Great reads from around the web.
I can rarely recall such a busy time in the UK. Decisions are being made now that will shape the economy for years to come.
On education and fees, the great student riot has been covered to death elsewhere. Regular readers may remember I feel the problem is simply too many weak students doing too many pointless degrees, creating a funding crisis. I’m all for aspiration, but it has to be credible, not fanciful. The world only needs so many digital photographers and marine biologists.
Those hungry for more should check out A Grain Of Salt’s link below to see why the debts aren’t so onerous, and Simple In Suffolk’s hopeful suggestion that revolting students could at least kill off the heinous X-Factor.
Common sense has at least broken out on welfare reform. Three cheers for Ian Duncan-Smith’s single universal benefit plan (a flat tax next, please!) People need to support themselves, and to aspire to a better life, whether it be materially or in terms of some other lifestyle choice. That thousands spend 20 years or more in a paid-for council house living on hand-outs from the State would shame the founders of the Labour movement. There’s far more dignity to sweeping the streets or cleaning the drains then scrounging off those that do.
Finally, the stock market continues its steady advance, as the global economy (ex-US and Europe) continues to roar ahead.
Many Monevator readers rightly follow a passive portfolio [1] strategy, which means rebalancing when appropriate and ignoring the noise.
But those who’ve tried to be clever (like me!) can’t afford to get the big calls wrong, and the last couple of years have been all about big calls.
In particular, any UK investors who timidly stuck to cash and ignored the recovery in the stock market from its March 2009 low has paid a steep price. Instead of excellent double digit gains, they’ve seen a loss in real terms, especially after tax, due to high inflation.
According to the Bank of England, inflation has been above target for over 40 of the past 50 months! With commodity prices booming, the economy picking up steam, and monetary policy still super loose, inflation still seems to me far more likely going forward than deflation.
The FTSE All-Share still looks reasonable value, although clearly no longer bargain basement cheap. In particular, 10-year Gilt yields are edging higher, while rising stock prices reduce the yield on the All-Share.
At some point the risk-free returns from Gilts will make the return on equities look expensive. But whether it’s in six months time or a decade, nobody knows.
I’m comfortable sticking with shares for the long-term, but I suspect my new money may go more into index-linked gilts or the equivalents from banks like RBS and Barclays.
From the blogs
- Can’t someone else pay? [On student debt] – A Grain of Salt [2]
- Investing for near-term goals – Oblivious Investor [3]
- Know your enemy [profiting from index rejigs] – Index Universe [4]
- Income distribution in the US – The Digerati Life [5]
- Economic parasites: A question of intelligence – The Psy-Fi Blog [6]
- It’s going to be a great decade for British music – Simple in Suffolk [7]
- FTSE 100 cyclically-adjusted P/E ratio – Retirement Investing Today [8]
- What are you really teaching your kids about money? – Moolanomy [9]
- Negative real returns are [for now] the price of safety – Finance Buff [10]
- How to overcome poor grades and get a job – Financial Samurai [11]
- An against the grain approach to saving priorities – Free From Broke [12]
On the Money Maven network
- Len Penzo explains how to find a 24 hour plumber [13].
- Canadian Finance blog on how to build an emergency fund [14].
- MH4C has a debt snowball spreadsheet [15] for free download.
- Deliver Away Debt does christmas on a budget [16].
- Wealth Pilgrim wonders who should buy guaranteed issue life insurance [17].
- US readers should check out The Military Wallets’ TSP Contribution Limits [18].
From the big boys
- Table-topping 3.11% one-year savings bond from Skipton – Skipton [19]
- Nassim Taleb on antifragility – The Economist [20]
- Inflation-linked gilts versus Barclays equivalent – Fixed Income Investor [21]
- Inflation sparks rush to safety – FT [22]
- Get set for the Green Deal bill – The Guardian [23]
- SERPS: A game of chance on a pensions promise – Telegraph [24]
- Antiques now the cheaper, greener option – The Independent [25]
- India’s growth potential – The Independent [26]
- A chilling lesson from dead investment funds – Motley Fool [27]
- If a single benefit, why not a single tax? – BBC [28]
- Gamer sells virtual asteroid for $0.5 million profit – Yahoo [29]
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