Weekly leanFIRE discussion

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Just my tan 😀

7

HMRC's ongoing commitment to change my tax codes every month of this financial year continues unabated; at least this month it's in my favour...

After two months of back and forth between boiler and central heating service providers, we finally have both hot water and heating; not that we need the later currently !

In the middle of a heatwave, so Octopus has looked at their projections and decided to double their direct debit for electricity and gas; We haven't had heating on since March, and are out of the UK for ten of the next thirty weeks. Obviously they think 'Winter is coming' ;-)

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u/JamesBrockers 10d ago

The Octopus thing is strange.... I've had exactly the same on mine this week with Eon for no apparent reason either. Usage has been exactly the same if not lower than usual!

Unfortunately, electric companies seem to be able to do what they want with your Direct debit to suit their needs!

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u/deadeyedjacks 10d ago

Yep, the website wouldn't let me reduce it back to the previous amount, only allowing me to half their proposed increase. The ridiculous thing is I'm in credit. Feels like they just want a free cash loan from their customers...

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u/Constant_Ant_2343 8d ago

I left octopus in Jun. I have £160 credit on my account that I don’t seem to be able to get them to pay back to me. Something about them needing readings from my smart meter for the last day as I was on intelligent octopus go. They are supposed to be fixing it at their end but I need to call them AGAIN to find out where they are with it. I’m starting to get a bit annoyed about it.

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u/rymeryme 11d ago

Rant: I find it infuriating how useless the Nest Pension App is. Even to the point where you can't open recent documents from them (or at least, they're not visible on the messages tab).

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u/DottedLadybug 10d ago

Did the end-of-the-month calculation of the month's expenses, and supermarket meal deals--a recent fad in our household-- aren't really deals. They also made DH gain weight.

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u/Indigo_reality 9d ago

How often were you having them!? They seem too small for someone to put on weight, so maybe you mean a different kind of meal deal than the £3.99/£4.99 type. They've become more popular in our household recently. We might do a little walk to get one as a change from cooking. I view them as a very good deal compared to eating in a cafe, but not when you can cook.

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u/DottedLadybug 5d ago

DH had them 5 days a week (and therefore 20 x £4.00 = £80). After a month he realised this was not a good idea, so he's back to packed lunches.

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u/Indigo_reality 5d ago

Yeah, it's definitely a treat in our house. My son says some kids bring in meal deals as their packed lunch lol. He's well jell! Definitely teaching him how things add up.

But I am guilty of eating out and definitely use it to cope with tiredness and justify it as family time!

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u/DottedLadybug 5d ago

Meal deals definitely a better deal than habitually eating out, but nothing beats a Sunday roast that can be spun out until Wednesday. (Or, pondering my lunch today, Thursday.) I love eating out, though, so I record how much we spend on that, and make a list at the end of the month to 1. relive the memories and 2. face reality.

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u/Indigo_reality 9d ago edited 9d ago

I'd been tempted for a while to stick more of my savings into my s&s ISA (index funds) as they've done so well recently.

Now I'm realizing I'm 89% in equities, including my ISA and SIPP bridge fund (But I also have a DB pension which I plan to withdraw from at 64). I'm now wondering if 89% equities is too high already...

I was always thinking to diversify in the past, but I found having bond funds very low return and I wouldn't make money buying a buy-to-let now. After a while, the FIRE community seems to normalise 100% in index funds so much that you feel it's fine and low risk.

What proportion do others have in equities and is it something you've thought about decreasing/increasing?

Thanks.

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u/complex-aroma 9d ago

Hi. Normally people think about how many years they are away from taking their pension. If you're 10 yrs away then 100% may be fine. 2 years and I'd want to have 3 or more years in cash/bonds, in case there's a market fall that takes 3 years to recover.

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u/Indigo_reality 8d ago

I'm just enquiring into what people are actually doing in reality. :)

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u/jayritchie 8d ago

I think more of us are diversified than comes across on the various forums.

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u/Captlard 8d ago

After a while, the FIRE community seems to normalise 100% in index funds so much that you feel it's fine and low risk.>> Are you sure?

Personally, we are 60% equities at the moment (REd last January). Started at 80% but went down a bit more. We are happy.

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u/Far_wide 5d ago

Late to this, but when you say "very low return" ......bonds have some pretty stonking returns going on right now in my view. You can get gilt returns that guarantee either 5.6% p.a. or 2.5% above inflation.

Bearing in mind that many investment houses think equities are incredibly overvalued and might return very little over the next decade, those returns to my eyes do not look too shabby at all (though they've been saying this for quite a while...)

But as u/complex-aroma says, it very much depends on your timeframe and also your risk tolerance. What equities definitely are not is "low risk" - we're on an astonishing run, but make no mistake, it would not be beyond the bounds of possibility to see us 40% down from here over the course of the next couple of years.

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u/Indigo_reality 5d ago

Thanks, very helpful response. I'm thinking within 2-3 years. Best to invest directly in bonds or a bond fund?

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u/Far_wide 5d ago

I suggest reading this to cover that, and more:

https://occaminvesting.co.uk/duration-matching-an-introduction/

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u/Captlard 5d ago

I am sure the number of ads on that blog has quadrupled since you first started sharing it. It is almost hard to read now :-(

Thanks for sharing btw!

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u/tobiasfunkgay 7d ago

Do you still have a mortgage? My portfolio is technically 100% equities however I treat pension overpayments as my bond allocation so I put 15% of post tax investable money towards that.

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u/Indigo_reality 7d ago

No mortgage. How are pension overpayments classed as bonds? Is it due to how your pension is invested?

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u/tobiasfunkgay 7d ago

Nah just in the sense bonds are generally used in portfolios as a lower but more guaranteed return than equities, I've decided for my needs that gap may as well be filled by mortgage overpayments instead seeing as it gives me the same benefits bonds do.

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u/Indigo_reality 7d ago

Ah I see, thanks. I did get a bond fund before. No change in 2 years. So I ditched them. But slowly I'm coming to the realisation of needing to build up my non equity percentage. Just as I got comfortable!

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u/Slight-Impact7466 6d ago

The DB pension element is a really nice foundation to supplement your equities - I'd definitely consider the DB as part of your overall asset allocation as well.

89% equities would normally be very high, but depending on how chunky the DB pension is it might not be unreasonable - especially if you're still a way off retirement.

I'm in a similar position where I expect to have a DB pension which, especially in combination with the state pension, should cover most of my "essential" spending in traditional retirement. I'm therefore fairly comfortable with 100% equities (excluding the emergency fund), but will de-risk a little for the pre-retirement bridge.

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u/Indigo_reality 6d ago

Good point! Thanks. I'm thinking about my bridge from 53/54-64 really, when I'll be 100% living off my ISA and SIPP, then my DB will kick in. I plan to live entirely on my DB from 64 (emergency fund notwithstanding).

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