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Old dog, old tricks

Old dog, old tricks post image

Where were you on 9/11? Do you remember when you first heard that Princess Diana had died?

What about when you truly realised what compound interest could do for you?

I know that I was in a Waterstones in Bayswater in London, browsing a book by – I think – Jim Slater.

I almost dropped it in shock when I saw the future.

Admittedly this ultra-niche appeal anecdote would be punchier if I could be certain which book of Slater’s I was reading– or even be sure that he was the author.

The truth is I’m not even confident what year it was.

Mid-to-late 1990s – and perhaps more ‘late’ than I’d like to concede. Me still in my 20s, just, thinking I knew it all but regularly getting my ideas turned upside down.

All that I remember very well.

Double Maths at A-Level, but it took a graph in a book and a few small numbers in an equation to show me a way that I hadn’t come up with myself.

Golden retrievers

Given that on every second date I go on the term FIRE comes up these days, I expect it will be hard for younger readers to believe there was a time when you had to ferret out this information for yourself.

No blogs, no YouTube, no financial Twitter or TikTok. No ‘finfluencers’. Nobody in your extended family who didn’t work until they were done unless they had kids, sold a business, got sick, or died.

No real-life role models for financial independence – let alone retiring early.

But that was how life was back then. You became interested in a subject and you followed a breadcrumb trail – through libraries, bookshops, the nascent Internet, and word of mouth. At the end might be a musical subculture, an Eastern philosophy, a passion for early Porsches, or maybe some sexual fetish you never imagined existed.

It all took a lot of time but the journey was half the reward.

Today though, it takes about as long as it took me to type “today though” for you to have answers to everything at your fingertips.

Of course you still need to digest the material. And you must be more alert than ever to bogus nonsense. That’s the downside of getting rid of the gatekeepers of yesteryear.

You also need to know the right question to ask – trickier than it sounds when you might not yet have a clue about the answer.

In any event, today’s shortcuts are more like warp zones in Mario than incremental power-ups.

There’s no excuse not to know how to do anything.

House-trained mutts

I suspect this abundant information is one of the frustrations that older people have with the young nowadays.

We – as I suppose I might as well get used to writing – might bemoan that the younger generation’s financial woes are due to avocado on toast or YOLO-ing away a potential house deposit.

But we also think there’s no excuse for them not to know better.

Because everyone can know all this stuff if they want to.

Never mind that ‘we’ have mostly been bailed out by rising house prices, decently well-paid jobs, and for 15 years by the near-absence of meaningful interest rates.

Nor that despite these tailwinds a large cohort of even professional people in their 40s and 50s remain slaves to their credit card debt – or are decades behind on saving for a pension.

And I’m only talking about the sort of people who might eventually cross the path of Monevator, you understand. Not the one in five who have no pension savings at all nor the many millions who would struggle to get their hands on just a few thousand pounds without taking out a loan.

Maybe knowledge isn’t everything, after all?

The dogged pursuit of financial freedom

I was thinking about all this after talking to the very bright son of a friend of mine who I’m convinced is on the brink of making a big mistake.

He’s in his mid-20s and he’s frustrated with “having no money”. So he’s about to chuck in a good thing – in my opinion – and make some massive compromises in the pursuit of more cash today.

I advised him to be patient and to look to the big picture.

As we talked, the memory of my compound interest revelation in the bookstore bubbled up:

“I worked out when I got back home that if I could just save £500 a month for the next 25 years then I’d become a millionaire,” I explained.1

Unusually for a stealth wealther like me, I delivered what I thought was the mic drop:

“So I started saving £500 a month – and I achieved that goal.”

My young disciple wasn’t even fazed though. And I don’t think just because a million pounds isn’t what it used to be.

Turned out he’d heard of Mr Money Mustache. Spent a few hours going down the YouTube rabbit hole. He’d discovered these ideas several years younger than me, as it happened.

“FIRE, sure, yeah. Well you have to have £500 a month to do what you did,” he said glumly, before listing his monthly post-tax income (after, as best I could tell, a mandatory pension contribution), the rent for a room in a shared flat in a grimy bit of South East London, how much he spent in Morrisons on a single visit last week, and what it costs to fill his car.

No, I don’t think he should be driving in London either. But it was hard to argue that he was living it up.

He told me he was thinking of moving back in with his parents.

Barking up the wrong tree

Yes I am the guy who said young people are already rich on account of their long time horizons.

But if they can’t begin to take advantage of that potential, then isn’t their youth a stranded, wasting, and illiquid asset?

