The Ermine is Retired

There’s only so long I can talk about early retirement before the time has to come to actually do it. That time was yesterday, to collect together the paraphernalia of an office worker’s trade ready to check them in for the last time.

Tools of a typical office-based worker’s trade, with unsightly electrical test labels

Moving on from something I’ve done for over two decades is always going to be strange, and my colleagues, many of whom I’ve known for most of those 20 years, gave me a great send-off at a local pub. The Firm bought us all a couple of  rounds of drinks, and I was armed with a pitchfork from the guys to hassle the uninvited to ‘gerroff my land’ and the wherewithal for a dinner with DW and a good skinful later on 😉 They did a fantastic job and if anyone is reading this then thanks guys – it was really appreciated!

It was an interesting day, the first half tipping my hat to the old world, and in the second half of the day drinking beer and having a barbecue on the farm tipping my hat to the new world.

Moonlight barbecue. None of these good-looking young folk are me 😉

I’ve been on leave for the last couple of weeks, and making the most of the time to set the transition right. It is in times of change that there is the opportunity to change old ways, but at the same time I shouldn’t change too much, for I have time enough in future to assimilate them.

The Island Dream opens this collection

Life without the daily grind is good. In some ways it feels like I have passed through a long, thirty-year tunnel of working, and come out blinking in the evening sunlight on the other side. Some things feel like the care-free days of childhood, but of course with far more power to affect things around me. And, of course, some of the marks of the long passage across sometimes stormy seas. There were hints of what I felt when I first read the early short story The Island Dream by Hermann Hesse. I read this as a young adult, the young Ermine was far more idealistic and mystical than I am now, and the somewhat purple prose resonated with me then. Hesse was 22 when he wrote that, ad it has a narcissistic introspection that one can only really get away with at certain stages of life. And yes, I do get the irony of writing that on a blog 😉

Curiously enough I’ve spent less than when I was working, my car has hardly moved so I guess I ought to sell the damn thing before I start having grief with the battery. I’ve used my bike more – the journey to work and back at 6.5 miles each way was a little bit beyond my natural range but most things are now in a three mile radius which is easy by bike, even for someone who has spent 20 years in a sedentary occupation. However, cycling gets a little easier with time, and indeed I may switch back to the drop handlebars from the more sit-up-and-beg setting I used of late.

Getting my time back is one of the great revelations – so many things are easier, and indeed cheaper, if you don’t have to pack them into weekends and evenings. When you can work your day round the opportunities and the weather, a bike is far more useful than it is if you’re trying to make things happen in a short space of time. Fixing things is so much eaiser as well when I can take the time to change something, and then mull over what the symptoms are telling me. I was able to get the starter motor of the tractor serviced by having the extra time to work out how to remove it and taking it to Eastern Auto Spares who tested and cleaned out the works. Previously this job was looking like getting a mechanic out to service it, which would have cost a lot more than the £30.

Spring and Summer is a good time to stop working – the world looks like a friendlier place than it did in February when I first applied for voluntary retirement.

So what does retiring early feel like?

Exhilarating, a relief, and scary as hell. I can do all the calculations I like, and many things are more securely fixed for me than for other retirees. I am still changing one of the deep assumptions that I’ve grown up and lived with, and that is that you need to work to have enough money. I’ve aimed at that as a child and student, and lived it for the last 30 years. I am half way through my adult life. Imagine being on an airliner travelling from New York to London. You would wonder if the captain reaches the halfway point, and then announces that he is going to cut the engines. It’s a bit like that – the good thing is that the noise and hum of work has ceased, but it still feels really strange. I am not a particularly early retiree – I am nearly 52 and the normal retirement age for The Firm was 60 until three years ago, so I only had another eight years to go. Nevertheless, some of the decisions made with early retirement are all-or-nothing. If I found myself short of money then the option of just going to work is not that open to me, I’ve got no desire to stack shelves on minimum wage and The Firm has been busy trying to pay off its old gits for the last decade or so, so it isn’t hiring 😉

