What caught my eye this week.
Something weird happened on Monday. Maybe it was autumn in the air. Perhaps it was the mounting fears about Brexit inflation pushing up the price of a packet of Pringles.
But for a moment the British newspapers caught FIRE.
First The Times ran a (pay-walled) interview with The Escape Artist.
As fellow blogger Fire V London captured and reported on Twitter it even made that newspaper’s venerable leader:
(Click to enlarge)
Next – within hours – The Daily Mail. It recapped The Times’ interview with T.E.A. (and properly linked to both it and T.E.A’s blog, unlike the rather ungenerous Times) before interviewing Ken Okoroafor of The Humble Penny.
Then, finally, The Guardian posted its own somewhat bemused take on ‘the Fire movement’.
I don’t know, maybe I’m an old punk who saw what Nevermind did to my little corner of music, but I was a bit unnerved by this sudden, synchronized interest from the newspapers
First they ignore you, then they laugh at you, then they join you – and then someone finds a new way to tax you!
Not to mention I’m a grouch about the FIRE acronym, too.
Then again, it was all forgotten by Tuesday. Stand down.
Have a great weekend.
From Monevator
All about inheritance tax – Monevator
From the archive-ator: If you want to make easy money, do something hard – Monevator
News
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!1
Average EU migrant contributes £2,300 more to UK public finances than average UK adult [Fiscal impact report] – Oxford Economics
Church of England pulls out of Wonga rescue effort – Guardian
Amazon may open as many as 3,000 cashier-less convenience stores by 2021 – Bloomberg
Buy now, pay later — the new debt trap for millennials? [Search result] – FT
London has only one property on sale for less than £100,000 – Guardian
From trillion dollar markets to trillion dollar companies – Political Calculations
Products and services
Interactive Investor could scrap exit fees ahead of FCA ban – Money Observer
Dire Straits back-catalogue investment venture launched – Guardian
How to check the performance of your robo-adviser – ThisIsMoney
Ratesetter’s £100 bonus effectively boosts your expected annual return on £1,000 to 14% – Ratesetter [Affiliate link]
The cheapest ways to get a new Apple iPhone XS – ThisIsMoney
Only 20% of Britons hold ethical investment products, study finds – Guardian
National Savings & Investments to cut rate on its Direct Isa from 1% to 0.75% – ThisIsMoney
Comment and opinion
Does your income bring you joy or happiness? [Search result] – FT
Don’t take investment advice from billionaires – A Wealth of Common Sense
Simon Lambert: The £750 exit fees to move my ISA – This Is Money
Saving is for the poor. Investing is for the rich – Nick Maggiulli via Twitter
Eight reasons why stock-picking is much harder than it looks – Jonathan Clements
Don’t be too quick to write-off The Holy Active Empire – Jamie Catherwood
The Bizarro World of UK financial advice – Young FI Guy
Understanding the psychological challenges of investing – Market Fox
Bleeping bleep! On turning $1m into $64m via compound interest – Per Diem
Long-term [active] investing is simple, says Merryn Somerset-Webb [Search result] – FT
Lessons from the financial crisis have not been learned – The Value Perspective
Also: Fool me three times and I give up – Morgan Housel
What one analyst learned from being fired in the financial crisis [Search result] – FT
Some bonds are better diversifiers than others [US but relevant] – Morningstar
Kindle book bargains
Saturday-only: Two Michael Lewis classics are Flash Deals – The Big Short and Flash Boys.
