Month: September 2015

Dark Anxiety

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Why is it oldies drive really slowly and carefully? Surely they have less to lose? They’ve had a good innings, so why not enjoy what’s left, careen around town like Lewis Hamilton while snorting crystal meth and burning rubber at the traffic lights?

But, it’s true, the older you get, the more cautious you become. Like approaching the edge of a high diving board you know you are going to have to jump from, you begin to walk a bit slower, trying to find an alternative to making that leap. Just a few more minutes, please, while I enjoy the view from up here!

dark anxiety

Self Generated IFA

As I grow older, I notice that I am becoming increasingly risk averse and more prone to seeing shadows where before the road ahead was bathed in sunshine. It’s rather annoying, and fetters my decision making as doubt clouds my outlook. In many of the FIRE blogs, I see us talk a lot about goals and objectives, plotting our future direction and trying to get the best odds to favour us. Behind us rides dark anxiety, the risk of loss. Unfortunately, over time, he’s gaining ground.

About fifteen years ago, I bought around ten grand’s worth of shares in Scottish Telecom (renamed Thus in those trendy dot com years). I did this based on the recommendation of a consultant I knew who was working there. “You can’t lose on them Jim, it is buying money”, he told me. Two years down the line and I had lost nearly every penny. At the time, I shrugged ruefully and put it down to experience. I’d just have to save the cash and try again because the next bet might quadruple my money. Nothing ventured, nothing gained.

I know this to be true, because that’s what I was writing in my diary at the time. I was charging forward into the future, confident that things would turn out right in the long run.

I look back on those years now in sheer horror. What was I thinking?!! If I had only stuck that ten grand in an index fund, it would now be worth…no, I can’t face it! And Thus was only one bad bet I made. I lost cash on quite a few others too.

At the same time as I work through my contemporary horror, I do admire and respect that attitude and confidence I had, underpinned by the time horizon I was working to. Retirement was so far away I could afford to make some mistakes and I wasn’t frightened or intimidated by the future. These days even passive investing looks extremely risky. My index funds, since the start of the year have lost….oh, you don’t want to know. I don’t want to know! If only I had converted some of them to cash, like I thought about at the turn of the year.  Maybe just ninety five percent of them, something like that. The other five percent, I could have risked.

I jest, of course. I accept that risk generally equals reward and that’s the deal we’ve signed up to. None of us, aiming for FIRE, are going to be able to do it by stuffing our cash under the mattress. Unfortunately, none of us can advise anyone else on what constitutes a risky approach to generate the best return, because the infuriating answer to that question is “It depends”, closely followed by “It’s up to you”.

So if I could hop Back to the Future to 1999, what would I tell myself to do with that ten grand? You know, I can’t help but think I’d tell myself to Damn the Torpedoes and have a punt. Despite those financial setbacks, I did learn from the experience: I subsequently read up more on investment strategies, I learned about asset allocation, and I realised that I wasn’t the type of person to gamble on individual shares. I became a better investor (for me) perhaps more quickly than I would otherwise have done – and finding out more about yourself is the one Never Ending Lesson on the road to FIRE.

How Much is Enough?

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My holiday wandering took me down to a big new Marina where the super yachts, Ferraris and heliports decorated the harbour. Apart from tourists like me, gawping at the wealth we’d never have even a snowball’s chance in Hell of attaining, the place was deserted. Maybe the billionaires are too embarrassed to be seen here by the poor people, mouths agape and slavering at the sheer vulgarity and colossal tastelessness on display?

Superyacht

Look, don’t touch.

Nobody else seemed to be bothered by the absence of those who control this wealth. In fact, other people were strolling the harbour side looking very happy, smiling at the deckhands and pointing at the display of ostentation in what seemed to be admiration. Clearly they derived some sort of pleasure from looking at objects that they would never, could never have the slightest hope of attaining and a lifestyle that will never be theirs. Whereas I was wondering more why we, the people, weren’t forcefully boarding these obscene gin palaces? After all, we paid for them. This harbour, built no doubt by the Spanish government and EU cash, is being hogged by these monstrous boats that none of we citizens can board. I wondered if it galls the billionaires that they can’t stop the hordes wandering along the harbour? I was also wondering why they couldn’t build their own damn harbours? The state can only go so far in its cosseting of the billionaire class of course, and needs their connivance to dangle the carrot to the people that one day, in our democracy, all this could be yours too. Just ask Tony Blair. Come look, admire and aspire. But don’t dare touch.

