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Weekend reading: And the little one said, rollover

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What caught my eye this week.

Five years flies by when your country is shooting itself in the foot, the world’s most powerful nation is led by a man-child, and a global pandemic sinks and then super-charges your portfolio.

Even so, as the dust settled I was surprised to see that my NS&I Index-linked certificates are up for renewal again.

If you have no idea what these are, I don’t blame you.

NS&I’s coveted certificates haven’t been available to new investors for almost a decade. Existing holders have been able to rollover what they have – but only for increasingly measly returns.

Roll over Beethoven

If I renew my certificates for another five years, then I will get a guaranteed return of 0.01% tax-free per annum, plus inflation1.

The same return is also available on rollover into two-year and three-year certificates.

Given that I am sure NS&I is familiar with the time value of money, this unchanging return profile over two-to-five years tells us a lot about where the market appeal lies with these certificates.

It’s all about guaranteeing the preservation of the spending power of your money via the index-linking.

If I rollover for five years, say, my money will preserve its real2 value over that term. But the additional returns on top could be beaten by skipping a latte a year.

That’s a pathetic-looking reward for planning to lock your money away for five years3.

And it gets worse!

In 2019, NS&I shifted the measure used to calculate the index-linking portion of the return. It now uses CPI instead of RPI. There are justifiable reasons for this, but as CPI has tended to run lower than RPI the net result for us investors is smaller gains over the years.

NS&I doesn’t hide the impact of the shift, as illustrated by its table below (which uses 2019 inflation rates). It shows what you would get from a £1,000 investment under the two different inflation measures:

Historically low returns will very likely be even lower with CPI.


Merrily we roll along

So why do I plan to rollover these certificates again – and for the full five years?

Because even just getting your money back with that inflation-tracking uplift beats cash in the bank. Returns on savings are currently far lower.

And because if inflation should spike dramatically, these certificates provide some protection against that, too.

Meanwhile if inflation turns negative, the NS&I certificates don’t go down in value. You’d just get the 0.01% applied that year. So there’s an asymmetrical risk/reward on offer.

Finally, I’ll renew for the whole five years just in case they decide to scrap them in the next few years.

You’ve got to roll with it

The big potential downside to rolling over is, of course, the probable opportunity cost.

My self-managed portfolio more than doubled over the past five years. Needless to say that smashed the return from my NS&I certificates.

But good investing isn’t just about holding assets with the highest expected returns. We need diversification, and we need an emergency fund, too.

I wrote a lot about my last rollover in 2016 that holds true today. Please check back for a full run through the attractions of these certificates.

The RPI element has gone since then, but that aside the certificates still look like unique asset class that we private investors are lucky to have access to.

Moreover they’re not issuing them any more. When it comes to the rollover it’s use it or lose it for those lucky enough to own them already.

Perhaps the biggest argument against rolling over for me, personally, is that unlike in 2016 I’m now running a big mortgage. I’d expect to earn a (slightly) higher return by cashing in my certificates and paying that down.

But then they’d be gone for me – and with them their unique diversification traits – and my overall investment posture would be less liquid (because I’d swap the semi-liquid certificates for a lower mortgage balance).

The cash value of my certificates could cover a couple of years of my mortgage payments, in a desperate pinch. Liquidity is valuable.

All told, my conclusion is much the same today as it was five years ago:

If these Index-linked certificates turn out to be the weakest performers over the next five years, then hurrah – because it will mean my vastly larger allocation to equities, for example, will have done better.

True, if I had a massive slug of these certificates then perhaps I’d need to think more carefully about how much money I wanted to commit to merely keeping up with inflation.

But like most people I only have a few percent in them, and as we’ve discussed they’re not making them anymore.

A solid hold, then. If only all investing decisions were this easy.

Let’s see where we are in 2026!

Have a great weekend everyone.

From Monevator

Accounting for big expenses and depreciation in your FIRE budget – Monevator

Why you might be your own diamond of a dream tenant – Monevator

From the archive-ator: Decoding a company’s dividend policy – Monevator


Note: Some links are Google search results – in PC/desktop view you can click to read the piece without being a paid subscriber. Try privacy/incognito mode to avoid cookies. Consider subscribing if you read them a lot!4

UK house prices increase at fastest rate since 2004 – Guardian

Barclays boss predicts biggest economic boom since 1948 – BBC

One in seven UK shop fronts are now empty – Yahoo Finance

Eurozone suffers double-dip recession as pandemic impact continues – BBC

US tax plan ‘opens door to rest of the world’ to raise capital levies [Search result]FT

