Compound Interest spreads its wings only at Dusk

It’s January. The nights are long, and it is cold, and rainy. It’s about this time of year that they always run the articles abut Blue Monday when it’s the most miserable time of the year, because we are done with the Christmas debauchery and it still doesn’t feel light even though the Sun is rising earlier. They are still wittering about the economically inactive. The BBC have at least identified there’s not much chance of getting you FI/RE lot to do your patriotic duty for the economy.

Almost nobody who has retired early says they want to return to work.

A new year, new start

I am old enough to have determined new years resolutions don’t work. I don’t do gyms anyway, but the best way to avoid that sort of resolution is not to pig out to excess extendedly. It’s OK to eat and drink to excess a couple of times in the Christmas period, but debauchery and gluttony are to be avoided in excess.

One thing I am experimenting with is to reduce screens/online. Interesting that Weenie is taking up jigsawing to go in this direction, is it a zeitgeist thing or great minds…

I have already taken step through the end of last year to reduce news consumption. I still remain informed, it’s the time/attention thief I am trying to reduce, rather than to do the full Walden Pond thing. One way is to to act more like it were 1998 on dial-up. As long ago as work I got a win on this with email by not running it all the time, once in the morning and once in the mid-afternoon. I have forgotten what office-worker’s guru put me onto that but it worked. For a wider win I aim to concentrate interwebs in bursts, like it were before the Millennium. GenZ has taken this battle to the enemy with customary panache, at the cost of never clocking off. I wonder if that Zuckerberg isn’t barking up the wrong tree trying to create the metaverse. It’s already here, just unevenly distributed. Poor old Zuck he’s pushing forty, and his younger self called the problem out

Young people are just smarter

I get to listen to a lot more music. Which is more reflective than using t’internet, although when I stream it is from a NAS rather than the likes of Spotify or Apple. I did consider using Tidal but I still can’t bring myself to do subscriptions. It is possible to buy downloads from Qobuz but it’s usually cheaper to get the CD s/h. I listen to music through the electric, instead of on their phones.

I usually listen to albums not tracks, and while it’s a little bit easier to locate a CD spine on a shelf physically than futz with a tablet, the convenience of finding it by artist-album works on a streaming system fine, and saves an awful lot of storage realestate and makes dropping the odd duff track easy. But I have finally concluded that only works for pop and rock – where artist-album has some meaning. I don’t know enough about classical music to understand the equivalent taxonomy, and I have some oddball field recordings – like the BTO nightingales CD and the BL Dawn Chorus and I’ve occasionally missed these.

I went to Ikea to buy a couple of CD racks to fix this for classical and others. I don’t usually listen to odd tracks off a classical performance, so streaming’s addressability and ability to drop and rearrange tracks on the fly is not useful. I still save a lot of shelf space locally streaming non-classical. The Ikea in-store display demonstrates vinyl LP storage for modern hipsters, eight years after discontinuing the go-to solution for ageing LP aficionados. I admire the cojones of mounting an Eket 12″ cube of vinyl on the wall, compete with glass door, don’t try this on a drywall fixing. Not sure of the mechanical integrity of the peg and cam side mountings either – the metal cams are now plastic, IKEA you cheapskate bums. A single LP doesn’t weigh that much but the memory of my 20-something younger self hefting three cubes of vinyl records up three floors stays with me. The Synology NAS I use now that holds well over ten times that much music is easily hefted in one hand.

I can find classical now, and DVDs and Blu-rays. I tried using Kodi to stream the ISO images of DVDs and it generally works well, after stripping CSS. However, I have to run a Raspberry Pi all the time to do that, which all adds to static power drain. The power saving exercise showed that static micro power drains need eternal vigilance to stop the buggers creeping up. It would be okay if I could treat the Kodi Raspberry Pi like a DVD player and switch it off at the wall, but it doesn’t like that.

I’d rather spend more time in the natural world and with my thoughts than the hive-mind. I quite like the thought of walking 1000 miles in the year, particularly because adding up the GPS tracks I wasn’t so far off that, probably managed that in the last 14 months. I can walk straight out into the countryside without getting in a car, though I do want to explore more of the area and it’s life.

I have learned, however, that letting the heels on my walking shoes wear down 3/4 of an inch is bad for me, and I can buy new walking shoes easier than new feet. It still grates that I only get a few hundred miles from the soles of walking gear. I’d get far more than that from the cheapest tyres I could buy. But I am not atypical by what I see online. The reason my working self got 15 years out of a pair of walking boots where I am now pushed to get two is that I spent time in the office rather than walking in the outdoors… I am trying the inverse – some £13 Aldi running shoes. They are lighter, though no pretence of being waterproof. I will see how they wear. Part of the trouble is the areas I walk are tarmac roads/farm tracks, which seems to wreck Vibram soles faster than rock or gravel.

There are some great nature reserves in easy bike reach, and most of the way is off-road. That matters a little bit more to me now, gone are my days of cycling up the A40 Westway from Shepherd’s Bush to Hangar Lane. One particular road which key to getting many places has a nasty combination of parked cars, full-width humps and traffic. The stretch of road is about 500m long and on a hill, and the humps just really get to piss me off, both as a driver and a cyclist. As a driver I am OK to take a longer way round which is presumably the aim of the game, but as a cyclist I am not drawn to taking on the 60mph stretch that’s fine in a car.

Looking back seven years ago, I have been true to the goal of not drinking homebrew again, I can afford decent wine and am prepared to pay for it 😉

I never did buy the oscilloscope I considered then, but that’s because my old Tek 100MHz analogue one is still perfectly serviceable. Pretty much all electronic test kit has become cheaper and often better now. I bought a cheap and nasty Chinese nanoVNA for £60 a year or so back. It does most of the functionality 1 of the sit-up-and-beg HP8510 vector network analyser and s-parameter test set that I used in the late 1980s and 1990s. Not as well, for sure, but close enough to get useful data. I remember the HP VNA cost more than my first house…

I have learned more of the Morse Code but not fast enough to be of a useful level. I have to listen at more than 18wpm character speed else I start to decompose the elements counting, but I can’t process the characters at that rate. I don’t really have any sense of rhythm, in music it is tone colour and intonation that floats my boat, so I generally favour slower songs. I don’t know if this is innate or learned, some quirk of the first songs that took my fancy.

I find it surprising that people confuse some birds that sounds totally different to me in pitch and tone, but I can just about hear there is a similarity in rhythm. Unfortunately morse code carries absolutely zero information in tone or tone colour, it’s all in the timing. Although my attempts to learn over a couple of decades were sporadic and undisciplined, they slowly accrete, but not enough to be useful.