So what has any of this to do with Early Retirement, I ask myself? Well, if I’m retired I can absolutely kiss goodbye to the aspirational lifestyle of monetary and material possessions. It was one that I used to be somewhat comfortable with and ensconced within. I worked, I earned and I bought the kind of stuff that could be posed with as a measure of my wealth. Okay, relative to the super-yacht set my splurges were laughable. But I have to say the sentiment was the same: Look at how much I’ve got!

Over the years, however, my goals and priorities changed more toward the Dave Ramsey mantra, “…where the status symbol of choice is the paid off home mortgage.” I stepped out of the rat race, I like to think.  Maybe now I rant against ostentatious displays of wealth in the same way a recovering alcoholic might rant against the evils of drink. I recognise my vulnerability to accumulating wealth and must protest against it.

Or is it simpler than that? Is it still basically envy? I remember an old colleague of mine stating his opinion on being offered BUPA through our company scheme (which I was thinking of declining.) “Jim, I’d only protest against it if I couldn’t get it”, he said. As I looked disdainfully at the Ferraris, was it just jealousy that was bothering me so much?

You know, I have no idea. But retirement brings home certain financial realities, that’s for sure. Living with less ambition for material goals is, I think, a “good thing”, but I still can’t completely shake the feeling that having money as a measuring stick is something I’ve completely left behind.

Holiday-ay, it Will Be Alright….

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Wish You Were FIRE

Wish You Were FIRE

I’m on a short break holiday abroad writing this, the first holiday I have taken in my “early retirement”. I used to wonder if I’d feel differently on holiday now that I’m not working, and the answer is “maybe”. Of course, not having any work to go back to, well, it’s hard to see a downside on that aspect. But I haven’t escaped any work either and I have missed that frisson of excitement on leaving the “Out of Office” message on Outlook.

On the other hand, no return to five hundred emails either, of which I would read the two from the boss and the two from clients. The rest sat with the other nine thousand “unread” in my inbox. (I jest not on the number, although that was about five years’ worth. Corporate life combined with shoddy email management.)

When on holiday from work, I always used to suffer “imaginary holiday envy” because of the sheer lack of exciting things my family did compared to the ideal families in the adverts. No paragliding for us. No long camel rides into an Arabian sunset. No awe-inspiring canoe trips up the Amazon. No sitting with my wife at a beachside Caribbean restaurant table as she stared devotedly into my eyes in sheer wonder that she’d married such a hunk, while waves crashed on a nearby shore. When I thought about it, all we did on holiday was the same as what we did with our leisure time at home, except we did more of it. A bit of shopping, a bit of walking into town for a coffee, a bit of reading books, reading the papers, eating out and so on. Maybe I’d play some golf. Relaxing from work, that’s what we did, and we enjoyed it.

Now I’m not working, I tell you, I do shitloads of walking into town, reading, going for coffees, shopping (groceries only though), playing golf, eating out and, I hate to admit, it is all in danger of becoming Really Effing Boring. All that sweet relaxing stuff is now my New Normal.

Once retired, if you tell people that you have reached that stage of life, they often make a remark such as “Permanent holiday, eh?” They could be right, but I’m not so sure. If I go back to work then I am certain that I will feel this stage of my life was a long, enjoyable holiday. A break from work. The first three months of my enforced retirement absolutely felt like that and I was on Cloud Nine. If I’m honest though, I also felt during that time that I would – probably – return to the workplace. I told people I was retired, but didn’t truly believe it (and still don’t). I now feel that if I really never return to paid employment, then this won’t feel like a holiday at all. It will just feel like my latest version of living, not that much different from your working life, providing that on the whole that you quite enjoy working and what it has to offer. And, on the whole, I did enjoy working. Okay, I now don’t have the boss paying my wages, but he’s been replaced by my investment funds paying my wages, and it’s them that now dictate my future retirement career.

So, as I sit here burning cash that maybe I will regret spending in twenty year’s time, I reflect that holidays are still a great break, still almost necessary and will still remain a part of my life going forward. But maybe next year I will try some paragliding.

Spending Capital

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One of my favourite financial journalists is Merryn Somerset Webb who writes the editorial for Money Week magazine. This week, she stated the following:

“It is hard wired into the UK financial brain, rightly or wrongly, that capital must not be spent – only income can be spent.”

