The Saving And Investing Into The Doom And Gloom Thread

[wish I could afford one]

It's been suggested on this classic thread that I start a thread on this topic. Let's see if the mods let it stay on main or if it can stay on page 1.

Many of us will be saving and then subsequently investing those savings to create personal wealth. That could be for consumption (a car, a holiday, a new roof), to help others (BOMAD, help someone through school/university) or to even buy financial freedom (my purpose).

While we are doing that:

- The media are trying to get us to read economic/financial articles through emotive language which might include words like soar or collapse. Today's seems to be "Pound volatile ahead of EU vote" and "Soros warns of Brexit threat to pound".

- The financial services sector are devising methods to try and extract ever more sums of money from that wealth through advertising, thinly veiled advertising or even obvious T&C's for which we may take no interest.

This threads aim is to try and understand what effect all of that noise is having on us as individuals as we try and build wealth for whatever purpose.

[durhamborn]

Well during the sell off last week i happened to have Premier Farnell shares id picked up earlier in the year get an all cash takeover bid 50% higher than close.Instead of waiting to see if any counter bidders came in i sold into the market and bought some Marstons,Mcolls Retail Group and Stagecoach with the cash.I dont sell much ever,tending to buy and hold for the dividend income long term,but a lovely premium the day the markets tanking was nice.

Iv got my eye on a few more id like to add to my dividend portfolio and i will buy if we get a sell off.

The market has some bargains around in my view for long term dividend investors.Companies with very nice free cash flow trading around the level they were 10+ years ago.

I never listen to the noise and never have,im only interested in my portfolio producing long term dividend income that at the least keeps pace with inflation (or deflation).

[wish I could afford one]

It's no secret that I am trying to build wealth to buy myself financial freedom. In writing about my journey I regularly talk about wealth numbers that are large 6 or low 7 digit numbers. In recent times I've been accused of willy waving because of those numbers.

I'd like to review that to ascertain if I have been a bit OTT.

Today's world is one where:

- employers want to take no responsibility for our welfare and well being after we leave their employ. Exhibit A is the rapid continual closure of defined benefit schemes.

- the government cannot afford their future aged welfare promises. Exhibit B is the continual pushing out of the retirement age and the increased contributions required over ones working life.

For this thought experiment I'm therefore going to propose that we need to self fund our financial freedom. The ONS's ASHE 2014 dataset tells us that average earnings in the UK were £501.00 (median £417.90) which is £26,052 per annum. The ONS also tells us that a typical house now also costs us £209,000.

The Barclays Equity Gilt Study 2016 tells us that over the last 116 years UK equities have returned a real 5% while UK gilts have returned a real 1.3%. The corporate bond dataset only runs for 10 years with a real return of 1.8%. If we build wealth and then aim to live off it annualised investment returns such as these are only half the story with the problem also being the worst sequence that those returns come in. Wade Pfau has completed a historical study into UK investors and found that if somebody wanted to live off their wealth for 30 years then to ensure they didn't run out before they ran out of breath they could only start drawing down on their wealth at the rate of 3.2%. That was for a 50% global equities and 50% global bonds wealth portfolio.

From that Pfau percentage you then have to subtract the expenses taken by the financial services sector. Let's assume that's 0.3% which is probably low for many.

So let's calculate how much wealth Mr Average needs to be financially free today. Wealth = £26,052/(3.2%-0.3%)+£209,000 = £1,107,345 which is a low 7 digit number.

Willy waving given I'm chasing a number less than Mr Average or the modern world which most haven't yet accepted?

Edit: spelling

Edited June 21, 2016 by wish I could afford one

[wish I could afford one]

Well during the sell off last week i happened to have Premier Farnell shares id picked up earlier in the year get an all cash takeover bid 50% higher than close.Instead of waiting to see if any counter bidders came in i sold into the market and bought some Marstons,Mcolls Retail Group and Stagecoach with the cash.I dont sell much ever,tending to buy and hold for the dividend income long term,but a lovely premium the day the markets tanking was nice.

