Weekend reading: Park the car, fuel the ISA
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“I presume nobody wants to go to bat for no cigarettes!”
Only an evil person would do that.
So, cigarettes are a good thing, when they bring pleasure to the user, and the (health) cost of using them is negligible. For example, some enjoy a last cigarette before being executed. Above a certain age, the pleasure of good cigarettes exceeds the cost of life-expectancy reduction due to the vice.
I’m middle-aged, and remember reading a 1960s book of woodwork projects for boys when I was at school (it was an old book then, I’m not yet ancient). One of the most intriguing was a wooden cigarette-holding box for terminally-ill patients, connected to the mouth by flexible tubing, so that a weakened patient could still enjoy smoking tobacco without setting fire to his or her bed.
It was a starkly rational solution to the problem of dealing with imminent death. These days, puritanical and virtue-signaling health zealots have banned smoking and fast-food from our hospital sites, so that those experiencing the last few days of life have no chance to enjoy a final cigarette or Big Mac.
I tend to find that the way people react to the idea of cigarettes ever being a good thing tells me a great deal about attitude to risk, rationality and economic thinking. Perhaps this is that About Duke was trying to convey to the general public in her book “Thinking in Bets”.
Great article ……
As an ancient Monevator (80) investor that lives deep in the countryside with his wife I have to confess to many “Cs”
We both have cars-necessity-distance/weather/independence
She (not me) has smoked from birth-now same age as myself-tried stopping once or twice but the risk of a mental breakdown caused by withdrawal pains was too much-too late now
Had 3 children -all flown the nest and independent
On the plus side my latest car is a hybrid so driving much slower at no fuel cost as often as possible
Mortgage free cottage
A worthwhile retirement was achieved in spite of everything-so far !
xxd09
“Add in a shift to electric vehicles, and our roads could be very different – safer and more pleasant, and with far fewer empty cars crowding up the pavements – in just a decade or so.”
I may be getting old and cynical, but isn’t there a risk that we are replacing the cars on the pavements with cars on the road.
If we’re essentially dropping the inconvenience of time on the road to be very low (presumably I can read, eat, work or even sleep whilst the robotaxi gets me there) then I can see the demand for roadspace jumping enormously.
A journey relaxing whilst my automated robotaxi takes me to and from the heart of London sounds idyllic compared to almost 2hrs each way on a mix of public transport (especially when it all goes to pot as the east coast mainline did on Thursday evening).
As others have the same idea, the 2-3hrs it currently takes to drive in will only rise.
Of course when I get there, if it isn’t taking fares, then it’s probably cheaper to have the robotaxi cruise around slowly, with everyone else’s, rather than pay for a parking space.
In fact a night in a well equipped slow moving self driving car is then probably a lot cheaper, and more pleasant, than an overnight stay in a tired London hotel.
I’m not saying the development can’t be a good thing, but I suspect it’s going to be a bumpy road (sorry!) of unforeseen consequences and need some forms of management/road pricing etc to get there.
An internet search on cycling dropped me on MMM, which led me to the idea of FIRE and eventually the good offices of Monevator!
MMM can puts the case for utility cycling better than I can, but a glimpse around the early retirees in my cycling club (admittedly a self selected group) speaks volumes.
Long time lurker, first time commenter – the paywall’s working! About time I contributed given the value Monevator’s provide me over the past decade.
Regarding the three C’s – like a lot of big city parents it’s actually the arrival of one of them that’s finally precipitated the purchase of another.
Like you we both moved to London for our careers and have enjoyed a car free life ever since.
However without family nearby our emergency childcare plan for when they’re too ill for nursery has been to buy an on the day open return train ticket on the 7am out of Waterloo (£180 each time) so parents can look after the little one and we can work remotely. It’s actually more economical to get an electric car on salary sacrifice (£350pcm) than having to get a train twice a month with no notice.
Regarding autonomous cars – they’ve been a few years away almost as long as fusion power has! Big difference between a single taxi service which has a backup connected to another AI (all Indians) versus replacing today’s entire fleet.
> The car becomes part of your identity — your freedom, your autonomy, your adulthood.
Hmm. Have you used public transport out of London? Self driving cars may solve this, they could do wonders for the fortunes of country pubs. London public transport is perfectly serviceable, frequent etc. I actually did own a car in west London many years ago and would agree, it was a right PITA and i often had to walk 100 yards to where I could park the thing, and try and remember where that was, which was easier when I was younger 😉
Outside London the bus services pack up in the early evening and even the taxi services are ratty, presumably because the business case is marginal. Perhaps Waymo will shift penetration deeper into the sticks. I don’t see the point of owning a self-driving car, and indeed car ‘ownership’ seems to be trending to rental/PCP whatever. Which matches the depreciation characteristics of EVs better anyway.