She’s right, but I need to adjust this wiring. Although I’m not a big fan of being as transparent on my finances as some of my fellow bloggers seem to be – and I kind of admire them for it – I will make this admission: in order to retire early with the lifestyle I want, I need to pretty much burn up my capital reserves between now and 65. (At 65, a combination of a generous defined benefit pension scheme, my other half’s DB pensions and state pensions all kick in. I also think my expenditure will be way lower as I head into my late sixties. No more cocaine parties at that age.)  

So, I’m looking at spending, over the next fifteen years, what some other people may call their “life savings”. Well, if they are “life savings” shouldn’t they be used to enjoy life? I’m heading off on holiday soon and am resisting trying to bite my lip over the money I’ll be spending. Shouldn’t I be sitting hoarding that cash as a protection against potential future penury? Accumulating the interest?

I heard Dave Ramsey on a podcast the other day advise a caller as to how to build his savings to a point that he’d accumulate over five million dollars in his bank. At that point, the caller would be 85 years old. Well, I hope he farging enjoys it at that age. He can buy a gold plated zimmer frame. More likely, as an American, he can continue handing it over to medical companies to manage his incontinence. I mean, come on, what exactly are we saving for? Repeat, You can’t take it with you. Yes, you can give it to your heir(s), but is that sensible for them, never mind you? My wife and I will inherit pretty much zero financially from our parents and so what? You could argue that this knowledge spurred us on to make a financially secure life for ourselves. Having our parents around was all the “reward” we needed from them. We’ve made our own way financially in life, and so should our offspring.

This financial bravado takes me only so far, all the same, because I AM as hard wired against spending my capital as much as the next miser. It’s hard to change the habits of a lifetime and, even when I don’t know exactly what I’m saving for, I still like to save! The pain of cashing in investments just to live from month to month is almost physical. As I push the heavily reluctant mouse to click “Sell” on the Fidelity web page, it takes a massive effort of will to do it. I hate the thought of doing this going forward on a monthly basis, I really hate it. In fact, I hate it so much, I spend a lot of retirement time figuring out how to go back to work and earn money! Even though, rationally and logically, I don’t think I actually need to. But my hard wiring seems to be a lot more hard wired than I thought.

Spending Your Pennies

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I noticed this advert on Twitter this morning and it struck me that there are several leitmotif images about retirement that many companies reach for when trying to attract prospective pensioners with their cash.

Did You Pack the Preparation H?

Two Portaloos Ahoy!

Firstly, there’s the inevitable scene on the beach. After all, that’s where all pensioners want to go. In real life, you tend to see them huddled in their cars at the coast, sitting staring silently out at the horizon instead of running laughing along the sands. They have a flask of tea and a tupperware box with a cheese sandwich in it, instead of just exiting the champagne and seafood bar, as the pictured couple might just have done.

Blue, almost cloudless skies (there have to be some clouds, this is old age and retirement we’re talking about) frame the scene, but it’s difficult to tell if this is Corfu or Cornwall. It’s certainly not Cromarty, where the rain would be lashing in horizontally from the sea. The Blackpool Tower is also noticeable by its absence, so draw your own conclusions and paste your own geographic dreams onto the beach

The second thing that makes me question if this is a typically British retirement couple is that they look quite cheerful. Nay, joyful. You wonder what news they’ve just received? Is it that David Cameron has blown up the Channel Tunnel? Is it that their forty year old son has finally moved out their home? Or perhaps they’ve discovered they won’t have to contribute to their grandchildren’s school fees? Whatever, it’s clearly news that would cheer up a middle class couple who have a private (Charles Stanley) pension to live on. A state pensioner can forget the beach, unless they’re trolling it with a metal detector hoping they might find a pound coin.

In many of these ads, women take predominance, underling the position that old men are basically pretty useless. The pressure seems to be placed more on the woman to make the most of retirement – it’s the globetrotting grannies and the skydiving seventy year old great aunts that we tend to read about in the papers. The woman will take the lead, the man is in the background. Old blokes as pensioner role models? Not in the adverts, unless they’re pottering around the garden or selling constipation relief. I feel that men only have themselves to blame for this and that we need to take a more positive and energetic approach to our retirement instead of seeing Victor Meldrew as an aspirational figure.

Where is the mobility scooter in this picture, you may ask? I did. Last time I was at the coast, I made a mental note to look into which companies built these things so I could invest in their shares. They were everywhere. I’m not sure I can recall seeing an advert for a mobility scooter though. Bad health is a difficult sell and, if you have your pension with Charles Stanley, that’s clearly not going to be YOUR future.