Iv got my eye on a few more id like to add to my dividend portfolio and i will buy if we get a sell off.

The market has some bargains around in my view for long term dividend investors.Companies with very nice free cash flow trading around the level they were 10+ years ago.

I never listen to the noise and never have,im only interested in my portfolio producing long term dividend income that at the least keeps pace with inflation (or deflation).

I follow this approach also having tried trading and subsequently failing dismally. Of course every UK share buy incurs a platform trading cost and 0.5% SDRT and every sell a platform trading cost. An ETF/fund buy doesn't get the tax but it of course gets a buy/sell spread to pay for the market makers suits.

My thinking is that I live off the dividends as you say and then the capital keeps up with inflation.

[Democorruptcy]

It's no secret that I am trying to build wealth to buy myself financial freedom. In writing about my journey I regularly talk about wealth numbers that are large 6 or low 7 digit numbers. In recent times I've been accused of willy waving because of those numbers.

I'd like to review that to ascertain if I have been a bit OTT.

Today's world is one where:

- employers want to take no responsibility for our welfare and well being after we leave their employee. Exhibit A is the rapid continual closure of defined benefit schemes.

- the government cannot afford their future aged welfare promises. Exhibit B is the continual pushing out of the retirement age and the increased contributions required over ones working life.

For this thought experiment I'm therefore going to propose that we need to self fund our financial freedom. The ONS's ASHE 2014 dataset tells us that average earnings in the UK were £501.00 (median £417.90) which is £26,052 per annum. The ONS also tells us that a typical house now also costs us £209,000.

The Barclays Equity Gilt Study 2016 tells us that over the last 116 years UK equities have returned a real 5% while UK gilts have returned a real 1.3%. The corporate bond dataset only runs for 10 years with a real return of 1.8%. If we build wealth and then aim to live off it annualised investment returns such as these are only half the story with the problem also being the worst sequence that those returns come in. Wade Pfau has completed a historical study into UK investors and found that if somebody wanted to live off their wealth for 30 years then to ensure they didn't run out before they ran out of breath they could only start drawing down on their wealth at the rate of 3.2%. That was for a 50% global equities and 50% global bonds wealth portfolio.

From that Pfau percentage you then have to subtract the expenses taken by the financial services sector. Let's assume that's 0.3% which is probably low for many.

So let's calculate how much wealth Mr Average needs to be financially free today. Wealth = £26,052/(3.2%-0.3%)+£209,000 = £1,107,345 which is a low 7 digit number.

Will waving given I'm chasing a number less than Mr Average or the modern world which most haven't yet accepted?

The house is £209k because joint income mortgages are now the norm not single income. Fag packet, £26k average main income add £20k as a second income £46k x 4.5 joint = £207k

The house is debt free but should the £26k single income be the £46k to reflect our dual income world and help with another potential problem ONS stat?

That gives £46,000/(3.2%-0.3%) +£209,000 = £1,795,207 so you are £687,862 short of FIRE! Don't give up your day job yet?

OK now that problem stat. It's not meant in a bad way just as food for thought* but the ONS say that 42% of marriages end in divorce with 34% by the 20th anniversary.

http://webarchive.nationalarchives.gov.uk/20160105160709/http://www.ons.gov.uk/ons/rel/vsob1/divorces-in-england-and-wales/2011/sty-what-percentage-of-marriages-end-in-divorce.html

The £1.1m is OK if your Mr Average is single but if there is a spouse without their own pot, who could take half Mr Average's pot, then having £1.8m instead would help?

*I had a relationship that ended after over 20 years together.

[Frugal Git]

My strategy in investing is the same as in life.

Embrace the chaos. Enjoy it.

I long for high volatility so I can buy cheaper, have a cheeky short or just watch for fun. I'm loving this referendum.

When the time comes I buy (either the premier share of the sector - e.g Rio/Blt if we're talking mining, or the one that has been hit the hardest e.g. AAL), hold until the share hits my price target and sell the stake. This is usually around a 40% gain, but could be much higher.

