What caught my eye this week.
I have used more than one of these Friday missives recently to talk about the shakier corners of the market.
But this week saw even the giant US bellwethers take enough of a beating for ardent indexers to notice.
Rather than listen to my pop market psychology again (don’t worry, I’ll be back) I’ve rounded up some other people’s views below.
Please note! If you have a plan and you’re happy with it, you’re welcome to skip all this stuff.
Especially if you think focusing on it might derail your sensible strategy.
Similarly if the volatility is getting to you emotionally, there’s no shame in taking a timeout, either.
Markets will be markets, regardless of whether you and I pay attention.
And whether they crash or soar, what looked terrible on a stomach-churning day like last Monday won’t be visible on an index graph in a year.
Am I bovvered?
Perhaps a good rule-of-thumb is to match the interest you give to these gyrations with the cadence of your investing activity.
If you invest automatically every month, I wouldn’t worry about weekly wobbles. If you rebalance once a year, maybe check out until December.
You needn’t suffer the daily turmoil with us masochists for no reason.
As Taleb stressed in Fooled by Randomness, whether stocks are up or down in a day is very nearly a coin-flip – close to 50/50…
…but losing half the time feels far worse.
You want some more? Here’s a selection of nicely-baked takes:
- Jason Zweig: why you should sit out the market mayhem – WSJ
- Four good reasons to sell stocks now – Morningstar
- Is this the end of the go-go years? – A Wealth of Common Sense
- We don’t get to choose when the market drops – The Belle Curve
- Four reasons investors should worry about volatility – Peter Lazaroff
- The big wobble – Banker on FIRE
- Is this a big rotation from growth to value? Sort of – Valididea
- Some reminders for a market crash – A Wealth of Common Sense
Pay off the mortgage or invest: with a new calculator – Monevator
How do zero commission brokers make money? – Monevator
From the archive-ator: Strategies for investing in bear markets – Monevator
Note: Some links are Google search results – in PC/desktop view you can click to read the piece without being a paid subscriber. Try privacy/incognito mode to avoid cookies. Consider subscribing if you read them a lot!1
UK property rents rise at fastest-ever pace – Yahoo Finance
Increasing the state pension age has kept more over-65s at work – IFS
Large investors driving up property prices in Europe’s big cities – Guardian
Two men take a corpse into Post Office in attempt to claim dead man’s pension – Guardian
Watchdog says people underpaid state pensions ‘left in the dark’ – Which
Law commission says drivers should not be liable for AI accidents – ThisIsMoney
New list of the individuals who pay the most tax in Britain – Guardian
US tax start-up targeting crypto traders hits unicorn valuation – Decrypt
Electric vehicle sales set to surge in 2022 – Axios
Products and services
Amazon and Barclays’ ‘buy now, pay later’ scheme explained… – Which
…and sector gorrila Klarna also set to launch in UK – Guardian
Open an account with InvestEngine via our link and get £25 when you invest £100 (T&Cs apply) – InvestEngine
Nationwide finally ups the rates on some savings deals – ThisIsMoney
Common mistakes that can invalidate your boiler warranty – Which
Homes for sale in historic ports, in pictures – Guardian
Comment and opinion
Will the UK’s 20-year housing bubble ever end? – UK Dividend Stocks
The plight of first-time buyers [Search result] – FT
Project Mickey – Humble Dollar
Robinhood, Reddit, and the revolution that wasn’t [Podcast] – Bogleheads
17 ways to save money on your household bills in 2022 – Which
Are you really getting rewarded without any extra risk? – Fortunes & Frictions
Jack Bogle at the Woodstock of capitalism – The Evidence-based Investor
Personal finance in nine diagrams – Mr Stingy
Rationalization – Indeedably
Is it okay to subsidize spendypants adult children? – Mr Money Mustache
Time is money mini-special
The opportunity cost of everything – Young Money
Everything must be paid for twice – Raptitude
Saving $575 for a moment of discomfort – Get Rich Slowly
Crypt o’ crypto
You don’t need a Bitcoin ETF when Coinbase tracks so closely – Josh Brown
Andy Warhol, Clay Christensen, and Vitalik Buterin walk into a bar – Tim O’Reilly
What Nicholas Taleb got right and wrong about Bitcoin – Bloomberg
Why are celebrities promoting dubious cryptocurrencies? – Slate
Naughty corner: Active antics