I won’t go through the laundry list of ways in which the older generations have arguably been over-enriched and the young given short thrift during the past 20 years.

House prices and insufficient new home building, the cost of higher education, and politicians favouring pensioners covers most of it – with the witless Brexit the icing on the cake.

Have a Google for hundreds of articles on the theme. There are even books on the generational divide.

But I will admit that this conversation gave me pause.

I think I know about all this stuff – yet my instinct had been to lecture this young man about compound interest rather than to truly hear him out.

In the way of a groovy geography teacher I had wanted to sound less like ‘we’ as the older generation when I was talking to him, and more like ‘us’.

But in reality there I was at the front of the class, and he was shaking his head at me not getting it.

In the dog house

What’s the killer takeaway? That I should talk less and listen more? That Britain needs to change its focus to the struggles of young people – especially those without rich parents? That I’m older than I think I am?

All true and maybe there isn’t a big revelation.

I’m pretty confident I could still reach financial independence if I started today. I see abundant opportunities that didn’t exist when I was my young friend’s age. He’s overly pessimistic.

Also, I did enough stupid things on my journey to believe there was a margin of safety. (For instance I never benefited from the long property boom, and I could have made more of my career.)

But honestly? I do suspect it would be harder now. Even if I still think he’s making a mistake.

Plus ça change, plus c’est la même chose and all that.2

This lad has run into the same concept that totally changed my life – and it has bounced right off him.

For all the guidance from blogs, YouTube videos, and social media influencers, every generation’s young people will do what they want and have to, and take their own missteps.

Those of us who went before are going to shake our heads.

And they’ll shake their heads right back at us.

Are you a younger person who thinks financial independence is harder to reach these days, despite all the information charting the path out there? Are you an older person with another perspective? Let’s have a productive discussion between the generations in the comments below!

  1. Yes I used an aggressive rate of return back in those days. Somewhere between 12-15% from memory. Which turned out not to be too optimistic for me but maybe that was lucky. It is also not really the point. []
  2. The more things change the more they stay the same. []
{ 32 comments… add one }
  • 1 xxd09 July 20, 2023, 10:59 pm

    Would be very pleased to impart my version of “parenting skills”. Have walked the walk with 3 kids-all now married,have their own homes and are financially secure-for now!
    All 3 kids with their own kids now (8 grandchildren in all)
    History doesn’t repeat but it rhymes!
    Luck plus some effort?

  • 2 mr_jetlag July 21, 2023, 3:12 am

    “So he’s about to chuck in a good thing – in my opinion – and make some massive compromises in the pursuit of more cash today.”

    Sounds… cryptic. Tempting as it is to opine from my own experience, kids these days have it much harder, and what looks like a compromise “back in our day” may be the least bad choice by modern standards.

    Renting, for example, is a necessary evil for now unless they can draw from the BOMAD; I certainly wouldn’t roll the dice with a mortgage at these rates.

  • 3 Millennial July 21, 2023, 9:17 am

    I appreciate your article and I really like to think that FI is still achievable for us younger folks but it has become so much harder, inadvertently lowering the number of success stories.

    I made the (financially unwise) decision to pursue a PhD in science in my 20s followed by switching to industry in my early 30s. While my salary is very good compared to income deciles, I won’t get rich anytime soon: Private rent in Oxbridge, study debt, inflation-related pay cuts, a 20% real-term pay cut thanks to Brexit-related exchange rate drops and it adds. Then there is the question of the climate catastrophe and the notion whether markets can / should actually grow. Or if climate-related catastrophes will just wipe out or stifle any growth, undermining the logic of compound interest.

    I am an optimistic person and believe in the idea of FI but seeing current and future challenges and my own situation in it makes me wonder whether FI will be achievable.

  • 4 equinox July 21, 2023, 9:21 am

    “So he’s about to chuck in a good thing – in my opinion – and make some massive compromises in the pursuit of more cash today.”

    Me too. Considering chucking a steady and I daresay cushy Civil Service job (~£65k, albeit with no possible progression or salary increases ever) which would probably give a comfortable retirement in 30 years to try for a finance/fintech/tech private sector role doubling my salary. It’s crazy that a 90th percentile salary affords no luxuries and we couldn’t even consider children – and I realise therefore that things are so much rougher for most other people.

