Playing With FIRE

This post is partly about the eponymous movie, featuring outgoing FIRE exponents like MMM. It will be shown in Birmingham on the 5th of July, well done Cashflow Cop for getting this shown outside the Great Wen. But I couldn’t help thinking about the other meaning, too…

The Ermine is an introvert1, so I fought the FI battle as a loner. For sure, I learned from other people – Monevator for how and sort of why2, Early Retirement Extreme for why though not so much how, I was too old and too wedded to some creature comforts to live the ERE life.

At that time the FIRE blogosphere was ruled by introverts too, unlike now, where I’d say extroverts rule the roost. I’m glad I started when I did, because I could relate to people’s narrative. We were crawling from the twisted wreckage of the credit crunch. The credit crunch had squeezed The Firm I worked for, and what had been a decent job for 20 years started to go bad, fast.

I read this post shortly after what I interpreted as a manager trying to run me out of the company. I was more than a decade away from retirement and needed a fast track out. I had been living the usual life of hedonism, though I didn’t carry consumer debt.

The world looked very different then – as Monevator described people’s emotional state was in the pits, the financial world was ending. I read that, and yes, I was one of the people that thought he was barking mad. Rather that yell abuse, however, I asked myself “what if this nutter is right, there is some logical coherence in what he says”. If he were right, this was a remote chance to stick a rocket on my exit plans. So I bought. That committed money to a remote chance, but that money wasn’t anywhere near enough to buy me out of 10 years of working. Looked at in that way, it was a rational choice, though a long shot.

I chose individual shares and a HYP approach, because I thought I was smarter than perhaps I was. I still have most of those HYP shares. It didn’t matter what you bought then, everything was down the toilet. It mattered that you bought.

Swimming in troubled waters – if I will fall, may I fall slowly, all is lost

I recall coming across the song Désenchantée from a colleague, and even with schoolboy French I got the feeling and it matched my mood playing on my work PC as I put half or the 2008/9 allowance into a Cash ISA and half into an III S&S ISA.

I had been slaughtered in the dot-com bust a decade before. Intellectually I saw the logic of Monevator’s words, but I did not feel that there was any hope, after all, it hadn’t worked out that well last time. I invested that money because I saw I was going to fall, though not when the end would come3. I did not have 10 years of working life left ahead of me. Your late 40s is often a troubled time of life,  you cannot live the afternoon of life by the principles of the morning.

The next month I did the same again, in the new tax year, but I also signed up to the company salary sacrifice AVCs and pushed my pay down to virtually the minimum wage, investing in a 50:50 UK:Global index fund. The other options were cash or 100% UK. I did not do this because I was an optimist, I was of the view that this was most likely a lost cause, but that there was a worthwhile chance.

The modern FIRE landscape is a very different place from that lonely and desperate world

We stand on the ramp of a long bull run from those troubled times. Extroverts are optimistic guys, they need to feel things can only get better. Let’s hear it from MMM on the practical benefits of outrageous optimism. Pete isn’t the sort of fellow to play Désenchantée on loop as he throws overboard the trappings of a comfortable middle class lifestyle into the bottomless stock-market pit for a low chance of a big win. He knows he is going to clean up and face-punch the bad guys. Every last one of them. Self-doubt is for pussies.

His story is better, and it’s been turned into a movie. Well, there’s more to it than that. Apparently it was shown in London earlier this month. I totally agree with Cashflow Cop that it shouldn’t just be the Londoners that should get the benefit. CfC has been instrumental in getting this sorted so it will be shown in Birmingham on the 5th of July. Take a look at Cashflow Cop’s site more generally – he is a UK FIRE aspirant who doesn’t live in London or work in finance. As for the movie,

It’s all rather American, but the principles of financial independence are the same. Go and see it for inspiration, particularly if you are an extrovert.

But leaven the feelgood story with the knowledge that…

Continue reading “Playing With FIRE”

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All you cash belong to Zuck

Say what you like about Mark Zuck, but the fellow doesn’t lack ambition. There’s a bit of the Terminator in him, or one of those mediaeval giants that takes quivers full of arrows but keeps on coming.

