Fear and loathing in the markets again

The Ermine household decamped to Wales for a few days, near Saundersfoot. Over a decade ago I was halfway through my three-year plan to gain manumission from The Man. The halfway point of any drawn out goal like that is really tough – you have lost the comfort of the port of departure, and are on the stormy uncertain seas without sight of the distant friendly shores.

I was living on roughly the national minimum wage, in order to maximize the benefits of salary sacrifice. This was greatly softened by the fact we owned a house outright and several acres of farmland which Mrs Ermine grew a fair amount of our food. But it was tough, and for a holiday in that period we took two weeks out, touring south Wales in our campervan, staying on campsites. Mrs Ermine has a penchant for spas, and while we stayed at Trevayne Farm campsite one afternoon she sampled the spa, and in the evening I walked down from the campsite and we had dinner at St Brides Spa Hotel. It wasn’t cheap, but not having gone out to a restaurant for a long time the experience was great. Hedonic adaptation means eating out every week gets ho hum, but if you go big once in a while it really hits the spot.

This time we stayed in a flat in Saundersfoot itself, which is a better experience than having to walk back three-quarters of a mile uphill to the campsite, and I got to see more of the strange heritage of the place.

It used to be a coal harbour, and the train ran along the now rather pleasant promenade along to Wiseman’s Bridge going through some tunnels carved through the dark rock, some of them long enough to be a struggle to see your way in the middle.

King’s Quoit, Manorbier

The Wales coast path had some remarkable prehistoric monuments, and we encountered these bad boys with curved crimson bills. I have never seen choughs before.

Chough, Manorbier Bay, Pembrokeshire
Chough, Manorbier Bay, Pembrokeshire

One downside of Saundersfoot beach and walk is it is dog-infested. Despite the council’s fond belief that dog owners can read, my experience is they don’t give a shit about signs, and assume everybody is as delighted to come across their precious pooch as they are. “Oh he won’t bite” they exclaim lamely when two barking rows of drooling teeth jump up at you.

Dogs not allowed on that side of the beach. Except for these ones, because they are special.

The photo, taken around noon on the 11th May, shows that these dogs were special, and rules didn’t apply to them. Neither the rules saying no dogs on that side of the beach, nor the rules saying keep your mutt on a lead, because it’s so much more fun for Fido to race up and down the beach, other beachgoers be damned. That’s bad on the beach, it’s really quite unpleasant in the tunnels.

crisis, what crisis?

I come back after about a week away and Monevator’s Bonfire of the Vanities seems to indicate that it’s been a tough time in the markets of late. GBP investors’ ability to shoot straight is handicapped by the falling pound, which flatters apparent returns.

Looking at my iWeb ISA, it didn’t look so bad, though of course that’s in falling pounds. I sold out a fair amount a little before the turn of the year, because I had done reasonably well coming out of the Covid crash and unicorn shit is on the rise. There is a lot of gold in there, because I had a plan to sell out gold from my ISA and rebuy it in my GIA, and buy income in the ISA with the liberated cash. Because: income tax and inflation.

Although discharging capital gains is a pain, with a gold ETF I can swap some SGLP for a gold ETF run by Wisdom Tree or SPDR, which would harvest capital gains for the cost of the turn.

As it was, I started buying gold in the GIA, but then Putin switched from exercises to war, and although I had started buying income ITs by selling gold in the ISA, I didn’t sell the rest of the gold for cash, so I rather increased my total exposure to gold. I will continue to hold my capital in the ISA as gold rather than cash, selling gold only just as I am buying. For some reason you don’t seem to have to wait for settlement in an ISA, so other than the £5 transaction cost there’s no advantage to selling it for cash ahead of the purchase.

I will admit to a fair amount of schadenfreude about tech, which I viewed as vastly overvalued before, and other than my exposure as part of VWRL didn’t really have much exposure. I do take the point that this will have given up return although I wasn’t quite as heavy on dividend paying equities as GFF, VWRL is my largest equity holding and pays almost diddly squat in yield. 1.56% isn’t going to make anybody fat. One needs £600,000 to capital in VWRL to earn £10k in dividends. I am some way off that.

Tech darling SMT versus VWRL. I gave up that return by not buying SMT. Looks like SMT is giving up that return all by itself now

Oddly enough it is in my Vanguard ISA index fund holdings I recognise myself in Monevator’s observation:

In contrast every active investor I know – including the UK-based ones who invariably fish in the mid and small cap arena – has been dragged through a hedge backwards.

Yeah. There was too much VFEM and VMID in my Vanguard index ISA. I still feel these dogs will have their day, but probably not for a couple of years yet, because I clearly jumped the gun. The increasing cost of capital will hurt both. I also bought a load of VWRL in that account, and took a minor bath on that. Trust me to balls up passive investing 😉

But in my main ISA and GIA, not so much crisis. Despite the somewhat active approach. At the risk of being classified as Monevator’s house troll

Important exception being the faultless Monevator house troll who will tell us in the comments he sold everything and put it all into shares of BP on 3 January and who can doubt him?

I did buy BP, though later than January. It’s up 10%, thanks 😉 Riffing on the get a yield from the energy theme I also bought ORIT which has done OK. Slightly denting my house-trolldom I bought TRIG which is lacklustre, and IUKP which is a 10% bust. The Ermine and property don’t really get on. I should suck up my 10% loss in IUKP and build up my stake in this falling knife as I have zero commercial property other than this small stake, though higher interest rates do not bode well for property. Sometimes you have to buy in what you don’t believe in. Particularly in bear markets, which presumably this is, judging by the breast-beating and keening noise.

Crypto – that is about a third down. It also transpires that should Coinbase go bust I will lose everything. So I will limit the total cash I have contributed to £2000, which gives me a more few bites at the cherry into the suckout. I can afford to lose £2000, I have seen a lot worse in equities.

I could address the Coinbase going bust issue by using a personal crypto wallet, but that seems to either involve a mobile phone, which has serious security problems of its own, or complexity issues. Perhaps I do need to run a machine that is airgapped from the internet for financial stuff, but that’s a lot of pain and capital cost to accept to safeguard £2000. DeFi is all very well but all of a sudden you have a serious IT management problem to try and hang on to your crypto. We invented banks for a very good reason, carrying shitloads of tokens of wealth about is a great incentive for ne’er-do-wells to steal them from you. I am not sure I have Monevator’s passion for crypto never mind Finimus’s talent, but it is an interesting ride. Much better than matched betting, which I loathed doing with a vengeance, though the return was better for me. I’d rather go back to work than do that again.

I hadn’t really ever thought about that risk with phones and financial apps. I am considering moving all financial apps to my non-phone tablet. I don’t find it valuable to do anything financial on a phone out and about, because I don’t carry a mobile phone routinely. I don’t need to take this extra risk when I do. I am happy to use cards.

Oddly enough, Vanguard haven’t closed the old ISA from last year, although it is totally empty now. The transfer to HL in specie went smoothly, taking about a month. I have deliberately not contributed to a new ISA yet, so I believe my HL ISA is not part of this year’s ISA. If the Vanguard ISA remains open for another month or so I may use it. I ballsed up transferring my old Charles Stanley ISA to Vanguard, because I ended up paying percentage fees on well over 80k which is bonkers. What I should have done was open Vanguard as planned, but only drip in my 20k contributions as I bought over the year. That keeps percentage fees low, because the balance is low. And I should have moved the Charles Stanley ISA to HL last year. That would have capped my fees to £45 at HL and less than £30 at Vanguard. However, at the time I was overly hung up on having the flexibility of Vanguard’s ISA.

Vanguard are cheap on transaction charges to buy, a lot cheaper than HL, so I may use them as a feeder account and transfer out in specie to HL again next year. I need to stick with buying Vanguard ETFs because the £45 cap on HL only applies to shares (which ETFs are) and not funds, but this is not a hardship for me. It is a neat combination, that gives me 1+1 platform diversification against iWeb and low purchase costs. I have been happy with Vanguard’s batch order buying of their ETFs, which eliminates transaction costs.

Rust never sleeps

At the moment the stock market hasn’t been the major threat to my networth, though that time may yet come. What has been a threat has been inflation. RPI at 7.5% has already overtopped the 5% cap on my pension. This makes me permanently poorer by 2.5% regarding that income. This is cumulative.

The amount of steam coming out of my ears about that was somewhat reduced by observing my colleagues in a different part of the scheme on an uncapped CPI rate were increased by 3.1%. This could catch up with me next year, but there is an argument to be made that the difference in RPI and CPI could compensate for the odd hit of the cap.

Unfortunately unlike some I don’t believe that inflation will drop after a couple of years. That’s probably due to a more pessimistic outlook all round, and hell, the bear case always sounds smarter. I think that the inflation we are experiencing the result of never repairing the damage of the GFC in 2007-9 but running away from it with artificially low interest rates. The can was kicked down the road, and won’t be kicked any more. There is also the whole Western secular decline issue – while the likes of Putin perhaps over-egged the pudding, he has some point. Xi seems tacitly on Putin’s side, not that he would necessarily have picked that specific fight. It is a useful heads-up on where China might want to make their financial system more resilient and dollar-independent. That may have a knock-on effect on the dollar as a reserve currency, it’s hard to envisage that changing, but history shows China plays a long game. The loss of reserve currency status will have interesting effects on American prosperity, in a curiously Chinese way.

On the other hand, what Xi is doing in Shanghai seems bonkers. Perhaps it is a pissing match showing he can dominate the population. I can see that sort of exercise of power and making millions of people do your bidding must make you feel big and powerful inside. Stanley Baldwin was right. The bomber will always get through, Xi just ain’t gonna win that fight given the way the rest of the world is carrying on. The battle will start again on the first incoming international flight.

The shutdown in itself will have a chilling effect economically on the world. At best the cost of living will get worse before it gets better. At worst it just doesn’t get better. This is what secular decline looks like. However, you can always fiddle the inflation figures.

