsible for ruining their financial lives? Would they remember my warnings, between slurps of coffee, that the value of investments can go up as well as down? Or that they need to work on a five year horizon?

Apart from that paranoia, however, I like the idea. I sometimes feel that it’s a lonely life being British and interested in this sort of financial stuff. It’s not really who we are, is it? We’ll conveniently ignore the reality of The City and tell ourselves that money is a private matter and that discussing it openly is really rather vulgar. It’s so much easier to pretend we’ve no interest in it because our lives are so much more bright and vibrant while we’re just “getting by” and being happy with that, instead of being some sort of dull bread-head counting every penny and comparing the size to your pile to everyone else’s.

Sometimes I scan the UK and US forums for meet-ups of like minded British people, but they seem few and far between. I did attend one of Huw’s (Financially Free by Forty) organised FIRE Escapes, but only because it was right in my home town. It was really enjoyable too, but would I travel miles to attend one? Stay overnight somewhere? “No” has been the answer to that so far. Perhaps this is because although I’m interested in financial matters, I don’t think I’m THAT interested. Yes, I could meet up with a bunch of people for a few drinks maybe once a month, but in between I’d rather get on with my passive, non-financial life. As for flying to Ecuador for a Chautauqua, I’m sorry, that verges toward cultish, Jonestown Massacre, behaviour. Which is probably a very British way of looking at it too, but there you go.

I don’t see myself as an organiser, starting a Club or forming a Society, but I have to admit I am tempted with regards to investing basics. Why? Because it’s important, and because it changed my life for the better. I think people should know about it and that they would benefit from it too. Perhaps that’s why I continue with this “Early Retirement” blog even after I went back to work. At least I had the choice to do so, and it was Financial Independence that afforded that choice – and continues to offer it. Surely that’s information that’s worth spreading?

Hard Graft

I was reading an article over the weekend that highlighted the fact that the new ISA  limit has been increased to £20,000 a year and that this amount, if invested over 25 years at 5% growth, would make you a millionaire. That’s a nice soundbite, but the article then dug itself into a hole by pointing out just how much saving that twenty grand a year would require – £1,666 a month, every month, for twenty years. And £1,666 is the total monthly average take home pay of a full-time worker earning £27,000 a year.

In other words, for the average Briton, a shitload of cash. In fact, it’s all of their cash, so it’s just too tall an order – most Britons won’t save themselves into millionaire status. Look on the bright side though, the article went on, if you could save just £100 a month into an ISA and return 5% over twenty years then at the end of that period you’d have at your disposal a total pot of……£41,000.

Excuse me, but does anyone else find that calculation somewhat uninspiring? Saving £100 a month for twenty years – that’s seems to me a pretty big commitment and somehow I was expecting it to be rewarded better than that. But then maybe I have swallowed the blue pill when it comes to compound interest, the miracle ingredient of investing. I barely question its efficacy, I just “know” it leverages wealth in a phenomenal way. I think, however, that the examples I read of how compound interest works were somewhat more inspiring than the “£100 a month” example above.

This leads me into an area that I find tricky when discussing FIRE with myself – just how much of a middle class, relatively high-earning ambition is it? It seems that the problem here is that £100 a month is just too small an amount to invest to promote sexy, head-turning results. Maybe the sum of £500 a month should have been used – that would deliver a sum of over two hundred thousand in savings. Unfortunately, I heard someone on the radio recently state that the majority of Britons couldn’t put their hands on a hundred quid cash if you gave them the morning to do it. They just don’t have a spare hundred quid lying around, never mind five hundred. The sad and brutal reality for many people is that even saving £100 a month is a stretch and, if the “prize pot” at the end of it is forty grand, then honestly, why bother?

The FIRE ambition is stoked by “disposable income” and a lot of the blogs I read focus on the first half of that statement i.e. what are you doing with the disposable element? How are you spending your cash? Are you squandering it on daily Starbucks frappuccinos? Is spending £100 on a decent Saturday night out second nature for you? Must you have a new, or relatively new, car when a trusty ten year old Honda, or even better, a Raleigh bike, would free up oodles of cash for you?