Banks routinely blame victims of fraud – Which

Some US insurers have started to invest in Bitcoin – Investment News

The seven money personality types – CNBC

Products and services

People could be asked to watch an education video before investing – Guardian

Staycation demand is up 200%, but where are people booking? – ThisIsMoney

Use my code eats-ubermonevator for your first Uber Eats order and we both get £10 off a £15 order – Uber Eats

The fourth Covid support grant for the self-employed is now open – Which

Get ready for a chablis shortage – Guardian

Homes for sale with inspiring interiors, in pictures – Guardian

Comment and opinion

Golden years at work are the hidden treasure of the old [Search result]FT

Whose decline is it, anyway? – Of Dollars and Data

The secret sauce of a successful retirement – Humble Dollar

Days of future past – The Reformed Broker

There’s nothing romantic about being scammed [Search result]FT

The future is promised to no company – Abnormal Returns

A golden age of fraud is upon us – A Wealth of Common Sense

Money is the greatest story ever told – The Belle Curve

Meta – Enso Finance

Do US government bonds [Treasuries] still work? [US but relevant, geeky]Verdad

Naughty corner: Active antics

The anatomy of a home run real estate investment – Banker on FIRE

Do commodities still work as portfolio diversifiers? – Morningstar

Swedroe: Be thankful you don’t have access to hedge funds – Seeking Alpha

How many stocks beat the indexes? – Morningstar

Wall Street Bets is still at it – Business of Business

The rage of short-seller Carson Block – Institutional Investor

The US corporation tax burden: facts and fiction… – Musings on Markets

…but should corporation tax actually be 0%? – Bennallack

Coronavirus corner

How Pfizer makes its Covid vaccine – New York Times

Covid-19 infections in UK back to late summer 2020 levels – ONS

More than 20 million living in UK areas with zero [recent] Covid deaths – BBC

How Pfizer became the status vaccine – Slate

One vaccine shot leaves many vulnerable to Covid variants, UK study finds [Search result]FT

How India’s second Covid wave exploded – ABC News

Kindle book bargains

The Almanack of Naval Ravikant: A Guide to Wealth and Happiness by Eric Jorgenson – £0.99 on Kindle

Bezonomics: How Amazon Is Changing Our Lives by Brian Dumaine – £0.99 on Kindle

Never Split the Difference by Chris Voss – £0.99 on Kindle

Blood, Sweat, and Pixels: The Turbulent, Triumphant Stories Behind How Video Games Are Made by Jason Schreier  – £0.99 on Kindle

Environmental factors

Why dead trees are ‘the hottest commodity on the planet’ – The Atlantic

Italy allows hunters to shoot 7.5m endangered turtle doves – Independent

Co-op to ditch plastic ‘Bags for Life’ over pollution concerns – Guardian

A climate scientist explains why it’s still okay to have kids – Vox

Europe is getting loads of really long parks – Time Out

The long-term outlook for CO2 as an investment – Klement on Investing

Off our beat

Is free will an illusion? – The Guardian

Myspace Tom got it right – The Verge

Tips on persuading people from the head of TED talks – Slate

Is rewatching old TV good for the soul? – BBC

The secret credit card that’s only for the rich [Ugh.]Backbencher

Untenable – Seth’s Blog

99 additional unsolicited bits of advice – Kevin Kelly

And finally…

“That’s a lesson we can all learn: the more we have, the more we want. And the only cure is to break the cycle of relativity.”
– Dan Ariely, Predictably Irrational

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  1. Technically ‘index-linking’ but it amounts to the same thing []
  2. i.e. Inflation-adjusted. []
  3. You can get the money out early if needed, with a penalty. []
  4. 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”. []
{ 53 comments… add one }
  • 1 G May 1, 2021, 5:45 am

    My indexed-linked certificates are also up for renewal this year, and it’s reassuring to hear they are still offering inflation. It could have been much worse.

    I’ll offer up the recent Freakanomics podcast on minimum wage as worthy of a listen if anyone has an interest in that area:

  • 2 Matthew May 1, 2021, 6:18 am

    I get the novelty, but what’s the plan? – ie what is 5+ years away that needs an absolute guarantee of capital?
    As you know, elements of the equities market ride/exploit inflation better than others (i.e. they are leveraged and able to raise prices)
    Also the mortgage rate would of course increase if inflation increased, but like you say then the money is gone and as I said before you might be able to just transfer it to equity release one day.