It not just your innermost secrets, your lives, your loves and of course what consumer goods you buy he wants to know. The Zuck is now coming for your money. Be very afraid. It’s called Libra, it’s blockchain, and Mark is doing it because he wants to make more money and know how you spend yours has a deep compassion for the

1.7bn people around the world without a bank account would be able to use it to make instant and nearly free international money transfers from their mobile phones

Earth calling Zuck. You may have a brain the size of a planet but has it ever occurred to you that a good number of these people don’t have a bank account because they don’t have any money? How do you fix that? Well, paying your taxes rather than spiriting the ill-gotten gains into Moneyland would help this altruistic aim more than facilitating people to spend money they don’t have, all watched over by the benevolent gaze of Facebook’s servers.

the great and the good involved with Libra

There are other companies involved, and of course Libra’s website makes much of its credentials as a not-for-profit independent company, along with all the good is will do for these good folk who are unbanked, possibly ‘cuz they don’t have anything to bank. To wit:

Reinvent money. Transform the global economy. So people everywhere can live better lives.

There’s a Youtube puffery vid for ya

There are some questionable statements delivered in that minute and a half:

Technology has improved the world around us

Not sure what Extinction rebellion would say about that. Not if you’re a London sparrow. Or a cyberbullied teen. But sure, it’s improved many things, lets move on:

So why is it simple to send these [on screen example of low-value consumer goods] anywhere, but not money? What if we made money truly global, stable, and secure

Err, that’s because there’s no United States of Earth to protect us from the goddamned strongmen that we already have and seem to be siphoning off resources into offshore tax havens? Who watches the watchers, and how to we kick the blighters out if we create such an overarching single point of failure? The problems here aren’t technical. They are human. The history of the world shows you shouldn’t put a few people in charge of power. Piss off, Zuck and your ubermensch mates. What part of No do you not understand? As for secure, with Facebook on the board that’s just not happening. I’m not even sure it’s possible at all. Every bugger has their price.

Let’s run Libra through the bullshit translator, shall we. Let’s take a look and what’s wrong with money now. Money is two things. One is a medium of interchange. If you have money, you can get people to do things for you, right now – clean my windows, fix my drains, make me and my SO a nice meal in attractive surroundings, build be a superyacht so I can big up my ego.

It’s also a claim on future human work, which is often called a ‘store of value’. For various technical reasons, ever since 1971 and arguably before then, it’s not particularly good at that. To store value these days you are usually advised to use it as a medium of interchange to buy a diversified array of other things like equities and bonds. Storing value as currency doesn’t work that well in normal times. It can work exceptionally poorly in abnormal items – Venezuela now, Argentina not so long ago, Germany in between the wars. It was pretty iffy in Britain in the 1970s 😉

Improvement is possible. Some people critique the issue of there being no anchor – once upon a time currencies were backed by gold. With crypto you could probably achieve a similar limit in the money supply, well, until quantum computing comes along and people get to forge it. But that’s technical, it’s probably solvable. There was a problem with the gold standard in an expanding postwar economy. If your money is fixed and the amount of valuable stuff in the economy it is chasing rises, you are locked into deflation, and the real value of your mortgages and bank loans goes up with time. Of course, having floating currencies lets politicians promise more than they can deliver and let a slow devaluation in the currency tax people invisibly. But given that we don’t want to pay tax I guess it’s got to come from somewhere…

OK, maybe we have gone ex-growth, environmental degradation may mean contraction and convergence. Maybe a fixed  worldwide amount of money could work. But not if it’s run by Facebook.

Iffen it ain’t broke don’t fix it.

Banks use ancient IT systems, but I can’t recall the last time a load of money just disappeared. Challenger banks are making the user interface better. Western consumers don’t need easier payment systems and micropayments. really they don’t. Consumer debt is already bad enough

UK households already owe £60k on average. They don’t need easier spending

One of the easiest wins you can have with spending is simply to insert a wait loop. want to buy something that’s over £50 and isn’t a matter of health and safety? Stick it on a piece of paper with the date, and wait a week. If you still want it a week later, go buy it. It’s amazing how many want-it-now purchases can be canned.

Paying for something really isn’t that hard these days, assuming you have the money. We don’t need a totally new edifice run by tech giants to fix something that just ain’t broke in that way.

I’m not saying that money can’t be improved. But let’s think long and hard about the requirements capture, the social ramifications and how we kick out abusers of power and grifters before we build a system because money attracts bad sorts like shit attracts flies. Before we have a Global Currency of Earth let’s have a United States of Earth first, eh? Currency unions are historically rife with problems – ask the Greeks how that’s going over a small area with closer economic convergence that Earth.

Libra. Just say no, if only to keep Mark Zuckerberg out of your payment history. He knows far too much about you as it is! One of the most scary bits in the Grauniad article is the kicker at the end.

Facebook claims financial transactions will remain siloed from social media activity and that user ad profiles will not be based on Libra habits

Yeah, right. And I am the King of Spain.

an engineering cameo at the Royal Bath & West show

There’s no finance angle – it’s a snapshot of an early retiree going along for the ride at a trade show, something I used to do at work.  It was good just being a grunt, rather than the organ grinder

One of the odd things about retirement is doing something that reminds me of my working life, but in a different context. I’ve done enough trade shows for work, both as a visitor but also as an exhibitor. Things like that don’t fall naturally to an introvert. Engineers often become engineers because they are better with things than with people 😉  But you can learn. And so it was that I had a very minor walk-on part on a stand at the Royal Bath & West show in the imagineering tent.

The show itself is an agricultural show, so there’s the usual bits of horsing about, and exhibits of sheep and pigs. Some of the vintage vehicles were pretty neat. Farming kit aplenty, and it would have been a good place to load up on wellies if you are going to the Glastonbury mudfest in a few weeks.

the train set was fun

the train set was fun

I was lucky enough to be there early in the show’s run, an agricultural show can get pretty high when the weather is warm 😉

Imagineering is all about introducing kids to engineering. I’d never heard the word before, though it has a half-century history in the States. Personally I had been pretty cynical about the idea. I’m of the view that if the interest is there, it will out. I learned a fair amount of electronics from picking TVs out of skips (people were throwing out their B&W full-size TVs in the 1970s as they replaced them with colour TVs) and scavenging the parts1. I learned from books and magazines that were written for adults.

Continue reading “an engineering cameo at the Royal Bath & West show”

Brexit – not in my name, thanks

It’s a day after last night’s drubbing for the tosspots who thought it was a clever idea to hold the 2016 EU referendum in the first place. So what is the conclusion they came to?

Election results, courtesy Jacob Rees-Mogg in the torygraph. Apparently it’s a blessing in disguise. Dunno what he’s smoking, but I bet it isn’t legal if it’s that strong

Take it away, Jacob Rees-Mogg. What did you learn?

Most obviously, Brexit needs to happen in a true form. The vassal state that apparently the Government and the Opposition have agreed, including a Customs Union and high alignment, is not the answer. This will simply ossify the failure that has just been punished in the local elections.

The Tory party needs to be the Brexit party and to win back all those who are planning to support Nigel Farage and my sister, Annunziata Rees-Mogg, at the European elections. To do so will show the path to a clean Brexit. This is not to deny that the current House of Commons has set its face against leaving the European Union properly and wants to remain at least semi-attached, but Parliament against the people cannot work for long. Voters will not tolerate such a state of affairs.

Hmm, that sounds like a challenge, Jake. It’s perfectly possible Britain is so enamoured with pure “kill em all” Brexit that Annunziata will romp home with the bacon at the end of this month. We shall see, eh? In the meantime, do you have a good explanation for the lib dem and green shift in your pic, Jake, seeing as they aren’t fans of any sort of Brexit? Jake wasn’t the only fellow to make this category error.

election results show voters want both main parties to ‘deliver Brexit’

Eh? How the hell do you interpret massive gains for the Liberals who are unashamedly pro-remain, and the Greens, who are functionally pro-remain, as a massive support for Brexit? Why is UKIP down more than half? WTAF is with the tin ear and blinkers?

It may not signify a massive push for Remain, after all, these elections are meant to be about local issues, which Brexit most certainly isn’t, but if you were to read anything about Brexit into it, less rather than more Brexit would seem to be the obvious inference to draw.

And anyway, Treeza, you took on this job so it’s your problem to deliver it. Verhofstedt was right that the Brexit was a catfight in the Tory party that got out of hand, so if it destroys your lot then perhaps that’s the price you pay for not kicking out the nut-jobs early on. This voter doesn’t want anybody to deliver Brexit. Not in my name, thanks. I was lucky enough to be on the winning side this time.

In a delightful twist today I got a welcome invitation to vote for the EU parliament elections.

Well I never, an EU Parliament poll card, against May’s apple blossom. That’s the month of May, not Theresa, whose nemesis JRM quoth “Never glad confident morning again”

The People’s front of Brexit and the Brexit people’s front

can go and stick it as far as I am concerned. I wasn’t for it in the first place, I thought May’s deal matched roughly the result of that 2016 vote but it appears that wasn’t good enough for the nut-jobs. FFS it wasn’t good enough for the nut-jobs supposedly on her side, they wanted a pure ‘and we curse you and the horse you rode in on’ version of trading with our nearest neighbours. I will try and understand the d’Hondt proportional representation system of the EU elections to maximise the pro-EU form of my vote. Brexit was wrong then in my view but it was doable and fair enough in 2016. It’s gotten even more wrong as time passed by, an amped up all or nothing caricature which doesn’t justify the slim margin. If you want that sort of extremism, then put it to another bloody vote, and this time, Brexit lovers, say what you are FOR rather than against. Give the People’s front of Brexit form.