Whatever is left - to my mind they are 'free shares', i plan on holding indefinitely.

My most recent buy was today. Stagecoach - not the best example but, because a girl at work told me they hadn't refunded her fare after an issue. I looked at the share and it looked reasonably priced hopefully. I'll collect the dividend and refund her myself.

Price target 350 for the sale.

If it drops to 200, I'll halve my stake as risk mitigation.

Edited June 21, 2016 by Frugal Git

[winkie]

Work hard, start young, invest well, spent wisely, then future freedom can be more of a reality.

What each individual needs or wants to live comfortably varies hugely.....falling income can only be counter balanced with reduced expenditure not greater borrowing however cheap it has become.....less can be more.

edit to say:.....a good well run growing business will and does benefit from low cost and fees borrowing with a personal cash investment showing personal commitment......get out of it what you are prepared to put into it.

Edited June 22, 2016 by winkie

[justthisbloke]

Forget willy waving - the "just over a million" figure is the honest price of freedom[1]. Willy waving on the other hand, is what other people do with their money - buying BMWs[2] instead of bicycles, etc. It's a mad old world where talking about the price of freedom is somehow shameful but driving round in a car, the list price of which is known by practically everyone, is OK.

I'm recently FIREd so, when it comes to accumulation strategies and, now, income strategies some people might think I should know a thing or two. I don't. I'm left with only two of the three pillars of Retirement Investing Today - earn lots and spend little. The "invest well" is a mystery to me. Instead, of "invest well", I "diversify well" and that's about it.

So, will my (non) strategy weather the storms of Brexit and the low income financial universe? I have no idea. The other piece of ignorance I've recognised over the decades is that there's no such thing as safety. The spreadsheets told me that quitting work when I did was not actively reckless - but they said nothing about it being safe. And no more years in the office earning and investing would ever give a guarantee on that front and I'd soon be running up against the office bound worker's post-45th birthday risk; "you could die in here".

[1] You could do it for less if you're an ascetic who places personal freedom above consumption. Quarter of a mill is probably the absolute base price.

[2] I know, I know. Glass houses etc. In my defence, I accumulated my stash first - then caught a late life case of mild consumerism!

[wish I could afford one]

...

OK now that problem stat. It's not meant in a bad way just as food for thought* but the ONS say that 42% of marriages end in divorce with 34% by the 20th anniversary.

http://webarchive.nationalarchives.gov.uk/20160105160709/http://www.ons.gov.uk/ons/rel/vsob1/divorces-in-england-and-wales/2011/sty-what-percentage-of-marriages-end-in-divorce.html

The £1.1m is OK if your Mr Average is single but if there is a spouse without their own pot, who could take half Mr Average's pot, then having £1.8m instead would help?

...

I hear you, but that's a risk I'm going to take. If for any reason it happened I'd quickly downgrade from a house to a small apartment. I also know that the quality of life I desire costs far less than that of my better half. So if we were to split I'd still probably (just) be ok given my better half will have her 'fun' money covered at the point we FIRE.

[wish I could afford one]

My strategy in investing is the same as in life.

Embrace the chaos. Enjoy it.

I long for high volatility so I can buy cheaper, have a cheeky short or just watch for fun. I'm loving this referendum.

When the time comes I buy (either the premier share of the sector - e.g Rio/Blt if we're talking mining, or the one that has been hit the hardest e.g. AAL), hold until the share hits my price target and sell the stake. This is usually around a 40% gain, but could be much higher.

Whatever is left - to my mind they are 'free shares', i plan on holding indefinitely.

My most recent buy was today. Stagecoach - not the best example but, because a girl at work told me they hadn't refunded her fare after an issue. I looked at the share and it looked reasonably priced hopefully. I'll collect the dividend and refund her myself.

Price target 350 for the sale.

If it drops to 200, I'll halve my stake as risk mitigation.

I know we've discussed this a little in the past and I applaud your capability. Early on I tried a few different trades and I can confirm that my crystal ball is very very broken. It's now buy the worst performer, buy the worst performer, rebalance and then buy the worst performer for me.