Current conditions: the cyclone beneath the surface [Podcast] – ILTB
Great look into German family HoldCo JAB – Neckar’s Insecurity Analysis
Expectations investing: Q&A with Michael Mauboussin – Motley Fool US
The market’s in freefall: what should I do? – Fire V London
Two stocks that ended one man’s stockpicking antics – Humble Dollar
The US Fed is over-egging rate expectations [Agreed, FWIW] – The Bellows
Why active managers are sitting pretty despite outflows – Investment News
Omicron’s fall has slowed. Should we worry? – BBC
Kindle book bargains
How to Build a Memory Palace: Books 1&2 by Sjur Midttun – £0.99 on Kindle
Scrum: The Art of Doing Twice the Work in Half the Time by Jeff Sutherland – £0.99 on Kindle
The 5AM Club: Own Your Morning by Robin Sharma – £0.99 on Kindle
Grit: The Power of Passion and Perseverance by Angela Duckworth – £0.99 on Kindle
These turtles fly south for the winter – Hakai
The [non-] impact of impact investing [Research PDF, from late 2021] – SSRN
Hopepunk: the optimistic new sci-fi genre [Couple of weeks old, not to be confused with solarpunk!] – BBC
Off our beat
Causalities of your own success – Morgan Housel
On the insanity of being a scrabble enthusiast – LitHub
The secret life of a super-recognizer – Guardian
Fight Club gets a new ending in China, and the authorities win – Guardian
Why is Ukraine such an economic failure? – Noahopinion
Dreams and kindness are all we have – Interfluidity
“Thanks to auto enrollment pensions most of us are shareholders – part owners of the corporate world. That common ownership people say they crave? We already have it.”
– Merryn Somerset Webb, Share Power
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> Amazon and Barclays’ ‘buy now, pay later’ scheme explained…
The rule’s much simpler than that. If you need buy now pay later to buy it, you can’t afford it.
Didn’t we have this sort of garbage forty years ago, in catalogue buying. Then we had things like payday lending and money shops. And Bright House.
We’ve seen this movie many times before. It never ends well…
I’ve a Kroijer style portfolio, with about 40% global trackers, 25% Fundsmith which I intend to reduce once I can get it onto iweb (it’s in an ISA), 20% VGOV, 10% index linked gilts and 5% Gold.
So maybe not that Kroijerish.
Anyway my point is, what’s really making me nervy now is not the fall in the global trackers or Fundsmith, but the fall in the gilts, which whilst not quite as spectacular have also fallen almost 4% in value in a month. I’m deeply concerned about owning these as opposed to staying in cash, and can’t foresee them recovering.
Of course, that I can’t foresee it doesn’t mean it can’t happen! But I wasn’t expecting gilts, as a supposed counterweight to equities, to perform so badly at the same time.
That Which? article is so depressing. 16 mediocre ways to reduce costs followed by the kicker at 17 – how to borrow money to pay the bills and cover rising living costs. Really?
YTD movements I’ve been watching if anyone’s interested:
Ruffer Investment Company 2.7%
FTSE 100 -0.5%
Vanguard Global Bond Fund -1.6%
Capital Gearing Trust -1.9%
Vanguard Lifestrategy 60 -3.6%
Vanguard Lifestrategy 80 -4.1%
Vanguard Lifestrategy 100 -4.6%
Lindsell Train UK Equity -6.4%
S&P 500 -7.6%
Fundsmith Equity -11.6%
LF Blue Whale -17.3%
Scottish Mortgage Trust -20.4%
ARK Innovation (ARKK) -29.0%
I took ages pondering my investment strategy for retirement and, just before Christmas, cashed in enough of a Vanguard LS 80/20 to cover my annual expenses for the next 3-4 years. That money is now sitting in the bank (psychologically torturing me with thoughts of rampant inflation). The upside should be that I don’t need to look at the markets for the moment, really. But, here I sit, biting my nails, looking at my portfolio and nursing my paper losses in severe pain. Deep sigh.
I set some orders to buy a global tracker if it dips 10, 20, 30, 40%… Going to ignore things now till I rebalanced in summer.
TBH I’ll be happier if those orders don’t trigger but I put them in as I know from experience that I won’t buy on any big fall if I have to do it on the spot.
People should be happy when the market falls.
It’s like the January sales but properly done.
However looking at my trackers this isn’t even a correction yet.
I think a lot of people who think they are gung ho for 100% equities are going wet their pants whenever they see a proper bear market
It’s worth mentioning that there was a big rally in the US especially to end the week on Friday, which did take a bit of the edge off the recent declines.