It seems to me, however, that it’s the income side that drives and realises the FIRE ambition, and that many of the bloggers are less inclined to discuss that, myself included. Our biggest icon, Mr Money Moustache, makes no secret of the fact that both he and his wife were high earners before they “retired” from the workplace. Yes, that’s a fact, and he’s open about it, as are many of his fellow flag-wavers. The point, however, is how much of that income was saved and invested, that’s the important thing.

Well, I beg to differ. I think that it’s the income that’s the important thing and that’s a more difficult thing to address than whether or not to buy a Starbucks frappuccino tomorrow morning. I’m not saying that the FIRE blogs ignore this aspect – there’s a lot of focus on side hustles and increasing earnings – but putting your shoulder to the wheel at the workplace deserves more attention than it is given. The fastest way to increase your savings is to ask for a rise at work, or work out a way to get it, and then bank the lot of it. Or work in a pub over the weekend and bank all of that ongoing. Yes, it’s hard, it’s graft, and it will cause pressure and stress that you might rather not have, but it will work faster for you in terms of increasing your savings than just about anything else.


Leave My Pie Alone!

In the way I used to go bed on Christmas Eve and think “Oh Santa please be good to me!”, I went to bed last Tuesday night thinking “Oh Mr Chancellor, please be good to me!” Or, more accurately, “Oh Mr Chancellor, please don’t muck with my pensions!”

This was partly inspired by something I mentioned in my last blog, that it wasn’t so long ago that a Chancellor decided you just couldn’t retire and claim a pension at 50 any.more, you’d have to wait until you were 55. Five years onto your working life, at a stroke. If, on Wednesday, the chancellor had announced that he’d decided you now couldn’t claim any pensions until you were sixty, that would so screw up my forward plans I can’t actually bare to think about it.

If there’s one thing I increasingly focus more on than my Isas and investments, it’s me and my wife’s pensions. And you need to because, compared to Isas, pensions are a complicated, maddening, mess of regulations, tax laws, restricted stipulations, sneaky stealth moves and, to be fair, generous loopholes that drive you insane.

As my wife and I approach 55, I’m really starting to think hard about our options. I thought I had devised a simple but cunning plan to transfer some of our ISA savings into a SIPP for my wife in order to grab the twenty percent tax bonus offered by the government for doing so.

I planned maybe a fifty grand deposit to be matched by the twenty percent rebate, which was certainly worth having for making a few mouse clicks. After all, I could invest in the exact same Vanguard 60/40 Lifestyle Fund in the SIPP that I was planning in the ISA anyway.

That was Stage One of the plan. Stage Two was that she would then draw around ten grand a year from the SIPP tax free over the next five years. When she reached sixty, she could then access her NHS pensions, at her “Normal Pensionable Age” and therefore maxing the benefit over time. Ya beauty. Simple, elegant and straightforward, eh?

Not a bit of it. First restriction: it turns out my wife can’t deposit more in a SIPP than she actually earns in a year. Which is nowhere near fifty grand, more like fifteen. And she can’t deposit fifteen either, because her current work pension deposits also count toward that fifteen limit. And the fifteen includes the tax rebate too.

Okay, not as straightforward as I thought, but nothing that my ‘O” level arithmetic and a bit of research can’t handle. With some quick moves, I can deposit into the SIPP this tax year, next tax year and the tax year after that – it’s not the fifty grand total I planned, but it’s close. Except, it turns out, it’s not that simple! If she gives up work on her 55th bIrthday then she’ll only have worked eight months in that tax year, and therefore her earnings and contributions have to be adjusted down accordingly. FFS. More research, more arithmetic.

Then I have my own pension to worry about. Have you heard of the LTA? Given you’re reading a blog like this you probably will have and you better start trying to focus on whether or not it applies to you – because it probably will.

The LTA is basically the amount you can have in all your pension pots before the government taxes the excess at fifty five percent. Fifty five percent!!!! Rod Stewart emigrated to avoid tax bands like these and by no stretch of any imagination in any direction – money, hair, leggy blonde birds – am I Rod Stewart. But I am in danger of exceeding the current LTA on my pensions. Or I think I am. “Think” because about six weeks ago I wrote to Aon Hewitt asking them to give me a cash equivalent figure on the pot that will fund a defined benefit pension that I have. I’m still frigging waiting on a response, despite calling them, writing via snail mail and chewing my nails that the chancellor would reduce the limit again in the current budget.

