fancy fintech’s fishy fun

When is a bank not a bank? When it’s a fintech startup pretending to be a bank. For example let’s hear it for Revolut, strapline “get more for your money”.

I like a lot of their offering. You can hold cash in all sorts of different currencies. Most of the time that’s only useful to globetrotters and people buying goods over international borders, and even that can be handled by a decent credit card in many cases.

Way back when, sometime last year, I had the fond idea of saving cash in a bunch of currencies. I don’t ask much of cash, I don’t even expect to come back in a year and find it worth as much as it was before. However: Brexit. I don’t believe in it, and I don’t think it’s going to be good for me.

Revolut seems to match the requirement of being able to diversify that cash holding across currencies, with very low transaction costs.

Retirees need a bigger emergency fund that their employed selves

Anyone living off investment income but without an income stream against which you can borrow money has to hold a fair amount of cash, typically one to three years’ spending, to avoid becoming a forced seller into a down market.

For people with investment income only, a market crash is an emergency writ large, because realising income from bombed out stocks hammers your capital. You need to sell of a larger part of your capital to get the same income, and a cash buffer puts that off. Unlike emergencies when you’re working, the emergency lasts a while, and there’s nothing you can do to swerve it. A bear market can last a couple of years.

Unlike your normal emergency fund of three to six months, that’s more exposed to losses simply by being larger.

Emergency fund counterfactual – if you’re working, you don’t need a year-long cash buffer

I had come across people who didn’t subscribe to the working life  emergency fund of three to six months expenses approach, early on. I read Early Retirement Extreme who was characteristically straight between the eyes on the subject.

I don’t have a disaster fund or an emergency fund. For emergencies, I use a credit card.
If I use a credit card, I will have a 20 day grace period during which I do not pay interest. This gives me sufficient time to move money from my savings account or my broker account into the checking account from where I can pay off the credit card. This way I am not losing money from money gathering dust in a checking account.

Hmm. The first this to say here is that ERE was young and employed, so perhaps more resilient. We tend to get more fiscally conservative as we get older, which is the way of the world – the future income stream from work is less because there are fewer years of income. But I recently read a similar iconoclastic attitude at EarlyRetirementNow, who is much further down the line than ERE was. He takes the same line. So does MedFi. Let’s take a look at ERN’s answer to an emergency

  1. Credit card float (=interest free loan from the credit card company between the transaction and the credit card payment due date)
  2. Papa ERN’s paychecks
  3. The $100,000 HELOC (home equity line of credit) on our condo
  4. Finally, a large sum in several brokerage accounts, more than half our liquid asset net worth

The Ermine is short items 2 and 3 – although there’s an argument that my pension is some variant of 2. A HELOC is probably what I understand as an offset mortgage. ERM is/was a banker, and is much more comfortable with leverage than I am. I don’t ever want another mortgage in my life – I spent 20 years trying to ground the last one. I do accept that’s an opportunity cost, Monevator tells you why. Some things are just a gut feeling, in the same way that so many people violate the personal-finance principle “never take financial responsibility for something that eats” for lifestyle reasons. Britons tend to regard property=money tree, but I do not regard property as a finacial store of value. I value it for the usufruct. This is because I have had the experience of the capital value of a property falling by a third, and about a half in real terms. Bricks and mortar is not a store of value in my book.

It is possible that living for several years with no capacity to borrow money  has skewed my perspective. All lenders want to see an income, paradoxically the financially independent are zeros in the eyes of lenders, because they are atypical. Your average wage-slave wants to borrow money because they want to spend more than they earn, and lenders are used to that. Sometimes that is reasonable – few people save up for a house to buy it cash, because it is easier to live in it and service the debt than to pay rent on top of saving for 20 years to avoid paying the mortgage interest.  OTOH if it is for weddings, holidays, cars or other wasting assets then it’s barmy. But lenders gonna lend, and unlike bank managers of yore they want to do it at scale, so they don’t really put any effort into analysing edge cases.

If you’re FI and not working, you need an emergency fund. You are your banker of last resort

We want to be financially independent, and for many of us that’s independent of The Man. But there is another side to financial independence. You look damned odd to the system, and in practice that means the non-working financially independent are independent of finance too. They are pariahs. You’re not going to be borrowing money from anybody unless you can show income. In practice that means your non-working self needs a larger emergency fund than your working self.

Holding a large emergency fund in great British Pounds runs the risk of these becoming a lot less Great but more British due to asinine incompetence. I’m sure there may be a way to make a success of Brexit, but it’s not the track being taken IMO.