The Nasdaq was up 3% on Friday for example. Popular individual stocks like Shopify and Alphabet rose 3-8% across the board.
I think that those of us who take money seriously and plan to save, invest and use that money later in life it’s hard to put away money each month and not look at it from time to time.
Then comes the tinkering and swapping ISA provider or ETFs you are invested in and it extends to going all in on the latest over hyped Crypto.
It would be better if we didn’t have to think about it at all – because the world markets are more complicated than any simple explanation you read about and the chances of you making a bad decision are almost fully guaranteed.
It tells us much about the last decade that a 10% retracement from the high watermark in the S&P generates such media commentary. Asset prices are not allowed to fall ever!
It does seem we are getting to a juncture in terms of the type of sell-off we are seeing. I bought some SARK ETF in Nov (shorts the meme ARKK ETF) to hedge some of my Nasdaq exposure. In Nov-Dec, it was moving about 6x more than the Nasdaq, early this year 3x. Last week less than 2x. So the beta is falling, as the breadth of the sell off broadens beyond meme/tech etc.
I think this should be a local bottom given that the market is now pricing 5 x 25bp rate hikes for 2022 from the Fed (7 meetings left for 2022) but, of course, then Russia invades Ukraine, The Fed starts considering 50bp moves, retail investors start to sell rather than keep buying and dump. This is a pinprick reversing the massive rally of 2020/21.
My personal portfolio is 1.4% off it’s high watermark. My stop is 5%, so I’ve already used almost 30% of my limit on a modest move down. Looks like my first down month on my personal portfolio since mid 19. Not at all happy and don’t want to even consider adding to equities or bonds here.
Cash allocation is at 37.2% given a recent distribution. Biggest holding is up 1.31% this month so business as usual for that one. Will add heavily to that, sit tight on rest, and wait and see.
@Valiant — I see IGLT (mixed UK gilts) down 1.8% for the year-to-date, and 2.7% over the past month. That compares to a 7% decline over both periods give or take for the VRWL (the global tracker).
Sure gilts are down – which is always a possibility, they definitely do not always move in the opposite direction to equities especially over short periods like this – but it’s much less of a decline than for shares.
If everything plays out ‘as expected’ (whatever that means really with investing, it’s a philosophical question!) then I’d imagine IGLT will fall another 5-20% over the next 1-2 years (assuming reinvested income) as yields rise before they start to stabilize, and returns begin to be bolstered by higher coupons.
Please note I’ve pulled that range out of the air this Saturday morning, but that’s a gut feel. If memory serves a 20% decline over two years would be at the high end of gilt losses in nominal terms over all time periods. It wouldn’t be my base case! 🙂
That’s not pretty but (a) things may not play out ‘as expected’ and (b) at the end of that period your gilt fund would be delivering higher income and its expected return would have risen, so over the next 10-20 years not a bad thing really.
What if (a) doesn’t happen? If for instance the market crashes, GDP collapses, inflation turns to deflation – numerous other scenarios? Then gilts might have already found their level, and shares could fall another 50% or more in a historically terrible chunk sequence of returns.
It’s entirely possible shares could be 30-40% lower this time next month (definitely not an expectation or prediction, I am just saying that kind of thing can happen). Even a 5% decline in a month for gilts would be historically extraordinary.
This is the way to think about different asset classes. Not that they all rise and fall conveniently on time (as I’m sure you know well 🙂 ) That they do different things over different time periods.
Set against all that if inflation was to stay at 5%+ for the next year or two it would undoubtedly be a terrible time to own gilts or cash, and probably shares too, in nomimal terms. (That’s why you’d own some inflation-linked bonds, maybe gold etc).
All more easily said then implemented towards the end of a 10 year bull run for stocks of course. Anything that doesn’t go up 10-20% a year with the expectation of more of the same seems a dud. 🙂
@The Investor. Thanks for addressing my lament on gilts. If I lost 20% on a gilt investment I’d be pretty miserable, whereas I’d just accept it as rough-and-tumble on equities.
My main holding is VGOV, which is down 3.6% over the month.
Vanguard Lifestrategy 60
Vanguard Lifestrategy 80
Vanguard Lifestrategy 100
I’ve always wondered with those eq/bd funds, how often they rebalance and if it’s automatic each day/week/month/year and whether it’s a good thing, going to do a search on here to see if there’s an article and if not might be worth adding to the wish list
I find it deeply ironic that of the top 5 tax payers in the Guardian article, 2 are betting companies i.e. removing money from poor people too daft or desperate to know it’s a mug’s game. So they pay the tax and then get it back again anyway. Or does it qualify as a perfect example of how economies work?