No doubt you’d be able to claim some sort of protection against such cuts, and maybe people were given a few years to get their head around the fact that they couldn’t retire at fifty any more. It’s not the first time that the LTA has been reduced, and each time you have had an option to apply for protection on your funds against the allowance being cut again. I wonder what percentage of the population have done so? Two percent? With the rest grazing on the grass contentedly, like sheep waiting to be fleeced by HMRC.

Honestly, when I see what has happened over university tuition fees, I think the Chancellor could pretty much do what he wants on pensions if all he took notice of was the general public. If he decided to tax all pots greater than 250k at seventy percent, the general population would ask, “Yeah, but did you see Kim Kardashian on telly last night?”  The only reason he even thinks about the consequences of such moves are because The City wants more coming into their coffers rather than less. They want people in pensions so that they can rake in more on fees. Any moves that have people looking elsewhere, like putting their cash under a mattress, or even worse, putting it into those upstart P2P funds, need to be stomped on at birth. Who wants more cash from your pension pot, the Government or The City? Probably the Government wants it more but The City won’t let them have it, not in any straightforward way. Hence the labyrinth of rules and regulations you need to get your head around to protect yourself or, even worse, try and make some sensible financial moves to benefit yourself when it comes to your life savings. Oh yes, they want to encourage you to provide for yourself in the older years, but only if they can take a slice of your pie on the way through. It’s up to you to make sure that slice is as small as possible.


Late to the Game

I “early retired” aged 50, and still put the term in inverted commas because (a) I never really convinced myself I had retired and (b) I went back to work a year after the event, so maybe I never really did retire in the true sense of the word.  And (c) does being aged 50 really qualify as “early retired” when for many years, that was quite a common exit point from the world of work? In fact, I was really surprised to learn that the government only changed the rules to make minimum pensionable age 55 from 50 in 2010!

I reflected on this subject as I was listening to the Mad Fientist’s most recent podcast where he was interviewing Mrs ONL from the Our Next Life blog. Toward the end of the hour, Mrs ONL made this cogent observation:

….my advice is, every day of freedom that you can steal back from 65 is a win. And so even if you are retiring at 64 ½ or 62, that’s still huge. And that’s still a lot more life that you get to live on your own terms than most people will ever get to say. Or just even being able to retire on your own terms is huge.”

She also commented on something I’ve noticed about the competitive nature of Retiring Early, where you now have bloggers claiming to have attained FIRE in their twenties. Soon enough you’ll be hearing some blowhard down the pub spouting “Yes, as a foetus I implemented the 4% rule and effectively retired”. To be fair, in Britain I think that’s a long way off. Occasionally during my year out I did tentatively mention to peers that I was “retired” and half expected to get the response, “Oh, I could have done that, but I just wasn’t ready for it in my fifties”. I expected this to happen much more frequently than it did. Coming to think about it, I can only recall the one occasion where I got this response and that was from a bloke whom, if he hadn’t reacted in that way, I’d have been devastated. He’s one of these guys who, when you tell him your car had a flat tyre on the motorway, will comment, “Oh yes, did I tell you about the time I had three tyres simultaneously blow out on me on the M25, when I was doing 98 mph? In the rain? And when I pulled over, Kylie Minogue stopped to give me a hand to change the tyres?” And he’d be quite serious.

The most common response was some sort of positive rejoinder accompanied by a kind of puzzled look, as if people were wondering if you were winding them up. (Not surprising when half the time I was wondering if I was winding myself up!) Nobody really asked for any further detail, preventing me from spreading the word about passive investing, Index Trackers and the list of inspirational websites that had helped me decide that Early Retirement was the lifestyle choice I wanted to experience.

