Brexit or not – opportunities and hazards?

In about a month’s time the UK will have a referendum on leaving the EU. I’m not going to spend much time on the merits or not, because the result will be whatever it is. I will observe, however, that you get to know something about your destination if you look at your fellow passengers on the bus. And the passengers on bus Brexit seems to be folk I don’t want to ride with – people who haven’t realised that the sun set on the British Empire a very long time ago and a few random chancers and headbangers from the Tory party. The one thing I do hope and pray for is once the result is known, whatever it may be, we don’t get to do this again for another 40 years 1. I suspect by then it will be a moot point for different reasons.

The quality of discourse about which way to vote is terrible, largely because so much is inherently unknowable. Osborne stands up and says house prices may fall by 18% if Leave wins. To which I ask myself exactly WTF this is regarded as a bad thing in the first place? Is it really so terrible that some of our young people might actually get to be able to buy a house and some borrow-to-letters get to know the deep joys of negative equity, and secondly, what is Osborne’s confidence interval on this stat? How certain is he of the assumptions behind this ridiculously precise-to-two-figures assertion – the range is probably between -50% and + 25% and he may as well say God knows. The same charge can be levelled against the other side – deciding to leave is a complex and chaotic process that depends on many variables that are inherently unknowable, open to fate and the whims of other people and countries. I’m not clever enough to have an informed opinion, and that probably goes for most 😉 So this is not about the merits of either course of action, and headbangers of either side aren’t welcome in the comments.

Financial hazards and opportunities

The choice is between the status quo and something different, and it’s probably fair to say that financial markets in the short term don’t really like ‘something different’ in general. That’s not specifically to decry the putative upsides the Leave camp are making – if they are right these upsides will show up over the five, ten, twenty year timescales. Certainly if one is convinced by the Leave economic case the course of action is to buy UK equities into the post-June whirlwind and sit tight for a few years – a mix of VUKE and some UK small-cap index fund would cover most bases.

I’m not personally that convinced. There is also the slow run on the pound which is already 25% down from the financial crisis, as a chart of IMF special drawing rights (a basket of foreign currencies to try and average out individual country forex swings) per UK pound shows

1605-gbpxdr

Which has no doubt made my ISA look better than perhaps it really is because there is now a fair amount of foreign stuff in it – indeed it is making my Charles Stanley ISA, which is purely a index fund of Dev world ex UK look better than it really is. And since that is over 50% US and I think the US is shockingly overvalued it’s not what I want to do. But sometimes in investing you have to invest in stuff you don’t believe in. The US isn’t a bad place to have a lump in if I am expecting turmoil in the UK and perhaps also Europe more widely. Obviously there’s the potential turmoil of the follically challenged trickster becoming POTUS in November 2, but let’s tackle the nearest fire first, eh. Oh and let’s not forget the Greek crisis and other tribulations. One of these days that damn Euro is going to go titsup…

Now a run on the pound could be countered in many ways. Buying foreign stuff, indeed buying forex or spreadbetting it. Buying gold isn’t a bad way to go, although I already have a bit too much gold from late last year. But I’m not after optimizing my long term asset allocation. I am looking for a defensive position until after the referendum.

There are two outcomes I can see. One is that remain wins. My asset allocation is broadly where I want it to be at this stage, and in five years time the referendum will have been a hiccup in the general trend. The only opportunities in this eventuality is if the uncertainly before the referendum makes prices cheaper. I bought some VUKE a couple of times earlier this year, this holding is currently 7% up. Should the turmoil of Brexit send that below par, or close, I am tempted to buy more of that sort of thing. Although a Brexit win will probably hit those firms, they are big fish and 70% of earnings come from overseas they can probably come good over time.

The other is of course that Leave wins, in which case gold will have been the right way to go because the pound is likely to come under severe pressure for a while. I’m still okay with the FTSE100/VUKE which I think will come good in the end. So, undecisive bastard that I am, I have chosen to do all three. I have switched the cash in my TD ISA with gold ETFs, I have brought forward my monthly purchases of the L&G Dev xUK index fund for the next three months and if FTSE100 starts to tank in the runup to the referendum I have a full year’s worth of ISA allowance to put into Charles Stanley, although I’m not going to use all of it on this. In the end I can’t protect myself against the downside, but I may as well try and lose a little less in the worst case, and if possible profit from the volatility in the best case.

The FT has a piece on Brexit finance ramifications and a poll tracker as does the Economist. But in the end William Goldman has the edge on all the pundits  – “Nobody knows anything”. He was talking about movies, but it applies just as much to Brexit and its outcomes or not.

Notes:

  1. in which case it’s highly unlikely to be my problem either way
  2. I don’t necessarily agree with all of the Spectator’s conclusion, but it’s a fun description and one by Americans rather than a slightly more balanced way of saying the same by us effete Europeans, which seems right in something that is essentially an American choice
19 May 2016, 5:35pm
housing
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  • Archives

  • Buy to let is a rich person’s game – shock alert.

    Aw, diddums. The Torygraph is spitting bricks about the unprecedented assault on private buy to letters in the Budget. Apparently buying houses to rent out to people too poor to buy them themselves is becoming a rich person’s game. Colour me flabbergasted. You’re buying extra copies of the single most expensive thing most Brits ever buy, just because you can, so you can fleece some of your fellow countrymen for an essential good. Of course BTL is a rich person’s game. The amazing thing is that we permitted, nay subsidised, non-rich but still extremely well-off people to borrow cheap money to give poorer people the shaft for so long, and indeed it’s another rum thing that it was a Labour government that aided this stiffing in the first place and a Tory government that applied the brakes, ever so gently.

    Obviously if you’re rich enough to buy more houses outright, well, go for it. But the one thing that the British housing market doesn’t need is more cheap borrowed money chasing a limited stock of houses, so it’s about time that these leveraged ‘landlords’ got run out of town, particularly at the moment when interest rates are low.

    Now it’s been a very long time since the Ermine rented a place, but my experience of private landlords was that in general they were thieving scum that wanted all the profit for themselves and spent as little as possible on their properties. Now part of that was my own fault – I had bought into the collective mantra the pollutes the British psyche that renting is fundamentally A Bad Thing. I was Monevator’s sister, probably before she was born 😉

    “I am just throwing money away by renting.”

    I combined this with another toxic tendency, one I still struggle with at times, which is if it’s something I don’t feel a passion for, I buy cheap. And often buy twice 😉 Now with renting I avoided the buy twice, but I did buy cheap. Not because I had to – I could have afforded to pay twice as much. But I was tight. Because I am throwing money away by renting, I tried to throw as little money away on that. Not to do something else clever like save for a pension but to spend it on beer and travel and music and shit like that. I was in my 20s FFS. The downside of this of course is that I was drawn to cheapskate landlords, because I was a cheapskate. I’m sure there are good landlords. I never ran into them. I never rented houses, either – only rooms – well and got together with others to rent a house but we each occupied a room. The only decent landlord I had was the work colleague I rented a room from for six months before I stupidly threw money away on buying a house at the top of the market.

    So when the Torygraph wheels out some dude called Craig Scott-Dawkins, ten years younger than I am who  owns five buy-to-let properties in Leamington and Warwick, the Ermine heart of stone chills to his plight

    He said: “I voted Conservative because I thought they were going to take a steady approach. But they’ve knifed us in the back. These changes are making it more difficult for those of us who want to prepare for retirement. 

    Let’s bottom out what is actually happening here. Let’s take a look at Maslow’s Hierarchy of needs, what the human animal focuses on

    1402_Maslow's_Hierarchy_of_Needs.svg

    A house sort of goes in the red bit. Since we’re not snails or tortoises, we need a roof over our heads to keep the rain off, and hairless wonders that we are walls keep the wind off us so we don’t freeze in these cold Northern climes. There’s no fundamental need to own houses, true, and in many other European countries renting is a perfectly good alternative. There is a strong argument to make that renting suits modern employment patterns better, at least until having children, but that’s a different issue. So our poor Craig isn’t rich enough to actually afford to buy the capital base of his evil empire, and he’s bitching about losing his subsidy. Well excuse me Craig, but you aren’t a landlord because guess who owns these damned houses – that’s the bank. You are a lord of jack shit, you are a bank worker making their money work for them. You are also exposing your unfortunate tenants to the risk of you getting taken out by rising interest rates on your overleveraged farrago. How do I know it’s overleveraged? Because you’re a subsidy junkie. If you really had the money you wouldn’t take the hit on the tax changes, because you were charging interest against tax, something that the poor bastards who actually want to buy a house to, y’know, actually live in the darned thing, haven’t been able to do for over 25 years.

    The trouble is that the government in the UK had made regulations about renting so bad for both landlords and renters that it’s a deadly embrace that isn’t much fun for either when it goes wrong. The renters have little security of tenure, but if they dig their heels in the landlords seem to have to jump through some odd legalistic hoops too kick ’em out. It’s something made for people with deep pockets who can play a long game, not the ‘my BTL is my pension’ brigade, who believe in housing as an asset class because they can touch it as opposed to things like shares or bonds. That’s religion, and it shouldn’t be subsidised by the taxpayer, particularly when it puts our young people at such a disadvantage compared to our old gits who have suddenly got pension lump sums to splurge from Osborne’s pension freedoms.

    learning to spend again – consuming more intentionally this time

    With a regular income now, and only so many years to use it in, it is time to review one of the Horsemen of personal finance from the other side, consumption and lifestyle. It’s an opportunity to think about it properly this time and consume intentionally – to spend on what matters to me and furthers my values, rather than the admen’s. This is a big difference to how I spent money up to 2009 – that was the classic slow lifestyle inflation of moving from a student through escalating jobs. That sort of lifestyle inflation is unthinking, and while I generally avoided consumer debt which is the #1 win against the black tide of advertising making consumers spend badly, I didn’t always get value. Some was bought for the promise that it would make things better and easier. Some of it didn’t because of the Diderot effect, and some of it was sheer being suckered.

    As proof of how much of this wasn’t necessary, in the seven years I have not lived a life of abject poverty or the Rowntree Foundation’s inability to take part in society – most of the stuff I had seven years ago is still in service and works well enough, and is not shockingly low-quality compared to modern offerings. One 20-year old piece of consumer spending that did give me great value that failed in service over that time was my Naim power amplifier for my hi-fi, already secondhand when I bought it, which developed a shorted turn in the transformer. I missed that, but anything else that broke I lived happily without. Some of this is because digitalisation means the world is getting a little bit more virtual and less physical, but much of it was simply because I didn’t give a damn, once you have freedom you can be more creative or just go do something else instead.

    It’s hard to get perspective as one gradually inflates lifestyle to match income, but I have had a long break from consumerism – for seven years the answer to how much to spend on Wants was ‘as little as possible so I can save’. So it’s like starting anew, but with the wisdom of hindsight from the previous experience. Not all consumption is bad – the consumer society didn’t get where it is today by never offering value. What I want to win from the hiatus is the discrimination to spend well, to get value on my terms rather than other people’s. So it still means a ruthless avoidance of advertising in its many forms, and I still don’t have time or inclination to watch TV 😉

    One of the I’m going to do with my return to a regular income is to enjoy some of the interests and hobbies I used to do before I made the decision to get out ASAP. Some of these I simply put on hold because they cost money to pursue on needed travel I didn’t want to spend money on, some of them I quite because I didn’t have the energy. All of these fall into interests; they are firmly in the Wants category and not in the Needs. So canning Wants when I Needed to retire early was an entirely rational thing to do.

    Sadly the rational thing to do isn’t always the right thing to do. In hindsight maybe I should have got that amplifier fixed and saved a grand or two less, because I missed decent sound, the sound systems I have with my computer and in the bedroom are okay but nowhere near as clear. I know everybody else uses Spotify and good for y’all but I like being able to listen on speakers and it not all blending to mush. So I should have pushed the boat out here, but the other interests etc, well, the time was better spent on learning and honing my art. When I was working and short of time it was always about the next great thing and gizmo that was going to turn me into a great photographer/recordist/birdwatcher/writer/whatever. In the long lean years I discovered that I was usually the weakest link, and learning to use the stuff I already had and more about my targets, to learn about what I was interested in and just damn well slow down and listen and observe FFS was often the secret sauce I was missing.

    One of the conclusions I have come to is that any sort of pastime I do in future needs to definitely not be primarily stuff-consumptive, it needs to involve some sort of challenge, or creative expression. I don’t necessarily have to have an audience, but I do want to be changed by the experience, have some element of mastery. So that’s no to the beach, anything that ends in -collecting, yes to things that involve some sort of art and craft, or reward for effort. So of course the first thing I go and do to celebrate is purely consumptive, but in experience

    The Swan hotel in Lavenham

    The Swan hotel in Lavenham

    I stayed a couple of days the Swan at Lavenham with Mrs Ermine for a short break. Apparently much used by London types up for a weekend, from Mrs Ermine’s chat with the spa staff. I drank coffee and spent time in the peaceful courtyard reflecting, reading and listening to the birds.

    the courtyard

    the courtyard at the Swan in Lavenham

    The Londoners clearly know a thing or two about demanding high standards for the grub, because it was excellent on both nights in at atmospheric half-timbered hall. I then had got Mrs Ermine a couple of hours of owl flying experience with Lavenham Falconry. She’s mad on owls, and you get to see them close

    Barn owl

    Barn owl

    though personally I’d say getting up this close to this great big lump was too close for my liking.

    Steve the proprietor with Bonnie the owl

    Steve the proprietor with Bonnie the owl. That’s one big owl IMO…

    I ducked every time this one came close 😉

    Inside the Guildhall

    Inside the Guildhall

    Lavenham is a nice part of Suffolk and the Guildhall was worth a gander (does a very decent afternoon tea and cakes too). I was taken by the mummified cat, there to ward of evil spirits coming down the chimney, a common feature of mediaeval Suffolk buildings – there’s one hanging from the ceiling in the tiny bar of the Nutshell in Bury St Edmunds too.

    Rameses

    Ramesses

    The NT have a nice feature that you aren’t hit by the grisly sight from the off, he’s respectfully covered in some cloth, but the temptation to peek is too strong…

    1605_ramcoverP1070556

    The village itself is all wild jaunty angles of the ancient half-timbering in many places.

    1605_rakish_P1070585

    A couple of weeks later we stayed three days at a dedicated spa, because this is something that Mrs Ermine really enjoys, and we went to Norfolk for a couple of days. Some of this I have to pack in in a short while because it so happens this is a better time of the year for her to be able to get away from the farm for a bit because of the vagaries of the growing season. While I have the time and now the money, she finds it harder to go away for more than a few days, which favours the fast and furious sort of decadence rather than slowly ambling along on a journey of discovery which I will be able to do on my own.

    a requiem for The Firm’s sports and leisure association

    One of the things I will mess around with again is amateur radio, despite the fact that the Internet happened between when I was a youth and now and has pretty much destroyed the whole point. But it’s an excuse to climb some of Britain’s hills 1 and make contacts and gawp at the scenery, a little bit of the experience and being changed by the challenge. Now when I joined The Firm, as a joint full of electronics engineers pushing the boundaries at times there was a very active amateur radio society. I never did much with it then because you need time. So many recreational interests are like that, you need time in the field to get any good.

