What caught my eye this week.
There’s a story in ThisIsMoney about what’s apparently the first-ever retirement interest-only mortgage that’s ‘fixed for life’:
The over-50s deal from Hodge features a fixed rate of 4.35 per cent with no term limit, meaning the borrower will never need to remortgage, or risk falling onto a standard variable rate.
The unique deal is a type of retirement interest-only mortgage, a relatively new type of home loan that lets a borrower take out a mortgage and then only pay back the interest each month.
We could have a spirited debate about the pros and cons of this innovation, but it actually sparked another thought.
These retirement interest-only mortgages have been a bit of a flop. They were introduced as a way to help stop the many people who took out interest-only mortgages in the housing boom from having to leave their homes because they’ve not actually been saving the capital required to pay off their mortgage.
Apparently only a few hundred people have signed up to them so far, even though there are tens of thousands of people who would appear to be in need.
Perhaps even 25 years isn’t long enough for some people to have a lightbulb moment – or maybe they all have a cunning plan?
Not all oligarchs
What I found myself musing on though is whether financial services firms will similarly start innovating for people at the other end of the spectrum – modestly financially independent and asset-rich early retirees?
I’ve already explained how hard it was for me to get a mortgage, despite my technically not needing one. I was an ultra-low risk for banks, but they wouldn’t look at me because I didn’t fit their profiles.
Similarly, blogger ermine has explained that as an income-poor early retiree he might as well not exist in the eyes of many financial services companies.
The financial independence community sometimes ponders what would happen if it became mass-movement. Would the capitalism that makes it possible fall over?
I wouldn’t hold your breath for an empirical answer to that question. But on the level of day-dreaming it’s fun to wonder how financial services might be reshaped by a widespread shift to extreme-saving and ultra-compounding.
If you were granted one wish from the financial services industry for something for the likes of us, what is the first product or service you’d ask for?
My biggest FI demon – status anxiety – Monevator
From the archive-ator: Why a little passive income from a side project is worth a lot more than you think – 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
Lloyds and Barclays face billions of pounds in new PPI claims costs – BBC
‘Never-ending saga’ of Brexit continues to hit property prices, with more falls predicted – MoneyWise
Bedtime browsing fuels nighttime shopping trend at John Lewis – Guardian
Low fees not always good value for pension savers, says report [Search result] – FT
California approves potentially influential bill that turns gig workers into employees – CBS News
French-style cap on working week in Britain unrealistic, finds study – Guardian
End of era: Passive equity funds surpass active in epic shift – Bloomberg
Products and services
Is Grandad’s stamp collection worth anything? – ThisIsMoney
Ratesetter will pay you £100 [and me a cash bonus] if you invest £1,000 for a year – Ratesetter
Banks hold £1.2trillion of our savings as we miss out on £1billion in interest each year – ThisIsMoney
The world’s first Vegan-friendly ETF is here [US but noteworthy of a trend] – Veganuary
Homes with a perk for sale [Gallery] – Guardian
Comment and opinion
“My boss lets me set my own salary” – BBC
Immutable truths and arguing with fools – Morgan Housel
Mercedes and me – Humble Dollar
How this 26-year old Amazon employee saved $120,000 in less than four years – CNBC
Robert Shiller: What people say about the economy can set off a recession – New York Times
Michael Burry trashes index funds – are we screwed? – Mr Money Mustache
There’s no running away from my worst-ever birthday present – MoneyWise
Why are so many fund managers men? – Behavioural Investment
The financial Turing test – Of Dollars and Data
Naughty corner: Active antics
Everybody was Kung Fu fighting [Geeky deep dive into the ‘passive bubble’ debate] – Albert Bridge
How the WeWork IPO unraveled – Musings on Markets
Are Woodford woes an opportunity for patient tech investors? [Search result] – FT
The modern bear trap – Demonitized
Mitie disappointment or Mitie dividend potential? [PDF] – UK Value Investor
AIM dividends jump 23.9% year-on-year to record levels – ThisIsMoney
This political crisis now goes far beyond Brexit. Our very democracy is at stake – Guardian
Even the Tories admit it: only duty free can get us through – Marina Hyde
Boris Johnson’s Week of Weeks has been a thing of wonder. We will not see its like again – Independent
Canvas of lies: what Dominic Cummings’ dress sense tells us about Brexit – Guardian
Kindle book bargains
Period Power: Harness Your Hormones and Get Your Cycle Working For You by Maisie Hill – £3.49 on Kindle
Liar’s Poker by Michael Lewis – £0.99 on Kindle
Elon Musk: How the Billionaire CEO is Shaping our Future by Ashley Vance – £1.99 on Kindle
ReWork: Change the Way You Work Forever by Jason Fried and David Hansson – £1.99 on Kindle
Off our beat
What if we stopped pretending we can avoid the climate apocalypse? – The New York Times
Black hole at centre of galaxy is getting hungrier, say scientists – Guardian
Legendary oil tycoon T. Boone Pickens has died – Institutional Investor
“Learn from the mistakes of others. You can’t live long enough to make them all yourself.”
– Matthew Syed, Black Box Thinking
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