  • 3 JimJim May 1, 2021, 6:58 am

    I have now got linker envy. I would prefer them to premium bonds, but as you say, no new issues. On the subject of CPI envy.
    As I draw closer to accessing a D.B. pension, and I am in one of those lovely quasi government jobs that has had a zero or 0.5% pay rise for the last ten years which seems to be the intent into the future from this government. Inflation is big on my mind as it has eroded part of my final salary pension in real terms. (I have yet to get the figures from the McCloud judgment). I am trying to figure out if I would be better off going early at a certain inflationary rate and time and when that date should be. I am nearly at tipping point with the actuarial reduction for early retirement giving me a large enough regular income to let the portfolio do the rest of the heavy lifting until the old age pension kicks in, and the thought of CPI every year is a nice one. (I have seen the difference it has made to Mrs JimJim’s pension over the last 4 years!) . When does inflation force pay increases? In our line of work we would need a 20% rise to get back to parity with 10 years ago? And if it does make sense at a time after 55 and a certain level of CPI to jump early – are we forcing public servants to leave before necessary as their money can do better than they can with a sub inflationary rise?
    I can’t get my head around it.

  • 4 Streptopelia Turtur May 1, 2021, 7:54 am

    Small typo in your narrative before the link – it’s Italians who are disgusting rather than Indians.

    Keep up the good work

  • 5 G May 1, 2021, 8:23 am

    @Matthew, it’s about having and preserving the value of a highly liquid stash of cash. Although you sign up for up to five years, you can cash in earlier with only the loss of some of last year’s interest. Plus being a government scheme, it’s unlikely to go to the wall if your bank does. I think of it as essentially like break open in case of extreme emergencies.

  • 6 Matthew May 1, 2021, 9:29 am

    @G – TI could have an offset mortgage perhaps even, then has liquidity
    Another option is to spend
    Suppose every pot must have a purpose – dry powder maybe?

  • 7 NewInvestor May 1, 2021, 10:10 am

    Alas, I cashed in all of my index-linked certificates seven years ago to fund my house purchase. It was a very sad day. Of course, I thought back then that might reappear, albeit sporadically, at some point in the future but that looks like misplaced optimism. 🙁

  • 8 The Investor May 1, 2021, 10:35 am

    @NewInvestor — Commiserations! I guess they might have reappeared, it’s not like the UK State hasn’t needed the cash. I suppose the demand would be overwhelming, and the certificates even on these measly terms are just much more expensive than issuing conventional gilts at the near-zero rates of recent years.

    @S.T. — Thanks! Bit of a dumb one. Fixed now. 🙂

    @JimJim — You write: “When does inflation force pay increases?” I think it works the other way around… that ‘true’ high inflation of the type we can rightly get frightened about is more likely to happen from persistent wage rises (and the fear of more inflation to come) than for inflation to rise first and you see wage rises in response. Although obviously there’s a chicken and egg thing going on here! There’ll be a short-term inflation pulse for sure though from various bottlenecks in the system at the moment (e.g. microchip shortgages) and year-over-year oddities (e.g. oil was below zero for five minutes roughly this time last year).

    @Matthew — They are a cash reserve, which we all need, that pays a much higher expected return that conventional cash savings. As for the mortgage, yes I’d love an offset mortgage but as we’ve discussed before many times I didn’t exactly have options:


  • 9 BeardyBillionaireBloke May 1, 2021, 10:41 am


    > quasi government jobs that has had a zero or 0.5% pay rise for the last ten years which seems to be the intent into the future from this government

    Also a common situation in the private sector.
    2007 44368.00
    2010 45112.00
    2012 45563.00
    … changed job here …
    2020 47047.50
    Now retired with DC pension possibly about equal to the LTA when I’m 55.

  • 10 JimJim May 1, 2021, 11:10 am

    @TI(8) and BBB(9).
    I suspect you are right about wages driving inflation, but only to a point. When wages drop in real terms (see BBB (9)) in both the public and private sectors and we still see inflation – your bonds were always positive- so inflation still existed – it cannot be the whole cause. We have seen a shift towards the value of capital that drives the rest perhaps? And when human labour is valued less than assets, this can only drive inequality. Which in a roundabout way was the point I was trying to make. It becomes ridiculous to erode wages when we need future tax payers to carry the burden of CPI increases on an aging population – and many of the government sector pensions rely upon current pension contributions to pay retired members. If the pensioned classes get an inflationary wage rise every year while the working population sees its earning potential diminish, who wouldn’t sign up for that level of security as soon as they could? Perhaps it will sort itself out, any imbalance seems to eventually. Perhaps inflation would do this, austerity seems only to have made it worse.

  • 11 Big Boss Man May 1, 2021, 11:53 am

    @TI – your New York Times link is routing to the same ABC article on the India covid collapse.

  • 12 BillD May 1, 2021, 12:45 pm

    Thanks for the reminder on ILCs which I have now checked online as they just keep rolling over. I currently have about 11% of my liquid cash in these – I do regret not taking more of them when available.