Scary is irrational – after all if I simply divide my redundancy money by eight, add it to the proceeds of some share options and the existing revenue from my ISA I can sit tight and enjoy the Jeremy Kyle show fo eight years and then draw my pension at a shade under half salary. I haven’t lived off that much for several years now. Okay, so I won’t be parking a Lamborghini in the drive or going to New Zealand on holiday, but so what. Even if I make a pig’s ear of investing the tax-free part of the redundancy money and write it all off to zero, I still have a couple of years’ salary saved in AVCs. So there really not too much that is scary and it’s easy enough to get an intellectual handle on that.

After all it’s been common enough in the past for there to be gentlemen of leisure in the sense of this definition

A man who derives a living from their own financial assets or has other sources of irregular income leaving them financially secure without any typical employment, duties, or financial responsibilities. Such a man may be self-made, or they may be the result of inheritance, a trust fund baby, or an “idiot son”.

as opposed to the second definition in the Urban Dictionary 😉 And self-made, I’m happy to say my parents are both still with us.

However, people of independent means do normally stick out as being hellaciously wealthier than their fellow-men. I don’t – I live in a semi, drive a 13-year old car. What I spend money on is very different to a lot of my peers, however. The proportion of my net worth held in property is a lot lower than the >40% typical of most people according to HMRC, and that’s even allowing for a slightly unusual property portfolio of not just my house. Clearly I should have been aspiring to a much more fancy house!

Scary is inherent in charting a course according to different lights to most people, but it’s not necessarily wrong. I’ve done the best I could and have tried not to lie to myself about the reality of what I’ve tried to do. If I could have shortened the three year period between starting to save to leave early and actually doing it I would have done, but I couldn’t see my way to achieving the goal in a compressed timescale. The corollary to that is once I’ve achieved the goal, then it was time to take the logical course of action. Each and every day I lose one day of remaining lifetime, just like you do too, dear reader. Therefore, if I wish to live life intentionally, I need to do aim a little higher that working for The Man in order to win beer tokens each day. And that’s what I have done. Who knows what the future will bring, after all the current long-running financial crisis could be the harbinger of Peak Oil overwhelming the assumptions underpinning industrial civilisation. Working for The Firm another eight years wasn’t going to protect me against that. Hopefully the future will look more like this.



Tesco – enthusiastically and tackily football mad

Despite the recent rain and the prognosis for more today, we wandered out this fine summer’s day in search of the finest cod roe. Round these parts that’s to be had from Richardson’s Smokehouse. DW knew about this before Johnny-come-latelys like Nigel Slater, but truth be told he probably did more to put it on the map.

Richardson's Smokehouse, Orford. I really must learn to avoid shooting into the sun 🙂

This part of Suffolk seems to be a magnet for London types in search of fine living on the weekend, some of the weekenders from The Smoke in Southwold seem to know the area better than us 😉 There’s competition round these parts with Pinney’s which has a shop in a much more tourist-friendly place on the quay.

Pinney's shop on Orford Quay

One of the things that made today even better was that the madding crowds seemed absent, indeed the roads were quiet and the village was quiet. I’d noticed the dearth of people yesterday when cycling in Ipswich, and wondered if it had something to do with all those Ingerland flags about the place.

Now the Ermine has detested sport, particularly team sports, ever since school. However, I do love it when sport is on the TV, because a) I hardly watch TV and b) it keeps everybody off the streets. So I’m all for Euro 2012, and indeed other sporting events, I hope people have a really great time while they’re leaving the real world to me!

Tesco loves Football too – as a way of parting the Punters from their cash

So one the way back we wander into Tesco. Mindful of the recently trumpeted researchthat supermarkets lead shoppers to buy 35% more with artful packaging (original report)I thought I’d take a look.

One of the obvious conclusions I had on entering the store was that Tesco really, really, loves football.

