Nine underrated tools to help you achieve Financial Independence

This is a guest post by David Sawyer, author of the UK-focused financial freedom book: RESET: How to Restart Your Life and Get F.U. Money. (You can also read his previous post on Monevator!)

Although RESET stresses that hard work and good habits are the key to success in life, I’m all for cutting a few corners.

The road to financial independence is not an easy one. Anything that saves me time and makes my life easier, I embrace.

This short post profiles nine under-rated tools/shortcuts – all featured in my book – that’ll smooth your path to FIRE¹ and give you more time to do what matters to you.

#1 How rich are you? / Salary calculator

Let’s start with two tools to help you put things in context and work out how much tax you’re paying.

Discovering where your salary places you compared to the rest of the world is humbling. Finding out your precise take-home pay is useful for personal financial planning (and also good to know if you’re going for a new job).

#2 How much do you need when you retire?

This is crucial. What type of life do you want to live when you retire and how much money will you need to fund it?

Spare yourself an extremely laborious task that you’ll never get round to and instead read Which?’s 2017-18 member survey of 6,000 retired and semi-retired couples.

Examine the detail and work out – factoring in the tax you’ll be paying in retirement – the before-tax amount you’ll need to draw down as an income in retirement.

#3 Candid Money’s ‘How Long?’ investment calculator

You simply plug six crucial figures into this calculator as follows:

A: Your target stash² £

B: Your current stash³ £

C: Annual (expected) investment return %

D: Annual (expected) inflation rate %

E: Combined⁴ annual investment charge %

F: Monthly savings figure £

When you’ve arrived at those figures, use the calculator to find out what age you’ll be when you become financially independent. Play around with F to see how this (the main variable within your control) affects matters. When do you want to reach financial independence and how much can you save each and every month?

#4 Check your state pension

This one’s dead easy. All you need is a phone and your passport to find out how many more years you’ll need to work to qualify for the full state pension. (Not the same as accessing it, of course.)

As I write, the full state pension is £8,546.20 a year, or £17,092.40 for a couple. Who knows what it’ll be in 15 years’ time but probably not a figure to be sniffed at.

Check your state pension online at gov.uk.

If you’re lucky enough to have a final salary pension, you can also request a transfer value from your scheme administrator once a year. (It’s the law and it’s free.)

Anything over £30,000 and you’ll need an IFA⁵ if you do want to transfer (think carefully before you do!) and also be sure to check if the administrator is applying a percentage reduction to the CETV⁶ first. Final salary schemes that are in deficit are allowed to do this (again, it’s the law).

#5 MSE’s Budget Planner and Money Dashboard

These two tools work in tandem and are key to budgeting – an important and often time-consuming aspect of achieving financial independence.

MSE’s Budget Planner is a flexible spreadsheet, which breaks your outgoings down into intuitive categories. It helps you to see the effect that planned changes in spending will have, and thus to protect your all-important monthly saving figure.

Money Dashboard is a secure cloud-based open banking website that enables you to replicate and then track all the spending categories you set up in MSE’s Budget Planner. It syncs all members of your family’s current, business and savings accounts in one place. It even lets you set up ‘offline accounts’ to track things like VAT, pocket money, corporation tax – whatever you like. It gives you a real-time one-figure overview of your everyday money.

If I had to track spending manually or by logging in to umpteen accounts, I wouldn’t do it. Money Dashboard is free and I believe it’s a game-changer for UK FIREers.

#6 The LAHs

For the biggest impact visit all three: Lidl, Aldi and Home Bargains. This one’s a no-brainer, albeit you may not want to take it to the extreme of using them all.

Changing your weekly shopping habits from Tesco, Sainsbo’s, and Asda to the delights of the discount food stores could save you 30% – or in my family’s case £300 – on your monthly groceries bill.

#7 Index cards

Financial independence is a philosophy of life. A different way of looking at the world. You’ve always got to be learning, reading, discovering – but you need to do this with intent, to challenge and enhance your worldview.

To achieve this objective, you need to record what you think. Some people use emails, some Evernote, some Google Keep. I use index cards. You know, those little bits of white card with ruled lines on. I carry them everywhere and file them in boxes. They came in really useful when I was writing my book.

Sound a bit old school? Perhaps. However, I’m in good company. Ryan Holiday, Anne Lamott, Robert Greene, Oliver Burkeman, Ronald Reagan, Valdimir Nabokov and Ludwig Wittgenstein (admittedly, he probably is a bit old school) all use(d) the humble index card to catalogue and organise their thoughts.

#8 WordPress and MailChimp

Increased broadband speeds have transformed our lives. None of us would be familiar with people like Mr Money Mustache or movements like FIRE if it weren’t for the Internet. It also means that communication has become democratised. Anyone anywhere can set-up a WordPress blog and sign-up for a free MailChimp account to broadcast their thoughts into the ether.

Why would you want to do that? Well, if you’re into financial independence you’re probably into personal development, and you should definitely be into maximising your career earning potential. Blogging and setting up an email list sparks professional rejuvenation, helps you organise your thoughts, and future-proofs your career.

WordPress powers 30% of all websites and is free. MailChimp is free until you get 2,000 people on your list and it’s easy to use.

#9 Why oh why oh why? (Over to You!)

Why oh why oh why is there not a free Personal Capital-type tool on our side of the Atlantic?

You know, one place where you can synchronise all your bank accounts, where all your investment accounts also sync to – where you can do all your financial planning and have a handle on all your money and your money-based financial independence plans in one place.

I like a good tool, but I don’t know a macro from my elbow. I have tried scores of FIRE-blogger spreadsheets and other systems that purport to make it easy for me, but they only seem to work in the US or in their creators’ heads.

The everyday money thing I have sorted – Money Dashboard and Martin Lewis’s Budget Planner spreadsheet. Easy.

But what about my portfolio?

When Google sounded the death-knell to the full functionality of Google Finance Portfolio last year I was aghast. With that I had been able to manually input all my fund purchases and sales and get a lovely real-time-updated coloured chart saying how well (or badly) my investments were doing and what the rate of return was on each fund. (Useful when you’re making multiple fund purchases every month).

