Good reads from around the Web.
A big congratulations to fellow UK personal finance blogger and sometime Monevator contributor, Retirement Investing Today.
After years of saving hard and investing wisely, RIT – as he is known to his friends and to those with carpal tunnel syndrome – has achieved his goal of financial independence.
The recent stock market rally has pushed his portfolio to the £1,014,000. According to his sums, that makes work optional for the foreseeable future.
Somewhat ironically though, the weak pound that has helped lift his assets has arrived in concert with a host of other post-Brexit imponderables that have made that “foreseeable future” rather less foreseeable.
You’d think we’d be out celebrating. But in the RIT household this week (and in the run up in recent weeks) there has been calm as I’ve actually been umming and ahing about whether I can actually call myself Financial Independent.
The main reason for this is that over the years I’ve diligently planned for just about every financial situation that I can think of.
However what in hindsight I’ve actually glossed over is the risk of politicians just blatantly changing the rules.
In the past few weeks we’ve seen some of this appear via the Brexit vote, which for somebody who intends to emigrate to an EU country as soon as they FIRE has brought real risk.
One impact is that in UK pound terms, the European-based property that RIT plans to sip fancy foreign beverages in until senility comes knocking is now more expensive.
The pounds thrown off by his investment portfolio won’t stretch as far when buying that booze on the continent, either. Nor his bread, his olives, nor his live-in maid and butler.
(Okay, they’re not in his plan. But if they were…)
RIT is also having to think again about his pension and healthcare entitlements in life after Brexit.
It’s yet another reminder that everything can turn on a dime, which for me makes micro-debates about whether 2.73% or 2.74% is a safe withdrawal rate in retirement rather moot.
Still, it’s great to have such options.
Brexit will sort itself out in time. Being free at 43-years old, RIT has plenty of that on his side.
And that’s the really inspiring part of his journey, for the likes of you and me.
If he can do it, can we?
Like me, RIT began blogging many years ago when there were barely any UK personal finance blogs around. If I recall correctly he started blind, before discovering how others had blazed a trail to financial independence before him.
When I began Monevator in 2007 I’d read some nascent US blogs – and a few influential financial forum posters – but my own journey to financial freedom was otherwise motivated by a personal epiphany.
You probably always need such a ‘lightbulb moment’ to get started.
But once you have begun, there are nowadays all sorts of sites to help and inspire you. I feature many in the links here every week.
Indeed, the Internet is abundant with role models.
- Will you do what a 25-year old friend of mine does, and follow a slew of fashion fanatics on Instagram, spend all your money (literally) on shoes and handbags, and then beg others for a pint so you can cry over your penurious plight?
- Will you work your fingers off and save nearly everything that’s left after food and rent or mortgage payments, in the style of RIT and my co-blogger The Accumulator? (Their patron saint and blogger Jacob also described his methods on Monevator).
- Will you be a bit slacker like yours truly – saving more than almost anyone you know, but still splashing out strategically on nice clothes, the odd overseas holiday, and making more effort to grow your income than to cut back on every last frothy coffee?
- Or will you (and the correct answer is “yes, this one!”) roll-your-own plan?
Your choice – but choose carefully.
US financial advisor Tony Isola wrote this week about the downsides of similar minds flocking together on the Internet, before asking:
[What] if we are genetically predisposed to join a tribe?
The answer is: find the right one!
I know I have.
Your tribe, like mine, should consist of people of high character.
Data and evidence should take precedence over emotion. The focus should be on what the tribe can control. Things beyond the tribe’s influence are rightly ignored.
Investment friction, like taxes and high-fee products, along with global diversification, are prime examples of the former; short-term market returns, the latter.
Finally, your tribe should think in probabilities and not certainties, which are non-existent in the markets.
Unfortunately most investors end up in tribes that spend their time throwing coconuts at each other, like our ancestral primates. They worship false investment gods and create cults of personality.
Deal with it; tribes are a major influence upon the choices we make. Joining the right one to manage your investments is a decision you should not take lightly.
With his blog – and the completion of his first goal – RIT has surely inspired many people climbing towards financial independence.
Not a bad tribe to belong to.
