End of Year Appraisal

We’re quite forward looking in the FIRE community, projecting into the future on our financial and personal goals. What income we’re going to have. What books we’d like to read. What tasks we’d like to complete, and so on. When January 1st comes ‘round, the whole population joins us in the goal setting process when asked to make a New Year’s Resolution. Although I bet 99% aren’t SMART (Specific, Measurable, Achievable, Realistic and with a Time horizon) at least it’s a start! I’m not going to knock anything that encourages people to think positively about the future.

Over the years, however, I’ve found myself more reflecting back over the year as it draws to a close. Generally this is on quite trivial stuff, such as what was the best book I read? Or the best film I watched? What was my best and worst investment? On those, I’d probably note a “Top Three”. No idea why.

What I’ve tended not to do is to review the year from a “personal development” point of view. Maybe that smacked too much of the dreaded and futile “Annual Appraisal” at work, which Ricky Gervais brilliantly captured in his meeting with Big Keith in The Office:

I also felt that by writing a daily journal, it meant that I was in constant personal appraisal mode anyway. Within that, I tend to reflect on the previous day and note down specific things that I may have done or felt I might want to remember. I take that information and park it in writing before going on to think and write about the day to come. In this way, I kind of hope that the journal serves as a continuous learning process that captures a lot of what I’m learning from the past.

A lot of people in the FIRE community will use the end of year to assess their investment goals and I used to do this too. This was largely because it was generally positive due to the amount of money I was putting away on a monthly basis. The regular savings tended to outweigh the negative fluctuations in the markets. Most years I could look at significant progress over the previous year and readily admit that much of the gain was due to simply saving. It’s a big message that’s often lost in many of the FI sites that I visit. The most important single thing about saving and investing is to just regularly do it. Save something – anything – every month. Get into the habit and make it the first thing you deduct from your wage packet before anything else.

This year, however, I’ve personally not been able to practice what I’d like to preach. I’ve earned nothing and therefore saved nothing while all the markets my investments are in seem to have added nothing to the pot. Meanwhile I’ve kept my expenditure pretty much unchanged from previous years. When I tote up my savings and investments on December 31st this year and compare them to what I had in December 31st last year I suspect (no, I know) there’s going to be a big year-on-year deficit. Even the thought of this is making me twitch in my seat as I write!

If I’m probably not going to enjoy reviewing the year in terms of investments, I need to look for other things to reflect back upon. I thought about this as I listened to the latest Tim Ferriss podcast where he is reviewing the things he’s learned from his guests this year. He mentions this “annual self appraisal” as a suggestion one of his guests made, and it struck a chord with me. Ferriss briefly rattles through some of the questions he might ask of himself in such a review, but to be honest I can’t be bothered to go back and find out what they were. I caught enough to get the gist of it, I think. Questions such as:

What was the biggest thing you learned about yourself over the year?

What was the best decision you took, and why?

Who was the most influential person you met with (or spoke to or listened to?)

What was your biggest mistake? What did you learn from it?

What habit or thing should you do more of next year?

What habit or thing do you want to cut out next year?

I could go on, but I’d be more interested in finding out what other people tend to ask themselves if and when they review the year that’s gone by. So what do you reflect back upon?

My Retirement Week (10)

It was the anniversary of Star Wars this week. I went to see the original when it was released, on a rainy night in Glasgow in 1977, taken by friends of the family and with no idea what the film was about. I wasn’t into science fiction at all and probably wasn’t expecting much. It’s fair to say, it blew me away (in my defence, I was thirteen years old!) As I left the cinema and my mate’s dad asked me if I’d enjoyed it, I was literally speechless. I couldn’t put into words what I’d just experienced – I was almost in a daze. I spent the next few weeks and months collecting everything I could about the movie and I still remember how caught up I was in the whole thing. But they should have left it there. One movie was enough. The sequels just ruined it all, as far as I was concerned and, as I grew up I grew out of Star Wars.

All the same, I wish that everyone could experience that sense of awe I felt as I left the ABC cinema in Sauchiehall Street. It’s a feeling that I remember as almost unique, like some sort of rapture, or wonder, that happens very rarely in life. Maybe you have to be that age though.