I’ve tried replacing it with Yahoo Finance and the Morningstar portfolio manager, and I’ve even attempted to get to grips with the Financial Times Portfolio tool. None is perfect and I find myself increasingly falling back on a combination of my fund providers, Vanguard and Fidelity – a sub-optimal solution.

So I’m wondering, how do you guys do it? What with the open banking reforms, why isn’t there a Personal Capital equivalent this side of the pond? How do you track your investment returns with the least hassle and in the shortest time?

With that said, every cloud has a silver lining… and a consequence of the absence of one tool to rule them all is my finger isn’t drawn to checking my investments on a daily basis.

That’s surely a good thing!

David Sawyer (46) is a United Nations award-winning PR man and author. He lives in Glasgow with his wife, Rachel, young kids (Zak and Jude) and pet – Hamsterdam. His first book  – RESET: How to Restart Your Life and Get F.U. Money – is priced at just £0.99 for the Kindle version until 8am Friday 4th January. In addition, David has cut the price of the paperback to just £9.99 and Amazon has knocked a further 18% off today, bringing the price down to £8.23. Get it while you’re in the mood for making resolutions!

1. Financial Independence Retire Early
2. The before-tax annual income figure you discovered above multiplied by 100 divided your safe withdrawal rate (e.g. 3.5 for 3.5% SWR.)
3. Your net worth minus house equity and final salary pension CETV (cash equivalent transfer value).
4. Ongoing charges figure (OCF), portfolio transaction costs and admin charge
5. Independent Financial Advisor
6. Cash equivalent transfer value

from Monevator https://monevator.com/nine-tools-for-financial-independence/

Top 3 Things You Should Invest In

There are many people working on the typical 9-5 shift, which is the usual for any employee. There are also others working on other shifts and it also depends on the payment. Aside from the salary, employees also get benefits depending on the company and their management. In an ideal world, this is already a good life. Sadly, that may not be the case in reality. Many people still need to have more than one job in order to sustain themselves and their families. Others are hardly resting anymore as there are expenses waiting to be paid. The bills are always arriving on a monthly basis. Prices of goods and services are increasing every year with no hope of ever going back. How can you even really live your life in this way? With all the problems in this world, it is important to keep a positive attitude. There is always a way for us to improve our own lives. Opportunities rise and fall like the sunset and sunrise: we just have to keep our eyes open for it.

Let’s just say that you received extra income from all the overtime you rendered for the past year. Maybe it can be a bonus from your achievements on the job. It can also be possible that you won the lottery. What will you do with the money? Some of you might think first of the things you will spend it on. It can be a new bag, a car, shoes, or anything you want. You may also want to treat your family for a fancy lunch or dinner. If you have a significant other, you may want to buy him/her an expensive watch or ring. Buying things after receiving extra money is an instinct most people have. It is not necessarily a bad thing because it can give you happiness and satisfaction. However, this feeling is temporary as your salary; it may not last until your next paycheck.

There are many ways that you can try and save money. You may want to plan ahead and divide your salary according to your needs. Separating the expenses from savings and miscellaneous needs can be helpful in saving a few dollars. Buying expensive stuff is good; just make sure that you have the money for it. Eat out only on special occasions and try to plan it out to avoid unnecessary expenses. There is always a good time for anything, and that includes when to buy for yourself and loved ones. Know more about saving money by clicking this link:https://americasaves.org/for-savers/make-a-plan-how-to-save-money/54-ways-to-save-money.

However, as you can see most of these saving tips still include spending money. No matter how much you save, it is still an expense. If you have extra income, why would you not want to try and invest it? In this manner, you may have the chance to increase what you already have. It may take some time, but the results are always worth it. Here are some areas you may want to invest into:

 

Small Business and Insurance

 

Establishing a small business is a good way to invest your money. There are many types of businesses that you can do from food stalls to buy and sell. However, you need to understand the market and try to keep up with what is trendy. It may not be a wise choice to invest in an already dying franchise or business idea. Unless you can try and revive it, there is no market value for such an idea. It is better to establish your own and see where it goes. Insurance can also be a great investment, and hiring an insurance software company can help you in brokerage and other processes. It does not just help you but your families as well.

 

Stock Market

 

It might be intimidating to think of investing in the stock market because of the price of stocks. It can range from the hundreds to thousands of dollars per share. However, there is a lot of ways that you can make a profit by buying and selling in the stock market with minimal risk. Keeping up with the stock market can also be difficult without the technologies we have now. Dealing with stocks can be considered as a game of chance, but seeing the patterns and learning the trade can help you with all of it. Learn more about the stock market by clicking here.

 

Real Estate

 

Buying a piece of land can be very expensive, but it can be considered as a good purchase. Prices of lands tend to only increase every time. It is such a lucrative option because people will always buy land for their homes or businesses. Buying and selling lots also incur fewer expenses as an owner. Also, you do not even need to be present at the time of purchase as you can just process it online.

from Finance Girl http://www.financegirl.co.uk/top-3-things-you-should-invest-in/

Weekend reading: Reading the last rites on 2018

What caught my eye this week.

And just like that it’s Christmas. Not sure if I should blame Brexit, the flu, the unseasonably warmish weather or the unseasonably bearish market, but it’s sprung up on me this year.

Even the spammers have stopped bombarding the website and sloped away to buy their Christmas turkeys. Time for me to do the same – after one last links post of 2018, of course!

Most years I suggest a few books before I take my annual Yuletide break. With just four sleeps to go until Santa, it’s hard to spin these books as gift ideas this year (although if you hurry Amazon might still manage it).

Oh well, the best presents are the ones you buy for yourself. So knock yourself out with one or two of these 2018 page-turners, to cheer yourself up if it’s socks again from the family on Christmas Day.

Thinking in Bets by Annie Duke

Nothing wildly original in this great read from a former poker star, its charm is that it’s an excellent entry-level introduction to probabilistic thinking and banishing black and white, all or nothing certainty from your investment approach.

Mastering the Market Cycle by Howard Marks

Mark’s The Most Important Thing is one of my favourite investing books, so I was disappointed to learn the other day he’s sold 500,000 copies. There goes another of my delusions of edge. This one isn’t in the same league, but everyone needs to understand that economies and markets are cyclical. Why not get a refresher from a man whose made billions from it?

