This past year has not been pretty for investors. Indeed it’s the worst on record for our Slow and Steady passive portfolio – even after a slight bounce back from last quarter.
We’ve taken a -13% loss during benighted 2022. Our previous all-time bruising was a mere -3% knuckle-scrape from 2018.
In fact we’ve only had three down years since the portfolio began in 2011. Six years ended with double-digit gains!
So while most of us understand that all good runs come to an end, I do worry we could still be mentally unprepared for a sustained spell of negativity.
Mental as anything
How many of us got used to glancing at our portfolio for a quick ego boost during the good times?
Gains dancing before our eyes and seemingly rearranging themselves into the words: “You’re doing brilliantly, old chum. Keep it up!”
How will we now fare when incessantly poor numbers decrypt into the sub-text: “You’re going nowhere, ya loser!”
We know all the powerful mantras to recite to ward off devilry:
- “Investing is a long-term game.”
- “Buy low, sell high.”
- Be greedy when others are fearful.”
And anyone who’s read their financial history appreciates a key test is keeping your head when the markets play rough.
But can we keep the faith?
Down but never out
While we sit on our hands and wait for the good times to return, here’s the latest numbers from the Slow and Steady portfolio in 8K Drama-O-Vision:
The Slow & Steady portfolio is Monevator’s model passive investing portfolio. It was set up at the start of 2011 with £3,000. An extra £1,200 is invested every quarter into a diversified set of index funds, tilted towards equities. You can read the origin story and find all the previous passive portfolio posts tucked away in the Monevator vaults.
The investing Razzie for 2022 has to go to UK government bonds. Our gilt fund lost 38% after inflation1, comfortably surpassing the previous historic low of -33% in 1916.2
We’re truly on the horns of a dilemma with bonds.
If inflation isn’t suppressed and bond yields climb vertically then even worse could follow. UK gilts suffered real-terms losses of -68.5% from 1915 to 1920.
But before you reach for the ‘bond eject’ button, know that gilt disaster was followed by a spectacular 480% rebound from 1921 to 1934.
Sack off bonds after a bad year and you can miss some big rallies:
- 1920: -19.7%
- 1921: 27.4%
- 1974: -27.2%
- 1975: 10.9%
- 1981: -1.6%
- 1982: 42%
- 1994: -12.2%
- 1995: 14.5%
- 2013: -8.5%
- 2014: 13.9%
Inflation-adjusted real returns. Data for UK gilt nominal returns from the JST Macrohistory database.3
Bonds spook many investors because they’re esoteric. But the fact is – like equities – bonds have bouncebackability.4
Dump your bonds now for cash and you may crystallise a loss that currently only exists on paper…
…or you may save yourself more pain, if it turns out we’re in for a rerun of the 1970s.
Given the uncertainty, I wouldn’t blame you for reducing bond exposure. But I respectfully suggest you avoid ‘all or nothing’ reactions such as swearing off bonds for life.
The long view
After a year like 2022, it’s probably better to count our blessings over a longer timeframe.
Stepping back we can see the portfolio has made a nominal annualised return of:
- 1.6% over 3 years. (Miserable!)
- 3.3% over 5 years. (Pants!)
- 6.3% over 12 years. (Actually, I’ll take it!)
That’s around 3.3% annualised in real returns. Historically we might expect an average 4% annualised from a 60/40 portfolio.
So while we’re currently sub-average, it’ll have to do for now.
One year ago that same number was a rollicking 9.8%. Things can change quickly.
Building back better?
Our property fund’s -25% real-terms annual loss was peak awful on the equity side of the Passive Portfolio’s scorecard.
Curse you rising interest rates!
And how do corporates deal with bad news? They rebrand it.
Coincidentally, iShares decided it was high time our dilapidated old global property tracker got a new lick of green, eco-conscious paint.
On 24 November, the fund changed its name from this:
iShares Global Property Securities Equity Index Fund
To this:
iShares Environment & Low Carbon Tilt Real Estate Index Fund
Despite some confusion on iShares’ website, it’s also changing the fund’s index from this:
FTSE EPRA/NAREIT Developed Index
To this:
FTSE EPRA/NAREIT Developed Green Low Carbon Target Index
The gist is that the vanilla property tracker now has an Environmental, Social, and Governance (ESG) twist.