[wish I could afford one]

...

I'm recently FIREd so, when it comes to accumulation strategies and, now, income strategies some people might think I should know a thing or two. I don't. I'm left with only two of the three pillars of Retirement Investing Today - earn lots and spend little. The "invest well" is a mystery to me. Instead, of "invest well", I "diversify well" and that's about it.

So, will my (non) strategy weather the storms of Brexit and the low income financial universe? I have no idea. The other piece of ignorance I've recognised over the decades is that there's no such thing as safety. The spreadsheets told me that quitting work when I did was not actively reckless - but they said nothing about it being safe. And no more years in the office earning and investing would ever give a guarantee on that front and I'd soon be running up against the office bound worker's post-45th birthday risk; "you could die in here".

...

Compared to what's discussed on this site I'm with you. With my portfolio this is my hypothesis:

- During an extended expansionary or growth cycle I'll very likely be ok

- During a normal style recession I'll also very likely be ok. I'd also bet that my dividends will suffer less than my capital during these periods.

- In a currency collapse, a major economy collapse or some other black swan type event I might be ok. In this event I'd prefer to have the portfolio I've worked so hard to build the portfolio of compared to someone who never started as I know which one might work and which one definitely won't.

- In a teotwawki scenario then I think whether I have a portfolio or not is going to be the last thing on my mind.

- If I keep going into work for another 10 years none of the above is going to change greatly.

[justthisbloke]

I hear you, but that's a risk I'm going to take. If for any reason it happened I'd quickly downgrade from a house to a small apartment. I also know that the quality of life I desire costs far less than that of my better half. So if we were to split I'd still probably (just) be ok given my better half will have her 'fun' money covered at the point we FIRE.

Same here. In the unlikely event that we ever split, I'd not need much money at all. The currently budgeted larger house, car ownership costs, annual holiday would all go. As would the mysterious budget line - "Personal stuff (female)".

[R K]

It's no secret that I am trying to build wealth to buy myself financial freedom. In writing about my journey I regularly talk about wealth numbers that are large 6 or low 7 digit numbers. In recent times I've been accused of willy waving because of those numbers.

I'd like to review that to ascertain if I have been a bit OTT.

Today's world is one where:

- employers want to take no responsibility for our welfare and well being after we leave their employ. Exhibit A is the rapid continual closure of defined benefit schemes.

- the government cannot afford their future aged welfare promises. Exhibit B is the continual pushing out of the retirement age and the increased contributions required over ones working life.

For this thought experiment I'm therefore going to propose that we need to self fund our financial freedom. The ONS's ASHE 2014 dataset tells us that average earnings in the UK were £501.00 (median £417.90) which is £26,052 per annum. The ONS also tells us that a typical house now also costs us £209,000.

The Barclays Equity Gilt Study 2016 tells us that over the last 116 years UK equities have returned a real 5% while UK gilts have returned a real 1.3%. The corporate bond dataset only runs for 10 years with a real return of 1.8%. If we build wealth and then aim to live off it annualised investment returns such as these are only half the story with the problem also being the worst sequence that those returns come in. Wade Pfau has completed a historical study into UK investors and found that if somebody wanted to live off their wealth for 30 years then to ensure they didn't run out before they ran out of breath they could only start drawing down on their wealth at the rate of 3.2%. That was for a 50% global equities and 50% global bonds wealth portfolio.

From that Pfau percentage you then have to subtract the expenses taken by the financial services sector. Let's assume that's 0.3% which is probably low for many.

So let's calculate how much wealth Mr Average needs to be financially free today. Wealth = £26,052/(3.2%-0.3%)+£209,000 = £1,107,345 which is a low 7 digit number.

Willy waving given I'm chasing a number less than Mr Average or the modern world which most haven't yet accepted?

Edit: spelling

There is an obvious disconnect though in your "average" numbers. This is not a criticism of your or anyone elses personal desire to FIRE but it is clearly not possible in the terms you describe for someone on "average" earnings as stated.

