I read recently that money is the new sex. But given that sex and money have been mixing it for thousands of years – and often getting together to, um, bury the hatchet – I think that’s a pretty bold claim.

What next? Food is the new water? Oxygen is the new carbon dioxide?¹

Or maybe money is like sex because these days everyone is talking about it, but nobody is getting any.

Journalistic tropes aside, one thing money and sex have in common is that we’re fascinated by other people’s mattresses – what happens on top of them, and what they’ve got stashed underneath.

Which is all a long-winded way of saying I’ve come across some interesting statistics about the average savings in an ISA, broken down by salary.

And you know you can’t resist a peek!

MPs in ISA savings revelation

This tangle of juicy ISA statistics comes to us courtesy of Hansard, the official record of UK Parliamentary debates.

Written questions were asked about the average savings in an ISA by salary – I’d guess to make political hay when it was ‘revealed’ that those on lower earnings don’t usually have as much saved as those on higher salaries.

But one person’s axe to grind is another person’s prurient look behind the curtain of people’s ISA savings habits.

The first piece of data shows how many thousands of people in different income brackets (left hand column) have ISA savings pots in six bands (to the right), running from £15,000 to £500,000.

Note that these figures – apparently the latest the Exchequer has to hand – are from 2008 / 2009:

Note: Bands rounded up to nearest the £1,000. Source: Hansard

For example, the most populous intersection shows that 715,000 people earning £10,000 to £20,000 have savings of £15,000 to £20,000.

Unfortunately, no details were asked or given about those with average ISA savings amounts below £15,000.

What about those with more than £500,000 tucked into an ISA?

This was asked, naturally enough! The original data has two further columns – one band for £500,000 to £1 million and then another for savings over £1 million. But none contain any data.

According to the Exchequer:

Information in respect of ISA market values above £500,000 is not separately available because of the limitations of the statistical sample from which the analysis has been drawn. However, fewer than 500 individuals are estimated to be represented in each of the separate ISA market value categories taking all the income ranges together.

I think this is saying the Exchequer estimates that fewer than 1,000 people have ISA savings of more than £500,000 (so fewer than 500 in the £500,000 to £1 million band, and the same for £1 million and over).

However an alternative interpretation I’ve read is that it means there are fewer than 500 for each of the seven income bands on the left.

I don’t think this is right, but it is feasible. Someone might earn less than £5,000 but have a rich spouse, and so eventually have a big ISA! Or they might have invested well and decided to live off their ISA savings, and no longer be earning. Or perhaps they have trust funds or an inheritance.

Some combination of those will also explain the 3,000-odd people who are earning less than £5,000 but have more than £200,000 in ISA savings.

How to make a million in an ISA

ISAs were introduced in April 1999, so to achieve a portfolio of £500,000 or more in ISA investments by 2009 would have been quite a feat.

However before ISAs there were similar savings accounts called PEPs, launched in 1986. In 2008, old PEPs automatically became stocks and shares ISAs, and I presume these stats refer to ISA savings that were originally wrapped up in PEPs, as well as pure-bred ISAs.

According to an FT article about ISA millionaires, as of 2012:

An investor who made full use of the maximum Pep or Isa allowance each year for the past 25 years would have invested £192,480 in total, which would have grown to almost £500,000 based on an average annual return of 7 per cent. With average returns of 11.7 per cent, they could have broken the £1m mark.

A nearly 12% annual return looks fanciful to today’s battle-weary investors’ eyes. But it will be interesting to see the same statistics in 2020, say, if we get the good spell in the markets that mean reversion indicates could be due after the lousy past decade.

I’d expect to see a lot more ISA millionaires by then.

Individual Savings Account market values: 2008-09

The second table reveals that most people aren’t very serious about tax-free savings, regardless of what they earn:

Note: Salary band rounded to nearest £1,000. Source: Hansard

To me these numbers are dispiriting. Not just because even this preselected group of super-savers has managed to save so little (people without ISAs aren’t even counted here, remember) but also because ISAs are perhaps the best and most flexible tax break going, and savers aren’t fully exploiting them.

A six-figure salary and yet a mere median £13,800 tucked away in an ISA beyond the taxman’s grasp? Easy come easy go I guess.

There’s no distinction drawn here between cash and stocks and shares ISAs. I suspect the comparatively few hardy souls who dare to open a shares ISA are skewing the median ISA savings figure upwards to produce the average figure on the right. (According to research from Halifax bank, the average amount in its customer’s cash ISAs is up 23% this year to £8,949).

