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Weekend reading: Healthy, wealthy, and shut-eyes

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What caught my eye this week.

I stuck my oar into a Twitter debate this week, after economist Julian Jessop produced a graph purporting to show that the UK has not grown much more unequal post-Thatcher:

I responded that if we assume the data is right, then it’s still interesting that things don’t feel that way. So why the disconnect?

I am sure one reason is house prices. Those who have been on the housing ladder for decades – especially those who can help their own kids on – don’t seem to understand how un-affordable prices for the young have fractured society.

Perhaps that doesn’t show up in overall statistics of inequality because older would-be poorer citizens were made richer by rising house prices? I don’t know.

The other reason I put forward was Instagram. The fabulous lives of celebrities, influencers, and the several thousand photogenic cats and dogs made famous by social media cast a pall over our realities.

In the old days the Jones’ lived next-door, or perhaps across the street. Now they’re in your pocket, for many people day and night.

On the spectrum

It all points to new, technology-enabled (or perhaps enfeebled) ways of feeling rich or poor, which reminded me of an excellent blog post by US writer Morgan Housel.

Commenting on how the super-rich can’t help but make even the ordinarily rich feel poor, Housel writes:

Past a certain income the most difficult financial skill is getting the goalpost to stop moving.

And today’s level of global wealth has moved it a town over.

Housel then proposed a new spectrum of financial wealth, described by words, not numbers – because numbers don’t seem to tell us the whole story anymore.

While there are categories on the list I’d feel prouder to belong to, I plumped for ‘Health Wealth’ as my current status:

You can go to bed and wake up when you want to. You have time to exercise, eat well, learn, think slowly, and clear your calendar when you want it to be clear.

…which is gratifying, because I’ve been reading Why We Sleep? by Matthew Walker, and it’s life-changing enough to have seen me buy some new blackout curtains!

Where would you place yourself on Housel’s spectrum? And are there any categories he’s missing?

Have a great weekend!

p.s. Monevator has been ranked as the #1 UK personal finance blog by Vuelio. Several other good blogs on that list, too.

From Monevator

Lars Kroijer on…hedge fund mimicking ETFs, checking your portfolio, and minimal risk assets – Monevator

By Brexit standards, the debate after last week’s post is worth reading for views from all sides – Monevator

From the archive-ator: Types of entrepreneurs – Monevator


Note: Some links are Google search results – in PC/desktop view you can click to read the piece without being a paid subscriber. Try privacy/incognito mode to avoid cookies. Consider subscribing if you read them a lot!1

Credit card interest rates have hit a 13-year high – ThisIsMoney

Bank split on rates as it warns Brexit deal would hit growth – BBC

UK investors dump equity funds at record rates – Money Observer

Scrap entrepreneur’s tax relief, urges former HMRC head – Guardian

Watchdog warns UK fund managers to avoid Woodford liquidity trap – Reuters

‘Greta Thunberg effect’ driving growth in carbon offsetting – Guardian

Zero-fee funds is part of the ‘re-verticalization’ of asset management [Industry]Institutional Investor

Record US personal savings of $1.3trillion are one reason why the US bull market can continue – Investing Caffeine

Products and services

Putting the AI into financial advice [Search result]FT

Vanguard vs Dimensional: Who has delivered the higher returns? – Evidence-based Investor

Ratesetter will pay you £100 [and me a cash bonus] if you invest £1,000 for a year – Ratesetter

Goldman Sachs teams up with Nutmeg to offer ISAs in the UK [Search result]FT

Plugging into the cost of charging an electric car – Guardian

Interactive Investor reveals its pension millionaires favour Vanguard, Terry Smith, and Nick Train – ThisIsMoney

Comment and opinion

The perma-everything approach – Pragmatic Capitalism

How to spend your money, according to science – Big Think

Bitcoin is a game – Moneyness

Why are we being herded into buying part of the world’s biggest polluter? – Patrick Collinson

Realistic investment results – Of Dollars and Data

Translating US financial independence jargon into UK English – The FI Fox

Money Box Live: How to Retire Young [Audio, featuring Barney]BBC iPlayer

Early retirement can accelerate cognitive decline – Science Daily [via Abnormal Returns]

Ergodicity [From 2018, but well worth reading for the counter-intuitive maths]Sid Shanker

Naughty corner: Active antics

What went wrong at Woodford [Video] – Stockopedia via YouTube

Only holding global stocks near all-time highs captured most upside with lower downside – Allocate Smartly inspired by Meb Faber

Tom Lee: The four most important market indicators [Video]Reformed Broker

America’s decade – Albert Bridge Capital

The fool’s gold of emerging market valuations [Search result]FT

Anatomy of a Sell decision: The Restaurant Group – UK Value Investor

Talk Your Book: Greg Zuckerman on Jim Simons & Renaissance Technologies [Podcast]Animal Spirits

Treat each fight as if it were your last, because if you don’t it could be – Klement on Investing

Investors seek to cash in on Airbnb via SPVs [Search result]FT

Brexit and the General Election

“Rambling” Boris Johnson contradicts own government’s claims on his Brexit deal – LBC

Investors fear Labour policies ahead of the election [Search result]FT

Liberal Democrats, Greens, and Plaid Cymru agree ‘Remain Alliance’ pact – Guardian

Kindle book bargains

Radical Candor: How to Get What You Want by Saying What You Mean by Kim Scott – £0.99 on Kindle

The Complete Guide to Property Investment by Rob Dix – £0.99 on Kindle

RESET: How to Restart Your Life and Get F.U. Money by David Sawyer – £0.99 on Kindle

Way of the Wolf by Jordan Belfort [aka The Wolf of Wall Street] – £0.99 on Kindle

Off our beat

Experience: My face became a meme and I turned it into a career – Guardian

The new dot com bubble is here: it’s called online advertising – The Correspondent

Biology is eating the world: A manifesto – Andreessen Horowitz

The four stages of Fintech start-ups – The Basis Point

Any amount of running reduces the risk of early death, study finds – Guardian

False memory – indeedably

Annoyed – Seth Godin

And finally…

“Budgeting is about telling each pound that comes through your hands where it should go, and how it should be used. In other words, budgeting is forward-looking. It’s about deploying your resources in the best way possible, like an army general planning the deployment of troops”
– Pete Matthew, The Meaningful Money Handbook

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{ 70 comments… add one }
  • 1 Alex November 8, 2019, 4:46 pm

    I would suggest (as you hint at with your comment about house prices) that the equivalent graph for wealth inequality, as opposed to income inequality, would tell a rather different story.

  • 2 Matthew November 8, 2019, 4:51 pm

    Is the gini graph for wealth any different? As more people renting means less efficient use of that income

    By the way,@ TI, the previous article about income increasing 0.2% or 0.5% per 1% change in unskilled immigration ,if thats linear then a 20% change is 4-10% change in wages, not so small! Plus anything is better than nothing, right? And the fact wages would increase at all implies that there will be jobs for those that stay.
    But perhaps it’s not a linear relationship, would it be reasonable to think its more pronounced when labour supply is in more acute shortage? 🙂

  • 3 John November 8, 2019, 5:25 pm

    Too often people fixate on inequality as though the fact someone else is richer explains why another poor sod is starving or whatever rather than thinking about the needs of the poor fellow. It’s my biggest single gripe with the fixation of some on inequality, and one of the few things that attracts me to the conservative party during the short periods where it’s remotely progressive.

    We’ve seen 15 years of stagnant, likely negative overall, real terms income growth. We’ve seen nearly a decade of frozen benefits. This is bound to hit those closest to the limit harder than those with relatively higher incomes. Maybe there are thousands of middle class folk out there who can only afford a mid-range German saloon or a less expensive Caribbean break at Easter because they’re relatively less wealthy to, but it’d be harder to see than the impact of decreasing real incomes on the poorest in society.

  • 4 AncientI November 8, 2019, 5:43 pm

    Im doubling down on my stance that the housing crisis is the #1 issue in UK and that house builders will likely continue to do well. After Help to Buy goes im sure the government will come out with something else.

    Further I hope the pound continues to sink in value so that all the overseas investors who speculated on UK property get hammered deeper.

    There was an interesting interview between Sargon and Piers Corbyn on youtube where piers suggests that there could be plenty of housing but that local councils wont convert industrial sites to houses and that alot of london property remains empty because overseas investors buy it and then let it sit there.

  • 5 Faustus November 8, 2019, 5:46 pm

    Wealth inequality in Britain is much more severe than income inequality. At least in London, the Gini coefficient for wealth is 0.67 compared to 0.37 for income. https://www.trustforlondon.org.uk/data/wealth-distribution/

    The problem is that most analysis focuses on income rather than wealth because the former is much easier to measure. But this gives a distorted picture. While income inequality has remained stable for 30 years, wealth inequalities (particularly when related to age) have dramatically increased, aided by rampant land/property price inflation since the late 1990s. It is one reason that there have been well-justified calls for a wholescale rethink of fiscal policy, reducing taxation on earned income and increasing it on capital, land and inheritance.

    Higher taxes are coming in one form or another if Javid and McDonnell get their way and go on a mammoth spending spree. But few realise that the UK currently has one of the most progressive income tax regimes in Europe in terms of a light burden on the low paid. Look at the tax someone earning £20k pa would have to pay in the UK compared to France, Germany, Spain, Austria, Denmark etc. and the differences are striking.

  • 6 Neverland November 8, 2019, 8:07 pm


    “but it’d be harder to see than the impact of decreasing real incomes on the poorest in society”

    I’m kind of staggered by your statement. Food banks barely existed in the UK twelve years ago: https://www.trusselltrust.org/state-of-hunger/

  • 7 Vanguardfan November 8, 2019, 9:44 pm

    @neverland I think you’ve misread John’s comment. I think you are saying the same thing – that stagnant or declining incomes have had a greater impact on the worse off.

  • 8 Vanguardfan November 8, 2019, 9:52 pm

    I found that Chinese study about pensions and cognitive decline absolutely fascinating. It could justify further increases in the state pension age….

  • 9 Algernond November 8, 2019, 10:24 pm

    Vuelio have given away yourr true identity. The magic is gone.
    This reminds me of when Titania McGrath’s identity was revealed 🙁

  • 10 Algernond November 8, 2019, 10:34 pm

    For anyone wanting to keep the magic, do not click on the Vuelio link!

  • 11 The Investor November 8, 2019, 10:40 pm

    @algernond — That’s @TA. He was on Radio 4 years ago talking for us and from there made his way into myriad press contacts agency books. 🙂

  • 12 Algernond November 8, 2019, 10:52 pm

    Well, I feel a bit better now. Although would have prefered not to have known @TA’s identity.

  • 13 Factor November 9, 2019, 12:00 am

    @TI “Why We Sleep?”

    Totally agree – should be compulsory reading. It’s in my bookcase, having been imbibed twice from cover to cover. I bought it after it was reviewed in the Mensa Magazine a while ago. It’s also available as an audiobook.

    Oops, is that the time? I’m off for my habitual 8 hours in the land of Nod 🙂

  • 14 JimJim November 9, 2019, 8:40 am

    @TI , Congratulations on the much deserved gong.
    Some great articles this week, I notice many pieces in the press and around the net about buying at a high. A study upon the occurrence of articles in the press and any relationship to the future shifts in markets would be interesting but probably pointless as most opinions about a market direction are espoused at the same time.
    The Ergodicity article was simply brilliant and counter-intuitive, thanks for that one.
    Assigning myself a position on the spectrum of wealth was an interesting experiment, I am sure most people will be spread across a few, I had a gap in my bandwidth.
    And how to spend… according to science, affirms my Yorkshire roots nicely.
    Have a peaceful weekend

  • 15 Mr Optimistic November 9, 2019, 9:23 am
  • 16 Vanguardfan November 9, 2019, 9:53 am

    The buying happiness article is based on a rather old research study – 2011- which has been widely written about. It is interesting, and worth reading the source paper, but I wonder if there has been an update with more recent research? (I can’t imagine we know all there is to know on the topic!)

  • 17 Vanguardfan November 9, 2019, 10:05 am

    Can anybody critique the Dimensional vs Vanguard article? And would Dimensional still outperform, after costs? (Only accessible in the UK if you allow a financial manager to control your investments).

  • 18 John November 9, 2019, 10:07 am

    @neverland: Read it again. I said the impact of decreasing real incomes and frozen benefits are most obvious to see on the poorest; like the massively increased need for food banks you mention 😉

  • 19 Steve21020 November 9, 2019, 10:09 am

    — ‘I found that Chinese study about pensions and cognitive decline absolutely fascinating. It could justify further increases in the state pension age….’ —

    Yes, I found it interesting as well, but not exactly surprising. In fact, I’d say it was stating the obvious. For every 100 people retiring, there will be some that vegetate, watch TV all day or wander aimlessly about their garden wondering what to do. A person with nothing to do, no challenges or a purpose in life does tend to decline faster than others. I’m sure we can all think of examples, either among relatives or colleagues. So the average cognitive test results will be lower than for those who remain working. As for the idea of raising the pension age for ‘health reasons’, where are the ‘Yes Minister’ scriptwriters when you need them. “Very courageous decision, minister. Retirement age to be five years after death. Those who claim they cannot work, to be re-trained for positions in a Customer Helpdesk.” 🙂


  • 20 xxd09 November 9, 2019, 10:26 am

    Bring back religion or its equivalent!
    Maybe it is already here-Climate change/Extinction Rebellion-with primary age children on the streets in school time waving banners!
    Man is a strange creature-tormented by his large brain and the knowledge /consciousness that there is a tomorrow
    Successful investing seems not to be enough!

  • 21 Gentlemans Family Finances November 9, 2019, 10:31 am

    Property has been a one way bet for millions of older people – in the same way that it is out of reach of millions of younger people.
    Buying one property or more has made older people richer to the detriment of the young.
    Coupled with great pensions – there is great inequality.
    But within each cohort the inequality is extreme. If you didn’t have a final salary pension scheme and rented all your life you may end up relying on the state pension and benefits for the rest of your life.
    For others (escape to the country types) they might be retiring on £40k a year living in a million pounds home with a million in the bank.
    Life isn’t fair it seems

  • 22 A Betta Investor November 9, 2019, 10:42 am

    Congratulations on the ranking, well deserved.

  • 23 Vanguardfan November 9, 2019, 10:46 am

    @steve – I’ve always been sceptical of research showing that retirement worsens health/cognition/mortality risk. Mostly if I’m honest because I don’t want to believe it. I’ve tended to assume that it is an issue of confounding, and the association is not a causal one, but rather due to those people who become less capable of work being more likely to retire/stop work. It’s a common issue with observational/non experimental studies – yes they try to statistically adjust but it’s often fairly crude. The Chinese methodology seemed more robust (although I should read the actual paper before I truly conclude that). It’s the first time I’ve wondered if there might actually be something positive about policy measures to keep people in work for longer (other than the obvious saving the government money argument). Or if not work, perhaps we (ie policy makers) should be looking much more seriously at ways to keep older people engaged with their communities and doing socially useful things. I’m just trying to keep an open mind, and allow my views to change when presented with new data . And from a personal point of view, I might keep myself in the job market for a little longer.

  • 24 Vanguardfan November 9, 2019, 10:55 am

    Also, the implication of the study was that retirement was actually harmful overall at a population level. It wasn’t just that ‘some’ individual people vegetate, the effect was strong enough that the cohort on average showed worse cognitive function once retirement had been introduced. That’s actually quite a disturbing and important message.

  • 25 Mr Optimistic November 9, 2019, 10:55 am

    I am always unsure about arguments for ‘fairness’. Inequality is a fact of nature and of capitalism. Some people are born smart and good looking in an environment which provides opportunities. Is it unfair that some had better chances with attracting the opposite sex or making money? That plenty of people have more money than I do isn’t a source of grief or reflection: it certainly isn’t wrong or unfair per se.
    By all means mitigate the effects ( such as having a state pension system and benefits) but like the Carnot cycle you need differences to get the engine working. Alternatively you could try full on the socialist model and turn a blind eye to the corrupted politics that brings ( not to mention rationing, shortages, collapsing productivity). We need differences, a gradient, winners and losers. That these things exist doesn’t make it unfair ( whatever that means). Incidentally, isn’t that is what the FIRE community is all about: I do well so that I can withdraw from production whilst others continue to provide the services I want. How fair is that: some people get to travel the world why I work to 68.

  • 26 Vanguardfan November 9, 2019, 10:58 am

    Sorry I wish there was an edit function. It’s not obvious to me, that retirement should be overall negative for the population. I would have thought the intuitive belief should be the opposite.

  • 27 A Betta Investor November 9, 2019, 11:01 am

    The rise in equality is a direct result of the collapse of the Bretton Woods agreement in the seventies and the move from hard money to soft money. And the 2008 crisis turbocharged it.
    Before the seventies there was a limit to how much debt an entity, corporate or individual, could take on. Those limits have gradually been loosened and now it is a race, as this GE demonstrates, to borrow more and more.
    Poor people and small companies cannot easily get credit so they lose out to those that can, and then compound interest works its unrelenting magic.
    A £1m house with a £500,00 mortgage gaining 1% a year as banks flood money into its local property market is going to make its owner a whole lot richer than a £100,000 ex council house with no mortgage growing in value at the same rate.

  • 28 Mr Optimistic November 9, 2019, 11:11 am

    True, and if you have savings you earn interest. If you have shares you get capital gains. We can’t all be rich and there are always people with more than you have, who had better luck. So what?
    Words like ‘ fairness’ and ‘ equality’ are in that dangerous class where it is difficult to see how you could propose the opposite, in which case what information do they convey? I think there is too much equality in the world and what we need is less fairness.
    An ex-colleague of mine borrowed 34k from his father in law to buy a bright shiny BMW. He loved extolling the virtues of the waterproofing benefits of his Rolex watch. My how he loathed the wealth of the Duke of Westminster. Never paid a penny to charity. Hated the ‘ tories’. He used to go on about inequality too but could never figure out why I was laughing.

  • 29 The Investor November 9, 2019, 11:26 am

    @Vanguardfan — As you say it is the population-wide focus of the study that made me pay attention too. We’ve all seen examples of people slowing down (you don’t have to vegetate to be affected, and to affect the data 🙂 ) when they retire, sometimes markedly so. It’s difficult to know what would have happened anyway in an individual case, but when looking at a large cohort that problem is somewhat addressed.

    Of course somebody like @ermine might come along to say that slowing down (which is a euphemism I’m employing to describe ‘sharpness’ and ‘on-it-ness’ not how much they sit in a chair all day…) is part of the joy of leaving work. You can just *be* instead of having to be *better* or whatever. Personally like yourself I’m highly unconvinced by that argument and would much prefer to keep my faculties intact (even improving – forlorn I know) for as long as possible!

    I suppose it depends where you come from, mentally speaking. If mind/cognition has never been highly prized or wildly useful to you, then perhaps it’s a rational trade-off to swap 10-20% in memory and IQ tests for all your time to be your own.

    @A Betta Investor

    The rise in equality is a direct result of the collapse of the Bretton Woods agreement in the seventies and the move from hard money to soft money. And the 2008 crisis turbocharged it.

    Before the financial crisis and quantitative easing I admit I would have skimmed past these sorts of sentiments as dogmatic, above my pay grade, or lacking in evidence but — perhaps because the evidence is mounting — I’ve more time for them today.

    Ray Dalio (hedge fund manager cum self-styled financial philosopher king) posted along similar lines on LinkedIn this week:

    At the same time as money is essentially free for those who have money and creditworthiness, it is essentially unavailable to those who don’t have money and creditworthiness, which contributes to the rising wealth, opportunity, and political gaps.

    Also contributing to these gaps are the technological advances that investors and the entrepreneurs that I previously mentioned are excited by in the ways I described, and that also replace workers with machines.


  • 30 Far_wide November 9, 2019, 11:30 am

    @Faustus, re: different tax regimes, tell me about it! I’m considering a move to Spain, and after investigating the implications of being tax resident here..well..

    Fancy a personal tax-free income allowance of 5550 euros? Ouch.
    ISA’s? Nope.
    Separate savings allowance? Nope.
    Separate dividend allowance? Nope.
    Wealth Tax? Yes, please!
    All accompanied by a tangled web of quarterly submissions requiring the services of a friendly accountant.

    Have a small self-employed business? Well, don’t forget to pay your 280 euro/per month social security, even if you earn nothing at all. Oh, then 19% Tax, VAT, etc etc…

    Yes, we really really do have it good in the UK at the moment.

  • 31 Mr Optimistic November 9, 2019, 11:46 am

    On a different note, somethinb is going wrong with physics at both ends of the spectrum

    When I studied, the precision by which the g- factor was known was the poster child of quantum mechanics, and general relativity the symbol of man’s ability to understand the universe. Wonder if we are reaching the limits of our ability to progress understanding ( or the limits of mathematical logic in describing reality).

  • 32 steve21020 November 9, 2019, 11:49 am

    But surely, a lot of wealth inequality can be explained by the huge and increasing number of pensioners, the baby-boomers who got on the housing ladder when the house price:average salary ratio was much lower. Give it 20 years or so and I imagine it will all even out. I feel a little uneasy looking at wealth inequality in the same way as income inequality. It’s not all down to luck. Two families, same income, one with expensive, unaffordable car on drive, credit cards maxed out, expensive life style, minimum savings, the other family living carefully, investing as much as possible for the future. Thirty years later, first family is comfortable but still working, second family have apartments abroad and have retired. Are we then going to tax this second family on their wealth, and if so, is that fair?

  • 33 Mr Optimistic November 9, 2019, 12:00 pm

    Why do you think the young today are so much worse off than previous generations ? Picking a date at random, 1978, when I was 25, I rented, couldn’t see how I would ever buy a house, couldnt afford a car. Employed by the civil service with a salary declining in real terms ( have a look at the economic conditions in the UK under the Callaghan government). Re-enrolled as a student ( in the USA) where I could buy a car even on the stipends.
    Why have today’s young thrown in the towel?

  • 34 Faustus November 9, 2019, 12:46 pm

    Interesting and demonstrates that the UK tax regime is relatively generous to those on modest incomes. The tax burden on £20k earnings if I recall correctly is even greater in Germany, Slovenia, Italy (although tax evasion there is rampant) and forget Scandinavia! Of course, public services are better in many of those countries, but they do make those on low incomes pay more for it. And our generous savings, pensions and ISA allowances make the UK seem like a low-tax paradise for those seeking FIRE.

    With tax rises inevitable to pay for the costs of the Tory/Labour magic money tree, one does wonder where they will hit. There seems no political appetite to penalise low earners, so their current generous allowances are likely to stay. Higher earners will probably have to bear the burden, although the UK already imposes similar rates on higher incomes to many other European countries. The outcome might well be to further reduce income inequality.

    @Mr Optimistic
    Not sure quite where you’ve been for the last 10 years but your question is easy – 1) in real terms house prices compared to incomes are 2.5x higher today (in southern England) than in 1980 which is a massive burden on young people. In the 1980s and 90s fast wage growth meant that although interest rates were higher mortgages rapidly shrank as a proportion of income. 2) young people in the 70s and 80s were actually paid by the government to study at University whereas today they leave with an average £50k debt burden, 3) like the majority of public and private sector workers in the 1980s, civil servants had highly generous and unaffordable final salary pension schemes, which are now being subsidised by young people on far inferior pension schemes.

  • 35 Anim November 9, 2019, 12:59 pm

    @John, how much of such need there was before the invention of food banks?


  • 36 steve21020 November 9, 2019, 1:03 pm

    — “Interesting and demonstrates that the UK tax regime is relatively generous to those on modest incomes. The tax burden on £20k earnings if I recall correctly is even greater in Germany, Slovenia, Italy (although tax evasion there is rampant) and forget Scandinavia!” —
    Yes, I work in North Italy, and there is virtually no tax allowance to speak of, so you pay tax from the start. I hear conversations about running a small business that make my hair stand on end. There are local laws, regional laws and state laws, and the complex system together with crazy tax rates mean that there is not much incentive for taking on new employees. On the other hand, council tax is either non-existent or very low, public transport affordable and easy (How can anyone afford buses and trains in the UK these days??) , rent cheaper, their NHS is better – though not as good as France -and food/drink cheaper, especially booze! 🙂 There’s still cheating on taxes of course, but a lot less than years ago.

  • 37 Far_wide November 9, 2019, 1:04 pm

    @ Faustus, yes anecdotally we met a German girl whilst travelling who moved her tax residence to Spain to lower the burden of her taxes. Wow. Does make you wonder whether it’s sustainable in the UK – even without Brexit it’d be difficult…now? Hmm.

    You’re totally right re: UK being a FIRE haven. If you can manage to save/acquire a chunk of capital (the hard part) and can live on relatively little, then you’re set. Even the saving aspect can be made much easier through the use of Pension tax allowances (esp. if you’re fortunate enough to be a higher rate taxpayer).

  • 38 Mr Optimistic November 9, 2019, 1:24 pm

    @Faustus, true but you do not know what the future will bring, as I didn’t in 1978. Point I am trying to make is that as a snapshot I wouldn’t have been any more confident in the future then, as I would have been today. There was also the added disadvantage that the incumbent generation had the ‘we fought the war to defend your freedom’ gambit.
    Taking on the university debt is a personal choice. I still think the widening of university education was largely a ploy to mask youth unemployment ( Thatcher).
    Of course there is wealth flow down through inheritance but there are plenty who regard this as an evil and want the state to use its power to intervene.
    I think the worry is that capitalism is running out of steam and the growth in markets and productivity which under pinned the rise in public and private wealth which allows our comfortable existence may not be sustained. The danger is that loss of faith in the future spawns social tension and destructive tendencies were politics becomes the weapon of choice as opposed to perseverance, innovation and endeavour. Just at the moment there are plenty of warning signs.

  • 39 jim November 9, 2019, 1:39 pm

    @a Betta Investor.
    Makes you think. I’ve no debt and practically always tried to avoid it. Perhaps its product of working class upbringing and parents striving to clear mortgage. Wonder if it’s holding me back. I have a friend in same line of business always borrowing, always ‘skint’ but every penny borrowed is being utilised in his house or business, seems to have paid off for him.

  • 40 Vanguardfan November 9, 2019, 1:44 pm

    @mroptimistic…..I’m not sure what point you’re making? I am sure that there are plenty young people today trying to make their way by seeking out overseas opportunities, or being creative about how they earn a living.
    As for student debt being a choice – um, only if you don’t want a degree (there are, granted, a small number of sponsored degree apprenticeships around, but far too few). And there are now many more career paths that require a degree for entry than in your or my day. I think any young person being told, by someone who benefited from a free degree, that their student debt is a ‘personal choice’ would be justifiably angry!

  • 41 Matthew November 9, 2019, 2:12 pm

    Student “debt” is really “student tax”, they really ought to stop scaring people with the debt word into making wrong decisions like repaying it in a hurry (like I did), it is not a merciless obligation like a mortgage.
    Why should people who don’t do a degree pay for/subsidise those that do? Cutting fees would cut the quality but hardly affect repayment for most.

    Compared to the previous generation there is less scope for the same increase in house prices since the multiple of earnings can’t really go beyond 5X and interest rates are bottoming out, however I accept that things looked bleak before when rates >1% were inconcievable and that the next decade probably will have more pay inflation, although whether it outstrips general inflation I’m not so sure about.

    As to @mroptimistic’s problems in quantum physics and the rate of expansion of the universe being wrong, I’d like to take this opportunity to blame Brexit and global warming :p

  • 42 jim November 9, 2019, 2:28 pm

    I know of one large FTSE company that used to require degrees for their buyers & merchandisers and now doesn’t. Student debt is a choice but it seems to also have become a right of passage. These parents should have a good honest conversation with their children and advise them against a degree if they don’t think it will be worthwhile to their (potentially average) child!

  • 43 Matthew November 9, 2019, 2:42 pm

    @jimjim – yes the parents should have had a decent talk with them, but many simply won’t – either a lack of knowledge or apathy, and a previous generation used to think any old degree would be rare enough to guarantee success

    Schools should bridge that gap, but only want results, and will happily encourage people to study based on their abilities, not on job market demand

    They say a child’s chances of success are influenced by their parent’s education – parents who have a degree are more able to advise their children about where the good jobs are, and how to get them, this, unresolved, compounds social immobility, but at least if 50% of all school leavers now end up with degrees there will be fewer parents unable to advise

    But does society really need everyone to have a degree? Would educating everyone create those jobs? My opinion is that society is choosing to under utilise the brain power available, and theres no compelling need for innovation if the rich simply won’t spend what they’ve got

  • 44 Mr Optimistic November 9, 2019, 3:30 pm

    @vanguardfan. When I went to university you had to pass an 11plus, get good grades in 9+O levels, 4 A levels and have parents who could afford to pay the maintenance ( no fees). Upshot was that about 12% of school leavers went to university ( those with unsupportive parents were yanked out if school at 14 believe it or not). The country decided it wanted to push more students through university. Many polytechnics which previously took day release students subsidised buy employers became universities. It wasn’t practicable to continue the old financial scheme but the quid pro quo was that many more have the opportunity to get a degree.
    So previously the ‘ justifiably angry’ would be those pupils excluded from university because of the high academic bar, or the cruelty of the 11 plus. Now it’s those who think it should be funded by others.
    I wonder if there is a law for the conservation of justifiable anger. If so, we better watch out when this brexit mess gets put to bed.
    I can remember complaining to my parents that they had it too good ( bought their first house for £1800) and had pensions ‘ they hadn’t earned’. Turns out the last one was an unwise choice of words even if financially justifiable ( db pensions being a form of Ponzi scheme). Riled my father no end. Fortunately he wasn’t old enough to have stormed the Normandy beaches so I escaped that rejoinder.
    Intergenerational anger isn’t useful. The future is theirs, hope they use it well.

  • 45 ZXSpectrum48k November 9, 2019, 3:31 pm

    Some generations luckier than others. Boomers were exceedingly lucky, at least in terms of where financial asset prices were. The end of the Bretton-Woods system generated a pulse of high inflation in the 70s and early 80s. This high inflation forced nominal yields on safe assets such as Gilts into double digits and forced down prices on risky assets.

    The response was neo-liberal economic policies and, in particular, the rise of central bank inflation targeting in the late 80s and 90s. This rapidly forced down inflation and (more importantly) inflation expectations, leaving very high real yields on safe assets such Gilts. The collapse, over the last 30 years, in those real yields has caused all assets to perform well. Property prices did very well over the last 30 years but anyone who just invested in long-duration Gilts in the late 80s would have generated returns of 9%/annum. You didn’t need to take risk to generate good real returns.

    By comparison, Millennials are faced with some of the lowest safe real yields recorded since records began. The last time safe real yields were at these levels was at the end of the Gilded age, prior to WW1; the 1930s, prior to WW2; and the late 1960s, prior to the end of Bretton-Woods.

    This is nobodies fault. It might be helpful, however, if Boomers stopped implying it was their hard work that got them where they are, when for most it was just luck that they entered their best earning (and saving/investing) years when real yields were at a 150 year high. In contrast, Millenials probably feel the are rowing upstream because they are rowing upstream. It’s exceedingly unlikely they are likely to see 9%/annum returns from safe assets like Gilts, or property. With few (unaffordable) DB pensions, they are going to have to take their chances with equity heavy portfolios.

  • 46 Mr Optimistic November 9, 2019, 3:45 pm

    @Zxspectrum. Yes, it was just luck but don’t forget the 1970s, the high inflation and high unemployment plus Thatcher’s austerity. There was a lot of worry then. Things change and hopefully will get better. The UK politicians never did have the guts to tackle the cult of home ownership ( which is still a key ambition). Don’t many of your points just come back to politicians protecting assets ( like our beloved equities) with QE?

  • 47 Matthew November 9, 2019, 3:48 pm

    @zx81 – although yields win’t be high, i dont see inflation stopping, millenials can still play their cards right by using assets that leverage that inflation, like property does, and like equity does. Millenials should be careful with boomer advice to settle mortgage debt, its a different game now

  • 48 Vanguardfan November 9, 2019, 5:28 pm

    @mroptimistic. I agree intergenerational anger isn’t helpful, but I do think that we don’t help things by being needlessly insensitive/complacent about things we have benefitted from which are no longer available (free degree tuition, DB pensions, affordable housing). Young people who get degrees are just doing the same as we were when we got degrees, ie trying to improve their life chances (yes I’m well aware of the history of the funding of higher education, and how much cleverer/harder working/altogether superior we had to be to get to university ). They are no more responsible for the policy environment they find themselves in than we were.
    I happen to think that abolishing the current system of financing higher education (ie wiping out loans) would not be a sensible policy priority, and that in many respects it is not a bad or unfair system (except that its working out to be far more expensive than anticipated). It’s a shame that here in the UK we pay lip service to the need to improve the quantity and quality of vocational training, but never actually stump up the money that would make a difference. Expanding degrees without a strategy to make them more vocationally relevant was a lazy approach, imo.

  • 49 Mr Optimistic November 9, 2019, 5:54 pm

    @Vanguardfan. Yes, I agree. I recall thinking that the changes to higher education were really a ploy to hide high levels of youth unemployment ( and opportunities) in the 80s. Think it was an open secret at the time. I think we have made a mess of education, as highlighted by all that “gold standard’ A level guff. These only make sense in terms of the university route ( whilst avoiding changes to the teaching profession). In the meantime ‘ professions’ have embodied a degree as a necessary entrance qualification, pulling up the drawbridge behind them.
    This one’s down to Maggie and the ‘death of manufacturing’.

  • 50 ermine November 9, 2019, 7:41 pm

    Of course somebody like @ermine might come along to say that slowing down … is part of the joy of leaving work

    It’s a dirty job, but an ermine’s gotta do it. The more I see of work, via what other people put up with, the more I am coming to the conclusion it is the power structure that is deeply nasty, manipulative sons of bitches who get ahead on other people’s backs and make life a misery. Combine that with the evil of the smartphone, which is a tool of oppression in employers’ hands, particularly at the lower end ZHC end.

    When the factory whistle blew, my Dad was off his blue-collar job (unless he was on overtime), and he could socialise, until it was time to punch the clock again in the morning. My career finished just as the smartphone started to come in, while a white-collar worker sometimes gives a bit of their personal time away it’s not the endless drip-drip-drip. I went to London for a non-work related shindig and one poor blighter who worked in IT was on his phone off and on even though he’d taken the day off.

    You seem to be of the impression that there is no challenge in retirees’ life. You’re still trying to get better at being human. Indeed, you can be more generous with your time and in some cases care and money when you aren’t on The Man’s short leash. Couple of days ago I got myself into the middle of a starling roost to get a great recording of the devilish row as they came in and jabbered. It took effort and understanding. No, I’m not going to be paid, but there is satisfaction in being part of a different species’ world. Next week I will help a lady chase some old pensions she may have. It’s a big wide world out there, and if the best thing someone can think of do do with their time is working then I suggest they lack hinterland.

    I was unable to imagine my current life when I was working, and I am sure I could do some things better. Nevertheless it really isn’t endless watching of daytime TV, I couldn’t watch the Jeremy Kyle show if I wanted because I’d have to cut back the bush that grew in front of the dish. I see no need to get the shears out.

    I don’t give a toss if the stats show early retirees take themselves to an early grave. I’d rather die young and a free man than live to 100 under the yoke. I’d also set against that the evidence I saw at work, that stress takes some people down in their fifties. Literally. I’ve stood behind the little pile of earth that is displaced for a former colleague and asked myself is that the sum total of a human life. He wasn’t the only one – continuous stress seems to give men (The Firm was an engineering facility and mainly male) cardiovascular trouble like heart attacks – 3 colleagues no longer there, and strokes – one who quit when his doctor said the next one would be his ticket to ride. I know of one other case.

    You don’t have to switch off your brain when you retire. Just apply it to a wider range of things, and if you can, with a wider range of people. I know people from a more diverse range of social class now than for most of my career. It broadens the mind…

  • 51 Chris November 9, 2019, 10:06 pm

    @Investor – Which block out curtains did you choose? I have been looking around too after reading the same book!

  • 52 Peter November 10, 2019, 2:22 am

    In comment 47 you wrote “@zx81” – that looks pretty disrespectful to ZXSpectrum48k.

  • 53 Matthew November 10, 2019, 7:57 am

    @oeter – lol i was wondering if oeople would notice! My dad had a black and white zx81 with 1kb inbuilt ram, he expanded it with 15kb additional ram – 15x!!!! – just shows how quickly things advanced back then, and then the spectrum had colour! But I skipped that part and was given a commodore 64 with lots of dizzy the egg games, and the cassette drive was a massive convenience over typing up code from magazines. Later on my dad bought a 286 “powerhorse’ which ran windows 3.0 which was fantastic, but windows 3.1 was just out of reach and barred me from a lot of games

    After freeserve ISP (paid dad pocket money for extra minutes) we used IC24 for free, which took about 30 minutes just to connect after about 60 attempts

  • 54 HariSeldon November 10, 2019, 10:46 am


    I’d take the Dimensional vs Vanguard study with a pinch of salt. In the US Mark Hefner of IFA has promoted Dimensional for years, I used to listen to his podcasts 10 years ago before they went the Vlog and article approach, the evidence based investor is often linked to by IFA. IFA have published comparisons with other fund companies for years and it’s a very common US approach in advertising to rubbish the competition with selective comparisons.

    The trouble with all stats is the selection bias when you are trying to make a point…

    DFA is heavy on Small and Value, Value has done poorly for years…enough said. ( it will turn some time though !)

    DFA is effectively offering active investing by using models to tilt index portfolios, it’s a black box but whilst cheaper than most active investors you pay an additional fee for access via an advisor.

    If you accept the zero sum game of active investing and that costs really matter then you can remain a Vanguard fan !

    Not forgetting that Vanguard run a lot of active funds…

  • 55 Kraggash November 10, 2019, 1:08 pm

    “– 1) in real terms house prices compared to incomes are 2.5x higher today”
    But paid for, in the vast majority of cases and for the majority of the mortgage duration, by one salary. Mostly, you got a mortgage based on your salary, and maybe taking wife’s into account. So wife had a job at application time, but gave it up for child rearing etc. Two (decent) incomes for a couple was very rare.

    Now, many, if not most, couples applying for a mortgage have two (good) salaries. More cash available = higher house prices. Probably accounts for most of the doubling.

  • 56 Algernond November 10, 2019, 2:12 pm

    @Matthew. The ZX81 RAM pack was 16K:
    (it was indeed 15K additional RAM, as it by-passed the in-built 1K).

  • 57 Gooey Blob November 10, 2019, 3:56 pm

    The ZX81 did indeed have a 16K RAM pack, I still have a couple of machines in my spare room. Not to mention several ZX Spectrums and a couple of Amigas. However, the least said about the Commode 64 the better…

  • 58 Anthony @ dividendyieldlive.com November 10, 2019, 6:06 pm

    Oh the old Speccy, conjours mixed emotions. The memory of crossing ones fingers and praying that game would load as the audio tape turned never gets dulled by time.