Keeping At It by Paul Volcker

Must admit I haven’t yet read this! It’s in my ‘Save For Later’ shopping basket though. It seems appropriate to hear from the man who killed off high inflation at a time when its return – or not – has the market running in circles.

Bad Blood by John Carreyrou

It feels like only yesterday I was sending uplifting media stories about the female-led biotech Theranos to friends concerned about the ‘bro-fest’ of Silicon Valley. That – well, relief almost – at finding a good story to share about a young female Steve Jobs type is one reason Theranos got an easy ride. This tense, gasp-inducing expose of a multi-billion dollar scandal picks apart the rest.

Buying books for kids? Be sure to peruse Maria Popova’s selection of The Loveliest Children’s Books of 2018 (h/t Zude).

The publishing event of 2019

While we’re feeling bookish, make sure you also set aside a few pennies ready for our Monevator book. It is definitely coming next year.

Oh yes it is!

We now have a near-complete draft ready for editing. How much longer can it take? (Okay, don’t answer that.)

Once our book is out and you’ve all bought a copy, we can hope to see @TA back on-site every week, too.

What larks pip! Maybe next year will be the year the world starts to emerge from the darkness? Well, maybe.

Until then have a great Christmas and New Year – and thanks as ever for stopping by!

From Monevator

Vanguard readying its Personal Pension – Monevator

From the archive-ator: Stress test your plan with a Monte Carlo sim – Monevator

News

Note: Some links are Google search results – in PC/desktop view you can click to read the piece without being a paid subscriber. Try privacy/incognito mode to avoid cookies. Consider subscribing if you read them a lot!¹

London property slump drags down UK house price growth – Guardian

UK consumer confidence hits five-year low – Retail Gazette

Business investment in longest slump since 2008 – BBC

HMRC’s out-of-date letters risk “confusing” taxpayers [Search result] – FT

British Gas owner Centrica challenges energy price cap – Guardian

SEC charges two US robo-advisers with false disclosures – SEC

Why hasn’t Australia had a recession in almost 30 years? – The Atlantic

Wagamama staff get bonuses up to £2,000 as chain is sold – ThisIsMoney

Anti-expert toll grows: Measles in Europe at a 20-year high due to the anti-vaccine movement – Guardian

There was nowhere to hide in 2018 [US dollar terms] – Pension Partners

Products and services

Bitcoin could be overseen by UK’s financial regulator – Guardian

Gatehouse Bank launches table-topping 2.1% one-year deal – ThisIsMoney

Ratesetter will pay you £100 [and me a cash bonus] if you invest £1,000 for a year – Ratesetter

Savers are barely rewarded for locking cash away for two years – ThisIsMoney

Credit card made from biodegradable PVC coming in 2019 – ThisIsMoney

Comment and opinion

Investing ideas that changed my life – Morgan Housel

Passive attack: the story of a Wall Street revolution [Search result] – FT

Once more, without feeling – AQR

The Instagram influencer side-hustle is hard to break into – New York Times

Three reasons you’ll never be financially satisfied – The Reformed Broker

Physician retires early and is met with scorn – Physician on Fire

How passive investing could change capitalism [Podcast] – Bloomberg

Not even hindsight could have helped you make money this year – Bloomberg

18 signs you were an institutional investor in 2018 – Institutional Investor

A momentum-driven Bitcoin strategy delivered a 500-fold gain – Elm Funds

You have to be in the game – Oddball Stocks

Why dividend investors should look at free cash flow – UK Value Investor

Volatility is the only asset class [Podcast, one for geeks like me] – Meb Faber

Brexit

That moment in a movie where the evil second in command has taken control and is screaming “Yes we’re going to storm the fortress armed with sticks of celery!” and about half the cast is about to get it in the neck: Treasury preps for no-deal Brexit – HM Treasury

Firms told to prepare for no-deal Brexit – BBC

Leave or Remain? The Brexit holiday dilemma [Search result] – FT

How a no-deal Brexit could affect British travelers – Guardian

A brief history of [the myriad] second referendums – BBC

How I became a Brexiteer: Merryn Somerset-Webb [Search result] – FT

30% fall in house prices on chaotic Brexit “implausible”, says RICS – ThisIsMoney

Kindle book bargains

The Barcelona Way: How to Create a High-performance Culture by Damian Hughes – £1.09 on Kindle

The 100-Year Life: Living and Working in an Age of Longevity by Lynda Gratton and Andrew Scott – £2.99 on Kindle

James Acaster’s Classic Scrapes by James Acaster – £0.99 on Kindle

Off our beat

Hyper-realistic scenes the cut from Cats: The Musical that they should have put in the movie – New Yorker

Dad and the Egg controller – Pentadact

Ex-NASA scientist’s glitter-bomb vs Amazon package thief – via YouTube

Confessions of a soulless troglodyte – Quillette

Parachute use to prevent death and major trauma when jumping from aircraft: randomized controlled trial – BMJ

And finally…

“No space of regret can make amends for one life’s opportunity misused.”
– Charles Dickens, A Christmas Carol

Like these links? Subscribe to get them every Friday!

1. Note some articles can only be accessed through the search results if you’re using PC/desktop view (from mobile/tablet view they bring up the firewall/subscription page). To circumvent, switch your mobile browser to use the desktop view. On Chrome for Android: press the menu button followed by “Request Desktop Site”.

from Monevator https://monevator.com/weekend-reading-reading-the-last-rites-on-2018/

Why Leeds is on the rise for property investment up North

A cultural hub with plenty to do and see, Leeds has long been noted as one of the UK’s key cities. One area that Leeds is gaining more recognition for in recent years is property investment, with predictions for the Leeds housing market to grow over the next five years. But what are the reasons behind this rise in Leeds as a property investment hotspot?

One of the reasons Leeds stands out when it comes to property is for the cities student scene. Leeds is home to the UK’s fifth largest university — the University of Leeds, along with other institutions including Leeds Trinity and Leeds Arts University. Any city that attracts high numbers of students will naturally have a demand for quality student property, and with student property being one of the lowest investment options which often comes with the highest yields, student accommodation could be a good route for investors to take in Leeds.

Alongside attracting students, Leeds is also a popular city for young professional tenants. Leeds is well known as one of the UK’s biggest business cities, boasting the second largest financial sector after London. Over 100,000 companies reside in the city, with some huge brands such as Burberry, Asda, First Direct and Jet2 providing high numbers of jobs to people in the city. Records show that more people are choosing to leave London and head to Northern cities, with a record number of people moving to Manchester in 2017. With Leeds being home to so many fantastic businesses, along with plans for Channel 4’s headquarters to move to the city, it’s likely that the population of professionals in the city will grow further. Property investment companies like RW Invest are recognising the potential behind Leeds for city centre property investment opportunities.

Much like other cities in the North, one of the main selling points for investment in Leeds is the affordability of property in the city. The average property price in Leeds stands at £164,900 in 2018, which is lower than many other UK cities, and more than £50,000 less than the UK average as a whole. Paired with a 2.47% rental price growth and a rise in the number of people renting in the city, property in Leeds has led to some attractive rental yields of 4.29% on average.

Regeneration will play a big part in the growing success of Leeds. Part of the Northern Powerhouse initiative, there are a number of big plans in store that will boost the cities overall economy, bring new interest and attention to the city, and attract new investments. Projects planned for the city include Northern Powerhouse Rail, which will make connectivity between Leeds and other key cities much easier and more efficient. Other regeneration projects include a £350 million regeneration scheme which will bring new business opportunities and homes to Leeds. These types of regeneration projects, paired with the fact that Leeds house prices are predicted to grow further over coming years, mean that now is a great time to invest in Leeds property for a lot of capital growth potential.

from Finance Girl http://www.financegirl.co.uk/why-leeds-is-on-the-rise-for-property-investment-up-north/

Overseas Investors Flock to Manchester

Manchester has become one of the world’s leading cities for investment from overseas. With a proud industrial history, booming property market and rising population, this Northern city has become a magnet for overseas investment, from Israel to Singapore to the USA. With an impressive record of profitable property deals to overseas investors, they are now flocking to Manchester like never before.

Manchester was recently found to be one of the world’s top 10 cities for foreign direct investment (FDI), with billions of pounds already invested and plenty more to follow. During 2017, the Manchester-Liverpool region attracted an impressive 68 foreign direct investment projects. Second only to London in the UK, Manchester, ranked jointly with Liverpool in the IBM Local Location Trends 2018 report. It earned an impressive tenth place, ahead of cities like Barcelona and Toronto.  In 2016, Manchester alone recorded 54 FDI projects, worth billions to the economy. With a highly skilled workforce, a slew of new infrastructure projects and citywide improvements, Manchester is an attractive destination to do business.

Manchester boasts huge returns which have been noticed by investors from around the world, earning it the title of ‘a hotbed for investment’. The city’s international reputation has developed over recent years as overseas investors are benefitting from previous larger investments in the city and have started to see impressive returns. Israeli investor Mayer Real Estate bought Peter House on Manchester city centre’s Oxford Street in 2011 for £14.7 million. He sold it just a few years later for a massive £23.7m deal; a £9 million profit in less than half a decade. With impressive rises in property prices across the region, many are looking to Manchester. Bold regeneration schemes are giving the whole of Manchester a facelift, and the development of Manchester Airport’s Super Terminal will give overseas investors a high class welcome to the city.

As investors fall out of love with London’s extortionate property prices and low yields, Manchester is positioning itself as a modern, forward-thinking, urban destination that can easily rival the capital. New companies advocating innovative technology, software and digital are also making Manchester more attractive, with future growth in these industries central to Manchester moving forward.  Manchester is well known now for its high value property market and booming economy, and its reputation has spread around the world. The head of investment at Colliers International Manchester, Jonathan Mills, said:

“Manchester is now the first choice outside London, both for UK investors and buyers from overseas. Our region has the most mature market. Manchester is a brand they recognise and an economy large enough for them. European investors are intrigued by the story the city has to tell. Manchester has the stability they want, the liquidity they want and they can see strong drivers for the regional economy to grow. Investors see Manchester in the same category as Brussels or Amsterdam”

Regional cities, including Manchester, are appealing directly to foreign investors with dedicated efforts. Northern Powerhouse trade delegations, international events and marketing campaigns have all added to the awareness of Manchester as an ideal investment location. Property investment experts like RW Invest have been championing Manchester, developing luxurious properties there that appeal to wealthy overseas investors. In particular, Middle and Far Eastern buyers were highly active in terms of investing in regional UK cities last year and they almost doubled their 2016 spend on UK regional investments, which reached approximately £1.9 billion.  Such huge volumes of overseas investment are making Manchester a truly global city and the levels of investment from around the world look set to continue.

from Finance Girl http://www.financegirl.co.uk/overseas-investors-flock-to-manchester/

Why does Manchester Continue to Outperform Other UK Cities?

Manchester has established itself as the UK’s second city, often rivalling the capital for opportunities and growth. From population to property price rises to number of students, Manchester continues to outperform other cities in the UK. So, what makes Manchester so special? How has it managed to set itself so far ahead of other cities in the UK? We take a look at Manchester’s accomplishments and how it has become so good at overachieving.

Manchester was ranked number one in a recent study compiled by independent think tank Centre for Cities of jobs and population growth in the UK. With a population growth of 149% from 2002 to 2015 and jobs growth of 84% from 1998 to 2015, Manchester was way ahead of other UK cities. The renaissance in Manchester was obvious, with the think-tank crediting knowledge-based businesses choosing to be in regional city centres and increasing opportunities for Manchester residents.

Accolades such as being the top regional UK city for creative talent in 2017 also show that more and more people are choosing to live in Manchester because of the many opportunities on offer. Manchester certainly has a history of innovation and industry, with an impressive heritage including one of the very first passenger railways, the first programmable computer and the first free public library. This legacy of firsts has set Manchester up to celebrate pioneering and forward-thinking businesses and projects, leading to sustained growth. This progressive attitude has also seen Manchester win funding to become one of the UK’s first smart cities, with the founding of CityVerve set to propel the city into the future.

Manchester is a welcoming, world-class, multicultural city with a diverse population and many international businesses. One main area that Manchester (combined with Liverpool) has excelled in is attracting foreign investment and international backers. It is one of the top 10 cities in the world for foreign direct investment, with billions of pounds already invested and many huge projects in the pipeline. In 2017, Manchester was the recipient of nearly 50 foreign direct investment projects.

Second only to London, Manchester trumped its contemporaries and cities like Leeds and Newcastle fell way behind in the same category. Such high levels of interest from global investors are also due to Manchester’s great international reputation and booming property market. Property investment companies like RW Invest have seen a marked rise in queries about Manchester from investors from around the world, from China to Israel, showing that Manchester really does have an international appeal.

Manchester also tops the tables when it comes to student population, with tens of thousands of young people choosing to further their education in the city. With a student population of 99,000, the city continues to attract the best and brightest students to its wealth of higher education institutions. It is incredibly high student retention rates show just how much students love the city and choose to stay. Manchester was also voted the best UK city to live in in 2018, beating London and many more international cities, earning an impressive 35th place on the Economist’s Global Liveability Index. These impressive accolades show that Manchester has managed to create a winning combination of growth, innovation and high living standards which continue to outperform its competitors.

from Finance Girl http://www.financegirl.co.uk/why-does-manchester-continue-to-outperform-other-uk-cities/

Vanguard readying its Personal Pension SIPP

Given how often we’ve been labelled a front for Vanguard – in reality it’s never paid us a penny to directly¹ , more’s the pity – I was reluctant to post a lightweight update on its Vanguard Personal Pension service.

But so many of you alerted me to the latest smoke signals, how could I not?

It’s clear that a pension with the low-cost juggernaut is something many Monevator readers are waiting for.

“Whadayoogonnadoaboutit?” I shrug, like a New York mobster in a mid-70s movie.

The missing link

A pension product was conspicuously absent at the launch of Vanguard’s Personal Investor service in the UK last year.

However it seems Vanguard has been beavering away since then.

The latest:

• Vanguard has obtained necessary permissions from its regulator, the FCA.
• The Vanguard Personal Pension is registered with HMRC.
• The product will be structured as a low-cost SIPP².
• There’s still no launch date. We can expect an announcement in 2019.
• The service will handle lump sum additions, regular contributions, and pension transfers.
• De-accumulators will have the option of flexi-access drawdown from launch.
• All Vanguard UK’s active and passive funds and ETFs will be available. (I’d expect people to be nudged towards its Target Retirement Funds.)
• Vanguard says its pension will be low-cost and easy to use.
• A dedicated pensions team has been recruited.

Pension perils

Vanguard admits it has taken longer than it hoped to get its pension up-and-running, though it hasn’t explained why.

I’m no expert on launching financial products. I’d guess though it comes down to the regulatory environment and a fear of mis-selling.

Because Vanguard will only be offering its own funds through its platform, some critics might argue that savers aren’t being given sufficient choice.

I don’t agree with that – at least not if they’re investing in broad-based tracker funds – but I do have sympathy with the view that putting all your eggs in one basket is sub-optimal in terms of total risk management.

And clearly that’s what will happen with a pension provider that only offers its own funds (a situation that won’t be unique to Vanguard, anyway).

The chances of Vanguard getting into trouble to the extent that your pension is threatened (remember, trouble might include fraud or technical disasters) seems to me infinitesimal.

But the impact on an individual from such a tiny probability event could be huge.

For me, that equation always suggests diversifying between at least two providers.

Of course it’s not a fatal issue. You’re allowed to have more than one pension provider, so such diversification is easily achieved. And as I say this risk is certainly not unique to Vanguard.

Even a major ‘open’ pension platform like Hargreaves Lansdown’s could equally (that is very, very unlikely) suffer some sort of permanent compromise. Brokers have failed. And in the opaque world of pensions there are already plenty of people banking their hassle-free retirement on the health of one company – not least with final salary pensions.

There are of course safeguards against pension failure, too. My point is after a lifetime of saving and with no time to make good any setbacks, you can’t afford to take chances. I’d therefore reduce the potential for catastrophic risks where possible.

A cheap platform is only half the battle

For a clue to the sort of thinking that Vanguard may have been grappling with, see this article from The Telegraph.

A 60-year old with a £420,000 pension pot says he has been advised to split it between two Vanguard funds – a Vanguard LifeStrategy 80 fund and a Lifestrategy 40 fund.

For this advice he’s charged £4,500 – to the apparent consternation of the experts the newspaper contacted.

To summarize, the experts want the money spread across 20-30 funds, including active funds and absolute return funds and “maybe gold”.

They say they’d charge much less than £4,500 for the upfront advice – but they’d charge 0.4% to 0.75% for ongoing advice.

True, £4,500 seems a lot to say “plonk it all in a couple of tracker funds”.³

We’ve often said much the same, for free!

But the average person hasn’t got the inclination to read Monevator for a year to learn why such apparently simple advice is probably the best way forward.

And for that reason, I’m not so sure that paying an extra £2,500 upfront to get the money into these super low-cost Vanguard funds is such a terrible deal.

I’m reminded of an old joke about a plumber who bangs a boiler once with a hammer to fix it and then writes an invoice for £250. When confronted that this was poor value for money, the plumber replies that the charge is for knowing where to hit.

Indeed I’d be prepared to bet, Warren Buffett-style, that a portfolio of the two LifeStrategy funds would beat most handpicked hodgepodges of expensive active funds that amounted to a similar risk profile – not least thanks to lower costs.

But sadly, the IFA who recommended the LifeStrategy funds seems to snatch defeat from the jaws of victory – at least as best I can tell from the article.

He or she will charge an ongoing 1% a year, the article implies, for presumably telling the client not to touch anything. (The LifeStrategy funds automatically re-balance).

If so that’s a travesty, which will undo all the good work of the initial selection!

Anyway, this is the quagmire that Vanguard is tiptoeing towards.

I have no doubt the firm will produce a simple and low-cost solution. But tools are only part of the picture. Education is all-important – and one of the hardest lessons for investors is there is no perfect strategy. Everything comes with compromises.

We’ll keep doing our bit, but I suspect it will be many years before self-directed pension provision is a solved problem in the UK.

• Have a play with Vanguard’s simple Pension Calculator to see if you’re saving enough.

1. It may have bought Google display ads at some point, not sure.
2. Self-invested personal pension
3. The LifeStrategy funds are actually funds of funds, albeit all Vanguard funds.

from Monevator https://monevator.com/vanguard-readying-its-personal-pension-sipp/

Bravo to the Personal Support Unit, which helps those facing civil or family court without lawyers

A couple of months ago I became a patron of the PSU charity, which helps those facing civil or family courts. I went along to the Royal Courts of Justice to explain why and to meet a superb collection of volunteers – who provide a mix of hand-holding of scared people, to providing excellent guidance to help them navigate the court system. 

from Martin Lewis' Blog https://blog.moneysavingexpert.com/2018/12/bravo-to-the-personal-support-unit--which-helps-those-facing-civ1/

Are Online House Valuation Tools Accurate?

Increasing numbers of homeowners are turning to online estate agencies for the convenience and instant accessibility they offer. However, there is frequently a considerable discrepancy between the online house valuations from agencies such as Property Price Advice, Zoopla and Yopa and the final price that the property realises. Consequently, there is much doubt over the accuracy of online property valuation tools and the methods they use.

How online house valuation tools work

Although there are minor differences between the valuation tools regarding the amount of detail they request, they all calculate a home’s worth by using a similar system. Generally, a property’s postcode is used to begin comparing it to other homes within a limited radius of its location. If the submitted postcode is in an area with high numbers of recent sales of similar properties the valuation can be relatively accurate in some cases. Without local sales or if the property is quite isolated, the valuation is calculated on the sales of properties much further afield and can vary considerably depending on which region of the UK they are located in.

Why do properties prices vary within the UK?

Regional property prices are dependant on a complex set of issues including geography, infrastructure and the concentration of various industries. Prices directly reflect the practicalities and appeal of the regions to prospective homeowners. As a result similar properties situated in various counties will have much different values. For instance, a detached family home in the north east of England may command an average price of £265,000 yet on the other side of the Pennines it can realise £330,000. Other regional averages are as follows:

• Midlands – £230,000

• South East – £320,000

• South West – £225,000

• London – £650,000

• Wales – £157,000

• Scotland – £184,000

When an online house valuation tool calculates a price in one region it might use any of those listed above resulting in a figure that doesn’t match the property itself simply because it cannot account for additional features that might affect its valuation.

Why prices can vary between similar properties

Online valuations are driven by the simplest formula of how many bedrooms a property has but even this can lead to a confusing result. Some homeowners opt to increase their number of bedrooms by dividing a large room into two. When calculating a valuation for such a property the online tool processes data from the postcode and properties nearby. This often results in an inaccurate figure due to not being able to evaluate the impact of additional but smaller sized bedrooms compared to homes that had the larger number of rooms to begin with. The majority of homeowners enjoy modernising their homes or adding extra features to make their properties comfortable to live in and to increase their value. Adjacent properties which were once identical in structure and amenities can eventually achieve vastly different selling prices due to the extra features they include. However, not all improvements will add directly to the value of the property.

Adding value to property

The most beneficial projects are those that increase the available living space within a home. Building a conservatory or converting a garage into an extra room will both add around 10% to the property’s value for investments that are often well below £10,000. Similar figures apply to loft conversions. Kitchen and bathroom refits never realise more than a maximum of 3% of the value due to being closely aligned with personal taste but they do add to the general appearance of a home. More than a thousand can frequently be added if there are such facilities as a sturdy shed for storage and a beautifully maintained garden but these won’t register in the online estimate. An online valuation tool is unable to factor into its calculations the appeal a well-appointed home might have to prospective buyers.

Obtaining an accurate estimate

Zoopla and Property Price Advice both state that their online house valuations are only an estimate and advise seeking a more detailed analysis when deciding to sell a property. Every home is unique and has its own particular merits that may add value for various reasons. The location is vitally important as being situated next to an eyesore can detract from the value of a home that is otherwise beautifully presented. Individual homes are always more accurately assessed through being seen in person. Online valuations are a useful tool that can suggest an opening figure for selling and often provide the inspiration for projects that will increase value. However, a personal valuation or appraisal carried out by an experienced estate agent who has an extensive understanding of the local housing market is still the most precise method for obtaining an accurate selling price.

from Finance Girl http://www.financegirl.co.uk/are-online-house-valuation-tools-accurate/

Weekend reading: Can we take back control from Brexit?

[A quick update on Brexit thoughts for those who want to reasonably discuss it. For those who don’t, please feel free to skip to the links.]

Imagine having anticipated something for 30 years, finally getting the freedom to do it, and then making a car crash out of it.

But enough about my life as a mid-40s singleton. I’m thinking here of the Eurosceptic wing of the Conservative party.

You know – those 40-odd guys who can’t muster up enough votes to unseat the UK’s most ineffectual leader since Hugh Laurie’s Prince Regent in Blackadder the Third, and yet who’ve somehow managed to send 63 million of us towards an apparently imminent impoverished future.

You might think the World Class farce we’ve endured over the past 30 months would see me smiling.

After all a second referendum is looking ever more likely, if still not odds-on.

But unfortunately, I continue to read and hear abundant evidence that most of the Leave voting contingent still doesn’t get it.

And that means despite the demographic challenges of that faction (i.e. its original margin of victory is literally dying) it’s quite possible Leave could win again.

Especially if the Remain side sticks to the previous policy of dull facts over bus-splattering bullshit fabrications.

No wonder Leave voters seem almost as angry as Remainers:

I’ve seen a parade of #Brexit leaders on news programmes today. Their position boils down to this: We are absolutely sure voters knew exactly what they voted for and, as soon as we manage to agree among ourselves what that was, we will inform voters what it was they voted for.

— Alex Andreou (@sturdyAlex) December 6, 2018

A second referendum is a horrible solution to a stupid problem, with plenty of downsides.

