Well now, we’ve had quite a run since the shock of Trump’s tariffs scattered our forces back in April.
Monevator’s Slow & Steady passive portfolio has rebounded almost 13% since the aftermath of Liberal With The Truth Liberation Day. I hope yours has done at least as well.
Overall, the portfolio has grown 6% so far in 2025. Which feels odd given the 24/7 bombardment of pessimism that’s churning up my online world. It’s getting to the point where I’m turning to real life for an escape.
Anyway, here are the latest numbers fresh from the manna-sphere:
The Slow & Steady is Monevator’s model passive investing portfolio. It was set up at the start of 2011 with £3,000. An extra £1,310 is invested every quarter into a diversified set of index funds, tilted towards equities. You can read the origin story and find all the previous passive portfolio posts in the Monevator vaults. Last quarter’s instalment can be found here. Subtract about 3% from the portfolio’s annualised performance figure to estimate the real return after inflation.
Ignoring the third-quarter’s thrivers and divers for a moment, the thing that catches my eye is the portfolio has broken through six figures in total value. We’re clocking in at £100,713 on the table above.
That’s quite something for a portfolio launched in 2011 with £3,000. It’s been run passively ever since on an inflation-adjusted £250 per month in cash contributions.1
(Just to stress again, this is a model portfolio. The attached monetary values are entirely notional. But I used the same kind of passive investing strategy to grow my own wealth if you’re concerned about skin in the game.)
Growing modest savings into such a sum seemed unimaginable to a younger me. I had zero interest in the stock market and couldn’t stop splurging away everything I earned.
I thought investing was the preserve of the rich and highly informed financial experts. Ha!
Think again
But as millions of investors have already discovered – and our model portfolio is just the latest to demonstrate – it’s entirely possible to achieve good results by sticking to a passive plan:
The dark green line shows the portfolio’s return in nominal terms. The more important lower (lighter) inflation-adjusted line represents the Monevator model portfolio’s real annualised return of 4%.
We’re bang on the historical average for a 60/40 portfolio. Granted, that’s not spectacular – but this portfolio isn’t called Slow and Steady for nothing.
Of course, my inner critic is scornful. He casts brickbats like:
“You fool! What if you’d invested less in bonds?”
And:
“Why didn’t you foresee the AI revolution and invest 100% in Nvidia in 1999?”
But I look again at the chart above and I’m reminded of Charley Ellis’ brilliant description of investing as a loser’s game. By which he meant you win primarily by avoiding egregious mistakes.
In other words, you come through by playing the percentages and limiting your unforced errors. As opposed to trying to smash it with spectacular winners.
Ellis’ metaphorical inspiration was amateur tennis. If you’d seen me play tennis you’d understand why I’m happy with average.
New transactions
Every quarter we lob £1,310 over the investing net, hoping the rally keeps going. The cash is split between our seven funds, according to our predetermined asset allocation.
We rebalance using Larry Swedroe’s 5/25 rule. That hasn’t been activated this quarter, so the trades play out as follows:
Emerging market equities
iShares Emerging Markets Equity Index Fund D – OCF 0.2%
Fund identifier: GB00B84DY642
New purchase: £104.80
Buy 44.19 units @ £2.37
Target allocation: 8%
Global property
iShares Environment & Low Carbon Tilt Real Estate Index Fund – OCF 0.17%
Fund identifier: GB00B5BFJG71
New purchase: £65.50
Buy 27.68 units @ £2.37
Target allocation: 5%
Developed world ex-UK equities
Vanguard FTSE Developed World ex-UK Equity Index Fund – OCF 0.14%
Fund identifier: GB00B59G4Q73
New purchase: £484.70
Buy 0.625 units @ £775.82
Target allocation: 37%
UK equity
Vanguard FTSE UK All-Share Index Trust – OCF 0.06%
Royal London Short Duration Global Index-Linked Fund – OCF 0.27%
Fund identifier: GB00BD050F05
New purchase: £222.70
Buy 203.193 units @ £1.096
Target allocation: 17%
New investmentcontribution = £1,310
Trading cost = £0
Average portfolio OCF = 0.17%
User manual
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Today’s £1310 quarterly investment is the inflation-adjusted equivalent of £750 per quarter in 2011. [↩]
I am definitely not saying that the massive megacap tech deals of the past fortnight will for sure end badly. Let alone that such deals must mark the top of this bull market.