The $100 Startup: Fire Your Boss, Do What You Love and Work Better To Live More by Chris Guillebeau – £0.99 on Kindle
Small Change: Money Mishaps and How to Avoid Them by Dan Ariely – £0.99 on Kindle
Your Money or Your Life: A Practical Guide to Getting – and Staying – on Top of Your Finances by Alvin Hall – £0.99 on Kindle
Talk Like TED: The 9 Public Speaking Secrets of the World’s Top Minds by Carmine Gallo – £0.99 on Kindle
Brexit
Pound plunges as Theresa May admits “impasse” in Brexit negotiations – Independent
Brexit Secretary Dominic Raab sees “no explanation” for EU rebuff [Except, you know, everything the EU stated before and after the Referendum…] – BBC via Twitter
I mean, even Baldrick gets it – Tony Robinson via Twitter
But John Redwood remains sanguine. Slash a parody of himself – via Twitter
President Macron says Brexiteers lied Brexit would make UK wealthier – Guardian (Context)
Beware of Brexiteers now saying “We told you so” – Me on Twitter
Legal action to revoke article 50 referred to European court of justice – Guardian
Off our beat
On ecstasy, octopuses reached out for a hug – New York Times
And finally…
“There are tons of times in your life when you do not want to be using a Vulcan brain. Life is for living, and Spock was pretty damn boring, except for the time he got high sniffing plants on a strange planet. But making money the boring way is really the only way to do it. Save the Kirk in your for enjoying what it can bring you later.”
– Robbie Burns, Trade Like A Shark
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Comments on this entry are closed.
Just read the ‘How to check the performance of your robo-adviser ‘ link.
Choice quote:
“Most of the robo-advisers don’t publish their performance figures”
Need I say more?
Although why they didn’t name and shame I don’t know.
I think the papers keep a few backup topics to talk about in slow news weeks, fire being one
Regarding the media and public catching on to the FIRE movement, there is reason to the madness. One does not have to look far. If people are gaining their freedom and lives back the parasites are not far away.. One might wonder if becoming non-resident helps avoid such nastiness..!? (Far better a 100% inheritance tax IMO)
https://www.huffingtonpost.co.uk/entry/has-the-time-for-a-wealth-tax-come_uk_5a523337e4b0cd114bdb3446
https://www.theguardian.com/commentisfree/2018/mar/23/labour-wealth-tax-economy
https://www.theguardian.com/business/2018/mar/04/has-the-time-come-for-a-wealth-tax-in-the-uk
The Telegraph couldn’t be seen to be missing out:
https://www.telegraph.co.uk/men/thinking-man/retire-40-still-have-nice-life/
It’s almost enough to turn one into a conspiracy theorist.
As usual, the comments (in any paper) show that FIRE isn’t going mainstream anytime soon. Probably a good thing from an investors perspective.
The Guardian sneer-piece gets my goat. They just didn’t get it.
The comments – worse! About 10% were positive. The rest were “Yeah, right. Live in poverty and save for 400 years. Only works if you’re rich to start with. Unattainable.”
The Guardian can be great when it’s preconceptions coincide with reality, or when it can peer past it’s pre-ordained agenda. But this article was a cue for a bunch of resentful slave-hamsters to chitter furiously at the gall of those who tunnel their way out of the cage-farm.
It’s almost as though Using The Tools Of Capitalism to reach your goals is abhorrent, repugnant: far better to squat in resentment waiting for some kind of Redistribution Rhapsody to make things better or at least bring down the mighty.
No mention of buy-and-hold investing, historical 7% returns, the SWR rationale. Denied that, even the minority of “Hey, they have a point, we don’t need as much consumer crap, spending intentionally improves your life” people didn’t have the material to work with.
They just didn’t get it.
For anyone interested in finance related Kindle bargains, today (Saturday), Amazon has both :Flash Boys: and :The Big Short: as daily deals for 99p
What I’ve been struck by recently is the number (usually US based) FIRE bloggers whose RE is actually underwritten by their partner still working. ERN, PIE, CanIRetireYet, SlowlySippingCoffee (SSC) all do this to one extent or another. Usually they seem to have a large stash, but their partner is still working which provides the security.
I do, though, like SSC’s “Fully Funded Lifestyle Change” idea, even if it is fully funded by his wife still working more or less full time. But to me, these bloggers are working part-time, or are stay-at-home Dads, or have agreed with their partner who will be the main breadwinner. And why not?
Which is the approach I hope to take. In six months, all being well, we’ll have no mortgage, no debts and I’ll go part-time to pay for the essentials while my wife can save 70-80% of her salary and provide some luxuries. In 15 years, my state and small DB pension can provide the floor, my DC pension the luxuries (after 15 more years of compounding I hope so!) and my wife can retire if she wants. After 30 years struggling in a corporate world I’m clearly not cut out for and significant life events, if we’ve divvy up the tasks and responsibilities and we’re happy, why not?