Apparently the Government is consulting on a proposal to reform RPI to align it with CPIH, with the change happening sometime between 2025 and 2030. So I am going to hope that is closer to 2030 than 2025, which should hopefully let some of the steam out of the pent-up inflation 😉 I am also grateful to my slightly younger self, who took a look at the quite heavily promoted “exchange some DB pension index-linking for a higher initial pension” and thought “bollocks to that, if it’s good for them it’s probably bad for me”. High inflation early in my retirement career, like now, would have made that a spectacularly poor deal.

I have high hopes for a delay to the demise of RPI – I have benefited from Government sloth before. As I finished work ten years ago I was fearful that they might terminate Class II National insurance rates – where if you earn a small amount you get to pay about £150p.a. to get an added year of State Pension rather than the roughly £700 for Class III voluntary contributions. They bottled on that decision. Class II NI is an absolute steal – an index-linked annuity for 97% off commercial rates, and doing it that way for eight years saved me about four grand in the difference between Class 3 NI and Class 2. I am done with NI now. Until they add it onto income tax…

A day of reckoning for the early FI/RE movement

GFF’s post on those who live by the SORR will fall by the SORR resonated with me. The early FI/RE movement has changed significantly from the people chasing FI in the early days who crawled from the wreckage of the GFC in 2009. Those people were shit scared of the stock markets, and had to fight their instincts to buy into it, albeit with some notable exceptions leading the charge from the low-water mark. There was a lot more about frugal living while you were working to build up a stash. Many of these voices have disappeared from the Web, as they passed over the event horizon of retiring, or perhaps concluded the wall was too high to climb.

Nowadays, there is less about frugality and more about returns, in some cases massive returns on capital with tech or crypto, or NFTs or memestonks. Crypto is pretty much speculation, relying inherently on the greater fool theory – it is tulip bulbs, not farms and factories producing things people want, or tech looting people’s heads and making them buy shit they don’t need to impress people they don’t like. At least tech is extractive, like mining, if not productive. The low cost of capital and increasing financialisation has distorted prices and incentives for thirteen long years. Nowadays retiring at 50 is lacking ambition, 40 is the new 50 as the time to clear the workforce.

The long term (multi-decade) return from the stock market seem to be more like 4 to 5% and that sort of thing needs RIT-like levels of Saving Hard, or starting out with a lot of capital to be able to retire in your forties. Of course you can be lucky – but if you rely on something like crypto to make your stash, then as soon as you have enough, get it out of that unproductive volatile asset and put it into either a much less volatile unproductive asset, or shift it into a productive volatile asset and hold it. If you are extrapolating a 13 year bull market and think that equity balance is your net worth, then look at the bottom line in GBP. Now halve it. That’s probably how much it is really worth 😉 You may be retired for 30-50 years, you will see those dark days at some point.

If you have enough ill-gotten gains then you have won the war. Now get the hell off the battlefield. GFF’s example redditor was somebody who didn’t clear the battlefield, and got to pay for the ride

Short-term meme stock pump-and-dump traders can win for a while. But eventually most pay for their ride.
Indeed a lot of newer investors are getting off the rollercoaster feeling a bit sick and wondering where they lost their wallets.

Easy come, easy go… It’s hard to cash in your chips after a winning streak. Getting out of speculative assets into productive assets is key. In a long bull run some element of speculation has its day, because a rising tide lifts all boats. Bears tend to bash the more speculative stuff first, where the valuation isn’t supported by fundamentals, or the valuation is lifted by speculative expectations of jam tomorrow.

I do get the irony of this coming from someone holding a lot of unproductive gold. Compared to a bitcoiner or memestonker I am at the widows and orphans end of the investing spectrum. I also don’t expect to be holding that high a proportion of deadweight in three years’ time. Hopefully the bears do their work by then. An improvement in valuations, particularly at the tech end, is long overdue, and improving valuations is what bears do, by mauling prices.

It feels much more like the real thing compared to 2020. Unlike the Covid bear market, I am not tempted to short this one, because if it is snapping at the heels of what has been a very long bull run, it feels like the processes of internal decay and decline are finally beginning to overwhelm the irrational exuberance that tolerated valuations only surpassed in the dotcom boom. Covid was an exogenous shock, this seems much more like an honest bear, munching its way through the fat of irrational exuberance.

one fellow managed to send out the bat signal at the low-water mark in the GFC Take a bow, Monevator.

It is hard to invest in bear markets, because nobody rings a bell at the bottom.  You buy shares for perfectly good reasons, and see the price mauled. Then you get to do it again in a month. And again. And again. How long is this going to go on for? Is this a one year bear market, six months, three years, or a long slow slog like the grind out from the dotcom bust? Somehow you need to live with that and continue to buy, because although the purchases you make in a bear market will make you feel awful in seeing the short-term losses, when you look back from a few years hence, some of those will have been your best buys, buying you a steady income for years and years at a low cost of entry. Bear markets are the time to build a HYP. Mine was built largely before 2015.

There be trouble ahead, particularly in the cost of fuel. I responded to some of that by buying BP and some renewable ITs. At this stage it is difficult to qualify how much is peak oil, how much Putin, how much Western decline, how much Covid shock. But I can see that at some point I may want to supplant my pension with income from either the ISA or the GIA. I have been adding HYP like investments to my GIA, to target enough income to consume my dividend tax allowance. This is only £2000, so at an example 4% yield I could park £50,000 in my GIA. Since this is a use it or lose it allowance it’s worth having, until such time as I have uncommitted ISA allowance left over. It roughly matches anticipated rises in the cost of fuel. In the ISA I am drip-buying index stuff for now, because I’m not sure this bear market has really got its boots on. If it does, then perhaps the amplification of IT discounts may mean we see these days again.

financial markets are not the only fruit

Some investments are non-financial. The house owner-occupiers live in is probably the commonest non-financial asset, inasmuch as the usufruct of the asset stops you paying rent at market rates. There is some dispute on the non-financialness of owner-occupied housing but I am not convinced, in the owner-occupation case. A Rachmanesque BTL crammed full of students is a financial asset.

Other non-financial investments include energy saving measures. Given energy is a rising cost, we have decided to spend capital on replacing a gas fire with a wood burner. The gas fire was valuable, inasmuch as it doesn’t require electricity unlike the central heating boiler, but since we use a gas boiler it doesn’t give us diversity of energy source. The advantage of wood is that it is often local, and can be stored on site – we are also spending some capital on constructing a log store.

In the last house we had some fellow who had started up his own business making garden furniture and bits and pieces. He did a great job for us for just over £200. This time we get to do the job ourselves and the cost of raw materials is nearly £500. The log store is about twice the size, however, since we have the realestate. You can do it a lot cheaper using pallets or IBC frames, but we will have to look at this damn thing every day, we are not so hard up as to use pallets as we did for the extension to the old log store. So I took some inspiration from these guys, I find their energy tiring, they have moved more times as owner occupiers than I have! I can only presume there aren’t any ankle-biters in their breathless European journey. I upscaled the thing bigly and used FreeCAD to simulate it, because I am not a real carpenter able to picture a design in my mind’s eye.

I am probably too old to chop wood myself these days. So we will pay people to deliver it, not owning a hedgerow full of old trees, although I am not above cutting pallets up with a reciprocating saw. I trim the resulting planks with a circular mitre saw.

The Guardian has had a persistent hate campaign on wood-burning. Particulate pollution is clearly an issue. The Government is more measured as is Which magazine. The manufacturers, unsurprisingly say it’s all tickety-boo, nothing to see here. Mandy Rice-Davies would probably like a word.

We decided to take this risk, despite it being really hard to qualify what exactly it is in the cacophony of conflicting opinion. We had a log-burner before without experiencing problems. The diversification of fuel and local storage is valuable. Energy is going to be a problem in future, and should we end up being forced down the heat-pump route in the long run, domestic heat pumps have a low peak output capacity 1 without using larger radiators, so the boost on very cold days will be welcome. An air-source heat pump efficiency falls as the outside air gets colder, so like a flawed sword, the damn thing will fail you when you need it most. They are more efficient at heating in midsummer.

Another investment I made was reactivating the gravity-fed shower fed from the hot water tank. Before we bought this house it was rented out to three people, and they must have struggled with the hot water capacity for the shower in the morning, because somebody took great effort to add on an electric shower. How the landlord got away with the 1970s open burning gas fire beats the hell out of me, I am sure that sort of thing isn’t allowed these days. We half expected the log burner surveyor to condemn it and isolate it as soon as he saw it 😉 I don’t like electric heating, these are big loads and you are carrying more load of the green crap. The Energy Saving Trust already admits a heat pump doesn’t save you energy costs on a gas boiler because of that. I am clearly on the wrong side of the right-thinking zeitgeist but I don’t want to pay more for my energy so other people can pay less, and a good place to start is don’t heat with electricity where you have an alternative. There will, of course, be some incremental gas consumption, but heating water with electricity in Britain is a mug’s game because of all the green levies. These parasitic costs are about 60% of the cost of electricity and 40% of gas. At least I am now paying less towards insulating other people’s houses.

To qualify this I bought an Efergy Engage hub. Inquiring minds might want to know why I don’t take a smart meter, but I am of the view that the longer I can hold that sort of thing off the better. A smart meter offers me a display until I change supplier, but offers them the option of remotely cutting me off, either through intent or through the battery failing. Being a recalcitrant old git, I don’t see why I should take either risk to make their life easier, so I have responded to all offers of smart meter installs with a polite form of go forth and multiply. I am happy to monitor using my own kit. If the battery runs out I can change it, but more importantly, I don’t lose power randomly, I just lose data. It’s not a hard choice to make. I confess to being totally confused why a smart electricity meter has a battery that needs replacing. A supercap would be more than enough to keep the memory over a power cut. They can shut down the measurement circuitry and the reporting back to Big Brother via the mobile network in a power cut, because you’re not consuming electricity when there ain’t any.