The new index apparently screens out companies that deal in weaponry, tobacco, and fossil fuels.
It also excludes – or at least takes a dim view of – anyone into human rights abuses, child labour, slavery, organised crime… that sort of thing.
Finally, it up-weights those constituents whose property holdings are deemed sustainable. That means they have to make an effort to be energy efficient and to obtain ‘green building certification’.
It all sounds excellent in principle – I doubt many of us want to prop up the share prices of slum landlords running slave gangs.
But just how radical a change is this in practice?
I must admit I’m not over familiar with the micro-details of the FTSE EPRA/NAREIT Developed Index.
Still, I’ve found one commentary about the switch from a firm of financial advisors called Old Mill, which says:
An initial look at the proposals suggest there will be little change in the underlying investments of the fund, with 23 of the approximately 340 investable companies being excluded.
And my own eyeballing of the respective index factsheets reveals:
- A reshuffle of the Top 10 holdings into slightly different percentage weights.
- Rejigged sub-sectors.
- Industrial, retail, and healthcare REITs are down 1-2% in the green index.
- Office and residential REITS are up 1-2%.
Call me Graham Thunberg but this doesn’t smack of saving the planet.
Meanwhile, the five year annualised returns (the longest available) published for the two indices reveal:
- 0.5% a year for the green index
- 1.5% a year for the standard index
While I admire people who want to invest in line with their values (assuming they’re not massive fans of cluster bombs and extortion) I’m personally dubious about the ESG label.
The potential for greenwashing is enormous. And I despair about my chances of verifying the ethical claims given:
- The finance industry is adept at misdirection
- We’ve been gaslighted about climate change for more than 30 years
There’s also a danger of individuals ticking the ESG boxes and then forgetting to take direct action like:
- Cutting back on planes and meat
- Trading in a gas-guzzler for an electric car
- Turning down the thermostat
- Voting for the political party with the best green policies
Still, as a card-carrying passive investor I’m inclined to keep our holding as is.
What say thee?
The one reason I’d consider switching to a new property fund is because the Slow and Steady portfolio is meant to be demonstrative for our readers.
Hence our property allocation is supposed to test the benefit – or otherwise – of diversifying into global real estate.
All this ESG gilding muddies the picture. I’d rather create an ESG version of the portfolio to illustrate the trials and tribulations of socially responsible investing.
That’s my opinion – but I’d really like to know what you think.
Should passive fund managers switch their index trackers to green indices?
Should I swap this fund for one focused purely on commercial property as an asset class?
Would you like us to come up with an ESG passive portfolio? That way we can contrast the fortunes of saint and sinner stocks alike.
Please let me know in the comments below.
Annual rebalancing time
I’ll run quickly through the annual portfolio maintenance because this post is already loooong.
We previously committed to an asset allocation shift of 2% per year from conventional gilts to index-linked bonds until we have a 50-50 split between them.
That means:
- The Vanguard UK Government Bond index fund decreases to a 27% target allocation
- The Royal London Short Duration Global Index Linked (GBP hedged) fund increases to a 13% target allocation
Our overall allocation to equities and bonds remains static at 60/40.
We also annually rebalance our positions back to their preset asset allocations at this point in the year. After 2022 that means selling off a portion of our badly performing equities and buying into battered bonds.
It’s a counterintuitive move (as discussed above). But over the long-term rising bond yields mean gilts are now better value than they were.
Inflation adjustments
To maintain our purchasing power, we must also increase our regular investment contributions every year by inflation.
We use the RPI rate. It has ballooned 14% this year according to the Office for National Statistics. (CPI was 10.7%).
So we’ll invest £1,200 per quarter in 2023. That’s up from £1,055 in 2022 and a titchy £750 back when we started in 2011.
