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Weekend reading: Pride, prejudice, and passive income

What caught my eye this week.

A bookish child – more wannabe poet than would-be Buffett – I first learned that some people could live off their capital from the novels of Austen, the Brontes, and Dickens.

So I was glad to stumble across this piece [1] from April, where the author explores the context of the “£10,000 a year” passive income enjoyed by Jane Austen’s Mr Darcy.

From Pride and Prejudice [2]:

“Mr. Darcy soon drew the attention of the room by his fine, tall person, handsome features, noble mien, and the report which was in general circulation within five minutes after his entrance, of his having ten thousand a year.

The gentlemen pronounced him to be a fine figure of a man, the ladies declared he was much handsomer than Mr. Bingley…”

Even the leanest pursuer of financial freedom wouldn’t consider £10,000 to be a sustainable income these days. I’m not sure it impressed me much as a kid, either, although I’d now respect it as suggesting Darcy boasted a pot of at least £250,000 (presuming he had a flexible withdrawal rate [3] in play).

But 200 years ago, a passive £10,000 a year meant you were fabulously rich.

A previous piece [4] by the same author, Joakim Book, estimated Darcy’s wealth might have a purchasing power of as much as £400m in today’s money!

Consol yourselves

Joakim’s newer article [1] is a wonderfully geeky dive into the history of a particular kind of UK government debt – Consols.

These perpetual bonds were central to the financial planning of well-off families, such as the Bennets in Pride and Prejudice:

Once the Bennet parents pass away, the £5,000 of Consols could be divided equally among her children; Lizzy’s share would be a thousand pounds, which earns her an annual 4% interest return, or £40 (although maybe several year’s earnings for a regular worker, this was a rather small sum for such rich families – in contemplating Lizzy’s sister Lydia’s imprudent marriage, we learn that Mr. Bennet spent almost £100/year on Lydia’s purchases and pocket money alone).

Being liquid financial assets, dividing up the Consols among children was very easy, and their steady income stream ensured that they would have at least some income.

Bar Napoleonic conquest, the interest payment on the Consols would reliably show up year after year.

It was ever nice to be rich, eh?

Still, a 100% allocation to bonds? You won’t find that in any model passive portfolios [5] today…

p.s. Thanks to The Details Man and The Accumulator for covering me for the past two weeks. Even if it was at the cost of their discovering how many hours Weekend Reading takes to compile and edit, and vowing never to do it again!

From Monevator

Summer time, and the living is easy. Slash lazy. Thank goodness we can order…

…from the archive-ator: Buffett’s folly: The dark side of compound interest – Monevator [6]

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 [7]

Sajid Javid: five priorities for the incoming UK chancellor [Search result]FT [8]

Home sales fell to a six-year low in June – ThisIsMoney [9]

They became millionaires and retired at 31. They think you can, too – The Guardian [10]

Fees will keep falling, spurring further industry consolidation… – Institutional Investor [11]

…so one UK group says regulators should save small fund shops – Institutional Investor [12]

Monzo warns young users over social media scams – ThisIsMoney [13]

High-earning YouTube influencers need help to manage their millions – LA Times [14]

[15]The weird world of inverted yield curves – Coppola Comment [16]

Products and services

Disruptive ETFs face their own disruption [from direct investing ESG solutions]Yahoo [17]

Ratesetter will pay you £100 [and me a cash bonus] if you invest £1,000 for a year – Ratesetter [18]

Why Neil Woodford’s troubled funds may never recover – ThisIsMoney [19]

A deep dive into biotech investment trusts – IT Investor [20]

Got a £3m house budget? This Grand Design has had £1m lopped off its asking price – ThisIsMoney [21]

Comment and opinion

Simon Lambert: What might Boris Johnson PM mean for your finances? – ThisIsMoney [22]

The over-re-balancing act – Humble Dollar [23]

How to handle the Diderot effect – The Simple Dollar [24]

Money does not deserve the bad rap it’s getting – Bloomberg [25]

Investment risk is a behavioural phenomenon not just a number – Behavioural Investment [26]

You may have longer than you think to invest for retirement – A Wealth of Common Sense [27]

Brussels sprouts, or the difficulties of selling useful financial advice – Epsilon Theory [28]

Beyond Meat looks like a classic bubble stock – Ramp Capital blog [29]

FIRE is for the few, not the many – Simple Living in Somerset [30]

The definitive list of the best investing movies – RCM Alternatives [31]

Why boring stocks are beautiful (but might be risky today) – Ensemble Investing [32]

A private investor rejigs her asset allocation to dial down risk – Quietly Saving [33]

Entrepreneurship comes with a cost – Abnormal Returns [34]

Brexit

Boris Johnson’s Hen Do strategy for Brexit – Joanna Hardy via Twitter [35]

How the Brexit debate was flushed down the drain – Tim Harford [36]

Kindle book bargains

The Art of Asking: How I learned to stop worrying and let people help by Amanda Palmer – £0.99 on Kindle [37]

#StandOutOnline: How to Build a Profitable and Influential Personal Brand by Natasha Courtenay-Smith – £0.99 on Kindle [38]

Talking to My Daughter: A Brief History of Capitalism by Yanis Varoufakis – £1.99 on Kindle [39]

More Time to Think: The power of independent thinking by Nancy Kline – £0.99 on Kindle [40]

Off our beat

Digital dating is now by far the most common way to meet your partner – Guardian [41]

As people celebrate migrant children dying in custody, has the internet made evil our new normal? – New Statesman [42]

‘My oestrogen levels were all over the place’: when men have ‘sympathy pregnancies’ – Guardian [43]

And finally…

“In reading The History of Nations, we find that, like individuals, they have their whims and their peculiarities, their seasons of excitement and recklessness, when they care not what they do. We find that whole communities suddenly fix their minds upon one object and go mad in its pursuit; that millions of people become simultaneously impressed with one delusion, and run after it, till their attention is caught by some new folly more captivating than the first.”
– Charles MacKay, Extraordinary Popular Delusions and The Madness of Crowds [44]

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  1. 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”. [ [48]]