This is purely a Brexit rant. I am not a fan of Brexit. If that sort of thing bores you then move along, nothing to see here.
The Ermine sits in his eyrie surveying the discombobulation that is Brexit in puzzlement. It was all supposed to be so easy in 2016. I’m reminded of that cartoon of the guy in the signalbox 1 watching train wrecks all around, muttering that’s no way to run a railroad.
Funny old crew, Brexiters. Despite the Leave conspiracy theory that it’s all Remainers wot are doing the wrecking, I think the most useful idiots in this game, from a Remainer point of view, are the misnamed European Research Group 2 . These are professional wreckers, the 21st century equivalent of Red Robbo and his crew at British Leyland. With top hats and Eton accents. I’d also remind Leavers that theirs is a broad church that contains two diametrically opposed constituencies.
One of the tenets of Brexit fundamentalism is that there should be no backsliding on 2016. There was a single vote in June 2016, they got the result they wanted, that is the fundamentally determined fricking will of the people and shall stand for all time despite the bullshit said on all sides. Continue reading “Through the Brexit looking glass”
Midnight CET today is meant to have been the culmination of Theresa May’s premature invoking of Article 50 to leave the EU. She did that, without really having much idea what success looks like with Brexit, in an unforced error which seems to have played into the hands of the other side, who naturally looked after themselves and their own interests. Not sure we are any closer to knowing what a successful Brexit does look like. I am of the opinion that there’s no such thing, which explains why the search party keeps returning empty-handed.
The Brexit crew seem to be channelling Thomas Edison, but they seem to lack his talent
I have not failed. I’ve just found 10,000 ways that won’t work
Thomas Edison, on the electric light bulb
Why you need Financial Independence – The Sovereign Individual
Let’s take a deeper look a Jacob Rees-Mogg, headbanger at the end on the left. Hopefully his crew are unwittingly acting more as useful idiots in weakening the No Deal ultra-case, but it ain’t done yet.
The Latin in the title is a hat tip to JRM’s tendency to break out into Latin, to confuse the bejesus of of those not drug up right in some elite British public school. Fortunately the proles have Google on their side
Where did he get his twisted ideas from? Maybe his Dad, who wrote The Sovereign Individual, basically Thomas Hobbes updated for the 21st century. Let’s hear it from JRM’s Dad
Nation-states will experience a sharp drop in revenue…but retain the unfunded liabilities and inflated expectations and social spending inherited from the industrial era…tax consumers will be the losers.”
The Sovereign Individual
To summarise, it’s a libertarian manifesto, Ayn Rand updated. Look after yourself and your own, and may the devil take the hindmost.
The Sovereign Individual was written in the last years of the last century, but its predictions do track some of what has come to pass in the ensuing twenty years
Rhys on Medium has a good summary. The SI looks at the metamorphoses of society through the intustrial revolution to now through the lens of capital, the capacity to impose your will on others through capital and violence on the one hand, and information and myth on the other. Daddy Rees-Mogg’s analysis bears witness on today’s world.
You need financial independence to be less enslaved to those with more. Violence isn’t a fist-fight in the street, it is the ability of the church, nation-state, or sovereign individuals like Jacob Rees-Mogg to make you do their bidding. The Church used the Inquisition, the Nation-State police forces and armed forces (in connection with other nations states) and Jacob Rees-Mogg and his libertarian ilk will use their superior capital assets.
Note: If you think we are conducting Brexit in a competent manner and it’s all a great idea, let me save you the time; don’t bother with the rest of this, OK?
Once upon a time, when that Jacob Rees-Mogg were a nipper, he sat on the knee of Daddy Rees-Mogg in charge of the Thunderer. Our lad Jacob was regaled with tales of Imperial derring-do, and he thought that’s the world he’d grow up in. Sadly, his cosseted public-skool upbringing never forged character in the crucible of adversity, so he got to grow up thinking that the world really was like he had been taught by daddykins, that it remembered the British Empire with fond sepia tones like the Road to Mandalay declaimed by BoJo rather than say, the trains oozing blood in the Punjab when in the shambles of the secretive Partition as the British scarpered. Sure, Britain did less badly de-Imperialising than some of her European neighbours, but let’s not celebrate that as something that will be a source of great common cause and better trade deals in the 21st century, eh, Jakes me old mucker? It’s probably safe to assume that Empire is recalled more fondly by the aristocratic class of this septic isle than the erstwhile subjects in all those red bits on the map, so check your facts Jakey-boy before sending your henchmen to go batting on that wicket in the trade talks, should we ever get that far.
Right now we Brits are making such absolute twats of ourselves on the international stage, what with striking a deal with the EU and seeming to agree, then saying well, no, that’s not what we actually meant all along, though hold the line, caller, while we actually work out what it is that we meant.
May picks up the old hotline to Jake’s pad where he celebrated her defeat with champagne for his buddies. Yes, I know, with friends like that who needs enemies and all that, but any port in a storm, eh? Brr, brr may I speak to JRM please? “heeelooooow, Jacob Rees-Mogg here, what’s that? (screws monocle into eye) oh what do we want? Simples, Treesa me gal, dont’cha-know, one wants not to give a bally inch. We keep all our cake and eat it, those dashed Continentals will soon come to their senses, they need us more than we need them. Stiff upper lip, Treesa, still upper lip and all that. Tally-Ho” Click.
It’s left people scratching their heads and wondering WTAF is going on here1. Hat tip to the Dutch government. Sometimes, faced with a clusterfuck over which you have precious little control, a spot of humour is the best answer. That’s exactly what they’ve done with their latest website to help their businesses understand Brexit. 2 Obviously they can’t really help them because nobody understands Brexit as it’s being made up on the hoof, but they’ve depicted it as a great big obstreperous woolly mammoth looming over small biz’s attempts to work out which way is up with Brexit.
And yeah, I’m doing the sneering Remainer bit here, because, to be honest, the absolute snafu being made here with Brexiters fighting with each other to imagine what success looks like does look bloody stupid. It looks bloody stupid inside the country, it must look like a collective nervous breakdown outside, though I tip my hat to the Irish Times in calling it a peculiarly English breakdown. Of the two constituencies of Brexit, I have some sympathy with the people who lost out to globalisation3, and I guess Theresa May’s original agreement would have been a serviceable answer to their complaints. I’m not sure it would have been a solution to their problems, but nevertheless, it would have delivered the result of the misbegotten referendum and allowed us to get on with life.
But it wasn’t to be, because there is another part of this heart of darkness, and it consists of people rich enough to not care one whit about the knock-on effects of their dreams. These are the toffs and aristocrats of Jacob-Rees-Mogg’s European Research Group. Just like you can take a bet that any country that has ‘democratic’ in its name is probably not democratic in any accepted term of the word, the ERG is neither European nor does it do any research, if you define research as inquiry into a topic where you don’t know what the answer to your inquiry is beforehand. These are guys who have a very purist view of sovereignty – pretty much ‘we are top dog and no other bugger has influence on what we do‘. Ahem, chaps and chapesses, along with that whole sun never sets on the Imperium no longer being a thing
some dashed clever buggers invented something called trade, y’know, where you buy and sell stuff and services to foreigners. It goes on a bit more nowadays that it used to. Anytime you want other people’s money, well, you get to dance a little to their tune. It also pays to speak nicely to them rather than charge around like you own the joint. You do seem to have your heads stuck in a time when you did own the joint, it’s been nearly 80 years since then.
The ERG and their ilk are despicable rich bastards that don’t have to giveashit
And they don’t give a shit. Sure, the entire UK body politic has conspired to make a pig’s ear of this, but I’d like to direct Donald Tusk’s infernal ire better. I reserve a special place in Hell for Jacob Rees-Mogg, BoJo and all the strutting rich bastards who seem to be getting a massive horn out of sticking spanners in the works, and telling people that the only way to think about sovereignty is the way Kim Jong-Un thinks about it. Presumably Jacob’s got My Way on repeat on the old gramophone, with some pliant serf to wind the dratted thing up when the spring runs down.