Revolut looks good, and you could hold several currencies in it. But they aren’t a bank (at the time of writing) – and you have to watch it with fintech, because a lot of fintech are fly-by-nights without FSCS protection. Even where they are banks, fintechs seems hellaciously trigger-happy on the money-laundering regulations. That’ll be Revolut, Monzo, Pockit.

That’s the trouble with startups. Try to avoid being their creditors 😉 If you have money in a bank, you are their creditor. Let’s take a closer look at Revolut

Well, you can’t argue with that. Wait, but what? Who the bloody hell is that large global bank, and who do they work for? If it’s Revolut, you are on the wrong side of the fight…

It used to be simple in the UK. If it took retail cash deposits, it was a bank, and you had some protection against it going bust. Fishy fintech seems to be making that a very different proposition. You’re lending money to a startup. That’s not necessarily a bad thing, but it’s not ‘cash deposit with FSCS protection up to £85k’.

I was saved from Revolut more by luck than judgement – they failed three times to SMS me a link for their app, and I figured I didn’t want to deal with such incompetents. If you go to their blog post on how we are different from a bank, and try and follow the link in the deathless quote

Though we are not the same as a traditional bank, your money is protected.

then call me a wuss, but I would say that’s a no, your money isn’t protected – the general feeling of a lack of competence persists. Apparently Revolut got its EU banking licence from Lithuania. There’s nothing wrong in that per se, and under passporting rules that’s good for operating in other EU countries, but, er, wait – we aren’t in the EU any more so that’s no good to us. And there’s more fishy fintech funniness in there.

I went with Starling instead for mobile money, from which I have had no trouble. However, though you can hold money in Euros with Starling, you can’t hold money in other currencies. Starling is a bank1, and you get your 85k FSCS protection.

I hold the cash sort of float in cash and gold ETFs now. There is an argument that the gold ETFs aren’t protected in the coming war of all against all, but sometimes you gotta know when to fold ’em. I’d rather have this lot

Each Gold ETC is a certificate which is secured by gold bullion held in J.P. Morgan Chase Bank’s London vaults. The issuer of the certificates, Invesco Physical Markets PLC (Invesco PMP), is an Irish-domiciled company administered by J.P. Morgan Administration Services (Ireland) Limited.

as a counterparty than a press on the Bank of Lithuania via the EU (as a Brit non EU member), though it’s probably still an unequal fight. If you really believe in gold, you have to be able to pick it up and run with it. And then in the ensuing twisted wreckage, be able to assure its purity to your counterparty and not get robbed…

Revolut doesn’t lack ambition – it has aspirations to widening its services to include retail stock trading via the platform Drivewealth. Let’s take a butcher’s as to what and how these investors are buying.

drivewealth’s punters, late 2019 to early this year. x-axis is in the perverted American M/D format

Something gives me a late 1999 feeling about all this. I have sympathy with their sentiment, buy what’s beaten up. I want to buy gold or VWRL2, monthly, to reduce my exposure to the Great British Pound. I take a look at how they’ve been doing

VWRL and SGLP

and buy the lower – that’s VWRL at the mo. But doing that with Hertz is a little bit too heady for me. I figure in three years time we will be looking back at the twisted wreckage that used to be known as the stock market and ask ourselves the GFC question ‘why did nobody foresee this‘.

FSCS, Treasury, or bust when it comes to cash, in my view

I’m not going to be trusting any of that Euro passporting malarkey, because by the time our bodacious Brexit buccaneers have finished being brutally boorish to anything prefixed with Euro I’d be surprised if they let Brits out the other end of the Channel Tunnel, never mind help us out in another Icesave scenario.

Brexiters are willing to die in a ditch by proxy for that -see we don’t need your steenking PPE and we don’t need your steenking vaccine, because we curse your steenking Europeanness and the horse it rode in on. Let’s take a rain check on the competence of these dudes in dealing with the pandemic, which is a simpler problem than making Brexit work right IMO.

How is the  UK doing relative to other countries in deaths per 100000 population3

UK exceptionalism – we have clear worldwide pole position of chance of dying of coronavirus. Well done us. Still, we clearly voted for this crew last December, so competence and skill in action are not things that were important to us, we want to Get Brexit Done

Euro passporting isn’t going to help me. Sovereignty means you get to sort your own shit out on your own. I have accounts with three UK clearing banks and Starling, and I also save £ cash with NS&I Direct. When it comes to cash, simple is what I want. FSCS, enough different institutions, and no fishy fintechs. I may well get hit with money laundering regs at some time, but probably not on all four accounts.