    If I am lucky not to suffer any emergencies requiring big lumps of additional cash in retirement, I struggle with when is the optimal time to cash them in. Maybe in the late 60s / early 70s for that last world tour splash or a fun large value purchase while still active and in good health? Perhaps more likely they will be used as an insurance against some expensive late life medical event. So it seems like my personal holding period for ILCs is effectively forever due to not wanting to cash in something that cannot be replaced…

  • 13 ZXSpectrum48k May 1, 2021, 12:59 pm

    @JimJim. As TI has said the primary driver for core inflation (i.e. net of volatiles like oil prices) has always been wage inflation. It’s hard to get sustained CPI without sustained wage inflation.

    The last decade has been anomalous in that we’ve seen about 6% wage deflation in real terms vs. RPI and 2% increase vs. CPIH. The last decadal period where we had wage deflation was 1900-1910, the end of the Gilded Age. The drivers are not dissimilar: a long period of strong economic growth generated by rapid globalization and technological progress, leading to downward wage pressures, but rising inequality, consumption and debt, then an economic contraction (a la 2008).

    The best chance for rising wage inflation in the UK was going to be later this decade. Chinese labour supply was about to turn negative in 2022. That’s acted as the floor for global wage inflation. Add that to demographics turning from 2025+ in the UK as boomers retired more rapidly. All of that though has probably been set back by COVID to some degree.

    The tax dependency ratio (ratio of non-tax payers to tax payers) is set to climb by 20-30% over the next 10-20 years. That tax base collapse will require higher taxes, lower spending or more growth. So even if you do get wage inflation, just assume it will be taxed away.

    UK workers need to abandon their wish for higher pay. It’s totally unrealistic when we are already massively overpaid on a global basis. We need to focus instead on a much lower cost of living. A big part of that is lower house prices and rents. And what is the current governments only economic policy? Driving massive house price inflation through SDLT cuts. You couldn’t make it up.

  • 14 Matthew May 1, 2021, 1:29 pm

    @Jimjim – thing is though about increasing wages is that workers are also customers, and what they buy will become more expensive too, with more tax in the transaction than before (vat, paye, ni) – national wage rises are only helpful to an individual if tax thresholds are going to raise, which like zx said probably won’t happen.

    I wouldn’t assume though that wages are doomed though because wage rises get people out of universal credit and benefits dependancy – if government raises minimum wage they probably save more on benefits for the private sector workers than they would pay out as extra in the public sector. As well as that minimum wage rises might increase pay up the bands which would bring in more tax, but of course theres a limit as to how far we can go with that and still be competitive, but some jobs can only be done locally and the country brings in its income from services which it can then fund it’s servants with.

    Also wage rises are needed to keep house prices rising, to avoid negative equity, to avoid another expensive bank crash.
    @zx – SDLT cut helps housing chains move along, increasing building at the top and consequently supply at the bottom of the chain, tax only gums up the cogs.

    @TI – I see the risk of cash differently when you consider opportunity costs – it wouldn’t take too long to grow enough of a margin that would preserve your initial capital in a crash (ie grow to safety) – but of course that involves an initial period of risk, discipline, and accepting when it goes wrong – In my mind its unlikely failure if you needed money during a crash in the first few years vs almost guaranteed opportunity cost. That said I used cash for wedding savings, because I would’ve been crucified. I figure that the amount of cash I’d actually need to be properly safe would severely hamstring me so I’m either an optimist or I’m dead!
    Agree though that as a cash option it looks like the best for you.

  • 15 JimJim May 1, 2021, 1:45 pm

    @ZX, thanks for your insight, logical as always and a broader perspective than mine.
    Being connected to the house building industry, at a trade training level, getting house prices to fall might be a tall order, and as you have mentioned the market is just getting pumped again, this time with the lenders even arguing that new builds are overpriced and only lending on “used” properties. Every tradie I talk to has more work than they can cope with and Covid19 has put back the training of the new generation by a year. (We may have fewer tradies from Europe too!) The construction industry more than most is blown by the winds of opportunity, a high percentage of self employed sub-contractors moving from job to job. When times are good everyone works and gets paid, and these times remind me of the early 2000’s when moving from site to site got you £1k+/week, a figure that has been hard to top until recently up north. Wages are rising and tradies are becoming more choosy about the work and have long work books. I doubt these times will continue for long, they never seem to in our industry, and the M.D’s of Persimmon and Berkley and, if they are lucky, the shareholders, are probably going to be the biggest winners.
    Successive governments since as far back as I can remember have failed to hit house building targets. If you know what the secret sauce might be, please share as I don’t.

  • 16 Matthew May 1, 2021, 1:51 pm

    @jimjim – the secret sauce would be lower building standards, the concept of every unskilled worker earning a highly skilled house built for them is out of step. Our expectations that everyone can be a homeowner and have good space is unrealistic and not what happened historically.
    Higher house prices are needed to incentivise building.