  • 5 Dawn July 21, 2023, 9:32 am

    Been through exactly the dame conversations with my nephew. Even set him up with a ss isa and trackers funds. He then sold it all and did copy trading, crypto . He has a student grant and regular looses £1000s . I’m in despair with him . Even his mum laughs at compound intrest graphs I send him . What can you do. ? It’s sooooo sad really. The young want eveything NOW. Quick. instant. Don’t wanna work. Want it given to them. Quick over night riches not embark on the slow, steady path to wealth..

  • 6 Grumpy Tortoise July 21, 2023, 9:39 am

    It seems that the modern world is far more get rich quick with an expectation of high returns over short time periods (crypto?).
    The idea of deferred gratification with a slow steady approach to saving and/or investing seems quaint when I talk to many of my younger colleagues and family members.

  • 7 ermine July 21, 2023, 9:40 am

    > I do suspect it would be harder now.

    Culture gets away from us all as we get older. A difference between then and now is that now it is probably easier for the really exceptional to get ahead. The downside is that it is harder for those closer to the average, even those moderately above average, because competition is drawn from a much wider pool. This is the other side of globalisation and the much faster communications, the flipside of being able to Google how to do anything.

    Even the FI/RE space has changed with it – in the early days it was much more about frugality. It’s much more about Fat-FIRE now, because, to be honest, frugality on a slightly above average wage probably ain’t gonna get you from here to there now.

    the rent for a room in a shared flat in a grimy bit of South East London, […] No, I don’t think he should be driving in London either.

    Sarf-east London. ‘Nuff said. Public transport is rubbish down that end, it was crap when I lived there, it was still crap when I visited my mother there 40 years later. It exists, but you needed too many changes, and the commuter trains were rammed in the mornings from all the blighters that were rich enough to live that little bit further out so you’d be standing for an hour and a half if you could get on the train, and late-night options stank. He may not have a useful choice.

  • 8 Prometheus July 21, 2023, 9:56 am

    Whenever I see posts about how the world has changed since the internet burst upon the scene, I imagine the hot takes they posted on parchment in the 15th century regarding the Gutenberg printing press.

  • 9 Andrew Porter July 21, 2023, 10:11 am

    Feel exactly like @equinox “It’s crazy that a 90th percentile salary affords no luxuries”

    Both my wife and I have salaries that fit into this and you think you’d feel really well off but it just doesn’t feel that way at all, especially woth two young kids and nursery fees. Of course, know we’re lucky to be in that position and have absolutely no idea how anyone on the average salary manages a life!

    A friend’s kid somehow managed to save up £80k just off giving gymnastic lessons for years but in home counties that deposit doesn’t get her as much house as she would expect.

  • 10 The Investor July 21, 2023, 10:37 am

    @Prometheus — I’m not sure exactly how you meant your comment but an incredible amount did change with the printing press, a lot of it very quickly! The analogy is apt. 🙂

  • 11 Scott July 21, 2023, 11:03 am

    “It’s crazy that a 90th percentile salary affords no luxuries and we couldn’t even consider children”

    And yet people on less than £65k do have luxuries, and do indeed have children. By all means go for more money if it’s what you want, but another approach would be to adjust your expectations.

  • 12 ZXSpectrum48k July 21, 2023, 11:06 am

    @ermine. I agree that the payout profile for ability is more non-linear now. Historically, 90% accruing to 10% is pretty much the norm. The second half of the 20th century was an anomaly with a more equal distribution.

    Obviously it isn’t really just about ability. Luck plays a massive part (genetics, parents, inheritance, location etc).

    Another problem is that we’ve devalued various forms of success. I’ve mentioned before that the number of first class degrees is now 7x greater than just 30 years ago.

    I reckon it is harder now though. The boomers had it easiest of all recent generations. Gen x like myself closely following up. Wasn’t so easy for the Silent Gen or for current Gen Y or Z. Another example of luck.

    Could I replicate what I’ve done now? Seems unlikely. Those a few years ahead of me are 5-10x wealthier. Those a few years behind are only worth a 10-20%. Temporal location mattered.

  • 13 Coupar July 21, 2023, 11:12 am

    The moving target of the state pension age feels like swimming against the tide when it comes to achieving a retirement age similar to previous generations, it is (currently) 68 for me and with a DB pension linked to this a lot of additional investment will be required in SIPP/ISAs to retire around 60 – not easy on moderate wages with a high cost of living and inflation!

