What caught my eye this week.
Hey there, thanks for stopping by. I appreciate things are a bit quiet around Monevator the past couple of weeks. We are having a summertime hiatus.
My co-blogger The Accumulator is on holiday. Quite the opposite issue here – I couldn’t do anything for the blog beyond comment moderation until Thursday night, as work has piled up with a particular client.
Meanwhile erstwhile contributors The Details Man, The Greybeard, and Lars Kroijer all seem to have said their pieces for now. Our bench is not so deep these days.
So far so gloomy. The good news is that this could be the calm before the… well, not the storm exactly but at the least what weather forecasters call ‘changeable’ conditions.
Because while I’m busy currently, my professional workload is set to get significantly lighter in a few weeks. I’m not sure how much time will be redirected towards Monevator. But certainly: some.
This is an interesting time for the blog. We’re still standing after 13 years. (Tiny trumpets!) Traffic plateaued years ago though. (Tiny violins!) People come, get the simple message, and leave. Or, starting around 2015, they never leave social media or YouTube to find us at all.
(If you’re wondering where all your favourite independent websites went, it was thataway.)
We’re at a low ebb financially speaking, too. Long-time readers will recall this was always the weakest leg of this operation. Post-Covid-19, that gammy leg has fallen off altogether.
No matter – it all sets the stage for some overdue introspection. (And it means we might FINALLY get our book finished…)
Asset allocation is not the only fruit
I was ruminating about what a passive investing / money blog should aim to do in 2020 and beyond when I came across an interesting post by Robin Powell at Humble Dollar.
In his article Robin outlines what people really pay good financial advisors for. It struck me most of his points could apply equally to our kind of investing website:
Good financial planners will play a number of pivotal roles for their clients, none of which is found on the typical job description.
Here are seven of those roles:
Guide. Most people know what they want or, at least, know what they don’t want out of life. What’s often missing is a sense of how they can get there. A planner provides an independent plan, showing possible pathways and the tradeoffs involved in each.
Teacher. Many people’s sense of what drives investment returns comes from the day-to-day noise in the financial media. It’s all about investment products and short-term returns. A good planner shows clients what drives long-term returns and connects this to their life.
Coach. It’s easy to make financial resolutions—to save more, to spend less, to grow wealth, to leave a legacy. It’s not so easy to keep them. At their best, financial planners will ensure goal accountability, keeping clients on their desired path and talking them off the ledge in anxious times.
Organizer. Our lives are busy. Jobs and family commitments leave little time for dealing with the minutiae of insurance, portfolio analysis, rebalancing, cash flow analysis and so on. A good advisor takes care of this complexity and frees you to focus on what really matters to you.
Filter. The problem right now isn’t gathering enough information. Instead, we’re overloaded with the stuff. The challenge is finding the right information for us in a form we can digest. A good advisor becomes a trusted source and an information filter.
Counselor. Few big choices in life are simple. There are always competing imperatives. Planners who can help you cut through the noise and focus on your underlying values are worth their weight in gold.
Sentinel. The best financial planners are not only looking at your circumstances as things stand today, but also what might be coming over the horizon to change all that. And they are mindful of your legacy—the welfare of future generations and how your wealth can keep working beyond your lifetime.
Go read the full post at Humble Dollar, especially if you’re in the market for financial advice.
And Watch This Space.
This website is much more geared towards evolution versus revolution in its DNA, so don’t fret if you’re already a fan.
It is, however, time for some modest mutations.
Have a great weekend!
From Monevator
From the archive-ator: What is liquidity? – Monevator
News
Note: Some links are Google search results – in PC/desktop view you can click to read the piece without being a paid subscriber. Try privacy/incognito mode to avoid cookies. Consider subscribing if you read them a lot!1
‘Eviction day’ looms for cash-strapped renters [Search result] – FT
British visitors to France could face two-week quarantine on return – Guardian
Just Eat to stop using gig economy workers – BBC
Landlords must reveal if tenants they try to evict have been affected by coronavirus – ThisIsMoney
Grand Designs host Kevin McCloud’s housing firm at risk of insolvency – Guardian
John Lewis’ £35m flagship store in Birmingham will never reopen after Covid closure – ThisIsMoney
[Click to enlarge the insights]
Products and services
HSBC hits flathunters with loans clampdown – ThisIsMoney
Why cash has been piling up during the pandemic – The Economist
New crop of ETFs offer creative investing ideas for volatile times [Search result] – FT
Sign-up to Freetrade via my link and we can both get a free share worth between £3 and £200 – Freetrade
Will taking a coronavirus payment holiday affect your credit score? – Which
1930s UK homes for sale [Gallery] – Guardian
Comment and opinion
Allan Roth: 500,004 reasons I’m not buying gold – ETF.com
Doing next to nothing is a very underrated strategy – A Teachable Moment
The hardest investing questions to answer – A Wealth of Common Sense
How to use an impact/effort matrix for your finances – The Simple Dollar
Do as I don’t – Humble Dollar
The rise and rise of ESG investing [Infographic] – Visual Capitalist
Mentally re-framing bull and bear markets – The Big Picture
Larry Swedroe: More proof that consultants can’t pick winning funds – Evidence-based Investor
Earn while you walk – Quietly Saving
Pedal pushers: when bikes became the vehicle for a bubble – Lookout Investor
Along the curve [Wonky] – Breaking the Market
Naughty corner: Active antics
Paper shuffling to fool investors – Novel Investor
How much conviction do you hold in your investment views? – Behavioural Investment
Gold’s role in global asset allocation will keep the price above $1,700 – Bloomberg
Covid corner
Why Britain failed its coronavirus test – The Atlantic
For every three Covid-19 deaths in the UK, lockdown may have caused another two – Sky News
Coronavirus cases now appear to be stable across England – BBC
Antibody prevalence for SARS-CoV-2 following the peak in England [Research, PDF] – Imperial
Immunology is where intuition goes to die – The Atlantic
Why it took us (and the WHO) so long to understand the coronavirus – Slate
Even in a virus pandemic, Germans are sticking with cash – NPR
NYC diner traffic still 75% down [Lower cases due to herd immunity or harsh lessons?] – Calculated Risk
On pins and needles: Will Covid-19 vaccines ‘save the world’? – McKinsey
Kindle book bargains
Influence by Robert B. Cialdini – £0.99 on Kindle
How to Own the World: A Plain English Guide to Thinking Globally and Investing Wisely by Andrew Craig – £0.99 on Kindle
I Will Teach You To Be Rich by Ramit Sethi – £0.99 on Kindle
Super Thinking by Gabriel Weinberg and Lauren McCann – £0.99 on Kindle
Off our beat
The unraveling of America – Rolling Stone
Helping your pet with post-quarantine separation anxiety – New York Times
How de-globalisers construct false narratives on the back of evident truths – Epsilon Theory
Is there a future for business cards? – Institutional Investor
And finally…
“You must go on a long journey before you can really find out how wonderful home is.”