If this is the way we are negotiating our first and possibly largest trade deal or non-deal with our largest and nearest trading partner, then as far as negotiating with Trump-land and China, well, so help us God. It reminds me of Tacitus’ description of the Druids retreating to Anglesey and hurling curses at the invading Roman Army across the Menai Straits.
On the beach stood the adverse array, a serried mass of arms and men, with women flitting between the ranks. In the style of Furies, in robes of deathly black and with dishevelled hair, they brandished their torches; while a circle of Druids, lifting their hands to heaven and showering imprecations, struck the troops with such an awe at the extraordinary spectacle that [it was] as though their limbs were paralysed, they exposed their bodies to wounds without an attempt at movement.
Apparently the troops got a right bollocking for such wussy behaviour along the lines of WTF is wrong with you lot, are you men or mice, and they stormed the island swimming across the Menai Straits with their horses. There’s a lesson in there, and it’s that hurling curses across a watery boundary at the other side doesn’t end well.
This is not a professional way of carrying on, people. We look like incompetent buffoons, and a great big blue furry buffoon looks about right. Hats off to the Dutch
At least they will be shot of it soon enough. We have to live with the massive monster of our projected id – it’s Forbidden Planet all over again without the pretty girl to make it better.
So here’s a gratuitous picture of Altaira
before we have one of the villains of the show, the “I drink champagne wiv my Brexit Bruvvas when ‘my’ side loses a battle they deserve to lose” Jacob Rees-Mogg
Now I’d rather have JRM for prime minister than Boris Johnson, but that’s not setting the bar high. In fact I’d prefer the Dutch woolly mammoth to either…
because when it comes to British politics, let’s take a leaf out of Hippocrates.
Rule 1: Do no harm
I am aware of the Brexiter’s line that you have to keep the enemy on it’s toes and not knowing WTF is going on during negotiations. Sometimes you do have to play the capricious fool. However, I think that the problems here stem from Brexit hiding two quite opposing world-views, and like the Red Dragon and the White Dragon under Vortigern’s castle, they fight endlessly so no stable structure can be built on the house divided. Where are Merlin and Arthur now? We need them now in the kingdom’s hour of need, there is only greed and evil in those that rule today… ↩
since obviously nobody in Britain speaks foreign any more, what with our Imperial glory meaning all we have to do is yell louder at our subjects till they get it, Google can help us with that. ↩
In theory these guys would be ably represented by the Labour Party, it’s fairly simple and honest what they want – less austerity, a better welfare state, some middling and low level jobs that pay enough to live on. They don’t really give a toss about the trade deals. However, if anybody can work out what Jeremy Corbyn thinks about Brexit, well, could they tell him, please, because there’s no consistent signal that comes out of the noise from his mouth, apart from that it’s not what the other lot wants. Which other lot, Jezza? in fact which part of which other lot? Oh, fuhgeddaboutit. ↩
Unlike most years, where the Santa rally is a thing, there’s not so much cheer on the stock market at the moment.
In other words, there’s a sale on. The Ermine has an additional problem, in that my money is held in increasingly worthless Lesser British Pounds, which are going lower relative to foreign assets day by day. That’s largely due to the pickle we have got ourselves into. Having narrowly voted to leave the EU for a land of unicorns and unlimited supplies of cake, hard reality seems to have met the dream. Usually when that happens the dream loses the fight.
The narrow majority for Brexit covered up an inconvenient problem in that there are two pro-Brexit constituencies, and their interests don’t really overlap.
These are roughly the groups as I see it – one lot want their unskilled jobs back, or at least not to see them going to young folk from the EU who can live more cheaply than their constituents can for a while1. There’s another lot who are the Tory headbangers of the ERG group, who are sore about the loss of sovereignty. There’s an argument that the sovereignty fight should have been had at the time of Maastricht and they should have signed up with James Goldsmith’s Referendum Party. These guys are usually rich enough to weather any storm of a no-deal, or old enough that they don’t have to find work in the resulting maelstrom, and some of them have fond memories of an imperial past when Britain ruled the waves. Whenever I hear Jacob Rees-Mogg speak, I do feel that the 1950s called, and I wasn’t even born in the 1950s, although I am about ten years older than him!
The top left side want much less immigration, they don’t really care about trade deals with non-EU countries, the top right don’t care about immigration but get off on the idea of trade deals free of the yoke of the EU that limits their coruscating ambition. There’s a small dark side of xenophobia, which isn’t necessarily just people who favour Brexit though it does tend to go along with the Brexit patch
At best only one of these groups with non-overlapping interests can be satisfied. Rationally, the largest group that can be satisfied would be the Remainers, because their desire is simple and achievable, what we had before that Cameron chap cocked it all up trying to hold his party together.
If one of the Brexit group gets what it wants, the other group largely doesn’t. The Remainers at least know they lost the fight. The Brexit contingent that doesn’t get what they want will be doubly pissed off because they thought they won. There is no win on offer here that gets anywhere near 50% of people happy. And yet Brexiters are busy screaming the house down about “The Will of the People Must Be Respected”. Well, yeah, as long as it’s not the will of the remainers and as long as it’s not the will of the other half of the Brexit voters, because for them that other lot’s Brexit is not my Brexit.
I’m all for respecting the will of the people, as long as they tell us which will of the people they think that should be. Will the real Brexit stand up and make itself known to the hapless captain of the good ship Britannia? Even when May brings them something that looks like a Brexit, as in ‘submit Article 50 to leave the EU’ people still yell out like two year-olds that’s not what we wanted, Waaah. So they defenestrate May and it’s Groundhog day again.
There should be an honorary eagle pecking out the liver for David Cameron for putting the question is such a stupid, damn-fool and undeliverable manner. It is like having a referendum on “Do You want Real Live Unicorns on the High Street Every Sunday”. The answer may well be yes, but it’s a tough one to deliver. Because: Unobtanium. In the form of cakeism in the first case and unicorns on the other
Warning – Brexit content, and I was/am a remainer. It the topic bores you, switch off and do something more constructive with your time now 😉
The Ermine sits in his eyrie, and surveys the increasing twisted wreckage of the British political landscape before him, and wonders, how did it really all come to this?
It took me too long to realise a philosophical fact about life. In general, run towards what you do want, rather than away from what you don’t want. Imagine sitting by a candle – if you want to run away from the darkness you have no end of directions to go, whereas if you are in the darkness and want to run towards the light, the aim is easy, as every night moth knows.
You gain simplicity in running towards a goal, and pay in decision making if you try and execute the ‘anywhere but here’ command. You get in your car and drive towards where you want to go, you don’t drive away from your home town.
There are exceptions, of course. If you were in the town of Paradise recently, get the hell out of here was a good move. That’s the sort of problem that is urgent and important. Some things that are important aren’t urgent, however.
There’s an argument that being in the EU or not is something that is important to many. But it wasn’t urgent. What was urgent was for Cameron to save his ass, so he couched his question is simplistic terms, and it looks like we get to live with the consequences of asking the question in such a stupid way without asking what sort of independent existence outside the EU matters to you, Sir? What does success look like?
There are several answers to that question, though the main axes, which aren’t particularly interdependent, seem to be
greater national self-determination over trade policy and legislation
control of immigration
In not asking the question ‘what do we want to happen here?’ Cameron turned something that was important but not urgent into something that is both. Well done you, Dave. Clearly a public school education doesn’t imbue an understanding of philosophy even if it does teach you to lead, sort of, until the going gets touch, in which case you run away from the SNAFU you have created because it falls into the ‘too hard’ bucket.
Two years later and we still don’t know what success looks like. Put two Brexiters in a room and you get five different answers, none of which are compatible with each other. That is the tragedy of chasing the negative. Well done us.
What’s wrong in the world gets a lot more attention than what’s right
That’s the problem with a lot of decision-making. Too much of it is running away from what is wrong, rather than towards what is right. I admire a lot of the younger FIRE-folk for getting this right – freedom to use their time for their own goals is what they want, FIRE is a means to an end. They are living Stephen Covey’s second rule – Begin With the End in Mind. Where do you want to go?