The dip in ISA savings for those earning £20-30K compared to the bracket below is interesting. Anyone got an explanation? Please share it in the comments.

Are you keeping up with the ISA savvy Jones?

So, how was it for you, darling? Did the earth move when you saw your own ISA savings compared to the average? Or was it an anticlimax?

Personally I’m just even more frustrated that I didn’t start fully using my annual ISA allowance until around 2003. I had plenty of cash saved by then, but I kept it in ordinary savings accounts.

What an idiot I was, given that unused limits cannot be carried forward to future years. Only this week I’ve had to do more tedious capital gains tax calculations on non-ISA protected shareholdings, in order to defuse future tax liabilities. I’m jealous of those with 25 years of PEP and ISA allocations to play with!

As I’ve said before, it’s worth using stocks and shares ISAs just to save paperwork, let alone the tax advantages. And who knows, maybe one day you could be swelling the ranks of the ISA half-a-millionaires-or-more?

That’s what I’m aiming for – the less-than-a-thousand club!

It sure beats the Mile High Club. The food is better, for a start.

1. Seriously, your lungs do not know to breath without a dash of CO2.

Further reading:

1. Why I’m celebrating the annual ISA limit being raised to £10,200
2. Annual ISA allowance goes up to £7,200 a year
3. Don’t wait to open your stocks and shares ISA

I suspect The Iron Lady – a biopic of Margaret Thatcher’s rise and fall – will be as divisive as her career, even among Monevator readers (and writers!)

I am a political pariah among my family and most of my friends in thinking the woman did the right thing for Britain, albeit in brutal fashion at times.

Nobody under 30 can imagine how economically crippled this country was in the 1970s, when it was known as the sick man of Europe (though looking at Italy today might give you a clue). Bodies of the dead piled up in the streets was perhaps the most famous incarnation of a Britain that was truly bust.

Thatcher didn’t just confront the ability of organised Unions to cripple the country on a whim – maybe motivated by their own ultra-leftist ideals as much as to achieve anything for members.

Ironically, she also did more for social mobility than Labour achieved in its decade in power (or that Cameron and Co will begin to achieve today) by freeing up enterprise and working against the clubbable nature of 1970s corporate Britain.

Countries like France and Germany can still only look on enviously at our entrepreneuralism – or their young can move here, of course.

Margaret Thatcher the milk snatcher

On the other hand, I’d agree insufficient attention was given to the likely impact of shock and awe Thatcherism on industrial and mining communities in, for example, Wales and the North of England.

Proud traditions in those areas had served Britain well for generations, and after decades of difficult, dangerous work they deserved more notice than they got from London-centric, market-obsessed Whitehall.

Remember, these were working communities then, not the early retirement homes for the 40-year old perma-jobless that some have now become.

I’d agree their subsequent marginalisation is partly down to the political element of Thatcherite restructuring, though to some degree it would surely have happened regardless (consider similarly moribund industrial areas of the US).

Even in London – where the right wing’s laissez-faire attitude towards free financial markets in the 1980s was eventually embraced by Labour – the so-called Big Bang of deregulation and the subsequent banking bonanza helped blow up the economic system a quarter of a century later.

So her record is mixed, but ultimately I admire Margaret Thatcher and her achievements, and I think Britain is better for them. I miss the politics of conviction, too – on both sides of the political spectrum.

What do you think? Will you be taking popcorn into the cinema to see The Iron Lady come January – or sneaking in a bag of rotten tomatoes?

Further reading:

1. David Cameron’s curse: To save the UK economy and be hated for it
2. Cameron and Clegg must make a suicide pact
3. Ask the Chancellors: The verdict

I have to get up ridiculously early on Saturday morning (I am writing this post in advance) so I won’t be able to do my usual run through the press.

Since apologies! I’ve only missed half a dozen Weekend Readings over the past few years, so I think my batting average is pretty good.

Instead I thought I’d give a quick recap of what’s going on here with Monevator, since we’re getting a lot of new readers recently and I’ve not updated the regulars on Monevator for a while.

Monevator now has two writers

This has been the biggest change in the past 12 months, and the most potentially confusing. It’s also been a change wholeheartedly to the good.

Monevator is now written by two bloggers, whose pseudonyms you can see at the top of the articles, just under the article heading. We are:

• The Investor – Yours truly. I am the founder of Monevator, and have been writing here for four years now. I am a semi-active investor (despite thinking most investors should be entirely passive) and many of my posts reflect this. I now tend to post every Thursday, and also write the Weekend Reading every Saturday.