Tesco really loves football. Look at all the things Euro 2012 related you can buy

Look at all that lovely Stuff you can buy! Is it a wonder nobody has any money left in the UK? Heck, you can buy your lardy kids an Official England Product of a £5 plastic football, in the vain hope that they lift their eyes from the screen they’re currently engrossed in long enough to consider a kickabout outside. I suppose it might happen, in the same way as It Could Be You in the Lottery but It Almost Definitely Won’t Be You. Presumably these footballs  no longer stitched by kids in Pakistan but perhaps stitched by kids somewhere we don’t know about yet. What is an Official England product anyway? Where’s the office that makes it Official? Is there only one of them? Can I get a peaked hat and a red rubber stamp and make merchandise official? Why does it make something sound more desirable to slap the meaningless adjective Official on it?

Hey, you can buy Official crates of wife-beater, any 3 for £22 on the left. Don’t like Stella? Tesco can do you industrial quantities of Carling to swill with your mates on the Big Day. And good luck to you if you’re prepared to sling that sort of ropey liquor down the hatch. Presumably the spirit of Euro 2012 doesn’t go as far as getting some of the rather fine lagers that Europe has to offer us, or indeed the ales of England. No, ropey, gassy and made by InBev seems to be de rigeur, but heck, something has to be done to turn the fortunes of Tesco around!

Mindful of the All Seeing Eye top dead centre I went to the other end and took a look back down, to secure the picture before some burly chaps with thick necks decide to take an interest in my research into Tesco’s sudden enthusiasm for the footy.

97p for a Euro cushion. Classy

You can get a Euro 2012 mug or cushion for 97p. I can’t quite work out what they were selling us in the foreground for £2, but they were obviously expecting to sell an awful lot of it.

Then I had a disturbing epiphany. All of this ephemeral crap was an insult to the resources of the world, shite created explicitly to become persistent landfill for hundreds of years to come. Tesco don’t give a tinker’s toss about football, but they see us as mugs to sell a transient feelgood factor and a few gallons of cheap and nasty metallic tasting lager.

So I passed on the opportunity to destroy a little bit more of the world’s resources to make Mr Tesco richer. Each to their own, clearly somewhere in Ipswich there’s a desperate need for plastic footballs and limp silvery doo-hickeys at £2 a pop. though if you’re really going to drink £22 worth of wife-beater I do suggest you might want to have a word with your insides first to gauge their take on it all 😉

Oh and in 3012 the equivalent of Time Team will be excavating the local rubbish tip. Some hypervision presenter will be standing beside a pile of this garbage and wondering to their audience why the good people of Ipswich had such execrable taste in the old days.

Tesco ain’t all bad. They do some things well

We managed to escape the blandishments of the football section, oddly enough, to get what we came for.  Anything as big as Tesco can’t be all bad, and they are one bulwark against the creeping malaise of Scaredypants that pervades life more and more. Tesco happens to be one of the few places in the area that sells Camembert from unpasteurised milk.

A Tesco Camembert. You owe it to yorself to make sure it's AOC

Camembert is meant to be made from unpasteurised milk. The trouble with that is that industrialised producers are shit-scared (literally 🙂 ) of E coli propagating through their processes, so they’d like to use pasteurised milk, and therefore can’t label their product AOC (Appellation Origine Controllee). Rather than accepting the fact that they are making a substandard product cheaply and taking the hit in the marketplace of being seen as an also-ran cheese, they lobbied to change the AOC definition. Which is a bit like me saying I can’t hit the goal at Euro 2012, could they please change the rules of football to make the goal the whole width of the field, please? It all sounds tremendously French, but it looks like the bureaucrats held firm and at least the Isigny co-operative wound their necks in, and continued to use unpasteurised milk.

The trouble is that when people of a nervous disposition read the label.

Warning - eat this and you might DIE

They then go Waaaaahh, I might DIE. Nooooooo. It might be BAD for CHILDREN. Eeeeoooowwww. Well, yes, if you go around this old world being frightened of anything with any taste to it and avoid the great outdoors then you might compromise your resistance to infection. That sort of thing still didn’t help Howard Hughes.