Credit with me some learning!
After more than two decades of meddling in the markets – and nearly as long making public pronouncements on this blog and elsewhere – it’d be a sackable offence for me not to have learned a bit of humility along the way.
Markets can remain irrational longer than you can believe what you’re reading on social media, as Keynes almost said.
Markets also have a way of turning today’s ‘irrationality’ into tomorrow’s ‘crucial staging point that any fool could have identified’ if you wait long enough for the proper perspective.
So yes, Nvidia investing $100bn in its major client OpenAI – or Oracle leveraging up to build out the data centre capacity required to fulfil the staggering $300bn compute deal it signed with OpenAI last week, which in turn inflated Oracle’s share price – may not be as Ponzi-ish as they look.
But these mind-bendingly big deals at the very least represent a gear shift.
Hitherto the hyperscalers (Meta, Google, Amazon et al) were just reinvesting their vast torrents of cashflow into building more data centres for paying customers. It was business as usual, albeit on steroids.
However this new phase is more self-referential. Something akin to a tech oligarch blood pact, where they are going all-in on the AI revolution and they’ll sink or swim together.
What’s My Age Again?
Sadly, I’m too old not to remember the Dotcom boom and bust at a time like this.
Not just in terms of the high valuations. (I’m thinking here of the likes of Palantir and OpenAI rather than the Magnificent Seven tech giants, most of which still don’t seem truly crazily-priced given their sales growth and margins.)
No, also in the way that Dotcom-era start-ups floated on an ocean of ultimately VC-funded advertising that paid the bills of a bunch of other start-ups, which ultimately took half of them down when somebody thought to ask “how many people are actually clicking on these things?” and pulled the plug when they got a straight answer.
I mean, doesn’t nVidia investing in OpenAI so that OpenAI can get chips from nVidia have the whiff of that to you?
Even so, you might imagine that none of this matters for your portfolio. But what if I quoted JP Morgan informing us this week that:
AI related stocks have accounted for 75% of S&P 500 returns, 80% of earnings growth, and 90% of capital spending growth since ChatGPT launched in November 2022.
This also seems like a pertinent point to remind you that US equities account for 60-70% or more of global tracker funds.
Artificial Intelligence taking all the jobs or becoming super-intelligent is one thing.
But this AI boom being exposed as productivity-sapping margin-crushing hype on a nation-state-GDP level would also cause us investors plenty of pain.
Wild Wild West
Accordingly, I’ve been worried and underweight the US at least 18 months. And boy hasn’t it made keeping within spitting distance of the global market’s return difficult.
Because once more with feeling:
AI related stocks have accounted for 75% of S&P 500 returns, 80% of earnings growth, and 90% of capital spending growth since ChatGPT launched in November 2022.
On the other hand, Wall Street’s obsession with big tech and AI has left lots of other stuff looking good value, especially outside of the US. And it’s fun to hunt around for it.
The activist manager Saba, for example, is awaiting approval for a new ETF it’s launching that will enable value-minded investors to buy a basket of UK investment trusts – specifically because so many of them are still going cheap.
Again, the parallels are obvious.
Nobody wanted to own Warren Buffett’s Berkshire Hathaway at the peak of the Dotcom Bubble. Then in the years after the bubble bust, value soared.
The set-up looks so easy, right? Yeah, too easy. We could be in 1996, say, not 1999. More importantly we’re actually in 2025, and stock market history rhymes rather than repeats.
So all I’m saying for sure is that if this is a bubble and if it does burst, then you’ll hear a lot about nVidia putting $100bn into OpenAI in every future account of it.
No Scrubs
Oh, and incidentally people keep saying the hyperscalers are spending tens of billions ‘building out the AI infrastructure’ as if they were laying down concrete.
But anyone who has ever bought a new nVidia graphics card to play the latest PC games will have found themselves confronted with jerky frame rates six months later.
These things go stale faster than you can say “whatever happened to the Metaverse?”
So if they are building out the AI infrastructure, they’re going to have to build it out again…
Exciting news: after four years of prohibition, UK retail investors will again be able to buy exchange-traded notes (ETNs) linked to cryptocurrencies.
The Financial Conduct Authority (FCA) lifts its ban on 8 October. Compliant products will likely hit mainstream brokers shortly thereafter.
According to the FCA, 12% of UK adults own crypto assets (around seven million people) and 26% of non-crypto asset owners say, “they would be more likely to buy crypto assets if the market and activities were regulated.”
In other words, crypto is gaining acceptance as a part of many people’s investment portfolios. (At least until the next crypto winter.)
What we want to know is:
What type of crypto products has the FCA approved?
How do they work?
Do they actually track their associated cryptocurrencies?
What are the risks?
How are you protected if it all goes horribly wrong?
What about tax?
That will do for starters.
The big win
Exchange-traded products of all types (ETFs, ETNs, and ETCs) enable more everyday people to invest in an asset class without getting embroiled in all the hassle that direct ownership usually brings with it.
Don’t want to research the ‘best dynamite-proof safes’ to house your gold bar collection? Buy a gold ETC
Don’t want a herd of cows turning up on your doorstep? Buy a commodities ETF
Don’t want the next Sam Bankman-Fried to nick all your crypto? Buy a crypto ETN
You get the idea. With exchange-traded products, you can outsource the grief of asset ownership to trusted providers for a reasonable fee.
However that doesn’t mean all exchange-traded products are the same.
If you buy an MSCI World ETF then you can be pretty sure you are getting well regulated exposure to over a thousand leading stock market-listed companies.
But ETNs are not ETFs. And crypto ownership entails different risks to share ownership.
Importantly, you don’t actually own any crypto when you invest in this type of product. But the ETN issuer may well do. That exposes it and you to a steaming jungle of risks that I’ll touch upon below.
Meanwhile the rest of this article will help you go into all this with your eyes wide open.
What are crypto ETNs?
The FCA has only green-lit the sale of crypto ETNs (not ETFs) to retail investors in the UK.1
The UK-approved crypto ETN headlines are:
Bitcoin or Ether are the only cryptocurrencies that can be linked to via an ETN for now
The ETN must track the market price of its cryptocurrency – often via a third-party index
It should be physically backed by a non-leveraged asset. That underlying asset can be Bitcoin or Ether, but it doesn’t have to be
ETNs aren’t protected by the FSCS compensation scheme. (Neither are ETFs for that matter, though hopefully you’ve chosen a broker who is)
Crypto ETNs are tradeable on the London Stock Exchange
ETNs can be bought in your ISA or SIPP, so long as the issuer has ticked the necessary boxes
ETNs are not governed by the warm and cuddly UCITS regulations
ETNs aren’t new. They’ve been used to track certain assets (like old-school currencies) long before crypto.
Indeed crypto ETNs aren’t new either. They were offered to the UK public up until they were restricted in January 2021. And they’ve gathered billions in assets from UK professional investors and European retail investors since then.
These existing products are obviously the ones most likely to come on-stream for retail investors after 8 October. Which is handy for us, because it means we can size them up beforehand.
Notable names
Crypto ETNs are issued by both traditional investment asset managers and crypto-native outfits.
Familiar names that already offer ETNs in the UK and Europe include WisdomTree, Invesco, Fidelity, VanEck, and BlackRock.
Crypto-focussed brands include 21Shares, Bitwise, Coinbase, and Valour.
Crypto ETNs: the dark and dingy details
ETNs are debt securities rather than investment funds. In exchange for your cash, you get a promise that the issuer will pay you a return in the future.
What happens if the ETN’s issuer defaults? In that case you may be paid less than you are owed – or not at all.
In debt parlance, you’ll ‘take a haircut’. Probably one that feels more like the medieval lock-chopping practised by religious maniacs than a nice tint and blow-dry down your local salon.
But what might prevent you from getting entirely mullet-ed in such a scenario is collateral.