A couple of observations:-

1. 40 years x £26,000 = £1,040,000 gross lifetime earnings.

2. Income taxes

3. Rent or mortgage

4. Living costs during working life

FIRE is only possible if you are earning very significantly > average earnings

In your example you completely discount the single most stable retirement income for most people on average earnings:- The state pension. In your own terms at £8,000 (35 years) / 3.2% discount rate = £250,000 Moreoever it is inflation/wage & most importantly life expectancy protected. i.e. it will last as long as you will.

Finally, there seems little point in conflating "avg house price" with "avg earnings" since it should be very obvious that no-one on avg earnings can buy an avg priced house on their own for reasons discussed on many other threads.

So I am all for FIRE, this thread & discussing ways to achieve it but to be fair to anyone on avg earnings it needs to be stated it is impossible (on the terms you have described). I feel sure you must be aware of this.

[19 year mortgage 8itch]

There is an obvious disconnect though in your "average" numbers. This is not a criticism of your or anyone elses personal desire to FIRE but it is clearly not possible in the terms you describe for someone on "average" earnings as stated.

A couple of observations:-

1. 40 years x £26,000 = £1,040,000 gross lifetime earnings.

2. Income taxes

3. Rent or mortgage

4. Living costs during working life

FIRE is only possible if you are earning very significantly > average earnings

In your example you completely discount the single most stable retirement income for most people on average earnings:- The state pension. In your own terms at £8,000 (35 years) / 3.2% discount rate = £250,000 Moreoever it is inflation/wage & most importantly life expectancy protected. i.e. it will last as long as you will.

Finally, there seems little point in conflating "avg house price" with "avg earnings" since it should be very obvious that no-one on avg earnings can buy an avg priced house on their own for reasons discussed on many other threads.

So I am all for FIRE, this thread & discussing ways to achieve it but to be fair to anyone on avg earnings it needs to be stated it is impossible (on the terms you have described). I feel sure you must be aware of this.

He's not as I have oft posted and expect the Starbucks blog to be resurrected now for your benefit.

[R K]

Supplementary post re SIPP savings/investment & tax efficiency (didnt want to make above post too long & it is a different issue):-

Current rules allow for drawdown at 55 but this is increasing to 58 as state pension age increases. Assuming max 35 years state pension of £8,000 (taxable) & tax free personal allowance of £12,000 this means only £4,000 SIPP income can be taken tax free. Remainder is taxable. So it is worth bearing in mind that for anyone shovveling savings into SIPPs even at a natural yield drawdown rate (i.e. FTSE yield for instance) they will be paying income tax of at least basic rate on at least part of that income. For obvious reasons then a SIPP cannot be used to save for your "house" money since you will be taxed at your marginal rate (even if FIREd) if/when you withdraw it.

If you have significant savings in a SIPP it is perversely quite difficult accessing them without a tax penalty (as Im sure Mr Osborne was perfectly aware of when he designed the flexible benefits rules)

[R K]

He's not as I have oft posted and expect the Starbucks blog to be resurrected now for your benefit.

He's not what?

[VeryMeanReversion]

For obvious reasons then a SIPP cannot be used to save for your "house" money since you will be taxed at your marginal rate (even if FIREd) if/when you withdraw it.

If you have significant savings in a SIPP it is perversely quite difficult accessing them without a tax penalty (as Im sure Mr Osborne was perfectly aware of when he designed the flexible benefits rules)

25% of the SIPP is tax-free. I will be using this to clear the last of my mortgage, approx 8 years early.

My current effective marginal tax rate (EMTR) is ~65% (includes income tax, employer/employee NI, child benefit withdrawal) but this reduces to 20% max when paid out at basic rate (some is still tax-free), More can be taken out of the SIPP tax-free between age 55 and 67 (in my case) if I am not working and not receiving a state pension.

On average my current 65% EMTR drops to ~15% via SIPP and patience.

It is so important to know what your EMTR is, not just your marginal income tax rate.

[19 year mortgage 8itch]

He's not what?