As MMM opined recently, safety is an expensive illusion – and it buggers your life up. Use your head. People have been eating this stuff for years. Sadly the increasingly frightened people will start shunning any out-of the ordinary experiences because ‘better to be safe then sorry’ and ‘think of the children’. There are lots of things that could go wrong. For a start, what idiotic jerk thought up of the idea of roads? People driving FAST in OPPOSITE DIRECTIONS with no SAFETY BARRIER? Where are the little yellow stickers there? Who let that happen round here, sack the buggers.

Anyway, we got out of Tesco with our Camembert cheese, and without any disposable Euro2012 paraphernalia despite Tesco’s best efforts to persuade us otherwise. And so far, fingers crossed, I’ve managed to survive the hazards of the cheese without noticing the awesome dangers I’ve dodged, yet again.

Interactive Investor wind their necks in about exorbitant charges

Not as far as reversing the exorbitant charges, but at least to let you show a clean pair of heels at no cost…

Looks like the angry hordes of Monevator’s men and Martin Lewis’s moneysaving experts have brought some pressure to bear in iii, formerly known as a reasonably good deal execution only broker until chief exec Tomas Carruthers and his band of merry men had  brainstorming meeting on the topic of ‘how can we make more money’ resulting in a sudden rush of blood to the head and this arrogant missive to the punters.

They’ve shown some contrition vis-a-vis their previous customers, who were hacked off at being charged £15 per line of stock to get the hell out of there. They’ve softened their tune. This is what their website said at 19:00 7 June 2012 (just in case they change it)

Transfer charges

We are confident that for the majority of our active investors our new pricing plan represents great value and is highly competitive.

There are many other customers who will find that by consolidating some of their investments with us they can further benefit their position. For investors who wish to transfer any holdings into our account we will cover transfer charges up to a limit of £100.

However, having listened carefully to our customers, we understand some of our customers have decided to move to providers who do not cover transfer charges, and some are reconsidering their financial strategy and now wish to close their investments entirely.

We have no desire to profit from customers who wish to close or transfer their account, and want to ensure all customers have an absolutely fee-free exit route.

We apologise for any undue concern or inconvenience that customers in this situation may have had.

We would like people to take the time to fully assess our offer and to consider the positive impact this could have to their investments.

If you do decide to leave us, though, please call us on 0845 200 3637 by 31 July 2012 and we will ensure you have a fee-free exit.

You can now git for nothing. Which is an improvement on the previous state of affairs, where an Ermine was going to have to eat a £225 hit to clear off with my 13 lines of stock and two index funds. It’s cheaper to eat the transfer charge than take the £10 sell charge on iii and the £10+ charge of rebuying plus the 0.5% stamp duty. Which is A Good Thing.

III are still desperately arrogant and think their customers are stupid however. In their advertising they trumpet that the FT made them Deal of the Week on the 2nd of June. I don’t know what they were smoking or whether money changed hands because my freebie FT articles are used up. More disingenuously, iii then chortle about kudos from Which magazine in May

what others are saying about iii ( on 7 June 2012)The May issue of Which magazine ranked us first out of 23 fund supermarkets. See a summary of the report online at the Which Magazine website.

Well Tommo Carruthers, one of the biggest downers you did was start charging dealing fees for funds, punk, so Which magazine was reviewing on data that is now false. To wit-


Ermine annotated copy of Which website about iii

Strangely enough iii’s link to which didn’t work so this one probably won’t either. I got there by searching for fund supermarket on Which’s site. I took that snapshot on the 7 June 2012 at 19:40.

So what exactly is the point of index funds in today’s market then, when ETFs give you an immediate price as opposed to forward pricing?

I’ve gone right off funds, from this experience. From my POV the whole point of buying funds was you could do it in itsy-bitsy pieces over time pound cost averaging and all that jazz, and the absence of dealing fees was what made it possible. If you’re going to be eating dealing fees on iii then heck, just buy the ETF a good honest share. Looks like fund buying is either going attarct dealing costs or going to have to be purchased in much bigger lumps than £100 or so.