I now find myself asking what I learned from that year and what I’ll do differently as I approach – or am forced to approach – my next retirement date. The first thing I think I’ve learned is to absolutely have a structure to the days, preferably written down in a spreadsheet, of what I want to do and when I want to do it. Definitely the most difficult retirement days were when I drifted through them, nothing to do and all day to do it, when walking to the local Co-op to buy a loaf and a pint of milk seemed to be a worthwhile objective. This was particularly true in the afternoons between about one o’clock and six in the evening, when I found it hard to motivate myself to do anything. I’d generally spend a lot of that time aimlessly surfing the internet in the vain hope that I’d find a hobby or pastime to occupy myself with that might also earn me a wee bit of cash on the side – then it’d feel more “worthwhile”. But if earning money was partly what I wanted to do, then why didn’t I just get back into the kind of career I once had and (generally) really enjoyed? In the end, that’s what I did.

It’s clear to me now how much routine and structure were important to my days and it now dawns upon me how, for almost thirty years, work provided it. Work also helped define the days that you weren’t at it  – weekends were special, holidays an oasis in the desert. Before that, it was school, with your scheduled timetable, the play time bell and the ever longed for summer holidays. It’s not really a surprise, or it shouldn’t be, that when that structure vanishes and every day is like Sunday, then it’s quite a shock to the system. It’s therefore not a failure to seek a structure to replace what you’ve known for literally most of your life to that point. In fact, it’s almost a requirement that you replace the old solid routine and structure with one that’s equally robust.

So what I learned was that it doesn’t really matter how late, or early, to the game you are if you’re really not prepared for it. In fact, the more months and years you have to start laying the foundations for outside interests, hobbies and pastimes that are an alternative to work, the better it will be. Don’t make the mistake of waiting until you have time in retirement to work on all those things because, in my experience, it just ain’t as simple as that.


Common Sense

I liked the recent blog post from The Escape Artist that should, in my opinion, be printed in every Money section of the weekend newspapers in the country. Or better still, the mainstream papers like the Daily Mail or The Mirror but I know that’s way too much to hope for. Finance? Who’s interested, versus who’s dress showed the most cleavage at the Oscars, or whatever they were going on about on Monday?

I’m one of these strange people who read the Money section of The Sunday Times straight after I’ve covered off the columnists in the main section. The finance paper has some good columnists too – Hunter Davies and Ian Cowie, for example – but they couldn’t write as straightforwardly as TEA in order to get their point across. Hunter Davies hates all fund managers and finance companies after a disastrous experience with the Equitable Life and his personal pension. He comes from a generation where frugality was the norm and, despite being quite possibly a multi-millionaire, still rummages in neighbourhood skips to see if someone has thrown out anything of value that he could use. A man after my own heart. Ian Cowie often alludes to the attraction of passive investing, but is a bit of an “Active” dabbler himself (or seems to be, maybe it just gives him something to write about!) Meanwhile the rest of the paper buries any worthwhile information under reams of other material that suggests maybe your savings would flourish under this fund or that fund, or in property – but I never read the Home section of the Sunday Times, clearly unlike many of their readers given property is given a whole weekend supplement to itself.

I accept that this agenda is probably driven by the advertisers – i.e. the big financial institutions – and I wonder how many articles’ recommendations are basically driven by a bung? Or to court favour with some fund manager who might lead them to a better story somewhere down the line if they turn out to be the next Neil Woodford.  Or Anthony Bolton (remember him?)  The financial industry and the financial press seem to have this need to find “investing heroes”, the David Beckhams of the Stock Exchange. I kind of understand the marketing psychology behind it, but it’s pretty ephemeral as the Anthony Bolton story demonstrates. Except for Warren Buffett, of course. There is a cynical view is that he is merely the fund managing monkey that typed the works of Shakespeare, or that maybe he’s just the financial equivalent of Highlander –  there has to be The One, doesn’t there, and he’s it. But Buffett himself tells you not to do what he does, but do what he says, and what he says is that you should invest in tracking funds, not stock pickers. I’m happy to follow this sage advice.

Extreme Brain Love

Extreme Brain Love

(Saying that, however, if Merryn Somerset Webb recommended I sink a few grand into the Ecuadorian Peanut Futures Market ETF, I’d be setting up the Direct Debit tomorrow as I am, I’ll admit, madly in love with her and her brain.)