A ‘collateralised’ ETN protects the value of your investment with a big stash of assets lodged with an (ideally) independent and reputable custodian.
Should your issuer be unable to pay, this collateral can be sold to honour the debt.
You might ask does your issuer stow away enough collateral to cover the value of its obligations? Is the collateral good quality? Will it fetch enough on the market to pay back investors during a crisis?
All good questions, which you’ll have to answer on a case-by-case basis (and by delving into the details provided by your ETN on its website).
The dating game
ETNs can be dated or undated debt instruments.
Dated means the ETN has a fixed maturity date. Just like a bond does.
Undated means the security is theoretically perpetual – like a share (or an old-fashioned ‘consol’ if you’re a bond aficionado or a Jane Austen fan).
You’d expect crypto ETNs to be undated – that is, for the security to be available so long as there’s a market for it and nothing blows up.
But an ETN can be called. This means the issuer can redeem it at any time – paying back investors with the cash in the collateral kitty.
It’s worth reading the ETN’s prospectus to understand what happens in the event your chosen product is redeemed early. Especially the sections on how the claims of other parties will be paid before the investors.
You’ll likely come across choice phrases such as:
…following satisfaction of all priority claims, such Security holders [that’s us!] may not receive payment of the Early Redemption Amount in full and may receive substantially less and may potentially receive nothing.
There’s lovely.
There’ll also be an early redemption fee to boot.
So choose an ETN that’s stocked with plenty of collateral. The issuer is under no obligation to make any other assets available in the event of a shortfall.
Let’s get physical
ETNs can be synthetic as opposed to physically backed.
A synthetic ETN employs a swap-based derivative to deliver the performance of the underlying asset. This introduces another layer of counterparty risk, because the company providing the swap could fail.
This may be moot for now, since it looks like only physically-backed crypto ETNs will be admitted to the London Stock Exchange. But it’s still worth checking if you’re compiling a shortlist of candidates.
Do crypto ETNs actually track their crypto’s spot price?
Here’s a quick USD comparison of the Bitwise Physical Bitcoin ETP (BTCE) versus Bitcoin’s market price.
Source: Google Finance (26 Sep 2020 to 22 September 2025).
BTCE
Source: justETF (26 Sep 2020 to 19 September 2025).
JustETF and Google Finance can’t quite agree on what five years is, so up next is the result I got when I matched the dates for a comparable long-term view:
Asset
5-yr cumulative return (%)
5-yr annualised return (%)
BTCE
878
56
Bitcoin
990
61
Dates: 26 Sep 2020 to 19 September 2025. (BTCE inception date: 9 Jun 2020, TER: 2%.)
That’s an astounding return from Bitcoin either way – assuming you held on during the 77% death slide from November 2021 through November 2022.
But still, BTCE gave up 5% a year in comparison to Bitcoin – a tracking difference that isn’t entirely accounted for by the ETN’s eye-watering 2% TER.
Tracks of my tears
Transaction costs, taxation, blockchain network fees, collateral overheads, brokerage charges, and various other operational frictions can all eat into your return without necessarily being captured by the TER.
You’re also likely to see a clause like this nestled in a crypto ETN’s prospectus:
The market value and price of the ETP securities does not exclusively depend on the prevailing price of bitcoin and changes in the prevailing price of bitcoin may not necessarily result in a comparable change in the market value of the ETP securities.
Other ETNs may track their linked cryptocurrency more faithfully than BTCE. I haven’t checked other products or timeframes.
But the point here is I’ve never seen such a large tracking difference gap when investigating vanilla ETFs tethered to mainstream asset classes.
On that basis, I recommend checking the tracking difference performance of all your prospective ETN candidates versus their linked cryptocurrencies. It looks like being an important factor.
Watch out for wide spreads, too. This is another cost of business that may vary widely, depending on the ETN’s liquidity and, at times, shifting perceptions of the creditworthiness of the issuer and any associated service providers.
Crypto ETNs: the risks
Reading the risk section of a crypto ETN’s prospectus is like visiting a chamber of horrors. Every grisly fate and sticky end your ETN could meet is listed.