I followed the lead of the folk on PM last Thursday (51:45 ff) and start learning Morse from humans rather than machines. It is a different kind of learning – most of the new things I have learned since leaving work have been along the intellectual axis. I generally detest the increasing dumbing down and Youtube presentation of things we used to learn from books before world+dog could put crap on Youtube. It would not surprise me if reading and writing are lost to the general public in fifty years. That’s not to say Youtube doesn’t have a place in some things – this presentation of quaternions

would struggle in text IMO. However, in general I read rather than watch/listen – I can’t stand audiobooks that weren’t made as radio plays because of the slow delivery. And I struggle to stick with MOOCs because I either get bored with the pace of video delivery or the crude gamification grates. In something intellectual I favour the written word and diagrams nearly always. However, Morse is not something intellectual.

It is more a kinesthetic sort of thing and perhaps it is good for the noodle to try and learn something non-intellectual for a change. But I am handicapped by the fact I don’t really believe you can get better at something by pure practice, either you get something quickly or you don’t with intellectual stuff. Aptitude trumps persistence in my experience.

The increasing measurement and quantification of life gets on my nerves, I respond poorly to gamification, which is behind most attempts to computerise training. So I may be better off learning this from humans rather than machines. Or I may just not have aptitude enough or be too old, a known unknown at this stage.

There’s been dissipation in following some of the ideas from seven years ago, but on the other hand I have learned all sorts of other things since writing that post, and earned useful money with some of the CAD, as well as using it to design my log store to minimise the amount of materials left over, this time I had a building supplier deliver rather than manhandle the materials myself. I’ve been reasonably true to the aim to learning at least one new thing each day.

There has been a slow trend from frugality and thin-FIRE over the years. Some of that is inherent in the gap between retiring early and being able to access pensions – that gap is likely to be tough for most early retirees at the start of their journey. I am probably done with work now. I didn’t experience the ageism SHMD seems to have run into 2. Brexit has seen to it that we told a large source of workers to piss right off and go home roughly as the baby boomers are retiring from the workforce. The electronics industry still seem short of engineers, including those with RF experience.

Sure, you get more cantankerous as you get older, and to some extent culture moves away from you – I still despise anything that requires a mobile phone, although not to the extend I abstain 100%. But I don’t carry it around with me, though I use it for the likes of Starling, and indeed for bank logins because they have made the web versions so awful with the need to piss about with SMS messaging, which is still a terrible way to do 2FA in my view – the card and keypad jobs are much less insecure than a phone number which crims can switch with a little bit of luck and guesswork. But since this falsity is what everybody else believes then you have to make an uneasy truce at times.

Tory thanatosis

I’m not a fan of the current crew in charge of the UK, turpitude is strong in this crew. The serial liar didn’t get Brexit done and repudiated what he signed. The next one off the bench was so bonkers she was ejected before Bozza had worked out how to swing his comeback. I didn’t care for their mendaciously sold One Big Idea, but they seem to be like the punch drunk boxer saved from the floor only by the ropes.

There may be a way to make Brexit work right, but these guys are clean out of ideas how to make anything work right, never mind something as tough as that. They will hang on for grim death for another two years, but so fragmented that power can’t be wielded in any one direction for any length of time before one of the mutant ‘research groups‘ starts getting the hump, since they all have a mutually contradictory idea of success one of these groups will be left with steam coming out of their ears if anything is changed. That’s the trouble with Brexitards, they had to drive competence out of town to get the one Big Idea through. If you buy a negative you know very well what you don’t want, which is still no damn use in navigating to what you do want. Run towards the light, rather than away from the darkness. This isn’t the Brexit I voted for. Sorry, mate, less immigration is exactly what that other Brexit lot voted for, Mr Next boss-man. That cakeism problem again.

Other Brits have it a lot worse, but for me there are some nasty implications of having dead men at the wheel. It’s clear that the NHS is out for the count now, the message is now don’t fall ill for two years. Don’t have a heart attack or stroke, try not to be involved in a RTA or break a leg. It’s sort of bizarre that so much is made of Sunak not having private health insurance any more. He doesn’t need private health insurance, because in the UK private health insurance only covers the nice-to-haves. It’s not going to restart your heart in A&E. The nice-to-haves you can probably pay as you go if you can contemplate FIRE, and Rishi Sunak most definitely can stick his hand in his back pocket if he needs a knee operation for a sports injury. He’s only 42 – I’d argue that private health insurance was a misallocation of capital, PAYG Rish! Not only can you say with a straight face that you don’t have private health insurance, but you get to save money to boot. I’m not clever enough to know if Gordon Brown’s argument that a privatised NHS would be less efficient passes muster.

On the one hand pretty much anything that the Tories privatised after BT is uglier than its earlier self. I haven’t been on a train since I left work, because: airline pricing. That’s fair enough for a foreign holiday, but there was once upon a time when you knew how much a train ticket would cost and you could turn up at a station and go, rather than apply for a mortgage first. You can still walk up in other European countries, if you avoid rush hour 😉 In healthcare there’s always the grisly cautionary tale of the American system. But we clearly don’t want to pay enough taxes to fix the NHS so perhaps a European style model would work, I hear good things about the French approach and the Australian. And in the next two years don’t fall ill etc…

Although my tail risks are worst with the NHS, there’s much else about the ship of state that doesn’t work right any more. My old passport would have run out later on this year, but I gave up six months when renewing my passport specifically because I thought there was going to be a bunfight, and I waited until the kids were back at school. I can’t personally say I have any complaints, the form was cleared in an afternoon including taking and uploading the photo and I got it in three weeks, which given I had no plans to travel was good. Note that the official recommendation is leave three months. At least it is a few years till I have to renew my driving licence – as a friendly warning, note the photo is only good for 10 years 3. Interactions with the DVLA seem to take ages and be another whole world of hurt.

I don’t have personal contact with schools and trains I am happy to say, but there’s a fair amount of hurt coming down the pike in that space. All of these things may be in my circle of concern but they are outwith my circle of influence. I can reduce my risk of a heart attack by walking more and not eating crap, but if I take that hit in the next two years then it’s a lost cause, it seems, particularly as the nearest general hospitals are 20 miles away and road speeds are slow in the sticks. I shall channel Jack London, better ashes than dust.

So my micro setting is reasonably good, where the macro setting is seven ways of shit for a couple of years. I will focus on trying to live well, but without poking too many of the macro bears with a stick. I’m not even saying the other lot would be better, but they haven’t yet degenerated into mutually contradictory interest groups like rats fighting in sack.

Compound interest spreads its wings at dusk

I grew less averse to work than in that post but I am not prepared to work harder than my money does. I am still cynical about the practical value of the much-vaunted magic of compound interest, in the specific case that it won’t particularly help you retire early unless your parents take out a SIPP for you when you are born, giving you a 20 year head start.

Owl, from the Bodleian library gift shop, though I can’t place what it refers to.

