This article on meal boxes is by The Mr & Mrs from Team Monevator. Check back every Monday for more fresh perspectives from the Team.

For years, money slipped through the fingers of The Mr and me. Our outgoings kept pace with – and often outstripped – our earnings.

Even once we’d noticed this insidious ‘lifestyle creep,’ our immediate options seemed limited. 

We had little scope to increase earnings, invest savings, or slash housing or travel costs.

But we could cut other spending. Significantly.

Our fight back began with food.

Ending the bloat

For the past decade, we’ve experimented with ways to feed a family of four (plus dogs) on a tight budget. Our efforts have ranged from discount stores to tending an allotment.

Yet holding down our food costs was a slog.

The Mr has always loathed shopping, particularly supermarket shopping. And I resented the time and energy I spent planning, prepping, and cooking nutritious food for an unenthusiastic family.

However, swapping household roles would be worse!

Every so often, tiredness, boredom, or disorganisation would get the better of us. We’d rebel against our self-discipline and seek a quick fix.

Comfort snacks. Unscheduled takeaways. Blowout restaurant meals. All bad for the budget and bad for our waistlines.

Each lapse would prompt tough measures to get us back on track.

This yo-yo scenario was how matters seemed set to continue, until…

Opportunity knocks

Five years ago, on a day when The Mr was home alone, a vivacious sales rep called by. The rep was signing up customers for a new subscription food service.

The Mr: I don’t remember using the word ‘vivacious’ but maybe my description conveyed it.

When I returned home, The Mr excitedly brandished glossy leaflets at me and explained we no longer had to eat crappy food. In fact, the rep would be back later to collect our payment details.

The Mr: For the record, this is literally the only time I have ever bought anything sold door-to-door. But – just sometimes – good things can happen this way!

I flicked through the blurb. So, there were companies that specialised in delivering meal kits to your door?

Wow – didn’t we already have online shopping?

When the rep returned, I was ready with a stern expression and my arms crossed. No way was I spending extra money and more time in the kitchen, whatever fantasies The Mr might be entertaining.

I said to the rep: “Sell meal boxes to me.”

The pitch that got us into meal boxes

“Imagine that a large box – carefully packed with fresh ingredients – lands on your doorstep each week. You’ve chosen the delivery date, some delicious meals, and the number of servings you require.

“The menu contains more than 40 meal options. These change on a weekly basis. High-quality seasonal ingredients are bought in bulk and the savings passed on to you. There’s minimal packaging and minimal waste as you buy only what you need. Meals are planned by professional chefs and are healthy, nutritious, and portion-controlled. Clear step-by-step instructions and timings are available online or on reusable recipe cards.

“It’s easy to suspend delivery if you’re away. Or to alter the number of meals required. There’s no need to trawl the supermarket aisles or to fret over balancing the family’s dietary needs.

We aim to deliver fine dining at home at a very competitive price.

Any questions?”

Reader, I signed up… on a discounted trial basis.

The Mr: Phew!

Meal boxes unpacked

It’s tricky to compare exact like-for-like options between the various subscription services. Some have tried though: BBC Good Food recently analysed meal kits from the main UK providers.

For the budget-conscious Monevator reader, the best value is usually a family box containing three or four meals for four or five adults (or two adults and three kids).

Introductory discounts for new customers can reduce costs for a few weeks while you try out a service.

Fixed-price family boxes are offered by HelloFresh (a German company that began UK operations in late 2012) and Gousto (appeared on Dragon’s Den in 2013).

During the pandemic, Morrisons entered the field with a meal-kit box containing five family meals. But while the cost is much lower, Morrisons doesn’t offer a choice.

• HelloFresh family box costs £54.99, or £3.25 per portion
• Gousto family box costs £47.75, or £2.98 per portion
• Morrisons family box (five meals) costs £30.00, or £1.50 per portion

Not falling into the budget meal bracket, but potentially useful for post-FI readers, is UK company The Mindful Chef. It’s aimed at the health-conscious and caters for (some) dietary needs ( for example gluten-free).

The Mindful Chef also offers meal boxes for one person.

For comparison purposes, The Mindful Chef’s family box (three meals) varies in price according to the recipes chosen. A test selection costs £64, or £6 per portion.

Note: prices quoted were noted on 31 July 2021 and do not include any promotional discounts.

But is it good value?

When we started using meal-kits, I obsessively price-checked each recipe against buying the same ingredients from the supermarket.

On the whole it was roughly equal, though some proved more expensive.

However I was not including delivery charges or petrol costs. Nor the re-planning on finding key ingredients were out-of-stock. Nor had I put any monetary value on the time that The Mr and I were saving.

The Mr: These are not to be ignored. And we find some ingredients (like Henderson’s Relish) aren’t even stocked by the local supermarkets.   

However for the geeks out there, we price-checked a recent Gousto recipe.

Gousto: chunky veg stew with goat’s cheese

• Stew incorporates 13 ingredients including fresh red peppers, courgettes, red onions, cherry tomatoes, rocket, and an excellent goat’s cheese. Cost from Gousto is £2.98 per portion.