  • 17 JimJim May 1, 2021, 2:03 pm

    @Matthew… Er, Grenfell… Perhaps our standards are low enough! Building regs are primarily about safety and not about quality.

  • 18 c-strong May 1, 2021, 2:10 pm

    If I had some NS&I linkers I’d probably keep them too, simply because they are so obviously a much better deal than the nearest alternatives (principally savings accounts and index-linked bonds). Though I do wonder how much the scarcity value should drive decisions like that.

    On the opportunity cost point, am I the only one here who doesn’t have an emergency fund? I have a few credit cards with zero balances but large limits instead. (Puts on tin helmet and ducks.)

  • 19 Jonathan B May 1, 2021, 2:25 pm

    @JimJim, if your “quasi government” DB pension is like mine was, you may still gain from inflation when your pay was frozen. I was pleasantly surprised at what I got, the way they related pension benefit to salary incorporated a standard inflation measure for past income so historic numbers came out higher than recent ones. You may yet benefit from the missed 20% pay rise – but you need to read the small print, with pay freezes likely to continue that historic higher effective income will become less helpful to your pension.

  • 20 JimJim May 1, 2021, 2:29 pm

    @Johnathan B, some is some isn’t, it’s the isn’t bit that has me scratching my head. Anyway it’s International Naked gardening day I hear, and the sun is out and the mower sharp. Time for a bit of horticulture

  • 21 Matthew May 1, 2021, 2:37 pm

    @jimjim – You can increase quality standards but in doing so you raise the cost of building it – many skilled manhours to produce something that will go to someone who, the economics are telling you, can’t make up that value with their own work.
    Either way, the unskilled worker does not get the good house.

    Social housing is a market distortion however, and you can imagine it doesn’t help the productivity of the country to have many builders slogging their guts out for days for someone who may never work – that’s why socialism resulted in poverty.

    Brutal as it is we need the poor to feel the strain of substandard houses so they slow down increasing in population.
    And we may have to choose between the working poor and the non working poor, we shouldn’t keep treating them the same – it undermines our unskilled workers if they’re being outbid for housing by someone who doesn’t work for example, likewise you can imagine how low skilled fathers feel like a spare part, undermined as a provider, if the state would give a single mother more without them there.

    The nicer option is improvements in technology like 3d printed houses or prefabs, but technology only ever kicks the can down the road and population always grows to such a point where it strains the system – i.e. feed the birds and you’ll just end up with more hungry chicks born, all animals at their terminal population live in an uneasy state of hunger/ unease, by definition of it being a population maximum.

  • 22 Jonathan B May 1, 2021, 3:26 pm

    @Matthew, are you proposing we invest in workhouses? Your point of view sounds like a character out of Dickens.

  • 23 Matthew May 1, 2021, 3:43 pm

    @Johnathan B – Workhouses get a lot of stick but at the time were set up as an early part of the welfare system – they were an option of employment, food and housing, open to anyone, and people were free to leave but would often come back. If workhouses seemed grim it was because of the uncomfortable truth that they were limited in what they could realistically provide for the value of unskilled work. In theory if workhouses were profitable, you’d expect more to spring up which would provide competition to improve standards, so if that wasn’t happening it kind of shows you the unsustainability of giving more.

    But for now, I’m only suggesting that if you want to get houses cheaper you have to cut the costs of production somehow so that more get built.

  • 24 E&G May 1, 2021, 4:38 pm

    Thanks for your posts on housing, at least, Matthew, which remind me not to comment with any confidence about matters I have no expertise in.

    Regardless of the obvious social value of good quality housing and the evidence that it supports improved health, educational attainment etc. the existence of social housing is really important to the construction sector, supporting it through the economic cycle and ensuring skills are retained through periods of private sector burst, keeping the lid on cost increases during boom.

  • 25 NewInvestor May 1, 2021, 4:44 pm


    …I’m only suggesting that if you want to get houses cheaper you have to cut the costs of production somehow so that more get built.

    Or pay less for the land (e.g. bid a lower amount to reflect the cost of building to a safe standard), or cut the profit margin. But that would spurn the opportunity for a misanthropic and callous approach to human beings.

  • 26 Matthew May 1, 2021, 5:02 pm

    @Newinvestor – by all means if we can make land cheaper, it’s the planning process that adds to that cost, maybe we can automate that or cut restrictions to free up land. The profit margin automatically cuts itself when new housebuilding competition comes in – we can’t expect housebuilding companies to take the risk of building houses without profit, and the profit they make is reinvested (i.e. dividends buy more shares which supports share price which buoys the share value which the housebuilder can access to grow by issuing more shares)

    E&G – indeed good housing is healthy, although it’s too expensive to buy, workers are being priced out. A messy compromise might give the most quality for least buck. Good housing does encourage local population growth though, which of course increases demand – it’d be a growing drag on growth and globally the UK gas to remain competitive against countries that are not doing this.