• The Accumulator – An old friend of mine who kindly agreed to start writing on Monevator back in Autumn 2010. He is a passive investing fanatic, and unlike me he doesn’t stray from the path. You can find most of his articles under a passive investing sub-category, which I will soon be making into a separate tab in the menu above. After that, the passive faithful can simply read him and ignore me altogether! (Sniff). He has also written a bit about saving and budgeting, and I hope to see more of it from him. His articles go up on Tuesdays, and feature his trademark blackboard graphics.

My hope is that between the two of us we offer something for everyone – sensible passive investing wisdom for the majority who badly need it, crossover articles on ISAs, pensions and the like, and some more esoteric stuff from myself (I’m tending to leave the passive stuff to The Accumulator now).

I don’t foresee us getting a third writer any time soon. I’d love to find a weekly illustrator/comic writer, but have yet to find a single one who knows anything about money and investing. Quite the opposite – those I know are experts in being semi-destitute, wearing £50 t-shirts, and buying grande skinny Frappucinos for a fiver.

A few other site features

There’s been a few things added over the past year that experience suggests many of you haven’t noticed:

• A discussion tab – It’s not pretty, but the Discuss link (top right of every page) enables you to see all the latest comments Monevator, across all the posts. This is a great way of dropping into active conversations on posts that may be quite old. I’ve considered adding a forum to Monevator, but this should work as a halfway house.

• Three fancy tools – A good friend of mine kindly produced three excellent personal finance tools, including a mortgage calculator, a millionaire calculator, and a compound interest calculator. They were state of the art when he did them, and the graphs are still pretty cool compared to the opposition. The link is in the top right – check them out!

• Search facility – There is a Search button hidden down the right hand column. It’s powered by Google, and it’s pretty accurate. I’m going to move it up the page eventually.

• Notify comment follow-ups – At the bottom of a post comment box you’ll see a tick box, which enables you to ‘subscribe’ to a comment thread on an individual post. Any easy way to keep following the discussion.

I’m sure there’s some other stuff, but it’s very late at night.

How to get updates from Monevator

You know how you sometimes come across a cool website then never find it again? Well it doesn’t have to be that way. You can follow Monevator via:

• Email or RSS subscription – See this page to discover how to sign-up. I never spam anyone; your email is only used for receiving posts. Some 1,600 people have signed up this way.

• Facebook – You can follow Monevator via following its Facebook page. I don’t really do as much as I could with this at the moment (no time) but all the posts are linked to on there, and so should get lost on appear on your Facebook wall.

• Twitter – We’ve just surpassed the 1,000 follower mark on the Monevator Twitter profile. Again, time constraints mean I can’t currently chat on there much; I hope to again someday. But all our blog posts are auto-tweeted, so it’s another option for all you Twits out there.

Spreading the word

Sometimes people contact me to say thanks for something they’ve read, which always makes my day.

Now and then they ask if they can do anything in return. Invariably I ask them just to share the word about Monevator. You can do this by simply emailing links to your friends and family, or by using the ‘social’ buttons that you’ll find at the bottom of each post to spread articles you like on Facebook or Twitter.

I’m going to streamline those buttons soon, to reduce the options down to Facebook, Twitter, Email and Print. Hopefully that will increase the propagation of our articles; I think there’s plenty more who would like to read them.

Where we’re at in terms of readers

I don’t like to speak in terms of specific numbers or goals. This is a site about investing and making money, not a blog fest. That said, I can confirm Team Monevator continues to swell in numbers, although not as fast as I (or any other writer!) would like.

Here’s a graph showing how monthly traffic has grown over the past three years:

You're part of a growing band of people with great taste

Hopefully this gives an insight into how Monevator has kept growing (and why if you email me I can take a while to get back, particularly if you’re one of the daily dozens trying to sell dodgy adverts or write guest posts about cheap loans).

If you’ve been here since the early days, you’re one of a select band of veterans.

Final thoughts

Writing a blog devours time like a teenage boy furtively devours tissues – and it similarly also tends to happen in gloomy bedrooms at 1am – but I’m very glad I’ve stuck at it.

Financially, the site is still not even washing its face in terms of how much I’d charge a client for my time. Another three years like the above and I may finally be getting there. Don’t blog to get rich, that’s for sure.