As per your last paragraph. He's not aware and if he is, chooses to ignore it. There's nothing average about wish I could afford one - which is great for him, may I add.

[R K]

25% of the SIPP is tax-free. I will be using this to clear the last of my mortgage, approx 8 years early.

My current effective marginal tax rate (EMTR) is ~65% (includes income tax, employer/employee NI, child benefit withdrawal) but this reduces to 20% max when paid out at basic rate (some is still tax-free), More can be taken out of the SIPP tax-free between age 55 and 67 (in my case) if I am not working and not receiving a state pension.

On average my current 65% EMTR drops to ~15% via SIPP and patience.

It is so important to know what your EMTR is, not just your marginal income tax rate.

Yes agree with all of that especially the "window" between 55/58 & state pension age.

But youre not on avg wages (OP's contention).

[mikthe20]

Great idea for a thread. Some years ago I started a thread called something like "Is there anything to invest in that isn't toppy?" when both stock markets and indeed gold were high.

I do think a major crash is inevitable, but who knows when. So what I'd be interested in is options for investment not to protect current funds (I've got that taken care of with a balanced portfolio mainly in a SIPP inc gilts and shares with decent dividends), but to make large gains when a crash happens. As far as I can see, this consists almost entirely of either precious metals and miners or Bitcoin, latter being a particular gamble. I did try a few shorts before the last crash but got the timing pretty wrong (except for oil) so don't want to go there again. So, anywhere else to invest that will grow rapidly when the doom and gloom actually hits? As I see, this is for my "high risk" pot and not main investments. TIA for any suggestions.

[wish I could afford one]

There is an obvious disconnect though in your "average" numbers. This is not a criticism of your or anyone elses personal desire to FIRE but it is clearly not possible in the terms you describe for someone on "average" earnings as stated.

A couple of observations:-

1. 40 years x £26,000 = £1,040,000 gross lifetime earnings.

2. Income taxes

3. Rent or mortgage

4. Living costs during working life

FIRE is only possible if you are earning very significantly > average earnings

In your example you completely discount the single most stable retirement income for most people on average earnings:- The state pension. In your own terms at £8,000 (35 years) / 3.2% discount rate = £250,000 Moreoever it is inflation/wage & most importantly life expectancy protected. i.e. it will last as long as you will.

Finally, there seems little point in conflating "avg house price" with "avg earnings" since it should be very obvious that no-one on avg earnings can buy an avg priced house on their own for reasons discussed on many other threads.

So I am all for FIRE, this thread & discussing ways to achieve it but to be fair to anyone on avg earnings it needs to be stated it is impossible (on the terms you have described). I feel sure you must be aware of this.

I agree that if you don't increase earnings, figure out ways to spend less, minimise taxes, minimise expenses and/or figure out how to invest it is going to result in a deferred (or in the extreme make it impossible) retirement.

The question I always have is why do we have to be average or worse? Instead let's leave that to the masses and work to rise above it.

When I started back in 2007 I was working a fairly typical job (a quick search on a major job board shows circa 5,000 vacancies today which seems fairly typical), was consuming like the best of them, was not taking responsibility for my own financial situation and at that time I realised my financial future was not looking good. I also don't come from a privileged background, have no BOMAD and am expecting no inheritance. Wish I Could Afford One referred to me pulling together the deposit for a family home. I will admit that the one thing I did have was a decent STEM degree.

At my 2007 wake up call and subsequently I have done a few things that were right. I firstly started, didn't fall into victim mode, was determined and importantly didn't accept average was all I was going to be. I've found it's not that difficult to be better than average financially (of course you may have to be less than average in other areas to compensate) if you put your mind to it.

[wish I could afford one]

He's not as I have oft posted and expect the Starbucks blog to be resurrected now for your benefit.

I'm of course not naive enough to suggest that my financial situation is average today however back in 2007 before starting my journey I was. I would also say that in all other walks of life you would think I was very average (I for example do not covet stuff which immediately makes me look poorer than many) and in some areas possibly even below average. If you passed me in the workplace or on the High Street you really wouldn't look twice I am that average.