No matter how the Money supplements try, however, the Passive Investing movement is building. I hope that the eventual outcome of this will be that good fund managers will eventually charge the same fees as a tracker funds, although I’m not holding my breath. There would still be plenty of cash in the racket if they did, and I have to admit that I would be tempted to give some of my savings to someone dedicated to trying to pick winning companies and gain an investment edge. After all, we trust professionals in other areas of life and knowledge and experience are surely worth something – it’s just that in the City, they’re not worth what they’re asking. TEA’s example of how to turn a £1m investment into £450k by simply giving it to some Champagne Charlie to manage for a 2% fee should be common knowledge to every schoolkid who can sit an arithmetic O level (if they even have these any more at school.)

It’s supposed to be that common sense is not so common and, to me, tracker funds struck me as complete common sense the very first time I read about them. I think that many people would think likewise, if only they could get past the “mystique” of investments and equities. Fund managers and IFA’s need to keep that aura of complexity alive as their fees depend on it, as do the firms that they represent. Independent financial bloggers – and Warren Buffett – can rise above such concerns, so let’s keep doing our best to get the message out there.


I blogged last year that I was thinking of investing some money into Premium Bonds as I felt I had enough in equities and not enough ready cash – but I couldn’t stand the thought of cash just sitting in a bank or savings account, earning virtually nothing. Arguably Premium Bonds had the chance of earning me something.

To my delight, my numbers came up last week and I won twenty five quid! Now that’s the kind of prize I like, because it’s total treat money. It’s the kind of sum I can spend without guilt or perceived “opportunity cost” that a win of say, five hundred quid, would bring about. If I won that amount, I’d probably invest it, although possibly in a speculative punt on a single share purchase like Rolls Royce. And if I won five thousand, most of that would definitely be squirrelled away into further investments.

I once actually did win five thousand pounds, on the Littlewood’s football pools. I was young then, just married a year, and we blew it all on a fly drive holiday to California. What a fantastic experience that was. Do you realise, however, that if I’d invested that cash wisely enough to return me 10% over all those years, that five grand would now be worth £60,278.73? Well, to quote those Californian legends, Metallica, so ****ing what? I didn’t regret spending that money then, and I don’t pine over that “lost” sixty grand today (I tell myself in my most adamant, and hopefully most convincing, tone of voice!)

I do sometimes wonder about the common story on FIRE blogs about the Starbucks Latte – you know the one, that if you didn’t spend that three pounds every workday then you’d save fifteen quid a week and over seven hundred pounds every year. Well, you can’t argue with the arithmetic, but it depends on how your coffee adds to your quality of life, doesn’t it? What would you pay to brighten your day? If that Starbucks latte floats your boat, then surely three quid a day is a bargain compared to going without it? Of course, if it does nothing for you whatsoever then why in God’s name are you buying it in the first place?!

In a way, I’m glad I didn’t discover the concept of FIRE until about five years ago, because I think I might have been swayed by that Starbucks analogy had I thought about it. These days I actually have the opportunity to indulge in this habit on a daily basis because there’s a Costa Coffee in the small market town where I work. About twice a week, I leave the house early, drive to work before the traffic becomes annoying, park up, head into the near deserted coffee shop, order up my latte, download The Times to my Ipad and enjoy some quiet time before work. It’s great, and I could easily do it five times a week – except for the fact that I’m thinking “Seven hundred quid a year! On coffee!?”

So I do have some spending thresholds these days that might prevent me from spending a five hundred pound prize on myself. Twenty five quid though, that’s a totally manageable windfall, arriving without fear, guilt or loathing. That’s a bottle of seriously nice wine for Saturday night. Or two (I can’t tell the difference between wine at a tenner a bottle and wine at twenty, except psychologically). Mind you, I couldn’t drink two bottles of red these days in the same evening without totally ruining the next day. Or maybe a it’s trip to The Fisherman’s Wife in Whitby with my DOH on a quiet evening, with its view out to the sea and an effectively free fish and chips? Or it’s a few decent books on the Kindle or, even better, a hardback book to fuel retirement dreams? A Moleskin notebook would be another guilty pleasure to indulge in, without the feeling that I was being ripped off and a bit of a pseud to boot. Perhaps a more manly purchase would be this handy wee Leatherman C33 with its twenty five year warranty? I’d want to spend it on something that I might otherwise apply the twenty four hour rule to, but at this level I don’t find the challenge too difficult.  It seems to me that I’d agree with The Beatles that the best things in life are free, but the second best things aren’t really all that expensive either.

