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UK House Price Update and Attempts to Model it...

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I haven't update my UK house price graph for a while, but this time, I thought I'd also include my attempt at modelling it.

I've previouslymentioned that I found an interesting correlation between the population and house prices.

In a very simplistic way, this makes sense. The UK is a fixed size, but its population is increasing, therefore prices go up. This is certainly the headline that's repeated endlessly on mainstream media. However, the subtlety that not everyone buys houses is lost in the noise. I doubt anyone under the age of 18 or over the age of 75 is buying houses for example. These days, it's also safe to assume that very few people under the age of 30 are either. (The average age of a first time buyer is now 30, compared with 23 in the 1960's.)

The other major factor in house prices is how much people are able to pay. Note that this is different from how much they are willing to pay. Unlike almost everything else we buy (with perhaps the exception…

The Slow March of Inflation...

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I went shopping this morning and noticed something that reminded me of inflation.


"Different pack size. Great regular price"

I knew straight away what it meant.

What used to be a 260g pack is now a 240g pack, but not to worry, it's the same regular price! Sounds like a good deal to me!

This is a real-world example of why you should invest in assets in addition to a cash savings account.

The problem, as I've detailed here and here, is that cash savings don't keep up with inflation.

A better way of looking at inflation is not that the prices of goods go up (they don't, unless supply of those goods is falling or demand for them is increasing), but that the value of the currency used to pay for them is going down.


This is what inflation really means. The value of the GBP has fallen by 90% since 1975 (using figures from Nationwide).

Let's keep it simple and say you put £1000 in a savings account in 1975 (about 6 months' annual earnings at the time).

Using …

Market Timing vs. Buy & Hold...

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I've previously mentioned that I experimented with market timing to determine when to buy/sell stocks. See my posts on the topic - here, here, here and here.

That theory, and those indicators, was based on some simple backtesting I did with a few large indices, such as the S&P500 and FTSE, for which I was able to easily plot and get data for using Google Finance. Sadly, Google seem to have removed all their lovely charts and data, presumably under pressure from financial companies who earn money for providing data that Google was providing for free.

In any case, the backtesting I did at that time was manual - i.e. I would follow the graph and make a note of the trades once the indicators were hit.

I wanted to automate this process to make it easier to test different timings, so I made an epic spreadsheet (and learned some new Excel skills along the way):


Here's an extract of an exponential moving average and SSTO (slow stochastic) to indicate when to buy and when to sell …

Buy-to-let...

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I've previously mentioned that I'm not a fan of buy-to-let.

A post over at Monevator caught my eye and sums it up well. As he says, and I agree (despite my cynical choice of blog post image),

Don't hate the player. Hate the game...

UPDATE - and the hits keep coming...


A House is NOT an Asset...

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A great post over at Sex Health Money Death highlights one of the reasons that owning your own home is not the best way to an early retirement or increasing your income.

Houses:
cost money on an ongoing basis.are difficult and expensive to buy and sell.can trap you in negative equity if you buy when they are expensive.may need to be sold to pay for care in old age.

The mistake a lot of people make is to plough money into a home while they are working, thinking that it will help them retire. They often forget (or simply don't account for the fact) that the house will not be earning them an income when they retire, but it will require ongoing costs:

taxesmaintenanceinsurance
Instead, more people should focus on accumulating true assets, like those mentioned in a previous post, namely:
Stocks & shares (e.g. like owning a tiny portion of a productive business)CashBondsCommodities (especially precious metals)Property (only if it's not the house you live in!)
Spending too much on …

The PoundCounter Guide to Wealth...

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So far, I don't think I've added a "getting started" post, or a concise guide on how to manage your money, so this will form the basis for it.

1) Pay off debt.

If you have any debts, like credit card balances, store cards, overdrafts or loans, pay them off first. Don't save anything into a savings or investment account until that's done.

Pay off the highest interest rate debt first.




The only exceptions are mortgage debt and student loans (in the UK anyway).

With mortgage debt, you want to make sure you get the lowest possible interest rate, or the lowest total cost over the period (sometimes the interest rate can be lower, but come with upfront fees).

With student loan debt, it's actually much more like an extra income tax. It's very difficult to work out whether you are better paying it off, or just putting up with it for the rest of your working life. This largely comes down to how much money you earn (or think you will earn) and how much you owe. Th…

Finding YOUR path...

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I've been struggling a little in the gym / with my diet lately.
I think it's because I ate way too much over Xmas, despite knowing I had a powerlifting competition coming up, which I would need to cut weight for.
I went from 133 lb before Xmas to 139 lb after and need to be 129 lb for my weight class.
January, February and March saw non-stop training and dieting, which took its toll on my energy levels.
The good news is that I set new (local / regional) records in the Squat, Deadlift and Total (140 kg, 170 kg and 400 kg), but sadly wasn't able to extend my benchpress record (92.5 kg) or beat the existing benchpress (all) record, which is 102.5 kg.
(For those of you unfamiliar with powerlifting, there are three lifts - Squat, Bench and Deadlift. These three lifts then produce six possible records - all three lifts (3), plus their total (4), when done on one day. The final two records are additional bench (5) and deadlift (6) records, which can be done on their own. Obvious…