Like the Hegelian Owl of Minerva, spreading its wings of wisdom only with the coming of the dusk, compound interest does appear, but only in later years 😉 I have not drawn from my ISA, and the value lifts now by more than I am prepared to earn (smoothed over five years). In a good year it lifted by more than I ever earned p.a, in a bad year it has fallen less than I earned at the high-water mark. But I am now past the normal retirement age of The Firm, and while people in high finance can probably manage it, most Brits 4 aren’t going to be investing the full ISA allowance every year for ten years in their working lives. I couldn’t have done so for ten years of my working life. I did save a fair bit more than 20k p.a. in today’s money into an AVC (SIPP equivalent) using salary sacrifice for three years, and in those days the ISA allowance was much lower so I could do that as well.

A reasonable counter to that is that for most people (early retirement aspirants excepted) ignoring ISAs and using SIPPs instead is a lot more effective. The stats on average SIPP amounts are unclear – not only is the typical amount lower than for ISAs it appears to be falling for the employed, though not the self-employed. SIPPs became more attractive after Osborne’s changes in 2016, and six years is not enough to build up a representative amount. For most non-FIRE people at retirement I would expect SIPP holdings to vastly outweigh ISA holdings, we have 34 years to wait to get the detail on that.

But across that gap I was always fearful, earning a little at times to add to savings to stave off the evil moment of drawing down on the ISA. I was lucky enough to reach the distant shore of drawing my DB pension just before the suckout of Covid, before the savings burned out. In theory the cash buffer of three years running costs in cash remaining would have carried me through the Covid suckout. But it would have been a tough game in the fog of the Covid battle. As RIT says, early retirement is about Saving Hard, not investment return.

The eventual appearance of compounding in useful amounts does enhance my quality of life, inasmuch as I have been able to invest in people and projects I care about, without requiring a return. Although from a strictly financial POV that is a dead loss, the enhancement of quality of life lies in seeing a decent change in the circumstances and opportunities of those people and projects while I am still alive 😉 I guess I need to try and live another seven years so there’s no tax hoohah. The odds are decent. FIRE parents presumably pass it on to the fruit of their loins via BOMAD or when they cark it, or shelling out a quarter of a million pounds on private school fees. I don’t know if that is a good ROI compared with putting £20k into an child ISA for 18 years for your rugrats, which is the counterfactual investment case. Judging by the results of the old Etonians running the country compared to when they had grammer-skool-kidz doing it 20-odd years ago I am not sure that private schools select for competence. You’re probably paying for networking and the old boys club rather than skill in action.

Compound interest doesn’t happen fast enough to stiffen the spine of the early retiree at the point of early retirement, or add another coloured panel to your parachute. Take Monevator’s compound interest calculator and take the default5 but set the initial amount to zero, because I don’t know about you but I started my working life with sweet FA. It takes about 30 years for compound interest to double your money. Change that to 40 years and it’s nutting on to tripling it. Now set against that the reality – most people don’t earn as much from the get-go as they do 20 years later, and that from the first 25 years you have to extract enough money to try and buy a house and have kids if that’s your thing and you will not generally realise that sort of compounding. You won’t be able to put as much in in the early years, and compounding feeds off time. Most illustrations of the magic are predicated on unrealistically high initial contributions. I stared working life with nothing, many people now start work with student and other debt.

It was interesting to observe Monevator’s Mark as a successful FIRE example. I am prorata in a similar ballpark with the ISA, though accumulated over 12 years not 20. They had better jobs than mine and a more valuable house, though being much further way from the Great Wen I get more actual house and land for the money. Interesting that Mark ascribes the lift in the ISA over 20 years to compound interest. He has integrated over more market cycles than I have, though I guess if he started just after the dotcom bust then Fate smiled on him with initial valuations/market timing.

Something Mark has more right than I have is they are living higher on the hog. Their camper van is a bit larger than mine, as you get older you do want more comfort and perhaps a larger van. I recall one year freezing at the midwinter solstice in Cerne Abbas thinking I was hard enough to sleep overnight in the municipal car park overlooking the Giant. You aren’t supposed to run the gas hob at midnight after staggering back from the pub, but it saved my tail. I did wonder then if perhaps I should have shelled out for the B&B 😉 I now have a Bluetti inverter and a heated blanket…

Of fearful greed

Well, it’s a dirty job, and while not so long ago I thought that Jezza’s tax changes changed things slightly, I wonder if this comment is right, and I should beware the changes more than I had anticipated. Which is piss poor planning given it’s only two months since Jezza stood down. I was wrong with that post saying Jezza’s changes have a slight impact. Three months’ reflection shows the buzzard was after me and I should change what I want to do with the GIA significantly.

the buzzard is after me

Most people had a bad 2022 on the markets. I don’t feel I had a terrible time last year, though I didn’t have a great time, inasmuch as I am ~10% up – the headline number is higher, but the value of the number is 10% down due to inflation, so I am evens. Cash-wise it’s still more than I ever earned net. That’s less than the burn US investors are feeling, particularly if they are tech-heads. I am now using an additional GIA where I got away without for many years. That has done well given it is only just over a year, to the extent I will be able to use the valedictory 12300 CGT allowance before the Buzzard drops that. I use a GIA because it is time to run out the cash buffers which stiffened the spine across the gap between retiring early and drawing my pension. The emergency that the emergency fund was meant to hedge didn’t happen. I don’t resent the opportunity cost, I’d rather miss the investment gain than handle the emergency 😉 But it needs to become productive assets, because: 10% inflation.

I can live reasonably OK on my company pension, which means I do not need to hold that cash against becoming a forced seller. The opportunities for high living have been limited over the past few years, though I have done my bit at times. The company pension is being eroded by inflation, but while I have no bonds I have more fixed income in the medium future due to investing in the State Pension. Subject to Polly Toynbee wanting to means-test it, which I can see as the obvious hazard – she is rich enough to do without. I’d say the NI changes she rails for are pretty much a given by the time I get there.

I have a hefty allocation to gold, as well as a full allocation to Premium Bonds. Gold doesn’t suffer the sort of rapid near-death experiences the stock market can, barring an inverse Goldfinger like the discovery of the philosopher’s stone, asteroid mining or King Midas, and cash and Premium Bonds offer decent liquidity. This means I am OK for defensive holdings and liquid capital. I also still have my old NS&I ILSCs. Be interesting to see if they try and get out of the 10% inflation heft there, other than of course the change to CPI instead of RPI that they did a few years back, because they didn’t like the numbers RPI was giving them.

Over time, particularly in Covid with the combination of spending less and shorting some of the suckout, that three years of running costs fund drifted up and it’s now more like five years, excluding the NS&I ILSCs and Premium bonds which I will retain. Over 10% of my expected future lifetime. That’s too damn much, particularly in a high-inflation regime. GFF would not approve, although he is young enough to have human capital, whereas I don’t any more, so I need more defensive assets than GFF.