I’m not the best blogger for interacting with readers, for various reasons. But that doesn’t mean I don’t appreciate every comment you leave. I especially love to see readers talking to each other, and providing solutions – there’s been a lot of that on The Accumulator’s passive posts, and it’s great to see we’re hosting such helpfulness. I look forward to more of it.

Finally, in the next few weeks I hope to give the site a bit of a Spring Clean, so look out for some more little tweaks to come.

Thanks for reading and spreading the word – or at least for sticking around.

Further reading:

1. Monevator: Blogging in 2010
2. Quick query re: email pop-up and comments
3. A quick guide to asset classes

Update: I’ve now uninstalled the pop-up, as NOT annoying my readers is my number one priority.

Of course if you can recruit a friend or two as a subscriber to make up for it, I’d be hugely grateful!

Apologies for a dull housekeeping post, but a couple of quick queries:

• I have installed a plug-in – OptInPop – that pops up an email request form over the screen. It should happen to you just once a year, presuming you’ve not set your computer to delete cookies or similar every X hours/days. I’ve had reports from one person that they’re seeing it more than once – even when they come back from an external link. Anyone else seeing this?

• A valued commenter and fellow blogger said he’s been having trouble leaving comments on the site. Has anyone else? If you have and you can’t comment below for that reason, please email me and let me know at theinvestor[-at-]monevator.com, where [-at-] is replaced by the usual @ email symbol.

While like any blogger I’m keen to find ways to turn new readers into regular readers, such as via the email newsletter pop-up, I really don’t want to annoy anyone with endless pop-ups. So please do let me know if you’re seeing that. (It may be a cache issue, or it may just be happening on that one person’s PC).

Further reading:

1. Weekend reading: A quick guide to Monevator
2. Pay off your mortgage double quick
3. Four quick sanity checks to stop the credit crisis killing your finances

This week saw the launch of a big money competition from Shopify, a leading online store vendor.

The American entrant who sets up the new Shopify store that achieves the greatest turnover within any two-month period over the next six months will win $100,000.

Full details here.

Sadly, the rest of us around the world (even Canadians!) aren’t eligible for the cash prize.

But we can still claim the moral high ground by beating our Colonial cousins. We can also access the tutorials and forums that Shopify is running.

And, of course, we can make money!

The cutthroat quest for customers began on January 1^st, but you’ve only missed a handful of trading days if you start now, and the two-month criteria means there’s plenty of time left to win.

A nation of online shopkeepers

In theory, I’d love to set up a shop. It’s the antithesis of what I do in my daily work, which is increasingly ephemeral and insubstantial.

What do I do? I’m paid to blow bubbles spun from dreams. (Okay, not really. Just the standard Western consultancy type stuff).

There’s definitely good money in Internet retailing, and you don’t have to be Amazon-sized to make a fortune. I personally know someone who is a self-made millionaire through peddling weird stuff online.

Shopify is considered amongst the best of the current crop of off-the-shelf store packages, too. They host your shop for you (under your own custom domain) and I like the monthly pricing structure:

Software as a service makes paying for your own store affordable

The $99 a month option is only about £60, even after the UK pound’s wilting.

If you fancy entering the Shopify competition and you’re UK-based, I wouldn’t let the lack of eligibility for the grand prize put you off.

You probably wouldn’t have won anyway. The fact is the winner will almost certainly be either:

• Someone who sells big ticket items to gross the most over two months, regardless of profit margins…

• …or an expert in online retailing who can re-direct Internet traffic to his/her new store

More importantly, who cares if you win $100,000 if you’ve got a burgeoning online shop in six months that could make you far more over the years to come?

The reality is online retailing is as difficult as everything else that’s lucrative: Most shops will fail.

I doubt the top 10% will regret getting started for a second, though. Good luck if you enter!

Further reading:

1. Hallelujah, online shopping!

Unlike most money bloggers, I’ve not talked much about the blog’s progress with you. I’ve reasoned you’re here for thoughts on personal finance and investing, not for updates on my tiny media empire.

On the other hand:

• It’s January, a time for New Year plans
• I want to keep regular readers in the loop
• Monevator is finally getting some traction
• Some of those other bloggers have many more readers than me, so they must be doing something right!

So here’s a run through how the blog is going, and what to look out for in 2010.

Monevator: Where are we now?

Monevator is now over two years old, although it was only in mid-2008 that I really committed to regular posting. It remains a rare UK-based money and investing blog.

As 2009 began, I aimed to write at least three posts a week, including my weekend reading digests, and I nearly always did. Readers seemed to approve – RSS subscribers grew from about 30 to nearly 700 over the course of 2009. (The number dropped in mid-late December, as I think all my readers have jobs!)