    Yes building houses for claimants gives builders jobs, but in doing so it increases the cost of builders for low income workers. I believe though that any transition away from that should however be slow because we wouldn’t want to pull the rug from underneath builders.

  • 27 NewInvestor May 1, 2021, 6:03 pm

    @Matthew (#26)

    …, it’s the planning process that adds to that cost, maybe we can automate that or cut restrictions to free up land.

    You really don’t like people much. One of the purposes of the planning system is to strike some sort of balance between competing and/or conflicting interests, though frankly it would appear to be loaded in favour of the applicant: just keep re-submitting the application with tweaks and eventually on appeal it will be approved.

    …we can’t expect housebuilding companies to take the risk of building houses without profit

    Hang about, I thought that risk and reward were at the heart of capitalist endeavour? Yes, we can and should expect them to take (calculated, considered) risk: they see somewhere they think they can build a housing estate, assess how many units they can fit onto the site and so determine the likely revenue, deduct the costs of how much it would construct the houses (to a safe standard, naturally), and what’s left should be the upper limit to how much they should pay for the site. Competitors will do the same. Pay too much and risk going bust, which if it happens will cause the competition to breathe a sigh of relief and gain the satisfaction of one fewer competitor.

  • 28 Hudlbuck May 1, 2021, 6:21 pm

    @Matthew(#26). Not even this government really still believes it is the planning system that drives up land prices, and has made some moves to tighten up on how landowners, agents and developers can value land in their appraisals to remedy the poor consideration of social and environmental externalities that only the planning system can really extract through S106 agreements, toothless though they are.

    As for improving building standards costing more, it’s almost as though you don’t believe technology exists. Off-site construction has done and will do much to quality assure environmental performance. As JimJim has said, building regs are about safety, but increasingly about environmental performance, and are set to be the main way in which improvements are driven. The industry will simply find ways to accommodate this. It may be that we see construction workers displaced by factory workers, or robotics and 3d printing. Such is the nature of things.

  • 29 Matthew May 1, 2021, 6:28 pm

    @Newinvestor – Well the planning process is for some reason expensive, if we want to tackle the cost of housebuilding by tackling that we’ll need to look at where we can save on that. I believe that some of these issues like conflicting interests should be compensated to anyone who loses out/loses value, but that as long as suitable compensation is paid that it should not obstruct development and that market forces will determine for example if new housing really is worth more than say a historic site or area of beauty – if people care about scenery or history they can put in a community bid for the land. However if people lose value after a development maybe it could be settled in a small claims court.

    Reducing human workers to reduce cost is exactly what we do by the way when we opt for a tracker fund rather than an active.

    On housebuilder profit I was just saying the market automatically finds a level of supply & profit that suits the risk, it’s not something they’ll do either charitably or exploititavely.

  • 30 Matthew May 1, 2021, 6:38 pm

    @hudlbuck – If developers are land banking, is it the process of building then that is not sufficiently profitable to entice them to follow through? If it’s not the cost of planning, wouldn’t the market get flooded with planning approved land?

    Technology could be great at cutting costs, although I think technology increases the population that earth can support (agriculture, refrigeration, mediciene, sanitation, etc) we will always encounter some sort of practical limit eventually (ie global warming, food supply, housing supply, etc) until we find a way to raise thd bar further.

  • 31 Naeclue May 1, 2021, 6:52 pm

    My understanding, which is admittedly limited, is that house prices are high mainly because the value of land is very high. Actual building costs can be relatively low. Fittings can be very expensive, but don’t have to be. For example a perfectly usable bath can be bought for less than £100, but some cost thousands.

  • 32 The Investor May 1, 2021, 7:18 pm

    @matthew — As I’ve mentioned before, you don’t need to reply to every comment. If you look at this thread, half of it is you. That’s in danger of crowding out other voices. Say your best then let it be sometimes perhaps. 🙂 Cheers!

  • 33 NewInvestor May 1, 2021, 7:21 pm


    Well the planning process is for some reason expensive

    You’ve asserted that twice but it’s the sort of remark I’d expect a developer to make to deflect criticism of their landbanking, etc. The planning process is not expensive, as Hudlbuck has pointed out. Moreover, as Naeclue tentatively says, land is a far more important factor – historically, this would amount to around one-third of the gross development value but in a frothy market can greatly exceed that. (labour/materials would account for another third, and profit margin the final third, for completeness).