The Efergy system has enough time resolution to qualify short high power loads properly. At first from a gut feel I didn’t think that a five or 10 minute shower would be a particular hit, but the instantaneous load is horrendous – 9.6kW peak, more than the fairly antiquated electric cooker roasting a chicken for an hour and a half, at a guesstimate roasting a chicken is about 2.8kWh, whereas a ten-minute shower would be 1.6kWh. The difference is we don’t roast a chicken every day. There is nothing else in my house that takes anywhere near that amount of power. The implied current consumption of 40A is scary in a domestic setting.

Restoring the gravity-fed shower was reasonably easy. I paid a little extra for a smooth-bore shower hose and a Mira single-function shower-head, to minimise resistance. Thankfully the previous owner had done the work of raising the cold-water tank onto a platform in the loft by a metre, which is the easiest win to get a decent flow rate from a gravity-fed shower in an upstairs bathroom.

I did consider switching to gas for cooking, but an electric fan oven does a much better job IMO and replacing it with a double oven and induction hob is probably a better way to go, since we don’t normally fill the oven for just two of us. Plus there’s the Putin effect on gas, I don’t want to increase my liability. Plus at one stage they will shift more of the the green crap onto gas. It’s not just equities where diversification is in order.

One more non-financial investment was getting a 250W motor front wheel mod for my pushbike. Although I am of the view that most local places I want to go are within two or three miles so perfectly walkable, there are some destinations in the three mile plus region where a bike scores, and it also scores carrying modest loads. It’s hard to say whether I will ever recoup the cost of the £500 mod, but it makes cycling a better experience, because I can ignore wind to a large extent and the hills are more tractable, though most of the area I cover is on the level. The downside is at the moment I have lost all front lighting capacity because there is no space on the handlebars. It also feels a little bit bonkers to piddle about with battery lights when I have 36V@250W on board. The supplier looks the other way and points you indirectly to how to mod the software to can the 15mph upper limit, but I haven’t bothered, because 15mph is quite fast enough for me on a pushbike with rim brakes thank you very much. This is probably a recreational/quality of life win rather than an non-financial investment.

We are entering strange times, and there will be a winnowing in the FI/RE space, with the rotation from speculation towards investing, and perhaps some good old-fashioned frugality and saving. Fundamentals start to matter as the tide goes out. I remember the shift well from the dotcom bust – dividends were irrelevant trash, it was all about rapid share price appreciation and the promise of jam tomorrow. Then a long, hard rain began to fall, from 2000 for several years of sideways grind. Presumably those people still standing were grateful for dividends again across the intercession, as share price appreciation disappeared 😉

Don’t they know there’s a war on?

If the inflation and energy prices somewhat frighten me, who has more resources behind me than many, it’s curious that Johnson’s crew don’t even seem to bother pretending they giveashit. They seem to wear the Nasty Party badge with pride. Obviously I don’t want to subsidise the power prices for the poor by paying more than I have to, but I’m not asking them to vote for me, so I don’t have to pretend to give a shit.

I can find the difference in price, and allocate capital to reducing the price/improve resilience. More than one in ten Britons was in trouble paying for energy in 2020, and I guess this will be worse this winter. We’ve seen this rocketing energy costs movie before, with a different cast of characters, in 2012.

We are funding a proxy war with a significant worldwide energy supplier, and like in 1973, when you do that fuel prices tend to rise. It is sometimes necessary to put up with privation to live your values, although the price rises mean the punch on the snout for Putin is rather offset by the increase in value of what he can now sell to China and India, though gas is a more local sort of thing.

A little bit like with changing the RPI definition of inflation to make it look less bad, the Government have opined that

In February 2022 the Government projects that fuel poverty will continue to decline in England in 2021 and 2022 despite very large increases in prices. This is due to a number of different factors including how fuel poverty is defined in England, a lag between when prices rise and when they are included in estimates and the impact of the energy bill rebates.

So that’s all right then. Let’s all whistle a dancing tune, hope there is no recession and party on. Nothing to see here. Honest. Shit will not go down this winter. It’s a bit like Lee Anderson telling us that the food bank he was at isn’t really necessary, because

You’ve got generation after generation who cannot cook properly. They can’t cook a meal from scratch. They cannot budget.

Well, maybe, but as a government you really ought to pretend to care a little, rather than telling people they are incompetent nincompoops who Must. Try.Harder. Or not, perhaps politics is so tribal now that in the same way as Donald Trump claimed he could shoot someone on Fifth Avenue and not lose voters, Bozza can’t be arsed with pretending he gives a toss.

I will buy my logs in Summer, following the good guidance of the old boy Thomas Tusser

Some of the Five hundred points of good husbandry, Thomas Tusser
From “Five Hundred Points of Good Husbandry”, Thomas Tusser 1580 (link to Google books scan of reprint from 1848)

because I am not so convinced the war will all be over by Christmas. I accepted the risk of a windfall tax2 on BP to get the energy-related yield because I didn’t think that the government gave a shit, but I didn’t expect them to go full Rhett Butler on the proletariat. MSE’s Martin Lewis found himself unamused, though I suppose if I were to invest enough in energy companies it’s good to be aware Ofgem is on the industry’s side rather than the side of us hapless consumers 😉

  1. Yet another area where there seems a range of opinion. Herehere, and here seem to indicate yay, and this seems to indicate maybe. 
  2. The risk of a windfall tax has somewhat increased since I bought the shares 

63 thoughts on “Fear and loathing in the markets again”

  1. I love your meandering rambling thoughts laid out on a page (screen!- you know what I mean 🙂 ), not quite a rant but certainly makes sense to me and hits many proverbial nails through the wood!! Great stuff.

    Liked by 2 people

  2. Interesting wheeze with Vanguard and HL; will you update us in due course?

    > This makes me permanently poorer by 2.5% regarding that income. This is cumulative.
    Were inflation to go negative I think you could recover. IIRC pension indexation is usually defined as an increase ie never negative. Perhaps such an inflation scenario is currently unlikely – but who knows.

    Surprised you did not mention the impact of high inflation on erosion of (currently frozen) tax bands: just imagine you got a below inflation pension increase which ordinarily would have been taxed at 0% (or 20%) but is actually all taxed at 20% (or 40%) – lovely double whammy that!

    I think there is more to smart meters than making the suppliers life easier. For example, I would be very surprised if demand based tariffs/billing (or similar) is not being considered. And I for one find the related Einstein themed adverts amongst the most annoying/patronising/misleading (take your pick) things on TV!

    Did you possibly mean interregnum rather than “intercession” ?

    Liked by 1 person

    1. > Interesting wheeze with Vanguard and HL; will you update us in due course?

      Yesterday I asked Vanguard that question explicity. As in can I use this empty account again for this year’s ISA? As I understand it the HL ISA has entirely previous years’ money, I haven’t paid in.

      Vanguard is quite a terrific match for a bear market approach. It’s foul to invest into bear markets, you see falls of 10% on purchases. I have never really drunk the passive investing Kool-Aid, but telling them to regularly buy say each month means I don’t feel the pain. I did some of that manually in the Covid crash after shorting it, and felt the fight between the angel of hope and the demon of fear each time I bought.

      Compared to that, the instruction to Charles Stanley to buy VWRL regularly was easy. Vanguard batch purchasing has no transaction costs, so they score on CS there, and using a standing order to shift the cash monthly would reduce costs even more, because the average value in the account over a year would be £10k rather than £20k.

      > interregnum

      It was an intercession for me, because I sold out of the dotcom bust into the pit of 2002-2003. But yes, a new order did appear afterwards, so it was an interregnum in fact.


      1. Vanguard update. They responded thusly

        Your account is currently closed. I have now requested this account to be re-opened. I will inform you once this has been done and you will be free to invest in this ISA.

        With a bit of luck I won’t have to go through the whole AML name,rank and serial number palaver

        In future, I think the tip is in the transfer to HL, don’t tell them to transfer everything. They do give you the choice, in theory you can even part-transfer one line of stock. An obvious one is to just transfer the investments in specie, leaving residual cash – HL has about 15k of cash which I suppose I have to do something with, sucking up their £12 transaction fee rather than Vanguard’s £0. On the upside I can invest it in something more racy than a Vanguard ETF.

        We shall see next year if Vanguard decide that I am taking the piss, but the trick seems to work OK once, at least.


      2. Traditional cost comparisons (e.g. platform A vs platform B) are never easy – and often are dependent on the details of the scenario envisaged. I have never seen such a hybrid approach before – so HT to you!

        To my eyes, your example also seems to imply that HL will happily open an ISA without any payment from the tax year of opening.

        Liked by 1 person

      3. > your example also seems to imply that HL will happily open an ISA without any payment from the tax year of opening.

        I believe this is the case. Much of their promo material pushes consolidate your ISAs here. On this page


        they quite explicitly say

        You can transfer Cash ISAs and Stocks and Shares ISAs to us.

        Transferring doesn’t count towards your ISA allowance.

        and I ought to be able to swing £200 to £250 cashback, depending on whether they view transferred cash as value

        I was happy to violate the principle of protecting against mustelid indigestion with AML freezes by putting in a little cash in their specific case because I already have a SIPP with them. AML regs caused me zero pain with HL for the transfer. Hopefully Vanguard won’t put me through that again either, because this is an existing account, although currently closed


      4. Thanks, I did read that HL page and the info about their cash back offer too.
        Pity that even with a three month extension the cash back offer may be too late for me.

        Liked by 1 person

      5. > Pity that even with a three month extension the cash back offer may be too late for me.

        Talk to them. I vaguely recall they gave me some bung for drifting over the AVCs into the SIPP, that is, once they had made me pay £500 for financial advice so I lost in the round. , but I wouldn’t have matched their timescale. So I asked for an extension and they were fine with it, yes, that’s OK, tell us if it will take longer (that the extra 3 months) and we’ll fix it for you.