You can see this step change in the following graph:

Green line shows RSS numbers ramp up with regular posting

A 20x increase in subscribers in a year is gratifying, and I’m proud of every one who signed up. It’d be fantastic to do the same in 2010, but I suspect that may be wishful thinking!

In terms of visitors, I’m still not at a stage where I’d feel comfortable sharing numbers. I don’t want people to think of a number and Monevator until that number is a decent one, which gives a hint that I don’t think we’re there yet.

I can reveal that monthly traffic tripled between January and November, however, before tailing off for Christmas:

Visitor numbers tailed off in December, but happily they're bouncing back

What about making money from blogging?

I really didn’t start Monevator to make any money and good thing, too, as for a long time I didn’t. However in autumn 2009 the pitiful Google Adsense income started to become mildly less pitiful.

There’s still a very long way to go until the site pays for my time, let alone makes a profit: Monevator revenues are about 5% of my total annual income.

While Monevator will likely always be a labour of love, I do need to make a little more from it, as the 10-20 hours a week it eats up undoubtedly curbed my earnings elsewhere in 2009.

More money, more posts, less waffle

Believe it or not, I’ve tried to write shorter posts all year.

One trick I discovered was splitting large posts into series, as I did with the focus on investing in bonds. But I need to be more disciplined.

I will always write 1,000 word articles – maybe every week – but it’s not sustainable for every article, either for you, my long-suffering readers, or for me.

Those longer articles can take 3-6 hours to write, and it probably feels like they take the same amount of time to read sometimes!

In an ideal world I’d write more pithy 500 word articles like my blogging chum Oblivious Investor, or the fabulous Frugal Dad. Writing shorter articles will also enable me to write more personal finance and income-related posts. The focus will remain on investing, but I always planned to have a wider brief.

I’d also like to sometimes highlight an interesting story, with a link and an opinion. This is how blogging started and it’s the mainstay of many blogs, but I’ve been too precious to do it.

I’d like to find time to cover some financial services, too, like cashback credit cards, brokers and savings accounts. These can be a useful heads up for you, and they offer a chance for me to make an affiliate commission if you follow the link, which is how all the U.S. money bloggers cover their costs.

Obviously I’d only say I liked a product if I liked it, as anything else would be shooting myself in the foot!

More community on Monevator

I added comments to Monevator in mid-2009, with mixed success.

A few regular commentators pop up now and again, as well as a couple of bloggers like my new chum Financial Samurai, but there could be more.

I’m not sure how to improve this. Many US blogs have lots of comments that are just other bloggers spreading their name, but a handful such as The Simple Dollar have a big base of readers adding real insight. I think Monevator would benefit from the same, but we seem to be a shy bunch.

It may be that the UK is already well-served by the likes of Money Saving Expert and The Motley Fool, but I’ve a few things to try out before giving up.

New for 2010: A ‘product extension’!

Nifty business jargon, eh? Yep, I’m going to push the Monevator brand envelope thing-ummy this year. You just watch me think in a blue sky outside of the box.

I think it’s most likely to be a Monevator book, but I’ve also had an interesting approach about a podcast, and I’ve even thought about Monevator TV.

Goals and targets for 2010

If you read my article on making New Year’s Resolutions, you’ll know I believe in turning vague hopes into actions.

Goals

• Post every weekday, plus the weekend reading roundup
• Write more (but not exclusively!) shorter posts – at most 3 a week
• Do at least two longer posts a week
• Take Monevator into new frontiers
• Improve community by helping promote discussion

Targets (all by end of 2010)

• Monthly visitors to triple
• RSS subscribers to reach 5,000
• Posts to have on average 20 comments after two weeks
• Blog income to be 20% of my total income

How you can help (please!)

If you’d like to see me hit these targets rather than fall on my face, I could use your help:

• Comment on any post that takes your fancy
• Suggest relevant friends subscribe by RSS or email
• Updated: Use the Tip’d, Digg, Stumble and other buttons below if you like a post
• Spread the word by re-tweeting @Monevator links on Twitter
• Email me any ideas or thoughts you have

Thanks in advance for anything you can do – and also for reading and just being around. I would probably keep writing without any readers (in fact, I used to!) but it’s infinitely nicer now.

Oh, and for the record this article was 1076 words. Damn, 1080 now. Gah! The new regime officially begins tomorrow.