I didn’t do that. I wanted to be free of work. I had some terrific luck which saved me from the consequences of violating Covey’s second rule and executing the ‘anywhere but here’ command, though I was at least guided by instinct towards freedom rather than, say, not working for The Firm but stacking shelves in Tesco.
Why is working getting more crap?
I am reading a dog-eared copy of Britain on the Couch, which from the cultural references must’ve been written in the late 1990s. The Ermine was just over halfway through his working life, and Oliver James observed that the heady mix of higher and more individualistic aspirations, combined with a greater exposure to comparing ourselves with others, as portrayed in the media was screwing us up at a faster rate than increasing material wealth seems to be making us happier. It was the increasing gamification of the workplace that started to make me sick of it, irrational spurious requirements to justify your existence every quarter, the knowledge it was a zero-sum game etc.
The writing was already on the wall halfway through my career. Nick asked me this, and it was an interesting question
I’m curious Ermine, what do you see as the purpose of work? Purely an exchange? Looking back on a full career, do you see it all as BS or enjoyable at the time (until things started changing and going south.) I think I actually enjoy the challenge work provides, I will always keep my toe dipped for that reason and the various protection mechanisms it offers (until this goes south anyway.) What gets me very badly is time pressure, work (too many things to juggle), side work, sorting the house, general life. For me I feel striking a balance could make things much more enjoyable…or as I get closer I’ll discover I’m wrong and have an existential crisis.
I had a good run. 25 years of no real trouble, two years of hell and then three tough years of saving hard to get out. There were several things running against me. Some of it was simple globalisation – the west does not need to staff its research and development facilities with expensive Westerners when they can outsource the job. Some of it was the sorts of things that Oliver James wrote about, the increasing surveillance and the gamification of the workplace. Reading articles like this about gamification taken to extremes gives me the creeps. Oliver James called that trend out twenty years ago…
I’m not even particularly sensitive to that sort of incentivisation – I don’t really do badges. I was a member of a professional confederation and happened to storm the theoretical part of one of their training courses, so they were chasing me to get hold of me to award the certificate and get the gong, and were clearly puzzled at how hard work it was to get hold of an Ermine 😉 Similarly for a club where I sorted out their online presence several years ago and was given an award. I have to tell myself that many see this as a big deal, because I don’t want to charge around upsetting people who worked hard to get the gong for me, but I don’t really feel it inside. I am an introvert, and more internally referenced. The sort of challenges and goal-setting that clearly reward others leaves me cold.
I’m only a third of the way through the book, but it’s always puzzled me why the Britain of now is so immeasurably richer than the London that I grew up in, and while physical disease is much lower, mental health and general distress with life seems worse. I was fortunate – I was able to buy my way out of it, because much of the trouble seems to be associated with the way we work now. Work seems to take up a lot more headspace now that it used to. My Dad needed to clock on on time but when he clocked off he was absolutely done with work. Looking at people now, work didn’t drift too much into my time off. But I look at the way many people work, and there are always on the job in some way it seems, tethered to their smartphones – I see these as a tool of oppression in the modern world, not emancipation.
Calling Extrovert FIRE Folk
For the first few years of my FI journey it seemed to be the introverts making most fo the running, I started reading Jacob ERE and many others seemed to lie on the introverted axis. However, all you extroverts in the Fi movement seem to have suddenly found your mojo and are making more of the running, what with meet-ups an the like. So if you’re the life and soul of the party but you find talking about saving makes people’s eyes glaze over then here’s a couple of events you can find some like minds.
There’s apparently a Financial Independence UK Facebook Group (wonder what Oliver James would have had to say about Facebook 😉 ) who are getting together on Nov 24th in Surrey a little way off the A3.
Then there’s a Financial Independence London facebook group who are meeting up on the 5th December, I guess you search FB for Financial Independence London
I’m not sure I fit in anywhere to this outgoing part of the FIRE community, but what the hell, each to their own; knock yourselves out, guys.
Escapism seems to be the norm, people have got back from their hols and the rude awakening of life back at the office makes for good newspaper copy. It seems the Torygraph is working on this sort of thing, and let’s hear it from the Grauniad –
…the secret to never having to work again – but does it work for everyone?