    POTUS with a Blackberry - in Nov 2014 WTF?

    POTUS with a Blackberry – in Nov 2014 WTF?

    And time is something we don’t have while working, and it got less with the always-on way work drifted after 2000 as mobile phones poisoned the work/life balance after the Crackberry (who remembers that from 2004, eh?). Time is not just the total number of non-work waking hours, it’s also about how many contiguous days of them them you can string together.

    I joined The Firm in the late 1980s as a twenty-something pup. In a research lab you are surrounded by clever people and there is always something more to learn, but The Firm was more than a workplace, it was a community, albeit a somewhat strange community. It was intellectually biased and technical/electronics engineering biased. Let’s face it, at times there were issues of personal hygiene in some places where guys spend too much time thinking, I actually switched job t at one time because I couldn’t stand the hum in the office from one fellow, though he was brilliant at what he did. And the girls in the town did get to know that while the odds were good (engineering facilities tend to be very male-biased) the goods were odd…

    But for all that it was still a community, and a vibrant community in that the social and leisure association had a dizzying array of clubs and societies, on all sorts of things. I used to borrow records then CDs from the music club, I spent lunchtime for a few weeks trying to learn Japanese. With a deep loathing of sports and particularly team sports that started in schooldays and persists to this day I was never going to see the point of half the clubs, but it was good to know they were there.

    In browsing on the Web I saw traces of The Firm’s radio society, but it’s a pale reflection of its former self, last significant news from 2009. I looked at the website of the umbrella leisure and social society and there’s a whiff of tumbleweed around there too, of the 19 clubs all are sports apart from the radio society, photography, angling, sailing and golf. There were three times as many when I was there, and it’s only been four years… Not only that but the link to the radio society goes to a lapsed domain. I still clearly remember the all hands meeting when a head of department said ‘although we are closing many of the labs we aren’t turning this place into a jobbing shop’ and while I subconsciously picked up that he was lying because I remember the oddness of the statement and shiftiness still now.  I failed to consciously pick this up, nor to take the corrective action which would have been easier to do from 2000 that it would have been ten years later. Oh well.

    It’s all a sort of creepy independent verification that this particular outpost of The Firm is a pale reflection of its former self. It’s also a signal of a wider malaise, where form is prized over function, which seems to weaken physical communities. I was talking to a bunch of people at the Aldeburgh Food and Drink Festival. They’ve been going round schools showing kids how to grow stuff to eat and all good things like that, but they were now getting stonewalled as schools cut out everything that doesn’t go into pumping up something called SAT scores. These are primary schools, by the way. And people used to bitch about the eleven plus FFS, but now we measure the little tykes twice in primary school, comparative to each other. Well, I suppose you have the groom the youngsters for the ghastly world of performance management at work, though it seems a little bit tough to do that at primary school. School is a larger part of a child’s world now than it used to be, with parents working and commuting long hours. You’d have thought eliminating the broader education of how they fit into society and where their food comes from for example, in favour of the misery of metrics draining the meaning out of life is a regressive move. But fortunately this is not my problem, though it looks like a rum way to run a school to me. My primary school, in the 1960s urban wasteland of inner London, found a way to take us ankle-biters out to see nature. And still get some of us to pass the eleven plus despite the shocking digression into the sordid realms of General Knowledge.

    I’m reading Nicholas Carr’s The Glass Cage, where automation is leading us, and he seems to make a cogent case that our thought processes are becoming shallower, that the hive-mind or the Big G will fix things for us. I mean hell, Amazon will sell you a gizmo 2 that we used to know as a bug. For the convenience of ordering pizza you livestream everything said in your house to Amazon for their computing hardware to parse and answer your questions. They will of course, so not parse everything else you say to use in evidence against you feed into their algorithms so they can upsell you more consumer shit that you will have to spend more hours of your life earning money to pay for. George Orwell was absolutely wrong, we will buy the telescreens ourselves and demand to be heard, doubleplusfeelgood social media indeed.

    Something else I learned is that while I take information in from the Web, I don’t gain deep understanding, compared to learning the same thing from books. Indeed, I’d also challenge the assumption that learning ability inherently decays with age. I was trying the understand the craft of designing aerials, and I spent way too much time on the Web, getting conflicting opinions. Then I pulled out a textbook that I had bought as a teenager. I had passed the radio test as a way to try and expand my application to Imperial College, though we didn’t have personal statements in the late 1970s there was some sort of CV and it helped to add bits to it. I had never understood that chapter, because I didn’t have the ability to imagine the electric and magnetic fields travelling through space. It was much easier to grasp this time, though I am 35 years older. By rights the younger me should have had no trouble, but it was the older me that made the grade, and turned some of the learning into action. Of course perhaps that is because I am a Physics degree and thirty years worth of experience later. But it is an interesting insight into knowledge learned from the Web can easily be, to pinch the words of Lord Kelvin “of a meagre and unsatisfactory kind”.

    That’s not to knock the big G, after all in a fast moving world often you don’t have time to go deep, you simply need some sort of heuristic rough guess right now. But it was an interesting insight in how all too often the Web tells me how but not why. Somehow that doesn’t seem to be improving my understanding of the world, though it an get a specific thing done. I am not sure that the answer to this conundrum is to spend more money on Freedom to ice this chatter, as opposed to learning to switch it off more, but that is much easier for a retiree I guess than if you’re working, so maybe Freedom is onto something!

    It’s one of the odd things about the cornucopia of information and stuff that we have around us – to use it well we must still know ourselves better, to know what do we want, how to gauge value and how to qualify the opportunity cost of doing one option of buying something, because every road travelled is a bifurcation with the road that was not taken. I once navigated that path by the need to avoid running out of money each month. I now want to navigate it more intentionally. It was necessary for me to escape the rat race that was freedom from. Living and consuming intentionally is part of the freedom to, not the freedom from. It’s inherently more pathless. I will no doubt spend money on crap in the future, what I want to avoid is doing it more than once, through deliberation, reflection and knowing myself. The only increase in spending I’ve done so far is these trips out with Mrs Ermine, because I have time enough to work out what I want where it doesn’t involve other people. I will change things slowly, only a few things at a time, because living intentionally can’t be rushed.

     

    Notes:

    1. most things radio work better with more height, which is the relevance of hills
    2. Amazon Echo is not yet available in the UK at the time of writing

    Journey’s End

    Another day, another tax year, and an Ermine finishes a long, slow glide path running off my cash savings, the ancient sunlight of the fossil wealth accumulated over my 30-year working life. I now return to the regular pay of the salaryman I was but now without selling my time or skills for money – using Osborne’s pension freedoms to front run my works pension that I will draw in five year’s time at its normal retirement age.

    In that respect the financial problem is solved for me at the moment. Of course it’s always possible to imagine scenarios of desperate governments taxing everything, war, pestilence and social disorder. But the end of the world has occupied people past midlife since Roman times. So I will park worrying about the things I can’t change and do the Money Mustache Shuffle. I built up a six-figure ISA since 2009/10, but in the end it was Osborne’s pension freedoms that saved my ass. That ISA will, of course, give me options and some tax-free income, which is nice. But I never learned properly how to live off capital without converting it into some sort of income statement, so that I had an answer to the Micawber question. In that respect I am Poor Dad out of Rich Dad, Poor Dad. I learned Rich Dad’s vocabulary, but never learned to speak the language fluently; I cannot determine if I am overspending or underspending until I can measure it against an income. I found it possible to improve as an investor, largely through learning to sit on my hands on the selling side, and learning to acknowledge that luck does not equal skill.

    The evidence is probably that I was underspending, you don’t fearfully husband an ISA stash across three years and then go WTF do I do with this now at the end if you have the cojones of Rich Dad. The job of that ISA now lies both near and far. Far as in 10 years out or so, where my pension may start to be overtaken by real inflation (as opposed to the official measure RPI) and/or a rise in general earnings relative to inflation, although this is hard to imagine at the moment. Near because I may use the dividend income thrown off to augment running down my SIPP at the personal allowance less any earnings, I really must get out of this working malarkey, since I’m not working for the government any more, which limits my pension + income to the personal allowance. The reason I’m not dropping working isn’t the money, it is that I don’t want to drop people I care about in the shit. 30 years of paying tax is enough, that’s a mug’s game when you have wealth, eh, Dave? At least I earned mine 1 rather than getting it from Daddykins…

    Like RIT I made mistakes along the journey, but like him fortunate enough that none of them was terminal. Unlike RIT, most of the heavy lifting for me was not Saving Hard 2, but Investing Luckily. I was standing next to an open goal of the stock market in March 2009 and that Monevator fellow gave me a kick up the backside that seemed to make sense. Maybe I had a guardian angel who got him to write then and me to look at the right time, when the student is ready the teacher will appear.

    The big tragedy of personal finance and FI/RE is that for most people it is a marathon, not a sprint, it is an accretion of a small amount, but steadily. All the projections you see, like the ones in MMM’s the shockingly simple maths behind early retirement

    show this marathon running steadily, either in their underlying assumptions or in the narrative. Now some people seem to swing that – take a look at RIT’s path to FI and while you can’t draw it with a ruler it’s not far off. Beats the hell out of me how he did that. I could never have saved £100,000 a year because I never earned that much, perhaps a higher savings rate makes spending disappear into the noise. I saved bugger all at the start – indeed by screwing up buying a house I anti-saved with negative equity for 1o years after 1989. Real lives have much more drama in them than the steady as she goes narrative. You can probably still do it with the marathon approach, but it won’t be a linear process and anybody in their twenties or thirties predicating FI on a stable savings rate for the next 20 years may rub up against some challenges to that assumption in the vicissitudes of Real Life™. Obvious challenges are Children, Divorce, Redundancy. And these are the external hits, although I guess children can be sort of planned, not so much the others.

    My biggest error was assuming I was a steady-state system. I wasn’t. You, dear reader, aren’t either. It is easy to make that assumption because once you enter your 30s you have passed the Turning Outward then the next transition you can see is your children coming of age or retirement. However, you may find along the journey what you want out of life and work may change. In particular you may favour more Life and less Work. Not necessarily the nuclear option on Work, but you might want to ease back. I am surprised at how few of the projections of FI/RE account for the life stages. Some written by DINKYs  don’t seem to account for the total devastation that having children wreaks on a DINKY couple’s finances. I don’t know that from personal experience but I saw enough of it at work, you have the double whammy of the extra costs of baby, and the suckout of losing one partner’s earnings, together with the concomitant damage that does permanently to their earning prospects if it’s a professional career. On the upside I guess the Government does sponsor the lifestyle a bit through the benefits system.

    A colleague at The Firm sometime in the mid 2000s was talking in the tea room about the opportunities presented by saving via salary sacrifice into pension AVCs, I guess I was 46 at the time. I was turned off the concept of pensions because they had just shifted the earliest age you could draw a pension from 50 to 55 and it all seemed way off then. However, one of his phrases did strike me “with these opportunities, you’re daft if you’re still working here after 45”. Obviously that’s going to stick in the craw, I was at the grand old age of 46.

    Funnily enough this fellow is still working at The Firm, so he clearly missed the boat too. There was nothing wrong in his reasoning, but one of the assumptions behind it is that you can take the axe to your consumer spending. The fly in the ointment for him was that his wife and kids quite liked the middle class lifestyle. You can’t spend more and save more at the same time without upping the Work monster, so I guess this fellow lacked the cojones to walk the talk, and turned into a walking wallet. The best laid plans of mice and men, eh? I could drive my pay down to a whisker of the national minimum wage using salary sacrifice because I had paid down my mortgage. OTOH presumably he and his wife and kids have some 5 bedroom executive house in a bijou village whereas I live in a crappy 3-bed semi in the better-off districts of Ipswich 3. But the walking wallet has to go to work whereas I get to listen to the birds and ruminate, you pays your money and you takes your choice 😉

    The non-financial error

    I failed to identify that I needed to stop working because work held no meaning for me any more, and I didn’t need the money if I stopped spending it on vacuous crap and empty experiences to compensate me for flushing my life away eight hours every day. The answer for me wasn’t to buy even more crap. It was to stop flushing my life away. I admit a sneaking admiration for several young people (well, in their thirties) I know who electively choose to work part-time because they value their free time. This was not my path – part-timers were despised at The Firm for being, well, part-timers, but it seems tolerated more nowadays despite being very hard to manage from the company’s point of view. Since I didn’t do that, effectively I saved all those days off these young ‘uns take during their working lives and get to take that all off at the end of my working life. Their pattern seems to be three days on two off (then weekends which I also had) so I guess I got the short end of the stick. If a normal working life is 35 years then a 2/7 taken off would imply a 25 year long full-time working life. Epic fail on my part. On the upside I have a lot more Stuff and capital assets, there ought to be something to show for all those hours indentured to The Man.

    It was easy for me to psychologically project much generic crap on The Firm. Modern performance management is a dreadful and stupid way to herd cats, all stick, no carrot and all tied up in barefaced lies for no good reason. You know the pack drill. And so the first three quarters of this blog is about how that sucks. Yeah, it did. Deeply. But in the end it wasn’t the fundamental reason I left, though I believed it was at the time. I had only one really bad half-year, and that was when the project I was on was canned due to a reverse takeover, and anyone who didn’t have enough billable hours was shot with a performance improvement plan. The poor sod instructed by HR a year or so after to try and patch the twisted wreckage up when The Firm needed my skills for the London 2012 Olympics work even said that they were rotating the piss-awful reviews round, because they had to reduce the marks profile.

    But something snapped within. Although others weren’t happy with being targeted I was unduly susceptible at that time and place. Once the mainspring is broken the dream can never be repaired because it has become a nightmare. I will never work for an organisation with a modern performance management system, and I focused all effort on making sure that I will never be in that weak position again. That meant three very lean years and seven lean years in all to to eliminate The Man from my life. The cloud had a sweet silver lining though – I paid my dues of angst about retirement upfront while I was working. I don’t miss the meaning and life structure The Man gives many people, it was weak in me from the off and got incinerated in 2009. But it took me three and a half years of running before I slowed enough to stop, look back and realise the footsteps I heard chasing me were the echoes of my own.

    a human being is never what he is but the self he seeks
    Octavio Paz

    I had to switch off so much of myself to fit in with work, and in the end the unused parts of my psyche needed the freedom. Initially the freedom from, and then the freedom to.

    I get the upside now. Kate Bush was right all those years ago.