New transactions
Our £1,200 contribution is split between our seven funds according to our predetermined asset allocation. The trades play out like this:
UK equity
Vanguard FTSE UK All-Share Index Trust – OCF 0.06%
Fund identifier: GB00B3X7QG63
Rebalancing sale: £457.14
Sell 1.951 units @ £234.35
Target allocation: 5%
Developed world ex-UK equities
Vanguard FTSE Developed World ex-UK Equity Index Fund – OCF 0.14%
Fund identifier: GB00B59G4Q73
Rebalancing sale: £984.72
Sell 1.958 units @ £502.91
Target allocation: 37%
Global small cap equities
Vanguard Global Small-Cap Index Fund – OCF 0.29%
Fund identifier: IE00B3X1NT05
Rebalancing sale: £124.68
Sell 0.334 units @ £372.79
Target allocation: 5%
Emerging market equities
iShares Emerging Markets Equity Index Fund D – OCF 0.2%
Fund identifier: GB00B84DY642
Rebalancing sale: £280.10
Sell 156.435 units @ £1.79
Target allocation: 8%
Global property
iShares Environment & Low Carbon Tilt Real Estate Index Fund – OCF 0.17%
Fund identifier: GB00B5BFJG71
New purchase: £134.76
Buy 60.596 units @ £2.22
Target allocation: 5%
UK gilts
Vanguard UK Government Bond Index – OCF 0.12%
Fund identifier: IE00B1S75374
New purchase: £1957.69
Buy 14.781 units @ £132.45
Target allocation: 27%
Royal London Short Duration Global Index-Linked Fund – OCF 0.27%
Fund identifier: GB00BD050F05
New purchase: £954.18
Buy 921.911 units @ £1.04
Dividends reinvested: £203.38 (Buy another 196.502 units)
Target allocation: 13%
New investment contribution = £1,200
Trading cost = £0
Take a look at our broker comparison table for your best investment account options. InvestEngine is currently cheapest if you’re happy to invest only in ETFs. Or learn more about choosing the cheapest stocks and shares ISA for your circumstances.
Average portfolio OCF = 0.16%
If it all seems too complicated check out our best multi-asset fund picks. These include all-in-one diversified portfolios such as the Vanguard LifeStrategy funds.
Interested in tracking your own portfolio or using the Slow & Steady investment tracking spreadsheet? Our piece on portfolio tracking shows you how.
Finally, find out why we think most people are better off choosing passive vs active investing.
Take it steady,
The Accumulator
- -27% in nominal terms with CPI inflation at 10.7%. [↩]
- See the JST Macrohistory database, which documents UK gilt returns since 1871. [↩]
- Òscar Jordà, Katharina Knoll, Dmitry Kuvshinov, Moritz Schularick, and Alan M. Taylor. 2019. “The Rate of Return on Everything, 1870–2015.” Quarterly Journal of Economics, 134(3), 1225-1298. [↩]
- The riskier, longer maturities do anyway. Short-term bonds more closely resemble cash. [↩]
Great post thanks. What do you think of using iShares GiltTrak Index Fund (IE00BD0NC250) instead of Vanguard UK Government Bond Index with? Seems they are similar.
Was hoping you would touch on the property index change, thanks.
Will definitely be keeping an eye out for if you recommend any alternatives that are just a standard global property fund.
I also just picked up on the name change of the iShares Property fund. I’m warts and all so will look to switch into something like the L&G Global Real Estate Dividend Index Fund Acc.
Why didn’t iShares open up a new ESG property fund rather than change the existing one? Seems somewhat underhanded.
Very interesting overview for which much thanks. Any chance of a benchmark for the package against, say Vanguard Lifestrategy 60?
You may have answered this elsewhere as I think I remember asking this on another article but can’t find it now so forgive me repeating myself
but I’m currently 100% equities in my portfolio.
Should I want to diversify in to bonds which I will at some point but don’t ‘need’ to right now (age 42 won’t be retiring for at least another 10 to 15 years)
Given equities have tanked this year if I were to do this now and sell part of my portfolio to reinvest Into bonds am I not locking in those losses.? Or given bonds have been even worse hit is now potentially a good time to do that ? Appreciate you can’t time the market but my thinking is I want all those equities to gain the upside when the market comes back . If I add bonds now am I not limiting the upside.
Some guidance how to think through this would be appreciated!
It does strike me as odd to simply swap an existing fund over to a new index. So, yes, if it were me, I’d change to the property fund to one more comparable to the previous version. But I would welcome an additional ESG slow-and-steady portfolio, for comparison, as you have suggested, TA.