    Clearly you believe that money solves everything to do with adverse development/neighbours. Well, are you seriously suggesting that the small claims court (maximum payout £10,000) will satisfy you when the 24-hour/7 days-a-week noisy and dust-emitting factory is built next door to your abode?

  • 34 The Investor May 1, 2021, 7:42 pm

    @Big Boss Man — Ack, apologies all. Fixed now and here it is:


    It’s well worth a 20-minute read. I was mildly awestruck by all the technologies coming together.

  • 35 BeardyBillionaireBloke May 1, 2021, 8:27 pm


    Barclays has just reduced a lot of CC limits.

  • 36 Firefly May 2, 2021, 9:53 am

    The ‘environment’ sub-section on the w/e blog diesn’t get a lot of comment, but i have been reading it. I found the article on CO2 Certificates interesting. After reading more into the climate change research it’s just starting to dawn on me the size of the problem we’re facing. I’ve known about it for a long time like most, but naively kind of thought that somehow it will be dealt with by the powers that be. Things seem to be moving slowly in the right direction, but now i really don’t think fast enough. If mankind does respond in time I’ve a feeling it could be a hard and fast shock at the 11th hr. I haven’t got a foggiest what that will do to markets, or how to hedge it if possible at all on a retail scale. I see the uk has just set up its own carbon trading scheme breaking away from the EU one, maybe as a result of Brexit. A quick google didn’t reveal any immediate ETF’s. Has anyone else been thinking along similar lines?

  • 37 Factor May 2, 2021, 5:05 pm

    @TI et al

    Re “Off our beat – is free will an illusion?”

    Many moons ago (at least 30 years), I asked myself that very question. The “thought experiment” which the question then lead me to carry out went like this (I know because I wrote it down and put it in my “might be useful one day” file, from where I’ve just retrieved it):

    1. I am my genetic inheritance and the sum of my experience.

    2. I react to every stimulus accordingly.

    3. You are your genetic inheritance and the sum of your experience but our reactions to an identical stimulus would not necessarily be the same.

    4. Our differing reactions to an identical stimulus would result from our differing genetic inheritance and sum of experience.

    5. If our genetic inheritance and sum of experience were identical then our reactions to an identical stimulus would be identical.

    6. These identical reactions would preclude the existence of free will.

    Thus, I personally believe that free will is definitely an illusion, but feel “free” to disagree.

  • 38 Jonathan B May 2, 2021, 8:15 pm

    @Factor, I think your stage 2 already has lack of free will baked in, it seems to say there is only one possible reaction possible with your genetics and experience. If you had said instead that your reaction was *biased* depending on your genetics and experience (i.e. there are still different possible reactions but altered likelihoods of which one you will follow) then stages 5 and 6 of your argument would no longer involve a single outcome.

    So to turn that into an example based on Monevator’s normal subject matter, it may be my genetics and past experience that mean I am unlikely to be an active investor using stockpicking or market timing strategies. But it would still allow my theoretical doppelganger to use free will to choose a different way of doing that, for example a bundle of index trackers rather than a single balanced fund, or a different ratio of stocks to bonds to cash.

  • 39 ZXSpectrum48k May 3, 2021, 12:21 am

    Depends on what you mean by free will. You can define it as the idea that in this present moment, several futures are possible, and your “free will” plays a role for selecting which one of those futures becomes reality.

    Under that definition then I’d argue that free will is both incompatible with the laws of nature, at least as we currently understand them, and logically incoherent. Most arguments for free will just seem to be, at worst, philosophical sophistry, or are actually defining something else.

    I find that most people believe they have free will. They often find the idea that such an attribute might not exist difficult. To me it’s in the same bucket as believing in gods/fairies etc. It’s not necessary to postulate such concepts so I just don’t.

  • 40 Grumpy Tortoise May 3, 2021, 8:26 am

    @JimJim – your first post could have been written by myself as I’ve been doing the same calculations with my NHS DB pension. I predict a lot of us after the McCloud Judgement will leave given our little/no cost of living increases for the past 10 years compared to a pension that is linked to CPI.

  • 41 Tom-Baker Dr Who May 3, 2021, 8:28 am

    There’s a weaker definition of free will where it means the opposite of determinism or fate. So it might not be you choosing one of the possible futures but some random event in Nature (e.g., a quantum fluctuation) that effectively makes the choice. This weaker definition of free will is compatible with the laws of Nature but it is probably not what most people would understand as free will.

  • 42 JimJim May 3, 2021, 8:31 am

    @Grumpy Tortoise (40) I take it you have both final and career average too? I swear that whoever wrote the rules on both of those schemes just tried to make it opaque as possible… Did you get an answer?