[wish I could afford one]

Supplementary post re SIPP savings/investment & tax efficiency (didnt want to make above post too long & it is a different issue):-

Current rules allow for drawdown at 55 but this is increasing to 58 as state pension age increases. Assuming max 35 years state pension of £8,000 (taxable) & tax free personal allowance of £12,000 this means only £4,000 SIPP income can be taken tax free. Remainder is taxable. So it is worth bearing in mind that for anyone shovveling savings into SIPPs even at a natural yield drawdown rate (i.e. FTSE yield for instance) they will be paying income tax of at least basic rate on at least part of that income. For obvious reasons then a SIPP cannot be used to save for your "house" money since you will be taxed at your marginal rate (even if FIREd) if/when you withdraw it.

If you have significant savings in a SIPP it is perversely quite difficult accessing them without a tax penalty (as Im sure Mr Osborne was perfectly aware of when he designed the flexible benefits rules)

I generally agree. The only bit I'd say is that if you think wider than the UK that doesn't have to be the case. For example there are countries in Europe where your maximum pension tax rate can be 5% (at least for now).

In the UK you also have the 25% TFLS which would also reduce the effective tax rate in your example to below that of the basic rate.

[wish I could afford one]

Great idea for a thread. Some years ago I started a thread called something like "Is there anything to invest in that isn't toppy?" when both stock markets and indeed gold were high.

I do think a major crash is inevitable, but who knows when. So what I'd be interested in is options for investment not to protect current funds (I've got that taken care of with a balanced portfolio mainly in a SIPP inc gilts and shares with decent dividends), but to make large gains when a crash happens. As far as I can see, this consists almost entirely of either precious metals and miners or Bitcoin, latter being a particular gamble. I did try a few shorts before the last crash but got the timing pretty wrong (except for oil) so don't want to go there again. So, anywhere else to invest that will grow rapidly when the doom and gloom actually hits? As I see, this is for my "high risk" pot and not main investments. TIA for any suggestions.

So do I. I also think over the remainder of my life there will be plenty more than one. If they are no worse (including sequence of returns consideration) than the 1907 Bankers Panic, the Great Depression, the crash of 1973/74 inc the Oil Crisis, the Dot Com Crash and the GFC then I'll back my portfolio to be ok though.

If it's worse than that then there is of course a very real risk I'll end up living under a bridge eating dog food. The problem I have is that if I had £10,000,000 in my diversified portfolio I'd also end up in the same place if the value of my assets went to £0. Of course I'd also be dead before I amassed that number so I'd never get to test the theory.

Plenty of HPC'ers continually talk the doom and gloom. From memory I can't remember one who was able to present an option that didn't involve market timing which in itself carries huge risk of failure (as you mention). I would therefore also like to know about possible investments for this scenario. I suspect they may be unicorns.

[Frugal Git]

I do have one question I've been itching to ask WICAO. Your investment strategy is a wonderful, mechanical, disciplined way to do things, which I too agree anyone can do.

However, there's one thing that isn't as easy, and that's a large part of your success. You've clearly gone in 7 years from a mid thirties reasonable but non spectacular earner (no offence!) to someone earning very decent money.

Without giving away too much detail of course, would you mind shedding some light (vague as you like) on how have you achieved that? I say this because although I'm very happy with my life, the fact that someone can make such a brilliant rise in earning power so rapidly is knowledge well worth knowing.

Case in point: Me being part time unquestionably has an unspoken (and unfair - but impossible to prove in an opaque environment) affect on my leverage to increase earnings in the job I'm in right now. I'm an engineer, despite achieving all my 'goals', being very well regarded and skilled,always willing to learn more and teach others, no matter how much I ask, try, etc I cannot get more than a very basic cost of living rise annually. Even when promoted.

That said, I doubt many of my non managerial colleagues are really *that* far ahead of me anyway - maybe I'm 20-30% off my best possible market rate, and nowhere near your level. What's the strategy to really make work pay as it were?

Edited June 23, 2016 by Frugal Git