As I said, I collected quite a bit of stuff about the original Star Wars and how I wish I’d kept hold of it! I once had the original movie poster which is probably worth in excess of £1,000 these days. At the time, I collected a lot

Spy who loved me

Bond Banker

of film posters, some of which I still have. Pride of place is an original James Bond movie poster of The Spy Who Loved Me which, allegedly, could also be worth close to £1,000. But I’ve lost or misplaced some of the better ones I had – Star Wars and Jaws being the two that I lose sleep over.

I’m sure that many of us who are into investing often look at alternative markets for putting our money into. I know I have, and still do. Wine is an obvious one, but in the past I’ve also thought about whisky, first edition books, car brochures, football and music memorabilia, to name a few. Collectables can be worth quite a bit of dosh. Suppose that I had the whole original set of Star Wars cinema posters – what would that be worth? Or the Harry Potter movies? Even better, the books. What if I’d bought an original First Edition of J K Rowling’s books when the hype started to take off? Got her to sign it at the local Waterstones? What would that be worth now? Twenty grand, I think, if you could actually buy one. It’s a risk though. In thirty years, people might look on J K Rowling as we look on Enid Blyton. Interesting but dated, and not all that valuable. On the other hand, like Star Wars, Harry Potter might have become a religious icon with a signed First Edition of the first book being almost priceless.

Collectables are a risky investment business though, much riskier than stocks and shares or property, so I’ve always thought that if I’m going to buy such things as wine, film posters or first editions, I better be prepared to lose everything on the investment. Therefore I’d need to get a real pleasure out of owning them for their own sake. I know that when I look through those old film posters, memories flood back of a time and place that have a real sentimental value, and I don’t really intend to sell them anytime soon. Money isn’t everything, after all.

Otherwise it’s been a quiet week. I did read another excellent novel that I’d found on a recommended list which I posted before as a link. This one was The Circle by Dave Eggers which takes the “sharing culture” of Facebook and Google and projects it forward into a “Big Brother is Watching You” thriller. Very entertaining. (The other I’ve read from this list is the equally excellent “Do Androids Dream of Electric Sheep?” by Philip K Dick).

Some of you might have tuned into the original Serial “true crime” podcast, which was a big hit when it was released, and which I would thoroughly recommend. They’ve now produced a second series on a completely different subject which I’ll try to find time to listen to. Both will be easily available through your normal podcast channel. The podcast I’m listening to most regularly at the moment is MoneyWeek. If you don’t buy the magazine, this covers a lot of the content that’s in each issue and is short and snappy enough to get through without being bored rigid. Which isn’t something you can say about a lot of financial broadcasts.


The Comfortable Poor

So what’s your net worth? Are you happy with it? Do you think you have enough? Do you compare yourself to others and think you can do better? Or thank your lucky stars for what you have already?

Felix Dennis, the now deceased publishing magnate and poet, wrote a very amusing book, How to Get Rich about how he’d built a personal fortune of over £500m. One of the more memorable passages in the book was where Dennis gives his opinion on what kind of money makes you rich. (I remembered this as I read Fire V London’s blog post on salary bandings in the capital city.)

We don’t often hear rich people defining wealth from their perspective, so here is the world of money according to Felix, a semi-billionaire:

Comfortably poor: £50k-£199k in liquid assets; £1m-£2m in total assets

Comfortably off: £200k-£499k in liquid assets; £3m-£4m in total assets

Comfortably wealthy: £500k-£999k in liquid assets; £5m-£15m in total assets

Lesser rich: £1m-£5m in liquid assets; £16m-£39m in total assets

Comfortably rich: £6m-£15m in liquid assets; £40m-£74m in total assets

Rich: £16m-£35m in liquid assets; £75m-£99m in total assets

Seriously rich: £36m-£49m in liquid assets; £100m-£199m in total assets

Truly rich: £50m-£100m in liquid assets; £200m-£399m in total assets

Super rich: Over £100m in liquid assets; over £1bn in total assets

I think by his own definition that Dennis falls into the banding of the “Truly Rich”. Interestingly not the Super Rich. That’s because, from what I’ve heard, rich people are somewhat obsessed by the people they know who are slightly richer than them. That’s why Warren Buffet was recently overheard saying, “That Bill Gates. He lucked into his money. If he’d been born thirty years earlier he’d be flipping burgers”. Okay, I made that up, but Buffet might have said it if he’s anything like a lot of rich people.  I mean, I thought it was interesting that someone like Felix Dennis would even categorise money in the way that he has. He’s accumulated way more wealth than he could ever spend, but he’s still wondering where he sits in the scheme of things.

