Financial independence in your 40s

Today’s Times has a piece on the so-called Fire (Financial Independence, Retire Early) movement that, having taken off in North American is growing in the UK, too.

Here’s the magic formula:

The basic mathematics of Fire are that you need a net worth of 25 times your annual spending, invested sensibly in the stock market in low-cost tracker funds or in buy-to-let property.

Financial independence, whether you  choose to continue working or not, must represent true sovereignty. It’s therefore a worthy goal for the sovereign professional.
“If you can save 50 per cent of your take-home pay, it will take 19 years to go from broke to never needing to work again. If you can save 75 per cent, it will take seven to eight years.”
The basic requirements are a long-term focus and an ability for deferred gratification.
It reminds me of a great book, Your Money or Your Life, by Vicki Robin and Joe Dominguez, which is well-worth a read.
Photo by Sonja Guina on Unsplash

Level playing fields and the realities of retail

Patrick Hoskings, Financial Editor at The Times, writes a rational and thoughtful column on the realities of British retail (free registration required, I think).

The unpalatable truth is that online retailers by and large are winning not because of their tax advantage but because they are producing a better service compared with many traditional shops. Technology has transformed the business of remote shopping. Buyers can glean far more product information and advice with a few clicks of the mouse or swipes of the phone than they ever garner from an assistant in a physical shop.

For some merchandise, the shop is fast becoming an absurd anachronism. The very idea that a business would still assemble a narrow range of products in a not very accessible room miles from the ultimate buyer’s home and put an under-trained and under-informed youngster in charge seems as quaint as a cash register with a bell that goes kerching.

Accompanying the ongoing Death of the High Street is a chorus of wailing for a level playing field. But, whenever people call for “fairness”, we need to check our objectivity.

In truth, we all vote with our wallets.

 

Photo by Alexandra Kirr on Unsplash … which I recognise as Daunt Books in Marylebone, London.

Hayek, Popper and Schumpeter – @TheEconomist on the Viennese economists

Three exiles from Vienna and their responses to totalitarianism.

Part of the Economist’s Schools Brief series, this is a great essay on the influential Viennese exiles.

Today the Austrians are as relevant as ever. Autocracy is hardening in China. Democracy is in retreat in Turkey, the Philippines and elsewhere. Populists stalk the Americas and Europe: in Vienna a party with fascist roots is in the ruling coalition. All three would have been perturbed by the decay of the public sphere in the West. Instead of a contest of ideas, there is the tribal outrage of social media, leftwing zealotry on America’s campuses and fearmongering and misinformation on the right.

Of no direct relevance, Vienna was recently ranked as the world’s most liveable city. It is certainly, beautiful, elegant and civilised.

And, of course it was the inspiration for a great song…

 

Image: National Portrait Gallery

Echoes through time: whoever offers to another a bargain

Whoever offers to another a bargain of any kind, proposes to do this. Give me that which I want, and you shall have this which you want, is the meaning of every such offer; and it is in this manner that we obtain from one another the far greater part of those good offices which we stand in need of. It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages. Nobody but a beggar chooses to depend chiefly upon the benevolence of his fellow-citizens.

Adam Smith (1723 – 1790), An Inquiry into the Nature and Causes of the Wealth of Nations

Too often, focus is on the [wicked] “self-love” rather than on the proper context.

 

Image: Shutterstock

Need a New Year’s resolution? Avoid 24-hour news

I’m late in flagging Michael Wade’s post on News Noise.

He makes a great point:

There is an Orwellian twist to how the press hypes certain stories and then, as interest wanes, reverses course with a “Never mind, but look at this exciting new report!”

Twitter, other social media 24-hour news channels, even the “quality” daily  newspapers are over-filled with breathless excitement and journalists interviewing other journalists. What you eagerly watched or read yesterday is obsolete today.

Better to devote your reading time to a considered viewpoint like the Economist, or other weekly. Better still:

If the subject is truly important, read a couple of books on the subject and scout out magazine and newspaper articles from all sides of the ideological spectrum.

Read the rest, here.

 

Photo by Tim Mossholder on Unsplash

The truth about trickle down – Thomas Sowell

A valuable explanation of how capitalism works from Thomas Sowell. It has nothing to do with wishful thinking or “trickle-down” thinking:

Those who imagine that profits first benefit business owners — and that benefits only belatedly trickle down to workers — have the sequence completely backward. When an investment is made, whether to build a railroad or to open a new restaurant, the first money is spent hiring people to do the work. Without that, nothing happens.

Money goes out first to pay expenses first and then comes back as profits later — if at all. The high rate of failure of new businesses makes painfully clear that there is nothing inevitable about the money coming back.

I came across this on someone’s blog. A hat-tip is due, but I can’t remember where I saw it.  Sorry.

Read the full piece, here.

 

Image: CapitalismMagazine.com