Here’s how it’s done.

I have not been represented in UK elections the last time

and I’m getting sick of it. Everybody seems to be yelling about the will of the people as in the 52% who voted leave, and ever since 2016 anybody of the 48% gould go swing in the wind. The result of that damned referendum was only slightly over 50%, it wasn’t overwhelming. Due to the nature of the voting system in the UK1, there are basically two choices in with any chance, and both of them promised to promote the goddamned Will of the fricking People as sampled in 2016. But the Will of the People is a moving target. We’ve had a general election since then. It would have been nice to have had a chance of voting for an unashamedly pro-Remain party, that had a chance of winning if there were enough Remainers to carry it. But there was nowhere to go for the for a Remain vote. I voted for one that didn’t have a chance of winning rather than vote for either of the two main parties who were in fear of the Referendum. This was a general election that happened after the bloody Referendum. the whole point of an election is that the answer can be different from what it was last time. Else what’s the point?

The thing that scares me most about Brexit is why it’s most ardent fans are so obscenely rich

The referendum was for leave, but not necessarily the most extreme leave. The result wouldn’t have cleared the 2/3 majority bar many countries set for constitutional change, so feelings weren’t extreme. Rich people seem to be taking us to the more extreme end, for example let’s look at the good people of the European Research Group2 Continue reading “Brexit – not in my name, thanks”

97% off annuity rates – with Class 2 NI contributions

Annuities are dear, so if someone offers you 97% off, you run, not walk to take them up on it. If you are an early retiree, don’t leave State Pension on the table. You need to get enough NI to get a full SP before you reach SP age, though don’t be in too much of a hurry to pay extra years until you are in the endgame of working.

I’ve always wanted a good reason to pinch this pic from Monevator’s post that kicked me up the backside to get into the market in 2009, and now I have it

The Ermine declared himself done with work in 2012, and little has occurred in the intervening seven years to make me enamoured with the idea of working again. I’d reconsider if I were going to live forever, or perhaps even to 150+.  Despite Monevator’s exhortations to the educated erstwhile specialists among us to get their asses back into the workforce – on a post ironically titled Choose Time, I can’t be arsed, I’ll choose time, thanks. Continue reading “97% off annuity rates – with Class 2 NI contributions”

In praise of the Flexible ISA

Flexibility is a good thing in an ISA. For most of their existence, ISAs and their forerunners PEPs were both use it or lose it tax-free allowances, and one way tickets. You could contribute money to an ISA, but draw it out and you lose the tax-efficiency of that contribution. Put 20k into your ISA in one tax year but draw 10k out, your allowance for that year is 20k-10k

Flexible ISAs make this work right. In the above example your allwoance for that year is still £20k, as long as the net contribution is made within one tax year. Here’s the Building Societies’ Association on flexible ISAs.

Most of the running about flexibility in ISAs is made about Cash ISAs, and the advantages are most obvious in cash ISAs. For most people, however, Cash ISAs are a waste of time, because you can usually get a better return on your cash/lose less of it to inflation with non-ISA accounts, because most people have a £1000 tax-free personal savings allowance on interest. Typical interest rates in the UK are up to 2%, so if you are using this allowance to the full you have about £50k as cash savings. That’s quite a lot – if you have that amount held as cash then you should ask yourself if you are allocating capital in your best long-term interest1, although of course if you are buying a house or have a highly variable income then maybe that is OK. Continue reading “In praise of the Flexible ISA”

Through the Brexit looking glass

Curiouser and curiouser

This is purely a Brexit rant. I am not a fan of Brexit. If that sort of thing bores you then move along, nothing to see here.

The Ermine sits in his eyrie surveying the discombobulation that is Brexit in puzzlement. It was all supposed to be so easy in 2016. I’m reminded of that cartoon of the guy in the signalbox 1 watching train wrecks all around, muttering that’s no way to run a railroad.

Funny old crew, Brexiters. Despite the Leave conspiracy theory that it’s all Remainers wot are doing the wrecking, I think the most useful idiots in this game, from a Remainer point of view, are the misnamed European Research Group 2 . These are professional wreckers, the 21st century equivalent of Red Robbo and his crew at British Leyland. With top hats and Eton accents. I’d also remind Leavers that theirs is a broad church that contains two diametrically opposed constituencies.

One team of leavers set against the other

One of the tenets of Brexit fundamentalism is that there should be no backsliding on 2016. There was a single vote in June 2016, they got the result they wanted, that is the fundamentally determined fricking will of the people and shall stand for all time despite the bullshit said on all sides. Continue reading “Through the Brexit looking glass”