Or at least I hope it’s listed.
Either way it’s an educational read and, if you’re on the fence about crypto investing, it could send you running in the opposite direction of the alluring 900% return graph I showed above.
To give you a flavour, let’s pick out a few highlights from the risk section of the iShares Bitcoin ETP (IB1T) prospectus. (To be clear this is just illustrative: I have no reason to believe that IB1T is a particularly risky crypto ETN.)
What follows is a sample of the higher-dimensional risk space you enter when crypto is involved. It’s got more dimensions than string theory…
Theft of crypto
…the Issuer’s bitcoin may be subject to theft, loss, destruction or other attack, which may result in the value of the Securities being reduced, potentially to zero.
Irrecoverable losses
A breach of the Issuer’s account at the Custodian or the Prime Execution Agent could result in the partial or total loss of the Issuer’s assets, which is likely to result in a partial or full loss in the value of the Securities.
If any relevant Cryptoassets are lost, stolen, damaged or otherwise compromised in circumstances in which the Custodian, the Prime Execution Agent, another service provider to the Issuer or any other party is liable to the Issuer for such loss, theft, damage or compromise, the Custodian, the Prime Execution Agent or other responsible party may not have sufficient resources to fully compensate the Issuer.
Security risks including the efficacy of cold storage
The security procedures in place for the Issuer’s bitcoin may include offline ‘cold’ storage, the use of multiple encrypted private key ‘shards’, and other measures designed to reduce the risk of the loss or theft of the Issuer’s bitcoin. However, these cannot guarantee the prevention of any loss due to a security breach, software defect or force majeure event that may be experienced by the Issuer or the Custodian…
Cryptoexchange risk
Crypto asset platforms are often unregulated in nature and may be vulnerable to manipulative trading activity, business failure, fraud and security breaches. In addition, if a crypto asset platform which a Series of Securities utilises for storage, trading and/or settlement becomes insolvent this may lead to a loss of the Issuer’s underlying assets and therefore a loss for the relevant Security holders.
Concentration of Bitcoin ownership
Crypto assets may be subject to attacks by malicious actors or groups of actors. If a malicious actor or botnet obtains control of more than 50% of the processing power dedicated to mining on the Bitcoin network, it may be able to alter the Bitcoin blockchain on which transactions in bitcoin rely by constructing fraudulent blocks or preventing certain transactions from completing in a timely manner or at all (a ‘51% attack’).
To the extent that such malicious actor or botnet did not yield its control of the processing power on the Bitcoin network, or the Bitcoin community did not reject the fraudulent blocks as malicious, reversing any changes made to the Bitcoin blockchain may not be possible. There have been a number of examples of 51% attacks on cryptocurrencies.
Devaluation risk
…there is no guarantee that the current 21 million supply cap for outstanding Bitcoin, which is estimated to be reached by approximately the year 2140, will not be changed. If a hard fork changing the 21 million supply cap is widely adopted, the limit on the supply of Bitcoin could be lifted, which could have an adverse impact on the value of bitcoin and the value of the Securities.
Cryptography risk
The cryptography underlying bitcoin could prove to be flawed or ineffective, or developments in mathematics and/or technology, including advances in digital computing, algebraic geometry and quantum computing, could result in such cryptography becoming ineffective.
Any resulting reduction in the integrity of, or confidence in, the source code or cryptography underlying crypto assets generally could negatively affect the demand for crypto assets and therefore may adversely affect the value of Bitcoin and consequently the value of the Securities.
Developer risk
Some developers may also be funded by entities whose interests are at odds with the interests of other participants in the Bitcoin network or with the interests of investors in bitcoin. A bad actor could also seek to interfere with the operation of the Bitcoin network by attempting to exercise a malign influence over a core developer.
Taxation risk
There is currently no tax certainty regarding the treatment of investments in crypto assets across various jurisdictions due to the novelty of the asset class. Accordingly, the taxation of the crypto assets and associated investments can vary significantly from jurisdiction to jurisdiction and may be subject to change, potentially also with retroactive effect. Any change in the tax treatment of the crypto assets could result in the Issuer incurring additional taxes…
…and there’s plenty more where that came from. I’m not even getting into the regulatory risk, or the uncertainty over whether the issuer could legally enforce its claim to the ETN’s crypto collateral held with third-parties.
Really, you could replace all 23,867 words in the prospectus’ risk section with the legend: AAAAARGH!
Or as the issuer succinctly puts it:
Don’t invest unless you’re prepared to lose all the money you invest.
Crypto ETN tax
Okay, let’s turn now to something more relaxing. Tax.
A crypto ETN does not pay an income. Thus the only tax to worry about is capital gains – payable if you hold the product outside of your tax shelters.
Also, if the ETN is domiciled outside of the UK then check it has reporting fund status. If not then capital gains will be taxed at income tax rates when you sell. That could hurt!
Note that this reporting fund stuff doesn’t apply if you’ve safely stashed your ETN in an ISA or SIPP.
Crypto ETN checklist
When comparing crypto ETNs, look for:
Cost of ownership – What’s the TER, bid-offer spreads, tracking difference?
Collateral – What assets are held as collateral, how much is held versus the value of the product, are there daily disclosures, is the collateral insured and independently audited?
The custodian – Is the keeper of the collateral independent and reputable?
Securities lending policy – Can the collateral be lent out? That would invite yet more counterparty risk.
Asset protection – Is the crypto mostly held offline in cold storage? Are the ETN’s assets segregated from other parties?
Product structure – Is the ETN backed by physical cryptocurrency or another asset, or does it use synthetic replication (that is, swap-based derivatives)? Physical is usually safer.
Price index – Google it. Is this index reputable? Does it definitely track the crypto’s spot price?
ETN leverage – Look for a 1:1 ratio to ensure you’re getting a non-leveraged product. (Unless you actually want leverage, you complete and utter nutter.)
Tax – Can I hold the product in my ISA or SIPP? If not, does it have reporting fund status?
Early redemption, default, and failure – What does the prospectus say about these scenarios?
Best of luck!
Obviously none of this is investing advice. We’re just running through things to think about should you decide you want to research these new offerings for yourself.
Personally, I can’t say I’m about to sink my life savings into crypto. But I will follow along with interest. I think crypto is an astounding phenomenon but I have grave doubts about its worth as an asset class in a wider portfolio.
Of course, my views are neither here nor there. And even the FCA has caved to the inevitable, because swathes of Brits were opting to take their chances in unregulated offshore exchanges. Not to mention the various other crypto-powered vehicles that had crept onto the market.
Is this progress? I don’t know. But I am fascinated.
Take it steady,
The Accumulator
The ‘retail investors’ category refers to ordinary punters like you and me who invest their own money in their own accounts. As opposed to professional investors who trade for a living, or ‘sophisticated’ investors who can typically afford to lose a lot of money if they spunk their cash away on a scam. [↩]
One big driver of the thousands of young economic migrants who’ve come to Europe and the UK over the past decade is said to be the spread of social media.
Now that the developing world can see – it all its influencer-filtered glory – how the West has been living all these years, many of world’s poorer citizens want a piece of it.
Wouldn’t you?
Of course we might say they should look to pull their own countries up instead. Strive for freer markets, better governance, more education, stronger property rights, and whatnot.
I agree but it’s easier said than done. While globalisation and capitalism have done a decent job of alleviating true poverty since the 1970s, from memory only a dozen or so developing countries have made it to developed status since the 1990s.
Also you don’t need to be an 18-year old student activist at SOAS to see the West still has multiple embedded advantages, which it strives to protect.
It’ll even adopt the role of victim to do so. Just consider the spectacle of the world’s richest nation bemoaning bullies and vowing to be make itself great again.
Get up and go
The point is though that as an individual the situation can look even more hopeless.
You have to rely on your country’s politicians and institutions to do the right thing. We increasingly can’t even rely on ours for that.
Indeed isn’t there an ironic tension that it’s the champions of individualism in the right-wing media who are the ones who most bemoan young men taking it into their own hands to try to better their lives?
Of course understanding their motivations – and even extending our sympathy – doesn’t mean we should let them act against the law.