I don’t disagree that there’s a lot of psychology around car ownership. but you miss out on an awful lot of interesting stuff and ease of life outside The Smoke without one.
If you buy a cheap older car on a 0% purchases card and balance transfer when needs be, could be much cheaper to run!
To me a car saves precious time more than anything
I do agree that self driving cars will make ownership less necessary, and they could take themselves off to be valeted and charged, and that there’s no thinking time in the braking, and humans aren’t perfect themselves, so I can see a day when humans eventually won’t be trusted to drive
Country Life.
Where I live, large village/small town in rural Somerset…..
Buses.., 1 every 2+ hours from 7.30 till about 18.30. Nothing on Sundays.
Taxis…, Uber hasn’t reached here, it’s still your local man with all their opinions.
My current car…, 2006 Yaris 1.0 3-cylinder, 50+ mpg without trying. Won for £995 on Ebay nearly 6 years ago. I do the oil changes, and servicing. Anything that involves using a breaker bar, it goes to the local repairer. Repair costs plus MOT’s tend to average out at around £350 a year. Insurance for me is typically about £250.
Road tax £165.
In my younger years a lot of money went on cars. A Porsche 911 whose 12000 mile service and heat exchanger replacements cost £2000 in 1988 is one of the more extreme examples.
For me now, a car is a practical necessity. The independence and freedom aspects, the emotional bits, are much diluted. As it happens, over the back fence of my (well, the landlord’s ) garden is the local bypass. It’s the railway line that closed with the 1960’s Beeching cuts. I’d love to be able to just hop on a train to the smallest city in England. By car, it’s just a grind.
I’m also outside of London (Greater Manchester), which means public transport is great – so long as you want to go in/out of Manchester centre, but impossible from one surrounding town/village to another. M60 ring road and all its tributaries (A34 for me) are constantly gridlocked. In practice, what should be a 15-20 minute drive actually takes an hour, so that means 2 hour round trips to commute or visit elderly relatives are routine. I (and everyone else I know) loathes driving, and would happily swap. WFH was a blessing, but seems to be regrettably out of favour (with bosses).
Much as I wish a Waymo-style service could solve this, I don’t think it answers everything: particularly too many people “needing” to be transported in a limited geography at peak periods.
So many advantages in self driving cars that I feel they will inevitably take over. This year, Waymo surpassed the safety record of human drivers. And it is still learning. Fewer drunk/ under the influence/ uninsured drivers/ scammers/ speed trap evaders/ distracted people on phones… on the roads should result in fewer accidents. Cheaper transport costs, no need for a parking space, transport on demand. What’s not to love!
However, I suspect that economics will mean that this service will start in the big cities, fair enough, but living in rural Cumbria, with no Uber yet, this don’t mean a thing. Also needing to tow things regularly is an obstacle to ditching a vehicle. The fact I love the combustion engine and vintage cars is irrelevant, I mean, who owns an actual horse to do work with now, they are mostly for fun.
Bring it on, it will improve life when I can no longer drive perhaps.
JimJim
@JimJim > Fewer drunk/ under the influence/ uninsured drivers/ scammers/ speed trap evaders/ distracted people on phones… on the roads
hey, I want Waymo to take me and some mates out to country pubs, there’s no problem with drunks on the roads, just not behind the wheel 😉
Having taken a ride in a Waymo in Phoenix late last year I also believe they are the future. The most impressive thing for me was how decisive the autonomous driving was – there was no dithering about lane changes or pulling out of junctions. It was far more confidence inspiring than many human drivers. After a few minutes of novelty my party and I soon forgot we were in a robo taxi and just carried on our regular conversation.
I wonder are autonomous vehicles going to increase or decrease road usage? Certainly it means less need for parking at destinations, but practical pick up points will need to be expanded
I think I first heard about this on a podcast but it appears Waymo have been using foreign labor as remote assistance personnel, located in the Philippines, in the use of it’s vehicles in the US, which calls into doubt it’s safety statistics.
The information was shared during a hearing held by the Senate Committee on Commerce, Science and Transportation on Wednesday, Feb. 4
https://uk.news.yahoo.com/waymo-exec-reveals-company-uses-200425072.html
I was talking to a friend who had an electric car, and how having that makes solar much more worthwhile than it otherwise would be, if self driving then decreases EV ownership, we may be in line to later lose some of that push to solar
Back in 2023 I went to VAMS (verification of autonomous mobile systems) conference in Paris. My impression was that the field of autonomous assurance was ‘nascent’ playing catch-up with the huge advances in AI capability. The associated software is inherently difficult to test due to the size of the operational domain (i.e. the range of inputs) and the black box, stochastic nature of many of the algorithms involved. It did make me think, ‘what assurance evidence would I need to see’ before getting into something like a waymo taxi as that is very much an example of a safety critical system, opposite end of the spectrum to a hallucinating LLM helping me write an email? Would be super interested to know others thoughts on that. Also, if anyone could elaborate on what ‘safety record’ actually means?
@all — Some very interesting points being raised here, especially the contrary possibilities (such as the tension between EV and solar installation, albeit I think we’re going to keep ramping solar up anyway, and that’s partly for economic reasons). I would say that the discussion about the self-driving facing insurountable challenges is over though, in that it’s proven technically to work with Waymo, at least in limited use cases in cities, and I personally know a dozen people who’ve taken them without incident. (I won’t go to the US under the current regime so I have to wait for London…)
Waymo cars are very expensive though so there may well still be economic headwinds if the price doesn’t come down a lot with their very bespoke and pre-mapping heavy rollout.
The alternative vision from the likes of Tesla and Wayve are autonomous cars that generalise immediately to any road network anywhere. That is the big unlock, clearly, and probably fair to say that route is yet to be proven.
@JtE — I think you’ve demonstrated something that can be good about cigarettes, not that cigarettes are good. A thinking in bets framework would assign weights to all the ‘goods’ and all the ‘bads’. And given that the ‘bads’ are very bad with cigarettes I’m confident they’d outweigh the goods, albeit I agree the downside probably lessens over 70 years old. (Though I’m not sure about that, sure less time to ramp up your cancer risk but perhaps they have more immediately negative consequences of others sorts on aged lungs…?)
Re:., Link. SpaceX is basically a huge meme stock..
From that.. “.. Shares in hot IPOs are typically doled out mainly to big institutional investors such as banks and mutual funds, but SpaceX reportedly may allocate as much as 30 percent of the IPO shares to retail investors ..”.
I’ve read elsewhere that what may be in prospect is for existing investors to be able to sell their shares on the first day of trading, ie, no lock-up period.
As a lock-up period aims to protect against downside volatility on the first day of trading, this all sounds somewhat dodgy, and rather looks like retail investors are about to be stiffed.
On the Self driving / EVs / Solar interaction topic there is Mercedes’ long promised solar paint that effectively turns the car itself into a solar panel. The ultimate breakthrough for self driving EVs would be solar paint applied to roads and cars drawing power from the road surface
Re Cigarettes, I had a boss who argued that whilst they were net bad on an individual level, they were net good on a societal level. His theory was that nicotine briefly sharpens the brain, which leads to lots of useful breakthroughs. Said smokers mostly then all die early, which compounds their societal benefit – short sharp lives ended before they troubled the welfare state. There’s a kind of perverse logic in there somewhere?
p.s. @BobbyD — Forgot to say thanks for signing up, doubly so as you’re already a long-time reader, cheers!
Welcome to the Monevator hive mind @BobbyD 🙂
@Vroom #20: that’s the premise of ‘Yes Prime Minister’ “The Smoke Screen” episode (January 1986) 😉
@AoI #19 > there is Mercedes’ long promised solar paint that effectively turns the car itself into a solar panel.
Don’t take press releases as gospel. The UK’s annual insolation is ~1000kWh per square metre. Let’s say that Merc is 10 sq m* and gives you a good 5 miles / kWh because Vorsprung durch Technik, yes I know that’s the other lot.
So you got 10000kWh per annum you so you get 2000 free miles. Wait but what, solar panels are not 100% efficient, let’s give you a very generous capacity factor of 20% and that’s 400 free miles, which I’d suggest is not worth the Sturm und Drang. But it makes a terrific story.
*a typical rooftop solar panel is about 2 sq m but they are angled at a better pitch to the sun, though I suppose you could park your Merc on a sloping driveway with North up to increase the efficiency a tad
@ Delta Hedge #22, that was an enjoyable rabbit hole of YouTube clips, thank you. On the full episode, did they also make the point that nicotine briefly sharpens the brain, which has led to lots of useful breakthroughs?
Watching those clips, you could easily make the case that Children are a net societal benefit too. Which leaves Cars as the true villains of the piece!
Cigarettes as net good on a societal level – 1) passive smoking. 2) Big Tobacco waging PR war on the evidence of harm lest it impact sales. Tactics so effective they were adopted and improved upon by the oil industry. Marvellous.
@TI – About these dozen cities you could live without a car. Where are they then? 🙂
@Toombsey nails it. It’s fine so long as you’re sticking to the main transport arteries converging on the city centre. But surely few other UK cities have the fine mesh of connections for which London, NYC and Tokyo are famous?
These numbers from the article are madness:
“Once you’re spending $700/month on a car payment plus insurance plus gas plus maintenance, you have to convince yourself you want it.”
You don’t have to spend anything like this. You can. But you don’t have to.
@TA (#25)
From some experience, Birmingham, Nottingham, and Leicester have (in descending order) reasonable intra-city public transport links – none are as good as London though.
I have never owned a car (living in a non-London city within walking/cycling distance of work) – for tricky cross-town (i.e., non-hub) journeys, we use a taxi (if in a hurry or after 11pm), walk (if within 2-3 miles), or navigate multiple bus journeys (all now on ‘smart’ fares and now, amazingly, with a reduction in the capped fares). In 2022 in the UK, there remained about 22% of households without a car so on first glance it is not that an unusual position. However, I note that the fraction is 32% in the poorest fifth of households and 7% of the wealthiest fifth, so perhaps more unusual for moneyvator readers!
Average cost to run a car in the UK is apparently £3500 per year (including depreciation), but I’m sure there is a lot of variation in that.
A quick search suggests that smoking has a deleterious effect on productivity, mainly through absenteeism.
I was in my 30s before I owned a car. Before that I lived in big cities and much like @AlanS says above used a combination of train/bike/walk/rent. Where I am now public transport is reasonable into town, and free now that I’ve come of age, but there are a lot of journeys that would be difficult/impossible/ really expensive without the car.
We’ve always bought cars for £2-4k cash and kept them for at least 10-15 years. Maybe we’ve been very lucky with them but our fixed cost of ownership is much as @Trufflehunt says, at most £1k annually including depreciation for around 10k miles on average (not including petrol of course ). I suspect it will be hard to improve on that using the self driving car model, and once you’ve locked yourself into that you’ll be at the mercy of the operators in relation to costs. It will be interesting to see how the market develops. For the people who lease it probably won’t make so much difference.
Googling around gives estimates of the annual cost of car ownership in the £2,800 to £3,500 range. So chunky, but admittedly a little lower than where I’d benched it mentally. Perhaps I have fancy taste, after all. 😉
I wonder if people are accurately accounting for all the costs? My family members forever seem to be forever hit for £500-£1500 bills for their (aged) cars. A bit like how if you own your own home the boiler will hit you with a £500 call out because an expansion vessel blows and then four months later there’s a mysterious leak coming from some flat roof.
Unlike cars that mostly waste away to zero though, property values tend to advance to offset these ongoing costs.
I’m very happy to believe life is better with a car in my cities I think I could live in carless. It would be easy for me to live in say Oxford, Cambridge, Bristol, Bath, Brighton, Edinburgh, the list goes on. Indeed I have lived in some of those places without a car.
But of course when you do you (a) position yourself for a carless life and (b) live like a person without a car. Totally get why both are outside of the car-owning mindset.
I used to muse in my old and (more?) pretentious days that I didn’t really understand the modern world on a visceral/intuitive level because I didn’t drive a car. Like I was playing one of those video games where you keep encountering regions or characters that don’t quite make sense or that you cannot access because you’re yet to discover some special trinket. This is a car-created world no doubt. 🙂
Also I think the busses are cheaper in London, artificially subsidised, a week megarider for Slowcoach where I am is about £25, over a year that’d be say £1k perhaps, which is roughly close to adding my insurance (£270 per year) + about £50 a month petrol (600 per year), however there’d also be some depreciation (say 600 a year on an older car) and importantly the opportunity cost of the money tied up. Parking costs where I live is negligible, but would be more in London – so ownership is more expensive, but the busses out here are once an hour (quicker to walk than catch the bus sometimes), in that time/ with my saved energy I could do overtime. There’s also the safety of cars Vs bicycles/motorbikes, when there’s potholes everywhere hidden by puddles, car doors, drain covers a bike could slip on, etc
“Googling around gives estimates of the annual cost of car ownership in the £2,800 to £3,500 range.”
This looks about right (including fuel and depreciation) judging from my expenses tracker.
I guess my cost of car ownership then is roughly that figure minus:
– Transport costs for non-car options.
– My hourly rate for screwing around waiting for buses
– Increased cost of living in the city centre or on a plum bus route
– The intangible cost of loss of personal liberty 🙂
For sure, you can live without a car, many people have to, and I did too back in the day.
I try to now. I can cycle into the two city centres near me quicker than I can drive there, once you take trying to find a parking space into account.
Electric bikes seem to be a bit of a game-changer already for people who are confident enough to use ’em.
Bristol has laid down hundreds of miles of cycle lanes and it’s a pleasure to ride around the city centre now. Sadly those cycle lanes aren’t as well used as they might be.
Strangely, other journeys would be terrible without a car. If I want to go to my doctors then I can drive there in 5, cycle there in 15, walk there in 45, and god knows how many bus journeys it would take.
I suppose everyday amenities were much closer in most places before cars. A couple of years ago, I accompanied an elderly relative through their childhood neighbourhood. 70 years had passed since they lived there. The post office, greengrocer, butchers were all gone. People lived in those buildings instead. You could even still see the old signage on a couple of places.
So I guess to live without a car in a place where most people have ’em can be tricky. Or a fun challenge for a FIRE type.
I recently WA a friend who has 2/3 Aston Martin’s.
I’d totted up all the vehicles we’d owned in 35 years driving:
– 21 cars (inc 4 perk cars)
– 6 motor bikes
– 2 motorhomes
My lifetime depreciation cost was about £80k (ex perk cars) which I didn’t think was too bad. My friend was most upset and insisted I should try harder (I hope he didn’t work out his number).
I’m not doing the lifetime holiday sums!!!!
@Vroom #24: not that specific point, no, but I do enjoy Sir Humphrey explaining how smokers are national benefactors laying down their lives to save on state pensions and opening their wallets to HMT through tobacco duty. Something of real life version of Logan’s Run….
@TA #25: I hate smoking viscerally, but you have to hand it to the tobacco industry, they’ve been good to their investors (whilst being a disaster for their consumers and wider society). Vice really does pay. Bessembinder found Philip Morris was the best single performing stock over the whole period from 1926 to 2025 IIRC. A 2.75 mn fold return (that’s not a typo, 275 mn percent) which was 16.3% CAGR for a century with dividends reinvested.
Funnily enough, the consensus view is that the smoking ban just makes the incumbents more lucrative. Every smoker knows about Marlborough Lights. But a lesser know brand that can’t advertise, not so much. The law of unintended consequences (the second most powerful one after compound interest 😉 )
Re: the Jason Zweig WSJ piece on real TIPS yields (e.g. 2.4% p.a. for a TIPS ladder now): can’t help thinking that there’s signal in this, and not just noise. The bond market is often wiser than the manic mood swings of equities when it comes to forward indicators. More inflation risk? More default risk? More elevated rate risk?
@The Investor #28 tickled me that you had to sub as Maven to your own site to read the WR comments. On the cars £4k p.a. doesn’t seem a terrible price to pay for freedom. Today I used mine to visit someone in hospital, go shopping, do some electrical work as a volunteer, and pick up a grass trimmer and an earth spike clamp from Screwfix. All of these places I have done on a bike, but doing it all in one day, I’d be run ragged.
However, it is possible to live without a car if you choose your place well. Particularly if you can use a bike. Where I lived in Somerset quite a few friends didn’t have cars and indeed couldn’t drive. But they missed out on using some of the great outdoors, and were stuck in some cases for getting to the railway station after about 8, and I gave a few lifts to A&E.
London is a another country, they do things differently there. OTOH you’re paying a big cost of living premium for being able to live without a car well, in terms of rental/house price premium, but also weirdly in the cost of things like decent food – you can eat exceedingly well in London, but it’ll cost ya, and I’m not particularly talking eating out.
The Morningstar piece should be required reading for any investor. As the good Prof. Bessembinder says, the evidence he has researched provides arguments for each of the opposing ‘camps’ here, both for index diversification and for concentrated stock picks. But, regardless, the vehicle of the actively managed mutual fund (or OEIC here) is not run or regulated to succeed. It is no surprise therefore that it doesn’t. If it can’t, it won’t. This is even before we get into the structural changes to market liquidity and price discovery (i.e. both reduced) from passive flow; which just makes the funds’ position even worse.