I won’t be calling myself retired or FIRE’d though.
@xeny — Cheers for the tip, have added to the links — two of my favourites!
“their partner is still working which provides the security”
Probably above all it provides the medical insurance. That would be much less of an issue here.
Perhaps it also provides the promise of a DB pension. That would be pretty desirable here too.
As someone who has read financial blogs for over almost two decades, the has been an exponential surge in FIRE blogs in recent years, on both sides of the pond. What hits me about many of these blogs is how strong the consensus now is on what is “right” in terms of FIRE and, in fact, on many issues completely unrelated to FIRE. What comes over is the bloggers’s (over)confidence regarding their views; the “truth” is completely known. For example, many will repeat the mantra that a 4% SWR is fine, despite it not even being applicable to the UK and further fail to mention other views such a Blanchett et al (2017) who put it below 2%. There is no balance in their views, not enough uncertainty. I suppose this is inevitable after a nine year bull run in equities with historically low volatility; they feel “FIREproof”!
The other factor that bothers me is the feeling that some bloggers are utilizing their blog really as a window-front into their consulting/counselling businesses. Or that they are FIRE despite their partner still working. This does rather undermine the idea they are actually FIRE at all.
Back in 2008-10, FIRE blogs seemed to be far more humble, more fearful, more uncertain, which I saw as far more realistic and preferred. There was no truth, just a bunch of disparate views from those trying to navigate their own path, one step at a time.
–“The Guardian sneer-piece gets my goat. They just didn’t get it.”–
Articles and comments like that upset me as well. I started a Halifax Sharebuilder over 20 years ago, paying in between 20 and 50 pounds every month. That was all I could afford. I refused to take out loans for flash cars; we had an old Saab 900, did most maintenance myself, much to the disgust of the neighbour opposite. Thanks to sites like TMF, Monevator and Lemonfool, I’ll be able to retire much earlier than most.
– “Regarding the media and public catching on to the FIRE movement, there is reason to the madness.” —
I have to admit that I’d like them not to talk about FIRE at all. Maybe paranoia creeping up on me, but I’ve felt for years that the ‘Establishment’, however we define them, would prefer the huddled masses to follow standard procedures, sit in front of TV soaps all evening and drop any aspirations of independent, informed thought. If more and more of us start taking our finances into our own hands, you can bet your bottom dollar that civil servants and ministers will notice and want to start meddling.
Steve
@ReluctantSlowBankRobber –
That particular column is tongue in cheek and usually provides a fairly basic, sneery view of most topics, it’s not that they don’t get it so much as they haven’t stopped to research it properly or think about it. There was a decent chat on the UK FIRE subreddit about it.
@The Investor – I enjoyed this article about octopuses:
https://orionmagazine.org/article/deep-intellect/
Comments on these FIRE articles aren’t great I would admit, but then that applies to most topics these large sites cover.
Having that said that, when I sorted the Guardian one by most recommended, a lot of the highest ranked seemed pretty reasonable.
@ZXSpectrum48k “I suppose this is inevitable after a nine year bull run in equities with historically low volatility”: I see the same absurd overconfidence when I visit the MSE forums. Coupled with a doctrine that it is always wrong to time the markets, it’s foolish stuff.
Articles about FIRE remind me about articles about dot com v1.0 day trading 20 years ago
It’s a symptom of a long in the tooth bull market in US stocks
@Brod – interesting comment Brod, which I’ve been mulling over this morning. I’ve never really thought about it from that perspective before (I’m kinda semi-retired, Mrs YFG still works). I can’t talk about how other people feel about things, but I was brought up in a pay-your-own-way home. My dad worked, my mum worked (till she couldn’t). If I wanted something I’d have to find the money for it. That extends to my adult life, I pay my share, Mrs YFG pays her own. I’d never let Mrs YFG pay any of my bills and vice versa (Mrs YFG got a job whilst studying). Perhaps it’s a generational thing? Where one breadwinner was more common? I also read from time to time that this one person works thing happens in the US for medical insurance through an employer. Luckily we don’t have that problem in the UK. Food for thought though.
@ZXSpectrum48k – very insightful comment (as always!). Picking up on two elements of the comment. There is a, somewhat alarming, trend in the community towards “FIRE is X, everything else is not FIRE”. I think it’s right to be sceptical of that group-think, especially when it can self-perpetuate in a bubble. Life is complex, it can’t be boiled down to a simple formula. As you note, that’s intrinsically linked to things such as the SWR. My perception is that it’s been over-mathematicised. Perhaps that’s because many of the FIRE community are from an engineering/IT/science type background where “math can solve any problem”. Perhaps also because the “math” is a soothing salve for the impossible uncertainty of financial returns. FIRE is really not for you if you can’t deal with uncertainty, I suspect many members of the community find that incredibly difficult.
(p.s. I think we may have discussed this before, but the Blanchett/Morningstar paper is, unfortunately, critically flawed. I’m somewhat on board with the historical analysis (though it’s been done much better elsewhere), but their forward-looking model is almost meaningless.)
@dearieme – yes, I think medical insurance may be a big driver of one partner being in full time employment (or near). But there are two arguments for that. Firstly, so what? Surely this is known in advance and should be factored in? Secondly, we pay through our higher taxes for a social health care system, and having been a heavy user on a couple of occasions, I very glad we do. And of course this limits our saving rate since we have lower post-tax income from which to save but we need to save a lower amount, etc. etc. etc.. If medical bills weren’t so ludicrously high in the States, it’d even out (a symptom of an inefficient market?) Actually, thinking about it, this might be two sides of the same point.
@YFG – yes, I’m imposing some crude assumptions about how couples organize their lives. But I think my rant still stands. Semi-retired and paying my half, that works. But when the sh*t hits the equity fan, is Mrs YFG going to kick you out? Insist you sell a kidney to meet your half of the electricity bill? Possibly not, and supporting each other is what has happened in our house when I or my wife were unemployed.
Which is why I chose the term “FIRE bloggers whose RE is actually underwritten by their partner still working” with care. Which is absolutely fine. My issue is that these are in reality stay-at-home Dads (no shame in that) or semi-retired (no shame in that) or like me, burnt out/fed up/demotivated/stressed out/whatever and working part-time in the same or another way (no shame in that either.) They have a measure of FI (good to have!) but not, imho, RE.
But it’s messy, like most things in life.
I think the Guardian piece *did* get it. The mockery was pretty gentle by the standards of that column and the author left enough clues to suggest they’d read a fair bit of MMM and are probably pro FIRE. That’s how I read it anyways.
If the comments are full of clueless vitriol then that’s probably a sign you’re on to something right? I don’t think you can subvert mainstream consumer culture and expect big hugs. If you point out somebody’s flaws, or become the living embodiment of their self-doubt then slings and arrows go with the territory.
Don’t understand why somebody can’t be FIRE if their partner is not. What if their partner chooses to work? What if you’ve signed a contractually binding agreement to allow each other to starve if the 4% rule doesn’t work out 😉 OK, I’m being daft but the community seems to spend an inordinate amount of time on definitions. Jacob at ERE was FIRE but his significant other wasn’t ready to make the jump when he wrote his blog.
@ YFG – the basic flaw with the 4% rule (as advertised) is that once you subtract the effect of taxes and investment costs and the possibility you might last longer than 30 years then it no longer works (as advertised). Not to mention the historically stellar performance of US assets that it’s based on. I know you’re on board with this already (I’ve read your work on the topic), but Blanchett and Morningstar do us a favour by casting doubt on 4% rule orthodoxy.
@Brod – your point stands 100%. Apologies if I came across as not agreeing – I do! Mrs YFG wouldn’t kick me out, if only because who’d do the laundry for her haha! I’d never let it get to that stage as I’d be working more to cover the bills. Of course, at some point, the s*** will hit the equity fan. My hope is that I am mentally prepared for that. We will have to see. But I’m quite sanguine, as far worse things have happened in my life before.
And I completely agree with your last paragraph – I’m reluctant to call myself ‘retired’, partly because I don’t feel retired and partly because the term ‘retirement’ conjures up often pejorative thoughts. When pushed, I say I’m semi-retired, or a stay-at-home dad who still dips his hand in. Like you say, it’s messy and many people (particularly the media) want a nice soundbite, a one-liner! It’s definitely: “I Think You’ll Find It’s a Bit More Complicated Than That” (I hope Ben Goldacre doesn’t start charging every time I say that, otherwise I will definitely need to go back to work full-time!)
Indeed, an interesting week for FIRE publicity! Perhaps, like lean FIRE and fat FIRE, we can now talk about loud and quiet FIRE. We quiet FIRE people can let the bloggers take the flak from people who can’t or don’t want to understand, while supporting them with our thoughtful critiques and/or compliments…
Also amazing was the number of commenters who mentioned being hit by a bus the day after retiring. Are there any reputable statistics on this particular phenomenon?
From my reading, your chances of being hit by a bus are proportional to how much effort you spend grousing on your smartphone versus looking both ways.
I have just read page 1 (of 11) of the comments in the Daily Mail about the EA article. Some had me laughing out loud. My favourite was that his kids would hate him and make sure to pick the cheapest care home for him. Ninety nine per cent of those comments are from people who will spend every last penny on things they dont need.
Who on earth could live on £25k they cry? Well, with no mortgage, no income tax, no consumer tat, just about anyone i would have thought.
The momentum and value article was interesting… I’ve got pretty much everything in a whole world tracker but it got me thinking about whether with a long time horizon I should think about looking at value and momentum fubds. Any thoughts?
Yes, it’s worth thinking about, but not just value and momentum:
http://monevator.com/return-premiums-introduction/
http://monevator.com/tag/return-premium/
@SurreyBoy
This is most unsatisfactory, I specifically told my kids NOT to comment on that Daily Mail article
@TA – that’s fair enough, you are right. I hope I didn’t come across too belligerent – I didn’t mean to be! I hope the book is going well 🙂
@brod very much agree with your comments. There are absolutely loads of couples where one partner doesn’t work much or at all – seems to me that to call that scenario FIRE seems to require that a) the non (or less) working partner has some assets and b) they are male. Otherwise, they are called a housewife or a stay at home mum. (And actually, some of them might have their own assets these days, but I bet they wouldn’t call themselves retired!).
Of course, people are free to live how they want, but clearly chucking in your day job is one whole lot easier if there is another regular household income, and that’s not something that is generally acknowledged on the relevant blogs.
FI is surely the key part of FIRE. FI is only genuinely achieved once activities are motivated by fulfilment and income if any, is incidental.
i haven’t read “weekend reading” for ages … are the links usually so anti Brexit ?!
not that i’m complaining … genuinely interested !
I believe some people achieve FIRE by reducing their expenses to the level of jsa/uc, and then living on that, no worse morally than tax avoidance… But no hope of comfort, and not such good treatment for homeowners
@ Vanguardfan
‘to call that scenario FIRE seems to require that a) the non (or less) working partner has some assets and b) they are male. Otherwise, they are called a housewife or a stay at home mum’
You beat me to it!
As always, great links, A sneer piece you missed was in the “I” physical newspaper, can’t find it online, (no link sorry) It was done in an editorial with a similar tone to the Guardian piece. The final salvo was on the lines of (from memory) -If we all become FIRE, who pays the taxes? … I don’t aspire to FIRE personally, at least not in the FIRE sense from over the pond where Pete et al decide to go at 30 and wing it (in a fantastically adventurous and interesting way, bravo!) whilst relying upon a big fat cushion of cash to break the fall if it all goes pear shaped. I like the idea of being able to choose my contribution to society on my own terms so I suppose I’m more interested in being a FIROptional kind of fellow. How we build the cushion, what it’s layers and complexities are cannot be represented in any single case study. All good reading.
The Accumulator , I love the comment “From my reading, your chances of being hit by a bus are proportional to how much effort you spend grousing on your smartphone versus looking both ways.” A classic and very apt
Great blog as always,
JimJim
@Vanguardfan – call a spade a spade. I was way too PC… 🙂
@ADS — Long-time readers know I am very anti-Brexit, and almost more so the politics / rhetoric / confusion / idealogy around it.