Made my pile a while ago-now 75-18 yrs rtd
Have run a 30/65/5 portfolio for many years-equities/bonds/cash (cash =2 years living expenses)
3 global index trackers only
Seen a few of these drops in my 40 years investing
Will sit it out -yet again!
Seems to be a successful investing policy for me
The property article was interesting. The comments and replies below too. Opportunity cost and a couple of other posts on that webpage also enjoyable. Cheers for links
Sure, but that’s not quite the right way to look at it. 🙂
In an environment where safe global government bonds fell 20% over two years I imagine (best we can do) equities would be down 30-60% over the same period. It would be a huge re-rating of risk across the curve.
So you’d be comparing a 20% loss in your bonds to maybe a 50% fall in your shares. (Again, pulling figures out of a hat).
The difference is that over a 10-year period from the start of this period, perhaps bonds would return 2-4% CAGR versus 5-10% CAGR from equities (again guesstimating from today’s valuations).
The bonds drawdown less in the short-term. They will probably increasingly under-perform equities over increasingly longer terms.
Of course someone might argue they don’t care about declines, they care about those long-term returns. Why not 100% equities then?
Sure, I did that when I was in my early 30s. I think it’s a valid strategy when you’re young or even perhaps if you’re rich (although in the latter case why take the risk, why not go 80/20 say and cover all bases).
When your wealth has grown versus your earnings and lifetime expectations, however, wealth preservation inches towards the fore — even if you brain thinks otherwise, your gut may have its own ideas. 🙂
Just thoughts, not advice. 🙂
Well, I’m pretty defensive at 20% Intermediate Treasuries, 10% International Inflation Linked Bonds, 20% Gold and 5% Cash, the rest Global Equities, Emerging Markets and Small Cap Blend. Overall, I’m down about 3.5% from the most recent high I measured, which seems OK. I would like to buy some REITs and Small Value, but I’m not rushing. Let’s see where we end up.
I think I may have found my risk tolerance level as I’m not overly fussed (yet!) about these declines. Those allocations have to get me 11 years to state pension age where I should be OK. What’s left of my portfolio (the equities, worst case) then funds luxuries.
Of course, I’m haven’t actually retired yet, which helps. End of March is the target (the new financial year :-))
Thanks again, The Investor.
>> . I think it’s a valid strategy when you’re young or even perhaps if you’re rich….
Can you put a rough figure on “rich”? £250k portfolio? £750k? £1m? £2.5m? £5m? £10m….?
Asking for a retired 60 year old friend.
Harking back to an earlier post, but when I checked my portfolio on Friday I was damned glad that our mortgage was paid off!
The fall across my pension pots and ISA was well over 5% but I’m not panicking just yet. I saw similar moves in the opposite direction last year so swings and roundabouts.
If there’s a crash, and you’re young, regularly saving in to the market will save you over the long-term. What should really keep us all up at night is a decade where everything trades sideways while inflation just ticks higher and higher.
We have had a secular bull market for gilts for the last 40-ish years. So not only have gilts provided a safe haven in a storm and gone up when equities have gone down, they have provided a return in their own right too.
If we are at a point where interest rates normalise, even a a little, heading up a few percentage points then they will lose some value, but that better allows them to provide a cushion for the next economic shock whenever that comes along.
Faced with the same quandry as you about gilts, I have moved to much shorter duration gilts in the form of IGLS until rates are more normal and provide a real yield. (The shorter the duration the small the loss when rates rise.) Obviously this is a judgement call and so not exactly passive. I will face the dilema of when to go sell IGLS and go back to a fund like VGOV. Active antictis? Maybe, but only partly, because I am leaving my equities alone to do their thing and track whatever happens. I am just trying to dodge what feels like a foreseeable loss on the gilts. One alternative to IGLS is just cash, but again that may not be right either.
I feel until rates are more nomal gilts and equities may be more highly correlated than normal.
Watch out – one day it could type better than you.
@Valiant – You write:
Can you put a rough figure on “rich”? £250k portfolio? £750k? £1m? £2.5m? £5m? £10m….?
I can’t really, which was why I left it vague. Some people are FIRE-ing on £500,000. Some popular UK people want £5m first.
Perhaps enough assets that you could live on 1.5% SWR if you had to?