Note: If you have any thoughts on how Monevator can scale dizzying new heights in 2010, please let me know in the comments below.

Further reading:

1. Weekend reading: A quick guide to Monevator
2. Why blogging for money will not make you rich
3. The archive hour: Five provocative posts from the Monevator vaults

The stock market might have mounted a bit of a recovery over the past ten days, but unfortunately your writer has gone the other way. Picking up a particular virulent strain of Lurgy maximus while messing about on the river last weekend, I’ve been confined to bed for the past 96 hours on a diet of Ibuprofen and freshly squeezed orange juice.

I’m happy to report I’m feeling much better today though, so please do stay subscribed to Monevator, and look out for a resumption in posting once I’ve caught up with my other work next week.

No related posts.

Financial journalists were just about the only winners in 2008. Whether it be Robert Peston on the BBC, the bookworms of The Economist, or the gorgeous anchor babes on CNBC, business reporters have had more front pages than Madonna.

Now they’re squeezing every drop from 2008 with their end-of-year roundups.

No time to read them all? Here’s what they’re saying in summary:

The BBC: A year to forget or learn from?

The equity market losses globally have been astonishing: in the US, on the Dow, General Motors (-89%) Citigroup (-79%) and Alcoa (-74%) are the worst fallers. Only Wal-Mart (+13%) and McDonalds (+0.5%) have made gains which tells us something about the evolving tastes of the credit-crunch generation.

The Times: The markets in 2008

This year will go down as one of the toughest on record. In the UK the FTSE 100 index of leading shares has fallen by 33 per cent. American stocks have dropped by 33 per cent, while shares in Europe and Japan have fallen by 44 per cent.

Bloomberg: Americans least favourite year

“It was the year we wish it wasn’t,” said Harvard University professor Kenneth Rogoff, a former International Monetary Fund chief economist. “The global scale and magnitude” of the financial crisis and recession “is much greater than those we’ve seen before.”

The Financial Times: The year the god of finance failed

A clean-up is overdue. Yet, in cleaning up, we must remember deeper truths: human beings will always believe what they want to; and so regulation will always fail. We know, too, that nothing better than the market system is on offer, however flawed. Financial markets fail. They are also indispensable.

CNBC: Famous Last Words of 2008 (slideshow)

Everybody says dumb things. But this past year has seen more than its share of spectacularly bad calls from CEOs, government officials and market pros. Much of the blame goes to the financial crisis, which escalated so quickly that some statements were out of date almost as soon as they were made. Still, even the so-called experts made plenty of boneheaded comments.

Briefing.com: 2008 Year in Review

While the financial sector was clearly the focal point of 2008, the bursting of the commodity bubble led to significant declines in commodity related groups as well. This is notable because commodities acted as a safe haven area in the early part of 2008, offering investors a temporary place to hide from the fallout in financials and the rest of the market.

Fortune: 21 Dumbest Moments in Business 2008

We don’t know whether to laugh or cry. Our annual list of the year’s most laughable moves proves that, even in moments of crisis, stupidity lives on.

The Scotsman: Chill wind of recession blows the year away

The year began with Northern Rock being nationalised, and ended with the biggest financial scam in the history of the world. In between, one of America’s Big Four investment banks, Lehman Brothers, was allowed to go to the wall by US regulators in September; Bank of America swallowed Merrill Lynch the same day; and a stricken Royal Bank of Scotland has been left with the UK taxpayer as a 59 per cent shareholder.

Barron’s: Good Riddance

What made the pain all the more searing was that even as Wall Street metamorphosed into Woe Street and the economy plunged into the abyss, we had it on the highest authority (and don’t ask us what he was high on) not to worry because, fundamentally the economy was strong. Which is a bit like telling a parachutist whose chute fails to open as he hurtles toward the earth how lucky he is to enjoy such a great view.

Kiplinger.com: Lessons learned from 2008

Some of the toughest questions came from retirees who had lost a chunk of their retirement savings and were struggling to figure out what to do next. And I continue to hear from many people who have lost their jobs — or whose companies have gone out of business — and who need information about their employee benefits, health-insurance choices and ways to cut their living expenses.

The Wall Street Journal: Hard times, told in rhymes

Stocks, commodities and private equity too,
It seems every sector has stepped in the poo.