So I investigated TD, because several people recommended them from my earlier snarl about this, and then TA from Monevator delivered the ultimate recommendation. So I opened a regular account with them to test the water before moving. Only to find they are fee-free on funds, but you have to buy funds in £500 lumps so some of this idea goes west. Fair enough, maybe that’s taking the piss, but even so, with £10k a year ISA allowance you’re only going to be able to get 20 slots so better not be trying to pound cost average more than two funds eh? TD do also support a regular investment which is batched on two Wednesdays a month where the limit is lower but you have to set up a steady payment. My income will be more variable so I don’t want to do that, I’ll still invest the whole ISA in a year but want to be in charge.

What was nice about iii was I could buy £100 of HSBC FT allshare index each month  and £100 of Legal and General Global every other month dealing charge free. All that’s been canned now.

From a fees POV I’d be okay with staying on iii and simply selling out my funds and considering buying an ETF say six-monthly on the £1.50 batch job price. However, iii have done a classic example of how not to change fees. It doesn’t affect me enough to want to move on its own, but the arrogant cockiness of Tomas Carruthers in his original mail telling me how I should trade just doesn’t make me want to do business with them.

III also made a right pig’s ear of switching from a Halifax white label dealing platform to their own, they take ages for dividends to show up and the latency of fund purchases (from order placing to execution) has become glacial relative to the current febrile state of the markets. However the real reason I want to move is that I don’t like the reports of the unsatisfactory financial state of the company. I’m too tight to buy the Companies’ House report on them to substantiate the claim but added to Carruthers’ bad attitude I don’t want to be there any more. So hello TD here I come. At least it shouldn’t cost me anything to switch. And TD seem to limit their transfer out and close cost to £55 at the moment, which beats iii’s original £225 exit charge.

All of this seems to have come about because the FSA is trying to stop companies using kickbacks and backhanders from actively managed funds to reduce platform costs. Investing is going to get a little bit more expensive and a little bit more inconvenient from here on because this subsidy is going away. Gee thanks a lot, guys.


Preparing for the Harvest with Elderflower Wine

The Elder tree is often to be found growing right next to the house or an outbuilding, making a right nuisance of itself. They get there because birds love the berries, and then the bird sits on the top of a wall or the gutter and shits out the seeds, and voila, new elder tree you get to spend ages trying to hack down, only for a bazillion shoots to spring up. Apparently a clean cut encourages shoots,so if you do want to take one down then hacking away at the stump with an axe to open up loads of cuts is recommended. Elder is no use for firewood, indeed, presumably this line from the Wiccan Rede is there to prevent people making a right prat of themselves trying to use it to light a bonfire

“Elder be ye Lady’s tree, burn it not or cursed ye’ll be”

You have to have seen someone try it to know how little success is to be had 😉

In our long ancient hedgerows we’ve got lots of Elder trees and they aren’t doing anybody any harm. Indeed Elder has its uses, and one of them is making the most fearfully strong and sweet elderflower wine. You can also make elderberry wine but that needs to get aged for over a year. Since we want something for the Harvest party in the Autumn, we’ll go for the elder flowers.

Unlike the berries, the elder flowers have a short season. It’s best to harvest on a dry sunny day, but the best we can do is a wet Jubilee Bank Holiday weekend – another week and the elder flowers will have started to go over.

Everybody knows what an Elder tree looks like, OK 😉

The flowers come in umbels, which the decadent Germans have been known to deep-fry in a sweet batter. However, we prefer the alcoholic form, so we harvested a load of the flowers, which you have to avoid crushing which releases  the fragrance.

A fresh head of elderflowers

Prefer the fresh flowers rather than the older ones that are excessively open for a better flavour – that’s the trouble with these, the short ripe season means you get only a couple of weekends to hit the trees at their best.