– Tove Jansson, Comet in Moominland
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Well for one, I most certainly appreciate the fact that you’re still here – my net worth would be a lot lower (it isn’t much might I add) if it’ wasn’t for this website.
Keep it up and I hope those mutations you talk off are positive 😀
Well done for keeping this going and as I said last year, I am sure many loyal readers would contribute a few pennies every month to keep this excellent site going.
It’s not just the main thread but the in the depth contribution below the line. In fact it was the comments that made me seek out the OU and SOAS finance courses (both free)
Perhaps, like Batman, MV needs a younger sidekick to eventually take over. (Firekid?)
Anyway don’t go anywhere. Please.
Well, I only discovered you a year or so ago (probably via Weenie’s blog) and I have become a regular and avid reader. I frequently trawl your back catalogue for more info (hint: if you’re ever lacking in inspiration, just update another of your older articles like you do already from time-to-time).
So, a big thank you from me: what I have learnt here has been gold dust!
The FT renters article is interesting. Anecdotally there seem to be quite a few properties coming onto the market in my area with sitting tenants. I’m guessing this could all get quite messy by the end of the year.
Over the years, I have had a couple of really bad experiences with Financial Advisors, one who was ‘impartial’ but this turned out to mean Restricted and another “chartered financial planner” who compared non inflation adjusted number with a inflation adjusted number!
Congratulations on 13 years, ‘changes‘ sound interesting, I shall watch this space with interest. As a side I must admit I do miss TheGreybeards pieces.
I sense a melancholy tone in this post.
I really value this blog. Indeed it is one of my most often check websites. In my favourites. It is the pure intelligence of the analysis that shines through for me.
This blog is wonderful. It’s actually part of my weekend. Please keep it going. And publish that goddamn bloody book! I will buy
it for all my nearest and dearest – and for a few friends.
Just putting my hand up to say thanks as well. I’m a novice in financial matters, but I appreciate your being here and am much happier getting information through your filter!
Keep on blogging! (please)
This week I listened to Pete Matthews’ interview with David Sawyer on the Meaningful Money podcast (an old episode from 2019) and I was impressed by how much respect both authors have for you guys. Monevator is brought up a few times in the interview and David mentions how honoured he felt to have his book praised by this site. Well done! I have been following this blog for some years now and I have learned a lot. Can’t wait for the book!
Another who really values the blog and also the limited attempt to commercialise it. It is a highlight of my week.
The gifted amateur(s) sharing their knowledge freely and respectful discussion below the line are rare commodities indeed. Thank you for all that you do, and if the equation has to change to make it work better for you, so be it.
The Investor, thank you and The Accumulator for running Monevator! I’ve been reading it for years and continue to learn a great deal from the articles, links, and discussion. You are the best UK investing website!
I will buy your book when it comes out.
A couple of reflections on the medium and motivation for Monevator: –
One question for Monevator is, what media would best suit its intended purpose? The Don of media studies, Professor Walter J. Ong, made two astute observations. First, with every technological revolution, the old media do not become redundant, they simply become more niche – think of the market for second-hand vinyl, for example. Secondly, every media shapes cognitive functioning, making some media more helpful for certain purposes than others – for example, the printed text allows for more detailed linear thought, compared to the spoken language.
I would suggest that a blog is the perfect format for Monevator (over and above a book or social media). The investment message of Monevator maybe simple, but there are complexities that would be difficult to convey on visual social media, with pictures of The Accumulator pouting. From my perspective, the value of the blog is not so much in imparting simple investment principles, but in applying those with clarity and whit to our changing world. It is the difference between knowledge and investment wisdom, the application of that knowledge. That is why I would go to the Monevator blog, but not a book. Lots of people have published books on the investment principles, but not many have kept on applying those principles, week-in and week-out, through the financial ups-and-downs of the market. That’s where the value lies. Numbers may have plateaued, but I suspect you have a loyal readership. They maybe niche, but they are probably the ones who have been persuaded by the investment philosophy and want a steer on putting it into practice.
That relates to a second point about the purpose of Monevator. In reviewing the blog, I guess it boils down to what you are trying to do. While the pull of numbers and money has been evident in some of the Monevator posts (who doesn’t feel the alure), what is refreshing about the blog is in its aim to offer a free, helping hand. It is a poke in the eye to the financial industry that has been fleecing ordinary folk for years. There is no pay wall, not many adverts, no vacuous clickbait attempting to sell you a book (not yet anyway!). It’s the Joe Wicks of financial blogs, giving cheery encouragements to keep up the financial burpees when the world is in melt down. It’s not the patronizing philanthropy, which casts bread to the masses and says, ‘look at my brilliance’. It says, ‘come on chaps, we can do it – and here’s some financial curiosities to tickle your fancies over your cornflakes on Saturday!’ It’s classic British understatement, which sports a mustache without the need to draw attention to it in its title.