You can bet your life that some of the most avid readers of the Sunday Times Rich List will be the multi-millionaires and billionaires, but it’s a safe bet they’ll only be reading the page they feature on. That’s because they’re obsessed with their peers and what they’ve got. (Seemingly they’re also terrified of losing it all too, although most would never admit this, even to themselves. It’s a big part of what drives them though.)

I’m speaking here only slightly from my own experience of meeting rich people. When working, I often had the company of some seriously rich individuals and it never ceased to amaze me how fixated on money they were. But they were even more fixated on the money that their peer group might have. One of my friends, an ex-fund manager in the city, backed up my observation, saying he was absolutely fed up of listening to clients worth £400m moaning and griping about their lucky neighbour or colleague who was worth £50m more than them.

I’m sure we all can relate to this though. When I used to have a company car, I would obsess about the next car up on the list, not a Ferrari or Lamborghini. Similarly, when I had a two bedroom house, all I could think of was affording a three bedroom one, not some country mansion with fifteen bathrooms. As for my mates who I suspected earned slightly more than myself, well, clearly they were just lucky. People I knew from school who were multi-millionaires….wait a minute, there weren’t any, so I never spared a thought for them!

The interesting thing about the book How to Get Rich, however, is that it’s quite anti-money. The message is that if you’re chasing Manon, then you’re chasing a false god. This is no self-help manual about how to make millions. It is, instead, a questioning of why you’d want to earn millions in the first place. Why squander the finite hours you have on this planet to chase money, when there’s so many other life enriching things you could be doing? Such as writing poetry, or planting trees, which became Dennis’s obsessions in his later life. Following these pastimes made him really happy and fulfilled, whereas building a fortune drove him only to drink, drugs, hookers and unhappiness (eventually. He seems to have quite enjoyed it at the time!)  He seemed almost sad to have come to the realisation too late that he could have lived a different life that required very little money, but might have offered the solace and fulfillment he found in walking through a forest or in penning a sonnet.

So, what’s your net worth? Or, more importantly, how much does it really matter compared with what else you could do with your life?

My Retirement Week (9)


A bit of a (12) Bore

I was invited to a shoot this week. Shooting pheasants, that is. I’ve been to these events before, in my previous working life, but it’s not something that ever captured my interest. I will sidestep the debate about the killing of defenceless animals and just note that I wasn’t totally comfortable with the activity – but then, when I think about what went into my McChicken sandwich, I’m not totally comfortable with that process either.

Then there’s all the paraphernalia involved, the equipment, the dress sense, the dogs, the need for a 4 x 4, the sturdy wellies, the teams of beaters needed to drive the birds toward you. It can be frighteningly expensive and somewhat class conscious. This was quite an informal affair though, run by a small farming a syndicate as opposed to a corporate jolly where, if they could, they’d use helicopters to round up and guide the birds toward you as opposed to mere beaters.

There can be a lot of money involved in shooting. Once, on a corporate do, a customer I was with asked one of the organisers how much  a shotgun would cost to buy. At the time, said organiser was driving us in his Range Rover (natch) across some rutted, blasted moor, so he replied by thinking out loud.

“Actually, you don’t normally buy one gun. You’d probably buy two as a pair. And you could probably pick up a decent gun for maybe thirty or forty, something around there.”

I was surprised. That sounded very reasonable. If I could get a shotgun (providing I passed all the background checks) for forty quid then I might consider getting one. Clearly the customer felt the same.

“Forty quid! Surely that’s a bit of a cheap gun?” he exclaimed.

Awkward pause while organiser pretended to fiddle with his four wheel drive shift. “Ehrm, yes that would be. Thinking about it, it’s probably nearer twenty for a decent gun. Twenty thousand pounds”.

