Good morning all – and happy Saturday!
We’ll keep it short and sweet this time around.
Yes, the markets are still down, and we are almost a year into this bear market.
We could well be almost through this particular drawdown – or have another year or two of pain to go.
But regardless of what Mr. Market does or says, it doesn’t change the long-term playbook for building wealth.
Maximize income. Minimize expenses. Invest the difference.
The rest will take care of itself. It always does.
Have a wonderful weekend all – and enjoy the link round-up below.
From Yours Truly
Why You Shouldn’t Be Investing
Avoiding Failure vs Achieving Success
Building Wealth
Getting Long-Term Bullish – Ben Carlson
Expectations – Morgan Housel
Value Creation – Josh Brown
Early Retirement
I’ve always said that it’s never too late to start building wealth – even if you happen to be in your 40s or 50s.
Here’s a real-life success story of someone who didn’t discover FIRE until his late 40s – and has done just fine for himself:
Finding FIRE After 40 – Finally Time To Live
Also:
It’s Time To Rethink Retirement – Darius Foroux
Lifestyle Design
Highly paid jobs are great when it comes to making money, but they sure can be challenging.
After all, what you are essentially doing is carving out a place for yourself in a pack of aggressive, hungry dogs. Rinse and repeat, every single day.
Dr. Julie Gurner is excellent at dispensing career advice for those who aspire to succeed in pressurized, charged environments.
If you haven’t done so yet, I suggest you give her a Twitter follow and subscribe to her new newsletter.
Tweets Of The Week – Ultra Successful by Dr. Julie Gurner
All Around
Most People Won’t – Bryce dot VC
And that’s a wrap.
Relax, kick back, and have a fantastic weekend everyone!
– Damian
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Banker On FIRE is an M&A (mergers and acquisitions) investment banker. I am passionate about capital markets, behavioural economics, financial independence, and living the best life possible.
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Thank you, these were all great!
Glad you enjoyed them!
These are great.
On your point about bear markets – struggling with it myself on the personal investing front. I keep thinking “wait another month to invest this month’s savings, indices will likely come down”, which I know is poor thinking for a passive investor. Do you / have you ever thought the same way? How do you rationalize that?
To be honest, I’m a perennial optimist so I actually think along the lines of “Better get in now as things are likely to rebound”
In your situation, I’d just automate investing as much as possible. Saves you time and cognitive energy involved in buying every month and second-guessing yourself while staring at the screen.
Once investing is on autopilot, you can just get on with living your life.
‘We could well be almost through this particular drawdown – or have another year or two of pain to go’
Hmm want to get your crystal ball out and tell me what I should do with 100k inheritance currently sat in premium bonds ?
Opinion only I fully accept any actions are my own and you bear no responsibility as a disclaimer lol
Pension well funded 320k even after current losses and Contributing 25k a year so loathe to put any more in. I’m 42
Partners less so so ideally I’d put a lump in that but Ltd as shes a brt
I’ve filled both isas so would be left with a gi account . I’m now ‘mortgage free’ between my investments and my cash with enough to pay off again despite the downturn
I was going to move but 6% mortgages have put paid to that I think
Mortgage fixed for 5 years interest only at0.99%
I’m basically torn between putting a good chunk (probably 30 to 50k ) in a fixed cash account paying 4.3% for a year and investing it . I will probably keep the 50k in premium bonds as a) you never know b) I don’t want to be faffed filling in tax returns for the interest and c) my current job may not be that secure so want to keep some flexibility
It feels weird to keep that much cash with inflation running riot
Agree it might feel weird but I’d rather have enough cash in the bank and sleep tight at night than stress out over every down day in the markets. So if I were in your shoes, I’d make a conservative estimate of what you might need and sock that away as an emergency fund.
As for everything else, I’d DCA in the market. At 40 y.o., this is probably the last downturn when I can be so aggressive. By the time the next one comes around I may be in my 50s, so a complete different ball game in terms of risk tolerance and asset allocation.
Hope this helps!
D ca or lump sum? I’m fine with the volatility it’s how long it’ll last vs when I need the money. I guess that may well answer my question!
Ok this is my plan.
I’ve upped my pension to the full amount I can do ( nearly ) so about 38k.
Has the two fold advantage of getting me used to living on the lowest new job salary I could expect should this job not work out £60k) and also gets my pension ‘done’ as it were so if I do take a pay cut I won’t need to attack the pension quite as hard so I won’t notice the pay cut.
I’m going to keep a decent amount of cash as the interest rates vs my mortgage i dont need to take undue risk ( I realise I’m probably better to put in the stock market but 4 years is just on the cusp of being a but dicey I think with the way things are
Ill probably lock 15k away in my partners name at 4.3% in cash and 10k in My name ( we’ve already got 5k in a 5% easy access account you get with barclays which was handy !) in cash to stay under the interest allowance to pay an interest free credit card I’ve been leaving which is due to be paid off next November. I’ll leave a decent chunk in premium bonds
I’ll continue investing monthly into my s and s isa as I am ( I’ve left my normal monthly isa investment of £600 spare as Charles Stanley Direct waives all fees if I make one purchase a month. )
I figure with 200k in isas and 100k in cash I can afford to really attack the pension get it up to around the 400k mark by the end of next year, then I can dial it back. The cash is better spent slowly being drawn down for daily expenses if I overspend my new budget for example ( unlikely all it means is im saving less into my isas.)
The 200k in isas is definitely I think enough where the gains will start to outweigh the contributions I can make
The bit I struggle with a bit is whether to dollar cost averaging Into a gi account when I’m only going to sell and transfer it in April into my isa? It feels too short a time period . It feels like if it goes down I’ll be better building up the cash and paying in a lump sum come April. Does that make sense? Of course it could rise I appreciate!
The Mortgage I’ll leave till the fixed rate is up in 2027 and review then and you would hope the isa has increased in 5 years
. If rates are 5 or 6% I guess I’m better paying it off?
But then I think even at that level of interest surely you’re better to stay interest only and pay into your pension for the tax relief and leave the mortgage as long as possible?
Feels like a sensible plan and you’ve clearly thought it through in good detail.
I’d definitely DCA. You may leave some money on the table but the best decision is the one that’s optimized for psychology, not math!