What else is missing? The Portaloo, of course. For an elderly couple to be having this much fun on a beach, there has to be a vacant toilet somewhere just off camera. To paraphrase for a pensioner, if you can see a loo it means you’re about to pee, if you can’t, you’re peeing.

All in all, the above advert is, for me, an absolute incentive to retire as early as possible. The time to be running joyfully along the sands with a big smile on your face is now, while you still can.

Homework

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My workday internal alarm clock wakes me before six this morning. Today is Friday, a day when I usually lived the average working man’s fantasy – I tended to “work from home” that day. Have you ever had the facility to “work from home”? Do you agree with the mayor of London, Boris Johnson, when he called the practice a “skiver’s paradise”?

Personally, although I chose to do it, I hated having to work from home. Firstly, you could almost guarantee an early phone call from a colleague in the office that inevitably began “Morning! Where are you today?”

“Ehrm, I’m actually working from home today, loads to do”.

“Oh, right. So you’re at home now?”

Just to induce the guilt. Mind you, that was better than the boss, who would inevitably call around lunchtime and ask the same question. This was to establish the fact that you were, indeed, a skiver.

Well, if I had been deliberately skiving then maybe I could have lived with the guilt. But generally I would have the laptop fired up by eight in the morning in my home office, mobile ‘phone by it’s side, proving to myself that I was really set to work and earn my day’s pay. Ten minutes later and I would have cleared the unread mail, the ‘phone would not have rung yet and I’d hear my wife in the kitchen downstairs fixing her breakfast. Maybe I should go down and have a coffee with her? No! I might miss an important mail from the boss and I’ve got my weekly report to write. I need to get on with that.

In the peace and quiet, I’d be able to write the weekly report in half an hour. No nipping in to see a colleague’s office to have a chat about the dismal state of the business. No opportunity to chat to the lads in supply chain about the week’s football. Just work to get on with.

Okay, report done. Now what? Well, I’ve that budget strategy presentation to write for the end of the month. I could do that. Nah, fuck it, that can wait. Aha! An e-mail to answer. Suddenly the mobile rings, and the name of a colleague flashes up (a colleague I actually don’t mind chatting to) so I answer:

“Hi, you okay”?

“Yeah, good. Where are you today?”

“Home, working on that budget strategy presentation. Where are you”.

“Yeah, I’m working from home too. Loads to do. It’s amazing how much you can get done at home, isn’t it?”

“For sure. I probably get three times the work done here that I would do in the office”.

“Totally agree.”

We’d then go on to talk about nothing for fifteen minutes while I secretly hoped the boss would try and call me now so he’d realise I was actually on the ‘phone and working. No such luck, so I decide to ‘phone another colleague who I bet is also “working from home” to repeat the conversation I’d just had.

Okay. Now what. Better start that strategy presentation. Nah, I’ll do that this afternoon. Ah, three more e-mails to answer.

And so the morning would progress. I’d sit in that office at home finding ways to get absolutely nothing done that didn’t have an urgent deadline to do it within. Meanwhile I’d hear my wife calling her friends, arranging her day, leaving me in peace and putting off the hoovering so as not to cause an awkward moment if and when the boss called. “Jim. Where are you today? Is that a hoover I can hear? Are you hoovering?”

Lunchtime would come ‘round and, maybe if she wasn’t doing anything else, I’d take my other half for a Chinese business lunch down the road. This was a big step for me in the guilt stakes, upping the pressure for the hour of not being welded to my laptop in the home office awaiting e-mails that I could respond to so as to prove that I was working, instead of skiving off having lunch with the wife. So, absolute maximum time I could afford for lunch would be an hour.

We’d get to the Chinese and take our seats, order up our food. I’d check the phone for mail. Hmm. Do I answer that one from the boss’s PA? If I do, it’ll tell her the message has been “Sent from a Window’s Mobile” and she’ll know I’m out and about. I’ll leave that one ‘til I’m back home.

The starters arrive. And, I kid you not, the mobile would suddenly vibrate on the table with an incoming call. The caller’s name? The Boss. The number of times this happened was incredible and inevitably lunch was then rushed and ruined because no way was I calling back from a Chinese restaurant. “Jim? Where are you? Is that Chinese music I can hear? Are you in a Chinese restaurant?! Aren’t you supposed to be working?”

I’d literally twitch through the meal to get back home and return that call. I’d run upstairs to my laptop and quickly return the boss’s call. “Hey, just noticed I missed a call from you?”

“Yes……Where are you today?”