My dear Monevator, we middle aged men are all vulnerable to a midlife crisis. Perhaps you should embrace it, go the way of the world, and blow your hard-invested cash on a racy, young hedge fund. Alternatively, you could recognize the canker, shout ‘pull yourself together man’, and keep marching on to the land of hope and glory. Hold fast my old friend! Stay strong! Keep blogging.
I think advertising would work with monevator – more than just googling about investing for those already looking but newspaper advertising, billboards, etc for those not already looking/ aware
Hello and thank you for creating this wonderful blog. Since I found you in 2015 I have been an avid reader and have applied many of the ideas proposed in this platform to improve my financial situation. The comments in your posts are also exceedingly good. I am sorry you feel a bit demotivated or disappointed. You are a big part of my weekend and certainly I am happy to contribute to keep you going in the present format. Best of luck and I hope that you make wise choices.
I just found three links that were meant to be included in the links above that I forgot to add. Here they are for anyone who has already processed the post:
https://news.sky.com/story/coronavirus-lockdown-may-have-indirectly-caused-16000-excess-deaths-study-12044923
https://lookoutinvestor.blogspot.com/2020/08/blog-post.html
https://www.mckinsey.com/industries/pharmaceuticals-and-medical-products/our-insights/on-pins-and-needles-will-covid-19-vaccines-save-the-world#
@all — Thanks for the generous comments, much appreciated and all grist to the mill. More thoughts (and sneak peaks at our thinking) at the end of the weekend perhaps.
I admire the passion on Monevator for index funds, but just how good are they I pondered? So just for fun, I did some revisionist analysis on Vanguard’s Lifestrategy 60% equity/40% bonds fund over 5 years. Using Trustnet’s portfolio tool, I plugged in a £100 drip-feed every month for 5 years from Aug 2015 to Aug 2020. Trustnet’s graph kindly illustrates how well such a portfolio compares against Aggressive, Moderate, and Cautious comparators.
well guess what? the vang60/40 beats every one of them.
Given low interest rates, some say the 60/40 portfolio is dead, but it looks pretty alive to me.
@AJ love this – It says, ‘come on chaps, we can do it – and here’s some financial curiosities to tickle your fancies over your cornflakes on Saturday!’
You should do the marketing for the update 😉
Both @TI and @TA provide great content, but I do think a large part of Monevator for me is the comments, maybe the evolution could include a curated forum?
@TI you tease us with this “sneak peak” at end of weekend
Congratulations on the anniversary
Stick with the blog, really
The book you want to write has already been written, dozens of times, since at least the 70s
The Retirement Investing Today blogger even wrote one, I think it’s free on Kindle
I even used to work with someone who wrote one (I didn’t read it)
I would happily pay a small monthly contribution if you had a Patreon. That’s what I started doing after you linked to More To That.
Good content, written from a UK point of view is rare these days. The written format is perfect for this kind of content (but arguably not for money making).
Maybe a more ‘mainstream’ section aligned to money saving type articles. How much mortgage should I take, childcare approaches, top saving accounts, energy bills etc. Each one with some sort of monetisation (mortgage / savings / energy comparisions). Investing is your USP and should continue to be the focus. But to grow traffic and revenue may mean diversifying. Of course it would be more work, keeping everything up to date and staying abreast with legislation etc. And maybe this doesn’t interest you or would water down the enjoyment of running this site.
I may not be a typical user of Monevator, but I hardly ever touch my investments (I read your stuff for enjoyment and to expand my knowledge, but it rarely drives me to change anything), but, as an example, I look for energy supplier every year, as an example. I wonder how does your broker comparison perform compared to other articles, do you get revenue for sign ups? Don’t need to answer of course….
However I know this is an already crowded space online so maybe finding a way to move the investing way forward is the answer (are you setting up as an IFA or a broker?)
Many thanks for the blog.
The advice has been almost too successful – spend less than I earn and keep my savings in 3 cheap index funds in a SIPP, left alone except for dividend re-investments. I now have less need to read all the great articles on here.
I do still come back every week for the links, it’s become part of my weekend.
If the time to write the blog is a problem / a factor in it being a low return on your work, maybe encourage community articles to be submitted for moderation/ inspiration/ release at a convenient time. I wouldn’t bother writing anything myself in that format but others might – its a potential untapped time resource
Really though once people are educated its then all about comments around the weekly links
Another message of thanks. I discovered your website via my dad who had just retired and was learning how to invest his cash. I read your articles for a year before I took the plunge and opened a S&S ISA. Having joined the workforce in the wake of the 2008 financial crisis my confidence in finance (and the world in general!) was extremely low. Now 3 years in and ~20% returns I’ve opened a SIPP to lock some money in long term.
I’ve no doubt I would be poorer without your words of wisdom. Cheers!
Please don’t give up. This is one of the more interesting places on which I lurk and occasionally comment. You (and the Accumulator) have created an immensely valuable resource and, despite not being very successful at monetising it, should be proud of your achievement and the positive impact which your blog has had on so many people’s lives.
Whilst it must be very difficult finding something new to say each week, there is a continuing value in encouraging people to stick to their guns regardless of ‘the slings and arrows of outrageous fortune’, alerting folk to new or changed investment and savings vehicles and, more broadly, to discuss current affairs in an environment relatively free of abuse and ad hominem attacks. Your weekly links summary is superb and many of the comments are of a very high quality.
I’ve a few Covid links you might like to add:
Crossreactive immune memory – https://twitter.com/profshanecrotty/status/1293344524731691008
https://twitter.com/youyanggu – pinned tweet on the role of immunity vs behaviour vs intervention on spread of Covid which follows quite neatly on to the last 10 or so comments on last weekend’s blog.
Eric Topol and Marc Lipsitch on twitter are excellent sources which I think I’ve mentioned before.