The New York Times: Yes, History Has Much to Say About This Market

You can view the markets’ behavior since mid-2007 as a textbook illustration of a statistical pattern uncovered years ago by two finance professors, Lubos Pastor of the University of Chicago and Robert F. Stambaugh of the Wharton School of the University of Pennsylvania. They found that the financial markets are always vulnerable to what they called a liquidity shock — a sudden tightening of credit. Aside from the current crisis, two recent examples are the market conditions during the market crash of October 1987 and the wake of the near-collapse of Long-Term Capital Management in the fall of 1998.

Reuters: The business year in pictures (slideshow)

A look back at the memorable moments from 2008 in the world of finance.

The Telegraph: Financial review of the year 2008

The plan to borrow Britain out of recession will leave the country’s deficit at 8pc of gross domestic product – the highest level in post-war history. Experts remain divided on whether the government’s gamble on the public finances will crucify the currency next year or help limit the pain.

Views from the financial blogosphere

Slate/The Big Money: The Five Worst Days of 2008 (video)

You know it’s been a bad year when you’re arguing about what the five worst days were. Between the massive market fluctuations and the biggest banks going belly up, it’s hard to know where to start.

Saving to Invest: Global Stock Markets in 2008

The worst performing major index was the Hong-Kong Shangai Index which was down almost 50%, reflecting the slow down in China and other Asian economies. Resource rich countries, Australia and Canada, were hit by the global commodity demand slowdown and saw their equity indexes fall by more than 40% for the year; wiping out most of the gains from the last 5 years.

Amateur Asset Allocator: How accurate were my predictions?

At the time, I suspected we had reached capitulation or close to it. It seemed as though the market was regularly shrugging off bad news, which is sometimes a sign of a market bottom. Well, it wasn’t. As of right now, the Dow stands at 8,391.

Financial reflections: 2008 By The Numbers

It’s been a wild year. A 700 billion dollar bailout, a 50 billion dollar Ponzi scheme, the Big 3 auto makers begging and stock indexes dropping like a rock. I decided to take a look at a how a few key numbers changed over the year to help see just where we are — and how far we’ve fallen.

My Dollar Plan: 2008: A year in review

With the year winding down, it’s always fun to look back and see all the things you have done during the year. It’s also a good way to make plans for the new year.

The Digerati Life: The top financial stories that shaped 2008

I have never seen so many ill-behaved corporate leaders in my life. But maybe stories like this come out of the woodwork much more often when things go south. When things go sour, many more truths are unmasked, and vulnerabilities and imperfections are easily exposed. It’s just too easy to look the other way when things are going well.

Million Dollar Journey: What have I learned from this bear market?

As some of you know already bonds in a portfolio help reduce the volatility without sacrificing too much of your returns. However, for those young investors with long investing time frames, it’s not uncommon to see portfolios with 100% equities to squeeze out every available percentage point. For those of you sweating buckets due to seeing all the red in your portfolio, it may be time to revisit your asset allocation.

Get Rich Slowly: The best of 2008

The past ten months have been amazing: I quit my job at the family box factory at the beginning of March to become a full-time writer. Since then, I’ve worked harder than I ever have in my life. I’ve had a lot of fun, but I’ve also learned a lot about myself, and about running a business.

Saving Advice: 2008: What I have learned

A year ago, I was gainfully employed working for a $2 billion company. I held a respected position and was highly paid. As this year ends, I am unemployed and trying to find a comparable position in an economy that is far from healthy and where layoffs are far more common than hiring. My home is worth at least 20% less now, as compared to a year ago and probably close to 40% less than it was at its peak value about 2 years ago. My retirement account is worth about 60% of where it was back in April and the stock market is still not showing signs of revival.

Let’s hope the next 12 months makes for happier reviews, eh? Don’t forget to stay up-to-date for free with my latest articles in 2009. Happy New Year!

Further reading:

1. 2008 the worst first quarter for stock markets in five years
2. Halifax’s UK house price index plunges 2.5% in March; falls year on year
3. Video: Tony Blair warns of the financial crisis

This fan chart depicts the Bank of England's assessment of the probability of various outcomes for CPI inflation up until 2012.

Pretty, isn’t it? Well, perhaps not if you’re a member of the Bank of England’s monetary policy committee, responsible for setting interest rates. In your case it’s a headache: a rather bloodier shade of red might be more appropriate.

The graph is taken from the Bank of England’s latest quarterly Inflation Report for November 2008. What does it mean?

Well, you’ll notice the fan grows outward from the red line, starting in Summer 2008. As the fan, erm, fans, the Bank becomes steadily less sure about the likely value of inflation.