        HL is an odd sort of shop. As I said here, they are selling you an odd sort of old-skool experience, to make you feel loved they flatter you along the lines of

        ““You are a wealthy sort of chap, probably a chap, probably 50+. You are knowledgeable in the ways of the world, so here is a shitload of complexity and a teeny bit of salami-slicing of fees. Needless to say, an experienced individual of your calibre has the savvy to make shitloads of money from these fine opportunities despite the fees, so take it away from here. For those of you into shares, we now offer real time live share prices, so you can ride the markets like a pro. Come on in”

        This is not a Millennial’s fintech tight ship, just an app, flashing and banging the latest prices at them. HL is Barry Blimp’s investment platform for fellows like “a 55-year old investor of not immoderate worth”. They snow you under with paper info, because Barry Blimp doesn’t use t’internet, he prefers to get out his Cross fountain pen, dip it in ink and transact biz that way.

        Trying to make you feel special is their stock-in-trade, so ask for the extension. They will probably want to make you feel they have gone out of their way specially for you.

        In fairness I had already been their basic SIPP customer for a year or so. But acquiring a new customer is probably also worth cutting you some slack. It doesn’t hurt to ask 😉


      6. Thanks for the tip – I may well do that.

        HL were not my preferred choice for the possible transfers I have in mind.
        My envisaged transfers would not ordinarily commence until much later this year (starting with a relatively low-value transfer) and run on into about Q2 2023. So, yes a kind of consolidation exercise.
        If anything, I had come down on X-O but I still need to confirm if they too will accept just transfers.
        In any case, having options is rarely a bad place to be.

        Whether HL “view transferred cash as value” could be a deal breaker for me.
        My reading of the HL website is that transferred cash is value; but it would be nice to have that confirmed, in due course, from the coal face – poor pun fully intended!

        Thanks again.


      7. > Whether HL “view transferred cash as value” could be a deal breaker for me.

        You could ask them. Beware, however of a different issue. If the amounts of cash are significant, then check the spreads. I was unwelcomely surprised, on deploying the 15k of cash that I shouldn’t have transferred out of Vanguard in hindsight, to observe that as well as the £12 transaction fee, which I was aware of, HL’s spreads are higher than I am used to in iWeb. I bought some VHYL (iWeb link) which is called VHYG on HL who don’t do the income flavour (HL link). The spread on HL is 0.4%, it’s 0.14% on iWeb. I figured VHYL would take less heat from the tech rout that VWRL, indeedably’s deconstruction notwithstanding

        This isn’t a dreadful issue for me, because this is mostly index fund fire and forget index stuff, and the bung will more than compensate for it. But it’s worth noting that HL is definitely not the place to trade, or even rebalance, without eating higher transaction costs, not just in the headline £11.95 cost of the turn, but also in the percentage rake, which is a bigger hit. I noticed this first on PHPP where it’s 0.74% at the time of writing, although in fairness the spread on that ETC at iWeb is 0.71%.


      8. Thanks again; and, as usual, the devil is in the detail!
        All I really want is another iWeb and that is why I favour X-O – but I dare say there will be some issues thereabouts too.


      9. Vanguard update 2. They have re-enabled the account and I bought a mix of three etfs as before. Can’t really fault them for service so far.


  3. Agree with you on the shift in the current batch of FIRE wannabes about it being less about frugality, more about returns. At times, the aim seems to be to just get rich quick; boring single figure returns via index trackers can’t compare with the bright lights of (possibly) doubling your money in something exciting like crypto or meme stocks. Retiring in your 50s isn’t considered early to those folk and some also advise against investing in SIPPs as you can’t get it until your 50s – it’s almost as if they don’t think they will live to that age, or even that they will need money then.

    Liked by 1 person

    1. It’s really odd.

      > more about returns. At times, the aim seems to be to just get rich quick

      I was that guy. I remember it well. Twenty-three years ago, in the dot-com boom. There’s an eerie deja vu about it, the dividends are trash, SP gain is what it’s all about. And tech again. I wonder if we spent the last couple of years WFH and on Zoom and started to believe that the virtual world was taking over from the real world, along with the low interest rates. I’m not sure that we need a spectral Paul Volcker to come to our aid, but there are also resonances with the beginning of the 1980s. There are no good options for central banks now, and they seem to be out of ammo. The loss of reserve currency status would be a hell of a blow to the US and it’s still hard to imagine, but it tends to follow the power shift. I wonder what their Suez crisis will be.

      Liked by 1 person

  4. Hi Ermine,

    I have a gas cooker. My general thoughts on it are that for half to to two thirds of the year it is free to run. I just open the kitchen door and the heat escapes into the living room and eventually upstairs. Meaning the gas central heating has less work to do, which is where the saving comes from. As a side benefit it also lets nice cooking smells waft round the house, which is fairly pleasant.

    Efergy looks really interesting. I bought a very cheap power monitor plug a while ago, so I know how much each appliance is when on standby and in use. I think the real benefit for Efergy would be when you have solar panels. If it told you how much you were using, then it would be easy to see what appliance to use with the free solar electricity, instead of feeding it back to the grid at a much lower rate. I could see a 500W travel kettle, of a small 500/1000W electric fire in the living room could perhaps be run on bright cold days, to spare the gas heating.

    CHIP to replace RPI – I hadn’t heard of that, so thanks for the warning. I have a final salary pension that gives limited protection against inflation. Part of it limited to 5% RPI and part to 2.5% before it was finally closed and we were moved into a money purchase plan.

    I have never worried about broker transaction costs too much. Just place a limit order for £15 or whatever below the current market price and it usually get fulfilled, saving the transaction fee, unless the market moves massively against you. I can be a bit stubborn and have waited months for the price to come down!

    Those quoted prices on the HL screen are not the actual quotes they will give you. I believe they are just figures based on actual transactions that were completed, which you can also see here:
    I don’t think they are screen scraping the LSE website, probably just using a separate feed.

    @AlCam, as Ermine said, just ask HL if they will extend their cashback offer, or keep it open until you are ready to transfer. They did this for me once. They will generally pay any exit fees for a transfer, whether there is a special offer or not, if you ask

    My understanding is that you can open as many ISAs as you want in any tax year, this allows you to transfer old ISA’s to your hearts content. What you cannot do is subscribe (i.e. commit new money) to more than one ISA in any tax year.

    Liked by 2 people

    1. > I think the real benefit for Efergy would be when you have solar panels. If it told you how much you were using, then it would be easy to see what appliance to use with the free solar electricity, instead of feeding it back to the grid at a much lower rate.

      I presume that with solar panels you’d probably need to have a smart meter, or at least the grid-tie inverter would be able to tell and app what it was up to, so you may not need something like that. I used to have an Efergy E2 in home monitor but if failed, but the sensor worked OK with the hub. the E2 required Adobe Air on the PC to run the download program, which was nasty. My over 10-year old Efergy elite in-home display is still serviceable, but the sensor wasn’t compatible with the hub, so I have two do these damn sensors on the intake.

      Most loads have a long enough dwell time that you don’t need the time resolution. I was shocked that a shower draws 40A, I had no idea it was that bad. The plug-in devices are good for loads above about 20W, but handle odd power factors badly and seem to over-read for really low loads like modern USB chargers and the like. The vampire power drain thing is somewhat overcooked nowadays.


      1. I was also surprised by the power used for an instant shower. We got a generator to work the light loads in the event of another power cut. In the hills we get a couple every winter.

        It’s also operates the electrics of the oil boiler and will run on petrol or lpg. The down side is the oil price. We were lucky and filled at a set price. The next day it doubled and none of the suppliers would set a tariff. You paid the price on the delivery day.

        Agree with log burners. Made bread in mine


      2. @Bob – I took a look at the MCB in the consumer unit for the shower, and it is one of these with a B40 curve, which sort of goes along with the 9.6kW observation. It’s the largest trip in the CU – the cooker is a 32A trip.

        > and will run on petrol or lpg

        Tell me more. I thought a gas conversion was either/or. I would be interested in a generator that didn’t use petrol, because after being idle for a while the carburettor gums up and you get to swap out the guts with some aftermarket bits from ebay. I have a few of these in stock, but it’s a PITA. It’s slightly less bad with fuel stabiliser, but the move to E10 won’t help fuel longevity it seems.


      3. Re generators

        I got mine from Machine Mart.


        This is the one I got. Annoyingly the Worcester Bosch oil boiler, although efficient, requires a smoother wave then a normal generator can deliver. Hence the inverter/generator. It only needs a tiny bit of power for the pump and computer jigger pockery.

        Otherwise a cheap diesel would have done.

        WB were very reticent about using anything except mains but I finally beat it out of them. You need to get electrician to connect to proper earth. It’s not huge but will keep the freezer from defrosting and

        Re the propane. Apart from the backup of no petrol I was concerned about jets clogging with the new E10 given it will just be started once a month. Propane avoids that.

        Not too worried about heating since, like every other hill dweller we have a shed of logs and a coal house.

        Liked by 1 person

      4. Wow. I clearly have let the grass grow under my feet since last looking at this. Thank you. For 800 sods I only need one of the dinky 1.4kW jobs, aim to keep the CH pump running and perhaps a small freezer, but while we get outages of a few hours it’s not usually days. My campervan is diesel so storing petrol is a right PITA for me, the only other this I have for petrol for is the chainsaw once in a blue moon. Best of all the campervan has a small propane bottle with the same bonkers backwards thread as on the gas fitting shown. The CH pump is what I presume is an induction motor at about 50W, so even with the nasty induction motor power factor I have an order of magnitude in hand. Just need not to start the pump and the freezer compressor at the same time.

        > You need to get electrician to connect to proper earth.