I’m another one with thanks to @TI and @TA (plus their occasional contributors). A few years it was clear that I needed to plan my and my wife’s glide path to retirement. Initially I went to a (recommended) financial advisor for a fixed fee consultation. That was helpful, but in doing the internet research to understand the implications of his suggestions I found Monevator which gave me the confidence to sort everything out myself at minimal cost. Not just your advice on the passive investing philosophy, but the very useful specific advice comparing platforms, index funds, etc.
Since then I have regularly followed what is posted and occasionally commented. For me personally the blog style is perfect, but then I am someone who just doesn’t have the patience for videos. Thanks very much, and don’t feel dispirited!
Another upvote from me.
The “Weekend reading” is a staple part of my Friday evenings/Saturday mornings.
I normally go through and open all the articles that seem interesting in new tabs and then work my way through them either in one go or slowly over the weekend.
So you are already performing the very important “Filter” or curator role for me and many others!
Thanks 🙂
I came to Monevator for the financial advice, but stayed for the insights into @TI’s and @TA’s lives, and your always-valuable opinions. I wish you both all the very best and here’s to another 13 years 🙂 !
@ The Investor
Would you and The Accumulator ever consider a Monevator Youtube channel? The creator of the PensionCraft channel, Ramin, seems to be doing well. My impression is that he does well because he is calm and analytical, has good graphics to illustrate his points, is British, clear spoken and avoids the highly strung salesmanship/bullshit artistry of the Americans and Australians who seem to dominate YT English language finance. You guys are past masters of clear, concise posts on investment matters. You could keep the blog and supplement it with a YT channel and Patreon membership.
I’ve recently increased my allocation to Vanguard UK government bond long duration index fund and Vanguard UK Inflation linked bonds fund. Both of these have been in heavy fall mode last week. While I am aware of the risk of high volotality for these funds (both are marked as risk 5 on 6 point Vanguard risk scale) I would really appreciate if someone could point my head in a right direction so I can understand why these funds fell last week.
Congrats on the anniversary and thanks again for the numerous useful, educational and interesting posts over the years – long may they continue.
Reading blogs/articles is still my preferred way to consume investing content – like @Jonathan, I don’t have the patience for videos. If you’ve ever had the misfortune to take a look at YouTube comments, you’d think they were from a radically different species from those who comment on here for quality discussion and debate!
podcast perhaps – not sure of the revenue opportunity but you have extensive / great content and its a different / crossover audience.
Probably a lot of us are set up or on the way (in no small part helped by you) and dont need/use referral links (sorry) but would be delighted to click on ads etc if we knew that action generated revenue for you.
extremely happy to pay back, just guide me.
cant wait for the monevator vlog 😉
I liked the OBR housing outlook document. Very interesting their central scenario is 11% down by end of 2021. Bad for me as a prop developer with an impending permission on a site, since I suspect banks won’t be loaning as much to cover the build costs and extra red tape which may mean I need to resell it!
Of course if you look at the graph who’d have thought the price rises in houses would have occurred after 2008 like they did, even with interest rates flat lining! I think even @TI couldn’t believe how insulated house prices were in 2012 – 2014.
I think guessing house prices is a fool’s game, but being that fool I do think it’s different this time, plus raise you Brexit transition expiry.
After all we have an elite former fire place salesman screwing up the young’s future and an elite trading secretary wanting to destroy a trade deal with Japan over Stilton!
Hey ho
Congrats on the 13 years. I only found this site around the end of 2017. I can remember going back to the beginning and reading every post from the start. There’s not many blogs I’d do that for. That’s the biggest compliment I can provide really. It must have taken me hours spread over however many weeks. My knowledge has increased enormously in that time and I am no longer scared to invest. That’s had a significantly positive impact on my future. My only criticism is that neither TI or TA contacted me from the outset to start reading real time back in 2007 🙂
This place can never cease to be. For a start, a bit like how my mum is addicted to soaps, I want to know what is going to happen in the great ‘Slow & Steady Portfolio’ saga over the next forty years.
May I also add my thanks to @TI and all the contributors to the blog. I re-organised my investments for de-accumulation four and a half years ago, following the principles set out by The Greybeard and I’m sure I’ve done better than the mish-mash of funds I held previously.
Like many others, Monevator is an essential part of my weekend reading, for the comments as well as the content.
Keep up the good work
Just adding my plaudits for what you’ve done so far and a plea that you don’t give up! This blog (and its comments, generally) are really outstanding.
Doh, *is* outstanding. (Not least because its readers are literate.)
The Saturday emails are an important part of my weekend too. You provide an essential service with a really valuable archive – thank you- make any change small.
I’m joining the others in praising your blog and your consistency! You’ve got a perfect mix of TI & TA styles of investing; reading the curated weekly list of links is part of my weekend routine, too; insightful comments from other readers, several of whom probably work in finance; endless possibilities for you to keep rewriting some of the older entries.
To highlight some things that have been meaningful to me: recent bond articles by TA, and rent vs. buy and housing posts from the TI (I’ve always rented and I’m hesitant to buy). I discovered your blog probably back in 2016 or so, soon after moving out of London. Among other things, your blog also helps me know what’s happening in the UK.
Peter. Looking at Vanguard UK Long Duration fund the price was £250.0 on 6th Aug and £240 on the 14th Aug, which is a fall of 4%. Is that the fall your referring to? if so I wouldn’t say it was a ‘heavy’ fall for a long duration bond fund. In particular now the nominal yield to maturities of Long Duration funds are practically zero, the convexity of the bond (in plain english the sensitivity to movements in rates) is much higher. So if interest rates moved from 0% to 1% the fund would fall a lot more than from 9% – 10%.
So why did your fund fall 4%? Take a look at this link. https://tradingeconomics.com/united-kingdom/government-bond-yield
You’ll see on 6th August 10 year gilts were yielding 11 basis points (virtually nothing) and now they are yielding 25 basis points (a tiny bit more than nothing) and so the price has fallen 4% accordingly. Why that’s the case I haven’t a clue (because it’s a minimal move) beyond the fact that on 4th August yields were trading at their lowest ever point. On the link reframe the time to 10 years, grab a cup of tea and then think how much your bond fund is going to fall if yields go back to where they were in 2008. Whilst I have no idea if that will happen – I suspect not – if you hold that fund you should be ready for large swings in the fund value.