That plus all the gold is too much in the defensive line, and I want to use the stock market misery and the GIA to get more into the market and quicker than the ISA £20k limitation. Although I am not the young whippersnapper that Monevator aimed this pep talk at, the principles still apply to me, which is why I have hoofed most of the gold out of the main ISA and replaced it with stocks, and my Vanguard ISA for this year is now maxed. It’s not quite like Monevator’s bat-signal rising above the twisted wreckage of the GFC but the song remains the same.

Looking at the asset allocation quilt the gold that uses some of this years CGT should give me a chance to harvest a respectable loss next year, because the hero one year usually becomes zero in the years to come. Compared to the quilt I had my hard time with the FTSE250 in the guise of VMID in TYE 2022, I have continued to buy and Vanguard say I am in the money this year, partly helped by that madwoman in October when I bought a lump on the off-chance that there was something in her crazy growth blatherings. I don’t think the growth showed up in the FTSE250 but the relief rally helped.

Although VMID has a pedestrian 3.3% dividend yield, that implies I can only hold £15000 worth of it in a GIA before taking a tax hit under the Buzzard’s regime in 2025. That’s just over half of what I already have across the ISAs, so it shows that GIAs have been somewhat kneecapped by Jezza as investment vehicles.

It will be a long time before growth rocks up in the UK with the current set of Brexitard drunkards at the wheel, all with a different and mutually contradictory view of success. Those whom the Gods would destroy, they first make mad, Liz and Kwasi… The current crew seem to have observed that every which way is down, so they try and do as little as possible. Thanatosis works for possums.

Jezza tells us

“Declinism about Britain is just wrong. It has always been wrong in the past and it is wrong today.”

Hmm, you know what they say “past performance is no guide…” For starters, stop bloody well telling us old gits that we should go back to work then!

“So to those who retired early after the pandemic or haven’t found the right role after furlough, I say Britain needs you and we will look at the conditions necessary to make work worth your while.”

It’s time young folk in Blighty got a break, and maybe this is the way they get some opportunities to do new things and get paid more?

I have some sympathy for the point of view “the best tax cut right now is a cut in inflation“.  Well yes, particularly in the light of your CGT changes, although arguably more importantly in the case of all the people you’re telling that inflation-matching pay rises are unaffordable, it’s not just the old gits that have to find work worthwhile. Make it so.

Using a taxable GIA in a higher-tax high-inflation environment

If inflation is running at 10%, and the capital gains tax allowance ends up at 3k, then the highest tax-free amount you will be able to hold in a taxable account will be 30k, assuming you hold it in something that keeps its value, unlike Great British Pounds. You will also have to crystallise that capital gain regularly. Opinion varies about how long inflation will be at that level, there’s an expectation it will come down, let’s hope so, eh? At the Bank of England target of 2% that 30k becomes 150k. Compared to the previous regime where the corresponding amounts were 123k and 615k that’s quite a lot worse, and my bad luck to start running into this now. However, it’s worth looking at the detail to minimise losses to the Buzzard.
Capital gains cogitations

This current tax year is valuable for optimising CGT. I am a basic rate taxpayer, I am not one of the increasing number of pensioners paying higher rate tax. I am probably likely to stay that way as the majority of my investment holdings and income are in ISAs.

This tax year the capital gains tax allowance is £12,300. Unlike income, you usually have a choice as to when to incur a capital gain. Since the allowance is falling, logic would indicate using as much capital gain allowance as I can this year.

I only started investing in the GIA just before this tax year. However, when I observe iWeb’s listing, I see £11700 of capital gain across the board. That includes a £206 loss on some stocks. If I don’t sell those stocks the capital gain could be nearly £12k.

Much of the gain is on gold, in the form of SGLP, which is Invesco Physical Gold ETF. This is sitting near a 12 month high. I could sell that all and buy iShares SGLN. I’m not really able to tell the difference in performance overlaying one chart against the other. Gold is a strategic holding, so I don’t want out of the asset class. By selling and buying within half an hour6 I am not particularly out of the asset class, but I should avoid falling foul of the HMRC 30 day rule.

Capital Gains are not the only fruit

I had started with some decent dividend payers in the GIA, on the principle that I could use the extra income to compensate for the increase in energy costs, and I wanted to use my tax-free £2k dividend allowance. As it happens BP is a respectable part of my capital gains this year as well as a significant divided payer. The renewables investments haven’t crashed and burned, and have produced the income expected. That only offsets the fact that the SP hasn’t really gone anywhere, which means they are worth 10% less in real terms. The tax-free dividend allowance falls from £2k this year, which I should almost make, to £1k next year, and £500 after that. I CBA with the £500 allowance, trying to fine-tune dividend income at that level isn’t worth the trouble for me. At least the one thing you do know about gold is that it doesn’t pay income 😉

So I want out of dividend-paying stocks in the GIA in a year-and-a-bit’s time. Kicking BP out of the GIA this year makes sense from a CGT and dividend POV- BP goes XD on the 17th Feb and the dividend is payable on the 31 March. Whether iWeb actually make that happen by the 5th April is moot, but it is only a quarter’s dividend, so if it falls into next TY then so be it.

It’s probably worth staying with collective investments in the GIA. Individual shareholdings can give you forced capital gains events through corporate actions. It’s probably also worth holding the more ‘growth’ oriented stocks there, to minimise dividend revenue, which is at a greater hazard from the changes.

The capital gains allowance will still be six times the dividend allowance when this government ends, let us say that is in three tax years, which will probably have three times 20k worth of extra ISA allowance and 6k+3k extra capital gains allowance. So the landing zone is reasonable in practice, though much smaller than it used to be.

  1. well, it tops out a 1Ghz rather than the HP’s 26GHz and the calibration kit is garbage, the UI is positively hostile. If someone offered to swap it out for an HP I’d take their arm off in the rush. But I am still amazed, it falls into the Johnsonian (Sam not Bozza) admiration for a dog walking on its hind legs – it’s not done well, but the amazing thing is it is done at all. 
  2. In fairness, I haven’t ever applied for work since leaving The Firm. The work I have done found me, so I could well experience ageism if I applied for jobs. I still have enough recruiters through LinkedIn, I don’t now if everyone gets snowed like that and it’s effectively spam. I would have thought a moment’s reflection would tell them that someone who left Imperial in the early 1980s was of a certain age ;) 
  3. You can check the photo expiry by looking for the cryptically named line 4b. If they named it photo expiry it might be useful, but they didn’t. 
  4. for example chart 5 from here and GFF’s piece on who invests in ISAs 
  5. Monevator’s default 4.5% p.a. is a serviceable proxy for the historical real return on diversified equities integrated over decades 
  6. I am making an assumption here that this is possible. It would be the largest sale/purchase of any investment I have made. It is below the noise in high finance terms, but retail facilities may balk. I don’t want to split it due to the increased transaction costs, but I should be prepared to do that. I may also be limited if I have to wait for settlement. 