But to avoid testing everyone’s patience too much I have been trying to mostly keep Brexit coverage to a Brexit section of the WR links.
Now and then I have included IMHO thoughtful pro-Leave perspectives/analysis in that section. But, without being snarky, I find such material to be very thin on the ground.
There is an element of smug self-righteousness evident in some of the FIRE blogs, particularly (but not exclusively) the American “FIRE-bro” offerings.
ERE and MMM were a huge inspiration to me when I started my FIRE journey and remain so. I read the others less and less now. In truth I find the descriptions of the lives being led post-FIRE pretty dull & uninspiring – what’s the point in being FIRE if you just kick about your city going to gigs, drinking coffee, surfing the internet and working out. Each to their own but not my vision of post-fire happiness if fun for a while.
I don’t get why the bull run would increase the popularity of FIRE. With asset prices at an all time high, interest rates on cash negative in real terms, dividend yields very low, and annuities such poor value, isn’t it harder than ever to save enough to “live off the interest”?
I appreciate that FI/FU pots have snowballed since the last crash, but most people are going to save the majority of their cash late in their careers, when they reach peak earnings – which is why compounding doesn’t do as much as you would hope, and RIT for example always says “saving hard” has helped more than “investing wisely”.
I think guardian/i sneering is partly because they derive their politics from not having a stake in the benefits of business, as soon as they all become shareholders it all starts to fade. I actually think the stock market does a lot to reduce inequality, because beforehand only rich people could invest.
Also as per jimjim’s point, they think that no tax is being paid, when infact even in an isa our businesses still pay corporation tax, withholding tax, employers NI, rates, and vat
@Brod
I agree with you. When I started on my FIRE journey back in 2007 I don’t think the term FIRE even existed. At the time I stated I was looking for ‘early retirement’ which I defined as work becomes 100% optional. In hindsight I should have called it FI and FI IMHO must occur before RE. Those that rely on spouse income to pay the bills and in parallel then call themselves FIRE are really stretching it, again IMHO. Of course it makes it much faster to set up a I’ve done it FIRE blog… That said, if they can live well without work earnings and they then work for enrichment with earnings being a bonus then I have no problem with the term FIRE.
@Ben
“Most of the robo-advisers don’t publish their performance figures”. I’ve noticed the same. I’ve just started a small experiment with the robo-advisor WealthSimple mainly thinking that this type of product could be suitable for Mrs RIT if I pop my clogs (or worse). I intend to track it’s performance against my DIY approach and will hopefully publish that performance quarterly. Of course one also needs to consider my robo-portfolio is based on the questions I answered so will be different for others and investing for FIRE is a long game as it needs to take you to the time you pop your clogs so I expect it will be a while before that story provides any sort of value.
@ZXSpectrum48k
I am far more conservative than many of the current FIRE bloggers but then again as you suggest I started sharing my story in 2009. My research has led me to the conclusion that the 4% Rule is far to ambitious for somebody who is UK based (and will soon be Med based), might live another 40 or so years and has a partner who will probably live longer. I ended up at a 2.5% plus investing expenses of circa 0.2% as my “SWR”. I also have a healthy dose of discretionary spending in my budget enabling some scale back if/when the bad times reappear.
@David
“…and RIT for example always says “saving hard” has helped more than “investing wisely”” You’re quite right David. I went for quite a rapid journey and became FI in 8.7 years and it will be close to 11 years by the time I RE. To date 41% of my wealth came from saving hard and 59% came from investing wisely. That said my situation also encouraged me to go for “surety” rather than potential velocity meaning my investing strategy wasn’t as aggressive as a number of the FIRE bloggers.
@ YFG – all good. You didn’t seem belligerent in the least.
Interesting article on robo advisors comparing a Nutmeg portfolio to a Vanguard lifestrategy fund. The Vanguard fund did better over 5 years. The moderate growth Nutmeg portfolio has nineteen ETFs in it with some holdings at only 0.5% of the portfolio (Japanese small companies). It makes you wonder if all the complexity has contributed to its poorer performance when compared to Vanguard.
I’d noticed the abundance of recent FIRE articles in the mainstream press earlier in the week, and couldn’t wait to read the comments under the Guardian one in particular. But what can you expect really given the demographic. At least a couple of people got it.
On the housewife/househusband FIRE bloggers, yes its harsh but I think you have to be disqualified from claiming to have reached that status if there is a conventional breadwinner underwriting your household. Write about the ongoing journey by all means.
On Brexit , I’d switched off for months as it was always going to go to the wire. But as the wire approaches I can’t see any agreement that will get past both the EU and various factions in parliament.
Looking at stuff like Greece, they were humiliated and forced to back down at the last second. But I’m not so sure a last second deal can be struck here. Labour/Momentum will vote against anything short of a full customs union purely to try and get a general election out of the chaos, so I can’t see how May will win a vote on any plan given her own party is split about 3 ways.
I am debating moving money into a nice 2.7% yielding 1-3 yr US Treasury ETF as a partial hedge (aside from global equities) but as soon as I do they will come up with some fudged Norway style soft Brexit deal out of nowhere and GBP/USD will shoot up to 1.40+ overnight.
@Grislybear – I lost any faith in Nutmeg after I looked at the makeup of a highest risk portfolio and discovered there was some gold in it.
> I actually think the stock market does a lot to reduce inequality, because beforehand only rich people could invest.
In the US barely half the population (~55%) have any exposure to the market at all, so it has exacerbated inequality. Curious what the rate is for the UK – suspect it’s significantly better and increasing with auto-enrollment.
Found this, which paints a grim scene:
https://www.finder.com/uk/investment-statistics
> I don’t get why the bull run would increase the popularity of FIRE. With asset prices at an all time high, interest rates on cash negative in real terms, dividend yields very low, and annuities such poor value, isn’t it harder than ever to save enough to “live off the interest”?
Serious interest probably depends on circumstances. There appear to be headwinds (or the tailwind is petering out anyway) for folks starting now vs starting 10-20 years ago. On one hand they’re probably accustomed to living lean post-crisis, which will help if maintained, on the other they’re unlikely to see homes triple in value or portfolios appreciating at 12%pa in the foreseeable. I understand interest from people who have done well so far this century and the idea of retiring has just occurred to them.
I can’t help smiling at a few comments here suggesting that people had it easy 10 years ago. I understand where they come from of course, but anyone who was around at the time may remember that was definitely not the view back then! 🙂
Rather, almost everyone said the golden era was over and the chance to reach high had gone. You had to force yourself to be optimistic and invest. (Or be on an automatic 30-year plan of course, which is much the better way forward for most of us.)
Even in 2011 I felt pretty lonely writing this piece: http://monevator.com/the-investors-2020-vision/
Of course it hasn’t really worked out particularly well for our UK All-Share since then (yet?) but the global market has done well, and in particular US exposure has multi-bagged since the crash.
I’d agree US would-be early retirees starting now probably face a few lean years in the medium-term, given where valuations are starting from, but much of the rest of the world’s stock markets haven’t made nearly so much expectation-dampening progress.
(Would agree with property in London and the South East though. That has surely had its quota of booms for the foreseeable, absent hyper-inflation?!)
Lots of interesting comments and perspectives, anyway. Makes for more thoughtful reading than the newspaper summaries! 😉
@learner – 55% of people having exposure is far more than would be possible without the stock market, without it pensions as we know it wouldn’t be possible and ownership could only be private equity buying large stakes in companies (ie only the very richest). Also people have the opportunity even if they don’t take it up, fault for that lies somewhere between the individual and the financial education people aren’t getting
On the spousal issue – I consider myself FIRE since early-middle age. I tell people I’m retired if they ask what I do.
My spouse works, and couldn’t afford to RE at this time. We each contribute 50% to household expenditure. No kids.
What would I do in the event of any equities crash – ride it out for a while, and longer-term probably take on some sort of work to avoid the need to sell in a down-turn.
Based on comments above, does this mean I am only semi-retired? Am I dependent/reliant on my spouse? I don’t believe so.
@Anon –
“I am only semi-retired? Am I dependent/reliant on my spouse?” – Yes.
