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Friday, 4 October 2013

What the "Rich" own vs. the "Poor"...

Fantastic graphic showing very simply the "magic formula" of becoming rich(er):

Want to be in the poorest 80% of the Western world? Put most of your money into your house and borrow money to fund a lifestyle (cars, holidays etc.)

Want to be in the richest 20%? Start your own business and spend money on investments (stocks / shares / bonds etc.). Keep borrowing to a minimum.

Thursday, 26 September 2013

Fantastic explanation of the economy and the debt cycle...

Pay attention to this - it's more relevant now than it's been in the past 30 years...

Friday, 19 July 2013

Pension vs. ISA...

Here's one of the reasons I prefer putting my retirement savings into an ISA instead of a Pension: you never quite know what the government is going to do with the money in your pension...

Already in my lifetime, the rules have been changed on pensions meaning that I can no longer access "my" money until I'm 55. It used to be 50 and I suspect it will be higher still by the time I finally retire.

UPDATE 30th Sept 2013:

Another excellent article from Merryn @ MoneyWeek:

Sunday, 12 May 2013

Q1 2013 UK House Price Update...

Mixed results this quarter for house prices. In real terms, (non-seasonally adjusted) prices reported by Nationwide fell by £700 this quarter for the UK as a whole. For Halifax, the same figure is an increase of £800.

For Northern Ireland, the average of Nationwide and Halifax figures show an increase of £2600! One swallow does not a summer make, so I await to see if the trend remains for more than one quarter. You can see from the long-term graph that price changes tend to be slow and that trends can only be established over periods of years, not months.

I've updated the graph a little to show current house price "crash" vs. the previous one in the 90s. In both cases, "crash" is an exaggeration - it's really just a long-term correction and only visible if prices are viewed in real terms.

I'm still waiting to see what happens with the government's various house price supports ("Funding for Lending" and "Help to Buy"). Interest rates are also something of a wildcard - they can be kept artificially low by the bank, but lending rates are largely determined by the broader market, namely inter-bank lending and gilt yields. If banks get jittery again, the former will increase because banks will be wary of lending to one another and if the market becomes worried about the UK government's ability to pay its debts, the gilt yield will increase, raising mortgage rates.

Summary: UK House prices are back to their 2003 level. I continue to save a deposit in various assets (cash, gold, stocks, gilts).

Tuesday, 22 January 2013

More fun with demographics...

Just a quick graph of the number of people born in the UK (shifted 42 years - e.g. the value for 2013 is actually the number of people born in 1971) and house prices.

Presented without comment.


Friday, 18 January 2013

Q4 2012 UK House Price Update...

Halifax have just today released their Q4 update for UK house prices, so I can combine them with Nationwide's to formulate an average, real price for both the UK and Northern Ireland (where I currently live).

Remember my hypothesis is that house prices are primarily driven by demand, and that demand is primarily driven by the number of people able to buy (not wanting to buy, but able to buy). The grey line on the graph is the number of people in the segment of the population I consider most likely to be in this category and you can see how well past prices have correlated with this line.*

Remember also that this graph is real prices. When dealing with time frames any longer than about a year, the corrosive effects of inflation on the value of money must be taken into account. As I outlined previously, it's more honest to discuss inflation in terms of the falling value of a currency than the rising cost of goods and services.

Since the start of the downturn (Q1 2008), houses have lost an average of ~£770 per month. This has slowed a little in the past year to ~£400 per month.

Given this, I will continue to save a substantial (15% or more) deposit and bide my time until the value of houses in my price range is falling less than the rent I currently pay. I still estimate this to be between 2015 and 2018.

* (Disclaimer - I have deliberately chosen the age bracket that most closely matches the data, rather than a broader segment that shows less extreme swings. However, any segment in the ~30 - 50 year old range fits the curve reasonably well).

Wednesday, 9 January 2013

Quick, lazy tip for dieting in 2013

Super lazy post because I've been insanely busy since my last post!

I'm currently in a hotel in Belgium chowing down on some salad that I bought from a petrol station because it's part of my new "how to stay lean while travelling overseas for business" plan.

Here's a handy tip for you to manage dieting without needing to count every calorie:

Take a look at the food label - if it contains less then 100 calories per 100g, you can pretty much eat as much as you want. If it contains over that, proceed with caution.

The reason for this is caloric density, which I believe is the major cause of the Western world's obesity problem. Food these days is simply so readily available and filled with calories. The human body evolved on foods like vegetables, berries and meat (think fish, deer, bison, mammoth), hence why I'm also a big proponent of "paleo" style diets. All of these foods contain either a lot of water, fibre, vitamins or protein. They fill you up a lot and provide lots of nutrients relative to their calorie content.

Modern foods can be extremely sweet or greasy, neither of which we would have been able to find in the wild (the exception would be something like honey, but that would be a rare treat, not to mention potentially dangerous to harvest!).

Anyway, the "100cals/100g" rule is handy if you're out and about and need to grab something from a corner shop / roadside petrol station / supermarket.

On a related note, one sure-fire way of overdosing on calories is to get them from liquids - avoid fruit juice (eat the whole fruit instead) and any soft drinks containing sugar.

Oh, and here's a bonus video combining both economics and food: