What caught my eye this week.
When my co-blogger The Accumulator told me about a new investing game, Build Your Stax, I was excited.
This educationally-minded simulation features all the asset classes – even individual stocks – and runs over a 20-year period.
A review by Allan Roth made it sound like The Matrix for money nerds:
Players will see high-flying stocks and learn that some may continue to fly while others will crash and burn.
They will encounter bull and bear markets, and learn the emotions and responses that accompany each.
Exciting! Would I be so bowled over I could swap my risky hobby of active investing for the virtual version instead?
Stax includes assets other than just shares, so it promised to be more than just a ‘pin the tail on the riskiest company’ paper money game.
Stacking the deck
Sadly, Stax didn’t live up to my hype.
Because you live through 20 years of market returns so quickly, you don’t really experience the emotional highs and lows of losing even fantasy money, as Roth suggested.
In fact it’s hard to even follow which assets are doing well, beyond a stark profit or loss line.
The individual stocks part is especially silly. There’s no data on the companies, and their prices whirl around seemingly randomly. I accept share moves might look that way if you’re not following companies closely, but whether a company – or its shares – does well is not random over the long-term, it’s related to earnings.1
That said, one neat aspect to Stax is it uses real-world data sequences for its asset classes returns – and it doesn’t tell you what time period you’re living through in advance.
The share prices aren’t really random, then, although they might as well be because you’re given no information about the companies.
More importantly, at the asset class level sometimes (usually!) a simple index fund beats everything. But sometimes you’ll wish you stayed in CDs (basically the US equivalent of our fixed-term savings bonds).
I did beat the computer, but I didn’t feel that proved I was the new Warren Buffett.
Oh, and this screen took the biscuit for me:
I’ll take my chances on a bear market, but I can’t envisage ever letting a marriage imperil my wealth.
For all my moans Build Your Stax is a fun way to spend 20 minutes. Give it a go and let us know what you think in the comments below.
From Monevator
How to buy and sell index trackers – Monevator
From the archive-ator: 10 things I’ve learned from being an active investor – 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!2
£15bn pensions windfall: Are you due some after court ruling? [Search result] – FT
US economic growth too robust for the Fed to bow to wobbling markets – Bloomberg
Nine out of ten Black Friday deals cheaper at other times, says Which? – Guardian
Investor says sorry for huge losses [No, not THE Investor…] – BBC
Young are saving more for pension, but many still confused and over-optimistic – ThisIsMoney
Graduates trapped in unpaid internships, study finds – Guardian
Simon Lambert: Five takeaways from the Bitcoin bubble – ThisIsMoney
Mainstream FIRE mini-special
Can anyone retire in their 30s? [Author emailed us, I missed it! 🙁 ] – Guardian
Want to retire early? Get FIRED – Daily Mail
FIRE: Live frugally and retire early – BBC
Products and services
40 ways to get free money – Moneywise
Smart meters rollout labelled a ‘fiasco’ as consumers face extra £500m bill – Guardian
Building Societies reconsidering the case for 100% mortgages – ThisIsMoney
Ratesetter will pay you £100 [and me a bonus] if you invest £1,000 for a year – Ratesetter
Remember last December, when people paid a 2x premium to invest in a Bitcoin trust? – Bloomberg
Homes for sale on British islands [Gallery] – Guardian
Comment and opinion
Yards after contact – The Reformed Broker
The dangers of maximization – The Research Puzzle
What if active investing wasn’t zero sum? [Trick premise but interesting] – Morningstar
Simple isn’t easy [Dividend tax bit is US taxes] – Humble Dollar
Change almost always comes as a surprise – The Financial Bodyguard
Rich people’s problems: There’s no such thing as free banking [Search result] – FT
Why is divorce expensive? Because it’s worth it! – Financial Samurai
Meb Faber outsmarted by his childhood stock picks – Market Watch
At the intersection of art and money – Abnormal Returns
Saving regret is common, but it’s events not laziness that got in the way [Research] – SSRN [h/t Abnormal Returns]
There’s still a case for owning Berkshire Hathaway – Brooklyn Investor
The rise of zombie stocks – Factor Research
Brexit
Brexiteer coup flops [Does anyone believe their magic thinking anymore?] – Spectator
Brexit political declaration: What you need to know [Search result] – FT
What happens if MPs reject the deal? [Video, great explainers] – TLDR News
“…a deal so unimaginably bad that no-one wants it. Not the EU, not the UK, not Brexiters, not Remainers, not Tories, and not Labour. No-one wants it and we’re told to do it anyway.” – Ian Dunt
EU officials meet to finalize agreement – BBC
Dominic Raab: Theresa May’s deal worse than staying in EU – Guardian
Shocked – shocked – to read Tommy Robinson is now an advisor to UKIP – Guardian
Kindle book bargains
Why You? 101 Interview Questions You’ll Never Fear Again by James Reed – £1.99 on Kindle
Thank You for Being Late: An Optimist’s Guide to Thriving in the Age of Accelerations by Thomas L. Friedman – £1.99 on Kindle
The Spider Network: The Wild Story of a Maths Genius and One of the Greatest Scams in Financial History by David Enrich – £1.99 on Kindle
Tiny Budget Cooking: Saving Money Never Tasted So Good by Limahl Asmall – £1.09 on Kindle
Off our beat
High score, low pay: Why the gig economy loves ‘gamification’ – Guardian
The simple joy of ‘no phones allowed’ – Raptitude
There’s seldom any traffic on the high road – Farnham Street
‘Sci-fi’ plane with no moving parts flies successfully [Video] – BBC
Computer vision: How Israel’s secret soldiers drive tech success [Search result] – FT
And finally…
“Never buy anything from someone who is out of breath.”
– Burton G. Malkiel, A Random Walk Down Wall Street
Like these links? Subscribe to get them every Friday!
- The reason even those who study companies and their prospects closely can’t beat the index is not because share prices are a lottery. It’s because the market mostly does a good job at figuring out the earning’s outlook for different firms, and what to pay for them in advance. And the reason stock price moves can be described as ‘random walks’ is because the current price supposedly encapsulates all the known information about a company, making the next piece of information – and price move – in theory a crap shoot. [↩]
- Note some articles can only be accessed through the search results if you’re using PC/desktop view (from mobile/tablet view they bring up the firewall/subscription page). To circumvent, switch your mobile browser to use the desktop view. On Chrome for Android: press the menu button followed by “Request Desktop Site”. [↩]
$7k for a “big ceremony”. Ha, ha, ha.
The FT won’t let me in, even using a private window. Even after trying to delete cookies.
One big advantage of tracker funds is that you don’t need to know too much about what’s going on in the world to invest.
Stock markets are about 10% down on where they were 2 month’s ago but nobody is any particularly the wider about why – and fewer still predicted it.
So I am happy not paying stax of attention to individual shares – it’s a bit of a waste of time and there are people in the industry who have access to the same information or better much earlier tha you and are paid for.what is a hobby for the rest of us.
Dont know why you are so shocked at UKIPs new advisor. After all their past leader Mr Farage has used the advice of Joseph Goebbels on one of his Brexit posters.
@dearieme right-click and Open in Private Window works for me with the FT. On an antediluvian piece of kit known as a computer, that is. If you’re using a smartphone then all bets are off…
Talking of which, Raptitude is on the money re said piece of kit. It’s turning us all into Solarians IMO.
I’m using a Mac (computer). What is this “right click” of which you speak?
@Grislybear — Um, I’m not shocked. 🙂
https://www.youtube.com/watch?v=yPY6Pp4kmxQ
@dearieme – try the ctrl key and clicking. Depending on if you’ve a track pad or which Apple mouse, there’s also normally a 2 fingered contortion that results in the same effect.
“I’ll take my chances on a bear market, but I can’t envisage ever letting a marriage imperil my wealth.”
You obviously have not been blessed with children! 🙂
Well those FIRE articles seem to be somewhat better thought out than the first wave we had a few months back. They still didn’t actually explain the process,except the one guy that slept in one half of his living room, because he was renting out his bed room.
Why did they feel the need to find detractors though? Why would any financial advisor, advise against building up a massive cash cushion?
And someone call Suze Orman (financial guru) is against it because you’ll need $10 million to retire.
I’m guessing she advises people to never retire, ever, and spend their money on drugs and hookers?
I’ll take my chances on a bear market, but I can’t envisage ever letting children imperil my wealth.
😉
(More contentious I know. 🙂 And obviously if I hankered for them I wouldn’t care about imperiling!)
Because we only live once. I don’t say that glibly or to dismiss FIRE, obviously.
But our mortality (and unknown time and date of reckoning) is absolutely on the other side of the ledger sheet.
Me and @TA discuss this quite a bit, he being more of the hardcore frugal FIRE mindset. As you’d expect, and he’s written, he’s got himself to the ‘money/stuff doesn’t buy happiness’ place necessary for successful FIRE-ing.
In contrast, I’ve definitely lived below my means for 25 years (https://monevator.com/live-like-a-graduate-student-and-save/) but I do spend more on current me than he does.
It’s a personal balancing act; perhaps it would be better if the articles framed it that way rather than so adversarially but that’s the way these things are posed today I suppose.
Agree they were better articles, particularly the Guardian one. I saw an email from the journalist a few days too late and kicked myself when the piece came out. 🙁
Interesting with the FI/RE article in the Guardian that the scribbler more-or-less reported the facts and didn’t bring pre-conceived prejudgment into it; possibly because TEA challenged him to not do a hatchet-job. I think it’s the first neutral mainstream article on the philosophy that I’ve yet seen here in the UK, which seems to be a shift in mentality. It was in an obscure section though, even on the day of appearance, so still relegated to the ‘obscure interests’ category, which to be fair is probably an accurate guess of the level of interest from the general public.
Given the unrelenting march of austerity’s effects on general prosperity, the public may well pay more attention as they increasingly look for creative ways to hang onto their standard of living. FI/RE’s time has come, but I predict it will be more by force than choice and the irony is that the longer it takes for people to cotton on, the less effective it will be as an overdue recession kicks in globally.
@TI
I understand all that, but these people are supposed to be responsible financial experts (sorry not sure which word to add the inverted commas).
They should be advising us to be saving anyway.
They should if anything be jumping on the bandwagon advising everyone to save more.
@Grislybear / TI,
Regarding Tommy Robinson, if you dig a little, you may find you’ve been duped by the MSM
@algernond
Go on then ill bite. Do tell.
But @TI, if you’d responded to the journalist and been included in the Guardian article, then your anonymity would have been jeopardised! (I think you had a close shave.) There were some people stalwartly putting up a defence for FIRE, e.g. Frugal Foxes. I tried to see if I could identify anyone from the blogs, posting under other names, but couldn’t. But it ties in with Indeedably’s recent conspiracy post – some/most people just don’t believe it could be true.
The Guardian FIRE article seems pretty balanced. It gets across the idea of improving your financial resilience and cutting out unnecessary consumption rather than FIRE itself or the more cultish aspects such as the pop psychology. The article is honest enough to underline that FIRE on low income is very hard. I think the negative comments from the IFA and Suze Orman actually helps make the FIRE bloggers look far far more sensible. The IFA comes across as a twit and Orman as totally deluded given that $10mm (£8mm) would put you at more than twice the level of wealth needed to get into the top 1% in the UK.
My gripes are the fact that “25x” rule is yet again given as a one line answer to a complicated problem. It also seems to only want see the leanFIRE side of the community; no fatFire examples are given. Extreme frugality probably does come across as a bit hardcore.
” I can’t envisage ever letting a marriage imperil my wealth”
“Marriage was in essence the ancient and mediaeval substitute for social security for females. On an isolated basis, the practice continued into modern times” (A very brief history of the world by AN Hospitaller).
@xeny, ermine. Thanks for the offers of help; my problem is that using a private window has done the trick for many months and no longer does. I’ll console myself with the thought that the Racing Pink has gone so far downhill that I probably shouldn’t worry about it. I’ll miss Merryn though.
Solved! It was the cookie monster.
Naked greed took me to “£15bn pensions windfall: Are you due some after court ruling?”
As usual, the answer to a newspaper headline question falls on the spectrum between Pretty Bloody Unlikely and No Sodding Chance.
Re: the FIRE special. Forgive me for probably sounding ignorant – I don’t know much about FIRE. But it strikes me that almost every FIRE person is someone who started this in the last 10 years, and so is doing this in the belief that stockmarkets are pretty much one direction.
What will they do if markets go down by 40%?
I’m sure there’s a snappy FIRE answer, but I’d like to know it, as I just don’t get what contingency there is for such an event.
@zxspectrum48k
“The Guardian FIRE article… gets across the idea of improving your financial resilience and cutting out unnecessary consumption rather than FIRE itself or the more cultish aspects such as the pop psychology.”
I agree. Its good to see more mainstream media attention for FIRE but I do worry that it will encourage some bloggers to plug so-called “life coaching” – see example here:
https://simplelivingsomerset.wordpress.com/2016/11/02/sic-daily-grind-wait-fi-andy/
Work a few more years if required
@tom_grlla
This is where all the discussion about safe withdrawal rates comes from – the idea is you take a portfolio, expose it to historic market movements at a given level of withdrawal, and see if it remains in positive territory, or if you end up starving on the street. Look at firecalc.com for an example.
@xeny
It’s US based but this one certainly helped focus my mind – http://engaging-data.com/will-money-last-retire-early/
Thanks for the links this week, TI.
I very much enjoyed the “yards after contact” idea — made sense straight away after reading the title, but nonetheless was entertaining to read Josh winding himself up into a righteous swearing fury.
I enjoyed the smattering of FIRE articles out in the mainstream, and agree with the rubber-keyed one that it would be nice to see a little more of the “earn more, pay less in fees” full-fat flavour than the frugalista how-I-starved-myself-to-retirement and live in a tent. But then middle classes failing to fall into lifestyle inflation isn’t great news, perhaps? Nice to see a bit more of the “doing what I want” rather than “doing nothing” coming out. True wealth is doing what you want with your time, not having money and being miserable with it.
And on that front, I really enjoyed the Farnam Street (not heard of them before: thanks TI) article on turning the other cheek. Really insightful about the psychological traps that are available to us to get drawn into expensive confrontations (sidebar: DDL in Phantom Thread’s dealing with conflict over breakfast had me in stitches). It’s something that I have coach drivers (and myself) on in aggressive road situations — focus on your objectives (safety, destination) and not the perceived tussle with another person. The trick is to imagine what an observer might say about your situation and to take yourself out of the ego-driven response. Incredibly hard to do face-to-face, I imagine.
And @dearieme – I empathise with your FT issue. I’ve finally stropped out of my subscription after many years. Not because of the content, which I enjoy, but the slipperiness of their renewal process got up my nose — not fatally initially — but when I got in touch with their CS teams, it was so badly dealt with that I was left with no option but to cancel. On the bright side, in doing so, I realised that they had overcharged me last year on renewal. Apparently I can expect a cheque in 21 business days by way of refund. Not so sharp when it comes to paying the money back. None of this stopped me from reading James Max on his private bank account, which I shall look forward to teasing him about next time I’m on air – quite simply my paper cheque book is looking not nearly antiquated enough without a leather-clad binding… As ever there’s a serious point in there — the hours of frustration dealing with ISPs led me to one that is more expensive but has excellent service, and I suspect that I’m just not there yet with banks.
Personally speaking, marriage has actually been rather good for my wealth. We both earn and costs are split. I think statistics also suggest similar trends.
https://www.worldfinance.com/wealth-management/for-richer-for-poorer-the-economics-of-marriage
@Lord — Agree marriage makes economic sense (though long term cohabitation has the same benefits.)
It’s divorce that’s a killer.
Friends call me pessimistic, even as 40-50% of marriages end in divorce.
Nobody would accept those payout terms for, say, insurance. Look how we argue over annuities, which are certain.
I’m too old and vaguely worldly wise enough now to rule anything out, but if I ever did get married it’d be fully a moment of madness / weakness. 😐
If you’re too old and worldly wise then the chances are you’d figure out how to dodge divorce. These things aren’t (entirely) random happenstance nor uniformly distributed!
@TI (28) “It’s divorce that’s a killer”.
I’m neither a lawyer nor legally qualified but a carefully drawn prenuptial agreement, meeting the necessary tests, should give you financial protection, unless the agreement is deemed to be “unfair” in the light of subsequent circumstances or is shown to be detrimental to any children of the marriage.
Marriage may appear to be a risk but, as they say, sometimes in life you just have to roll the dice!
Clearly not entirely random but why take the (high) chance? I don’t believe 10% of people would enter marriage if it was a new fangled craze. I think it’s still embedded in culture because it was once so important. Looked at rationally in 2018 it’s like a bonkers cult practice.
Zero upside unless you long for marriage for whatever reason except keeping hold of someone you love who will walk if you don’t. Various downsides, of varying degrees.
I don’t really understand why anyone who has ever spent time with a human being — inconstant and imperfect as we all are — would voluntarily sign up to crazy bilateral pseudo binding commitments with poor odds of success. Especially not in a society that no longer even really half heartedly demands it.
I’m not that old and I’ve seen a ton of marriages fail (almost half of weddings I’ve been to) often with horrible consequences made worse by the unreality of marriage and needless state involvement.
I’m famous amongst my friends for staying friends with exes (I’ve even been to their weddings!) so I’m not (quite) an embittered misanthrope. 🙂
P.S. Oops, yes, I’d try for a prenup in any moment of madness. But I don’t really trust them.
P.p.s. UK law is far worse than say German law as I understand it. An ex German girlfriend thought I was about ranty until she compared and contrasted!
@TI (32) – compare and contrast
For info: https://en.wikipedia.org/wiki/Prenuptial_agreement
@Mathmo re “I very much enjoyed the “yards after contact” idea — made sense straight away after reading the title, but nonetheless was entertaining to read Josh winding himself up into a righteous swearing fury.” I enjoyed this article too, but unlike you, in the end, I felt I didn’t have much of a clue what he was on about. He seemed to be criticising index investing:
“Trillions of dollars have come into ETFs, index funds, passively-oriented financial advisors, robo services, etc, all of them pitching some form of ‘I promise not to do anything for you and the cost to you is practically free.’ That’s a great pitch when the markets are higher every year than they were the previous year.”
And contrasting this with the benefits to advised clients, I suppose, whose advisors can help them go the extra yards in difficult times, like the football stars he lionises. Then there were side rants about poorly managed funds that have collapsed. So the case for taking advice was rather undermined… And he never really presented a case for it anyway, just presented the image of making extra yards. Perhaps he’d oiled his writing gears a little too liberally before sitting down to write the piece, at least that’s how it reads to me.
@IanH — While he’d possibly push back at this, Josh and some of his crew (eg Michael Batnick, who blogs as The Irrelevant Investor) are among a contingent who believe index investing as popularity practised involves buying markets because they are presumed to go up, so why not index, kind of blindly. This is contrasted with (good) active management that is supposed in this view to be more tactical, and even more so with (good) paid financial advice, which is presumed to talk people out of selling in a bear market.
Josh has obviously talked to a lot of clients, and I don’t doubt he feels this is a valuable, even vital, role on that capacity. Set against that, it’s also his job. It’s hard not to believe in your job.
I’d make some observations. Firstly, people who use advisors will benefit from good not poor advice. But not everyone uses or needs advisors. It may be that people who become clients of Josh and his peers are prone to “doing things”.
Second, the passive investing we discuss here is not blind. 🙂 Eg We repeatedly have discussed the inevitability of crashes, and we’ve repeatedly made the case for an allocation to bonds and cash, despite invariant pushback!
Finally I’m not even sure the evidence is there that index investors who invest blind without even the likes of us or Josh sell up in bear markets. Vanguard produced data showing only a tiny percentage of users of its funds in a US tax advantages account sold out in 08/09 (apologies, I forget the specifics and am out on phone!)
In my experience it’s active investors who ‘do things’ that do things in bear markets. All my friends I encouraged into trackers in the early 2000s just kept sticking money away through the drawdown.
So yes, awesome rant and a viewpoint/experience. But the indexing piece is definitely more nuanced.
@TI Thanks for your additional insights on the article. I too started regular investing early 2000s and plodding on through the big recession didn’t put me off at all. I find it is a more scary now that I am not salaried anymore.
The ‘blind indexing’ issue is worth further thought. I saw a comment the other day that claimed that there were now 240,000 ‘indexes’, if I recall correctly. It seems any old Joe can make one up, so you can imagine this might not end well.
“…and am out on phone!” gosh – you must have nimble fingers.
I understand the UK divorce laws tend to split 50:50 as default starting position. It is why the ‘poorer’ spouse often pushes to divorce in the UK.
I agree though, if you are basically two single people who live together then clearly marriage is not worth it. Even if you are single people with a long term agreement to only ever date each other. Where marriage does start to make some sense is if one half sacrifices themselves financially, the obvious example is raising children. I don’t think cohabiting offers the same level of protection to someone who, let’s say, gave up a high flying career 15 years ago to raise children. There is also a point of view that would say making it hard to split up is desirable, again when kids are on the scene. I remember an article by a housewife with children complaining that she didn’t have the time or energy to make herself look as good as the young single girls in her husbands office. Perhaps a bit dated now, but if her husband could just run off with the younger more glamorous girl in the office with no real reprucusions or consequences then why wouldn’t he? Will someone think of the children!!!
Of course, it always helps to marry someone of similar means and earning potential as you as in the modern world that reduces the risk quite considerably. …..
@TI I’m always wary when people are quick to discount ancient and hugely popular cultural conventions. Occasionally there’s a method in the madness. That’s also the reasoning behind me being an atheist, but not a militant-atheist a la Dawkins.
@Richard – “if you are basically two single people who live together then clearly marriage is not worth it.” au-contraire, as this excellent story demonstrates -> https://www.theguardian.com/world/2017/dec/23/two-heterosexual-irish-men-marry-to-avoid-inheritance-tax-on-house
@The Rhino — I suspect marriage is possibly good for society (and definitely *was* good) and is very possibly still a good option for the party taking massive amounts of time out and/or simply a lower earner / bringing most assets to the arrangement.
However that doesn’t mean it is good for me (/many of us). Exactly like living below means is good for our bank accounts but would be bad for our shares if everyone did it. 🙂
I think I’ll post on this.
@TheRhino- very good point. Though it moves into the inheritance tax debate – why should a partner receive more than the usual inheritance tax allowance tax free? They never earned that money. Unless again they provided something to the relationship that can’t be measure in money. Such as child raising. As you can see, marriage really feels like it is designed to facilitate child rearing.
@Richard “marriage really feels like it is designed to facilitate child rearing” yes – i think that sounds about right. On a slight tangent, but in line with marriage is for the kids idea, I have a feeling that having kids could be considered a form of taxation. Like an enormous cost borne by the parents for the greater good of society, i.e. the kids are essential to keep the show on the road. Its quite an easy argument to make that those choosing not to have kids are pretty reliant on the bunch that do choose to have kids. Things would get pretty precarious within a decade or two if the supply dried up. So to carry on the theme of kids as tax – not having kids is a really good tax-scam. You get the benefit of a functioning society at a fraction of the cost. You just have to shell out a bit of tax for state schools and stuff like that. Going child-free is the ultimate form of societal free-loading. I think its a pretty good strategy if you can keep on top of your Darwinian urges..
I’ve been reading this marriage debate, and I have to say I’m quite surprised by the opposition.
I’ve always thought of marriage in the legal sense, as a recognition of the family unit. 2 people pooling resources to bring up a child, buy a house, look after each other etc.
I suppose you could say that the welfare state, women’s participation in the labour force and house hold labour saving technology has negated the advantage somewhat. But I still think theres a good case to be made for the state to recognise that 2 people want to pool their resources in that way.
Obviously if you pool resources, you have to divvy them up again when you want to part ways but that to me seems reasonable.
Obviously if you aren’t happy with that, don’t get married, I’m not sure you can extend that to being anti marriage, which I seem to be detecting an current of?
Now I know that I’m missing a massive amount of cultural and emotional baggage there, but is that relevant?
I’m now wondering whether TI’s post on the marriage subject is going to cause more (trouble and?) strife in the comments section than a Brexit opinion piece.
How will TI reconcile his “Remain in the Union” position on one subject with his “Never get in” on the other? Will he bundle them together into a one-size-fits-all “Never Get Divorced” anthology? Are kids the future of the human race or the scourge that will deplete all our natural resources? Stay tuned to find out…
*subscribes to Monevator for 48% of another year*
@Mathmo – “Are kids the future of the human race or the scourge that will deplete all our natural resources?” haha – both of course!
@Ben — As I’ve already stated, this isn’t about what the state should or shouldn’t do. It’s what an individual (of the kind who reads Monevator) should or shouldn’t do. 🙂
@Mathmo — Sadly, simultaneous — or even future — very close relationships with any or all of more than one of 28 EU nationalities is one of those things officially banned under the marriage treaty.
@TI
True but hopefully, eventually, maybe, perhaps governments should theoretically match the views and wishes of the people. So in that sense the difference between “I wouldn’t” and “you shouldn’t” matter.
Very interesting discussion on divorce/marriage. Seems like there is mileage in a post about it.
I think TI is being consistent with his views r.e. brexit and marriage. He is clearly very supportive of freedom of movement. Marriage often, though not always, creates a limit on such ‘freedom’.
If you are going to do a piece on marriage and divorce, for heaven’s sake stop nattering about “UK law”. There is no such thing. Scots Law is far saner on divorce than the Law of England and Wales. Of Northern Irish Law nobody outside Norn Ireland knows a thing.
P.S. I had hoped that “Yards after contact” would be about the effect on your garden of an asteroid strike. Alas it was just bog standard blowhard rubbish. Maybe he plans to run for President.
@Ben — With respect, I think that’s an extremely simplistic view of what governments can deliver. We’re in the middle of seeing what they can/can’t deliver with respect to “the wishes” of the people with Brexit right now. Clearly plenty of people don’t care for marriage, although not a majority. So any State legislation is a compromise.
Moreover, I’ve already given the frugality example. Our economy would grind to a halt if everyone pursued early retirement / financial freedom, as popularly understood. (It might be a new economy would emerge but that’s another issue). I recall you expressing surprise that mainstream media would question why anyone should *not* to pursue FIRE the other day. This marriage example is exactly the same. Maybe it would be bad for society if nobody married (maybe) but that’s above my pay grade for the purposes of this website. 🙂
I’ve made no comment about what the State should support; nor have most of the other comments here. (I’m not saying it’s irrelevant or you shouldn’t have brought it up — just that your “anti marriage” sentiment detection isn’t applicable at state level, applied to my comments. 🙂 ).
People underestimate how useful marriage was for individuals in the past compared to now. Obviously as has been stated hugely useful for women who have kids (and possible still is) but also for childless women and men, in the sense that you wouldn’t be shunned / burned as a witch / blackballed from the golf club / distrusted / snubbed at church when everyone was observant / overlooked for promotion as a CEO or MP / etc etc.
Take children out of the picture especially, and all of this has gone today.
To someone without kids, or to a main breadwinner with kids who would rather s/he control as best they can what proportion of their wealth goes towards them rather than the State/courts (which is still much protected by, for instance, child support for non-custodial offspring), it’s deeply unattractive to my eyes, unless, as I have happily conceded, it appeals to someone for folksy/cultural reasons.
Indeed it’s really only useful now as a voluntary opt-in to a self-destruction pact, on the grounds that having opted into the pact you’ll be less likely to trigger the self-destruction.
Some may find that kind of motivation attractive, but it’s not for me. 🙂
@TI, @The Details Man,
On a different matter re children and wealth, is there any chance of an update/fresh comparison of child Sipps? I know Monevator did something a few years back, but an update that also includes lots of specifics (e.g. minimum amounts) would be welcome. A quick googletrawl a week or two back suggested (only) a few providers (Hargreaves Lansdown, A J Bell, Tilney Bestinvest, Fidelity, Alliance Trust, Killik & Co, Hartley (?)) and it would be useful – to me, certainly, but perhaps also to others – to have an overview of the differences between them. It would also be good to get a sense of which is easiest for a grandparent to operate and/or contribute to. Yes, legally the child’s parent or guardian is supposed to operate the account, but where that person wants to delegate it upwards to their own parent it would be helpful to know how each provider’s login and payment arrangements etc facilitate or impede that!
There’s the psychological aspect? Removing optionality can save one from the paradox of choice? The path to happiness can be a counter intuitive one..
https://www.ted.com/talks/dan_gilbert_asks_why_are_we_happy
Or as Dumbledore succinctly put it,
“The trouble is, humans do have a knack of choosing precisely those things that are worst for them.”
On the marriage or not debate, I have no strong views on whether the state should or should not support marriage or does or does not. However, in 1983 when my long-term partner and I decided to have children, and she to be out of the workforce for at least a slug of time, we looked at the then rules and practices.
It may well have changed since then, but at the time there were a whole bunch of things that were automatic if you were wed and difficult or not automatic if not.
There was so much of it that we just looked at each other and said “you know what; it’s just much easier to get married”. So we did.
So far so good.
@tyro re SIPPs.
The problem with SIPPs is they tend to have relatively high fees if you have a small amount invested.
You do have access to many/most personal pension options as well, and these can be cost effective for smaller amounts. I opened a personal pension for my kids with Aviva through Cavendish Online, which I think is still one of the cheaper ways to start a child’s pension (this was about 6 years ago). It is definitely simple, the main downside being a fairly restricted fund choice.
Its now getting to a size where I am looking for alternative flat fee options. This is tricky as you rightly point out not many online brokers provide SIPPs, (I think you can add Charles Stanley Direct to your list). Most of them have a % fee for funds (my preference) which rules out pretty much all of the list for my purposes. I think the best I have found so far is Halifax. Other than that I may wait until child turns 18 when there is more choice.
@Tyro — An update / follow up does sound look a good idea, and potentially a great subject for the fastidious Details Man! 🙂 It’s another of the subjects that’s fallen between the cracks with our Great Book Folly. 😉 Anyway, watch this space.
@TI
Simplistic view, govt reflecting peoples views?
Yes probably. I thought the couching of my language would have made clear how wedded (ha) I was to that argument.
My post 42 set out my stall on my mental model of marriage. I thought it fairly uncontroversial?
From my point of view my partner and I are a team, we divide thing equally, she’s the main breadwinner, but I don’t think that was clear when we first met, we have kids and aren’t married. I probably would be better off if we were married, but I don’t think my views have changed since I was expecting to be the major breadwinner.
Your view (if I’m interpreting it correctly) that your money is your own, and you want to keep it that way, just seems to me to be the antithesis of a long term relationship.
I hope you don’t think I’m being rude in the above paragraph, I hope it comes across as measured. These things quite often get lost in non face to face conversation.
It’s not so much that (though in principle it amounts to the same thing I suppose) it’s more the risk of what happens if/when it goes wrong, and the lack of control. Will become clearer after my article.
Tell me about it! 🙂 But this discussion is fine as far as I’m concerned, thanks. 🙂
[Just edited last line to be a bit clearer!]
Ok good 🙂
I look forward to the article.
You just need to make sure you marry above your station – perhaps a member of the royal family. Than marriage makes perfect sense.
There is also the question of fairness as well as risk. Cohabiting allows the more clued up partner to set things up in a way that they would keep everything in the case of a split. Throwing their partner onto the street. Marriage allows someone who hasn’t put much in to take a lot out. So how do you go about setting up cohabiting in a way that is fair to both parties?
@Richard — You know, I think of myself as a somewhat bright person but this realization came to me very late in life. i.e. That I could contemplate marriage from the financial risk point of view by marrying someone much better off. Only realized this probably five years ago or so. Doh! 😉 On the other hand, non-trivial if you’re a man, especially when my generation was learning the ropes. There’s a bunch of other reasons why I wouldn’t like marriage but it would help with that one.
Yikes. I think trying to reduce marriage to an analysis of its effect on your balance sheet is the epitomy of knowing the price of everything but the value of nothing.
Frankly, to my mind, the emotional benefits and risks of committing to (what you hope will be) a life long partnership far outweigh the financial considerations – as with all human relationships, money is fundamentally not the point (oh yes, sure it can be used to benefit or destroy a relationship, but it’s a tool and not the underlying issue).
I personally believe that as a legal institution it has some benefits/protections for children, and I find it hard to understand how some people can take on the (lifelong, highly risky, and definitely involving loss of control – financial and emotional) commitment of children more easily than the commitment of marriage. If there are no children then there is much less point imho (although it’s a good IHT avoidance strategy).
I think it was Hamlet who said there are more things in heaven and earth, Horatio, than are dreamt of in your spreadsheet.
Re. marriage. I have been badgering my parents for years now to get married.
They are in their late 60s/early 70s.
Two grown up kids in late 30s/early 40s.
Majority of their friends and wider family assume they are married. They wear “wedding” rings. My mum uses my dad’s surname for everything except official documents e.g. passport.
So why bother getting married at this late stage?
Security for my mum. She stopped working 40 odd years ago when she became pregnant with me. My dad was the main breadwinner. His pensions pay all the bills. My mum is a WASPI woman who has had her state pension pushed back year after year. I know that my dad’s pensions won’t continue to pay out for my mum when he passes, because I’m the one who helped sort out the annuities etc. If he goes, she will be reliant on me and my brother helping out, plus whatever state benefit she may be entitled to at that point. She doesn’t get any state benefits now either, because my dad is considered to be supporting her.
Luckily, they are both in good health, as things stand. They don’t have any objections to getting married. They know it makes financial sense. It’s just inertia at this point.
On the one hand, I joke if they don’t get their bottoms in gear, I’ll be signing them up to ‘Don’t tell the Bride”, but on the other, I seriously worry about it. For women of a certain age, marriage really is a form of financial security.
On a completely unrelated tangent, any thoughts about the recent AJ Bell ipo? I have a LISA with them, so have been invited to apply.
@TI I remember the words of advice I received when young – you can fall in love with a poor person or with a rich person. So make sure it is a rich person. Although it sounds like gold digging, if you believe there are a large number of people who could be your soul mate it makes sense that some of them will be rich. Of course, you have to be able to meet them which is not always easy or cheap. Polo anyone?