  • 14 Time like infinity July 21, 2023, 1:09 pm

    Glad no ‘Four Yorkshiremen’ critiques of young in piece, or comments. Boomers and Gen Xs (like Mrs TLI & I) had it made. Grants/no fees for Uni. Devaluation by degree oversupply yet to hit (albeit, we’ve still needed decent degree + 2 post-grad diplomas/masters each to get moderately comfortable professional jobs). Interest rates stopped house prices spinning up to infinity. Wages (mostly) rose in tandem with inflation, making mortgages easier to pay down. Decent rates for saving up for a deposit. Unemployment higher in 1980s / early 1990s; but our generations dodged both literal bullets of 1st hand experience of global conflict + aftermath (unlike Silent Generation), and the metaphorical ones faced by Gen Z & Millennials now, i.e. demographic burdens, being out of EU, declining globalization, AI taking jobs, debt crisis, climate change). Young don’t have it relatively easier, realistically.

    @equinox #4: YOLO and all, so go with your ambitions. Just, if you are weighing things up, do remember your DB pension. Guessing for CS it could add £15-£20k p.a. to pay depending on whether it’s CARES or Final Salary, accrual rate and scheme retirement age.

  • 15 tetromino July 21, 2023, 1:29 pm

    Doesn’t your example prove that we need not only the ‘information value’ of the message but also to hear it at the opportune time?

    I can think of several times when my attitude to personal finance changed, not because I learned something new about the theory, but because something in ‘real life’ had changed, meaning I was now ready to act on what I knew.

    Also reminds me of Housel’s ‘no one’s crazy’ point, which seems pretty valid to me.

  • 16 BBBobbins July 21, 2023, 3:02 pm

    I probably heard similar messages in my 20s but didn’t go into over optimising investments for the future, my priorities were a property and saving enough cash buffer that I could afford to walk from a job if it ever got too much. As it was this afforded me a couple of years travelling career break in my early 30s. But it was tax rates and the recognition that the age of pension access was no longer decades in the future that really upped my investment game.

    You not only have to hear the message but be in a position to do something about it. And that includes being in the right headspace re what your future self will be. If you still think that future self will be earning £ms pa then a few £ks invested don’t really mean anything and a £k spent networking for that next step or gambled on a meme stonk might be more attractive. Confidence is one thing but pessimism can also be a valuable tool.

  • 17 weenie July 21, 2023, 4:56 pm

    @Dawn (5) – For each of my nieces and nephews I have invested some money for them (low 4-figure sums), which I will give to them as each turns 21 (current ages range between 8-16).

    I don’t want to tell them what to do with the money, so will just say that I hope they will ‘spend some of it on fun stuff, save some of it and invest some of it’.

    I’ll try to explain how what I invested in has compounded over the years and hope that at least one of them will take it in and understand the slow path to wealth!

  • 18 BeardyBillionaireBloke July 21, 2023, 5:30 pm


    Your site is broken as seen from here. Can you check it out please?

    “The connection to the server was reset while the page was loading.”

  • 19 weenie July 21, 2023, 7:12 pm


    Seems ok on my phone. Will check on laptop when I get home, cheers.

  • 20 Phillip July 21, 2023, 7:39 pm

    Every generation has different challenges and opportunities that makes it tougher or easier. With my kid who just graduated from secondary school, I asked him 3 years ago to consider career choice moves based on these conditions. For example, career wise in my days in the US, doctors and lawyers were all the rage. These days, changes in health care and the over-saturation of lawyers make these professions less desireable but software development (think FAANG) is all the rage now. And as for university expenses, my kid decided to take many AP classes to receive college credit which will shave a year off his university attendance, thereby saving mid 5-figure sums and the benefit of earning an extra year of wages. My generation didn’t offer that many AP classes. Things are only harder for a given generation if you don’t anticipate and plan ahead.

  • 21 Neverland July 21, 2023, 10:07 pm

    As I hang out with the kids on r/FIREuk I can tell you quite categorically that its quite possible to earn six figures by your mid-20s in certain occupations

    There are also many many 20 something with six figure savings balances – albeit they live at home with their parents mainly in the SE

    So FIRE is alive and well and, as always, concentrated on those who started on third base to begin with as the americans would put it

  • 22 The Rhino July 22, 2023, 8:31 am

    @neverland – for sure, I’ve lost two from my team over last year. First was a graduate who left for 50k, second a post grad who left for 100k. Both less than a year out of uni. This is in AI R&D. What I would say is they were super bright so, as others have mentioned, it is a case of winner takes it all. Companies seem to need a few exceptional people rather than lots of good people.