However from my perspective it has the minor virtue of being less terrible than all the other alternatives.

Whose Brexit is it, anyway

Can we not stop this death march? Absolutely no one seems happy with the direction of travel.

Not even the Leave voters, that’s the most galling – if unsurprising – thing.

Blogger Ermine came close to capturing this contradiction at the heart of the Leave vote with a graphic this week. Leavers are represented here by the two Mickey Mouse ears on top of the smug metropolitan elite mug:

What @ermine’s Venn diagram is missing though is the set of people who voted either Leave or Remain to make us poorer.

Perhaps that’s because it doesn’t exist – despite even the Government admitting that’s what we face.

True, a tiny set of Brexiteers have belatedly conceded that a No Deal Brexit will hit us in the national nads.

That, they now say, is a price worth paying for sovereignty / blue passports / the right to negotiate trade deals with Madagascar and Kazakhstan.

But all the leading Leave-supporting players continue to lie to the electorate.

Theresa May herself rounded off her Deal Debate Dodge by harking back to the supposed ability of Brexit to reduce the inequalities and insecurities she spoke of in the aftermath of the vote – despite almost every single analysis of Brexit showing a net negative impact, economically-speaking.¹

If you want sovereignty or fewer immigrants from Brexit, fair enough. Own that. Don’t claim the tooth fairy too.

But sadly, the very few Leavers I come across in real-life are still saying things like “The EU needs us more than we need them.”

The same EU that has run rings around us in negotiations.

The EU that has stuck firmly together, despite all forecasts to the contrary, and strangely believes more in its vision of togetherness than in the fantasies of Brexiteers.

The EU that takes 44% of our exports, while we take 8%² of theirs.

The roughly 450 million of them versus the 63 million of us.

The UK vs the EU is a negotiating position that only looks attractive to Tories of a certain class raised to see greatness in the self-destruction of The Charge Of The Light Brigade.

“C’est magnifique, mais ce n’est pas la guerre; c’est de la folie”.³

Barry Barricades

What I missed when I created Barry Blimp – the archetypal Home Counties Leave voter of not inconsiderable means and more than a few years – was his zealotry.

Because I now see a big chunk of the Leave cohort want Brexit no matter what.

In fact I rather think some would enjoy it if we saw ferries piled up outside Dover and food rationing at Tesco.

Obviously I feel vindicated when I think back to the insults hurled at me when I ventured the opinion that many Leave voters didn’t know what they’d started, or that this would drag on for years.

But that’s about as satisfying as telling the person in the seat next to you that yes, you were right that the 747’s engine sounded a bit funny as the Captain shouts “Brace, brace!” over the tannoy.

There seems no good solution to this mess now. Revolutions have started over less.

(That may sound melodramatic if you don’t know your history. I suggest you Google the origins of the French Revolution, the English Civil War, or the American War of Independence before you jab your finger in my chest.)

To be clear I’m not predicting revolution – let alone hoping for it, from any perspective – but there’s got to be a non-zero chance.

Currently we’re just living through a nationalist coup, and that’s bad enough.

The irony is for many on the right, Jeremy Corbyn is a revolutionary Marxist!

Politics has abandoned the center ground. As a result, many people are going to be very unhappy, however this turns out.

Our politicians need to get a grip, fast.

From Monevator

Money is power – Monevator

From the archive-ator: The characteristics of an entrepreneur – Monevator

News

Note: Some links are Google search results – in PC/desktop view you can click to read the piece without being a paid subscriber. Try privacy/incognito mode to avoid cookies. Consider subscribing if you read them a lot!⁴

UK economy slows as car sales fall – BBC

Property market at weakest since 2012 as Brexit takes toll, says RICS – Guardian

ECB ends €2.5tn eurozone QE stimulus programme – BBC

Luxury goods inflation running at nearly 6%, says Coutts – Guardian

Richest parts of London generate 30x cash of poorest parts of UK – ThisIsMoney

Scotland freezes threshold for higher-rate income tax – Guardian

Crowdcube investors threaten legal action after Emoov goes bust – ThisIsMoney

 

 

 

Check out the collapse in the price of solar powered energy – Vox

Products and services

Are real or fake Christmas trees better for the planet? – Guardian

Small energy providers keep going bust. Is switching too risky? – ThisIsMoney

Investors flock to venture capital funds [Search result] – FT

Britain to force broadband providers to tell customers their best deals – Reuters

Ratesetter will pay you £100 [and me a cash bonus] if you invest £1,000 for a year – Ratesetter

Examining the risks and rewards of securities lending for funds – Morningstar

Investec’s new notice savings account allows 20% withdrawals – ThisIsMoney

Questioning the $1million retirement maths special

$1 million isn’t enough – Fat Tailed and Happy

The hardest problem in finance – The Irrelevant Investor

$1 million? Meh. [US but relevant] – The Belle Curve

Comment and opinion

Stellar take on the savings-versus-investment-returns debate – Get Rich Slowly

Situational spending – Seth Godin

Index-investing critic takes aim, fires, misses – Bloomberg

Rational versus reasonable – Morgan Housel

Financial planning – Indeedably

Three investing maths mistakes to drive you nuts – The IT Investor

The current danger for stocks: Fear itself – Morningstar

Why you need a money mentor – The Cut

The reason many billionaires aren’t satisfied with their wealth – The Atlantic

The wonderful Portfolio Charts has had a makeover – Portfolio Charts

How to measure a company’s growth rate – UK Value Investor

The best investing white papers of 2018 [For nerds/pros] – Savvy Investor

Crypto corner (December 2017 nostalgic edition)

Four days trapped at sea with crypto’s nouveau riche – Breaker Mag

Yes Bitcoin was a bubble. And it popped… – Bloomberg

…but is it time for believers to buy back into Ethereum? – AVC

Prices are down more than the ‘fundamentals’ [My quotes] – Chris Burniske

Brexit

The EU rebuffs Theresa May on Brexit — six takeaways [Search result] – FT

Lord Heseltine nails it on Brexit [Video] – via Facebook

“This was the second failed attempt to unseat May in three weeks, for a bunch of guys who’d be picked last for paintball and are led by rejected Paddington villain Jacob Rees-Mogg.” – Guardian