Ah bless ’em. There are people who get to live in London and retire early. They aren’t the Guardian media types, though, who asked themselves this question and failed to detect yes in the echo from the walls of the city skyscraper canyons.
The ermine already established part of the dirty little secret to retiring early. You need to earn more than average for a decent amount of time, or massively more than average for a shorter time. The Times qualifies that as having £600k in the bank and a fully owned house, H/T Monevator for breaking down the paywall.They also say that Barney from Surrey managed this as a modestly paid accountant after 20 years. WTAF, guys, compound interest is irrelevant over a period of 20 years so there’s an implication this modestly paid accountant was on a screw of ~£800k * 2 / 20, assuming he had a savings rate averaging 50% and his Surrey place cost him about £200k1. That’s about £80k net pa, which is way over the average UK income. Now it’s possible he got lucky on the stock market, let’s face it the stock market probably worked the equivalent of three years of an ermine at the office, but there’s another little dark truth here. We are several years in to a bull run that is long in the tooth by historical standards.
Oh yes, and half our blessed fellow countrymen decided to devalue the pound in a rush of blood to the head a couple of years ago, which made the numbers bigger by roughly the same as the loss in currency value. It ain’t real guys, the tide’s gonna run out at some time, and much shorter than the 40+ years a fellow retiring in his forties and drawing down needs it to last… Let’s hope Barney has some other plans, eh?
I only earned a bit more than the British average wage compared to many others in the PF scene, but I did it for thirty years. Let’s get that into perspective, however, I earned getting on for twice the average national income for more than half my working life. Many PF writers earn a lot more than I did, but they are in industries where burnout is rife. So it’s pretty darned obvious that it’s not going to work for everyone, d’oh. And we really shouldn’t be bullshitting people, if you are earning the average wage, and get up to the average level of spendyness and the average number of kids, there’s not a snowball’s chance in hell you are going to retire early. End of. Sorry about that. You might get it so you don’t have to wait to 67, but 40? Fuhgeddaboudit.
Let’s look at a poster child – MMM. That was deconstructed by Flannel Guy a while back. It’s still an impressive achievement – most people who have a household income of $100,000 for ten years don’t end up retiring early, they rack their lifestyle up to spend that and then gaze longingly at the people earning $500,000 and wishing they were them. Yacht envy is a thing2, y’know.
So you gotta earn more, but that’s not enough. Not only do you have to do an MMM and know when to stop, you need to have a stroke of luck, or at least avoid some types of bad luck. The prime example is for God’s sake don’t have kids and get divorced before they all come of age. So the answer to the rhetorical question
but does it work for everyone?
Is even more a great big fat no. Not a prayer, Guardianistas. If you want to live an average life, do the things everyone else does, well, you ain’t gonna retire early, because that’s not an average thing to do.
There probably aren’t that many people who live in London and get to retire early in London. For two reasons. Just about everything about London, with the exception of transport and art galleries/museums, is dearer than pretty much everywhere else. So you need more to retire there, unless you bought your house 40 years ago on a teacher’s salary. Plus you’ll have more going out the kitty day-to-day, though perhaps that is compensated by the fact you can earn more in London. The operative word there is earn, which implies w-o-r-k.
The other reason is that of sample bias – if you are the sort that flourishes in London and earns shitloads of money you are probably driven, and would find doing without the finer things in life a massive privation and you’d feel out of kilter with your peer group. You’re more Wolf of Wall Street than the Good Life. Jeroboams of champers and fine dining don’t grow on trees. If you want to stop working and enjoy that, then you either need to have earned stratospheric amounts of money, in which case hitting the off switch early may be tough though necessary, or you need inherited money. Take Petra Ecclestone, for instance. A great way to retire early is to get Daddykins to earn the money 😉
Wikipedia says about her “Petra Ecclestone (born 19 December 1988) is a British-born heiress, model, fashion designer and socialite.” I’m guessing here, but probably the modelling and fashion designer income wasn’t quite enough for a 29-year old to buy the $90M Chelsea place and the 57,000 sq ft LA place. Thanks, Dad, is probably the order of the day, here…
The Times did a feature on FIRE where apparently 900 good people from London piled into a pub to hear about how they could retire early. Several things vaguely disturb me about this –
In a pub – you’ll find it easier to be an introvert if you want to retire early, because to be different you have to do different 😉
but the #1 thing that worried me was if they were paying to hear how to retire early, because they’ve started off on the wrong track. Retiring early is usually about spending less, and spending to find out how to spend less has a delicious irony of its own. If it was a general shindig to chinwag and you got to cover room hire, fair enough, but if it’s like one of those make-money-fast trading seminars then it’s wrong foot forward, people.