Illegal immigration is an overblown and politically weaponised issue, but it’s a real one. Not only does it erode trust in our multicultural social fabric in the short-term, it can only scale badly in the long-term, given the disparity in global demographics.
So we have to draw the line somewhere. Much of the nastiness we’re seeing these days is a reflection of the developed world’s struggles to do just that. (Though to be clear plenty of it is stoked by opportunism from a resurgent far-right, too.)
Would you like an extra zero with that?
All that said, perhaps Barry Blimp – or at least his more hard-pressed children – might be finding it a bit easier these days to empathise with economic migrants motivated by unimaginable wealth abroad.
Because the fact is the West is not a homogenous bloc. And it’s becoming ever-clearer that the US and the UK in particular have been on very different trajectories.
Of course there are millions of poor and struggling people in the US as well as here. And at least ours have better healthcare.
But this Tweet that went viral from Monevator contributor Finumus highlights a real contrast:
If you consume US personal finance and investing media, you’ll come across this wealth disparity all the time. Casual references to $1,000 splurged at a casino or $20,000 spent on a jet ski on a whim or $500 concert tickets as part of an everyday Friday night out.
It’s not that we don’t ever spend like this in the UK. It’s that there seems to be a zero tacked onto the end of the typical well-off American’s fun budget.
Their truly disposable income comes across as an order of magnitude higher.
Mickey Mouse budgets
Here’s an interesting example from the past couple of weeks. The writer Aaron Renn bemoans a ‘middle-class squeeze’ that has created Have-VIP-passes at Disney World and Have-Nots:
[…] there are just a lot of people making a lot of money today.
A couple where I live who are both middle managers at Eli Lilly could easily have a household income north of $350,000. The median individual employee at Facebook makes $379,000.
This has produced asymmetric financial competition. It used to be that there were rich people, but the middle class wasn’t really competing with them. Rich people bought mansions or luxury cars, but it didn’t affect the average person. There weren’t enough rich people to affect how long it took you to get through the line at Disney World, for example.
Today, there are so many people with so much money that the middle class is now in direct competition with people who have vastly greater financial resources.
You might argue Aaron’s take undermines my point. Sure there are lots of richer people in America, but that’s because of growing inequality there too?
Well yes, except that here in the UK we don’t even really have much in the way of wage inflation at the top. And on average we have had stagnant real wages since the financial crisis:
That chart is from last year, but it’s too striking not to use – and nothing much has changed since except more of us are paying higher-rate taxes and there’s a bigger tax burden on employers.
Again, I know and appreciate the US has plenty of poor people. But Britain is frequently compared to the poorest State in the US – Mississippi – and in doing so we’re found to be worse off, per capita.
Not a good look for a nation that still considers itself amongst the leading ranks.
A plague on all your over-priced houses
What’s to be done about? Well plenty that isn’t. But just not shooting ourselves in the foot would help.
You wouldn’t want to make it more expensive to hire people, to overburden development, or choose to depress our wealth creators. And of course as a trading nation you wouldn’t impose permanently higher costs on the economy by deciding to leave the vast and prosperous free market on your doorstep.
At this point you might be hurrying to the comments to post your political point of view. But let’s face it, both sides have done poorly over the past few years.
Team Blue must take the lion’s share of the blame, thanks to their lengthy and shambolic stint in power that left us in this mess. But Team Red has been to the cavalry what Jar Jar Binks was to the war effort on Naboo.
Fortunately it’s still possible in the UK to get ahead financially, if you’re say a well-educated Monevator reader who saves and invests hard, uses tax shelters to the max, and you had the good fortune to be born before 1990.
However you can understand why some people jump on boats in despair at their own political systems.
Just be aware if you are tempted to cut corners that the US is destroying boats it doesn’t like in international waters. (It’s also urging we do the same).
Ho hum.
Have a great weekend.
p.s. We were a bit too imprecise about passwords in The Realist’s excellent debut article on preparing your paperwork ahead of your death. So please note it may be against the T&Cs – and even the law – to access some accounts after your loved one has died, if they were held in their own name. See this commentary from the Bereavement Advice Centre.