Walk Like a Man

By now, I hope you’ve all listened to, or intend to listen to, the Tim Ferriss podcast of an interview with our cult leader, Mr Money Moustache. You can tell (I thought) that common ground was sparse between them, as Ferriss has gone in writing about how early retirement would utterly bore him to death, but there were more than a few areas that they could agree upon.

If you’re a regular listener to this podcast (and can get past the first few minutes of annoying “infomercials”) you’ll know that Ferriss has a set list of questions that he likes to pose to most guests in order to stimulate some dialogue. One of the problems with this routine is that the guests now know the questions are coming and sometimes have pat answers prepared, or answers you suspect are somewhat less than genuine. Still, it’s better than “Loose Women” and generally speaking I like the approach.

One of the regular questions is “If you could erect a billboard for a month and write a message on it, what would it be?” and MMM’s answer struck a chord with me. He’d write “Just Walk”, which surprised me a bit because I’d have more expected “Just Bike” from him. But no, it was walking that triumphed for a variety of reasons that he and Ferriss went on to discuss.

I don’t want to regurgitate their praise for this simple activity but I agreed with just about all of it.I posted earlier this year about resolving to try and get a bit fitter but, in general, I can’t be arsed with serious exercise or the gym. I do enjoy walking, however, so about two weeks into January I resolved to try and hit a target of 10,000 steps a day on my Fitbit monitor. When you’re in an office almost five days a week, this takes a bit of effort – I know from experience that an average day, sitting at a desk, will result in me clocking up about 4,000 steps between breakfast and bed. Given I walk about 1,000 steps in ten minutes, I need to find an additional hour, most days, to achieve the target.

We all lead busy lives, or tell ourselves we do, but for me when it comes to exercise it’s just an eternal battle between discipline and distraction. I can find a hundred reasons not to exercise if I allow myself to, so I need to be firm with myself. I have to have a plan, or write a goal to commit to it. I can’t just vaguely tell myself I’ll get up half an hour early tomorrow and take a morning walk because, if I’m vague about it, I won’t.

And, in order to achieve my 10,000 steps, I do have to get up half an hour early and take a walk, because I’ve found with this base achieved then the rest of the day takes care of itself. Once I have the morning set done and dusted, I then tend to make sure I nip out for lunch and fit in a half hour or forty minutes at that point, and then, if necessary, pop out in the evening for a quick pint to the pub at the other end of the village to claim the rest. (No doubt this undos any calories burnt, but ye Gods, you have to live, don’t you?)

There’s other parts to the routine that I put in place to ensure that I get out the door in the morning. I have to have my gear ready and prepared for that 6am exit, including my iphone, headphones and downloaded podcasts preloaded in my jerkin pocket. If I have to end up looking for any of these items then it will throw me completely out of kilter. I also have an insulated mug sitting by the kettle so I can boil it up and then slurp a morning cuppa as I walk around the quiet village streets. Having an objective helps too, such as walking to a local shop (or BP petrol station for me) to buy a paper, a pint of milk or anything else that gives a “point” to the excursion. Actually, this really helped me at the start because I was quite self-conscious about aimlessly walking at that time of the morning. What did people think I was up to? A trainee Peeping Tom, clearly. I almost considered buying a dog.

In the same way they say “money goes to money” I’m finding “walking leads to walking”. It’s now my preferred way to go from A to B if it’s a feasible proposition. When I find myself frittering time away on an evening at a loose end, then I’ll don the headphones and head out for a stroll. I don’t mind what it’s like out, believing the Billy Connelly adage that there’s no wrong weather, just the wrong clothes.

There’s loads of side benefits too. I’m slowly losing weight despite sticking to three square meals a dayrest-hr. I’m sleeping like a log and the seeming lack of dreams probably signals that I’m not waking as often during the night. I’ve posted here the graph of my Fitbit’s tracking of my resting heart-rate since I began this campaign, an alleged indicator of improving fitness, although I was more interested to see the peaks inspired by Friday night visits to the pub (especially last Friday’s rather lengthy session!) You need a bit of excitement after all, and it’s the one downside of walking that I’ve discovered so far: my DOH tells me I’m turning into a walking bore.