Good reads from around the Web.
The US blogger Mr Money Mustache has been making spendthrifts and complainers feel like they must try harder for years, to widespread acclaim and the occasional brickbat.
For my part I’ve always felt smugly on-side with Team Mustache, given that I’ve saved a big slug of my earnings for years and I’m well aware of how I (occasionally) spend my money.
However this week Monsieur Mustache opened up a new front in the doing-things-better-than battle, making me feel inadequate as a blogger as a result.
He’s only gone and create his own investing tool!
It’s called IndexView and it looks like this:
Note to the easily befuddled: This is just a non-interactive screenshot of the tool.
The idea of IndexView is that you can change the dates and see how time would have smoothed out your returns and spared your worry wrinkles, despite some crazy crashes along the way.
There are also various overlays you can add to the graph, such as the much touted cyclically-adjusted P/E ratio.
The tool only offers US data, but Tristan Hume – who everyone’s favourite mustachioed mister hired to do the coding – says he’d be happy to add another country’s data. However he hasn’t found any UK source that’s as easy to work with as Professor Shiller’s data is for the US.
I had fun playing around with it – give it a try.
Be nice if you could easily embed it in your own site like a YouTube video, mind.
From the blogs
Making good use of the things that we find…
Passive investing
- Active versus passive asset allocation – The Capital Spectator
- In pursuit of past performance – A Wealth of Common Sense
- Moving past the active versus passive debate – Abnormal Returns
- How to track the US market [Ignore US 401(k) stuff in UK] – Rick Ferri
Active investing
- What stage of the bull market are we in? – A Wealth of Common Sense
- New highs, new fears – Alpha Capture
- How to focus on defensive sectors – UK Value Investor
- One way of seeing the stock market cycle – Crossing Wall Street
- The Stockdale paradox and investing – Brooklyn Investor
- Preserving investment capital – Under the Money Tree
Other articles
- 6 things to do in your early 20s – Millennial Invest
- Exercise for the soul – The Escape Artist
- The two phases of wealth building – Retirement Investing Today
- Cash ISAs are king, it appears – Simple Living in Suffolk
- The case for simpler financial regulation – John Kay
- The limits of Monte Carlo simulators [Nb: Nerdy] – Advisor Perspectives
Product of the week: The Guardian points out that despite fears of an imminent Bank Rate rise, there are still good fixed rate mortgages around. Top of the crop is a new 5-year fix from First Direct at just 2.89%.
Mainstream media money
Some links are Google search results – in PC/desktop view these enable you to click through to read the piece without being a paid subscriber of that site.1
Passive investing
- Time, not timing, is key to investing success – Washington Post
- How to win at the loser’s game: Part 1 [Video] – Sensible TV
- The rise and fall of performance investing [PDF] – Charles Ellis / F.A.J.
Active investing
- The 108-year old value investor who is still investing – Telegraph
- Time to check out the supermarket strugglers – Interactive Investor
- M&G unveils bond fund to weather interest rate rise [Search result] – FT
Other stuff worth reading
- Finance is a strange industry – Morgan Housel / Fool
- Don’t change strategy just because something happens – New York Times
- Solar mini-bond touts a 7% return – ThisIsMoney
- Where would it be better to rent in London? [Tool] – Find Properly
- Downshifting from Ocado to Lidl to try to save money – Guardian
- How long before your holiday home pays for itself? [Gallery] – Telegraph
Book of the week: Readers of an active bent often ask for more articles about investment trusts. For those who can’t wait, The Financial Times Guide to Investment Trusts
Like these links? Subscribe to get them every week!
- Reader Ken notes that: “FT 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”.” [↩]
You have to hand it to Mr Money Mustache….he is The Boss…we can not beat him, we can only join him.
Thanks for the Guardian link, Investor! Looks like we’ll be picking up a new First Direct mortgage on Monday….
I am a big fan of MMM. He is one blogger who’s been able to fight his way past the corporate advertising dollars telling us why we must consume with some very simple positive messages. That is a good thing IMHO and I personally read his blog regularly.
One area where I do have a problem though (which could just be a cultural thing or even a glass half full vs glass half empty thing) is how he presents his philosophies very confidently and as fact when they are sometimes anything but and should have clear caveats.
An example that is still fresh in my mind is the 4% SWR post and his approach to the 4% rule. In this post he talks about up to 60 year retirements and concludes the post with “Planning for a 4% withdrawal rate is a shiny, bulletproof limousine of a retirement plan…” In fairness he does provide some hyperlinks which show that as a potentially dangerous assumption but how many readers go to that level of detail. Follow that detail though (plus a bit of further reading) and it will show that should history repeat then a UK investor with a 50% domestic equities and 50% domestic bonds portfolio plus a 4% rate would see their funds depleted 23.8% of the time in only a 30 year period (as opposed to 60 years). A US investor would be staring at failure 8.3% of the time. Both in my opinion are hardly shiny or bulletproof results.
PS Many thanks for the hat tip.
Go view MMMs source, find the iframe that links to thume.ca and include it as an iframe 🙂
@ermine — Thanks for the pointers. Tried that and it does indeed embed, but it doesn’t scale (it just lops the sides off). Be okay if you have a wider column like MMM. (I need to bite the bullet and resize Monevator at some point…)
@Matt — My pleasure! 🙂
@RIT — I know what you mean, but suspect his clarity is why he has a million-odd visitors a month and I have a fraction of that. The public doesn’t like caveats and ifs and buts. To be honest, better they read his confident version of the truth then the mainstream narrative, I think?
@TEA – Indeed. Especially as he’s liable to punch us in the face if we deviate. 😉
@TI
Just to clarify I 100% agree with you. From my side also the MMM confident way is surely much more likely to lead to a much more successful enjoyable healthy life than that possible if one follows the VI’s who need your money to live off. It just makes me a little nervous that some of the readership could be in for a nasty surprise in the years to come. I guess it’s a case of better for some to feel pain to help the many vs the many feeling the pain.
Great list TI, loved Morgan Housels article.
“The ongoing charge is 2.07 per cent a year and the fund has an initial charge of 3 per cent.”
Golly: how nice for M&G.
As for MMM, we shouldn’t confuse two different points, viz (i) the merits of simplifying, and (ii) the risks of choosing an SWR that is plain too high.
@RIT
But someone facing a 60 year retirement is unlikely to totally eschew adding value to somebody’s project or the world in general, which will add to that income. Heck, I am a total cold-turkey-on-working hardliner and I’ve found it difficult to totally avoid making some money over just three years. There’s no way I’m looking at a 60-year retirement.
Humans are traders and value-adders by nature, leastways the sort that will have the enterprise to start a 60-year retirement with a 4% SWR. They’ll make it, not because 4% is good enough, but because of what they are, not what they have, unless they addle their brains in the first couple of years with a diet of daytime TV.
In some ways it’s more hazardous to start a 30 or 20-year retirement with a 4% SWR assumption. The 60 years in retirement guys are still flexible and young enough to adapt. Older retirees may be, or they may want to go for the hedonism and cruising option, in which case the 4% has got to work for them.
@ermine @RIT
i think ermines got it on this one – RIT reclaim some precious time and nudge that SWR back up to 4%. Your analysis will almost certainly be nugatory anyway – you will be hit by a black swan or two before your time is up for sure and you will chuckle how you worried about these fractions of a % back when you were starting out.
chance favours the bold, not the spreadsheet, as they say..