EU leaders scrap plans to help Theresa May pass deal after disastrous meeting in Brussels – Independent

How Ireland outwitted Britain on Brexit – Bloomberg

Don’t know why people see a nasty, racist fringe to the Leave vote… – via Twitter

Kindle book bargains

The Barcelona Way: How to Create a High-performance Culture by Damian Hughes – £1.09 on Kindle

The 100-Year Life: Living and Working in an Age of Longevity by Lynda Gratton and Andrew Scott – £2.99 on Kindle

James Acaster’s Classic Scrapes by James Acaster – £0.99 on Kindle

Off our beat

Habits are the compound interest of self-improvement – Farnham Street

Population mountains [Striking 3D maps of global populations] – The Pudding

KFC debuts fried chicken-scented fire logs ahead of Christmas – Fox News

We need academic conferences about robots, love, and sex – Slate

And finally…

“For half a century the competition to produce the fastest stock price-printing machine was almost as frantic as the pursuit of the stocks and the shares. Indeed for many, the two were inseparable.”
– Selwyn Parker, The Great Crash: How the Stock Market Crash of 1929 Plunged the World into Depression

Like these links? Subscribe to get them every Friday!

1. Yes, a couple of things might be made better for a tiny subset of the population. But as we’ve discussed before, almost every serious economist believes those benefits would be grossly outweighed by the economic negatives. They’d be far better addressed directly via redistribution or government investment.
2. Or 18%, in a certain light.
3. “It’s magnificent, but it’s not war; it’s madness” – General Pierre Bosquet.
4. Note some articles can only be accessed through the search results if you’re using PC/desktop view (from mobile/tablet view they bring up the firewall/subscription page). To circumvent, switch your mobile browser to use the desktop view. On Chrome for Android: press the menu button followed by “Request Desktop Site”.

from Monevator https://monevator.com/weekend-reading-can-we-take-back-control-from-brexit/

The Cost of a Wedding

We all know weddings are expensive, but how much do they cost? And how do you fund them? Find out this, and more, in our post.

Your wedding isn’t going to be cheap. Whilst there’s loads of things you can do to help you save money, ultimately, it’s still going to be costly and you may need to make a loan application to help you. The average wedding in the UK costs around £27,000 – so, even if you can fund a wedding for a fraction of this price, it’s still going to be expensive. The wedding industry is huge in the UK, and sadly it’s going to cost you a lot. But how do you fund your big day?

Well, in this post, we’re going to tell you some wedding finance options, but not before we break down the costs of what your big day could cost (based on the UK average). Yes, we’ll be talking about some possible wedding loans to using your savings. But first, let’s look into the wedding costs.

The Average Costs

So, in this section we break down the average costs of a wedding. We cover everything from the venue, the cake right down to the honeymoon. These are based on national average costs – it’s not a set figure you will or should spend.

The Venue

On average, the venue for both the ceremony and reception could cost the bride and groom around £5,000. It is usually dependent on the venue itself, what’s included and of course the day you’re going to get married. Weekends are usually popular days for weddings, therefore, the venue will charge more. Some venues may be more expensive than this average cost, but they may have extras included such as drinks and even catering too. So, when it comes to booking your wedding venue, make sure you know what’s included and what isn’t.

The Catering

The average cost of catering a wedding in the UK is around £5,000 – but again, this is dependent on the number of guests you have and what type of food you have too. Sit down meals are generally more expensive, whilst buffets are a cheaper alternative. However, some choose to go for both. The type of meal you have and the number of people that attend can bump up the price of catering as a whole. Some brides and grooms offer either an open bar or set a bar tab, which can push the costs up even more.

The Dress & Clothing

Clothing on the day is going to cost around £2,700 (on average). The brides dress can be the most costly thing, but most choose to buy their bridesmaids dresses too. Let’s not forget about the groom and the groomsmen – as they’ll also need a suit for the day as well. This can also include things like the shoes, the vale, jewellery and even make up and hair on the day too – it all adds up.

The Photography

On the day, you’re going to want a photographer to capture your wedding. On average, this can cost around £1,000. Some choose to have the photographer for the entire day. Everything from before the ceremony right up until the reception in the evening. The costs of the photographer not only come from paying their day rate but also editing costs too – and if you want the photos printed into a book. Some want their big day to be filmed as well, which means there is also video costs too.

The Flowers & Décor

Decorating the venue isn’t cheap, and it costs on average around £1,000. This includes everything from flowers for the venue, centre pieces and place cards too. However, this price can vary depending on how many flowers you have, what kind of centre pieces and place cards you have as well.

The Cake & Entertainment

On average, the cake and entertainment can cost around £1,000. Of course, the costs will depend on the size of the cake you choose and the type of entertainment. Live music entertainment tends to be more expensive, but DJs are more expensive than a playlist on Spotify or Apple Music. Most venues may be able to provide you with a sound system and an aux led for you to plug your own music into – however, this may be an additional cost.

The Rings

If you include the costs of the engagement ring as well as the wedding bands, the average cost is around £3,800. Again, it is dependent on the cost of the engagement ring and the type of wedding bands (silver, gold, white gold etc.)

The Honeymoon

Finally, after paying for the entire wedding there’s the honeymoon costs too. On average, couples will spend around £5,000 on their honeymoon. Again, this depends on how early you book, how long you go for and where you go to.

Funding the Wedding

Now, whilst some couple’s parents may pay all or a little towards your wedding day, most will have to raise the funds themselves. Some choose to pay for the wedding out of savings, making cut backs out of their monthly budget in order to finance the wedding or use their credit card to pay for the wedding. Some couples may even use a wedding loan – be it a standard or bad credit loan.

For those with good credit, there’s financing options available with low APRs. However, for those with bad credit, there’s the option to use a guarantor loan. Whilst they have a higher APR then a standard loan (available for those with good credit), they are an option of financing your wedding. However, most tend to save up.

Whatever way you finance your wedding there’s easy ways to cut costs down. The averages above are based on what everyone in the country spends typically on a wedding, so it can vary in price.

from Finance Girl http://www.financegirl.co.uk/the-cost-of-a-wedding/