In fact reframe the yield curve to all and you’ll see the explanation for a whole lot of things….house prices, p/e multiples, destruction of money, gold price rise etc etc etc. What happens next is anyone’s guess.
Make sense?
I appreciate all the hard work put into Monevator. Love the Weekend links. Please continue. Thank you!
Another well-wisher here. I often wish this blog was available before I retired (22 years ago). It’s extraordinarily well written and informative with sound counselling. I’ve benefited immeasurably. I’d miss it if it decayed.
Please keep up the good work. FOXY’s (19) Patreon suggestion is not without merit.
I really appreciate this site. I think it’s what the Motley Fool could (and should) have become, but they were increasingly keen on pushing their ‘tip sheets’. I guess central London rents needed to be paid, and it’s difficult to monetize the message ‘buy a cheap tracker and go fishing’ ….
I normally hang out on the Lemon Fool discussion boards (where the Motley Fool diaspora ended up when they shut the TMF boards) and many people -including myself- recommend Monevator as a great resource.
So, please carry on carrying on 🙂
Keep on keeping on.
Its holiday season and the world is up in the air, don’t despair.
Your class shines through and I’m sure somehow you can make it pay.
Keep on keeping on……..
@Seeking Fire thank you for this excellent answer. I did not expect so much detail. Now it makes sense to me, obviously I should be looking at yields. It’s such a shame yields have nowhere to go but up (unless they can go negative in a future? – anybody’s guess). Now I remind myself why am I holding this fund in first place, which is negative correlation to stocks (tends to spike when stocks go down) and potentially better returns due to higher volatility(risk).
I echo AI’s post wholeheartedly.
And what an ego boost from all these comments.! Can you feel the love?
Monevator is as much a part of my weekend as parkrun. Intelligent and respectful commentariat are the cherry on top.
A suggestion for easy and entertaining new content if I may: financial wellbeing snapshots. Essentially reader moneydiaries like you find on other websites but without the anecdotal fluff, just the facts and figures and some explanatory notes. I for one am very much not in the high earner bracket and have a particularly atypical situation and probably past and projected career and life path too. But I suspect I’m not alone. What and who really is normal? I’d love to know and I’d just love to read anonymised snapshots of others’ situatuons.
Much love, props and kudos as ever. Keep on trucking!
Peter. thanks. mmmm in 2011 people said yields have no where to go but up and they went down. ditto in 2018 and now again in 2020. It is perfectly feasible to me that yields can become negative. Return of capital minus something can be better than lots of volatility. Equally investors need to realise in isolation a long duration bond fund is now highly highly sensitive to changes in yield. The rationale to a hold a bond fund is as you say, they generally ying when stocks yang. but it is perfectly feasible they could also yang in line with stocks – say inflation gets out of control, investors start demanding higher yields in compensation – both stocks and bonds would start falling in synch pretty damn quickly. FWIW I have no idea if that will happen or not, it’s just a plausible scenario. I hold a fair amount of $bonds (inflation linked). My view is the risk of inflation is rising but I don’t expect to see it yet – not that I have a clue really. But I do think it is worth planning for lots of scenarios.
Seeking Fire since you have used $ character, then perhaps this graph of probability of inflation/deflation in US will interest you https://fred.stlouisfed.org/graph/?g=qIVp
During 2008 crisis many expected inflation but that never happened. Will this happen now? Hard to tell. Governments printing money like there is no tomorrow, which suggests inflation ahead but then there are other factors which actually suggest deflation, for example consumers might get into saving mode because of recession/another lockdown(s). Or another deflationary scenario where excess of printed money will be spent to pay debt/liabilities rather than on goods/services. I also hold inflation linked bonds because as you have said, it is worth planning for lots of scenarios. As for the bonds yang in line with stocks, this reminds me these scary March 2020 days when rapid fall in stocks was accompanied with equally rapid fall in bonds – negative correlation of these assets when most needed was gone and so as option for buying more cheap stocks by selling expensive bonds. This tells me that when there is a panic on the market then absolutely everything might go down and people tend to run into most safe/liquid asset, cash. What a shame that not much have been discussed (at least across blogs/vlogs I follow) in regards to this huge (temporary) bonds fall in March.
@Peter, wasn’t the effect of a mixed equity/bond portfolio during March discussed here on Monevator? https://monevator.com/diversification-in-the-coronavirus-crisis/
@peter
Many more things can happen than will happen, given no one knows what will happen … you may as well plan for multiple outcomes.
Long bonds for deflation, linkers for inflation, some $ assets are not a bad idea if the pound has problems, a whack of equities and enough cash to cover cash flow needs for a lengthy period and your pretty well covered.
The balance between these assets is the tough choice and is really dependent on your needs and financial life position.
Regarding why QE from 2008 hasn’t caused high inflation, I think essentially because it bids up long term investments the inflation it causes is spread over the future, and because the beneficiary of the printing is essentially the government rather than the public, it hasn’t gone into the economy anymore than what fiscal spending you see
I also get the feeling that with general inflation anyway leading up to 2008 you can’t keep raising the price of everything without increasing the money supply, or at some point it will choke back in a deflationary crash like it did when the money supply that there is can’t cover the high numbers everywhere. Now that we do QE it’s a steady increase in the money supply that facilitates normal inflation.
The money normal banks can print to lend isn’t enough since it’s limited by the borrowers affordability – once borrowers are maxed (as they said high personal debt levels) there’s no more road for that method of printing to keep the money supply going
Regarding gov bonds I expect that although they might go negative that their days of high returns are behind them and any return to normal will be slow, long and painful, but they will continue to have a role as portfolio insurance so much so that they may become fairly disconnected from base rates
@Matthew – but the inflation has occurred. In asset values – house prices & shares come to mind.
