Greatest Hits: Volume 12 (Fringe Benefits)

Greatest Hits

When I first started this blog back in 2019, I had a pretty good idea of what I was looking to get out of it.

A creative escape valve from the pressures of my day job.

An opportunity to explore topics I am curious and passionate about, such as capital markets, investing, and behavioral economics.

And an off chance that along the way my writing could possibly help others in their own personal finance journey.

But the one benefit of this blog I did not expect is inspiration.

Over the past two years, I’ve had readers reach out to me with stories of setbacks and successes, failures and breakthroughs.

Stories of determination, resolve, and grit, showing how much is possible should one really set their eyes on a specific goal.

This week was no different.

Common Knowledge

If there’s one thing I quite like to do on this blog it’s to push the boundaries of accepted wisdom.

One such boundary is the notion that becoming a millionaire is somehow out of reach for the vast majority of the population – and certainly not for those born without a silver spoon.

With that in mind, I published a detailed, step-by-step guide on getting to your first million.

No secrets and shortcuts, just a proven, patient strategy that will get you there in twenty-odd years.

In the comments section, one of the readers responded:

I can now (almost) speak from experience that the path you describe will get you there.

When I take my monthly snapshot of my ‘retirement’ funds at the end of May I should have passed through that 7 figure mark for the first time at the age of ~46. For a northern lad of working class stock that is something I could never dreamed of.

~70% of that is in Pensions with the balance in emergency cash, ISAs, and company shares that I am locked in to (i sell and diversify as soon as I can).

No doubts I got lucky on the way.

A 1:1 company match on pension contributions upto 10% meant it was a no brainer to put 20% in my pension (at a 6% of take home pay) cost to me. This started at the age of 25 and I am certain I would not have done this without the company match.

I was also lucky over the past 5 year that the effective 60% marginal rate of tax from erosion of personal allowance effectively capped my taxable income at £100k and I was loading anything above that into my pension at 38% cost to me as salary sacrifice.

Combined with strong market growth over the past 5 year enabled me to double my retirement fund; I had ~£450k at the start of 2016.

With another 4-5 years of pension contributions, with the 60% marginal rate hopefully remaining, I should be complete with pension contributions and then can worry about managing the LTA.

The final lucky turn was company share schemes, either SAYE (no downside risk as can cash in contributions if shares are below option price) or parternship shares (upto £1,800/year pre tax contribution – again at 60% marginal rate in recent years).

On reflection, I have to thank my company for the position I am in, but i have many colleagues in similar positions who didn’t take the 121 match, invest in the company share schemes, and happily pay the 60% marginal rate of tax today …….

No need for a trust fund, a lottery win, or a “master of the universe” career.

Also no reference to skipping on lattes, avocado toast, and every other pleasure in life.

Just a slow and steady journey, staying the course through good times and bad, and being smart about investment vehicles (pensions, ISAs, SAYE plans) and that boring but lucrative topic of taxes.

As a result, a seven-figure portfolio by mid-forties, with tons of runway ahead.

All a result of a little planning, consistency, and the audacity to set a goal far higher than what is suggested by “accepted wisdom”.

If that’s not inspiring, I don’t know what is.

Have a wonderful holiday weekend all!

From Yours Truly

From Zero To Hero: Getting To Your First Million

It Will Be Too Late Tomorrow

The Many Different Paths To Financial Independence

Building Wealth

The Ladders of Wealth Creation – Nathan Barry. If you are only going to read one thing this week, this is it.

Two Big Reasons For Active Management’s Underperformance – Rock Wealth

Are You Childish About Money? – Monevator

How To Do Long Term – Morgan Housel

Ten Rules For Negotiating A Job Offer – Haseeb Qureshi

Early Retirement

Is the topic of safe withdrawal rates keeping you up at night?

You might want to give this article a glance:

The Extraordinary Upside Potential Of The Sequence Of Returns Risk – Michael Kitces

Lifestyle Design

When All Moments Have Equal Value – Raptitude

All Around

“Dear son. If you are reading this, I’m dead. I’m sorry”

Is fear holding you back from living your dream life?

If the story below doesn’t spur you into action, I don’t know what will:

When I’m Gone – Rafael Zoehler

Recommended Books

As always, let’s finish off with some top-notch books on life, money, and happiness:

How To Fail At Almost Everything And Still Win Big – Scott Adams (aka the creator of Dilbert)

The Seven Habits Of Highly Effective People – Stephen Covey

The Happiness Curve: Why Life Gets Better After Midlife – Jonathan Rauch

Happy weekend all!

 

P.S: Attention New Bloggers:

if you are a personal finance blogger who hasn’t yet been featured on Greatest Hits, I would like to hear from you.

Please send an email to bankeronfire at gmail dot com with a blog post you would like to submit for consideration.

The key criteria for inclusion are as follows:

(i) Content that will be interesting or beneficial to the readers of this blog (I hope you will forgive me for reserving judgment on this one)

(ii) Your blog must be at least 6 months old, with regular posts. Too many bloggers flame out early, and I don’t want the readers here to follow a bunch of dead links.

I look forward to hearing from you.

 

Note: the above post may contain affiliate links.  You can read up about our affiliate policy here.

About Banker On FIRE

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Banker On FIRE is a London-based M&A (mergers and acquisitions) investment banker.  I am passionate about capital markets, behavioural economics, financial independence and living the best life possible.

Find out more about me and this blog here.

If you are new to investing, this is a good place to start.

4 Comments

  1. “When I’m gone” was lovely, thank you for the link. Being a sentimental old fool such articles raise a little tear. Is it a genuine story? I hope so.

    • It’s one of my favourite reads on this week’s list.

      Pretty sure it’s fiction but I haven’t come across many pieces that can put things in perspective like that.

      Glad you enjoyed it – happy weekend!

  2. Ok, I’ll speak up for the latte crew.
    I’m not saying this is my sole route to retirement riches, but saving on a Starbucks latte (£3), bought lunch (£5+) and car parking (£8) every day in my 30’s allowed me to contribute a lot more to my pension than I otherwise would have. (3+5+8x 260 working days = £4K pa divided by 0.68 plus bonus 13.8% employers pension contributions) = over £7k extra into my pension every year, plus the quiet enjoyment every time I walk past a queue of people at Starbucks/ Costa knowing I’ll cope with instant coffee in 10 minutes when I arrive at the office.

    I definitely think this has helped give me a big push on the road to FIRE.

    Ps. Have chilled out a bit now I’m into 40’s and regularly buy lunch/ coffee, but think the head start the small sacrifices in my 30’s gave me were worth it and I didn’t suffer any serious hardship!

    • Thanks Brady!

      Listen, I totally agree with you. All for intentional spending here and you’ll struggle to see me going to Starbucks if I can make my own cappuccino at home.

      The challenge I Have with “skip the latte” advice is that it certainly doesn’t add up to millions (though I agree it can be meaningful, especially if savings are invested and compounded over time).

      In addition, I think it distracts people from the more important task at hand, which for most folks happens to be earning more money.

      You can only cut so much, especially for folks with low earnings.

      Most importantly, I just don’t think folks should cut on things that are important to them – even if happens to be a latter or avocado toast.

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