The Ramblings of a Muppet

This blog post was originally written in March 2014 for our sister website – The Money Muppet. We set that site up in January 2014 as we embarked on our journey to financial freedom. The Money Muppet site no loner exists, so we’ve incorporated our financial journey into our travel blog.

What can I write about I wonder? What sage bit of insight into financial freedom can I give today?

I’ve sat about in the bath, on the tram, in the office, in queues of traffic and generally day-dreamed my way along, searching for a blinding bit of cashy cleverness to share with you. The answer’s not been forthcoming, can you believe it!? So I’m just going to ramble on about where my financial noggin’s at.

The Financial Times Guide to Investing has gone back to the library, roughly half read, having convinced me:

1. I’m not interested in active sock market investment – trying to pick stocks, buying and selling anything more than once a year’s too much for me, and I’m not coughing up for anyone to actively manage a fund for me (us), as it’s been proven that a monkey can literally choose better stocks than most fund managers
2. Bonds are too low risk/reward
3. We’re OK with individual stocks, but our appetite for risk at the moment limits us to blue chips, traded very infrequently, and a small percentage of our portfolio only
4. Our eye at the moment’s on Exchange Traded Funds (ETFs), passive index-linked portfolios of shares. Possibly Vanguard-provided ones, and probably not restricted to the UK
5. 25p to read a book worth £21.87 isn’t a bad deal (there was a reservation fee as it had to come from another library). Somehow our local library has limited (zilch) stocks of personal development and financial education books…?

We’ve both applied for Stocks and Shares ISAs for 2013-14. Ju’s sold her premium bonds (they were returning next to nothing) and invested in blue chip shares using some of her ISA allowance. I’ve yet to work out exactly what to do, but I’m thinking a small portfolio of ETFs in my S&S ISA with some of the income we’ve saved up since getting back home. I can’t quite believe I’m writing this stuff by the way. A few weeks ago I was entirely clueless about all of this. I’m not much less clueless now mind, but if there’s one thing I’m rapidly picking up, no-one knows 100% what they’re doing or where the markets are going. It’s mostly educated guesswork, even for the pros.

Our strategy has been written down too, an important step for us. It’s to aim for roughly 50% property, 45% shares/funds and 5% cash/bonds. We hope this will protect us somewhat from the inevitable jagged-rock graphs of market fluctuations. If there’s a massive increase in interest rates, we’ll have the option to liquidate our shares/funds and stick it in the bank if needs be, to balance off the potential loss we’ll make as rental income’s exceeded by mortgage payments. If (when) the stock market bombs, we hope the rent will continue to flow. It’s pretty basic, a kind of mid-risk approach.

If anyone’s any thoughts on it by the way, please feel free to comment at the bottom. Don’t be shy to rip in – you might be saving our future.

We have dormant pensions too, but trying to work out quite how they fit into the whole equation’s a challenge too far at the moment. We’re treating them as a kind of safety net, but keeping in mind we don’t want to go and use up too many years grafting, earning too much money, we’re not Total Muppets you know…! We desire freedom, a breathless life, not money.

Big steps are happening on the property side of things. We’ve an offer in place to re-mortgage our small bungalow, releasing enough equity to buy another buy to let at between £75k to £100k purchase value, on an interest only mortgage at 70% LTV, returning a gross yield of roughly 6% (and also a nett yield of 6%, proving there are many weird and wonderful ways to calculate rental yield). Get me! I’m at it again! Being ‘accidental landlords’, the idea of buying a place deliberately to rent out scares us both a bit daft, and we’re doing HUGE amounts of local market research. home.co.uk‘s my favourite site so far, as it makes time on the market and price changes nice and visible. I’ve a spreadsheet more complex than the FTSE 100 which works out the profit and loss for each of a growing list of potential deals. I enjoy it, it’s a glint of light at the end of a dank, twisting tunnel.

Next up. We’re thinking like the rich. Our beloved motorhome which we lived in for two years is for sale. We love it to pieces, tears have fallen over the decision, but as it’s not generating income but instead is burning through cash (insurance, servicing, depreciation, fuel), it’s time to go. We’ve cleaned it to within an inch of its life and I’ve just discovered the habitation water pump didn’t last the winter. Ju’s bought a new one on our cash back card and we’ll get it fitted in time for anyone to come to look around our previous home.

And last but not least I’ve found a new website, The Monevator, to read when I can tear myself away from Mr Money Moustache! Whereas the ‘tache face-punches home the philosophy of an efficient lifestyle, The Monevator talks more detail about investment. I’ve got to say, the ‘tache is my current all-time-favourite website, he’s a funny guy when he’s not verbally slapping everyone for spending money on stupid shit (his words, not mine, ah, OK, they were mine too). I like to think he’d be impressed by my purchase of a nice pair of prescription specs from Goggles4U for, wait for it, nine fecking pounds. £9. Including postage and packaging. I used to spend £200 to £300 a pair. NEVER EVER AGAIN. My badassity rocks!  This all makes sense if you read his site, honestly.

Right. Enough. Time to get on with life. Cheers, Jay

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