Btw, the Resolution Foundation piece on House Prices shows the national picture. It bears little relation to London (as has been said many times before.) Our South London house has appreciated 50%+ in nominal terms since we bought during the “depths” of the post-financial crisis dip. Still, I guess the higher they rise, the further they fall…
Peter, That’s an interesting link thanks, I hadn’t seen it. I hold the $TIPS for unexpected inflation. Like the link I don’t currently expect them them to outperform conventional bonds as of today but they could do in the future hence the protection. The YTM is -1% (not much of an investment on paper) particularly when in about twenty years ago you could get £ILG at inflation + 4% real return. In March correlations of everything went to one given the desire to sell any volatility, raise cash. In that situation as you say cash is king. That type of volatility tends not to be sustained unless say you live in situation where the future of the country is under serious debate (e.g. Lebanon). That is when gold tends to become useful. As Hariseldon says, covering a range of scenarios seems sensible. I have read, which I largely agree with, that we haven’t seen the typical type of inflation we know of due to the deflationary effects of globalisation, which could be about to reverse a bit but who knows. I do question a bit when people say there’s been no inflation though…….mmm the cost of sheltering someone (home), privately educating someone, looking after the elderly in care, buying safe income through an annuity all seems to have gone up a lot in price over the last twenty years.
@brod – indeed the things not measured by cpi have inflated… with property and bonds I wouldnt expect a fall as such so much as decreased gains in the future – property is largely linked to what mortgage/rent people can afford and how property yields against other things, so if wages dont increase much and people can’t cram into tiny houses any more then i think there will be a limit to its future growth. With regards to property too it wont be too many decades until boomers start handing them down
The Consumer Prices Index, or CPI, was first published in 1997 to measure inflation consistently across all European Union states. In 2003 the CPI became the Bank of England’s inflation target. The CPI is required by European law and ONS
has to produce the CPI to the specification of European legislation.
CPIH was introduced in 2013. CPIH is currently the governments preferred measure of inflation. CPIH includes a measure of owner occupiers’ housing (OOH) costs including Council Tax. It is otherwise identical to the CPI, although its calculation and structure are controlled by ONS and so it may deviate further from the CPI in future.
A summary of the extant basket of goods for CPI, CPIH & RPI can be found at:
https://www.ons.gov.uk/economy/inflationandpriceindices/articles/ukconsumerpriceinflationbasketofgoodsandservices/2020 with more lower-level details provided in Annexes A & B.
The baskets include most of the items that some people seem to assume are “missing”, such as school fees, nursing/care home fees, etc
@Matthew – I would suggest that ultimately property prices are underpinned by people being able to pay the mortgage i.e. having a job. And by all accounts we should expect a return of massive unemployment soon. People mistake the lack of liquidity of property, and not being constantly marked to market, with stability. And a property crash just stops people spending – no new car, holiday, lattes, make do without the latest on trend shoes, etc, etc.
I remember the ’90s crash, it was ugly and ground on seemingly forever. I knew a guy back then who worked for a firm of Chartered Surveyors in Hanover Square. While all of us were bemoaning we’d never be able to buy, he did. Great place overlooking Battersea Rise, I was so jealous. Unfortunately, the UK out of ERM, he lost his job, lost his flat, declared bankrupt. Yes, a massively concentrated portfolio of assets, but we were mid-20s, what could possibly go wrong? I hope he managed to get back on his feet. As a consequence, I’ve always been cautious of property.
I wonder if cpih also doesnt show the complete picture as imputed rents may move differently to house prices – if rates went up landlords may have to increase rents to cover the mortgage even if house values drop, and if rates drop cpih may drop even if house prices rise so cpih could be giving us a false illusion of whats happening – its all well and good to think about imputed rent if someone can borrow most of the houses value but if they can’t borrow and have to cough up a bigger deposit instead then they are experiencing the inflation on the value itself, rather than their monthly payments. Cpih practically consigns everyone to renting at best, doesn’t track the ability to buy
@Matthew:
Good discussion of the many issues around OOH at:
UK Consumer Price Statistics: A Review
Paul Johnson
January 2015
Out of interest, “ability to buy” anything has nothing to do with inflation.
@aicam – ability to buy various things would change if inflation in one sector was different to another – our ability to buy consumer electronics is vastly better than 40 years ago, our ability to buy cars vastly better than it was 80 years ago, but while those things got relitively cheaper the void was filled by the cost of hired help & basics ie food getting relitively more expensive – overall inflation balances out but within there is turbulence.
I think there is just a danger to saying “this measure covers something” when essentially its saying that the massive house price rises we’ve seen are nothing big, discouting the knock on effects for specific generations within the population – so our policy makers and maybe the public and press get a nerfed view of microeconomics
Another appreciative follower here. Like others it’s part of the routine – after Sunday brunch. Links are always decent. Cheers!
As I understand it:
a) Inflation is, by definition, a quantitative measure of the rate at which the average price level of a basket of selected goods and services in an economy changes over some period of time. That is, inflation does not reflect price paid per se.
b) Ability to buy (Atb) is somewhat more subjective and really an attribute of an individual. Atb can be related to, amongst other things, income, preferences, etc.
c) Affordability may be what you are getting at, as this often relates current average price for goods to some form of average salary or means. This can clearly change over time in the manner you indicate for houses, electronics, etc.
Thus, for example, the cpi measure of inflation for six eggs is exactly the same whether a consumer chooses to purchase their eggs from their local Lidl or Harrods food hall. Thus, this consumer choice may come down to some combination of Atb and/or affordability but not inflation.
I’d just like to add my appreciation of this blog. I’ve been avidly reading it since around 2016 when I first discovered the article on nine lazy(ish) portfolios. I then read Tim Hale’s book, ditched the hotchpotch of active funds I had with Hargreaves Lansdown and also ditched my IFA who was looking after my pension (doing a perfectly reasonable job, but not something I couldn’t do myself). I’ve saved £1000’s and am much happier with my resulting asset allocation. I’ll continue to visit the site (several times a week) regardless of any changes deemed necessary. Thanks again.