Still crazy after all of these years
RIT tends to update his blog on Saturdays – and often after I’ve done my Weekend Reading links.
This means he actually achieved financial independence a week ago. By now he might have spent it all on fast cars and even faster women!
It’s okay, stand down – I just checked and everything’s good. Rather than withdrawing his cash to head to a casino, RIT is predictably blogging about safe withdrawal rates.
Old habits die hard.
Let’s make sure we have the right habits.
From the blogs
Making good use of the things that we find…
- Evidence is beating advertising – The Reformed Broker
- My investing mentors – The Irrelevant Investor
- An introduction to index funds – DIY Investor (UK)
- Riskese: The language of investing [Video] – Evidence-Based Investor
- Academic finance as a check on pretension – Enterprising Investor
- There are no bond kings in this market – Pragmatic Capitalism
- Peter Lynch’s track record revisited – A Wealth of Common Sense
- Superior returns from less frequent traders [Research] – SSRN
- A vague sense of returns – Abnormal Returns
- Never use a forward P/E ratio – Enterprising Investor
- A dozen things learned from Eugene Kleiner – 25iq
- Top 20 (mostly smaller) shares to buy and hold – Richard Beddard
- Negative yields are irrational, but they could persist – The Value Perspective
- Good question, great question – A Wealth of Common Sense
- Reading personal finance blogs: A guide for dummies – The FIREStarter
- What if everything goes right? – The Escape Artist
- Jeremy Grantham: Immigration and Brexit [PDF] – GMO
- Residential property success with Castle Trust – Simple Living in Suffolk
- Lift where you stand – Benjamin Hardy
Product of the week: The cost of 10-year mortgages continue to fall, which like the weaker currency could take some of the sting out of Brexit. ThisIsMoney reports that the new 10-year fix from the Yorkshire Building Society charges 2.89% – not the very cheapest, but the lowest available for those with just a 25% deposit to bring to the party.
Mainstream media money
Some links are Google search results – in PC/desktop view these enable you to click through to read the piece without being a paid subscriber of that site.1
- Three reasons to go low-cost – Morningstar
- Buffett deputy Ted Weschler makes his mark – Institutional Investor
- This bull market is powered by your indifference – Bloomberg
- Brexit puts UK companies in the bargain basement [Search result] – FT
- Four trends rocking the hedge fund industry – Business Insider
A word from a broker
- Four graphs to ward off a house price crash – Hargreaves Lansdown
- The top 20 FTSE 350 dividend stocks – TD Direct
Other stuff worth reading
- Britain’s economy wilting fast after Brexit vote – Reuters
- Brexit and the pound, property prices, and more [Search result] – FT
- Santander’s new 1-2-3 ‘Lite’ account pays no interest – Telegraph
- How Pokémon Go will make you spend more [Search result] – FT
- New chancellor has to wean us off high house prices – ThisIsMoney
- Property market hit by Brexit, warns leading agent – ThisIsMoney
- Housel: The power of asking, “Compared to what?” – Motley Fool US
- Capitalism is reducing inequality, on a global scale – Quartz
- Financial stress can cause physical pain – Scientific American
- Robert Shiller: Why US land has been a poor investment – NYT
- How exercise shapes you, far beyond the gym – NYT
Book of the week: In the late 1990s, former Wired editor Kevin Kelly wrote a soon much-mocked book called New Rules for The New Economy that basically foresaw the Internet revolution we’re living through. True the dotcom bust made Kelly look like a nelly for a few years, but many of his then-radical pronouncements are now truisms. Having got the big picture right, with The Inevitables Kelly digs into the detail to consider how everything from AI to Uber can be understood as arising from a handful of massive forces of change. (Personally, I believe this is the stuff that’s really making the world richer and more bountiful – yet also angrier and more unequal.) Extra irony points if you buy the hardcover dead-tree edition, instead of getting it on Kindle.
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- Note some articles can only be accessed through the search results if you’re using PC/desktop view (from mobile/tablet view they bring up the firewall/subscription page). To circumvent, switch your mobile browser to use the desktop view. On Chrome for Android: press the menu button followed by “Request Desktop Site”. [↩]