    All the colours look brighter now. Everything they say seems to sound new

    I hear the robins and their territories spread across the land, a patchwork with the other birds interleaved. I hear the shifting dynamic tension between the calling males and the 3d spatial pattern of the territories, it is a thing of beauty to observe, as the others interleave their song. I pay attention more, and see and hear and smell things better. You aren’t supposed to gain any sensory acuity as you grow older, but by unrepressing parts of myself the grey matter does a better job of interpreting what is there. I was lucky enough to grow up when personal audio devices were uncommon, but most of the win is being present in the moment. You can do that actively most of the time, not just in bursts with the much-vaunted mindfulness. All you need is time…

    I did some tech stuff for the RSPB a little while back, and for the bizarre way they fund projects (this was not paid work as I was interested in the results) they wanted a guesstimate for the time spent. I was dumbstruck – I had no idea. The whole point of being retired is you don’t have time sheets and project codes and shit like that. I get up, think what moves me to do right there and then get on and do it, after some undefined time I go do something else or waste time on the Web 4 or go for a walk. Although Philip Greenspun made a decent case that the average person has zero drive and it is the strictures of school and employment that get them focused enough to make anything useful happen, I haven’t found that my days disappear into

    Suppose that the guy cashes in his investments and does retire. What do we find? He is waking up at 9:30 am, surfing the Web, sorting out the cable TV bill, watching DVDs, talking about going to the gym, eating Doritos, and maybe accomplishing one of his stated goals.

    I told the project leader to make it up. I’ll back up whatever he says. Nobody is going to sack me for it 🙂

    Along with not going to the gym, not eating Doritos etc I have done a fair amount of introspection, and came to the conclusion that Work and I grew apart. Retirement seems to be different for me than many others because of this. I’ve really struggled to get this across, and I think I now understand why. Work used to matter more to me, the status of earning decently more than my parents, and, okay, I may as well accept my heart of darkness, most other Brits, the sense of changing things. The sonofabitch work turned me into in my late 30s and 40s used to get a rush from saying jump and have people do stuff just because I said so 5. It’s hardly as if this was a big part of my life but after a certain level you have to lead teams and projects even though I cleaved closely to the technical axis. So I never got the rush that the big swinging dicks of finance  have. But a small dose of the poison coursed through my veins, and I became a worse person because of it.

    A Cock of the Rock. Basically wants everybody to do as he says

    A Cock of the Rock. Basically he wants everybody to do as he says. Primates are even worse, which is why you can never have too big a yacht

    If this is one of the reasons lesser BSDs carry on working until they are 80 fair enough, well, as long as they don’t ruin too many people’s lives playing Cock of the Rock. I started to outgrow this phase with the start of the Turning Inward at 45. Work, particularly the management structures, seem to increasingly demand and express the psychopathology of the extrovert writ large as you go up the greasy pole, so in the end I had to switch off so much of my nature to do that and it wasn’t sustainable.

    Since retiring the armour of bitterness and unkindness accreted over many years of competing and expectations of dog-eat-dog behaviour slowly begins to ease and fall away. I was not born for Work, and while I discharged myself acceptably I have now transcended Work 6. Rabindranath Tagore speaks of a similar transition, he’s more articulate than me

    “I travelled the old road every day, I took my fruits to the market, my cattle to the meadows, I ferried my boat across the stream and all the ways were well known to me.

    One morning my basket was heavy with wares. Men were busy in the fields, the pastures crowded with cattle; the breast of earth heaved with the mirth of ripening rice. Suddenly there was a tremor in the air, and the sky seemed to kiss me on my forehead. My mind started up like the morning out of mist.

    I forgot to follow the track. I stepped a few paces from the path, and my familiar world appeared strange to me, like a flower I had only known in bud. My everyday wisdom was ashamed. I went astray in the fairyland of things. It was the best luck of my life that I lost my path that morning, and found my eternal childhood.”

    Hermann Hesse and others have been similar places, indeed art and literature seem to be more in touch with the meaning of the changes of life than the dry narrative we have of  A Successful Career.

    I drew from Carl Jung in the last narrative, but in chasing some of the other references I came across several citations from to Gail Sheehy’s Passages, which is a good read. It is a more accurate read for my life than probably for Generation Y, who will probably be better off with the revised edition New Passages, though the original reads much less New-Agey.  Some of the stages of life are due to the natural life cycle of the human animal, and its physical development, but a lot of the transitions are across the stages society and world of work set, and these have changed dramatically since 1969 when she wrote the first book. The blurb of the revised edition explains some things that have changed –

    Seven years ago she set out to write a sequel, but instead she discovered a historic revolution in the adult life cycle. . .
    People are taking longer to grow up and much longer to die. A fifty-year-old woman–who remains free of cancer and heart disease– can expect to see her ninety-second birthday. Men, too, can expect a dramatically lengthened life span. The old demarcations and descriptions of adulthood–beginning at twenty-one and ending at sixty-five–are hopelessly out of date. In New Passages, Gail Sheehy discovers and maps out a completely new frontier–a Second Adulthood in middle life.
    “Stop and recalculate,” Sheehy writes. “Imagine the day you turn forty-five as the infancy of another life.” Instead of declining, men and women who embrace a Second Adulthood are progressing through entirely new passages into lives of deeper meaning, renewed playfulness, and creativity–beyond both male and female menopause.

    I’m not sure I am ready for the concept of a male menopause, presumably this is decadent metrosexual London/New York sort of thing 😉 Her narrative is very different from the Jungian descriptions I am more used to, but they are derived from observations of hundreds of people 7, though of course edited by their conscious selves in telling them to the author. The conclusions have great similarities despite the varying methodology, Jung gives more of a hypothesis why, Sheehy’s work is more observational Big Data before its time sort of thing.

    Sheehy’s book is a tough read at times if you’re over 45, any life worth living has error in it, and she distills some of the errors of people refusing to grow, it’s a harsh spotlight of some of mine. The increasing competitiveness of working life over my career due to globalisation and improved communications did not foster that sort of thing, I favoured the outer world over the inner, playing against my introverted type and failing to grow.

    The surrender of those career goals on the Turning Inwards and the overflowing of the Shadow and the unlived elements that are incompatible with careerism are also recorded in other narratives -I am not such a special snowflake after all 😉 Sheehy covers a decent range of adult passages, I see friends and colleagues in some of the others. Of course the details vary and some are dated, but the big pictures match. As Joseph Campbell’s Hero with a Thousand Faces described, the stupendous variation of individual life stories is woven from a surprisingly small number of different archetypal threads.

    But I feel have probably won most of the fight to turn that particular decade of life experience into wisdom, to clear out the baggage, and to disembark from the old vehicle and be ready look to the new beginning. That is the point of journey’s end for the Work phase, to change mode and start travelling the journey of Life in a new way at a new stage. Hopefully be a long and happy retirement full of people and things many of which I have no inkling of now. Of course there are no guarantees, a hundred and one ways it might all go titsup, but I will do the MMM thing on that.

    The financial errors

    Some readers may one day need to float ISA savings ahead of their pension savings simply because of the arbitrary age as of which you can draw a pension. It is very hard to do that right, because your money is in silos, and you can easily flatten one silo and find yourself short, even if others are flush. My solution to that was being prepared to borrow money but it is very, very tough  for the debt-free to make that mental adjustment, it caused me to underspend since retiring in 2012. It’s probably also hard for me to borrow money other than on a credit card offer by now because my credit scoring probably stinks, not from a litany of missed payments but from an absence of ‘normal’ credit 8. MBNA let me money a few days ago because it was just before the end of the tax year, I need to put all my earnings into a SIPP, fill up the last few thousand in my ISA and front-load £2880 into the SIPP just after the tax year, so I can maximise my tax-free SIPP PCLS. Since I was at  journey’s end I didn’t have enough money in my bank account to do all that, and I couldn’t sell unwrapped holdings because else I’d fall into capital gains tax. So I borrowed the money in the old tax year and just now I have sold some unwrapped shares without tripping the CGT limit  to pay them back when I get my T+2 settlement. Thank you, MBNA for your kind loan of 5.6% APR and no fee – for about two weeks I figure  that will be less than £100. There’s nothing wrong with debt if you invest it in productive assets which return more than the interest. I don’t need to do that any more, now I have access to the SIPP silo.

    It’s not easy qualifying a withdrawal rate

    Nominally the safe withdrawal rate is 4%. It’s easy to know that, but I was just not able to bring myself to do spend at that rate. I am fortunate that most of my pension is expressed as an income – effectively an annuity. It’s that Rich Dad Poor Dad thing. I have no mental model of personal finance that works with Capital, rather than income when it comes to spending. I never built that mental model in 30 years of being paid a monthly salary, so while I did okay on the investing front I was horrendously conservative in my use of that saved cash – in 2012 I thought it would last one or two years. For each of those three years I saved the max into my ISA, which made bridging the gap much harder. Now as it was, that was a lucky sort of error, because after a while that Osborne fellow came along and totally turned my retirement plan around. I was going to have to draw my pension early about now and eat a 25% actuarial reduction due to it being paid five years early. Then Osborne comes along and tells me I can burn up my AVC savings before the main pension. I saved those AVCs in the last three years of working, and because this was a combination of 40% taxed earnings and salary sacrifice I only gave up net income of about 40% of the amount saved. Thank you Osborne, and goodbye to actuarial reductions. The Firm can bloody well pay me what it contracted to for the amount of time I was there and my final salary. And I can leave my ISA be, and indeed add to it over a few years.

    networth from that fateful appraisaement in 2009 (it doesn't include house or main pension)

    networth from that fateful appraisement in 2009 (it doesn’t include house or main pension) The ISA is less than half

    Most of the variation post 2012 is stock-market variation on the ISA, my spending is in the noise at this scale, indeed I failed to spend more in total than the stock market gained (in reality I should deflate this by the rate of inflation, though that hasn’t been terribly high over this period, the aggregate fall since 2012 is about 10%). Now that I have a basic income that is fine for my needs the 100% equity invested ISA looks more reasonable although it would be considered madcap aggressive in an IFA attitude to risk assessment.

    If I invest my PCLS  in the ISA then perhaps I should draw the natural yield of the ISA and spend more. I have never drawn money from my ISA, but it will probably be better if I increase the capital and draw the return rather than leaving the ISA static and running down the cash across five years. The annual cash income from the SIPP is enough to keep the wolf from the door and a few treats, which is just as well, at current valuations a stock market crash is pretty much guaranteed some time in the next five years. Shame the mini-crash earlier this year didn’t really get its boots on now I have a load of cash.

    I don’t know what to do with cash, it is the asset class I most loathe, though inflation hasn’t been as high as I once feared. You seem to have loads of itty bitty aggravation to make it work. Yes, there’s P2P but after the kicking Osborne doled out to the scalpers of the young otherwise known as Britain’s army of leveraged BTL landlords there’s one thing I know from experience, and that is that negative equity is a bear, and faced with keeping the overpriced house or paying back the P2P loan which one are people gonna do? I have some P2P, but no more than I can afford to lose. Matched betting, I didn’t stop work to try and grind out a living trying to arbitrage the fine difference between lots of big numbers on a screen. And I’m always scared by wizard wheezes where I can’t see what value is being rendered to the world by introducing myself as the middleman, P2P falls squarely into that category too. Too many methods of making cash turn a return these days have a whiff of financialisation and arbitrage rather than value-add. We’re fighting central banks if we want a return on cash, and let’s face it, the punters are the small guys in that fight. Gimme a stock market crash, and pronto, guys, the same forces are inflating equity prices.

    The move from a definitely optimistic to an indefinitely optimistic outlook

    I read Peter Thiel (one of Paypal’s  founders) ‘s book Zero to One today – had to read it in the morning because the library wants it back. He had an interesting taxonomy of views of the future, he was applying this to civilisations, not individuals, but it holds true in the micro as well as macro scale. His taxonomy had four quadrants

    Definitely optimistic

    This was the western world I grew up in, Thiel classes this as the US up to 1982. If you are definitely optimistic you expect the future to be better than today and you have some idea of what that will look like. So it makes sense to understand it in advance and apply yourself to making it happen. You spit on your hands, roll up your sleeves and get to work – moon landings, railway electrification, Arpanet, satellite communications.

    Indefinitely optimistic

    Thiel classes this as the US post ’82. You expect the world to be better tomorrow, but you’re buggered if you know how. Thiel says

    indefinite attitudes to the future explain what’s most dysfunctional about our world today. Process trumps substance: when people lack concrete plans to carry out, they use formal rules to assemble a portfolio of various options […]

    A definite view favours firm convictions, instead of pursuing many-sides mediocrity a definite person determines the one best thing to do and then does it

    You can be definitely pessimistic (China – you then take what worked for others and do more of it, but don’t innovate) and indefinitely pessimistic (Europe since 1970 – you know tomorrow will be worse than today but not how quickly, so you party while you still can and kick cans like Greece down the road.)

    On the micro scale of my career, I used to know one definite way of adding value – engineering. The young Ermine switched my career in this direction, against the backdrop of the definitely optimistic time when science and engineering were sorting a lot of problems 9. I have surrendered that – I have moved to being indefinitely optimistic, and that means

    they use formal rules to assemble a portfolio of various options

    which we otherwise know as index investing, indeed the name passive investing already kind of flags Thiel’s point. I am slightly definitely optimistic in that in my HYP I use individual stocks, but there’s still a lot of the indefinite optimism that lies at the heart of diversification. Peter Thiel sticks the knife into the Efficient Market Hypothesis with verve and doesn’t take prisoners –

    “The efficient market hypothesis is the idea, that people can’t have ideas.”

    it is a poster child for for the wider way the West has lost it’s mojo and the way productivity is flatlining as more and more human effort is going into finance and lawyering. Maybe he has a point. If you look at what Physics graduates of Imperial College do after graduation 10, IT, banking and accountancy take over 25%. You don’t particularly need a Physics degree to do any of those.

    I now have time for reflection – no longer the desperate trying to build an ISA which throws off an income I can believe in, to compensate for an actuarially reduced pension. My plan didn’t survive contact with the enemy, but in a good way. In financial terms, I have reached journey’s end. I crossed the three and a half years without an income and without destroying my liquid capital, because I had enough cash savings, inflation was low, the markets were kind to me, and I learned to be less of a damn fool in them than the first time round. I got roughly a 50% uplift in the unitised value as of 2010, rabid indexers will tell me I could have got roughly that with VWRL and they’re right – I have a big hole in my asset allocation of the US, because it’s been too dear throughout my investing time. So I’ll give that point. OTOH I will load up on the US when they take the sucker punch at some point. And the VWRL dividend yield at 2.8% is too low for me 11, I get about 4.8%, though it’s a moot point as I don’t draw from it yet.

    I have work to do now. To know myself, to roll back the years of activity without thinking, unpick the characteristics amplified in my Shadow by the increasingly competitive nature of work 12. To deepen, and grow, to experience things that transform me. That is for me. It’s not for everyone, vive la difference and all that. For sure, I am poorer in money than if I were still working. I will never be worth a million pounds in today’s money. But I am richer in Life, and accreting these riches of experience faster as I return to shape after the straitjacket of three decades of working life. Although I am far more comfortable with Jung’s concept of individuation, Sheehy’s description of the midlife gateway is more generally understandable

    dangerous years when we confront the loss of youth, the fading purpose of old roles, career changes, spiritual dilemmas, but also find the greatest opportunity for self-discovery and renewal

    It’s not a bad description of the point of retirement. Getting the money sorted is necessary. But it isn’t sufficient. You have to roll with the change of that stage of life too, and grow, otherwise freedom to will turn into dissipation, decadence and decline.

     

    Notes:

    1. There is an argument to be made that the investing gain wasn’t earned, I guess, but it’s still not risk-free unearned ancestral wealth of the sort that exercises the Torygraph’s old buffers
    2. discharging my mortgage before I started saving to get out had been a topsy-turvy form of saving, you can of course save a lot more if you don’t have a mortgage to pay
    3. the rules of real-estate still apply – a bad house on the right side of the tracks beats a good house on the wrong side, because all the others residents are carrying the cost
    4. I am slowly cutting that down, but there is a fine line between intellectual curiosity and rabbit-holing for the sake of vacuous novelty
    5. Mrs Ermine tells me this is a guy thing, but look at the caricature of this writ large that is the CEO and officer class – think Robert Fuld, Fred Goodwin and anybody with a yacht in the harbour that is driven by ‘staff’ rather than skippered by themselves
    6. I am still young enough that much may change within and without. One should never say never. But it’s my current state
    7. Carl Jung’s observations were derived from his patients, by his hyptheses merged these, Sheehy cites individual lifestreams, and they are closer to our times than Jung’s
    8. I have no mobile phone subscription, I pay most things cash upfront or on a credit card cleared each month, I have not had a car loan for 25 years, I have no mortgage, compared to normal Brits I am a debt cleanskin
    9. later in Thiel’s narrative he says that the Baby Boomers experienced the world getting better for the first 18 years of their life though it had nothing to do with them , and extrapolated this to be just the way things were, whereupon the mainspring of innovation in the West ran down because they switched it from definite optimism to indefinite optimism
    10. Why Physics? Because I did Physics at Imperial. I would have been classified in technical consultancy/R&D, after a period in manufacturing and Others
    11. yes I know, in theory there’s now’t wrong with running down your capital. You try doing that and feeling good about it though, once you aren’t accumulating
    12. It all seems a terribly long time ago, but once upon a time it was possible to progress at work by simply becoming a better engineer, learning from others and sharpening the saw which showed as skill in action, showing up in better, faster or cheaper work. Skill in action takes time to accrue and show, years not months. The change to performance management meant you have to tell a story each quarter that is better than the last, and to pump up minor successes into major triumphs, and shout louder than everyone else – a microcosm of the short-termism of quarterly reporting by companies. That sort of thing emphasises form over function. Real Life doesn’t show monotonic progress on a quarterly basis.

    Freedom to, not freedom from is what retirement is about

    Be careful what you wish for. You might just get it.

    recent Western proverb that puzzles the occasional Chinese speaker

    Over at SHMD 1 Jim is reflecting on the meaning of early retirement for him. Intimately bound with that, of course, is what the meaning of work was for him. Retirement is the yin to the yang of work, it is often thought of in terms as a freedom from. If you’re looking for the PF angle in this piece, there isn’t one. It’s not about the how, it’s about the why, which is inherently subjective.

    In looking at people who have retired, be it early or not, there are many common themes. Jim prepared himself far better for early retirement than I did, because I realised I wanted early retirement one day all of a sudden in 2009. Although it’s easy to infer that I really hated my job, I didn’t – it served me well for thirty years in all, and gave me intellectual challenge and a congenial atmosphere for 27 of those years. What I came to hate was the performance measurement system – it was the performance art in a panopticon I came to loathe – I have, in my entire 30 years at work only had one rotten quarterly appraisement. Because of other changes in my personal life, this shattered my self-image 2, and I initiated the escape program executed over the following three years. This post isn’t about that.

    Looking back, it seemed I had two advantages on many people who retire, and find some part of themselves is going “yes, and now what?” it seems, when it comes to actually enjoying being retired 3. One, being an introvert, is innate, but the other is conceptual – that of the cycle of life and its stages.

    Introverts have a harder time at work. They have an easier time as retirees.

    It’s not hard to see why. I somewhat simplistically mused if the difference showed in the amount of money each type needed. Yes, there probably is a difference in the amount of money needed, but this is an effect, not a cause. Let’s take a look at what Carl Jung said about the two traits 4

    Each person seems to be energized more by either the external world (extraversion) or the internal world (introversion).

    Introverts are interested primarily in their own thoughts and feelings, in their inner world; they tend to be introspective. One danger for such people is that as they become immersed in their inner world, they may lose touch with the world around them. The absent-minded professor is a clear, if stereotypical, example.

    Extroverts are actively involved in the world of people and things; they tend to be more social and more aware of what is going on around them. They need to guard against becoming dominated by external events and alienated from their inner selves. The hard-driving business executive who has no understanding of feelings or relationships is a classic stereotype of unbalanced extraversion.

    Stephen Garrett, London City Psychotherapy

    Well, duh. Extroverts rock at work. They play well to the gallery which is an increasing trend of the metricised world of work and modern business theories of management. The whole point of work is to grab the external world by the balls and whack it around the chops to become a different shape. Western culture got where it got today by being extroverted and changing the world. That’s why when you flick the switch on your heating your house gets warmer – because legions of other human beings got to work pummeling the world into a different and very specific shape so that gas comes into your house, is burned in a controlled way, hot water goes round the radiators and you get warm. Previous generations had to go out and shovel coal or chop wood. I’ve spent a long time disparaging excess consumerism but it’s not all bad – central heating and vaccination against polio were not prevalent when I was born.

    As a young man I had to fight the introverted nature to find success in the world. The first Turning Outward, around the mid twenties, is about the world of people and things. The world of work did once tolerate introverts in its engineers locked away in the lab 5making clever shit happen. In an increasingly connected and competitive world they get the sand kicked in their faces, one is because there’s always a cheaper guy in the massively expanded global labour pool, plus they are not team players in a business environment and people think of them like this:

    Introverts have long been prejudicially perceived 6  as being selfish, narcissistic, pathologically shy or even psychotic. You know the sort, the shy, dangerous loner with the gun. 7

    So the extrovert stops work, and all of a sudden a load of noise and hum goes quiet, the phone stops ringing, and after a while he goes WTF – get me outta here! It’s a lot more common than is given credit for, and indeed I have seen people who have gone back to work not because they needed the money, but they needed the meaning. There’s nothing wrong in that, indeed one of the hazards of FI is that at least the early retiree who goes back to work because he miscalculated and needs the money knows a good reason why he is there. Whereas the early retiree who is financially independent has some serious questions to ask themselves about why they are returning to work, because it isn’t for the money. The extrovert has to fight the extroverted nature to find success in retirement, because it is the turning inward, that complements the quarterlife turning outward. His other option is to stall the change, more of which later.

    So the ermine, as an introvert, stops work, and all the noise and hum stops, and, well, peace at last. I did actually think about the web of life and connection with other people across the three years as I was getting out and took some steps to widen this, and some of it was eased by being involved in a community farm which gives me a ready-made community. I think it’s really hard for extroverts to realise that for the introvert, the whole frickin’ point of becoming FI is to go nuclear on your career. Take the battle to the enemy – work steals my time and stops me being me. I am working now not because I need the money, but because I am filling a hole efficiently that would need more resource to fill otherwise, and I care about the project and people. I don’t volunteer – 30 years of working for a living means if people want my time and commitment they can damn well pay for it, I would otherwise find it demeaning. I presume all the good people volunteering at bird reserves and the like are extroverts, as such they are getting something they need. It takes all sorts to build a world. But I’m not working for the money and as soon as someone or something better suited comes along to fill my shoes, great. Bring it on. I am Rhett Butler to the Scarlett O Hara of work

    Turning freedom from into freedom to

    Because it was reactive, I confess my search for financial independence was driven by freedom from. Freedom from the endless measurement, the criticisms, the you need to be doing more and more, you need to be team player 8, you need to sell yourself, you need to suck up this that and and the other to be good enough. I was already lethally individualistic and the shy 9, dangerous loner when, after splitting up with DxGF I heard one time too many in some ghastly all hands meeting the claptrap that there is no forced distribution, performance management is all about your individual contribution to The Firm. Like hell it is. It’s about controlling the pay bill while fostering the belief that employees have some control over the matter to encourage the hamsters to run a little faster, you sociopathic shits. It’s a zero-sum game from the employees’ pay.

    Against a background of feeling hollow enough I didn’t give a damn but I demanded respect for my basic intelligence, I came to the conclusion that sometimes you have to lift the weapon, aim and fire. In amidst a hundred souls in a small lecture theatre, I stood up, and fixed the lying senior manager in the eyes. and said “Since there is no fixed ranking, as you say, you will, of course, be happy, in the interests of openness and transparency to publish the number distribution of the marks each quarter, and I will be pleased to collate this information. We will of course see the natural mean vary across time, while giving due regard to the central limit theorem over the long run 10 when collated over many years, and we will expect some variance in the year-on-year means, and by inference the pay bill”. Finance obviously doesn’t want a randomly varying pay bill across departments, which is why you have a forced distribution per department. He said he would, but it never happened. Looked nervous when I caught his eye in an all-hands meeting after that, but at least the lie was not repeated.

    It was that sort of daily demeaning bullshit that I wanted freedom from, as well as having to fabricate SMART goals etc. The world is going in a direction where people compete for false badges of performance – the gamification of work, social media and all that malarkey. Rhett Butler again. For sure, for personal dignity I wanted to do a decent job and deliver value at work, but I didn’t want to play the mind games or take part in the casual lies. I don’t pay games like that because I am largely internally referenced. I don’t play computer games, and I don’t play sports, and I don’t do personal bests. For what it’s worth, I got a notable payrise after that quarter, either because I was identified as dangerous and they were calculating how to run me out, or because the same loner stood up in another meeting on some project where people were high-fiving themselves about how they were going to build a great delivery system. And asked them what legal basis they would have for actually putting programmes onto that system, and did they understand the principles of licensing TV programmes in the specific Asian country they they were going to do all that stuff. Yes, I was an engineer and knew how you design the transmission system, but I had enough awareness of the big picture to realise paying customers get bored of watching testcard real fast. Paying customers are what makes it worth doing.

    You do sometimes need the loner in business, because groupthink means an awful lot of bad ideas get to run too far too long. That project would have been a white elephant. It needed shooting.

    Work is not the point of Life

    The point of becoming FI is to go nuclear on your career. I mean FFS, it’s a serious grunt to become FI, and you don’t go through that sort of hurt to back off on the project at a whim. Despite all sorts of propaganda to the contrary, Work is not the whole point of Life in some fundamental way. It only gets to look that way after  30,40 years because – well, heck, if you get to 50-something and have thirty years of working life behind you like I had, then you’ve been doing this shit for more than half your life. How many of you at school felt that the one thing that was missing in your life was work? Not many, I’ll bet. You work because otherwise you get to suck up to pipsqueaks in the DHSS or go to prison for lamping them as they tell you to jump through a squillion hoops to get your £73 a week. Or you look at all the ads for lovely consumer stuff and figure you want some. The universal income can’t come soon enough, IMO. We don’t have enough work to match the intellectual capacity of most of our graduate output as it is, and it’s time we stopped pretending that picking up a shitload of debt is a way to get work. It isn’t, for many people. It’s a way to pick up a shitload of debt. End of. 11

    The point of putting up with the deprivation of becoming financially independent is to become a gentleman/woman of leisure. If you want to go part-time then for God’s sake give yourself an easier ride. It’s a much smaller ask to become well-off enough to only need to work two days a week, or four months a year if your business works that way. If you are going to go for gold, then once you have FI, don’t take prisoners. You are running out of Life 24 hours every day, don’t throw them away on Work once you have any other choice. The Times’s Luke Johnson kindly cited by Jim to save us the paywall shows the horrific paucity of imagination that can happen after you have spent half a lifetime working. You get Stockholm syndrome with Work, you start to believe it is in and of itself A Good Thing.

    hostages express empathy and sympathy and have positive feelings toward their captors Work, sometimes to the point of defending and identifying with the captors Work.

    Slightly adapted from Wikipedia on Stockholm Syndrome

    Retirement is arguably the biggest lifestyle change you will have made if you stop working after half a lifetime – most people won’t have been married or had children for as big a part of their lifetime as they’ll have been working if they get to their 50s in the traces. And there is some dignity in working and not freeloading off your fellow people, but once you’re done, you’re done. Which is then time to get on with the rest of Life.

    Ah, Life, what’s it all about

    Big questions need big answers. If the meaning of of Life looks like Work, well, you’ve taken 30+ years of your ticket to ride and used ’em badly, chum. As the old saw goes, nobody gets to their deathbed and says ‘I wish I spent more time at the office’. So, quite frankly, Luke Johnson, you, sir, are running away from Life. Whom do you serve, what do you want? The numbers to go up on some spreadsheet? Seriously, that gives you a rush? I can see the gravestone now. Luke Johnson. He Had Two Careers. Big ‘king deal. You ever been to a cemetery, mate? The headstones say devoted father, son, wife, husband. Nary a whisper of what he did at work unless it’s a military grave 12. Nobody remembers you at work two weeks after your leaving do.

    Now I do accept that each of us are different, and some readers will be thinking that their descendants are what it’s all about or something else, well, that’s all good as long as you haven’t spawned axe-murderers or a dynasty of unpleasant dictators.  Others, well, it will be their ideas that will be their legacy. Some people touch others through their ideas and inspiration, or their art. It’s the people whose lives you touch, ideally in a good way, that are your legacy. Whatever it is, great. But if you look in the mirror and Work is the best you can do, then, well, okay, each to their own. But since this is my blog, and I’m sick and tired of the tedious assertion that Work is the point of Life, I call that out for the shortage of imagination it is. Yes, it’s my opinion. I am an old man compared to many of the current PF community, some of you are at the gateway of the having kids phase, a third of the way through your working lives, some at at the very beginning, you are in that long period of Work and Family being what life is all about.

    But what life is about changes with time, and if it doesn’t then you are in trouble, ossification has set in and Stasis is the opposite of Life. There’s time enough to do that when you’re dead. It’s easy to lose sight of the change when it’s slow. What was it all about 30 years ago? For many it will be some of the earlier stages of Erikson’s developmental series. You’re not bothered with that so much now, potty training and walking are prerequisites for a career 😉 But it took up an awful lot of your time and energy at some stage. So why the hell should Work not be one of those stages? Don’t dither in the crossways when the time is come, FFS, let it go. I’m of the opinion that early retirement is to get on with the process of individuation earlier. I was an early retiree, not the 30s-40s extreme early retiree, though I am still over 10 years from normal retirement age. Straight through, school-university-6months dole-work-work-work-postgrad-work-work-retire

    So I have done my time with the harsh mistress called Work, and never took a gap-yah or a sabbatical. I didn’t come from a rich enough background to even think of a gap-yah, and these were unusual in the late 1970s. Millennials may bitch about the load of student fees with some reason, 13 but the very fact that gap years are much more common now shows how much richer Britain has become in the intervening thirty-odd years. I haven’t done things like travel to find myself (hint: you’re looking in the wrong place. Julia Roberts looked great in Eat Pray Love but it’s a movie, a myth, a metaphor, not real Life) or climb Mount Kilimanjaro to show I am hard. I got out of work because I was sick of metrics, and I believe it’s worth putting the time in to become wise enough to know what you value without having to measure it up against an external reference all the time. You live life, you don’t measure it, or Facebook/Instagram it, the movie of the life you live is shot in the first person, it’s not reportage.