  • 43 Grumpy Tortoise May 3, 2021, 10:01 am

    @JimJim – I’ve currently got 26 years under the 1995 Section and 6 years under the 2015 Scheme. If the judgement goes ahead on 31 March 2022 I should get 7 years added back to the 1995 Section which pays out at 60. This is the crucial thing for me since the CARE 2015 Scheme pays out at SRPA which for me would be 67. I wait with baited breath. Make sure you’ve got the most up to date GAD actuarial reduction factors since these changed in 2019 (slightly more generous) than those usually quoted in the NHS Pension guidance. PM me for further details.

  • 44 JimJim May 3, 2021, 10:30 am

    @Grumpy Tortoise, Never knew Monevator had a PM function, can’t find it, interested as I’m 19 and 6, 7at next March. I will leave the topic at that so as not to hijack the post further

  • 45 Brian Williams May 3, 2021, 11:25 am

    I would prefer a “man child” willing to do the best he can for his country over a senile placeholder for a communist race baiter who could not win the nomination in her own state. The Atlantic is just another example of left wing MSM dominance. Biden will UNDOUBTEDLY be the worst in terms of outcomes for the US.

  • 46 Grumpy Tortoise May 3, 2021, 11:49 am

    @ Mods – is there any way of passing my email address to JimJim to continue our discussion elsewhere?

  • 47 The Investor May 3, 2021, 1:21 pm

    @Brian Williams — Biden isn’t senile, and his vice president isn’t a communist. Perhaps “man child” is subjective, too, but given the man(child) threw a temper tantrum every day and was impeached twice, I’m happy it’s closer to the truth.

    I actually agree with you / the link generally about the divisiveness, just because anyone on either side would be divisive now, as your comment demonstrates. America remains in a dangerous place. 🙁

  • 48 Simon Taylor May 3, 2021, 6:36 pm

    Uber eats discount worked a treat for the wedding anniversary takeaway (far too windy to eat outside). Thank you very much. You might have to watch your weight if a lot of us take this offer.

  • 49 The Investor May 4, 2021, 11:41 am

    @Simon Taylor — Cheers and happy anniversary.

    Luckily only a couple of people took me up. 😉

    I say “luckily” because it seems the promo discount I get back as disclosed has to be used up within 7 days! I dread to think what would happen if 50 people took up the promo! 🙂

    Don’t let that stop anyone though — as Simon found it works fine. My eating my proceeds is my problem. 😉

  • 50 EcoMiser May 5, 2021, 10:45 am

    On free will. We make choices dependant on the state of our brain at the time, which includes everything we have experienced or learnt, possible tumours, and possible quantum fluctuations. We make choices, but the result of the choice is inevitable, given the state of the universe (as a finite state machine). However, given quantum fluctuations, Heisenberg uncertainty and Chaos Theory the result is unknowable, even to an all-knowing demon, in advance. Thus we have a perfect illusion of free will, as no-one knows, or can know, what any particular choice will be in advance, although some choices may be predictable with better than 99% certainty.
    If legislators believed that lack of free will meant we were not responsible for our actions and removed retribution for wrongdoing, that lack of retribution would be among our experience or learning, and therefore would affect our decisions, mainly in favour of wrongdoing. Therefore it is necessary for legislators to behave as if we have free will, whether it exists or not.

  • 51 David Andrews May 5, 2021, 10:58 am

    I’m planning on cashing out my certificates at renewal time ( might still change my mind though ). After making maximum pension contributions and using up some pension carryover I’ve got a bit of a cashflow bottleneck for a few months. I was thinking of drawing some funds out of my fully offset mortgage on a property. However, that property is let out on a consent t let ( soon to end ) and I’ll need to decide very soon to take possession or clear the mortgage.

    The certificate were previously very good but less so now.

  • 52 The Hare May 11, 2021, 7:37 pm

    @TI Order two for 1 Franco Manca pizzas and freeze in slices. Handy pizza available for months plus the discount and 2 for 1 and your tenner.

    That’s what we’re doing. Win all round except for Uber profits and possibly The Fulham Shore.

    I added a separate tip for the driver as their pay is shite and it’s the nearest there is now to a McJob.

  • 53 The Investor May 11, 2021, 7:59 pm

    @The Hare — Interesting tip, thanks. I am finding the Uber Eats promo a pretty unprofitable operation to be honest. I also tip at least the 10% setting. Going on my local Chinese, its prices on Uber are markedly higher than in the shop itself. Add in delivery and the tip and even after my promo it’s very close to the same price of a pleasant 8 minute walk to the shop itself and perhaps a 15 minute stroll up the High Street until they cook it. The counter is obviously time (40 minutes of mine, which should be worth more than £20 I suppose) but it’s a pretty pleasant stroll.

    I suspect robots are needed to make food delivery a viable business model, unless everyone is a *lot* more time-starved (/richer!) than I feel. 🙂

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