  • 23 E&G July 22, 2023, 9:20 am

    Every generation does have its own challenges and this one’s is housing and insecure employment related, but when I read Andrew’s comments on most posts, and Equinox’s here too, I often wonder just how privileged and entitled a lot of youngish people are when they feel they are so hard done too. I come from a very different personal finance background to most readers but I know very content pensioners who think having a few hundred quid in the bank and the security of their state pension, allowing them the luxury of some ‘butcher meet’ at the weekend, to buy their grandkids a toy or magazine and treat their kids to a birthday lunch makes them rich. And in some respects they are much better off than the top decilers ludicrously saying they can’t afford a decent bottle of wine or takeaway, or a trip to the pictures or whatever else would have been considered a luxury by previous generations, never mind being able to have children.

  • 24 Gentleman's Family Finances July 22, 2023, 9:24 am

    “If you want to look slim, hang out with fat people”
    In the same way, I’m slumming it in a LCOL area – comfortably getting by on higher than average (national) earnings. WFH and savings mean that we can put up with the opportunity cost of living away from better paying jobs.

    Are we raising our kids for export?
    Probably. And I hope that they have the good mind to leave and never come back.
    Of course, our parental financial responsibilities will continue post 18 (under the guise of helping but it’s a funny form of privilege not afforded to me).
    That’s far enough away to make the current maelstrom for young people irrelevant. As much as I bemoan the intergenerational injustice (which I discovered 2001 around the time of 9/11 coincidentally) the best I do is mitigate its affects.

  • 25 John Kingham July 22, 2023, 9:54 am

    For the average person, I think it’s harder to get going today than it was back in my day (the 1990s) and the main reason is house prices. Or, more accurately, the completely insane housing bubble that successive governments have inflated in the hope that it will (a) get them re-elected and (b) not explode on their watch.

    None of my 20-something relatives has a high hope in hell of buying even a one-bedroom flat, let alone somewhere they could raise kids.

    I think the single best thing we could do for Gen Z would be to keep interest rates at mid-single-digit levels for a decade and watch house prices halve relative to wages. For that, I think, they would be truly grateful.

  • 26 Time like infinity July 22, 2023, 10:56 am

    “..keep interest rates at mid-single-digit levels for a decade..”: Second that @John #25. Since 1990s the Gov & BoE have spent far more time with their foot to the floor accelerating house prices (ZIRP, so called Help to Buy, selling off last council houses, not building new ones etc) than they’ve spent applying brakes, or attempting any steering. Now younger folk can’t afford a place to raise a family. A need for housing for younger adults has been turned into: 1) a reverse wealth pump, taking the little capital the young have and making it into a rentier income stream for BTL; and 2) an unproductive asset for the elderly.

  • 27 Prometheus July 22, 2023, 11:47 am

    @the investor

    Quite, a lot changes with technological breakthrough but not human nature

  • 28 FitandFunemployed July 22, 2023, 2:30 pm

    @equinox, I’m scratching my head over what Civil Service job pays £65k with “no possible progression or salary increases ever”.

    Salary bands are quite tightly controlled in the Civil Service, so to be earning £65k you must either be a Grade 6 or be at the top end of a Grade 7 post with an interesting speciality, e.g. a legal or analytical qualification.

    To have achieved either of those things 30 years out from retirement suggests a good degree of aptitude (especially if you are a Grade 6), and I can’t imagine why you think there’s no opportunities for promotion.

    You could move from ops to policy (or vice versa), change departments, loads of stuff. You could get a Permanent Secretary post, quit that and get some cushy non-exec directorships within 30 years….!

  • 29 Factor July 24, 2023, 1:04 pm

    @TI “My young disciple wasn’t even phased [sic] though.” Should be fazed?

    Late reading this one – been away walking the walk looking at possible unis with younger son.

  • 30 The Investor July 25, 2023, 2:37 pm

    @Factor — Oops, thanks. Fixed now. Good luck with that hunt. Doesn’t seem a million years ago I was making that round with my late dad. But it was about a million years ago, to stay on-brand with this article 😉

  • 31 DavidV July 25, 2023, 3:27 pm

    @Factor @TI Interesting how generational norms change. My generation (entering university early 70s – we never called it uni) wouldn’t be seen dead turning up at a university with parents in tow. I winced at ‘phased’ also 🙂 .

  • 32 Andrew Porter July 25, 2023, 3:30 pm

    @E&G you have a point in regards to luxuries, perhaps people do expect more.

    I thinks it’s more about what lifestyle you expect you will have when you are in the top 10% of earners.

    A large part of your standard of life currently seems to be deritrmed by when you bought a house. If you’re in the 10% of earners and bought a house in the south 10+ years ago you will be a lot better off.

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