“What would I do in the event of any equities crash” – you are asking the wrong question. The right question to ask is what would happen in the event of your spouse falling ill and becoming unable to work. If the answer involves you having to take up paid employment, then your family (read: you) is financially dependent on your spouse.
Also, an equities crash shouldn’t impact your retirement(sic) – it should already be factored into your withdrawal rate.
Oops, didn’t mean to imply it was a doddle to invest during the crisis, just that those that did have done well and might be seriously considering FI/RE now. The 12% figure was taken from one of the articles, DM I think.
Something else that has taken off recently are the reddit communities for personal finance, frugal living, etc. It’s interesting to dip into now and then, though riddled with US peculiarities like car loans, medical debt / health insurance, student loans, etc.
@Learner — Very true. I happily plugged one of the Facebook groups a few times in its early days, and I must admit I am now a bit jealous of the community they’ve built up there. Perhaps I should have bitten the bullet and started a Monevator one (on Facebook — I couldn’t bear the ordeal of running a bespoke bulletin board again) but I suppose the important thing is the communities are there if people need them. 🙂
Im glad this isnt facebook, since i never go on there (just a way to get into trouble and not healthy to air your emotions publicly all the time like people do on there)
Also facebook would have no privacy and our bosses would see what we’re planning
@hosimpson – I understand what you’re saying with the examples you’ve provided, but disagree that a person cannot be FI/RE unless their other half is also.
There are a multitude of scenarios that ‘could’ occur, irrespective of whether half a couple is still working, whether they’re drawing a DB pension (company goes bust) or state pension (country has a financial collapse), even if they’ve hit the lottery jackpot (spend, spend, spend), that could mean they consider paid employment again to improve their financial situation.
Taking your argument to the extreme, nobody could call themselves retired until their final day on earth, as there’s always the possibility of something going wrong.
Some of these iffs and buts are insurable – if the person can afford income protection for their partner or an annuity for themselves and/or ppi, then at that point they are safe
Anon, you would be FIREd if, for instance, you moved out into a different property and covered 100% of the bills and living expenses yourself.
If your partner came with you and spent none of their earned income on the household bills and living costs, but directed it entirely into motorbikes and sportscars then you would be FIREd yourself.
They would be a dependent, like a child or house spouse.
@ Anon – I must have expressed myself poorly. I wasn’t aiming to point out the contingencies, but merely saying that a person cannot be financially independent if the family as a whole is not financially independent.
If your wife works for The Man because she wants to, that’s fine and (to some people, apparently) perfectly normal. If not, then the family in question is simply living on a single income, and the non-employed spouse is a homemaker. There’s nothing wrong with being a homemaker. And there’s nothing wrong for one of the spouses to contribute to the family’s finances by supplying capital rather than paid labour; in the olden days that used to be called a dowry.
To be honest, I’m slightly regretting my rant which opened this particular can of worms. I don’t think it’s a useful exercise, and more likely to cause rancor or offense.
The people I highlighted earlier are entitled to call themselves FIREd. I am entitled to call them part-time workers/stay-at-home Dads/contractors/part of the gig economy/burned or dropped out or whatever seems appropriate, while acknowledging the effort and foresight that’s gone into putting together a large stash of FI/FU money which contributes in many ways to the family budget. I think I’d just wanted a little more honesty (or maybe less machismo – calling yourself FIRE’d is a lot better for the image (if you need that sort of thing) than saying you’re part-time and the stay at home parent to some people.
@hosimpson (& #54, #53) – food for thought, thanks.
@Brod – I think you’re right, that’s it’s up to the individual how they classify themselves/others.
I don’t look after kids, I don’t work part-time, and have no side-hustles. My time is my own to do as I please. Maybe, by the definition of “independent”, I’m not strictly FI as I have a spouse who still needs to work, but I certainly feel like I’ve RE’d!
Unfortunately pay-walled, but a predictable outcome of the possible impact on the government’s war on landlords
https://www.thetimes.co.uk/article/landlords-increase-rent-on-record-40-of-properties-t079b2ssk
https://www.thetimes.co.uk/edition/bricks-mortar/prepare-for-the-rental-revolution-ghpcf8kmm
Landlords withdrawing from the market and those remaining increasing rents to offset increased tax and stamp duty costs.