As it happens, in my search for a Vanguard index tracking fund (not ETF) which would exclude emerging markets but be all-cap I settled on one that had an ESG tilt (no non-ESG version available, surprisingly). As it contained over 4,500 stocks I thought it still worthwhile for diversification.
On the broad index vs ESG screened index question:
From a cold hard investment perspective if the essence of passive investing is harvesting the equity risk premium it should be a broad index, an ESG screened index is arguably a factor bet / marketing ploy. Just as new technological innovations find their way into the broad index, as the economy transitions to carbon neutral the broad index will reflect that shift.
In terms of responsible investing, more real impact is achievable through corporate governance than divestment.
BP has a market cap of $104bn and spent $10bn on share buybacks in 2022. If environmentally conscious investors succeed in raising the cost of equity capital for BP by divesting en masse do they impact carbon emissions? BP funds it’s operations with cashflow not via equity capital markets. By switching to an ESG screened fund the investor is probably selling their shares to BP’s buyback program and concentrating ownership of the company in the hands of people who are likely less environmentally minded.
Does a higher cost of capital for western defence companies contribute to global peace? How? Or ultimately just higher costs for western governments?
Passive investors concerned with having positive impact could achieve more by requiring their index fund provider to exercise corporate governance on their behalf in a way that reflects their values than they would by switching to funds that arbitrarily screen out ‘dirty’ sectors. Better to be effective than puritanical.
I had a similar experience when I looked into ESG funds. Personally it was more labour standards and basic human rights that concerned me, than fossil fuels – where I think things like regulation and carbon pricing might help, but the problem is the same. My impression looking at the funds in each index (ESG and non-ESG) were that they were so similar under the bonnet, it was greenwashy – and especially on things like labour standards. If you try to find out how it is decided which companies get on ESG indexes, it’s a pretty high-level procedure, using risk indices and the like, presumably to cope with that scale at cost – it all seems detached from reality on the ground. So I gave up on that idea.
But it does matter. I’m pretty convinced that markets are effiicent, and if *all* I cared about were maximum profit, I could just let the index funds get on with it.
However, there are limits. I once read a book by the holocaust survivor, Samuel Pisar. He quoted from a letter, sent by a company that had employed slave labourers from concentration camps. What was striking was the stomach-turning tone of it, the cool, commercial calculation. I can’t find the quote now, but it was something along the lines of,
“Dear Sirs, Thank you for the batch of 70 women delivered on 25 March, last. Unfortunately, they were in a relatively poor condition and have now been used up [=killed]. Could you provide us with a further delivery – but at a discount, given the condition? Yours etc.”
Employing slave labourers might be cheap, and a competitive advantage, if you only care about maximum profit. So I worry about countries with poor regulation, poor enforcement, or indeed active encouragement of this kind of thing.
I gave up on ESG, and instead divested global bond funds which included countries with governments whose activities I don’t want to be funding. I will have lost out financially, a bit, but that wasn’t the point. I just wasn’t comfortable with the idea.
I don’t much care if ESG funds slightly outperform or underperform the rest – that’s not what they’re for. And like everyone else, I’m also here to meet my own financial needs – otherwise I would just donate to charity. But I imagine there would be interesting material on the issue of how the ESG indexes are formed and reviewed.
I’ve mentioned before that I think an ESG portfolio is worthwhile – not only to compare performance with ‘version A Slow & Steady’ but also to address the challenge about what to put in it. There are plenty of investors out here that want to ‘do our bit’ and it’s useful to debate the complexities rather than just give up!
An interesting update. I agree with Onedrew that it would be interesting to compare with the Vanguard Lifestrategy 60 fund; partly because that’s where I’m currently directing my ISA savings!
However, I would also be interested in a comparison with a portfolio with an ESG tilt. I have wondered about shifting some of my portfolio over in this direction. At the moment it’s tricky as it’s too small to be worth investing across lots of funds; the Lifestrategy fund works well for smaller portfolios like mine. On the other hand I was disappointed to learn that Vanguard has left the net zero group of asset managers and I would consider shifting as my assets grow – say to L&G who have a growing stable of ESG funds. However, I have doubts over how much difference this makes (compared to reducing the number of flights I take or cycling to work some days rather than driving) and about how much ESG is greenwashing driven by marketing departments. I am sure some of Monevator’s excellent analysis would help with this; it is a rapidly growing part of the investment world worthy of scrutiny.
