Hasn’t Brexit been great? The FTSE is back above 7,000, the fabled point that I swore, if it ever reached it again, I’d flog my UK Index funds and buy…and buy….what? Dollars? Euros? A Ferrari? Maybe I’ll wait and see if it hits 7,500?
I have a bad habit of checking my funds on a daily basis when the markets are going up. “Wow! I’ve ‘earned’ another five grand this month!” is a nice reminder of how clever I am. Meanwhile I can ignore all the furore about Sterling falling through the floor as I have only a vague notion about the ramifications of that, including that it’s connected to the rise of the FTSE. I know that this “head in the sand” attitude on currency is probably not the best approach, but after years of investing I’ve become bored with so-called financial “catastrophes”. After all, I was riding out the storm of 2008 when my investments probably tanked if I’d bothered to look that closely at them, but I just kept saving away, telling myself that it was a good time to amass more units in my chosen funds. (Although I check the markets daily when they’re on the way up, I can ignore them for weeks when they’re going the other way). I remember one night in 2008 just after the collapse of Lehmans, standing in a London pub with my mate, a fund manager in the City who was looking much paler than his normal self, when he suggested to me that I should remortgage the house and buy as much of the American market as I possibly could. In his view, it couldn’t go any lower. Hmmm, maybe, but I had another pint of London Pride instead, and continued with my chosen investing strategy of steady as she goes. And, as far as I know, he didn’t remortgage his house either.
I tell myself that I “invest for the long term”, while avoiding the question of what duration the long term actually is. The need to try and answer that question becomes more pressing as you enter into your fifties, and you increasingly wonder when you’re going to choose your moment and cash in your chips? One of my pension funds is doing fantastically well right now in terms of growth, but it’s three years before I can take it. I wonder, if I was 55 today, if I’d be cashing it for the tax free gain? Or would I hold on, wondering if better things were coming? I was reflecting the other night that the state pension seems quite far off in the future to me at the moment, kicking in when I’ll be 67. On the other hand, when I reach that age I’ll be looking back at my current 52 year old self and thinking it was only yesterday. “I was young then”, I might reflect, “Why didn’t I spend some of the cash then when the markets were great, Brexit was still a dream and I was young enough to enjoy it?” Of course, I might be saying, “Thank God I didn’t sell at 52 when the FTSE was at 7,000, given it’s at 21,000 now.” But you can’t take it with you and at 67, really, how much cash do you need? I won’t even be able to get into a Ferrari at that age, even if I could buy one.
This is a question I’ve been vexing over recently, how much do I need for a comfortable retirement? And how much for each stage? Thanks to my recent year out, I think I can quite solidly budget for the years between 55 and 60. I can have a decent stab at 60 to 65 too, but 65 to 70? And beyond 70? My mum is 77 and, after covering the essentials to live, spends about a tenner a week – never mind a Ferrari, we took the car off her as she wasn’t safe to drive. She’d love to go loads of holidays too, but she’s just not fit enough for them.
You can’t see into the future and I suppose you have to stay positive and think that you’ll be one of the lucky ones still throwing cash at cars and holidays well into your eighties. That’s my plan anyway, but it’s not something I focus on too much because I think that doing so might hold me back from enjoying the moment today in preference of having plenty of cash for tomorrow. I’ve had about thirty years of that, and I increasingly want to break the habit of saving for the rainy day and start spending while the sun’s still out.
This is easier said than done and it’s a path I’ve walked before. I sometimes look back and think that I didn’t enjoy the fruits of my labour when I was a serious earner, forever on the “Save Save Save” track as opposed to the “Spend Spend Spend”. But now, in many ways, I think that tomorrow might have arrived, and it’s time to break that savings habit of a lifetime and start spending. My first attempt at “de-accumulation” wasn’t very comfortable, and was part of the reason I went back to work, but at some point I’m really going to have to take the plunge and take some cash.