  • 59 Steve21020 November 10, 2019, 9:42 pm

    Well, if you’re talking about the old spectrums etc, anyone remember Oric? I think it was pretty horrendous and a year or so later, having just got my wages from some fill-in student job, I got an Amstrad 64. Then my uncle in the USA gave me books of games which I had to type in myself. I think one was a very early attempt to mimic AI, called Eliza or something similar. We had a computer game shop in town that sold the cassettes and I remember Codename Matt and a few Classical adventure games, finally with graphics. PS I can’t stand games now, but very occasionally play Duke Nukem 3D, much to the amusement and sad, understanding nods of my grown up kids!

  • 60 Matthew November 10, 2019, 9:55 pm

    I get the feeling these early computers were more luxury gadgets based on excitement than practical, if you wanted practical you’d buy a typewriter.
    This excitement is what culminated in the dotcom boom and the crash earmarks the new, slower reality, but even so since then mobiles and FANG companies have come a helluva long way and AI and quantum computing and further automation are 3 more exciting tech booms still to come, possibly outside of FANG.

    Even now if you were to put tech improvement as a % it’d still be well above inflation, i’d be curious what number we can put on it

    I remember loving CD encyclopedias!
    Generation Z wouldnt even know what a CD is, but mp3s and cloud backups are fantastic I think, I buy games on steam now, since it’ll be kept up to date and no risk of scratched disks

  • 61 Bob The Dinosaur November 10, 2019, 10:33 pm

    @Algernond I also had the joy of using the wobbly ZX81 RAM expansion pack, but I don’t think it ever occurred to me that it was actually disabling the on-board 1KB of RAM!

  • 62 Matthew November 10, 2019, 11:13 pm

    My dad said it seemed inconcievable that you’d ever need the whole 16kb typing in programs, more space than you’d ever need!

  • 63 Ecomiser November 11, 2019, 2:33 am

    @Mathew (60) Those early computers weren’t gadgets, they were toys. Kept their owners amused for hours at a time, and years in total, with very little that could be claimed to be useful resulting from it. More fun writing and debugging programs than playing the games though. 39 years later, they’re still toys.

    e-Tech has been improving exponentially, doubling every year in the 60s, then slowing a bit to doubling every two years in the 70s,80s,90, and 00’s . That’s compounding at 100% per year, dropping to 50% per year. Makes 2%-5% inflation, or even 25% inflation at its worst in the 70s look small.

  • 64 steve21020 November 11, 2019, 9:44 am

    — ‘Those early computers weren’t gadgets, they were toys. Kept their owners amused for hours at a time, and years in total, with very little that could be claimed to be useful resulting from it.’ —
    Not quite. I remember spending happy hours writing a simple program in Basic to produce prime numbers, which, considering I was pretty bad at Maths, was a great achievement at the time. Tweaking the A.I. Eliza program taught me much about how language works and a bit about psychology. Then there was a program where I had to get the Eagle lander down safely on the moon. Very educational for learning about rate of descent, influence of momentum, energy related to square of velocity etc. Then there were gambling games where I learned plenty about probability, all without touching a penny of my student grant. All on an Amstrad 64K. Eeebygum, they don’t make computers like they used to. 🙂

  • 65 Ecomiser November 11, 2019, 1:52 pm

    As I said, toys, Educational toys, similar in concept to Meccano, which taught a previous generation about engineering, and great fun working out for yourself what was already well known, but toys nonetheless. I learnt quite a bit about ballistics programming a tank battle game, and quite a bit about compact programming ripping off Jet Set Willy.

  • 66 Berkshire Pat November 11, 2019, 3:43 pm

    Ah the ZX81 wobbly RAM pack. I couldn’t afford the official one, which was about £50 I think, so got a cheaper one for ~£35. Still a lot of money in the early 80s
    They may have been ‘toys’ in that you couldn’t really do any useful real world work with them (word processing, spreadsheets etc) but I learned a heck of a lot about programming, and also built my own I/O board to turn things on and off from a program

  • 67 Derrick November 11, 2019, 5:21 pm

    Income inequality is only one relevant measure.
    As others have pointed out wealth inequality is important as is the relatively fixed costs of living (linked to wealth through housing costs) affecting those on lower incomes more.
    More worrying for me is the reduction in inter-generational mobility in the recent decades. Your parent’s earnings have always been the biggest predictor of your income, but this reduced substantially in the post-war period. The trend is now back the other way.
    It’s hard to defend inequality based on merit, when the evidence suggests it’s getting harder to escape your parents socio-economic position.

  • 68 ermine November 11, 2019, 11:09 pm

    > Ah the ZX81 wobbly RAM pack. I couldn’t afford the official one

    Me neither. I built my ZX80 at university, managing to get it working first time, which for soldering God knows how may chips was remarkable, and wire-wrapped a 16k RAM pack at my first company. That RAM took a lot of buzz-testing to get right.

    > Those early computers weren’t gadgets, they were toys. Kept their owners amused for hours at a time, and years in total, with very little that could be claimed to be useful resulting from it.

    I’m not so sure. There were things you could do with those that you couldn’t do with the tech of the time. That crappy ZX80 plus RAM board helped me with some analogue filter design. Sure, I could have done it with pencil and paper and a calculator, but it let me iterate a few different versions quickly.

  • 69 John @ UK Value Investor November 14, 2019, 6:17 pm

    My Spectrum 48K was definitely a toy and nothing but a toy. And thanks to Daley Thompson’s Decathlon, I have several destroyed joysticks to prove it.

  • 70 Rosie December 1, 2019, 9:53 pm

    @Chris You want blackout Duette blinds with side channels. Worth every penny. Eye masks only go so far.

    They block the horrific street lighting and we now sleep better and have stopped clenching our teeth at night (which resulted in tooth loss and a crown and the blind cost is less than the dental work, if you need another way to look at it).

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