    Over those 30-35 years I have learned that work ain’t all that. Don’t get me wrong, it can be fun, you can have a good time, do good and challenging stuff, and have some great memories and make good friends, and whip some small part of the world into shape. But really, Luke, if you find Life without Work empty and meaningless, you need to get out more. And since you were necky enough to intimate that you had the one truth, I’m gonna be necky enough to say you didn’t just fail to locate the bullseye, you’re not even in the same room as the target and you’re looking the wrong way. A second career at 60 is displacement activity. There’s a cycle of stages of life 14 from birth to death, and wanting to prolong the work bit is arrested development. Luke, you’re like those really clever guys who want to freeze their heads after death so they can live for ever, without having jumped to the elementary fact that the only way to live for ever is to avoid dying in the first place. 15

    Fortunately other people have been here before me, Carl Jung, but more accessibly perhaps, Joseph Campbell, he of the hero’s journey and the monomyth. Eat Pray Love, for an example was a narrative, not a recipe, that’s what myth is. Western culture is desperately short of rites of passage across the great transitions of life, but by observation there are at least two big ones of adult life IMO. Childhood is wasted on mastering some basic skills, puberty is a big one, but internally focused, and we don’t even have any rites of passage for that. But there are two big transitions after you have come of age, which mind-wise is usually > 21 from what I can see.

    The first unrecognised turning  is the turning outward (Erikson’s stage 6, Love), when you have established who you are to yourself and immediate peer-group, and begin to refine the face you present to the world. I look at the Guardian Millennials primal scream, and I see two conflated forces. One is some issues have genuinely become harder,  because greater communications have concentrated work and power to the Imperial core of decadent London. We have also become far more antisocial – there are more single households than there used to be, which is a serious problem for housing. The other is the angst of being 25 – the quarter-life crisis and the intimacy vs isolation thing, which is as old as Mankind. Your twenties are when you shift focus on getting control of who you are to you to who you are to everybody else. There is seriously no fun in that at all, there’s no damn roadmap – the milestones for my parents and me are hoplessly out of date in today’s society. For me it was (not in exactly that order) get a job, get a girl, get a house, get kids 16, retire, die. We will all get to die. Not every fella goes for the girls, that’s cool, but most want somebody to love. Not all by a long chalk – a third of us live on our own, and having kids is not the must-have among college-educated women. You aren’t supposed to stereotype because every one of us is a special snowflake, but in the round that first turning outwards is tough.

    In our individualistic Western traditions, of course, we don’t acknowledge this is tough because the Individual is King, we are masters of all we survey, and we have the myth of the endless more. In my mid twenties I could have slapped every jerk who told me “you are young, the the world is your oyster and this is about as good as it gets” So why the hell am I finding life pointless, girls just want to be friends, and I am stuck with endless choice and no damned idea of which way is up and where to allocate the meagre fruit of my labours? Oh yes, and why I am in a crummy bedsit in London and can’t afford to even think of buying a ‘king house? The oysterpeople lied, it does get better, but I’d deserve that slap if I tried to snap some young Millennial out of it with the same words because, well, the process of transformation is not a spectator sport. You must do it to integrate the learning. This turning outwards is tougher on introverts, I mean FFS, it is the turning outwards, the intimacy vs isolation phase. Introverts tend to flunk this, the archetypal geek who has no date for the prom. Engineers seem to be a particularly maladjusted and introverted crew, the Firm had way too many single guys all the way through late middle age 17, despite the fact many girls in the town seemed to be quite happy with the fact that the odds were good but the goods were odd. That’s tech and geeks for you.

    But the guy who easily got the date for the prom and steams through at the top of their game through work tends to flunk the second call 30-40 years later, the turning inward, because he is now playing against type (Erikson’s Stage 8, where he takes the typical retirement age of 65, but early retirees get to do this earlier, assuming they have offed the kids that is). It’s another stage for which the modern world has no rite of passage, for sure we’ve been to enough retirement ceremonies where we see the old boy, and glad-hand him, wish him well, and ignore the dead eyes that see an endless routine of gym trips, shopping and daytime TV. Or, heaven help them, you could be Luke Johnson, and flunk the call to the turning inwards, because hey, success looks like work -spin the old hamster wheel again. Because, as the lovely lady once sang, every place you travel through, still yourself you see.

    Who looks outside, dreams. Who looks inside, awakes

    Carl Jung

    Retirement is a curious reversal of the forces that endless favour the extrovert in the Western world. It can be an awakening, but the likelihood of this is less than 50% by observation. If it isn’t an awakening, it is a stasis or a decline. Luke wants to be a serial entrepreneur because he can’t direct his gaze to the next stage in his life because he clings to old forms, in the way Donald Trump clings to the memory of when he had hair. You can run, Luke. But you can’t hide…every place you travel through, still yourself you see.

    I missed the point of retiring too, but in my favour I did not stand in the way of progress, and it was easier tor me to rattle across the switch of the Turning Inwards without the brakeman seizing the wheels at the horror of running on a single track. For two years I slowly recovered from cutting off parts of my being to be able to face the external world and to become FI. Getting to FI may be easy for London-based finance people to do, but it is a massive ask for ordinary grunts or even relatively lucky mustelids. But even that was not enough, I restored myself to roughly what I was as a worker drone in 2009, after 27 years of work. The recovery was slow, because it was passive, always falling back and falling back waiting for Time. I thought I was done after two years, but I was wrong, because personal growth is not a spectator sport – the journey transforms the traveller who looks how they are changed inside by the landscape they pass through, not the tourist who looks only out the window at the scenery.

    The process is slow, but it is steady if undisturbed. I gained some childish playfulness, I listen up to the sound of the birds singing, I live more in the moment. And gently and faintly I hear a change from minor to major key in the sound of the distant drummer. The change in key is from freedom from to freedom to. Many of the crises in a life long enough have a natural diastole and systole, the first part is passive and undirected, the passage of Time. I had to fall back and fall back and fall back until the unconscious processes of repair achieved enough that the system can take the strain of the active part, the freedom to picks up from the freedom from.

    Like Luke, I too was running away, but unlike Luke, I was not running away from myself, so once there was enough distance from the noise and hum of Work I could hear the still voices that whispered to me what I wanted to do. I called it out okay in About when I started this a few years ago

    I have seen too many days from inside office windows, I want to hear the birds, live more simply and frugally and drink in the days, rather than sleepwalk my way through them

    So, extroverts of the world, you’ve had your glorious time in the sun, you’ve earned more money than I did if you had the same talents as I, and you absolutely stormed it at work, which is why some of you have this problem of what a successful early retirement looks like. And now the tables have turned. My time has come, because in the Turning Inward I am in my element. Let’s hear it from Carl Jung again 18. I want a similar level of wisdom in my eighties, should I be graced to get that far, and I have 30 years to understand myself well enough to get to where he was at his age 😉 Of course I am different, I will see things he missed, and I am sure I will miss things he saw. It is no matter. That is the point of retirement, the freedom to gain understanding and wisdom – and it’s personal. Freedom from the time sink and outward perspective of work is a necessary, but not sufficient condition to retire well.

    […] After all, we try to equip young people with all the education they need for the building up of a successful social existence. This kind of education is valid for about as far as the middle of life—say, thirty-five to forty years. Man nowadays has a chance to live twice as long, and the second half of life has for many people a structure which is thoroughly different from the first half. But this fact remains just as often unconscious. One does not realize that the rising tide of life carries young people forward to a certain summit of safety, fulfilment, or success. In this period one can forget bad experiences; life is still new and fresh, and every day renews its hope that it may bring the desired
    things which one has missed hitherto.

    It is when you approach the ominous region round the fortieth year that you look back upon the past which has accumulated behind you and the silent questions approach you, stealthily or openly: Where am I standing today? Have my dreams come true? Have I fulfilled my expectations of a happy and successful life as I imagined them twenty years ago? Have I been strong, consistent, active, intelligent, reliable, and enduring enough to seize my opportunities or to make the right choice at the crossroads and produce the proper answer to the problem which fate or fortune put before me? And then the final question comes: What is the chance that I shall fail again in fulfilling that which I obviously have been unable to accomplish in the first forty years?

    And then?

    Then, with the beginning of your life’s second part, inexorably a change imposes itself, subtly at first but with ever-increasing weight. Whatever you have acquired hitherto is no longer the same as you regarded it when it still lay before you—it has lost something of its charm, its splendour and its attractiveness. What was once an adventurous effort has become routine. Even flowers wilt, and it is hard to discover something perennial which will endure. Looking back slowly becomes a habit, no matter how much you detest and try to suppress it. Like the wife of Orpheus emerging from the underworld, who could not resist casting the forbidden look behind her, and consequently had to return from whence she came.

    This sort of thing is what you might call the “way of life a revers,” so characteristic of many people and which at the beginning is adopted quite unawares: to continue in one’s accustomed style, if possible more and better—to improve on the past, as if your disposition, which accounts for all your past failures, would be different in the future. But without your being aware of it your energy is no longer attracted to its former objectives in the way it was before: enthusiasm has become routine and zeal a habit. The backwards look will not fail to show you sides and aspects of yourself long forgotten and other ways of life you have missed or avoided before. […]

    Soon unconscious fantasies begin to play with other possibilities, and these can become quite troublesome unless they are made conscious in time. They may be mere regressions into childhood, which prove to be most unhelpful when one is confronted with the difficult task of creating a new goal for an aging life. If one has nothing to look forward to except the habitual things, life cannot renew itself any more. It gets stale, it congeals and petrifies[…]. Yet these insipid fantasies may also contain germs f real new possibilities or of new goals worthy of attainment.

    […]

    One might advise old people to live on with the times, and realize that time would provide them with all necessary novelties. But such easy advice takes it for granted that an old individual is capable of perceiving and agreeing with new things, ways, and means. But this is just the trouble: new goals demand new eyes which see them and a new heart which desires them. In all too many cases life is disappointing and even the most cherished illusions do not last forever. It is all too easy to reach the conclusion: plus fa change, plus fa reste la meme chose. That is a fatal conclusion, however: it blocks the flow of life and causes ever so many troubles of a physical or mental nature. Your pure rationalist, who bases his expectations on statistical verities, is thoroughly perplexed when he has to deal with such cases because he ignores the one important practical fact that life is always an exception, a “statistical random phenomenon.”

    It is so because it is always the life of an individual, who is a distinct, unique, and inimitable being, and not “life in general,” since there is no such thing. Then what do you advise this inimitable being to do once he passes the ominous age of forty?

    An ever-deepening self-knowledge is, I’m afraid, indispensable for the continuation of real life in old age, no matter how unpopular self-knowledge may be. Nothing is more ridiculous or inept than elderly people pretending to be young—they even lose their dignity, the one prerogative of age. Looking outwards has got to be turned into looking into oneself. Discovering yourself provides you with all you are, were meant to be, and all you are living from and for. The whole of yourself is certainly an irrational entity, but this is just precisely yourself, which is meant to live as a unique and unrepeatable experience. Thus, whatever you find in your given disposition is a factor of life which must be taken into careful consideration.

    I can honestly say that I have never missed Work in the last three and a half years. I’ve been at the odd celebration and drinks with ex-colleagues since then, but these were the People, not the Work. Work is massively overrated, and I can say that so far retirement has just got better and better with time 🙂 I am still slowly peeling pack the repressed inner elements that found no expression in 30 years of working , and possibly even before-

    Repression is a process that begins in early childhood under the moral influence of the environment and continues through life.

    [“The Personal and the Collective Unconscious,” Carl Jung, CW 7, par. 202.]

    Now I am perfectly open to the charge that extroverts will view the process of understanding myself better and deepening. the process of individuation,  is a narcissistic endeavour. That’s fine with me, but I don’t have their angst about missing work. Each to their own. Luke’s welcome to his serial entrepreneurship. I become a better listener and sounding board for people, and I gradually improve my general education and openness to different ideas. Overall I’ll try and take becoming a better and deeper human being over starting yet another company, but hey, whatever floats your boat. Gnothi Seauton will do for my gravestone, reads better than He Lived. He Worked. He Died 😉 Indeed, I will go further – many entrepreneurs and pretty much the entire CEO and officer class show the psychopathology of the extrovert writ large. They charge around like big swinging dicks changing this that and the other, they close offices because thy can and put swathes of grunts out of work, they introduce pathological employment practices like zero-hours contracts and all that performance management shit because it gives them a feeling of being alive. We’ve seen this movie before – I don’t normally like punk, but “Keith Joseph smiles and a baby dies on Beasley Street” sums up the same attitude from the 1980s.

    I was unlucky enough to start looking for a job in the next year, Thatcher’s first recession. It was a dirty job, and some of it did need to happen, Scargill’s rent-a-goons did need taking down IMO, but the ensuing scorched earth policy is why there will not be a Northern Powerhouse three decades on – the social fabric wasn’t just razed, the ground was salted too.

    An awful lot of CEO types pump themselves up like peacocks telling themselves they are so great and like the Wolf of Wall Street. The obvious question then, is why is productivity flatlining and exactly why are they looting the shareholders for their own self-aggrandisement. If I spend the next 30 years trying to gain wisdom and it doesn’t amount to a hill of beans, it is probably less damaging to Britain that is some arrogant CEO forgoes the golf course to perpetrate more destruction of shareholder value. Ogilvy Mathers who was Luke’s cause celebre spend 50 years in advertising  getting us to buy crap that we don’t need with money we don’t have to please people we don’t like. Mind you, I have a sneaking suspicion the old boy was with Carl Jung in some ways

    Big ideas come from the unconscious. This is true in art, in science, and in advertising. But your unconscious has to be well informed, or your idea will be irrelevant. Stuff your conscious mind with information, then unhook your rational thought process. You can help this process by going for a long walk, or taking a hot bath, or drinking half a pint of claret. Suddenly, if the telephone line from your unconscious is open, a big idea wells up within you.

    but I don’t think he left the world a better place.

    This is why the  point of becoming FI is to go nuclear on my career

    Jung’s narrative is stated better than I can say, but basically, my career was getting in my way. There are more important things for me to do with my life now, and I don’t have time for Work. At first I believed it was about freedom from, but I have not stayed still across the intervening three years, and gradually accrete some wisdom, and I came to see that I was wrong. Freedom from is necessary, but it is only when retirement becomes freedom to that I can embark on the next stage of the journey.

    Younger folk can’t understand that, because they are not yet at that stage of life. Older ones may not understand it because this is not part of their calling, or perhaps they are refusing to progress -stasis is not an option. I am not saying that everyone is like me, we diverge more and more from each other as we get older, I know many people for whom the meaning of life is the way of the hearthfire and children and grandchildren are what it’s about for them at the early retirement stage of life.

    Others volunteer for positive reasons, not to run away from the still, silent voice within but to lend their energies to making the world a better place. But many regress, they cannot surrender the lamps that illuminated their early and middle adulthood, they search without for what is probably to be found within. Far too many people vegetate, they lack the courage or the awareness to throw the switches of their life and it descends into endless dissipation, daytime TV and travel that is about novelty rather than experience. I have seen this failure in relatives from two generations of my own family, though in fairness to these people when you have worked from 14 to 65 work has been what you have been doing over three-quarters of your life, perhaps the failure to adapt to the change is more understandable.

    What I am saying is undoubtedly wrong for some people, but in general I think Carl Jung had a lot of point. Our society has become dramatically more outward-focused, extroverted and lauds external success more than in the 1960s of that article. But for all that, and the stupendous improvements in the physical fabric and quality of nearly all material goods and services, why do we have such disaffection and widespread issues with mental health? We have symptom-addressing fixes like mindfulness masquerading for inner knowledge and wisdom. Mindfulness is probably necessary, but I would venture it is insufficient for any deep self-awareness, and people turn to it to try and address stress issues – freedom from, not freedom to.

    Even the very rich extreme early retirees of the PF community aren’t so far from having to answer some of these difficult questions and operate the switches of their lives with intent, or stagnating. If you retire ten years earlier in life than I did, in your early forties, then Jung’s turning point will be on you in ten years – there’s a case to be made that modern living has retarded these stages of life compared to earlier generations because we live longer than they did; as a practical illustration people tend to have children in their mid thirties now rather than the mid-twenties of my parents’ generation. I missed my own turning point, it is clear looking back in the rear-view mirror occupying the early to mid forties.  The turning inward is important – because it integrates many of the experiences of the first half of life, to become whole. I have seen that in some, though by no means all, of the elderly people around me when I was a child – even at a young age I could tell that they knew something that has special, and different from other people that age who did whatever the 1960s equivalent of going to the gym and watching daytime TV was. You lose some physical capacity as you age. It is when you catch yourself not gaining wisdom as you age that you know that you are on the wrong track.

    Carl Jung note

    I have borrowed from the ideas of the Swiss psychologist Carl Jung extensively in this post. I find his map of the world useful for my psyche, in particular the psychological types and the archetypes have a resonance for me. However, as this article shows, his ideas are often at variance with modern psychological principles, and some of the concepts make people with certain types of world-view which are very common in the PF community choke on their beer.  You know the pack-drill, it’s the same as for finance- – DYOR, I may have it all wrong, what works for me may not work for you etc,

    On the whole modern psychology has not viewed Jung’s theory of archetypes kindly. Ernest Jones (Freud’s biographer) tells that Jung “descended into a pseudo-philosophy out of which he never emerged” and to many his ideas look more like New Age mystical speculation than a scientific contribution to psychology.

    However, whilst Jung’s research into ancient myths and legends, his interest in astrology and fascination with Eastern religion can be seen in that light it is also worth remembering that the images he was writing about have, as a matter of historical fact, exerted an enduring hold on the human mind.

    The more accessible version is Joseph Campbell’s The Hero with a Thousand Faces which had some influence on a young fellow called George Lucas when he wrote a well-known mythical tale in the 1970s. It is possible that Jung’s map is not general but has a resonance for people of my mindset and that of a fair number of people I know. Since I am not a clinician there to sort out the problems of the world in general I am happy to run with a map that may only cover my part of the territory if helps me understand or at least orient myself. The process of individuation is not a spectator sport. You have to live it to do it.

     

    Notes:

    1. I can’t spell Jim’s blog out because otherwise at least one of my readers gets banned from here at work for a while
    2. M Scott Peck, in the Road Not Travelled, sums up that often progression in life comes from loss. I had become brittle because I had thrown out elements of my psyche that I had rejected or couldn’t square with the requirements of the outer world. This is bad for the soul – rejecting capacities often pushes them into the unconscious, where they start to destroy and cause hurt.
    3. The Internet Retirement Police will probably say that I am not really retired, since I earned over the £3600 pa you can stick in a pension as a true unemployed beach bum. The IRP can go stick it. I am probably the purest example of someone who genuinely doesn’t want to be working, but if I see people in the shit that I care about and I can fix it I will. There really is nothing about working that I miss!
    4. The original reference is here, but Jung’s CW is dense and impenetrable. We should also remember that Jung’s patients came from the upper middle-class of his time (turn of the century to 1940s), and the women were typically SAHMs  – some of the sexism in the description is probably from the sample bias. There appears to be less inherent difference in the capabilities of male and female humans than was assumed at the time. This bias affects more the description of the inferior functions than the concept of introversion and extroversion itself.
    5. I choose engineers because I was one. There are no doubt other occupations that had a use for introverts but I can’t think of any at the moment
    6. https://www.psychologytoday.com/blog/evil-deeds/201205/essential-secrets-psychotherapy-jungs-typology-eudaemonology-and-the-elusive
    7. this prejudice is not new, although it is being amplified by a culture that increasingly focuses on the outside form, sometimes at the expense of function. The young Ermine in a South London primary school was about to take the eleven plus sorry, “independently set test” for grammar school, and there was a report from my primary school, which was generally favourable but included the term “is a lone wolf”. My mother begged the headmaster to take that out, which he did, because she understood how that sort of thing puts a red dot on your back.
    8. Every company I have seen wants ‘good team players’. I have never been a good team player, but I think I delivered value, albeit in a less connected world
    9. everybody believes introverts are shy. As children yes, but if they make a successful transition across the first turning outwards in the mid-20s they are quiet, but not necessarily shy. I have led teams, and I can speak in public in front of hundreds of people
    10. the central limit theorem states that the arithmetic mean of independent random variables will be approximately normally distributed.  I aimed this knowledge at this dude’s head, to acknowledge that this used to be a premier industrial research facility, and he and I had been in it long enough and we both had scientific degrees, and that we both understood that one can estimate the expected variation on the mean value of a normally distributed quantity. And guess what, the mean ain’t always going to be the same, and if it is the game is up! HR fixers usually apply this mean each quarter because it’s easier to do it that way, faking a quarter on quarter variation is possible but time-consuming. I had the advantage of having seen the spreadsheet some berk in HR had failed to remove before sending out an all-personnel email broadcast, and I knew what the quotas were.
    11. Yes, it is effectively a graduate tax as well/instead, but you only get to really believe that when you are 50 and the option lapses so the dead hand is lifted. For most of your working like you think of it as a mahoosive loan
    12. in which case his work is usually what he died of, so it’s relevant
    13. though they should note only 11% of school leavers went to university when I graduated – the taxpayer could probably do grants provided four out of every five putative Millennial students were rejected by their university for grades not up to scratch to control numbers and impose a defacto numerus clausus.  Rationing the limited resource by academic ability is considered elitist these days, so we ration by financial backing instead. I am not clever enough to understand why having enough money is not elitist whereas having enough brains is
    14. While I wrote the narrative in Jung’s terminology, Erik Erikson comes at it from a Freudian tradition, and there is much commonality in the stages to my untrained reading
    15. There is no bootstrap BIOS in the human brain to restore state, even if the hardware survives the freezing process. And where the bloody hell is the hard disk preserving a static copy of the OS? It beats me that people like Ray Kurzweil who is about 1000 times cleverer than I am miss this inconvenient fact that a loss of dynamic living state is a pretty total loss of information and no backup. You’re better off believing in God or the Flying Spaghetti Monster than snappily freezing a cranium that has already lost the state called Life which is the bit you are trying to catch, FFS. At least God and the FSM are inherently unprovable and could be true, rather than missing the point by conflating physical form with function.
    16. I passed on this one, it wasn’t for me
    17. I am talking 20, 30 years ago, it is a much more balanced though average crew now they shut the laboratories down
    18. Unfortunately I haven’t got a primary reference for this, I hacked it from the Net years ago. Suffolk Libraries doesn’t subscribe to the Sunday Times digital archive. I believe it was an article in the Sunday Times on the 17 July 1960 by Gordon Young, possibly titled the Art of Life and Carl Jung (who was 84 at the time)

    It’s easy to feel poor in decadent London

    I took a short visit to a foreign country last night. No passport needed; that country was the city-state once known as London. It was time for a piece of gratuitous decadence, an Ermine trip to visit the heart of the Imperium, to go see Philip Glass’s Akenhaten at the Coliseum. I fear the Ermine lacks culture, so I enjoyed this as music and performance art, with no idea of the plot 😉 Mrs Ermine however is of more refined tastes, and actually understands WTF is going on, but so be it, it was still a fine experience for my unsophisticated fur. I’ve seen a Mozart opera there once before when I used to live in London and recalled the venue as being microscopic, and it still is. I was used to listening to music in places like the RAH and the RFH. I don’t do theatre because I lack the education/refinement to avoid getting bored or losing the ability to suspend disbelief – I never understood why people bother with theatre after movies and television were invented, so I wasn’t familiar with the bijouness of the venues, presumably the limits of human visual acuity constrict size so the punters get to see what’s going on on the stage.

    The Coliseum is of course deep in the heart of this foreign country, and we penetrated the defences of the city from the provincial backwaters. I have gotten sick of having to barge out before the final curtain to catch the last train to Ipswich that usually leaves London  at 11:30 pm, so we drove to Colchester, as you get another hour to sort yourself out by the time the very last train leaves at a quarter to one.

    Centrepoint. Still there, still not a thing of great beuty

    Centrepoint. Still there, still not a thing of great beauty. ” Some things just need time to be loved” errr – no Kathrin Hersel, I think when it comes to revamping Centrepoint the expression you’re looking for is “putting lipstick on a pig”. 1960s concrete prefab. ‘Nuff said

     

    I grew up and went to university in London, and the basic street plan of the inner city hasn’t changed much, but they are always building stuff. We took the Tube to Tottenham Court Road to walk down, and at first when we got out of the station I thought they had demolished Centrepoint, but it was something else nearby that they’ve turned into a two-storey high lump of rubble. Damned if I can remember what it was.

    We couldn’t really stick more strap-hanging than absolutely necessary in the commuter underground crowds – this is something that has got a hell of a lot worse than when I commuted to near Broadcasting house – and this was the shortly after 5 rush hour and travelling into the city rather than out of it.

    Seven Dials some 10 years ago

    Seven Dials some 10 years ago

    We drifted down towards Monmouth Street and then via Seven Dials where I used to like browsing the bookshops and oddball shops. The place has been transformed, it seems, in the last few years – it absolutely stinks of money, everything has been turned into a bewildering array of restaurants catering to every niche taste, in minimalist glitzy bright lights and whatnot. I even got to see people queuing to get into a restaurant, since when has that been a thing? We had time to kill to wandered towards Leicester square and had a couple of drinks in the Bear and Staff, which bent a twenty pound note well out of shape. Having said that, at least they kept the beer decently, some of those pricey pubs used to serve a pretty ropey pint because they knew they could get away with it. And of course the people looked beautiful and young, even in the pub. Then it was time to wander back to the Coliseum and hoof it up miles of stairs it seemed, way up into the Gods.

    After the show we got to see that rough sleeping in London has got up to Thatcher’s first recession standards. The whole thing was a bizarre counterpoint of the eye-watering reek of incredible amounts of money and the fact that you can’t move or do anything in London without spending shitloads of money. Which is fine for tourists, domestic and foreign, because they aren’t doing it all the time. But London seems to be such a great sucking force, a workhouse for the young as the Telegraph put it. But it also sucks money out of them, in housing, in living, you can’t even go for a dump in the city 1 without being shaken down for the privilege, I have no idea how you live in the city without becoming inured to paying far too much for all sorts of things, because raw and garish consumerism is all out there and right in your face. Do people even have kitchens in London these days, you can probably make the business case that the rent you’d pay on the space will get you a year’s worth of nouvelle cuisine, or at least more fried chicken than is good for you?

    It’s a different place, this post financial crash London – and it made me feel poor. Not poor as in dossing down in a doorway – while I have slept in the open in London I did it in some 1980s summer, not in early March. But I looked at all the money changing hands and the overpriced this, that and the other, the shocking price you get charged for a cup of coffee 2, and it was impossible to get away from the fact that this is a place that makes you feel poor if you don’t have at least a million pounds in investible assets. And I don’t.

    And yet I saw the dark underbelly of this beating heart of the Imperial centre as the trains started to draw out towards the provinces, because there is a strange onion-ring effect. Once you are past the recently-gentrified Stratford 3 you see row upon row of shabby High Streets with rows of dirty chicken shops, fast food joints, betting shops and places that advertise they take Western Union. I’m sure they sent a search party out for a legit way to use Western Union sometime in the late 1980s but they never returned. They may as well call the place a laundromat for money with the strapline ‘ask no questions, tell no lies’. We take Western Union is just not the sign of a good part of the ‘hood.

    Now I grew up in south east London, which was the arse end of the universe back in the day because the tube didn’t go there. It’s still the wrong side of the tracks, but in a different way now, I know a couple where he works somewhere in Canary Wharf though they live sarf of the river. I don’t know where the horny-handed sons of toil live – or do Londoners just throw stuff out when it stops working – looking at some of the trash at the end of the day it seems perhaps. One day there will be a company trucking this shit out to the provinces where children will heat up the circuit boards over coal fires to recycle the parts in some part of Britain-that isn’t-London and they will make a mint. Or scavenging gangs coming in on the last in train and leaving on the six am out trains with their rubbish booty. On the other hand it’s good to see that the London Evening Standard is all for the idea of a basic universal income, there’s hope yet.

    London Stone to City of London Corporation - I was here before you, and will outlast you. I am Ozymandias to your hubristic soul

    London Stone to City of London Corporation – I am the Omphalos of London. I was here before you, and I will be here when you are long gone. I am Ozymandias to your hubristic soul

    And there’s even more hope from the paper – perhaps the pimps, oligarchs and spivs will be ejected from the city when the original Omphalos of London is to be restored to its rightful place. Be careful what you wish for, vainglorious City of London Corporation, because London Stone was there before you.

    So long as the Stone of Brutus is safe, so long will London flourish

    Inscription, apparently – I’ve heard of the legend though never seen it written 4.

    This new city state has gone rogue, it’s a really weird place, and somebody in London town has got to be eating a serious amount of generic fried chicken to support all those dirty chicken shops. As the train cleared the city limits I felt less impoverished 😉 After all, unlike all those strap-hangers and the beautiful people in the pub, I didn’t have to get up to go to work today. It’s not a million pounds, but it’s worth something, and that something is called Time…

    Oh and I was chuffed that people listened/watched the performance entirely with their own eyes, rather than through the screen of a smartphone. Didn’t realise that sort of thing still happened. I didn’t actually see people being shaken down for ambulatory telephonic apparatus, and it’s not like the bulbous thingy at the top of the Coliseum houses an EMP device to fry the works of every smartphone within 100 yards of the building. One day these things will be available, hopefully, but refreshingly no need this time.

    There is, of course, the irony of going to the gratuitous decadence of an an opera making the financially independent feel impoverished, but London has become a really, really, strange place since the financial crash. It’s as if the crash never happened, indeed, it feels as if the financial crash was good for London is some bizarre way, though I am sure it sucked for people who worked for Lehman’s and the like. As to whether what’s good for London is good for Londoners, well, that’s a totally different question. The way the Grauniad has been talking about Millennials who nearly all work in London 5 they are hosed, though I observe even now Millennials are earning more in real and relative terms than when I was the equivalent age working in London in 1986. Which has something to do with why I got the hell out. That’s not to say that there hasn’t been a hellacious suckout compared to recent times, it looks like you were truly  charmed if you reached 30 in 2007. And, surprisingly, SOL if you are 45 to 49 – you’d have been relatively better being 30 years older, monetarily, though you can take cheer that you are still better off in real terms. But as the London experience shows, being rich isn’t about how much you have, after a certain point is reached which Britain reached long ago. It’s about how much you have relative to other people, and that’s a bear. Because while many of us live like kings of old in absolute terms, doing the ‘I’m king of the castle and better off than everyone else’ is still as hard as it always was.

    Notes:

    1. on further research, this is apparently not the case – more free bogs
    2. I resisted. I can live with being overcharged for beer, but not coffee, particularly when the coffee has as many calories as beer
    3. I knew someone who lived in Stratford in the late ’80s. Their parents flat out refused to let us go to the pub round the corner on the principle it was that rough they may as well call the cops when we stepped out the door in the dark
    4. This PDF from the Museum of London has more
    5. Earth to Guardian – while your interns may think the M25 is the edge of the world there is a fair amount of territory beyond

    the great sucking sound of retail investors heading for the hills

    We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.
    Some well-known investing chap you may have heard of
    The big problem, of course, is that it’s hard to do. We all have to do the old run for the hills thing some time, and I’ve BTDT – more than ten years ago. The mistake is doing it a second time. Either get out and stay out, or if you do get in again then listen to what Mr Market is telling you about yourself. There’s nothing wrong with paying for learning, well, as long as it doesn’t wipe you out for a decade like houses can, but that’s a different story. Shares are safer and more dangerous at the same time. The trouble with houses is you borrow money to buy them, which means you make out like bandits when things go up, which is most of the time. Get that wrong and you get shellacked big time. But shares, well, you shouldn’t be borrowing money to buy shares. 1
    The trouble with the stock market and the retail investor like you and I, is that we get massively interested in the stock market when there’s recent proof that people have made loads of money from shares. So we buy. Then, when things go pear-shaped, we head for the hills, and exactly that has been happening. To the tune of 450million sods, indeed. Some of us sell, then go rinse, repeat.
    Laith Kalaf of Hargeaves Lansdown put it well
    “There is no shortage of bad news now, but, if you invest when everything is smelling of roses, the chances are you are paying a premium for the comfort of doing so,”
    Quite. I’ve been grizzling about too much smelling of roses, so I spent a fair amount of last year buying gold. Unlike some of HL’s investors I didn’t sell shares to buy gold, I simply couldn’t think of much of fair value, after dabbling in some EMs. This year has been more interesting, with a hit on the FTSE100 and a hit in my second ISA (which is more suited to funds) on a Global ex-UK fund approved of by The Accumulator no less, though I found it independently when looking to repeat what I used to do in my pension AVC fund – invest in a 50:50 Global:FTSE100 fund. I can’t buy that in an ISA, so a mix of VUKE and the L&G International ExUK will have to do. The original plan was to track these, buying 1k of one in one ISA and 1k in the other, but I will probably focus on the L&G fund, because I have more money as cash in that account – a straight transfer of a Cash ISA I had from 2009 as part of an emergency fund I need much less of now, as I will start getting a pension income as of next tax year.
    The L&G fund

    The L&G fund

    The heft at the end of this chart is not so much that the stock market has decided to go gangbusters. No. That, dear fellow UK reader, is the great sucking sound of the pound falling relative to everything else. It makes sense to shovel as much money out of the country or into hard assets as possible, and preferably by last month. It was some of the rationale behind the gold buying last year, but now that Mr Market has taken a bit of a swoon, productive foreign assets are also of interest. The UK stock market is looking less bad than it should do at the moment because though denominated in pounds it also contains a fair amount of foreign assets, though all that mining and oil is probably still tracking down in price measured against foreign dev world currencies.

    Braver souls than I trade forex. The trouble with that is it’s still holding cash, it’s sort of like holding gold, and the trouble with owning an asset like that that is not only do you have transaction and holding costs, but when the hell do you decide to sell and buy rotten-looking assets? It’s the old retail investor dilemma again, you have to make yourself do it.

    So I take heart with that sucking sound of retail investors beating it. It means it’s time to keep on buying and ramp up 🙂

    Now I happen to be in trouble now on that front, because there’s another investment opportunity for me, which is a cash investment, into the SIPP holding my AVCs. I will toss my entire earnings for this year into that, to maximise my tax-free PCLS (if we still have one after the Budget). Ideally after March 16th’s budget, because I am hoping for a flat-rate 25% tax bung replacing the existing 20%. I will therefore flatten myself into this, because I have coasted for three and a half years on savings and these are almost all out. I don’t want to spring cash from my ISA because now is the time to invest, and I don’t want to liquidate my NS&I ILSCs because you can’t reload them and no other cash-like savings beats inflation these days without fiddling about with a zillion accounts, which I can’t be bothered to do.

    So I will borrow money on credit cards at 2% p.a. to invest in bigging up my PCLS. Because I can eat paying 2% if there’s a 20% tax-free bung in it. Although I am looking forward to getting a hold of my pension savings in the new tax year, because I don’t like carrying debt. So I will be adding to the statistics of Britain as a nation of spendthrifts going bananas on their credit cards.


    source: tradingeconomics.com

    However, unlike my fellow-countrymen who are spending this on consumer goods and holidays in the sun, I will be buying cold, hard, cash with this – not at the usual rate of -2% but at +18%. I think Mr Micawber would let me off. As for the others rushing for the exits – if you can’t buy in, at least sit on your hands FFS, guys!

    Notes:

    1. I am actually considering doing exactly that, so this is definitely a do as I say not do as I do, but I have some good reason. Don’t they all say that, eh?

    wither pension tax relief and lump sum again?

    OLYMPUS DIGITAL CAMERA

    The flowers are coming out, there is the sound of the robin and the dunnock singing, Spring is in the air, and along with the snowdrops and early daffodils there are some stories in the press that come round every March/April time. Oyez oyez, it’s the last chance for you lucky higher rate taxpayers to get pensions tax relief. And as for you lot expecting to pay off your BTL mortgages with the pension commencement lump sums, well, better do it now while you can 1. ‘Twas ever thus

    1602_DSCN2798

    Going, going, gone…It’s the oldest trick in the book

    Sale – Must end Now – punters are suckers for a bit of FOMO, and pension providers always like to hit us with a quick giddy-up at this time of year. It’s always the same old story, sometimes it’s the PCLS that’s due for the chop, sometimes the tax relief. That’s not to say that adverse changes don’t happen with pensions, but they tend to come from left field – the reductions in the annual allowance ,and the introduction of the Lifetime Allowance are two, although these only hit the well-heeled. Presumably these well heeled got to be well-heeled because they had the odd brain cell to rub together; if they can’t be bothered to work it out for themselves Merryn Somerset-Webb of the FT is there to sock it to you straight between the eyes.

    The result is still up for grabs but one thing at least is clear: the game is up for higher earners. Whatever the new system is, it will further cut the reliefs given to them.

    Well, yeah, but it’s going to be more of a whimper than a bang, at a guess – they will be sliced and diced.

    The PCLS was introduced in 1988 I think, when the concept of a personal pension came into being, and every year since then the same stores have been trotted out by the pensions industry trying to stampede the rich into getting their money into a pension, like NOW. The poor, of course, well, they don’t save for retirement anyway.

    Despite having told HL for the last three years that I am an Ermine of very modest means, less than £3600 p.a. indeed, which is all I can save for a pension, they clearly think I am still one of the movers and shakers with a six-figure salary. As such I got my very own copy of this missive. No wonder HL is so damned dear for holding investments, as opposed to cash, if they have to mail so much cruft out to us all. I have nothing against them, well, apart from them demanding I pay £500 to be advised that transferring my AVC funds was a good idea, something I had worked out quite nicely for myself thanks. I observe they have got themselves into this advice game themselves, nowadays, clearly jobs for the boys is a revenue stream too good to miss.

    I am just a poor boy 2 though my story’s seldom told

    There’s a corollary here, which in fairness HL did list in a throwaway paragraph

    1602_DSCN2799

    Quite. Your impecunious scrivener, having failed to avoid earning about £5k can put this into his SIPP for the initial outlay of £4000. I’ve never really understood the status of the remaining £1k, obviously if I had been earning £20k then it would have disappeared into the taxman’s maw, but instead remains to be spent on beer and fast cars, or beaten down stocks. Anyway, the taxman adds the £1k back into the SIPP despite not taking it off me. The speculation on changes seems to vary between divvying up the HRT break into nothing extra for anyone, 25% tax relief for all, 33% tax relief for all, and zero tax-relief for all but the chance to have any gains tax-free in an ISA-like savings vehicle, but presumably one you can’t access before you are grizzled of years. I struggle to see the attraction here. Most people don’t save £15k a year into their pensions, so they may as well fill their ISAs first. The average DC pension capital on retirement is about £100k , elementary arithmetic indicates this is not saving £15k p.a. for 30 years. You read about all the options here. I am not sure that the savers of Britain are ready for a second major overhaul in the retirement savings structure and ethos in as many years without becoming suspicious refuseniks, but there we go.

    Should this go the 25% relief I guess I can hope for £1250, so there’s a potential £250 in it for sitting on my backside for a few weeks. Because I am entirely a cash saver in a SIPP, I always leave it to the last minute to contribute, because there’s no point in locking money away before I need to (to get the win of the tax break). Obviously the big money for HL is with the well heeled, but there are crumbs in it for the little sparrows in doing exactly the opposite of what is advocated in that HL exhortation. Indeed, for someone who is post 54 and intending to retire next year, the difference is respectable if they are earning, say £32,000 and toss the lot in. They could get £6400 at the moment going up to £8000 if the 25% tax relief happened. Of course it may not, or it may be deferred, but a potential £1600 would be worth waiting three weeks for. Obviously if you are one of the six-figure vHRT fellows then throw caution to the wind as HL advocate!

    Lifetime Allowance, Marginal Tax Relief, Annual allowance – one, not three

    I benefited well from higher rate tax relief, but even then my higher rate tax paying years were perhaps a third of my working life. Careers tend to be more contrasty now, they peak earlier, but people also burn out earlier. I’ve already put my colours on the mast for the lifetime allowance, which most accurately defines the ambition of tax-privileged pension savings to my eyes. All this fiddling with marginal tax relief and annual allowances sucks IMO – you should be able to get to the LTA in a couple of furious years in finance or 30 years of steady Eddie saving. It’s about the destination, not the journey.

    All the annual and lifetime restrictions combine to make tax-privileged pension saving more suited to your grandfather’s career arc than today’s sort where even the better off are likely to experience feast and famine, or burn out prematurely. Even I would have rubbed up against the annual allowance at the end of my career, and I got nowhere near the LTA.

    Erstwhile pensions minister Steve Webb scares the horses on the PCLS

    Meanwhile, Steve Webb says the pension commencement lump sum is due for the chop. Well, sort of – if the principle of tax-free pension saving on accumulation is iced, then yes. But those of you sitting on a potential PCLS, including me, this doesn’t mean you have to hook it out by the 16th March. Adverse pension changes are usually trailed at least a year ahead – such as the reduction in the LTA which was announced last year. Positive pension changes sometimes have immediate effect – the announcement of the pension freedoms was announced in March, giving me just enough time to open a SIPP in the old tax year.

    Pensions are still giving me a hard time to qualify the opportunities

    Say I take my PCLS this April, and start to run out the pension below the personal allowance. Let’s ignore that fact I am earning chickenfeed at the moment, say that is £0. I am still allowed to save £2880 a year and the tax man stumps up another £720. By rights 25% of that should be available as a PCLS – after all, say I opened another HL SIPP which had just that £3600 in it, there would be no quibble. I don’t know if HL are smart enough to be able to track that sort of thing.It isn’t as good as the deal used to be for me, because 3/4 of the tax credited is taken back again, so the gain is reduced from £720 to £180, but it’s still free money

    In theory, therefore, even I earned £10k all of which would be taxable at 20% because I am drawing pension income up to the personal allowance there would be a win to pass this through the SIPP. Because of the PCLS I could reduce my basic rate tax liability by a quarter. Paying tax at 20% × 0.75=15% seems like a step in the right direction, saving me £500 in that case. Of course changing to a post-tax savings regime would rain on my parade. Pretty much everything about pensions is hard, counterintuitive and full of wrinkles, that’s the nature of the beast.

    Notes:

    1. what with some of the changes to BTL tax relief on leverage there is more sense to that, but for different reasons
    2. Irony,dear reader, irony… ‘ere I take heat for being a PT b’stard.

    An insight into the consumer heart of darkness of watches

    The peacock has his tail, and it seems humans have jewellery. In general the march of technology has made many things cheaper and sometimes better, though often not more durable. However, it seems the humble wristwatch is not one of these things, here we have a dude inquiring about finding good value in a watch for £8000. Don’t get me wrong – there are some sorts for whom maybe £8000 is about value. Say you are the crew of Apollo 13, you are SOL when the tank explodes in space, you are on 20% of electrical power, and you need a 5 minute burn to speed you on your way round the moon before your ticket to ride expires with the air. You have two chances to get this right. And the knob of the Command Module Interval Timer comes off in your hand. Then you might be grateful that someone spent a shitload of money on a watch that could survive takeoff. £8000 well spent, you get to see you wife and kids again. Early twenties, working for a REIT, looking to be individual in the stuff that you buy rather than the person you are, well, not so much.

    I was recently on a retreat where they aren’t keen on mobile phones. I’m with them there, I don’t tote a mobile most of the time, although often I have one with me when I am out, even if it is mainly switched off. I discovered it’s far too easy to switch it on in a pocket just by bending down, pressing the button on the side that starts it all up. I get to be that tosser with the mobile, and I don’t like it, even if it is just the Galaxy startup sound on low.

    A mobile is an okay way of telling the time, though I am still shocked that mobiles don’t update the clock from the mobile network, or failing that use NTP. But I have discovered that I want to go back to an old way of knowing the time, which used to be known as a watch. I have two, both from 30 years ago. One was my own, an automatic mechanical watch, because 1986 was still just in the time when it was cheaper to buy an analogue watch 1 as a mechanical one than a quartz watch and just about the time when mechanical cheap watches became serviceably accurate – the ones of my schooldays would gain or lose five minutes a day. The Seiko was good enough for that much a week ISTR.

    I could use this if I could wind it manually, but I'd have to wear it for half a day before it would run reliably

    I could use this if I could wind it manually, but I’d have to wear it for half a day before it would run reliably

    I would use the Seiko but I don’t want to wear a watch all the time. So it would run down and stop, and generally be a pain, because for some reason I can’t wind it manually, so I’d have to shake it about and hope the mainspring has enough energy to run, that’s too much trouble for occasional use. Plus it’s the 21st century, FFS. William Gibson was right. There is no point to a mechanical watch, which is exactly why they sell for shitloads of money. Because humans are funny like that. The other one has some sentimental value because it was given to my Dad on his retirement.

    1602_LDSCN2792

    This works – but the trouble is it eats batteries, they last less than a year. I took it to be changed a couple of times but after that I’ve had enough.

    What I basically want of a watch is battery powered – I can’t be fussed with winding them, and the mighty quartz crystal pretty much solved the drifting out problem, you can check a quartz watch monthly and never be more than a couple of minutes off. Analogue, because I can easily compute 20 minutes from now in a third of the sweep. I confess as a retiree it is sometimes nice to know what day it is as well as the date. I had a browse of Amazon, and after a couple of minutes I lost the desire to look any more, because the paradox of choice was doing my head in. I did since discover one should change watch batteries yearly or maybe every other year. This is to forestall the blighters spewing out sludge, the idea seems to be change the batteries before they run flat. I didn’t know that, though it applies to other sorts of batteries I guess.

    There are two other techniques, that replace the battery with a supercap. Either charged by movement energy like the automatic mechanical watches of old or by solar. The latter sounds like it could eliminate the not wearing it all the time and the battery leakage problem. So if my investment in a little bit of IPA and a new battery fails, that seems to be the way to go. Shame that people still putz about with a mechanical ring for the date, which is fundamentally a digital display. It wouldn’t be too hard to use a LCD display for the day and date, which would save mucking around with the date on months shorter than 31.

    a bit too industrial IMO. I am also disturbed by the concept of Sunday the 36th...

    a bit too industrial IMO. I am also disturbed by the concept of Sunday the 36th…

    Casio do these, but I can’t really cope with the idea of a plastic resin case. I don’t really care how ugly a mobile phone is, but a resin watch will offend me regularly with its gauche machismo. I am too old to join the military. I appreciate this is a matter of taste, but it isn’t mine. And I really don’t want a watch that even thinks of making a noise. Five alarms is five too many. It seems nobody simply takes all the mechanical gubbins of showing the day and date and swaps it for a LCD of the same size. Perhaps they can’t make LCD displays small enough and sharp enough, though with watches there seems to be some kudos in doing bizarre things mechanically that really should either not be done at all, or done electronically.

    The paradox of choice makes me think better

    A retiree should be insanely curious about the world. One is simply to sharpen the saw, the other is because he has the luxury of time, to really get into something because it is there. One of the incidental values of being curious is that it leans against the learned helplessness of living in an unrepairable consumer world. And so I thought ‘Self, for thirty odd years an electronics engineer, what is the obvious most likely cause of a watch working, but running batteries down excessively? Well, it is what battery operated devices left in a drawer for years have always suffered from – a battery leaks and leaves gunk behind, which adds a slight load. You don’t notice that with a radio or a power drill, but a 373 battery is tiny, so the added load is much bigger in proportion to the capacity of a watch battery 2. I confess I’d never really thought about a watch battery leaking, I have never seen a leaking button cell. I just didn’t think it happened.

    So I popped the back off this and observed that there was indeed gunk from a previous battery. Not only that, but neither the place in LA who had swapped the first battery in 1993 nor the well-known high-street jeweller’s in Ipswich  had seen fit to inform me of this (the battery I extracted was clean, so not at fault).

    leakage from an old battery

    leakage from an old battery and corroded terminal, easily visible to me, though I had to really push the contrast in the photo.

    A tissue and some isopropyl alcohol were my friend, so writing this post saved me the price of a new watch, by galvanising me to get off my backside and remain challenged and keep learning. It isn’t that I am short of the money for a replacement watch, and indeed if I miss having the day display then I will buy one. But  all H Samuel had to say is “we will change the battery for you for £5, but there is evidence of leakage and we recommend a clean of the compartment if you find battery life is reduced, that would be £25”. This took me less than five minutes 3 it would have been an easy £20 profit guys! Even if they didn’t want the profit warming me up to the issue wouldn’t have left me pissed off thinking they sold me an old battery when it expired in less than a year.

    A visit to the bizarre form over function world of Consumerism with a capital C

    When I was at school, the office used mechanical adding machines, because electronic calculators only started to appear in the mid 1970s. When the hell was the last time you saw a mechanical adding machine or a slide rule in an office? There is absolutely no reason for the mechanical watch to exist, perhaps save in the West Virginia Radio Quiet Zone or the like. The sheer exuberant impracticality of the mechanical watch and bizarre fetishes like the tourbillon have become mobile jewellery in themselves – Blancpain tells us

    The tourbillon compensates for running errors due to gravity by mounting the balance wheel in a rotating cage. Equipped with a tourbillon, your watch runs with greater accuracy.

    Well, yeah, but not half as much as throwing the bugger out and swapping it for a quartz crystal would.

    Call a tourbillon a complication? THIS is a complication. By I, Mogi, CC BY 2.5, https://commons.wikimedia.org/w/index.php?curid=2523740

    Call a tourbillon a complication? THIS is a complication. By I, Mogi, CC BY 2.5

    Okay, so you lose out on the pretty rotating device, but the accuracy wins out. I don’t know why they don’t get rid of the dial altogether then and have a living, breathing mass of rotating and shifting whatnots in a crystal round case. An orrery or an astrolabe, maybe an Antikythera mechanism would suit Sir to a T, and our young REIT worker could use his iPhone to tell the time while dazzling his boss and clients with his metropolitan sophistication and one-of-a-kind-ness

    Meanwhile, the Chinese can send me a working analogue quartz watch from Shenzen for less than three quid, delivered. That’s only twice the price of my replacement battery, although the aesthetics suck slightly (but not as much as the Casio IMO). Ain’t consumer capitalism amazing…

    Notes:

    1. digital display watches were cheaper
    2. leakage is a much bigger issue than I’d expected. After I got the replacement and pressed it into place with my fingers, I noticed the bit on the invoice where it said “please refrain from pre-testing watch and coin cell batteries, and only use plastic tools (no fingers!) to insert battery wherever possible to avoid premature failure of battery cells” Oops. Oh well, I will know next time, eh ;)
    3. this is apparently not the correct way to clean this off, but it will do for me

    Markets are squiffy again. Pound is also slip-sliding away in the background

    After a bit of cheer I was starting to wonder if the buying opportunity last month was a flash in the pan, but no, general squiffiness means an Ermine sticks a paw into the back pocket and buys another lump of VUKE in the ISA. I aim to do that once a month, to average into the unknown future shape of this bear market. I like to do it on days when the headlines are saying things like Shares dive as fears mount for health of global banking although this morning also looks good with Stock market rout intensifies amid fears central banks are ‘out of ammunition’. In moods of general jitteriness I’m not aiming to be smart, but I am aiming to be out there, buying something. There’s just so much out getting better value, and the £1k a month limit acts as a brake to spread myself out in a measured fashion rather than do the kid in a sweet shop grab all in one go scenario.

    Investment Trust discounts seem to be showing up too. I don’t buy ITs at a premium, and the premium/discount mechanism seems to amplify market sentiment, free money on offer when others are fearful. Last month I pitched for some CTY.L that I was sore about missing out on in 2009 after I read this on should you swap your shares for an IT on a discount. At the time I didn’t have any shares but the sound of the discount was nice, so I bought MRCH, then focused on building up a cash ISA firewall against getting canned and shoved money with both hands into AVCs, using a Global:FTSE100 50:50 fund which was one of the three choices available.

    Now that AVC move was good, because the Global part hedged me well against a 25% fall in the pound that also occurred, so it impressed upon me that one of the side functions of shareholdings is to hedge against governments torching the value of the currency, by say printing shitloads of it… That is the trouble with money, it is a relative scale, and it moves around all the time

    Going down - value of the pound in US dollars

    Going down – value of the pound in US dollars

    So although I am not particularly discriminating in terms of buying at the moment, if I had access to that L&G fund I’d probably use that

    1602_lg-ukx

    which performed thusly relative to the FTSE100. Sadly iii doesn’t go back far enough to show the deep joy that buying this from before March 2009 onwards was, I liquidated in March 2012 and stayed in cash, so obviously I kissed goodbye to another 30% lift in this AVC fund. However, I believed at the time that I would have to call on this very soon after leaving work. As it was this wasn’t true, but I will call on that money this year. You shouldn’t have money in the stock market you will need to use in the next five years, I’m easy with walking away from the 30% uplift. It’s not like I didn’t get any uplift in my ISA between 2012 and now, one should always leave a little behind in the markets for the other guy, otherwise you get greedy 😉

    I don’t think I can buy that fund outside a pension, perhaps even outside the Firm’s AVC scheme which I am out of now. There is a L&G fund BKF0  (ISIN GB00B2Q6HW61) which sort of does the International ex-UK half of that, and this will go up roughly by the fall of the pound, times of course the performance of the underlying assets. 57% North America equities, oy vey, I haven’t wanted to buy into the overpriced US market for the last few years, although I did in a Dev World ex-UK fund I held unwrapped. And very nicely that overheated market did for me. I can’t sell that unwrapped fund because I am up against the CGT limit for this year, but in April, assuming it’s still worth ‘owt I may do that, shove the wedge into my new Charles Stanley ISA and buy some of this L&G international, to get out of the pound and lean against the UK bias of my TD ISA which holds my HYP, which is largely big UK based fish.

    I also have two Cash ISA contributions from years back transferred into Charles Stanley. So maybe it’s time to start getting out of the pound. It has a nice 8% loss YTD, when I’m buying something generic like that I do like to see the previous owners losing money, because it means I don’t pay that on buying it. With individual shares you can go wrong with that principle, but it’s safer with broad index funds. I went with Charles Stanley because I am trying to break up my ISA holdings because of the government guarantee and in the interests of diversifying against platform counterparty risk, although this means I will have several accounts, which is always a pain to manage as an integrated whole. TD are very cheap to hold shares on, no annual fees on the account or for shares, Charles Stanley are cheap to hold funds with for small total amounts, and I will try and stay below £50,000 on there. So I will do funds on Charles Stanley, ETFs and shares on TD.

    Other ways of hedging the pound

    I bought a lot of gold last year in my ISA, because I couldn’t really bring myself to buy the in my view overpriced UK stock market or the US. Of course the cheap EMs that I bought in 2015 got cheaper but that’s life 😉  That gold seems to be reacting to the fall in the pound by going up a fair way. I don’t really feel terribly good about having 10% of the ISA in gold, but it’s working for me at the moment. It is, of course, possible to hedge the pound using spread-betting and FX, but that is a harsh mistress full of tiny changes in points bought/shorted making humdingers of changes in the total amount at risk, and these vary shockingly day to day. What I’d really like to do is buy SDRs from the IMF because what I really want to do is hedge the pound against a bunch of currencies, but I guess the Ermine economy is too small by a few squillion pounds to get a seat at the IMF. An ISA letting me hold the cash part in SDRs would be nice 😉

    Simulating SDRs by averaging forex holdings is tough, there are high carrying costs with spreadbetting FX. Well, paying anything to carry cash is bad news, because it is generally a wasting asset, not a productive asset. I’m already sore about screwing up and buying PHAU in my TD ISA, although the gold has gone up I failed to spot this is denominated in USD so I ate FX costs buying and no doubt will take the same hit on selling. In fairness the rise in the value of the gold will pay me handsomely for my trouble, but nevertheless it is a drag on performance I missed. Doing anything with FX is just like that, too many people with a hand in the till on every transaction.

    Overall, since I want to be a net buyer into a bear market hedging the pound then buying a global ex UK index denominated in pounds isn’t such a bad way to do it. I shall leave arcane forex shenanigans to the truly wealthy, like people bumping up against the lifetime allowance and the brave, like ERG. I haven’t got brains or balls enough for raw forex. Sometimes you gotta know when to hold ’em and when to fold ’em. Buying foreign productive assets to shovel money out of the UK I can relate to.

    It’s also worth noting that the contents of the FTSE aren’t totally GBP assets, a lot of these big fish make their money outside the UK. Mind you, at the moment making money isn’t something some of these FTSE100  firms are doing in a big way!

    Why is it all going titsup again?

    God knows. If it were just the markets that wouldn’t be so bad, that’s just what markets do, they have regular hissy fits. It’s their job, it is how they transfer capital from the timid to the brave 😉 But other things aren’t right. Moneyweek and the Torygraph say it’s all debt, I don’t think that we took the hit from the first credit crunch enough. In the past we used to take the hit of recessions straight between the eyes – Paul Volcker in the mid 1970s, Thatcher in 1979. The price of those interventions was some very serious economic pain – I had the bad luck to graduate into the very deep recession of 1982 that Thatcher’s medicine invoked, and was unemployed for six months at the start of my career. Since the dotcom bust we just aren’t prepared to take that sort of hit, which seems to smear everything out by driving the crap underground, for it to pop up in unexpected places. The oil price just ain’t right, and we aren’t going to stop using oil in the next 10 years; the exploration  investment that isn’t happening now we are going to rue bitterly in 10 years’ time, although we will hopefully use renewables for a larger proportion of our global energy consumption than currently used.

    Where is the bit that says buy UK residential property, BTL etc?

    I have had the experience of selling a house for nearly half the purchase price and endlessly pissing money into the mortgage for that hole. Every other bastard believes that house prices in the UK only go up, I know that this is not true from personal experience. The Ermine Does. Not. Do. Res. Property. I don’t care how great it is, why it will only go up, and up, and up. Quite frankly, I don’t give a damn. It’s worth owning the roof over my head, and after that it’s enough with the madness of crowds that is British res property. So often you hear punters say the stock market is a casino – well at least the chips are productive assets. Even being a total momentum-chasing asshole in the dot-com boom and bust I lost less money absolutely and proportionally to the capital invested than on housing. 1

    Why do I want to shift out of the pound?

    One word. Brexit…

    There may be a teeny bit of noise and hum associated with that, whichever way the referendum goes. And hell, finally the US stock market which seems to dominate ex-UK funds is getting less overpriced. So the stars are kind of aligning to make this the flavour of the first part of this year for me. Of course, this being the stock market it could all go titsup and the sky may fall and it all turns into endless pouring rain. In which case, well ,what the hell, perhaps let’s take a tip from the guys at Powerswitch and spin this doomer anthem from the last financial crash.

     

    Notes:

    1. because I have been in it for 28 years overall I am past the breakeven point on housing even taking the hit into account, because of subsequent rises. The stock market has been considerably kinder to me than British residential housing. Plus the trouble with thinking you are rich when your house rises is value is that you have to move out of it to realise that money, and observation shows old people don’t like to do that until they absolutely have to. The people who may benefit from the rise in value are your children when they come back from the crematorium, but you pushing up house prices means they couldn’t afford to buy earlier in their life. Funnily enough it’s always people with kids who go on about how great it is their house increased in value so they can leave it to the fruit of their loins, if I were the kids I’d slap ’em around the chops with a wet fish because that sort of thing is part of the problem, not part of the solution IMO. But British residential property is not my circus, not my monkeys.
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