Update 30/9/2018 – it was a Facebook meetup and the only cost was the price of your beer, see Luke’s comment below. I am getting too much of a cynical S.O.B. I’ve been punted too many payable London events but I should roll back my guns in this case. There’s everything good about the extrovert wing of the FIRE clan getting together and drinking beer. I’m all for it. Mea culpa
The Times headline is modest earners find formula to retire in their 40s, which should be banned under advertising standards regulations. If these are modest earners in London they are stuffed. Has anybody told these poor saps that we are ten years into a massive bull run fluffed up by funny money? You don’t have to be clever to have made money on the stock market in the last 10 years. Weegee’s quip on how to get a great picture applies – f/8 and be there. The f/8’s irrelevant, it’s the be there. Where you gotta be clever is holding on to that wedge over the next 10 years – and if you’re retiring at 40 then you need to accumulate and hold on to that for the next 40 years.
How do you make a small fortune on the stock market? Start with a big one, or start when it looks like it’s going to hell in a handcart. That time is not now, dear modest earning office workers, so if you want to start your FIRE journey on your modest earnings, then don’t start with the stock market, start with racking back your spendy ways. Some of your spendy life choices have probably already been made, but don’t add to ’em.
So no, the ermine is not going to add to this pipe-dream. If you’re on a modest income in London looking at a bull run that’s one of the longest in recorded history and you are looking back at what would have happened if you had invested along with Monevator in March 2009 then stop right there, breathe in deeply and remind yourself that it was all a dream.
I’m not saying you can’t retire a little bit earlier than normal, if you invest sensibly and consistently, and control your spending, and you have reasonable luck. But look at the sort of privations RIT had to put up with to retire in his 40s – and he was an above average earner, again. But if you are looking at the stock market to do the heavy lifting, then forget it. If you are beginning to aim at retire in your forties, assuming you have started work, you are between 20 and 30. You can’t retire on a modest salary from a standing start in 10 years without having given it any thought beforehand. Really you can’t.
Take it from me – at 49 I wanted to retire early, from a standing start. By then I owned my own house almost (bar £1000) mortgage free, had a decent built up pension and I was earning a decent salary. Plus I was starting in a stock market swoon otherwise known as the global financial crash. Try as I might to munge the figures to give me a shorter timescale, I had to work another three years saving as much as I possibly could, living on less than the national minimum wage after all the saving. That really wasn’t any fun at all. 3
30 year-olds on a modest salary in London probably haven’t paid off their mortgages and you’ll have 20 years less pension savings than I had. You’re unlikely to cross the finish line in 10 years, and you have to stretch it for 15 years longer. And whatever you read about the magic of compound interest, forget it. Over a 30 or 40 year working life, compound interest sort of doubles the real value of your pension savings, as long as you leave them alone to grow. Over 10 years, not so much. If you don’t believe me, listen to RIT. There is no snowball in FIRE.
There’s a general rule about investment. By the time you read it in the papers, it’s too late. Beware Greeks bearing gifts. It’s going to be a tough ask for somebody starting now to replicate RIT’s work of retiring by 40. Oddly enough your greatest hope of doing that is for the greatest humdinger of a stock market crash to occur ASAP, provided you get to hold your job. But remember Weegee. You gotta get in there and stay there, and stay the course.