52 thoughts on “Compound Interest spreads its wings only at Dusk”

  1. Stunningly interesting post – are you sure we aren’t clones? Looking at your content, I am sure you have enough maths to understand this: I took early retirement from a Russell Group University in 2010 (I am now Professor Emeritus of Photonics) and came up with the Golden Solid Angle about a year into retirement. All excited I sent it off to the Mathematical Gazette – and they came back with – “Although this is a new idea, not all new ideas in Mathematics are worthy of publication”. Well after 23 years R&D at University with over 120 refereed Journal Papers to my name – I must admit, that was a new one on me. Totally discouraged I put it aside for all these years until it came to mind that Wolfram Research (Mathematica) would be far more open-minded (and accepting of something that should have been written about centuries ago – and wasn’t) – so I sent it off to their Notebook Archives – where of course it was published within a fortnight. So at least my name is now officially associated with this discovery – so I can die happy. Happy New Year to you Ermine – and as you say – don’t get ill or have an accident for at least the next couple of years. Having said that my Missus got her car written off on her way to get her 4th jab a few weeks ago. She got out unhurt (unbelievably) and maybe someone above took desperate measures to make sure she didn’t get the jab. I on the other hand simply didn’t go in to get the thing – an earlier jab gave me BPPD, and talking around, several other people I know ALSO got BPPD from the jab as well! Funny that doesn’t even get a mention, as statistically (from my own very limited observations), BPPD must be rampant amongst those jabbed.

    Liked by 1 person

  2. “So to those who retired early after the pandemic or haven’t found the right role after furlough, I say Britain needs you and we will look at the conditions necessary to make work worth your while.”

    When I read that, I can’t help but focus on the phrase “conditions necessary to make work worth your while” and see that as a threat. Sort of “ve haf vays of making you work”!

    Liked by 4 people

    1. > see that as a threat

      Me too. I don’t think I am that much of a load on the common weal, I didn’t even get my six months contributory JSA on leaving work. And hopefully some younger mustelids are adding value and getting paid better, though maybe firms are outsourcing this to India.

      Having said that, I am sure some of Toynbee’s ideas are coming down the pike. I’d be surprised if this crew that charge pensioners and maybe investors NI, but someone will.


  3. Hi, regarding your (and my) not getting on with Kodi, I can recommend Jellyfin as a NAS media player. Easy to set up, easy to use and it’s open source

    Liked by 1 person

    1. I really can’t blame Kodi, it’s more that the Pi gets shirty if you just power it off. Not every time, but often enough to make it a pain. My TV doesn’t run Android, though the idea of using the TV as the server and client reading the ISO images via NFS looks like the way to go if I had the hardware. After realising the TV drew 25W in standby I just power that down at the wall, it seems to handle it just fine.


  4. Frustrating to have to transition from selling what you want to get rid of to selling what minimises CGT in the old GIAs.

    You learn a new thing every day? That’s a lot of new things! Where do you find the storage space?

    Liked by 1 person

    1. > Frustrating to have to transition from selling what you want to get rid of

      I’m looking at favouring collective investments because that seems a way to go along with the letter of the law while end-running its spirit. Although gold is one example, VWRL has its iShares body double and so on. Ideally there would be three equivalent ETFs for an asset class that you could rotate around in case it takes more than one tax year.

      > Where do you find the storage space?

      You’re assuming it sticks 😉 Maybe it’s one big FIFO buffer. Sometimes it leads to ratholing – like with the otoliths – where do they come from. Do they grow on the ends of the hair cells? Is there a gland that makes them, or are they like oocytes, you have ’em all at birth. Because I don’t have to apply any of this, it shares some of the juvenile elements of inquisitivesness, compared to the more directed learning of secondary school onwards.


    1. Gotta watch thinktanks based in Tufton Street, particularly after what happened last October when that experiment was tried 😉

      I found their paper hard to square with my experience. I am perfectly able to understand the concept of benefits in kind, from the NHS to the fact I don’t have to maintain a private army to keep the revolution at bay, but I don’t recognise any of the ‘cash benefits’ they claim are widespread. Apparently I should be getting about 5k of this by their book, in honest cash, but I don’t recognise any of it. I didn’t get any of the covid bungs they fulminate about. I do get the £400 energy bung from Liz Truss. It’s an order of magnitude short of what Civitas assert. I want to know what I am doing wrong, I am happy to stick out a furred paw for the remaining £4500 in cash benefits!

      Interesting that Thatcher rather seriously raised the Gini coefficient by 10%(as a change) almost monotonically. I probably did benefit from that – I paid much more tax on a larger proportion of my lower income when I started work than when I left.


      1. Sure they have an agenda – but who doesn’t.

        I too am sadly missing out; I suspect the law of averages is probably at play.
        Apparently the figures ignore the impact of furlough payments!

        Personally, I think the key points are fairly clear.

        IMO, we seem to live in an increasingly dependent society which by and large seems to think it is entitled way beyond what its means justify and is always looking to blame somebody else for its woes. For me, a key C-19 lessons should have been about improving personal/familial robustness/resilience but that is not what I see.


      2. > increasingly dependent society

        Isn’t this partly an outcome of the increased Gini coefficient? Let us postulate it costs X% of GDP to run the UK to an acceptable standard. Gini=0 everybody pays the same, Gini =1 and one guy is paying it all.

        It’s hard to separate the variables here, the modern world is more competitive and has more winner-takes-all effects (due to better communications, both information and physical) so perhaps the total amount of value added optimal point happens at a higher Gini value than in the past. OTOH than means a higher level of distress, particularly given the improved communications and social media pressures, as Charlie Munger observed, MRDA.


      3. > you did get the VAT reduction ‘bung’

        Are we talking about this scheme or is there some other source of pork that my ungrateful self has missed? I guess I did use Eat Out to Help Out a couple of times too 😉 Not enough to make up the missing 90% in any useful amount.

        I assumed the figures did include furlough, which I didn’t get either. So I still want to know where all this wedge is going begging.


    2. I’m at the time of life where I clearly get more in benefits than I pay in tax. My state pension easily exceeds the income tax, council tax and VAT I pay, without looking at winter fuel payments (£500 this year!) and £400 energy support payments that I receive.


  5. I understand the GCT behaviour you are proposing to use in your GIA.
    This paper from the now disbanded OTS explains some of the thinking behind the reduction to ultimately 3k [“between 2000 and 4000” on page 12], see:

    My take is that re the CGT Annual Exempt Amount (AEA) the paper concluded that:
    a) people are ‘milking’ the current system at c. 12k; and
    b) if you lower the AEA they will not bother.

