of savings rates, metrics and goals

Over the last couple of years the UK personal finance blogosphere has expanded massively – it is a great thing to see many more people taking their financial future into their own hands, and asking themselves what they want out of the whole work-eat-play-sleep tradeoff offered in a post industrial consumer society. One of the great things is that there is more awareness of these options – and that there are choices to be made, at least for some of us.

Most PF bloggers seem to be in the accumulation stage, although there are a few who have passed across the event horizon to the other side like me – The Escape Artist for one, and I greatly enjoyed Living A FI’s post on crossing the Great Divide. My summary of the changes looking back on work to non-work is here. I feel different to most writers, not only because I am looking back from the other side, but also because I lack much of the laser-like analytical focus. It’s been just over five years since I started. I have changed, the world has changed, perhaps my work is done here.

Of measurement, and metrics, and goals

Many of us are quite analytical employing metrics and goals, tracking progress against these goals reviewing them and keeping score. In particular the notion of the savings ratio clearly works for most people. I’m a lazy barsteward and don’t do any of that. I had no idea what my savings ratio was – all I knew is it wanted to be as high as possible to shore up the defences against an earlier exit from The Firm than I had planned. I guess I took RIT’s ยฃ0 target and considered anything else a fail.

Metrics never worked for me steer savings. For starters the whole goals and metrics things was one of the things that really pissed me off towards the end of my working life, I have no desire to gamify my life, and I lose the big picture easily if I focus on the details. I have never forward budgeted like you are supposed to – I have always tried to satisfy the Micawber rule by looking in the rear-view mirror and the shape of the road behind me in what I have spent, and adjusting the direction to keep the line on the right side of the Micawber threshold.

The one exception is I track investment dividend income and capgain, benchmarking total return against VGLS100 and the FTAS, unitising every year. I probably need to rethink the benchmark as I am diversifying geographically. Maybe benchmark the HYP against VGLS100 and FTAS and the overall portfolio against some sort of passive world index fund.

It’s difficult to work back and see what it had been when I was working – it was probably in the order of 80% for the three years as I ran out. This was easier for me than most because as I had discharged my mortgage. In theory saving has now switched into reverse – I don’t have use of pension savings yet and I don’t use the proceeds from my ISA. And yet one thing puzzles me – I look at how dramatic the contributions of Saving Hard make to RIT’s networth and wonder what is different. It might be as simple as I am ten years older and therefore the stock of accumulated resources was higher than the flow of savings, but on the other hand I didn’t have huge savings when I started in 2009 because I had favoured paying down debt in the form of the mortgage. I don’t count the value of my house in my networth because its value is more income-like in the rent I don’t pay. Shona Sibary is the cautionary tale of considering home equity as networth and spending increases in it. If you want to make money from residential property do it on other people’s homes, as a BTL landlord. I don’t do BTL and I don’t eat the seedcorn, so res property doesn’t show on my networth chart.

I only have investment gain at the moment to carry things forward until first my SIPP gives me an income that I run down over five years and then my main pension comes in, paid at the normal NRA of 60 for The Firm for the vast majority of my time there.

Ermine networth
changes Ermine free cash and investments networth – ignoring house equity and any pension savings

The stock market has been on a tear pretty much from when I left work, I have been lucky with that. This would have been tough had things gone the other way – as I crawled from the crash-landing of my career it would have been difficult to look at a gradual networth decline and not extrapolate that to a feeling of general wipeout and fail 2.0. Personal Finance is as much about the personal as it is about finance. The numbers circumscribe what is possible, but what matters is how you feel about the numbers and where they are going. That’s not always acknowledged – this is symbolic, it is part of the myth[ref]myth as in psychological legend, not the alternative usage myth as in fictitious[/ref] of one’s lifestream.

Not everything that counts can be counted, and not everything that can be counted counts.

Albert Einstein William Bruce Cameron

About half of these assets are in cash – I would have reached the other side (getting to 55 to use pension income) before the cash ran out even if the market had wiped out. But it’s as much about how it feels as about how it is. I fought against the fears of a fall in networth as I retired, but in the end Lady Luck smiled upon me – governments pumped stupid amounts of money into inflating asset classes, the oil price fell holding the inflation that would normally create at bay for a few years. I was fortunate enough to have invested in the right things, though over the last few years you just had to show up in the market and be reasonably spread out across sectors. Of course I would like to say that I was a stupendously brilliant investor. But that would be bullshit. So thank you, madcap governments who pumped up asset prices with fistfuls of funny money – I feel better set to face the coming crash than I did in 2012 because I will soon have pension income and once again an answer to that Micawber fellow…


Some of the government activity that made things look better in the markets may turn out bad in the end – perhaps as the decades roll by the centre cannot hold and it will all fall apart in a doom and death spiral. But so far, despite endless prognostications that the world was going to end including some of my own it hasn’t. Maybe it will end with a series of whimpers rather than a bang – after all the middle class is slowly being destroyed in the West and the whole experience of work is getting increasingly insecure, ugly and marginal for many[ref]Lousy and Lovely Jobs: the Rising Polarization of Work in Britain, Maarten Goos, Centre for Economic Performance, LSE[/ref], although a small number are making hay. Indeed, apparently by taking my engineering skills out of the workforce, I am a hazard to the economy and destroying Britain’s productivity.[ref]there seems to be much head-scratching as to why Britain’s productivity is falling, and early retirement isn’t fingered by Peston, for example, who seems to point to governments spiking the guns fired by Schumpeterian creative destruction[/ref] To which I can only say f**k that – if you want humans to work longer then stop being stupid with metrics – as Liz Ryan summarised

To hire talented people and hobble them with bureaucracy is the height of stupidity and poor management to boot.

In the long run this too shall pass, indeed. More and more jobs are being controlled, measured and rammed into a rigid structure. I rose four levels up the greasy pole at The Firm – when I started as a young pup I could authorise ยฃ500 spend before needing authorisation from the next level up, when I left as a greybeard I had to get authorisation from two levels up get a train ticket to London. The only correct response of humans to that sort of ossification of processes and systems is to get the hell out, and let the devil take the national productivity ๐Ÿ™‚ Work is supposed to sustain your life, not replace it.

I am an outlier – much less analytical, and I don’t subscribe to some common PF shibboleths

Maybe because I never worked in a management consultancy, I’m weak on the whole PDCA thing here. Philosophically I just don’t have the faith in in it when it is applied to complex and interactive systems, because it is hard to separate the variables properly, and also you are typically an observer rather than an active experimenter (unless you’re the Fed). As for the check part, the problem here is the dreadful uncertainty of some key variables – obsessing about the exact value of a variable with an inherently massive uncertainty leads to short-termism and massive over- and under- compensations. Lord Kelvin is all very well in his place but mistaking precision for accuracy can turn meagre knowledge into precisely incorrect beliefs.

I’m with Mr Fox here rather than the prickly one – read widely and cover much ground, and read lots of stuff I don’t believe in (the efficient market hypothesis) as well as echo chambers of my own predilections and prejudices. I should know why I disagree with something, what the counterarguments are and I should have the humility to accept that I may be currently believing something that’s wrong simply because sometimes I know jack shit and sometimes see things wrong. I try toย  at least do common memes the honour of trying to understand their premises. Nevertheless, I’m big picture fellow rather than streetfighting the details. I leave it to others to determine the details worth fighting – lower fees, yes, all the way, but I still can’t get excited about trying to win a return on cash.

There are a number of common tenets in the PF community – passive investing, an ultimate ~4% SWR, the efficient market and some of the consequences of that hypothesis, that I don’t find common ground with. So be it, I have no desire to push what may simply be my ignorance onto others. So far I have survived six years of investing reasonably well. That’s still not a huge track record and it doesn’t span multiple market cycles. The job I had to do was much simpler and lower risk that for many – I wanted to top up my works pension to compensate for the missing eight years of working, which is easier than establishing a complete retirement fund for 30-40 years of working. I have largely done that now – the HYP pays enough dividends now to make up the shortfall, and being tax-free as ISA savings the target was 20% lower. I will half split future funds, half to build the HYP and half to built a more globally diversified index ETF section of the portfolio to insure against something currently unknown about the HYP philosophy going bad in the decades to come.