Thanks again @TA (and @TI) for all the bond coverage last year.
Comparing an ESG portfolio would be interesting but not my #1 choice.
The angle on the “restricted portfolio” approach I like is: can we omit
several major asset classes and still get a good result? It would be v
interesting if making some class ESG significantly changes its results.
There’s something you’re doing in S&S that maybe you should draw out a bit more: I think the short linkers are basically “investment cash” and the yearly addition to that class is basically taking 2% out of the growth portfolio, wherever it happens to be, and preserving it through to the target date in a low volatility investment. Could this be improved by using other low vol
classes? (Also, their “12% annualized return” must be from the days when they were full strength long linkers? so how about resetting that and then you can monitor the low vol sub-portfolio return v inflation through to the target date?)
Always an continuing interesting dilemma for investors to decide whether they should prioritise their investment portfolio choices for political reasons rather than for “pure” index investment
We have been here before-guns,tobacco etc -now it’s ESG
History shows that deviation from the “straight” index inevitably results in a poorer performance of portfolio
It’s Active versus Passive investing again!
Perhaps investors should pursue political change though other means ?
A very personal choice
xxd09
I think I’m being a dunce here, but you say you lost -13% overall but when I look at the image it says 6.27% portfolio gain?
I assume this is because you’re factoring in inflation? How did you calculate the inflation loss as I’d be keen to do this for myself?
I guess an extra column including inflation might be useful, which hasn’t been needed in the past.
Otherwise I look at this data and think everything is mostly going green and great!
Thanks for the slow and steady updates; it is very informative to be able to follow a porfolio over time like this.
I keep a record of the real returns (above RPI inflation) for cumulative whole year periods up to now on typical equity based regional index funds i.e. UK, US, Europe, Asia Pacific, Japan and Emerging Markets. The funds are just low cost tracker funds I own or have owned in the past covering these regions. Here is the chart that comes from that
https://ibb.co/55mqdc0
It’s interesting to compare these with the slow and steady portfolio as well as to see how regional equity returns have varied.
Over 11 years things don’t look too bad, although there is a significant variation of real returns across regions. You can see how the return figures compare with the 3.3% real return over 12 years of the slow and steady portfolio; some are above and some are below albeit the latter isn’t all equity return of course.
Over time periods up to around 5 years, real returns have typically been negative which will be difficult for those just starting out investing in the past 5 years.
Over the 27 years of my own investing my real return above RPI inflation has been 3.6%pa (that’s an equity based figure as I’ve always chosen savings accounts to water down risk rather than gilts and have been close to 100% equities at times in the past). I can’t easily calculate my real return above RPI inflation over just the past 12 years but I suspect it will be around the 3.3%pa of the slow and steady portfolio also.
Unless I’ve made a mistake it looks like in the UK the 250 index has delivered a very poor performance recently although over 11 years it has still outperformed the all share index, 4.4%pa for the 250 vs 3.0%pa for the all share index.
@ Mario – I haven’t taken a close look at GiltTrak but I did a piece on choosing bond funds here: https://monevator.com/best-bond-funds/
I’d be fine with any gilt tracker that looks similar to these.
@ Nomis – The only comparable tracker fund is the L&G Global Real Estate Dividend Index Fund Acc mentioned by Fremantle. It follows a slight different benchmark – the FTSE EPRA Nareit Developed Dividend Plus Index.
ETF wise, you can go back to the vanilla index with:
– Amundi ETF FTSE EPRA/NAREIT Global ETF (EPRA)
– HSBC FTSE EPRA NAREIT Developed UCITS ETF (HPRS)
Or there’s VanEck Global Real Estate ETF (TREG) which tracks the GPR Global 100 Index
@ Fremantle – yes, I totally agree. I don’t like having the ESG skew imposed and I hope other fund managers don’t follow suit. I’ve been doing some more reading around ESG the past couple of days and it looks contentious to say the least.
@ Onedrew – great idea, cheers. I’ll do that in a future post.
@ Fatbritabroad – Barring property, nominal equity losses aren’t even in correction territory. And you could argue they were due a reversal after the Covid stimulus.