Basically enough assets to withstand a 50-75% equities crash I guess, or enough time to make it back (hopefully).
So what you’re saying is the music is about to stop and we’re going to be left holding the biggest bag of excrement every known in the history of ……capitalism.
The music’s just slowing buddy, if it had stopped as you put it, this week wouldn’t be even close…it would be considerably worse.
to paraphrase an amusing quote from margin call.
If you are holding equities, you’ve gotta be willing to take a 50% hair cut every once in a while – it’s a good mental exercise to look at your net worth, divide the equity component by two and see how that feels and can you suck it up.
otherwise stop looking at your portfolio…..
dollar cost average……
Hold enough liquidity in ST bonds / cash / gold etc to ride out the storm, if necessary for years, if necessary alone 🙂 At the moment there’s just a couple of black clouds on the horizon.
The main +ve could be a few bloggers seem less keen to smugly say, all I do is invest in 100% equity index funds, take out 4% and I will never run out of money! Really not sure I could stick with the volatility if I wasn’t working myself.
I took out a 5 year fixed i/o mortgage at 0.94% last year to invest and so far have held off – which on both counts looks smart given rate rises although it’s largely luck and I haven’t got a clue where markets are going.
The house price article is interesting but seems to miss the key graph being affordability, which has been quite static over the past decade as rates have fallen. So yeah if rates rise, affordability will worsen and house prices could take a tumble. But I doubt we’re seeing i/r of 5%. The wheels will have properly come off if that happens.
Dunno what the UK govt plans to do if house prices fall as they’ve no other idea how to achieve any economic growth 🙂 The rising interest bill won’t help the need for public service investment and so expect more fraying round the edges.
Gonna seriously be painful this and next year probably for graduates with large loans, lower paid, fixed income retirees delete as appropriate!
Investing for the last 2.5 years. I just DCA regardless of what is going on in the market. Recent falls just mean I will buy cheaper so I am very happy about it. I actually wish market to continue this downtrend for as long as I am in accumulation mode. It does not matter my portfolio numbers will turn red at this moment. My first planned withdrawal is 10 years away.
I was more worried when market was reaching new highs and I had to DCA through this, knowing that the more expensive I buy the less future upside O can count for.
Dear mr market, do me a favour and wipe out half of my portfolio money today so I can enjoy the gains of tomorrow.
@Seeking Fire, as @TI pointed out in a recent post the loan repayment by graduates doesn’t depend on interest rates. So actually they won’t feel more pain than the rest of us.
But I agree, the current Conservative government seems only to have one idea about economic growth which is artificially inflating house prices via QE. (Their opinion of business is an oft-quoted disdain). A lot could go wrong if inflation doesn’t work the way they hope.
JB – yes u r absolutely right of course. I was thinking about this, which is another whammy for them on top of everything else.
The WSJ article contains a gem of a quote : “First, if stocks always went up, they would be riskless—and their returns would end up being paltry. The short-term pain of loss is the price we pay for the potential for meaningful long-term gain”. That’s a fantastically important point. As investors, we are quite literally paid for the emotional burden of owning stocks. Investing can be scary, which is why it can also be so profitable. No pain, no gain !
@ Flying Scotsman a few more:
average uk commercial property IT 3.5%
average infrastructure IT -1.8%
average renewables IT -0.8%
average P/E IT -3.8%
@miner2049er – my understanding is that the Lifestrategy funds auto rebalance using investor’s subscriptions and redemptions, so I’m assuming that means daily.
I see rebalancing more as a risk management tool, as opposed to something that will gain you excess returns and I believe there are articles on Monevator which go into more detail on that.
I myself invest into LS80, and ultimately plan to move into LS60 at a future point (maybe when I’m much closer to my FI figure).
@TI, I really like your definition of rich enough.
‘Perhaps enough assets that you could live on 1.5% SWR’
… Or half of the probable “safe” return from a U.K. portfolio? (I put words into your mouth, sorry). I have my suspicions that this is a little too safe, (a small movement in SWR in a retirement portfolio can lead to a big difference in outcome over the long run) but will put that argument on hold.
It would mean that to achieve a U.K. average full time wage of C£32K you would need £2.13MM, to achieve the average U.K. wage of a 40-50yr old, full time, of £36K you would need £2.4MM and to achieve national “living wage” outside London you would need £1.35MM in invested assets. (I ignore tax here, as at those salaries, tax would probably be similar in and out of the portfolio @20% after allowance – all basic rate earners). The trouble with all of those figures is that to achieve them, you would probably have to be earning significantly more PA to do it in one lifetime. So all that you would have to rely upon is luck or family money. If you want a reason why the lotto is so popular and the betting shops can pay their taxes, perhaps this is it. You average FIRE aspiree would probably look at the figures and give up early after working out their savings rate, I digress.
I get that this SWR of 1.5% is for a stock only portfolio, which personalises it to the individual expecting the returns, which is why I like this idea as a measure of true wealth. I suspect as with all simple ideas that it is a lot more complex when applied to individuals.
Thanks for the links again, my weekend would not be complete without them and the discussions that follow.
@Valiant. Just to reiterate @TI’s point though, if long duration Gilts really take off in yield terms, you can just forget about positive UK stock returns. A rise of 2% in 30-year Gilts would cause the 30-year discount factor to drop 45%. For dividend heavy, low growth, UK large caps that is utterly disasterous. If long-term inflation expectations ever go up in the UK, it’s carnage.
The issue is that retail keep making the error of going for shorter dated Gilts (say 3-5y). Yet again, short duration is not actually safer, it’s more risky. You just can’t expect short duration bonds to do well in a short-term inflation surge that will prompt central bank tightening. Typically it’s better to stick to a cash/30 year butterfly.
My portfolio (VWRL / REIT / PE / Com. Prod / Com. FTR / Bond / Cash / PM) has not shifted more than 1% away from any of it’s targets for the last few weeks – nothing to do there for now.
So I’m buying ISO20022 compliant altcoins – anyone got a view on that ?
@JimJim — Glad you’re enjoying the links, cheers. 🙂
Re: My definition of ‘rich’, please remember I raised this in the context of somebody who wanted to maximize returns / avoid bonds for whatever reason, by going 100% for equities because they couldn’t stomach losses from gilts.
I’m not endorsing that strategy! I was just asked what ‘rich enough’ meant, in that context, so I gave an answer.
Personally I think most people can retire today on a 3.5% to 4.5% SWR with a reasonably balanced portfolio that includes gilts, with a high degree of confidence (not certainty!) — if perhaps much less likelihood of dying a lot richer, compared to someone a decade ago.
The comment about being rich applies to lots of things effectively why buy insurance if you dont need it? A balanced portfolio is just a type of insurance if you already have enough and can get a higher return using 80/20 or 70/20/10 then just relax at some point it will come back.. Chasing safety or return is imho risky. Worst thing most people need to do is work a bit more or improve the side hustle. That 20% SMT hit comes after a whopping rise so over 3 years its not really that bad. We can all try and feel safer but as recents events show we dont have alot of control so I agree chill its better for your health.
I’ve just found out ISA income is taxable if I become a NHR in Portugal – but had the same shares been held in a non ISA account they wouldn’t be!
I’m keen to keep the wrapper benefits as I all likelihood I’d return to the UK at some point (10+ years). Does anyone had any knowledge about practical workarounds (the tax is 28% on gains).
Finumus’s ISA/IO mortgage article had me wondering about a flexible ISA and using in specie transfers out and in every year to exposure the gains to uk tax, and therefore being tax free in Portugal (apparently DTRelief means if your gains would be taxable in the uk they are exempt in Portugal with the NHR scheme).
Not looking for advice, just anyone’s experience or thoughts along this line – perhaps Cyprus or just settle for 90 in 180 (the uk is basically a tax have for retirees already)
I have always liked Portugal.
I was aware that years ago the original Habitual Non Resident scheme gave everyone from outside of Portugal a great tax loop hole. The original tax rate back then for pensions was 0%. So, move to Portugal for a year and claim HNR status there. Withdraw your entire SIPP at 0% and move back to Blighty the next tax year.
That was always too good to last though, Portugal came under pressure from their European partners who were losing a lot of tax revenue to it. I believe the scheme has changed yet again from 1st Jan 2022, but I have not been fully keeping up with it.
I wasn’t aware that ISA income would be taxable. (Do you have a source for that please?)
I wouldn’t want to do any scheme that sails too close to the wind, even if technically legal. HNR is very generous compared to normal tax rates in Portugal. One other main attraction would be getting a Portuguese passport and EU citizenship back after 5 years living there. (Sadly I do not have Irish grandparents.)
From a pure financial perspective I think I am better off taking 25% of my SIPP tax free here and using the £12,570 personal tax allowance that using HNR.
I think you are right that the UK is a bit of a tax haven for retirees.