Matching the exact quantities – regardless of actual packaging amounts – for this meal against our three nearest supermarkets:

• Tesco – £2.89 per portion
• Sainsbury’s – £3.46 per portion
• Asda – £2.47 per portion

But wait! Unless you’re buying at a market, it’s tricky to buy exact quantities. Most food is sold pre-packaged, or bottled in set amounts. While you may end up with a larger quantity that lasts longer, it will cost more at the outset.

Assuming that you had none of the ingredients – except olive oil, which Gousto also requires as extra – we recalculated the costs of this recipe using the closest packaging match and loose veggies (where these are available or work out cheaper).

We’ve also given a portion-cost for consistency, although you will have surplus ingredients like pumpkin seeds for other meals:

• Tesco – £4.18 per portion (£16.71 total)
• Sainsbury’s – £4.78 per portion (£19.10 total)
• Asda – £3.42 per portion (£13.69 total)

Again Gousto’s £2.98 per portion charge holds up fairly well by comparison.

I hope you can see that meal boxes are not the luxury purchase you might have thought they were.

Not to taste

Meal boxes will not suit everyone. Here are some who might pass.

Rarely in – If no one’s around to take delivery or there’s nowhere sensible to leave a package, then meal boxes don’t make sense.

Those on a tight budget – Simpler low-budget meal plans can be quite a bit cheaper per head. If you’re time-rich and cash-poor, meal kits may raise your costs.

The Mr: The really budget-conscious people I know look for alternatives to supermarkets. For example, Suma deliver wholefoods very cheaply but only in bulk. You need somewhere to store it, or else to club together with other households.

Foodies – While meal-kits may inspire some of us, others will be reluctant to outsource all their fun. Some of my friends spend hours poring over recipe books and heading off to the shops with a long list. There’s no accounting for taste…

The Mr: I know some people who need to ‘eyeball their vegetables’. It won’t work for them either.

Tasting notes

Originally, I saw the costs of a regular meal box as being akin to having a fixed-rate mortgage.

There’s a certain relief in fixing your mortgage costs, provided you don’t then agonize over whether the variable rate is lower.

I thought meal boxes would similarly make things simpler, but also add to our monthly spend on food.

In fact, our spending has decreased, despite the national rise in food prices.

One reason is that having restaurant-standard meals at home means we don’t feel deprived and so we rarely eat out these days.

Plus nobody in our family now minds our own boring cheap meals that help to balance out costs for the remainder of the week.

We create far less food wastage. Yet we don’t overeat because something is about to go off and we can’t bear spoilage, either.

And – saving the best until last – armed with clear instructions and all the ingredients, our kids have turned into good and confident cooks.

In short, I spend less time in the kitchen. The Mr spends less time at the shops. The family eats well. And spending on food is kept in check.

It’s an approach that works for us.

See all The Mr & Mrs’ articles in their own archive.

What caught my eye this week.

Two diligent bloggers took a run at the subject of rebalancing portfolios this week.

First up – in a tour de force that could give our own @TA a run for his carefully husbanded money – Occam Investing dove deep into the fabled ‘rebalancing bonus’, where investors see extra returns from regularly rejigging their asset allocation.

The post concludes that while such a rebalancing windfall is obviously welcome, the bonus cannot be banked on in the real-world:

Am I personally likely to benefit from the rebalancing bonus over the long term?

Probably not.

I’m not confident it’s possible to forecast anything with a great level of accuracy in markets, let alone being able to predict correlations, returns, and volatility. I’m certainly not confident enough to start making my portfolio more complicated by splitting it up, and therefore increasing trading costs, time required for monitoring, and risk of tinkering.

I may be sacrificing a potential rebalancing bonus by investing in a global tracker because I can’t rebalance its constituent parts.

But in my view, the benefits of a global tracker are worth it.

Not so well endowed

Funnily enough, this very same week on a A Wealth of Common Sense, Ben Carlson spotted the rebalancing bonus roaming in the wild.

After showing how a simple portfolio of index-tracking ETFs would have beaten the returns of a bunch of sophisticated endowment funds over the past decade, Ben noticed that an investor with an 80/20 stock/bond split across three particular Vanguard tracker funds could have conjured up even higher returns by annually rebalancing:

If you were to simply multiply the weights for the 80/20 portfolio (48% U.S. stocks, 32% int’l stocks, 20% bonds) by [their] returns you would get an overall annual return of 8.9%.

But the actual 10 year annual return for the 80/20 portfolio shows 9.1%.

How could this be?

The difference here is the rebalancing bonus.

Both authors show their workings, and both are well worth a read.

Everything in moderation

While any investor would take bonus returns where they can get them, rebalancing is best thought of as a risk management tool rather than a source of alpha.

You may or may not see a rebalancing bonus in your years as an investor. That’s down to the luck of the historical draw.