The trouble with networth is while financial stock and flow are related, they aren’t locked together, and the variation is called volatility, and afflicts the stock value – the income flow is much less volatile. It was with great difficulty that I finally broke out of the instinctive association of volatility with risk. At some point, to become a successful investor, you have to do the Dr Strangelove thing with volatility[ref]hopefully without the drastic ending![/ref] and learn to love it. It gives you your opportunities as well as your challenges.

How I Learned to Stop Worrying and Love volatility
How I Learned to Stop Worrying and Love Volatility

Although volatility is sometimes associated with risk, it doesn’t stand proxy for it. For someone with a high proportion of capital in equities the volatility makes the savings rate/rundown rate unknowable over short time-scales of less than about five years, particularly if they are adding to their equity holdings.ย  I exchange some of my cash savings for equities rate limited by the annual ISA allowance. It is possible to derive some statistical estimates for the income from equities – after all the 4 or 5% SWR principle is derived from a Monte Carlo analysis of historical (US) data. However, the history of statistical analysis on equities is littered with some extremely big fails.

There’s an implication that I have a positive savings rate at the moment despite having no income, because the networth is still rising, though the value is volatile. It’s a bizarre carry-on that investment capital can increase at a faster rate than I spend it, I guess this was the thesis of Piketty’s Capital in the 21st Century, and of course there should always be the memento mori that the stock market has been going absolutely bananas for three years and really cannot go on like that. It’s not like the world has suddenly become free of financial hazard. Presumably it would also be possible for a working saver towards FI to have a negative savings rate even if he were saving as much as he could, in the event that his investment capital were high enough for a stock market crash to diminish his networth faster than he is saving.

This seems to be a problem with some of the common PF metrics – they start to fail you and become noisy and erratic as you approach the destination, because of the uncertainty of the value of equities. The rising uncertainty of the value can be seen as the increasing erratic trace of my networth as time goes by. This is characteristic of any equity based DC pension savings – and mine are buffered by about half the holding in cash.

There will be two more jumps in the networth when my DC pension savings appear in the total – one when I get to 55 and the other when I get to 60. After that the fossil savings from my working life will be mined out, other than my pension after 60 which is deferred pay, a flow not a stock. The implication of that networth chart is that once I get these extra funds/income I will be underspending. That’s what happens when you shoot the demon of consumerism. There are many people who fixate on replicating their income when they were working, and want to be able to buy a new car every three years etc because that’s what a prosperous middle class lifestyle looks like, and good luck to them. My income will be less than when I was working, though it is possible that my disposable income will be a little bit more. The working me put a lot of money into the mortgage, and a lot into spending on rubbish, and the focus needed to get out in three years still serves me. The lesson stuck – consumerism involves a lot of spending that doesn’t necessarily lead to enhanced quality of life. One of the metrics the consumer sucker uses is comparing their Stuff and lifestyle with other peoples Stuff and lifestyles, rather than their own requirements. Busting out the TV and other instruments of consumer mind control like Facebook and social media in general help shift the balance closer to following my own needs and wants rather than those of the admen.


32 thoughts on “of savings rates, metrics and goals”

  1. Like you; I’ve never really pre-planned a budget and instead prefer to look in the rear view mirror and analyse past trends.

    I track expenses/networth not so much to aid with future planning but more for personal motivation to be able to demonstrate the change over time. At the end of June will be my first anniversary of documenting the monthly reports and I’m looking forward to seeing how things have changed over the year.. if only for my own curiosity.

    I think its important also for people to have a view of how much they are saving in order to plan the future timescales and allocations. While some people plan simply to ‘save enough to retire asap’ and allocated funds as such.. I’m currently more focused on clearing the house mortgage for the security being mortgage-free provides, and will then look to redirect income into the ER funds.

    I do agree with you that people should be wary of including primary residence in networth while using the 25x 4% rules etc.


    1. I think I expressed it wrong – I do track all spending in Quicken. Largely nowadays to inform me – for instance on my recent Scotland trip I discovered that fuel was a much smaller part of the total than I expected.

      Like you, however, I’ve not usually forward budgeted. Yes, I’ve saved towards specific items, and I used to save the purchase price of a car divided by its expected service life.

      I think I’m missing some of the necessary genes on getting a feeling of reward seeing numbers track a goal. It just leaves me cold. I was able to save massively on a ‘as much as possible’ basis leaving work, but not to a specific goal – which was just as well as things changed over the runout, in my favour and adversely.


  2. ermine, your tale of increasing infantilisation over your working lifetime, in terms of what power you were allowed to exercise, is very telling. I’m just a few years younger than you, and find myself FI largely through unexpected luck rather than my own efforts, which has led me to endless debate with myself about what to do with work….not so clear cut for me but maybe I lack imagination or, more likely, my work is not quite as unbearable (yet) as yours became to you. so I really appreciate your contribution to the blogosphere and the counterbalance to the accumulating young ‘uns….I’d miss your musings on life if you were to decide to move on.


    1. Thanks ๐Ÿ™‚

      me to endless debate with myself about what to do with workโ€ฆ

      May I suggest a different way of looking at that. Perhaps you’re asking the wrong question. Change the framing, and have the debate with yourself about what to do with Life. It’s people, relationships and experiences that can also lend meaning and value, and of course there is the inner journey of individuation, there is art, there is so much to learn more about.

      It’s trite but not without some substance that nobody looked back at the end of their life and wished they’d spent more time at the office.


  3. The question I always ask myself is whether the whole “financial independence by forty” community is just Day Trading 2.0 returned from 1998

    All sorts of things look possible in a bull market when you extrapolate straight line gains forward for eternity in a spreadsheet

    History teaches differently


    1. Oh boy, I was there. I still remember setting up our works discussion share group, with the opener the aim is to make you rich, very rich ๐Ÿ˜‰ Oddly enough I never expected to retire early then, ERE wasn’t a thing I was aware of then.

      That’s why every investor needs the memento mori. And the ring – this too will pass


  4. Oh, and before my life changing event, I never tracked or planned very consciously either. I just always saved, and put as much as I possibly could into what I believed was our best chance at comfortable retirement, my public sector FS pension. I’d never really considered retiring before 60, but I was pretty clear about not wanting to work beyond that.
    I’ve now ironically got much more obsessed with tracking spending. Although not so great at reducing it, although at least now I know what is baseline essential spend and what is discretionary. Mostly though I feel that the discretionary spend does represent spending on what I value rather than mindless waste (but, I guess we all think that don’t we- so good at self justification!)


    1. > Mostly though I feel that the discretionary spend does represent spending on what I value

      It was when I lived without it for a while to maximise saving, and then retired, and asked myself “Do I want to do this/buy this, now that I have the money” and mostly the answer came back “Hell, no”.

      Many times, indeed, the answer to things was learn to use what I had better, or put more time/effort into improving my craft. I was a terrible workman, always looking for better tools when taking time to learn and to observe was what I needed to do things better.


  5. @Elliott

    I guess you could argue that the whole “financial independence/extreme budgety” thing is a logical extension to the end of largely employer funded pensions in the US and the UK

    Has anyone ever seen a French or German financial independence blogger?


    1. I can offer you a Belgian – NoMoreWaffles. My German is okay to follow some electronics engineering stuff but I don’t know what financial independence would be in German. And my French is only good for ordering beer.


  6. @ermine I really get tired of all the “make the pensioners work longer” garbage in the media.
    I graduated from University on May 30,1969. After a weekend off I started my career. 35 years later I stopped. No “finding myself”, no year long trips to Europe – just nose to the grindstone except when my health failed.
    I’m well past that now – even if I’d stuck it out until 65 I’d be out of it – but the whole concept of flogging seniors till they drop is idiotic. Personally I don’t want to bag groceries in a supermarket in my dotage – and nobody should.


  7. @ermine. Yes I know it’s all about what you want to do with life. But, but…I guess I am worried about missing the structure, the interactions, the sense of having a role in the world separate from my relationships with children and parents, who would inevitably end up absorbing more of my time if work wasn’t there. being a housewife isn’t really my idea of self actualisation, but I guess that’s just a label and life is what you make it. I also have residual anxiety at pulling the plug on my earnings potential. But, I’m sure I’ll get there when the time is right for me…


  8. @Ray

    The whole concept of flogging seniors till they dropped was the norm across Europe and North America until about 1986 based on life expectancy data

    Working till a decade at best before you drop is still pretty normal for most people in the rest of the world

    Over the next 35 years life expectancy forecasts after 65 increased by half for men, women by a third

    So the options to pay for this are:

    a – you work longer
    b – you save more
    c – other people get taxed more to pay for you

    So far its mostly (c) with a bit of (a) to come

    This is a five year old piece of UK on life expectancy at 65 for different birth cohorts


    You say: “Personally I donโ€™t want to bag groceries in a supermarket in my dotage โ€“ and nobody should.”

    A young person with ยฃ50k of student loans might reasonably ask why they should pay so much income tax, VAT and council tax because you don;t want to work


    1. @Neverland – the answer is obviously (b) and was for me and my wife. We had financial independence in our late 50s by living beneath our means.
      As far as the student loans go, we also managed to get my daughter through school and into the workforce debt free. It can be done if you are willing to try. I might reasonably ask why the student and/or the parents can’t do the same.
      And I agree with ermine that the way older workers are treated in the workplace gives them ample reason to get out as soon as they can. It happened to me.


  9. @ermine – “Presumably it would also be possible for a working saver towards FI to have a negative savings rate even if he were saving as much as he could, in the event that his investment capital were high enough for a stock market crash to diminish his networth faster than he is saving.”

    I think savings rate is usually understood as the percentage of your income that you do not spend. It is certainly possible to have a negative savings rate by spending more than you bring in, but it shouldn’t have anything to with changes in your net worth due to market swings.

    @Neverland – do you read blogs in French or German? ๐Ÿ™‚


    1. I guess I was scratching around for a way to represent the spending/accumulating balance, but without any income to set for the ratio. I probably didn’t get it right, certainly if the savings ratio is defined that way – if I take my dividend income as income my savings rate is slightly negative!


  10. If you’re looking for a bit of solidarity, I’ve never done a budgeting spreadsheet (for myself) in my life, and I have no idea what my savings ratio is.

    I *have* done and helped implement/police a detailed budget for someone else who really needed something like that. It helped a lot.

    Personally I was just born with a savings gene, like Usain Bolt was born with a nippy pair of lanky pins. I left school with savings, University with more, and no doubt I’ll leave this planet/mortal coil in the black.

    “This seems to be a problem with some of the common PF metrics โ€“ they start to fail you and become noisy and erratic as you approach the destination…”

    A nice line, but come on — you know that’s why you shift to focussing on *income*. Why are you drifting back to eyeballing your net worth again? ๐Ÿ™‚

    Be a shame if/when you hang up your blog clogs. But nothing lasts forever, eh? Especially if it stops being fun.

    We should have a drink one day if you do decide to call it a day. Maybe in a London railway station — it seems appropriate. Naturally you’ll be honour bound not to bring a camera. ๐Ÿ˜‰


    1. > you know thatโ€™s why you shift to focussing on *income*. Why are you drifting back to eyeballing your net worth again?

      Because I never spend that ISA income – it goes to buying more shares. Which matches my shifting risk profile as I get closer to to having an income from other sources, and lowers my excessive exposure to cash – by gradually shifting it to equities.

      I can’t really qualify the income part – the divi income is a little bit less than my running costs, although more than my originally targeted top-up. I expected my networth to either stay the same or fall – it’s not an unreasonable assumption if I pull the income plug for three years.

      So I don’t really understand why. Some of it is, as Neverland says, a heady dose of irrational exuberance that will go. It doesn’t seem quite enough. I’m really not moonlighting on the side ๐Ÿ™‚

      I’m up for the drink – even if I don’t call it a day. It’s not so much that it’s getting less fun, but I seem to be increasingly atypical.


  11. I think the attraction of all the metrics is a feeling that they somehow create order and simulate control, validation? If I track my progress it makes me try to do better, save more.

    If I “know” what I am aiming for (SWR, or “The Number”) it is attainable and, by definition, I will know when I am there. The decision will be made. However this is currently slightly uncomfortable for me – I’m there but I keep telling myself that it’s only “just about” – why is that?)

    I totally agree that Personal Finance is as much about the personal as it is about finance and your blog always gives us lots to think about on both counts. ๐Ÿ™‚


    1. > If I โ€œknowโ€ what I am aiming for (SWR, or โ€œThe Numberโ€) it is attainable and, by definition, I will know when I am there. The decision will be made

      One of the hazards is that some of the uncertainty in these metrics seems to get worse as you approach the mark. Monevator is entirely right in that with a HYP I target the income, and this is much less volatile than market value which is what networth shows. Divi does get hammered in recessions, but not as much as the market price if you are spread across sectors.

      Once I reached my income target for the HYP I started to diversify globally using ETFs to dilute the UK bias of the HYP. The results started to confuse me because the return of these appears mainly as capgain. I could understand the HYP and indeed reasonably trust the income. The ETFs force me to look at capital value because the yield is trivial, and all of a sudden the uncertainty in the value shoots up.

      For me, because these are a part of total pension savings that’s not so bad. But I don’t know how somebody who has saved into, say, a world index fund could get to sleep as they came up to retirement. This is one of the recommended passive plays and there’s nothing wrong with it, but say you want to retire at 40 now. What does the 4% SWR mean per unit? 4% of 175 (in 2010) or 4% of 291 (now). How do we know that the 4% of the now figure which is 1.5 times the 2010 figure doesn’t fail Neverland’s query?

      > All sorts of things look possible in a bull market when you extrapolate straight line gains forward for eternity in a spreadsheet

      That would bother me. Maybe wiser heads would say as an upcoming retiree a hefty bond allocation would soften this, and I have that as a FS pension, so I’m only looking at half the story with my equity exposure.

      With the HYP dividend there’s some sort of automatic brake on exuberance because the dividend yield falls in bull markets – it was a lot easier to get a decent paying dividend in 2009 than it is now.

      It could be the personal part of personal finance that I’m struggling with. In searching for long-term security I’ve adopted a bit of passive index theory, which I don’t trust. ERE put it best, and that Rob Bennett fellow also has a decent point – so I am investing against my beliefs in the non-HYP area.

      > However this is currently slightly uncomfortable for me โ€“ Iโ€™m there but I keep telling myself that itโ€™s only โ€œjust aboutโ€ โ€“ why is that?)

      Me too ๐Ÿ˜‰ And I’m trying to find out why.


  12. “Itโ€™s not so much that itโ€™s getting less fun, but I seem to be increasingly atypical.”

    Isn’t the lesson of the Internet is that if you’re entertainingly atypical, you’ll attract a bunch of other like-minded weirdos to come and hear what you have to say? ๐Ÿ˜‰

    You’ve clearly done that with you blog. If you’re enjoying it, why change?


  13. @Ermine- I agree with The Investor- it’s because you’re atypical that I really enjoy this blog and would miss it (as I do Mrs Ermines!), if you decide to quit.
    But- yes I know time becomes more precious- so as the Investor says if you’re enjoying it……..


  14. Another great piece Ermine! They are all great, informative, educational, interesting, amusing! I love going back to previous entries (now what did Ermine say about……!)

    I’m with you on the big picture focus, probably due to age and experiences. We are all doing this for various reasons, and I haven’t spotted a Smaug among the lovely UK FIRE bloggers, they are a nice bunch ๐Ÿ™‚

    I recorded spending/saving in a notebook for years (before FI aspirations, there was FS – financial security – and I started with nothing and no parental support available). So looking into my notebook was comforting over the years. Apart from 1988, when it was impossible to buy a house, 2003 when my stock market portion lost 35%, and 2009 it lost 20%.
    I don’t really care about net worth – I’m more interested in what I will be able to do with it – it’s all relative to the time you live in anyway (that’s what you said, only you said it with more poetry!)

    Now I’m spread sheeting every little thing. (We’re at the transition of both of us giving up work and need to do the detailed work for organising the next 6 years). 60 may not be very early retirement, but plenty of friends and colleagues are envious of this – even if they are not interested in how to do it!


  15. Hi Ermine, I am a long time reader, but first time poster. I am pleased to see you are still blogging. Your a-typicalness is part of your charm.

    I always thought you were very like me career-wise, but I just managed to avoid the chop from my firm by the skin of my teeth. Hopefully I will soon be jacking it all in, but going when I am ready, on my terms, but I am a bit worried about the prospect of being bored if not working full time. It seems like a big leap, so I am always interested in your experiences.


  16. @investingtortoise, it seems crazy to worry about boredom after leaving work, but when I sit and ponder what I would like to do with the time liberated, I end up describing something that sounds suspiciously like my job (something with structure, variety, intellectual challenge, social interaction with like minded and interesting people, with at least an aim to be socially useful…). Perhaps it is just a failure of imagination, but I do wonder whether I’d be able to find activities that fill the needs my work currently meets for me. The main problem I have with it is there’s simply too much of it, and it stops me from exploring other things I’d also like to do.


  17. Ermine, I think your approach to finance (and writing) is unique and a needed voice. Many times, every blogger is following the path that a few have marched as if there is no other way to be or think.

    There needs to be different points of view, different methods of tackling our finances and diversity in thinking.

    I fancy the less-obsessed and more “living my life” methodology that you communicate through your blog. Keep up the great work Ermine. We’re reading!


  18. Afternoon Ermine,

    I am not a natural saver. But I believe that can be changed. Hopefully by living to targets for a year or two will change my habits and living (more happily) off less will become the norm. And it already has I believe, I don’t particularly ‘aim’ for a target each month, but when I calculate the numbers I seem to broadly hit my savings target. So I think I have through sheer force changed my spending habits for the better (which come to think of it is a similar approach I take to exams). That said – I’m not sure I will continue to monitor progress in the same way after a year or so, as it will start to feel restrictive. Like I’m always under surveillance from my self. Creepy ๐Ÿ˜‰

    I am also a bit hesitant to set an ‘age’ for FI as missing it would feel like a failure which would hardly be the case if the markets crashed 6 months before, kids came along etc

    I would be very sad if you decided to hang up your blogging hooves – always look forward to your posts ๐Ÿ™‚ Especially as they are a different read to so many other out there. But if it’s becoming a drag then maybe it’s time for a (n early retirement ๐Ÿ˜‰ ) from it!

    Mr Z


  19. @all thanks for the support – I’m touched! Somehow in initially writing this piece i seemed out of touch with the zeitgeist but I’ve got over it now.


  20. Great post, and one that strikes a chord with my own strategy, at least in parts. My forward planning figure for a SWR has always been 3.6% for my equity investments, because it is a typical portfolio yield over the business cycle, something my portfolios typically exceed, it is 10% safety margin over the 4% rule if you believe in such things, and the maths works out nicely when converted to a monthly figure. However come draw down I will not use a SWR but rather go for withdrawing no more than the dividend income in any given month. Naturally there will be a cash buffer or “header tank” to smooth the quarterly income peaks across the monthly bills.

    I also violently agree that volatility doesnโ€™t stand proxy for risk. To think it does would be to have a mind set that makes you a potentially poorer investor, and more likely to be suckered into high fee products designed to remove such pseudo risks. (In my opinion).



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