So I think your situation is quite different from someone who, say, was panicked by 40% losses during the Financial Crisis and sold out to cash. That person doesn’t know when the market will rise again and has no real strategy to get back in.
You’re not running scared of the market, you’re making a long term move to diversify a portion of your portfolio while retaining your exposure to equities.
Moreover, it’s not as if you’re contemplating a switch from an undervalued asset class to one that’s hitting Peak Mania.
Equities may be down, but bonds are also much better value now given the terrible year they’ve just had.
When I made this move, I had to try and disconnect the change from pure return and think more in terms of risk.
Afterall, it’s likely that over the long-term your portfolio will now grow more slowly (equities beat bonds over time).
But you’ll also be better protected against sudden reversals in fortune which typically smash equities far more frequently than bonds.
And if bonds bounce back faster than equities in the short-term then you’ll even pocket rebalancing bonus. But that’s for the gods to decide.
@ AoI – great comment. Like you I largely think of ESG as marketing. And the war in Ukraine is a salutary lesson in why having a strong defence industry is a vital component in the preservation of our freedom.
@ Haphazard – another thought-provoking comment. In my ideal world, every time a company is found to be doing something disgusting like that then they’re swiftly brought to book by a consumer boycott. No more sales, no more company.
@ Andrew, Curlow, and David – thank you for your thoughts. Thinking about it, I’d have to be quite confident that any ESG fund in the portfolio was living up to its billing, so I need to dig into whether any variant of ESG amounts to more than window dressing.
@ Meany – Really interesting – and you’re right – as long as the real yield of linkers is negative then they’re an insurance policy against the ravages of unexpected inflation. You’re also right about the origin of the high return (along with a lucky rebalance out of that fund). TI suggested a similar study looking at the impact gold would have made in the Slow & Steady. I’ll have a think about what you’ve said and see if I can come up with something.
@ looksgoodtome – the -13% is just the 2022 result. The 6.27% is the annualised return for the portfolio since it began in 2011. Sorry, I can see that it’s quite confusing from the spreadsheet screenshot but I’ve been staring at it for so long that I’ve stopped noticing!
For a ‘real’ inflation-adjusted return, you deduct 2022 inflation from the 1 yr nominal return and average inflation since the portfolio’s start date from your overall annualised return.
UK inflation
https://www.ons.gov.uk/economy/inflationandpriceindices
UK average inflation calculator
https://www.officialdata.org/uk/inflation/2011?endYear=2022&amount=100
Just subtract your inflation number from your nominal return for a quick and dirty real return.
For greater accuracy:
https://financeformulas.net/Real_Rate_of_Return.html
@ Snowman – cheers for sharing. If you have a homepage for your various charts then I’d love to see it. The US has just dominated everything else since the GFC. Still the UK is fighting back this year 🙂 The FTSE All-Share was the only thing in the S&S that scraped into positive territory. Still down after inflation of course. I think you’re right about the 250, btw.
@Fatbritabroad.
Just to add to TA’s comments on your situation which I am in full agreement with. I’m in a very similar position to you regarding age, retirement horizon and asset allocation. I’ve recently begun my own version of the typical “lifestyling” path by amending the allocation of my monthly purchases – I’ve begun buying bond funds. The subtle difference between this and rebalancing has meant it has been psychologically easier for me rather than locking in equity prices at sub peak levels.
I was also somewhat surprised when doing my annual update to see the Global Property fund had changed name to include a ESG tilt on it. It was not something I signed up for and don’t think I was made aware of the change by Interactive Investor. Generally I’m very sceptical of the ESG branding for many of the reasons already mentioned mainly of course that it moves away from pure passive investing.
Given that the underlying holdings are not that different I’ll probably wait until switching to one of the other Global Property funds mentioned. Thanks for highlighting them.
I would be interested in Monevator tackling an ESG portfolio. Partly so that there is a real life working out of what ESG means in practice and how to achieve it (and how it compares with the ethics one expects of it) but also to see whether it would still allow a diversified balanced portfolio with outcomes comparable to Slow & Steady and VLS60 (do include that too).