Somewhat skanky overblown flower, we left this one for berries for the birds

The season is sensitive to the microclimate, in more sheltered areas the flowers were just buds

immature elder flowers

What makes this job easier on a sunny day is that you can take a sniff of the flowers, you want ones that smell good as there seems to be some genetic variation. even with a few hundred yards of hedgerow we don’t have so many to choose from, but we had decent results last year so we used trees from these areas again.

You need a pint of flowers per gallon. The next bit I’ve simply lifted from one of Mrs Ermine’s articles as I don’t understand all the technical stuff 😉

How to Make Elderflower Wine


  • 1 gallon of boiling water
  • 1 packet wine yeast
  • 3 lbs white sugar
  • A small cup of very strong black tea
  • Juice of two lemons or 1 teaspoon citric acid
  • 1 teaspoon yeast nutrient
  • 1 pint of Elder flowers cut from their stems and gently pressed down


  • Two one gallon demijohns
  • A large unchipped enamel container or stoneware crock.
  • Clean cloth for covering this container
  • Airlock and bung to fit demijohn
  • 2 meter length of clear food grade plastic tubing
  • Sodium Metabisulphite or Camden tablets for sterilising equipment
  • Large plastic spoon
  • Home brew thermometer
  • Extra boiling water for rinsing off sterilising solution
  • Sieve
  • Large Funnel


  1. Clean and sterilise the enamel pot or the crock, the thermometer and the spoon. Rinse off the sterilising solution with boiling water.
  2. Add all the ingredients except the yeast, yeast nutrient and two of the three pounds of sugar to the crock or enamel container and pour on the boiling water and stir well. Insert the thermometer, cover, and leave to cool.
  3. When lukewarm add the yeast and yeast nutrient, and stir in with the spoon (which must again be sterilised).
  4. Remove the thermometer, cover with the clean cloth to keep flies out, and leave to ferment in a warm place for three days.
  5. After these three days, sterilise one demijohn, the airlock and bung, the sieve and funnel, and rinse all this equipment with boiling water.
  6. Pour the remaining two pounds of sugar into the demijohn using the funnel and then strain the fermented flower mix into the demijohn, over the sugar. Fill so that the wine is around and inch (2.5 cm) below the fitted bung. Fit the bung and airlock (which should contain a little sterilising solution to prevent contamination by flies) and leave to ferment in a warm place for a couple of months.
  7. After these two months, sterilise the second demijohn and the plastic tubing, and rinse with boiling water. Remove the airlock and bung, and carefully siphon the wine off the yeast sediment into the fresh demijohn. If necessary make up the volume with a very little boiling water. After sterilising and rinsing the bung with boiling water, and refreshing the sterilising fluid in the airlock, refit the bung and airlock on the new demijohn.
  8. Leave to ferment until the airlock no longer bubbles, meaning that fermentation is complete. Your wine is ready to drink, or you may prefer to let it mature a little longer by siphoning into sterilised wine bottles

How much sugar goes into that again?

Each gallon uses 1.5 bags of sugar, so 5 gallons uses 7 bags!!!
One of the thing that struck me was the off-the scale amount of sugar that goes into it. Alcohol has a bad rap for all sorts of things, and not being part of a calorie controlled diet is probably one of the lesser of the charges, but you can see why it has a lot of calories because that is a lot of sugar. On the other hand elderflower wine is quite strong and 5 gallons is a fearsome amount that goes a long way. It took a lot of assembled party-goers two parties to get through the lot last year.
I took a look at the sugar label, and it looks like you could chug down half a bag of sugar and still remain within the nominal adult calorie allocation. It’s quite awesome that the small box above has enough power to run an adult human for a fortnight.
Sugar info

Elderflower wine has a very sweet taste with a hefty kick and seems to be targeted to the female palate in particular 😉 It seems to come out about the same strength as port subjectively, but apparently wine yeasts top out at 17%-ish as opposed to 20% for port.