You couldn’t make it up, really, not where I’m from anyway. I’ve actually toned this story down from the truthful version for the sake of credibility. Would you believe it if I said that the original statement was “You can probably pick up a decent gun for fifty or sixty, something around there.”  Maybe not, but that’s what was actually said. Fifty or sixty thousand pounds for a gun. And then you buy its “pair” while you’re at it. Of course you do.

Anyway, I don’t go to shoots much. Nor do I go to “gigs” much either, although I would quite like to attend more than I do. This week, I was offered two free tickets to see Simply Red. Suffice to say, had they not been free I wouldn’t have bothered. I’m not a big fan, and “Money’s Too Tight to Mention” for concert tickets these days (see what I did there?) The ticket I was given would have cost fifty notes, and I spent the boring songs trying to work out how much the band would gross from the night. The arena seated 13,000, and it looked full to me. Then programme sales (£15 each) and T shirts, hats, scarves etc.. On that basis, Mick Hucknall can probably afford to buy a shotgun. Or two. Which, I believe, is the proper form.

I didn’t watch much on the box this week because I was caught up in other things. Part of this was reading The Constant Gardener, a John Le Carre novel that was made into a film. I did see that years ago and couldn’t remember a thing about it, other than thinking it was a decent film. Given that fact, the book would be better. The books are always better, providing they come first. And this was borne out, I think, as I swept through over five hundred pages over three evenings.

Having really enjoyed watching the TV series Fargo recently, I’ve started to watch Fargo Season 2 which is currently showing on Channel 4. It’s shaping up to match the first one in terms of the quirky plot and black humour. I’m saving a British crime drama that I recorded a long time ago – Red Riding 1974 – because I’ve just started reading the book this week. This is like Fargo without the quirky plot and black humour. It’s just relentlessly grim, but sometimes we like that, don’t we? It seems to me that a lot of British crime drama rolls about in misery, inflicting violence on innocent creatures, class warfare and miserable weather. Coming to think of it then, it’s a bit like pheasant shooting.







If You Don’t Ask

Hi, I’m Jim, and I’m a Scorpio. A November baby, but if you’re thinking of getting me a present next year then (1) I’d prefer cash and (2) I’d like to combine it with your Christmas present (also cash) so I can buy myself something decent.

The “something decent” I’d planned to allocate cash on this year was a new golf bag. Exciting, eh? I’d been pondering this for some time, as my old one is beginning to look a bit shabby, ripped in places and suffering the results of a few brutal rounds in Scottish weather. In a way, I quite like this, because the golfing fraternity can be often be stuck-up, money orientated and dress conscious (I’ve been asked twice this year to tuck my shirt in!)  that this has been a small rebellion. There comes a time though – such as when your balls are dropping through holes in your pockets – that you have to bite the bullet.

I did my usual research – checked bags in a few of the shops, searched them out  on the internet, read reviews and pondered my choice. Finally I decided on the bag I wanted weekend, and was very close to buying it on Sunday…. but I imposed my 24 hour rule. Sleep on it. Did I really, absolutely need this? Of course not, but come on, it’s my birthday. Treat myself.

Having gone through the requisite mental financial hoops, I found myself in the American Golf store on Monday morning. I was the only person in the shop and the assistant was soon by my side. Normally, I don’t much welcome such attention – I know what I’m there for – but this time I was glad of his presence because I couldn’t see the bag I was after. Their website had said it was in stock. Was it hiding through the back?

“Don’t think so sir. I think it’s somewhere stacked in here”, said the assistant as he dug through the display. Sure enough, he found it. “Here you are…..”

We went through the motions of checking the bag out, but this was the one I was after. I checked the price and it was what I expected too. The only thing was, I’d seen it on a rival online store for about a tenner cheaper.  But what if it turned up damaged, or the wrong design, or with a broken zip, or a missing cover? What a pain that would be to return it. Or what if they were out of stock until after Christmas? I didn’t want to “risk” it. Was all that potential hassle worth a tenner?

I pondered this and suddenly surprised myself by asking the assistant, “Ehrm, I saw this bag online for ten pounds cheaper. Would you match that price?”

The assistant pretended to think for a few seconds and said, “If it’s an exact match, then I think we can do that. Where did you see it?”

“I can’t remember”, I said. “I actually thought it was on your site!” This was a bit of a white lie, but I wasn’t 100% sure where I’d seen it. We were now at the checkout, where an ipad was produced. “Try Online Golf”, I suggested, but he was already ahead of me on Google Shopping.

“Ah yes”, he said, “Here it is, on Golfdeals.com”. (or something)

“That’s right”, I said.  I’d never actually been near that site, but I’m not daft.

“Okay, no problem, we can match that.”

Ya beauty. A tenner saved just for asking the question! I could buy a dozen golf balls with that. Which I don’t need, so give it 24 hours…

I walked out the shop with a spring in my step. I almost never ask for discounts in shops. I don’t know why. British reserve? A sense of embarrassment at being seen as “cheap”? A feeling that it’s pointless? The risk of rejection? Sympathy for the sales guy? All of the above? Possibly. Or maybe I’m just out of practice – because practice is really all takes to get over yourself on something like this.

I seem to recall, years ago, I would have asked for discount on any “big” purchase. Maybe earning decent money for too many years had made me less thrifty? Or more stupid. 

My Retirement Week (8)

I posted recently about the costs of retirement, so I thought I’d actually monitor what I spent this week on myself. I split our expenses into a monthly household budget, out of which we half an equal amount of “spending money” for myself and Mrs McG. That’s our own personal spend, so that’s what I’m monitoring here.

Saturday 28th – Golfed in arctic conditions. I have an annual membership which I budget for, so I’m classing this as “free”. But, if I want to roughly estimate it, I play around 70 games a year, the cost per round is approximately £12. In the evening, we were out with friends for a birthday celebration, which came out of our joint “Family Events” household budget.

Sunday –  Usual lazy (hungover) morning, followed by a trip to town in the afternoon where, to avoid Christmas shopping with my DOY, I headed for a pint. £3.20. As the missus was taking her time (more than ten minutes) I had to have another. £3.20.

Monday – Atrocious weather. I went to the gym, skipped a coffee, came home, cooked, read books, wrote my journal, cooked dinner, ‘phoned ex colleagues. Personal spending: £0

Tuesday – due to a swimming pool refurbishment in my gym this month, I’m having to use a local alternative, so I spent £4.00 visiting there this morning. Followed by a coffee, £2.60.

Wednesday – Quick visit to the golf range, trying to keep my arm in, £3.00.

Thursday – Another visit to the pool and a coffee – £6.65

Friday – Coffee at Bannatynes gym, £1.90. Lunch at Chinese, £9.00, couple of pints “early doors” at local, £10.50.

There you go then. Total spend in a fairly typical week, £44.55. The majority on coffee and alcohol. Enough said.

I caught a BBC4 concert featuring Burt Bacharach. My God, how did I know so many of those songs?  The music service I’m a member of, Deezer, (which is a bit like Spotify) recommends music to you, and one caught my attention this week: Battle Scars by Walter Trout. Never heard of him, and with a name like that I’m sure I’d have remembered. Turns out it’s a blues album. I’ve no idea why this was recommended, but then even Amazon fires books to me as suggestions that I would not pick up if they were offering me a tenner to read them. I’m not a massive fan of the blues but after a week of listening to this album, I was glad it had been pushed my way.

The Sunday Times started to publish their Books of the Year of which, annoyingly, I’d read about two. Less annoyingly, there was about two I thought I’d want to read. On top of them, there was a recommendation for Don Winslow’s epic The Cartel which is on my list. His novel The Power of the Dog is, if you’re into hard boiled American crime fiction, an absolute belter.

Martin Lewis was on TV ranting, as he does, that the majority of people in the UK are sitting on standard tariff energy bills. He became quite flustered about it, so I went onto my “Blue Price Promise” EDF tariff to see if they had any new offers. They did. About four clicks later and I’d saved £120 against my projected energy budget for next year. Thank you Martin. But why hadn’t EDF flagged this up to me?

Talking of money, when am I going to stop the daily checking of the stock market? On Thursday morning, it had risen to above 6400. “Aha, the fabled Christmas rally”, I thought, only to see it drop to 6290 that afternoon. This was due to….ah, who gives a toss? Nobody knows anything anyway.

Talking ’bout My Generation


my generation jpg

(Young) People Try to Put Us Down….