    IMO, the paper has a lot of other interesting content too.


    1. Curious that

      > Capital Gains Tax incentivises owners to transfer business and personal assets to others on death rather than during their lifetime.

      I can’t really argue the case against that paper, and wasn’t saying ‘snot fair. But I will go out of my way to pay as little tax as I can, within the boundary conditions, rather than in a Nadhim Zahawi sort of way, I am one of the little people 😉


  6. With reductions in allowances for forms of ‘unearned’ income on the way, it possibly makes sense to run down any GIA before beginning to draw from an occupational pension? (I realise you personally are past that decision point now, but others may not be.) That allows one to set CGs, dividends and interest against the personal allowance before the specific allowances for these forms of income become relevant. Even under the 2024/5 regime, assuming no further changes (e.g. to the starting £5k rate for savings), one could take over £20k of income from a GIA before paying any tax and draw capital from it if one wanted to spend more. It also allows your DC/SIPP pots to grow and may enhance DB payments in later years by deferring.

    Liked by 1 person

    1. It’s certainly worth considering, though the devil is very much in the detail as always with DB schemes, like how much to you gain for deferring past scheme NRA. You also have to consider tail risks (like ending up in the PPF) and any cap on indexing. The value of my pension has been dropped by 5% for the rest of my life due to the indexing cap, and to this is added Bear in mind that the current tax on dividend income is lower than that on income.

      More generally, by deferring your DB pension and running down a GIA you are shifting the balance of your total retirement lifetime resources towards a more bond-like fixed income and away from equities. That’s very much a philosophical/worldview call. I didn’t, for instance, use the full PCLS because I was a pussy and had enough equity, so I favoured more DB pension, even though it is taxable. Many other people made a different call, back in the day when CETVs were high…


    2. I was thinking something similar. I am in the post fire period of drawing down my SIPP, with half a dozen years to go before I get my final salary pension.
      The thought had crossed my mind to perhaps not draw anything from my SIPP for a few of those years to set my CG’s against the combined CGT threshold and personal allowance.
      It might perhaps help, but I need to do some more deep thinking/calculations to see if it make sense.
      (Pehaps even still drawing something, but less than the full personal allowance is another option.)
      Not sure I would want to defer my FS pension though.


      1. > to set my CG’s against the combined CGT threshold and personal allowance.

        Can you actually do that? ie say CGT allowance is 3k and PA=12300 so if you earn nothing that year you can then take a CG of £15300?

        The fly in the ointment is the probability of NI on pension income in years to come. Though these changes always seem to take a lot longer than you think. I feared they were going to can Class II NI contribution rates for the self employed soon after I left work in 2012. I paid my last class II NI two years ago, and you can still do it, though it was the LibCons that were going to pull it nearly ten years ago.


      2. Erime : “Can you actually do that? ie say CGT allowance is 3k and PA=12300 so if you earn nothing that year you can then take a CG of £15300? ”

        Yes, I strongly believe so and I think it was what Keith was also suggesting in delaying taking FS Pension benefits, so as to not use up the normal personal allowance with taxable income from the pension.

        Possible changes such as NI could be a problem, but things chnage slowly in the pension world. More likely to happenif there is a chnage of government I feel.

        Liked by 1 person

      3. Jam,
        One other thing to consider / be aware of is the corrosive effect of frozen income tax allowances and bands. Add to this the IMO near certainty of [most likely non-means tested] future state pension that recently (until April 2023’s increase – based on Sept 2022 CPI) has risen faster than CPI inflation. FWIW, I reckon in some situations the solution might be to bring your FS pension forward.

        Just such a move may also reduce the impact of more run-away inflation on your FS pension, assuming the actuarial reductions are fair and your schemes indexation is more generous than its revaluation! FS schemes are in general fairly complex so some further homework may be required.

        As I said mentioned below it is an optimisation problem (where what you are optimising for may not be totally clear) with lots of moving parts and the rules/constraints are subject to change.


      4. >> Yes, I strongly believe so and I think it was what Keith was also suggesting in delaying taking FS Pension benefits, so as to not use up the normal personal allowance with taxable income from the pension.

        I’m not sure PA can be used against capital gains (which are taxed differently from other forms of income), but I believe, in the absence of earned income, the PA can be set against interest and dividend income before the specific allowances for those types of income kick in. Doing this could put you in a lower rate tax band for CGs, but if you have unused PA you will still have tax to pay on gains over the specific CG allowance. So it will be harder to mitigate the reduction of the CG allowance in the future.

        Liked by 1 person

      5. IIRC Keith is correct.
        I laboured under this misunderstanding [using PA against CG] for a good few years until I checked it out for another scenario.

        Liked by 1 person

      6. Thank you @Al Cam and @Keith, I had seriously misunderstood that.
        I suspect that by the time I would have wanted to do it though (not the next couple of tax years) we will have a new government and perhaps a whole new set of factors, or at least allowances, to optimise for.


  7. Since like me you have a healthy scepticism for banks using phones for 2FA (without even mentioning catch-22 situations like “your phone got stolen, how do you buy a new one”), let me mention some hidden alternatives that still work.

    HSBC has a “physical secure key”. The battery lasts for 6 years (I got my first in 2016, the battery died in 2022, but I picked up a replacement from a branch the day after), and it lets you log in without a phone. Periodically, they cluelessly suggest downgrading to a code generator within the app. Even their help pages are heavily focused on the downgrade

    Barclays has “PINsentry” that uses a card reader + your card to generate 2FA codes. They seem less hellbent than HSBC on downgrading people to the mobile app version.

    Liked by 1 person

    1. Funny, isn’t it – back in the day UK banks had a reasonably serviceable 2FA system of your bank card and a card reader – the Barclays system being just that.

      Then everybody decided that the smartphone was king. There’s nothing secure about an SMS text message, because there’s nothing secure about your phone number.

      I used to be able to log into the bank’s website using just the card and reader. Now since they insist on SMS rather than PINsentry I use their mobile app nstead. Which is serviceable, but a bear to copy transaction details into Quicken where it was a Ctrl-C before, rather than rekey. Bastards.


      1. Have you tried midata for moving transaction details out of your bank and into your accounting software? It’s not guaranteed your bank implemented it, and it’s probably absent from the mobile app, but works reasonably well where it’s implemented


    2. OOI, the last time I was required to do 2FA online I was offered a choice of methods: a) via SMS to my mobile or b) using my card reader/card.
      Not too sure if this ‘choice’ is a new development but I do not recall being offered it before?

      Liked by 1 person

      1. I have just tried it on the offending account. Provided I limbo under the great big prompt that wants to know my mobile number and say I’ll do this later, I have the option to use the card. Once I am in there is a big header saying we have xxx as your mobile number, update if this is worng. Which is fine, in which case whats with the interstitial UI widget I had to refuse in the first place?