        I take it you doing this properly rather than using the gonzo method of throwing the main intake switch and an ahem, interesting cable that needs treating with great care 😉 Presumably you are TT earthed with your own local earth if out on the hills, and I could see why an oil boiler might not approve of a floating supply, what with flammable liquids and the hazard of an uncontrolled path to ground.

        On my old farm days I used a big copper spike banged into the ground, wired to the earth terminal of the distribution and connected to the generator neutral as well, which mimicked TT for the otherwise isolated generator powering our borehole pump.


      5. You reminded me that I remember reading about Dacia’s new Duel Fuel cars that use LPG
        They look quite interesting and work out cheaper per mile than petrol.
        (Not that I am in the market for a new car – yet anway.) But I can’t see much downside to LPG, the cars don’t cost more for Duel Fuel than just the petrol version and have slightly better performance. I could be tempted when the time comes for a change.

        Liked by 1 person

      6. I really like the way you have changed you central heating system so that it can run off a generator. This is certainly something I have been thinking about for the last few days – how to make myself more resilient in case of power cuts. Electric cuts are one thing, but a gas cut, possibly over winter, as has been mentioned in the papers recently has got my brain cells going.

        Since I live in a mid terraced house (with very nice neighbours either side) I would be very reluctant to run a generator, I wouldn’t want to annoy them, so wondered if there were other options I could use.

        This, a butane cabinet heater wouldn’t annoy the neighbours at all.
        Not ideal for everyday use, I think condensation might be a problem, but much cheaper than a generator and would work if the mains gas and electric was cut for a few days.

        This then lead me to thinking about protecting the freezer. I wondered if there was an uninterruptible power supply that I could use. This thing:

        may not be uninterruptible, but would seem to be able to power a freezer. One of the photo reviews even shows an electrician with this running his central heating a fridge freezer.

        Thought I would mention it, since you might be interested in an alternative to a generator and it also looks ideal for camping.

        I don’t think I could justify the cost. The contents of my freezer I would guesstimate are only £50 to £100 so a cost benefit analysis wouldn’t work just for this purpose. We very rarely get power cuts, may once every 5 years. Maybe this winter will be worse, but the freezer never defrosted during the last power cut which was about 8 hours. I may just be better off with filling any spare space in there with freezer packs to help it stop from defrosting if we do get a power cut.

        One problem I just discovered: I attached my little power monitoring plug to my freezer to see how much power it uses (about 90 watts), but the thing hasn’t switched off all day and seem to run 24/7. That’s never right, there must be a problem with the thermostat. 😦
        Perhaps it’s time to invest in super insulated power efficient fridge.

        Liked by 1 person

      7. > Electric cuts are one thing, but a gas cut, possibly over winter, as has been mentioned in the papers recently has got my brain cells going.

        Haha. I am so old that I recall the power cuts of the Heath administration, albeit as an ankle-biter rather than a sentient adult. They were very, very reluctant to do gas cuts because of the hazard of air getting into the pipes where people leave a gas appliance running unattended. There are gauzes in the gas pipework to arrest the flame front but not necessarily in the domestic pipes. And you have the fun and games of pilot lights going out and the return of gas, now unlit, nicely diffusing into the kitchen ready for the punter to make a spark switching on the lights, hello BOOM. Modern boilers use electronic ignition/gas valves and sensing so that shouldn’t be so much of a problem. But the gas fire we just had removed would have been a prime candidate – other than we never left the bugger unattended.

        The problem you have with gas central heating is electricity cuts, which stop the boiler control system working and the circulating pump. Neither of these is a high load, and can be easily handled with a generator, or indeed the camping power gizmo you highlighted. The load is about 50W, though the pump is an induction motor so a git of a power factor, dimension for 200W. I am tempted for this winter to build a big 24V Lithium battery pack using 18650 cells and use a 24V inverter, which reduces the sort of outrageous currents in the 12V flavour. But the trouble is that capacity is incredibly expensive, dropping a grand on a gas generator gives me much more bang for the buck than dropping a grand on a Li inverter. Wandering Bird reviewed this power pack gizmo which sounded great until I clicked through to the price. I never struggled on the road wild camping, even on NC500 before World + Dog did it – the win is never invert from 12V to 240 and then downconvert to laptop or 5V for your phone FFS. But then I have never aimed to run a hair dryer in a camper van, and I will run the (built in) gas hob in the night in the dead of winter* to warm up if it gets so cold I wake up, which is frowned on. I have managed to run 100W amateur radio gear off the van leisure battery, but I am not trying to work on the road. That’s the trouble with fossil fuels. They are damn good at what they do, beating that costs an arm and a leg. Though absolute hat tip to the performance of electric cars, if you boot a Tesla it feels like somebody had punched you in the solar plexus and your guts get left 300 yards down the road, I had a 3L 130BHP car in the mid 1990s and that didn’t have anywhere near that sort of punch. I can get away with a generator because I am far enough away from my neighbours that I wouldn’t bother them, even though my current generator sounds like a bag of nails. Anyway, after that rambling digression –

        Against a gas cut you need a alternative fuel, LPG, wood or coal 😉 Which is the thinking why we have gone the wood burner way, though getting rid of a ghastly 1970s gas fire which ran the risk of singed eyebrows each time we sparked it up was an added plus. You can run Calor gas fires inside building, but the combustion products do really get the back of your throat. My first company used those in the lab, what the combustion products did to the pins of the integrated circuits in Stores which was also there was really quite shocking. The lead wireman died of some respiratory disease, though people smoked like chimneys in those days. The youthful Ermine though I would have to leave the electronics industry because of occasional asthma from the combination of solder fumes and those fires, it never happened in the summer. And for the forty years since I left that firm I never had asthma again.

        In the 1970s the best win with a freezer in a power cut is don’t open the door. A chest freezer is good for about 8 hours, if you add some plastic water bottles for capacity if it isn’t full you get the latent heat of fusion which gives you a big leg up. And an immediate indicator if it got too warm. I am sure 2020s freezers are better insulated than they were in the 1970s

        * I don’t venture north of Watford Gap camping in winter 😉 The gas hob saved me from hypothermia on the winter solstice in Cerne Abbas in Dorset. I have no idea how people survive in tents 😉


      8. Thanks, that has given me more a bit more to think about. Nowhere seems to have any gas cabinet heaters in stock (supply chains I think, but it could be people preping), but I think I may not need one on second thoughts. I don’t see how my house could get as cold as a camper van or tent, plus I have the option to pile more blankets on the bed and wear extra layers.
        Maybe all I really need is just a portable gas cooker/hob, so I could get a warm drink and warm food if there was a gas and electric power cut. (Assuming it doesn’t go on for days!)
        In extreme circumstances I could just run the portable gas/cooker for half an hour to boost the warmth of the room, a bit like like you did, but it rarely gets that cold as far south as I am.

        More immediately, I need to do something about my broken freezer. I know a local man who replaced the thermostat on my fridge a few years ago. Hopefully it just needs the same for my freezer. I have plugged it into a mechanical timer, switching on and off alternately each hour, until Monday, as I can’t see any point in running it flat out until then. Fortunately, it seems to be staying frozen.

        Anyway, I am about to start a spreadsheet to compare new freezers, just in case I can’t get it fixed. These days they specify how long they stay frozen in the event of a power cut, which is helpful.


      9. > Maybe all I really need is just a portable gas cooker/hob, so I could get a warm drink and warm food if there was a gas and electric power cut. (Assuming it doesn’t go on for days!)
        In extreme circumstances I could just run the portable gas/cooker for half an hour to boost the warmth of the room, a bit like like you did, but it rarely gets that cold as far south as I am.

        We used to use this sort of thing on the farm for a off-grid brew. My younger and more foolish self had one of these death traps which were top-heavy even before you put something on it, but having tipped it over enough times in the open trying to get coffee I wouldn’t dare run that inside, from a fire safety POV.

        There’s obviously the CO risk, though since our 5 and a bit kW wood stove needs no external ventilation, and indeed people run Calor gas stoves inside which don’t even have a flue to discharge the combustion products without dying like flies the flat camping stove is probably OK in typical UK homes. Interestingly when they fitted the CO monitor for the stove they put it high up, as it rises, which I didn’t know until I looked it up.

        90W all the time sounds a bit off for the freezer. This guy seems to reckon his chest freezer takes about 600Wh a day, so you’re three times that. Though if it’s not a chest freezer it will be a lot less efficient. Intriguingly there was a link of the teaser stuff on the side of that video to this guy who has built the gizmo I was thinking of making, I am wondering if I should just suck up the sticker shock of your device or that Wandering Bird thing, since they seem to run at an internal system voltage of more than 24V. If they follow the 1970s rolling power cuts pattern it tended to be 9 hours off which that sort of thing could bridge for say the central heating pump. Interesting that freezer specs now tell you how long they will bridge a power cut. The gas generator scores on the days long power cuts issue which is the issue in the hills due to damage and response times for overhead lines, but we don’t have that sort of problem.


      10. Another update. I’ve now tracked my fridge freezer, which is vertical, about chest high and with the freezer on top, which seems to run 139Wh a day, averaged across a day and a bit. Which is better than that American fellow, though I would say his chest freezer has way more capacity, so perhaps that explains it, and it is hotter in America usually given the lower latitude of 42N against my 51N. So your 2160Wh is bonkers, as a freezer should take less power than a fridge freezer, as it only has one job. Unless it’s a huge industrial meatsafe, of course.

        I bought the Bluetti device, it is cheaper from here than from Amazon, and I made sure to buy it with a credit card for S75 protection.

        The 500Wh capacity would run my freezer for two days, though yours for only six hours… I live in a town, not in a rural location, so if power cuts were like the 1970s it would bridge the gap usefully. I could get another 400Wh by feeding in a 12V leisure battery. There is an input limitation of 8A which is about 100W. After that I would then run my old generator at probably 24V (it is a 12/24V unit, not mains)

        I am not expecting the sort of day-long power cuts of rural areas. I didn’t bother buying the solar panels, and I expect this fight in the winter. You don’t have to use the matching solar panels, a secondhand panel from a roof system would work it is it < 28V o/c – most seem to come in around 18V. It does have great potential in camping, allowing me to save on hookup and particularly in the smaller sites which often have no EHU anyway. It would let me charge my ebike battery, and indeed perhaps I may buy some flexible solar panels to put in or over the windscreen for summer. So I may end up spending as much as Wandering Bird, in the end 😉

        The weakest part is the 12V DC output, which is limited to 10A, which is about half what an amateur radio transceiver draws on transmit, so that side is not so useful to me. Shame, as it is more compact that a leisure battery and can be picked up with one hand. The DC outlets are either the horrible cigarette lighter socket or DC barrel jacks wrongly gendered, and I’m not drawing even 10A from one of those. You can’t have it all.

        The manual is competently proofread for both eliminating Chinglish and for logical sense, though the world distributor map labels the Republic of Ireland as New Zealand, which is about as wrong as you can get.

        Mobile phone lovers are well catered for, with USB-C, four regular USB and a wireless charging spot on top.

        I am glad the batteries are LiFePO4 which have a better cycle life and are much less likely to start a fire than LiIon, the downside is energy density is poorer

        So thanks again for the heads-up. I had no idea this sort of product existed.


      11. Thanks for the link to the YouTube video, it was a good watch and really relevant.

        Yes, my freezer is totally kaput. I defrosted it a couple of months ago and it seemed fine. After the defrost it got the temperature back down to freezing (-18C?) and switched off. Only switching back on again after the temperature got too high again. I never really monitored it before but I guess it would normally spend at least three quarters of the day switched off.

        It was only when I went to measure its power usage that I noticed it seemed to be switched on all the time and freezing food to the absolute max. It must have broken in the last month or so. No idea how cold it was in there, since I don’t have a thermometer, but I would guess -30 from the could of frozen air that came out!

        I dug out the old receipt of when I had the thermostat in my fridge fixed and that was £70 in 2009. No idea how much a fix would cost today, at least the same if not a lot more.

        My freezer is just over 31 years old. I bought it, a matching fridge and washing machine altogether for £770 in 1991 and that was using a 10% staff discount my late mum was able to wangle for me, bless her. (I was earning not so much and that was a huge fortune for me given that I had just bought the house and was brassic.) How times change.

        Given its age, I have just decided to not bother with the repair and put the saving to a new energy efficient one, despite any sentimental attachment to the old one.

        After doing a spreadsheet, I went and had a look in a couple of shops. I could see much difference between these:


        My original freezer was a Zanussi and was made it Italy. Now these three are made in China and look identical internally to me. Even the placing of the thermostat dial is in the same place on the outside. The difference seem to just be to the internal plastic trays and cosmetically to the door handle.

        I haven’t seen the HiSense in person, unlike the other two, but it is half the price of the Bosch and £100 less than the Zanussi, so don’t know what I would be paying extra for apart from the badge. Although the HiSense also claim to have the best energy rating and lost power consumption. (I am as trusting of manufacturer’s claims for their products as I am of VW’s claims for car exhaust emissions to be honest). They are all safe for 24 hours in the event of a power cut, allegedly.

        I was going to hang onto my broken Zanussi until a week on Friday. That would have given me the chance to eat my way through all the food in it apart from a few oven chips. That seemed like a good plan, to not throw out from expensive Salmon and other expensive food, but AO have just done the dirty on my and put the price of the Hisense up £60. I should have ordered it on Monday. Oh well, it is still much cheaper than the others. I can still shop around.

        Sorry that was a long ramble about my freezer woe.

        I hope the purchase works out well. It seems much better than a generator, I am very tempted myself, to run the central heating, but one problem at a time for me.

        Liked by 1 person

      12. It seems that your freezer compartment is quite small if the combined unit is chest high and consumes only 139Wh a day. I had a 1980s Electrolux fridge-freezer about my own height, with roughly equal-sized fridge and freezer compartments and the freezer at the bottom. This consumed about 2kWh a day. I replaced it when it eventually failed in late 2019 with a Liebherr A++ model (under the then EU rating system). It is of similar size and has halved the consumption to about 1kWh a day. The official figure is 253kWh/annum but I assume this is rarely achieved in practice. The rated capacities are fridge 165L and freezer 129L.

        Liked by 1 person

      13. > It seems that your freezer compartment is quite small if the combined unit is chest high and consumes only 139Wh a day.

        Yep. We have a standalone freezer a bit like Jam’s which I will measure separately, but the fridge freezer was a prime suspect because the magnetic seal is marginal, though rectified by buying a set of strip magnets like this to stick to the frame to amp it up a bit.

        If the standalone measures bad then I will consider swapping it for a small chest freezer, which seem to have the edge on the upright format. Upright are probably OK until the plastic drawers break which they inevitably do after a while, so the cold falls out when you open them.


      14. By way of an update, my new freezer was delivered on Sunday. I went for the Hisense one. It looks really well insulated. The walls of it are very much thicker than on the old one and the draws seem designed to stop the cold air falling out when the door is opened.

        I was very surprised to find it used 55-60w when running, which is a really good efficiency gain on the 90-95w on the old one.

        Today I gave it a better test and from 8AM over the next 12 hours it used only 0.195KwH. That was in a hot south facing kitchen and cooling down another freezer pack I added at the start of the test. Overnight, when things are cooler in the kitchen I would expect it to use a bit less power, so that would make it 390 wH over an entire day.

        That is even better than the manufacturer claimed figures and less than the chest freezer in the video you linked to! Due to all the insulation, I could see it keeping food frozen for the claimed 24Hrs if there was a power cut.

        The main problem is hedonic adaption. I am now thinking about upgrading my fridge to match, since it seems old in comparison. I wonder if I would get the same gain in the compressor efficiency. I will keep my eye on the price and swoop if there is a bargain.

        I am getting a load of food tomorrow, the fuller it is, the more efficient it should be in theory.

        How are you getting on with your new portable power station? I am interested in hearing how you find it. It is something I am still thinking about for myself.

        Did you see this today? https://www.theguardian.com/money/2022/jun/20/net-zero-rules-set-to-send-cost-of-new-homes-and-extensions-soaring
        Looks like housebuilding will be getting a long overdue efficiency upgrade.

        Liked by 1 person

      15. I was going to observe re the Guardian article that the cost fo building a house is a small part of the capital cost fo buying one. However, either these guys massively overinflate the cost of building a house or indeed it is really a major part of the cost, where I would have thought the land would be the dominant cost.

        I have a solid solar panel which we used on a telemetry relay station one the farm, I can investigate what that does with the power bank but otherwise it seems to work fine on what I’ve tested it with. For use with the campervan I’d need the flexible version – using a large rigid panel is asking for a bazillion fragments of smashed glass in in 😦

        The match with solar is better for camping that for a winter gas cut, as the IEA seems to be anticipating now. Experience with solar panels for island sites is that the power delivery is absolutely miserable in winter, typically 10% of the power to be had from the same panels in the summer. However, the aim here is not to achieve off-grid resilience, I probably don’t even have the realestate to do that. It is to bridge rolling power cuts, which is probably achievable. And I have logs now, so the CH is not as critical as before.


    2. HL, iWeb – prices. That’s fair comment, perhaps it is an artefact of the feed. without running the experiment of actually flogging what I have just bought it’s hard to say for sure, I had understood those as quotes, but yes, there is always the process of the next screen to actually do it.

      > What you cannot do is subscribe (i.e. commit new money) to more than one ISA in any tax year.

      Strictly speaking that’s not more than one of each type of ISA, though it’s a moot point for people over 40. depressingly, cash ISAs still rule the roost in terms of aggregate amounts contributed.


      1. >depressingly
        quick comparison of Figures 2 & 3 [of the linked report] says it all

        P.S. nice stats which I have never seen before


      2. I agree with Al Cam, the stats were very interesting and I hadn’t seen them before either, thanks for the link.

        What did make me worry though was that there is £300billion sheltered in stocks and shares ISAs. I didn’t realise it was so massive.

        I remember when back to when Labour were elected in 1997 and the new chancellor, Gordon Brown, floated the idea that all PEPs (the predecessors to ISAs) with a value above £50,ooo would have the excess moved to a normal trading account as £50,000 was sufficient for such a good tax shelter.

        As it turned out, I think that was just kite flying/expectations management, instead he ‘only’ removed the ability to claim back the tax credits on PEPs and pension funds instead, which eventually contributed to the demise of finaly salary pension funds.

        Now it just seems weird to think back on that. I had an accumation unit trust, but received a 10% tax credit on the value of the dividends accumulated in the fund. Vaguely like receiving an extra dividend, which was invested by the PEP provider in more accumulation units in the fund! (Having experienced it on my PEP I did at least fully understood the impact on pensions.)

        Stocks and shares ISAs are an absolutely massive tax shelter now and I wonder how long £300Bn is going to be protected for, under any chanceller whatever their colour.

        Liked by 1 person

      3. I also found it surprising that the average value of people’s ISAs was relatively low in Chart 4. I suppose that might be because people are spreading it across more ISAs to keep within/near the FSCS limit.

        The Chancellor can be mollifed by the corresponding £310bn in Cash ISAs, I guess, which is depreciating due to finacial repression…


      4. I am with you regarding building resilience against rolling power cuts.

        I finally got around to measuring the power used by my old Zanussi fridge. It uses 95w to run the compressor and just over 1KwH per day. This despite only needing to cool to +5C. Compared to my new freezer, which is using 0.4KwH per day and cools to -18C, it is a shocking result. Ok, the fridge has a drainage hole in it, so it can run frost free, but even so I didn’t think it would be that bad.

        The manufacturers figures for the freezer were surprisingly accurate, despite my cynicism, so if the fridge figure are as accurate, I think I can save roughly £75 pa by changing the fridge too. That is a nice return on £200 (37% pa!) and helps the environment too.


  5. A really interesting read as ever. Never heard of Saundersford, just googled it and would be over a 4 hour drive for us. We don’t do long car journeys, 2 hours is classed as a very long drive to my oh, maybe when retired.
    Unfortunately with war, inflation and a very right wing government and media things can only get worse, and it will be the working class who suffer the most. Feel like we are going back to Boys From The Blackstuff Days.
    We have a built in multi fuel fire that was here when we moved in. Not sure we even use it properly as not much heat from it.
    My best investment has been my heated throw that only costs pennies a day to run, I hate being cold but it keep me nice and warm. It is now my oh who wants the heating on, not me.


    1. > heated throw that only costs pennies a day to run

      Martin Lewis would approve – heat the human, not the home

      I have an electric gilet. My electronics lab is in the garage, which is below the house. It sort of works in the winter, but as the temperature falls I find I get intellectually slower, which is bad for something like that, and the gilet doesn’t quite make it work. Mrs Ermine swears by a heated throw, but that’s more effective if reading or wrangling a computer.

      My experience of stoves has been too much rather than too little output 😉 Not sure what’s going on there?


  6. This market has a long way to fall. Figures just out suggest that German Producer Price Index at 33%! You either pass it on to consumers or reduce your margins – I suspect a bit of both.

    A reduction in margins, rising interest rates and an increase in UK corporation tax will ensure 2023 is a rotter.

    A friend of mine, who happens to grow wheat, said that the cost of nitrogen based fertilizer has gone up 3 times, and wheat is now twice the price it was a year ago. His wheat is mainly sold as animal feed. His predictions for 2023 are that a £3.50 chicken will increase to £4.50 and a £1.20 loaf of Warburtons to £1.50.

    My own predictions for the S&P500 is a long and slow descent to 3000, and if it hits the fan 2000. I look forward to the profit warnings, especially Apple and Tesla.

    Liked by 2 people

    1. > This market has a long way to fall.

      I really can’t disagree with that at all 😦 Still, think on the bright side. Inflation at 10% p.a. will make a 50% fall look a lot less bad…

      > a £3.50 chicken will increase to £4.50

      I don’t see too much wrong with that. The very concept of a Tesco £2 chicken made me feel queasy, because I figure that hides some serious abuse of market power. Not just of the chickens, but the people too. When I was a child chicken was much much dearer, though arguably so was food generally, though it wasn’t quite as bad for you are some of the rubbish labelled as food nowadays.

      > Tesla

      Yeah, I want to see Elon Musk get his comeuppance for being a totally shit human being, regardless of his so called brilliance – I suspect it is more in the showman department anyway. Musk brings PT Barnum more to mind for me than Isambard K Brunel. I can’t understand the massive fanboi love everywhere. Sure, a Tesla is a great ride. GFF said that Tesla is still on a P/E of 99, compared to VW of 4. That is nuts. Cars are still wrangling stuff in meatspace, and I find it hard to believe that for the next 10/20 years Tesla is going to be 25 times better at making a profit from electric cars and battery gizmos, and other firms aren’t going to learn a teeny bit and compete their margins down even a teeny little bit. Plus there’s a sociopathic twat at the helm, given to random flights of fancy and pissing off the SEC…


  7. Absolutely energy & inflation are only going up from now on because the fundamental divers of those trends won’t change, that is, overpopulation coupled with diminishing returns from mismanaged resources, money-printing on a massive scale and exhaustion of easily accessible energy.

    If you are able, (home-owner planning to stay put for example) it would better to shift the emphasis on reducing energy requirements in optimising resilience, like passivehaus investment, front-loading the expenditure while your paper money still has value. This puts you more in control for the future as energy becomes more expensive, seeing as you’ll need so much less of it. I have a friend in Germany who has just moved into one & was really shocked at how the power bills fell to insignificant levels. The fact that the laws here favour housing as financial speculation over accommodation needs means builders are incentivised to knock out flimsy, shoe-boxes at good profits, dooming the inhabitants to high power bills for ever after. Alternatives to this option are in short supply & similarly discouraged.

    Re: food inflation, apparently food waste in general, nationally starts at about a third, so given the fact that about 2/3 of the amount needed to support the current population is produced here, coupled with the obesity crisis, some common sense adjustment was long overdue. This is not saying the poor just need a cookbook as that vile MP kindly shat out of the wrong end, as Jack Monroe the foodwriter/activist already eloquently pointed out, the square root of fk’all is still fk’all. ( if you have no food in the first place, knowing how to be creative with frugality can’t help you )


  8. For my gravity fed shower, the original plastic moulded shower head from maybe the ’70’s or ’80’s, with very fine holes which worked fine, finally broke, rendering the shower unusable. Along with wide-bore smooth hose and wide bore washers, the only shower head that actually worked, after trying about a dozen all described as ‘high flow’ and supposedly increasing shower water pressure, including from well known brands that didn’t work at all, was one of the cheap Chinese round ones with micro-holes; and only one of those with the holes in rows of circles from the centre. None of the similar gimmick type micro-holes e.g. with filters, or the same in shapes or hole patters, worked satisfactorily at all… I’ve still not come across a known or supposedly quality brand shower head that work for low pressure gravity; and various plumbers don’t know of any either, but also seem to know it’s a big problem for many people.


    1. Mine is this Mira single-function . I have no complaints. The specifications specify that in theory the adjustable variant would give a higher flow rate on Modes 1 and 3, but I didn’t fancy that would hold up over time, it’s yet another restriction to clog up. I have about a metre of head due to the raised cold water tank, which seems to be about 9.8kPa, I am at the bottom end of the flow rate chart. Raising the cold water tank on a timber platform in the loft is a significant win – I did this at my last house and it turned a fairly marginal shower experience into something that worked fine. I was glad someone had done the work for me in this house.


      1. Large tanks (hot and cold) plus a hefty pump works for us.
        Added advantage is that you can heat water with an immersion if the boiler fails – but you need the space.


  9. Wow… A great read Ermine thanks 🙂

    I am trying to not look at my investments as they drop. Being an ‘inactive unemployed’ person I am living off my cash savings at the moment and trying not to touch my ISA while the value is low. I will stop there, it will only depress me.

    I read your house heating changes and I concur with you. I did think of installing a multifuel burner and replace the sh*t gas fire which is for effect than heat but I am in a built up area so expect to get hammered by future council restrictions on such fittings. Still pondering what to do with that gas fire monstrosity. I am glad I did not replace my current CH system and hot water heater for a combi boiler when I moved in. I also did not get an electric shower fitted, just got the old badly installed shower changed for an integrated pump shower that works off my hot & cold water tank. This gives me the option to install solar and use that to heat my water and get me off grid somewhat in the future (if I could get it at a good installation price). I only use gas for my CH and for a hob. Now it is the summer my gas usage is minimal and most summer months I am only paying the gas standing charge. (Another thing that Ofgem brought in, mandatory standing charges – I used to have a no standing charge tariff which made my costs minimal) Ofgem is a joke, it is NOT on the side of the consumer.

    This energy crisis has been building for ages and I agree with other comments that house builders have just focused on profit and not on the consumer and building proper energy efficient housing. Whack out the house as fast as possible with the least cost. The government are not helping to resolve this either. They are too dependent on the energy companies and the VAT from utility bills. What happens when we are fully 100% electric supply?

    I was a child when the power cuts of the 70s happened. I remember the power cuts in the evenings and having to use camping stoves to cook food and candles to light the room. There was luckily a coal fire so that helped for heating.

    Without diversity in energy sources, we are going to have the dreaded single point of failure and what will everyone do when we have wide ranging power cuts, they cannot:
    – heat or light their home, no cooking, no internet, no mobile signal (as per Northumberland last winter after the storms), unable to charge their electric car. (people were sitting in their fossil fuel cars to warm up in Northumberland)

    I also read the article stating that the only winners on the heat pump system are homeowners that originally had oil-heating or those horrid storage heaters. If you use gas now it will cost you more to use a heat pump – including ripping half your house out to fit new radiators and pipework.

    Did you hear the story about someone who thought they were doing the right thing and replacing their gas CH system for a heat pump – sadly sold the story it would be better for them by the installers, they now spend £99 A WEEK in electricity to operate it. Dread to think what they are paying now unit prices have gone up again.

    How will this energy crisis pan out? As the push to get EVs continues and we have no stable/cost effective energy infrastructure. Those with EVs are laughing at the moment but as the prices rise and the volume of EVs increase, the government will tax them. This time not a fixed fee but a pay-per-mile. Also as fossil fuel is 47% tax at filling stations – what’s to say that this does not become the case with public charge points?

    These are the times when off-grid living looks attractive to me.

    Liked by 1 person

    1. > so expect to get hammered by future council restrictions on such fittings

      You usually get grandfathered on existing installations 😉 I do wonder at the push to electrify everything. Although EVs, if charged overnight as part of an integrated power network could become more part of the solution. But I do expect it to take a lot longer than is being touted, because ti will involved a lot of civil works and adapation of the grid from what it was designed to do. That’s not particularly a cousel fo despair – previous generations installed gaslight network, then ripped much of that out/reallocated to space heating and built district, town and then national electricity distribution networks. Whether than is best done by private companies I don’t know, because those jobs were done by the likes of the CEGB in the 1950s to 1970s, which shows the sort of timescales involved.

      Households were much more resilient in the 1970s, there was diversity in space heating sources, and people were much less reliant of electronic media for information and entertainment – nowadays many people don’t even have a battery radio, because, well, their smartphone does everything, innit?

      The IET report into the flood-induced power cuts in Lancaster indicate the mobile network has backup for about an hour if it does have power backup at all. That wouldn’t work well with the 1970s style roughly half a day outages

      Liked by 1 person

      1. Ah that term grandfathering! How that covers a lot if sins… 😉
        Maybe I should get one fitted before they are banned. My house is modern and does not have a chimney so would have to had a external flue pipe up the wall. I haven’t noticed anyone near me with one but further North I have seen a few similar housing estates where quite a few houses have had stoves fitted with flues present sprouting out of side walls.

        True, if EVs are predominantly charged overnight then that would work. Not sure what the terrace house dwellers do unless street charge points are added although they are starting to pop up in the major cities now. As you say it will be part of a big re-engineering project (which the government will want to outsource – bad idea IMHO) unlike the days of the CEGB – which my grandfather worked for – lol – 🙂

        Mmm, houses did have some diversity and that seems to be the thing that is disappearing, we seem to be putting all our eggs in one basket and diversity is being dropped and seen as unimportant. That’s fine if you can guarantee that it will be 100% available. Same happening with food diversity, only growing one type of fruit/veg/grain so when a new disease wipes it out we will get food shortages.

        Guess that goes with the general short term planning view both government and business have. “What if X happens? Ah, that’s not our problem. We’ll have moved on by then. Someone’s problem in the future and they will have to work it out.”

        Love your comment on smartphones, indeed current society would be lost without their phone – then again so much is being moved to them; train/bus/concert tickets, pay apps,2FA, COVID & NHS app, etc. etc…
        Funny enough I do have a battery radio! I guess that makes me a bit of a doomsday prepper. A throwback to the 70s.

        It was Northumberland that had the worst problem with mobiles as masts dropped, oh and the landline issue as customers had VOIP rather than old skool analogue so had no phone line. Which I think has made BT re-think its VOIP plans.


      2. > so would have to had a external flue pipe up the wall

        Well, I have learned something new. I always wondered why people went that way, but had failed to observe it’s because they don’t have a chimney. D’oh, obvious now I know the reason 😉

        The problem with resilience is it involves diversity and redundancy of networks and systems – ie spare capacity either idling or at the very best an asset not fully sweated. That is something with capitalism naturally eliminates with the objective of reducing costs, so progress will tend to reduce resilience and tend towards single points of failure with the aim of minimising costs. It’s not particularly that capitalism hates resilience, it just doesn’t want to pay for it, and drives it out.


      3. I think most Android phones have an FM radio so long as there is a set of wired headphones connected to act as an antenna. Probably want to put it in flight mode or similar to stop it wasting battery looking for the mobile network if that is definitely down.

        Liked by 1 person

      4. > so long as there is a set of wired headphones connected to act as an antenna

        I’d agree with that, certainly all mine have, though I am not on the bleeding edge here. But seriously, when was the last time you saw someone using wired headphones? Bluetooth wotsits are just so much more convenient on the move!


  10. > The amount of steam coming out of my ears about that was somewhat reduced by observing my colleagues in a different part of the scheme on an uncapped CPI rate were increased by 3.1%.

    That seems generous – is it really uncapped?


    1. I never really investigated it deeply as it didn’t apply to me. It is grandfathered from a previous incarnation of The Firm. A copy of the relevant booklet indicates

      > currently this is in line with the rise in the Consumer Prices Index (CPI) as at the previous September, although this might change in future

      which would seem to be a shocking level of handwaving as a multitude of sins could be covered under

      > although this might change in future

      but presumably m’learned friends have a load of formalised cruft to ponder that hampers the firm from saying ‘oh yes, that may change is future now means it’s been changed to 0%’


  11. > RPI at 7.5% has already overtopped the 5% cap on my pension.
    A somewhat belated follow up question.
    I have been doing a bit of a deep dive into DB inflation protection and am intrigued that you mentioned an RPI of 7.5% as being relevant to you. Is this because your DB scheme uses RPI as at the previous December rather than the previous September – which seems to be the norm?

    Liked by 1 person

    1. Yes, the relevant documentation states

      Currently based on the rise in the Retail Prices Index (RPI) over the 12 months to the previous December, up to a maximum of 5%. RPI over this period was 7.5% and therefore an increase of 5% will apply to this element of pension in April 2022

      I am kind of glad that my cynical younger self look the old gift horse of the higher start non-indexed at all option and gave it the bum’s rush. I didn’t expect to the fighting this fire quite so soon!


      1. Thanks for that.
        I completely agree that you made the correct choice!

        As I mentioned above and partly inspired by your writing on this subject I have been doing a bit of a deep dive into DB inflation protection. This has shown up quite a few interesting points, for example:
        a) inflation protection prior to the DB being paid is called revaluation, and protection once the DB is in payment is called indexation. Only indexation applies to you now, but for me both revaluation and , in due course, indexation matter as I have yet to commence my DB.
        b) Revaluation schemes and indexation schemes are often different and in the current scenario these asymmetries are definitely worth understanding.
        c) In my scheme, and IIRC by law, revaluation is a compounding calculation. This means in low inflation times – and provided that inflation has been less than any revaluation cap – you will build up ” revaluation credits” that help out when a period of higher inflation comes along. Also interesting to note that AFAICT, revaluation can be negative.
        d) My schemes indexation comprises several distinct tranches of rules applicable to different periods of service. These rules include some caps, some collars and even fixed revaluation too. The upshot of which is that whilst I do not quite reach a maximum of RPI to 5%, there is a possibility that my schemes indexation can exceed RPI if it is lower than about 4%. Thus, in my scheme there is a possibility to recover some of the loss to high inflation. I think with your rules the only possibility to “catch up” would be if RPI were to go negative – as an “increase” can, by definition, never be less than 0%.
        e) Most schemes rules include discretion to award indexation payments that exceed the maximum specified in the rules.
        f) In summary, for my scheme, once any revaluation “credit” has been used, indexation is more generous than revaluation. FWIW, for the PPF – it is the other way round.
        g) A top-level DWP UK-wide summary of revaluation and indexation (amongst many other DB things) dating from 2017 can be found be putting “Security and Sustainability in Defined Benefit Pension Schemes” into google.

        As usual, the devil is in the details with DB schemes.

        Finally, did you check your April increase this year to confirm that 5% was the increase paid. I ask as there are several further layers of details that are sometimes glossed over e.g. GMP payments.

        Liked by 1 person

      2. Interesting that revaluation is cumulative and that overtopping the RV cap can be made up.

        In my scheme they managed to switch revaluation to CPI but haven’t managed to can indexation to CPI, not for the want of trying. I was not hugely off NRA when I pulled it, but that difference made pulling earlier a little bit more attractive.

        > to confirm that 5% was the increase paid

        Taxation complicates this somewhat. As does HMRC’s tendency to bugger about with the coding notice mid year. I wish they would leave off – I always tick the box to say I will pay the tax over PAYE explicitly, and pay the amount pretty much as I get the calculation. But they fiddle with the tax coding notice, then about two months later roll it back, I have three tax coding notices for the last year, and I am not clever enough to know which one is used.

        However, if I take the gross amount for April last year and multiply it by 1.05 I get the gross amount for April this year, so I’d say it’s good enough for government work.

        I will take some suckout on getting my SP through some obscure GMP-related clause but that’s a way off


      3. My scheme also has that CPI / RPI : revaluation/indexation “feature”.
        In my case, this is because revaluation for deferred members was defined in the scheme rules as being statutory – so when HMG changed statutory to use CPI …. My scheme has also tried very hard to change indexation to CPI – but has always failed thus far; having said that RPI will be CPIH as of 2030 IIRC.
        Due to the length of time I have been deferred, after my 22/23 revaluation [of 3.1%] I will still have a tad over 4% of what I call “revaluation credit” – so, my 23/24 revaluation will be a maximum of somewhat more than 6.5%, which is likely to be somewhat short of measured inflation then [Sept 2022], but not as far short as a 2.5% revaluation would be. Revaluation for 24/25 would then max out at 2.5%. Revaluation is generally described as “x% cumulative” – and that last word is very important!

        I am considering my next steps very carefully as beyond the 23/24 revaluation, all things being equal and assuming the overall level of inflation remains high, then the indexation route should offer me better – or perhaps I should say less bad – inflation protection.

        OOI, I have monthly RPI data all the way back to 1915 and, as you can imagine, this provides a wealth of very useful information. For example: a) the difference between using Dec to Dec vs Sep to Sep is pretty negligible, b) average RPI over the total period is about 4.3% c) your schemes indexation [capped at 5%] provides an average of 3% indexation over the period, my schemes algorithm provides an average of about 3.5% over the period – but in both cases the sequence of inflation is important too.


    2. A few other thoughts to share/discuss:
      a) ceteris paribus, RPI does mathematically overstate inflation primarily due to what is known as the “formula effect”, FWIW I prefer CPIH;
      b) negative RPI does feature in the historical record;
      c) barring sequence/compounding effects (which can be mitigated, to some extent, when annual indexation exceeds annual inflation), the overall average indexation shortfalls indicated above are broadly within the range of the expected annual reduction in retiree expenses;
      d) point c) assumes that, on average, retiree expenses reduce over time- however, this point has recently been questioned in this IFS paper: https://ifs.org.uk/publications/16055
      Personally, I think I have some problems with this paper but have yet to bottom them out
      e) lastly, AFAICT nobody will live a 100 plus years retirement, and the statistics for more typical retirement durations are somewhat less encouraging: with an average RPI of around 5% for all possible 25 to 40 year duration sequences and a median value of over 6% for 40 year sequences.


      1. P.S. for RPI data see: http://www.wolfbane.com/rpi.htm
        Other sources I have compared are: ONS [from 1987/1948 : monthly/annual IIRC]; and Barclays Equity Guilt Study 2016 – annual data only – which incidentally goes back to 1900.

        There are some discrepancies between the three sources albeit that in the round they seem to pretty much agree.

        I used wolfbane data as it is monthly back to 1915.


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