I don’t do P2P other than about £1k sculling about in Zopa from ages ago, no Ratesetter. I’m not going to open an account with Robinhood, I only hold money in dodgy shysters like IG index while I am using them, so I am not exposed to them. Cash is meant to be boring, and it’s meant to be safe. In the Bernie Madoff sense of the term, rather than long-term store of value usage of the term. If you think of cash even with FSCS protection or NS&I as a safe deposit box, then remember that the termites are after the value

Governments are going to inflate their debts away like those termites, cash is not a store of value, it is a medium of interchange. Storing value is what equities, bonds and gold are for 😉 Even for cash, however, diversify holdings.

Because this can happen. I’d say a smaller pool of sovereignty will make it more likely to happen, although finance is one of the things the UK does quite well. Spread around, you are also not quite such a tall poppy when it comes to Cyprus-like bail-ins too.

Fintech is fine if you want it on your mobile phone, or you were a magpie in a previous life so having brightly coloured bank card is really important to you. Fintech is for features, on amounts you can afford to lose. If you’d like to find your money still there when you come back for it, just say no, and avoid a single point of failure in the old system. If you want the fancy fintech features do a standing order from an old-skool bank to the fintech for your monthly spend, to get nice graphs of your consumerism. But use old-skool for your salary. Return of your capital matters more for cash, because it pays no return on your capital these days.


  1. Starling Bank Limited (FRN:730166) 
  2. the amount I am adding isn’t going to really shift the overall asset allocation, so I don’t really care whether it’s in gold or foreign assets. I just don’t want to be holding any unnecessary amount in pounds, because the incompetence of this government horrifies me, with the mess they are making of coronavirus I anticipate a clusterf*k of Brexit 
  3. I am aware that there’s a case to be made that the Government discharged a lot of elderly back into care homes from hospitals without testing for Covid 19 early on, effectively saying early deaths, bring it on. These infections then went through the care homes like a dose of salts. Perhaps this was part of a policy to triage the population and avoid carrying the load, but I think April was a bit early to decide who to throw out of the sinking boat first. I hope this was incompetence rather than intent, Dominic Cummings. It’s not something we can feel proud of, but perhaps other countries’ elderly may catch up eventually. 

38 thoughts on “fancy fintech’s fishy fun”

  1. Absorbing alliteration Ermine! I too went with Starling as the best of a bad bunch, albeit only as a tool for ‘fun money’. Revolut’s name is mud in my book; have heard of a toxic culture on the inside of the business from ex-employees. Wouldn’t touch them with the proverbial pole.

    On the C-19 front, be wary of the stats. That graph only shows the 20 ‘most affected countries’ (unclear what that means). For example, Belgium has higher mortality incidence (86/100k vs. 67/100k) and similar case fatality (~16%) to the UK, but isn’t featured? Not saying that the UK’s done brilliantly, but the picture is greyer than it would seem…

    Liked by 1 person

    1. On the C-19 front, be wary of the stats.

      Somebody recently said that C-19 has strong elements of the Trickster in it, so little is as it seems. Nevertheless, I think it’s pretty clear from that chart that the UK’s official response to it is not that of competence, even if it isn’t comprehensive.

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  2. I’ve been thinking a lot about this same topic because 3m spending is about 1% of our net worth but 2.5% if our FIRE assets.
    Increase that to 2 years spending in cash and you are talking about 8% / 20%.
    Too much imo.
    I’m even loaded up with stooze money and have a mortgage to boot!

    My plan is to keep around £5k accessible at all times and keep a keen eye on future cashflow – outgoings, dividend, interest, sales and purchases.
    I think of it Just In Time cash management.

    Liked by 1 person

    1. You are young, and resilient 😉 I have carried three times your 5k in NS&I ILSCs for the last 10 years. I am undoubtedly poorer now because of carrying that, and quite a bit more, through a long bull run.

      But there is much less time for that deadweight loss to accumulate in my case. I would certainly agree that for somebody working, three year’s expenditure is far too much to carry. Arguably I have a steady income now, so I should ramp that down, and perhaps start applying for a higher CC limit. Some of reducing this float is what the VWRL/SGLP thing is. But there’s no way it’s dropping below one year. I see very, very hard times ahead, and I have very little human capital left.

      Liked by 1 person

  3. I tried Revolut right from the beginning and the card was good on your travels and recently I wanted to hedge foreign currencies with my cash stash because I think the £ is going to take a hit soon for several reasons. But, I’ve seen 3 different issues that worry me – keeping a lot of cash idling on that card is trusting in some random Lithuanian bank as you point out, which has uncomfortable echos of the Iceland banking fiasco. Then their anti-money laundering ID request system was clunky and finally, when you tried to sort that or anything out, you find out they’ve now completely removed humans from the customer service equation and that doesn’t work well if anything goes wrong.

    So, the card now languishes in a drawer and I am waiting to see if they can turn it around because at the moment they’ve lost their way, you can’t have no options for fixing cash flow fast, this is not a library card, it’s the most important thing in your life. So they started as a brilliant distruptor, but seem to have tripped on hubris very quickly.

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    1. That seems to be the trouble with fintech, it’s too clever by half. That’s OK in many fields, if Netflix goes titsup you get to read more books. But if your connection to your salary goes south, your life suddenly gets very very hard indeed.

      I’d never use a fintech bank to put my salary through. And as for savings…no

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  4. Many COVID stats are useless, in all probability – but which have any merit? I put no weight on cases or COVID deaths – there’s little standardisation of definitions within countries and effectively none between countries or between time periods.

    I suspect that the best available is excess deaths per 100,000.

    Even then we don’t know over which period to measure it. I’d guess a full year is best, as covering all four seasons (or two, or one, depending where you live). So in less than a year’s time we might (i) know how everyone did, (ii) have some idea, however vague, at to why, (iii) know whether there was a second wave e.g. in the Northern Hemisphere winter of 20/21, and (iv) know whether the virus shows signs of becoming endemic or, indeed, shows signs of just having petered out.

    To minimise the problem of an arbitrarily chosen time period it would probably be sensible for the moment to confine comparisons to developed countries in the Northern Hemisphere which have the great bulk of their population living north of thirty degrees or perhaps even forty degrees of latitude. In light of that rational suggestion, and the fact that it doesn’t use excess deaths, I’d say that that international comparison chart is absurdly defective for any serious use. The Johns Hopkins people should be ashamed of themselves.

    However, it’s quite possible that British numbers are poor: better maybe than Belgium, about as bad as Spain and Italy, perhaps. (I say “maybe” and “perhaps” because I haven’t seen excess death numbers for those three countries so I’m just guessing.) Huffing at the numbers now is probably a rush to judgement. Those deluded souls who hold that the NHS is The Envy of the World presumably hope so.

    It already seems likely that the main “vector” of the virus has been NHS staff. A lesser vector that has proved particularly deadly has been patients discharged into care homes, plus care home staff themselves. So as I expected the NHS has made an arse of itself. Everyone knows that its infection control in hospitals is, by the standards of developed countries, abysmal, and that it has been abysmal for decades under many different governments. Why has no Secretary of State for Health managed to ameliorate the problem, however much money he or she has chucked at the NHS? Dunno. Presumably competing factions within the NHS grab the money for their own purposes.

    This I will predict: the present government will prove no more effective at improving the NHS than its predecessors. Maybe it can do something about the care homes, but I doubt that too. Governments have been nattering about the problems for decades, to no avail.

    I’m not suggesting that our care homes have been any deadlier than, say, Sweden’s or Spain’s, because I just don’t know. Have they been less deadly than Ontario’s? I do hope they’ve been less deadly than New York state’s.

    In its own defence the NHS could point out that Public Health England has perhaps been even more incompetent; it would in turn perhaps argue that it’s been no worse than the Centre for Disease Control and the Federal Drugs Administration in the USA. There’s every chance that the “scientific” advice that the British government has assiduously sought has proved pretty ropey, and it seems almost certain that the mathematical modelling advice it took was pure charlatanism.

    It’s a different hemisphere and a different latitude, but the Australian federal government seems to have done a broadly successful job, apparently by deciding to ignore the advice of its medical experts. But again, that would be a rush to judgement. I do know, from having lived there, that infection control in Aussie hospitals is (or was) generally far superior to ours. Whether their epidemic got far enough to test that advantage I don’t know.

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    1. “I’m not suggesting that our care homes have been any deadlier than, say, …”

      I am now able to announce that I’ve found a country with a worse care home record than us. From the Telegraph:

      ‘Looking at Nicola Sturgeon’s polling popularity it’s easy to forget that the Scottish First Minister presided over a care home coronavirus death rate double that of England.’

      I admit I don’t know whether Scottish care homes used the Ontario trick of hiding dead bodies in the wardrobes.

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      1. Well, look on the bright side, the stats will be compiled on the same basis for Scotland. There seem to be enough other indicators of a lack of competence in the UK’s response. I’m not sure we should let the perfect be the enemy of the good. If we have to wait for a definitive comparison on the same statistical basis then sometime five years’ hence we might know what happened. That’s not the most useful thing in trying to forestall a pandemic, it will deliver us herd immunity and a pile of bodies probably greater than it needed to be.

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      2. >dearieme
        I agree with your conclusions re the NHS. I too have lived abroad and experienced far better systems.
        Can you offer any explanation as to why the UK population at large just do not get this, and, furthermore, appear to hold that body (very bad pun intended!) in such high esteem?

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      3. “Can you offer any explanation as to why the UK population at large just do not get this…?”

        My theory, original as far as I know, is that everything turns on the fluke that the creation of the NHS coincided with the arrival of antibiotics, so that for the first time in world history the chances were that doctors were more likely to save you than kill you. So the NHS religion came into being. Why would a religion hang on for three generations? Many of them do, you know. On and on and bloody on.

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      4. >dearieme
        Interesting theory.
        The similarity to an organised religion (as opposed to say faith) has struck me before.
        The recent goings on during the COVID outbreak have, IMO, that sort of feel about them too!

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  5. nice article ermine. a few somewhat unrelated thoughts.

    It struck me (again) when reading your article how you (and everyone else’s) judgement is coloured by their life experiences. You had a negative experience with property. I started investing in 1999 and by 2008 thought what’s the point – equities had been a poor investment – this caused me to miss some of the upturn in the last decade. People who have been investing in the last decade have only seen rapid asset price growth. The germans until recently hated credit and still have concerns over inflation. Short (ish) term serial correlation. an opposite to mean reversion. If you live in Lebanon at the moment what is happening there is clearly going to colour the rest of your life. You’ll be super cautious with your finances or maybe throw caution to the wind with your life choices.

    As you may remember, I also think the risks are to the downside here for the £ but I certainly don’t know and I hope I am wrong given I’m long £ more than I am short through house and earnings. I do hold gold and in the physical form – couple of reasons – (a) it’s a minor and incomplete hedge against the govt coming for your wealth (b) in another GFC you may find your Gold ETF price start becoming more volatile than the underlying price – I say may not will.

    On Revolut / Starling – all my (substantially) younger colleagues hold these cards and have no interest in opening a ‘traditional’ bank account. A long term warning sign I feel for those who hold bank shares beyond those investing in the index.

    On Corona – Like many others, I have been none to impressed with our govts performance – the puppy dog and the ex fire place salesman come across as particularly incompetent and that’s with the volume turned down. A measure of my distrust for the govt is the fact that I have never once listened fully to a govt briefing on this whole affair. But…..I’m cautious as to jumping to the bandwagon that that explains our high death rate. Why is India, many parts of Africa and South Africa so low. Better govt performance – maybe but I’m not so sure – it feels just as plausibly it may be to do with the population age or other factors such as better immunity. To note, I am purely speculating.

    All asset prices feel expensive but relative to the risk free rate…hmm.

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    1. > It struck me (again) when reading your article how you (and everyone else’s) judgement is coloured by their life experiences.

      Of course it is. Something that makes me despair of the current FI/RE scene is how so many people think they are brains on a stick optimizing returns at the efficient frontier. That’s easy to do sitting on the top of a long bull run, and even still easy to do after a suckout like earlier this year, if you are young. But somebody who is starting at 20 will see at least three market crashes in their working life, likely twice that many. They need to have an investing story that they can believe in. They will probably see at least one grinding couple of years of slow slip sliding away like the dotcom bust or the early 1970s

      I’ve never said property is an awful investment. It’s just not one I can believe in. If you could pound cost average into buying a house it would be fine given all the tax breaks, but in practice you have to do it at a particular time of life give or take a few years, and you are not experienced as to market cycles at that time of life. Even if you are, are you going to put off having children for an uncertain period of up to 10 years to spend less on a house? I got slaughtered in the dotcom bust, but my mistake was understandable, and arguably I had had more experience of market cycles, so I saw an opportunity in the GFC, though I was also desperate. It’s the stock market, a decent hunk of luck and having had decent jobs for 30 years which is why I retired early. Buying an overpriced house is stil lthe greatest personal finace error of my life.

      One’s animal spirits and psychology are both the enemy of the investor but also the engine of the long-term saver – you have to believe in the story to forgo all the lovely consumer doodads and experiences and YOLO to be able to save, and fling the key of financial freedom to your future self. You gotta take yourself along for the ride, else you ain’t getting from here to there. That’s inherently coloured by the experiences you pick up along the way. Many people start, but few stay the course.

      > I hope I am wrong given I’m long £ more than I am short through house and earnings.

      Me too, while I ignore the house and it isn’t the largest part of my non-pension assets anyway, my pension is in £ and is totally exposed to the currency. This is why I came to the conclusion that I want out of UK exposure and to emphasise foreign assets and gold. I will be more than happy to be wrong. Diversification in action, but it has to be on a 360 degree view of one’s assets as you get older, because there is less future income stream, and also FIRE folk accrue assets as they get older so the balance matters more with age.

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      1. Excellent summary of life experiences informing investment choices. Ditto for me living through the 90s house price crash. I was buying with a mate at the time (we were young , it was London, we got two sets of MIRAS). He actually paid to leave the mortgage to me and it was more by luck than judgement it turned out well in the end. But that was only after some thin Christmasses and a trail of dislikable lodgers. So my judgement on property investing is thrown into question as well.

        On the subject of hedging the dollar against the pound but needing somewhere to keep it, you might consider a US brokerage account like Muriel Siebert or eTrade (other brokers arre available). There are no fees as long as you hold more than $25k. Under that they are not huge. You can keep the lot in cash. Because of the reciprocal tax arrrangement you dont upset HMRC.

        What I really want to know is how the well informed Brexiters are investing.

        Liked by 1 person

      2. > What I really want to know is how the well informed Brexiters are investing.

        Emerging Markets – Somerset Capital Management is Jacob Rees-Mogg MP’s ex-manor (and presumably his stake is held in some Cayman Islands holding company as the laundromat for Parliamentary conflict of interest regs)

        John Redwood MP is chief global strategist for Charles Stanley and told investors to GTFO of the UK at the end on 2017

        So, er, anywhere but the UK is the common thread!

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  6. On Covid reported figures and the real threat, ‘Why is India, many parts of Africa and South Africa so low. Better govt performance – maybe but I’m not so sure’

    Indeed, in places like Nairobi’s slums there can be a million people crammed into a square kilometre, forced to live several to a room with no piped water, sewerage or meaningful healthcare. Keeping healthy is therefore near impossible as healthcare is mostly not available to these poor masses and they can’t afford to socially distance either, starvation from not working is the guarantee that beats any virus or disease. Given those facts and the claims from the mainstream media on how infectious and lethal Covid is, how come 10% haven’t died within days in a slum like this where no cover up could hide a hill of 100 000 bodies? Their population profile may well be less susceptible due to their age, but that should be negated by their being immunocompromised from the effects of poverty, like malnutrition.

    Multiply this question by all the different situations in all the slums across the third world where a serious amount of humanity currently live and there’s no way this virus is as lethal as reported, at least up to this stage in the process.

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    1. Aren’t the obvious solutions these guys are young and the environment is warm? After all even here they say being over 65 is where the mortality starts to rise massively – if you look at the population pyramid for Africa on page 17 of this there’s hardly anybody over 65 due to the high fertility and probably lower life expectancy.

      If the virus isn’t as lethal as reported, the charge of Government incompetence is raised, not lowered – why the hell did we focus all the incoming fire on the community most at risk?

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      1. Office of National Statistics-deaths in Winter/Spring for last 27 years adjusted for population
        This year is only eighth in term as of deaths
        Some perspective needed
        From article by Dr John Lee-Spectator

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      2. > From article by Dr John Lee-Spectator

        Hmm, having read three articles by John Lee he does have a very definite agenda. There’s uncertainty enough in the subject that he might be right, but my feeling is he’s at the tails of the distribution of what’s probably the case due to the specific lens. However, we’re running the experiment right now. No second wave by April 2021, he was probably right 😉

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      3. Well, India and S. Africa are supposedly showing high numbers infected and dead an they’re in a warm place with a relatively young demographic, but interestingly, both countries have the unfortunate record for highest AIDS-affected populations. (absolute number and per capita respectively) This suggests the common denominator is weakened immune systems which is why the old in wealthy countries are principally affected, in turn suggesting the virus is not as lethal as radvertised ad nauseum on mainstream media. Most elderly populations in countries with older profile demographics are unhealthy for lifestyle reasons, such as overweight-related conditions, > 90% of deaths being co-morbid with some other serious condition such as diabetes. The bulk of deaths have been over 80 years old which until recently was regarded as the time you die as per current normal human life expectancy.

        I guess there will be a second wave in those countries where it is convenient for the political leadership at the time and their populations will believe in it, scientific experts are understandably discredited because there are always some willing to be wheeled out to give any opinion wanted by their sponsors. This was beautifully illustrated by the tobacco companies dating back decades ago already.

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  7. Each to their own I guess but I wouldn’t sleep if I didn’t have 5 years spending in cash. Some of my buddies had only a few months and when the C19 crash happened they were scared to death and are now building up cash reserves. I am pleased that I did this as although in good times my pile would have grown I am insulated a little bit from the next few years which are going to be painful due to the double whammy of Brexit and C19. I just found out that I am to be made redundant which is fantastic news as it add another years cash buffer.

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  8. You don’t mention it, I think, ermine, but presumably Revolut take their cut for swapping between currencies via slightly blunted exchange rates? I’d be curious to know what these amount to.

    My own perhaps slightly cumbersome / outmoded tack over the last few years – really since the first half of 2016 – has been to set up accounts in various currencies spread across some of the largest banks both in the UK and Oz, where I spend half my time, and shift money around using XE (used to be HiFX), costs about 0.5% per transaction. Admittedly it could get a bit costly if you churned, but with a sensible strategy you can avoid that. And given the almost overnight gains of around 15% in sterling terms in June 2016 (less excitingly of course, really just not a loss of 15% of global wealth), worth taking the small hit! Plus as you point out, the problem of sterling can also be solved by allocating investments away from the UK.

    Although my %age exposure to sterling, both in cash and investments, is down to around 20%, I’m looking at reducing that further as the end of the year approaches. I reckon unless the Spaffing One has an ace up his sleeve, there’s a high chance of an economic pile-up and a further 10-15% being knocked off the £.

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  9. Starling was also my choice for app-only bank and has served me well on my travels these past couple of years, both for card payments and cash withdrawals.

    Had an issue recently trying to use their cheque deposit facility (yes, people still write cheques!) and after numerous unsuccessful attempts, had to post said cheque to my main bank, which at least knew what to do with such an ‘archaic’ form of payment!

    The app is used mostly for travel or emergency cash and for funds saved towards future holidays.

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  10. I wouldn’t touch Revolut. An actual bank licence in the UK please, and not an e-money licence either. It’s alright saying money is protected but if the shit hits the fan, I bet customers cash will be at the bottom of the priority tree if it’s not a UK banking licence.

    I am also not a fan of flashy advertising saying dodgy things (Revolut again).

    FT did a feature on the founders in May which was really interesting. https://www.ft.com/content/7fa2a8ea-8e66-11ea-a8ec-961a33ba80aa

    Starling is ok as it’s more like an actual properly protected ‘real’ bank just without branches, which is okay. It isn’t trying to be flashy or disrupt anything, just do traditional boring banking in an up to date way and with actual people to talk to when you have an issue.

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  11. Robinhood looks like a fun way for inexperienced specuvestors to blow themselves up. Investing is not Pokemon Go.
    As far as real estate goes, I have owned a house for decades and enjoy the experience mostly. I have been mortgage-free a long time, collect my imputed rent, have put thousands into the place and never made a penny profit.
    As for buying rental property, I do not wish to fix toilets at 2 AM, get stiffed by unreliable tenants, or bleed cash. I shall stick to REITS, thank you.

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  12. > Anyone living off investment income but without an income stream against which you can borrow money has to hold a fair amount of cash, typically one to three years’ spending, to avoid becoming a forced seller into a down market.

    I am reminded of the recent Monevator article (see:
    https://monevator.com/how-to-choose-an-swr-for-your-isa-and-your-pension-to-hit-financial-independence-fast/)
    where the following was stated:
    “For eight-year periods or less: save enough in cash to cover your spending needs plus an inflation top-up.3 The potential upside of equities isn’t worth the risk of grievous loss with so little time to bounce back.”

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      1. As glenelg above says each to their own.

        From a practical perspective a few questions if I may:
        a) in previous posts you wrote about your concerns re the Euro – have you had a change of heart or is it just a case of any form of diversification is better than none
        b) what share/%age of your cash holding are you aiming to hold as non-sterling
        c) does your strategy for migrating from your pre-pension level of “emergency funds” to your post-pension level of “emergency funds” impact a) and/or b) above

        Apologies if you have addressed these issues above, but I do not recall seeing them.

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  13. It’s a mess because the EF is being overtaken by events. And also I don’t have to optimise everything rationally, I have slack enough in the system to take into account how I feel. I need to live with the position, and feel OK about it. I have too much EF for my current situation.

    One thing that overtook the EF amount is drawing my pension, I hadn’t realised that changed things quite as much as it does. I am closer to the position of an employee earning a regular income. Analytically I should shift much more towards ERN. I could raise over a year’s spending on credit cards if I wanted to, though I would find it hard to bring myself to do it. I have lived eight years with a three year cash buffer against the bear market that never came – when it did come in March I was not living off investment income. But I find it hard to change, because a high EF was a hedge against the fear of becoming insolvent in a bear market, without any human capital to fix this. Above all I did not want to end up on minimum wage stacking shelves. Perhaps the fear of that tail risk made me live less large, everybody has their own specific Room 101.

    Inflation can/may/will kill my pension, but the fall will be over time. Years, not days -it’s not the same speed of escalation as losing one’s job, with a mortgage. A large EF is an irrational response to that -arguably gold and equities is a better hedge.

    a) My plan was to hold cash in the proportions of the XDR. I now track (sampled about monthly) the value of my holdings denominated in Strategic Drawing rights. I first investigated Revolut about a year ago. I do think the Euro will blow up at some stage within my lifetime. Doing XDR has 30% Euro, so it is tough. Which is why I struggled with this.

    b) I wanted to diversify the part that was more than a year out. In particular I have about a year / thereabouts of essential spend in NS&I ILSCs which I don’t want to liquidate.

    c) It should do – I should ramp the EF down greatly. But to what – my pension is enough to live on, which would technically point to an EF of three months. I just can’t bring myself to drop it that low. The EF has to do two things. One is to forestall needing to sell shares into a down market, I use some of the income in increase lifestyle, as well as the capital defending longer term attrition due to inflation/wages rising faster than inflation/elective health choices. The other is the normal thing an EF is there for – the boiler breaking down etc.

    I have chosen to earn some money, against some long-term hazards that I fear but hopefully won’t happen. I see very hard times ahead for Britain. Plus there is a limit to the amount of recreation one can do in the pandemic without raising risk profile. Theoretically that increases my income which pushes the requirement for an EF even lower, I have a savings ratio above zero which is piss-poor for someone in decumulation, I should be eating more lobster. But I don’t want to ever get to rely on work income.

    At the moment I have filed holding cash in foreign currency in the too hard camp. I really hate Brexit, so to forestall losing money to it I am shifting some of that EF into my ISA, and buy either gold or VWRL monthly, which reduces its exposure to the GBP. But that’s mainly to avoid the resentment of losing money. If Brexit is a great success then I will revel in the greater purchasing power of my GBP pension and be happy that I was wrong.

    Gold is one alternative to diversifying cash in into forex, but it has volatility issues of its own. I feel far better about gold ETFs than I do about Revolut, or using IGIndex (which also has a high cost of carry). Plus I get to fill up my ISA allowance, so I can change my mind and switch this ‘diversified cash’ into stocks.

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    1. Thanks for the prompt and detailed reply.

      I wholeheartedly agree that whatever plan you decide to follow – it should sit comfortably with you & yours!

      As you may recall, I am part way through “the Gap” between jumping ship and drawing DB pension. Hence, I wonder if you might say a bit more about “… drawing my pension, I hadn’t realised that changed things quite as much as it does. ” For example, what sort of thing(s) changed more than you had foreseen; what do you know now that you wished you knew before you drew your pension, etc? I genuinely am interested in any lessons you have re this particular transition as I do not recall seeing much written about it at all.

      In a manner not entirely dissimilar to Jobber (see above) I have managed to diversify cash holdings into €’s (at around the XDR indicated level). Whilst this has performed largely as expected it has, to date, not been a game changer. In fact, I would have to say that the effect has been largely lost in the other usual month-to-month variances in spending/income, etc. Therefore, I am not sure if the inevitable further effort required to remove it from your “too hard camp” would/will pay off in anything other than an analytically rational sense!

      I recently read another blog where a de-accumulator expressed concern about his/her +ve savings rate – the answer that stuck with me was “….so is it really a problem that you have excess cash?” So, if you like to eat lobster then go do it!

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  14. Having worked in numerous ‘big bank’ IT departments – they really are trying to keep their technology up to date and provide their customers with what they want (banking apps, money transfers, online cheque deposits, budget/analysis tools), because that’s what others are offering and the future will be more and more online – bank branches are expensive (I’ve seen the numbers!).

    Saying that, they do the fundamentals pretty well and it is nice to have a physical place you can visit if you can’t stand phone calls like me. Sucks if you’re in a more rural area though.

    What FinTech do offer, as they are nearly completely clueless about how to communicate with normal banks and financial institutions, are massive grey loopholes in the systems that a canny operator can experiment with and potentially exploit. Case in point, using a 24 month 0% spending card and some special transactions, I was able to essentially get a £6,000 2 year cash loan for actually 0% interest. Try and get that from your local high street bank! This loophole has since been closed so don’t try it at home – but my loan is still chugging along fine 🙂

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