@rosario @ta
Thanks both and yes I was considering doing it from future contributions. And it’s only my isa I’m considering doing this with at present as I may want to use at least part of it to pay down my mortgage (I now have enough to clear it at any time but have fixed at 0.99% last year very fortunately and so better to save and invest at the moment despite the psychological temptation to clear it ASAP
Other snag is I’m in a fairly high paying job that I’m not sure i can stomach much longer as thimk I’m suffering either burnout and /or I think mild depression. Certainly very disengaged having suffered quite a bit of trauma in the last 12 months plus a change of job that I think with hindsight was a mistake
Life is definitely what happens when you make other plans isn’t it !
@FBA – you’re not alone. Past 2 years have been pretty traumatic also. Particularly on the work front. Have been experiencing similar symptoms. Don’t really know what the solution is but can certainly empathize. If you come up with any bright ideas then I’m all ears, likewise if I have an epiphany I will be sure to share!
@FBA & & Rhino – that makes three, currently rolling around ideas of stepping off the corporate ladder vs hanging on and retraining into something more interesting (but less lucrative) vs biting the bullet and trying to power through for a couple more years to break the back of the mortgage! Head says one thing, heart says another!
You have hit the big time – under the title Have Passive Funds had Their Day you now have your own thread on MSE savings forum
@ Kay – haha. Thank you for the link. Happy to see it’s not entitled: “Have Passive Fund Writers had Their Day” 🙂
@ Fatbritabroad, The Rhino, Grouty – quite a few have reported that the pressure drops at work once they’ve made the decision to quit. The power of “No” and all that. I wonder if that might help you guys?
@The Accumulator – think its fair to say most people hope you have many more years of writing ahead
@TA – I don’t think I want to quit as such, I just want to find some sort of work that improves rather than degrades my mental health. It’s not really a question of finance now. In many ways, getting the finances together removes an excuse, and then you have to really answer why your not doing this or that with your life, issues such as lack of courage, fear, anxiety, lack of ideas etc. I’m finding it tricky for sure.
I have a hypothesis that there are two FIRE types, those that are coming at it from a very practical angle, they save the money, they quit, they get on with it; but then there are those that see it as a means to solve some other more psychological issue, the snag being that it doesn’t, i.e. you get there and you realise loads of cash and no job isn’t going to do it for you. Maybe I need a good counsellor, a priest or a buddhist monk or somesuch?
Troublesome, but I’ll just keep buggering on and see what happens..
@the investor, good advice I think,
interestingly in my first conversation with my boss this year I told him that my mantra for this year was going to be ‘I don’t care’ when faced with any corporate bullshittery, wasteful process indoctrination or pointless training, such that I can let the stress wash over me. It may not last and I may regret it but I guess I will see if that graduates to a full on ‘no’
@ The Rhino and Grouty – good luck to you both. I hope the coming year proves at least partially less stressful due to the financial strength you’ve built up.
I did get demob happy during the last six months once I knew I could go. In fact, I did wonder whether I might lapse into a cycle of repeating “One more quarters” given the psychological freedom I felt.
Rhino, I think I’m a blend of your two types… FIRE doesn’t alleviate my personal baggage but it’s a lot easier to carry without all the corporate BS mentioned by Grouty. That said, TI is a big fan of changing careers rather than ditching them and I think he’s on to something!
I’d really like it if you did set up an ESG passive portfolio – it would be interesting to see how it compared to the warts, human rights & environmental abuses and all version; but would also be a helpful place for people like me who would like to put my money to good societal use, whilst hopefully still making sound investments, to be a bit more thoughtful and informed as to where to put it!
I’m also averse to and very sceptical about this whole ESG thing. Actually I want the companies I invest in through index funds to do the right thing in two ways: I want them to move away from hydrocarbons faster than they are doing and I want them to invest in difficult places on the planet, and do so in a way which actively makes life for people in those places more like life as enjoyed in most of Western Europe.
The algorithms which determine “ESG” screening don’t compel companies to do that: the criteria seem far too woolly and too concealed.
The best way to do that by far is to use the power of investors’ cash, and as someone with a lot of cash tied up in Vanguard holdings, I read with dismay and some anger about its general refusal (allegedly) to wield the cosh which its 10s of billions bring with it. Its enough to make me want to look at other tracker managers which share my attitudes.
Conversely, it seems to me that divesting from non-screeners achieves nothing: as someone above said, it may even result in more power being given to the wrong people.