Technically, I’m a Baby Boomer, born in 1963 and just nipping in before the shut-off date for those born post 1964. The way things are going, however, maybe I’ll start to claim I was actually born in 1965, because the Boomers aren’t getting much good press these days. We’re becoming the generation that looked after ourselves and ruined it for everyone else following on.

You’re probably quite familiar with the arguments because hardly a week goes by where there isn’t an article or opinion column in the press outlining them. Books have even been written about the subject. But, as a later member of the Boomer Club, I find myself in what feels like a kind of no man’s land watching the youngsters and the oldies lobbing bricks at one another.

A lot of today’s pensioners aren’t on the Easy Street that the Press and some young people seem to think they are. They’re not even close to it. My old mum, living in Scotland, has the luxury of two small private pensions to top up the state one, but she worries a lot about her friends who are really struggling to get by. Although she would happily meet them in town and blow a fiver on a coffee and a cake, they can’t afford it, at least not on a weekly basis. As for going away for a weekend or taking a week abroad (England counts as “abroad” by the way) forget it. She’s nobody to go with. I honestly find it difficult to believe that the majority – the majority – of pensioners are probably like my mum’s friends, but it’s probably true. It must be galling for them to read that they’re the Boomers too.

The affluent Boomers, on the other hand, gripe that they worked hard, saved hard and therefore deserve every penny they’ve got. No, they’re not about to downsize, they grafted for that family home which they’ll be handing over, hopefully tax free, to their kids. In the meantime, they’ll act as Bank of Mum and Dad if they can, and will take as many steps as possible to protect the financial future of their family. They’ve paid their taxes, national insurance, built the NHS and, if they’re living longer, it’s nobody’s fault but their own.

Many of the generation sired by the Boomers, however, believe that their financial futures are a lot less rosy than that of their parents. Mind you, I think that many of today’s youngster’s financial expectations are ludicrous compared to what mine were, at least in terms of material goods and spending. They need to cool their jets instead of boarding them for the stag or hen weekend in Vegas. Their fixation on bling, brands and gadgets is endless, even if they could afford them. Which they can’t. They seem to live for today with an expectation that “today” should last fifteen years. But it’s maybe that they have a much more complex financial and economic environment to cope with than I had.

I feel, when I was younger, I had a very simple view of financial matters. Saving was good and debt was okay – basically I felt there was nothing wrong with the latter providing you could eventually pay it off. My folks avoided credit cards for decades, but I had one as soon as I qualified for it. The next generation though? For a start, if they choose further education, they’re saddled with an horrendous amount of state sponsored debt. Then, as soon as they start working, they’ll be bombarded with credit offers from the banks. I was talking to the son of a friend the other day who was telling me, with a glint in his eye, that he has five credit cards and therefore a potential twenty five grand of combined spend across them if he maxed his limit on each. He probably doesn’t earn much more than twenty five grand. But he is thinking about going to Vegas and maybe upgrading to Business Class if he can rack up enough miles on one of the cards to qualify. One way to do that? Book the flight on the credit card.

I can’t decide whose side I’m on. I do feel I’m in quite a fortunate position in many ways. After graduation with no debt whatsoever (the state paid for nearly all of my education), I managed to find a job with a lucrative Defined Benefit pension scheme that I contributed to for almost fifteen years. My foot went on the property ladder along with my first year of employment – I think the first deposit I needed for a flat came in at just over one thousand pounds (5% of the purchase price!) The bank would only lend you three times your salary at the time, but that was enough to give me a few options. I lived in a world of relatively conservative financial rules and regulations that allowed debt within reason. Those early lessons stayed with me. I have never borrowed more for my mortgage than three times my salary despite the fact that in 2008, a financial advisor offered to get me a multiple of six. Or more.

I was also brought up to believe that pensions were a good thing instead of a worthless con not worth the digital screen they’re displayed on. I believed that both a decent free school education and a free NHS would be there for both me and my family throughout our lives and, pretty much, they have been so far. For how much longer, realistically, is that going to last?

I wonder if there is a middle class generation aged around forty to sixty today that is somewhat of an outlier and is experiencing a kind of lifestyle that neither the preceding generation or the one coming up will get? It does sometimes feel to me that a lot of my generation have had it pretty good so far.