Inflation is high now, but expected to plummet

The key thing to notice is that most of the fan is below the 2% inflation rate line, even though we’re starting off with whopping CPI inflation of around 5%. The Bank sees almost no chance inflation will rise any higher in the near-term; with nary a shimmy upwards, the central expectation plunges down with a trajectory to make an Olympic diver proud.

This graph tells us then that on current information, the Bank of England sees a very good chance that inflation will fall below the target rate of 2% over the next few years, all things being equal.

All things won’t be equal, of course. For one, the Bank will cut rates to try to stave off deflation (that’s the scary bit where the graph goes under 0%).

Base rates are now 4.5% but some predict rates could go to 1% or lower. Time to secure those 6.95% one-year fixed cash savings rates?

There’s always a danger that rates will be held low for too long, stoking up inflation for the future. But for now, the recession is more pressing. There’s probably plenty of time yet for those who fear inflation to buy gold.

Further reading:

1. Zopa interest rates falling
2. Are rising Zopa interest rates an opportunity or a time-bomb?
3. Zopa update: Interest rates rise for savers, but bad debt doesn’t

Regular readers will have noticed Monevator has had an overhaul in recent days. The new look is based on Chris Pearson’s amazing new Thesis premium WordPress theme, which I’d urge all you WordPress users to consider using.

I based the previous incarnation of Monevator on one of Chris’ earlier themes, Copyblogger; I loved the clean typography and logical way Chris had put together that theme. There were also lots of great little extras, such as the pull quotes you more often see in magazines than websites.

When I discovered Chris had Thesis, a very affordable premium package, in the works, I knew I had to try it out and I’ve not been disappointed.

Thesis has all the grace and style of Chris’ previous free themes, but this time it’s backed up by what seems like almost daily tweaks and upgrades (free for life!) and also a lively support forum. All for the price of a decent steak dinner for two!

I’ve tried many WordPress themes, and this is something special.

A list of advantages to Thesis would run and run, but my favourites include:

• Super typography, as you can see from this site – I’ve never even seen another WordPress theme with drop caps, for instance. Your site will look effortlessly great
• Thesis is easily tweaked, due to its logical structure, even by the less skillful coders out there
• The Thesis support forums have seen most problems before, so it’s the work of minutes to find a solution to a common customisation query, such as inserting blocks of ads or changing the header
• Chris is writing excellent Thesis tutorials, which have expanded my knowledge of WordPress as much as of Thesis. A great bit of icing for the cake…
• Finally, there are more goodies to come from the Thesis stable, such as a magazine-style WordPress theme (I asked specifically for it, and Chris wrote back within 24 hours to say one was in the works!)

I hope you stick around for more changes to come with Monevator, and I hope you agree the new look is a winner.

To be honest, Thesis made it pretty easy to smarten up. It costs $87 to buy, which is $87 more than all the free themes out there, but with the volume of Internet sites out there nowadays, I’m not sure free really cuts it anymore. And that $87 entitles you to lifetime upgrades, and currently a special second theme that’s in the works from Chris, too.

But don’t just take my word for it, check out these Thesis Testimonials.

No related posts.

The actor from Lock, Stock (and Press Gang, for a certain generation) has given The Telegraph a cautionary tale on the reckless spending and debt-mania that saw him go bankrupt at 31:

I guess I was under the impression I had more money than I did. But I was very wasteful – I bought a brand new Land Rover for £13,000 having gone to the showroom looking for a second hand car. When the salesman didn’t take me seriously I decided to show off and prove I could buy something new and expensive, just to see the look on his face. Then along came the 1990s property crash.

All the equity I thought I had in the house disappeared. My credit cards had racked up and I owed money to friends. Having defaulted on my mortgage I was a month away from being repossessed, so I put up a ‘For Sale’ sign and a couple knocked on the door who had just been gazumped on a house nearby. They offered me £155,000 and after I paid off my mortgage (and anyone who’d loaned me money), I only had £10,000 left.

I still owed a total of £90,000, so there was no other option than to go bankrupt.

Read my article on why you must get out and stay out of debt.

Further reading:

1. Buy on credit and you’ll pay for it twice
2. Money can’t buy me love

New government statistics reveal home ownership in the UK is the lowest it’s been for a decade. In London there are an incredible 110,000 fewer home owners than in 2001 (not that surprising if you’ve seen London prices recently). Blame buy-to-let.

Further reading:

1. Should you buy or rent your home?
2. Sell-to-rent gamblers return to property market
3. No lost decade: Why we’re not Japan