Popping in to say thanks for the blog along with everyone else. Your advice has been invaluable over the years.
Don’t give it up please. It’s a huge part of my weekend and really look forward to it.
@Matthew –
I think you’re over thinking CPI(H). It’s a general measure. It won’t all apply to you but it should give an indication of the direction and velocity of price changes. Nothing more, nothing less. So if last year it was 2% and this year it’s 4%, the prices of the basket of goods it measures are increasing at double the rate. Maybe we should expect some fiscal tightening? (Those as passive purists, should it bother us?)
A further plaudit here and as others have said your blog is something I look forward to on a Saturday morning with a cup of coffee in hand.
My first eye opener was John bogles book which was very heavy reading but totally convinced me on passive investing. This led me to this site when I was looking for more education and further convinced me to change my strategy from a large ish cash pile, over paying my mortgage and paying into my pension to investing outside of a pension as well as in one with the vast vast majority of my money now held in investments and understanding that ‘risk of loss’ is nothing to be afraid of if done right.
As a further plaudit your series on how much to invest in your pension and isa to retire early should be up for an award somewhere if one exists. It is one of the most detailed and well written investment pieces I have read and and answered a question for me I’ve been wanting answers for a long long time
Just to add my word of thanks – not sure I’d have had the guts to go it alone without all the helpful blog posts.
One of the best things about the blog is that it caters to a wide audience, from the novice to people who already know their stuff. As a relative novice, I’ve never minded there being articles that may be a bit beyond me – it helps include everyone, and I’ve learned from other readers as well as the original articles. The room for debate and discussion adds to the credibility.
I’d also say it’s a relief not to be able to access the blog on a proper website without the faff of passwords or social media (I don’t use the latter at all).
Sometimes you seem quite hard on yourselves – no need for the slough of despond.
Perhaps, post-covid, there will be an interest in insurance/managing debt – as much as investing. Is that an area you could cover?
A huge thank you from my side as well for the enormous impact that you’ve had on my financial life. I’ve been following your blog since 2010, and Monevator has been weekend ritual for me.
Power to you brother, keep writing, keep shining, keep winning.
I can honestly say Monevator has been one of the most life-changing websites I’ve ever read. Guided me along the path out of consumerist/careerist hell to financial enlightenment!
Many thanks and please continue. Would be especially interested to learn about TA’s strategy as his retirement date approaches – believe his figures and timing are quite similar to mine.
Another messages of thanks here.
I’ve read this blog for around 4 years and couldn’t begin to tell you the value it has brought me.
The level is perfect, engaging enough that as a newcomer I wasn’t put off by it and in-depth and detailed enough that 4 years later I still find the posts both interesting and educational. They still introduce me to new ways of thinking and via the various contributors offer slightly different perspectives which help me find and test my own personal approach.
Keep up the good work guys, from another very happy customer!
I’m another one who wants to say thank you. It was 2016 when I found Monevator and, like some others have mentioned, it changed my life. I actually mirrored the Slow n Steady before changing to Life Strategy (now VWRL and the Global Bond Fund). You have given my family and I focus and the tools to get there. While I try not to benchmark with my peers (everyone’s situation is different and it can be a bit sneery), I am forever grateful that my financial life is in pretty good order and a huge part of that is due to this website.
I’d just like to echo many of the comments here and say thank you for creating and curating such a great site. Monevator is genuinely a rare and precious corner of the internet. Well researched, well written, open minded, serious but entertaining, generous, practical, friendly… I could go on. As many have said it’s like a very relaxed club where people want to share and learn. And so so much better than the vast majority of finance books which are either dry as sticks or too busy telling you how stupid everyone is for not following their advice.
Long may you continue.
Thanks for all the incredible comments everyone. We’ve long been lucky enough to have great feedback for our work here, and as I’ve said before it’s certainly the reason why we’ve kept at it. 🙂
The site isn’t going to go anywhere. What we’re looking to do is to find a way to make it sustainable, to better layer/curate what’s on offer here, to potentially broaden the range of what we cover a smidgeon (subject to finding the right people) and for the site to better pay its way, or ideally do much better given the opportunity cost versus all the things we’ve not done with our free time over the past decade+.
I’ve been cautioned that now isn’t the time to go into this, so I won’t… sorry for the tease. Suffice to say that the articles that can get anyone passive investing towards financial freedom will always be the heart of what we do here. And I’ll keep doing the links on Fridays/Saturdays (ideally with some tag team support now and then.) Otherwise look for a few changes towards the end of this year and into 2021. Hopefully not too much in the way of friction for long-time readers… 🙂
Finally the book is 96% written and has been for the best part of a year now! The delay in finishing it was mostly down to me not writing a last part I had committed to writing (I’ve felt a bit burned out to be honest, need this upcoming break!) and then us under-estimating the learning curve of self-publishing and so deciding to kick it out a year or so until we have more free time. Hopefully that time is approaching…
It’s mostly @TA’s work and he totally ignored the brief to simply repurpose Monevator articles, which is why it took so long but is also why it’s deep and funny. I think it’s very good and different enough to justify adding to the library out there. Watch this space! 🙂
Thanks again, not least because my new-ish girlfriend read all the comments and now better appreciates why I had 75 tabs open and was just reading the Internet when I was compiling the links on Friday! 😉
And another round of thanks from me. The stuff on bonds still goes way over my head, but I can follow the other discussions. I will add to some of the other posts – in that I am retiring in a few months (69 working days to be precise), and there is no way I could ever have done the DIY approach without sites like this.
Covid obsessives may find this source useful:
https://www.arcgis.com/apps/webappviewer/index.html?id=47574f7a6e454dc6a42c5f6912ed7076
@TI
Simply to say total thanks for Monevator.
It is your site and you must take it forward in whichever way you choose, even closing it if that is best for you but I hope that you don’t. Do what feels right for you and your life, and above all do what makes you happy.