Passive investing aficionados will no doubt tell me that’s market timing, to which I would say yep. You want to retire in only 10 years, you need a bit of market timing on your side to get yourself a place most have to work for more than 30 years to get to. RIT reached the finish line using passive investing. But he sure started at a reasonably good time, too, like me. Methinks he earned more than that average British wage for much of that time, too. RIT also highlights some very serious social costs that will be more of a load on younger people – to wit:
The vast majority of my friends and certainly my indirect family are still from my pre-2007 days. This means that over time a big shift between our once reasonably common values and beliefs has occurred. […]
At the same time I have found it very difficult to find “new” friends with common interests to my new self (it really is amazing once you have shunned consumerism to see how much it dominates people’s lives). They really do seem to be few and far between.[…]
my day to day contacts and colleagues have changed and because their standard of living matches the salary they receive today I am now starting (if I’m not there already) to be seen as very obviously different.
The social contact is more important when you are younger. I didn’t experience these issues because I didn’t really rise through the ranks as I was saving to escape, I did that from the high-water-mark of my career. So while I experienced a much more dramatic adverse change to my lifestyle than RIT, I didn’t have so much of a drift away of common interests.
Beware newspapers bringing you promises of freedom from The Man through the stock market. It’s doable, but as a marathon if you start now. The starting pistol for the sprint probably fired over five years ago.
The stock market gets all the attention because of the promise of free money if it goes right. The other things – getting out of debt and reducing your spendyness are the Mr Boring of the FIRE world but they are reliable. They will deliver dividends just as they always did. FIRE wannabees should start with those first – get out of debt and spend less.
Don’t believe all you read in the papers…
I know, you don’t get to buy a garage in Surrey for £200k. Let’s assume Barney got lucky at some stage in the housing market. It’s what the asset cost Barney when he bought it that matters, not what it is worth now. ↩
I wrote that before googling the supporting reference because a lifetime of studying the human condition taught me yacht envy would be a thing ;) ↩
The fellow who introduced me to using pension contributions to save the loading of 40% tax, who opined that you have to be mad to be working here after 50? He’s still working there as far as I know. Absolutely nothing wrong with his theory. It was selling the lifestyle to his wife and kids that was too hard. Let’s face it, there’s nothing in it for his kids but privation, they don’t have to earn the money for their nice middle class lifestyle. I can see their point ;) ↩
I opened my S&S ISA in March 2009, with Interactive Investor (III). I was used to their system, had used it for shares research in my dotcom boom and bust days, and their charges were OK. What I want in a ISA platform is pretty simple. No ongoing fees, and specifically no percentage fees. I am happy to pay for buying and selling shares, not to hold them.
Before the Retail Distribution Review (RDR) this was common. Platforms made their money on kickbacks from funds. I had been educated to this problem so I didn’t have any funds. Simples. The RDR was supposed to help the common people, but I took the shaft. I was perfectly happy to have my platform costs subsidised by all those fund holders. III introduced a £80 p.a. fee, apparently for our own good. From their guff at the time
We believe that customers should be engaged with their investments and actively manage their portfolios. To support this, we are introducing a quarterly fee of £20. If you already trade twice or more a quarter then this fee will make no difference to what you pay – it is effectively an advance payment of those first two trades for the quarter. If you are trading less than that then you will still have the right to your two trades in each quarter without any additional payment and hopefully feel encouraged to more actively manage your investments.
It took ages to move that ISA, I moved it in stock format. Don’t know why we suddenly resurrect Latin and call this in specie, but that’s the convention. You have to watch it because some platforms charge a transfer out per line of stock. OTOH you get to pay the transaction charges twice if you convert to cash and rebuy. Some people say there’s the extra hazard of being out of the market, and I suppose since bull markets are longer than bear markets that’s probably the case for a randomly chosen time period.
I had five years with TD, where they generally did what I wanted them to do, and didn’t give me any trouble, other than starting to charge for holding funds. So I got rid of funds I’d acquired with TD and switched to using ETFs. That gets easier as the ISA becomes a bigger beast. I don’t really buy less than £2k of anything now, £12.50 out of that is 0.63%, on a par with stamp duty. So I take a 1% hit upfront. On the £500 transactions when I started out in 20091 that 12.50 was an ugly 2.5%, which is why everybody used funds in those days. Paying the 3% in kickbacks and fees, no doubt 😉