        But yes, a big leg up from computer sez no, thanks. Maybe they have taken earache from curmudgeonly old gits. Or maybe sanity has finally prevailed and despite everybody’s touching faith in the security of smartphones they figure they will lose less money going back to real 2FA rather than illusory 2FA

        I also get the option to d/l transactions as excel, although in practice I do that with good old ctrl-c and ctrl v because I use Quicken from 2004 so I can’t use Pikolo’s mifid option unless I write a Perl script to munge that. It’s nice to wrest one of The Old Ways back from the claws of smartphone is best progress 😉


  8. My driving licence was due to expire in April so I sent it off in December – surprisingly it came back in under a week. My wife’s did hers last week with a similar turn around.

    The other good news was that the system picked up my passport photo to simplify the process – a very reasonable £14 fee too

    Now if only the HMRC could fix the error that’s making bailiffs chase me for imaginary staff I never had!

    Liked by 1 person

    1. I think that sums up what’s good and what’s bad about those systems. When they work well, they are great. It’s probably easier for people who aren’t moving frequently, if only because much of the error seems to be when the data is changed, or more specifically it’s changed in one place but not another.

      When it goes wrong, however, it’s hell, because you can’t get through to anybody with the nous or the authority to catch the exception – like your imaginary staff problem! And then Computer Says No and nobody can hear you scream.


  9. Good morning to you & good wishes for a happy 2023, I have a suggestion on your boot frustration that’ll hopefully be useful. In Kenya, I saw sandals made from recycled car tyres, done in front of you in local markets & cheaply enough for the poorest to be shod. This was great common sense, given the fact that the poor walk miles, everywhere, every day, so you saw even the Maasai grazing their herds over sharp rocks in terrain where no conventional footware dared tread. That was widespread throughout East Africa, though disdained as ‘for poor people’, but in South Africa, I saw nicely designed, quality manufactured, leather boots (they did shoes too) with added tyre soles. These were aimed at tough outdoor activities, but useful even for farmers & could be easily re-soled if worn enough. Reflecting their cost of production, they were obviously not cheap, but given their probable lifetime, I’m guessing reasonably priced ……so, maybe here you could have your favourites re-soled, I think my village cobbler does this. (Asking for car tyre will at least get you an entertaining look)

    Liked by 1 person

    1. Hmm, the raw materials are at hand here too, chavs throw tyres in the rhynes all te time, and the internal drainage board fish ’em out every so often. If they actually cleared them, they might not have to do it again so often, but they don’t. The mod’s easy enough to do with a tube of Shoe Goo 😉


  10. It clearly makes sense to move investments from a GIA to an ISA as quickly as the annual £20k allowance permits. Also with the impending reduction of the annual exempt amount for CGT from £12300 to £6000 and then £3000, as much of this allowance as possible certainly should be used this tax year. I question, though, whether it is worth anyone expending too much effort to minimise dividends in a GIA if it causes asset allocation complications.

    Dividend tax is only 8.75% for basic rate taxpayers and AFAIK is not scheduled to rise. Better to have dividends over the allowance outside an ISA at 8.75% than interest over the PSA at £20% (I’m not suggesting you are planning on this either). In future with the reduced allowances, it would seem to me to be preferable to have high dividend payers than high growth in a GIA as dividend tax is lower than CGT

    For me dividends are an administrative hassle as I don’t qualify for self-assessment and keeping my tax straight in a purely PAYE system is a pain. This is the bigger incentive for me to organise to be under the dividend allowance than the actual tax hit. (I’ve failed on that this year but should manage next year.) I seem to remember, though, that you do qualify for self-assessment, so your administrative burden should be minimal if for any reason you can’t get under the dividend allowance.


    1. David,
      FWIW, I agree. It is an optimisation challenge, with the added complication that the rules/constraints appear to be somewhat unstable. So just bear in mind that whatever route you follow this year it may not make so much (or even any) sense in a few years time! Ho hum, hours of fun!!
      Is there not some adage about the tax tail wagging the ………..


      1. @Al Cam Indeed so. And the dividend tax tail is too small to permit its wagging to have any serious influence on the asset allocation dog. Hopefully this tax optimisation will become a declining problem as, like @ermine, I am gradually able to move more assets from my GIA to my ISA. I ended up with unsheltered assets after taking the AVCs associated with my DB pension as a TFLS and also the inheritance from my late mother. I know, nice problems to have :-).


      2. I like a good optimisation problem too!

        Back many years ago, instead of global trackers, I used to buy individual region/country funds. E.g. US Index Tracker, Japan Tracker, European Tracker, etc. It would have been simpler to just buy global trackers, but I don’t think they were even a thing back then, e.g. VWRL didn’t exist until 2012 which was when I was doing some of my early investing.

        Some of these are in my GIA, so to artificially create my own global tracker, I purchased enough of these inside my ISA so they have, as close as I can reasonably get, the correct world weightings. E.g. US Index Trackers inside and outside add up to the correct global weighting for the US, etc.
        And anything inside my ISA not need to balance what was outside my ISA in this way has now gone to a global tracker fund.

        Essentially I feel I have optimised all my equities into one big global tracker fund in a slightly roundabout way. If I ever do sell something outside my ISA, trying to minimise CGT, I just buy it back inside my ISA so thing all rebalance again.

        It would have been so much simply to have had global trackers back in the day, so I didn’t have to faff about with it like this, but it does work and I never need to pay CGT. If they reduced the CGT allowance to £0, I don’t think I would ever sell any of it, just let it run as it automatically rebalances with the ups and downs of the individual markets.

        It would be nice to be able to move it all slowly from my GIA to my ISA each year, but with the lower CGT allowance I don’t think I will ever get there. (File under nice problems to have!) The dividend tax isn’t too bad.

        My main worry would be if they capped the ISA ceiling at £100,000 as was discussed in the press this last week. It is only slightly better than completely abolishing it, which we talked about previously, but that would still be a massive hit.


    2. Although I should drop off the self-employed status, since I have no incentive for that now i have enough NICs paid up, I stay with SA for the capital gain and other wrinkles. Once/if everything is in the ISA I can return to PAYE. Looks like there is a new system to report CG if you aren’t in SA called the Real Time Capital Gains Tax service, whatever that is.

      > it would seem to me to be preferable to have high dividend payers than high growth in a GIA

      I came to the opposite conclusion. But I may be wrong! I may buy SMT in the GIA, for instance. I have a modest holding of that in the ISA, recent enough that I am not nursing a great loss, less than 0.5%. But I am not so sure that tech will find its mojo Real Soon. But it may be a better store of value than GBP.


      1. I’ve seen mention of the Real Time Capital Gains Tax Service also. Fortunately, I haven’t had to report any capital gains as I’ve always managed to stay within the AEA. I did need the help last year of a historical loss from 2013, after failing to subtract equalisation from the acquisition cost in my original calculation of how much to sell to stay within the AEA . (I think we discussed this in the comments to one of your recent earlier posts).

        It’s dividends and savings interest that give me grief with HMRC. They are supposed to get the interest amounts automatically from the banks, but the amounts are invariably wrong or estimated or missing one bank. Dividends I have to phone to report as they are not reported automatically and the Personal Tax Account facility doesn’t allow you to report information for the previous year. If they fixed that, life under PAYE could become a lot simpler.

        I don’t think asset growth in a GIA was such a problem with a £12300 AEA, especially if from funds/ETFs with near equivalents that can be used to diffuse CG, like your gold ETF. It will though become harder to manage when the AEA is reduced to £3000, assuming of course that our investments do indeed grow.


  11. On the ILCS :

    >> Be interesting to see if they try and get out of the 10% inflation heft

    Hopefully you’ll be OK on that, I already had 10% added to mine on the anniversary last September. Probably the best return I’ve had on hard cash for a while! The flip side of this, I’ve been paying more for stuff. But at least the ILCs are doing their job…oddly I’m hoping I won’t see another 10% next September…

    Liked by 1 person

  12. Cheers for the shout out, ermine – have already spent many enjoyable hours on my jigsaw.

    I still use a reader for my Nationwide account and hope I can get a replacement when the battery runs out.

    Liked by 1 person

  13. Greetings ermine!

    I haven’t commented here in a long time. Pre-covid, probably. But I’ve been reading everything you write.

    But your mention of the HP 8510 inspired me this time.

    I’m almost the US equivalent of you. A few years younger, but also an EE who retired early. And I record birds and nature sounds too!

    I came out of the university in 1987 knowing how to use one. I was one of maybe 50 students in the US who attended a class sponsored by HP and Harris, a defense contractor.

    And that skill got me my first job, and a connector company you’ve probably heard of.

    Long story short, I made a career out of using that thing, and its follow ups. I eventually became a manager and had a team of 50-60 engineers all over the world. But I always kept a hand in the lab.

    During my last few years on the job, my employer allowed me to move back from management to engineering, with the thought of working part time in the test lab after I retired.

    My last project was developing test procedures using the latest HP, oops I mean Agilent, oops, I mean Keysight VNA. It was a 64 port unit, and could test to 110 GHz. But it was still the same thing, if you know what I mean.

    But once I made the break, I had no desire whatsoever to go back to work, even part time.

    I suspect I’ve built a larger nest egg than you, because of my management roles and some great opportunities. Plus I actually started saving when I was 22 years old, so I’ve had 35 years of compounding so far.

    Anyway, please keep writing. I don’t understand some of the stuff that’s specific to the UK, but I trust your wisdom and enjoy reading on whatever topic you choose.

    Liked by 1 person

    1. Sounds like you had a great run! The States is probably a better place to be an engineer, I speculatively applied to I think it was HP in CA in the 1990s but it was not to be. There again, although it went bad at the end I had a good enough run, the cut and thrust of American business was probably too heady for me so the right answer was probably had in the end 😉 Good on you for quitting on a high – it can be hard for people to manage the suckout of those first few years if they were high-fliers.

      That HP VNA was amazing, particularly for the tech of the time. They had some strange stuff, the HP basic computers driving test gear using GPIB which I used to mess with before that rig. I still have a several pole 200MHz elliptical filter I prototyped on that VNA, was the devil’s own job to make that sort of repeatable. If I can find some SMC adapters it’ll be interesting to see if it is anywhere near original spec after more than thirty years, using my Chinese gizmo that fits in the palm of my hand. The filter was OK after 15 years when they started to decommission that sort of work.

      I still have a small HP boatanchor, a HP3200B VHF sig gen with the bonkers pull-out attenuator at the back, and the little rectangular hp symbol that keeps the magic in the box, the equivalent of the ravens at the Tower of London.

      > I’ve had 35 years of compounding so far.

      That will add up 😉 I was nearly 30 before I started to accumulate years in the DB pension, which saved me from my youthful folly by having professionals do the job. Although I have since beaten out the equivalent capital value behind it, it permitted me to be more aggressive as an investor out of the GFC.


  14. Young people are just smarter? I beg to differ. Young people are not necessarily intrinsically dumber than the old guard, I think the hardware is all there. After all, they have had better healthcare, albeit probably not better nutrition or cleaner air. One offsets the other two? The problem is the software. Not the education per se, but the method of learning. They have only ever been told what they did right, never what they done wrong, which has rendered them incapable of learning from their own mistakes. With my generation it used to be you do something stupid, you get to know that had been stupid, then you quickly put a plan in place to decrease the likelihood of a repeat. The youngster that I’m seeing at work? Fucking imbecilic levels of inability to do just that. After a third or fourth repeat of the same stupid shit I usually give up and ask to amend / implement some procedure or policy they’re following to say the business equivalent of “boiling coffee may be hot”. That’s what happens when you raise a generation with handrails everywhere — a total disconnect between experience and cognition.

    Liked by 1 person

  15. Hmm, interest rates have gone up again and not insignificantly so, as have essential bills like water, then half a million are on strike over at least 4 industrial sectors, so it looks like this year is going to make millions of people’s eyes water a bit. I wonder if the housing market’s only holding up so far because hedge funds are buying up swathes of property to add to their utility companies and ‘other UK’ quota in a final organisation of the UK’s renteer economy.


    1. The BoE policy rate has risen but interest rates have actually fallen since the start of the year. The 5-year swap rate has dropped from 4.30% to 3.55% and this is more relevant for most forms of funding (including for property). Swap rates are now below the levels we saw before Kamikwasi decided to “go for growth”.

      The fall in the yield curve takes a bit of time to feed through into mortgage rates. Banks will have locked in higher rates in 4Q22 on their tranches of fixed rate products. Banks are probably being more cautious here on future defaults/lower recoveries and trying to widen margins to offset that.

      I’m afraid that the required total collapse in the property market may be postponed again. You can’t take rentier capitalism out of the UK economy since what’s left isn’t worthy of a developed economy.

      1st Law of UK economy: “every house price will remain at the current level or in uniform motion up in a straight line unless compelled to change its state by the action of a massive external force”.


  16. I got into the audiobook habit when I was driving long hours to and from my mother’s after she received a terminal diagnosis, to keep my mind occupied. Then, they were a good way to mitigate the commute to work and now I’m not working I like listening as I’m walking. As a voracious reader I used to read in gulps and the slower speed of the narration means I get the whole book and start to get to thinking about the “whodunnit”. There are times though I just wish they would hurry TFU!

    Horses for courses.

    Liked by 1 person

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: