Investments and attitudes

This is about personal investments and attitudes.  The way in which a person organises their finances says a lot.  Perhaps a bit like buying a car, or a house and so on, it might reflect someone’s personality.  

For those of us in the world of early retirement, we generally need to keep an eye on our finances especially while we wait for pensions to fall into place.  Inevitably this will mean delving into the intriguing and (at times) murky world of investments.

Quite a few of my friends are at this stage, perhaps looking to retire in a couple of years time, through to those of us who have been retired for several years.  We seem to all have different view points and slightly different circumstances.

What are our priorities, our objectives?  How do we want money to work for us?

Some of our friends have clearly worked very hard for their retirement, always checking on the best rates of return, tax situations and so on.  Some are independent thinkers along the lines of “we don’t need any advice, we’re certainly not paying for it”.  They aren’t known for giving money away.  Nevertheless they probably have a prosperous retirement ahead of them.

Another friend (who I’m confident he never reads my blog), has had a prosperous career, earning far more than I ever did.  As I close friend I know he has been very generous in his lifetime, supporting a number of charities and, I think, some anonymous gifts to people in need. One year he gave away all of his salary.  His retirement is now modest but adequate; he can live within his means.  He has a contented air about him.  I admire him.

Others plan to live modestly but leave money for their children, while others plan to run their money down to the last £10 and then pop their clogs.

I think this is all quite interesting and often I reflect on where we stand.  There’s nothing exciting or surprising; in many ways we might be just like Mr & Mrs Average.  However, we admire the philanthropists of the past and their selfless thinking.  Those in Victorian times who built hospitals, schools and children’s homes.  I am often reminded of this when I see a Müller Home*¹, just a few doors along from my mother in Weston-super-Mare.  Others, with more ordinary amounts of wealth, gave more generously than wealthy people.  We can touch other people’s lives in all kinds of ways; it doesn’t have to involve money.  Kindness, giving time and showing love towards our neighbours is a good thing to do and probably in short supply these days!

Turbulent markets

A couple of weeks ago I blogged about the turbulence out there*² in the markets.  I was having a moan that our funds had dropped in value by about 2% in the first few days of September (and to make it easier, the link is at the bottom of this post).

I took the view that there was nothing to be done, simply ride it out.  Do not react, certainly not to over react, hold on and so on.  Those words still stand, especially as that dip has seen a recovery and those funds, on average, recovered as quickly as they dipped.

Now taking the slightly longer view, I see that in the last 12 months we have seen an overall increase of about 11 or 12%.  All very well but not without some risk and of course there’s some tax to pay.

However, it’s a mixed bag

I see the worst performing fund is the Lion Trust UK Ethical Fund which has probably lost us money.  However, looking at the longer term performance of the fund, it’s doing fine.  Even now I can hear our advisor reminding me “time in the market is more important than timing the market”.  Of course, he’s right, or mostly right depending on how you cut it.

I think I would be pretty miffed if I had invested in this fund at the start of the 21st century.  For the first six years I would have lost money and yet if someone had been brave and invested in, say, 2003, they would be laughing all the way to the bank with a rise of well over 200% by now.

On balance I see that our Vanguard ESG Developed World equity fund has done alright.  In the last 18 months we have gained about 30%.  Again, not without risk.  I have always liked this fund as it’s almost a like a global FTSE100 fund with 71% in American stocks including Apple, Microsoft and Amazon.  Now having said that, one would have to question if the likes of these companies should fall within the vaguely ethical banner but it’s all a question of criteria and our subjective opinions.

Why I am still so frustrated

Yes I am still so frustrated by this ESG lark (that’s Environmental, Sustainability and Governance).  It is always so hard to see what good our money is doing out there, especially when it’s in return for modest gains.

I want to see how this money has been used to fund certain projects out there and the return that’s been generated – innovations in clean transport, energy, industrial innovations.  In pharmaceuticals, in good food production, good housing and so on.

Instead we tend to get lots of waffle.

The solution?  

Firstly, no knee jerk reactions.

Two, always be thankful that the Good Lord has been amazingly generous towards us.

Thirdly, take on board good advice from people we admire and trust.  Having said that, we take the decisions, not other people.

Fourthly, keep on talking to each other, weighing things up.

Five, be like a plate spinner, keep an eye on everything in our complicated lives and keep everything finely tuned and balanced.

Finally, be thankful.

Going back to the beginning of this post and reflecting on attitudes, perhaps there’s no right or wrong answer.  I have to remain steadfast in wanting to do the right thing, always.  As a Christian, I long to hear those words “good and faithful servant” and yet I know I have often fallen short.  We must press on, always do what we believe is the right thing.

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*¹ Link to the Müller website

*² Link to turbulence out there blog post