Good reads from around the Web.
Despite protesting that my allergy to office life [1] meant I was the last person they should be asking, I found myself given career advice to young people [2] this week.
They were all inspiring, even in their silliness, and it would make for good blog fodder (and I’m sure they felt the same, though sarcastic Twitter hashtags might be more their style. Alas I don’t think I am Instagram worthy.)
One of my top suggestions is to try to not to want to do something everyone else wants to do, but instead find something you like or even love doing – and that preferably you’re good at – that everyone else hates.
This isn’t always a route to riches or satisfaction (just ask a lavatory cleaner on the minimum wage) but I think it’s a better starting point than joining the other 50,000 hopefuls heading off to study fashion, photography, or marine biology.
Friends from my previous professional life look at me like I’m a dog they know has to be put down when I tell them what I’m doing these days.
Me? I can’t believe I’m getting paid for it.
Webb of intrigue
In some small way, I try to follow this principle with Monevator.
I believe most people should invest passively [3] but I have little passion for the details, which is why we’re all lucky to have The Accumulator doing the heavy lifting. Same deal with The Greybeard and pensions and deaccumulation [4].
That leaves me free to wax lyrical about the philosophical aspects [5] of investing and financial independence, and to write the occasional article about some lunatic active investing experiment that you probably shouldn’t try at home.
In a similar vein, if I had an unlimited budget then FT columnist and MoneyWeek editor Merryn Somerset Webb would be my go-to writer on debunking the intersect between financial hype and the official line, especially when it comes to government policy.
For instance, reader David [6] pointed me towards the great job Merryn did in the FT this week with the flat rate pension top-ups being loudly trumpeted across the press as super-cheap annuities.
I’d already decided that my mum would probably be better off holding on to her cash as opposed to topping up and doubling down on living into her late 90s, but Merryn went wider [7] [search result]:
The key here is that if you have £22,250 sitting around it is capital. Capital on which no tax is due.
If you turn it into state pension it becomes income. Income subject to income tax.
So let’s say you are a 65-year-old male 20 per cent taxpayer. You hand over the cash for £25 extra a week. With no tax it would take 17 years for the state to return to you the money that was yours anyway (£22,250/£1,300). You’ll need to live to 82 to break even.
At 20 per cent it is 21 years (breaking even at 86). At 45 per cent it is nearly 30 years (95).
Not looking such a good deal now, is it? More like a totally rubbish one (unless you happen to be married to someone who might live 20-odd years longer than you and keep trousering the 50 per cent payout).
The truth is that even if you can’t make a post-tax return greater than inflation on keeping your capital in the bank account, hanging on to your capital (and putting it into an Isa as and when you can) has got to be a better bet for taxpayers than turning it into income.
This isn’t to say these top-ups (or Class 3a Voluntary National Insurance Contributions [8]) aren’t a good deal for anyone. I’m sure they are for some.
But it is to confess that you’re never going to find out from me.
Give me magical thinking [9] about the future of stock market returns, any day!
From the blogs
Making good use of the things that we find…
Passive investing
- 11 tips from my new millionaire friend – Budgets Are Sexy [10]
- Bonds are dry powder – The Irrelevant Investor [11]
- Why people still invest in hedge funds – AWOCS [12]
- Beware: Experts are deluded – The Value Perspective [13]
Active investing
- Premature evacuation – The Felder Report [14]
- Beware of paradigm shifts – A Wealth of Common Sense [15]
- Is it worth paying up for Ferrari shares? – Musing on Markets [16]
- How can there be “more sellers than buyers”? – Oblivious Investor [17]
- Tristel: To global growth – Richard Beddard [18] and Maynard Paton [19]
- The collected wisdom of Seth Klarman – Scribd [20]
Other articles
- A reality check: Now versus 1929 – ETF Reference [21] (via Josh [22])
- A year on from busting out of the prison camp – The Escape Artist [23]
- Pack your lunch, go to Paris! – Proceed Until Apprehended [24]
- Reclaim your time and get rich – Under The Money Tree [25]
- Solar PV Panels: A year in review – The FIREStarter [26]
- Out Liars and entrepreneurship – SexHealthMoneyDeath [27]
Product of the week: Have you claimed your PayPal.me [28] vanity URL yet? PayPal’s new easy payment initiative might not go anywhere, but if it does, wouldn’t you rather your friends and family could pay you as JoeBloggs instead of J03blggz1932 because that’s all that’s left by the time you show up?
Mainstream media money
Some links are Google search results – in PC/desktop view these enable you to click through to read the piece without being a paid subscriber of that site.1 [29]
Passive investing
- Trump would be twice as rich if he’d just tracked the S&P 500 – Twitter [30]
- Why you can safely ignore commodities futures [Nerdy] – Morningstar [31]
- Hedge funds are dropping like flies – ETF.com [32]
A word from a broker…
- The most popular funds in September [Only one is a tracker 🙁 ] – BestInvest [33]
Active investing
- Investing versus flipping – Research Affiliates [34]
- The easy way to beat the market? – The Guardian [35]
- Behind the scenes at Woodford Investment Management – ThisIsMoney [36]
- Seven previous stock market crashes – Telegraph [37]
- Another comically bad year for hedge funds – Business Insider [38]
- It’s not easy to exploit these structural ETF flaws – Bloomberg [39]
Other stuff worth reading
- Ethical funds’ moment in sun [I get asked about these a lot] – Guardian [40]
- What stuff loses its value fastest? – Guardian [41]
- £80,000 in a pension at 20: Time to stop contributions? – Telegraph [42]
- Landlords admit to £50m in unpaid tax… – Telegraph [43]
- Couple who live on 6.25% of their income, donate the rest – Quartz [44]
- How Al Gore has profited from a ‘new capitalism’ – The Atlantic [45]
- Get your shit together in an afternoon – Medium [46]
Gadget of the week: The new Amazon Fire tablet [47]
Like these links? Subscribe [48] to get them every week!
- 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”. [↩ [52]]