I can take it or leave it but it does make parties more fun, and it’s nice to have the Harvest party with some of the produce from the field.

Retail Distribution Review ISA Reflections

Looks like I wasn’t the only one to find the results of the RDR not to my liking from the comments on the iii fee changes 😦 Thanks for all the great info in those comments, which helped me get things clearer in my head. I’ve mulled this over and this is the conclusion I’ve come to.

What seems to have been happening is that the kickbacks and backhanders from active funds have been subsidising the costs of servicing other investors. This means passive investors in particular have been getting a free ride and though I’m not passive I appear to be an extremely inactive trader so I’ve also been getting a free ride.

What’s likely to change about DIY investing in the UK as a result of RDR?

Looking ahead it seems that there are some obvious changes coming up:

  1. many platforms that used to let you trade funds without dealing charges will start charging like iii will do.
  2. The small guys will get rocked as fixed costs are a higher part of a small ISA.
  3. Spreading your isa accounts to gain provider diversification will probably cost you more.
  4. Passive funds will get less attractive compared to passive ETFs, because the lack of dealing fees which was a gift to drip-feeders may go. That leaves the daily forward pricing model on funds, which sucks because you never know what you are buying or selling at.
  5. Passive investors in general will get the shaft/have to pay their way. Once you get a few years’s worth of ISA contributions into one ISA provider this won’t make a great deal of difference but it will be dispiriting for people at the start of their investing careers.
  6. Some actively managed funds, such as Neil Woodford’s Invesco Perpetual High Income fund will become more attractive to Ermines because there will be fewer snouts in the trough 🙂
  7. The difference between investment trusts and OEICs may get smaller though governance probably still favours investment trusts. This may favour people who dislike NAV discounts on ITs
  8. The whole active/passive balance may shift away from the latter.
  9. There may be some platform fee structures that work better for funds and different platform fee structures that work better for shares/ETFs

I’m lucky in that I have two-and-a-half years worth of ISA and coming into the third so I have got over the early hump where the £80 charge would look high as a proportion of the income. Although I’d rather not pay an annual charge of £80, in practice it will probably be more like £40 as I will use some of the bundled trades. As a proportion of the £1500 dividend yield on my £30k (at the moment and going down) ISA the fees are 5% of my income. I’m sort of making a first approximation that over the long run capital appreciation will compensate for inflation 😉 A 5% hit is tedious, but not earth-shattering. However assuming I had the same spread of holdings in my first ISA year then the fees would be 15% of my income. That’s getting close to a taxman-size bite!

How do I need to adapt how I am investing right now?

For me the fee isn’t a deal-breaker on the existing HYP. However, what does affect me is the passive section of my ISA. I buy £100 a month of CPUKI (HSBC FTSE All-share) and a bimonthly purchase of £100 a month of LGAAAK emerging markets tracker. I did that to gain a passive investing benchmark and a feel for drip feed index investing; some things you have to actually do to find out whether you believe in. III have been becoming increasingly crap for funds purchases – the latency seems to be stretching to several days over that last couple of months. It looks like iii want to get out of the whole funds business if they start charging dealing fees.

That game has to stop, and I will sell these funds out while it’s still free to do so in June. I’ve only got £1400 in these. However, I do want to continue the experiment, and because I am into market timing (I know you shouldn’t, but heck, it worked well for me in 2009 in my pension AVCs) I want to do this in the coming Eurozone bloodbath.

I was going to do it in my iii ISA, however, I will probably look at another provider which is targeted to funds and still offers free fund trading. I’m leaning towards selftrade or bestinvest for these. Selftrade are candidates because they have recently changed their pricing structure (thanks to Oliver for the heads-up)  to adapt to RDR so hopefully they won’t change it again in the near future. Bestinvest because they charge a £15 per-account quarterly custody fee for index funds and they run Vanguard funds which will form part of my post-retirement investment approach. Because they charge an explicit fee they will have less need to change this to reflect RDR. And if I do this then they will work for that fee 🙂 Other providers I am considering are Cavendish Online and Commfreefunds. The latter seem due to take a direct hit from RDR but may be suitable for the Grexit daily purchase plan.