To add to the chorus (but definitely no less sincere for that!)
Thank you for this site and the work you put in. I am in the process (not there yet!) of ditching a FA who seemed to be doing a reasonable job but was also costing 10s of thousands a year between their costs and the active funds they had me in (which changed reasonably regularly) and moving to a self managed passive portfolio. I’ve been hugely surprised by how much hand holding (even if just in terms of the “you can do it” encouragement nature although some of it has been much more than that!) I’ve needed as I go through the process and have mild panic attacks about what could go wrong. This site – and your writings especially (but also the community of commenters you’ve attracted and kept interested enough to stick around) have provided all that hand holding and more.
Thank you. I do hope you get even just 10% of the help you’ve provided to others back as satisfaction for running this site because that alone should be enough to make you feel a never ending stream of warm fuzzy feelings!
I have enjoyed Monevator for nearly a decade…..it’s been a great source of financial education and always stimulating in its philosophical approach especially the weekend reading section.
I hope the revamp (when it comes) works for you and us.
another massive thanks here. Found your site in 2017 and reading here encouraged me to take the plunge in getting my finances in order, slowly but surely. Have cleared credit card debts, shaved a chunk off my mortgage and have both emergency cash and the startings of S&S ISA with vanguard as a result!
Another one here whose life you helped to change. 2016 my wife said we could do this FIRE thing and your site was material in convincing me she was right. It was hope in the darkness (I was in an Ermine kind of situation). Last year the trigger was pulled, and that life change was certainly for the far better. Now I look forward to the weekend reading links to help keep the old mind engaged.
@Vanguardfan: Thanks. I’ve bookmarked it ready for the winter.
Gosh, well that was a rather lovely thread to read. I might read it again.
Thank you all for the generous comments and for taking the time. It makes all the difference.
A rare and valuable corner of the internet indeed.
I also second Rich #45′ suggestion of money diaries. It’s that aspect in the comments (FIRE v London, ZX, Ermine) which has super helped me work out the many unsaid assumptions in a lot of financial advice and writing (and if those assumptions don’t apply, neither does the advice).
I send everyone here.
It’s not just for learning about what to do for my own investing, the learning for how to manage income without employment and how that works in the real world has been found only on Monevator (often in the comments, hat tip to Ermine again). Since me and many of my friends as in the non standard income bracket, I’ve been recommending they all read those posts and the comments and Ermine’s blog.
If anyone gets freaked out by investing, I send them over to FIRE v London’s posts on buying his property (found through this blog) so they can stress test their emotional reaction to risk and what real risk looks like and the process of working out what’s right for a person.
As Rich in #45 and other commenters have already said, there is little out there which tells us what it is actually like to run one’s finances and financial life without an employment income or standard assumptions about pensions and earnings. Monevator is one of the few, if only places.
Finally, none of us will get dementia hopefully with the weekly brain stretching from some of the posts here and some of the comments. ZX in particular has stretched my brain cells but I can now have free ‘advice’ from a friend about bonds because now I understand what she is talking about as she works in the bond markets.
I apologise for previously not noticing my Adblocker was not off for Monevator, I have remedied that situation now and happy to pay for Patreon.
Monevator is a key part of my financial security, what I have learnt here, and continue to learn.
I’ve read your blog for at least 11 years now. Not entirely sure when I started, probably 2008, but I was certainly here for your famous 2009 “Now’s the time to buy stocks” post. March 2009, I believe it was.
Hope you keep the site going, it’s my favorite personal finance site.
I’m not sure it’s over the top to say you have helped save my mental health. Not metaphorically or hyperbolically, just in a straightforward “yes, that’s probably true” way.
I think your website has done an amount of good you could not really imagine.
Why is there no patreon or similar?? I’ve looked in the past and couldn’t find it. I would contribute for sure, on a very modest level, at least until such time they manage to make that website completely unusable for me (they’re trying, slowly, but they haven’t stopped me yet).
@better — Thanks so much for sharing those generous thoughts! Made me smile this morning.
Many people have asked about donations or Patron over the years. In retrospect we should have enabled something but I always felt a bit sheepish about the idea of some people donating/contributing and others not. Just a personal thing.
I’m hoping we’re going to be able to introduce some very low-cost membership system soon, where for a low annual subscription member-readers can get some extra articles and other tidbits. We’d still have the free site, this would be an added extra for those who kindly want to contribute something more or who want more material. Watch this space! 🙂
Whatever you’ve got out of it so far, I hope you’re still getting some of that, and that turning it into a business of a sort doesn’t turn it into a “job” — if that’s something that might demotivate you.
I hear what you’re saying about feeling odd about it, and I realize you’re not Scott Alexander [1], but do consider that potential patreon contributors may be motivated by the fact that the posts are public — adding private posts isn’t motivating for those people even if the majority of the site remains public.
And if you give it up at some point (don’t!), you know you’ve already done a lot.
[1] https://old.reddit.com/r/slatestarcodex/comments/i10p4m/survey_on_moving_ssc_to_substack/
@better — Thanks for your further thoughts. My other fear with Patreon is that we’d ultimately just get £100-200 a month which wouldn’t solve the problem and leave us in a bind where we had already half gone down one road.
‘Unfortunately’ our site typically educates people to invest passively then go away and do something else. So most do after a few months — even one-time regular commentators. Hence my feeling that converting maybe 150-350 super-passionate passive investors / financial nerds at a slightly higher (still very low) price point and giving them something extra for their trouble might prove more sustainable.
I’d love to be proven wrong! I’d love to have 1,000-2,000 people paying £2-3 a month (remix to suit, on average) to keep this site on the road. First thing I’d get rid of would be all the advertising in that case, most likely. 🙂
(Might introduce targeted sponsorships. Would keep affiliate links indefinitely I suspect, since they’re under our control.)
But I suspect it’s wishful thinking. Maybe if we’d started 10 years ago! 🙂
Thanks for the link.