But you might well expect to have a lower-risk portfolio if you keep your allocations broadly in-line with where you’ve determined they should be.

As a naughty active investor, my portfolio is to a passive 60/40 set-up what quantum mechanics is to Newtonian physics. Investments pop in and out of existence in my portfolio all the time. Any one of them could affect my returns (for good or ill) much more than the modest impact of annually rebalancing between asset classes.

Nevertheless, these days I too try to ensure nothing grows too far out of whack. This can mean trimming winning positions, which I do knowing full well this can be a behavioural bias and mathematical blunder that curbs long-term returns.

So why do it?

Because you never really see a catastrophic blow-up in investing that doesn’t involve over-exposure to a share, sector, geography, or asset class.

Stay vaguely diversified and the worst you will likely do is relatively poorly.

Of course we all hope to do better than that! But avoiding disaster is the number one rule.

As Warren Buffett’s sidekick Charlie Munger says: “All I want to know is where I’m going to die, so I’ll never go there.”

Amen to that!

[continue reading…]

There’s a rule-of-thumb you can use to evaluate when risky, higher-yielding bonds may be worth investing in.

Sadly the hour typically arrives when entering a market looks as suicidal as entering Deathtrap Dungeon in search of fame and fortune.

Apparent probability of death: Near certain!

We saw in part two of our Emerging Market bonds series that this sub-asset class’s historic outperformance has been driven by spikes in credit risk, following market hammerings.

Crisis-charged yields offered a profit opportunity to those who heeded Warren Buffett’s maxim: “Be fearful when others are greedy. Be greedy when others are fearful.”

So I asked hedge fund quant and Monevator reader ZXSpectrum48K if there’s a bond market signal that can help us recognise these decisive moments.

Beware all ye who enter here

Warning: what we’re about to discuss is a very rough rule-of-thumb. It is not an iron law of bonds, and you can have no expectation of profiting from it.

Think of this bond credit risk valuation method as analogous to the cyclically-adjusted P/E ratio (aka CAPE).

Its efficacy is highly debatable. It relies on mean-reversion to a historical ‘average’ that may not apply in the future.

You’ll also need considerable fortitude and spare financial firepower to burn if your judgement proves wrong.

With that said, let’s gird our loins and push into the dungeon’s maze.

Yield and spread

Yield and spread may sound like sweet-nothings whispered on a medieval speed-date but they’re actually the key metrics for ZX’s money.

That’s because his rule-of-thumb enables him to estimate the credit spread of a high-yield fund versus an appropriate benchmark, such as US$ Treasury bonds.

The credit spread compensates you for the default risk inherent in high-yield bonds.

A wide spread may mean the market is over-reacting to recent waves of defaults or anticipated risks. You’ll win if you invest when the credit spread runs ahead of the default rates that actually occur.

By comparing the spread against historic norms, you may get a sense of when to press deeper into the gloom in pursuit of treasure.

I’m going to leave out ZX’s maths and cut to the chase:

Step one: Find the yield-to-maturity (YTM) and duration of the high yield bond fund you’re interested in. These metrics should be published on the fund’s web page or factsheet.

Step two: Subtract the YTM of an equivalent duration US$ Treasury bond fund from your first bond fund’s YTM.

The difference in those yields is a reasonable approximation of the credit spread.

The wider the spread, the riskier your bonds are judged to be by the market.

If Buffett’s adage and market history holds then periods when the credit spread widens could herald an opportunity.

Note, you need to have some sense of historical credit spread fluctuations in your market.

Bond credit risk valuation in practice

Following on from our series on risky Emerging Market bonds, I looked at the iShares Emerging Markets Government Bond Index Fund.

It follows the market-leading index1 for EM US$ sovereign bonds, so is a useful proxy for that sub-asset class.

I’ll compare our fund with iShares $ Treasury Bond 7-10yr ETF. This is the closest duration match I can find among the available US Government bond funds.

Here’s the Emerging Market bond fund’s numbers:

Yield-to-Maturity (YTM): 4.09%

(iShares publishes the yield-to-worst for this fund but that’s close enough for our purposes.)

Modified duration: 7.77

Here’s the US$ Treasury fund’s numbers:

Yield-to-Maturity (YTM): 1.4%

Modified duration: 7.96

Approx credit spread = Credit risk bond fund yield minus US Treasury fund yield.

4.09 – 1.4 = 2.69%

How does 2.69% compare to the credit spread history of the EM US$ sovereign bond fund’s index?

This chart shows the index’s spread over US Treasuries:

The spread sank to an all-time low of 1.66% in May 2007. (That’s 166 ‘basis points’ in the chart above.)

2.69% is the tightest spread since January 2018.

What does that tell me, according to our rule of thumb?

It suggests this is probably not an auspicious time to load up on Emerging Market US$ sovereign bonds – at least on this metric.

Better bookmark this four-part series after all, and come back when the rule of thumb is flashing green!

Take it steady,

The Accumulator

1. The JP Morgan Emerging Market Bond Index Global Diversified. [↩]