I’ll do funds this year outside the ISA wrapper. The whole process of transferring ISAs to keep the wrapper seems grief-stricken and painful. Hopefully investment platforms will have sorted out their fee structures in a couple of years, and I can sling this lot into an ISA then. If by then funds are still dealing charge free then I’ll split my ISA into a passive section on a suitable fund platform, and leave my HYP on iii. If funds aren’t dealing charge free anywhere then I’ll run a passive section in my regular ISA using tracker ETFs. Perhaps Vanguard will sell a Lifestrategy 80%equity ETF by then 😉

 What opportunities does this open up for me in the longer term?

One of the interesting things that came out of Pete Comley’s book for me is that the fundamentals behind the active/passive mantra is not as clear cut as some people lead you to believe. One of the reasons that it looks clear cut is that at the moment the results for the end customer are clear cut. Although some professional investors do seem to be a little bit better at the job than ordinary grunts, actively managed  investing delivers bad results because of the layers of fees drawn off by various intermediate snouts in the trough.  The RDR will shoot some of these hogs, and load some of the costs onto passive investors who had hitherto been getting a cross-subsidy from fund kickbacks. Self-select shareholders like me were also getting a cross-subsidy, and will take a little bit of the heat.

My high yield portfolio is not passive, and the values and aims are very similar to those of Invesco Perpetual’s High Income Fund run by Neil Woodford – heck I hold nearly half his top 10  shareholdings and came to those conclusions independently with some help. Which begs the obvious question.

I have spent an awful lot of time and nervous energy on trying to understand the investing universe, because it seems the only way to avoid getting slaughtered in the markets and have some chance of making an income from it. However, I don’t have the deep inquisitive fascination for the field that for instance shines  through Monevator‘s writing. I’ve gone for understanding as a means to an end. I’m sick of working for a living and reporting to The Man. I didn’t prepare early enough so what most people seem to do over 5-10 years I had to do in three, which telescopes a lot of the learning together.

This was my role model in the dotcom bust. It isn't what I want to be like now 🙂

For all that, I don’t plan to buy a shedload of plasma screens and cover the wall of my den with them and live like Gordon Gekko in the movie Wall Street. Neil Woodford is probably a far better HYP investor than I am, particularly in the area of rebalancing the portfolio which seems to be another thing I am not particularly good at, just how do you rebalance a HYP? I’d be happy to turn the job over to him via the IP High Income fund – if the fees come down for his  fund and/or the fees go up for me doing the job myself.

There are other things I want to be doing with my time. Although I’m not a candidate for spending time in Westfield shopping mall, in the end spending money is more interesting than making it. Once I have got enough money in the right places to make enough income, I want to close the door on it and let it get on with giving me a passive income to get on with the rest of my life.

Although the RDR has given me the shaft in one way, may actually be opening up other ways for that to be possible. TANSTAAFL so it’s time to man up and work out what I’m prepared to pay for in a investing platform. It may be as simple as a fund platform with half in IP High Income and the other half in Vanguard LifeStrategy 80:20 🙂

A lot of folks are spending a lot of energy boiling iii’s head about the fees change. That’s great if it makes them feel better, but in the end there’s not much you can do about it, and it is difficult and expensive to move an ISA. They’re dearer but not outrageously dearer now. One of the interesting posts on that thread however claims that the company is in an extremely weak financial position

Interestingly I’ve just had a better look at the Interactive Investor Group (I know, I should have done this before I put money there). The group made a £2m loss last year, on £14m turnover, which is pretty bad, and has made a loss every year except 2010. Despite being a plc, they are not publicly quoted and only have 63 shareholders. Venture capital is involved. Their reserves are negative and they had to have a round of fund raising after their last year end.

Now compared to a £80 p.a. fees increase this is something that is more concerning! I haven’t been able to substantiate this from a second source, however.